City of Morristown v. Rebecca A. Long

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
February 17, 2005 Session

CITY OF MORRISTOWN v. REBECCA A. LONG

Appeal from the Chancery Court for Hamblen County
No. 2003-64 Ben K. Wexler, Chancellor

No. E2004-01545-COA-R3-CV - FILED MARCH 31, 2005

The appellant was discharged from her job by the City of Morristown based upon allegations that
she participated in the use, possession, sale and distribution of marijuana in violation of the City’s
policy against illegal drugs in the workplace. She applied for unemployment benefits and her claim
was denied. She appealed the denial of benefits and both the Appeals Tribunal and the Board of
Review of the Employment Security Division of the Tennessee Department of Labor and Workforce
Development ruled that she was eligible for unemployment benefits because the City failed to prove
the alleged illegal drug activity. The trial court reversed the decision of the Board of Review. We
hold that the trial court exceeded its authority under the applicable standard of review, and therefore,
we reverse the judgment of the trial court and remand.

Tenn. R. App. P. 3 Appeal as of Right ; Judgment of the Chancery Court Reversed; Cause
Remanded

SHARON G. LEE, J., delivered the opinion of the court, in which D. MICHAEL SWINEY and PATRICIA
COTTRELL, JJ., joined.

P. Richard Talley, Dandridge, Tennessee, for the Appellant, Rebecca A. Long

Paul G. Summers, Attorney General and Reporter, and Warren A. Jasper, Assistant Attorney
General, Nashville, Tennessee, for the Appellee, James G. Neely, Commissioner, Tennessee
Department of Labor and Workforce Development

Lori L. Jessee, Morristown, Tennessee, for the Appellee, City of Morristown

OPINION

On or about October 7, 2002, the appellant, Rebecca A. Long, was terminated from her
employment with the Tax Office of the appellee City of Morristown (hereinafter “the City”) upon
charges that she had violated the City’s policy regarding illegal drugs in the workplace. This policy,
established pursuant to Tenn. Code Ann. §50-9-101, et seq, provides that “[i]t is a violation of City
policy for any employee to use, possess, sell, trade, offer to sale [sic], or offer to buy illegal drugs
or otherwise engage in the illegal use of drugs on or off the job.”

Evidence supporting the City’s allegations against Ms. Long was apparently gathered during
the course of an investigation with respect to missing City funds. Shortly after she was discharged,
Ms. Long submitted a claim for unemployment compensation to the Tennessee Department of Labor
and Workforce Development (hereinafter “the Agency”). However, this claim was denied by the
Agency pursuant to Tenn. Code Ann. § 50-7-303 upon a finding of work related misconduct. The
Agency’s decision, dated October 28, 2002, provides in pertinent part as follows:

CLAIMANT WAS DISCHARGED FROM MOST RECENT WORK FOR
VIOLATION OF POLICIES ON INTOXICANTS. THE EMPLOYER HAD
ADVISED ALL EMPLOYEES OF THE POLICIES RELATIVE TO
INTOXICANTS. CLAIMANT DID SIGN THE DRUG FREE WORKPLACE
POLICY. CLAIMANT WAS AWARE THAT VIOLATIONS OF THIS POLICY
WOULD RESULT IN DISCIPLINARY ACTION UP TO AND INCLUDING
TERMINATION. CLAIMANT’S ACTIONS WERE WITNESSED BY OTHER
PERSONNEL.

SINCE THE CLAIMANT WAS AWARE OF THE COMPANY POLICIES ON
INTOXICANTS AND VIOLATED SUCH, THE AGENCY FINDS WORK-
RELATED MISCONDUCT UNDER TENNESSEE CODE ANNOTATED 50-7-
303 AND BENEFITS ARE DENIED.

The referenced Code section, Tenn. Code Ann. § 50-7-303, provides at subsection (a)(2) that
unemployment benefits shall be denied upon a finding that the claimant has been discharged from
his or her most recent work for work-related misconduct.

Ms. Long appealed the Agency’s decision to the Agency’s Appeals Tribunal on October 31,
2002. Based upon the following findings and conclusions, the Appeals Tribunal reversed the
Agency’s decision:

After carefully considering the testimony and the entire record in the case, the
Appeals Tribunal makes the following:

FINDINGS OF FACT: Claimant’s most recent employment prior to filing this
claim was with the City of Morristown from September 14, 1998, until October
7, 2002, as a revenue officer. The city became aware of a missing deposit. It
began searching for the deposit and found other problems with its finances. It
turned the matter over to the police. The police questioned the claimant, her co-
workers, and her friends at work. Sometime during its investigation, the police
discovered that the use of drugs was involved with the people it questioned. Two
employees admitted to drug use during the investigation. One admitted to the

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 police that she had bought drugs from the claimant and had paid for them at work.
One employee admitted to the police to seeing drugs at work and hearing
conversations about it, but she denied using drugs herself. These three employees
had never told the city about what they had observed at work prior to being asked
about the financial problems. They all pointed out that the claimant had used
marijuana, sold it at work, arranged to buy it at work, and that her boyfriend used
drugs. The police did not question the claimant about drugs. The police reported
its findings to the employer. The employer disciplined the other employees in
various ways. The employer terminated the claimant without talking to her about
the drug issue. It terminated the claimant rather than disciplining her because it
was reported that she had drugs on city property and had offered it for sale. The
employer has a drug policy. It has adopted the Drug Free Workplace Policy
codified at TCA 50-9-100 et seq. The employer also informs its employees that
it can terminate an employee for behavior away from work that brings dishonor
to themselves or the employer. Since her termination, the claimant has denied any
connection with drugs to the employer. The employer asked the claimant to
submit to a drug test. The claimant did so. The test was negative for drugs.

CONCLUSIONS OF LAW: The Appeals Tribunal holds the claimant is eligible
for benefits. The issue is whether the employer terminated the claimant for
misconduct, according to TCA 50-7-303(a)(2). The evidence establishes the
employer terminated the employee for violating its drug policy. Although the
employer’s witnesses have testified the claimant did use drugs and was involved
in selling drugs, the claimant’s drug test shows she was not using drugs or
involved with drugs. Even assuming the employer proved the claimant has used
drugs, it has failed to prove the claimant’s actions were so different that the other
employees involved that she deserved termination, while they received a lesser
punishment. Two of them had used drugs, and one testified she paid for it at
work. She paid the claimant for the drugs. In other words she was the second
party to a drug transaction at work, yet she was not terminated. The other had
observed drugs and overheard drug deals, but none of them had ever reported this
at all before the issue concerning the lost money surfaced.
Misconduct is an act by an employee that breaches a duty the employee owes the
employer. The employer has the burden of proof in this matter. Using drugs at
work or being involved with them in violation of the employer’s policy is
misconduct. The employer has failed to prove the claimant used drugs or was
involved with drugs at work or away from work. Even if it had, it has failed to
prove the claimant’s actions were a breach of duty deserving termination, while
the other employees involved did not breach a duty and did not deserve
termination.

The City appealed the decision of the Appeals Tribunal to the Agency’s Board of Review.
After hearing the testimony of witnesses and reviewing other evidence in the case, the Board of

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Review determined that the Appeals Tribunal was correct in its findings of fact and application of law
and the Tribunal’s decision in favor of Ms. Long was affirmed. The Board of Review’s decision
provides as follows:

FINDINGS OF FACT: The claimant’s most recent employment prior to filing
this claim for benefits was as a revenue officer for the City of Morristown from
September 14, 1998 until October 4, 2002.

The employer discovered that there were two missing deposits “from the office
that (the claimant) worked in” totalling approximately $18,000.00 and “turned
everything we had over to the Morristown Police Department.” During the police
investigation, “statements came out concerning the use of drugs.” One co-worker
employed as a secretary in the City police department’s narcotics division reported
that the claimant had smoked marijuana a couple of months prior while the two
were away from the workplace on a lunch break and that she had given the
claimant money at the workplace that the claimant was to use to buy marijuana for
her (the co-worker). Another co-worker who worked in the same office with the
claimant reported that the claimant had had marijuana at the workplace, used the
“city’s telephone to arrange transactions” to purchase marijuana, and had large
amounts of cash in her purse at the workplace. The claimant denied the co-
workers reports and insisted that she did not use marijuana. The claimant
complied with the employer’s request that she take a drug test and a September
30, 2003 drug test report showed negative results for drugs, including marijuana.
The claimant was subsequently discharged effective October 4, 2002 for violation
of the employer’s “drug free workplace policy.” In accordance with that policy,
“(I)t is a violation of City policy for any employee to use, possess, sell, trade, offer
to sell, or offer to buy illegal drugs or otherwise engage in the illegal use of drugs
on or off the job.” The policy further indicated that violations “are subject to
disciplinary action up to and including termination.”

The claimant filed a grievance with her department head and that grievance was
denied. She then sought a hearing before the city administrator who upheld her
termination. The co-worker working in the same office as the claimant was
disciplined by the employer but maintained employment. The other co-worker
who worked as a secretary in the narcotics department was suspended without pay
for two weeks and then transferred to another department and placed on probation
for a period of six months. During the police investigation, the chief of police
indicated to that employee that he would “work against her being terminated” and
“do what he could to maintain her employment.” The city administrator offered
that the police chief’s approach in obtaining information from that co-worker was
“typical of what the police department uses in criminal investigations.” The city
administrator discussed the matter with the police chief who believed that he had

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 “felt like had said to (the co-worker) that he would work with her to try for her not
to lose her employment.”

CONCLUSIONS OF LAW: The Board finds that the claimant was discharged but
does not find the evidence sufficient to establish misconduct within the meaning
of TCA § 50-7-303(a)(2). The claimant was discharged amid allegations that she
violated the employer’s “drug-free workplace policy.” The claimant has
consistently denied those allegations. Two of the co-workers alleging the
claimant’s conduct provided testimony before the Board. The claimant has
speculated that her office co-worker may have provided untruthful statements in
the investigation “perhaps because (she) worked within (the claimant’s)
department.” Such motivation to discredit the claimant, particularly given the
underlying investigation concerning the missing monies, is not implausible.
Taking that possibility into account, other credible evidence presented in this case
shows disputed testimony between the claimant and the other co-worker.
Information from that other co-worker was obtained using an approach “typical
of what the police department uses in criminal investigations.” Given all the
circumstances, the Board does not find the evidence as presented sufficient to
reasonably establish conduct by the claimant in violation of the employer’s drug
policies.

That finding notwithstanding, however, the Board notes the inequality of
disciplinary action applied to the claimant, who was discharged although denying
the allegations presented, and the narcotics department secretary, who was
suspended although admitting a violation of the employer’s drug policy. Given
that inequality, the Board finds that it cannot be said that the claimant’s conduct,
even if as alleged, should warrant a finding of misconduct in this case.

DECISION: The previous decision of the Board of Review that approved this
claim is affirmed.

On December 9, 2003, the City filed a petition pursuant to Tenn. Code Ann. §50-7-304(i)
in the Chancery Court for Hamblen County for judicial review of the decisions of the Appeals
Tribunal and Board of Review. The petition states that review is sought upon the following grounds:

(I). Rights of the City have been prejudiced because the administrative findings,
inferences, conclusions and decisions are unsupported by evidence which is both
substantial and material in light of the entire record and (ii) the decision of the
Agency and its reviewing bodies is arbitrary, capricious, characterized by an abuse
of discretion and/or a clearly unwarranted exercise of discretion and is based upon
erroneous factual and legal considerations and conclusions.

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 By judgment and accompanying memorandum opinion, the trial court reversed the decisions
of the Agency Appeals Tribunal and Board of Review and denied Ms. Long her requested
unemployment benefits. Thereafter, Ms. Long filed her notice of appeal to this Court.

The sole issue we address is whether, under the applicable standard of review, the trial court
erred in reversing the decisions of the Agency’s Appeals Tribunal and Board of Review.

Tenn. Code Ann. §50-7-304(i) provides that, upon proper application, the Chancery Court
may review an Agency decision under the following standard:

(2) The chancellor may affirm the decision of the board or the chancellor may
reverse, remand or modify the decision if the rights of the petitioner have been
prejudiced because the administrative findings, inferences, conclusions or
decisions are:
(A) In violation of constitutional or statutory provisions;
(B) In excess of the statutory authority of the agency;
(C) Made upon unlawful procedure;
(D) Arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion; or
(E) Unsupported by evidence which is both substantial and material in the
light of the record.
(3) In determining the substantiality of evidence, the chancellor shall take into
account whatever in the record fairly detracts from its weight, but the chancellor
shall not substitute the chancellor’s judgment for that of the board of review as
to the weight of the evidence on questions of fact. No decision of the board shall
be reversed, remanded or modified by the chancellor unless for errors which affect
the merits of the final decision of the board. Such petition for judicial review
shall be heard by the chancellor either at term time or vacation as a matter of right,
any other statute of this state to the contrary notwithstanding. (Emphasis added)

In accord with this statute, the Tennessee Supreme Court has indicated that an agency’s
factual determinations should be upheld by a reviewing court if supported by “substantial and
material evidence” defined as “such relevant evidence as a reasonable mind might accept to support
a rational conclusion and such as to furnish a reasonably sound basis for the action under
consideration.” Southern Ry. Co. v. State Bd. of Equalization, 682 S.W.2d 196, 199 (Tenn. 1984).

We base our analysis of the trial court’s decision in this case upon recitations set forth in its
memorandum opinion. The opinion re-states the previously noted grounds which the City asserted
in support of its application for judicial review and continues as follows:

15. Long was terminated by the City in October 2002, [for] violation of the City’s
policies relating to illegal drugs. Evidence of drug involvement by Long

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was discovered by the City during an investigation of missing funds from the City
tax office where Long was employed. The City presented testimony before the
agency and its reviewing bodies, of three coworkers of Long, who testified that
Long used marijuana during work hours, sold marijuana to at least one coworker,
collected payment for illegal substances during working hours at her place of
employment with the City, and possessed marijuana during working hours at her
place of employment. This testimony was presented live, and by written statement
established that Long violated the City illegal drug policies by possessing
marijuana, using marijuana, offering marijuana for sale to other City employees,
and distributing marijuana to other City employees. She was terminated on this
basis in October 2002.

16. Long denied all the allegations of her coworkers and relied upon a
negative drug test as her only defense to the above allegations. She presented no
witnesses and presented no proof other than her personal speculation that the
coworkers that testified fabricated all this marijuana evidence to the Morristown
Police during the missing money investigation. One of the coworkers that
testified was not employed at the tax office and had no connection to any pending
investigation of money missing from the tax office, and there had been several
days that had elapsed between the administration of the drug test and the time the
alleged drug use by Long as testified to by her coworker. Usually marijuana only
stays in the blood system of a marijuana user some 20 to 25 days. The evidence
by the coworker was she used marijuana in late August and the drug test was in
late September the negative drug test did not refute the allegations of drug
possession, drug sale and drug distribution to other city employees.

17. The City asserts that the weight of the evidence establishes that the
City terminated Long for misconduct connected with work. It is the City’s
position that the decision(s) of the Appeals Tribunal and the Board of Review of
the Agency are against the weight of substantial and material evidence
establishing misconduct connected with work by Long and such decision(s) are
not supported by substantial and material evidence in light of the entire record.

18. In addition, the Agency’s legal and factual analysis is in error as it
relates to considerations of the punishment of coworkers who provided testimony
of Long’s drug involvement. Respectfully, the City asserts that disciplinary action
taken by it with respect to employees other than Long was not germane to the
issue before the Agency and its reviewing bodies in determining whether Long
was terminated for misconduct connected with work. Such considerations were
not relevant to the determination of the issues before the Agency and its reviewing
bodies and/or were given inordinate weight in reaching this decision and thus
constitute and contributed to a decision which is arbitrary, capricious,

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 characterized by abuse of discretion and/or a clearly unwarranted exercise of
discretion.

19. The Board of Review, in its conclusions of law states as follows:
“Given all the circumstances the Board does not find the evidence as presented
sufficient to reasonably establish conduct by the claimant in violation of the
employees [sic] drug policies.”

“That finding notwithstanding, however, the Board notes the inequality of
disciplinary action applied to the claimant who was discharged although denying
the allegation presented, and the narcotics department secretary, who was
suspended although admitting a violation of the employer’s drug policy. Given
that inequity, the Board finds that it cannot be said that the claimants [sic]
conduct, even if as alleged, should warrant a finding of misconduct in this case.”
It is alleged in this case and there is some evidence that Long used marijuana used
marijuana during working hours, sold marijuana to a coworker, received payment
for marijuana during working hours at her place of employment and possessed
marijuana during working hours at their place of employment, all of the above is
in violation of the City’s illegal drug policies.

The previous decision of the Board of Review that approved this claim for
benefits pursuant to T.C.A. Sect. 50-7-303 is denied.

Upon our review of the decisions of the Agency’s Appeals Tribunal and Board of Review,
the judgment of the trial court and the record as a whole, it is our determination that the trial court
erred in reversing the decisions of the Agency’s Appeal Tribunal and Board of Review.

The trial court’s decision in this case was based solely upon the record of the proceedings
before the Appeals Tribunal and the Board of Review. Evidence in the proceedings before the
Agency’s reviewing bodies consisted of witness testimony and the results of a blood test for the use
of marijuana. Three of Ms. Long’s co-workers -Sonya Bunch, Kim Humbard and Glenda Pike- gave
evidence that they had personally witnessed Ms. Long violating the City’s policy against illegal
drugs.

Sonya Bunch was a former employee of the cashier’s office of the City’s Finance
Department. She did not appear to testify before either the Appeals Tribunal or the Board of Review.
At the outset of the hearing before the Appeals Tribunal, Ms. Long’s attorney raised a hearsay
objection to a written statement by Ms. Bunch which alleged that Ms. Long had been to her house
to buy marijuana and that Ms. Long used marijuana in her presence. The hearing officer sustained
this objection, noting, however, “We do accept hearsay in these cases, but it goes to the weight of
the document, okay?”

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 Kim Humbard testified that Ms. Long smoked marijuana in Ms. Humbard’s car while the two
were on lunch break from work. Ms. Humbard also testified that she had paid Ms. Long for
marijuana at work and used marijuana with Ms. Long away from work. At the time these events
allegedly took place, Ms. Humbard was employed as a secretary in the narcotics division of the
City’s police department.

Glenda Pike, who worked with Ms. Long in the City tax office, testified that Ms. Long had
marijuana in her possession at work and that Ms. Long showed her a bag of marijuana while at work.
Ms. Pike further testified that she herself had not used drugs with Ms. Long and had not used any
drugs in almost ten years, stating “I tried when, I tried marijuana when I was 19. It almost killed me
and I haven’t tried it since.”

In her testimony before the Appeals Tribunal and the Board of Review, Ms. Long denied that
she ever violated the City’s drug policy and stated that the allegations of her three co-workers to the
contrary were untrue. Ms. Bunch’s absence from the hearings before both of these reviewing bodies
precluded any cross-examination regarding her written statement and the Agency’s reviewing bodies
were denied the opportunity to observe her demeanor as a witness. However, Ms. Humbard, Ms.
Pike and Ms. Long all appeared before the Appeals Tribunal and the Board of Review and their
demeanor under oath was readily observable. Based upon such observations and the record as a
whole, the testimony of the witnesses against Ms. Long was assessed to be not credible. We have
previously noted that when resolution of an issue depends upon witness credibility, the fact finder
who has the opportunity to observe the manner and demeanor of the witness while testifying is in
a far better position than the reviewing court to decide such issue. Cappello v. Albert, C/A No.
M2000-02104-COA-R3-CV, 2001 WL 1141220, 2001 Tenn. App. LEXIS 721 at *18 (Tenn. Ct.
App. M.S., filed September 27, 2001). We find no basis for concluding that the decision to accept
as true Ms. Long’s testimony in denial of the allegations of the witnesses against her “was arbitrary
or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.”
We further deem Ms. Long’s testimony in her own behalf denying the charges against her to be
“substantial and material evidence” as defined by the Court in Southern Ry. Co. v. Board of
Equalization, 682 S.W.2d 196,199 (Tenn. 1984). We also note the Board of Review’s
acknowledgment of the possibility that Ms. Long’s “office co-worker”, apparently Ms. Pike, had
motivation to discredit Ms. Long given the pending investigation regarding funds missing from their
department. Additionally, Ms. Long’s testimony implies that, although Ms. Humbard was not
employed in Ms. Long’s department, she might have been motivated to give false testimony by a
general fear of losing her job:

Well the whole time me and Kim [Humbard] were friends we worked together,
we went to lunch together, she was always worried about losing her job, she could
never lose her job. And it didn’t have anything to do with drugs or anything like
that. She just constantly made comments, “I can’t lose my job, I’ve got two kids
I’ve got to take care of.”

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 In addition to its assessment of the testimony of witnesses, the Agency’s decision on review
shows that it considered the fact that Ms. Long submitted to a blood test for marijuana on September
27, 2002. Ms. Long testified that she took this test the day after she was requested to do so by
assistant city administrator, Jack Hennerly. The results of the test were negative, although Ms.
Humbard had testified that Ms. Long had used marijuana as recently as late August. The trial court
apparently discounts the negative test results stating in its memorandum opinion that “[u]sually
marijuana only stays in the blood system of a marijuana user some 20 to 25 days.” We find no
evidence in the record to support this finding. In any event, the fact that an individual who is alleged
to have used marijuana on multiple and relatively recent occasions, promptly and willingly submits
to a requested blood test for marijuana which shows no trace of marijuana in her blood stream
constitutes circumstantial evidence tending to disprove such allegations. We conclude that this
evidence was substantial and material and was properly considered by the reviewing bodies of the
Agency in support of their decisions in favor of Ms. Long.

As a final matter, we address the assertion of the trial court and the City that the Agency
reviewing bodies inappropriately considered the fact that unequal disciplinary action was taken
against Ms. Long and her co-workers. As stated by the trial court in its judgment:

In addition, the Agency’s legal and factual analysis is in error as it relates to
considerations of the punishment of coworkers who provided testimony of Long’s
drug involvement. Respectfully, the City asserts that disciplinary action taken by
it with respect to employees other than Long was not germane to the issue before
the Agency and its reviewing bodies in determining whether Long was terminated
for misconduct connected with work. Such considerations were not relevant to
the determination of the issues before the Agency and its reviewing bodies and/or
were given inordinate weight in reaching this decision and thus constitute and
contributed to a decision which is arbitrary, capricious, characterized by abuse of
discretion and/or a clearly unwarranted exercise of discretion.

While we do not necessarily disagree that the disciplinary actions taken by the City with
respect to other employees is not relevant to the determination of whether Ms. Long violated the
City’s drug policy1, we do not agree that this factor carried an inordinate amount of weight in the
Agency’s decision. The decisions of both reviewing bodies indicate that the initial decision reached
was that the City had failed to prove that Ms. Long violated the City’s drug policy. The Appeals
Tribunal states in its decision, “The employer has failed to prove the claimant used drugs or was
involved with drugs at work or away from work. Even if it had, it has failed to prove the claimant’s
actions were a breach of duty deserving termination, while the other employees involved did not
breach a duty and did not deserve termination.” The words “even if it had” refer to a hypothetical
situation that did not exist in light of the primary finding that the City did not prove its case.

1
The question before the Agency was whether Ms. Long’s employment was terminated “for” (meaning ‘because
of’ or ‘due to’) misconduct. To the extent the City’s treatment of other employees who violated the same policy casts
doubt upon its proffered reason for this employee’s discharge, it is relevant.

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Likewise, while the Board of Review alludes to disparate treatment of Ms. Long, the Board’s
primary finding is that the City did not meet its burden attempting to prove the charges against Ms.
Long with respect to illegal drugs. As the Board states in its decision:

Given all the circumstances, the Board does not find the evidence sufficient to
reasonably establish conduct by the claimant in violation of the employer’s drug
policies.

We are compelled to the conclusion that the trial court “substituted its judgment for that of
the board of review as to the weight of the evidence on questions of fact” in this case. In so doing,
the trial court exceeded its authority under Tenn. Code Ann. §50-7-304(i). We further disagree that
the decisions of the Appeals Tribunal and the Board of Review were either “[a]rbitrary or capricious
or characterized by abuse of discretion or clearly unwarranted exercise of discretion” or were
“[u]nsupported by evidence which is both substantial and material in the light of the record.”
Accordingly, the judgment of the trial court is reversed and the cause is remanded for further
proceedings consistent with this opinion. Costs of appeal are adjudged against the City of
Morristown.

_________________________________________
SHARON G. LEE, JUDGE

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