Recker v. Review Bd. of the Ind. Dep't of Workforce Development

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Jamie Andree Gregory F. Zoeller
Indiana Legal Services Attorney General of Indiana
Bloomington, Indiana
Stephanie Rothenberg
Katherine Rybak Deputy Attorney General
Indiana Legal Services, Inc. Indianapolis, Indiana
Evansville, Indiana
Heather D. Cummings
Review Board of the Indiana
Department of Workforce Development
Indianapolis, Indiana
____________________________________________________________________________________

In the FILED
Dec 29 2011, 3:13 pm
Indiana Supreme Court
_________________________________ CLERK
of the supreme court,
court of appeals and
tax court

No. 93S02-1105-EX-285

DIANE RECKER, Appellant (Claimant below),
v.

REVIEW BD. OF THE IND. DEP'T OF WORKFORCE DEVELOPMENT, Statutory Appellee,1
and
FEDEX TRADE NETWORKS,2 Appellee (Employer below).

_________________________________

Appeal from the Review Bd. of the Ind. Dep't of Workforce Development, No. 10-R-1235
_________________________________

On Petition for Transfer from the Indiana Court of Appeals, No. 93A02-1005-EX-522
_________________________________

December 29, 2011

Dickson, Justice.

This is an appeal from the denial of unemployment insurance benefits to a claimant after her de-

1
In every appeal from a decision of the Review Board of the Indiana Department of Workforce Devel-
opment, the Board "shall be made a party appellee." Ind. Code § 22-4-17-12(b).
2
The appellee-employer is identified as FedEx Trade Networks in the caption of the decision of the Re-
view Board, but is also variously identified throughout the record as Federal Express Corporation, Tr. at 2 and E-
2, and FedEx Express, Tr. at E-8, E-4. No appearance was filed by any attorney for this party on appeal.
parture from employment because she was unable to perform skills required for her employment. We
affirm the denial of her claim.

The relevant facts as found by the Department of Workforce Development ("Department")3 are
not in dispute. Summarized briefly, the claimant-employee, Diane Recker, accepted an offer of em-
ployment from a parcel courier company, FedEx Trade Networks ("FedEx").4 The offer expressly in-
formed her that she would be subject to termination if she did not successfully complete all necessary
training. Recker was repeatedly unable to pass a portion of the training program's driving test that re-
quired her to back up a truck on a serpentine course and into a parking space. She was required to fly to
Tulsa, Oklahoma, to receive the training and take the driving test. During the flight from Indiana to Ok-
lahoma, Recker's ears became "clogged," and she believed that this affected her ability to satisfactorily

3
Under Indiana's statutory unemployment insurance scheme, claims for benefits are initially determined
by the Department of Workforce Development. Ind. Code § 22-4-17-2(a). The Department administers "unem-
ployment insurance," Ind. Code § 22-4-18-4, and provides support to the Indiana Unemployment Insurance
Board, which "is responsible for the oversight of the unemployment insurance program." Ind. Code § 22-4-18-
2(a). Initial claim decisions may be challenged by seeking a hearing before an administrative law judge employed
by the Department. Ind. Code § 22-4-17-4(a). An appeal from an administrative law judge decision is taken to a
review board appointed by the Governor. Ind. Code §§ 22-4-17-3(b), -5.
4
We acknowledge that the identities of the claimant and employing unit are generally subject to the con-
fidentiality requirements prescribed in Indiana Code Section 22-4-19-6(b). Excluding exceptions not relevant to
the present case, the statute provides: "information obtained or obtained from any person in the administration of
this article and the records of the department relating to the unemployment tax or the payment of benefits is con-
fidential and may not be published or be open to public inspection in any manner revealing the individual's or the
employing unit's identity, except in obedience to an order of a court or as provided in this section." Ind. Code
§ 22-4-19-6(b). This confidentiality requirement is expressly implemented as to judicial proceedings by Indiana
Administrative Rule 9(G)(1)(b)(xviii). The rule further provides, however, that when information excluded from
public access is presented in court proceedings open to the public, "the information shall remain excluded from
public access only if a party or a person affected by the release of the information, prior to or contemporaneously
with its introduction into evidence, affirmatively requests that the information remain excluded from public ac-
cess." Adm. R. 9(G)(1.2) (emphasis added).
The decisions of the ALJ and the Review Board in this case were each expressly labeled as a "Confiden-
tial Record" pursuant to Indiana Code Section 22-4-19-6. Appellant's App'x at 2, 5. In the course of this appeal,
the Appellee's Appendix filed by the employer was identified as "Confidential," but the Appellant's Appendix
filed by the employee was not so labeled, and it disclosed her full name. Both the claimant-appellant and the
Board-appellee used only initials to identify the claimant in their briefs, but the briefs of both revealed the identity
of the employer. Neither the claimant, the employer, nor the Review Board, made any affirmative request pursu-
ant to Administrative Rule 9(G)(1.2) to continue the exclusion from public access the identities and information
confidential under the statute and rule. Pursuant to Administrative Rule 9(G)(1.2), in light of the absence of an
affirmative request for continued confidentiality of the identities of the employee and the employing entity, we
fully identify the parties. As to the facts of the case that derive from the records of the Department and are dis-
cussed in this opinion, we deem such information to be public as essential to the resolution of the litigation and
appropriate to further the establishment of precedent and the development of the law. Adm. R. 9(G)(3) and
9(G)(4)(d).

2
complete the test. FedEx allowed Recker to take the driving test two times while in Oklahoma, although
it generally only allows an employee to attempt the test once. Again, after Recker returned to Indiana,
FedEx allowed her to take the test a third time, but she was still unable to pass. After the third failed
attempt, FedEx gave Recker the option to resign immediately or to be placed on a thirty-day unpaid
leave of absence, during which time she could apply for other positions within FedEx, after which time
FedEx would consider her to have resigned voluntarily. Recker opted to resign immediately and there-
after sought unemployment insurance benefits. A claims deputy for the Department denied Recker's ap-
plication for benefits on grounds that Recker (a) voluntarily left employment and (b) did so without
good cause. Recker appealed the deputy's decision to the Department, and an Administrative Law Judge
("ALJ") concluded that Recker did not voluntarily quit her position but was constructively discharged.
The ALJ determined, however, that Recker was disqualified from receiving unemployment insurance
benefits because she had breached a duty reasonably owed to her employer, which breach constituted
just cause for her termination.

Among its conclusions of law, the ALJ found that "the employer discharged the claimant for fail-
ing to pass the mandatory defensive training test," that "[t]he claimant should have known that there was
a duty to maintain training levels in order to remain employed," that "[b]y failing to meet the training
levels, the claimant no longer had the proper qualifications to meet the job requirements," and thus "that
the claimant breached a duty reasonably owed to the employer and that the claimant was discharged for
just cause as defined by Ind. Code § 22-4-15-1."5 Appellant's Supp. App'x at 43. The findings of fact,
conclusions of law, and decision of the ALJ were subsequently expressly adopted and approved by the
Unemployment Insurance Review Board ("Board"). Id. at 45. Recker thereafter initiated this appeal.
The Court of Appeals affirmed the Board’s denial of benefits. D.R. v. Review Bd. of Ind. Dep't of
Workforce Dev., 942 N.E.2d 820 (Ind. Ct. App. 2010). We granted transfer.

On appeal, Recker challenges "the Review Board's conclusion of ultimate fact—that she
breached a duty reasonably owed to her employer and was discharged for just cause—[as] unreasonable
and, thus, erroneous, in light of its findings of basic fact." Appellant's Br. at 6–7. She argues that (a)

5
Subsequent to oral argument, on November 29, 2011, Recker filed a Notice of Additional Authority pur-
suant to Indiana Appellate Rule 48 directing our attention to 646 Indiana Administrative Code 5-8-4(c) (2011)
(see http://www.in.gov/legislative/iac/), which addresses certain employee resignations. This is not relevant to
any issue raised by Recker in this appeal and thus requires no discussion.

3
because her inability to perform a required task was not willful or intentional, she did not breach a duty
owed to her employer, and (b) because the Indiana Unemployment Compensation Act was passed for
the purpose of providing benefits to persons unemployed through no fault of their own she was not inel-
igible for benefits. Id. at 7–12.

The standard of review on appeal of a decision of the Board is threefold: (1) findings of basic
fact are reviewed for substantial evidence; (2) findings of mixed questions of law and fact—ultimate
facts—are reviewed for reasonableness; and (3) legal propositions are reviewed for correctness.
McClain v. Review Bd. of Ind. Dep't of Workforce Dev., 693 N.E.2d 1314, 1318 (Ind. 1998). Ultimate
facts are facts that "involve an inference or deduction based on the findings of basic fact." Id. at 1317.
Where such facts are within the "special competence of the Board," the Court will give greater deference
to the Board’s conclusions, broadening the scope of what can be considered reasonable. See id. at 1318.
The claimant does not dispute the Board's findings of basic fact but rather only the reasonableness of its
conclusion of ultimate fact. Appellant's Br. at 6.

1. Breach of Duty and Inability to Perform

With respect to Recker's first contention, that she did not breach a duty owed to her employer
because her inability to perform a required task was not willful or intentional, she asserts that the duty
owed her employer was merely "to perform to the best of her abilities." Appellant's Br. at 5. Conceding
that "[i]t is true that [she] knew she would be discharged if she were unable to complete the test," Recker
asserts "[t]here is, however, a fundamental difference between knowingly violating a duty owed to an
employer and simply being unable to perform despite all good faith efforts to the contrary." Id. at 9.
This argument, however, conflates the question of whether Recker breached a duty to her employer with
the separate question of whether she is at fault for the breach. Under Giovanoni v. Review Bd. of Ind.
Dep't of Workforce Dev., breach and fault are separate inquiries.6 See 927 N.E.2d 906, 908–12 (Ind.

6
Recker points to several cases decided by the Court of Appeals that, in her opinion, hold that a breach of
duty must be "willful." Appellant's Br. at 8–9 (citing McClain, 693 N.E.2d at 1318–20 (holding that an employee
violated a reasonable and uniformly enforced rule of his employer when he allowed another employee to "clock
out" his timecard); McHugh v. Review Bd. of Ind. Dep't of Workforce Dev., 842 N.E.2d 436, 442 (Ind. Ct. App.
2006) (holding that an employee breached a duty to her employer when she told her employer she was taking time
off work to attend to personal matters but attended a sporting event instead), trans. not sought; Doughty v. Re-
view Bd. of Dep't of Workforce Dev., 784 N.E.2d 524, 527 (Ind. Ct. App. 2003) (holding that an employee know-

4
2010).

Under the Unemployment Compensation System established by the General Assembly, an indi-
vidual is disqualified from receiving benefits if discharged for just cause by the most recent employer.
Ind. Code § 22-4-15-1(a). The statute delineates nine non-exclusive scenarios that can amount to "dis-
charge for just cause." Ind. Code § 22-4-15-1(d). Many, but not all, of these include an express or im-
plied requirement for the employee's conduct to have been willful (e.g., "falsification of an employment
application to obtain employment through subterfuge," "knowing violation" of certain employer rules,
"damaging the employer's property through willful negligence," and "refusing to obey instructions"). Id.
In the present case, Recker was denied benefits because she was discharged for just cause for a "breach
of duty in connection with work which is reasonably owed an employer by an employee." Ind. Code §
22-4-15-1(d)(9). This basis for a just cause discharge does not explicitly condition a claimant's ineligi-
bility on a requirement that the breach of duty must have been knowing, willful, or intentional. Thus,
deferring for a moment any application of the "at fault" factor under Giovanoni, we first determine
whether the Board's conclusion of ultimate fact—that Recker "breached a duty reasonably owed to
[FedEx]"—was reasonable.

As the principal source for understanding the "breach of duty" ground for just cause discharge,
the parties point to Hehr v. Review Bd. of Ind. Emp't Sec. Div., 534 N.E.2d 1122 (Ind. Ct. App. 1989),
trans. not sought. There the court cautions that "the 'breach of duty' ground for just [cause] discharge is
an amorphous one, without clearly ascertainable limits or definition, and with few rules governing its
utilization." Id. at 1126. The court in Hehr explained:
In considering whether an employer may utilize this provision as a basis for justifying its action,
the Board should consider whether the conduct which is said to have been a breach of a duty rea-
sonably owed to the employer is of such a nature that a reasonable employee of the employer
would understand that the conduct in question was a violation of a duty owed the employer and

ingly violated a reasonable and uniformly enforced rule of his employer against fighting with or assaulting anoth-
er employee when he aided in the assault of another employee), trans. not sought; Hehr v. Review Bd. of Ind.
Emp't Sec. Div., 534 N.E.2d 1122, 1126 (Ind. Ct. App. 1989) (holding that an employee breached a duty to his
employer when he damaged or attempted to damage property on the employer's premises), trans. not sought.
However, we note that all of these cases were decided before Giovanoni, which clarified that fault is a distinct
inquiry. See 927 N.E.2d at 908–12. We note also that the McClain and Doughty cases rest on Indiana Code Sec-
tion 22-4-15-1(d)(3), which defines "discharge for just cause" as the "knowing violation of [an employer rule]"
(emphasis added), thus, explicitly requiring an inquiry into whether the employee's conduct was intentional or
willful.

5
 that he would be subject to discharge for engaging in the activity or behavior.
Id. We agree .

We note, as a preliminary matter, that this is not a case that requires us to articulate the outer lim-
its of the breach of duty ground for just cause discharge. Recker commenced her employment with
FedEx fully informed that she would be subject to discharge if she did not successfully complete the
mandatory training program. The offer letter expressly stated that the offer of employment was "contin-
gent upon successful completion of . . . all necessary training." Appellee's Supp. App'x at 42. These
facts demonstrate that Recker had notice that failure to pass the driving test would be a violation of a
duty owed to FedEx and would subject her to discharge. In addition, the ability to back up a truck is an
intrinsic part of the work responsibilities of a courier for a parcel delivery company such as FedEx. In-
deed, Recker acknowledges as much in her petition to transfer. Appellant's Trans. Br. at 4 ("[Recker]
does not dispute that it was reasonable for [FedEx] to expect her to pass their driving test or that [FedEx]
had a right to fire her for failing to do so."). As the Court of Appeals has observed, a claimant should
reasonably expect a duty fundamental to the claimant's job. Byrd v. Review Bd. of Ind. Emp't Sec. Div.,
469 N.E.2d 463, 465 (Ind. Ct. App. 1984), trans. not sought. Actual driving competence, not just mere
good faith, was an integral component of Recker's employment duties. The Board's finding that she
breached a duty reasonably owed to the employer is reasonable.

2. Denial of Benefits and Absence of Fault

The employee also contends that her just cause discharge should not warrant a denial of her un-
employment benefits because the purpose of the Indiana Unemployment Compensation Act is to provide
benefits to persons unemployed through no fault of their own. Appellant's Br. at 11–12. She argues that
"[t]he Review Board's decision to find her ineligible, even though passing the driving test was beyond
her ability, stands in direct conflict" with this Court's recent opinion in Giovanoni. Id. at 12.

Giovanoni involved an appeal from a Review Board decision denying unemployment insurance
benefits on grounds that the claimant-employee was discharged for just cause because of absences from
work in violation of the employer's "no-fault" attendance rule. 927 N.E.2d. at 908–09. There, the rele-
vant statutory bases bearing on whether the discharge was for just cause were (a) an employee's "know-

6
ing violation of a reasonable and uniformly enforced rule of an employer," and (b) an employee's "unsat-
isfactory attendance, if the individual cannot show good cause for absences or tardiness[.]" Id. at 909
(citing Ind. Code § 22-4-15-1(d)(2)–(3)). In Giovanoni, we held that a "'no-fault' attendance poli-
cy . . . may form an appropriate basis for discharge from employment" but that eligibility for unem-
ployment benefits following such discharge must consider "whether, under the totality of circumstances,
an employee's absenteeism is the result of circumstances beyond that employee's control." 927 N.E.2d
at 912. We concluded that disqualification from benefits is appropriate only if "[a]t a minimum, the
claimant . . . performed some volitional act or . . . exercised some control over the circumstances result-
ing in the discharge from employment." Id. at 910.

In contrast to the just cause bases for discharge in Giovanoni, both of which included express
consideration of an employee's intent, Recker was discharged on grounds of breach of duty to her em-
ployer, which does not expressly require a finding of intent. Compare Ind. Code § 22-4-15-1(d)(2) (re-
quiring a "knowing" violation of an employer rule to constitute a "discharge for just cause"), and Ind.
Code § 22-4-15-1(d)(3) (requiring that an employee show "good cause" to exclude absences or tardiness
from constituting a "discharge for just cause") with Ind. Code § 22-4-15-1(d)(9) (defining "just cause" as
"any breach of duty" without any corresponding reference to the employee's intent). In Giovanoni, we
held that "'just cause' determinations, as they pertain to an employee's discharge, must be consistent with
the legislative purpose underlying the [Unemployment Compensation] Act—to provide financial assis-
tance to an individual who . . . [is unemployed] through no fault of his or her own." 927 N.E.2d at 910.
We were concerned only with a discharge for the violation of an employer's attendance rule, id. at 909,
not with a discharge based upon an employee's breach of duty. Thus, we did not address whether the
General Assembly intended to provide unemployment benefits to persons who unintentionally breach a
duty to their employer. Unlike the grounds for discharge in Giovanoni, there is no specified statutory
intent for discharges for breach of duty.7

7
Subsequent to our grant of transfer in this case, the Department published new regulations, apparently in
response to both Hehr and Giovanoni, interpreting the terms "duty" and "breach of duty" as used in Indiana Code
Section 22-4-15-1(d)(9). Ind. Reg. LSA Doc. No. 10-464 (May 25, 2011) (see
http://www.in.gov/legislative/register/irtox.htm) (adding 646 Ind. Admin. Code 5-8-6 (2011) (see
http://www.in.gov/legislative/iac/)). The new regulation presents several non-exclusive examples of "breach of
duty reasonably owed to an employer," among which are "damaged the employer's trust and confidence in the
claimant's ability to effectively perform the job" and "willfully failed to meet the employer's reasonable expecta-
tion." 646 Ind. Admin. Code 5-8-6(b)(1), (2). Neither party has sought retroactive application to this case of the
Department's interpretation contained in the regulation.

7
 As noted in Giovanoni, a claimant is not eligible for unemployment benefits when the individual
has performed a "volitional act or . . . exercised some control over the circumstances" resulting in her
discharge. Id. at 910. We find that Recker's unsuccessful attempts to properly back up a truck were
matters over which Recker had "some control" under the Giovononi analysis. The ALJ's findings adopt-
ed by the Board acknowledge that Recker believed that her first two failures to pass the driving test in
Oklahoma were the result of "clogged" ears, but the Board did not find this contention to be significant.
Unlike the claimant in Giovanoni, who suffered from seizures and debilitating migraines, id. at 908,
Recker makes no appellate claim that her inability to meet the job requirements was affected by a de-
monstrable impediment. It was reasonable for the Board to find that Recker was discharged for just
cause and is therefore ineligible for benefits.

Conclusion

For these reasons, we affirm the Review Board's determination that Recker was discharged for
just cause and is therefore disqualified from receiving unemployment insurance benefits.

Shepard, C.J., and Sullivan, Rucker, and David, JJ., concur.

8