Eagala v. Department of Workforce Services

• Decision Date: 15 February 2007
• Docket Number: No. 20060340-CA.,20060340-CA.
• Parties: EAGALA, INC., Petitioner, v. DEPARTMENT OF WORKFORCE SERVICES, Workforce Appeals Board; and Gregory W. Kersten, Respondents.
• Court: Utah Court of Appeals

157 P.3d 334

2007 UT App 43

EAGALA, INC., Petitioner, v. DEPARTMENT OF WORKFORCE SERVICES, Workforce Appeals Board; and Gregory W. Kersten, Respondents.

No. 20060340-CA.

Court of Appeals of Utah.

February 15, 2007.

Gabrielle L. Caruso, Van Cott Bagley Cornwall & McCarthy, Park City, for Petitioner.

Suzan Pixton, Dept. of Workforce Services, Salt Lake City, for Respondents.

Before BENCH, P.J., McHUGH and THORNE, JJ.

OPINION

McHUGH, Judge:

¶ 1 Petitioner the Equine Assisted Growth and Learning Association, Inc. (EAGALA) seeks judicial review of Respondent Workforce Appeals Board's (the Board's) final order ruling that EAGALA did not have just cause to terminate Respondent Gregory W. Kersten. See Utah Code Ann. § 35A-4-405(2)(a) (2005). We affirm.

BACKGROUND

¶ 2 Kersten and Lynn Thomas founded EAGALA in 1999 as a nonprofit corporation promoting equine assisted therapy. Kersten was the chairman of the company's board of trustees. Kersten and Thomas both resigned from the board in 2005 because they were collecting salaries. Kersten then became the company's president and chief executive officer.

¶ 3 On November 16, 2005, Kersten was notified that the board of directors had voted unanimously to terminate his employment. EAGALA claimed that Kersten misused corporate funds when, among other things, he charged EAGALA for the repair of his tractor, for veterinary care of his horses, for payments on his house and barn, and for renting office space in his home even after most of EAGALA's offices had moved to a different location. EAGALA also contended that Kersten verbally abused board members and failed to comply with the directives of the board by not submitting a strategic plan for the company.

¶ 4 After receiving notification that he had been terminated, Kersten applied for benefits under the Employment Security Act. The Department of Workforce Services initially denied Kersten's claim, finding that he was discharged from his job for an act constituting a crime that he admitted or of which he had been convicted. Kersten appealed that decision and sought a hearing before an administrative law judge (ALJ).

¶ 5 Around 8 a.m. on the morning of the hearing, EAGALA faxed documentary evidence to the ALJ and emailed copies of the documents to Kersten. During the 3 p.m. telephonic hearing, Kersten told the ALJ that he had not checked his email that day and therefore had not received the documents. The ALJ then determined that the documents would not be received as evidence.

¶ 6 After the hearing, the ALJ ruled that EAGALA failed to prove that it had just cause to terminate Kersten because EAGALA did not show that Kersten was culpable for his conduct or that he had knowledge that it was wrong. Therefore, EAGALA was found to be liable for a share of the unemployment benefit costs paid to Kersten. EAGALA appealed the ALJ's decision to the Board, arguing that just cause was demonstrated and that the documentary evidence should have been admitted. The Board adopted the ALJ's findings of fact and affirmed the ALJ's decision, concluding that EAGALA did not unequivocally disallow Kersten's expenditures. The Board's decision did not make any reference to the excluded documentary evidence. EAGALA seeks review of the Board's decision by this court.

ISSUES AND STANDARDS OF REVIEW

¶ 7 EAGALA first argues that the Board did not "decide[] all of the issues requiring resolution," Utah Code Ann. § 63-46b-16(4)(c) (2004), because it failed to rule on the ALJ's decision to exclude the documentary evidence faxed the morning of the hearing. Issues raised under Utah Code section 63-46b-16(4)(c) are questions of law to which we apply a correction of error standard. See SEMECO Indus., Inc. v. State Tax Comm'n, 849 P.2d 1167, 1171 (Utah 1993).

¶ 8 EAGALA also challenges the Board's factual findings supporting its conclusion that EAGALA did not have just cause to terminate Kersten. See Utah Code Ann. § 63-46b-16(4)(g).

[T]his court grants great deference to an agency's findings, and will uphold them if they are supported by substantial evidence when viewed in light of the whole record before the court. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. . . . It is the petitioner's duty to properly present the record, by marshaling all of the evidence supporting the findings and showing that, despite that evidence and all reasonable inferences that can be drawn therefrom, the findings are not supported by substantial evidence.

Department of the Air Force v. Swider, 824 P.2d 448, 451 (Utah Ct.App.1991) (quotations and citations omitted).

¶ 9 Finally, EAGALA contends that the Board erred when it concluded that EAGALA did not have just cause to terminate Kersten. See Utah Code Ann. § 63-46b-16(4)(d). "When we review an agency's application of the law to a particular set of facts, we give a degree of deference to the agency." Autoliv ASP, Inc. v. Department of Workforce Servs., 2001 UT App 198, ¶ 16, 29 P.3d 7 (quotations and citations omitted). Application of the Employment Security Act "requires little highly specialized or technical knowledge . . . uniquely within the [Board's] expertise"; therefore, we grant "moderate deference" to the Board's decision. Id. (alteration in original) (quotations and citations omitted). "Thus, we will uphold the [Board's] decision so long as it is within the realm of reasonableness and rationality." Id. (alteration in original) (quotations and citations omitted).

ANALYSIS

I. Exclusion of Documentary Evidence

¶ 10 EAGALA first argues that the Board erred by failing to address the ALJ's refusal to admit documentary evidence EAGALA faxed to the ALJ and emailed to Kersten the morning of the hearing. According to EAGALA, the Board failed to "decide[] all of the issues requiring resolution," Utah Code Ann. § 63-46b-16(4)(c), and instead of excluding the documents, the ALJ should have followed the relevant administrative rule, which provides:

Parties may introduce relevant documents into evidence. Parties must mail, fax, or deliver copies of those documents to the ALJ assigned to hear the case and all other interested parties so that the documents are received prior to the hearing. Failure to prefile documents may result in a delay of the proceedings. If a party has good cause for not submitting the documents prior to the hearing or if a party does not receive the documents sent by the Appeals Unit or another party prior to the hearing, the documents will be admitted after provisions are made to insure due process is satisfied. At his or her discretion, the ALJ can either:

(a) reschedule the hearing to another time;

(b) allow the parties time to review the documents at an in-person hearing;

(c) request that the documents be faxed during the hearing, if possible, or read the material into the record in case of telephone hearing; or

(d) leave the record of the hearing open, send the documents to the party or parties who did not receive them, and give the party or parties an opportunity to submit additional evidence after they are received and reviewed.

Utah Admin. Code Ann. R994-508-109(11) (2006). Kersten claimed that he had not checked his email the morning of the hearing and thus had not received the documents. After learning this, the ALJ stated that he would not address the documents or admit them into the record. The ALJ also stated, however, that he would not "prevent any discussion or verbal testimony regarding anything that might be contained in those documents."

¶ 11 Under the plain language of the rule, the proper course would have been to order one of the enumerated options, such as rescheduling the hearing, reading the documents into the record, or resending the documents to Kersten. However, we need not determine whether the Board erred by failing to address this issue because, even assuming the documents should have been admitted, EAGALA was not prejudiced.

¶ 12 EAGALA asserts that the excluded documents were crucial because they included checks written by Kersten to pay for both his horse's veterinary expenses and the construction of his barn. The documents also included corporate credit card statements showing charges for vehicle maintenance, fuel, and dry cleaning.

¶ 13 We disagree that the introduction of these documents was critical because the ALJ allowed extensive questioning and discussion on all of the contested expenditures. The ALJ asked Kersten whether he had a corporate credit card, whether he was given any instructions on what the card could be used for, and whether he used the card for his dry cleaning bills. The ALJ further questioned Kersten about the veterinary bills and the vehicle costs.

¶ 14 EAGALA's witnesses were also asked about these expenditures. Thomas told the ALJ that Kersten "purchased a barn for his personal property," "used EAGALA funds to support his personal horses," and "purchased items—tools [and] fencing materials that benefitted his personal property." EAGALA's counsel specifically asked Thomas whether Kersten "would . . . make out checks for personal use." Thus, because these expenditures were repeatedly discussed, EAGALA was not harmed by the exclusion of the documents. Cf. State v. Stephens, 667 P.2d 586, 588 (Utah 1983) ("Where evidence is excluded by the trial court, any error which may have resulted from such exclusion is cured where the substance of the evidence is later admitted through some other means.").¹

II. The Board's Factual Findings

¶ 15 EAGALA next contends that the Board's decision is not supported by substantial evidence. We disagree. Although EAGALA has marshaled the evidence in support of the Board's decision, it has not demonstrated "that despite the supporting facts, . . . the findings are not supported by substantial evidence." Grace Drilling Co. v. Board of Review of the Indus. Comm'n, 776 P.2d 63, 68 (Utah Ct.App.1989).

¶ 16 We review...