Kentucky Retirement Systems v. Nancy Gauze ( 2020 )

RENDERED: SEPTEMBER 4, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
MODIFIED: DECEMBER 4, 2020; 10:00 A.M.
Commonwealth of Kentucky
Court of Appeals
NO. 2018-CA-1753-MR
KENTUCKY RETIREMENT SYSTEMS APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
v. HONORABLE PHILLIP J. SHEPHERD, JUDGE
ACTION NO. 16-CI-00066
NANCY GAUZE APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, COMBS, AND MAZE, JUDGES.
COMBS, JUDGE: The Kentucky Retirement Systems (the Appellant) appeals an
opinion and order of the Franklin Circuit Court of October 25, 2018, reversing the
agency’s decision to deny disability benefits to Nancy Gauze (the Appellee).
Appellant argues that the Franklin Circuit Court erred by not dismissing the case
for lack of prosecution pursuant to CR1 77.02 and by re-weighing the evidence.
We disagree with both arguments. Thus, after our review, we affirm.
Gauze worked as a Food Service Manager for the Ashland
Independent School District for twenty-three years. Her duties included: (1)
preparing breakfast and lunch for Ashland Middle School students; (2) recording
inventory; (3) supervising food staff; and (4) stocking orders. She worked
approximately eight hours per day. Her job required her: (1) to stand or walk
during most of her shift; (2) to lift boxes of food products weighing as much as
forty pounds or more; and (3) to bend, stoop, and squat repeatedly. Over the
course of the years, Gauze testified that her legs and arms would often “go numb.”
Gauze requested and received accommodations from her employer.
Floor mats were laid on tile floors and she was provided non-skid shoes. A hand-
cart was made available to her for use in open areas. However, even with these
accommodations, Gauze was unable to perform all her duties. It became necessary
for co-workers to assist her. In light of her need of assistance, Gauze’s supervisor
expressed concern about her ability to do her job.
In order to remedy some of her conditions, Gauze planned physician-
recommended surgery. Her last day of physical work prior to her surgery was
December 18, 2013. On December 27, 2013, Gauze underwent surgery to address
1
Kentucky Rules of Civil Procedure.
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issues pertaining to: (1) lumbar spinal fusion; (2) rheumatoid arthritis; (3) lumbar
disc disease; (4) fibromyalgia; (5) cervical disk budge; (6) dizziness; and (7)
numbness. Her recovery was gradual. Her neurosurgeon eventually cleared her to
return to work, but he restricted her to lifting no more than fifty pounds -- and
doing so no more than twice a day. Gauze informed only her direct supervisor of
her restrictions. He advised her there was no “light duty” work available in the
school system for which she qualified. “Light work” is defined in KRS2
61.600(5)(c)2 as follows:
Light work shall be work that involves lifting no more
than twenty (20) pounds at a time with frequent lifting or
carrying of objects weighing up to ten (10) pounds. A
job shall be in this category if lifting is infrequently
required but walking and standing are frequently
required, or if the job primarily requires sitting with
pushing and pulling of arm or leg controls. If the person
has the ability to perform substantially all of these
activities, the person shall be deemed capable of light
work. A person deemed capable of light work shall be
deemed capable of sedentary work unless the person has
additional limitations such as the loss of fine dexterity or
inability to sit for long periods.
She did not inform or consult with anyone else in the school system, including the
Human Resources Department. She simply resigned, and her last day of paid
employment was September 30, 2014.
2
Kentucky Revised Statutes.
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Gauze filed an application for early retirement benefits based on her
disability due to the issues listed above. She explained she was unable to lift and
stand for a long period of time. After reviewing her application, the Appellant’s
Medical Review Board recommended denial.
Gauze then requested and was granted an administrative hearing.
After the hearing, the hearing officer prepared findings of fact, conclusions of law,
and a recommended order upholding the Medical Review Board’s denial of
benefits. In relevant part, the recommended order states as follows:
Claimant has failed to establish disability based upon the
cumulative effect of her conditions. Claimant failed to
present her required restrictions to anyone else other than
her direct supervisor. The Record does not show whether
Claimant discussed her claim with Human Resources
prior to filing her notice of resignation as was
recommended by her physician. Regardless, Claimant
testified that she was given multiple accommodations,
and that her co-workers were there for assistance when
she needed it. None of Claimant’s treating physicians
provided statements which would render her conditions
debilitating. Claimant claimed that the majority of her
conditions were controlled medicinally, and the records
did not indicate that these medications were ever
discontinued. For these reasons, Claimant has failed to
establish disability based upon the cumulative effect of
her conditions.
(Record (R.) at 501-02.) After the Appellant’s Disability Appeals Committee met,
the Appellant’s Board of Trustees adopted the hearing officer’s recommended
order.
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Contending that the record contained substantial evidence to show
that she was unable to perform her duties due to a disability, Gauze appealed to the
Franklin Circuit Court. Appellant filed its answer on February 5, 2016, but no
action was taken on the case for more than a year. The Clerk of the Franklin
Circuit Court issued a notice to dismiss for lack of prosecution. Gauze filed no
pleadings to show good cause why the case should not be dismissed, and she took
no other action to pursue her appeal. Nevertheless, the Franklin Circuit Court, sua
sponte, issued an order establishing a briefing schedule. Following the submission
of briefs, the Franklin Circuit Court reversed the Appellant’s final order, finding
that it was not supported by substantial evidence and ordering Appellant to
award Gauze disability benefits. This appeal followed.
KRS 13B.160 governs this Court’s review of a circuit court’s prior
review of a final order of an administrative agency. Therefore, our Court must
adhere to KRS 13B.150(2). We may not substitute our judgment for that of the
agency as to the weight of the evidence on questions of fact. KRS 13B.150(2).
Our review of an administrative action is generally focused on the question of
arbitrariness. Kaelin v. City of Louisville, 643 S.W.2d 590, 591 (Ky. 1982). If
substantial evidence exists to support the agency’s findings, those findings must be
upheld despite the presence of conflicting evidence. Ky. Comm’n on Human
Rights v. Fraser, 625 S.W.2d 852, 856 (Ky. 1981). Substantial evidence is
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“evidence of substance and relevant consequence, having the fitness to induce
conviction in the minds of reasonable men.” Ky. State Racing Comm’n v. Fuller,
481 S.W.2d 298, 308 (Ky. 1972). As the sole fact finder, an administrative agency
has broad discretion in evaluating the evidence. Aubrey v. Office of Attorney
General, 994 S.W.2d 516, 519 (Ky. App. 1998). However, its conclusions of law
are subject to our de novo review. Mill Street Church of Christ v. Hogan, 785
S.W.2d 263, 266 (Ky. App. 1990).
Appellant first argues that the circuit court erred by failing to dismiss
the case for lack of prosecution pursuant to CR 77.02(2). CR 77.02 is essentially a
“housekeeping rule” utilized to remove stale cases from a court’s docket. This rule
was created for use by trial courts -- not by appellate courts. It provides as follows:
At least once each year trial courts shall review all
pending actions on their dockets. Notice shall be given
to each attorney of record of every case in which no
pretrial step has been taken within the last year, that the
case will be dismissed in thirty days for want of
prosecution except for good cause shown. The court
shall enter an order dismissing without prejudice each
case in which no answer or an insufficient answer to the
notice is made.
CR 77.02(2) (emphasis added). In the case before us, the Franklin Circuit Court
was functioning as an appellate court. KRS 61.645(14) (“Any person adversely
affected by a decision of the board . . . may appeal . . . to the Franklin Circuit
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Court”) (emphasis added). Because the Franklin Circuit Court was acting in an
appellate capacity, arguably CR 77.02 may not be applicable at all.
Regardless, a court always enjoys discretion in deciding whether or
not to dismiss a case for lack of prosecution. Trial courts have wide discretion in
dismissing cases under CR 77.02. Honeycutt v. Norfolk S. Ry. Co., 336 S.W.3d
133, 135 (Ky. App. 2011). The circuit court did not abuse its discretion
proceeding as it did.
Appellant next argues that the circuit court erred by re-weighing the
weight of the evidence. We disagree.
A court cannot substitute its judgment for that of an administrative
agency as to the weight given to evidence bearing on fact issues. KRS 13B.150(2).
The agency as trier of fact “is afforded great latitude in its evaluation of the
evidence heard and the credibility of witnesses appearing before it.” Bowling v.
Nat. Res. and Envtl. Prot. Cabinet, 891 S.W.2d 406, 409-10 (Ky. App. 1994).
With that guideline in mind, the circuit court observed that a
reviewing court may overturn an agency’s decision if the evidence in favor of the
party bearing the burden of proof “is so compelling that no reasonable person
could have failed to be persuaded by it.” Ky. Ret. Sys. v. Ashcraft, 559 S.W.3d
812, 816 (Ky. 2018) (citing McManus v. Ky. Ret. Sys., 124 S.W.3d 454, 458 (Ky.
App. 2003)). The circuit court reversed after “find[ing] the agency’s final order
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is . . . [w]ithout support of substantial evidence on the whole record . . . .” KRS
13B.150(2)(c).
At issue is the sometimes elusive -- if not necessarily subjective --
determination of what is truly substantial evidence. There is no doubt that there is
ample evidence in this record supporting both sides. However, the mere quantity
of evidence is not the test. As noted by both Ashcraft, supra, and McManus,
supra, the qualitative element of the evidence is critical, i.e., that it is “so
compelling” that “no reasonable person could have failed to be persuaded by it.”
Ashcraft, 559 S.W.3d at 816.
In the case before us, the circuit court carefully reviewed the
evidence, recounting in considerable detail the rigorous tasks that Gauze performed
daily in the course of her twenty-three years of service. She was on her feet almost
constantly for eight hours and performed a variety of functions, including heavy
lifting of food products to stock the cafeteria. The court observed as follows:
. . . However, according to the job descriptions in the
record, the heaviest items that she lifted unassisted were
frozen foods and sauces, which weighed approximately
thirty (30) to fifty (50) pounds. RO at 16; AR at 6, 9.
She was required to carry these and other items
approximately eighteen (18) feet and did so for roughly
two and a half (2.5) hours of each day. AR at 6, 9.
Gauze also testified that she lifted eighty (80) pounds of
frozen ground beef, thirty (30) pounds of corn, and thirty
(30) pounds of green beans. RO at 16. She testified that
her job required repetitive “lifting, bending, stooping,
[and] squatting.”
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When asked about “the physical effort requirements
for the employee to perform his or her job duties as of the
last day worked,” both Gauze and her employer noted
that the requirements were “[v]ery hard work on the
back, hands, arms, legs and feet.” AR at 6, 9. Her
supervisor also submitted a memo dated August 26,
2014, in which she explained that “[t]he Food Service
Manager position does not have a light duty. There is a
lot of lifting and standing. Employee must be able to
stand for a long period of time and lift product.”
Opinion and Order, Franklin Circuit Court, October 25, 2018, p. 2.
In a carefully-crafted, well-reasoned opinion, the court undertook a
thorough analysis of all the evidence in this case. Its opinion recited the elements
of KRS 13B.150(2) setting forth the statutory criteria that both govern and
circumscribe the role of a court reviewing a final order of an administrative
agency. The court reasoned that the quality of the evidence wholly supported the
conclusion that Gauze presented evidence so compelling that no reasonable person
could deny her eligibility for disability benefits.
The circuit court reasoned as follows in a portion of its opinion
entitled, “The Agency’s Decision is Not Supported by Substantial Evidence”:
Though the parties presented various arguments, this
case can be resolved under the “substantial evidence”
standard. The evidence available in the Administrative
Record reveals the following: Gauze suffered from
degenerative disc disease and underwent a L4-5
laminectomy, bilateral foramintotomies at L3-4, L4-5,
and L5-S1, excision of a left L4 synovial cyst, and
fosterolateral fusion surgery on December 27, 2013.
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Gauze’s neurosurgeon, Dr. Powell, did not release her to
return to work until August 6, 2014. He conditioned her
release on a fifty (50) pound lifting restriction, and she
was instructed not to lift more than twice a day. Dr.
Powell advised her that this lifting restriction must be
accommodated; otherwise, Gauze must seek permanent
disability status. However, due to the heavy and repeated
lifting required of a Food Service Manager, Gauze’s
employer could not accommodate the lifting restrictions
imposed by Dr. Powell. Accordingly, her last day of paid
employment was on September 30, 2014. Despite this
evidence, the Agency denied Gauze’s application and
now argues that the lifting restrictions imposed by
Gauze’s neurosurgeon were “minor.” [citations omitted].
However, Gauze’s employer indicated that she could not
accommodate the restrictions and stated that there was no
light duty work available for Gauze. This was supported
by the memo submitted by Gauze’s supervisor, the job
descriptions submitted by Gauze and her employer, and
the testimony of Gauze. Thus, the Court finds
Respondent’s characterization of the restriction as
“minor” to be wholly unpersuasive. It is clear that,
regardless of how “minor” the restriction, it could not be
accommodated.
The fact that the restriction could not be
accommodated is not altered by the presence of a
handcart or the assistance that Gauze previously received
from her coworkers. Though Respondent refers to these
forms of assistance to support its denial of Gauze’s
application, the record clearly indicates that Gauze
received such assistance prior to her surgery and the
resulting lifting restrictions. In addition, her supervisor
acknowledged that the handcart provided help only in
open areas of the kitchen and cafeteria; it could not be
used in tighter spaces. Furthermore, her supervisor
explained that each employee is expected to perform his
or her daily tasks and expressed concern upon
discovering that Gauze received help from her
coworkers. Of course, the record also contains the
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supervisor’s unequivocal denial of the request for
accommodation, which was joined by an Agency
Representative. No reasonable person would review
this evidence and fail to be persuaded that the lifting
restriction could not be accommodated.
The agency also places tremendous weight on the fact
that Gauze did not speak directly with or submit a written
accommodations request to Human Resources.
However, from even a cursory review of the record, it is
clear that Human Resources could not have
accommodated the lifting restrictions imposed by Dr.
Powell; at most, the department could have provided her
with a written denial of her accommodations request.
However, though the Agency places great weight on the
fact that the record lacks such a written denial, the Court
again notes that Gauze’s supervisor stated—in
unequivocal terms—that Gauze’s lifting restrictions
could not and would not be accommodated. Any
reasonable person viewing this evidence would
understand that Gauze’s accommodation request was
impossible to fulfill.
Opinion and Order, supra, pp. 9-11 (emphases added).
In summarizing the quantity and quality of the evidence, the circuit
court recapitulated both its substantial nature supporting Gauze and its quantitively
compelling nature:
Even without considering the cumulative effective of the
various other ailments suffered by Gauze, the Court finds
that the Agency erred in denying Gauze’s disability
benefit application. There is substantial evidence on the
record demonstrating that Gauze suffers from
degenerative disc disease and, since at least August 6,
2014, she has been limited to lifting fifty (50) pounds or
less, no more than twice a day. There is also substantial
evidence in the record to show that this restriction cannot
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and would not be accommodated. Thus, there is
substantial evidence, including objective medical
evidence, on the record to show that Gauze is and has
been permanently incapacitated from performing her job
as a Food Service Manager since her last day of paid
employment on September 30, 2014. The evidence is so
overwhelming as to compel a finding in Gauze’s favor.
For these reasons, this Court finds that the Agency’s
decision was not supported by substantial evidence and
the Final Order must be reversed.
Opinion and Order, supra, p. 12 (emphases added).
The Appellant premises its allegation of error on an improper “re-
weighing” of the evidence by the circuit court. Much discussion has focused on
the proper measure of discretion that a court reviewing administrative law matters
must accord to an agency. An agency’s discretion is broad indeed. But it is not
absolute or unfettered. Administrative determinations surely cannot be immune
from the scrutiny of a reviewing court without undermining and sabotaging the
guarantee of the right of at least one appeal under Section 115 of the Constitution
of Kentucky.
And so, as noted at the onset of this opinion, the question remains:
how does a reviewing court comply with its constitutional duty to conduct an
appeal if it is bound to accord to an agency what has become an almost
insurmountable level of deference to agency decisions? The answer has to be one
of finding the proper balance between deference to an agency as set forth by statute
and the constitutional guarantee of a meaningful appeal/review. And in order to be
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meaningful, an appeal must -- perforce -- entail a court’s review of the same
evidence that was initially weighed by an administrative body. Needless to say,
any judicial review could be characterized as “re-weighing” of the evidence. But
that characterization in this case is merely semantic.
All the evidence in this case was clear that Ms. Gauze suffered
severely debilitating injuries after twenty-three years of service to the Ashland
Independent School District. Yet in a highly conclusory and perfunctory order, the
Kentucky Retirement Systems found otherwise -- essentially by administrative fiat.
The Franklin Circuit Court meticulously reviewed the evidence -- as
was its duty. In its review, the Franklin Circuit Court correctly found repeatedly
that the agency’s order denying Gauze’s benefits clearly was not supported by
substantial evidence. Again, Section 115 of the Kentucky Constitution guarantees
one appeal as a matter of right to every litigant. No statute can override or
supersede that right of constitutional import. And we must presume that an appeal
shall be meaningful and honest rather than an act of perfunctory deference to an
agency decree -- where substantial evidence is merely recited rather than
demonstrated.
We are persuaded that the Franklin Circuit Court wholly complied
with its constitutional mandate to review the evidence in this case. We reject the
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argument that it engaged in an “improper re-weighing” of the evidence or
substitution of its judgment for that of the agency.
Consequently, we AFFIRM the opinion and order of the Franklin
Circuit Court reversing the decision of the Kentucky Retirement Systems.
MAZE, JUDGE, CONCURS.
ACREE, JUDGE, DISSENTS.
ACREE, JUDGE, DISSENTING: Respectfully, I dissent because the
majority opinion misconceives the law applicable to the issues presented.
To begin, the majority opinion misinterprets Section 115 of the
Kentucky Constitution as guaranteeing someone, like Gauze, the right to seek
review of an agency’s adverse final order. It does not.
Section 115 “presupposes that the appealed cause was in the first
instance vested in a court.” Moore v. Kentucky State Penitentiary (Corrections
Cabinet), 789 S.W.2d 788, 789 (Ky. App. 1990). So, while Section 115 does, and
did, allow the Kentucky Retirement Systems the privilege of appealing the
Franklin Circuit Court ruling to this Court of Appeals,3 Gauze’s right to access the
3
Appellate review is not a fundamental right protected by the federal constitution on a par with
the right to seek redress of grievances. “[N]o principle of law is better settled than the right of a
state to limit or even deny appeals, and that no constitutional guaranty is invaded thereby.” Lake
v. Commonwealth, 209 Ky. 832, 273 S.W. 511, 513 (1925). In Kentucky before January 1, 1976,
“appellate review [even] in criminal cases was not a constitutional right.” Blankenship v.
Commonwealth, 554 S.W.2d 898, 900 (Ky. App. 1977). Appellate review then was a legislative
prerogative, a privilege doled out by statute for specific causes. The privilege only became a
universal right of Kentuckians with “the new policy of Section 115 of the Kentucky Constitution
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justice system initially is recognized as a fundamental right by the First
Amendment, which ensures “the right of the people . . . to petition the Government
for a redress of grievances.” U.S. CONST. amend. I; California Motor Transport
Co. v. Trucking Unlimited, 404 U.S. 508, 510, 92 S. Ct. 609, 612, 30 L. Ed. 2d 642
(1972) (“right of access to the courts is indeed but one aspect of the right of
petition”). The First Amendment right of redress, being applicable to the states
through the Fourteenth Amendment,4 is again guaranteed in Section 14 of the
Kentucky Constitution to protect “[t]he right of every individual in society to
access a system of justice to redress wrongs . . . .” O’Bryan v. Hedgespeth, 892
S.W.2d 571, 578 (Ky. 1995).
This being so, one must question the seemingly inconsistent and oft-
repeated adage that “[a]n appeal from an administrative decision is a matter of
legislative grace and not a right, and thus the failure to strictly follow statutory
guidelines for the appeal is fatal.” Gallien v. Kentucky Bd. of Medical Licensure,
336 S.W.3d 924, 928 (Ky. App. 2011). The answer is that this statement is a
that there shall be as a matter of right one appeal in every case . . . .” Yocom v. Franklin County
Fiscal Court, 545 S.W.2d 296, 299 (Ky. App. 1976).
4
“The United States Constitution, by the First Amendment, provides, ‘Congress shall make no
law . . . abridging . . . the right of the people . . . to petition the Government for a redress of
grievances.’ This Amendment becomes applicable to the states through the Due Process Clause
of the Fourteenth Amendment to the United States Constitution. The Kentucky Constitution
separately heralds the protection of these rights . . . .” Associated Industries of Kentucky v.
Commonwealth, 912 S.W.2d 947, 952 (Ky. 1995).
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conflation of several concepts – (1) the U.S. Constitution amendment I/Kentucky
Constitution Section 14 right of redress; (2) legislative grace in creating statutory
claims; and (3) the requirement of strict compliance to pursue such claims. One
can research the concept stated in Gallien back in time until you find a better
explanation. For example, recognizing the fundamental First Amendment right of
redress reflected in our own constitution, our highest Court said in Kendall v.
Beiling:
The right to resort to the courts is implicit in the terms of
Section 14 of the Constitution of Kentucky, declaring that
all courts shall be open and every person shall have a
remedy by due course of law for any injury to his person
or property or reputation. It is the inherent power of the
courts to scrutinize the acts of such administrative
tribunals wherein the person or property rights of an
individual have been adjudicated, and no special provision
of a statute is necessary to confer authority already
possessed by them under the constitution.
295 Ky. 782, 175 S.W.2d 489, 491 (1943) (emphasis added).
Although Kentuckians need no statute to access the courts to
challenge a government agency’s decision, the legislature exercised its authority to
control the process by delineating in statutes how court access occurs. The statute
governing disability retirement says how a person “may qualify to retire on
disability . . . .” KRS 61.600(1). Disability retirement, like the right to appeal
from one court to another, is not a fundamental right. It is a benefit system
established by legislative prerogative. Whether one can qualify to retire on
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disability depends upon satisfying conditions the legislature established and that
the Kentucky Retirement Systems administers. The legislation places the burden
on the claimant to present enough evidence to convince the agency, not the courts,
that benefits should be awarded. Until found to be unconstitutional, Kentucky
statutes defining standards for seeking and obtaining benefits must be strictly
followed. But the right of redress in Kentucky courts exists with or without them.
A person can claim that right by filing an original action in those
courts. The legislature reiterated the concept that these are original actions in the
statute defining circuit court jurisdiction, stating, “The Circuit Court may be
authorized by law to review the actions or decisions of administrative agencies,
special districts or boards. Such review shall not constitute an appeal but an
original action.” KRS 23A.010(4) (emphasis added). The statute is clear and
consistent with the constitutional right to initiate an action to seek redress of a
grievance; these are not administrative appeals. That means all the rules of civil
procedure apply, including CR 77.02. CR 1(2).5
It is also well-settled that when the right to claim a government
benefit “is granted by statute, a strict compliance with its terms is required.”
5
In pertinent part, CR 1 says: “These Rules govern procedure and practice in all actions of a
civil nature in the Court of Justice except for special statutory proceedings, in which the
procedural requirements of the statute shall prevail over any inconsistent procedures set forth in
the Rules.” CR 1(2). There are no procedural requirements of Chapter 13B or KRS 61.510, et
seq., governing the Kentucky Retirement Systems that prevail here.
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Louisville Gas & Elec. Co. v. Hardin & Meade County Property Owners for Co-
Location, 319 S.W.3d 397, 400 (Ky. 2010) (quoting Board of Adjustments of City
of Richmond v. Flood, 581 S.W.2d 1, 2 (Ky. 1978)). Those terms requiring
compliance are found in KRS Chapter 13B. KRS 61.665(5) (allowing “judicial
review in the Franklin Circuit Court in accordance with KRS Chapter 13B”).6
Beyond misidentifying the source of Gauze’s right of review, the
majority opinion excuses the circuit court’s clear error in applying the law.
Affirming the circuit court requires turning a blind eye to the circuit court’s
violation of the civil rules and statutes that govern adjudication of Gauze’s petition
for a redress of her grievance.
The first error compelling reversal is revealed on the face of the
majority opinion, which states the following:
[N]o action was taken on the case for more than a year.
The Clerk of the Franklin Circuit Court issued a notice to
dismiss for lack of prosecution. Gauze filed no pleadings
to show good cause why the case should not be dismissed,
and she took no other action to pursue her appeal.
Nevertheless, the Franklin Circuit Court, sua sponte,
issued an order establishing a briefing schedule.
6
KRS 13B.140(1) says “[a] party shall institute an appeal by filing a petition in the Circuit Court
of venue, as provided in the agency’s enabling statutes . . . .” After captioning the statute as
structuring a “judicial review,” it then uses the term “appeal” in its body. This is unfortunate
considering the term “appeal” is inconsistent with the First Amendment right to initiate an action
for redress of a grievance against the government. Kendall, 175 S.W.2d at 491. To be clearer,
the denial of benefits under KRS 61.600, et seq., is a grievance entitling the party to initiate,
consistent with the First Amendment, an original action in circuit court where the legislature
established jurisdiction pursuant to KRS 23A.010(4).
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Majority opinion, supra, at p.5. This passage shows generally that although Gauze
stopped pursuing her claim, the circuit court became proactive in advancing it.
To be even clearer, the record shows the court clerk notified Gauze
that “the case will be dismissed in 30 days for want of prosecution unless there is
filed in the record prior thereto a pleading, with affidavit, showing good cause why
no steps have been taken of record for more than a year.” (AOC7 Form 2-050; R.
at 19 (emphasis added).) This is consistent with the rule of procedure that binds
the circuit court no less than the parties, CR 77.02. The rule applies to “all pending
actions on their [Kentucky trial courts’] dockets . . . in which no pretrial step has
been taken within the last year,” and mandates that “the case will be dismissed in
thirty days for want of prosecution except for good cause shown.” CR 77.02(2).
To emphasize its mandatory nature, the rule then states: “The court shall enter an
order dismissing without prejudice each case in which no answer or an insufficient
answer to the notice is made.” Id. (emphasis added).
Did Gauze comply with the rule? Did she file a pleading, supported
by a notarized affidavit, explaining why she did not intend to abandon her claim
against the government despite all appearances to the contrary? No, she did not.
Did the circuit court comply with the rule? Did the circuit court enter
an order dismissing Gauze’s case without prejudice as the rule required? No.
7
Administrative Office of the Courts.
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Instead, the circuit court saved Gauze’s case by entering a sua sponte order setting
a briefing schedule and, in effect, signaling Gauze that she would not be wasting
her time by filing a brief. As it turns out, she was not wasting her time.
Gauze never asked to submit briefs as she was entitled to do. KRS
13B.150(1) (emphasis added) (“The court, upon request, may hear oral argument
and receive written briefs.”). Without any request to brief the case, the circuit
court elected to resurrect a claim the Kentucky Retirement Systems had every
reason to believe it could put behind it.8
But what of the notion that CR 77.02 is a mere “housekeeping rule,
within the wide discretion of the trial court”? Honeycutt v. Norfolk Southern Ry.
Co., 336 S.W.3d 133, 135 (Ky. App. 2011) (citing Hertz Commercial Leasing
Corp. v. Joseph, 641 S.W.2d 753 (Ky. App. 1982)). Without context, that
statement is somewhat unsophisticated and thus inaccurate. Hertz, upon which
Honeycutt relies, did not put that “housekeeping rule” label on CR 77.02, but said
only that the rule “has been referred to as a ‘housekeeping’ rule which has as its
purpose expediting the removal from the docket of stale cases.” Hertz, 641 S.W.2d
8
Nothing in KRS 13B.140 or KRS 13B.150 requires the circuit court to review anything more
than the petition and the agency record and, obviously, the response if there is one. Here, the
circuit court was not prompted by a motion, or a notice of submission on the record, or a Form
AOC-280 (Notice of Submission of Case for Final Adjudication). Such efforts, of course, are
not required. However, if Gauze assumed she had done all that was necessary to entitle her to
judicial review, she failed to make her understanding known to the circuit court when she was
delivered a notice to show cause under CR 77.02.
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at 755. Hertz, in fact, emphasized the rule’s mandatory components that must be
satisfied before the court’s discretion comes into play. Id. (emphasis added) (“We
deem these requisites [of CR 77.02] to be mandatory”; “what we consider to be
mandatory steps were not taken”).
It is mandatory that the plaintiff demonstrate good cause for leaving
the case on the court’s docket. CR 77.02(2). Only if the plaintiff so complies is
the circuit court then authorized the discretion to determine what is or is not good
cause. But, make no mistake, the rule leaves no discretion when, as here, the
plaintiff presents no cause whatsoever. CR 77.02(2) (“The court shall enter an
order dismissing without prejudice each case in which no answer . . . is made.”).
The circuit court ordered briefing in derogation of the mandate of CR 77.02(2) to
dismiss the case. The court then reweighed the evidence, contrary to KRS
13B.150(2), just as the Kentucky Retirement Systems argues.
As correctly stated by the majority, “a court cannot substitute its
judgment for that of an administrative agency as to the weight given to evidence
bearing on fact issues.” Majority opinion, supra, at p.7. That is because the
Kentucky Retirement Systems alone is vested with the “administrative duties to
carry out its policies by discretionary decisions” and “a ‘de novo’ trial in the circuit
court” that reweighs the evidence is both “unconstitutional and void.” Am. Beauty
Homes Corp. v. Louisville and Jefferson Cty. Planning and Zoning Comm’n, 379
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S.W.2d 450, 455 (Ky. 1964). The very language of the majority opinion
demonstrates the circuit court’s disregard of that admonition when the lower court
found “the Appellant’s final order . . . was not supported by substantial evidence
. . . .” Majority opinion, supra, at p.5 (original emphasis).
For example, the opinion quotes the circuit court’s conclusion that the
agency’s “characterization of the restriction [on Gauze’s activity] as ‘minor’ to be
wholly unpersuasive.” Majority opinion, supra, at p.10 (quoting circuit court
order). But it is not the Systems’ role to persuade the circuit court; the burden was
Gauze’s to show the absence of substantial evidence. The Systems found as fact
that the restriction was minor; the circuit court’s role was to accept that fact unless
the finding lacked support of substantial evidence. Some of that substantial
evidence is described in the Systems’ opinion and order, but all of it can be found
in the administrative record.
Gauze’s burden was to demonstrate that such evidence was not in the
record, and she failed to meet it. She simply wanted a reweighing of the evidence.
As the majority said, “Contending that the record contained substantial evidence to
show that she was unable to perform her duties due to a disability, Gauze appealed
to the Franklin Circuit Court.” Majority opinion, supra, at p.5. That is not enough.
Similarly, the majority opinion quotes the circuit court’s criticism
that “[t]he agency . . . places tremendous weight” on this evidence and “great
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weight” on that evidence, ignoring the fact that it was all substantial evidence that
supported the agency order. Majority opinion, supra, at p.11 (quoting circuit court
order). A jurist cannot determine from a cold record what was in the head of the
factfinder and whether he attributed tremendous weight or great weight or some
other weight to this evidence or that. I have no doubt, however, that a reviewing
court’s subjective determination of what weight was given some evidence as
opposed to other evidence is itself a reweighing of the evidence. Unquestionably,
these quotes demonstrate the circuit court’s disregard of the statute that says, “The
court shall not substitute its judgment for that of the agency as to the weight of the
evidence on questions of fact.” KRS 13B.150(2).
As if this were not enough, the majority acknowledges the circuit
court reached its decision to reverse the agency’s final order after considering “the
quantity and quality of the evidence” the agency had before it. Majority opinion,
supra, at p.11. The majority opinion could not ignore entirely the evidence
supporting the agency decision. “There is no doubt[,]” says the majority, “that
there is ample[9] evidence in this record supporting both sides.” Majority opinion,
supra, at p.8. After first saying the concept of “substantial evidence” is “elusive,”
the majority then suggests the “ample evidence” supporting the final order was not
9
“Ample” is defined as “generous or more than adequate in size, scope, or capacity . . .
generously sufficient to satisfy a requirement or need.” Ample, MERRIAM-WEBSTER ONLINE
DICTIONARY, https://merriam-webster.com/dictionary/ample (last visited Nov. 23, 2020).
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“truly substantial evidence.” Majority opinion, supra, at p.8. I disagree as to both
accounts.
Far from being elusive, “[s]ubstantial evidence has been conclusively
defined” for at least a quarter century according to my learned colleague who
authored the majority opinion. Transp. Cab., Dep’t of Highways, Commonwealth
of Ky. v. Thurman, 897 S.W.2d 597, 600 (Ky. App. 1995), abrogated on other
grounds as recognized in City of Danville v. Goode, 122 S.W.3d 591, 593 (Ky.
App. 2003). In fact, the concept is practically genetic in our jurisprudence. And
there is no better explanation of substantial evidence in Kentucky case law than the
original one found in American Rolling Mill Co. v. Pack, 278 Ky. 175, 128 S.W.2d
187 (1939).
When it initially described “substantial evidence” in American Rolling
Mill, Kentucky’s highest Court was “more or less general in its terms.” Id. at 190.
Then it engaged in an “elucidation [that] sheds light on our general interpretation
referred to and gives it more definite limitations. It better defines the route to be
traveled by the courts in reviewing the findings of fact by administrative boards,
including that of the compensation board.” Id. at 191. The Court said substantial
evidence:
means evidence which is substantial, that is, affording a
substantial basis of fact from which the fact in issue can
be reasonably inferred. Substantial evidence is more than
a scintilla, and must do more than create a suspicion of the
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existence of the fact to be established. It means such
relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, and it must be enough to
justify, if the trial were to a jury, a refusal to direct a
verdict when the conclusion sought to be drawn from it is
one of fact for the jury.
Id. at 190 (internal quotation marks and citations omitted). Logic suggests relief
from the final order of an agency head, consisting of specialists in the regulated
field, would be rarer than grants of directed verdict. If Gauze’s case had been tried
to a jury upon the evidence in this administrative record, it would have easily
survived a directed verdict motion. The conclusion could not be avoided that
Kentucky Retirement Systems’ final order is supported by substantial evidence.
Ignoring its own tacit acknowledgement that substantial evidence
supports the Systems’ ruling, the majority then cites McManus v. Kentucky
Retirement Systems, 124 S.W.3d 454 (Ky. App. 2003) and Kentucky Retirement
Systems v. Ashcraft, 559 S.W.3d 812 (Ky. 2018) as explanations of the substantial
evidence standard of KRS 13B.150(2)(c). Citing that subsection (2)(c) and both
McManus and Ashcraft, the majority opinion says “the qualitative element of the
evidence is critical . . . .” Majority opinion, supra, at p.8. The majority concluded
that, to be meaningful, judicial review of an agency decision “must -- perforce --
entail a court’s review of the same evidence that was initially weighed by an
administrative body.” Majority opinion, supra, at p.13 (emphasis added). Use of
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the adjective “initially” clearly suggests a subsequent reweighing is justified. That
is not so.
McManus and Ashcraft do not allow the same evidence that was
initially weighed by an administrative body to be reweighed by a court. These
cases are not focused on subsection (2)(c) of KRS 13B.150, but on subsection
(2)(d). That is the clearer lesson of Bradley v. Kentucky Retirement Systems, 567
S.W.3d 114 (Ky. 2018), which was rendered the same day as Ashcraft.
After explaining the substantial evidence analysis, the Supreme Court
in Bradley considered a rhetorical question:
One may rightfully query whether once a court finds
substantial evidence supporting the Board’s decision,
there could ever be a circumstance where the denied
applicant still prevails because his or her proof is so
compelling that no reasonable person could have failed to
be persuaded. However, as we explained in Ashcraft,
some cases may contain substantial evidence of record
supporting either of the two sides. Indeed, in the view of
the majority of the Court of the Appeals’ panel in this very
case, “the record contains medical evidence sufficient to
support both the conclusion that Bradley suffers from
Lyme disease and the conclusion that she does not.” In
cases such as this where the evidence may, at least at first
blush, be perceived to be in equipoise, the McManus
“compelling evidence” standard properly breaks the tie. It
does so by implementing the legislative command that the
courts “not substitute [their] judgment for that of the
agency as to the weight of the evidence on questions of
fact,” KRS 13B.150(2), while outlining an understandable
test for determining if the fact-finder was “arbitrary,
capricious or . . . abuse[d] [its] discretion” in violation of
KRS 13B.150(2)(d) when assessing the evidence.
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Id. at 119-20 (emphasis added); Ashcraft, 559 S.W.3d at 820 (“If this high
[McManus’ ‘compelling evidence’] standard is met, so is KRS 13B.150(2)(d).”).
After acknowledging the evidence in the administrative record “to be
in equipoise,”10 the majority opinion ultimately concludes Gauze’s evidence was
“so compelling that no reasonable person could deny her eligibility for disability
benefits.” Majority opinion, supra, at p.9. Viewed through the lens of Bradley,
this is the same as concluding the Kentucky Retirement Systems’ decision is
“[a]rbitrary, capricious, or characterized by abuse of discretion[,]” KRS
13B.150(2)(d), none of which the majority held or could hold. In this case, just as
in Ashcraft, “there are no grounds for reversal of that administrative decision on
judicial review.” Ashcraft, 559 S.W.3d at 822 (footnote omitted).
I agree with the Kentucky Retirement Systems that the circuit court
failed to follow CR 77.02, and I agree that the circuit court substituted its judgment
for that of the agency. To paraphrase the Supreme Court, the evidence favoring
Gauze, who bore the burden of proof, was not “so compelling that the agency’s
decision is properly seen as arbitrary or capricious or reflecting an abuse of
10
“There is no doubt that there is ample evidence in this record supporting both sides.” Majority
opinion, supra, at p.8.
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discretion.” Id. at 820. Gauze never met that standard. For these reasons, I
respectfully dissent.
BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:
Leigh A. Jordan Davis Jerald Bryan LeMaster
Frankfort, Kentucky Somerset, Kentucky
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