Davis-Lynch, Inc. v. Texas Employment Commission and Celedonio S. Reyes

Davis-Lynch v. TEC IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS, AT AUSTIN NO. 03-90-170-CV DAVIS-LYNCH, INC., APPELLANT vs. TEXAS EMPLOYMENT COMMISSION AND CELEDONIO S. REYES, APPELLEES FROM THE DISTRICT COURT OF TRAVIS COUNTY, 147TH JUDICIAL DISTRICT NO. 405,255, HONORABLE HUME COFER, JUDGE PRESIDING Davis-Lynch, Inc., appeals from a judgment affirming an award of unemployment benefits to its former employee, Celedonio S. Reyes, by the Texas Employment Commission (the Commission). Davis-Lynch contends the trial court erred because: (1) the Commission erroneously concluded that the facts, as stipulated, constituted good cause for Reyes to voluntarily terminate his employment; (2) the Commission's conclusion on the good-cause issue contravenes the policies underlying the Unemployment Compensation Act; and (3) the district court improperly conducted a "substantial evidence de novo" review. We will affirm the trial court's judgment. BACKGROUND The Commission's claims examiner awarded Reyes benefits on the basis of the following stipulated facts. Before quitting, Reyes had been employed at Davis-Lynch on an at-will basis, operating machinery and occasionally working on the assembly line. Each week Reyes was paid at an hourly rate for the total hours he had worked. Although not guaranteed a minimum number of hours' work, Reyes usually worked forty hours each week. In May 1986, Davis-Lynch unilaterally cut Reyes' weekly hours from forty to thirty, effectively reducing his pay by more than 20%. Reyes voluntarily terminated his employment, telling his supervisor that he was going to take a job in California. Reyes did not request additional work of other types before quitting, although he had done so previously when his normal tasks had taken less than forty hours to complete. After leaving Davis-Lynch, Reyes applied to the Texas Employment Commission for benefits under the Texas Unemployment Compensation Act, Tex. Rev. Civ. Stat. Ann. art. 5221b-1, et seq. (1987 & Supp. 1991) (the Act). The Act provides: "An individual shall be disqualified for benefits: (a) If the Commission finds that he has left his last work voluntarily without good cause connected with his work." Act, art. 5221b-3(a) (Supp. 1991). The Commission's claims examiner found that Reyes had good cause connected with his work for voluntarily terminating his employment and, consequently, awarded him benefits. Davis-Lynch appealed, and both an appeals tribunal and, subsequently, the Commission affirmed the award. Davis-Lynch then brought this suit in district court for judicial review of the Commission's decision. Following a hearing on both parties' motions for summary judgment, the trial court denied Davis-Lynch's motion, granted appellees' motion, and affirmed the Commission's decision. Davis-Lynch appeals the trial court's judgment, asserting that the court should, instead, have granted its motion for summary judgment. CLAIMS PROCEDURE When an employer believes its former employee to be disqualified from receiving benefits, the employer must supply the Commission with any facts adversely affecting the former employee's right to receive benefits. Act, art. 5221b-4(b) (Supp. 1991). A Commission claims examiner decides whether the former employee is disqualified and notifies the employee/claimant and former employer of the decision. Id. An aggrieved party may appeal the examiner's decision to a Commission appeals tribunal. Id. The appeals tribunal affirms or modifies the examiner's decision, after which an aggrieved party may appeal the tribunal's decision to the Commission. Act, art. 5221b-4(e). The Commission, which has the express power to compel production of additional evidence, then modifies, affirms, or sets aside the tribunal's decision. Id. A party dissatisfied with the Commission's decision may bring suit to obtain judicial review of the decision in district court. Act, art. 5221b-4(i) (Supp. 1991). Although the Act provides that "[s]uch trial shall be de novo," this language has been held to require employment of a substantial-evidence-de-novo review. Texas Employment Comm'n v. Texaco, Inc., 719 S.W.2d 243, 244 (Tex. App. 1986), writ dism'd, 741 S.W.2d 927 (Tex. 1988); Haas v. Texas Employment Comm'n, 683 S.W.2d 462, 464 (Tex. App. 1984, no writ); Instant Photo, Inc. v. Texas Employment Comm'n, 650 S.W.2d 196, 198 (Tex. App. 1983, no writ). See also Tex. Rev. Civ. Stat. Ann. art. 6252-13a § 21(g) (Supp. 1991). SCOPE OF JUDICIAL REVIEW At the heart of Davis-Lynch's complaint, in its fourth and fifth points of error, is the contention that the presence or absence of substantial evidence to support the Commission's decision was not the proper standard for the trial court to use in reviewing the Commission's decision. Davis-Lynch contends that the substantial-evidence test is necessitated only by an appellant's challenge to the Commission's findings of fact. Consequently, in a case decided on stipulated facts, the district court should not conduct a substantial-evidence review. Davis-Lynch argues, therefore, that substantial-evidence review was inappropriate in the present case because it had challenged only a legal conclusion. Several courts have considered the position urged by Davis-Lynch and held to the contrary. For example, the identical contention was rejected by the court in Nelson v. Texas Employment Comm'n, 290 S.W.2d 708 (Tex. Civ. App. 1956, writ ref'd), where the trial court's judgment recited that the decision of the Employment Commission was reasonably supported by substantial evidence: [A]ppellants complain that since they are not assailing any fact finding of the Texas Employment Commission, the substantial evidence rule has no application. . . . We fail to see the materiality of the point, or how the complained of recitation, whether proper or improper, can, under this record, constitute error. It appears to be established that actions to review decisions of the Texas Employment Commission are governed by the substantial evidence rule. [Citations omitted.] Since in the present case all facts were stipulated, the sole question presented is whether such undisputed facts support the decision of the Commission, and the judgment of the trial court. 290 S.W.2d at 710; see also Norris v. Texas Employment Comm'n, 688 S.W.2d 125, 128 (Tex. App. 1985, writ ref'd n.r.e.); Martinez v. Texas Employment Comm'n, 570 S.W.2d 28, 30 (Tex. Civ. App. 1978, no writ). In a substantial-evidence-de-novo review, the district court determines whether the Commission acted arbitrarily, capriciously, or without regard to the facts or the law in making its decision. Haas, 683 S.W.2d at 464; Martinez, 570 S.W.2d at 30; Circuitronics, Inc. v. Texas Employment Comm'n, 561 S.W.2d 555 (Tex. Civ. App. 1978, writ ref'd n.r.e.). See also Gerst v. Guardian Savings & Loan Ass'n, 434 S.W.2d 113, 115 (Tex. 1968). We conclude that the district court conducted the appropriate review, and we overrule Davis-Lynch's fourth and fifth points of error. GOOD CAUSE DETERMINATION In its first, second, and third points, Davis-Lynch complains of the Commission's conclusion that the stipulated facts constitute good cause for Reyes to have voluntarily terminated his employment. Davis-Lynch asserts, first, that the good cause issue is one of law, susceptible of independent determination by the district court and, second, that the Commission's conclusion that these facts constitute good cause goes against the policy underlying the Act. As we have concluded above, the district court properly used a substantial-evidence review in considering Davis-Lynch's challenge to the Commission's good-cause determination. In such a review, a court may not substitute its judgment for that of the Commission, even if it would have reached a different conclusion than the one the Commission reached. See Texas Employment Comm'n v. Holberg, 440 S.W.2d 38, 42 (Tex. 1969); City of San Antonio v. Texas Water Comm'n, 407 S.W.2d 752, 756 (Tex. 1966); DeLeon v. Texas Employment Comm'n, 529 S.W.2d 268, 270 (Tex. Civ. App. 1975, writ ref'd n.r.e.). Only a showing that the Commission's decision was arbitrary, capricious, or made without reference to the law or the facts would compel us to reverse the judgment below and remand the cause to the Commission. One purpose of the Act is to alleviate the economic plight of workers who have become unemployed through no fault of their own. Martinez, 570 S.W.2d at 32. The legislature attempted to accomplish this goal by statutorily disqualifying workers who voluntarily leave their jobs from receiving benefits unless they had "good cause" for doing so that was connected with the work. Act, art. 5221b-3(a) (Supp. 1991). Consequently, the Commission's finding that a particular claimant had good cause to voluntarily terminate his employment necessarily implies that the claimant became unemployed through no fault of his own. Davis-Lynch's complaint, therefore, is apparently an assertion that, as a matter of law, the Commission could not have found good cause under these facts. We conclude that the Commission's decision in this regard was not arbitrary, capricious, or made without regard to the law or the facts. Davis-Lynch attempts to show error in the Commission's decision by claiming that it failed to consider all the relevant factors in determining that Reyes had good cause to quit, specifically, that Reyes had not requested additional work, that he had been guaranteed no specific number of hours, and that he was not designated to be laid off. We disagree. Indeed, the Commission's written decision expressly considers all of these factors. We find no error in this respect. Davis-Lynch next argues that we should lay down a rule that only facts amounting to "constructive firing" will constitute good cause in future cases. In other words, Davis-Lynch would have us restrict the Commission to finding good cause only in those situations clearly demonstrating the employer's desire to force the employee into surrendering his employment voluntarily. We decline to express a view on this theory, as it is unnecessary to the resolution of this case. The parties agree that the term "good cause," as used in section 3(a) of the Act is a cause, "related to the work, as would cause a person who is genuinely interested in retaining work to nevertheless leave the job." The Commission concluded that good cause existed for Reyes to terminate his employment based on the following facts: Davis-Lynch unilaterally reduced the hours of all its employees by 25% per week. This reduction in hours translated into a weekly pay decrease for Reyes of more than 20%. In addition, the hours/pay cut came during a time when rumors of an impending layoff were circulating. Reyes quit without seeking additional hours of work. Davis-Lynch makes much of Reyes' failure to ask for additional hours of work. We are not persuaded that this fact alone renders the Commission's good-cause determination arbitrary or capricious. The reduction in hours applied to all the workers; the Commission could reasonably have concluded that additional work would not have been available if Reyes had asked for it. We conclude that the Commission's good-cause determination was not made without regard to these facts and was not arbitrary or capricious. Davis-Lynch contends, as a final matter, that the summary judgment should be reversed and judgment rendered in its favor on the basis that, regardless of whether the good-cause determination was appropriately made, Reyes voluntarily terminated his employment for a reason not connected with the work. We disagree. Although Reyes told his foreman that he was leaving to take a job in California, the record is devoid of evidence that Reyes actually became employed there or anywhere else after leaving Davis-Lynch. In addition, our review of the record shows the Commission reasonably could have concluded that Reyes was genuinely interested in retaining work, notwithstanding his failure to ask for additional work. We overrule Davis-Lynch's first, second, and third points of error. We affirm the trial court's judgment. J. Woodfin Jones, Justice [Before Chief Justice Carroll, Justices Jones and B. A. Smith] Affirmed Filed: July 3, 1991 [Do Not Publish]