Town of Cedar Lake v. Review Board of the Indiana Department of Workforce Development, and Nicole Hoekstra (mem. dec.)

MEMORANDUM DECISION Pursuant to Ind. Appellate Rule 65(D), FILED this Memorandum Decision shall not be Jun 20 2016, 9:50 am

regarded as precedent or cited before any CLERK Indiana Supreme Court court except for the purpose of establishing Court of Appeals and Tax Court the defense of res judicata, collateral estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE David M. Austgen REVIEW BOARD Adam M. Sworden Gregory F. Zoeller Austgen Kuiper Jasaitis, P.C. Attorney General of Indiana Crown Point, Indiana Aaron T. Craft Deputy Attorney General Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Town of Cedar Lake, June 20, 2016 Appellant, Court of Appeals Case No. 93A02-1512-EX-2165 v. Appeal from the Review Board of the Department of Workforce Review Board of the Indiana Development Department of Workforce Steven F. Bier, Chairperson, Development, and Nicole George H. Baker, Member, and Hoekstra, Larry A. Dailey, Member.

Appellees. Cause No. 15-RB-1904 Bradford, Judge. Court of Appeals of Indiana | Memorandum Decision 93A02-1512-EX-2165 | June 20, 2016 Page 1 of 9

Case Summary [1] Between 2013 and 2015, Appellee Nicole Hoekstra was an employee of

Appellant the Town of Cedar Lake (“Cedar Lake”). On July 10, 2015, Cedar

Lake terminated Hoekstra’s employment for unsatisfactory work performance

and dissemination of confidential information. A claims deputy for the Indiana

Department of Workforce Development (“the Department”) determined that

Cedar Lake did not have “just cause” to discharge Hoekstra and, as a result,

Hoekstra was eligible for unemployment benefits. Cedar Lake appealed the

decision and an Administrative Law Judge (“ALJ”) affirmed the deputy’s

decision, concluding that Cedar Lake did not have just cause to terminate

Hoekstra because she did not disseminate confidential information and Cedar

Lake failed to follow its own progressive discipline policy. Upon final review

by the Department’s Review Board (“the Board”), the Board affirmed the ALJ’s

decision and adopted its findings of fact and conclusions of law. On appeal,

Cedar Lake contends that there was insufficient evidence to support the Board’s

determination that Hoekstra was not discharged for just cause. We affirm the

Board’s decision.

Facts and Procedural History [2] Hoekstra began working for Cedar Lake as an administrative assistant and

special events coordinator on April 15, 2013. On July 10, 2015, Cedar Lake

terminated Hoekstra’s employment for unsatisfactory work performance,

violation of Cedar Lake’s policy on email use, and dissemination of

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confidential information. In the termination notice sent to Hoekstra, Cedar

Lake outlined the incidents of alleged misconduct which included failure to

complete various assigned tasks in a timely manner, failure to attend two town

events (Flag Day and Chamber of Commerce Business Expo), and deleting

emails which Cedar Lake considered destruction of public records. The notice

also listed a general violation of Cedar Lake’s policy prohibiting “Disclosure of

confidential Town information to outsiders without proper authorization.”

Appellant’s App. p. 12. Cedar Lake alleged that Hoekstra violated this policy

by emailing the meeting minutes regarding an engineering project to

Eric Wolverton, one of the engineers working on the project. Cedar Lake

acknowledges that these records were available to the public but maintained

that a public record request was required. Hoekstra testified that Wolverton

informally requested the minutes, that he was the design engineer for the

project, that he typically attended the meetings but was unable to attend this

particular meeting, and that she did not believe any of the information she

shared was confidential. [3] On August 28, 2015, a claims deputy for the Department determined that

Cedar Lake did not have just cause to discharge Hoekstra and that she was

entitled to unemployment benefits. Cedar Lake appealed the decision and an

ALJ held a hearing on October 15, 2015. On October 19, the ALJ affirmed the

deputy’s decision, concluding that Cedar Lake did not have just cause to

terminate Hoekstra. The ALJ’s findings of fact were, in relevant part, as

follows:

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Employer had a policy on email use. See Employer Exhibit 1 (Section IV ?D). “Improper (i.e. Immoral, Unethical and Unprofessional) use of the Town’s computers and the Town’s email system will not be tolerated.” Employer’s policy did not further define what proper use was. The policy did not specify if email could be used for personal use. Employer testified that there was a policy on retaining email. Employer did not submit the policy for the record. [Hoekstra] refused to stipulate to the policy. The [ALJ] finds there was no Employer policy on the retention of emails. While there are state laws that require government to maintain email for a certain amount of time, no evidence was offered that Employer ever made [Hoekstra] aware of these laws.

In the three years that [Hoekstra] worked for Employer, she received two promotions. Employer had a progressive discipline policy to correct unsatisfactory work performance or misconduct by employees. Employer never issued any steps of discipline to [Hoekstra] per the progressive discipline policy.

Employer would assign [Hoekstra] tasks, but not set a deadline. [Hoekstra] worked on several projects simultaneously for Employer. Employer did not prioritize the projects for [Hoekstra]. Jill Murr felt [Hoekstra] was not completing her duties in a timely manner. Murr felt [Hoekstra] was a poor communicator. Rather than use the progressive discipline policy to correct any deficiency in [Hoekstra]’s performance, Murr compiled records of everything [Hoekstra] had done wrong. See Employer’s Exhibit 5. Murr did not confront [Hoekstra] about the failures.

[Hoekstra] did use her email for personal limited use. She used it on break times when Employer allowed such activity. [Hoekstra] carried on several conversations with Eric Wolverton, an engineer that worked on projects for the city. [Hoekstra]’s tone with Wolverton was friendly and personal, but was not unprofessional. [Hoekstra] provided Wolverton with information about city projects. That information was not Court of Appeals of Indiana | Memorandum Decision 93A02-1512-EX-2165 | June 20, 2016 Page 4 of 9

confidential. As someone who worked for the city, Wolverton had an interest in knowing what was going on in city government. Wolverton did not file form requests under the Access to Public Records Act, but [Hoekstra] provided the information on the basis of an informal request. Employer had no policy that employees could not provide public information to the public.

[Hoekstra] deleted several emails from her computer. [Hoekstra]’s email box was full, and this caused [Hoekstra] to be unable to send or receive messages. [Hoekstra] deleted sent emails to free up space. Later the email was expanded, and [Hoekstra] was again able to use her email. Employer had its IT department retrieve the deleted emails, which had not been completely deleted from the system.

Appellant’s App. pp. 2-3. [4] Among its conclusions of law, the ALJ found that (1) Cedar Lake’s email

policy “was a guideline rather than a rule because it did not define prohibited

conduct,” (2) “prohibitions against immoral, unethical, and unprofessional

conduct are too vague to inform an employee of what type of behavior will

violate the policy,” (3) “an employee could not knowingly violate the policy,”

and (4) Hoekstra did not use her work email in an immoral, unethical, or

unprofessional manner. Appellant’s App. p. 4. The ALJ also found that Cedar

Lake “had a progressive discipline policy to inform employees when they were

failing to meet employer’s reasonable expectation,” did not use its progressive

discipline policy with Hoekstra, did not attempt to correct any perceived

deficiency in Hoekstra’s conduct, did not inform Hoekstra that her work was

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unacceptable, and that “[a] reasonable employee would not understand that the

conduct here would lead to discharge.” Appellant’s App. p. 4. [5] On November 3, 2015, Cedar Lake appealed the ALJ’s decision to the Board.

On November 20, the Board affirmed the ALJ’s decision and adopted the

ALJ’s findings of facts and conclusions of law.

Discussion and Decision Standard of Review [6] Cedar Lake appeals the Board’s determination that Hoekstra was not

discharged for just cause and, therefore, is eligible for unemployment benefits.

Our standard of review for a determination by the Board is threefold. “We

review the Board’s findings of basic facts under a ‘substantial evidence’

standard, and we neither reweigh the evidence nor assess its credibility. We

consider only the evidence most favorable to the Board’s findings and, absent

limited exceptions, treat those findings as conclusive and binding.” Chrysler

Grp., LLC v. Review Bd. of Ind. Dep’t of Workforce Dev., 960 N.E.2d 118, 122 (Ind.

2012); see also Ind. Code § 22-4-17-12 (“Any decision of the review board shall

be conclusive and binding as to all questions of fact.”). “Ultimate facts––

typically mixed questions of fact and law––are reviewed to ensure the Board

has drawn a reasonable inference in light of its findings on the basic, underlying

facts.” Id. We give more deference to the Board where the matter lies within

the particular expertise of the administrative agency. Id. Finally, we generally

review the Board’s conclusions of law de novo; however, “[a]n interpretation of Court of Appeals of Indiana | Memorandum Decision 93A02-1512-EX-2165 | June 20, 2016 Page 6 of 9

a statute by an administrative agency charged with the duty of enforcing the

statute is entitled to great weight, unless this interpretation would be

inconsistent with the statute itself.” Id. at 123 (quoting LTV Steel Co. v. Griffin,

730 N.E.2d 1251, 1257 (Ind. 2000)).

Whether Hoekstra was Discharged for Just Cause [7] The purpose of Indiana’s Unemployment Compensation Act (“the Act”) is to

“provide for payment of benefits to persons unemployed through no fault of

their own.” Ind. Code § 22-4-1-1. However, an individual is ineligible for

unemployment benefits if he or she is discharged for “just cause.” P.K.E. v.

Review Bd. of Ind. Dep’t of Workforce Dev., 942 N.E.2d 125, 130 (Ind. Ct. App.

2011) (citing Ind. Code § 22-4-15-1). According to the Act, “discharge for just

cause” includes, but is not limited to, an employee’s “knowing violation of a

reasonable and uniformly enforced rule of an employer,” “refusing to obey

instructions,” or “any breach of duty in connection with work which is

reasonably owed an employer by an employee.” Ind. Code § 22-4-15-1(d).

This court has previously held that “[t]o find that a discharge was for just cause,

the Review Board must first find that: (1) there was a rule; (2) the rule was

reasonable; (3) the rule was uniformly enforced; (4) the claimant knew of the

rule; and (5) the claimant knowingly violated the rule.” S.S. LLC v. Review Bd.

of Ind. Dep’t of Workforce Dev., 953 N.E.2d 597, 601 (Ind. Ct. App. 2011) (citing

Barnett v. Review Bd., 419 N.E.2d 249 (Ind. Ct. App. 1981)).

Court of Appeals of Indiana | Memorandum Decision 93A02-1512-EX-2165 | June 20, 2016 Page 7 of 9 [8] On appeal, Cedar Lake reiterates the arguments it made to the ALJ and Board;

that Hoekstra underperformed on regular tasks and knowingly violated rules in

the employee handbook. However, Cedar Lake does not dispute nor even

address the Board’s determination that Cedar Lake failed to utilize its own

progressive discipline policy, and it is this determination that appears to be at

the crux of the Board’s ultimate conclusion. Cedar Lake’s progressive

disciplinary policy provides for the corrective action Cedar Lake would take in

the event of disciplinary violations by an employee. Disciplinary violations are

categorized into Group I and Group II Rules, the latter being the more serious

violations. The policy provides that

If a violation of a Group I rule occurs, the Department Head will use the following procedures: Step 1. Corrective interview, confirmed in writing. Step 2. Violation of any Group I rule, within the calendar year, may subject the employee to up to 3 days suspension without pay. Step 3. Violations of any Group I Rule, following a disciplinary suspension will be subject to termination. (Pending review by a Town Council hearing).

Ex. p. 73. The policy further provides that “Any violation of a Group II rule

will result in the employee being relieved from duty with pay from 3 to 5 days

and may be subject to termination pending an Administrative hearing.” Ex. p.

74. The only Group II rule which Hoekstra was alleged to have violated was

“Disclosure of confidential Town information.” Ex. p. 74.

Court of Appeals of Indiana | Memorandum Decision 93A02-1512-EX-2165 | June 20, 2016 Page 8 of 9 [9] The Board specifically found that “[Cedar Lake] never issued any steps of

discipline to [Hoekstra] per the progressive discipline policy,” did not “use the

progressive discipline policy to correct any deficiency in [Hoekstra]’s

performance,” did not confront Hoekstra about the alleged failures in her

performance, and promoted Hoekstra twice during her three years working for

Cedar Lake. Appellant’s App. p. 4. Again, Cedar Lake does not contest these

findings. Because Cedar Lake ignored its own policy and gave Hoekstra no

indication that she had violated any rules, we conclude that Cedar Lake’s

disciplinary rules were not uniformly enforced and that there is insufficient

evidence that Hoekstra knowingly violated the rules. See Coleman v. Review Bd.

of Ind. Dep’t of Workforce Dev., 905 N.E.2d 1015, 1021 (Ind. Ct. App. 2009)

(employer failed to use its progressive discipline policy to deal with employee’s

improper email use and so evidence was insufficient to find that claimant

knowingly violated a uniformly enforced rule). [10] Furthermore, concerning the single alleged Group II violation––the only

violation which would be eligible for termination on the first offense––the

Board found, and Cedar Lake concedes, that the records released by Hoekstra

were public and not confidential. Accordingly, Hoekstra’s actions would not

qualify as “disclosure of confidential Town information” sufficient to establish

a Group II violation. [11] The judgment of the Board is affirmed.

Bailey, J., and Altice, J., concur.

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