99-CV-2959 Board of Regents of the University of Wisconsin System v.
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2002 WI 79 SUPREME COURT CASE NO.: OF WISCONSIN 01-1899 COMPLETE TITLE: Board of Regents of the University of Wisconsin System, Petitioner-Respondent, v. State of Wisconsin Personnel Commission, Respondent-Respondent-Co-Appellant, Dale R. Brenon, Appellant. __________________________________ Dale R. Brenon, Petitioner-Appellant, v. State of Wisconsin Personnel Commission, Respondent-Respondent. ON CERTIFICATION FROM THE COURT OF APPEALS OPINION FILED: SUBMITTED ON BRIEFS: ORAL ARGUMENT: May 28, 2002 SOURCE OF APPEAL: COURT: COUNTY: JUDGE: Circuit Dane Michael N. Nowakowski JUSTICES: CONCURRED: DISSENTED: NOT PARTICIPATING: SYKES, J., dissents (opinion filed). ABRAHAMSON, C.J., did not participate. June 28, 2002 ATTORNEYS: For the petitioner-appellant there were briefs (in the court of appeals) by Paul R. Erickson and Gutglass, Erickson, Bonville, Seibel & Falkner, S.C., Milwaukee, and oral argument by Paul R. Erickson. For the respondent-respondent-co-appellant there were briefs (in the court of appeals) by Kristine A. (Edwards) Long and Hurley, Burish & Milliken, S.C., Madison, and oral argument by Kristine A. Long. For the petitioner-respondent the cause was argued by David C. Rice, assistant attorney general, with whom on the brief was James E. Doyle, attorney general. 2 2002 WI 79 NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 01-1899 (L.C. No. 99 CV 2959 & 00 CV 661) STATE OF WISCONSIN : IN SUPREME COURT Board of Regents of the University of Wisconsin System, Petitioner-Respondent, v. State of Wisconsin Personnel Commission, Respondent-Respondent-CoAppellant, Dale R. Brenon, Appellant. __________________________________ Dale R. Brenon, Petitioner-Appellant, v. State of Wisconsin Personnel Commission, Respondent-Respondent. FILED JUN 28, 2002 Cornelia G. Clark Clerk of Supreme Court No. APPEAL from a judgment of the Circuit Court County, Michael Nowakowski, Circuit Court Judge. 01-1899 for Dane Reversed in part and affirmed in part. ¶1 WILLIAM A. BABLITCH, J. Appellant Dale Brenon (Brenon) successfully challenged his discharge by his employer, the Board of Regents of the University of Wisconsin System, more specifically Department the (UWM), University in an Commission (Commission). of Wisconsin-Milwaukee appeal to the Wisconsin Police Personnel During a hearing on damages for the wrongful discharge, the Commission denied admission of evidence related to additional alleged misconduct during his employment with UWM. committed by Brenon UWM discovered this evidence after Brenon's initial discharge and argued that this evidence should have been admitted to limit any award of back pay to Brenon. The circuit court reversed the Commission's decision to exclude this evidence and remanded for a new hearing where UWM would be permitted to introduce this evidence. The court of appeals certified this appeal to this court. ¶2 We examine two issues. Commission properly excluded First, we examine whether the UWM's evidence on Brenon's subsequent misconduct when it was offered, without prior notice, during a hearing on damages to reduce the amount of back pay on Brenon's wrongful discharge. properly exercised its We conclude that the Commission discretion in excluding this evidence because Brenon did not receive proper notice, consistent with 2 No. due process and the civil service introduction of this evidence. statutes,1 prior 01-1899 to UWM's Second, we address whether the Commission properly denied fees and costs to Brenon based on its conclusion that UWM's disciplinary actions against Brenon were substantially justified. uphold this determination. Granting great weight deference, we Accordingly, we reverse the circuit court's decision to reverse and remand the matter for a new hearing, and we affirm the circuit court's decision to deny fees and costs. I ¶3 Brenon began employment at UWM in October 1974 as a police cadet. At the time of his discharge, Brenon was serving with permanent status in class as a police sergeant. ¶4 received In November reports from 1995, various UWM Police officers inappropriate racist and sexist jokes. Chief that Philip Brenon had Clark told Clark directed Brenon's supervisor, Lieutenant Richard Sroka, to investigate and gather information. ¶5 Sroka sent Brenon an electronic mail message asking Brenon to meet with him.2 A few days later, they met, and Sroka 1 The civil service law is found under Wisconsin Stat. ch. 230 (1999-2000). Wisconsin Stat. § 230.34 specifically governs disciplinary actions taken against civil service employees. 2 The text of the electronic mail message was as follows: Dale, I need to meet with you on Friday morning, 12/08/95, regarding some recent personnel issues that I have just been made aware of. I will be away in Madison the rest of this week but will attempt to get in the office on Friday as early as I can. No big 3 No. informed Brenon of the allegations against him. 01-1899 Sroka asked if the allegations were true, and Brenon admitted to telling the jokes. Sroka informed Brenon that unsatisfactory and that it must stop. this conduct was Brenon apologized, and Sroka stated that he thought Brenon's conduct would stop. Sroka told later Brenon that he considered the matter closed and described the meeting as a warning or an oral reprimand. ¶6 Immediately thereafter, Sroka reported to Clark about the meeting, including the oral reprimand. Clark, however, told Sroka to instead prepare a ten-day suspension without pay for Brenon. Sroka immediately reported Clark's disciplinary decision to Brenon, and Brenon then met with Clark, asking him to reconsider his decision. Clark's decision, however, remained final. ¶7 As a result, Sroka prepared a letter of suspension dated December 19, 1995, for Brenon. the suspension would February 2, 1996. take effect According to the letter, from January 22, 1996 to The letter offered the following explanation for the disciplinary action: This disciplinary action is based on your conduct, as related by four officers of this Department, that during the first week of November, 1995 you related racially demeaning jokes to them while in the performance of your duties as a police sergeant. Regardless of the motivation for relating such jokes, this conduct exhibits unprofessional behavior, deal, won't take wait. Thank you. up much of 4 your time, but please No. demonstrates a lack of sensitivity and creates hostile environment within a diverse workplace.3 01-1899 a The letter also warned that "any further violation of work rules will result in further disciplinary action, up to and including discharge." ¶8 After this letter was issued, an investigation into Brenon's conduct continued. UWM received information from one female police cadet concerning sexist and racist comments and jokes told by Brenon as well as alleged dishonest conduct by Brenon in the performance of his duties. In addition, UWM received a report from another female officer who stated that 3 The letter specified the following rule violations: This conduct constitutes violations of University of Wisconsin System Work Rules IV., B and J, which states: B. Threatening, intimidating, interfering using abusive language towards others. with, or J. Failure to exercise good judgement, [sic] or being discourteous in dealing with fellow employees, students or the general public. These actions violate University Police Rules and Regulations, Article I Conduct, Section 4, which states: 4. When dealing with any person, employees shall at all times conduct themselves in a courteous and helpful manner. As these violations in and of themselves show cause for disciplinary action, the greater concern is that such behavior is not acceptable for a University of Wisconsin-Milwaukee Police Supervisor. 5 No. 01-1899 Brenon harassed her and made several sexual comments and jokes to her. Several other officers were also interviewed. ¶9 Clark and UWM Labor Relations Manager Shannon Bradbury met with Brenon. several During the meeting, Brenon admitted to making inappropriate jokes and comments, but denied telling racial jokes after notification of his suspension. ¶10 Clark later notified Brenon to disciplinary hearing on February 5, 1996. report to a pre- The notice identified the hearing subject matter as "allegations of [Brenon] making sexually explicit and demeaning subordinates, . . . allegations subordinates in violation of comments of UW and jokes retaliation System Work to against Rules and the University of Wisconsin-Milwaukee Sexual Harassment Policy, and continuing inappropriate activity subsequent to his suspension." Clark and Bradbury met with Brenon on February 5. During the meeting, Clark informed Brenon of the allegations against him and told against him that UWM him ranging from was a considering 30-day disciplinary suspension without action pay to UWM discharged Brenon effective February 11, 1996. A discharge. ¶11 February 9, 1996 letter provided the following explanation for this disciplinary action: This termination is based on other complaints of your conduct, untruthfulness uncovered in the course of the investigation of those complaints and your retaliation against subordinates who cooperated in those investigations. Specifically, complaints were received that subsequent to your learning of your 10 day suspension, you continued to tell jokes to 6 No. 01-1899 subordinate officers substituting "Irishman" for other ethnic groups. Additionally, new complaints were received about your making sexually explicit and demeaning comments, telling ethnically and sexually demeaning jokes. . . . . These examples are not an exhaustive list, but merely indicative of a much larger problem of continuing inappropriate and abusive treatment of subordinates and co-workers which cannot be tolerated in a UWM Police Department supervisor. Your behavior is all the more unacceptable in light of the frequent and numerous training programs you have attended on proper supervisory practices, appropriate interpersonal relations in the workplace, and dealing with the sensitive issues of diversity in a campus environment.4 4 The letter specified the following rule violations: This conduct constitutes violations of University of Wisconsin System Work Rules; I E., and IV., B., D., and J., which state: Prohibited Conduct I. E. Failure to provide accurate and complete information whenever such information is required by an authorized person. IV. B. Threatening, intimidating, interfering with, or using abusive language towards others. IV. D. Making false or malicious statements concerning other employees, supervisors, students or the University. IV. J. Failure to exercise good judgement, [sic] or being discourteous in dealing with fellow employees, students or the general public. These actions violate University Police Rules and Regulations, Article I Conduct, Section 4, which states: 7 No. ¶12 the Brenon appealed his suspension and his termination to Commission 2000).5 01-1899 pursuant to Wis. Stat. § 230.44(1)(c) (1999- He sought review on whether UWM had just cause for its disciplinary decisions and whether either decision constituted excessive discipline. ¶13 a On October 7, 1997, Commissioner Donald Murphy issued proposed decision and order on Brenon's appeal. In it, Commissioner Murphy concluded that UWM had violated Brenon's due process rights in issuing the initial ten-day suspension. He concluded that UWM failed to provide Brenon with adequate notice and a pre-disciplinary hearing prior to the suspension and therefore recommended that the Commission reject the suspension. However, he determined that, because Brenon had failed to 4. When dealing with any person, employees shall at all times conduct themselves in a courteous and helpful manner. In addition, a complaint was made by one of your subordinates to the Office of Diversity/Compliance on December 28, 1995 regarding the hostile environment created by your demeaning, degrading and otherwise inappropriate racial, ethnic and sexually explicit language, as well as an intimidating and retaliatory management style. Their investigation and findings corroborated the findings of the University Police Department's investigation. This continuing unprofessional behavior demonstrates a lack of sensitivity and creates a hostile work environment within a diverse workplace and is not acceptable for a University of Wisconsin-Milwaukee Police Supervisor. 5 All subsequent references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise indicated. 8 No. 01-1899 exercise good judgment in violation of University of Wisconsin System Work Rule IV. J.,6 this conduct was sufficient to warrant some disciplinary action. He deemed that the ten-day suspension was excessive discipline for this violation and that an oral or written reprimand was appropriate. ¶14 With respect to the termination, Commissioner Murphy concluded that UWM failed to prove all the allegations of misconduct that prompted Brenon's termination and that UWM had no just cause for the termination. The evidence, he noted, failed to establish that Brenon told derogatory ethnic jokes after notification of the ten-day suspension, that he retaliated against during any employees, the and that investigation. considered the As termination he a as was otherwise result, an untruthful Commissioner excessive Murphy exercise of discipline and ordered the modification of Brenon's termination of employment to a suspension of ten days without pay. ordered a reinstatement of Brenon. He also The Commission, although amending some language, adopted the findings of the proposed decision and request order. by It Brenon reserved for jurisdiction costs and to fees consider a pursuant to request for Wis. Stat. § 227.485(3). ¶15 costs The and justified" Commission fees, in later rejected concluding taking its that position 6 UWM on Brenon's was Brenon's "substantially conduct and Commissioner Murphy noted that the evidence fell short of showing that Brenon violated the other work rules as alleged. 9 No. 01-1899 therefore an award for fees and costs was not warranted. Wis. Stat. § 227.485(1)(f) and (3). See The Commission then granted leave to conduct discovery related to the remedy. ¶16 A remedy hearing was scheduled. Before the hearing, Commissioner Murphy proposed the following statement of issues for hearing: (1) the sum of Brenon's back pay and other credits, (2) the sum of UWM's mitigation damages and set-offs, and (3) the total hearing, sum of Brenon's Commissioner remedy. Murphy After issued a the May proposed 18, decision 1999 and order, recommending $159,533.64 in back pay to Brenon for the time period from February 11, 1996 to May 22, 1999, and additional back pay plus interest until Brenon's reinstatement. The decision noted that UWM had failed to mitigate its damages by reinstating Brenon and also ordered UWM to immediately offer reinstatement to Brenon to his former position or its equivalent. ¶17 evidence During the remedy hearing, UWM attempted to introduce related to alleged misconduct committed by Brenon during his employment with UWM but was not discovered by UWM until after his termination. The misconduct consisted of Brenon's alleged practice of copying and removing confidential documents from UWM. UWM first questioned Brenon on this conduct on June 24, 1996, during a pre-hearing deposition. deposition, files. UWM demanded that Brenon return all During this confidential ¶18 Brenon subsequently returned one box of documents. When UWM sought to introduce evidence related to this misconduct at the remedy hearing, Brenon objected on the basis 10 No. of relevancy. UWM responded that the evidence was 01-1899 relevant because it would show that UWM would have terminated Brenon for misconduct in June 1996 if he had still been employed there. Accordingly, on this "after-acquired evidence" theory, UWM argued that this evidence applied toward the issue of mitigation of damages in the wrongful termination case because it would limit an award of back pay at June 1996. initially overruled Brenon's objection. continued his argument on the objection. Commissioner Murphy Brenon, however, He asserted that he had not been charged with any misconduct on the issue and that the issue had not been included in the notice of hearing. a recess, Commissioner excluded the evidence. Murphy sustained the After objection and UWM made an offer of proof on the issue, during which Commissioner Murphy specifically asked whether it had been UWM's intent to present the document evidence in order to show just cause for terminating Brenon in June 1996. UWM answered affirmatively. ¶19 In the proposed decision and order on damages, Commissioner Murphy concluded that the decision to exclude the evidence at the hearing "was proper." He stated that "[t]o have ruled otherwise would have been in deprivation of appellant's [Brenon's] job property rights without due process of law." ¶20 order. to The Commission adopted the proposed decision and It also provided additional discussion on its decision exclude the after-acquired evidence. Specifically, it concluded that this evidence, if admitted, would have unfairly required Brenon to address a significant new issue on which he 11 No. had no prior notice. 01-1899 The Commission rejected UWM's arguments that Brenon had prior notice based on evidence in the record.7 Instead, based on this evidence, the Commission held that it was reasonable for Brenon to conclude that the document removal issue would be addressed in a pending replevin action seeking these documents or in a new disciplinary action following his restoration to his former job. The Commission declined to address the question of whether introduction of this evidence would violate the civil service code. It stated: There is also a question as to whether it would violate the civil service code to sanction what would be in effect the retroactive addition of reasons for the discharge of the appellant. However, because the commission concludes that lack of notice precludes litigation of the issue of the missing documents at this point in the remedy process, it will not address the question of whether injecting this issue into this case at this time would violate the civil service code. (Citations omitted.) 7 UWM supported its position that Brenon had proper notice that this evidence would be raised at the remedy hearing based on three evidentiary items. First, UWM cited the June 1996 deposition at which Brenon was asked about the documents. Second, UWM cited a June 20, 1998 letter from UWM to the Commission in opposition to appellant's motion for reinstatement, which stated in relevant part: "If ordered to return Brenon to the workplace at this time, UWM would be forced to consider initiating a formal investigation, possibly resulting in disciplinary action against him, for unauthorized possession of university property with regard to the records issue." Third, UWM cited a May 14, 1999 memo and settlement offer, which discussed the process that would be followed if Brenon were reinstated to his job. In relevant part, it stated: "After the final decision we also intend to reinstate your client and initiate the discipline process because of his gross violation of the records policies." 12 No. ¶21 UWM moved for reconsideration. In support 01-1899 of its motion, UWM pointed to newly discovered documents that Brenon recently provided to UWM that had been at his home.8 UWM argued that Brenon should have disclosed these allegedly confidential documents in June 1996 and that this evidence provided a basis for the Commission to overturn its order for reinstatement and back pay. UWM also cited to McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), to support its argument that the after-acquired evidence should have been admitted at the remedy hearing. ¶22 The Commission, however, held that the newly discovered documents did not provide a material difference to allow UWM to raise any issue surrounding the documents at that time. It maintained that UWM never raised the document removal issue before the remedy hearing and that it therefore waived this issue. The Commission also distinguished McKennon, noting that Brenon's case involved a discharge under the civil service code, requiring due process before any disciplinary action. Such a limitation on back pay based on subsequent misconduct, the Commission unlawful determined, retroactive Commission stated, would discharge could not effectively requiring now 8 add amount to an notice. UWM, the additional reasons for UWM pointed to the fact that it had filed a replevin action on April 28, 1998, in Milwaukee County Circuit Court seeking the recovery of documents that had allegedly been removed from the workplace. In connection with this proceeding, UWM contended that Brenon had recently returned, on September 29, 1999, ten file boxes containing about 24,000 documents. 13 No. discharge after its initial notice of termination, 01-1899 Brenon's disciplinary hearing, and the hearings before the Commission. The Commission relied on State ex. rel. Tracy v. Henry, 219 Wis. 53, 262 N.W. 222 (1935), in reaching its conclusion. ¶23 UWM appealed the Commission's decision on the merits of the suspension and discharge and on the decision to exclude the after-acquired evidence to the circuit court (Case No. 99 CV 2959). Brenon appealed the Commission's decision on fees and costs to the circuit court (Case No. 00 CV 661). consolidated. The cases were The Circuit Court of Dane County, Judge Michael Nowakowski presiding, upheld the Commission's findings on the merits, concluding that the Commission's modifications to UWM's discipline of Brenon were reasonable. The court also affirmed the Commission's decision denying fees and costs to Brenon. court, however, reversed the Commission's related to the back pay award. Commission's document refusal removal was decision and The order The court concluded that the to consider evidence an abuse discretion. of related The to the court's decision was based in part on its conclusion that the Commission applied an incorrect rule of law by concluding that Tracy was applicable and by concluding that McKennon was inapplicable. It also concluded that the Commission failed to properly engage in a balancing of interests to determine whether the evidence was admissible in light of any surprise element of the evidence. The court remanded to the Commission for further hearings at which UWM would be permitted to offer evidence in support of its after-acquired evidence theory. 14 No. ¶24 The court of appeals certified this case to us. court presented the following issue for certification: the 01-1899 Personnel Commission is permitted to The "whether consider 'after- acquired evidence' when deciding the remedy for a civil service employee who was wrongfully discharged." We accepted certification on this issue and on the issue of whether Brenon is entitled to fees and costs. II ¶25 We rephrase the first issue. The first issue is whether the Commission properly excluded evidence of Brenon's alleged misconduct when it was offered, without prior notice, during a hearing on damages to reduce the amount of back pay for Brenon's wrongful termination. We review the decision by the Commission, not the decision by the circuit court. Currie v. DILHR, 210 Wis. 2d 380, 386, 565 N.W.2d 253 (Ct. App. 1997). ¶26 Admission of evidence is a matter of discretion with the Commission. N.W.2d 315 J.I. Case Co. v. LIRC, 118 Wis. 2d 45, 48, 346 (Ct. App. 1984). We uphold the Commission's discretionary decision if there is a reasonable basis for it. Prahl v. Brosamle, 142 Wis. 2d 658, 667, 420 N.W.2d 372 (Ct. App. 1987). facts A proper exercise of discretion must be based on appearing applicable law. ¶27 in the record and on the appropriate and Id. Our review, like UWM's arguments, focuses primarily on the legal bases for the Commission's decision, in particular the civil service Commission statutes concluded and that the the due process attempted 15 clause. introduction The of the No. 01-1899 after-acquired evidence on the alleged document removal amounted to a retroactive excluded termination this evidence in of Brenon. part because As UWM a had result, not it provided notice to Brenon as required under the civil service statutes and the due process clause. Our review of whether the Commission properly based its decision on this law requires a determination on a question of law, that is, whether UWM was required service to provide statutory notice, following requirements, to due process and civil before it could Brenon introduce this evidence during the remedy proceeding. We first resolve this question of law before we address the Commission's discretionary decision. bases for the We also examine the additional legal Commission's determination, namely the Tracy decision and waiver. ¶28 We conclusions are not bound when reviewing by an questions administrative of law. Kelley Marquardt, 172 Wis. 2d 234, 244, 493 N.W.2d 68 (1992). agency's Co. v. Instead, we have applied three levels of deference to conclusions of law and statutory interpretation by an agency. administrative agency's experience, Id. technical "First, if the competence, and specialized knowledge aid the agency in its interpretation and application of the statute, the agency determination is entitled to 'great weight.'" Id. Second, if the agency determination is very nearly one of first impression, the agency determination is entitled to "due weight." Id. Third, if the issue is one of first impression for the agency and the agency lacks special 16 No. 01-1899 expertise or experience in its determination, our standard of review is de novo. ¶29 Id. at 245. The Commission argues that it has experience applying constitutional standards of due process and therefore its decision on this issue should be accorded due weight deference. However, the issue before us is one of first impression, that is, whether standards on apply, due statutes even introduce the after-acquired process requiring and notice, evidence on the civil before Brenon's service UWM could misconduct. The Commission has not provided any support to show that it has experience in addressing this issue. novo standard. As a result, we apply a de In turn, we review this question independently, while benefiting from the analyses of the Commission and the Auman v. School Dist. of Stanley-Boyd, 2001 WI circuit court. 125, ¶6, 248 Wis. 2d 548, 635 N.W.2d 762. ¶30 required Applying a de novo standard, we conclude that UWM was to provide notice to Brenon as contemplated by the civil service statutes and as required under due process before it could introduce evidence related to his alleged misconduct in copying and removing confidential documents from the UWM Police Department. Notice and a proper hearing addressing this misconduct is required to remain faithful to the due process interests of civil service employees in Wisconsin and to remain consistent with the policies of security of tenure and impartial evaluation prior to termination. See Watkins v. Milwaukee County Civil Serv. Comm'n, 88 Wis. 2d 411, 420, 276 N.W.2d 775 (1979). 17 No. ¶31 01-1899 In reaching this conclusion, we distinguish McKennon, in which the United States Supreme Court allowed after-acquired evidence, but did so in the context of at-will employment. In McKennon, McKennon was discharged from Banner Publishing Company when she was 62 years old. McKennon, 513 U.S. at 354. She sued alleging that her discharge violated the Age Discrimination in Employment Act of 1967. Id. During a subsequent deposition, Banner discovered that McKennon had copied and removed several Id. at 355. confidential documents. A few days later, Banner terminated her (again) for removal and copying records. After Banner conceded its discrimination, the District Id. Court granted summary judgment to Banner and concluded that, because of her subsequent termination, McKennon was not entitled to any remedy, including back pay. appeal. Id. This judgment was affirmed on Id. ¶32 The Supreme Court reversed, concluding that McKennon could obtain relief despite her employer's discovery of evidence to support her termination. Id. termination competing interests: gaining compensation interest inevitable for discharge. the burden evidence. her initial decision balanced Court's an employee's interest in deterring and employer's carried to The at 361-63. subsequent in when discriminatory obtaining Id. it Id. at 362-63. at relief 362. sought conduct from The to rely an and employee's employer, on the however, after-acquired In this respect, the Court stated that an employer must "establish that the wrongdoing was of such severity that the employee in fact would have been terminated on 18 No. 01-1899 those grounds alone if the employer had known of it at the time of the discharge." at issue. Cf. Id. Due process considerations were never Vorwald v. Sch. Dist. of River Falls, 167 Wis. 2d 549, 557, 482 N.W.2d 93 (1992) (at-will employees have no property interest in employment). ¶33 Due process considerations and certainly at issue in this case however. protections are Brenon is a permanent civil service employee, and as such, he has a property interest in his employment pursuant Wis. Stat. § 230.34(1)(a) suspended without pay, (such to statute. employees discharged, reduced "may in See be removed, base pay or demoted only for just cause"); see also Arneson v. Jezwinski, 225 Wis. 2d 371, 393, 592 N.W.2d 606 (1999) ("An employee who may be dismissed only for 'just cause' has a property interest in continued employment which is protected by the due process clause of the federal constitution."). interest, the statutes require the Because of this property appointing authority to provide notice to the employee prior to any disciplinary action. See Wis. Stat. § 230.34(1)(b) (requiring the appointing authority to "furnish to the employee in writing the reasons for the [disciplinary] action"). Further, the employee is entitled to a hearing permitting him to address the employer's reasons for any disciplinary action. These pretermination protections are required under the due process clause pursuant to Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985). See Hanson 443 v. Madison Serv. Corp., N.W.2d 315 (Ct. App. 1989). 19 150 Wis. 2d 828, 840-46, No. ¶34 We discuss Loudermill briefly. In 01-1899 Loudermill, Loudermill was hired to work as a security guard a classified civil servant position under Ohio law for the Cleveland Board of Education. Loudermill, 470 U.S. at 535. Shortly thereafter, he was terminated when the Board of Education discovered that he had been convicted of a felony and had failed to report this conviction as required on his job application. Id. Loudermill was not afforded an opportunity to respond to the charge or challenge the dismissal. that Ohio law failed He filed a federal suit, claiming Id. to afford him, as required by the constitution, the opportunity to respond to the charges prior to his removal. Id. at 536. The District Court dismissed the claim, and the Court of Appeals reversed. Id. at 536-37. ¶35 was The Supreme Court affirmed, concluding that Loudermill not provided termination. proper The Court due process noted that procedures Ohio law before his specifically conferred a property right to Loudermill in his employment,9 and accordingly, he could not be, pursuant to due process guarantees, deprived of this substantive right except pursuant to constitutionally adequate procedures. Id. at 538, 548. The Court concluded, however, that the procedures required did not need to be elaborate; they only need to be "an initial check 9 The Ohio statute at issue entitled Loudermill to retain his position "during good behavior and efficient service," and could not be dismissed "except . . . for . . . misfeasance, malfeasance, or nonfeasance in office." Ohio Rev. Code Ann. § 124.11 (West 1984); see Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538 (1985). 20 No. against mistaken decisions essentially, a 01-1899 determination of whether there are reasonable grounds to believe that the charges against the employee are true and support the proposed action." Id. at 545-46. opportunity essential respond. Court an severity of depriving a person of the means of livelihood. Id. at 542-43. The and the retaining 546. notice employment specifically in at were the interests Id. elements noted private to The Indeed, it is this specific property interest that necessitates notice and hearing for a civil servant in Wisconsin prior to termination. ¶36 Brenon's livelihood property existed not interest only when in his UWM employment sought to and initially terminate him, but also when it sought to introduce evidence of misconduct to show termination to limit his award of back pay. As a result, UWM could not introduce evidence of his subsequent misconduct without adequate notice and hearing. Adequate notice and hearing must follow the due process requirements discussed in Loudermill. Such notice and hearing is consistent with policies of security of tenure and impartial evaluation prior to deprivation Watkins, 88 of this property Wis. 2d at 420. interest UWM in concedes employment. that it did See not provide any such notice to Brenon prior to its introduction of this evidence at the remedy hearing. Adequate notice should have been provided to Brenon at the time that UWM would have acted on the misconduct. The Commission relied on this lack of notice in justifying its decision to exclude the evidence. 21 Lack No. 01-1899 of notice provided a reasonable basis for the exclusion of the evidence. ¶37 Tracy, Requiring which determination. the notice in this Commission case also is cited in with making its In Tracy, the state treasurer discharged several civil service oil inspectors without reason. 55.10 consistent Tracy, 219 Wis. at The discharges, however, were found illegal. Id. In a subsequent investigation, the treasurer found that, for some of the inspectors, there had existed a just cause for their discharges at the time of the original illegal discharges, but that a provide reasonable an Id. at 56. time explanation had expired pursuant to for to (1933). The treasurer therefore notified these inspectors of court inspectors inspectors Wis. Stat. § 16.24 their subsequent discharges by letter. circuit those as ordered of the the date Id. Nevertheless, the treasurer to of original their reinstate these discharges, concluding that the subsequent discharges did not affect their rights to gain relief from the time of the original discharges 10 The statute which stated: at issue was Wis. Stat. § 16.24(1)(1933), No permanent subordinate or employe . . . shall be removed, suspended without pay, discharged, or reduced in pay or position except for just cause, which shall not be religious or political. In all such cases the appointing officer shall, at the time of such action, furnish to the subordinate his reasons for the same and allow him reasonable time in which to make an explanation. The reasons for such action and the answer thereto shall be filed in writing with the director prior to the effective date thereof. 22 No. to the time of the alleged subsequent discharges. The primary question was whether the 01-1899 Id. at 57-59. subsequent discharges defeated the court's reinstatement of these inspectors to the time of the original discharges. Id. at 59-60. The court held the subsequent discharges would not operate retroactively to be effective on the date of the original discharges, and that, even though valid, the subsequent discharges should not affect the reinstatements. ¶38 For Id. at 61, 63. our purposes, the court's holding is important insofar as it showed that the subsequent discharges were valid because the treasurer complied with the notice requirements. See id. at 63 (the reinstatement could occur despite "just and valid causes for discharge" which were "effective upon compliance with the conditions precedent and the expiration of time prescribed under [Wis. Stat. § 16.24(1) (1933)]"). although Tracy does not discuss an after-acquired Thus, evidence question, it does lend support to the conclusion that notice must be provided on a subsequent discharge in order to limit back pay. Therefore, the Commission also appropriately cited Tracy as consistent with its holding in this case. ¶39 Finally, the Commission appropriately relied on UWM's waiver as a legal basis in excluding the after-acquired evidence from the remedy Commissioner Murphy hearing. specifically discussion at the hearing. followed. Before the enumerated remedy the hearing, issues for Extensive briefing by both parties UWM never informed Brenon that it intended to present evidence related to Brenon's alleged document removal in order 23 No. to limit its damages on back pay. 01-1899 As the Commission noted, UWM's evidence instead indicated that the document removal issue would be addressed during the replevin action or in a subsequent disciplinary action. ¶40 As a result, UWM waived this issue. In sum, we conclude that the facts in the record and the legal basis (the civil service code, due process concerns, Tracy, and waiver) which the Commission relied on support its decision to exclude the after-acquired evidence in this case. Accordingly, we hold that the Commission's decision to exclude the after-acquired evidence was not an erroneous exercise of discretion. III ¶41 The Commission second erred successfully issue in that denying defending claims we fees of address and costs wrongful is to whether the Brenon for termination on his misconduct involving the telling of racial and sexist jokes. Brenon sought fees and costs pursuant to statute.11 He is entitled to fees and costs unless UWM can show that it was "substantially 11 justified in taking its position . . . ." Wisconsin Stat. § 227.485(3) provides: In any contested case in which an individual, a small nonprofit corporation or a small business is the prevailing party and submits a motion for costs under this section, the hearing examiner shall award the prevailing party the costs incurred in connection with the contested case, unless the hearing examiner finds that the state agency which is the losing party was substantially justified in taking its position or that special circumstances exist that would make the award unjust. 24 No. Wis. Stat. § 227.485(3). "having basis justified" "Substantially a reasonable Wis. Stat. § 227.485(2)(f). in 01-1899 means fact and law." To meet this burden, UWM must show (1) a reasonable basis and truth for the facts alleged; (2) a reasonable basis and law for the theory propounded; and (3) a reasonable connection between the facts alleged and the legal theory advanced. See Sheely v. DHSS, 150 Wis. 2d 320, 337, 442 N.W.2d 1 (1989). The Commission concluded that UWM had met this burden and denied costs to Brenon. We now review this decision by the Commission. ¶42 The question substantially Statutory interpretation presents a question of law. Wis. 2d 357, levels 639 Ass'n v. N.W.2d 733. of deference under an was statute. Educ. requires UWM in Dodgeland position whether justified See its of WERC, As interpretation 2002 WI mentioned, which we review the Commission's decision is there Id. entitled the ¶22, are questions "great weight," "due weight," and de novo. that 22, of 250 three of law: We conclude to great weight deference on this issue. ¶43 An agency's entitled to great conclusions weight on deference questions when (1) of the law are agency is charged by the legislature with the duty of administering the statute; (2) the interpretation of the statute is long-standing; (3) the agency employed its expertise or specialized knowledge in forming the interpretation; and (4) the agency's interpretation will provide uniformity and consistency in the application of the statute. 25 Kannenberg v. LIRC, 213 No. Wis. 2d 373, 384, 571 N.W.2d 165 (Ct. App. 1997). 01-1899 In this case, UWM and the Commission have provided numerous instances in which the Commission standing has applied experience. In this statute, addition, in showing such its long- instances, the Commission employs its expertise and knowledge in interpreting the statute, determining whether agencies justified in taking its position. are substantially Finally, the Commission's interpretation will provide consistency in application of this statute. For these reasons, we conclude that the Commission's interpretation is entitled to great weight deference. Accordingly, we uphold the Commission's interpretation of the statute if it is not contrary to the clear meaning of the statute, even if another interpretation is more reasonable. Id. In other words, we will uphold the Commission's decision if it has "'any rational basis.'" Dodgeland, 2002 WI 22, ¶30 (citation omitted). ¶44 The Commission concluded justified in its position. that UWM was substantially In reaching this determination, it first examined its decision to reject the ten-day suspension issued against Brenon. It noted that its key reason for finding no just cause for the suspension was that UWM failed to provide sufficient pre-disciplinary process to satisfy due process and statutory requirements. Commission concluded, The primary reason for such notice, the is to provide an opportunity for the employee to respond to the alleged misconduct and to try to persuade the employer to impose a lesser penalty. reasoning, the Commission then 26 concluded Based on this that the pre- No. 01-1899 disciplinary process provided by UWM in this case "possessed enough of the attributes of a sufficient due process proceeding to support a conclusion that respondent [UWM] had a reasonable basis in law and fact for contending standard had been met in this regard." that the just cause The Commission discussed the "attributes" present in this case as follows: Under the facts present here, appellant [1] was given notice of the specific allegation against him, i.e., the . . . [racist] joke he had repeated; [2] was given an opportunity to answer the allegation during his meeting with Mr. Sroka; [3] was made aware as a part of his meeting with Mr. Sroka that the purpose of the meeting was to discuss this particular allegation and what consequence should follow; [4] was provided notice, although not until the end of his meeting with Mr. Sroka, of the fact that a ten-day suspension was being contemplated; and [5] was provided an opportunity, through his meeting with Chief Clark, to persuade the employer to impose a lesser penalty. Based on these "attributes," the Commission determined that UWM was substantially Brenon's justified application for in its costs position and fees and on it the denied ten-day suspension. ¶45 Brenon disagrees with this conclusion for three main reasons. ¶46 First, Brenon asserts that his notice was inadequate. His only notice, he argues, was an electronic mail message from Sroka telling personnel although him matter" Sroka that but he that informed him wanted to it "no was of the talk big to him deal." allegations about "a Further, against him during their meeting, Brenon argues that he was not notified that Clark was actually considering suspension or termination. 27 No. 01-1899 Adequate notice, he asserts, would have provided him with the opportunity to prepare responses to the allegations and to obtain counsel prior to the meetings. ¶47 Second, he argues that his meetings with Sroka and Clark provided no real opportunity for him to be heard. particular, he meaningless because disciplinary argues that Clark decision. his had UWM meeting no with Clark was to change any authority administration In officials, Brenon contends, had determined his discipline before the meeting, and therefore, he was not afforded any meaningful hearing prior to discipline. ¶48 Third and finally, Brenon argues that UWM failed to follow the guidelines for disciplinary procedure imposed by the collective bargaining agreement that UWM voluntarily applied to non-union employees. that discipline must Under these union rules, Brenon contends be applied progressively, requires a reprimand before suspension. agency fails is not to substantially follow its own first Brenon asserts that an justified rules, which in citing its position Stern v. if DHFS, it 212 Wis. 2d 393, 569 N.W.2d 79 (Ct. App. 1997). ¶49 Despite these arguments, when granting great weight deference to the Commission's determination, we conclude that its decision must be upheld. In making its determination, the Commission looked collectively at all of the occurrences before UWM suspended Brenon. The Commission did not conclude that these occurrences were sufficient to provide Brenon with due process. It only determined 28 that these occurrences were No. 01-1899 sufficient for UWM to conclude that Brenon had been adequately notified and heard and that it could then suspend him. We uphold this decision. ¶50 Certainly, UWM could have and should have provided Brenon with additional notice of the allegations against him prior to any meetings in order for Brenon to adequately prepare. However, Sroka fully informed Brenon of the seriousness of his conduct at their meeting. Sroka then provided Brenon with an opportunity to respond and then warned him that his conduct must stop. Sroka informed Brenon that he was then going to talk with Clark about attempting decision. the to meeting. persuade Brenon Clark to later met with Clark, change the disciplinary Clark testified that he made the ultimate decision on discipline. Further, the fact that Clark met with Brenon indicates that Clark was willing to at least consider Brenon's explanation and change his disciplinary decision. Indeed, additional notice may have provided Brenon with more time to prepare. Further, under these facts, a different reasonable interpretation However, we could conclude rational basis. have that been the reached by Commission's the Commission. decision had a Based on the above facts, the Commission could conclude that UWM had a reasonable basis to issue a ten-day 29 No. suspension against Brenon. We therefore 01-1899 uphold this determination.12 ¶51 and The Commission also denied the application for fees costs as it related to the subject of discharge. It concluded that UWM was substantially justified in taking its position in light of representations from co-workers that Brenon was continuing Commission to noted engage that in some inappropriate of these behavior. allegations The were not corroborated; however, it held that UWM had no reason to doubt the reliability discharge. of these allegations at the time of the The allegations, it concluded, came from various sources and were consistent with Brenon's past behavior. Thus, UWM acted reasonably by taking steps to discharge Brenon because "discharge was the next step in the progressive discipline process . . . ." ¶52 Brenon contends that UWM was not substantially justified in taking this position, but does not significantly develop this argument. initial suspension was In essence, he argues that because the not justified termination was clearly inappropriate. 12 and was excessive, He also asserts that Stern v. DHFS, 212 Wis. 2d 393, 569 N.W.2d 79 (Ct. App. 1997) does not change our holding. There, the agency's failure to follow its own rules provided only part of the court's basis for not finding the agency's actions "substantially justified." Stern, 212 Wis. 2d at 399-403. Here, even if UWM's failure to follow union rules could provide the entire basis for finding that it was not substantially justified in its actions, Brenon only alleges that UWM "voluntarily" applied these rules, not that it was required to apply them, in this instance. 30 No. 01-1899 termination was not necessarily the next step in the progressive discipline. ¶53 that As a result, termination was not justified. Again, the applying decision by great the weight Commission deference, must be we conclude upheld. UWM's subsequent investigation of Brenon's conduct after it issued the suspension revealed several of his co-workers, in particular two female cadets, had serious inappropriate conduct. relied on the inappropriateness of the other conclude that facts the about Brenon's In its decision to terminate, UWM also Brenon's supervisory position. and complaints relied comments in light of Again, in light of these facts on Commission's without any rational basis. the by the Commission, decision on this we cannot issue was The decision to terminate, in the wake of the ten-day suspension, was reasonable. We therefore deny Brenon's request for fees and costs as it relates to the decision on discharge as well. IV ¶54 the In conclusion, we reverse in part and affirm in part decision of the circuit court. We reverse the circuit court's decision on the after-acquired evidence issue. result, we conclude that the Commission properly As a denied admission to UWM's evidence showing prior misconduct by Brenon to support its argument that his back pay should be limited. Notice of such misconduct could be introduced. denying costs and fees was required before such evidence We affirm the circuit court's decision to Brenon. 31 The Commission correctly No. 01-1899 determined that UWM was substantially justified in suspending Brenon and in terminating him. We uphold these determinations. By the Court. The decision of the circuit court is reversed in part and affirmed in part. ¶55 SHIRLEY S. ABRAHAMSON, participate. 32 CHIEF JUSTICE, did not No. ¶56 DIANE dissent. S. SYKES, J. I (dissenting). 01-1899.dss respectfully I read nothing in Cleveland Board of Education v. Loudermill, 470 Henry, Wis. 219 U.S. 532 53, (1985,) or N.W. 222 262 State ex (1935), rel. that Tracy v. precludes application of the after-acquired evidence doctrine of McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), in a remedy hearing under the civil service code in order to determine the proper measure of back pay damages for wrongful termination. ¶57 The McKennon later-discovered after-acquired evidence of evidence employee rule misconduct allows supplying independent justification for termination to be admitted on the issue of remedy for an earlier wrongful termination. 513 U.S. at 360-61. McKennon, "The employee's wrongdoing must be taken into account . . . lest the employer's legitimate concerns be ignored." Id. at 361. Accordingly, in determining a back pay remedy for an illegal employment termination in McKennon it was a termination Employment admission in violation Act the of of the after-acquired evidence that the Age Discrimination evidence employee would terminated on separate, later-discovered grounds. ¶58 As the majority notes, rule Loudermill in allows have been Id. at 363. held that due process requires notice and an opportunity for "'some kind of hearing' prior to the discharge of an employee who has a constitutionally protected property interest in his employment." Loudermill, 470 U.S. at 542. However, 1 "the pretermination No. 01-1899.dss 'hearing,' though necessary, need not be elaborate." 545. Id. at "The essential requirements of due process . . . are notice and an opportunity to respond." Id. at 546. There is no reason why the notice and hearing requirements of due process cannot be satisfied within the context of a remedy hearing. As long as the employee has notice and an adequate opportunity to respond on the after-acquired evidence issue, there can be no due process violation. ¶59 As the circuit court in this case held, applying the after-acquired evidence rule is fully consistent with Tracy. There, this court was concerned with the issue of whether a subsequent legal discharge could operate retroactively to the date of a prior illegal discharge. Tracy, 219 Wis. at 54. The court said no; a civil service employee illegally discharged is entitled to recovery from the time of the illegal discharge up until the subsequent legal discharge reinstated during that time period. ¶60 does as if he had been Id. at 62. Application of the after-acquired evidence rule here not operate to make a subsequent legal retroactive to the date of the illegal discharge. discharge UWM seeks only to limit Brenon's back pay recovery to damages from the date of the original wrongful discharge to the date that it says it could validly have discharged him on the independent, newlydiscovered grounds. the public This does not run afoul of Tracy. employees in Tracy were limited to a Indeed, back pay recovery "as of the date of their original illegal discharge, as 2 No. 01-1899.dss employees in the state civil service . . . up to the time of a valid discharge." ¶61 The Id. at 62. real question here is whether Brenon was "ambushed" with the after-acquired evidence issue at the remedy hearing.13 That UWM considered the "purloined documents" serious misconduct certainly came as a surprise to no one. as The parties had been waging a pitched battle over the return of the documents ever deposition. since the issue arose in Brenon's June 1996 The documents were the subject of a replevin action initially filed in 1997 and re-filed in 1998, which Brenon resisted. As the majority notes, Brenon had originally returned a single box of UWM documents upon demand after his deposition; very shortly after the Commission's decision in this matter, Brenon capitulated on the replevin action and disgorged ten more boxes of UWM documents. Majority op. at ¶¶17, 22 n.8. In addition, as the majority also notes, in arguing against any reinstatement order in this matter, UWM put Brenon on notice that if action reinstated, for he unauthorized would immediately possession of face disciplinary university property. Majority op. at ¶20 n.7. 13 I do not understand the majority to have created a rule that the after-acquired evidence doctrine can never be applied in the context of civil service or other public employment. Rather, the majority has upheld the Commission's decision to exclude the evidence in this case as a proper exercise of discretion. Majority op. at ¶40. For an example of the application of the McKennon after-acquired evidence rule in the context of a protected civil service employee, see Brogdon v. City of Klawock, 930 P.2d 989 (Alaska 1997). McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995). 3 No. ¶62 01-1899.dss It may well be that Brenon assumed the dispute over the documents would be litigated outside the forum of the remedy hearing, and was therefore surprised when the matter came up at that hearing as after-acquired evidence for purposes of limiting his back pay recovery. As the circuit court noted, however, exclusion of evidence as remedy for unfair surprise is usually appropriate only if the alternative of a continuance would cause undue delay or if the surprise results in a danger of prejudice or confusion Liability of Ins. issues. Plan, 211 Magyar Wis. v. 2d Wisconsin 296, 303, 564 Health Care N.W.2d 766 (1997). ¶63 Ordinarily, "the drastic measure of excluding a witness should be avoided by giving the surprised party more time to prepare, if possible." "continuance is usually Id. at 303-04. the more Magyar held that appropriate remedy for surprise; exclusion should be considered only if a continuance would result in a long delay." Id. at 304. The determination of whether to exclude evidence or grant a continuance to allow the surprised party to prepare is made by evaluating "whether the surprise was unfair, and, if so, whether the unfair surprise outweighed the probative value of the evidence." Id. Here, neither the hearing examiner nor the Commission applied this balancing test or considered the alternative of a continuance. ¶64 I would conclude that any unfair surprise on Brenon's part does not outweigh the probative value of the after-acquired evidence in this case. Brenon's unauthorized The after-acquired evidence relating to possession 4 of confidential university No. 01-1899.dss documents is highly probative of the proper measure of Brenon's back pay damages, provided UWM can prove that it could and would have validly terminated him on these independent grounds. Despite the lengthy and convoluted procedural history of this matter, there is no allegation that UWM's failure to disclose its after-acquired evidence theory violated any scheduling order or discovery rule. A short continuance to allow Brenon to prepare to address the issue would have accomplished the dual purpose of giving him his due process notice and opportunity to respond, and would have mitigated any unfair surprise. ¶65 I agree completely with the majority's resolution of the second issue in the case regarding the denial of Brenon's costs and fees, which is consistent with the circuit court's analysis. I would affirm the circuit court's decision in its entirety. 5 No. 1 01-1899.dss
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