v. Department of Corrections

2019 COA 10

• Court: Colorado Court of Appeals
• Decided: January 24, 2019
• Docket: 17CA1992, Stiles
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY January 24, 2019

2019COA10

No. 17CA1992, Stiles v. Department of Corrections, Denver Reception & Diagnostic Center — Government — State Personnel System Act — Disciplinary Proceedings

In this Colorado State Personnel Board case, a division of the

court of appeals considers the appropriate standard of review an

Administrative Law Judge should employ during an evidentiary

hearing under section 24-50-125(4), C.R.S. 2018 to decide whether

an appointing authority acted arbitrarily and capriciously in

disciplining a state-certified employee. Consistent with Dep’t of

Instits., Div. for Developmental Disabilities, Wheat Ridge Reg’l Ctr. v.

Kinchen, 886 P.2d 700, 705 (Colo. 1994), the division holds that a

section 24-50-125(4) hearing is a de novo hearing at which the

Administrative Law Judge makes credibility, factual, and legal

findings without deference to the appointing authority. COLORADO COURT OF APPEALS 2019COA10

Court of Appeals No. 17CA1992 State Personnel Board Case No. 2016B034

Mathew Mark Stiles,

Petitioner-Appellee,

v.

Department of Corrections, Denver Reception & Diagnostic Center,

Respondent-Appellant,

and

State Personnel Board,

Appellee.

ORDER AFFIRMED

Division VI Opinion by JUDGE FREYRE Furman and Dunn, JJ., concur

OPINION PREVIOUSLY ANNOUNCED AS “NOT PUBLISHED PURSUANT TO C.A.R. 35(e)” ON December 6, 2018, IS NOW DESIGNATED FOR PUBLICATION

Announced January 24, 2019

Greg D. Rawlings P.C., Greg D. Rawlings, Denver, Colorado, for Complainant- Appellee

Philip J. Weiser, Attorney General, Katherine Aidala, Assistant Attorney General, Denver, Colorado, for Respondent-Appellant

Philip J. Weiser, Attorney General, Leanne B. De Vos, Senior Assistant Attorney General, Billy Seiber, First Assistant Attorney General, Denver, Colorado, for Appellee ¶1 The Department of Corrections, Denver Reception and

Diagnostic Center (DOC), appeals the order of the Colorado State

Personnel Board (Board) reinstating appellee, Mathew Mark Stiles,

because his termination from DOC was arbitrary and capricious.

For the reasons described below, we affirm the Board’s order.

I. Background

¶2 DOC hired Stiles as a part-time correctional officer in August

2010. In December 2010, Stiles became a full-time employee, and,

in 2011, he achieved state-certified status. In 2013, DOC

transferred Stiles to a boiler room position in the facility. Every

performance evaluation since Stiles’ hiring date rated him as a

competent employee, and Stiles never received any corrective or

disciplinary actions during his employment.

¶3 Beginning in 2015, Stiles experienced several unexpected and

stressful events in his personal life, including an admitted affair by

his wife, his teenage daughter’s diagnosis of and emergency

hospitalization for schizophrenia, and disputes with his daughter’s

birth mother concerning his daughter’s condition. Stiles sought

professional help through the Colorado State Employee Assistance

Program. Stiles’ personal challenges never adversely affected his

1 job performance. But the related stress of these challenges caused

Stiles to experience bouts of insomnia.

¶4 Following an emotional counseling session with his wife and

an argument with his daughter’s birth mother on Friday, September

25, 2015, Stiles was unable to sleep. To alleviate his insomnia,

Stiles smoked some marijuana around midnight. On Monday

morning (September 28), Stiles returned to work and was randomly

selected for drug testing. He complied with the testing, and, the

next day, he submitted a confidential incident report to DOC

admitting his marijuana use and explaining the extenuating

circumstances that led to it. On October 2, DOC received the test

results, which revealed a positive result for THC, the main

psychoactive chemical in marijuana.

¶5 On October 13, Stiles received a hand-delivered Notice of Rule

6-10 Meeting.1 The notice, dated October 9, was signed by the

appointing authority, Warden David Johnson, and informed Stiles

1A Rule 6-10 meeting “is not a formal hearing but rather an opportunity for the parties to exchange information. The appointing authority must consider any written or oral information that the employee provides before making a final decision.” Dep’t of Insts., Div. for Developmental Disabilities, Wheat Ridge Reg’l Ctr. v. Kinchen, 886 P.2d 700, 705 (Colo. 1994) (citation omitted).

2 of an upcoming Rule 6-10 meeting concerning his continued

employment in light of the test result. On October 19, Stiles met

with Warden Johnson and provided an explanation for the positive

test result. He was accompanied and supported by his immediate

supervisor, Lieutenant James DeTello, who confirmed that Stiles

was a valuable employee. On that same date, Lieutenant DeTello

submitted Stiles’ final performance review, which provided an

overall rating of Level II (meets expectations) and a Communications

and Interpersonal Skills rating of Level III (exceptional).

¶6 On November 2, Warden Johnson issued a notice of

disciplinary action immediately terminating Stiles. Stiles appealed

his termination to the Board. An Administrative Law Judge (ALJ)

conducted a hearing and issued an initial decision. That decision

rescinded Stiles’ termination, modified the discipline to a ten

percent pay reduction for six months, and ordered back pay and

benefits. In reaching his decision, the ALJ found that Warden

Johnson’s decision was arbitrary, capricious, and contrary to rule

or law. In particular, the ALJ found that Warden Johnson (1) failed

to candidly and honestly consider all of the evidence he procured,

as required by Department of Personnel & Administration Board

3 Rule 6-9, 4 Code Colo. Regs. 801-1, particularly Stiles’ lack of prior

disciplinary history and his extenuating mitigating circumstances;

and (2) imposed discipline that was not within the range of

reasonable alternatives by failing to consider the disciplinary

alternatives set forth in the DOC regulation directed at marijuana

use, DOC Admin. Reg. 1450-36(IV)(A)(1). On review, the Board

adopted the ALJ’s initial decision, and this appeal followed.

¶7 DOC contends that the ALJ employed an incorrect standard of

review and improperly reweighed the evidence when he reviewed

Warden Johnson’s disciplinary action. DOC argues that the ALJ

was required to defer to Warden Johnson’s findings and that such

deference supports Stiles’ termination. We are not persuaded, for

three reasons. First, the Rule 6-10 meeting is informal and does

not sufficiently protect the property interests of a state-certified

employee accused of misconduct. Second, section 24-50-125(4),

C.R.S. 2018, provides for an adversarial proceeding at which the

employee is entitled to representation by counsel of choice, and it

requires the Board to make written findings of fact and conclusions

of law — a hearing our supreme court has described as de novo.

Finally, under the standard of review that binds this court, section

4 24-4-106(7), C.R.S. 2018, we conclude that the ALJ’s decision is

supported by the record.

II. The Board’s Appellate Process

¶8 “The state personnel system is established by Article XII,

sections 13, 14, and 15, of the Colorado Constitution and is

legislatively refined by” Title 24, Article 50 of the Colorado Revised

Statutes. Dep’t of Insts., Div. for Developmental Disabilities, Wheat

Ridge Reg’l Ctr. v. Kinchen, 886 P.2d 700, 705 (Colo. 1994). One of

its central features is that “persons within the system can be

subjected to discharge or other discipline only for just cause.” Id.

The Constitution creates the Board and authorizes it to adopt rules

to implement it. Colo. Const. art. XII.

¶9 The legislature has enacted a statute that enforces these

constitutional standards by requiring that (1) an appointing

authority notify the employee of the discipline, § 24-50-125(2); (2)

the employee be provided a hearing before the Board if requested,

§ 24-50-125(3); (3) the employee be afforded the right to legal

representation at the hearing, § 24-50-125(4); and (4) the Board

make findings of fact and conclusions of law affirming, modifying,

or reversing the appointing authority’s discipline, id.

5 ¶ 10 Finally, the Board has prescribed rules that elaborate on the

disciplinary procedures set forth in the statute. See Dep’t of Pers. &

Admin. Ch 6, 4 Code Colo. Regs. 801-1; Dep’t of Pers. & Admin. Ch

8, 4 Code Colo. Regs. 801-1. These rules permit an appointing

authority to discipline a certified employee for failing to comply with

efficient service or competence, for willful misconduct, or for an

inability to perform assigned duties. Dep’t of Pers. & Admin. Board

Rule 6-12, 4 Code Colo. Regs. 801-1. They require an appointing

authority to meet with the employee before taking disciplinary

action. Dep’t of Pers. & Admin. Board Rule 6-10, 4 Code Colo.

Regs. 801-1. The appointing authority must inform the employee of

the alleged misconduct and allow the employee to respond in this

meeting. Id.

¶ 11 In deciding whether to discipline a certified employee, the

appointing authority must take into consideration certain criteria

set forth in Rule 6-9:

The decision to take corrective or disciplinary action shall be based on the nature, extent, seriousness, and effect of the act, the error or omission, type and frequency of previous unsatisfactory behavior or acts, prior corrective or disciplinary actions, period of time since a

6 prior offense, previous performance evaluations, and mitigating circumstances. Information presented by the employee must also be considered.

Dep’t of Pers. & Admin. Board Rule 6-9, 4 Code Colo. Regs. 801-1.

If discipline occurs, the employee must be notified of the decision

and the right to appeal the decision to the Board within ten days of

receipt of notice. § 24-50-125(3); Dep’t of Pers. & Admin. Board

Rule 6-15, 4 Code Colo. Regs. 801-1; Dep’t of Pers. & Admin. Board

Rule 8-8, 4 Code Colo. Regs. 801-1.

¶ 12 An ALJ may conduct the hearing on behalf of the Board.

§ 24-50-103(7), C.R.S. 2018. The ALJ must make written findings

of fact and conclusions of law and render an initial decision

affirming, modifying, or reversing the disciplinary action. §§ 24-50-

125(4), -125.4(3), C.R.S. 2018; Colo. Dep’t of Human Servs. v.

Maggard, 248 P.3d 708, 712 (Colo. 2011). Either party may appeal

the ALJ’s initial decision by petitioning the Board to modify the

decision. § 24-50-125.4(4); Kinchen, 886 P.2d at 706. On review,

the Board must accept the ALJ’s findings of historical fact unless

they are contrary to the weight of the evidence. § 24-4-105(15)(b),

7 C.R.S. 2018. The Board’s decision is reviewable in this court. § 24-

50-125.4(3); Kinchen, 886 P.2d at 706.

A. Standard of Review

¶ 13 We review the decision of an administrative agency for an

abuse of discretion. Lawley v. Dep’t of Higher Educ., 36 P.3d 1239,

1247 (Colo. 2001). We will reverse a Board’s decision only if we find

that the Board acted arbitrarily and capriciously, made a decision

that is unsupported by the record, erroneously interpreted the law,

or exceeded its authority. Rice v. Auraria Higher Educ. Ctr., 131

P.3d 1096, 1100 (Colo. App. 2005) (citing § 24-4-106(7)). We must

sustain the Board’s decision “if it has a reasonable basis in law and

is supported by substantial evidence in the record considered as a

whole.” Farny v. Bd. of Equalization, 985 P.2d 106, 109 (Colo. App.

1999). Substantial evidence is “the quantum of probative evidence

that a fact finder would accept as adequate to support a conclusion,

without regard to the existence of conflicting evidence.” Black

Diamond Fund, LLLP v. Joseph, 211 P.3d 727, 730 (Colo. App.

2009). All reasonable doubts about the correctness of the Board’s

ruling must be resolved in its favor. Lawley, 36 P.3d at 1252.

8 B. The ALJ Employed the Correct Standard of Review

¶ 14 The issue before us is whether, as DOC contends, the ALJ

must defer to the appointing authority’s weighing of the Rule 6-9

factors or whether, as Stiles contends, the hearing before the ALJ is

de novo and requires no deference to the appointing authority’s

Rule 6-9 findings. DOC correctly asserts that Rule 6-9 provides no

guidance on how an appointing authority should weigh the factors.

And it reasons that this absence implies that an ALJ should defer to

the appointing authority’s findings because permitting the ALJ to

reweigh the factors would “read into the rule a requirement that

does not exist.” See Beruman v. Dep’t of Human Servs., 2012 COA

73, ¶ 26. We disagree and find more persuasive and binding our

supreme court’s analysis of section 24-50-125 and its conclusion

that only a de novo hearing can properly protect a certified

employee’s property interests. Kinchen, 886 P.2d at 707; People v.

Gladney, 250 P.3d 762, 768 n.3 (Colo. App. 2010) (this court is

bound by supreme court precedent).

¶ 15 In Kinchen, our supreme court held that the appointing

authority bears the burden of proof in disciplinary hearings before

the Board. 886 P.2d at 710. In doing so, it recognized that the

9 Colorado Constitution provides state-certified employees with a

property interest in their employment and that such employees can

only be discharged for just cause based on constitutionally specified

criteria. Id. at 707. In analyzing disciplinary procedures, the court

noted that the Board has prescribed rules requiring the appointing

authority to notify and meet with the employee before taking

disciplinary action. Of importance here, the court said, “[t]his

meeting is not a formal hearing but rather an opportunity for the

parties to exchange information.” Id. at 705.

¶ 16 The supreme court further explained that the forum in which

a certified employee’s property interest is properly protected is the

section 24-50-125 hearing before the Board. Id. at 707. Indeed,

unlike the procedures leading up to the imposition of disciplinary

action, which are informal and afford little protection to an

employee accused of misconduct, the Board hearing ensures that a

certified employee is discharged “only for just cause based on

constitutionally specified criteria.” Id. And the court found this

was a de novo hearing where “the scales are not weighted in any

way by the appointing authority’s initial decision to discipline.” Id.

at 706. We view this language as dispositive and in conflict with

10 DOC’s deference argument. Moreover, if the Board were required to

defer to the appointing authority, “there would be little check on the

constitutional sufficiency of an appointing authority’s standards in

imposing discipline.” Id. at 707. Accordingly, we hold that an ALJ

is not bound by the appointing authority’s initial decision and need

not defer to it. Instead, the ALJ conducts a de novo review of the

appointing authority’s decision, weighs the evidence presented, and

must make findings of historical fact and ultimate conclusions of

fact based on that evidence.

¶ 17 Because rulings and rationale necessary to reach conclusions

on the issues presented are binding law, we are not convinced that

we may depart from the language of Kinchen based on DOC’s

argument that this language constitutes nonbinding dicta. Super

Valu Stores, Inc. v. Dist. Court, 906 P.2d 72, 78-79 (Colo. 1995)

(“Conclusions of an appellate court on issues presented to it as well

as rulings logically necessary to sustain such conclusions become

the law of the case.”); Hardesty v. Pino, 222 P.3d 336, 340 (Colo.

App. 2009) (“A holding and its necessary rationale . . . are not

dicta.”). The cited language provided the rationale of the court’s

holding that the appointing authority bears the burden of proof at

11 the Board hearing. And, the court expressly held that the hearing

before the Board is de novo. See Kinchen, 886 P.2d at 706 n.10

(“We hold . . . that the hearing before the Personnel Board is de

novo.”).

C. The ALJ Properly Applied the Standard of Review

¶ 18 DOC next contends that the ALJ misapplied the arbitrary and

capricious standard in modifying Warden Johnson’s decision. We

disagree.

¶ 19 Section 24-50-103(6) authorizes an ALJ to overturn an

appointing authority’s actions only if it finds that those actions were

arbitrary, capricious, or contrary to rule or law. Lawley, 36 P.3d at

1251-52. An appointing authority acts arbitrarily or capriciously in

one of three ways:

(a) By neglecting or refusing to use reasonable diligence and care to procure such evidence as it is by law authorized to consider in exercising the discretion vested in it.

(b) By failing to give candid and honest consideration of evidence before it on which it is authorized to act in exercising its discretion.

(c) By exercising its discretion in such manner after a consideration of evidence before it as clearly to indicate that its action

12 is based on conclusions from the evidence such that reasonable men fairly and honestly considering the evidence must reach contrary conclusions.

Id. at 1252 (quoting Van DeVegt v. Bd. of Cty. Comm’rs, 98 Colo.

161, 166, 55 P.2d 703, 705 (1936)).

¶ 20 The ALJ determined that Warden Johnson used reasonable

diligence to procure evidence and appropriately conducted the Rule

6-10 meeting. But, he found that Warden Johnson violated Rule 6-

9 by failing to properly weigh the mitigating evidence and the

absence of any prior discipline. The ALJ noted Stiles’ “mistake” in

consuming marijuana one time, Stiles’ “solid performance” record,

Stiles’ “absence of any prior corrective action,” Stiles’ “documented

desire to improve his job,” and Stiles’ “dedication to his job.”

Because the ALJ was free to weigh these facts and because these

evidentiary facts are well supported by the record, we may not set

them aside. Lawley, 36 P.3d at 1245; Kinchen 886 P.2d at 706.

¶ 21 As well, the ALJ found that Warden Johnson violated Rule 6-9

by imposing the most severe form of discipline for Stiles’

misconduct. While the ALJ agreed that Stiles’ marijuana use was

serious (as reflected in the six month, ten percent pay reduction),

13 he found that it was not so egregious as to warrant termination

because this was a one-time bad decision, the effects of the

marijuana wore off well before Stiles returned to work, and no

evidence was presented that this one-time use ever affected Stiles’

job performance. The ALJ also cited DOC’s marijuana consumption

regulation, DOC Admin. Reg. 1450-36(IV)(A)(1), and found that its

violation could result in any type of corrective action and “need not

result in the severest form of disciplinary action.” Because these

findings of evidentiary fact are supported by the record, we affirm

the Board’s order adopting the ALJ’s initial decision.

¶ 22 Last, we reject DOC’s argument that the ALJ was required to

make findings under all three factors of the three-part test for

arbitrary and capricious action, and that the third factor

(reasonable men would reach a different conclusion) somehow acts

as a check on the other two factors and therefore requires deference

by the ALJ. DOC cites no authority for this argument and we

conclude that supreme court authority contradicts it. See Lawley,

36 P.3d at 1252 (upholding Board’s decision that university failed to

give candid and honest consideration to evidence before it (second

factor)); Kinchen, 866 P.2d 706 n.10 (requiring the ALJ to make “an

14 independent finding of whether the evidence presented justifies a

dismissal for cause”). Accordingly, because the ALJ’s decision and

the Board’s order adopting it are supported by the record, we affirm

the Board’s order.

III. Conclusion

¶ 23 The order is affirmed.

JUDGE FURMAN and JUDGE DUNN concur.