IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-13
Filed: 7 January 2020
Office of Administrative Hearings, No. 18 OSP 00407
RAY DION BROWN, Petitioner
v.
FAYETTEVILLE STATE UNIVERSITY, Respondent
Appeal by Petitioner from Final Decision entered 10 July 2018 by
Administrative Law Judge Stacey Bice Bawtinhimer in the Office of Administrative
Hearings. Heard in the Court of Appeals 5 September 2019.
The Angel Law Firm, PLLC, by Kirk J. Angel, for petitioner-appellant.
Attorney General Joshua H. Stein, by Special Deputy Attorney General Vanessa N. Totten, for respondent-appellee.
HAMPSON, Judge.
Factual and Procedural Background
Ray Dion Brown (Petitioner) appeals from a Final Decision of the
Administrative Law Judge (ALJ) concluding Fayetteville State University
(Respondent or FSU) failed to show its decision to terminate Petitioner was for “just
cause” but further concluding Petitioner was not entitled to reinstatement and
additional damages based on after-acquired evidence of Petitioner’s misconduct. The
Record before us tends to show the following: BROWN V. FAYETTEVILLE STATE UNIV.
Opinion of the Court
Petitioner began employment with Respondent as a housekeeper on a
temporary basis in June 2000. On 21 August 2000, Petitioner submitted an
application for full-time employment with Respondent, and on 1 February 2001,
Respondent hired Petitioner into a permanent position as a housekeeper, thereby
rendering Petitioner a “career State employee” under N.C. Gen. Stat. § 126-1.1(a).
Petitioner continued working in this position until Respondent fired him on 26 July
2017.
On 14 July 2017, Petitioner was assigned to clean the FSU library. While in
the library, Petitioner took an iPhone charger cube (charger) from Library Technician
Man-Yee Chan’s (Chan) desk. After realizing the charger was missing, Chan
contacted her supervisor to report the missing charger and to request viewing
security camera footage. Chan testified she did not recognize Petitioner on the
footage and also could not remember whether she had given Petitioner permission to
use the charger, even though in the past she had given several other coworkers
permission to use the charger. Petitioner asserted Chan had previously given him
permission to use her charger.
On 20 July 2017, Petitioner was placed on Investigatory Leave with Pay for
“stealing an item from a staff member’s desk.” After attending a pre-disciplinary
conference, Respondent notified Petitioner on 26 July 2017 in writing that he was
dismissed for unacceptable personal conduct for “stealing a staff member’s personal
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item from their . . . desk.” Petitioner appealed his discharge through Respondent’s
Internal Grievance Process, and Respondent issued a Final University Decision
upholding Petitioner’s dismissal on 19 December 2017. Thereafter, on 23 January
2018, Petitioner filed a Petition for a Contested Case Hearing with the Office of
Administrative Hearings (OAH), alleging his termination was without just cause.
The matter came on for hearing before the ALJ on 18 May 2018.
Sometime prior to this hearing, Respondent submitted a Motion for Summary
Judgment.1 The ALJ found that in this Motion, Respondent alleged for the first time
that dismissal of Petitioner’s claims was warranted because Petitioner had falsified
his employment application in 2000 by “submitt[ing] false and misleading
information about his criminal background[.]” Respondent asserted it first learned
of Petitioner’s alleged false application on 9 August 2017 and that Petitioner would
have been terminated immediately for this reason. Although Respondent learned of
this falsification on 9 August 2017 during the Internal Grievance Process,
Respondent did not disclose this evidence to Petitioner until it filed its Motion for
Summary Judgment sometime prior to the hearing before the ALJ.
Petitioner’s 2000 job application asked whether Petitioner had “ever been
convicted of an offense against the law other than a minor traffic violation[.]” If
answered in the affirmative, the application requested the applicant to “explain fully
1 In his brief, Petitioner contends Respondent filed its Motion for Summary Judgment on 21
March 2018. However, Petitioner failed to include this Motion in the Record on Appeal.
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on an additional sheet.” Petitioner listed driving without a license as his only prior
criminal conviction. During an offer of proof at the hearing before the ALJ, Petitioner
acknowledged that prior to submitting his 2000 job application with FSU, he had
been convicted of carrying a concealed weapon, possession of drug paraphernalia,
resisting an officer, and larceny. Petitioner, however, contended there was an
additional page on his application that was not presented at the hearing showing he
did disclose these prior convictions. Also during this offer of proof by Respondent,
FSU’s Director of Facilities Operation, who directly oversaw Petitioner, testified that
had Respondent known of Petitioner’s prior criminal history, Respondent would have
terminated Petitioner immediately in accordance with Respondent’s Employment
Background and Reference Check Policy.
At the hearing on 18 May 2018, the ALJ bifurcated the hearing to address two
separate issues: “Whether Respondent . . . had just cause to terminate Petitioner from
his position as a Housekeeper with FSU and, if not, what is the appropriate remedy
considering the ‘after acquired’ evidence of Petitioner’s misconduct?” Regarding the
first issue, the ALJ found “there [was] no credible evidence to suggest Petitioner
willfully and intentionally stole the charger cube from Ms. Chan” and therefore
concluded “Respondent’s termination of Petitioner was without ‘just cause.’ ”
Turning to the after-acquired evidence of Petitioner’s failure to disclose his prior
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criminal convictions on his 2000 job application, the ALJ in its Final Decision made
the following relevant Conclusions of Law:
27. Even though FSU lacked “just cause” to terminate Petitioner on July 26, 2017, FSU provided substantial “after- acquired” evidence demonstrating that Petitioner provided false and misleading information on his August 21, 2000 State Application for Employment. FSU did not discover that Petitioner had submitted false and misleading information on his August 21, 2000 job application until August 9, 2017 after Petitioner was terminated.
28. “Once an employer learns about employee wrongdoing that would lead to a legitimate discharge, we cannot require the employer to ignore the information, even if it is acquired during the course of discovery in a suit against the employer and even if the information might have gone undiscovered absent the suit.” McKennon v. Nashville Banner Publ. Co., 513 U.S. 352, 362, 130 L. Ed. 2d 852, 864 (1995). The North Carolina Court of Appeals explicitly adopted the after-acquired evidence doctrine established by McKennon. See Johnson v. Bd. of Trs. of Durham Tech. Cmty. College, 157 N.C. App. 38, 48, 577 S.E.2d 670, 675 (2003). If an employer demonstrates that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of discharge, neither reinstatement nor front pay are allowed, and back pay is limited to the time between the discharge and the time of discovery. Id. at 48-49, 577 S.E.2d at 676.
29. “[F]alsification of a State application or in other employment documentation” also constitutes unacceptable personal conduct. 25 N.C.A.C. 01J .0614(8)(h).
30. Furthermore, a State agency may discharge “[a]ny employee who knowingly and willfully discloses false or misleading information, or conceals dishonorable military service; or conceals prior employment history or other requested information, either of which are significantly related to job
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responsibilities on an application for State employment.” N.C.G.S. § 126-30(a).
31. Dismissal is “mandatory” for any employee who “discloses false or misleading information in order to meet position qualifications.” N.C.G.S. § 126-30(a).
32. The preponderance of evidence shows that Petitioner falsely claimed on the application that his only conviction prior to August 21, 2000 was for driving without a license.
33. Petitioner admitted at hearing that, prior to August 21, 2000, he had also been convicted of: assault on a female; carrying a concealed weapon; resisting a public officer; possession of drug paraphernalia; and larceny. . . .
34. Pursuant to N.C.G.S. § 126-30(a), if Petitioner were still employed by FSU, his dismissal would have been mandatory.
35. FSU provided substantial “after-acquired evidence” that bars Petitioner’s reinstatement, front pay, and significantly limits his back pay to the period between July 26, 2017, his discharge, to August 9, 2017, the date FSU discovered the falsification on his application.
The ALJ’s Final Decision then reversed the Final University Decision and ordered
that “Petitioner is barred from reinstatement and front pay . . . [and] his back-pay
shall be limited to the time between his discharge on July 26, 2017 and the discovery
of the ‘after acquired’ evidence on August 9, 2017.” Petitioner timely filed Notice of
Appeal from the ALJ’s Final Decision. See N.C. Gen. Stat. § 126-34.02(a) (2017)
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(allowing an aggrieved party to appeal the ALJ’s final decision to this Court, as
further provided under N.C. Gen. Stat. § 7A-29(a)). 2
Issue
The sole issue on appeal is whether the ALJ erred by applying the after-
acquired-evidence doctrine to Petitioner’s contested case under N.C. Gen. Stat. § 126-
34.02 and concluding Petitioner was barred from the remedies of reinstatement and
additional compensation.
Standard of Review
“ ‘It is well settled that in cases appealed from administrative tribunals,
questions of law receive de novo review, whereas fact-intensive issues such as
sufficiency of the evidence to support an agency’s decision are reviewed under the
whole-record test.’ ” Harris v. N.C. Dep’t of Pub. Safety, 252 N.C. App. 94, 99, 798
S.E.2d 127, 132 (quoting N.C. Dep’t of Env’t & Natural Res. v. Carroll, 358 N.C. 649,
659, 599 S.E.2d 888, 894-95 (2004)), aff’d per curiam, 370 N.C. 386, 808 S.E.2d 142-
43 (2017).
“Where the petitioner alleges that the agency decision was based on error of
law, the reviewing court must examine the record de novo, as though the issue had
2 Although the ALJ concluded “Petitioner may seek reasonable attorney’s fees proportionate
to his limited prevailing party status[,]” the ALJ did not decide the amount to be awarded to Petitioner; however, the fact the ALJ left open the issue of the amount of attorney’s fees “does not alter the final nature of the ALJ’s Final Decision for purposes of its appealability under N.C. Gen. Stat. § 7A-29(a).” Ayers v. Currituck Cty. Dep’t of Soc. Servs., ___ N.C. App. ___, ___, 833 S.E.2d 649, 654 (2019) (citation omitted).
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not yet been considered by the agency.” Blackburn v. N.C. Dep’t of Pub. Safety, 246
N.C. App. 196, 207, 784 S.E.2d 509, 518 (2016) (citation and quotation marks
omitted). As such, “[u]nder a de novo review, the court considers the matter anew
and freely substitutes its own judgment for that of the [ALJ].” Id. (alteration in
original) (citation and quotation marks omitted).
On the other hand, “[u]nder the whole record test, the reviewing court must
examine all competent evidence to determine if there is substantial evidence to
support the administrative agency’s findings and conclusions.” Henderson v. N.C.
Dept. of Human Resources, 91 N.C. App. 527, 530, 372 S.E.2d 887, 889 (1988) (citation
omitted). “When the trial court applies the whole record test, however, it may not
substitute its judgment for the agency’s as between two conflicting views, even
though it could reasonably have reached a different result had it reviewed the matter
de novo.” Carroll, 358 N.C. at 660, 599 S.E.2d at 895 (citation and quotation marks
omitted).
Analysis
Petitioner contends the trial court erred by applying the after-acquired-
evidence doctrine because the application of this doctrine to a career State employee
would “contravene the just cause statute and deny due process.” Specifically,
Petitioner asserts this doctrine is inapplicable to contested cases brought under N.C.
Gen. Stat. § 126-34.02 and that applying the doctrine in this case would violate
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Petitioner’s due process rights. In addition, Petitioner argues that even assuming
the after-acquired-evidence doctrine applies, the ALJ erred by concluding Petitioner’s
dismissal was “mandatory.” We address each of Petitioner’s contentions in turn
below.
The United States Supreme Court first articulated the after-acquired-evidence
doctrine, or McKennon rule, in McKennon v. Nashville Banner Publishing Co., 513
U.S. 352, 130 L. Ed. 2d 852 (1995). In McKennon, the employee, McKennon, alleged
she was discharged by her employer in violation of the Age Discrimination in
Employment Act (ADEA). Id. at 354-55, 130 L. Ed. 2d at 859. While conducting a
deposition of McKennon during discovery, McKennon’s employer learned McKennon
had copied confidential company documents before her discharge, as McKennon
suspected she would be fired based on her age and wanted “insurance” and
“protection” against her employer. Id. at 355, 130 L. Ed. 2d at 859 (quotation marks
omitted). A few days after these deposition disclosures, McKennon’s employer sent
her a letter advising her that the “removal and copying of the records was in violation
of her job responsibilities[,]” informing her that she was terminated again, and
stating “had it known of McKennon’s misconduct it would have discharged her at once
for that reason.” Id. The Sixth Circuit Court of Appeals held this misconduct was
grounds for McKennon’s termination and affirmed the trial court’s granting of
summary judgment in favor of the employer. Id.
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The Supreme Court reversed, concluding the after-acquired evidence of
McKennon removing and copying confidential company documents could not serve as
a valid justification for upholding the employee’s termination because the employer
did not know of McKennon’s misconduct until after she was discharged. Id. at 359-
60, 130 L. Ed. 2d at 862. Therefore, “[t]he employer could not have been motivated
by knowledge it did not have and it cannot now claim that the employee was fired for
the nondiscriminatory reason.” Id. at 360, 130 L. Ed. 2d at 862. Although the after-
acquired evidence of the employee’s misconduct could not bar the employee’s ADEA
claim, this type of evidence could be used to limit the employee’s relief. Id. at 361-62,
130 L. Ed. 2d at 863. Specifically, the Supreme Court in McKennon held: “as a general
rule in cases of this type, neither reinstatement nor front pay is an appropriate
remedy. It would be both inequitable and pointless to order the reinstatement of
someone the employer would have terminated, and will terminate, in any event and
upon lawful grounds.” Id. Rather, the McKennon Court limited the remedy of a
wrongfully discharged employee in such circumstances to backpay for the period
between the wrongful termination and discovery of the new information:
Once an employer learns about employee wrongdoing that would lead to a legitimate discharge, we cannot require the employer to ignore the information, even if it is acquired during the course of discovery in a suit against the employer and even if the information might have gone undiscovered absent the suit. The beginning point in the trial court’s formulation of a remedy should be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered. In determining
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the appropriate order for relief, the court can consider taking into further account extraordinary equitable circumstances that affect the legitimate interests of either party.
Id. at 362, 130 L. Ed. 2d at 864.
In Johnson v. Board of Trustees of Durham Technical Community College, this
Court adopted the McKennon rule to the plaintiff’s claim under the North Carolina
Persons with Disabilities Protection Act (NCPDPA), N.C. Gen. Stat. § 168A-1, et seq.
157 N.C. App. 38, 48, 577 S.E.2d 670, 676 (2003). The Johnson Court looked to the
common purposes and remedial provisions of the NCPDPA and the ADA, and after
noting the purposes and contents of the two statutes were consistent with one
another, our Court held the McKennon rule applies for determining the proper
remedy in NCPDPA cases involving after-acquired evidence of wrongdoing on the
part of the employee. Id. at 46-48, 577 S.E.2d at 674-76.
Accordingly, the question presented here is whether the McKennon rule should
also apply to contested cases brought by career State employees. As our Court did in
Johnson, “we look to the provisions of the statute [governing career State employees]
to ensure that McKennon is consistent with its purpose and content.” Id. at 46, 577
S.E.2d at 674.
Pursuant to Section 126-35 of our General Statutes, “[n]o career State
employee subject to the North Carolina Human Resources Act shall be discharged,
suspended, or demoted for disciplinary reasons, except for just cause.” N.C. Gen.
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Stat. § 126-35(a) (2017). Although Petitioner focuses on the purpose of the notice
requirements under Section 126-35, see infra, the overall statutory scheme of the
North Carolina Human Resources Act, which includes Section 126-35, is to ensure
employees are not arbitrarily or discriminatorily fired by their employer. See, e.g.,
N.C. Gen. Stat. § 126-34.02(b)(1)-(6) (allowing the ALJ to hear an employee’s claim
that the employee was wrongfully terminated based on, inter alia, discrimination or
harassment, retaliation, or a lack of just cause). Although the North Carolina Human
Resources Act protects a different class of employees than either the NCPDPA or the
ADA, all three acts are designed to guard against adverse employment action by
employers. See id. § 126-34.02(a)-(b) (allowing “an applicant for State employment,
a State employee, or former State employee” to file a contested case alleging their
adverse employment action was based on impermissible grounds); see also N.C. Gen.
Stat. § 168A-5(a)(1) (2017) (barring an employer from making an adverse employment
action based on the employee’s or applicant’s disability); 42 U.S.C.A. § 12112(a) (West
2013) (same under federal law). In addition, the ADA, NCPDPA, and the North
Carolina Human Resources Act all “contain similar remedial provisions, including
those for injunctive relief and back pay awards.” Johnson, 157 N.C. App. at 46, 577
S.E.2d at 674 (citing 42 U.S.C. § 2000e-5(g); then citing N.C. Gen. Stat. § 168A-11);
see also N.C. Gen. Stat. § 126-34.02(a)(1)-(3).
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Further, Section 126-35 sets the benchmark for a state employer who desires
to terminate a career State employee. This Section “establishes a condition precedent
that must be fulfilled by the employer before disciplinary actions are taken.” Leiphart
v. N.C. School of the Arts, 80 N.C. App. 339, 350, 342 S.E.2d 914, 922 (1986) (citation
omitted). “The employer must provide the employee with a written statement
enumerating specific acts or reasons for the disciplinary action” before the action is
taken. Id. (citation omitted). As in Johnson, “[t]his is consistent with McKennon,
which focuses on the intent of the employer at the time of the alleged discriminatory
act.” 157 N.C. App. at 46, 577 S.E.2d at 675 (citing McKennon, 513 U.S. at 360, 130
L. Ed. 2d at 862). Accordingly, “[w]e find nothing in the purpose or content of the
[North Carolina Human Resources Act] that is inconsistent with or contrary to the
McKennon rule.” Id. Therefore, both Johnson and McKennon support the proposition
that the McKennon rule should be adopted to contested cases brought under N.C.
Gen. Stat. § 126-34.02.
This does not end our inquiry, however, as Petitioner claims extending the
McKennon rule to this context violates a career State employee’s due process rights.
Specifically, Petitioner alleges by allowing the after-acquired evidence of Petitioner’s
misconduct—which Petitioner first learned of in Respondent’s Motion for Summary
Judgment before the ALJ—to limit Petitioner’s remedy, Petitioner was not given the
required notice and opportunity to be heard, thereby denying his due process rights.
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Petitioner correctly notes a career State employee has a property interest in
continued employment, therefore requiring a state employer to comply with certain
procedural due process requirements before terminating employment. See Leiphart,
80 N.C. App. at 348-49, 342 S.E.2d at 921-22 (citations omitted). The North Carolina
Human Resources Act affords these obligatory protections by requiring, inter alia,
written notice to the employee stating the precise grounds for termination and by
providing an employee with the opportunity to be heard on why the adverse
employment action is not warranted. See N.C. Gen. Stat. §§ 126-35; -34.02. Our
Supreme Court has explained these statutory protections “fully comport[] with the
constitutional procedural due process requirements mandated by the Fourteenth
Amendment” of the United States Constitution. Peace v. Employment Sec. Comm’n,
349 N.C. 315, 327, 507 S.E.2d 272, 280 (1998).
Adoption of the McKennon rule to contested cases brought by career State
employees, however, does not conflict with these due process protections. This is so
because after-acquired evidence of misconduct does not serve as a justification for the
termination.3 Rather, under the McKennon rule, this after-acquired evidence simply
limits the remedy of an employee who was wrongfully discharged. See Johnson, 157
N.C. App. at 48, 577 S.E.2d at 675 (explaining that “while ‘after-acquired’ evidence of
3 Indeed, if it did serve as a justification for termination, this would flout the purpose of the
North Carolina Human Resources Act’s statutory notice protections. See Leiphart, 80 N.C. App. at 351, 342 S.E.2d at 922 (Section 126-35(a) “was designed to prevent the employer from summarily discharging an employee and then searching for justifiable reasons for the dismissal.”).
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employee misconduct could not bar an employer’s liability for discriminatory
discharge, such evidence may be relevant to determining the relief available to the
employee” (emphasis added) (citation omitted)). Therefore, the application of the
McKennon rule is not inconsistent with the statutory notice provisions mandated by
a career State employee’s due process rights. Further, this result is consistent with
N.C. Gen. Stat. § 126-34.02(a)(3), which grants the ALJ “express statutory authority
to ‘[d]irect other suitable action’ upon a finding that just cause does not exist for the
particular action taken by the agency.” Harris, 252 N.C. App. at 109, 798 S.E.2d at
138 (alteration in original) (quoting N.C. Gen. Stat. § 126-34.02(a)(3)).
In any event, and on these facts, Petitioner was afforded sufficient notice to
comport with due process. Regarding the after-acquired evidence and Petitioner’s
notice thereof, the ALJ found that Respondent first disclosed this evidence in its
“Motion for Summary Judgment to bolster Respondent’s ‘just cause’ argument”;
Petitioner filed a Motion in Limine to exclude this evidence as support for Petitioner’s
termination, which Motion the trial court granted; after the ALJ concluded just cause
did not exist to terminate Petitioner, “Respondent was allowed to submit this ‘after
acquired’ evidence as Offers of Proof in the form of documentation and testimony”;
and “Petitioner cross-examined the witnesses on this documentation during
Respondent’s Offer of Proof.” Because Petitioner has not challenged these Findings
of Fact and because substantial evidence in the Record supports these Findings, they
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are binding on appeal. See id. at 108, 798 S.E.2d at 137 (citation omitted). These
Findings show Petitioner knew of Respondent’s intent to offer this evidence prior to
the hearing before the ALJ and that Petitioner was given the opportunity to cross-
examine the State’s witnesses on this evidence, thereby comporting with
constitutional procedural due process requirements. See Peace, 349 N.C. at 322, 507
S.E.2d at 278 (“The fundamental premise of procedural due process protection is
notice and the opportunity to be heard.” (citation omitted)).
As discussed supra, the structure and content of the North Carolina Human
Resources Act are consistent with the application of the McKennon rule. Further,
application of this rule does not conflict with Petitioner’s due process rights under the
Act. Accordingly, we hold the McKennon rule applies in a contested case brought
under N.C. Gen. Stat. § 126-34.02 and that the ALJ did not err in applying this
doctrine to Petitioner’s contested case.
Lastly, Petitioner contends even assuming the application of this doctrine was
appropriate, the ALJ erred by concluding Petitioner’s dismissal was “mandatory”
because “there was not sufficient evidence to show that Petitioner should have been
terminated[.]” Under Section 126-30(a) of our General Statutes, “[d]ismissal shall be
mandatory where the applicant discloses false or misleading information in order to
meet position qualifications.” N.C. Gen. Stat. § 126-30(a) (2017).
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Here, the ALJ found that Petitioner’s 2000 job application listed his only
criminal conviction as driving without a license. However, at the hearing before the
ALJ, Petitioner admitted he had been previously convicted of carrying a concealed
weapon, possession of drug paraphernalia, resisting an officer, and larceny. When
asked whether he listed any of these convictions on his application, Petitioner
contended “[t]here was another sheet that should have been with [the application]
that had all that stuff on it.” Petitioner presented no additional evidence regarding
another sheet attached to his application. Based on this testimony, the ALJ found
Petitioner failed to “report[] these criminal convictions on his application.” The ALJ
also found, based on FSU’s Director of Facilities Operation’s testimony, that
Respondent would have terminated Petitioner immediately upon learning of
Petitioner’s inaccurate application. These Findings are supported by substantial
evidence in the Record and thus binding on appeal. See Harris, 252 N.C. App. at 108,
798 S.E.2d at 137 (explaining that as the ALJ is “the only tribunal with the ability to
hear testimony, observe witnesses, and weigh credibility[,] . . . we defer to the ALJ’s
findings of fact, even if evidence was presented to support contrary findings” (citation
omitted)). In turn, these Findings support the ALJ’s conclusion—“Pursuant to
N.C.G.S. § 126-30(a), if Petitioner were still employed by FSU, his dismissal would
have been mandatory.” Therefore, the ALJ did not err in applying the McKennon
rule, concluding Petitioner’s after-acquired evidence of misconduct would have
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warranted dismissal, and limiting Petitioner’s remedy to back pay from the time of
his discharge to the discovery of this after-acquired evidence.
Conclusion
Accordingly, for the foregoing reasons, we affirm the ALJ’s Final Decision.
AFFIRMED.
Judges ZACHARY and ARROWOOD concur.
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