William M. Hamman, Relator (A03-135), Luauna L. Warner, Relator (A03-136), vs. Transportation Center for Excellence, Inc., Respondent, Commissioner of Employment and Economic Development, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-135 A03-136

 

William M. Hamman,

Relator (A03-135),

 

Luauna L. Warner,

Relator (A03-136),

 

vs.

 

Transportation Center for

Excellence, Inc.,

Respondent,

 

Commissioner of Employment

and Economic Development,

Respondent.

 

Filed September 7, 2003

Affirmed Hudson, Judge

 

Department of Employment and Economic Development

 

 

William M. Hamman, 1771 Manor Lane, Hastings, Minnesota 55033 (pro se relator)

 

Luauna L. Warner, 15050 Cedar Avenue South, Suite 116-103, Apple Valley, Minnesota 55124 (pro se relator)

 

Transportation Center for Excellence, Inc., 2811 Highway 55, Suite B, Eagan, Minnesota 55121 (respondent)

 

Lee B. Nelson, Philip B. Byrne, Department of Employment and Economic Development, 390 North Robert Street, St. Paul, Minnesota 55101 (for respondent commissioner)

 

            Considered and decided by Halbrooks, Presiding Judge; Randall, Judge; and Hudson, Judge.

U N P U B L I S H E D   O P I N I O N

HUDSON, Judge

In this consolidated pro se certiorari appeal, relators William M. Hamman and Luana L. Warner seek reversal of the commissioner's representative's decisions, or in the alternative, a new hearing, due to unfair surprise, undue delay and improper evidentiary rulings.[1]  Because the scope of review is narrow and the record reasonably supports the commissioner's representative's findings that relators committed employment misconduct by attempting to open a competing school, we affirm.

FACTS

Respondent Transportation Center for Excellence, Inc. (TCE), is a driving school for training truck drivers.  Relator Hamman was the president of TCE; relator Warner was a senior vice-president.[2]  Relators each signed an employment agreement with TCE that contains a breach-of-loyalty clause and provides for termination in the event of an "employee's substantial and material breach of loyalty to the corporation."  TCE owner, Donald Keller, testified that he terminated relators for breach of their respective fiduciary duties as corporate officers by planning a competing school; but relators claimed that Keller terminated them without reason or cause. 

In the spring of 2002, TCE was in dire financial straits.  Relator Hamman testified that he was aware of TCE's financial problems.  According to Keller and two other corporate officers, Donald Vance and Sanford Hurlbut, relator Hamman approached Vance and Hurlbut in June 2002 with the news that he and relator Warner had an investor, and asked if Vance and Hurlbut wanted to join relators in forming a new competing school.  Vance and Hurlbut declined, and reported these "offers" to Keller.  Relator Hamman terminated Vance and Hurlbut on June 21, 2002, with the cursory explanation that their positions had been eliminated.  Hamman "copied" relator Warner on the termination memos he sent to Vance and Hurlbut.  Keller then terminated relator Hamman for cause later that same day because Hamman violated his fiduciary duty of loyalty to the corporation, in part by terminating Vance and Hurlbut in retaliation for their loyalty to TCE. 

Keller also terminated relator Warner for breach of her fiduciary duty to the corporation.  While not specified as a basis of termination, the commissioner's representative also found that relator Warner committed employment misconduct by her frequent use of derogatory language to describe Keller, despite warnings from Hamman to desist.

            Initially, a department adjudicator determined that relators were not disqualified from receiving unemployment benefits.  An unemployment law judge reversed the initial determinations, finding relators were discharged for employment misconduct.  The commissioner's representative issued the agency's final determinations that relators had committed employment misconduct by attempting to establish a competing business and were ineligible from receiving unemployment benefits.  This consolidated appeal follows.

D E C I S I O N

            This court applies a narrow scope of review to economic security appeals.  Markel v. City of Circle Pines, 479 N.W.2d 382, 383 (Minn. 1992).  We review the factual findings of a commissioner's determination in a light most favorable to the findings, and we leave that determination intact so long as the record reasonably supports the factual findings.  Schmidgall v. Filmtec Corp., 644 N.W.2d 801, 804 (Minn. 2002).  "When the parties have presented conflicting evidence on the record, this court must defer to the Commissioner's ability to weigh the evidence . . . ."  Whitehead v. Moonlight Nursing Care, Inc., 529 N.W.2d 350, 352 (Minn. App. 1995).

An employee discharged for misconduct is disqualified from receiving unemployment benefits.  Scheunemann v. Radisson S. Hotel, 562 N.W.2d 32, 34 (Minn. App. 1997).  Whether an employee committed a specific act is a question of fact.  Id.  Whether an employee committed misconduct that disqualifies a person from eligibility for unemployment benefits is a mixed question of law and fact.  Colburn v. Pine Portage Madden Bros., Inc., 346 N.W.2d 159, 161 (Minn. 1984).  Whether a specific act constitutes misconduct is a question of law reviewed de novo.  Schmidgall, 644 N.W.2d at 804.

Disqualifying misconduct is defined by statute as:

(1) any intentional conduct, on the job or off the job, that disregards the standards of behavior that an employer has the right to expect of the employee or disregards the employee's duties and obligations to the employer; or (2) negligent or indifferent conduct, on the job or off the job, that demonstrates a substantial lack of concern for the employment.

 

Minn. Stat. § 268.095, subd. 6(a) (2002).[3]  Determining whether an act constitutes misconduct is a "fact-based inquiry."  Ress v. Abbott Northwestern Hosp., Inc., 448 N.W.2d 519, 524 (Minn. 1989).  Generally, an employee commits misconduct by refusing to comply with an employer's reasonable requests and/or policies.  See McGowan v. Executive Express Transp. Enters., Inc., 420 N.W.2d 592, 596 (Minn. 1988).  A single deliberate act adverse to the employer may constitute misconduct.  Ress, 448 N.W.2d at 524.

            Both relators claim that they were discharged because Keller owed them money, and he wanted to avoid those financial obligations or break their contracts.  But, as to Hamman, the commissioner's representative found that relator Hamman's "actions evince an intent to disregard the employer's interest by attempting to set up a competing business and by requesting other employees to join him in that business.  Mr. Hamman was not discharged because of any claimed monetary obligations owed to him by the employer."

Similarly, with respect to relator Warner, the commissioner's representative found that

Ms. Warner's actions evince an intent to disregard the standard of behavior an employer has the right to expect.  [A]n employer has the right to expect that its employees will not attempt to set up a competing business and will not make repeated derogatory remarks to other employees, about the owner of the employer.

 

We conclude that the commissioner's representative's findings are reasonably supported in the record.  First, three separate witnesses testified that relators stated their intention of starting a competing school in close proximity to TCE; and two of the witnesses, corporate officers Vance and Hurlbut, were approached by relators in an attempt to recruit them to relators' new enterprise.  When the two officers declined, and instead showed their loyalty to TCE, relator Hamman fired them and "copied" relator Warner on the memo, thus indicating the depth of her involvement in the matter. 

The commissioner's representative's findings regarding Warner's derogatory comments toward Keller are also reasonably supported in the record.  Relator Warner claims that upon examining TCE financial records with relator Hamman and discovering the dire financial straits of the company and the extent of Keller's use of corporate funds for personal use, she could not control her temper and swore frequently, calling Keller derogatory names.  The record contains her admission as well as Hamman's testimony to that effect.  Relators' conduct constitutes employment misconduct and they were properly denied unemployment benefits.

Relators Hamman and Warner also argue that they are entitled to reversal of the commissioner's decision or, in the alternative, a new hearing, because the hearing was flawed in a number of respects.  First, relators argue that they were prejudiced by the 25-day lapse between the two hearing dates.  (The first hearing occurred on August 30, 2002; the second on September 24, 2002.)  Relators claim that by the time of the second hearing, key testimony and facts had been forgotten and they were unable to sufficiently rebut Keller's testimony from August 30, 2002.  We find no merit in this contention because the continuance was not unduly long and both relators were represented by counsel.

            Relator Hamman also argues that Keller did not timely notify relator of documents he intended to present or witnesses he intended to call.  But, as the respondent-commissioner notes in its brief, relators' remedy was to ask for a continuance.  After relators' attorney objected to the lack of notice, the unemployment law judge told relator's counsel that he (the judge) would be receptive to a motion for continuance if relators needed more time to prepare a response.  Neither relators nor their attorney asked for a continuance before responding to the testimony and documents presented.

            Relators also argue that the unemployment law judge considered impermissible hearsay and made other improper evidentiary rulings.  But "[w]ritten documents, reports, and whatever other credible hearsay are allowedfor whatever weight the examiner wishes to give them."  Jean Thorne Temp. Servs., Inc., v. Elliot, 351 N.W.2d 393, 395 (Minn. App. 1984) (explaining rules of evidence relaxed in unemployment proceedings).  Furthermore, when the parties have presented conflicting evidence on the record, this court must defer to the commissioner's ability to weigh the evidence.  Whitehead, 529 N.W.2d at 352.

Finally, relator Warner argues that she should not be singled out for making derogatory remarks about Keller because other employees called Keller derogatory names.  Indeed, Vance admitted that he had engaged in such name-calling prior to his termination by Hamman.  But violation of the employer's rules by other co-workers does not insulate an applicant from a claim of employment misconduct.  Sivertson v. Sims Sec., Inc., 390 N.W.2d 868, 871 (Minn. App. 1986), review denied (Minn. Aug. 20, 1986); Dean v. Allied Aviation Fueling Co., 381 N.W.2d 80, 83 (Minn. App. 1986).  The commissioner's representative found that Warner's derogatory name-calling was employment misconduct.  This finding is reasonably supported in the record, particularly since Warner admitted committing the acts in question.

            The record contains credible evidence that relators committed employment misconduct by planning to open a competing school and by recruiting other TCE employees to join them.  In addition, relator Warner committed employment misconduct by her repeated and admitted derogatory language about her employer.  Because the scope of review in an economic security appeal is narrow, and because the commissioner's representative's findings are amply supported in the record, we will not disturb them.

            Affirmed.

 

[1] On agency appeal, a single attorney at a single evidentiary hearing represented relators for both of their cases.  The unemployment law judge issued separate findings for each relator.  The commissioner's representative issued the final agency decision for each relator.  On appeal to this court, relators filed separate appeals, which were consolidated by order of the court.

 

[2] Some facts apply to both relators, some to just one or the other; in such instances, "relators" is used when the facts apply to both, but when speaking of a single relator, he or she is identified by name for clarity.

 

[3] Minn. Stat. § 268.095, subd. 6(a) (2002) has been amended.  2003 Minn. Laws ch. 3, art. 2, § 13.  The new definition of employment misconduct, effective August 1, 2003, is "any intentional, negligent, or indifferent conduct, on the job or off the job, (1) that evinces a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that demonstrates a substantial lack of concern for the employment."  Id. (amending Minn. Stat. § 268.095, subd. 6(a)); Minn. Stat. § 645.02 (2002) (providing laws effective August 1 of year enacted unless otherwise specified).