                                                                                       Michigan Supreme Court
                                                                                             Lansing, Michigan
                                                                Chief Justice:         Justices:



Syllabus                                                        Robert P. Young, Jr.   Stephen J. Markman
                                                                                       Mary Beth Kelly
                                                                                       Brian K. Zahra
                                                                                       Bridget M. McCormack
                                                                                       David F. Viviano
                                                                                       Richard H. Bernstein
This syllabus constitutes no part of the opinion of the Court but has been             Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader.               Corbin R. Davis


                                 HODGE v US SECURITY ASSOCIATES, INC

               Docket No. 149984. Decided February 6, 2015.

               Carnice Hodge brought an action in the Wayne Circuit Court to appeal the
       Unemployment Insurance Agency’s determination that she was disqualified from receiving
       unemployment benefits under MCL 421.29(1)(b), a provision of the Michigan Employment
       Security Act (MESA) that disallows benefits for individuals discharged for work-related
       misconduct, after respondent U.S. Security Associates, Inc., terminated her employment as a
       security guard at Detroit Metropolitan Wayne County Airport. Claimant was fired for accessing
       publicly available flight departure information on a computer near her post at the request of a
       traveler in violation of respondent’s policy regarding the unauthorized use of client equipment.
       Administrative Law Judge Lawrence E. Hollens affirmed the denial of benefits, as did the
       Michigan Compensation Appellate Commission (MCAC), but the Wayne Circuit Court, Robert
       L. Ziolkowski, J., reversed. The Court of Appeals, O’CONNELL, P.J., and WILDER and METER,
       JJ., granted respondent’s application for leave to appeal and affirmed, holding that the circuit
       court had not erred by concluding as a matter of law that claimant’s behavior was a good-faith
       error in judgment rather than misconduct under MCL 421.29(1)(b). 306 Mich App 139 (2014).

              In a unanimous opinion per curiam, the Supreme Court, in lieu of granting leave to
       appeal and without oral argument, held:

               The Wayne Circuit Court and the Court of Appeals applied an incorrect standard of
       review by substituting their own assessment of the relative severity of claimant’s violation of her
       employer’s rules for the assessment of the MCAC. Because the MCAC’s assessment of the
       claimant’s conduct was made within the correct legal framework and was therefore authorized
       by law and not contrary to law, the courts below improperly reweighed the evidence in order to
       reach a different assessment in violation of Const 1963, art 6, § 28 and MCL 421.38.

               Court of Appeals judgment reversed; MCAC judgment reinstated.




                                             ©2015 State of Michigan
                                                                            Michigan Supreme Court
                                                                                  Lansing, Michigan
                                                     Chief Justice:           Justices:



Opinion                                              Robert P. Young, Jr. Stephen J. Markman
                                                                          Mary Beth Kelly
                                                                          Brian K. Zahra
                                                                          Bridget M. McCormack
                                                                          David F. Viviano
                                                                          Richard H. Bernstein

                                                                      FILED February 6, 2015

                            STATE OF MICHIGAN

                                    SUPREME COURT


 CARNICE HODGE,

               Claimant-Appellee,

 v                                                            No. 149984

 U.S. SECURITY ASSOCIATES, INC.,

               Respondent-Appellee,

 and

 DEPARTMENT OF LICENSING &
 REGULATORY AFFAIRS/
 UNEMPLOYMENT INSURANCE
 AGENCY,

               Appellant.


 BEFORE THE ENTIRE BENCH

 PER CURIAM.


       In this case involving a claim for unemployment benefits, we must determine

 whether the lower courts applied the proper standard for reviewing determinations made

 by an administrative agency.         Specifically, claimant was terminated from her
employment for willfully violating her employer’s computer use policy. The state’s

unemployment agency denied her claim for unemployment benefits and this decision was

affirmed by an administrative law judge (ALJ). In turn, the Michigan Compensation

Appellate Commission (MCAC) affirmed the ALJ’s decision, holding that the decision

was made in conformity with the facts as developed at the hearing and properly applied

the law to the facts. On appeal to the circuit court, however, the court concluded that,

because claimant violated her employer’s policy to assist a customer, the conduct did not

warrant a denial of unemployment benefits.        The Court of Appeals, in a published

opinion, affirmed the circuit court, agreeing that claimant’s violation of her employer’s

rules was not sufficiently egregious to deny the claimant benefits.

       We reverse the judgment of the Court of Appeals and we reinstate the judgment of

the MCAC. Both the Wayne Circuit Court and the Court of Appeals applied an incorrect

standard of review by substituting their own assessment of the relative severity of the

claimant’s violation of her employer’s rules for the assessment of the MCAC. The

MCAC’s assessment of the claimant’s conduct was made within the correct legal

framework and, therefore, was authorized by law and was not contrary to law, and the

courts below improperly reweighed the evidence in order to reach a different assessment

in violation of Const 1963, art 6, § 28, and MCL 421.38(1).

                        I. BASIC FACTS AND PROCEEDINGS

       Claimant, Carnice Hodge, was employed as a security guard with U.S. Security

Associates, Inc (USSA). On November 11, 2008, shortly after being hired, Hodge signed

an acknowledgement of USSA’s “Security Officer’s Guide,” which provided, in relevant




                                             2
part, that the “[u]nauthorized use of client facilities or equipment, including copiers, fax

machines, computers, the internet, forklifts, and vehicles” may result in immediate

termination. USSA had a contract to provide security at Detroit Metropolitan airport, and

she was assigned to work at the airport.       Despite acknowledgement of USSA’s “Security

Officer’s Guide,” on January 27, 2011, Hodge accessed the airport’s computer system in

order to assist a passenger by retrieving departure information.

         The parties agree to the following facts: (1) USSA had a policy that prohibited

employees from accessing airport computers, (2) Hodge knew of this policy, (3) Hodge

had violated this policy on some occasions in the past, (4) Hodge never received any

instruction or approval to violate this policy, and (5) Hodge violated this policy on

January 27, 2011 when she accessed the airport’s computer system in order to retrieve

departure data for a passenger.

         Given these facts, the ALJ concluded that Hodge’s reason for using the airport

computer was irrelevant because USSA’s policy prohibited computer access for any

reason.      The ALJ concluded that the unauthorized computer access constituted

misconduct, disqualifying Hodge from benefits under MCL 421.29(1)(b), because Hodge

“was discharged for reasons which would constitute behavior beneath the standard the

[e]mployer had reason to expect . . . .” 1


1
    MCL 421.29(1) reads, in pertinent part:

                 (1) Except as provided in subsection (5), an individual is disqualified from
         receiving benefits if he or she:

                                               * * *




                                                  3
         The MCAC upheld that decision, ruling that the ALJ’s decision conformed to the

facts as developed at the administrative hearing and that the ALJ properly applied the law

to the facts.

                    II. APPLICABLE STANDARDS OF REVIEW

         Michigan’s Constitution sets forth the guiding principles of how courts should

review a decision of an administrative body. It provides:

                All final decisions, findings, rulings and orders of any administrative
         officer or agency existing under the constitution or by law, which are
         judicial or quasi-judicial and affect private rights or licenses, shall be
         subject to direct review by the courts as provided by law. This review shall
         include, as a minimum, the determination whether such final decisions,
         findings, rulings and orders are authorized by law; and, in cases in which a
         hearing is required, whether the same are supported by competent, material
         and substantial evidence on the whole record.[2]

         Consistent with this provision, the Michigan Employment Security Act,

MCL 421.1 et seq., expressly provides for the direct review of unemployment benefit

claims. Specifically, MCL 421.34 addresses an appeal from an ALJ to the MCAC.

MCL 421.38 then addresses an appeal from the MCAC to a circuit court:




                (b) Was suspended or discharged for misconduct connected with the
         individual’s work or for intoxication while at work. [Emphasis added.]

       In Carter v Employment Sec Comm, 364 Mich 538, 541; 111 NW2d 817
(1961), this Court defined “misconduct” as including “such willful or 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 . . . .”
2
    Const 1963, art 6, § 28.



                                               4
                The circuit court . . . may review questions of fact and law on the
         record made before the administrative law judge and the Michigan
         compensation appellate commission involved in a final order or decision of
         the [MCAC], . . . but the [circuit] court may reverse an order or decision
         only if it finds that the order or decision is contrary to law or is not
         supported by competent, material, and substantial evidence on the whole
         record.[3]

         Using this standard, a circuit court must affirm a decision of the ALJ and the

MCAC if it conforms to the law, and if competent, material, and substantial evidence

supports it. A reviewing court is not at liberty to substitute its own judgment for a

decision of the MCAC that is supported with substantial evidence. 4               The Court of

Appeals then reviews a circuit court’s decision “to determine whether the lower court

applied correct legal principles and whether it misapprehended or misapplied the

substantial evidence test to the agency’s factual findings . . . .” 5

                                       III. ANALYSIS

         We conclude that both the circuit court and Court of Appeals erred by departing

from the applicable standard of review.

         The circuit court determined that Hodge ultimately had to make a decision

between two conflicting policies: one, to not use the airport’s computer system, and two,

to assist passengers by retrieving departure information. 6             The lower court record,

3
    MCL 421.38(1).
4
    Smith v Employment Security Comm, 410 Mich 231, 256; 301 NW2d 285 (1981).
5
    VanZandt v State Employees Ret Sys, 266 Mich App 579, 585, 701 NW2d 214 (2005).
6
  The circuit court inaccurately characterized this case as placing Hodge in a dilemma in
which she had to choose to violate one of two company policies. There is no evidence
that it was the policy of Hodge’s employer that employees assist passengers with flight
information. Hodge admitted as much during a July 13, 2011 hearing with the ALJ.


                                                5
however, does not contain any evidence of a stated policy to assist passengers by

retrieving departure information. Even if such a policy can be implied from the record,

the ALJ determined, in a factual finding, that the most weight should be given to the

expressly stated policy against access of the airport’s computer system. Thus, the circuit

court erred when it discounted the stated policy of Hodge’s employer and, instead,

credited Hodge with complying with a nonexistent policy of assisting passengers by

retrieving departure information.

        Likewise, the Court of Appeals erred by determining that Hodge’s act of helping a

passenger actually benefitted USSA. 7 The panel reached this conclusion despite the

ALJ’s contrary finding that Hodge’s violation was so severe that it went against USSA’s

interest. Instead of determining whether factual assessments made by the agency were

supported by substantial evidence, both the lower courts engaged in an unbridled effort to

reevaluate the ALJ’s factual findings.

        The ALJ, the only adjudicator who actually heard testimony and observed the

demeanor of the witnesses while testifying, reviewed all the evidence in the record and

made findings of fact based on the credibility of witnesses and weight of the evidence.



When asked if there is “anything in the policy that says it’s okay to violate these rules [to
not access the airport’s computers] so long as you’re assisting a passenger,” Hodge
responded “no.” But even if such a policy existed, there was no dilemma presented.
Hodge could have complied with the express policy barring the use of airport computers
and at the same time assisted the passenger seeking flight departure information by
directing the passenger to airport personnel authorized to obtain and provide flight
information to passengers.
7
    Hodge v US Sec Assoc, Inc, 306 Mich App 139; 855 NW2d 513 (2014).



                                             6
The ALJ ultimately determined that Hodge’s violation of the computer policy was a

deliberate disregard of USSA’s interest and that Hodge was discharged for reasons that

would constitute behavior beneath the standard expected of employees. Thus, the ALJ

disqualified Hodge from unemployment benefits for committing misconduct, in

accordance with MCL 421.29(1)(b), and most prominently defined in Carter, 364 Mich

at 541. 8

        The ALJ reached this conclusion by giving weight to evidence within the lower

record. The lower courts should have given deference to the ALJ and the MCAC by

reviewing those decisions only to ensure conformity with the law and the existence of

competent, material, and substantial evidence. In sum, the lower courts improperly

discounted the ALJ’s findings to apply their own factual assessments, in violation of

Const 1963, art 6, § 28 and MCL 421.38(1).




8
  Hodge claims that the lower courts applied the proper standard of review and reversed
the MCAC because its decision did not conform to the law. Specifically, Hodge claims
that the test for “misconduct” as set forth by this Court in Carter was not satisfied by the
undisputed facts presented in this case. We disagree. The test for “misconduct,” first and
foremost, looks to whether the claimant’s conduct showed a willful disregard of her
employer’s interest. One example of such disregard is the deliberate violation of
standards of behavior that the employer has the right to expect of its employees. Such
standards are set out in an employer’s policy, and in this case that policy clearly and
unequivocally prohibited the use of the airport’s computers. Hodge was fully aware of
the policy and knew that, by going to the computer to check on flight information, she
was violating that policy. In short, plainly and unequivocally, Hodge engaged in
“misconduct” as defined in Carter.



                                             7
                                 IV. CONCLUSION

      The application for leave to appeal the July 15, 2014 judgment of the Court of

Appeals is considered and, pursuant to MCR 7.302(H)(1), in lieu of granting leave to

appeal, we reverse the judgment of the Court of Appeals and we reinstate the judgment of

the Michigan Compensation Appellate Commission.

                                                      Robert P. Young, Jr.
                                                      Stephen J. Markman
                                                      Mary Beth Kelly
                                                      Brian K. Zahra
                                                      Bridget M. McCormack
                                                      David F. Viviano
                                                      Richard H. Bernstein




                                           8
