Ken's Beverage, Inc. v. Wood

2020 IL App (3d) 190115

• Court: Appellate Court of Illinois
• Decided: February 19, 2021
• Docket: 3-19-0115
• Status: Published

Opinion

2021 IL App (3d) 190115

Opinion filed February 19, 2021 ____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

KEN’S BEVERAGE, INC., ) Appeal from the Circuit Court ) of the Twelfth Judicial Circuit, Plaintiff-Appellant, ) Will County, Illinois. ) v. ) ) MICHELLE P. WOOD, ILLINOIS ) DEPARTMENT OF EMPLOYMENT ) Appeal No. 3-19-0115 SECURITY BOARD OF REVIEW, and ) Circuit No. 18-MR-2455 JEFF MAYS, in His Official Capacity as ) DIRECTOR OF THE ILLINOIS ) DEPARTMENT OF EMPLOYMENT ) SECURITY, ) The Honorable ) John C. Anderson, Defendants-Appellees. ) Judge, presiding. ) ____________________________________________________________________________

PRESIDING JUSTICE McDADE delivered the judgment of the court, with opinion. Justice Wright concurred in the judgment and opinion. Justice Holdridge specially concurred, with opinion. ____________________________________________________________________________

OPINION

¶1 Plaintiff Ken’s Beverage, Inc. discharged Michelle P. Wood from her position as a

dispatch supervisor, citing her behavior toward the manager and her subordinates during the final

months of her employment as the reason for the discharge. Wood applied for unemployment

benefits from the Illinois Department of Employment Security; Ken’s Beverage resisted. Referee David Ott held that Wood’s discharge was for misconduct and that she was, therefore, not

entitled to receive unemployment compensation benefits. The review board reversed Referee

Ott’s decision on the basis that Ken’s Beverage had failed to meet its burden of showing that

Wood had been discharged for misconduct. The circuit court affirmed the review board’s

decision. Ken’s Beverage now appeals.

¶2 I. BACKGROUND

¶3 Michelle Wood was employed at Ken’s Beverage from July 30, 2007, to March 1, 2018.

Her final position at Ken’s Beverage was as a Dispatch Supervisor. Ken’s Beverage alleged that

she had received at least 12 documented warnings within the seven years from June 2010 to July

2017, of which the following 6 were for unprofessional behavior. On June 10, 2010, Wood was

given an oral warning for insubordination after she “blew up at a supervisor.” She received a

written warning for disruptive work behavior on February 15, 2011. The warning reported that

Wood was bad-mouthing an employee while the employee was within hearing distances and

counseled her to change her behavior. On April 1, 2011, she was placed on a three-day

suspension for insubordination. Ken’s Beverage alleged that Wood disrespected the owner while

he was discussing her processing of invoices for payment. Wood was counseled to listen to

instructions. On April 21, 2013, Wood received an oral warning for verbally insulting a

coworker. Then, on April 25, 2013, she received a written warning for causing disruptive work

behavior by cursing and swearing at another coworker.

¶4 On July 5, 2017, Wood received a “final” written warning alleging unprofessional

conduct for making an inappropriate comment about an employee’s sexual orientation. The

conduct, which occurred in the presence of a manager, was deemed a violation of Ken’s

Beverage’s sexual harassment policy. The written warning included a reprimand and stated that

2 “any further incidents of misconduct [or] harassment will result in [Wood’s] immediate

termination.”

¶5 On March 1, 2018, Ken’s Beverage terminated Wood for engaging in hostile and

disruptive work behavior. Wood received an “employee counseling form,” describing her

conduct after the issuance of the final warning. It stated that Wood “demonstrated a continued

pattern of abusive, petty and passive aggressive behavior [against] her supervisors” and three

dispatchers under her supervision. It also stated that she “blatantly ignored requests from the

Operations Manager.” It concluded Wood’s repeated behavior created a hostile work

environment.

¶6 Wood subsequently filed a claim for unemployment security benefits, which Ken’s

Beverage resisted. On April 19, 2018, Referee Ott held a telephonic hearing to resolve her claim.

Human Resources Director Pamela Rebhorn and Operation’s Manager Carlos Mullins testified

on behalf of Ken’s Beverage. Rebhorn explained that, because of Wood’s behavior, Ken’s

Beverage had to move personnel who felt uncomfortable because of her behavior. She stated that

she received several complaints in the final months leading to Wood’s termination.

¶7 Mullins testified that he was Wood’s direct supervisor. A dispatcher, whom Wood

supervised and who complained of daily disrespect and mistreatment from Wood, had to be

transferred to another call center. He also stated that he found another dispatcher crying in her

car because of a hostile interaction with Wood. Mullins recalled these incidents as occurring in

February 2018, shortly before Wood was discharged. Finally, Mullins testified that, when he was

discussing her behavior with her, Wood said “that’s bulls***.”

¶8 Referee Ott found that Wood had been counseled repeatedly regarding her behavior. He

also found that Wood’s comment (“that’s bulls***”) to Mullins was a willful and deliberate

3 disregard of the standards at Ken’s Beverage. He concluded that the comment was not an

isolated incident, as shown by the repeated prior occasions when she was counseled that her

behavior had to stop. Referee Ott ruled that the “evidence showed that the employer fired

[Wood] for misconduct within the meaning of the Section 602A.” Wood appealed Referee Ott’s

ruling to the Department of Employment Security Board of Review.

¶9 The board reversed the ruling, concluding that the evidence was insufficient. It explained

that Ken’s Beverage’s “case would have been greatly strengthened if any of the dispatchers

[Wood] supervised, who allegedly complained about her behavior towards them, testified at the

hearing and gave examples of [her] abusive qualities and liberal use of profanity while on the job

***.” The board also stated that “Mullins could have written [Wood] up any number of times for

her alleged insolence and insubordinate behavior ***.” It noted that the comments made against

the previous employee’s sexual orientation were “ant-gay [sic].” But, the board found that,

although Referee Ott could have properly considered the sexual allegation claim in the final

notice, “it was a singular, isolated incident and not *** illustrative of [the] ‘continued pattern’ of

abusive [behavior]” and “poor work performance for which she was ultimately discharged.” The

board concluded that Ken’s Beverage failed “to provide eye-witness testimony about actual

incidents, along with the dates of those incidents, and the contemporaneous documentary

evidence.”

¶ 10 Ken’s Beverage filed a complaint for administrative review in the Will County circuit

court on September 5, 2018. The court held a hearing on February 8, 2019. It considered the

memoranda of law submitted by the parties; no testimony was heard. On February 15, 2019, the

court affirmed the board of review, finding that the decision was neither contrary to the manifest

weight of the evidence nor clearly erroneous. Ken’s Beverage appealed.

4 ¶ 11 II. ANALYSIS

¶ 12 On appeal, Ken’s Beverage argues that the board of review’s finding that Wood was not

terminated for misconduct was clearly erroneous. The company contends that the board

incorrectly focused on the final triggering event, rather than considering Wood’s entire history of

misconduct, as evidenced by the numerous previous warnings she had received. Ken’s Beverage

also contends that the board incorrectly applied a new legal standard by requiring the employer

to present additional eye-witness testimony to support the allegations of misbehavior following

the final warning. We agree with Ken’s Beverage, and we reverse the board’s decision and

reinstate Referee Ott’s initial ruling.

¶ 13 When an appeal of an administrative agency’s final decision comes to this court, we

review the decision of the agency—here, the board of review—rather than that of the circuit

court. Petrovic v. Department of Employment Security, 2016 IL 118562, ¶ 22. The court will not

disturb the agency’s factual findings unless they are against the manifest weight of the evidence.

Woods v. Illinois Department of Employment Security, 2012 IL App (1st) 101639, ¶ 16. If,

however, the agency applies a legal standard to a given set of facts, whether its decision was

proper is reviewed under the clearly erroneous standard. Cinkus v. Village of Stickney Municipal

Officers Electoral Board, 228 Ill. 2d 200, 211 (2008). A decision is clearly erroneous if the

record leaves the reviewing court with the firm and definite conviction that a mistake has been

made. Alternative Staffing, Inc. v. Illinois Department of Employment Security, 2012 IL App

(1st) 113332, ¶ 29.

¶ 14 An employee who is discharged for misconduct is ineligible for unemployment insurance

benefits. 820 ILCS 405/602(A) (West 2018). To establish misconduct under section 602(A), the

employer must show that:

5 “(1) there was a deliberate and willful violation of a rule or policy of the

employing unit, (2) the rule or policy was reasonable, and (3) the violation either

harmed the employer or was repeated by the employee despite a previous warning

or other explicit instruction from the employing unit.” Woods, 2012 IL App (1st)

101639, ¶ 19 (citing 820 ILCS 405/602(A) (West 2008)).

“Harm includes damage or injury to other employees’ well-being or morale ***.” Alternative

Staffing, Inc., 2012 IL App (1st) 113332, ¶ 31. Misconduct can be premised on either a single

incident of a violation of an employer’s rules that triggered the employee’s discharge or the

employee’s cumulative violations of the employer’s rules taken as a whole. Id. ¶ 30. Willful

misconduct occurs where an employee is aware of a company rule and consciously disregards it.

Id. ¶ 31.

¶ 15 The record on appeal establishes each of the necessary elements for a section 602A

employment misconduct. The parties do not dispute that Ken’s Beverage had a policy against

sexual harassment or that the policy was reasonable. The sole issue presented is whether Wood

willfully violated the policy, despite repeated warnings from June 2010 to July 2017 for

insubordination and disruptive work behavior. Eventually, Ken’s Beverage issued her a final

notice that her behavior would no longer be tolerated. The “final” notice came as a warning

triggered by a comment about a fellow employee’s sexual orientation, which was made in the

presence of a manager. The notice informed Wood that “any further incidents of misconduct [or]

harassment will result in [her] immediate termination.”

¶ 16 Despite these warnings and the final notice she received, Wood persisted in her abusive,

offensive behavior and insubordination. Two dispatchers, supervised by Wood, complained to

Mullins of behavior following Wood’s receipt of the final notice. One dispatcher reported daily

6 disrespect and mistreatment from Wood, and another dispatcher was found crying in her car

because of an interaction with Wood. Rebhorn explained that, because of Wood’s behavior,

Ken’s Beverage found it necessary to transfer dispatchers who were uncomfortable because of

her behavior. Moreover, when Mullins attempted to discuss her behavior with her, Wood

dismissed the claims as “bulls***.” Referee Ott concluded that Wood’s behavior and her

comment to Mullins were consistent with previous behavior for which she had been repeatedly

warned over the course of her employment.

¶ 17 However, the Board of Review disagreed, concluding that the sexual harassment claims

were different from the abusive behavior for which she was discharged. The board seemingly

considered the comments regarding an employee’s sexual orientation to be of a higher magnitude

than the ordinary type of abusive language for which Wood was ultimately discharged. The

board therefore held that Ken’s Beverage failed to give Wood further requisite notice before

terminating her. We do not find the board’s distinction regarding the nature of Wood’s various

choice of abusive language consistent with the statute. Whether verbal insult targeted at an

employee constitutes disruptive or abusive behavior does not turn on whether the insult was anti-

gay, was predicated on the employee’s sex or gender, or contained ordinary use of profane

language. The issue is whether Wood’s comments or choice of words caused harm to other

employees by affecting their “well-being” or their “morale.” Alternative Staffing, Inc., 2012 IL

App (1st) 113332, ¶ 31 (“Harm includes damage or injury to other employees’ well-being or

morale ***.”). Abusive language is harmful regardless of the subject of its content. Id.

¶ 18 On July 5, 2017, Wood received a final notice for abusive behavior against a dispatcher

under her supervision. The employee counseling form noted that the warning was triggered

under Ken’s Beverage’s sexual harassment policy. However, the warning alerted her to the risk

7 of termination for disruptive or abusive behavior against other employees. In Alternative

Staffing, the appellate court found error where the board focused on the final triggering incidents,

while ignoring the prior incidents. Alternative Staffing, Inc., 2012 IL App (1st) 113332, ¶ 34. The

court held that the failure to consider the prior incidents was clearly erroneous. Id. It noted that

misconduct, disqualifying an employee from employment security, can be found in the

cumulative effects of documented warnings of misbehavior. The court stated that the employer

submitted sufficient evidence documenting the 11 prior incidents and thus met its burden of

proof. Id. ¶ 35. Under the standard in Alternative Staffing, evidence of Wood’s prior documented

warnings is sufficient to satisfy Ken’s Beverage’s burden of proof. Id. ¶ 31.

¶ 19 Referee Ott considered Rebhorn’s and Mullins’s testimony regarding their conversations

with dispatchers complaining of Woods abusive behavior. The board, however, ruled that Ken’s

Beverage did not meet its burden because it failed to call the two dispatchers whose complaints

triggered Wood’s termination. In so doing, the board clearly erred by requiring a higher

evidentiary threshold than that ordinarily required in such cases. The “Director [of the

Department of Employment Security] may adopt regulations governing the conduct of hearings

held pursuant to any provisions of [the] Act.” 820 ILCS 405/2300 (West 2018). Under section

2300, the director’s regulations are binding, regardless of whether they conform with “the

common law or statutory rules of evidence or other technical rules or procedure” or not. Id. The

“admission of evidence contrary to the common law rules of evidence [cannot] invalidate any

decision made by the Director.” Id. Applying his discretion, the director held that “[t]echnical

rules of evidence do not apply to hearings before Referees.” 56 Ill. Adm. Code 2720.250(a),

amended at 43 Ill. Reg. 6385 (eff. May 14, 2019). A referee may consider “[u]nobjected to

hearsay statements” and give them “their natural probative value.” Id.

8 ¶ 20 We find nothing in the record suggesting that Wood timely objected to the possible

hearsay statements contained in Rebhorn’s or Mullins’s testimony. Once such statements were

presented, Referee Ott could “not, on his *** own initiative, refuse to admit [the] evidence or

testimony.” 56 Ill. Adm. Code 2720.250(b), amended at 43 Ill. Reg. 6385 (eff. May 14, 2019).

He could only weigh the credibility of each side—which he presumably did. Id. The review

board, however, rejected his assessment because the evidence was not from eyewitnesses’ first-

hand accounts. We find this evidentiary ruling clearly erroneous under the standard set in section

2300 and section 2720.250 and, therefore, reverse the decision of the Illinois Department of

Employment Security’s Board of Review.

¶ 21 III. CONCLUSION

¶ 22 The judgment of the Illinois Department of Employment Security’s Board of Review is

reversed.

¶ 23 Reversed.

¶ 24 JUSTICE HOLDRIDGE, specially concurring:

¶ 25 I join the majority’s judgment and most of its analysis. I agree that the board of review

erred by concentrating only on the final, triggering incidents that prompted the employer’s final

warning and termination of Wood and by failing to consider documented evidence of Wood’s

misconduct prior to the final warning. I also agree that the board erred by excluding hearsay

statements that Rebhorn and Mullins made during their testimony and by requiring first-hand

witness testimony as to all instances of Wood’s alleged misconduct. I write separately to clarify

one point in the majority’s analysis as to the latter issue.

¶ 26 The majority suggests that there is “nothing in the record suggesting that Wood timely

objected to the possible hearsay statements contained in Rebhorn’s or Mullins’s testimony.” Supra

9 ¶ 20. I disagree. During Mullins’s testimony, Wood’s counsel told the referee that he had “a

continuing objection to the hearsay evidence.” The referee interrupted him and stated, “Yeah.

Here’s the way it works. I’m allowed to hear hearsay but I’m not allowed to rely on it in preparing

my decision. *** But you’ve got your continuing objection.” Thus, contrary to the majority’s

conclusion, the hearsay statements at issue were not “[u]nobjected to hearsay” which the referee

was required to admit and to “give *** their natural probative value.” (Internal quotation marks

omitted.) Supra ¶ 19.

¶ 27 Nevertheless, the issue of the admissibility of Mullins’s and Rebhorn’s hearsay statements

is moot in this case because the referee did not rely on those statements in reaching his decision.

(The referee expressly noted that fact both in response to Wood’s counsel’s objection at the hearing

and in his final decision.) Accordingly, the referee correctly applied section 2720.250 of the Illinois

Administrative Code, which applies in proceedings for unemployment benefits filed with the

Illinois Department of Employment Security. That section provides, in relevant part, that the

referee “may, but need not, rule on any objection to the introduction of evidence or testimony” but

must note any objections and make them part of the record. 56 Ill. Adm. Code 2720.250(a).

Because neither the referee nor the board of review relied upon the hearsay statements in reaching

their respective decisions, we need not address this issue further on appeal.

¶ 28 In any event, we do not need to rely upon any of the hearsay statements at issue to reverse

the board of review’s decision. There was sufficient non-hearsay evidence of Wood’s misconduct

after the employer’s July 5, 2017, final warning to justify reversal. As the majority correctly notes,

the final warning informed Wood that any further misconduct by Wood would result in her

termination. Mullins testified that he repeatedly e-mailed Wood warnings about her failure to

follow his directives, but Wood ignored his directions on several occasions. At least one of these

10 instances occurred after the final warning. Mullins testified that, when he met with Wood in

February 2018 to discuss Wood’s misconduct, Wood dismissed the claims against her as

“bullshit.” That statement constituted misconduct by Wood in defiance of the final warning. In

addition, Rebhorn testified that she was present during a meeting in the Fall of 2017 when Wood’s

supervisors warned Wood about her misconduct and Wood “started yelling.” These instances,

coupled with documentary evidence of Wood’s prior misconduct, justified Wood’s dismissal for

misconduct. The board of review’s contrary conclusion is clearly erroneous.

11 No. 3-19-0115

Decision Under Review: Appeal from the Circuit Court of Will County, No. 18-MR- 2455; the Hon. John C. Anderson, Judge, presiding.

Attorneys Gregory W. Guevara, of Indianapolis, for appellant. for Appellant:

Attorneys Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz for and Caleb Rush, of Chicago), for appellee. Appellee: