                                                        STATE 6r"'\VASfYifjGfc:.
                                                        2015 MAY 26 Ail 9= 26




      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON



JEFF KIRBY, an individual and sole                  No. 71708-1-1
shareholder and founder of PUGET
SOUND SECURITY PATROL, INC., a                      DIVISION ONE
Washington corporation,

                    Appellant,




STATE OF WASHINGTON,                                UNPUBLISHED
DEPARTMENT OF EMPLOYMENT
SECURITY,                                           FILED: May 26. 2015

                    Respondent.



      Cox, J. — Jeff Kirby and Puget Sound Security Patrol, Inc. (collectively

"PSSP") appeal the superior court's order affirming the decision of the

Commissioner of the Employment Security Department to award unemployment

benefits to Robert Boiling, a former PSSP employee. The Commissioner's

findings of fact are supported by substantial evidence. And the findings support

the conclusions of law. There was no disqualifying misconduct to bar Boiling's

receipt of unemployment benefits. We affirm.

      The Commissioner's findings of fact establish the material facts. Boiling

worked as a part-time, permanent, nonunion security guard for PSSP from June
No. 71708-1-1/2


2010 to August 2012. He worked the weekend graveyard shift at the facilities of

PSSP's client.


       Several incidents occurred during Boiling's employment. We describe

them later in this opinion.

       PSSP discharged Boiling in August 2012. Boiling applied for

unemployment benefits. The Department denied his application based on

PSSP's statement that it had discharged Boiling for insubordination. Boiling

appealed. After a three day hearing, an administrative law judge (ALJ)

concluded that Boiling was discharged for unsatisfactory conduct or an inability to

perform his job but not "misconduct" that would disqualify him from benefits.

       PSSP petitioned the Department's commissioner for review. The

Commissioner adopted most of the ALJ's findings of fact and conclusions of law

and affirmed. PSSP petitioned for reconsideration, which the Commissioner

denied. PSSP appealed the Commissioner's decision to King County Superior

Court. The superior court affirmed the Commissioner's decision.

       PSSP appeals.

             SUPPLEMENTATION OF ADMINISTRATIVE RECORD

       PSSP argues that a document, which was admitted below, was

erroneously omitted from the administrative record. PSSP asks this court to

supplement the record to include it. We grant this request.

       Pursuant to RCW 34.05.566(7), this court may permit corrections or

additions to the agency record. Here, PSSP seeks to supplement the record with

a letter, which it asserts is from two of its client's employees. The record shows
No. 71708-1-1/3


that the ALJ admitted this letter into evidence as page three of Exhibit 6. Thus,

the omission of this letter from the record appears to be an oversight. There

being no objection from the Department, supplementation of the record is proper.

                          UNEMPLOYMENT BENEFITS


       PSSP argues that the Commissioner improperly awarded unemployment

benefits. We disagree.

       The Employment Security Act exists to provide compensation to

individuals who are involuntarily unemployed "through no fault of their own."1 An

individual is disqualified from receiving unemployment benefits if he or she is

discharged "for misconduct connected with his or her work."2

       Judicial review of a decision made by the Commissioner of the

Employment Security Department is governed by the Washington Administrative

Procedure Act (WAPA).3 This court sits in the same position as the superior

court and applies the standards of the WAPA directly to the administrative record

before the agency.4 We review the Commissioner's decision, not the underlying

decision of the ALJ.5




       1 RCW 50.01.010.

       2 RCW 50.20.066(1).

       3 Tapper v. Emp't Sec. Dep't. 122 Wn.2d 397, 402, 858 P.2d 494 (1993).

       4jd

      5 Verizon Nw., Inc. v. Emp't Sec. Dep't. 164 Wn.2d 909, 915, 194 P.3d
255 (2008).
No. 71708-1-1/4


       The Commissioner's decision is prima facie correct.6 The party

challenging the decision bears the burden of demonstrating its invalidity.7 Relief

from an agency decision is granted ifthe reviewing court determines that the

Commissioner erroneously interpreted or applied the law, the order is not

supported by substantial evidence, or the order is arbitrary or capricious.8

       We review findings of fact to determine whether they are supported by

substantial evidence.9 Unchallenged findings are verities on appeal.10 We

review de novo questions of law.11 We give substantial weight to the agency's

interpretation of the statutes it administers.12

       Whether a claimant engaged in misconduct is a mixed question of law and

fact.13 Accordingly, we determine the law independently and then apply the law

to the facts as found by the agency.14




       6 RCW 50.32.150.

       7]d\_

       8 RCW 34.05.570(3)(d), (e), (i).

       9 Barker v. Emp't Sec. Dep't. 127 Wn. App. 588, 592, 112 P.3d 536
(2005).

       10 Fuller v. Emp't Sec. Dep't. 52 Wn. App. 603, 605, 762 P.2d 367 (1988).

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

       12 id,

       13 Tapper, 122 Wn.2d at 402.

       14 Hamel v. Emp't Sec. Dep't. 93 Wn. App. 140, 145, 966 P.2d 1282
(1998).
No. 71708-1-1/5


                                  Findings of Fact

       PSSP assigns error to Finding of Fact no. 20, but fails to make any

specific argument about this assignment of error. Nevertheless, we address

whether substantial evidence supports this finding.

       "'Substantial' evidence is evidence that would persuade a fair-minded

person of the truth or correctness of the matter."15 An appellate court views the

evidence and reasonable inferences therefrom in the light most favorable to the

party who prevailed at the administrative proceeding below.16 An appellate court

does not substitute its judgment for that of the agency regarding witness

credibility or the weight of evidence.17

       Finding of Fact no. 20 states:

              The claimant tended to give elaborate explanations for why
       what he had done was appropriate or justified, and intended to
       serve the best interests of the employer. He did not intend to cause
       harm, but his actions were seen as disruptive and possibly
       damaging to the employer's relations with the client.1181

       Boiling's testimony supports this finding of fact. Boiling testified about

several incidents that occurred during his employment and explained how he

thought his actions were appropriate. His testimony reveals that he was trying to

serve the best interests of his employer and did not intend to cause harm.



       15 Smith. 155 Wn. App. at 32-33.

       16 William Dickson Co. v. Puqet Sound Air Pollution Control Agency, 81
Wn. App. 403, 411, 914 P.2d 750 (1996).

       17 Smith, 155 Wn. App. at 35.

       18 Administrative Record at 454.
No. 71708-1-1/6



       The first incident occurred in September 2011. Boiling received a written

warning for not filling out an incident report during the shift in which the incident

occurred. Boiling's supervisor called him the next morning and asked him to

come in and write the report. Boiling complied, but he did not have all of the

information, so he wrote a supplemental report at home. Boiling thought PSSP

was in a hurry to get the report, so he faxed it to PSSP's main office rather than

to his supervisor. PSSP criticized Boiling for failing to follow the chain of

command.


       Boiling testified about this incident. He explained that he did not write an

incident report immediately upon returning to his work site because he ran out of

time at the end of his shift and because there is a rule that prohibits two security

guards from being on duty at the same time.19 He also testified that there was no

requirement that the report be done immediately, rather, it had to be done

quickly.20 He "did the best [he] could" and "did it as quick as [he] could."21 He

was concerned about making sure the report was correct and free of mistakes.22

Boiling submitted an additional report providing more detail.23 He testified that he




       19 jd, at 253-54.

       20 jd, at 255.

       21 ]dL at 255-56.

       22 ]d at 255-57.

       23 Id. at 255-56.
No. 71708-1-1/7


faxed it to PSSP headquarters rather than sending it to his supervisor because

he had the impression "that the report had to be in headquarters right away."24

      Another incident occurred in January 2012. While Boiling was on his way

to work, he observed a vehicle that acted strangely when a police car went by.

After he arrived at work, his supervisor told him about the murder of a Park

Ranger and told him to be especially watchful during his shift. After learning this

news, Boiling became concerned that the vehicle he had seen might have been

involved. He called the client's manager for a description of the suspect. The

description did not match, but Boiling told the client's manager about it and wrote

an incident report on it. In the report, Boiling said that his supervisor was

paranoid and had put him on high alert. The supervisor objected to these

characterizations and asked Boiling to rewrite the report, which he did.

       Boiling also testified about this incident. He testified that his supervisor

told him to be on alert and watchful of everything.25 Boiling said that he wrote an

incident report because "when something like this happens, you have got to

mention any details, any little facts. It could have been the killer. We didn't know

at that moment."26

       In another incident, Boiling looked in a cupboard belonging to the client for

some rechargeable batteries. His supervisor told him he should not have done

so. When Boiling saw the client's manager a few days later, he apologized. The

       24 jd at 257.

       25 id at 194.

       26 Id. at 195.
No. 71708-1-1/8


manager did not know what he was talking about, so Boiling explained and asked

if he needed to contact them before getting into the cabinet, to which the on-site

supervisor said no.

       Boiling testified about this as well. He explained that he believed he was

following instructions from a supervisor.27 He said that he did not "go around

and do things [he] shouldn't have done."28 Rather, he testified that his supervisor

asked him to check the batteries and that when he told her he did not know

where they were, she told him to "[g]o find them."29
       The final incident occurred in August 2012. Boiling's supervisor told him

that certain equipment of the client was offline for maintenance and repair. While

making his rounds, Boiling saw that the equipment's start light was out, so he

noted it on a maintenance log at the facility. When Boiling next came to work, his

supervisor gave him a written warning for disregarding orders and writing up the
equipment even though there was no need. Boiling disagreed with the warning
and said he would take his objections to the supervisor's supervisors. Two days

later, Boiling asked the client's head mechanic and electrician if it was okay for
him to have logged the burned out bulb. They notified Boiling's supervisor of his
inquiry. Boiling had previously sought a second opinion from the client, which the
client's on-site manager referred to as "playing the mommy-daddy game."30


       2714 at   304.


       28 id

       29 id

       30 Id. at 453.

                                             8
No. 71708-1-1/9


       Boiling testified about this incident. He explained that he was specifically

instructed not to test the alarms on the equipment when they were offline.31 But

when asked if he was instructed not to test the lights when the equipment was

offline, Boiling testified that it was never discussed.32 He stated:

       [l]t is not anything verbally or written down saying that I couldn't test
       that bulb the day I did it. And I did it as a matter of habit. It wasn't
       anything insubordinate or any—I was not instructed not to test the
       bulbs.. . J33'

Boiling further testified that if the machine is down, and the test light is out, "it

doesn't hurt to check it as you go by."34 He explained that the "panel" on the

client's equipment was still up and running and the lights could still be tested.35
Boiling believed it "was the best thing to do because, as it turns out, the

electrician saw—saw that it was burnt out. It was one less problem to worry

about."36

       In sum, Boiling's testimony supports Finding of Fact no. 20. The

Commissioner adopted his testimony and apparently found him credible. This

constitutes substantial evidence to support the finding.




       31 id at 247, 332, 334, 336.

       32 id at 246, 332, 334, 336-37.

       33 id at 247.

       34 id at 251.

       35 id at 251, 335-36.

       36 Id. at 251.
No. 71708-1-1/10


      The remaining findings are verities, as they are unchallenged on appeal.37

Accordingly, the question is whether the Commissioner's findings support the

conclusions of law.


                                Conclusions of Law


      PSSP argues that the Commissioner erroneously concluded that PSSP

failed to prove misconduct under RCW 50.04.294. We disagree.

       Under the WAPA, we review the Commissioner's legal conclusions for

error of law.38 We give substantial weight to the Commissioner's interpretation of

"misconduct" as it is defined under the Employment Security Act because of the

agency's special expertise.39

      Claimants are disqualified from benefits if they are discharged for

misconduct connected with their work.40 "Misconduct" is defined by statute.41

       RCW 50.04.294(1) provides a non-exhaustive list of "misconduct":

      (a) Willful or wanton disregard of the rights, title, and interests of
      the employer or a fellow employee;

      (b) Deliberate violations or disregard of standards of behavior
      which the employer has the right to expect of an employee;

      (c) Carelessness or negligence that causes or would likely cause
      serious bodily harm to the employer or a fellow employee; or




       37 Fuller, 52 Wn. App. at 605.

       38 Verizon Nw.. Inc.. 164 Wn.2d at 915.

       39 id

       40 RCW 50.20.066(1).

       41 RCW 50.04.294.

                                             10
No. 71708-1-1/11


       (d) Carelessness or negligence of such degree or recurrence to
       show an intentional or substantial disregard of the employer's
       interest.


       RCW 50.04.294(2) identifies several acts of per se misconduct. These

acts are considered misconduct because they "signify a willful or wanton

disregard of the rights, title, and interests of the employer or a fellow

employee."42 Among these is RCW 50.04.294(2)(a), which is "[insubordination

showing a deliberate, willful, or purposeful refusal to follow the reasonable

directions or instructions of the employer." Also among these is RCW

50.04.294(2)(f), which is a "[violation of a company rule if the rule is reasonable

and if the claimant knew or should have known of the existence of the rule."

       RCW 50.04.294(3) expressly defines what is excluded from "misconduct":

       (a) Inefficiency, unsatisfactory conduct, or failure to perform well as
       the result of inability or incapacity;

       (b) Inadvertence or ordinary negligence in isolated instances; or

       (c) Good faith errors in judgment or discretion.

       Here, the Commissioner concluded that Boiling did not commit

disqualifying misconduct:

              Based on the above findings and pursuant to the above
       referenced authority, [PSSP] has not met its burden of proof with
       respect to misconduct. While [PSSP's] frustration with [Boiling] is
       real and understandable, [Boiling's] actions do not exhibit the kind
       of willful or wanton disregard of the employer's interests that
       constitutes misconduct under the statute. This was not intentional
       behavior done deliberately or knowingly with the awareness that
       [Boiling] was violating or disregarding the rights of the employer.
       Nor was it malicious behavior showing extreme indifference to a
       risk, injury, or harm to another that is known or should have been


       42 RCW 50.04.294(2).


                                              11
No. 71708-1-1/12


       known. [Boiling's] acts here were at worst the kind of unsatisfactory
       conduct or inability to perform well that the statute states is not
       misconduct. Accordingly, [Boiling] is not subject to disqualification
       under RCW 50.20.066J43]

This reflects two separate conclusions by the Commissioner.

       First, the Commissioner concluded that Boiling's actions "do not exhibit

the kind of willful or wanton disregard of the employer's interests that constitutes

misconduct under the statute."44 This conclusion tracks the statutory language of

RCW 50.04.294(1 )(a). The Commissioner concluded that Boiling's conduct "was

not intentional behavior done deliberately or knowingly with the awareness that

[Boiling] was violating or disregarding the rights of the employer."45 The

Commissioner also concluded that Boiling's conduct was not "malicious behavior

showing extreme indifference to a risk, injury, or harm to another that is known or

should have been known."46

       This conclusion accurately reflects the Department's regulations. Under

these regulations, "'Willful' means intentional behavior done deliberately or

knowingly, where you are aware that you are violating or disregarding the rights

of your employer or a co-worker."47 "'Wanton' means malicious behavior




       43 Administrative Record at 456.

       44 id

       45 Id

       46 id

       47WAC 192-150-205(1).

                                             12
No. 71708-1-1/13


showing extreme indifference to a risk, injury, or harm to another that is known or

should have been known to you."48

       As discussed earlier, in Finding of Fact no. 20, the Commissioner found

that Boiling intended to serve the best interests of his employer and did not

intend to cause harm. This supports the conclusion that Boiling's conduct was

not willful, because he was not aware that he was disregarding the rights of his

employer. It also supports the conclusion that Boiling's conduct was not wanton,

because he did not act maliciously. Finally, it supports the conclusion that PSSP

failed to show misconduct, because as this court recently stated in Kirbv v.

Department of Employment Security, a showing of misconduct "must be

established by evidence that the employee was aware that he or she was

disregarding the employer's rights."49 In short, the Commissioner properly

applied the law and determined that Boiling's conduct was not misconduct under

RCW 50.04.294(1 )(a).

       Second, the Commissioner also concluded that Boiling's acts "were at

worst the kind of unsatisfactory conduct or inability to perform well that the

statute states is not misconduct."50 This tracks the statutory language of RCW

50.04.294(3)(a), which excludes from misconduct "unsatisfactory conduct" or

"failure to perform well as the result of inability or incapacity."



       48 WAC 192-150-205(2).

       49 Kirbv v. Dep't of Emp't Sec. 179 Wn. App. 834, 847, 320 P.3d 123,
review denied, 181 Wn.2d 1004 (2014).

       50 Administrative Record at 456.


                                               13
No. 71708-1-1/14


       In The Markam Group Inc. v. Department of Employment Security,

Division Three concluded that a paralegal's conduct was not misconduct even

though she committed a series of mistakes.51 The court reasoned that she did

not deliberately or knowingly fail to perform her job duties correctly, rather, she

tried to perform to standards but was unsuccessful because she lacked the skills

she needed.52 Accordingly, the court concluded that the paralegal's conduct was

expressly excluded from the statutory definition of misconduct and she was

entitled to unemployment benefits.53

       Here, like in Markam, Finding of Fact no. 20, together with the

unchallenged findings of fact, support the conclusion that Boiling's conduct was

excluded from "misconduct." The findings show that although Boiling may have

made mistakes, such as making unnecessary notes in the maintenance log or

looking in the client's cupboard for batteries, he believed that he was doing work

correctly and following proper instructions. As in Markam, Boiling did not

deliberately or knowingly perform his duties incorrectly. Rather, the record

demonstrates that Boiling was unable to perform his job to his employer's

standards due to poor judgment or a lack of skills. In short, the Commissioner

properly concluded that Boiling's conduct constituted "unsatisfactory conduct" or

the "inability to perform well" and did not constitute misconduct.




       51 148 Wn. App. 555, 563-64, 200 P.3d 748 (2009).

       52 id

       53 id at 564.

                                             14
No. 71708-1-1/15


       We note that, in the order before us, the Commissioner did not expressly

determine whether Boiling's conduct constituted misconduct under RCW

50.04.294(2)(a), despite arguments about this subsection before ALJ and the

Commissioner.54 PSSP argues that failing to consider this standard is reversible

error. It is mistaken.

       Under RCW 50.04.294(2)(a), "[insubordination showing a deliberate,

willful, or purposeful refusal to follow the reasonable directions or instructions of

the employer" constitutes per se misconduct. Here, there is no finding of

insubordination. Likewise, there is no finding of "deliberate, willful, or purposeful

refusal to follow the reasonable directions or instructions of the employer." The

absence of a finding on a matter generally connotes a finding against the

proponent ofthat finding.55 Thus, the underlying predicate to a conclusion about

misconduct under this subsection is absent.

       More importantly, the well-supported conclusion that the conduct of this

employee was not misconduct under RCW 50.04.294(3)(a) is dispositive. If
Boiling's conduct was statutorily excluded from the definition of misconduct under
RCW 50.04.294(3)(a), the employer cannot establish misconduct under RCW

50.04.294(2)(a).

       PSSP makes several arguments in opposition to the Commissioner's

determinations. None are convincing.



        54 See Administrative Record at 345-47, 482-84.

        55 Stuewe v. Dep't of Revenue, 98 Wn. App. 947, 952, 991 P.2d 634
(2000).

                                              15
No. 71708-1-1/16


       PSSP first argues that the Commissioner used the wrong legal standard.

Specifically, it asserts that the Commissioner "essentially require[ed] [PSSP] to

prove that [Boiling] had a criminal mens rea: a specific intent to harm."56 PSSP

asserts that "[p]urposeful action against the employer's interest is all that is

required."57 But this is not a proper statement of the law.

       To establish misconduct under RCW 50.04.294(1 )(a), PSSP must show

that Boiling's conduct was either "willful" or "wanton." Under the Department's

regulations, both of those definitions require more than purposeful action.58

While PSSP is correct that "subjective motivations and intent to harm the

employer are irrelevant," this court recently made clear that a showing of

misconduct "must be established by evidence that the employee was aware that

he or she was disregarding the employer's rights."59

       PSSP also relies on Griffith v. Department of Employment Security to

support its assertion that purposeful conduct is all that is required.60 In that case,

an employee was discharged after making inappropriate comments to a




       56 Brief of Appellant at 16.

       57 jd at 17.

       58 See WAC 192-150-205(1), (2).

       59 Kirbv, 179 Wn. App. at 847.

       60 Brief of Appellant at 16 (citing Griffith v. Dep't of Emp. Sec, 163 Wn.
App. 1,259P.3d 1111 (2011)).


                                              16
No. 71708-1-1/17


customer.61 Division Three concluded that the employee committed misconduct

because "[h]e acted intentionally, if also mistakenly, and harmed his employer."62

       But a close reading of that case reveals that reliance on Griffith is

misplaced. The Griffith court heavily relied on Hamel v. Employment Security

Department in concluding that the employee committed misconduct.63 In Hamel,

the employee was aware of his employer's policy against sexual harassment,

had twice been reprimanded for remarks that violated the policy, and had been

warned that another incident would lead to termination.64 After a third incident,

the employer discharged Hamel. The Hamel court concluded that the employee

committed disqualifying misconduct because he was aware of the company's

interest, a reasonable person should have known his behavior would harm the

employer's interest, and he acted intentionally.65

       The Griffith court stated that the facts of that case resembled Hamel.66

The facts of Hamel were that the employee knew of his employer's interest and

knew or should have known that his conduct jeopardized that interest.




       61 Griffith, 163 Wn. App. at 5.

       62 id at 11.

       63 id at 9-11 (citing Hamel. 93 Wn. App. 140).

       64 Hamel, 93 Wn. App. at 142-44.

       65 id at 147.

       66 Griffith, 163 Wn. App. at 10.

                                             17
No. 71708-1-1/18


        Here, in contrast, Finding of Fact no. 20 establishes that Boiling thought

his actions were justified and intended to serve the best interests of PSSP. And

there is no finding that Boiling should have known he was disregarding his

employer's interests. This supports the conclusion that Boiling did not act with

knowledge that he was violating or disregarding the rights of his employer. Thus,

this case is distinguishable, on its facts, from Griffith and Hamel.

        PSSP contrasts this case with Markam and argues that "[b]luring mistakes

and lack of skill with insubordination and refusing to follow reasonable rules is

bad law."67 But, as we discussed earlier, there is no finding of insubordination in

this record. Thus, the underlying premise of this argument is unsound. We

reject it.

        PSSP argues that Boiling committed misconduct under various other

subsections of RCW 50.04.294. Specifically, it relies on (1)(b), (1)(d) and (2)(f)

and argues that Boiling committed misconduct by purposely violating rules or

directions and by acting carelessly or negligently. Because these arguments are

first raised on appeal, we do not address them.

        Under the WAPA, parties generally may not raise issues on appeal that

were not raised before the agency, absent an applicable statutory exception in

RCW 34.05.554(1). Further, "In order for an issue to be properly raised before




        67 Appellant's Reply Brief at 10-11 (citing The Markam Group, Inc. 148
Wn. App. at 564).


                                             18
No. 71708-1-1/19


an administrative agency, there must be more than simply a hint or a slight

reference to the issue in the record."68

       Here, PSSP does not explain how any of the statutory exceptions to

preservation of arguments below apply to these new arguments on appeal.

Accordingly, there is no basis for us to consider these new arguments.

       PSSP asserts that it raised below the argument that Boiling violated a

reasonable company rule. It points out that it identified a violation of a

reasonable company rule as a ground for Boiling's discharge, and it included the

company rules in the administrative record. But PSSP failed to make any

argument about this at the agency level. Thus, this is nothing more than a slight

reference to the issue in the record, which is insufficient to preserve the issue for

review. Moreover, PSSP does not identify a specific company rule that Boiling

allegedly violated until its reply brief. And arguments first raised in a reply are too

late to warrant consideration.69

       Finally, PSSP argues that Boiling had the burden of proving that his

disobedience was justified. But PSSP also does not raise this argument until its

reply brief, and thus, we do not consider it.

       In sum, PSSP fails to show that the Commissioner erred in concluding that

Boiling is entitled to benefits.




     68 King County v. Wash. State Boundary Review Bd. for King County, 122
Wn.2d 648, 670, 860 P.2d 1024 (1993).

      69 Cowiche Canvon Conservancy v. Boslev. 118 Wn.2d 801, 809, 828
P.2d 549 (1992).


                                                19
No. 71708-1-1/20


      We affirm the superior court's order affirming the Commissioner's

decision.

                                                      CmtT.
WE CONCUR:

        \
      ]M.y                                       'ZeckeA.




                                          20
