October 14, 1993
DURWOOD C. JAMES, PETITIONER
DISTRICT OF COLUMBIA DEPARTMENT OF EMPLOYMENT SERVICES, RESPONDENT
Petition for Review of a Decision of the District of Columbia Department of Employment Services
Before Rogers, Chief Judge, and Schwelb and Farrell, Associate Judges. Opinion for the court by Associate Judge Farrell. Dissenting opinion by Chief Judge Rogers.
The opinion of the court was delivered by: Farrell
FARRELL, Associate Judge: In discussing the admission of a particular form of hearsay, the Supreme Court has observed:
Individual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it. The sum of an evidentiary presentation may well be greater than its constituent parts. . . . piece of evidence, unreliable in isolation, may become quite probative when corroborated by other evidence.
Bourjaily v. United States, 483 U.S. 171, 179-80, 107 S. Ct. 2775, 97 L. Ed. 2d 144 (1987). This observation is relevant to the case before us in which we decide whether evidence chiefly -- though not exclusively -- hearsay in nature constituted "substantial evidence" of misconduct sufficient for us to sustain a hearing examiner's denial of petitioner's application for unemployment compensation. We hold that the evidence satisfied that standard, and therefore affirm.
Petitioner was employed as a security guard by Diamond Security, Inc., from April 21, 1988 through November 27, 1989, when he was fired as a result of a series of job-related acts of misconduct. After a Department of Employment Services (DOES) claims examiner denied petitioner's request for unemployment compensation, petitioner appealed, and an appeals examiner convened a hearing on February 22, 1990, at which petitioner and his former job supervisor testified. The examiner concluded that petitioner did not qualify for unemployment benefits because he had been discharged for misconduct. D.C. Code § 46-111 (b) (1990). The examiner based this finding chiefly on disciplinary action reports (DARs) contained in petitioner's employment record, as well as the supervisor's testimony and the examiner's negative assessment of petitioner's credibility. The Office of Appeals and Review affirmed the examiner's decision.
The supervisor, John Steele, testified at the hearing that petitioner was fired because "over a period of time, consistently and constantly continued to break the rules and regulations after being counseled by my supervisors as well as by myself. . . ." The most recent incident, which was the "last straw" for the employer and resulted in the termination, took place on November 23, 1989, *fn1 when petitioner failed to report to work. Steele testified that after being informed of this fact, he called petitioner's home. *fn2 Petitioner's wife said that he was sick in bed and could not come to the phone. The following day petitioner called Steele to explain that he had been absent from work because he was sick. According to Steele, this violated the employer's established procedure "in respect to calling off duty that he was not coming to work" (emphasis added).
The record contains twenty-two disciplinary reports concerning petitioner prepared by various Diamond Security sergeants and generally signed by Steele, who also personally prepared and signed three of them. Among the offenses listed are: failing to report for duty, tardiness, falsely claiming he was at work, drinking or sleeping on duty, being out of uniform, taking home the company radio, having a television on the work site, and failing to obey orders. Petitioner signed seven of the nineteen reports without comment, indicating he had received and read them, and signed one other report under protest. Most of the reports were prepared the same day the misconduct occurred; others were prepared within three days (in one instance six days) of the incident. The appeals examiner relied specifically on seven of the reports, *fn3 but took account of the others ("The misconduct in this case included the following. . ." (emphasis added)).
Although Steele did not prepare most of the DARs, he testified that he wrote the November 6, 17, and 23, 1989 reports since he was "the manager of the building that was working at," and he therefore had personal knowledge of these incidents. Otherwise, Steele would review such reports and discuss them with the employee involved and "counsel" him. Steele listed a number of reports for which he had personally counseled petitioner contemporaneously with the infractions, testifying that petitioner was "personally present to review and to voice any objections" to the reports.
Petitioner did not deny speaking with Steele "about the problems that we had with the schedule and working at Diamond Security," but denied the basis for the reports. He contended that there were inconsistencies in the DARs, that he did not have knowledge of some of them, that they were false, and that they were written up in order to avoid paying him unemployment and as retribution for his having won a wage and hour award. He also objected to the fact that the persons who had written the individual reports were not present for him to cross-examine.
A decision by DOES must be supported by substantial evidence, Jadallah v. District of Columbia Dep't of Employment Servs., 476 A.2d 671, 675 (D.C. 1984), defined as "such relevant evidence as a reasonable mind might accept as adequate to support a Conclusion." Nova Univ. v. Educational Inst. Licensure Comm'n, 483 A.2d 1172, 1190 (D.C. 1984), cert. denied, 470 U.S. 1054, 105 S. Ct. 1759, 84 L. Ed. 2d 822 (1985) (citations omitted). Since the appeals examiner based her decision primarily on the evidence in the disciplinary reports, whose authors -- except in the case of Steele -- were not present to testify, we must decide whether the hearsay evidence presented was substantial as thus defined.
"Hearsay evidence is admissible in administrative proceedings unless it is irrelevant, immaterial, or unduly repetitious." Lim v. District of Columbia Taxicab Comm'n, 564 A.2d 720, 724 (D.C. 1989) (citation and quotation marks omitted); D.C. Code § 1-1509 (b). "If hearsay evidence is found to be reliable and credible, it may constitute substantial evidence." Simmons v. Police & Firefighters' Retirement Bd., 478 A.2d 1093, 1095 (D.C. 1984) (citing Johnson v. United States, 202 U.S. App. D.C. 187, 190-91, 628 F.2d 187, 190-91 (1980)). At the same time, "administrative findings and Conclusions based exclusively on hearsay [are subject] to exacting scrutiny." Lim, supra. More than once we have declined to uphold a DOES finding of misconduct where an employer's hearsay evidence was refuted by the claimant's sworn testimony. E.g., Jadallah, supra; McLean v. District of Columbia Dep't of Employment Servs., 506 A.2d 1135, 1137-38 (D.C. 1986).
We have not, however, mechanically rejected agency findings for lack of substantial evidence whenever the finding was based mainly, or even entirely, on hearsay evidence contradicted by sworn testimony. Rather, the test remains as we described it in Simmons and Lee: hearsay found to be reliable and credible may constitute substantial evidence, "especially . . . where the evidence is uncontradicted," Simmons, 478 A.2d at 1095; but without extrinsic corroboration (proof aliunde) such evidence will be "scrutinized" carefully. Lim, 564 A.2d at 724. See also Jadallah, 476 A.2d at 677 (Ferren, J., Concurring) ("Absent some indicia of reliability, hearsay evidence alone should not be permitted to offset the sworn testimony of a witness and to constitute substantial evidence in support of an agency position"); Martin v. District of Columbia Police & Firefighters' Retirement & Relief Bd., 532 A.2d 102, 109-10 n.2 & accompanying text (D.C. 1987); Johnson, supra, 202 U.S. App. D.C. at 190-91, 628 F.2d at 190-91 (cited in Martin and Simmons) ("rejecting a per se approach that brands evidence as insubstantial solely because it bears the hearsay label"; "instead . . . evaluating the weight each item of hearsay should receive according to the item's truthfulness, reasonableness, and credibility"). *fn4
In this case, a variety of factors confer reliability on the DAR reports, and these in turn, viewed together with Steele's testimony, provide substantial support for the examiner's finding that petitioner was terminated for conduct manifesting "a disregard of standards of behavior which the employer a right to expect of his employees." D.C. Code § 46-111 (b)(2). See, e.g., Shepherd v. District of Columbia Dep't of Employment Servs., 514 A.2d 1184 (D.C. 1986) (pattern of absenteeism and tardiness). Whether or not they fit within the hearsay exception for business records (a question we need not decide), the DARs were completed as part of Diamond Security's regular procedure for disciplining employees. They were prepared by a succession of sergeants contemporaneously with the events, and were routinely followed up by personal counseling, in some cases by Steele himself -- who had personal knowledge of three of the incidents. This aggregation of prompt reports by different supervisors tends to disprove either that the DARs stemmed from faulty perception or memory or that the writers lacked objectivity or "disinterestedness." Simmons, 478 A.2d at 1095. Moreover, in large part they were "consistent with each other in that they described the same pattern of behavior" by appellant, id. -- absence from or tardiness in reporting to work, falsely representing that he was at work, and sleeping or drinking on the job. The fact that Steele (who testified and could be cross-examined) had personally counseled petitioner following many of the incidents is important. Were the reports all or mostly baseless, as petitioner asserted at the hearing, one would expect him to have voiced some objection to them to Steele at the time; yet Steele testified to no such denials or to any reason he had acquired to doubt the reliability of the reports based on petitioner's reaction during the counseling.
Petitioner had access to the reports before the agency hearing, Simmons, 478 A.2d at 1095; Johnson, 202 U.S. App. D.C. at 191, 628 F.2d at 191, *fn5 but his denial of misconduct was blanket and largely non-specific. *fn6 Other than to say that the DARs were "just written up to evade paying me unemployment," petitioner did not explain why or how the employer would have fabricated an extensive file of disciplinary reports prepared by several different sergeants. Moreover, the examiner discounted petitioner's credibility because of shifting answers he gave her about when, in relation to a new job he had begun, he had also applied for unemployment benefits.
All of these circumstances persuade us that the disciplinary reports were reliable proof which "a reasonable mind might accept as adequate to support Conclusion" that petitioner had engaged in misconduct justifying termination. Nova Univ., 483 A.2d at 1190. Even if a small number of the DARs together might not have persuaded us of the reliability of the examiner's Conclusion, the sheer cumulation of reports made the body of proof self-corroborating and the "sum of evidentiary presentation" more trustworthy than "its constituent parts" would have been if viewed in isolation. Bourjaily, 483 U.S. at 179-80. This was no "attenuated evidentiary chain" as in Jadallah, 476 A.2d at 677 (criticizing reliance on "hearsay within hearsay"), nor a case where an appreciable gain in reliability would have been achieved by requiring the authors of the individual reports to testify. Steele described both the process by which the disciplinary reports were prepared and the important follow-up in the form of counseling which regularly attended them and which he specifically performed in petitioner's case. *fn7 When added to this is the personal knowledge Steele had of three of the infractions on which the examiner expressly relied, there was no infirmity in the proof sufficient to permit us to reject the judgment of the hearing examiner.
ROGERS, Chief Judge: The majority concludes that based on hearsay statements in the form of disciplinary reports, there is substantial evidence to support the agency's finding that petitioner was discharged for misconduct under D.C. Code § 46-111 (b) (Repl. 1990). The difficulty with this Conclusion is twofold: (1) the petitioner's sworn testimony challenged the accuracy of the hearsay disciplinary action reports on which the employer relied, and (2) the employer's witness did not have personal knowledge of the events at issue.
Unlike the key decision on which the majority relies, Bourjaily v. United States, 483 U.S. 171, 107 S. Ct. 2775, 97 L. Ed. 2d 144 (1987), in the instant case there were no surrounding circumstances to constitute independent evidence of the violations. In Bourjaily, there was subsequent evidence showing that the person engaged in the telephone conversation had appeared at the arranged place and done what he said during the telephone conversation he was going to do. Id. at 180-81. On that basis the Court was satisfied that even if each of the hearsay statements was unreliable, the subsequent events provided corroboration by independent evidence. Id. The Court stated that it was not deciding whether the hearsay statements standing alone would have been sufficient evidence of the conspiracy. Id. at 181. Furthermore, in Bourjaily, the issue was confined to the use of hearsay in making preliminary factual determinations on the admissibility of hearsay under an exception to the rule against hearsay, see FED. R. EVID. 104 (a) & 801 (d)(2)(E). Id. at 181. By contrast, in the instant case, the majority would broaden Bourjaily to allow use of hearsay to make the substantive finding, namely, whether there is substantial evidence of misconduct, without regard to the admissibility of such evidence under an exception to the hearsay rule. See majority opinion at 1, 8. Hence, its reliance on Bourjaily is misplaced.
In the instant case, the Department of Employment Services (DOES) had before it only the challenged hearsay disciplinary action reports and the testimony of a supervisory employee who provided no evidence contrary to the petitioner's sworn testimony that the particular disciplinary reports were prepared for the purposes of the unemployment compensation review and were false or otherwise inaccurate. There was no evidence of subsequent events to demonstrate the reliability of the disciplinary action reports (DARs) at issue. Contrary to the warnings of Jadallah v. District of Columbia Dep't of Employment Servs., 476 A.2d 671, 676 (D.C. 1984), and Washington Times v. District of Columbia Dep't of Employment Servs., 530 A.2d 1186, 1190 (D.C. 1987), the majority, relying, in part, on a Concurring opinion in Jadallah, see majority opinion at 5 (citing Jadallah, supra, 476 A.2d at 677 (Ferren, J., Concurring)), upholds the agency's decision. Because the hearsay evidence on which the agency relied in finding misconduct was refuted by petitioner's sworn testimony, the agency's decision was not based on substantial evidence under Jadallah, supra, and, therefore, the case should be remanded to the agency for further proceedings. *fn1
A review of the facts and agency proceedings is required to appreciate the limited nature of the employer's non-hearsay evidence. The only witness presented by the employer, John Steele, testified that he is generally responsible for reviewing field supervisors' DARs and discussing the DARs with the individual security guard.
Petitioner was employed as a security guard by Diamond Security, Inc. from December 30, 1986 until November 24, 1989, when he was terminated for a pattern of consistent and constant misconduct. *fn2 Following an intra-agency appeal and a hearing at which petitioner appeared pro se, the agency denied his request for unemployment benefits. *fn3 Petitioner contends that disciplinary action reports (DARs), which were the sole method of proof for all of the allegations of misconduct on which the agency relied, except the most recent one, are hearsay evidence that he disputed at the bearing. *fn4 In his words, the DARs "could have been written and stamped by any one."
An examination of the DARs on which the agency relied reveals, as the employer's witness, Mr. Steele, testified at the hearing, that field supervisors actually prepare the DARs. *fn5 The most recent DAR, which ostensibly was the immediate cause for the dismissal, was dated November 23, 1989, when petitioner did not show up for work. A supervisor called petitioner's home and was told that he was sick. The writer of the DAR then called petitioner's home and asked to speak with him. A person whom the writer stated was petitioner's wife told the writer that petitioner was sick and could not come to the telephone. In response the writer informed petitioner's wife that petitioner was no longer employed by Diamond Security. Mr. Steele testified that he was the person who had made this call. In fact, however, the actual DAR, which is in the record, is signed "action taken by" Sgt. Howe on November 23, 1989. *fn6 Mr. Steele's name appears in signature form in his reviewing capacity on November 24, 1989, and the description of the occurrence appears to be in the handwriting of Sgt. Howe. Thus, although Mr. Steele testified that he had first-hand knowledge of this incident, the record before the agency indicates that this DAR, like the others, was prepared by someone else and signed by Mr. Steele in his supervisory capacity. *fn7
The appeals examiner relied on six incidents, aside from the November 23rd incident, in finding that petitioner had been discharged for consistent and constant misconduct. At the hearing, petitioner's testimony effectively refuted each DAR. First, the November 6, 1989, DAR stated that petitioner had been sleeping on the job. Petitioner testified that he was not at work on that day, explaining that a wage and hour dispute was occurring and he was on call. *fn8 Second, the November 2, 1989, DAR stated that petitioner was out of uniform. Petitioner testified that there was no basis for that report. Third, the DAR report of April 21, 1989, stated that petitioner had falsely represented that he was on the job site. In his testimony, petitioner denied a similar DAR that he said concerned June 24, 1989, claiming that he had not been on the job site because the supervisor had failed to pick him up. In addition, petitioner testified that it was not a fair write-up and that "a whole lot of these are the same way." In response to the hearing examiner's question whether he denied the dates that he failed to either call or report to work, petitioner testified that he always called: "I was there or I called . . . and let them know that I wasn't going to be at work. I'm not that kind of employee." *fn9 Fourth, the November 17, 1989, DAR stated that petitioner was late reporting for work. Petitioner testified that all the reports for May 19 through November 24 were false and had no basis. Fifth and sixth, the DARs of April 13 and 14, 1989, cited petitioner for having a television on site. While petitioner was not afforded an opportunity to respond to these reports, petitioner stated in his April 9, 1990, appeal from the hearing examiner's decision that there were no rules forbidding television. *fn10
Mr. Steele, for the employer, testified that petitioner was dismissed because he "consistently and constantly continued to break the rules and regulations after being counseled by my supervisors as well as myself." Mr. Steele explained that he had allowed petitioner "to continue to work, because he was a good worker until he started to mess up, and then he just continued, refused to conform to things that we talked about on each DAR until . . . finally I didn't have any choice but to terminate him." Mr. Steele also testified that he had personally counseled petitioner on numerous occasions. He did not testify, however, that petitioner had ever admitted that he had violated any of the employer's rules or reasonable expectations after prior warnings. Nor did petitioner deny talking to Mr. Steele "about the problems that we had with the schedule and working at Diamond Security." Rather, he testified that there were inconsistencies in the DARs, that he did not have knowledge of many of them, that some were false and that they were written up in order to avoid paying him unemployment. At the hearing, petitioner objected to the fact that the people who had purportedly written up the reports were not present for him to cross-examine, specifically citing 7 DCMR § 312.7 (1986). *fn11
The majority concludes that in the face of sworn testimony contesting hearsay evidence, hearsay evidence standing alone can constitute substantial evidence to support a finding of misconduct warranting the denial of unemployment benefits. See supra, majority opinion, at 5-7. This controverts binding authority that hearsay evidence is not sufficient evidence where it is refuted by sworn testimony. Jadallah, supra, 476 A.2d at 676 (declining to hold that the direct sworn testimony of a witness on a crucial fact can be refuted by hearsay from a declarant available for trial); see also Curtis v. District of Columbia Dep't of Employment Servs., 490 A.2d 178, 179-80 & n.3 (D.C. 1985) (failure to swear witnesses, simply reading documents into the record did not constitute sufficient evidence of misconduct). In Jadallah, supra, the court made clear that, notwithstanding the hearsay testimony on behalf of the employer:
It is one thing to hold that hearsay evidence is admissible at agency hearings, but quite another thing to say that the direct sworn testimony of a witness on a crucial fact can be effectively refuted by hearsay, i.e., the statements of persons not produced as witnesses -- and hence not subject to cross-examination -- when the party relying on such statements is in a position to call the declarants to the stand.
Jadallah, supra, 476 A.2d at 676. In reversing and remanding the case to the agency in Jadallah, supra, because the double hearsay was "too thin" to constitute substantial evidence, the court noted that the employer had failed to explain why security officials with direct knowledge of the misconduct were not called to testify at the agency hearing. *fn12 Id. at 677. Since Jadallah, supra, the court has continued to emphasize its concern about reliance by agencies on hearsay evidence when the declarant is available. See McLean v. District of Columbia Dep't of Employment Servs., 506 A.2d 1135, 1137-38 (D.C. 1986) (hearsay testimony contradicted by sworn testimony of witness does not constitute substantial evidence). See also Lim v. District of Columbia Taxicab Comm'n, 564 A.2d 720, 725 & n.11 (D.C. 1989) (reemphasizing that "an administrative agency should not rely on hearsay to refute sworn testimony, when the party relying on the hearsay is able to call the declarant to the stand").
The record does not provide a basis on which to conclude that the DARs were reliable hearsay. First, the DARs were not business records falling within the exception to the hearsay rule. *fn13 Petitioner challenged not only the accuracy of the DARs, but testified that most of the DARs were "just written up to evade paying me unemployment," claiming that he thought he was being fired because he had won a wage and hour award. Mr. Steele's testimony did not address these allegations in petitioner's testimony and cannot, therefore, provide an evidentiary basis on which the appeals examiner could conclude that the DARs were within the business-records exception. See Palmer v. Hoffman, 318 U.S. 109, 114, 63 S. Ct. 477, 87 L.Ed. 645 (1943) (business reports whose primary purpose is for litigation are not admissible under business-records exception to the hearsay rule). He never responded to petitioner's assertion by testifying that the DARs at issue were prepared as part of the employer's regular business operations and not primarily for use in unemployment compensation proceedings, and the hearing examiner made no pertinent finding. See Coates v. Johnson & Johnson, 756 F.2d 524, 550 (7th Cir. 1985) (disciplinary memorandum admissible because used as part of "the systematic conduct of running a business" and "not prepared primarily with a view toward their use in a subsequent adversarial proceeding"). While personnel records may properly be accorded some weight, they cannot constitute sufficient evidence when rebutted by sworn testimony. See Washington Times, supra, 530 A.2d at 1190. The hearsay records on which the agency relied, therefore, did not constitute sufficient evidence on which to base a finding of misconduct under D.C. Code § 46-111 (b) (Repl. 1990). See Id.; Jadallah, supra, 476 A.2d at 675-76, 677 (Ferren J., Concurring); see also 3 KENNETH C. DAVIS, ADMINISTRATIVE LAW TREATISE § 16.6, at 243 (2d ed. 1980) (listing circumstances to be considered in determining whether or not particular evidence should be relied upon); cf. Curtis, supra, 490 A.2d at 179-80 & n.3.
Second, the credibility determination made by the appeals examiner misses the mark. The majority points out that the appeals examiner found that Mr. Steele was truthful and petitioner was not. See supra, majority opinion, at 8. However, this credibility finding cannot overcome the requirement that the agency's findings must be supported by substantial evidence. Gunty v. District of Columbia Dep't of Employment Servs., 524 A.2d 1192, 1197 (D.C. 1987) (citation omitted). The burden to show misconduct was on the employer, see supra note 3, and, in view of the employer's reasons for discharging petitioner -- for "consistently and constantly continuing to break the rules and regulations after being counseled" -- the appeals examiner's reliance on the seven DARs challenged by petitioner's sworn testimony could not constitute substantial evidence of "misconduct" under the statute. See Jones, supra, 395 A.2d at 395. The employer's only witness, Mr. Steele, had no personal knowledge of the incidents, other than through hearsay reports from the field examiners. *fn14 Nor did he otherwise provide a basis, as did independent evidence in Bourjaily, supra, 483 U.S. at 180-81, on which the appeals examiner could determine that the DARs were reliable or admissible as business records. Thus, the appeals examiner's credibility determination could not overcome the deficiency of proof occasioned by the disputed DARs. *fn15
Finally, the factors on which the majority relies in concluding that the DARs were reliable are peripheral to the issue of whether there was substantial evidence to support the finding of misconduct. The thrust of the majority's Conclusion is that the DARs were inherently reliable because of their cumulativeness, the fact that they were created by different sergeants following company procedure, and their consistency. *fn16 See majority opinion at 6. Upon examination, these factors do not provide an adequate response when hearsay is challenged in sworn testimony in the absence of a showing that the declarants are unavailable to testify and there is no substantiating independent evidence of reliability.
The factors on which the majority relies confront neither petitioner's testimony that the DARs were false nor his testimony that they had been manufactured for the purpose of depriving him of his unemployment benefits. The truthfulness of petitioner's testimony was not inconsistent with the factors on which the majority relies. If the DARs are false, the fact that there are a number of reports makes them no less false; the employer's witness had no personal knowledge of the incidents set forth in the DARs. The fact that the DARs were prepared pursuant to company procedure does not necessarily mean that the particular DARs challenged by petitioner were not prepared for reasons other than his unemployment disqualification; an assertion that the employer's witness did not address. Neither did the fact that the DARs were prepared according to general company procedure mean that the DARs were accurate. See also supra note 2. The fact that the DARs were consistent can cut both ways: either they can be read as the majority suggests or, read as too consistent, indicating that they were manipulated, especially in view of the fact that many of the DARs were prepared by two sergeants. See supra note 12. The appeals examiner made no findings on the relevant points relating to these factors, relying instead on a credibility determination that missed the mark since Mr. Steele was not in a position to address the accuracy of the reported incidents and did not testify that the DARs at issue were not written for unemployment compensation purposes. In other words, the existence of the majority's factors are peripheral to the issue of whether there was substantial evidence of misconduct based on the employer's hearsay evidence which was challenged in sworn testimony.
Accordingly, because Jadallah is controlling, the case should be remanded to the agency for further proceedings, and I respectfully Dissent.