Joan Zerzan v. Department Of Retirement Systems ( 2019 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JOAN ZERZAN,
DIVISION ONE
Appellant,
No. 77602-9-1
V.
UNPUBLISHED OPINION
STATE OF WASHINGTON
DEPARTMENT OF RETIREMENT
SYSTEMS, FILED: March 25, 2019
DWYER, J. — Following a hearing pursuant to the Administrative
Procedure Act, chapter 34.05 RCW,the Washington State Department of
Retirement Systems denied Joan Zerzan's claim for 12 months of additional
service credits in Washington's Public Employee Retirement System (PERS).
Zerzan appeals from the Department's final order, asserting that the hearing
officer misapplied the applicable burden of proof. Because the hearing officer
properly placed the burden on Zerzan to establish, by a preponderance of the
evidence, that she worked the requisite number of hours to obtain service credits,
and substantial evidence supports the hearing officer's determination that she
failed to meet that burden, we affirm.
In July 1987, Joan Zerzan began working for the University of Washington
Food and Nutrition Department in a position eligible for PERS membership,
No. 77602-9-1/2
specifically for PERS Plan 2.1
Prior to November 1988, the University reported to the Department that
Zerzan worked in a .75 full time equivalent(FTE) position. On November 3,
1988, the University began reporting that she worked in a .5 FTE position, and
continued to report it as such through July 1990.
In 2007, Zerzan made a request to the Department for additional service
credits, believing that she was missing credits earned between 1988 and 1991.
The Department and Zerzan dispute how many hours per month she worked in
this period, specifically during the months of December 1988, January, February,
April, September, November, and December 1989, and February, March, April,
June, and July 1990. During these disputed months, employees in PERS-eligible
positions were required to work at least 90 hours per month to earn service
credits for the month.2 According to Zerzan, in November 1988 the University
placed her in two additional positions, which combined for a total of .2 FTE,
bringing her total FTE for all positions to .7 FTE through July 1990(which would
be the equivalent of over 100 hours of work per month). However, the
University's employee records for that time period do not indicate that Zerzan
worked in PERS-eligible positions equaling a .7 FTE during the disputed months,
1 The Department is the agency responsible for administering PERS. See RCW
41.40.020. Plan 2 retirees receive lifetime monthly payments pursuant to a statutory formula that
multiplies a percentage of a measure of the member's highest earnings by the member's service
credits. See RCW 41.40.620. Service credits are determined based on the months of service in
a position or positions eligible for retirement benefits. See RCW 41.40.010(37).
2 See former RCW 41.40.010(LAws OF 1990, ch. 274, §3(9)(b)); former RCW 41.40.010
(LAws OF 1989, ch. 309, §1(9)(b)); former RCW 41.40.010(LAws OF 1989, ch. 289, §1(9)(b));
former RCW 41.40.010(LAws OF 1985, ch. 13, §7(9)(b)). It was not until 1991 that PERS-eligible
employees could earn partial service credits for working fewer than 90 hours per month. See
former RCW 41.40.010(LAws OF 1991, ch. 343,§ 6(9)(b)).
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No. 77602-9-1/3
instead showing that Zerzan worked fewer than 90 hours per month. Relying on
the University's employee compensation records, the Department declined to
grant Zerzan service credits for the disputed months.
Zerzan appealed the Department's decision. The Department held a
formal hearing pursuant to the Administrative Procedure Act. At the hearing, the
hearing officer heard testimony from Zerzan, the University's Director of Human
Resources, and Department officials. Additionally, the Department presented the
University's employee compensation records for Zerzan, including a verification
of employment form detailing her total compensated hours of work for the
disputed months. Zerzan presented her Social Security records and other
documents indicating that she had worked in multiple positions during the
disputed months.
Zerzan asserted that she had worked the requisite hours and that the
University's records must be deficient because they did not match her memory of
her work schedule. The Department asserted that the University's employee
records and Zerzan's Social Security records do not support Zerzan's claim for
service credits and that her testimony, uncorroborated by any official records of
her work hours or by other witness testimony, was less persuasive than the
official documentation showing that she worked fewer than the required 90 hours
per month during the disputed months. Ultimately, the hearing officer issued a
final order concluding that Zerzan had "not provided sufficient positive evidence
to obtain the credit she seeks," and affirming the Department's decision denying
Zerzan additional PERS service credits for the disputed months.
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No. 77602-9-1/4
On judicial review, the superior court affirmed the final order. Undaunted,
Zerzan appeals to us.
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Zerzan contends that the hearing officer erred by concluding that she did
not meet her burden of establishing, by a preponderance of the evidence, her
entitlement to 12 months of additional service credits. This is so, she asserts,
because the record evidence and testimony she presented at the hearing
established that she worked for at least 90 hours in a PERS-eligibile position or
positions in each of the disputed months. Zerzan further asserts that by virtue of
her testimony explaining that the University of Washington's employment
records, records on which the Department based its determination of service
credits, were inaccurate, she shifted the burden of proof to the Department to
establish that she was not entitled to service credits. In response, the
Department contends that Zerzan's testimony was insufficient to satisfy her
burden of proof because it was unsupported by the record evidence or by any
corroborating witnesses, and that the burden of proof never shifted to the
Department because the Department was never Zerzan's employer. The
Department has the better argument.
Judicial review of any final decision and order by the Department is
governed by the Administrative Procedure Act. RCW 41.40.078. When
reviewing the Department's decision,"we sit in the same position as the superior
court, applying the relevant standards of review from the Administrative
Procedure Act(APA) directly to the record." Fox v. Dep't of Ret. Sys., 154 Wn.
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No. 77602-9-1/5
App. 517, 523, 225 P.3d 1018(2009)(citing Hunter v. Univ. of Wash., 101 Wn.
App. 283, 288, 2 P.3d 1022 (2000)); RCW 34.05.570. "The burden of
demonstrating the invalidity of agency action is on the party asserting invalidity."
RCW 34.05.570(1)(a). The party claiming invalidity must prove such invalidity by
a preponderance of the evidence. See Fox, 154 Wn. App. at 525 (citing
Thompson v. Dep't of Licensing, 138 Wn.2d 783, 797, 982 P.2d 601 (1999)).
"The preponderance of the evidence standard requires that the evidence
establish the proposition at issue is more probably true than not true." Mohr v.
Grant, 153 Wn.2d 812, 822, 108 P.3d 768 (2005).
We review an agency's legal conclusions de novo. Bullseye Distrib.,
LLC v. Gambling Comm'n, 127 Wn. App. 231, 237, 110 P.3d 1162(2005).
However, while not bound by an agency's interpretation, we "accord substantial
weight to the agency's interpretation if the agency is operating in an area where it
has specialized expertise." Fox, 154 Wn. App. at 523 (citing City of Redmond v.
Cent. Puget Sound Growth Mgmt. Hearings Bd., 136 Wn.2d 38, 46, 959 P.2d
1091 (1998)).
We review issues of fact by applying the substantial evidence standard.
Lawrence v. Dep't of Health, 133 Wn. App. 665, 671, 138 P.3d 124 (2006).
"Evidence is substantial if it is of sufficient quantity to persuade a fair-minded
person of the truth or correctness of the agency order." Hahn v. Dep't of Ret.
Sys., 137 Wn. App. 933, 939, 155 P.3d 177 (2007). Unchallenged findings of
fact are considered verities on appeal. Vorhies v. Dep't of Ret. Sys., 199 Wn.
App. 543, 556, 399 P.3d 599 (2017).
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No. 77602-9-1/6
The issues presented in this appeal are practically identical to those
resolved in our prior decision in Fox. Therein, Fox sought a ruling overturning a
Department decision that concluded that he had not worked in a PERS-eligible
position at the University of Washington for the requisite number of hours to
establish an entitlement to benefits. Fox, 154 Wn. App. at 522. However, the
University of Washington had no records of Fox ever having worked in the
janitorial position he claimed entitled him to the benefits. Fox, 154 Wn. App. at
522. Nevertheless, Fox argued that he had met his burden of proving that he
had worked the required hours through the provision of his own testimony to that
effect, coupled with a near-contemporaneous letter of recommendation and a
signed declaration from his former supervisors stating that he had worked the
required hours. Fox, 154 Wn. App. at 524. Fox asserted that "this evidence was
sufficient to 'shift the burden' to the Department to disprove his contention that he
worked the requisite number of hours." Fox, 154 Wn. App. at 524.
To support his burden-shifting theories, Fox relied on federal cases
interpreting the Fair Labor Standards Act of 1938(FLSA), 29 U.S.C. §§ 201-219.
In Fox's chosen cases, the courts held that if an employer fails to maintain
adequate records, "the employee need prove the amount of uncompensated
work performed only by 'just and reasonable inference,' after which the burden
shifts to the employer to come forward with contrary evidence." Fox, 154 Wn.
App. at 524-25 (citing Reich v. S. New Enqland Telecomms. Corp., 121 F.3d 58,
66-67(2d Cir. 1997)). Additionally, Fox asserted that the Department had
required him to produce contemporaneous official employer records to meet his
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No. 77602-9-1/7
burden and, that by so requiring, the Department altered his burden from a
preponderance of the evidence burden to a beyond a reasonable doubt burden.
Fox, 154 Wn. App. at 525 n.6.
We rejected Fox's contention that the burden of proof was shifted to the
Department. Fox, 154 Wn. App. at 525. We explained that the rules in the
context of FLSA cases are not the same as those set forth by the APA for
hearings before the Department: "under WAC 415-08-420, '[t]he person
appealing or requesting a hearing shall have the burden of proof in the matter.'
This rule places the burden on Fox to prove by a preponderance of the evidence
that he worked the requisite number of hours." Fox, 154 Wn. App. at 525
(alteration in original)(quoting WAC 415-08-420). We also rejected Fox's
contention that the Department required him to provide contemporaneous
employer records because the record in Fox "indicates the Department does not
limit its consideration to employer records. It also considers Social Security
records, tax records, personal records, affidavits, and other evidence." Fox, 154
Wn. App. at 525 n.6. We concluded that "the University's alleged failure to keep
adequate records did not relieve Fox of his burden." Fox, 154 Wn. App. at 525.
Finally, we noted that the hearing officer at Fox's hearing considered Fox's
testimony and the other evidence he submitted and deemed it unreliable. Fox,
154 Wn. App. at 526. We explained that the hearing officer had weighed the
evidence and concluded that
Mr. Caldwell's 1974 recommendation letter stating that Mr. Fox had
worked "as a half-time employee" was written not to document his
work hours in 1970 but to communicate in general terms the extent
of the writer's familiarity with Mr. Fox's work and performance. Mr.
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No. 77602-9-1/8
Byrd's 2005 statement that he was "scheduled to work 80 hours per
month," is no more than a statement of what Mr. Byrd remembers
Mr. Fox's schedule generally was. Neither provides meaningful or
specific corroboration that he actually worked the requisite number
of hours.
Fox, 154 Wn. App. at 526-27. We subsequently declined to reweigh the
evidence because "it is well established that '[o]n factual questions the reviewing
court cannot substitute its interpretation of the facts for the agency's
interpretation or reweigh the evidence." Fox, 154 Wn. App. at 527 (alteration in
original)(quoting Van Sant v. City of Everett, 69 Wn. App. 641, 650, 849 P.2d
1276 (1993)). We concluded that substantial evidence supported the
Department's decision to deny benefits. Fox, 154 Wn. App. at 527.
Herein, Zerzan makes the same arguments as those that we rejected in
Fox, but with even less supporting evidence in the record than that which Fox
relied on.3 She asserts that she met her burden of proof by showing, through her
own testimony, that the records used by the Department to calculate her benefits
were deficient, and that this shifted the burden to the Department to prove that
she was not entitled to additional service credits.4 She further asserts that the
hearing officer required her to prove her claim beyond a reasonable doubt by
3 Unlike in Fox, Zerzan did not present any corroborating witnesses or affidavits to
support her testimony. Additionally, and again unlike in Fox, the University actually had records
of Zerzan's employment, records which show that Zerzan was not compensated for the requisite
90 hours of work during the disputed months.
4 As with Fox, who relied on FLSA cases to support his burden-shifting argument, Zerzan
relies on cases outside of the context of administrative hearings before the Department to support
her position. Specifically, she relies on Hill v. BCTI Income Fund-I, 97 Wn. App. 657, 986 P.2d
137(1999), aff'd in part, vacated in part, 144 Wn.2d 172, 23 P.3d 440 (2001), which discusses
burden-shifting in age discrimination cases against an employer, and a few other cases
addressing burden-shifting to employers in the context of Social Security records. None of her
cases are applicable because the Department is not, and never was, Zerzan's employer.
Instead, Fox sets forth the applicable legal principles.
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No. 77602-9-1/9
requiring record evidence, specifically time sheets, to support her testimony.5
However, it is apparent from the Department's final order that the hearing
officer, in fact, simply required Zerzan to meet her burden of proof by a
preponderance of the evidence. The hearing officer did not require her to
provide time sheets to meet her burden. Instead, the hearing officer weighed the
evidence. The hearing officer considered not only Zerzan's testimony, but also
the Social Security compensation and employment records she provided,
comparing her testimony and her compensation as detailed by her records with
the records provided by the University detailing her total compensated hours for
the disputed months.6 The hearing officer, after reviewing all of the evidence
submitted by Zerzan and the Department, concluded that Zerzan's compensation
records, including her Social Security records, cast considerable doubt on the
reliability of Zerzan's testimony.7 The hearing officer concluded:
In this case the employer's records for the disputed months show
fewer than the required number of compensated work hours for
PERS service credit. Ms. Zerzan is unable to produce any
contemporaneous records to show that the hours as reported on
5 Zerzan refers to an "incontrovertible evidence" standard in her briefing, which we
interpret as referring to the "beyond a reasonable doubt" standard.
6 Zerzan also appears to assert that the hearing officer and the superior court were
improperly biased against her and thus improperly disregarded her testimony. She points to
nothing in the record that supports such an assertion.
7 Zerzan testified that her schedule remained unchanged during the pertinent years while
her compensation records showed what the hearing officer considered to be considerable
variance in her total compensation during those years. The hearing officer explained:
After October 1988 the register shows a drop in overall compensation paid to her, and
even by the end of 1990 it did not recover to the October 1988 level. This pattern is
consistent with the 20% drop in the compensation reported to the Social Security
Administration for 1989 and 1990 when compared with 1988 and 1991. . . . This reduced
compensation in late 1988 through 1989 and 1990 cannot be reconciled with her
testimony that her work schedule did not vary significantly during these years. If that
were so, her payroll records could be expected to show greater uniformity. It is not
reasonable to think that she would have accepted such reduced pay for a comparable
and steady number of work hours.
(Footnotes omitted.)
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No. 77602-9-1/10
the [verification of employment]spreadsheet are incorrect. The
University's timesheets, the record that would be most significant
for this purpose, no longer exist. There are no longer paystubs or
even W-2 forms for her earnings available. She could not identify
anyone who would now be able to testify from personal knowledge
about her weekly work schedule during the disputed months.
Zerzan also asserts that we should disregard Fox's holding regarding
burden-shifting and rule that her testimony claiming that the University's records
were deficient shifted the burden of proof to the Department. She asserts that
Fox is distinguishable because the issue addressed therein was whether Fox had
ever worked in a PERS-eligible position, whereas there is no dispute that Zerzan
worked in a PERS-eligible position while employed by the University of
Washington. We decline this invitation. Fox addresses the burden of proof for a
claimant seeking to establish, in an administrative hearing, that the claimant
meets the statutory requirements to receive entitlement benefits from PERS.
Nothing in Fox, nor in any of the applicable statutes or regulations, indicates that
the burden changes depending on which of the statutory requirements is
disputed. As in Fox, the "University's alleged failure to keep adequate records"
herein does not relieve Zerzan of her burden to prove that she is entitled to
additional service credits.8 154 Wn. App. at 525.
8 Zerzan also asserts that the burden of proof should be placed on the Department
because the Department had a duty to maintain accurate records of her employment at the
University. This is so, she asserts, because ROW 41.50.130 states that the director of the
Department"may at any time correct errors appearing in the records" of the PERS retirement
system. However, the statute simply does not address the burden of proof during administrative
hearings before the Department. Zerzan appears to contend that the Department's authority to
correct errors in its records implies a duty to exercise complete control over all PERS employer
records to ensure that they are maintained to provide accurate data for calculating PERS service
credits. To the contrary, hothing in ROW 41.50.130, nor in any other statute or regulation,
requires or even authorizes the Department to administer the payroll systems and human
resources functions of all PERS employers.
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No. 77602-9-1/11
As in Fox, Zerzan essentially "asks this court to reweigh the evidence and
come to a contrary conclusion." 154 Wn. App. at 527. Here, Zerzan relied
primarily on her own testimony to prove that she is entitled to additional service
credits. However, the hearing officer chose not to credit that testimony because
it was inconsistent with the record evidence. Thus, the hearing officer concluded
that Zerzan did not meet her burden of proof. We decline Zerzan's invitation to
reweigh the evidence. The hearing officer herein correctly required Zerzan to
prove her claim by a preponderance of the evidence and substantial evidence
supports the decision denying her service credits for the disputed months.
Affirmed.
We concur:
QccS2s,\,-dsle., I
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