Department Of Employment Security v. Corporate Security, Llc ( 2018 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
CORPORATE SECURITY, LLC, ) No. 77138-8-I
)
Respondent, ) DIVISION ONE
) r...s ci
v. ) UNPUBLISHED OPINIONe —f C
—I AI
>
) 0
C) fr1-4
STATE OF WASHINGTON, ) .-1 C3
CI -ri
NI
EMPLOYMENT SECURITY )
DEPARTMENT, ) ..-- -ti ni
3D• cpn
.. . ,.).
t tp —
) zr
S
Appellant. FILED: October 22, 2018 9? 00
)
—o
r o—
C
—
ANDRUS, J. — The Employment Security Department (Department)
appeals the superior court's order denying unemployment benefits to Myron
Pinkney. We reverse the superior court's order and reinstate the agency
decision finding Pinkney eligible for benefits.
FACTS
Myron Pinkney applied for a security officer position with Corporate
Security, LLC on September 25, 2015. On the application, Pinkney was asked if
he had ever been convicted of a crime; and he checked "Yes." During the
application and training process, Pinkney disclosed to Shawn McCarthy,
Corporate Security's human resources recruiter, that he had a prior assault
conviction and a gross misdemeanor drug conviction. Pinkney spoke several
No. 77138-8-1/2
times with McCarthy and another person within the company about both cases
and provided them with copies of some of his court records.
Corporate Security conducted a criminal records search that disclosed two
cases—a 2012 fourth degree assault charge in Kent Municipal Court and a 2013
felony drug charge in Snohomish County—both of which were identified as
having been dismissed. Based on what Pinkney had disclosed, McCarthy found
the background check information inconsistent and confusing. But after
consulting with Dr. William Cottringer, Executive Vice President for Corporate
Security, they decided to hire Pinkney, issue a temporary security guard license
to him, and await "a second opinion for a more elaborate background
Investigation" from the agency that would issue the permanent license.
McCarthy testified that Dr. Cottringer wanted the Washington State Department
of Licensing (DOL) to make the decision based on its own background
investigation. McCarthy did not want to wait for the results of DOL's Investigation
before hiring Pinkney because that would delay hiring him for two months.
On October 1, 2015, with the company's help, Pinkney applied for a
private security guard license with DOL. On the license application, he listed a
1998 conviction for "violation of a controlled substance," and a 2013 conviction
for "solicitation of drugs (possession of paraphernalia)." He offered to "provide a
copy of [his] record upon request."
I Although Pinkney identified the solicitation conviction as occurring in 2013, the
Judgment and sentence on the conviction was entered on January 21, 2014. DOL based Its
decision to deny the license on this 2014 gross misdemeanor conviction.
- 2-
No. 77138-8-1/3
DOL notified Pinkney, on December 2, 2015, that it intended to deny his
application for a private security guard license. According to Pinkney, DOL
indicated that the 2014 solicitation conviction was a disqualifying crime. Pinkney
subsequently learned that because he had been sentenced on a DUI, along with
a drug solicitation charge, his sentence included five years of probation, the term
of which had not expired. Because Pinkney did not have a probation officer, had
completed a court-ordered drug and alcohol assessment, and had attended the
DUI victim's panel, he was under the mistaken impression that he had completed
all of the terms of his probation and that if he did not get into any trouble for the
next year, the case would be dropped. Pinkney admitted he provided erroneous
information to Corporate Security, but he "never tried to hide it or — or mislead
them into believing ...that anything was different than what [he] said." He was
"completely straight up with them because [he] appreciated the fact that they
were giving [him]a chance to have a job."
DOL denied his request for a security guard license by letter dated
January 5, 2016. Pinkney appealed the decision but was unsuccessful in
reversing the agency's decision. Corporate Security terminated his employment
on January 11, 2016, after learning the outcome of the appeal. McCarthy
testified that the company waited to terminate Pinkney until it knew that DOL
would not license him.
- 3-
No. 77138-8-1/4
Pinkney applied for unemployment benefits. In responding to a
Department inquiry as to whether Pinkney did anything wrong at work after he
was hired, Dr. Cottringer wrote:
No. But if you review all these documents carefully as we have,
you will come to the same conclusion as DOL, that he was in fact
properly/legally denied his security guard license for disqualifying
"convictions" that were not really dismissed[,] and the dates of
these offenses were grossly mixed up in offense types and dates
and inclusion on his applications .... And later, ESD earnings
reports showed serious discrepancies on the jobs he reported on
his application[.] This information is available to you, but not
relevant because this dishonesty was not the reason we terminated
him. We clearly discharged him with the DOL mandate we could
not legally work him as a security guard because he wasn't
licensable. That is the real bottom line to all of this.
The Department denied benefits, reasoning that his termination was due to
"misconduct" connected to his employment.
Pinkney appealed the Department's benefits decision. At the
administrative hearing, Dr. Cottringer confirmed the information provided to the
Department: Pinkney was discharged because he was ineligible to obtain a
license and work as a security guard. Dr. Cottringer learned that DOL's more
elaborate background investigation discovered that one of Pinkney's cases was
still open with unfulfilled conditions, which he thought disqualified Pinkney for a
security guard license under RCW 18.170.030. When the AU asked Dr.
Cottringer who made the decision to terminate Pinkney, he replied, "it was made
for us by DOL. I just carried it out" Dr. Cottringer confirmed he told Pinkney he
was discharged because he was "ineligible for licensure." At the conclusion of
-4 -
No. 77138-8-1/5
the administrative hearing, Dr. Cottringer stated that Corporate Security did not
discharge Pinkney for dishonesty.
The AU granted Pinkney's request for unemployment benefits, finding
that Pinkney disclosed his criminal history to Corporate Security, and concluding
that the company had not shown by a preponderance of the evidence that
Pinkney engaged in job-related misconduct.
Corporate Security filed a petition for review to the Department's
Commissioner's Review Office. It argued that Pinkney's failure to reveal
complete details of his criminal history constituted dishonesty and was a basis to
deny benefits.
The Commissioner rejected Corporate Security's petition. It found that
Pinkney had verbally advised Corporate Security of at least some of his criminal
background. Corporate Security was aware of this history because its own
criminal history check revealed an April 2013 offense in Snohomish County and a
March 2012 King County offense. Although Corporate Security was "admittedly
uncertain as to the extent of [Pinkney's] criminal background, [it] still decided to
hire (him]." The Commissioner found that Corporate Security chose to hire
Pinkney immediately and to train him while DOL conducted a more elaborate
investigation into Pinkney's background through the licensing process. The
Commissioner further found the basis of DOL's denial of a security guard license
for Pinkney was that he had been convicted of a crime on January 21, 2014. The
-5-
No. 77138-8-1/6
Commissioner also found that Corporate Security waited to terminate Pinkney
until after he unsuccessfully appealed DOL's decision.
Based on these findings, the Commissioner concluded Corporate Security
was on notice, even before hiring [Pinkney], that [Pinkney's]
criminal background could prevent him from becoming licensed
through DOL. However, instead of waiting for the outcome of
[Pinkney's] DOL license process, [Corporate Security] decided to
hire [Pinkney] and begin training him. DOL's decision to deny
[Pinkney's] license application rendered [Pinkney] incapable of
doing the job for which he was hired. [Pinkney] became
unemployed through no fault of his own, but through [Corporate
Security's] decision to hire him in spite of the possibility that
[Pinkney] would not meet the requirements of the job. [Corporate
Security]failed to show that[Pinkney] acted in willful disregard of its
interests as defined at RCW 50.04.294. Thus, [Pinkney] is not
disqualified pursuant to RCW 50.20.066.
The Commissioner denied Corporate Security's petition for reconsideration.
In its petition for review to the superior court, Corporate Security again
argued that Pinkney was terminated due to misconduct during his employment
application process because Pinkney mischaracterized and omitted material
facts about his criminal record. The superior court granted Corporate Security's
petition and reinstated the Department's initial denial of benefits.
The Department appeals.
ANALYSIS
Washington's Administrative Procedure Act (APA), chapter 34.05 RCW,
governs judicial review of employment benefits decisions. Michaelson v. Emp't
Sec. Dep't, 187 Wn. App. 293, 298, 349 P.3d 896 (2015). The APA allows
reversal of an administrative decision if it is based on an error of law, if it is not
-6
No. 77138-8-1/7
based on substantial evidence, or if it is arbitrary or capricious. RCW
34.05.570(3)(d),(e), (i); Michaelson 187 Wn. App. at 298.
Although this is an appeal from the superior court, this court reviews the
Commissioner's decision, not the AL's findings or those of the superior court.
Michaelson 187 Wn. App. at 298. Because the Commissioner did not adopt any
of the AL's findings or conclusions, we review the Commissioner's decision
only. Michaelson 187 Wn. App. at 298. This court considers the
Commissioner's decision as prima facie correct, and the burden of demonstrating
invalidity of the decision is on the party asserting invalidity, here Corporate
Security. Smith v. Emp't Sec. Dep't, 155 Wn.App. 24, 32, 226 P.3d 263(2010).
The sole issue on appeal is whether the Commissioner erred in
concluding that Pinkney was not discharged for misconduct. Corporate Security
contends the Commissioner's order is not supported by substantial evidence, is
the result of erroneously interpreting or applying the law, and is arbitrary or
capricious. The company argues Pinkney was dishonest during the application
process because he misrepresented to Corporate Security that the gross
misdemeanor was dismissed, when in fact, he was on probation. The company
maintains that had he disclosed that he was on probation, it would have
terminated the hiring process. Accordingly, Corporate Security argues the
Commissioner should have found these misrepresentations amounted to
dishonesty, making Pinkney ineligible for unemployment benefits.
A. Substantial Evidence
-7-
No. 77138-8-1/8
The Commissioner's findings of fact are reviewed for substantial evidence
in light of the entire record. Michaelson, 187 Wn. App. at 298. "Substantial
evidence is evidence that would persuade a fair-minded person of the truth or
correctness of the matter." Id. at 298-99. This court defers to the factual
decisions and views the evidence in the light most favorable to the party who
prevailed in the highest forum with fact-finding authority; here, this is the
Department. Id. at 299.
Whether an employee committed misconduct is a mixed question of fact
and law, but this court does not substitute its judgment for that of the agency as
to the facts. Tapper v. Emp't Sec. Dep't, 122 Wn.2d 397, 403, 858 P.2d 494(1993). "[1]nstead, the factual findings of the agency are entitled to the same
level of deference which would be accorded under any other circumstance." it
Thus, this court will not substitute its judgment on witnesses' credibility or the
weight given to conflicting evidence. Michaelson, 187 Wn. App. at 299.
Unchallenged findings of fact are accepted as verities on appeal. it
The process of applying the law to those facts is a question of law
reviewed de nova. Tapper, 122 Wn.2d at 403. Nevertheless, this court gives
substantial weight to the Commissioner's interpretation of the law given the
agency's special expertise. Michaelson, 187 Wn. App. at 299.
RAP 10.3(h) provides that a respondent challenging an administrative
agency's adjudicative order under chapter RCW 34.05 "shall set forth a separate
concise statement of each error which a party contends was made by the agency
-8-
No. 77138-8-1/9
Issuing the order, together with the issues pertaining to each assignment of
error." Corporate Security assigned error to the Commissioner's legal
conclusions but did not assign error to any of the Commissioner's findings of fact
Generally, when a party challenging an agency action does not challenge the
agency's findings of fact, this court deems these true on appeal and limits review
to determining whether the findings support the conclusions. Smith, 155 Wn.
App. at 32. This court in Smith recognized, however, that RAP 1.2(a) gives us
the discretion to review an agency's findings "where proper assignment of error is
lacking but the nature of the challenge is clear and the challenged findings are
set forth in the party's brief." it at 33.
In this case, Corporate Security challenges the evidentiary support for the
Commissioner's findings only in passing. Its briefing instead focuses on what it
characterizes as the Commissioner's misapplication or incorrect interpretation of
the law. When proper assignment of error is lacking, the challenged findings
must be perfectly clear and extensively discussed in the brief. Id. at 33-34. The
only finding of fact Corporate Security clearly discusses is the Commissioner's
finding that Pinkney "verbally advised [Corporate Security] regarding at least
some of his criminal background."2 We conclude this finding is supported by
substantial evidence.
2 Corporate Security also argues that the fact that Pinkney was still on probation for the
gross misdemeanor is why he was denied a private security guard license. But the security guard
licensing statute does not specify that an existing probation or unfulfilled probation conditions
disqualify someone from receiving a private security guard license. Rather, it provides that to
obtain a private security guard license, the applicant must
-9
No. 77138-8-1/10
Pinkney testified that he disclosed his criminal history to Corporate
Security to the best of his knowledge. But Corporate Security challenges
Pinkney's testimony that he did not understand that he was still on probation at
the time he applied for a job, arguing that this testimony is not credible. On
appeal, we do not substitute our judgment for that of the agency regarding
witness credibility. Michaelson, 187 Wn. App. at 299. According to the record,
Pinkney disclosed criminal convictions on both his employment application and
his security guard license application. The record also shows that after Pinkney's
disclosures during the hiring process and Corporate Security's initial background
check, the company did not foresee a licensing problem. The substantial
evidence standard is deferential; this court views the evidence in the light most
favorable to the party that prevailed before the Commissioner. Affordable Cabs,
Inc. v. Emp't Sec. Dept 124 Wn. App. 361, 367, 101 P.3d 440(2004). Based on
this record, there is substantial evidence supporting the Commissioner's finding
that Pinkney advised Corporate Security regarding at least some of his criminal
background.
Inlot have been convicted of a crime In any Jurisdiction, if the director determines
that the applicant's particular crime directly relates to his or her capacity to
perform the duties of a private security guard, and the director determines that
the license should be withheld to protect the citizens of Washington state.
RCW 18.170.030(3). DOL's notice to Pinkney Indicated that he could reapply for a license six
years after the date of his conviction. It said nothing about probation. Corporate Security does
not challenge the Commissioner's finding that the basis of DOL's denial of a security guard
license for Pinkney was that he had been convicted of a crime on January 21, 2014. Therefore,
the record does not support Corporate Security's contention that Pinkney's probation status
caused DOL to deny his license application.
-10-
No. 77138-8-1/11
At oral argument, Corporate Security contended that the Commissioner
erred by not making a finding that Pinkney misrepresented his criminal history
during the application process. At the agency level, it was Corporate Security's
burden to establish misconduct by a preponderance of the evidence. Corporate
Security argued in its petition for review to the Commissioner, as well as on
reconsideration, that Pinkney's failure to reveal the complete details of his
criminal history was per se dishonest. "If no finding Is entered as to a material
Issue, it is deemed to have been found against the party having the burden of
proof." Pacesetter Real Estate, Inc. v. Fasules 53 Wn. App. 463,475, 767 P.2d
961 (1989). Additionally, this court does not substitute its judgment on the facts
and, instead, defers to the Commissioners factual decisions. Michaelson, 187
Wn. App. at 299. Therefore, we reject this argument and conclude the
Commissioner did not find that Pinkney misrepresented his criminal history to
Corporate Security.
B. Error of Law
Next, we turn to applying the law to the Commissioner's findings of fact.
Corporate Security argues that because Pinkney made false statements
and material omissions about his criminal history during the hiring process and
when applying for a security guard license, the Commissioner should have found
that Pinkney engaged in misconduct even if he was not discharged for that
reason. Corporate Security appears to misunderstand the unemployment
compensation statute.
No. 77138-8-1/12
The Employment Security Act provides compensation to individuals
involuntarily unemployed "through no fault of their own." RCW 50.01.010;
Tapper, 122 Wn.2d at 407. An individual is ineligible for unemployment benefits
If he or she is "dischamed or suspended for misconduct connected with his or her
work." RCW 50.20.066(1)(emphasis added). Misconduct is defined by statute
and includes "willful or wanton disregard of the rights, title, and interests of the
employer," and "Ripshonesty related to employment, including but not limited to
deliberate falsification of company records, theft, deliberate deception, or lying."
RCW 50.04.294(1)(a),(2)(c).
Corporate Security admitted on several occasions that Pinkney was
discharged because he could not obtain a private security guard license, not
because he committed misconduct during the application process, as it argued in
its trial brief to the superior court. Four times during the administrative hearing,
Corporate Security representatives stated Pinkney was not discharged for
dishonesty. First, Dr. Cottringer testified Pinkney was discharged because
DOL's more in-depth background check discovered a case that was not
dismissed. Next, when asked who made the decision to discharge Pinkney, Dr.
Cottringer replied that "it was made for us by DOL. I just carried it out."
McCarthy testified that Pinkney was not terminated until the company knew that
DOL would not issue him a security guard license. Finally, Dr. Cottringer stated
that Corporate Security
had to terminate Mr. Pinkney's employment according to DOL
qualifications for licensure, which they denied his license and we
-12-
No. 77138-8-1/13
could not continue his employment. He was not discharged for
dishonesty, as he said.
He was discharged because DOL would not license him and
we could not work him as a security guard.
Elsewhere in the record, Dr. Cottringer admitted that Pinkney was not discharged
for misconduct. Although there were
serious discrepancies on the jobs he reported on his
application ... this dishonesty was not the reason we terminated
him. We clearly discharged him with the DOL mandate we could
not legally work him as a security guard because he wasn't
licensable.... He was terminated because DOL, in effect, directed
us to do so, because he could not legally work as a security guard,
when his license was duly denied by them.
Therefore, based on the plain language of the statute, Pinkney was not
discharged for misconduct Rather, he was discharged because he could not do
the work for which he was hired because he could not obtain a security guard
license. Thus, we conclude Corporate Security has not met its burden to show
that the Commissioner's decision was invalid.
C. Arbitrary and Capricious
Lastly, Corporate Security argues that the Commissioner's decision is
arbitrary and capricious because it did not find that Pinkney committed
misconduct and was terminated for that misconduct. We reject this argument.
"[A]gency action is arbitrary and capricious if it is willful and unreasoning
and taken without regard to the attending facts or circumstances." Wash. Indep.
Tel. Ass'n v. Wash. Utils. & Transp. Comm'n, 148 Wn.2d 887, 905, 64 P.3d 606(2003). The Commissioner reviewed the entire record, including the audio
-13-
No. 77138-8-1/14
recording of the administrative hearing. The Commissioner's decision is well-
reasoned and follows logically from its findings of fact. The Commissioner found
that, regardless of whether Pinkney revealed the complete details of his criminal
history, Corporate Security was admittedly uncertain but still decided to hire him.
After DOL's more elaborate investigation revealed a disqualifying conviction that
affected Pinkney's ability to perform the duties of a private security guard,
therefore, making him Ineligible to receive a security guard license, Corporate
Security terminated Pinkney. As a result, Pinkney "became unemployed through
no fault of his own, but through the employer's decision to hire him in spite of the
possibility that[Pinkney) would not meet the requirements of the job." Therefore,
we conclude the Commissioner's decision was neither arbitrary nor capricious.
We reverse the superior court's order and reinstate the Commissioner's
order finding Pinkney eligible for unemployment benefits.
il41...41 9_.
WE CONCUR:
WO
-14-