Peace v. Employment Sec. Com'n of North Carolina

• Decision Date: 04 December 1998
• Docket Number: No. 599A97.,599A97.
• Citation: 507 S.E.2d 272,349 N.C. 315
• Parties: William H. PEACE, III, Petitioner, v. EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondent. William H. PEACE, III, Petitioner, v. EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondent.
• Court: North Carolina Supreme Court

507 S.E.2d 272

349 N.C. 315

William H. PEACE, III, Petitioner, v. EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondent.

William H. PEACE, III, Petitioner, v. EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondent.

No. 599A97.

Supreme Court of North Carolina.

December 4, 1998.

Hilliard & Jones, by Thomas Hilliard, III, Raleigh, for petitioner-appellant Peace.

Michael F. Easley, Attorney General by Andrew A. Vanore, Jr., Chief Deputy Attorney General; John R. Corne, Special Deputy Attorney General; and Sylvia Thibaut, Assistant Attorney General, for respondent-appellant and -appellee Employment Security Commission.

LAKE, Justice.

The essential question presented for review is whether the Court of Appeals erred in affirming the trial court's determination that the State Personnel Commission improperly placed the burden of proof on the Employment Security Commission of North Carolina (ESC) in a claim for "just cause" termination pursuant to N.C.G.S. § 126-35. For the reasons discussed herein, we conclude that allocating the burden of proof to the disciplined employee does not violate that employee's rights to due process. Accordingly, we affirm the Court of Appeals.

Petitioner, William H. Peace, III, was hired by respondent ESC on 5 October 1985 as its Equal Employment Opportunity (EEO) officer. Petitioner was responsible for the direction of the employee relations section, and his duties included the administration of both internal and external EEO programs. During his employee orientation in 1985, petitioner learned that the ESC office employees maintained a petty fund, with monthly dues of $2.00. Petitioner also learned that participation in the petty fund entitled participants to an occasional cup of coffee from the personnel file room. Petitioner chose to participate in the fund, paid his monthly dues, and occasionally obtained coffee from the file room. However, petitioner's normal habit was to obtain coffee each morning from the agency cafeteria.

Generally, petitioner did not attend the staff meetings where the employees discussed office policies, including the petty fund. At some point following petitioner's 1985 orientation, a local commercial coffee service was contracted with, and a new and separate coffee fund, with monthly dues of $3.40, was established. The office employees maintained the new coffee fund separate from and in addition to the office petty fund. Petitioner was not aware of the new coffee fund, and he was not asked to participate in or contribute to the new fund.

On 10 April 1991, petitioner was involved in an incident with a co-worker, Ms. Catherine High, concerning access to coffee from the personnel file room. As was his normal custom, petitioner went to the agency cafeteria the morning of 10 April 1991 to obtain a cup of coffee. However, the cafeteria was out of coffee, so petitioner proceeded to obtain coffee from the personnel file room. As he was leaving the file room, Ms. High confronted petitioner and stated, "[Y]ou are going to have to pay me for that coffee." Petitioner refused to pay for the coffee, and a heated exchange ensued. Following the exchange, petitioner alleged that Ms. High stated, "If you get another cup of coffee and do not pay me, I'm going to get a cup of coffee and scald you with it." Several other office employees witnessed the argument between petitioner and Ms. High. Ms. High also informed her supervisor of the incident.

Petitioner contacted the magistrate's office on the afternoon of 10 April 1991 concerning the alleged threat made by his co-worker, Ms. High. The magistrate advised petitioner that if he believed Ms. High to be capable of carrying out her threat, he should take out a warrant. Petitioner approached Ms. High following his discussion with the magistrate, seeking an apology for her earlier actions and statements. Ms. High refused to provide an apology for the morning coffee incident. Later that same afternoon, petitioner again contacted the Wake County magistrate's office and formally filed criminal charges against his co-worker for communicating a threat. On 21 May 1991, the trial court dismissed the charge as frivolous and ordered petitioner to pay court costs.

Petitioner's supervisors did not contact or question petitioner about the coffee incident pending resolution of the criminal charges. On 5 June 1991, petitioner's immediate supervisor, Gene Baker, informed petitioner by written memorandum of a 6 June 1991 predismissal conference. The conference culminated in a decision to discharge petitioner from employment for "unacceptable personal conduct." A 7 June 1991 letter from Ann Q. Duncan, chairperson of ESC, further explained petitioner's dismissal. The 7 June letter reaffirmed the dismissal for "unacceptable personal conduct," including the taking of coffee without payment and the filing of frivolous charges against a co-worker. The letter explained that the "unacceptable personal conduct" diminished petitioner's respect among fellow employees and called into question his reputation as the EEO officer for the ESC.

Petitioner filed two appeals from the ESC's decision to discharge him from employment. Petitioner contended (1) that the ESC lacked "just cause" to dismiss him pursuant to N.C.G.S. § 126-35; and (2) that he had been terminated in retaliation for a discrimination complaint he filed against the ESC in 1989, for violation of title VII, section 704(a) of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-3 (1988).

The Civil Rights Division of the Office of Administrative Hearings (OAH) investigated petitioner's retaliatory discharge claim pursuant to N.C.G.S. § 7A-759. The OAH found that there was reasonable cause to believe that a title VII violation had occurred. The OAH determined that petitioner could select one of three options: (1) receive a right-to-sue letter, (2) commence a contested-case hearing in OAH, or (3) do nothing. Petitioner decided to pursue his retaliatory discharge claim by commencing a contested-case hearing. As for his claim that the ESC lacked "just cause" to dismiss him, petitioner filed another petition for contested-case hearing pursuant to N.C.G.S. § 126-35.

A consolidated hearing was conducted on petitioner's two administrative appeals by Administrative Law Judge (ALJ) Sammie Chess, Jr. on 12-14 July 1993. ALJ Chess determined that under the applicable "just cause" termination statute, the ESC bears the ultimate burden of persuasion to demonstrate the validity of the termination. In his recommended decision to the State Personnel Commission (SPC), the ALJ concluded that the ESC had failed to meet its burden of proof and recommended petitioner's reinstatement with back pay.

In determining petitioner's claim as to retaliatory discharge under title VII, ALJ Chess again put the burden of proof on the ESC. The ALJ then found petitioner was the victim of a retaliatory discharge, and he therefore ordered reinstatement.

The SPC adopted the ALJ's recommendation for petitioner's "just cause" claim with slight modification by an order dated 3 November 1994. The SPC agreed that the ESC bore the burden of proof in a "just cause" termination and affirmed the order reinstating petitioner with back pay.

The ESC petitioned for judicial review of the SPC decision and the ALJ decision separately, pursuant to N.C.G.S. § 150B-50. In a 12 August 1994 order, Superior Court Judge Narley L. Cashwell upheld the ALJ's final decision as to petitioner's retaliatory discharge claim. By order dated 13 March 1995, Superior Court Judge Wiley F. Bowen reversed the SPC's decision with prejudice and dismissed petitioner's "just cause" claim on the basis of two prejudicial errors of law: (1) that the SPC inappropriately placed the burden of proof on the ESC, and (2) that the SPC incorrectly concluded that petitioner was dismissed without "just cause."

The ESC then appealed to the Court of Appeals Judge Cashwell's order affirming the decision concerning petitioner's retaliatory-discharge claim. Petitioner also appealed to the Court of Appeals Judge Bowen's order reversing the SPC's decision to reinstate him. The Court of Appeals consolidated the ESC's appeal and petitioner's appeal, and both were originally heard in the Court of Appeals on 7 May 1996. See Employment Sec. Comm'n v. Peace, 122 N.C.App. 313, 470 S.E.2d 63 (1996). This Court allowed the ESC's petition for discretionary review and thereupon remanded the case to the Court of Appeals in order for the Court of Appeals to reconsider its ruling in light of Soles v. City of Raleigh Civil Serv. Comm'n, 345 N.C. 443, 480 S.E.2d 685 (1997). Employment Sec. Comm'n v. Peace, 345 N.C. 640, 483 S.E.2d 706 (1997).

On 2 December 1997, the Court of Appeals, on remand, with Judge Greene dissenting, held that the burden of proof in "just cause" claims pursuant to N.C.G.S. § 126-35 may be allocated to an employee without violating due process. The Court of Appeals ruled that while the trial court may not substitute its judgment for that of the agency with respect to the evidence, the trial court did not err in determining that the SPC's decision and order improperly placed the burden of proof on the ESC. Employment Sec. Comm'n v. Peace, 128 N.C.App. 1, 14, 493 S.E.2d 466, 474 (1997). Therefore, the Court of Appeals remanded the matter to the superior court for further remand to the SPC for application of the proper burden of proof. Id. at 14, 493 S.E.2d at 474-75. Petitioner subsequently filed his notice of appeal, based on the dissent, to this Court on 17 December 1997.

On 6 January 1998, the ESC petitioned this Court for discretionary review seeking to have this Court determine whether the OAH acted ultra vires when it adjudicated petitioner's title VII claim. Contemporaneously with its petition for discretionary review, ESC filed with this Court a notice of appeal asserting a substantial constitutional question pursuant to N.C.G.S. § 7A-30(1) as to whether...