Grace Drilling Co. v. Board of Review of Indus. Com'n of Utah

Decision Date02 June 1989
Docket NumberNo. 880572-CA,880572-CA
Citation776 P.2d 63
PartiesGRACE DRILLING COMPANY, Petitioner, v. BOARD OF REVIEW OF the INDUSTRIAL COMMISSION OF UTAH, Department of Employment Security, and Gordon E. Goodale, Respondents.
CourtUtah Court of Appeals

Frederick M. MacDonald, Salt Lake City, for petitioner.

R. Paul Van Dam and Alan Hennebold, Salt Lake City, for respondents.




Petitioner Grace Drilling Company appeals from the decision of the Board of Review of the Industrial Commission ("Board") awarding Gordon E. Goodale unemployment compensation benefits. The Board concluded Mr. Goodale was not discharged from his employment for disqualifying conduct under Utah Code Ann. § 35-4-5(b)(1) (1988). We affirm the Board's determination.


We review only those facts relevant to the issues presented. In January 1988, Mr. Goodale was hired by Grace Drilling to work as a foreman on two of its oil drilling rigs in Uintah County, Utah. As a condition of employment, Mr. Goodale agreed to abide by Grace Drilling's safety manual, work rules, and regulations. Mr. Goodale also consented to submit to random drug testing. Both Grace Drilling's safety manual and the consent forms signed by Mr. Goodale clearly stated that testing positive on a drug screen while on duty was cause for discharge. Mr. Goodale acknowledged that he had read and understood the manual, drug policy, and consent form.

While at work on March 17, 1988, Mr. Goodale was randomly selected for drug testing. He voluntarily submitted a urine sample and executed another consent form. On the form, Mr. Goodale disclosed that he had been taking Advil within the past seven days. Mr. Goodale also verbally informed his supervisor that he had been taking two prescription drugs for lower back pain, the names of which he could not recall. He offered to go home to retrieve the names of the drugs, but Mr. Goodale's supervisor informed him that it was unnecessary. Instead, the supervisor informed Mr. Goodale that if the test results were positive, he would be given an opportunity to present the names of the other two drugs for Grace Drilling to consider. The drug test was conducted and Mr. Goodale's urine sample tested positive for marijuana. Mr. Goodale was discharged on March 24, 1988, without being given an opportunity to provide the names of the two prescription drugs he told his supervisor he had been using prior to the drug test.

Mr. Goodale filed for and was awarded unemployment benefits. Grace Drilling appealed the Department of Employment Security's initial determination by notice dated May 12, 1988. At the administrative hearing, Grace Drilling's representative had no personal knowledge of Mr. Goodale's drug test or the circumstances surrounding his discharge. Furthermore, the written test results were not offered into evidence, and Grace Drilling failed to call any witness who had administered the test or who was otherwise familiar with the testing procedures. Instead, Grace Drilling's representative merely testified as to what she had been told by others about Mr. Goodale's test results.

At the conclusion of the hearing, the appeal referee requested further information, including a copy of the test results which Grace Drilling agreed to provide. The record was left open for this purpose. However, Grace Drilling later advised the appeal referee that it would not provide the test report. Accordingly, the appeal referee affirmed the Department of Employment Security's initial disposition awarding Mr. Goodale benefits based on the available evidence in the record. Specifically, the appeal referee found that Grace Drilling failed to provide sufficient foundation to support the validity of a positive test result, and its hearsay testimony that Mr. Goodale tested positive was contested by sworn testimony. The appeal referee also found that Grace Drilling refused to verify the positive test result or offer evidence negating the possibility that the prescription drugs reportedly taken by Mr. Goodale could have affected the outcome of the test. Accordingly, since no other reasons were given by Grace Drilling for terminating Mr. Goodale, the appeal referee concluded that he was entitled to unemployment benefits.

Following the appeal referee's decision, Grace Drilling filed its appeal and submitted to the Board the written test report originally requested by the appeal referee. The Board refused to accept the proffered report stating that "[t]o consider such evidence would deny the claimant due process by depriving him of the right to challenge and rebut the information contained therein." The Board further concluded the appeal referee's decision was a correct application of the Utah Employment Security Act, supported by competent evidence, and therefore, affirmed the award of unemployment compensation benefits to Mr. Goodale.

Grace Drilling raises two issues in this appeal claiming, (1) there is substantial evidence that Mr. Goodale was terminated for just cause because he tested positive for drug use while on duty, and (2) the Board abused its discretion in refusing to consider the proffered test results.


These proceedings were commenced after January 1, 1988, and thus our review is governed by Utah Code Ann. § 63-46b-16(4) (1988) of the Utah Administrative Procedures Act ("UAPA"). 1 Section 63-46b-16(4) governs judicial review of formal adjudicative proceedings and provides:

The appellate court shall grant relief only if, on the basis of the agency's record, it determines that a person seeking judicial review has been substantially prejudiced by any of the following:

(a) the agency action, or the statute or rule on which the agency action is based, is unconstitutional on its face or as applied;

(b) the agency has acted beyond the jurisdiction conferred by any statute;

(c) the agency has not decided all of the issues requiring resolution;

(d) the agency has erroneously interpreted or applied the law;

(e) the agency has engaged in an unlawful procedure or decision-making process, or has failed to follow prescribed procedure;

(f) the persons taking the agency action were illegally constituted as a decision-making body or were subject to disqualification;

(g) the agency action is based upon a determination of fact, made or implied by the agency, that is not supported by substantial evidence when viewed in light of the whole record before the court;

(h) the agency action is:

(i) an abuse of the discretion delegated to the agency by statute;

(ii) contrary to a rule of the agency;

(iii) contrary to the agency's prior practice, unless the agency justifies the inconsistency by giving facts and reasons that demonstrate a fair and rational basis for the inconsistency; or

(iv) otherwise arbitrary or capricious.

Grace Drilling claims the Board's findings of fact are not supported by substantial evidence as required under § 63-46b-16(4)(g). No reported Utah case to date has directly addressed whether the UAPA modifies the standard for reviewing the Board's findings of fact previously utilized by Utah courts. Thus, the issue is one of first impression.

Standard for Reviewing the Board's Factual Findings Prior to the UAPA

Prior to the UAPA, the standards for reviewing administrative agency proceedings on appeal were a combination of specific statutory provisions governing judicial review of particular agency determinations, interpreted in light of "established principles governing judicial review of administrative agencies generally." See Utah Dep't of Admin. Servs. v. Public Serv. Comm'n, 658 P.2d 601, 607 (Utah 1983).

Utah Code Ann. § 35-4-10(i) (1988) (superseded by § 63-46b-16(4)(g)) set forth the standard for reviewing the Board's findings of fact and provided in relevant part:

In any judicial proceeding under this section, the findings of the commission and the board of review as to the facts if supported by evidence, are conclusive and the jurisdiction of the court is confined to questions of law.

One of the earlier Utah Supreme Court decisions interpreting this provision held the Board's findings of fact will be affirmed "if there is evidence of any substance whatever which can reasonably be regarded as supporting the determination made...." Kennecott Copper Corp. Employees v. Department of Employment Sec., 13 Utah 2d 262, 372 P.2d 987, 989 (1962). This standard has been followed on a number of occasions, including the Utah Supreme Court's landmark pronouncements concerning judicial review of administrative proceedings in Utah Dep't of Admin. Servs. v. Public Serv. Comm'n, 658 P.2d 601, 607-12 (Utah 1983). In Administrative Services, the court stated in dicta, "in reviewing decisions on unemployment compensation ... we have declared that we will sustain the findings of the Board if 'there is evidence of any substance whatever which can reasonably be regarded as supporting the determination made....' " Id. at 609 (quoting Kennecott Copper, 372 P.2d at 989) (emphasis in original). 2

However, there are also a number of Utah decisions that, without elaboration, have used different terminology in discussing the applicable standard for reviewing the Board's findings of fact. For example, in Northwest Foods Ltd. v. Board of Review, 731 P.2d 470, 471 (Utah 1986), the Utah Supreme Court declared that the Board's findings of fact "are conclusive and binding, and are to be sustained if supported by competent and substantial evidence in the record." 3

Notwithstanding these variations in terminology, under the UAPA, it is clear that the Board's findings of fact will be affirmed only if they are "supported by substantial evidence when viewed in light of the whole record before the court." Utah Code Ann. § 63-46b-16(4)(g) (1988). This "substantial evidence test" grants appellate courts greater latitude in reviewing the record than was previously...

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