Town of Cedar Lake v. Review Board of the Indiana Department of Workforce Development and Mary J Dickson

• Court: Indiana Court of Appeals
• Decided: September 3, 2014
• Docket: 93A02-1402-EX-72
• Status: Unpublished

Opinion

Sep 03 2014, 10:27 am Pursuant to Ind.Appellate Rule 65(D), this Memorandum Decision shall not be regarded as precedent or cited before any court except for the purpose of establishing the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEE MARY DIXON: DAVID M. AUSTGEN ADAM M. SWORDEN TERESA A. MASSA Austgen Kuiper Jasaitis, P. C. Valparaiso, Indiana Crown Point, Indiana

ATTORNEYS FOR APPLLEE REVIEW BOARD:

GREGORY F. ZOELLER Attorney General of Indiana

KRISTIN GARN Deputy Attorney General Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA TOWN OF CEDAR LAKE, ) Appellant, ) ) vs. ) No. 93A02-1402-EX-072 ) REVIEW BOARD OF THE ) INDIANA DEPARTMENT OF ) WORKFORCE DEVELOPMENT and ) MARY J. DICKSON ) Appellees. ) APPEAL FROM THE REVIEW BOARD OF THE DEPARTMENT OF WORKFORCE DEVELOPMENT Steven F. Bier, Chairperson George H. Baker, Member Lawrence A. Dailey, Member Cause No. 13-R-04534 September 3, 2014

MEMORANDUM DECISION - NOT FOR PUBLICATION

FRIEDLANDER, Judge The Town of Cedar Lake (the Town) appeals from the decision of the Review

Board of the Indiana Department of Workforce Development (the Review Board) that

Mary J. Dickson is entitled to unemployment benefits following her discharge from

employment.1 The Town presents the following restated issue for our review: Is the

Review Board’s determination that Dickson was not dismissed for good cause supported

by substantial evidence?

We affirm.

The Town hired Dickson as the director of its Parks and Recreation Department in

1990, and she served in that capacity until her dismissal in 2013. Dickson was also active

in a number of civic organizations and, at the time relevant to this appeal, served as

president of the Cedar Lake Kiwanis Club. Every year, an event called Summer Fest is

held over the Fourth of July weekend in Cedar Lake. Numerous churches and non-profit

organizations participate in Summer Fest. In the spring of 2013, Adam Noel, who was

tasked with running a bingo tent at the 2013 Summer Fest on behalf of the Knights of

Columbus, approached Dickson and asked her if she would be interested in working a

shift in the bingo tent, and she agreed to do so. Noel mistakenly assumed that Dickson

would work the event on behalf of the Parks and Recreation Department. In fact,

Dickson planned to work the event on behalf of the Kiwanis Club, which voted to

1 We identify the claimant and employing unit by name because the parties have made no affirmative request to keep their identities confidential. See J.M. v. Review Bd. of Ind. Dep’t of Workforce Dev., 975 N.E.2d 1283 (Ind. 2012). undertake the event as a group. The Kiwanis Club planned to use the profits from the

bingo event to purchase various items to donate to the Parks and Recreation Department.2

Dickson, along with other volunteers, ran the bingo tent on behalf of the Kiwanis

Club on the evening of July 3, 2013. At the end of the night, the proceeds from the event

were placed in the Summer Fest drop box located at the Town’s office for safekeeping.

After Noel deducted rental fees and corrected an accounting error, the Kiwanis Club

made a total of $541.82. The next day, the funds were turned over to Dickson because

the Kiwanis Club treasurer, Dana Griner, was on vacation. Dickson did not see Griner

again until an August 19, 2013 meeting of the Kiwanis Club, at which time Dickson

turned the money over to Griner.

Meanwhile, at some point in August 2013, the Town Manager, Ian Nicolini,

became aware that Dickson had worked at the bingo tent. Nicolini believed that the

proceeds from the event belonged to the Town and that Dickson had unauthorized

possession of the funds and had failed to properly account for them pursuant to the

Town’s donation acceptance policy. Even after Dickson explained that she had worked

the event in her capacity as president of the Kiwanis Club and not as a Town employee,

2 We note that the Town repeatedly mischaracterizes the record by asserting that the Kiwanis Club planned to donate the proceeds of the bingo event to the Parks and Recreation Department. This assertion is not supported by the record. The testimony of the witnesses and the minutes of the Kiwanis Club meeting uniformly establish that the Kiwanis Club intended to use the proceeds to purchase items that it would then donate to the Parks and Recreation Department. We also remind counsel for the Town of their duty under the Indiana Appellate Rules to state the facts in accordance with the standard of review—i.e., the facts most favorable to the Review Board’s findings. Ind. Appellate Rule 46(A)(6) (b)(providing that a statement of facts “shall be stated in accordance with the standard of review appropriate to the judgment or order being appealed”); S.S. LLC v. Review Bd. of Ind. Dep’t of Workforce Dev., 953 N.E.2d 597 (Ind. Ct. App. 2011) (noting that in an appeal from a decision of the Review Board, we will consider only the evidence most favorable to the Board’s findings).

3 Nicolini still believed that the money earned should be considered a donation to the Parks

and Recreation Department.

On August 26, 2013, Nicolini sent Dickson written notice that she was “terminated

from [her] employment with the Town of Cedar Lake pending final action by the Cedar

Lake Town Council[.]” Exhibits at 176. In the notice, Nicolini alleged that Dickson had

received “a cash donation from a Knights of Columbus Bingo Fundraiser on July 3,

2013” in the amount of $541.82 and that she had not “provided any accounting for the

donations or sought to properly receipt the donation from a member of the Knights of

Columbus into Town Funds.” Id. Nicolini further stated that he had previously given all

department heads an oral directive explaining how to properly account for donations

using a donation acceptance form. Nicolini noted that Dickson had expressed an

intention to use the “donated funds” to buy materials for the Parks and Recreation

Department, but stated that Dickson had “a responsibility to properly receipt and account

for the donation prior to spending donation funds which also have protocols for the use of

such funds.” Id. The termination notice also indicated that Dickson had committed five

prior documented violations of the Town’s Personnel Policy Manual. Nicolini concluded

that “[i]n considering your previous violations of the Personnel Policy Manual, your

current insubordinate actions by failing to properly account for a cash donation or even

disclose that you were in receipt of a cash donation, and the previous instance of

improper financial management within the past six (6) months, your present

actions/inactions constitute serious misconduct.” Id. at 177. As a result, Dickson was

placed on suspension with pay pending a final termination decision by the Town Council

4 following a hearing.3 Id. at 178. An administrative hearing was held on September 3,

2013, at the conclusion of which the Town Council voted to terminate Dickson’s

employment.

Dickson subsequently applied for unemployment compensation. On October 3,

2013, a claims deputy of the Indiana Department of Workforce Development determined

that Dickson was not discharged for just cause and was therefore eligible for benefits.

The Town appealed the determination of the claims deputy, and an evidentiary hearing

was held before an Administrative Law Judge (ALJ). On December 13, 2013, the ALJ

issued a decision affirming the conclusion of the claims deputy. In pertinent part, the

ALJ found as follows:

In the present matter, [the Town] failed to meet its burden. There were rules contained in [the Town’s] Handbook. The rules were reasonable ensuring employees performed as instructed and properly maintained [the Town’s] property so there was no loss to [the Town]. [The Town] uniformly enforced the rules with all employees who violate them treated equally with discharge. Claimant knew the rules as she signed stating she read and intended to comply with its [sic] terms. However, [the Town] failed to establish Claimant knowingly violated the policies.

The Kiwanis club worked the event and the profits were theirs not the [Town’s] so Claimant did not misuse [the Town’s] property when she did not turn it in. The club also voted to use the funds to make in kind donations not a monetary donation. Therefore, Claimant had no duty to create and submit a donation form for the profits so she did not fail to follow instruction to fill out a donation form at that time. Therefore, [the Town] discharged Claimant but not for just cause under Indiana unemployment law.

3 The Town incorrectly asserts that the termination notice instructed Dickson to tender receipts and provide an accounting to the Town within five days, which she failed to do. Although Nicolini testified that the termination notice contained such instructions, our review of the record reveals otherwise. The termination notice did not instruct Dickson to provide an accounting; instead, it simply demanded payment of $541.82, i.e., the proceeds from the bingo event, within five days.

5 Appellant’s Appendix at 3. The Town appealed to the Review Board, and on January 8,

2014, the Review Board issued a decision adopting and incorporating the ALJ’s findings

of fact and conclusion of law and affirming the ALJ’s decision. The Town now appeals.

The Indiana Unemployment Compensation Act provides that “[a]ny decision of

the review board shall be conclusive and binding as to all questions of fact.” Ind. Code

Ann. § 22-4-17-12(a) (West, Westlaw current with all 2014 Public Laws of the 2014

Second Regular Session and Second Regular Technical Session of the 118th General

Assembly). When the Review Board’s decision is challenged as contrary to law, the

reviewing court is limited to a two-part inquiry into the “sufficiency of the facts found to

sustain the decision and the sufficiency of the evidence to sustain the findings of fact.”

I.C. § 22-4-17-12(f); McHugh v. Review Bd. of the Ind. Dep’t of Workforce Dev., 842

N.E.2d 436 (Ind. Ct. App. 2006). Under this standard, we are called upon to review “(1)

determinations of specific or ‘basic’ underlying facts, (2) conclusions or inferences from

those facts, sometimes called ‘ultimate facts,’ and (3) conclusions of law.” McClain v.

Review Bd. of the Ind. Dep’t of Workforce Dev., 693 N.E.2d 1314, 1317 (Ind. 1998).

We review the Review Board’s findings of basic fact under a “substantial

evidence” standard. Id. In this analysis, we neither reweigh the evidence nor assess the

credibility of witnesses, and we consider only the evidence most favorable to the Review

Board’s findings. McClain v. Review Bd. of the Ind. Dep’t of Workforce Dev., 693

N.E.2d 1314. We will reverse only if there is no substantial evidence to support the

findings or if a reasonable person, considering only the evidence supporting those

6 findings, would be bound to reach a different result. KBI, Inc. v. Review Bd. of the Ind.

Dep’t of Workforce Dev., 656 N.E.2d 842 (Ind. Ct. App. 1995).

The Review Board’s conclusions as to ultimate facts involve an inference or

deduction based upon the findings of basic fact, and they are reviewed to ensure that the

Review Board’s inference is reasonable. McClain v. Review Bd. of the Ind. Dep’t of

Workforce Dev., 693 N.E.2d 1314. Finally, we review conclusions of law to determine

whether the Review Board correctly interpreted and applied the law. McHugh v. Review

Bd. of the Ind. Dep’t of Workforce Dev., 842 N.E.2d 436.

The Act provides unemployment benefits to individuals who are “unemployed

through no fault of their own.” I.C. § 22-4-1-1 (West, Westlaw current with all 2014

Public Laws of the 2014 Second Regular Session and Second Regular Technical Session

of the 118th General Assembly); Albright v. Review Bd. of Ind. Dep’t of Workforce Dev.,

994 N.E.2d 745, 749 (Ind. Ct. App. 2013). I.C. § 22-4-15-1(a) (West, Westlaw current

with all 2014 Public Laws of the 2014 Second Regular Session and Second Regular

Technical Session of the 118th General Assembly) provides that an unemployment

claimant is ineligible for unemployment benefits if the claimant is discharged from

employment for “just cause”. See Recker v. Review Bd. of Ind. Dep’t of Workforce Dev.,

958 N.E.2d 1136 (Ind. 2001). When an employer asserts that an employee was

discharged for just cause, the employer bears the burden of establishing a prima facie

case of discharge for just cause. Albright v. Review Bd. of Ind. Dep’t of Workforce Dev.,

994 N.E.2d 745. Once the employer satisfies this burden, the burden shifts to the

employee to rebut the employer’s evidence. Id. Whether an employer had just cause to

7 discharge an unemployment claimant is a question of fact for the Review Board. Gibson

v. Review Bd. of the Ind. Dep’t of Workforce Dev., 671 N.E.2d 933 (Ind. Ct. App. 1996).

Just cause for discharge includes “refusing to obey instructions” and “knowing

violation of a reasonable and uniformly enforced rule of an employer[.]” I.C. § 22-4-15-

1(d); see also Coleman v. Review Bd. of Ind. Dep’t of Workforce Dev., 905 N.E.2d 1015

(Ind. Ct. App. 2009). “To have knowingly violated an employer’s rule, the employee

must know of the rule and must know that his conduct violated the rule.” S.S. LLC v.

Review Bd. of Ind. Dep’t of Workforce Dev., 953 N.E.2d at 602.4 In this case, the ALJ

found that the rule regarding accounting procedures for donations was uniformly

enforced and that Dickson was aware of the rule. The ALJ concluded, however, that

Dickson had not violated the rule. Specifically, the ALJ found that Dickson ran the bingo

tent in her capacity as president of the Kiwanis Club, not as a Town employee. Further,

the ALJ found that the money raised at the event belonged to the Kiwanis Club, not the

Town, and that no cash donation was made. These findings are amply supported by the

evidence.

4 Additionally, this court has explained that “[a]n employer’s asserted work rule must be reduced to writing and introduced into evidence to enable this Court to fairly and reasonably review the determination that an employee was discharged for just cause for the knowing violation of a rule.” S.S. LLC v. Review Bd. of Ind. Dep’t of Workforce Dev., 953 N.E.2d at 602. In this case, no written version of the donation acceptance policy was introduced into evidence. In the termination notice provided to Dickson, Nicolini asserted that he had given all department heads, including Dickson, “an oral directive explaining how to properly account for donations[.]” Exhibits at 176. The record contains a copy of the handwritten notes from the staff meeting at which this directive was apparently given, as well as a blank donation acceptance form, but neither of these documents set forth the donation acceptance policy. See KBI, Inc. v. Review Bd. of Ind. Dep’t of Workforce Dev., 656 N.E.2d 842 (concluding that an employer failed to satisfy its burden of showing that the claimant was discharged for just cause for violating a uniformly enforced work rule by failing to introduce into evidence a written policy). Because neither the parties nor the ALJ have addressed this issue, however, we do not base our decision on the Town’s failure to introduce into evidence a written copy of the donation acceptance procedures.

8 Nevertheless, the Town apparently believes that the funds raised at the bingo event

were a donation simply because the Kiwanis Club membership had voted at a recent

meeting to use them to purchase items for the Parks and Recreation Department. The

Town is incorrect. The evidence presented at the hearing clearly establishes that the

Kiwanis Club never delivered any cash to the Parks and Recreation Department and

never had any intention of doing so. The intention of the Kiwanis Club’s members to use

the funds to purchase items for the Parks Department does nothing to alter the ownership

of those funds. Indeed, the Kiwanis Club membership was in no way bound by its

previous decision to use the money to purchase items for the Parks and Recreation

Department and could have decided at any time to use the money for a different purpose.

Because no cash donation was made, Dickson cannot be said to have violated the Town’s

rules concerning the documentation of the receipt of cash donations.

The Town also argues that even if Dickson did not violate the procedures relating

to the acceptance of cash donations, she violated the procedures relating to the receipt of

in-kind donations. We note, however, that Dickson’s termination notice referred to a

cash donation only. Moreover, the evidence presented at the hearing established that

Dickson did not violate the donation acceptance procedures with respect to in-kind

donations. The evidence shows that the Kiwanis Club donated only one item, a telephone

system, to the Parks Department prior to Dickson’s termination. A receipt submitted into

evidence at the hearing shows that the telephone cost less than fifty dollars. Accordingly,

no donation acceptance form was required pursuant to the Town’s policy regarding de

minimis in-kind donations. The Town also seems to suggest that the Kiwanis Club

9 donated banners, which were valued at over one hundred dollars, prior to Dickson’s

termination. The evidence presented at the hearing, however, establishes that the banners

belonged to the Kiwanis Club and had been purchased for use at events the Club

sponsored jointly with the Town. Because the Kiwanis Club retained ownership of the

banners, they were never donated to the Town. The remaining receipts submitted into

evidence show that all additional purchases of items were made after Dickson was

terminated.

Finally, the Town argues that even if Dickson did not violate the Town’s donation

acceptance policy, she was nevertheless terminated for just cause pursuant to the Town’s

“Progressive Discipline Policy” based on five previous violations of the Town’s

Personnel Policy Manual.5 Appellant’s Brief at 8. Dickson and the Review Board argue

that the Town has waived this argument, and we agree. At the hearing before the ALJ,

the Town focused exclusively on Dickson’s actions with respect to the proceeds from the

bingo event. Although the Town made passing reference to previous infractions, it did

not discuss what those infractions were or set forth any clear argument that they were

alternative grounds for termination. Moreover, in its notice of appeal to the Review

Board, the Town made no reference to previous infractions, arguing only that it had

carried its burden to show just cause for the termination because “[Dickson] did not

5 The Town cites Wynkoop v. Town of Cedar Lake, 970 N.E.2d 230 (Ind. Ct. App. 2012), trans. denied, for the proposition that this court “has reviewed and held valid” the Town’s Progressive Discipline Policy. Appellant’s Brief at 14. The “validity” of the Progressive Discipline Policy was not at issue in Wynkoop. Instead, this court considered whether the Town’s Personnel Policy Manual created a property right in continued employment, and concluded that it did not. Wynkoop did not address issues of unemployment compensation, and it is therefore irrelevant to the issues before us.

10 follow [the Town’s] uniform rule for disclosure of donated money or property in-kind.”

Appellees’ Appendix at 1. See Cunningham v. Review Bd. of Ind. Dep’t of Workforce

Dev., 913 N.E.2d 203, 205 (Ind. Ct. App. 2009) (explaining that “a party who fails to

raise an issue before an administrative body has waived the issue on appeal”).

Nevertheless, the Town argues that it has not waived this argument because the record

contains evidence of Dickson’s prior violations of the Personnel Policy Manual.

Specifically, the Town notes that the violations were referenced in Dickson’s termination

notice and in a memorandum of law submitted to the ALJ. But in light of the Town’s

failure to argue at the hearing or in its notice of appeal to the Review Board that the prior

infractions constituted just cause for Dickson’s termination, it was reasonable for the ALJ

and the Review Board to conclude that the Town had abandoned that argument.

Moreover, it is apparent that the Town’s mistaken belief that Dickson had violated

the donation acceptance procedures was the determining factor in its decision to

terminate Dickson. Although the Town reprimanded Dickson for the previous violations,

it chose not to terminate her for those infractions. While the previous infractions might

have been a contributing factor, the Town’s ultimate decision to terminate Dickson was

clearly based on its belief that Dickson had failed to properly account for donations to the

Parks and Recreation Department. See Voss v. Review Bd. of Emp’t & Training Servs.,

533 N.E.2d 1020, 1021 (Ind. Ct. App. 1989) (explaining that “[w]hether or not other

grounds may have existed for [a claimant’s] discharge is irrelevant because [the

employer] did not exercise its discretion to discharge [the claimant] on those grounds”).

In other words, Dickson would not have been discharged but for the Town’s incorrect

11 conclusion that she had violated the donation acceptance policy.6 For all of these reasons,

we conclude that the Review Board’s finding that Dickson was not discharged for just

cause was supported by substantial evidence.

Judgment affirmed.

NAJAM, J., and BAILEY, J., concur.

6 In its reply brief, the Town alleges several “other violations”, including misuse of the Town’s tax exempt identification number and Sam’s Club commercial account and failure to follow purchasing procedures. Reply Brief at 9. Because the Town did not raise these arguments in its principal appellate brief, they are waived. See Showley v. Kelsey, 991 N.E.2d 1017, 1021 n.2 (Ind. Ct. App. 2013) (noting that “it is well settled that grounds for error may only be framed in an appellant’s initial brief and if addressed for the first time in the reply brief, they are waived”), trans. denied.