RICHARD E. HUGHES v. KENTUCKY HORSE RACING AUTHORITY, Successor to the KENTUCKY RACING COMMISSION, and KENTUCKY PERSONNEL BOARD
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RENDERED:
APRIL 23, 2004; 2:00 p.m.
TO BE PUBLISHED
Commonwealth Of Kentucky
Court Of Appeals
NO. 2002-CA-002580-MR
RICHARD E. HUGHES
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE WILLIAM L. GRAHAM, JUDGE
CIVIL ACTION NO. 01-CI-00717
v.
KENTUCKY HORSE RACING AUTHORITY,
Successor to the KENTUCKY RACING COMMISSION,1
and KENTUCKY PERSONNEL BOARD
APPELLEES
OPINION
REVERSING
** ** ** ** **
BEFORE:
MINTON and SCHRODER, Judges; MILLER, Senior Judge.2
MINTON, Judge:
Franklin
Circuit
Richard E. Hughes appeals the decision of the
Court
that
reversed
the
order
of
the
state
1
The Kentucky Racing Commission was abolished, re-created,
restructured, and renamed the Kentucky Horse Racing Authority by
Executive Order 2004-030, dated January 6, 2004.
2
Senior Judge John D. Miller sitting as Special Judge by
assignment of the Chief Justice pursuant to Section 110(5)(b) of the
Kentucky Constitution and Kentucky Revised Statute (KRS) 21.580.
Personnel Board.
Commission’s
The Personnel Board found the Kentucky Racing
(KRC)
termination
of
Hughes’s
employment
for
misconduct to be excessive and modified punishment to a thirtyday suspension without pay.
The circuit court disagreed, ruling
that the Personnel Board had acted arbitrarily.
We reverse the
circuit court.
Until his termination by KRC, Hughes was an employee
of that agency holding the full-time merit position of Racing
License Inspector.
African-American
At that time, he was a sixty-nine-year-old
man,
who
described
himself
as
having
worked
around thoroughbred horse racing for more than fifty years.
KRC notified Hughes by letter dated August 17, 2000,
that he had been placed on special leave with pay effective
August 18, 2000, pending an investigation of charges that he had
engaged in terroristic threatening while working at Ellis Park,
a thoroughbred track located in Henderson, Kentucky, and that he
had brought a firearm to work at Ellis Park.
In a second letter
dated August 31, 2000, KRC notified Hughes of its intention to
dismiss him effective September 19, 2000, for these charges.
The letter stated that KRC found probable cause to believe that
he had threatened the life of Gerard O’Brien, a trainer at Ellis
Park, in a parking lot at Ellis Park on August 6, 2000.
The
letter
had
repeated
further
this
stated
death
that
on
August
threat
to
David
2
9,
2000,
Paulus,
Hughes
another
horse
trainer at Ellis Park.
violated
101
Kentucky
According to the letter, these threats
Administrative
Regulations
Section 1,3 and 101 KAR 2:095, Section 9.4
(KAR)
1:345,
In addition, on
August 9, 2000, Hughes brought a gun onto Ellis Park property in
violation
of
Ellis
Section 3(12)(a).5
Park’s
rules
and
810
KAR
1:025,
Darrell Williams, head of security at Ellis
Park, located a loaded handgun in the passenger compartment of
Hughes’s car following an interview with Hughes on August 9,
2000,
in
which
Hughes
confirmed
to
Williams
that
he
had
threatened to kill O’Brien and that he had a gun with him at the
track.
KRC’s
letter
further
stated
that
Hughes’s
racing
license,6 which permitted him to perform his job duties at the
3
Appointing authorities may discipline employees for lack of good
behavior or the unsatisfactory performance of duties.
4
State Workplace Violence Policy, infra.
5
The commission in its discretion may refuse to issue a license to
an applicant, or may suspend or revoke a license issued, or order
other disciplinary measures, on the following grounds:
(12)
Possession
on
association
grounds,
permission from the commission or stewards, of:
(a)
without
written
Firearms[.]
6
KRS 230.310 authorizes KRC to control horse racing in the
Commonwealth through the issuance of racing licenses for participants.
Virtually everyone who works at thoroughbred race tracks during a race
meeting, including racing officials employed by KRC, must carry a
valid license for access to the facility and grounds.
See 810 KAR
1:025, Section 5(8)(a) and Section 8.
KRS 230.320 authorizes KRC to
deny, revoke, or suspend the license for anyone who violates any
statute, administrative regulation, or condition of KRC. See 810 KAR
3
various thoroughbred tracks around the state, had been suspended
at a hearing by the Ellis Park Stewards on August 23, 2000.7
In
addition, Ellis Park management had ejected him from the track
and refused to allow him further access.8
The suspension of the
license and the ejection barred Hughes from Ellis Park; and this
bar would also be recognized and enforced by the other Kentucky
tracks, which meant that Hughes would not be able to perform his
job at any track in Kentucky.
By agreement between Hughes and KRC, the termination
was
held
in
abeyance
pending
an
evidentiary
hearing
on
the
license suspension by a KRC hearing officer on October 9, 2000.
KRC formally terminated Hughes effective October 13, 2000.
As
a
classified
state
employee
with
status,
Hughes
appealed the termination to the Personnel Board on December 12,
1:025, Section 3. License disputes are typically dealt with summarily
and informally by track stewards, but the licensee has the right to a
full administrative appeal to KRC. See 810 KAR 1:025, Section 1(2).
7
On August 23, 2000, the three Racing Stewards at Ellis Park
ordered that Hughes’s racing license be suspended for misconduct for
the remainder of the 2000 calendar year. A KRC hearing officer
conducted an evidentiary hearing concerning the stewards’ order on
October 9, 2000, and in an order dated December 27, 2000, recommended
that the stewards’ order be affirmed by KRC. That suspension is the
subject of a separate appeal to the Franklin Circuit Court.
8
KRC recognizes in 810 KAR 1:025, Section 7, the independent
“common law rights of associations to eject or exclude persons,
licensed or unlicensed, from association grounds.” See also James v.
Churchill Downs, Inc., Ky.App., 620 S.W.2d 323 (1981) (recognizing the
common law right to exclude persons from the track).
4
2000.9
On
February
Personnel
Board
13,
2001,
conducted
the
an
Hearing
Officer
accordance with KRS Chapter 13B.10
the
hearing
administrative
for
in
The Hearing Officer rendered
his “Findings of Fact, Conclusions of Law and Recommended Order”
on February 21, 2001.
By way of background, the Hearing Officer
recited verbatim KRC’s findings.
However, the Hearing Officer’s
findings of fact diverged significantly from those made by KRC.
The
Hearing
Officer
found
that
even
though
Hughes
admitted
threatening to kill O’Brien on August 6, 2000, he actually found
no evidence of intent on Hughes’s part to follow through with
the
threat.
Furthermore,
the
Hearing
Officer
found
that
a
“wounded” Hughes delivered the death threat in reaction to a
racially charged retort that O’Brien had aimed at Hughes at the
track
about
two
August 6, 2000.
“I’m
not
differing
hours
before
the
parking
lot
encounter
on
The Hearing Officer found that O’Brien said,
going
to
be
from
KRC’s
any
nigger’s
charges,
the
Cheshire
Hearing
cat.”
Officer
Further
did
not
believe from the evidence that Hughes repeated the threat on
O’Brien’s life to Paulus or Williams on August 9, 2000.
the
presence
August 9,
of
the
2000,
the
9
in
Hughes’s
Hearing
Officer
KRS 18A.095(2).
10
gun
KRS 18A.095(18).
5
car
at
Ellis
dismissed
it
As for
Park
on
as
an
inadvertent coincidence.
The Hearing Officer believed Hughes’s
testimony that he had a permit to carry a concealed weapon, that
he customarily carried the weapon with him as he traveled about
the state, and that he had simply failed to stop by the motel to
leave his weapon before coming to the track on the morning of
August 9, 2000.
The Hearing Officer agreed that KRC had grounds to
discipline
Hughes
for
misconduct
associated
with
the
work,
stating
(1)
Hughes was guilty of misconduct, as that term is
defined by 101 KAR 1:345, Section 1, in his use
of language during his angry outburst on August 6
which communicated a threat to do physical
violence to O’Brien.
(2)
Hughes violated 810 KAR 1:[025], Section 3(12),
by
possession
of
a
firearm
on
association
grounds.
However, the Hearing Officer’s conclusions then departed from
KRC’s in that he concluded that
(3)
Hughes did not violate the state’s workplace
violence policy [101 KAR 2:095, Section 9](1)(b).
Although his words make out a prima facie case of
terroristic threatening, the evidence failed to
establish that the angry remarks, uttered in the
context of the parking lot exchange between
O’Brien and Hughes, caused O’Brien to have a
reasonable belief that his health or safety was
at risk.
The situation strongly implies that
O’Brien understood that these were angry words
from a black man who had been offended by the use
of the word “nigger.”
O’Brien did not want the
situation to go any further, but he registered
the remark with the track steward merely as a
defensive posture should Hughes continue to
6
protest.
The subsequent recitation of the same
words, first to Paulus, then to Williams, were
out of context. It was here that Hughes made his
most serious error by confirming his intention to
Williams as a means of underscoring his anger.
Yet the Hearing Officer is persuaded he meant
nothing more than to communicate the depth of his
feeling to Williams, whom he trusted as an old
friend who would understand.
He seriously
miscalculated the position that Williams would be
in, as director of security, in hearing the
threatening words repeated and confirmed.
(4)
The
Hearing
Officer
finds
the
penalty
of
termination excessive and erroneous under the
circumstances.
There are mitigating factors
which powerfully influence the evaluation of the
seriousness of the offense and the appropriateness of the penalty.
Hughes['s] situation is
examined under KRS 18A, a statute that requires a
just and proper cause.
(5)
Grave sanctions should not be applied to the kind
of verbal threat that expresses transitory anger
rather than a settled purpose to carry out the
threat.
While it must be recognized that the
increasing
incidence
of
workplace
violence
requires vigilance by any employer, the principles of fairness and just cause cannot be
sacrificed because of the challenges facing management in enforcing policies against aggressive
behavior.
(6)
On the charges of misconduct, as grounds for
termination, the Hearing Officer finds that the
penalty of forfeiture of his job is inappropriate
for the utterance of angry words to O’Brien in
reaction to a racial slur and additional rude
conduct during their parking lot conversation.
Although Hughes’[s] subsequent handling of the
situation magnified the original problem, these
complications
occurred
independent
of
the
original threat and do not convert it into a
dischargeable offense.
(7)
The possession of a handgun was the result of an
oversight. Although [Ellis Park’s Chief Security
7
Officer] Williams testified that there have been
other occasions of ejecting people from the Park
for possession of firearms, there is no evidence
to lead the Hearing Officer to believe that such
ejections arose from similar circumstances to
finding a firearm, sealed in a pouch, in a locked
car in the parking lot.
While Hughes violated
both the KAR regulation and Ellis Park rules,
this infraction would not warrant termination of
his employment.
(8)
The KRC also advocates that discharge is warranted because Hughes has lost the ability to
fulfill his job requirements.
The ejection from
Ellis Park results in being barred from not only
that track, but other tracks in the state. This
was compounded by the suspension of Hughes’[s]
license by the stewards, which also prohibited
him from being on the premises, independent of
the Ellis Park ejection. Either of these circumstances results in Hughes being unable to perform
the duties of the license inspector.
There are
no other administrative jobs available on the
relatively small staff of the KRC.
(9)
The
Hearing
Officer
concludes
that
these
complications in the ability of Hughes to perform
his job do not constitute independent grounds for
dismissal.
The ejection from Ellis Park is not
irrevocable. Although Williams testified that he
would not support setting it aside under the
present circumstances, he is not the decisionmaker.
Hughes has made no application to have
his ejection lifted and his privilege to return
to the track reinstated.
The Hearing Officer
considers Williams’[s] opinion as simple conjecture.
If Ellis Park would reinstate Hughes,
he would be able to perform his normal duties.
Similarly, as of the writing of these recommendations, suspension of Hughes’[s] license has
not been finalized by the KRC.
If that Commission were to act in Hughes’[s] favor, another
impediment to performing his normal duties would
be removed.
Even if the suspension is upheld,
Hughes may apply for a new license for 2001.
This application would have to be reviewed by a
panel, who would make recommendations to the KRC.
8
The KRC could well determine that the suspension
of Hughes['s] license during 2000 was a sufficient
penalty, and permit him to be licensed for 2001.
Such a result may be suggested by the stewards['s]
failure to recommend that Hughes’[s] license be
suspended for 2001. The testimony at the hearing
clearly established that the stewards have such
authority and have exercised it in the past.
....
(11) It is recommended that Hughes’[s] termination be
converted to a thirty (30) day suspension.
Such
a penalty should clearly communicate to Hughes
that his conduct was inappropriate and that it
cannot be justified by his sense of personal
offense.
There was no evidence that Hughes’[s]
job performance was in any other way unsatisfactory, or that he is not capable of improving
his conduct and learning the lessons that this
wrenching episode impose.
The
Hearing
Officer
concluded
that
following
the
thirty-day suspension, Hughes should be immediately reinstated
to his former position, or to a position of like status and pay,
and
otherwise
hearing
adopted
be
officer’s
all
of
made
whole.
recommended
the
KRC
order,
hearing
filed
but
exceptions
to
the
the
Personnel
Board
officer’s
findings
and
recommendations in a final order dated May 15, 2001.
KRC appealed to the Franklin Circuit Court.11
In an
order entered November 22, 2002, the circuit court found a lack
of substantial evidence in the whole record to support overturning
11
the
dismissal
and
concluded,
KRS 13B.140 and KRS 18A.100.
9
therefore,
that
the
Personnel
Board’s
action
was
arbitrary.
In
so
doing,
the
circuit court found:
The record reflects that Mr. Hughes threatened
the life of a co-worker while at work on the Ellis
Park premises. There is also credible evidence in the
record that he repeated this threat to another coworker and demonstrated his ability to carry out this
threat by showing the loaded weapon concealed in his
car.
The safety of the workplace is of paramount
importance in such circumstances.
The circuit court reversed the Personnel Board and ordered that
the KRC’s decision be reinstated.
Hughes then appealed to this
Court.12
On appeal to this Court, KRC urges us to affirm the
circuit court by arguing that its decision to terminate Hughes
trumps the conflicting decision by the state’s Personnel Board
because the General Assembly’s grant of authority to regulate
horse racing confers on KRC an “over-arching responsibility []
to protect the public’s interest by continuing and maintaining
the integrity, honesty and the orderly conduct of thoroughbred
racing.”
According to KRC, this “over-arching responsibility”
exempts KRC from the provisions of the state’s merit system.
We
recognize that KRC is an agency of state government created to
regulate the conduct of horse racing and pari-mutuel wagering on
horse racing within the Commonwealth.13
12
KRS 13B.160.
13
KRS 230.225(1).
10
In matters relating to
the
state’s
General
Assembly
provisions
system
system
as
of
has
made
other
provided
in
personnel
KRC
state
KRS
administration,
subject
agencies,
18A.005
to
to
the
however,
same
specifically
KRS
the
statutory
the
18A.200.
merit
Had
the
legislature intended to exempt KRC from the state merit system,
it could easily have done so as it did for other entities of
state government in KRS 18A.010(3).
case,
KRC
more
realistically
From the outset of this
acknowledged
Hughes’s
appeal to the Personnel Board under KRS 18A.095.
when it terminated him.
right
of
It said so
Accordingly, we reject KRC’s preemption
argument.
When reviewing the action of an administrative agency,
a
court
is
concerned
arbitrary,
which
is
erroneous
means
not
with
defined
whether
as
supported
the
“clearly
by
agency’s
action
erroneous”;
substantial
was
clearly
evidence.14
“Substantial evidence” is evidence which, when taken alone or in
light of all the evidence, has sufficient probative value to
induce conviction in the minds of reasonable persons.15
In reviewing whether an agency’s decision is supported
by substantial evidence, the reviewing court must adhere to the
principle that the agency, as fact finder, is afforded great
14
Kentucky Bd. of Nursing v. Ward, Ky.App., 890 S.W.2d 641, 642
(1994).
15
Bowling v. Natural Resources and Environmental
Cabinet, Ky.App., 891 S.W.2d 406, 409 (1994).
11
Protection
latitude
in
its
evaluation
of
the
evidence
heard
credibility of the witnesses appearing before it.16
and
the
In addition
to the principles established by case law, the judicial review
process
of
Kentucky’s
KRS 13B.150(2)
administrative
circumscribe
the
scope
procedures
act
at
judicial
review
of
of
factual determinations made in an agency’s due process hearing,
as follows:
“The court shall not substitute its judgment for
that of the agency as to the weight of the evidence on questions
of
fact.”
What
constitutes
cause
for
dismissing
a
merit
employee is a fact question for determination by the Personnel
Board.17
In
the
case
at
hand,
the
Personnel
Board
properly
placed the burden of proof and the ultimate burden of persuasion
on KRC to demonstrate by a preponderance of the evidence the
propriety
of
misconduct.18
sufficient
Hughes,
but
the
penalty
it
had
imposed
for
Hughes’s
Since the Personnel Board found that KRC produced
evidence
to
found
that
sustain
KRC
did
a
finding
not
of
sustain
misconduct
its
burden
by
of
proving that termination was the appropriate penalty, the issue
on appeal is whether the evidence favoring termination was so
16
Kentucky State Racing Commission v. Fuller, Ky., 481 S.W.2d 298,
308 (1972).
17
Perkins v. Stewart, Ky.App., 799 S.W.2d 48, 51 (1990).
18
KRS 13B.090(7); Commonwealth, Transportation Cabinet v. Woodall,
Ky.App., 735 S.W.2d 335 (1987).
12
compelling that no reasonable person could have found facts as
the Personnel Board did.19
Although we might have reached a
different result, we cannot say from our review of the record
that the evidence compelled different findings.
An administrative agency's interpretation of its own
regulations is entitled to substantial deference.20
A reviewing
court is not free to substitute its judgment as to the proper
interpretation
of
the
agency's
interpretation
is
compatible
regulations
and
as
consistent
long
with
as
the
that
statute
under which it was promulgated and is not otherwise defective as
arbitrary
address
or
capricious.21
KRC’s
argument
With
on
appeal
that
standard
that
the
in
mind,
Personnel
we
Board
misconstrued the state’s workplace violence policy regulations
as
promulgated
by
the
Secretary
of
the
Personnel
Cabinet,
101 KAR 2:095, Section 9(1)(a) and (b) and (2)(a) and (c), which
provide:
(1)
Workplace
include:
(a)
violence
See Bourbon County Board
873 S.W.2d 836, 838 (1994).
21
be
prohibited
and
The attempted, threatened, or actual conduct
of a person who endangers or is likely to
endanger the health and safety of state
employees or the general public; or
19
20
shall
of
Adjustment
v.
Currans,
Ky.App.,
Camera Center, Inc. v. Revenue Cabinet, Ky., 34 S.W.3d 39 (2000).
City of Louisville By
798 S.W.2d 454, 458 (1990).
and
Through
13
Kuster
v.
Milligan,
Ky.,
(b)
(2)
A
threatening
statement,
harassment
or
behavior
that gives a state employee or
member of the general public reasonable
cause to believe that his health or safety
is at risk.
Examples of prohibited workplace violence shall
include:
(a)
Threats of harm;
....
(c)
In
an
Intimidating,
threatening,
or
directing
abusive
language
toward
another
person,
either
verbally,
in
writing
or
by
gesture....
obvious
reference
to
508.080(1)(a),22
KRS
the
Hearing Officer concluded that Hughes’s threat “[made] out a
prima facie case of terroristic threatening.” The offense of
making a terroristic threat may be complete without evidence
that the accused intended to carry out the threat and without
evidence that the victim was placed in reasonable apprehension
of
immediate
Hughes’s
injury.23
“terroristic
By
comparison,
threat”
did
not
when
concluding
violate
that
Subparagraph
(1)(b), the Hearing Officer found that Hughes’s threat was an
expression of “transitory anger” lacking intent on his part to
22
[A] person is guilty of terroristic threatening in the third
degree when:
(a) He threatens to commit any crime likely to result in
death or serious physical injury to another person....
23
Thomas v. Commonwealth, Ky.App., 574 S.W.2d 903, 908-910 (1978).
14
follow through with the act threatened.
the
Hearing
Officer
found
that
the
In further comparison,
threat
did
not
“cause[]
O’Brien to have a reasonable belief that his health or safety
was at risk.”
Since the language of Subparagraph (1)(b) differs
substantially from that of the terroristic threatening statute
by
specifically
adding
the
requirement
that
the
threatening
statement or behavior “give[] a state employee or member of the
general public reasonable cause to believe that his health or
safety
is
at
risk,”
we
cannot
say
that
the
Hearing
Officer
misconstrued the actual language of Subparagraph (1)(b) when he
concluded that Hughes had not violated this regulation because
the threat did not actually make O’Brien apprehensive for his
own safety at any time.
In upholding the Personnel Board’s
interpretation of its own regulation here, we are not endorsing
an interpretation of the regulation that would require evidence
of the state of mind of the author of a threatening statement
that the author actually intends to carry out the threat or even
that
the
author
intends
to
frighten
the
victims.
It
is
sufficient that the threatening statement is made causing the
victim reasonable apprehension.
We
do
not
address
the
possible applicability of Subparagraph (1)(a) because KRC did
not
present
that
argument
to
consideration.
15
the
Personnel
Board
for
its
In the final analysis, KRS 18A.095(23)(c) vests the
Personnel Board with the exclusive authority, if “[it] finds
that the action taken by the appointing authority was excessive
or erroneous in view of all the surrounding circumstances,” to
direct the appointing authority to alter, modify, or rescind the
disciplinary action.24
The Board here found just cause existed
to discipline Hughes for misconduct, but further found that a
thirty-day
suspension
was
more
based on all the circumstances.
appropriate
than
termination
The Personnel Board exercised
its statutory prerogative to alter or modify Hughes’s penalty as
excessive.
Again, we might have imposed a different penalty,
but under the facts as found by the Personnel Board, we cannot
say that the decision was arbitrary, capricious, or an abuse of
discretion.
In accordance with the foregoing, the order of the
Franklin Circuit Court is reversed and the final order of the
Personnel Board is reinstated.
ALL CONCUR.
24
See Wilson v. Bureau of State Police, Ky.App., 669 S.W.2d 18, 2122 (1984) (interpreting similar language in a prior version of
KRS 18A.095) (reversed on other grounds in Howard v. Transportation
Cabinet, Ky., 878 S.W.2d 14 (1994).
16
BRIEF FOR APPELLANT:
Herbert L. Segal
Everett C. Hoffman
SEGAL STEWART CUTLER LINDSAY
JANES & BERRY, PLLC
Louisville, Kentucky
BRIEF
FOR
APPELLEE
KENTUCKY
HORSE RACING AUTHORITY:
J. Bruce Miller
J. BRUCE MILLER LAW GROUP
Louisville, Kentucky
NO BRIEF FOR APPELLEE KENTUCKY
PERSONNEL BOARD
17
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