                                                                                    01/16/2019
               IN THE COURT OF APPEALS OF TENNESSEE
                           AT NASHVILLE
                             November 6, 2018 Session

    JAMES NATHAN MITCHELL V. ELECTRIC EMPLOYEES’ CIVIL
      SERVICE AND PENSION BOARD OF THE METROPOLITAN
      GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY,
                        TENNESSEE

               Appeal from the Chancery Court for Davidson County
                 No. 16-649-II    William E. Young, Chancellor


                           No. M2018-00186-COA-R3-CV


An employee of Nashville Electric Service (“NES”) was terminated in 2015 due to false
and misleading information he provided on his initial application for employment nine
years earlier, in 2006. NES did not discover that the information was false until the
employee submitted an application for promotion in 2015 and one of his supervisors
noticed a discrepancy between the two applications. NES provided the employee with a
due process hearing and a hearing by an administrative law judge before the Electric
Employees’ Civil Service and Pension Board of the Metropolitan Government of
Nashville and Davidson County (“the Board”), which voted to terminate his employment.
The employee filed a petition for judicial review of the Board’s decision, which the
chancery court affirmed. On appeal to this Court, we affirm the trial court’s judgment
upholding the Board’s decision.

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

ANDY D. BENNETT, J., delivered the opinion of the Court, in which RICHARD H. DINKINS
and W. NEAL MCBRAYER, JJ., joined.

W. Carl Spining, Nashville, Tennessee, for the appellant, James Nathan Mitchell.

Robert W. Horton, Nashville, Tennessee, for the appellee, Electric Employees’ Civil
Service and Pension Board.
                                      OPINION
                     I. FACTUAL AND PROCEDURAL BACKGROUND

        James Nathan Mitchell was an NES employee from 2006 until 2015, when NES
preferred charges against him for providing false and misleading information on his
initial employment application in 2006. Mr. Mitchell first submitted an application to
work at NES as a meter reader on December 11, 2006. In the “Employment Record”
section of the application, Mr. Mitchell indicated that he had worked for Purity Dairies
from September 1998 to October 2002. He stated that he left Purity Dairies due to “pay
cuts and policy changes.” The application contained a statement that read: “The
information herein furnished is true and correct to the best of my knowledge and belief,
and I am aware that should investigation show any falsification, I will not be considered
for employment or, if employed, I will be dismissed.” Mr. Mitchell signed his name
immediately below this statement.

       NES hired Mr. Mitchell to work as a meter reader in the first quarter of 2007. Mr.
Mitchell was promoted to Storekeeper I in 2008 and to Storekeeper II in 2010. In
February 2012, Mr. Mitchell applied for a promotion to Storekeeper III. He was not
promoted in 2012 and applied for this position again in June 2015. Mr. Mitchell filled
out an online application in 2012 and 2015, and on both of these applications he indicated
that he had been “terminated” from Purity Dairies. The explanation Mr. Mitchell gave
for his termination was “Vehicle Accedent [sic] Zero tolerance policy.” A staffing
specialist at NES noticed the discrepancy between Mr. Mitchell’s 2006 and 2015
applications and reported this to her supervisor. The Vice President of Human Resources
and Corporate Services concluded that termination charges should be preferred against
Mr. Mitchell based on the discrepancy between his initial application and his later
applications for promotion.

       The President and Chief Executive Officer of NES conducted a due process
hearing on July 7, 2015, and at the end of the hearing he concluded that management met
its burden of proving that Mr. Mitchell had provided false information on his initial
employment application. Mr. Mitchell was then suspended without pay pending
disposition of the charges by the Board. The Board referred the charges to an
administrative law judge (“ALJ”), who held a hearing on December 18, 2015, and wrote
a report recommending that NES’s charges of termination of Mr. Mitchell’s employment
be approved.




                                          -2-
                          Hearing before the ALJ

The ALJ heard live testimony and made the following factual findings, inter alia:

5. On January 22, 2007, NES completed its background investigation of
Mr. Mitchell. The investigation included a Department of Motor Vehicles
search that apparently went back five years and included a Report from the
State of Tennessee, Department of Safety, which contained one motor
vehicle related citation: On December 2, 2004, Mr. Mitchell was cited for
“MAKING IMPROPER TURN.”

6. On March 2, 2007, NES hired Mr. Mitchell as a Meter Reader Trainee.

7. On June 13, 2007, Mr. Mitchell was involved in an at-fault motor vehicle
accident while driving an NES truck in a parking lot and was disciplined
with a “First Offense – Written Notice.”

8. On August 29, 2007, Mr. Mitchell was unanimously recommended to be
retained as an NES employee and granted Civil Service Status.

9. From June 4, 2008, through June 23, 2015, Mr. Mitchell received annual
performance reviews, rating him as follows:

2008 Good                                       2012 Outstanding
2009 Very Good                                  2013 Outstanding
2010 Very Good                                  2014 Very Good
2011 Very Good                                  2015 Very Good

10. Between 2008 and 2015, Mr. Mitchell applied for promotion several
times. Two of those times, in 2012 and 2015 respectively, were specifically
raised by NES as presenting issues at the hearing.

11. On February 20, 2012, Mr. Mitchell was considered for a promotion
for which he applied for the position of Storekeeper III. He was not hired
for the position.

12. In seeking the 2012 promotion, Mr. Mitchell had to complete an online
application form. The 2012 online application stated the following
regarding the reason for leaving Purity Dairies:

Reason for Leaving: Terminated

Explanation: Vehicle Accedent (sic) Zero tolerance policy

                                   -3-
....

14. In reviewing the 2015 online application, Pat Greer, a Staffing
Specialist for NES, noticed discrepancies between Mr. Mitchell’s initial job
application and the 2015 online application. Specifically, Ms. Greer noticed
that Mr. Mitchell’s stated reason for leaving his employment with Purity
Dairies on his initial application was due to “Pay cuts and policy changes.”
However, on the 2015 application, Mr. Mitchell stated his employment
with Purity was “terminated” because he “violated the company’s zero
tolerance vehicle accident policy.”

....

26. In this case, Mr. Mitchell denied that he intended to misrepresent
anything to NES.

27. Mr. Mitchell testified that when he completed the 2015 online
application for a promotion, he did not refer back to his initial paper NES
application. . . .

28. Regarding his previous employment with Purity Dairies, Mr. Mitchell
testified that ownership there changed during his tenure. As a result, a few
things changed, including route changes and pay structure, which included
less pay for his particular position, and new management implemented a
zero-tolerance accident policy. Mr. Mitchell acknowledged having a single-
vehicle at-fault accident after he fell asleep at the wheel while working at
Purity Dairies. He explained that after the accident, he was called into the
office by a manager and that he quit before he could be terminated.

His testimony varied on this point:

       [The route manager said] Hey, so let’s talk about this at-fault
       vehicle accident that you had. I said, Yeah. And he went on to
       talk about the policies that Dean Foods had set in place, that it
       was a pretty bad wreck. Even though nobody else was
       involved, there was some pretty significant damage to the
       truck that I wrecked. I saw where the conversation was going,
       and I just basically told him, Look, I’m not real happy here,
       and you know that I’m not real happy here. You know a lot of
       these extra guys are not real happy around here. I know where
       this conversation is going, so let’s just save each other
       another 30 minutes of going back and forth. I appreciate the
       opportunity that I have had, but I’m going to have to take off.

                                      -4-
And I dismissed myself from the meeting, and that was the
extent of it.
He called my immediate supervisor that worked under him
over [to] me, and he escorted me back up to the dock. I got
my personal items out of my truck, and we walked to the
parking lot, and that was it.

....

To this day, I really don’t know if I was terminated from
Purity or if I quit Purity or if I resigned from Purity if I was
forced to resign. It’s a gray area. I never talked to them. They
never talked to me. So do I consider myself terminated or
not? I guess it just depends on time.

Q. So once you were called into the office and you had this
conversation with —was it a manager?

A. He was the route sales manager, yes, ma’am.

Q. And did he say you’re terminated?

A. At no point during the conversation did he specifically say
to me you are terminated. But I could tell that the
conversation was building quickly to that point.

Q. So did you quit? Is it your position that you quit?

A. To this day, I don’t know. I don’t have a position. That’s --
the age-old question is did you quit before they fired you, or
did you get fired?

....

Q. So because of the vehicle accident, you quit; your
employment terminated with Purity?

A. My employment terminated a lot sooner than I would have
expected because of the at-fault vehicle accident. Would I
still be at Purity this day? No, ma’am, I would not.




                              -5-
29. Mr. Mitchell asserted that during his initial interview with Tyler Mills
in 2006, he explained to Mr. Mills that he had an at-fault accident while
working at Purity Dairies.

30. Tyler Mills, Mr. Mitchell’s previous supervisor, testified at the trial in
this case. Mr. Mills recently retired from NES after 57 years of service. Mr.
Mills remembered Mr. Mitchell and testified that he was a good employee
who never presented any problems.

31. Mr. Mills acknowledged interviewing Mr. Mitchell in 2006 for the
meter reader position and did not remember whether Mr. Mitchell told him
that he had been terminated from his employment at Purity Dairies or about
having an accident while working for Purity Dairies. Mr. Mills further
testified that it would not have mattered if Mr. Mitchell had been
terminated by a previous employer, but if Mr. Mitchell had mentioned
having an accident, Mr. Mitchell would not have been hired at NES.

       Q. Mr. Mills, you mentioned that you interviewed Mr. James
       Nathan Mitchell for the position of meter reader, right?

       A. Yes.

       ....

       Q. And in that interview, you asked him about Purity Dairies.
       Would you agree to that?

       A. We talked. Yes, we did ask him about previous work, and
       it was with Purity Dairies.

       Q. Did he tell you that he was terminated from Purity
       Dairies?

       A. I don’t remember if he told me he was terminated or not. I
       really don’t.

       ....

       Q. Do you think you would remember if someone told you
       during an interview that they had been terminated from
       previous employment?



                                    -6-
              A. In some cases, but I don’t remember whether he -- whether
              James told me that he had been terminated or not. But we
              spoke of his past job, which was with Purity Dairies.

              Q. But what I’m asking is if someone told you something like
              they had been terminated, would you consider that a good
              thing or a not-so-good thing?

              A. Well, that would -- in some cases would be a good thing,
              or it could be either way.

              Q. Okay. So if an employee -- or Mr. Mitchell is interviewing
              for a meter reader position, if he told you that he was
              terminated for having a vehicle accident, what would you
              consider that information?

              A. Well, back then, we were very strict on safety. If I had
              been told he had had a vehicle accident in an interview, then
              he would not have been hired.

              Q. And –

              A. Because of the safety record, our manager wouldn’t allow
              us to hire a person like that because we’ve had to not hire
              people in the past for that same reason.

(Citations to the record omitted.)

      Rule 9.03 of the Board’s rules that apply to NES employees (“Rule 9.03”) states as
follows:

       Disciplinary action up to and including discharge may be taken for
       insubordination, improper conduct, inefficient work performance, habitual
       tardiness, absenteeism, or for other causes when it is determined to be in
       the best interest of [NES]. Discharge may occur only after charges have
       been filed and a hearing before the Board.

The Charter for the Metropolitan Government of Nashville and Davidson County (“the
Charter”) provides at Appendix 3, Article 43, paragraph 12:

       No employee of the electric power board of the metropolitan government,
       except temporary employees and provisional employees, shall be
       discharged, suspended for more than ten (10) days nor oftener than twice in

                                          -7-
       any twelve (12) months, or otherwise punished except for just cause and
       after the filing of charges and trials . . . .

        The ALJ considered whether NES had “just cause,” as that phrase is used in
Appendix 3, Article 43, paragraph 12 of the Charter, to discharge Mr. Mitchell from his
employment at NES. The ALJ found that NES proved by a preponderance of the
evidence that the explanation Mr. Mitchell provided on his 2006 job application for
leaving Purity Dairies was “not completely truthful.” As the ALJ noted, “Mr. Mitchell
acknowledged that he omitted the principal reason he left Purity Dairies: that he had an
at fault accident at work.” The ALJ explained further:

               As to his “reason for leaving,” Mr. Mitchell asserts that he was upset
       about the changes in policies at Purity Dairies, but acknowledges that the
       precipitating cause of his departure from Purity Dairies was his at-fault
       accident. Thus, while his statement on his initial application had a grain of
       truth, any fair reading of his own testimony demonstrates that the reason he
       left Purity Dairies when he did was due to the at-fault accident. Whether he
       was fired or quit, the at-fault accident was the reason for his leaving that
       employment at the time that he did.

The ALJ then concluded that NES failed to prove by a preponderance of the evidence
that NES would not have hired Mr. Mitchell had he provided a fully accurate explanation
for why he left Purity Dairies.1 Finally, the ALJ addressed Rule 9.03, which it described
as the “general dismissal rule” and found that this rule “gives NES broad discretion to
terminate Mr. Mitchell if such dismissal is due to ‘improper conduct’ or is in NES’s ‘best
interests.’” The ALJ found that “[i]t is certainly up to the Board of NES to decide
whether it is in the best interests of NES to terminate Mr. Mitchell in this case” and that
“[t]he policy decision of how best to implement the discretion granted the Board in Rule
9.03 is legitimately up to the Board.” Thus, the ALJ recommended that NES
management’s charges of termination of Mr. Mitchell’s employment be approved. Mr.
Mitchell appealed the ALJ’s decision to the Board, which voted to uphold the ALJ’s
recommendation to terminate Mr. Mitchell’s employment.

                                    Hearing before the Board

      Mr. Mitchell filed an appeal of the ALJ’s recommendation with the Board, and the
Board held a hearing on April 27, 2016, during which it heard oral argument from Mr.
Mitchell’s and NES management’s attorneys. Following the argument, the Board


1
 The ALJ reached this conclusion based on evidence that Mr. Mitchell had had an at-fault accident while
he was a probationary employee at NES and that NES retained him despite this and granted him civil
service status.
                                                 -8-
members upheld the ALJ’s recommendation by a vote of four to one. One of the Board
members explained his reasoning as follows:

       He’s obviously been, by all accounts a very good employ[ee], third
       generation, been here a long time. I know his livelihood is at stake here, it’s
       in the balance, and I appreciate that. But the veracity of an application for --
       to work here at NES is critical to the integrity of our hiring process, and I
       do believe that materiality is a factor. I think it is a consideration we have to
       think about. I think it’s hard for us to measure that in a limited time in front
       of this hearing without hearing the testimony, so I rely a great deal on the
       fact-finders that have come before us through the process, including the
       ALJ.

               I do believe that there is a difference between saying I was
       terminated for policy changes and pay cuts versus being terminated or
       quitting in the face of certain termination. It’s a little difficult for me to
       think that that was accidental or unintentional. He may have thought it was
       immaterial, but I think it was -- it’s hard for me to think it was
       unintentional. I think it’s difficult for us to say in retrospect had he said
       this, this is what would have happened or we wouldn’t have hired him. I
       don’t know.

              But -- but it was a misrepresentation. It has been found to be
       material. I think that it is concerning that he was employed here for a good
       bit of time and an employee before we -- before it came up and -- and
       before we exercised this remedy, but I do think it’s true and I think Ms.
       Steward says and I agree with her that, you know, if we -- if we can’t
       withhold -- if we can’t hold up the integrity of the application process and
       someone thinks they could mislead and get in and just hang on and hope
       nobody finds out, it -- it leads to a potential -- potential other problems
       down the road.

             And so as difficult as this is, as much as I hate for him -- because
       obviously he’s been a good employee, I -- I move that we withhold -- we
       uphold the termination.

As reflected above, the Board rejected the ALJ’s determination that Mr. Mitchell’s
accident while employed by Purity Dairies, and his nondisclosure of this on his 2006
application form, were not material to NES’s decision to hire him.

       Mr. Mitchell filed a petition with the chancery court seeking judicial review of the
Board’s decision. In a Memorandum and Order filed on January 8, 2018, the chancery
court upheld the decision of the Board. The court found that there was substantial and

                                             -9-
material evidence to support the Board’s decision to terminate Mr. Mitchell’s
employment because Mr. Mitchell did not truthfully and forthrightly explain on his initial
employment application why he left Purity Dairies; that Mr. Mitchell’s termination was
not based on an unlawful procedure; and that terminating Mr. Mitchell’s employment
was not arbitrary or capricious under the circumstances, where NES had a goal of
maintaining the integrity of its hiring process.

      Mr. Mitchell now appeals the Board’s decision terminating his employment to this
Court pursuant to Tenn. Code Ann. § 4-5-322. He argues that the Board’s decision to
terminate his employment was (1) unsupported by substantial and material evidence, (2)
made upon unlawful procedure, and (3) arbitrary and capricious or characterized by an
abuse of discretion or clearly unwarranted exercise of discretion.

                               II. STANDARD OF REVIEW

       NES is governed by the Charter, which created the Board. Metro Charter, App. 3,
Art. 43, ¶ 1. The Board is an agency of the metropolitan government, and the Charter
gives the Board authority to promulgate rules applicable to NES employees. Metro
Charter, App. 3 (editor’s note), and Art. 43, ¶ 2. This contested case must be decided in
accordance with the Uniform Administrative Procedures Act, specifically Tenn. Code
Ann. §§ 27-9-114 and 4-5-322.

       Trial and appellate courts follow the same standard of review. Martin v. Sizemore,
78 S.W.3d 249, 275-76 (Tenn. Ct. App. 2001). A court reviewing an agency decision
may affirm or remand the decision for additional proceedings. Tenn. Code Ann. § 4-5-
322(h). The reviewing court may also reverse or modify the decision if the court
determines that the petitioner’s rights have been prejudiced because the agency’s
findings, inferences, conclusions, or decisions are:

      (1) In violation of constitutional or statutory provisions;
      (2) In excess of the statutory authority of the agency;
      (3) Made upon unlawful procedure;
      (4) Arbitrary or capricious or characterized by abuse of discretion or clearly
      unwarranted exercise of discretion; or
      (5)(A) Unsupported by evidence that is both substantial and material in the
      light of the entire record.

Id.

      Courts are not to reverse an agency decision just because the evidence could
support a different result. City of Memphis v. Civil Serv. Comm’n of the City of Memphis,
238 S.W.3d 238, 243 (Tenn. Ct. App. 2007) (citing Martin, 78 S.W.3d at 276); see also
Metro. Gov’t of Nashville & Davidson Cnty. v. Tenn. Solid Waste Disposal Control Bd.,

                                          - 10 -
832 S.W.2d 559, 561 (Tenn. Ct. App. 1991). A court may reverse an agency decision
“only if a reasonable person would necessarily arrive at a different conclusion based on
the evidence.” City of Memphis, 238 S.W.3d at 243 (citing Martin, 78 S.W.3d at 276).

                                      III. ANALYSIS

       A. Substantial and Material Evidence

       To determine whether evidence is “substantial,” the reviewing court “shall take
into account whatever in the record fairly detracts from its weight, but the court shall not
substitute its judgment for that of the agency as to the weight of the evidence on
questions of fact.” Tenn. Code Ann. § 4-5-322(h)(5)(B); see also City of Memphis, 238
S.W.3d at 243; McClellan v. Bd. of Regents of State Univ., 921 S.W.2d 684, 693 (Tenn.
1996) (citing Humana of Tenn. v. Tenn. Health Facilities Comm’n, 551 S.W.2d 664, 667
(Tenn. 1977)). A reviewing court’s standard of review is “narrow and deferential.”
Miller v. Gywn, No. E2017-00784-COA-R3-CV, 2018 WL 2332050, at *2 (Tenn. Ct.
App. May 23, 2018) (citing Wayne Cnty. v. Tenn. Solid Waste Disposal Control Bd., 756
S.W.2d 274, 279 (Tenn. Ct. App. 1998)).

       “Substantial and material evidence is ‘such relevant evidence as a reasonable mind
might accept to support a rational conclusion’ and to furnish a reasonably sound basis for
the decision under consideration.” City of Memphis, 238 S.W.3d at 243 (quoting City of
Memphis v. Civil Serv. Comm’n of City of Memphis, 216 S.W.3d 311, 316 (Tenn. 2007)).
The substantial and material evidence standard requires proof beyond a mere “scintilla or
glimmer,” but less than a preponderance of the evidence. Beal v. Nashville Elec. Serv.,
No. M2009-01604-COA-R3-CV, 2010 WL 4272696, at *11 (Tenn. Ct. App. Oct. 28,
2010) (citing Dickson v. City of Memphis Civil Serv. Comm’n, 194 S.W.3d 457, 464
(Tenn. Ct. App. 2005); Mosley v. Tenn. Dep’t of Commerce & Ins., 167 S.W.3d 308, 316
(Tenn. Ct. App. 2004)).

        NES preferred charges against Mr. Mitchell for providing false and misleading
information on the employment application he submitted in 2006. Mr. Mitchell argues
on appeal that the information he included on his application was not false; he contends
he left Purity Dairies because of the change in policy regarding at-fault motor vehicle
accidents and because of lower wages. Mr. Mitchell further argues that Tyler Mills, who
interviewed him for the NES meter reading position in 2006, was aware of Mr. Mitchell’s
at-fault accident at Purity Dairies and recommended that he be hired anyway.

       We understand Mr. Mitchell’s argument to be that before the change in policy
occurred at Purity Dairies, there was not a zero tolerance policy in place, and Mr.
Mitchell may not have been at risk of losing his job as a result of his at-fault accident in
2002 if the policy had not changed before he had his accident. Mr. Mitchell conceded at
the hearing before the ALJ, however, that if he had not had the at-fault accident, his

                                           - 11 -
employment at Purity Dairies would not have ended when it did. Mr. Mitchell testified
as follows:

       Q: So because of the vehicle accident, you quit; your employment
       terminated with Purity?

       A: My employment terminated a lot sooner than I would have expected
       because of the at-fault accident.

       We disagree with Mr. Mitchell’s representation that Mr. Mills was aware of Mr.
Mitchell’s at-fault accident at Purity Dairies and recommended that he be hired anyway.
Our review of Mr. Mills’ testimony before the ALJ reveals that Mr. Mitchell
mischaracterizes Mr. Mills’ testimony. Contrary to Mr. Mitchell’s representation, Mr.
Mills testified that he and Mr. Mitchell did not discuss accidents during Mr. Mitchell’s
interview. During his direct examination, Mr. Mills explained that “we were very strict
on safety. If I had been told he had had a vehicle accident in an interview, then he would
not have been hired.” Mr. Mills reaffirmed this on cross-examination: “[T]he reason that
I don’t think we discussed [Mr. Mitchell’s at-fault accident] is because if I had known he
had had accidents - - we would not have put him on the list to be hired had I known about
that.”

       The ALJ found Mr. Mills’ testimony was “not credible” in part because Mr.
Mitchell caused an at-fault accident during his probationary period at NES and this did
not result in Mr. Mitchell’s termination.2 However, as the trial court wrote,

       In his analysis, the ALJ failed to take into account the different perspective
       an employer would have in its dealings with an already-hired, probationary
       employee invested with three-months-worth of training — an employee
       who purportedly had a clean driving record when hired — versus an
       applicant who disclosed an at-fault accident with a prior employer.
       Creating a false equivalency between two such persons leads to the unlikely
       conclusion that NES did not care whether applicants for driving jobs had
       clean driving records. This conclusion is belied by NES’s apparent practice
       of obtaining Department of Motor Vehicles records on driver applicants.

The trial court also determined that the Board considered and then rejected the ALJ’s
conclusion that Mr. Mitchell’s at-fault accident at Purity Dairies was not material to
NES’s hiring decision. According to the trial court,



2
  The record shows that the accident Mr. Mitchell had while a probationary employee at NES was
extremely minor, occurred in a parking lot, and did not require a significant repair of the NES vehicle.
                                                - 12 -
       [A]n applicant for a driver’s position who has previously worked as a driver
       surely has an advantage in the hiring process. Revealing an at-fault accident
       at a prior job would take away this advantage, potentially making the
       applicant less desirable than someone with no driving experience at all.
       Such information cannot reasonably be deemed “immaterial.”

       The Board is not bound to accept the ALJ’s determination. McEwen v. Tenn.
Dep’t of Safety, 173 S.W.3d 815, 822 (Tenn. Ct. App. 2005). As the McEwen Court
explained,

       Because an agency possesses its own fact-finding authority, it may make its
       own factual determinations, and it may substitute its judgment for that of
       the hearing officer or administrative judge. Thus, when an agency reviews
       an initial order, it renders its own decision, and it is the agency’s final
       order, not the initial order, that is the subject of judicial review.

Id. (citations omitted). Moreover, an agency is not bound by an administrative law
judge’s credibility determinations; it is able to make its own independent credibility
determinations even without hearing live testimony. Id. at 823; see also Sanderson v.
Univ. of Tenn., No. 01A01-9607-CH-00289, 1997 WL 718427, at *5 (Tenn. Ct. App.
Nov. 19, 1997) (noting that “the person or entity making the final agency decision may,
but is not required to, defer to a hearing officer’s findings”) (citing United States v.
Raddatz, 447 U.S. 667, 680 (1980)). “[D]ue process does not require the decision maker
to observe the witnesses testify and . . . there is ‘broad discretion to accept, reject, or
modify the [fact finder’s] findings.’” Sanderson, 1997 WL 718427, at *5 (quoting
Raddatz, 447 U.S. at 680). Although agencies, such as the Board, should give
“appropriate deference” to an administrative judge’s credibility determinations because
of his or her opportunity to observe a witness’s demeanor first-hand, “only demeanor-
based credibility determinations are entitled to special deference.” McEwen, 173 S.W.3d.
at 823. Thus, “[i]f credibility is not a central ingredient of the agency’s decision, then the
. . . administrative judge’s credibility determinations are not very significant.” Id. at 824.

       The ALJ’s determination that Mr. Mills was not credible was not based on his
demeanor; instead, it was primarily based on the ALJ’s reasoning that NES would not
have retained Mr. Mitchell after he had an at-fault accident during his probationary
period at NES if Mr. Mitchell’s driving record had been so important. As a result, there
was no reason for the Board to give the ALJ’s credibility determination special deference.
Reviewing the record as a whole, we find it contains substantial and material evidence to
support the Board’s decision to terminate Mr. Mitchell’s employment because Mr.
Mitchell was not truthful and forthright about the reason he left Purity Dairies.




                                            - 13 -
      B. Unlawful Procedure

        Mr. Mitchell next contends that the decision by NES to terminate him was based
on unlawful procedure. The Charter authorizes, empowers, and directs the Board “to
make all reasonable rules as it may deem necessary” to govern NES employees,
“expressly including the right to make all necessary and proper rules as to employment,
discharge, compensation and classification . . . .” Metro Charter, App. 3, Art. 43, ¶ 2.
The parties agree that the Board has adopted Civil Service Rule 9.03, which authorizes
the Board to discharge an employee when it is in NES’s “best interest.” Mr. Mitchell
argues that this rule applies only to NES employees, not to those applying to become
employed, as he was in 2006. However, Mr. Mitchell was an active employee by the
time NES took disciplinary action against him, and Rule 9.03 expressly gives NES the
right to discharge employees if and when it determines that the discharge is in its “best
interest.” Courts are directed to “give great deference and controlling weight to an
agency’s interpretation of its own rules.” Jackson Express, Inc. v. Tenn. Pub. Serv.
Comm’n, 679 S.W.2d 942, 945 (Tenn. 1984). We also note that the application for
employment that Mr. Mitchell signed in 2006 cautioned that he could be dismissed if an
“investigation [should] show any falsification” of any information he furnished on the
application.

      As discussed above, Appendix 3, Article 43, paragraph 12 of the Charter requires
NES to have “just cause” before terminating an employee:

      No employee of the electric power board of the metropolitan government,
      except temporary employees and provisional employees, shall be
      discharged, suspended for more than ten (10) days nor oftener than twice in
      any twelve (12) months, or otherwise punished except for just cause and
      after the filing of charges and trials . . . .

Mr. Mitchell neither addresses this aspect of the Charter nor argues that NES did not have
just cause to discharge him. This court addressed the meaning of “just cause” in the
context of determining whether a civil service employee’s job was properly terminated in
Knoxville Utilities Board v. Knoxville Civil Service Merit Board, No. 03A01-9301-CH-
00008, 1993 WL 229505 (Tenn. Ct. App. June 28, 1993), wherein we adopted the
following standards:

      As a general rule, a civil service employee may be discharged or demoted
      on grounds, or for a cause. . . . The term “cause” implies good cause which
      must be substantial; but, any reasonable, sufficient cause may be ground for
      dismissal, and the power to discharge is not limited to specific grounds. The
      term “cause” is construed to mean some substantial shortcoming which
      renders continuance in office or employment in some way detrimental to


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       the discipline and efficiency of the service and something which the law
       and sound public opinion recognize as good cause for removal.

       ....

       Where lawful grounds for dismissal of a civil service employee exist, the
       character and work record of the employee involved is of no importance,
       and the fact that he has previously received a general rating of satisfactory
       does not bar his removal.

Knoxville Utils. Bd., 1993 WL 229505, at *10 (quoting 67 C.J.S. Officers and Public
Employees § 132). Mr. Mitchell argues that he did not intend to mislead NES or to be
untruthful on his initial application. However, it is not necessary to find that Mr. Mitchell
intended to mislead NES or to be untruthful for NES to have “just cause” to discharge
him. See Biggs v. Reinsman Equestrian Prods., Inc., 169 S.W.3d 218, 221 (Tenn. Ct.
App. 2004) (stating that just cause “does not require an element of intent”).

       Any action by an employee that injures or tends to injure the employer’s
       “business, interests, or reputation will justify . . . dismissal. Actual loss is
       not essential; it is sufficient if, from the circumstances, it appears that the
       [employer] has been, or is likely to be, damaged by the acts of which
       complaint is made.” Brewer v. Coletta, No. 02A01-9601-CH-00005, 1996
       WL 732429, at *3 (Tenn. Ct. App. Dec. 20, 1996) (No Tenn. R. App. P. 11
       application filed); Curtis v. Reeves, 736 S.W.2d 108, 112 (Tenn. Ct. App.
       1987).

Lawrence v. Rawlins, No. M1997-00223-COA-R3-CV, 2001 WL 76266, at *5 (Tenn. Ct.
App. Jan. 30, 2001).

        As one of the Board members stated in explaining his vote to terminate Mr.
Mitchell’s employment, “[I]f we can’t hold up the integrity of the application process and
someone thinks they could mislead [NES] and get in and just hang on and hope nobody
finds out, it - - it leads to a potential - - potential other problems down the road.” We
stated in Knoxville Utilities Board that “any reasonable, sufficient cause may be ground
for dismissal, and the power to discharge is not limited to specific grounds.” Knoxville
Utils. Bd., 1993 WL 229505, at *10. Deferring to the Board’s interpretation of its rules,
as we must, we conclude that the Board did not improperly rely on Rule 9.03 to conclude
that it was in NES’s best interest to discharge Mr. Mitchell after discovering that he was
not truthful and forthright in explaining on his initial application why he left Purity
Dairies. In addition, we agree with the trial court that withholding material information
on an employment application could have an adverse effect on an employer’s interests
and could undercut the effectiveness of its hiring decisions. The Board did not act


                                            - 15 -
improperly in concluding that withholding such information constituted just cause for
terminating Mr. Mitchell’s employment.

       C. Arbitrary and Capricious/Abuse of Discretion/Clearly Unwarranted Exercise of
Discretion

        A decision is arbitrary and capricious if it is not supported by substantial and
material evidence. City of Memphis, 238 S.W.3d at 243. However, even in the face of
sufficient evidentiary support, a decision may be arbitrary and capricious if the agency
has made a “clear error of judgment.” Id. “A decision is arbitrary or capricious if it ‘is
not based on any course of reasoning or exercise of judgment, or . . . disregards the facts
or circumstances of the case without some basis that would lead a reasonable person to
reach the same conclusion.’” Id. (quoting City of Memphis, 216 S.W.3d at 316.

        Mr. Mitchell contends the Board’s decision to terminate his employment was
arbitrary and capricious because it was not supported by any specific evidence in the
record. Mr. Mitchell makes no new arguments that he did not raise earlier in his brief.
We have already addressed the evidence in the record that supports the Board’s decision
to discharge Mr. Mitchell and will not do so again here. Having already concluded that
the record contains substantial and material evidence to support the Board’s decision and
that the Board did not follow any unlawful procedures in reaching its decision, we also
conclude that the Board did not disregard any facts or circumstances of the case that
would necessarily lead a reasonable person to reach a different conclusion. Mr. Mitchell
fails to show that the Board made a clear error of judgment in terminating his
employment. We hold that the Board’s decision was not arbitrary or capricious and that
it did not constitute an abuse of discretion or clearly unwarranted exercise of discretion.

                                    IV. CONCLUSION

        The judgment of the trial court is affirmed, and this matter is remanded with costs
of appeal assessed against the appellant, James Nathan Mitchell, for which execution may
issue if necessary.


                                                   ________________________________
                                                   ANDY D. BENNETT, JUDGE




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