Case Title: Daniel R. Flowers v. Shenango Screen Unemployment Insurance

Citation: 

Docket Number: 36367

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2010-12-23T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 36367 
 
DANIEL R. FLOWERS, 
 
       Claimant, 
 
v. 
 
SHENANGO SCREENPRINTING, INC.,  
Employer, 
 
       Appellant-Appellant on Appeal, 
 
and 
 
IDAHO DEPARTMENT OF LABOR, 
 
       Respondent-Respondent on Appeal.                          
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Boise, September 2010 Term 
 
2010 Opinion No.  141    
 
Filed:  December 23, 2010 
 
Stephen Kenyon, Clerk 
 
Appeal from the Industrial Commission of the State of Idaho. 
 
The decision of the Industrial Commission is affirmed. 
 
Child & Fisher, Coeur d‟Alene, for appellant.  Jeffrey A. Child argued. 
 
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent.   Tracey K.  
Rolfsen argued. 
 
                     _______________________________________________ 
 
HORTON, Justice 
This is an appeal from the Idaho Industrial Commission‟s (Commission) decision 
affirming the determination by the Idaho Department of Labor‟s (Department) appeals examiner 
that Shenango Screenprinting, Inc. (Shenango) is chargeable for unemployment insurance 
benefits for Daniel Flowers (Flowers).  Shenango appeals the Commission‟s decision to not grant 
Shenango an evidentiary hearing or remand the matter to the appeals examiner for further 
development of the record and the Commission‟s denial of Shenango‟s request for 
reconsideration.  We affirm. 
 
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I. FACTUAL AND PROCEDURAL BACKGROUND 
Flowers was employed by Shenango as lead screen printer from June 2007 until he was 
fired on September 5, 2008.  Flowers applied to the Department for unemployment 
compensation.  The Department made an initial determination that Flowers was eligible for 
benefits.  Shenango owner and president Jerry Fraley (Fraley) then timely appealed the 
determination and requested a hearing.  Along with the request, Fraley included a letter 
explaining that Flowers was terminated because Flowers had been involved in a personal 
relationship with Mrs. Fraley and, in contravention of company policy, repeatedly lied about the 
existence of the affair.   
The Department provided Shenango notice that a telephone hearing was scheduled, along 
with a document captioned “Important Information about Your Hearing:  Read Carefully.”  The 
informational document stated that “[t]he Appeal Hearing MAY be your only chance to present 
witnesses and give evidence about your side of the issue.  Except in rare circumstances, you will 
not be allowed to present additional evidence upon further appeal.  The Appeals Examiner will 
make a new decision in your case based on the sworn testimony during the hearing.”  The 
document explained that the appeals examiner would seek to obtain relevant facts and that the 
appellant‟s rights at the hearing included the right to representation and to present and challenge 
witnesses and evidence.  It explained that “[t]he best witnesses are people who actually saw or 
heard the incident(s) involved in your claim, since hearsay is less reliable.”  Finally, it stated that 
“if you have evidence which was not available at the time of the hearing, you have ten (10) days 
after the date of mailing of the [appeals examiner‟s] decision to file a written, signed request to 
reopen the hearing.”   
At the hearing, Fraley appeared on Shenango‟s behalf.  He testified that Flowers had a 
relationship with Mrs. Fraley, a part-time Shenango employee and Fraley‟s wife, and 
subsequently lied about the affair on several occasions when confronted at the workplace.  Fraley 
testified that Flowers‟ lies about the relationship disrupted the small business workplace by 
unsettling other employees to the point that at least two refused to work with him.  Fraley 
testified that he terminated Flowers‟ employment because of the lies and disruption.  When the 
appeals examiner asked if he had any other witnesses, Fraley responded “I don‟t think so.  If I 
need to I can.  For example, if you needed me to . . . the employees I mentioned that would 
refuse to work, could . . . but I don‟t think it‟s necessary.  If you request it I can.”  Based on 
 
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Fraley‟s testimony, the appeals examiner found that Shenango discharged Flowers because he 
had an affair with Fraley‟s wife.  However, the appeals examiner concluded that Shenango failed 
to meet its burden of proving that Flowers‟ misconduct was sufficiently connected to his work to 
constitute work-related misconduct and thus affirmed Flowers‟ eligibility for unemployment 
benefits.   
Shenango appealed the decision to the Commission, which conducted a de novo review 
of the case.  Neither party requested a new hearing, and the Commission found that the interests 
of justice did not require one.  While the appeal was pending, the Commission received a letter 
from Flowers claiming that he had been harassed by Fraley and requesting the Commission to 
put an end to the alleged harassment.  In the letter, he stated that Mrs. Fraley had “pursued a 
relationship” with him and acknowledged that he had “made a bad decision, as did Mrs. Fraley.”  
Shenango requested the Commission strike the correspondence from the record.  Although the 
Commission did not take action on Shenango‟s motion, it did not rely on the letter in reaching its 
decision on appeal, other than to note that it lacked jurisdiction to address Flowers‟ complaint of 
harassment.  After reviewing the record on appeal, the Commission determined that “the record 
[was] void of any competent evidence to conclusively establish that the affair occurred” and 
concluded that Shenango failed to meet its burden of proving that Flowers had committed work-
related misconduct.  The Commission noted the absence of direct evidence that Flowers had 
been involved in a relationship with Mrs. Fraley, characterizing Shenango‟s claim as relying 
“solely on its verbal assertions.”   
Shenango requested that the Commission reconsider its decision, arguing that the appeals 
examiner had failed to develop all available evidence by failing to “consult[] the IDOL 
representative who interviewed Mr. Flowers.”  The Commission denied Shenango‟s request for 
reconsideration.  Shenango appeals, arguing that the Commission erred by finding that it had 
failed to meet its burden of demonstrating that Flowers engaged in employment-related 
misconduct and by denying the request for reconsideration. 
II. STANDARD OF REVIEW 
Industrial Commission determinations regarding supplemental hearings are reviewed for 
an abuse of discretion.  Teevan v. Office of Att’y Gen., Nat. Res. Div., State of Idaho, 130 Idaho 
79, 81, 936 P.2d 1321, 1323 (1997).  The three-part test to determine whether the Commission 
has abused its discretion is:  “(1) whether the Commission correctly perceived the issue as one of 
 
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discretion, (2) whether it acted within the outer boundaries of its discretion and consistently with 
the legal standards applicable to the specific choices available to it, and (3) whether it reached its 
decision by an exercise of reason.”  Super Grade, Inc. v. Idaho Dep’t of Commerce and Labor, 
144 Idaho 386, 390, 162 P.3d 765, 769 (2007).   
III. ANALYSIS 
Shenango argues that under Rule 7(C)1 of the Rules of Appellate Practice and Procedure 
under the Idaho Employment Security Law (Rules of Appellate Practice), the Commission was 
authorized to grant a hearing to permit Shenango to present further evidence of Flowers‟ 
misconduct or remand the matter to the appeals examiner for specific findings of fact.  Shenango 
argues that the Commission‟s failure to pursue either of these avenues was an abuse of 
discretion.  Shenango‟s claim that the Commission erred in denying its request for 
reconsideration is based solely upon the Commission‟s failure to permit a new hearing or remand 
the matter to the appeals examiner.       
When an employer disputes a former employee‟s eligibility for unemployment 
compensation benefits, the appeals examiner bears “the responsibility of developing all the 
evidence that is reasonably available.”  IDAPA 09.01.06.026.11.  If the employer chooses to 
appeal the decision to the Industrial Commission, the record is identical to the record of the 
proceedings before the appeals examiner “unless it appears to the commission that the interests 
of justice require that the interested parties be permitted to present additional evidence.”  I.C. § 
72-1368(7).  Shenango argues that Rule 7(C) of the Rules of Appellate Practice, stating that “the 
Commission shall review the matter to determine whether the interests of justice require the 
presentation of additional evidence,” imposes upon the Commission the obligation to sua sponte 
order further fact finding in the form of an evidentiary hearing or a remand to the appeals 
examiner whenever the record may be inadequate.  (Emphasis added).   
Shenango overstates the Commission‟s duties, while understating its own.  First, while 
“[t]he Commission has the discretion to admit evidence if „it is a type commonly relied upon by 
prudent persons in the conduct of their affairs,‟” the Commission is not required to do so.  
                                                 
1 Throughout the course of these proceedings, the parties have referenced Rule 6(C) of the Rules of Appellate 
Practice and Procedure under the Idaho Employment Security Law.  However, those Rules were amended on March 
1, 2009, after the Commission affirmed the Department‟s holding and denied Shenango‟s request for 
reconsideration.  Other than changing Rule 6(C)‟s descriptive title, “Standard of Review for Hearing Request; 
Notice of Commission Hearing; Limitations on Evidence, Witnesses Presented at Hearing,” to Rule 7(C)‟s 
“Evidentiary Hearing,” the text of the original and amended rules is identical.  Here, the Rules are referenced in their 
present, post-amendment form. 
 
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Higgins v. Larry Miller Subaru-Mitsubishi, 145 Idaho 1, 5, 175 P.3d 163, 167 (2007) (quoting 
Stolle v. Bennett, 144 Idaho 44, 50, 156 P.3d 545, 551 (2007)).  For example, the Commission 
may choose to exclude hearsay evidence.  Id.  Further, the Commission has the discretion to 
admit evidence that was not presented before the appeals examiner, but is not required to do so.  
Teevan, 130 Idaho at 81, 936 P.2d at 1323.  Idaho Code § 72-1368 “allows the Commission to 
receive new evidence that was unavailable at the time of the hearing before the appeals examiner 
[but] „[t]his section is not carte blanche allowing . . . [a party] the unbridled right to present a 
substantially new case, absent some showing as to why the evidence had been unavailable 
earlier.‟”  Id. (quoting Rogers v. Trim House, 99 Idaho 746, 750, 588 P.2d 945, 949 (1979)).  
Commission rules require that a party requesting a hearing before the Commission provide “an 
explanation of why the proposed [additional] evidence was not presented before the examiner.”  
Rule 7(B)(5)2 Rules of Appellate Practice.   
From the onset of a dispute, an employer must make full and deliberate use of the 
evidence available to it in order to meet its burden of proof.  Parker v. St. Maries Plywood, 101 
Idaho 415, 419, 614 P.2d 955, 959 (1980).  This is so because:  
The employer is in a unique position to know the reasons for his employee‟s 
discharge and access to the facts relating to that discharge will be more readily 
obtained by the employer than by the employee.  Further, as a practical matter, the 
task of proving the existence of employee misconduct will be much easier for the 
employer than would be the employee‟s task of disproving a charge of employee 
misconduct.  The employee may not always know what the employer‟s reasons 
were for discharging him. 
 
Id.  Thus, the employer is tasked with presenting evidence sufficient to prove that the discharge 
was justified by the employee‟s work-related misconduct.   
In the present case, Shenango protested the Department‟s initial finding that Flowers was 
eligible for benefits and subsequently participated in a hearing with the appeals examiner.  In 
relation to the appeal, an informational document was provided that made Shenango aware that 
evidence not submitted at the hearing would only be later admitted in “rare circumstances” and 
that the best witnesses were non-hearsay witnesses.  Nonetheless, Shenango chose to proceed 
                                                 
2 Like Rule 7(C) referenced supra note 1, Rule 7(B) is identical to Rule 6(B) of the pre-2009 amendment Rules of 
Appellate Practice and Procedure, except that the title of (B) has changed from “Form of Hearing Request” to the 
present “Application for Hearing.”  Rule 6(B) is referred to here in its post-amendment form. 
 
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without counsel,3 and to submit into evidence only the Shenango employment policy and 
Fraley‟s assertions that Flowers had engaged in an affair with Mrs. Fraley and that Flowers had 
lied about the affair.  This was the case even though Fraley acknowledged to the appeals 
examiner that he had access to other witnesses.  Fraley even went so far as to state that “I don‟t 
think [their testimony is] necessary.”   
After taking an appeal to the Commission, Shenango did not request a new evidentiary 
hearing, and did not provide the Commission with any grounds to believe that the interests of 
justice would require one.  To the contrary, Shenango continued to rely on the record developed 
before the appeals examiner, and requested that the Commission strike the correspondence from 
Flowers that appears to have acknowledged the affair.  Thus, as required by I.C. § 72-1368(7), 
the Commission conducted a de novo review of the record before the appeals examiner and 
found that Shenango‟s failure to provide non-conclusory testimony or other evidence 
establishing the fact of an affair between Flowers and Mrs. Fraley was fatal to Shenango‟s 
misconduct claims.   
It was only when Shenango requested reconsideration that it submitted a letter from Mrs. 
Fraley confirming the existence of the affair.  However, Shenango did not explain why it did not 
call Mrs. Fraley to testify before the appeals examiner nor did Shenango explain why it was 
unable to present other evidence of the affair prior to the request for reconsideration.  In short, 
Shenango simply did not attempt to present “an explanation of why the proposed [additional] 
evidence was not presented before the examiner” as required by Rule 7(B)(5), Rules of Appellate 
Practice.    
The Commission recognized that the decision whether to permit the introduction of 
additional evidence was a matter of discretion when it stated that the record before it did not 
suggest that the interests of justice required a new hearing.  The decision whether to permit the 
introduction of additional evidence was within the bounds of the discretion afforded the 
Commission.  The Commission acted consistently with applicable legal standards, specifically, 
Rule 7(B)(5), Rules of Appellate Practice.  The Commission‟s decision not to permit an 
additional hearing or remand the matter and the subsequent denial of the motion for 
reconsideration were simply the product of Shenango‟s failure to comply with this rule.  It is 
                                                 
3 In fact, Shenango chose to participate in all of the proceedings prior to its appeal to this Court without legal 
representation. 
 
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evident that Shenango could have presented the testimony of Mrs. Fraley or other Shenango 
employees before the appeals examiner.  Shenango could have requested the Commission 
consider Flowers‟ letter acknowledging the affair as additional evidence and chose, instead, to 
ask the Commission to strike that letter.  Contrary to Shenango‟s assertion, Rule 7(C) does not 
obligate the Commission to sua sponte order further fact finding.  Rather, as this Court stated in 
Teevan, without a showing of circumstances justifying Shenango‟s failure to adequately present 
evidence to the appeals examiner, Shenango does not have carte blanche to present a 
substantially new case to the Commission.  Under these circumstances, we cannot conclude that 
the Commission abused its discretion by failing to conduct a new hearing or remand the matter to 
the appeals examiner.  For the same reasons, we are unable to conclude that the Commission‟s 
decision to deny Shenango‟s request for reconsideration was an abuse of discretion.   
IV. CONCLUSION 
We affirm the Industrial Commission‟s decision to not grant a new hearing or remand the 
matter to the appeals examiner and the denial of Shenango‟s request for reconsideration.  Costs 
to Respondent. 
 
Chief Justice EISMANN and Justices BURDICK, J. JONES and W. JONES CONCUR.