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Pavement Restorations Inc. v. Ralls

Court of Appeals of Tennessee, Jackson

February 17, 2017


         Session Date: January 19, 2017

         Appeal from the Chancery Court for Gibson County No. 21757 George R. Ellis, Chancellor

          Employee's employment was terminated for smoking in a company truck in violation of the employer's rule. Employee's initial request for unemployment benefits was denied. The Appeals Tribunal affirmed the denial of benefits, but the Commissioner's Designee later reversed, finding that employee's conduct was exempt from the definition of misconduct and concluding that the employee was, therefore, not terminated for work-related misconduct as defined in the unemployment compensation statutes. On appeal to the chancery court, the trial court concluded that evidence in the record supported the Commissioner's Designee's decision. Discerning no error, we affirm.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Michael R. Hill, Milan, Tennessee, for the appellant, Pavement Restorations, Inc.

          Herbert H. Slatery, III, Attorney General and Reporter; W. Derek Green, Assistant Attorney General for the appellees, Burns Phillips, Commissioner, Tennessee Department of Labor & Workforce Development.

          J. Steven Stafford, P.J., W.S., delivered the opinion of the court, in which Brandon O. Gibson, and Kenny Armstrong, JJ., joined.




         Defendant/Appellee Thomas E. Ralls ("Mr. Ralls") was employed as a field laborer with Pavement Restorations, Inc. ("Pavement Restorations") from September 28, 2011, until the termination of his employment on March 9, 2015. On March 16, 2015, Mr. Ralls filed a claim for unemployment benefits. The Defendant/Appellee Tennessee Department of Labor and Workforce Development ("the Department") rendered its initial decision on March 25, 2015, finding that Mr. Ralls had been discharged for work-related misconduct and was thus not entitled to receive unemployment benefits. On April 1, 2015, Mr. Ralls appealed the decision to the Department's Appeals Tribunal.

         The hearing officer for the Appeals Tribunal conducted a telephonic hearing on April 22, 2015. Neither Mr. Ralls nor Pavement Restorations was represented by counsel during the hearing. Instead, Mr. Ralls appeared on his own behalf, and Pavement Restorations' president and co-owner, Jon Hargett, appeared on its behalf.

         Mr. Hargett testified first, explaining that another co-owner[1] noticed an employee smoking in the back of a company crew cab truck on the crew's return trip from a job site to the Pavement Restorations shop. According to Mr. Hargett, the co-owner informed him that "someone in the back seat" was smoking and requested that he "find out who was in that truck." Mr. Hargett's account thereafter is as follows:

And so, I called the - the foreman on the job that was driving the truck to find out who was sitting in the back seat. And so, that was - they were about five minutes from the office. When they got here and [Mr. Ralls] came inside, I told him I needed to talk to both of them and he came inside and said he was embarrassed that he - he had fallen asleep on the way home and when he woke up, he just pulled out a cigarette and lit up and had only taken a couple of puffs off of it and then threw it out. So, but that's against ou[r] policy. So, due to that and the previous instances of violations of things, that I did the separation notice based on that.

         Mr. Hargett further clarified that the "previous instances of violations" referenced Mr. Ralls's four instances of tardiness in 2014. Mr. Hargett testified that Mr. Ralls was aware of the rules because they are located in the company handbook given to all employees and that employees are subject to termination upon even a single violation of any of the rules. Mr. Hargett added that Pavement Restorations had just discussed the no-smoking rule during an annual safety meeting only one month prior to the termination Mr. Ralls's employment.[2]

         Mr. Ralls testified that he had received "verbal warnings maybe twice in one year." Although Mr. Ralls concedes that he was aware of the company's no-smoking policy in company vehicles, Mr. Ralls asserted that "everybody at the company smokes and they all smoke in the vehicle." According to Mr. Ralls's account:

Well, I had just woken up and that's just, you know, when you wake up, that's what I - what I did and then I remembered and I threw it out. We was almost to the shop because I'm not trying to smoke in the vehicles. I was usually awake the whole time, you know, and I wait till we get to where we're going or whatever, but I mean, I don't think it's misconduct.

         On April 24, 2015, the Appeals Tribunal issued a written decision affirming the Department's decision. On May 14, 2015, Mr. Ralls appealed the decision to the Commissioner's Designee. On May 21, 2015, Mr. Hargett signed and returned an acknowledgment of appeal form wherein he indicated that Pavement Restorations did not "wish to have another hearing to present additional evidence." On June 1, 2015, the Commissioner's Designee reversed the Appeals Tribunal's decision, finding the following:

The record establishes that [Mr. Ralls] had received one prior warning which was issued because [he] was tardy four times in 2014. [Pavement Restorations] had recently discussed the prohibition against smoking in company vehicles, though [Mr. Ralls] noted that most employees smoked and most smoked in the company vehicles, even his supervisor. [Mr. Ralls] was in the back seat of company vehicle and fell asleep. When he woke up, he lit a cigarette out of habit but immediately realized what he had done and threw it out. [Pavement Restorations] learned about [Mr. Ralls] lighting the cigarette and discharged him.

         Based upon these facts, the Commissioner's Designee made the following conclusions of law:

. . . [T]he Appeals Tribunal incorrectly applied the law under T.C.A. § 50-7-303(a)(2).
There is insufficient evidence that [Mr. Ralls's] discharge was for disqualifying misconduct. The record establishes that one warning had been issued to [Mr. Ralls] in his three and a half year employment and the warning was not at all related to the infraction leading to . . . his discharge. His accidental, habit-based lighting of a cigarette before immediately throwing it out is not misconduct in this case. It seems that this infraction was an isolated incident without harmful intent.

         As a result, the Commissioner's Designee concluded that Mr. Ralls was eligible for unemployment benefits under Tennessee Code Annotated section 50-7-303(a)(2).

         Mr. Hargett, on Pavement Restorations' behalf, filed a petition to rehear the Commissioner's Designee's decision on June 10, 2015, claiming that the "facts [had] been distorted by [Mr. Ralls]" and describing additional evidence that was not introduced at the April 22, 2015 hearing. Specifically, Mr. Hargett asserted that the other co-owner witnessed Mr. Hargett smoking for a total of 4.7 miles before he disposed of the cigarette. The Commissioner's Designee denied Pavement Restorations' petition on June 16, 2015, noting that Pavement Restorations "ha[d] not explained why this information, if relevant, was not presented during the Appeals Tribunal hearing as required" and concluding that Pavement Restorations was "essentially requesting a second opportunity to meet its burden of proof."

         On July 27, 2015, Pavement Restorations timely filed a petition for judicial review of the agency decision in the Gibson County Chancery Court. The trial court heard oral argument on Pavement Restorations' petition on April 18, 2016. By order of May 10, 2016, the trial court affirmed the Commissioner's Designee's decision, concluding that there was evidence in the record to support the findings of the Commissioner's Designee and a reasonable basis in law for its decision to award unemployment benefits to Mr. Ralls. This appeal followed.


         Pavement Restorations raises two issues for review, which we have slightly restated, as follows:

1. Whether the Commissioner's Designee and the trial court erred in ruling that Mr. Ralls was not guilty of misconduct for violating Pavement Restorations' known policy.
2. Whether the Commissioner's Designee acted arbitrarily and capriciously by denying Pavement Restorations' petition to rehear.

         Standard of Review

         Tennessee Code Annotated section 50-7-304(i) contains the standards by which chancery courts are to review administrative decisions involving claims for unemployment compensation. This Court employs the same standard of review applicable to the trial court. See Armstrong v. Neel, 725 S.W.2d 953, 955 & n.1 (Tenn. Ct. App. 1986). Tennessee Code Annotated section 50-7-304(i)(2) provides that:

The [court] may affirm the decision of the commissioner or the chancellor may reverse, remand or modify the decision if the rights of the petitioner have been prejudiced because the administrative ...

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