Case Title: Fearn v. Steed

Citation: 

Docket Number: 37368

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2011-06-13T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 37368 
 
TRACY E. FEARN, 
  
     Claimant-Respondent, 
 
v. 
 
DAVID C. STEED and MARSHA STEED, 
 
       Respondents-Appellants, 
 
and 
 
IDAHO DEPARTMENT OF LABOR, 
 
       Respondent-Respondent on Appeal.                            
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Boise, May 2011 Term 
 
2011 Opinion No.  72  
 
Filed:  June 13, 2011 
 
Stephen Kenyon, Clerk 
 
Appeal from the Industrial Commission of the State of Idaho. 
 
The decision of the Industrial Commission is affirmed. 
 
Holden, Kidwell, Hahn & Crapo, P.L.L.C., Idaho Falls, for appellants.  DeAnne  
Casperson argued. 
 
Rigby, Andrus & Rigby, Rexburg, for respondent Tracy E. Fearn.  Hyrum  
Erickson argued. 
 
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent Idaho    
Department of Labor.  Tracey K. Rolfsen argued. 
 
                     _______________________________________________ 
 
HORTON, Justice 
 
This case is an appeal from the Idaho Industrial Commission (the Industrial Commission 
or Commission) by David C. Steed (Steed) and Marsha Steed (collectively the Steeds).  The 
Steeds are the former employers of Tracy Fearn (Fearn).  Fearn handed in her resignation on 
April 1, 2009, with her last day to be April 8, 2009.  On April 3, 2009, she sent an email that 
included her personal contact information to approximately 7,500 sales contacts. Upon finding 
out about this email, the Steeds terminated Fearn’s employment.  Following consideration by the 
Idaho Department of Labor (IDOL), an appeals examiner, and twice by the Industrial 
 
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Commission, the Commission determined that the Steeds had failed to show that Fearn was 
discharged for misconduct.  The Steeds now appeal.  We affirm. 
I. FACTUAL AND PROCEDURAL BACKGROUND 
 
The Steeds own a business that resells agricultural, forestry, transportation, and material 
handling equipment.  Fearn was initially hired by the Steeds in January 2002, after meeting 
through their church.  Fearn was initially employed as an office helper but eventually became a 
salesperson.  During this time, Steed, who ran the business, made comments about Fearn’s 
attendance at church, inquired into her romantic life, and lectured her about her son, her church 
attendance, and her finances.  Fearn approached Steed about these comments, telling him that 
these issues were none of his business, but the comments continued.  Fearn has also argued that 
she was treated differently from the other salespersons and paid a different commission.  
 
On April 1, 2009, Fearn gave notice that she was resigning.  Steed and Fearn agreed that 
Fearn would work shortened hours and receive full pay until April 8, 2009.  On April 3, 2009, 
Fearn sent an email to approximately 7,500 sales contacts stating that she would be leaving the 
company.  After receiving ten to fifteen calls asking why she was leaving, Fearn sent a second 
email to the sales contacts giving her personal contact information.  Steed concluded that the 
second email was intended to steal these clients and discharged Fearn on April 6.   
 
Fearn applied for unemployment benefits.  The IDOL concluded that Fearn had quit 
without good cause and was ineligible for benefits.  Fearn then filed an appeal, and an appeals 
examiner held a hearing on May 28, 2009.  The appeals examiner issued a decision affirming the 
finding that Fearn quit without good cause.   
 
Fearn then appealed to the Industrial Commission.  The Commission conducted a de 
novo review of the record, although the Commission denied Fearn’s request for additional 
witnesses.  On August 31, 2009, the Commission issued its Decision and Order, basing its 
decision on an examination of whether Fearn had quit with good cause.  The Commission 
concluded that Fearn had failed to show that she was treated differently with regard to sales 
credit and that the disputes between Steed and Fearn over her performance did not constitute 
good cause.  However, the Commission found that the pattern of Steed’s comments about 
Fearn’s religion and personal life did constitute good cause to quit.  It found that her attempts to 
resolve the issue on multiple occasions exhausted all viable options to address the problem.  
Consequently, the Commission determined that Fearn was eligible for unemployment benefits.   
 
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The Steeds timely moved for reconsideration, arguing that the Commission erred in 
determining Fearn’s eligibility based on her reasons for resigning but should have, instead, 
looked to the reasons for her termination.  They further argued that substantial and competent 
evidence did not support the Commission’s finding that Fearn had good cause to quit.  In 
reaching its decision, the Commission’s factual findings included the following: 
That Fearn had never been told that she had to have Steed review all of her 
emails.   
That the expectation that a supervisor review all emails does not flow normally 
from the employment relationship.   
That emailing sales contacts did not violate any communicated expectations or 
expectation that naturally flowed from the employment relationship.  
That Fearn has not stated or implied that she would be working for someone else.  
That her email did not violate any rule that was in place.  
That the email did not state or imply that Fearn would be working for someone 
else.   
The Industrial Commission found that the Steeds were correct that Fearn’s eligibility should 
have been based on the reasons for her termination.  However, the Commission found that the 
Steeds had not met their burden of showing that Fearn was discharged for employment-related 
misconduct.  The Steeds now appeal.  We affirm. 
II. STANDARD OF REVIEW 
 
When this Court reviews a decision of the Industrial Commission, it 
exercises free review over questions of law, but reviews questions of fact only to 
determine 
whether 
substantial 
and 
competent 
evidence 
supports 
the 
Commission’s findings.  Substantial and competent evidence is relevant evidence 
that a reasonable mind might accept to support a conclusion.  Because the 
Commission is the fact finder, its conclusions on the credibility and weight of the 
evidence will not be disturbed on appeal unless they are clearly erroneous.  
Eacret v. Clearwater Forest Indus., 136 Idaho 733, 735, 40 P.3d 91, 93 (2002) (citations 
omitted).  “The burden of proving misconduct by a preponderance of the evidence falls strictly 
on the employer, and where the burden is not met, benefits must be awarded to the claimant.”  
Adams v. Aspen Water, Inc., 150 Idaho 408, __, 247 P.3d 635, 640 (2011) (quoting Harris v. 
Elec. Wholesale, 141 Idaho 1, 3, 105 P.3d 267, 269 (2004)). 
III. ANALYSIS 
 
The Steeds raise two issues on appeal.  First, they discuss whether the Industrial 
Commission was correct in determining that Fearn’s firing was not for misconduct.  Second, they 
 
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raise the issue of whether Fearn resigned for good cause.  The Industrial Commission decided the 
case on reconsideration based on IDAPA 09.01.30.450.08.1  IDAPA 09.01.30.450.08 states: 
“Unrelated Discharge Prior to Pending Resignation.  A claimant, discharged before a pending 
resignation has occurred, for reasons not related to the pending resignation, shall have his 
eligibility determined on the basis of the discharge, not on the pending resignation.”  As the 
parties agree that IDAPA 09.01.30.450.08 applies to the present case, we address only the 
question of whether Fearn was discharged for misconduct and do not reach the question of 
whether she had good cause to resign.     
 
Idaho Code Section 72-1366(5) provides that a claimant is ineligible for 
unemployment insurance benefits when the claimant was discharged for 
misconduct in connection with his employment.  Misconduct for which 
unemployment benefits can be denied has been defined by this Court and by 
statute as (1) a willful, intentional disregard of the employer’s interest; (2) a 
deliberate violation of the employer’s reasonable rules; or (3) a disregard of a 
standard of behavior which the employer has a right to expect of his employees.  
The burden of proving the alleged misconduct is on the employer.  
Kivalu v. Life Care Ctrs. of Am., 142 Idaho 262, 263-64, 127 P.3d 165, 166-67 (2005) (internal 
quotations and citations omitted).  The Industrial Commission found that Fearn was not 
discharged for misconduct.  On appeal, the Steeds argue that the Commission erred by not 
finding that the first (willful and intentional disregard of the employer’s interest) and third 
(disregard of a standard of behavior) potential definitions of misconduct were satisfied.   
 
In reaching its conclusion, the Industrial Commission noted that “[a]t no point does 
[Steed] claim that it communicated to [Fearn] the expectation that someone review every e-mail 
before it was sent.”  It likewise relied on the fact that the email included no disparaging 
comments, offering only her private contact information, and concluded that “[a]ny speculation 
as to what the customers implied from the e-mail is pure speculation on [the Steeds’] part.”   
                                                 
1  The parties only argued the question of whether Fearn quit for “good cause” as defined by IDAPA 
09.01.30.450.03 during the hearing before the appeals examiner and in the initial petition to the Industrial 
Commission.  This Court has repeatedly held that “Appellate court review is ‘limited to the evidence, theories and 
arguments that were presented . . . below.’”  Obenchain v. McAlvain Constr., Inc., 143 Idaho 56, 57, 137 P.3d 443, 
444 (2006) (quoting State v. Vierra, 125 Idaho 465, 468, 872 P.2d 728, 731 (Ct. App. 1994)).  However, the 
Industrial Commission is not bound by this limitation and the comments to the Rules of Appellate Practice and 
Procedure under the Idaho Employment Security Law state that “a request for reconsideration will ask that the 
Commission reexamine its decision in light of additional legal arguments, a change in law, a misinterpretation of 
law, or an argument or aspect of the case that was overlooked.”  Rule of Appellate Practice and Procedure under the 
Idaho Employment Security Law 8, cmt. F. 
 
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In addition, all of the parties cite Fearn’s testimony regarding her decision to send the 
email: 
[T]here is an original e-mail that I sent out that said I would no longer be with the 
company.  There was a second e-mail that had my cell phone that said they could 
contact me on that if they wanted to and the reason I said that was because I – 
between sending that first email saying I would no longer be with the company, I 
had ten or 15 phone calls from my customers wanting to know what I was doing, 
why I was leaving, what’s going on and I told them I didn’t feel politically correct 
discussing the matter with them until I was no longer with the business and that 
was the intent and why I sent the e-mail with the cell phone saying call me after I 
am not here. 
 
The evidence in the record supports the Commission’s finding.  It suggests that Fearn 
sent the email, not to compete with Steed, as he stated in his dismissal of Fearn, nor to disparage 
her employer, as the Steeds now argue on appeal, but to avoid talking about her reasons for 
leaving until she had left her position.  The Industrial Commission’s determination that Fearn did 
not willfully disregard the Steeds’ interests is supported by substantial and competent evidence.  
 
The Steeds argue that “Fearn admitted to the Appeals Examiner that she wanted Steed’s 
clients to have her contact information because she intended to tell them she was harassed and 
discriminated against, confirming her intentions to harm Steed’s business and his relationships 
with his clients.”  This, they argue, violated Fearn’s duty of loyalty to the company.  First, we 
note that the case the Steeds cite, R Homes Corp. v. Herr, 142 Idaho 87, 123 P.3d 720 (Ct. App. 
2005), is not a case involving a dismissal for misconduct, and we have been unable to locate any 
case appealed from the Industrial Commission that has invoked the duty of loyalty.   
 
However, assuming that the generalized duty of loyalty was applicable to the question of 
misconduct, the Industrial Commission’s finding is supported by substantial and competent 
evidence.  Contrary to the Steeds’ assertion, Fearn did not send the email “because she intended 
to tell them she was harassed and discriminated against” but rather because Fearn had been 
contacted about her prior email stating that she was leaving and wanted to avoid saying anything 
about her reasons for leaving while she was still employed by the Steeds.  She testified that she 
sent the email to avoid disparaging the Steeds.  That testimony was apparently believed by the 
Commission and provides the substantial and competent evidence necessary to sustain the 
Commission’s decision.   
 
The Steeds’ argument that Fearn’s email constituted “a disregard of a standard of 
behavior which the employer has a right to expect of his employees” fails for these same reasons.  
 
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The Industrial Commission concluded that the email was vague and did not necessarily lead to 
any conclusion as to why Fearn was leaving nor what she would say if contacted.  In addition, 
there is evidence suggesting that Fearn was attempting to avoid disparaging Steed while still 
employed.  The Commission further found that there is no generalized expectation that a 
supervisor review all emails. Together, these provide the substantial and competent evidence 
required for the Commission’s finding.  
 
We find that the Industrial Commission’s determination that Fearn was not discharged for 
misconduct is supported by substantial and competent evidence.  We therefore affirm. 
IV. CONCLUSION 
 
We hold that the Industrial Commission’s determination that Fearn was not terminated 
for misconduct is supported by substantial and competent evidence.  Costs to Fearn and the 
IDOL. 
 
 
Chief Justice EISMANN and Justices BURDICK, J. JONES and W. JONES CONCUR.