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District of Columbia v. District of Columbia Dept. of Employment Services

April 28, 1994

DISTRICT OF COLUMBIA, PETITIONER
v.
DISTRICT OF COLUMBIA DEPARTMENT OF EMPLOYMENT SERVICES, RESPONDENT. CAROL Y. RICHARDSON, PETITIONER V. DISTRICT OF COLUMBIA DEPARTMENT OF EMPLOYMENT SERVICES, RESPONDENT



Petition for Review of a Decision of the District of Columbia Department of Employment Services

Before King and Sullivan, Associate Judges, and Mack, Senior Judge.

The opinion of the court was delivered by: King

KING, Associate Judge: Petitioner, the District of Columbia ("the employer"), challenges the decision by the Acting Chief of the Office of Appeals and Review ("OAR") of the Department of Employment Services ("DOES"), reversing the appeals examiner's denial of unemployment benefits to a former employee. On appeal, the employer contends that OAR erred when it rejected the appeals examiner's finding that the employee was not eligible for unemployment compensation benefits based on the employee's misconduct. We agree and reverse and remand.

I.

On January 4, 1991, Carol Y. Richardson ("the employee") was terminated from her position as an audit assistant with the Adjustment and Review Unit, Tax Processing Administration for the District of Columbia Department of Finance and Revenue. The employee was discharged for misuse of her official position by using confidential information, gained through her audit assistant duties, to obtain District of Columbia personal income tax refunds she was not entitled to receive.

The employee sought and was denied unemployment compensation benefits by a DOES claims examiner because she had been terminated for misconduct. See D.C. Code § 46-111 (b)(1990). The employee appealed that determination, and a hearing was held before appeals examiner, John Bockius, on April 10, and continued on May 2, 1991. At the hearing, the employee admitted that she had purposefully filed falsified personal income tax returns, which she knew would not be challenged because of the city's tolerance policy. *fn1 She claimed, however, that she was not guilty of misconduct because her supervisors condoned the submission of falsified tax returns that were within the tolerance. A former co-worker, Delores Yates, also testified that the supervisors had condoned the misuse by the employees of the tolerance policy. Both the employee and Yates testified that Romie Grady, their supervisor at Adjustment and Review, in explaining the tolerance policy to them and other employees, had said that the employees could use their knowledge of the policy at their discretion. The employee also testified that Grady's predecessor had made comments similar to those attributed to Grady, essentially stating that employees should use their own discretion in deciding whether to take advantage of the tolerance policy.

The employer presented testimony that the employee knew of the tolerance policy, and an examination of the tax returns of the employee revealed she took advantage of that policy. There was also evidence that the employee's duties included the reviewing of personal income tax returns filed by others; performing audits of the returns; assessing unpaid taxes, penalties, and interest; and authorizing refunds. The employee's position required that she have knowledge of tax laws and the tolerance policy. Finally, Grady denied ever making any statements advising or suggesting that employees could use their knowledge of the tolerance policy for their personal benefit.

The employer also introduced relevant excerpts from the Personnel Manual containing personnel regulations regarding misuse of information, the position description for an audit assistant, the employee's tax returns showing that she claimed a refund that was in excess of what she was entitled to receive but with a discrepancy within the tolerance policy, and two documents signed by the employee concerning confidentiality guidelines.

The appeals examiner ruled that the employee knew about the tolerance policy and used it dishonestly for her own personal gain. The examiner further concluded that the statements by Grady *fn2 and the former supervisor, regarding the tolerance policy, "do not rise to the level of condonation . the employee I was clearly aware that her actions amounted to misuse of her official position as an audit assistant." Based on those findings, the appeals examiner held that the employer had sustained its burden and the employee was properly "discharged for intentional dishonesty and hence misconduct, within the meaning of the District Unemployment Compensation Law."

OAR Acting Chief Ronald G. Perkins reversed on appeal, concluding that the employer had failed to sustain its burden in proving misconduct and that the hearing examiner's decision was not supported by substantial evidence. The employer then petitioned this court seeking reversal of the OAR ruling.

II.

An employee who has been discharged for misconduct occurring in the course of his or her most recent work may be denied unemployment compensation benefits. See D.C. Code § 46-111 (b)(1). in reviewing a final decision of DOES, relating to a finding of misconduct, our role is limited. We will not "disturb a decision if it rationally flows from the facts relied upon, and those facts or findings are substantially supported by the evidence of record." Jadallah v. District of Columbia Dep't of Employment Servs., 476 A.2d 671, 675 (D.C. 1984) (citation and internal quotation marks omitted). in the instant case, however, OAR's rejection of the appeals examiner's decision cannot be sustained.

When OAR reviews an appeals examiner's decision, "due deference must be accorded the credibility determinations of the examiner who heard and evaluated the evidence." Gunty v. Dep't of Employment Servs., 524 A.2d 1192, 1197 (D.C. 1987). The rationale for such deference is that the appeals examiner is in the best position to observe the demeanor of the witnesses. See Dell v. Dep't of Employment Servs., 499 A.2d 102, 106 (D.C. 1985) (citing 3 K. DAVIS, ADMINISTRATIVE LAW TREATISE § 17.16, at 330 (2d ed. 1980)). OAR "may not reject an appeals examiner's findings of disputed fact based on a resolution of witness credibility unless the examiner's findings are unsupported by substantial evidence." Gunty, supra, 524 A.2d at 1198. The requirement of substantial evidence means "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a Conclusion." Washington Post Co. v. District Unemployment Compensation Bd., 377 A.2d 436, 439 (D.C. 1977) (citations and internal quotation marks omitted).

Moreover, OAR may not substitute its judgment for that of the appeals examiner unless the evidence is inherently unreliable, because if "the Director can make [his or] her own credibility findings based upon a reading of the record, we would essentially scrap the principle of deference to the examiner who actually hears the testimony and is in the best position to make such determinations." Gunty, supra, 524 A.2d at 1198. Thus, in this case, OAR lacked authority to reject the appeals examiner's resolution of witness credibility and was bound by the examiner's findings of disputed fact unless they were unsupported by substantial evidence. Moreover, OAR is bound by the factual findings supported by substantial evidence even if OAR would "have reached a contrary ...


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