Title: Peace v. Employment Security Commission #+#
Citation: 349 N.C. 315
Docket Number: 599A97
State: north-carolina
Issuer: north-carolina Supreme Court
Date: December 4, 1998

IN THE SUPREME COURT OF NORTH CAROLINA
No. 599A97
WILLIAM H. PEACE, III,
Petitioner
v.
EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA,
Respondent
-----------------------------------------
WILLIAM H. PEACE, III,
Petitioner
v.
EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA,
Respondent
Appeal by petitioner pursuant to N.C.G.S. § 7A-30(2) from
the decision of a divided panel of the Court of Appeals, 128 N.C.
App. 1, 493 S.E.2d 466 (1997), remanding an order entered by
Bowen, J., on 13 March 1995 in Superior Court, Wake County.
On 5 February 1998, the Supreme Court retained the
Employment Security Commission’s notice of appeal of a
substantial constitutional question pursuant to N.C.G.S. §
7A-30(1) and allowed discretionary review of an additional issue
from the unanimous portion of that same decision of the Court of
Appeals reversing and remanding an order entered by Cashwell, J.,
on 12 August 1994 in Superior Court, Wake County.  Heard in the
Supreme Court 29 May 1998.
Hilliard & Jones, by Thomas Hilliard, III, for petitioner-
appellant Peace.
Michael F. Easley, Attorney General, by Andrew A. Vanore,
Jr., Chief Deputy Attorney General; John R. Corne, Special
Deputy Attorney General; and Sylvia Thibaut, Assistant
Attorney General, for respondent-appellant and -appellee
Employment Security Commission.
LAKE, Justice.
The essential question presented for review is whether the
Court of Appeals erred in affirming the trial court’s
determination that the State Personnel Commission improperly
placed the burden of proof on the Employment Security Commission
of North Carolina (ESC) in a claim for “just cause” termination
pursuant to N.C.G.S. § 126-35.  For the reasons discussed herein,
we conclude that allocating the burden of proof to the
disciplined employee does not violate that employee’s rights to
due process.  Accordingly, we affirm the Court of Appeals.
Petitioner, William H. Peace, III, was hired by respondent
ESC on 5 October 1985 as its Equal Employment Opportunity (EEO)
officer.  Petitioner was responsible for the direction of the
employee relations section, and his duties included the
administration of both internal and external EEO programs. 
During his employee orientation in 1985, petitioner learned that
the ESC office employees maintained a petty fund, with monthly
dues of $2.00.  Petitioner also learned that participation in the
petty fund entitled participants to an occasional cup of coffee
from the personnel file room.  Petitioner chose to participate in
the fund, paid his monthly dues, and occasionally obtained coffee
from the file room.  However, petitioner’s normal habit was to
obtain coffee each morning from the agency cafeteria.
Generally, petitioner did not attend the staff meetings
where the employees discussed office policies, including the
petty fund.  At some point following petitioner’s 1985
orientation, a local commercial coffee service was contracted
with, and a new and separate coffee fund, with monthly dues of
$3.40, was established.  The office employees maintained the new
coffee fund separate from and in addition to the office petty
fund.  Petitioner was not aware of the new coffee fund, and he
was not asked to participate in or contribute to the new fund.
On 10 April 1991, petitioner was involved in an incident
with a co-worker, Ms. Catherine High, concerning access to coffee
from the personnel file room.  As was his normal custom,
petitioner went to the agency cafeteria the morning of 10 April
1991 to obtain a cup of coffee.  However, the cafeteria was out
of coffee, so petitioner proceeded to obtain coffee from the
personnel file room.  As he was leaving the file room, Ms. High
confronted petitioner and stated, “[Y]ou are going to have to pay
me for that coffee.”  Petitioner refused to pay for the coffee,
and a heated exchange ensued.  Following the exchange, petitioner
alleged that Ms. High stated, “If you get another cup of coffee
and do not pay me, I’m going to get a cup of coffee and scald you
with it.”  Several other office employees witnessed the argument
between petitioner and Ms. High.  Ms. High also informed her
supervisor of the incident.
Petitioner contacted the magistrate’s office on the
afternoon of 10 April 1991 concerning the alleged threat made by
his co-worker, Ms. High.  The magistrate advised petitioner that
if he believed Ms. High to be capable of carrying out her threat,
he should take out a warrant.  Petitioner approached Ms. High
following his discussion with the magistrate, seeking an apology
for her earlier actions and statements.  Ms. High refused to
provide an apology for the morning coffee incident.  Later that
same afternoon, petitioner again contacted the Wake County
magistrate’s office and formally filed criminal charges against
his co-worker for communicating a threat.  On 21 May 1991, the
trial court dismissed the charge as frivolous and ordered
petitioner to pay court costs.
Petitioner’s supervisors did not contact or question
petitioner about the coffee incident pending resolution of the
criminal charges.  On 5 June 1991, petitioner’s immediate
supervisor, Gene Baker, informed petitioner by written memorandum
of a 6 June 1991 predismissal conference.  The conference
culminated in a decision to discharge petitioner from employment
for “unacceptable personal conduct.”  A 7 June 1991 letter from
Ann Q. Duncan, chairperson of ESC, further explained petitioner’s
dismissal.  The 7 June letter reaffirmed the dismissal for
“unacceptable personal conduct,” including the taking of coffee
without payment and the filing of frivolous charges against a co-
worker.  The letter explained that the “unacceptable personal
conduct” diminished petitioner’s respect among fellow employees
and called into question his reputation as the EEO officer for
the ESC.
Petitioner filed two appeals from the ESC’s decision to
discharge him from employment.  Petitioner contended (1) that the
ESC lacked “just cause” to dismiss him pursuant to N.C.G.S. §
126-35; and (2) that he had been terminated in retaliation for a
discrimination complaint he filed against the ESC in 1989, for
violation of title VII, section 704(a) of the Civil Rights Act of
1964, 42 U.S.C. § 2000e-3 (1988).
The Civil Rights Division of the Office of Administrative
Hearings (OAH) investigated petitioner’s retaliatory discharge
claim pursuant to N.C.G.S. § 7A-759.  The OAH found that there
was reasonable cause to believe that a title VII violation had
occurred.  The OAH determined that petitioner could select one of
three options:  (1) receive a right-to-sue letter, (2) commence a
contested-case hearing in OAH, or (3) do nothing.  Petitioner
decided to pursue his retaliatory discharge claim by commencing a
contested-case hearing.  As for his claim that the ESC lacked
“just cause” to dismiss him, petitioner filed another petition
for contested-case hearing pursuant to N.C.G.S. § 126-35.
A consolidated hearing was conducted on petitioner’s two
administrative appeals by Administrative Law Judge (ALJ) Sammie
Chess, Jr. on 12-14 July 1993.  ALJ Chess determined that under
the applicable “just cause” termination statute, the ESC bears
the ultimate burden of persuasion to demonstrate the validity of
the termination.  In his recommended decision to the State
Personnel Commission (SPC), the ALJ concluded that the ESC had
failed to meet its burden of proof and recommended petitioner’s
reinstatement with back pay.
In determining petitioner’s claim as to retaliatory
discharge under title VII, ALJ Chess again put the burden of
proof on the ESC.  The ALJ then found petitioner was the victim
of a retaliatory discharge, and he therefore ordered
reinstatement.
The SPC adopted the ALJ’s recommendation for petitioner’s
“just cause” claim with slight modification by an order dated
3 November 1994.  The SPC agreed that the ESC bore the burden of
proof in a “just cause” termination and affirmed the order
reinstating petitioner with back pay.
The ESC petitioned for judicial review of the SPC decision
and the ALJ decision separately, pursuant to N.C.G.S. § 150B-50. 
In a 12 August 1994 order, Superior Court Judge Narley L.
Cashwell upheld the ALJ’s final decision as to petitioner’s
retaliatory discharge claim.  By order dated 13 March 1995,
Superior Court Judge Wiley F. Bowen reversed the SPC’s decision
with prejudice and dismissed petitioner’s “just cause” claim on
the basis of two prejudicial errors of law:  (1) that the SPC
inappropriately placed the burden of proof on the ESC, and
(2) that the SPC incorrectly concluded that petitioner was
dismissed without “just cause.”
The ESC then appealed to the Court of Appeals Judge
Cashwell’s order affirming the decision concerning petitioner’s
retaliatory-discharge claim.  Petitioner also appealed to the
Court of Appeals Judge Bowen’s order reversing the SPC’s decision
to reinstate him.  The Court of Appeals consolidated the ESC’s
appeal and petitioner’s appeal, and both were originally heard in
the Court of Appeals on 7 May 1996.  See Employment Sec. Comm’n
v. Peace, 122 N.C. App. 313, 740 S.E.2d 63 (1996).  This Court
allowed the ESC’s petition for discretionary review and thereupon
remanded the case to the Court of Appeals in order for the Court
of Appeals to reconsider its ruling in light of Soles v. City of
Raleigh Civil Serv. Comm’n, 345 N.C. 443, 480 S.E.2d 685 (1997). 
Employment Sec. Comm’n v. Peace, 345 N.C. 640, 483 S.E.2d 706
(1997).
On 2 December 1997, the Court of Appeals, on remand, with
Judge Greene dissenting, held that the burden of proof in “just
cause” claims pursuant to N.C.G.S. § 126-35 may be allocated to
an employee without violating due process.  The Court of Appeals
ruled that while the trial court may not substitute its judgment
for that of the agency with respect to the evidence, the trial
court did not err in determining that the SPC’s decision and
order improperly placed the burden of proof on the ESC. 
Employment Sec. Comm’n v. Peace, 128 N.C. App. 1, 14, 493 S.E.2d
466, 474 (1997).  Therefore, the Court of Appeals remanded the
matter to the superior court for further remand to the SPC for
application of the proper burden of proof.  Id. at 14, 493 S.E.2d
at 474-75.  Petitioner subsequently filed his notice of appeal,
based on the dissent, to this Court on 17 December 1997.
On 6 January 1998, the ESC petitioned this Court for
discretionary review seeking to have this Court determine whether
the OAH acted ultra vires when it adjudicated petitioner’s title
VII claim.  Contemporaneously with its petition for discretionary
review, ESC filed with this Court a notice of appeal asserting a
substantial constitutional question pursuant to N.C.G.S. §
7A-30(1) as to whether the provisions of N.C.G.S. § 7A-759(d) and
(e) violate the provisions of Article IV, Sections 1 and 3 of the
North Carolina Constitution.  This Court entered an order
allowing discretionary review and retaining ESC’s notice of
appeal; upon review, we conclude this petition was improvidently
allowed, and such appeal should be dismissed.  
With respect to the issue which this Court previously
remanded to the Court of Appeals and which is again before us by
virtue of the dissent, petitioner asserts that the Court of
Appeals incorrectly concluded that this Court’s holding in Soles
mandates the assignment of the burden of proof in “just cause”
termination disputes to the employee.  Petitioner also contends
that the assignment of the burden of proof to the employee
following a “just cause” termination violates the procedural
protections required by the Due Process Clause of the Fourteenth
Amendment.  For the reasons stated below, we reject these
assertions.
Procedural due process restricts governmental actions and
decisions which “deprive individuals of ‘liberty’ or ‘property’
interests within the meaning of the Due Process Clause of the
Fifth or Fourteenth Amendment.”  Mathews v. Eldridge, 424 U.S.
319, 332, 47 L. Ed. 2d 18, 31 (1976).  A terminated employee must
initially demonstrate a “property” interest in continued
employment in order to invoke procedural due process protection. 
Board of Regents v. Roth, 408 U.S. 564, 570-71, 33 L. Ed. 2d 548,
557 (1972).  State law determines whether an individual employee
does or does not possess a constitutionally protected “property”
interest in continued employment.  Bishop v. Wood, 426 U.S. 341,
344, 48 L. Ed. 2d 684, 690 (1976).
Under North Carolina law, an employee has a protected
“property” interest in continued employment only if the employee
can show a legitimate claim to continued employment under a
contract, a state statute or a local ordinance.  Nantz v.
Employment Sec. Comm’n, 290 N.C. 473, 226 S.E.2d 340 (1976).  The
North Carolina General Assembly created, by enactment of the
State Personnel Act, a constitutionally protected “property”
interest in the continued employment of career State employees. 
N.C.G.S. § 126-35 provides, in pertinent part, that “[n]o career
State employee subject to the State Personnel Act shall be
discharged, suspended, or demoted for disciplinary reasons,
except for just cause.”  N.C.G.S. § 126-35(a) (1995).  It is
undisputed in the case sub judice that petitioner, as a career
State employee, is entitled to the “just cause” protection of the
State Personnel Act and is thereby imbued with a constitutionally
protected “property” interest.  Board of Regents, 408 U.S. at
577, 33 L. Ed. 2d at 561; Leiphart v. N.C. Sch. of the Arts, 80
N.C. App. 339, 348, 342 S.E.2d 914, 921, cert. denied, 318 N.C.
507, 349 S.E.2d 862 (1986).
While the demonstration of a protected “property” interest
is a condition precedent to procedural due process protection,
the existence of the “property” interest does not resolve the
matter before this Court.  We must inquire further and determine
exactly what procedure or “process” is due.  The fundamental
premise of procedural due process protection is notice and the
opportunity to be heard.  Cleveland Bd. of Educ. v Loudermill,
470 U.S. 532, 542, 84 L. Ed. 2d 494, 503 (1985).  Moreover, the
opportunity to be heard must be “at a meaningful time and in a
meaningful manner.”  Armstrong v. Manzo, 380 U.S. 545, 552, 14 L.
Ed. 2d 62, 66 (1965).  While the United States Supreme Court has
consistently held that some form of hearing is required prior to
a final deprivation of a protected “property” interest, the exact
nature and mechanism of the required procedure will vary based
upon the unique circumstances surrounding the controversy. 
Mathews, 424 U.S. at 333, 47 L. Ed. 2d at 32; Wolff v. McDonnell,
418 U.S. 539, 557-58, 41 L. Ed. 2d 935, 952 (1974).
The United States Supreme Court has never required the
allocation of a particular burden of proof in an employee
termination dispute.  In Lavine v. Milne, 424 U.S. 577, 47 L. Ed.
2d 249 (1976), the Supreme Court did recognize the important and
potentially dispositive effect of the allocation of the burden of
proof.  However, in that decision, the Court also stated,
“[o]utside the criminal law area, where special concerns attend,
the locus of the burden of persuasion is normally not an issue of
federal constitutional moment.”  Id. at 585, 47 L. Ed. 2d at 256. 
Only in cases involving the deprivation of a fundamental right
has the United States Supreme Court found a constitutionally
protected right to a particular allocation of the burden of
proof.  See Santosky v. Kramer, 455 U.S. 745, 71 L. Ed. 2d 599
(1982) (termination of parental rights); Addington v. Texas, 441
U.S. 418, 60 L. Ed. 2d 323 (1979) (fundamental right to physical
liberty associated with involuntary commitment to state
hospital); Speiser v. Randall, 357 U.S. 513, 2 L. Ed. 2d 1460
(1958) (fundamental right to freedom of speech).  Fundamental
rights are those rights “deeply rooted in this Nation’s history”
and “implicit in the concept of ordered liberty.”  Washington v.
Glucksberg, 521 U.S. 702, ___, 138 L. Ed. 2d 772, 787-88 (1997).
The United States Supreme Court has held that an interest in
continued employment is not a constitutionally protected
fundamental right, but rather a “property” right subject to
traditional procedural due process protections.  Board of
Regents, 408 U.S. at 576-78, 33 L. Ed. 2d at 560-61.  In this
case, petitioner has failed to identify the impingement of any
fundamental right in his “just cause” termination claim.
The United States Supreme Court, in Mathews v. Eldridge, 424
U.S. 319, 47 L. Ed. 2d 18, set forth a three-part balancing test
to determine the appropriate procedures required to comply with
procedural due process protection in any given situation.  The
Supreme Court in Mathews reiterated that procedural due process
protection is a flexible, not fixed, concept governed by the
unique circumstances and characteristics of the interest sought
to be protected.  The Court there identified the following three
factors:
first, the private interest that will be affected by
the official action; second, the risk of an erroneous
deprivation of such interest through the procedures
used, and the probable value, if any, of additional or
substitute procedural safeguards; and finally, the
Government’s interest, including the function involved
and the fiscal and administrative burdens that the
additional or substitute procedural requirement would
entail.
Id. at 335, 47 L. Ed. 2d at 33.
There is no dispute that the initial Mathews-Eldridge
factor, the private interest affected by the official action, is
of significant importance in the matter before this Court.  The
ability to obtain and retain employment is of utmost concern to
individuals as they strive to provide support for themselves and
their families, as well as in seeking to achieve their
aspirations and goals.  The United States Supreme Court has
emphasized that the private interest in continued employment
cannot be denied.  Loudermill, 470 U.S. at 541, 84 L. Ed. 2d at
503.  However, an individual employee’s interest in retaining
employment is not absolute and must be evaluated in the light of
additional factors.  See Mathews v. Eldridge, 424 U.S. 319, 47 L.
Ed. 2d 18; Arnett v. Kennedy, 416 U.S. 134, 40 L. Ed. 2d 15
(1974).
The second factor discussed by the Mathews Court requires an
objective evaluation of the risk of erroneous deprivation of the
protected interest under the present procedures, as well as the
potential value of additional safeguards.  It is upon this second
Mathews-Eldridge factor that the central dispute between
petitioner and the ESC rests.  Petitioner asserts that the
allocation of the burden of proof upon an employee in a “just
cause” termination controversy deprives the employee of
procedural due process protection because of the serious and
significant potential for erroneous decision making.  We find
this assertion to be without support in either federal or state
statutory schemes and case law.
The Mathews-Eldridge analysis places emphasis upon the
fairness and reliability of the currently utilized procedures. 
However, procedural due process protection clearly does not
prescribe or require a failsafe process that totally precludes
any possibility of error.  Walters v. National Ass’n of Radiation
Survivors, 473 U.S. 305, 320, 87 L. Ed. 2d 220, 233 (1985). 
While the United States Supreme Court has consistently held that
some type of hearing is required prior to the deprivation of a
“property” interest, in only one case, Goldberg v. Kelly, 397
U.S. 254, 25 L. Ed. 2d 287 (1970), has the Supreme Court held
that an evidentiary hearing is mandated.  See Mathews v.
Eldridge, 424 U.S. 319, 47 L. Ed. 2d 18.  The Goldberg Court
carefully considered the potential impact of the deprivation of
welfare benefits and placed considerable emphasis on the unique
fact that welfare recipients live on the margin of existence. 
Goldberg, 397 U.S. at 264, 25 L. Ed. 2d at 297.  A temporary, but
erroneous, deprivation of benefits to a welfare recipient would
often have major consequences, depriving “an eligible recipient
of the very means by which to live.”  Id.
In contrast, a career State employee contesting a “just
cause” termination does not face the same dire consequences from
loss of employment.  A typical terminated State employee, much
like the Social Security benefit recipient considered in Mathews,
may have other independent sources of support, including savings,
gifts from family members, as well as government-assistance
programs.  Additionally, the terminated employee is free to and
can readily seek alternate gainful employment, utilizing his or
her skills and experience, within the available job market.
The Mathews-Eldridge analysis requires careful consideration
of the protections and procedures available to “just cause”
terminated employees under our current administrative and
judicial review system.  It is readily apparent that the appeal
and review guidelines and procedures mandated by the North
Carolina General Assembly provide ample protection against
potential erroneous decisions accompanying “just cause”
terminations pursuant to N.C.G.S. § 126-35.  The ESC fully
complied with the established legislative scheme in the matter
now before this Court.
N.C.G.S. § 126-35 establishes a mandatory notice and hearing
requirement in “just cause” terminations involving employees,
such as petitioner, protected by the State Personnel Act.  The
statute requires the provision of a written statement detailing
for the employee the reasons for the discharge as well as
detailed instructions describing access to the administrative-
appeals process.  The statute provides, in pertinent part:
In cases of such disciplinary action, the employee
shall, before the action is taken, be furnished with a
statement in writing setting forth in numerical order
the specific acts or omissions that are the reasons for
the disciplinary action and the employee’s appeal
rights.  The employee shall be permitted 15 days from
the date the statement is delivered to appeal to the
head of the department.  However, an employee may be
suspended without warning for causes relating to
personal conduct detrimental to State service, pending
the giving of written reasons, in order to avoid undue
disruption of work or to protect the safety of persons
or property or for other serious reasons.  The
employee, if he is not satisfied with the final
decision of the head of the department, or if he is
unable, within a reasonable period of time, to obtain a
final decision by the head of the department, may
appeal to the State Personnel Commission.
N.C.G.S. § 126-35(a).
The North Carolina statutory scheme provides a detailed
mechanism within article 8 of chapter 126 for resolution of the
“just cause” dispute.  The scope of the administrative-appeal
procedure for the State Personnel System is basically set forth
in N.C.G.S. § 126-37, which provides in part:
(a) Appeals involving a disciplinary action,
alleged discrimination, and any other contested case
arising under this Chapter shall be conducted in the
Office of Administrative Hearings as provided in
Article 3 of Chapter 150B . . . .  The State Personnel Commission
shall make a final decision in these cases . . . .
. . . .
(b2) The final decision is subject to judicial
review pursuant to Article 4 of Chapter 150B of the
General Statutes.  
N.C.G.S. § 126-37(a)-(b2) (1995).
The OAH has adopted, pursuant to its rule-making authority,
procedures and rules designed to assist a terminated employee in
obtaining an accurate and fair resolution of the dispute.  The
OAH allows the employee access to traditional evidentiary tools
and processes in the investigation for preparation and
presentation of his complaint.  The OAH procedure allows a
terminated employee to readily obtain all the information relied
on by the State agency in making the termination decision.  The
North Carolina Administrative Code provides in pertinent part:
Governed by the principles of fairness,
uniformity, and punctuality, the following general
rules apply:
(1) The Rules of Civil Procedure as contained in
G.S. 1A-1, the General Rules of Practice for the
Superior and District Courts as authorized by G.S.
7A-34 and found in the Rules Volume of the North
Carolina General Statutes . . . shall apply in
contested cases in the Office of Administrative
Hearings (OAH) unless another specific statute or rule
. . . provides otherwise.
. . . .
(5) Except as otherwise provided by statutes or by
rules promulgated under G.S. 150B-38(h), the rules
contained in this Chapter shall govern the conduct of
contested case hearings under G.S. 150B-40 when an
Administrative Law Judge has been assigned to preside
in the contested case.
26 NCAC 3 .0101(1)-(7) (February 1994).
N.C.G.S. § 150B-43 further creates a final statutory
safeguard against an erroneous decision by providing a right to
judicial review of final agency decisions.  The statute provides
in part:
Any person who is aggrieved by the final decision in a
contested case, and who has exhausted all
administrative remedies made available to him by
statute or agency rule, is entitled to judicial review
of the decision under this Article, unless adequate
procedure for judicial review is provided by another
statute.
N.C.G.S. § 150B-43 (1995).
The statutory protections afford a terminated State employee
a comprehensive and effective deterrent against erroneous
decisions.  A terminated employee may avail himself not only of
administrative review incorporating full discovery of information
and an evidentiary hearing, but may also obtain judicial review
of the final agency decision.  We conclude that this procedure
fully comports with the constitutional procedural due process
requirements mandated by the Fourteenth Amendment, and no
additional safeguards are needed to avoid erroneous deprivation.
The third and final factor set out by the Mathews-Eldridge
Court focuses on the government’s interest in the dispute,
including the government function involved.  Consideration of
this factor, the government interest involved, supports the
allocation of the burden of proof to the terminated State
employee in “just cause” cases.  The State of North Carolina,
through each of its agencies, must remain a responsible steward
of the public trust by maintaining an efficient and productive
government.  In order to provide for efficient administration,
State officials must promote and encourage employee productivity
and discipline.  The State Personnel System, created by chapter
126 of the General Statutes, strives to implement a program of
employee management “based on accepted principles of personnel
administration and applying the best methods as evolved in
government and industry.”  N.C.G.S. § 126-1 (1995).  It is
imperative that agency officials maintain adequate supervision
and control over personnel matters.  See Arnett v. Kennedy, 416
U.S. at 168, 40 L. Ed. 2d at 41.  The maintenance of an efficient
and productive government or private employment workforce
requires the availability and utilization of appropriate
disciplinary procedures.
The United States Supreme Court has never indicated that
procedural due process requires a particular allocation of the
burden of proof among parties in a civil matter.  The Supreme
Court has, however, addressed the determination of the
appropriate standard of proof, recognizing that the determination
of an appropriate standard of proof must reflect the value
society places on the individual interest sought to be protected. 
Santosky, 455 U.S. at 754-55, 71 L. Ed. 2d at 607.  The Santosky
Court utilized the Mathews-Eldridge balancing test to determine
the appropriate standard of proof in a case involving the
termination of parental rights, reaffirming the Mathews-Eldridge
test as the benchmark for procedural due process compliance.  Id.
In addition to the Mathews-Eldridge analysis, we must also
consider applicable North Carolina law addressing the allocation
of the burden of proof.  The North Carolina Constitution, like
the United States Constitution, does not compel the allocation of
the burden of proof to either party in a “just cause” employment
termination controversy.  Furthermore, the North Carolina General
Assembly has not specifically addressed the proper allocation of
the burden of proof in “just cause” termination cases.  The State
Personnel Commission likewise has not dictated a specific
allocation of the burden of proof pursuant to its rule-making
authority found in N.C.G.S. §§ 126-4(6), (7a), (9), (11) and
126-26.
In the absence of state constitutional or statutory
direction, the appropriate burden of proof must be “judicially
allocated on considerations of policy, fairness and common
sense.”  1 Kenneth S. Broun, Brandis & Broun on North Carolina
Evidence § 37 (4th ed. 1993).  Two general rules guide the
allocation of the burden of proof outside the criminal context: 
(1) the burden rests on the party who asserts the affirmative, in
substance rather than form; and (2) the burden rests on the party
with peculiar knowledge of the facts and circumstances.  Id.  The
North Carolina courts have generally allocated the burden of
proof in any dispute on the party attempting to show the
existence of a claim or cause of action, and if proof of his
claim includes proof of negative allegations, it is incumbent on
him to do so.  Johnson v. Johnson, 229 N.C. 541, 544, 50 S.E.2d
569, 572 (1948).
Applying these general principles to the case sub judice, it
is clear that an employee terminated pursuant to the “just cause”
provision of N.C.G.S. § 126-35 should bear the burden of proof in
an action contesting the validity of that termination. 
Petitioner, the terminated employee, is the party attempting to
alter the status quo.  The burden should appropriately rest upon
the employee who brings the action, even if the proof of that
position requires the demonstration of the absence of certain
events or causes.  Neither party in a “just cause” termination
dispute has peculiar knowledge not available to the opposing
party.  A terminated employee may readily utilize the procedures
outlined in chapter 126 and section 1A-1 of the North Carolina
General Statutes, as well as title 26 of the North Carolina
Administrative Code, to obtain any and all necessary information
to establish and advocate his or her position.
In the decision below, the Court of Appeals correctly noted
that this Court’s decision in Soles controls the judicial
allocation of the burden of proof in “just cause” employee
terminations.  Employment Sec. Comm’n v. Peace, 128 N.C. App. at
13-14, 493 S.E.2d at 474.  In Soles, a city employee was
terminated because of “personal conduct detrimental to City
service.”  Soles, 345 N.C. at 445, 480 S.E.2d at 686.  We
concluded in Soles that the terminated city employee did not
possess a constitutionally protected “property” interest in
continued employment, thereby triggering procedural due process
protection.  Id. at 447, 480 S.E.2d 688.  However, in reaching
the Soles decision, we stated that “[a]ssuming a situation
existed in which an employee was entitled to procedural due
process protection, we agree with the City and hold that the
allocation of the burden of proof to a disciplined employee does
not violate the employee’s guarantees of procedural due process.” 
Id. at 448, 480 S.E.2d at 688.
The dispute between petitioner and the ESC raises the issue
addressed by this Court in Soles.  While the Soles controversy
did not directly involve a “property” interest triggering due
process protection, we nevertheless addressed the proper
allocation of the burden of proof in employee termination cases
involving such a protected interest.  Id.  We noted that the
Mathews-Eldridge balancing test provided the proper framework to
evaluate the allocation of the burden of proof.  Id.  As
previously discussed, application of the Mathews-Eldridge factors
to the dispute now before this Court leads to the inevitable
conclusion that the individual “property” interest sought to be
protected by petitioner, while important and significant, is
decisively outweighed by the substantial government interest in
maintaining a productive and efficient workforce.  There is also
a very minimal risk of erroneous decision making when utilizing
the existing administrative and judicial protections.
For the reasons stated herein, we affirm the decision of the
Court of Appeals and hold that the burden of proof is properly
allocated to the employee in “just cause” termination cases
pursuant to N.C.G.S. § 126-35.  We further hold that respondent
North Carolina Employment Security Commission’s petition for
discretionary review as to the additional issue was improvidently
allowed, and we hereby dismiss respondent’s notice of appeal on
an asserted constitutional claim.
AFFIRMED IN PART; DISCRETIONARY REVIEW IMPROVIDENTLY ALLOWED
IN PART; DISMISSED IN PART.
Justice WYNN did not participate in the consideration or
decision of this case.
=======================
Justice FRYE concurring in part and dissenting in part.
I agree with the majority opinion in holding that
respondent’s petition for discretionary review of an additional
issue was improvidently allowed and in dismissing respondent’s
notice of appeal asserting a substantial constitutional question. 
I dissent only from the majority’s affirmance of the Court of
Appeals’ holding that the employee has the burden of proof in
“just cause” termination cases pursuant to N.C.G.S. § 126-35.
In Soles v. City of Raleigh Civil Serv. Comm’n, 345 N.C.
443, 480 S.E.2d 685 (1997), we said, “[a]ssuming a situation
existed in which an employee was entitled to procedural due
process protection, . . . the allocation of the burden of proof
to a disciplined employee does not violate the employee’s
guarantees of procedural due process.”  Id. at 448, 480 S.E.2d at
688.  In this case, on remand, the Court of Appeals decided, and
the majority here concludes, that the burden of proof in “just
cause” claims pursuant to N.C.G.S. § 126-35 may be allocated to
an employee without violating due process.  I agree.  However,
that is not the issue before us.
In the instant case, the State Personnel Commission (SPC)
adopted the recommendation of the Administrative Law Judge (ALJ)
placing the burden of proof on the Employment Security Commission
(ESC) to demonstrate “just cause” for petitioner’s termination. 
Upon judicial review, the superior court held that this was an
error of law.  The question before the Court of Appeals then was
whether it was error for the SPC, the agency charged with the
administration and enforcement of the State Personnel Act, to
allocate the burden of proof in “just cause” termination disputes
to the employer in the absence of any statutory guidance.  Soles
does not answer that question, and I do not believe that the
majority here directly addresses that issue.
On the merits, Judge Smith, writing for the majority of the
Court of Appeals’ panel and citing 1 Kenneth S. Broun, Brandis &
Broun on North Carolina Evidence § 30 (4th ed. 1993), explains
the distinctions between the burden of producing evidence and the
burden of persuasion.  He then continues as follows:
When statutes fail to dictate with whom the burden
of persuasion lies, the burden is judicially allocated
based on “considerations of policy, fairness and common
sense . . . .”  [1 Kenneth S. Broun, Brandis & Broun on
North Carolina Evidence § 37.]  For cases in which the
burden of proof remains unallocated, it has been
suggested that the burden be placed “upon the party who
has peculiar knowledge of the facts and who, therefore,
is better able to produce proof.”  Id.  In the instant
case, the party having particular knowledge as to the
cause of Peace’s dismissal is ESC.  An employee
allegedly dismissed for “just cause” would be faced
with an almost insurmountable task in attempting to
prove he or she was dismissed for something short of
“just cause,” in that the employee would be forced to
prove a negative.  We believe the better view is to
allocate the initial burden of proof to the employer to
prove that an employee was dismissed for “just cause”
and then have the employee come forward with evidence
showing that his or her dismissal was made without
“just cause.”  Here, SPC expressly adopted the ALJ’s
Conclusion of Law Number 2, which states “[w]here just
cause is an issue, the Respondent [ESC] bears the
ultimate burden of persuasion.”  Taking into account
“the specialized expertise of the staff of an
administrative agency,” we give great deference to
SPC’s decision to place the burden of proof on ESC. 
[High Rock Lake Ass’n v. North Carolina Envtl.
Management Comm’n, 51 N.C. App. 275, 279, 276 S.E.2d
472, 475 (1981).]
Employment Sec. Comm’n v. Peace, 128 N.C. App. 1, 12, 493 S.E.2d
466, 473 (1997).  I agree.  I also agree with Judge Greene’s
dissenting opinion in which he said:
I agree with the majority’s well-reasoned explanation
of why the burden of proof in a termination without
just cause case is more fairly placed upon the
employer.  I add only that this Court has repeatedly
acquiesced in the placement of the burden of proof on
the employer in just cause cases. . . .  There is no
pre-existing rule mandating placement of that burden on
the employee in this case.  Soles does not, either
explicitly or implicitly, require courts to place the
burden of proof on the employee in just cause cases.
Id. at 15, 493 S.E.2d at 475 (Greene, J., dissenting).
Again, in Soles, the City of Raleigh Civil Service
Commission had a preexisting rule that a terminated employee must
bear the burden of proving that the termination was unjustified. 
We held that Soles had no constitutionally protected property
interest in his continued employment with the city, but even if
he had such an interest, the allocation of the burden of proof to
him would not violate procedural due process.  Soles, 345 N.C. at
447-48, 480 S.E.2d at 688.  However, in this case, although the
General Assembly certainly could have directed by statute which
party must carry the burden of proof in a disputed “just cause”
termination, it has not.  Thus, as the majority correctly notes,
it is a matter for judicial allocation.
For the reasons stated in both the majority and dissenting
opinions of the Court of Appeals, I would hold that the burden in
this case was properly allocated to respondent ESC.