      IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

CORPORATE SECURITY, LLC,                     )    No. 77138-8-I
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                    Respondent,              )    DIVISION ONE
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                    Appellant.              FILED: October 22, 2018 9? 00
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       ANDRUS, J. — The Employment Security  Department  (Department)

appeals the superior court's order denying unemployment benefits to Myron

 Pinkney.   We reverse the superior court's order and reinstate the agency

decision finding Pinkney eligible for benefits.

                                      FACTS

       Myron Pinkney applied for a security officer position with Corporate

 Security, LLC on September 25, 2015. On the application, Pinkney was asked if

 he had ever been convicted of a crime; and he checked "Yes." During the

 application and training process, Pinkney disclosed to Shawn McCarthy,

 Corporate Security's human resources recruiter, that he had a prior assault

 conviction and a gross misdemeanor drug conviction. Pinkney spoke several
No. 77138-8-1/2

times with McCarthy and another person within the company about both cases

and provided them with copies of some of his court records.

       Corporate Security conducted a criminal records search that disclosed two

cases—a 2012 fourth degree assault charge in Kent Municipal Court and a 2013

felony drug charge in Snohomish County—both of which were identified as

having been dismissed. Based on what Pinkney had disclosed, McCarthy found

the background check information inconsistent and confusing.                   But after

consulting with Dr. William Cottringer, Executive Vice President for Corporate

Security, they decided to hire Pinkney, issue a temporary security guard license

to him, and await "a second opinion for a more elaborate background

Investigation" from the agency that would issue the permanent license.

McCarthy testified that Dr. Cottringer wanted the Washington State Department

of Licensing (DOL) to make the decision based on its own background

investigation. McCarthy did not want to wait for the results of DOL's Investigation

before hiring Pinkney because that would delay hiring him for two months.

       On October 1, 2015, with the company's help, Pinkney applied for a

private security guard license with DOL. On the license application, he listed a

1998 conviction for "violation of a controlled substance," and a 2013 conviction

for "solicitation of drugs (possession of paraphernalia)." He offered to "provide a

copy of [his] record upon request."


        I Although Pinkney identified the solicitation conviction as occurring in 2013, the
Judgment and sentence on the conviction was entered on January 21, 2014. DOL based Its
decision to deny the license on this 2014 gross misdemeanor conviction.




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       DOL notified Pinkney, on December 2, 2015, that it intended to deny his

application for a private security guard license. According to Pinkney, DOL

indicated that the 2014 solicitation conviction was a disqualifying crime. Pinkney

subsequently learned that because he had been sentenced on a DUI, along with

a drug solicitation charge, his sentence included five years of probation, the term

of which had not expired. Because Pinkney did not have a probation officer, had

completed a court-ordered drug and alcohol assessment, and had attended the

DUI victim's panel, he was under the mistaken impression that he had completed

all of the terms of his probation and that if he did not get into any trouble for the

next year, the case would be dropped. Pinkney admitted he provided erroneous

information to Corporate Security, but he "never tried to hide it or — or mislead

them into believing ...that anything was different than what [he] said." He was

"completely straight up with them because [he] appreciated the fact that they

were giving [him]a chance to have a job."

       DOL denied his request for a security guard license by letter dated

January 5, 2016. Pinkney appealed the decision but was unsuccessful in

reversing the agency's decision. Corporate Security terminated his employment

on January 11, 2016, after learning the outcome of the appeal. McCarthy

testified that the company waited to terminate Pinkney until it knew that DOL

would not license him.




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      Pinkney applied for unemployment benefits.            In responding to a

Department inquiry as to whether Pinkney did anything wrong at work after he

was hired, Dr. Cottringer wrote:

      No. But if you review all these documents carefully as we have,
      you will come to the same conclusion as DOL, that he was in fact
      properly/legally denied his security guard license for disqualifying
      "convictions" that were not really dismissed[,] and the dates of
      these offenses were grossly mixed up in offense types and dates
      and inclusion on his applications .... And later, ESD earnings
      reports showed serious discrepancies on the jobs he reported on
      his application[.] This information is available to you, but not
      relevant because this dishonesty was not the reason we terminated
      him. We clearly discharged him with the DOL mandate we could
      not legally work him as a security guard because he wasn't
      licensable. That is the real bottom line to all of this.

The Department denied benefits, reasoning that his termination was due to

"misconduct" connected to his employment.

       Pinkney appealed the Department's benefits decision.                At the

administrative hearing, Dr. Cottringer confirmed the information provided to the

Department: Pinkney was discharged because he was ineligible to obtain a

license and work as a security guard. Dr. Cottringer learned that DOL's more

elaborate background investigation discovered that one of Pinkney's cases was

still open with unfulfilled conditions, which he thought disqualified Pinkney for a

security guard license under RCW 18.170.030.          When the AU asked Dr.

Cottringer who made the decision to terminate Pinkney, he replied, "it was made

for us by DOL. I just carried it out" Dr. Cottringer confirmed he told Pinkney he

was discharged because he was "ineligible for licensure." At the conclusion of




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the administrative hearing, Dr. Cottringer stated that Corporate Security did not

discharge Pinkney for dishonesty.

      The AU granted Pinkney's request for unemployment benefits, finding

that Pinkney disclosed his criminal history to Corporate Security, and concluding

that the company had not shown by a preponderance of the evidence that

Pinkney engaged in job-related misconduct.

      Corporate Security filed a petition for review to the Department's

Commissioner's Review Office.        It argued that Pinkney's failure to reveal

complete details of his criminal history constituted dishonesty and was a basis to

deny benefits.

      The Commissioner rejected Corporate Security's petition. It found that

Pinkney had verbally advised Corporate Security of at least some of his criminal

background. Corporate Security was aware of this history because its own

criminal history check revealed an April 2013 offense in Snohomish County and a

March 2012 King County offense. Although Corporate Security was "admittedly

uncertain as to the extent of [Pinkney's] criminal background, [it] still decided to

hire (him]." The Commissioner found that Corporate Security chose to hire

Pinkney immediately and to train him while DOL conducted a more elaborate

investigation into Pinkney's background through the licensing process. The

Commissioner further found the basis of DOL's denial of a security guard license

for Pinkney was that he had been convicted of a crime on January 21, 2014. The




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Commissioner also found that Corporate Security waited to terminate Pinkney

until after he unsuccessfully appealed DOL's decision.

      Based on these findings, the Commissioner concluded Corporate Security

      was on notice, even before hiring [Pinkney], that [Pinkney's]
      criminal background could prevent him from becoming licensed
      through DOL. However, instead of waiting for the outcome of
      [Pinkney's] DOL license process, [Corporate Security] decided to
      hire [Pinkney] and begin training him. DOL's decision to deny
      [Pinkney's] license application rendered [Pinkney] incapable of
      doing the job for which he was hired. [Pinkney] became
      unemployed through no fault of his own, but through [Corporate
      Security's] decision to hire him in spite of the possibility that
      [Pinkney] would not meet the requirements of the job. [Corporate
      Security]failed to show that[Pinkney] acted in willful disregard of its
      interests as defined at RCW 50.04.294. Thus, [Pinkney] is not
      disqualified pursuant to RCW 50.20.066.

The Commissioner denied Corporate Security's petition for reconsideration.

      In its petition for review to the superior court, Corporate Security again

argued that Pinkney was terminated due to misconduct during his employment

application process because Pinkney mischaracterized and omitted material

facts about his criminal record. The superior court granted Corporate Security's

petition and reinstated the Department's initial denial of benefits.

      The Department appeals.

                                     ANALYSIS

       Washington's Administrative Procedure Act (APA), chapter 34.05 RCW,

governs judicial review of employment benefits decisions. Michaelson v. Emp't

Sec. Dep't, 187 Wn. App. 293, 298, 349 P.3d 896 (2015). The APA allows

reversal of an administrative decision if it is based on an error of law, if it is not




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based on substantial evidence, or if it is arbitrary or capricious.         RCW

34.05.570(3)(d),(e), (i); Michaelson 187 Wn. App. at 298.

        Although this is an appeal from the superior court, this court reviews the

Commissioner's decision, not the AL's findings or those of the superior court.

Michaelson 187 Wn. App. at 298. Because the Commissioner did not adopt any

of the AL's findings or conclusions, we review the Commissioner's decision

only.     Michaelson   187 Wn. App. at 298.           This court considers the

Commissioner's decision as prima facie correct, and the burden of demonstrating

invalidity of the decision is on the party asserting invalidity, here Corporate

Security. Smith v. Emp't Sec. Dep't, 155 Wn.App. 24, 32, 226 P.3d 263(2010).

        The sole issue on appeal is whether the Commissioner erred in

concluding that Pinkney was not discharged for misconduct. Corporate Security

contends the Commissioner's order is not supported by substantial evidence, is

the result of erroneously interpreting or applying the law, and is arbitrary or

capricious. The company argues Pinkney was dishonest during the application

process because he misrepresented to Corporate Security that the gross

misdemeanor was dismissed, when in fact, he was on probation. The company

maintains that had he disclosed that he was on probation, it would have

terminated the hiring process.      Accordingly, Corporate Security argues the

Commissioner should have found these misrepresentations amounted to

dishonesty, making Pinkney ineligible for unemployment benefits.

A. Substantial Evidence




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      The Commissioner's findings of fact are reviewed for substantial evidence

in light of the entire record. Michaelson, 187 Wn. App. at 298. "Substantial

evidence is evidence that would persuade a fair-minded person of the truth or

correctness of the matter." Id. at 298-99. This court defers to the factual

decisions and views the evidence in the light most favorable to the party who

prevailed in the highest forum with fact-finding authority; here, this is the

Department. Id. at 299.

      Whether an employee committed misconduct is a mixed question of fact

and law, but this court does not substitute its judgment for that of the agency as

to the facts. Tapper v. Emp't Sec. Dep't, 122 Wn.2d 397, 403, 858 P.2d 494

(1993). "[1]nstead, the factual findings of the agency are entitled to the same

level of deference which would be accorded under any other circumstance." it

Thus, this court will not substitute its judgment on witnesses' credibility or the

weight given to conflicting evidence.      Michaelson, 187 Wn. App. at 299.

Unchallenged findings of fact are accepted as verities on appeal. it

      The process of applying the law to those facts is a question of law

reviewed de nova. Tapper, 122 Wn.2d at 403. Nevertheless, this court gives

substantial weight to the Commissioner's interpretation of the law given the

agency's special expertise. Michaelson, 187 Wn. App. at 299.

       RAP 10.3(h) provides that a respondent challenging an administrative

agency's adjudicative order under chapter RCW 34.05 "shall set forth a separate

concise statement of each error which a party contends was made by the agency




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Issuing the order, together with the issues pertaining to each assignment of

error."      Corporate Security assigned error to the Commissioner's legal

conclusions but did not assign error to any of the Commissioner's findings of fact

Generally, when a party challenging an agency action does not challenge the

agency's findings of fact, this court deems these true on appeal and limits review

to determining whether the findings support the conclusions. Smith, 155 Wn.

App. at 32. This court in Smith recognized, however, that RAP 1.2(a) gives us

the discretion to review an agency's findings "where proper assignment of error is

lacking but the nature of the challenge is clear and the challenged findings are

set forth in the party's brief." it at 33.

          In this case, Corporate Security challenges the evidentiary support for the

Commissioner's findings only in passing. Its briefing instead focuses on what it

characterizes as the Commissioner's misapplication or incorrect interpretation of

the law. When proper assignment of error is lacking, the challenged findings

must be perfectly clear and extensively discussed in the brief. Id. at 33-34. The

only finding of fact Corporate Security clearly discusses is the Commissioner's

finding that Pinkney "verbally advised [Corporate Security] regarding at least

some of his criminal background."2 We conclude this finding is supported by

substantial evidence.



        2 Corporate Security also argues that the fact that Pinkney was still on probation for the
gross misdemeanor is why he was denied a private security guard license. But the security guard
licensing statute does not specify that an existing probation or unfulfilled probation conditions
disqualify someone from receiving a private security guard license. Rather, it provides that to
obtain a private security guard license, the applicant must




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       Pinkney testified that he disclosed his criminal history to Corporate

Security to the best of his knowledge.               But Corporate Security challenges

Pinkney's testimony that he did not understand that he was still on probation at

the time he applied for a job, arguing that this testimony is not credible. On

appeal, we do not substitute our judgment for that of the agency regarding

witness credibility. Michaelson, 187 Wn. App. at 299. According to the record,

Pinkney disclosed criminal convictions on both his employment application and

his security guard license application. The record also shows that after Pinkney's

disclosures during the hiring process and Corporate Security's initial background

check, the company did not foresee a licensing problem. The substantial

evidence standard is deferential; this court views the evidence in the light most

favorable to the party that prevailed before the Commissioner. Affordable Cabs,

Inc. v. Emp't Sec. Dept 124 Wn. App. 361, 367, 101 P.3d 440(2004). Based on

this record, there is substantial evidence supporting the Commissioner's finding

that Pinkney advised Corporate Security regarding at least some of his criminal

background.




       Inlot have been convicted of a crime In any Jurisdiction, if the director determines
       that the applicant's particular crime directly relates to his or her capacity to
       perform the duties of a private security guard, and the director determines that
       the license should be withheld to protect the citizens of Washington state.
RCW 18.170.030(3). DOL's notice to Pinkney Indicated that he could reapply for a license six
years after the date of his conviction. It said nothing about probation. Corporate Security does
not challenge the Commissioner's finding that the basis of DOL's denial of a security guard
license for Pinkney was that he had been convicted of a crime on January 21, 2014. Therefore,
the record does not support Corporate Security's contention that Pinkney's probation status
caused DOL to deny his license application.



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      At oral argument, Corporate Security contended that the Commissioner

erred by not making a finding that Pinkney misrepresented his criminal history

during the application process. At the agency level, it was Corporate Security's

burden to establish misconduct by a preponderance of the evidence. Corporate

Security argued in its petition for review to the Commissioner, as well as on

reconsideration, that Pinkney's failure to reveal the complete details of his

criminal history was per se dishonest. "If no finding Is entered as to a material

Issue, it is deemed to have been found against the party having the burden of

proof." Pacesetter Real Estate, Inc. v. Fasules 53 Wn. App. 463,475, 767 P.2d

961 (1989). Additionally, this court does not substitute its judgment on the facts

and, instead, defers to the Commissioners factual decisions. Michaelson, 187

Wn. App. at 299.        Therefore, we reject this argument and conclude the

Commissioner did not find that Pinkney misrepresented his criminal history to

Corporate Security.

B. Error of Law

       Next, we turn to applying the law to the Commissioner's findings of fact.

       Corporate Security argues that because Pinkney made false statements

and material omissions about his criminal history during the hiring process and

when applying for a security guard license, the Commissioner should have found

that Pinkney engaged in misconduct even if he was not discharged for that

reason.    Corporate Security appears to misunderstand the unemployment

compensation statute.
No. 77138-8-1/12

      The Employment Security Act provides compensation to individuals

involuntarily unemployed "through no fault of their own."        RCW 50.01.010;

Tapper, 122 Wn.2d at 407. An individual is ineligible for unemployment benefits

If he or she is "dischamed or suspended for misconduct connected with his or her

work." RCW 50.20.066(1)(emphasis added). Misconduct is defined by statute

and includes "willful or wanton disregard of the rights, title, and interests of the

employer," and "Ripshonesty related to employment, including but not limited to

deliberate falsification of company records, theft, deliberate deception, or lying."

RCW 50.04.294(1)(a),(2)(c).

       Corporate Security admitted on several occasions that Pinkney was

discharged because he could not obtain a private security guard license, not

because he committed misconduct during the application process, as it argued in

its trial brief to the superior court. Four times during the administrative hearing,

Corporate Security representatives stated Pinkney was not discharged for

dishonesty.   First, Dr. Cottringer testified Pinkney was discharged because

DOL's more in-depth background check discovered a case that was not

dismissed. Next, when asked who made the decision to discharge Pinkney, Dr.

Cottringer replied that "it was made for us by DOL. I just carried it out."

McCarthy testified that Pinkney was not terminated until the company knew that

DOL would not issue him a security guard license. Finally, Dr. Cottringer stated

that Corporate Security

       had to terminate Mr. Pinkney's employment according to DOL
       qualifications for licensure, which they denied his license and we



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No. 77138-8-1/13

      could not continue his employment. He was not discharged for
      dishonesty, as he said.

            He was discharged because DOL would not license him and
      we could not work him as a security guard.

Elsewhere in the record, Dr. Cottringer admitted that Pinkney was not discharged

for misconduct. Although there were

      serious discrepancies on the jobs he reported on his
      application ... this dishonesty was not the reason we terminated
      him. We clearly discharged him with the DOL mandate we could
      not legally work him as a security guard because he wasn't
      licensable.... He was terminated because DOL, in effect, directed
      us to do so, because he could not legally work as a security guard,
      when his license was duly denied by them.

      Therefore, based on the plain language of the statute, Pinkney was not

discharged for misconduct Rather, he was discharged because he could not do

the work for which he was hired because he could not obtain a security guard

license. Thus, we conclude Corporate Security has not met its burden to show

that the Commissioner's decision was invalid.

C. Arbitrary and Capricious

      Lastly, Corporate Security argues that the Commissioner's decision is

arbitrary and capricious because it did not find that Pinkney committed

misconduct and was terminated for that misconduct. We reject this argument.

      "[A]gency action is arbitrary and capricious if it is willful and unreasoning

and taken without regard to the attending facts or circumstances." Wash. Indep.

Tel. Ass'n v. Wash. Utils. & Transp. Comm'n, 148 Wn.2d 887, 905, 64 P.3d 606

(2003). The Commissioner reviewed the entire record, including the audio




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recording of the administrative hearing. The Commissioner's decision is well-

reasoned and follows logically from its findings of fact. The Commissioner found

that, regardless of whether Pinkney revealed the complete details of his criminal

history, Corporate Security was admittedly uncertain but still decided to hire him.

After DOL's more elaborate investigation revealed a disqualifying conviction that

affected Pinkney's ability to perform the duties of a private security guard,

therefore, making him Ineligible to receive a security guard license, Corporate

Security terminated Pinkney. As a result, Pinkney "became unemployed through

no fault of his own, but through the employer's decision to hire him in spite of the

possibility that[Pinkney) would not meet the requirements of the job." Therefore,

we conclude the Commissioner's decision was neither arbitrary nor capricious.

       We reverse the superior court's order and reinstate the Commissioner's

order finding Pinkney eligible for unemployment benefits.




                                                il41...41 9_.
WE CONCUR:



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