O'Keefe v. State, 68460

CourtSupreme Court of Nevada
Citation431 P.3d 350
Docket NumberNo. 68460,68460
Parties Cara O’KEEFE, an Individual, Appellant, v. The State of Nevada DEPARTMENT OF MOTOR VEHICLES, Respondent.
Decision Date06 December 2018

431 P.3d 350

Cara O’KEEFE, an Individual, Appellant,
v.
The State of Nevada DEPARTMENT OF MOTOR VEHICLES, Respondent.

No. 68460

Supreme Court of Nevada.

FILED DECEMBER 06, 2018


Hejmanowski & McCrea LLC and Malani L. Kotchka, Las Vegas, for Appellant.

Adam Paul Laxalt, Attorney General, Jordan T. Smith, Assistant Solicitor General, Cameron P. Vandenberg, Chief Deputy Attorney General, and Dominika J. Batten and Brandon R. Price, Deputy Attorneys General, Carson City, for Respondent.

BEFORE THE COURT EN BANC.

OPINION

By the Court, STIGLICH, J.:

This case concerns a decision by the Department of Motor Vehicles to terminate a classified employee’s employment and a hearing officer’s decision to reinstate the employee. At issue is whether the hearing officer applied the correct standard of review. To resolve that issue, we must interpret NRS 284.385(1)(a), which sets forth grounds for an agency to dismiss or demote a classified employee, together with NRS 284.390, which directs a hearing officer to review the agency’s disciplinary decision. We hold: Whether the employee violated a law or regulation is reviewed de novo, but the agency’s decision to terminate the employee is entitled to deference. Because the hearing officer applied the wrong standard of review, we affirm the district court’s order granting the petition for review.

FACTS AND PROCEDURAL HISTORY

The employee’s policy violations and termination

From 2006 until 2012, appellant Cara O’Keefe worked as a revenue officer at the Department of Motor Vehicles (DMV), where her job involved the licensing and registration of trucks. Her performance evaluations were positive, and she had never received discipline for violating any DMV rules or regulations. In December 2012, O’Keefe transferred to a different state position within the Nevada Division of Insurance (DOI). That transfer was considered a promotion, and so, under NRS 284.300, O’Keefe had the option to return to her position at the DMV if she failed her probationary period at the DOI.

431 P.3d 352

Shortly after O’Keefe’s transfer, two of her former DMV colleagues notified the DMV administrator for management services that they had overheard O’Keefe making unauthorized calls to the Carson City Sheriff’s Office. On those calls, O’Keefe stated that she was helping a customer with a driver’s license issue related to a DUI, but in reality, O’Keefe had no customer at her desk, and her job duties never involved DUI issues. Because O’Keefe had already left her position at the DMV, the DMV administrator declined to investigate the allegations.

O’Keefe failed her probationary period at the DOI and opted to return to the DMV. In light of O’Keefe’s imminent return, the DMV administrator opened a formal investigation into O’Keefe’s prior conduct while employed by the DMV. That investigation revealed that, in addition to the two unauthorized calls she made to the sheriff’s office, O’Keefe accessed confidential DMV databases on at least ten occasions for nonwork purposes. O’Keefe admitted to all of the allegations, explaining that she accessed the information to help a friend "fill out some paperwork" related to the friend’s DUI violation. O’Keefe further admitted that she had read and signed a memorandum from the DMV director warning employees that "querying DMV records for a purpose other than DMV business is strictly forbidden." That memorandum contained only one sentence that was underlined: "The first offense can result in termination."

In a predisciplinary hearing memorandum, the DMV administrator noted that "misuse of information technology is a terminable offense for a first time violation" and recommended that the DMV terminate O’Keefe’s employment. The DMV director agreed, concluding that "it is in the best interest of the State of Nevada to terminate [O’Keefe’s] employment."

The hearing officer’s decision

O’Keefe requested a hearing under NRS 284.390 to challenge the DMV’s decision to terminate her employment. After considering the evidence, the hearing officer vacated the DMV’s decision, noting the hearing officer’s duty "to ascertain if there is substantial evidence of legal cause, and to ensure that the employer did not act arbitrarily or capriciously, thus abusing its discretion." The decision cited NRS 284.385, Dredge v. State, Department of Prisons, 105 Nev. 39, 769 P.2d 56 (1989), and Knapp v. State,Department of Prisons, 111 Nev. 420, 892 P.2d 575 (1995), for the proposition that the hearing officer must "make an independent determination as to whether there is sufficient evidence showing that the discipline would serve the good of the public service."

The hearing officer found that O’Keefe violated three Nevada Administrative Code (NAC) regulations1 and four provisions of the DMV Prohibitions and Penalties.2 With regard to the most serious offense—DMV Prohibition G(1), "Misuse of Information Technology"—the hearing officer found that while a first-time violation "can result in termination," "the level of discipline for this offense is discretionary." The hearing officer found that O’Keefe’s conduct "was not a ‘serious violation of law or regulation’ to merit termination prior to imposition of less severe disciplinary measures" (citing NRS 284.383(1) ), and the evidence "does not establish that termination will serve the good of the public service." The hearing officer based these determinations on (1) "the nature of the offense," which the hearing officer did not consider grave; (2) O’Keefe’s "seven years of state service without prior discipline"; and (3) "the DMV’s failure to promptly investigate this matter and take immediate corrective action." Thus, the hearing officer reversed the DMV’s decision to terminate

431 P.3d 353

O’Keefe and recommended the lesser discipline of a 30-day suspension.

Judicial review

The DMV petitioned for judicial review. The district court noted the hearing officer’s finding that O’Keefe had violated DMV Prohibition G(1), which, according to the DMV’s regulations, warranted termination even if it was the employee’s first offense. The district court reasoned that "[a] hearing officer does not have authority to second-guess the DMV’s Prohibitions and Penalties offense classification," so if the DMV "proves an offense for which the Prohibitions and Penalties provide a minimum discipline of termination, just cause for termination is established and termination is reasonable as a matter of law." On those grounds, the district court granted the petition and set aside the hearing officer’s decision.

O’Keefe appealed. The court of appeals affirmed by order, holding that the "DMV’s Prohibitions and Penalties mandated dismissal for O’Keefe’s actions," so the "hearing officer’s ruling to the contrary was arbitrary and based on an error of law." O’Keefe v. State, Dep’t of Motor Vehicles , Docket No. 68460-COA (Order of Affirmance, January 30, 2017). O’Keefe petitioned for review under NRAP 40B, which we granted.

DISCUSSION

"When a [hearing officer’s] decision ... is challenged, the function of this court is identical to that of the district court. It is to review the evidence presented to the [hearing officer] and ascertain whether [the hearing officer] acted arbitrarily or capriciously, thus abusing [his or her] discretion." Gandy v. State, Div. of Investigation, 96 Nev. 281, 282, 607 P.2d 581, 582 (1980) (discussing review of an administrative body’s decision); see also Knapp , 111 Nev. at 423, 892 P.2d at 577 (indicating that a hearing officer’s decision is treated the same as an "agency determination"). Under the arbitrary-and-capricious standard, this court defers to the hearing officer’s "conclusions of law [that] are closely related to [the hearing officer]’s view of the facts" but decides "pure legal questions" de novo. Knapp, 111 Nev. at 423, 892 P.2d at 577 (internal quotation marks omitted).

Statutory background

Nevada’s state personnel system is highly regulated. See generally NRS Chapter 284; NAC Chapter 284. The Personnel Commission must adopt an employee discipline system wherein, "except in cases of serious violations of law or regulations, less severe measures are applied" before more severe disciplinary actions such as termination. NRS 284.383(1). Permanent classified state employees receive the additional protection that the appointing authority3 must "consider [ ] that the good of the public service will be served" by terminating the employee. NRS 284.385(1)(a).4 Classified employees also have the right to challenge their termination before a "hearing officer of the [Personnel] Commission." NRS 284.390(1).5

In this case, the parties agree that O’Keefe was a classified employee who violated multiple NAC 284.650 regulations and four DMV Prohibitions and Penalties, including DMV Prohibition G(1). The issue we address is whether the hearing officer acted arbitrarily and capriciously in overruling the DMV’s conclusions that (1) O’Keefe’s conduct constituted a "serious violation[ ] of law or regulation[ ]," NRS 284.383(1), and (2) terminating

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