PAVEMENT RESTORATIONS INC.
THOMAS E. RALLS, ET AL.
Date: January 19, 2017
from the Chancery Court for Gibson County No. 21757 George R.
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.
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
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.
Steven Stafford, P.J., W.S., delivered the opinion of the
court, in which Brandon O. Gibson, and Kenny Armstrong, JJ.,
STEVEN STAFFORD, JUDGE
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.
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.
Hargett testified first, explaining that another
co-owner 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
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.
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.
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.
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.
result, the Commissioner's Designee concluded that Mr.
Ralls was eligible for unemployment benefits under Tennessee
Code Annotated section 50-7-303(a)(2).
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."
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.
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
2. Whether the Commissioner's Designee acted arbitrarily
and capriciously by denying Pavement Restorations'
petition to rehear.
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