ATTORNEY FOR APPELLANT

Charles H. McClain, Sr.

Indianapolis, Indiana 

ATTORNEYS FOR APPELLEE

Jeffrey A. Modisett

Attorney General of Indiana

Jon Laramore

Deputy Attorney General

Indianapolis, Indiana

	IN THE

	SUPREME COURT OF INDIANA

CHARLES H. McCLAIN, SR.,			)	                           		 							)

				Appellant,		)	Supreme Court

							)	Cause No. 93S02-9708-EX-456

		v.					)

 							)

REVIEW BOARD OF THE INDIANA   	)	Court of Appeals

DEPARTMENT OF WORKFORCE		)	Cause No. 93A02-9602-EX-72

DEVELOPMENT & IUPUI HUMAN		)

RESOURCES DEPARTMENT,			)

							)

							)

                                          Appellees.		)

APPEAL FROM THE REVIEW BOARD OF THE INDIANA 

DEPARTMENT OF WORKFORCE DEVELOPMENT

	The Honorable Mable Martin-Scott, Chairperson

	Cause No. (95-A-12238) 95-R-1950

	ON PETITION TO TRANSFER

	ApriallApril 20, 1998

BOEHM, Justice.

	We granted transfer to consider under what circumstances an employer’s termination

of an employee for a knowing violation of a reasonable employer workplace policy under

Indiana Code § 22-4-15-1(d)(2) meets the requirements that the rule be “uniformly enforced”

when it is enforced for the first time.  We also attempt to clarify the standard of review of

the Unemployment Insurance Review Board’s findings and conclusions.  We affirm the

Board’s determination that the rule was uniformly enforced and therefore the termination

was for just cause.

	Factual and Procedural History

	Charles H. McClain, Sr. was fired from his job as a custodian at the Indiana

University Medical Center in Indianapolis (“IUPUI”) for violating IUPUI’s policy that

employees personally “clock out” their own timecards at the end of a work shift.  When

McClain began his employment with IUPUI he signed an employee information receipt

which provided in part: “I must always use my time card to clock in when beginning work 

and clock out when ending/leaving work (including lunch break) for each shift I work.”  On

the evening of the violation, McClain’s supervisor saw a friend of McClain’s, James Jones,

sitting in the time clock room at 11:00 p.m. holding four time cards.  The supervisor

remained in the room until clock out time at 11:30 p.m. when he observed Jones clock out

two of the four time cards -- Jones’s and McClain’s -- before he stopped Jones.  McClain

later claimed that he gave his timecard to Jones only a minute or two before 11:30 so he

could help another of the four, who he said had car trouble.  All four employees involved in the incident were suspended and then fired.

	McClain applied to the Indiana Department of Workforce Development for

unemployment benefits under Indiana Code §§ 22-4 et. seq.  The Department determined McClain was terminated for “just cause” and suspended McClain’s benefits.  Ind. Code § 22-4-15-1(a) (Supp. 1997).  McClain appealed to an Administrative Law Judge who, after

a hearing, agreed that McClain was discharged for just cause.  Specifically, the ALJ found

that McClain was engaged in a “knowing violation of a reasonable and uniformly enforced

rule of an employer.”  Under Indiana Code § 22-4-15-1(d)(2) this is a basis for denial of

compensation.  At the hearing, McClain testified that he knew of the timecard policy and was

aware that a violation could result in a loss of his job.  He said, however, that he thought he

would be warned before he would be terminated.  The supervisor testified that it was

“standard practice” to fire employees who violate the policy but admitted that he knew of no

other incidents of one employee clocking out another.  IUPUI’s representative at the hearing,

the manager of records and unemployment compensation, testified that McClain was

discharged for falsification of his timecard and that “the university treats that as a suspension

subject to discharge in all departments.”  IUPUI introduced a copy of the written policy,

partially quoted above, as an Exhibit.  The ALJ concluded that McClain knew about the

policy, and that it was reasonable and uniformly enforced.

	The Unemployment Insurance Review Board affirmed the ALJ and McClain appealed

to the Court of Appeals, which reversed on the issue of uniform enforcement.  McClain v. Review Bd. of the Ind. Dep’t of Workforce Dev., 677 N.E.2d 1084, 1087 (Ind. Ct. App. 1997).  The majority held that in a case of the first instance of enforcement of a rule an

employer must “establish a uniform policy by a plain and clear written rule which establishes

what does and what does not constitute a violation and the punishment which will

accompany a violation.”  Id.  It concluded that IUPUI’s rule in this case did not meet this test.  Judge Barteau dissented, concluding that the question of uniform enforcement was a

question of fact and that the Board’s decision was supported by the evidence.  Id. at 1088.  We granted transfer.

	Standard of Review

	The Indiana Unemployment Compensation Act provides that “[a]ny decision of the

review board shall be conclusive and binding as to all questions of fact.”  Ind. Code § 22-4- 17-12(a) (Supp. 1997).  However, the statute also includes explicit provision for judicial

review in language virtually identical to that found in provisions for review of other

administrative agency actions.1  Indiana Code § 22-4-17-12(f) provides that when the Board’s decision is challenged as contrary to law, the reviewing court is limited to a two part

inquiry into: (1) “the sufficiency of the facts found to sustain the decision”; and (2) “the

sufficiency of the evidence to sustain the findings of facts.”  Under this standard courts are called upon to review (1) determinations of specific or “basic” underlying facts, (2)

conclusions or inferences from those facts, sometimes called “ultimate facts,” and (3)

conclusions of law.  Courts uniformly recognize that propositions of law, such as the construction of the statute, are for the court to determine.  Parkison v. James River Corp., 659 N.E.2d 690, 692 (Ind. Ct. App. 1996); Pazzaglia v. Review Bd. of the Ind. Dep’t of Employment & Training Servs., 608 N.E.2d 1375, 1376 (Ind. Ct. App. 1993).  There is less clarity in identifying what is a proposition of law.  And the review of determinations of basic

facts and ultimate facts has also generated a variety of formulations of the proper standard. 

	Review of the Board’s findings of basic fact are subject to a “substantial evidence”

standard of review.  KBI, Inc. v. Review Bd. of the Ind. Dep’t of Workforce Dev., 656 N.E.2d 842, 846 (Ind. Ct. App. 1995) (“We will reverse [the Board’s] decision only if there

is no substantial evidence to support the findings . . . .”).  See also City of Evansville & AFL- CIO v. Southern Ind. Gas & Elec. Co., 167 Ind. App. 472, 482-86, 339 N.E.2d 562, 571-73 (1975) (substantial evidence test applied to factual findings of the Utility Regulatory

Commission under language almost identical to that of § 12(f)).  In this analysis the appellate

court neither reweighs the evidence nor assesses the credibility of witnesses and considers

only the evidence most favorable to the Board’s findings.2  General Motors Corp. v. Review Bd. of the Ind. Dep’t of Workforce Dev., 671 N.E.2d 493, 496 (Ind. Ct. App. 1996).

	The Board’s conclusions as to ultimate facts involves an inference or deduction based

on the findings of basic fact.  These questions of ultimate fact are sometimes described as

“questions of law.”  Hehr v. Review Bd. of the Ind. Employment Sec. Div., 534 N.E.2d 1122, 1124 (Ind. Ct. App. 1989); Cf. City of Evansville, 167 Ind. App. at 486, 339 N.E.2d at 573 (“the reasonableness of the agency’s inference is a question appropriate for judicial

determination -- a ‘question of law’”).  They are, however, more appropriately characterized

as mixed questions of law and fact.  As such, they are typically reviewed to ensure that the

Board’s inference is “reasonable” or “reasonable in light of [the Board’s] findings.”3  KBI, Inc., 656 N.E.2d at 846-47; Hehr, 534 N.E.2d at 1124; Blackwell v. Review Bd. of the Ind. Dep’t of Employment & Training Servs., 560 N.E.2d 674, 677 (Ind. Ct. App. 1990).  The term “reasonableness” is conveniently imprecise.  Some questions of ultimate fact are within the special competence of the Board.  If so, it is appropriate for a court to exercise greater

deference to the “reasonableness” of the Board’s conclusion.  An example of such an

ultimate fact would be whether the workplace rule is reasonable, which is not contested in

this case.  In evaluating this conclusion, if no proposition of law is contravened or ignored

by the agency conclusions, the “reasonable” inference standard gives deference to the agency

determination.4  However, not all ultimate facts are within the Board’s area of expertise.  See, e.g., id. at 677-78 (reviewing whether the Board’s findings supported its conclusion that the employee “voluntarily” left her job).  As to these, the reviewing court is more likely to

exercise its own judgment.  In either case the court examines the logic of the inference drawn

and imposes any rules of law that may drive the result.  That inference still requires reversal

if the underlying facts are not supported by substantial evidence or the logic of the inference

is faulty, even where the agency acts within its expertise, or if the agency proceeds under an

incorrect view of the law.

	Providing a more exact standard is neither necessary nor desirable.  Like the courts

in Indiana, courts in other jurisdictions have found it difficult to formulate a consistent,

precise, and meaningful standard of review of agency action.  Tests for “clear error,”

“substantial evidence,” “clear error of judgment,” or “arbitrary and capricious” action are

often bandied about without any obvious benefit.  See generally Kenneth Culp Davis, 5 Administrative Law Treatise § 29:5 (2nd2d ed. 1984).  We agree with Davis that: 

	the dominant scope of review is in the middle: Courts usually substitute judgment on 

	the kind of questions of law that are within their special competence, but on other 

	questions they limit themselves to deciding reasonableness; they do not clarify the 

	meaning of reasonableness but retain full discretion in each case to stretch it in either 

	direction.

Id. § 29:1, at 332 (emphasis omitted).  In sum, basic facts are reviewed for substantial evidence, legal propositions are reviewed for their correctness.  The best that can be said for

ultimate facts or “mixed questions” as a general proposition is that the reviewing court must

determine whether the Board’s finding of ultimate fact is a reasonable one.  The amount of

deference given to the Board turns on whether the issue is one within the expertise of the

Board.

	Application to this Case

	In order to establish a prima facie case for violation of an employer rule under § 22-4-

15-1(d)(2), the employer must demonstrate that the employee knowingly violated a

reasonable and uniformly enforced rule.  Hehr, 534 N.E.2d at 1125.  In this case, McClain admitted he knew he violated the rule when he gave his time card to Jones.  No one contends

that the rule is not reasonable, and the Board concluded that it was.  The sole issue is

whether there was uniform enforcement of the rule.

	The standard of review of the Board’s decision depends in the first instance on

whether uniform enforcement is a question of basic fact, ultimate fact, or a question of law. 

In order to evaluate uniformity one must first define the class of persons against whom

uniformity is measured.  This is usually a rule of law but it may be informed by appropriate findings as to employer practices, etc.  In this case the definition of the class presents no

issue; it is those employees who participate in vicarious clocking.  Definition of the class

can, however, be a significant issue.  For example, in General Motors Corp. v. Review Bd. of the Ind. Dep’t of Workforce Dev., 671 N.E.2d 493, 498 (Ind. Ct. App. 1996) the employer fired employees who were trafficking drugs.  It was the first time that drug traffickers had

been disciplined under the employer’s drug policy, which prohibited a variety of conduct. 

A violation of the policy could result in discharge but the precise penalty for violation was

discretionary with the employer.  Prior to this incident, the employer had disciplined

employees for drug possession but had not discharged them.  The Board concluded that the

policy was not uniformly enforced because the traffickers were treated differently from those

who had possessed drugs.  The Court of Appeals reversed, holding that there was uniform

enforcement of the drug policy because the traffickers and possessors constituted separate

classes of persons and treatment of each group was consistent within the group.  The court’s

determination that traffickers and possessors were different for purposes of enforcing the

drug policy was a review of the Board’s decision of a question of law.  

	Once the class is defined, the question whether the employer treats the persons within

a class consistently is a basic factual inquiry and is reviewed subject to the substantial

evidence test and for conformity to law.  See, e.g., Citizens Gas & Coke Util. v. Review Bd. of the Ind. Employment Sec. Div., 471 N.E.2d 1175 (Ind. Ct. App. 1984) (the evidence supported the Board’s finding that there was no uniform enforcement where employees with

worse attendance records than the discharged employee were still employed).  In this case there is no issue as to the class of employees -- those who do not punch their own timecards

-- against whom uniform enforcement is measured.  Accordingly, the uniform enforcement

inquiry is a question of basic fact.  The question becomes whether the enforcement “is

carried out in such a way that all persons under the same conditions and in the same

circumstances are treated alike.”  General Motors Corp., 671 N.E.2d at 498.  We review this decision for substantial evidence.  KBI, Inc., 656 N.E.2d at 846.  Here, both the supervisor and IUPUI’s representative stated that it was standard practice to discharge employees for

violating the timecard policy.  Further, McClain was not singled out for punishment: all four

employees involved in the incident were fired.  Although McClain alleged that the supervisor

had once before witnessed a violation of the policy but done nothing, the supervisor denied

these allegations.  The Board and the ALJ found the supervisor’s testimony credible and we

do not revisit the credibility of witnesses on review.  Parkison, 659 N.E.2d at 692.  The Board’s determination that the policy was uniformly enforced was supported by substantial

evidence.

	The Court of Appeals majority held that as a matter of law, when a rule is enforced

for the first time, there cannot be uniform enforcement.  The court  required that the policy

must include its own sanction to meet the standard for a “discharge for just cause” under §

22-4-15-1(d)(2).  We disagree.  A policy that has not been the basis for termination of an

employee in the past may nonetheless be “uniformly enforced” even if only one person is the

subject of an enforcement action, so long as the purposes underlying uniform enforcement

are met.  Uniform enforcement gives notice to employees about what punishment they can reasonably anticipate if they violate the rule and it protects employees against arbitrary

enforcement.  See McClain, 677 N.E.2d at 1087.  This is important to ensure that employees who are denied compensation under this subsection are only those who lost their jobs for

reasons within their control.  See Wasylk v. Review Bd. of the Ind. Employment Sec. Div., 454 N.E.2d 1243, 1245 (Ind. Ct. App. 1983) (purpose of unemployment compensation

legislation is to provide benefits to those involuntarily out of work through no fault of their

own).  Here, the purposes were met if, as the ALJ found, McClain knew of the violation,

knew or can be fairly charged with knowledge that it could result in termination, and there

was no arbitrary enforcement.  These factual determinations are supported by substantial

evidence.  As such we accept them.  KBI, Inc., 656 N.E.2d at 846.

	Conclusion

	We affirm the decision of the Unemployment Insurance Review Board.

	SHEPARD, C.J., and DICKSON and SELBY, JJ., concur.

	SULLIVAN, J. did not participate.