EVANS v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION

EVANS v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION
2011 OK CIV APP 9
Case Number: 106939
Decided: 10/28/2010
Mandate Issued: 01/28/2011
DIVISION II
THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION II

TED EVANS, JR., Plaintiff/Appellee,
v.
OKLAHOMA EMPLOYMENT SECURITY COMMISSION, Defendant/Appellant,
and
BOARD OF REVIEW, APPEAL TRIBUNAL, and the OKLAHOMA STATE DEPARTMENT OF HEALTH, Employer, Defendants.

APPEAL FROM THE DISTRICT COURT OF COMANCHE COUNTY, OKLAHOMA

HONORABLE MARK R. SMITH, TRIAL JUDGE

AFFIRMED

Samuel L. Talley TALLEY, CROWDER & TALLEY, Norrman, Oklahoma, for Plaintiff/Appellee
Teresa Thomas Keller, OKLAHOMA EMPLOYMENT SECURITY COMMISSION, Oklahoma City, Oklahoma, for Defendant/Appellant Oklahoma Employment Security Commission

DEBORAH B. BARNES, JUDGE:

¶1 The Oklahoma Employment Security Commission (OESC) appeals the district court's order, filed on March 2, 2009, reversing the Board of Review's decision that denied unemployment compensation benefits to appellee Ted Evans, Jr.1 (Evans) pursuant to 40 O.S.2001 § 2-406, because he was terminated for "misconduct." On appeal, OESC argues that the district court erred because the decision of the Board of Review, which had affirmed the findings of fact and conclusions of law of the Appeal Tribunal, was supported by the evidence and was not contrary to law. We disagree and affirm the district court's order.

FACTS AND PROCEDURAL BACKGROUND

¶2 The relevant facts are not in dispute. Evans was employed by the Oklahoma State Department of Health (OSDH) since May 1, 1981. On August 30, 2007, he was terminated for "misconduct relating to a conflict of interest."2 At the time of his termination, Evans served as the "Chief of the Consumer Health Service"3 for the State of Oklahoma Department of Health and oversaw the regulation of the Oklahoma tattooing industry.4 He was also "responsible for administering a number of regulatory programs, including food service, body piercing, x-ray," as well as various occupational licensing. 5

¶3 Evans' son was a licensed tattoo artist and the proprietor of Eden Body Art, a tattoo business located in Lawton, Oklahoma.6 Evans also lived a short distance from Lawton.7 Although Evans never told his current supervisor, Dr. Henry Hartsell, Jr., about the potential conflict of interest between him and his son, Evans had verbally informed his previous supervisor, Rocky McElvaney.8 According to Evans, he assumed that he had disclosed the conflict of interest because "[e]verybody knew in my office, Rocky . . . knew" that his son was a tattoo artist.9

¶9 After receiving a complaint regarding Evans' involvement in a tattoo convention in which Evans' son participated, Dr. Hartsell testified that in May 2007, he relieved Evans of that portion of his job duties that involved tattoo enforcement while the matter was being investigated.

failing to disclose . . . his conflict of interest[,] and then his actions relating to directing surveyors to perform activities at his son's establishment, directing the surveyors to perform activities at other establishments in the Lawton area where his son operated a facility . . . his personal site visit to one location in Lawton[,] [a]nd his interference with the staff regarding the tattoo convention in early May.

-3-

[Evans] was discharged due to a conflict of interest in violation of the employer's policy. The terminal instance occurred when the claimant performed job functions directly involving his son's business as well as his son's competitors[]. . . . [Evans] verbally disclosed this potential conflict of interest to the employer and indicated he would take a hands off approach with regard[] to his son's business and isolate himself from involvement. As Chief he was aware of the employer's company policies and procedures regarding conflict of interest.

-4-

. . . [Evans] chose to personally perform an inspection/investigation on a shop in Lawton which was his son's competitor and threatened fine and closure. After the supervisor in charge of the inspectors had already directed a proximity check of an establishment to assure compliance with the distance statute, [Evans] directed the inspector to re-measure a Lawton competitor for potential violation of the statute after his son or his son's workers complained. He chose to personally investigate or initiate investigation of complaints regarding his son's Lawton competitors which were received from his son as well as persons working for his son. He had a subordinate normally assigned to direct and perform those tasks but chose to take them on himself.

. . . .

-6-

Even though, through oversight or error, [Evans] did not disclose his son's relationship in writing, he did do so verbally and to the appropriate parties. By his own admission, [Evans] was in a position of high authority within the agency, he was aware of the employer's policies and regulations regarding conflict of interests, he was charged with the regulation of the tattoo industry, and he was very cognizant of the potential for a conflict of interest surrounding his son's business. Therefore, his actions show an act or course of conduct evidencing such willful or wanton disregard of an employer's interest as is found in deliberate violation or disregard of standard of behavior which the employer has the right to expect of his employee. Even though [Evans] indicated he would isolate himself from his son's business, the evidence as presented indicates he knowingly and intentionally chose to become personally involved in investigations, inspections, and complaints which were directly related to his son's business and which resulted in a conflict of interest for him. Therefore, [Evans] was discharged for misconduct connected with the work and benefits should be denied.

Evans then appealed to the Board of Review, which adopted the findings of the Appeal Tribunal and affirmed its decision.

D. Plaintiff took actions in his position that were prudent under all circumstances in his general regulation of the tattooing industry which included scrutinizing boundary lines, licensure requests, and health inspections. Evidence was uncontroverted that Plaintiff did not discriminate against any tattoo artist in this state due to his disclosed conflict of interest and that Plaintiff performed his job duties when regulating all tattoo artists he came into contact with, in good faith, and according to the rules of the State Department of Health.

E. No evidence was ever shown or ever existed that demonstrates that Plaintiff's son was given special treatment by Plaintiff, in his official position, or that Plaintiff's son got his license by fraud with the help of Plaintiff. No evidence was ever shown or ever existed that demonstrates that Plaintiff was financially invested in his son's business. No evidence was ever shown that Plaintiff's actions in directing the Tattoo Industry were unlawful or against policy of Defendant/Employer and all of his actions were according to the charge of his position within the Department.

F. Plaintiff failed to correctly check the box on a Department form that he had a conflict of interest in fact, by his son being a licensed tattoo artist, in or around April of 2007 this year. The appeal tribunal states that this fact in and of itself is not determinative of misconduct since Plaintiff had previously disclosed his conflict of interest orally and to the appropriate parties.

STANDARD OF REVIEW

¶13 On appeal, "the findings of the Board of Review as to the facts, if supported by evidence, shall be conclusive and the jurisdiction of the court shall be confined to questions of law."

ANALYSIS

¶14 OESC argues that the district court erred in determining that the evidence presented did not, as a matter of law, support a finding that Evans' actions constituted disqualifying "misconduct." We are not persuaded and therefore affirm the district court's order.

¶15 The Oklahoma Employment Security Act provides that "[a]n individual shall be disqualified for [unemployment] benefits if he has been discharged for misconduct connected with his last work . . . ."

conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. (Emphasis added.)

Vester

¶16 Because unemployment benefits should be awarded to "persons unemployed through no fault of their own,"

¶17 Although this standard of misconduct is meant to balance the rights of the employer and the employee, § 2-406 should be construed narrowly and in favor of the employee. Vester at ¶ 15, 697 P.2d at 537. The employer has the burden of establishing that the employee engaged in misconduct. Tynes v. Uniroyal Tire Co.,

I. Alleged Violation of the Conflict of Interest Policy

¶18 Where a violation of an employer's policy is alleged to constitute misconduct, the burden is on the employer to establish the existence of the policy, the reasonableness of the policy, and the employee's violation of that policy. Grace Drilling Co. v. Novotny,

¶19 Here, however, OSDH's conflict of interest policy is conspicuously absent from the record.

II. Misconduct as a Matter of Law

¶20 The Appeal Tribunal, affirmed by the Board of Review, found that Evans' involvement in his son's tattoo business and its competitors constituted a "deliberate violation or disregard of [the] standard of behavior which [OSDH] has the right to expect of [its] employee."

¶21 As stated above in more detail, misconduct may be found where an employee manifests an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. Vester at ¶ 12, 697 P.2d at 537. As set forth below, we find that Evans did not act in disregard of his employer's interests, but rather he acted to meet his obligations to OSDH as his professional duties required.

¶22 The Appeal Tribunal and the Board of Review found that Evans filled out the conflict of interest form inaccurately not because he intended to deceive his supervisors, but rather out of "oversight or error."

¶25 It was not until May 12, 2007, six weeks after Evans turned in his form and after six months of job performance under the new tattooing law, that Dr. Hartsell relieved Evans of that portion of his duties regarding tattooing when he became aware that Evans' son was a licensed tattoo artist. Why Dr. Hartsell, who took over as Evans' supervisor in December 2006, was not aware of what Evans was doing in his day-to-day job and was not aware of who was licensed to tattoo in Oklahoma until five months into his supervisory position is unknown. Nevertheless, after May 12, 2007, Evans took no more actions regarding tattoo establishments but continued to perform his other duties.

¶26 Another six weeks passed. Dr. Hartsell then interviewed Evans on June 28, 2007, pursuant to an investigation, transcribed on July 10, 2007. Evans testified at the telephonic hearing held by the Appeal Tribunal that Charnek, who previously worked for Evans' son and had been terminated, had a grudge against Evans. Evans testified there were postings on MySpace by Charnek in which he said he would push this forward until he had Evans' job and also emails in which Charnek was laughing out loud at Evans' son because Evans indeed lost his job.

. . . I thought it was interesting when [counsel for OSDH] said the appearance of impropriety was the problem, and not actual impropriety. I don't think that meets the legal standard of misconduct, especially since you've got to consider the timeline. You know. . . . him being taken off the tattooing industry didn't happen until May of 2007 . . .

. . . And [the agency] knew what was going on - they knew his son was an artist.

. . . [Y]ou'll not find any testimony in there that said Dr. Hartsell didn't know his son was a tattoo artist when he didn't check the form.

. . . But they still trusted him to do his job and perform things. . . .

Everything that he did, all the times that he ordered his people to carry out the laws of the State of Oklahoma and have work performed on license inspections, distance inspections - I mean, he's doing his job. It's really just as simple as that.

¶29 Evans stated in his interview, regarding his completion of the conflict of interest form:

I made a mistake. I should have done that. I verbally told everybody, Nick Slaymaker, and Rocky [McElvaney], and everybody that my son - . . .

Nick and other people that I had conversations with in legal, and Tressa and everybody. I told everybody that my son was considering becoming an artist, and I should have filled out that - that form. . . .

Because I'd been so open about it I didn't even think about it.
. . .

That could be a conflict, yes. . . .

I've been so open about it, and I told everybody upfront, including, Rocky, that I was going to stay away from that program as much as I could and let Tressa handle it. . . .

Because that could be a conflict. . . .

I don't think I've done anything wrong other than not filling out that form. That was a stupid mistake on my part. I've tried to be open about it, honest, not provide any favoritism to anybody. You know, I just stayed away from it as much as I could, except where I seen things were going - looked to me like they were going wrong. Then I stepped in and had some input on what was going on.

CONCLUSION

¶32 In light of the Board of Review's adoption of the findings of fact made by the Appeal Tribunal, as supported by the evidence, we hold that Evans' actions, performed in the course of his duties and with no evidence of intent to act contrary to his employer's best interests, do not constitute "misconduct" as a matter of law pursuant to

¶33 AFFIRMED.

FISCHER, P.J., concurs, and WISEMAN, C.J., concurs in result.

FOOTNOTES

1 Although the Oklahoma Supreme Court case file refers to Evans as "Ted Evans," we refer to Evans as he identifies himself - "Ted Evans, Jr." (Transcription of the tape of the telephonic hearing held by the Appeal Tribunal on October 16, 2007, at Record of Proceedings Before the Board of Review, Record (R.), p. 105.)

2 R., p. 131.

3 R., p. 119.

4 Record from Comanche District Court Clerk's office, p. 58.

5 R., p. 119, (testimony of Dr. Henry Hartsell, Jr., Deputy Commissioner for Protective Health Services for the State of Oklahoma).

6 R., pp. 165-166.

7 R., p. 190.

8 R., p. 179.

9 R., p. 180.

10 "All body piercing operators, tattoo operators and artists shall be prohibited from performing body piercing or tattooing unless licensed in the appropriate category by the State Department of Health. The State Board of Health shall promulgate rules regulating body piercing and tattooing . . . ." 21 O.S. Supp. 2006 § 842.3(A).

11 R., p. 119.

12 R., p. 145.

13 R., p. 172.

14 R., p. 182. "The State Department of Health shall not grant or issue a license to a body piercing or tattoo operator if the place of business of the body piercing or tattoo operator is within one thousand (1,000) feet of a church, school, or playground." 21 O.S. Supp. 2006 § 842.3(C)(1).

15 R., p. 182.

16 Id.

17 R., p. 59, "Employer Exhibit 2," Transcription of June 28, 2007, Interview of Evans by Dr. Hartsell.

18 R., p. 183.

19 Id.

20 R., p. 44.

21 Id. According to 21 O.S. Supp. 2006 § 842.3(F), "The State Department of Health may notify the district attorney of any violation of Section 842.1 of this title or rules promulgated pursuant thereto and, in addition to any criminal penalty imposed, the Department may impose an administrative fine not to exceed Five Thousand Dollars ($5,000.00) per violation per day, and may suspend, revoke or deny the license of the establishment, or may impose both such administrative fine and suspension, revocation or denial for any such violation." (Emphasis added.)

22 R., p. 191.

23 R., p. 120.

24 R., p. 192. The OSDH conflict of interest policy was not made part of the record on appeal.

25 Id.

26 Id.

27 R., pp. 120-121 and, R., p. 5, "Employer Exhibit 1," Conflict of Interest form which states: "I have read, understand and agree to abide by Oklahoma State Department of Health Procedure Number 6-26, Conflict of Interest, issued January 2001 found in the Administrative Procedures Manual."

28 R., p. 180.

29 R., p. 193.

30 R., p. 163.

31 R., pp. 130, 142-144.

32 R., pp. 125, 189-190.

33 R., pp. 180-181, 196.

34 R., p. 131.

35 R., p. 199, Appeal Tribunal's Order of Decision.

36 R., p. 181.

37 R., pp. 199-200.

38 R., p. 202.

39 Evans' Petition for Review, Comanche County District Court Record, p. 2.

40 Comanche County District Court Record, p. 56.

41 In Vogle v. Oklahoma Employment Security Commission, this Court held that a department store worker did not engage in disqualifying misconduct when she mistakenly took a perfume tester home without the permission of her supervisor. 1991 OK CIV APP 84, ¶ 15, 817 P.2d 268, 271. We observed that, "[t]he conduct of [the employee] may have been inadvert[e]nce or ordinary negligence . . . but it does not constitute the type of conduct . . . which would divest her right to unemployment benefits" because "[her] conduct was not wilful or intentional." Id. at ¶ 14, 817 P.2d at 270.

42 The Oklahoma Supreme Court in Vester addressed the issue of misconduct in the context of employee absences. In Vester, an employee was chronically tardy for work - missing over 600 hours of work in a single year. Vester v. Board of Review of the Oklahoma Employment Security Commission, at ¶ 5, 697 P.2d at 535. The Court held that the evidence presented did not establish disqualifying misconduct, however, because the employee informed her employer that she would be absent, and because her absenteeism was a result of health-related problems. Id. at ¶ 17, 697 P.2d at 538. A finding of misconduct must include an element of willfulness or culpable negligence that was lacking because "such absences have been required to be unexplained, unexcused, unjustified or unreported . . . ." Id. at ¶ 16.

43 We note that there exists a strong state public policy in limiting the potentially negative effects of public officials with conflicts of interest. Dr. Hartsell testified that OSDH has "tremendous responsibilities . . . to uphold the common good," and that "[t]here's an expectation that [OSDH employees] will pursue [their] duties[] impartially and fairly for all . . . ." R., p. 123. The Oklahoma Constitution mandates that "the Ethics Commission shall promulgate rules of ethical conduct for state officers and employees, including civil penalties for violation of these rules." Okla. Const. art. 29, § 3(B). The Ethics Commission promulgated and the Oklahoma Legislature adopted such rules, including rules related to conflicts of interest, because they help "to develop public confidence in persons seeking or holding state office or employment, to enhance the dignity of state government, and to make it attractive to citizens who are motivated to public service." 74 O.S.2001, ch. 62, app., 257:20-1-1.

44 R., p. 200.

45 R., p. 200.

46 Id.

47 R., p. 137.

48 R., pp. 136-137.

49 R., pp. 73-77, 179-180, 189-190.

50 R., p. 131.

51 R., p. 186.

52 R., pp. 142; 151-152.

53 R., p. 182.

54 R., p. 183.

55 Transcript of Comanche County District Court hearing held on October 1, 2008, p. 26.

56 Id., pp. 31-33.

57 R., pp. 75-78.

58 R., p. 190.

59 Id.

60 In MacFarlane v. Commonwealth of Pennsylvania Unemployment Compensation Board of Review, an employee was discharged for failing to disclose certain adverse health conditions on his employment application even though he had previously disclosed the health conditions orally during an interview. 317 A.2d 324 (Pa.1974). In holding that the omission did not constitute disqualifying misconduct because the employee had no intent to deceive, the court stated:

In all the[] definitions [of "misconduct"] there is an element indicating a consciousness of wrongdoing on the part of the employe [sic]. The use of such words as "wanton or willful," "deliberate," "disregard," "intentional," and "negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design" indicates that an employe [sic] is only guilty of wil[l]ful misconduct when he is, or should be, under the circumstances, conscious that his actions are inimical to the interests of his employer.

Id.