Sherry A. Ridley v. James G. Neeley

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

September 1, 2010 Session

SHERRY A. RIDLEY v. JAMES G. NEELEY, ET AL.

Appeal from the Chancery Court for Hamilton County

No. 08-0849 W. Frank Brown, III, Chancellor

No. E2010-00289-COA-R3-CV - FILED OCTOBER 28, 2010

After being discharged from her employment with Federal Express Corporation (“the

Employer”), Sherry A. Ridley filed a claim for unemployment compensation. The Tennessee

Department of Labor and Workforce Development (“the Department”) initially approved her

claim, and its ruling was affirmed by the Appeals Tribunal. Following an evidentiary hearing,

the Appeals Tribunal reversed, concluding that Ridley was disqualified from receiving

unemployment benefits because she was discharged for work-related misconduct. The Board

of Review affirmed the denial of benefits. Ridley filed a petition for judicial review. The

trial court affirmed the Board’s decision. Ridley appeals to this Court and essentially

contends that there is no evidence that she committed work-related misconduct. We

conclude that there is substantial and material evidence to support the decision that Ridley

is disqualified from receiving unemployment compensation benefits because of work-related

misconduct. Accordingly, we affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;

Case Remanded

C HARLES D. S USANO, J R., J., delivered the opinion of the Court, in which D. M ICHAEL

S WINEY and J OHN W. M CC LARTY, JJ., joined.

Joe Timberlake, Signal Mountain, Tennessee, for the appellant, Sherry A. Ridley.

Robert E. Cooper, Jr., Attorney General and Reporter; Michael E. Moore, Solicitor General;

and Lindsey O. Appiah, Assistant Attorney General, Nashville, Tennessee, for the appellee,

Tennessee Department of Labor and Workforce Development.

Colby S. Morgan, Memphis, Tennessee, for the appellee, Federal Express Corporation.

OPINION

I.

Ridley worked as a courier for the Employer for some fourteen years. On April 10,

2008, she was terminated for falsifying company documents. On April 18, 2008, she filed

a claim for unemployment benefits. In response to the Department’s request for

information,1 the Employer responded only that she was “discharged for unacceptable and

improper conduct.” Ridley’s claim for benefits was initially approved based on the

Department’s finding that the evidence submitted by the Employer was not sufficient to

prove that she was discharged for misconduct related to her work.

The Employer sought review by the Department’s Appeals Tribunal. The Employer

did not participate in the scheduled telephone hearing, and the Department’s ruling was

initially affirmed. Subsequently, the Employer was granted a new hearing on August 5,

2008, at which hearing Ridley and the Employer both appeared and presented evidence.

Scott Sealor, Ridley’s former supervisor, testified on behalf of the Employer regarding

the circumstances that lead to Ridley’s discharge. On Monday, April 7, 2008, a customer

called the Employer to advise that its packages had not been picked up on the previous Friday

as scheduled. In its ensuing investigation, the Employer determined that Ridley had scanned

a different customer’s package as if it were the package of the complaining customer but had

actually missed that customer’s stop. In looking further at Ridley’s pick-up manifest, the

Employer discovered it reflected that Ridley had made seven stops in seven minutes on April

4 within a 10-12 mile radius, a physical impossibility. Sealor noted that according to the

manifest, some of the packages were picked up during the same, brief time span from

customers with different zip codes. Sealor testified to his conversation with Ridley when he

first confronted her with the apparent discrepancies on her pick-up records:

[W]hen I first talked to her I asked her . . . why the pick up . . .

had been missed . . . and she stated that she did not pick up

there, that she overlooked the stop and used the wrong . . .

number and it caused her to think that she had [received] that

package, . . . so she failed to go to that stop, then later I asked

1

See Tenn. Code Ann. § 50-7-304(b)(2)(C) (providing that “[i]f a separation issue exists, the

separating employer will be asked to supply information describing circumstances leading to the

separation”).

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her, . . . how she could have done seven stops in seven minutes,

basically. . . .

Two days later, Ridley wrote a statement explaining her actions:

Picked up several stops while I was still in break mode. Trying

to get the numbers for this route to improve. I have been told

nearly everyday how important the numbers are. This is the first

time to do such, need to see how to make my route numbers.

After being confronted with situation, was told would be

suspended.

Sealor further related as follows with respect to his conversation with Ridley:

Counsel for Employer: Now in discussing this with [Ridley],

what did she tell you about scanning and taking a break?

Sealor: She told me verbally that she had picked up all these

stops while she was in break and she sat in a parking lot and

scanned them all, . . . each number is different, she was still at

the same location, she just scanned them all together.

Counsel: At the conclusion of all this, . . . was the decision made

to terminate her?

Sealor: It got sent to upper management and human resources

and they looked over everything and decided it was deliberate

falsification, that [Ridley] admitted it and that she was aware of

the policy and the repercussions, if you violated the policy, was

terminated the next day.

Sealor explained the importance of accuracy in the electronic tracking system, i.e., the

Employer offered a money-back guarantee to its customers that it could inform a customer

of the location of any package within 30 minutes or shipping was free. In addition to its

business reputation and the money-back guarantee, Sealor noted that tracking records were

also used to measure an employee’s productivity. For these reasons, the Employer’s policy

mandated accurate record keeping. It allows “zero tolerance” for violations.

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At the conclusion of the hearing, the Appeals Tribunal found that Ridley was

disqualified from receiving unemployment compensation and reversed the Department’s

approval of Ridley’s claim. In its August 6, 2008, decision, the Appeals Tribunal stated:

FINDINGS OF FACT: The claimant’s most recent employment

prior to filing this claim was with Federal Express Corporation

from October 25, 1993 until April 9, 2008 as a courier. On

April 7, 2008, a customer complained that the claimant failed to

pickup a package from their place of business. On April 9,

2008, the operations manager investigated this matter by

checking the claimant’s documentation of her pickups.

According to the documentation, the claimant made 7 pickups

within a 10 to 12 mile radius in 7 minutes. The claimant could

not have made that many stops in that period of time. The

claimant also twice documented the same pickup.

The operations manager confronted the claimant later that day

concerning her documentation of her pickups. The claimant

submitted a handwritten statement to him that indicated she

picked up several stops while on break mode. On April 10,

2008, the operations manager discharged claimant for violation

of the employer’s acceptable conduct policy. On February 25,

2005, the claimant acknowledged she had read and understood

the seriousness and consequences of violations of the

employer’s acceptable conduct policy. The policy notified the

claimant that deliberate falsification of company documents

including but not limited to business reports, delivery records,

timecards, benefits eligibility forms, expense reports, and

employment applications would result in discharge.

The employer considers falsifications of delivery records a

serious violation because they guarantee to tell customers where

their package is located within 30 minutes of an inquiry or the

customer receives free shipping. The claimant’s conduct

inflated her productivity but she denied that her conduct was

deliberate. The employer is subject to Department of

Transportation policy violations if employees are found to be

working while on break.

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CONCLUSIONS OF LAW: The Appeals Tribunal finds that

claimant is not eligible for unemployment benefits. The issue is

whether the claimant is guilty of work-related misconduct under

TCA 50-7-303(a)(2). Misconduct is an intentional act or a

violation of policy that materially breaches the standard of

behavior an employer has a right to expect. The evidence

establishes that the claimant was discharged for violation of

company policy. The Appeals Tribunal finds the evidence is

sufficient to establish misconduct as defined in the statute

because the claimant’s conduct materially breached the

standards of behavior the employer had a right to expect.

The claimant’s negligence may have resulted in her

documenting that she made a pickup twice. However, her

documentation of 7 pickups in 7 minutes while she was on break

was substantial and shows an intentional disregard of the

employer’s interest. She was made aware that such conduct

would result in discharge. Therefore, the evidence amounts to

work-related misconduct as provided under the statute.

In affirming the denial of benefits,2 the Board of Review found, in relevant part:

The claimant performed work during her break time (a violation

of policy) but was discharged because she did not accurately

record the times the items were actually picked up by scanning

them at the time of the pick-up. She apparently made several

pick-ups and later went to a parking lot at which time she

scanned and entered them into her computer. The paperwork

did not reflect an accurate pick-up time for those items. The

employer testified that it insists on accurate scan times for item

pick-ups. The claimant was aware that her conduct was contrary

to policy. Misconduct has been reasonably shown.

2

The Board affirmed in part and remanded in part the decision of the Appeals Tribunal. As noted,

the Board affirmed the decision denying unemployment benefits to Claimant. It remanded for consideration

of the question of “whether the employer should be charged with any benefits [initially] paid [to Ridley] in

accordance with TCA § 50-7-304(b)(2)(D) . . .” based on the Employer’s failure to respond to the

Department’s request for separation information by “describing circumstances leading to the [claimant’s]

separation” as required by statute. The Board ultimately resolved this issue in Ridley’s favor by ruling that

any benefits paid to Ridley were properly charged to the Employer. This issue is not a subject of this appeal.

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Ridley filed a petition for judicial review in the trial court. The court affirmed the

decision of the Board.

The instant appeal to this Court followed.

II.

Ridley presents one issue for our review:

Whether there is substantial and material evidence to support the

decision of the Board of Review disqualifying Ridley from

receiving unemployment compensation benefits as a result of

work-related misconduct.

III.

Appellate courts and trial courts are subject to the same standard of review when

reviewing administrative decisions pertaining to unemployment compensation. Armstrong

v. Neel, 725 S.W.2d 953, 955 n.1 (Tenn. Ct. App. 1986). That standard, codified at Tenn.

Code Ann. 50-7-304(i)(2)-(3) (Supp. 2009), provides as follows:

(2) The chancellor may affirm the decision of the board or the

chancellor may reverse, remand or modify the decision if the

rights of the petitioner have been prejudiced because the

administrative findings, inferences, conclusions or decisions are:

(A) In violation of constitutional or statutory provisions;

(B) In excess of the statutory authority of the agency;

(C) Made upon unlawful procedure;

(D) Arbitrary or capricious or characterized by abuse of

discretion or clearly unwarranted exercise of discretion; or

(E) Unsupported by evidence which is both substantial and

material in the light of the entire record. In determining the

substantiality of evidence, the chancellor shall take into account

whatever in the record fairly detracts from its weight, but the

chancellor shall not substitute the chancellor's judgment for that

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of the board of review as to the weight of the evidence on

questions of fact. No decision of the board shall be reversed,

remanded or modified by the chancellor unless for errors which

affect the merits of the final decision of the board. Such petition

for judicial review shall be heard by the chancellor either at term

time or vacation as a matter of right, any other statute of this

state to the contrary notwithstanding.

Substantial and material evidence consists of “such relevant evidence as a reasonable mind

might accept to support a rational conclusion and such as to furnish a reasonably sound basis

for the action under consideration.” Sweet v. State Tech. Institute at Memphis, 617 S.W.2d

158, 161 (Tenn. Ct. App. 1981) (quoting Pace v. Garbage Disposal District of Washington

County, 54 Tenn. App. 263, 390 S.W.2d 461, 463 (Tenn. Ct. App. 1965)). Therefore, if the

record contains such evidence, we are limited to examining the issues of law posited by the

plaintiff. See Perryman v. Bible, 653 S.W.2d 424, 429 (Tenn. Ct. App. 1983). On our

review, we accord no presumption of correctness to the Department’s conclusions of law.

Wallace v. Sullivan, 561 S.W.2d 452, 453 (Tenn. 1978); Stanford v. Comm’r of the Dep’t

of Labor & Workforce, No. W2004-02373-COA-R3-CV, 2005 WL 1833734 at *3 (Tenn.

Ct. App. W.S. filed Aug. 2, 2005) (citing Sutton v. Traughber, No. 88-309-II, 1989 WL

48782, at *2 (Tenn. Ct. App. filed May 12, 1989)). Further, we are mindful that

“unemployment compensation statutes should be construed liberally in favor of the employee

and . . . an employer has the burden of proving the employee’s disqualification from

unemployment benefits.” Stanford, 2005 WL 1833734 at *5-6 (citing Sutton, at *2);

Armstrong v. Neel, 725 S.W.2d at 955 n.2 (Tenn. Ct. App. 1986).

IV.

Ridley challenges the Board’s decision that she was disqualified from receiving

unemployment benefits as a result of work-related misconduct. Basically, she contends that

her actions did not amount to misconduct and therefore there is nothing to support the denial

of her claim. The evidence persuades us otherwise.

A claimant is disqualified from receiving benefits “[i]f the administrator finds that a

claimant has been discharged from the claimant’s most recent work for misconduct

connected with the claimant’s work, . . . .” Tenn. Code Ann. §50-7-303(a)(2). In the present

case, the Board found that Ridley’s discharge for falsification of company documents

constituted such misconduct and therefore rendered her ineligible for benefits. As a

reviewing court, we are mindful that we must affirm the administrative denials of claims for

unemployment compensation if the record contains substantial and material evidence to

support a finding that an employee has engaged in misconduct related to his or her work.

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First, we agree that the findings of the administrative bodies below, as affirmed by the

trial court, are supported by substantial and material evidence. The evidence showed that in

2005, the Employer amended its acceptable conduct policy to include falsification of

company documents as a “discharge offense.” A memorandum the Employer sent to all

employees reflected the change and emphasized the importance of maintaining accurate

documents to the Employer’s business and its reputation, among other considerations. It is

undisputed that Ridley was aware of the policy that provided for an employee’s termination

upon the occurrence of “even one” violation. Furthermore, Ridley does not dispute that

while on her route on April 4, 2008, she failed to scan several packages when she picked

them up, instead scanning them all at roughly the same time during a later stop. As a result,

the tracking documents for the packages in question did not reflect accurate pick up times.

We agree with the Board’s finding that Ridley thereby falsified company documents in

violation of the Employer’s express policy prohibiting such conduct. We next consider

whether Ridley’s conduct is properly deemed “misconduct” related to her work for purposes

of her claim for unemployment compensation.

At the time Ridley was discharged, Tenn. Code Ann. § 50-7-303(a)(2)3 did not define

the types of misconduct that warrant a denial of unemployment compensation. The courts

were left to make this determination on a case-by-case basis. See, i.e., Grandstaff v. Hayes,

No. 01-A-01-9206-CH-00253, 1993 WL 46509, at *2, Tenn Ct. App. M.S., filed Feb. 24,

1993). “At a minimum, however, . . . there must be shown a material breach of some duty

which the employee owes to the employer.” Cherry v. Suburban Mfg. Co., 745 S.W.2d

273, 275 (Tenn. 1988)(citing, generally, Weaver v. Wallace, 565 S.W.2d 867, 870 (Tenn.

1978)).

On February 11, 2005, Employer issued a memorandum to its Southern Region

employees addressing the “critical importance” of the “change addressing falsification-

related violations” to its “Acceptable Conduct Policy.” The memo stated:

[C]onduct involving deliberate falsification of Company

documents is now listed as a “Discharge Offense” along with

firearm/dangerous-weapons and drug/alcohol violations.

The policy specifies:

Discharge Offense:

3

Effective January 1, 2010, the statute was amended to include a definition of “misconduct.” See

Tenn. Code Ann. § 50-7-303(b)(3)(A).

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An employee is dismissed upon completion of an investigation

confirming violations related to

Deliberate falsification of Company documents including but

not limited to business reports, delivery records, time cards,

benefits eligibility forms, expense reports and employment

applications.

This policy reflects the seriousness of falsification and its legal,

financial, public relations, and operational impact on the

Company. Even one failure to maintain our reputation for

integrity can jeopardize our relationship with customers and

other groups whose business and goodwill is essential to our

continued success.

Do not jeopardize your career or the Company’s reputation by

engaging in falsification of any kind. In accordance with the

above-quoted policy, which specifies discharge/dismissal for

falsification-related violations, there is and will be zero

tolerance for this type of behavior.

It is critical that you understand the consequences of conduct

involving falsification of Company documents.

I have read this carefully and understand the seriousness and

consequences if I violate this policy.

(Underlining in original).

As reflected by her signature, Ridley received the memo on February 25, 2005; she

does not argue that she did not understand its contents. Neither, as we have noted, does

Ridley contest that she created inaccurate records for those packages that she admittedly

failed to enter into the company’s tracking system at the time she received them for shipping.

She simply asserts that “there was no evidence that [her] failure to scan at the time of pick

up was fraudulent or arose out of ‘wrongful intent’ or ‘evil design’ ” and therefore, she

reasons, it is not properly deemed misconduct for purposes of her benefits claim. As the trial

court put it, Ridley’s argument “appears to be that she had no bad motive, i.e. no intent to

harm [the Employer],” and there was “nothing in it” for her either.

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At the hearing, Ridley essentially contended that she “had no intention of deliberately

falsifying anything,” or to cause damage to anyone, and offered various other possible

reasons for her discharge – her recent wreck of a company vehicle, her age, the physical

effects of the wreck, and making her supervisor “look bad.”

The hearing officer questioned Ridley further as follows:

Hearing officer: [B]ut looking at this report, why . . . is it

documented that way, if you didn’t do anything intentionally,

what did you do . . . .

Ridley: When I had the wreck?

Hearing officer: No, we’re talking about why you were

discharged mam. All these stops.

Ridley: They said I was discharged because I falsified

Hearing officer: Right, so you’re saying

Ridley: It said deliberately falsifying and I did not deliberately

falsify

Hearing officer: I heard that mam, but how did [you] make all

these stops according to your tracking. How did you make all

these stops

Ridley: These stops, . . . . I couldn’t get in, get out, I had to

walk a distance to get to them.

* * *

I was running a route for another fellow and I overlooked one of

his stops that they had assigned to me. I did wait til I got, [. . .]

there was a lot of 18 wheelers in the way so I was trying to get

out of their way and I was trying to just get somewhere where I

could stop safety and not get hit. Before I scanned these

packages, I was not trying to deliberately, I was just trying to get

them into the system. I was not deliberately trying to falsify

anything.

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We have defined “misconduct,” for purposes of disqualification of benefits under

Section 50-7-303(a)(2) as

conduct evincing such wilful and wanton disregard of an

employer’s interests as is found in deliberate violations or

disregard of standards of behavior which the employer has the

right to expect of his employee, or in carelessness or negligence

of such degree or recurrence as to manifest equal culpability,

wrongful intent or evil design, or to show an intentional and

substantial disregard of the employer’s interests or of the

employee’s duties and obligations to the employer. On the other

hand mere inefficiency, unsatisfactory conduct, failure in good

performance as the result of inability or incapacity, inadvertence

or ordinary negligence in isolated instances, or good faith errors

in judgment or discretion are not to be deemed “misconduct”

within the meaning of the statute.

Armstrong v. Neel, 725 S.W.2d at 956 (Tenn. Ct. App. 1986) (citing Boynton Cab Co. v.

Neubeck, 237 Wis. 249, 296 N.W. 636, 640 (Wis. 1941)). As can be seen, conduct

manifesting a “wrongful intent or evil design” may certainly constitute misconduct that

disqualifies an employee from unemployment benefits. “Misconduct,” however, is not

limited to acting with such “bad” motives. An employee’s “intentional and substantial

disregard of the employer’s interest or of the employee’s duties and obligations to the

employer,” despite his or her good intentions, may also constitute disqualifying misconduct.

In its December 29, 2009, memorandum opinion and order, the court denied Ridley’s

petition and upheld the denial of her claim for benefits, in relevant part, as follows:

[Ridley] has not met her burden of proof to reverse the Board’s

decision[ ] to deny unemployment compensation benefits to

[her]. She failed to scan the packages when received. Instead,

she scanned the packages close in time. The scanned time was

not the time the package was picked up. Ms. Ridley falsified the

pickup time for 7 to 11 packages. She committed an intentional

act by scanning the packages one after the other one [and this]

was not a mistake. She did an act that was prohibited by

company policy. She was supposed to scan the packages when

picked up, not later as a part of a mass scanning. She violated

a duty she owed to [the Employer]. There is material and

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substantial evidence to support the decision of the Appeals

Tribunal and the Board. There are no errors of law.

On our review, we conclude that there is substantial and material evidence to establish

that Ridley was disqualified from receiving unemployment compensation benefits as a result

of misconduct related to her work.

V.

The judgment of the trial court is affirmed. This case is remanded to the trial court,

pursuant to applicable law, for the collection of costs assessed below. Costs on appeal are

taxed to the appellant, Sherry A. Ridley.

_________________________________

CHARLES D. SUSANO, JR., JUDGE

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