                     IN THE COURT OF APPEALS OF IOWA

                                     No. 13-1380
                               Filed October 29, 2014


STACY JORDAN,
    Petitioner-Appellant,

vs.

EMPLOYMENT APPEAL BOARD,
     Respondent-Appellee.
________________________________________________________________


       Appeal from the Iowa District Court for Wapello County, Lucy J. Gamon,

Judge.




       A former employee appeals from the district court’s decision on judicial

review affirming the Employment Appeal Board’s denial of unemployment

benefits. AFFIRMED.




       John S. Allen of the Clinical Law Programs of the University of Iowa

College of Law, and Calvin Dane, Andy Giller, and Aja Oyegunle, Student Legal

Interns, Iowa City, for appellant.

       Rick Autry of the Employment Appeal Board, Des Moines, for appellee.




       Heard by Danilson, C.J., and Doyle and Tabor, JJ.
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DOYLE, J.

       Stacy Jordan appeals the district court’s denial of her petition for judicial

review, which sought to reverse the decision of the Employment Appeal Board

(EAB) denying her unemployment benefits. Jordan asserts on appeal the district

court erred in affirming the EAB’s decision because the agency failed to prove

she was discharged for misconduct and the administrative law judge failed to

explain the basis for her factual findings. Because we find specific credibility

determinations were not required to be set out in the agency’s ruling and

substantial evidence supports its decision, we affirm the district court’s ruling.

       I. Scope and Standards of Review.

       It must first be noted that our review of final agency action is “severely

circumscribed.” Greenwood Manor v. Iowa Dep’t of Pub. Health, 641 N.W.2d

823, 839 (Iowa 2002); Sellers v. Emp’t Appeal Bd., 531 N.W.2d 645, 646 (Iowa

Ct. App. 1995). Nearly all disputes are won or lost at the agency level; the

cardinal rule of administrative law is that judgment calls are within the province of

the administrative tribunal, not the courts. See id.

       Iowa Code section 17A.19(10) (2013) governs judicial review of an

administrative decision.    NextEra Energy Res. LLC v. Iowa Utils. Bd., 815

N.W.2d 30, 36 (Iowa 2012).        If the agency action prejudiced the petitioner’s

substantial rights, and the action meets one of the criteria listed in section

17A.19(10), the district court may grant relief. Evercom Sys., Inc. v. Iowa Utils.

Bd., 805 N.W.2d 758, 762 (Iowa 2011). We apply the standards set forth in

section 17A.19(10) to determine whether our conclusion matches the district
                                        3

court’s result. Id.; City of Des Moines v. Emp’t Appeal Bd., 722 N.W.2d 183, 189

(Iowa 2006).

      Our standard of review depends upon the petitioner’s challenge to the

agency’s decision. Burton v. Hilltop Care Ctr., 813 N.W.2d 250, 256 (Iowa 2012).

If the agency is clearly vested with the authority to make fact-findings on an

issue, then we may disturb those findings on judicial review only if they are

unsupported by substantial evidence when reviewing the record as a whole. Id.

“Substantial evidence” is “the quantity and quality of evidence that would be

deemed sufficient by a neutral, detached, and reasonable person, to establish

the fact at issue when the consequences resulting from the establishment of that

fact are understood to be serious and of great importance.”            Iowa Code

§ 17A.19(10)(f)(1).   We judge the agency’s findings in light of the relevant

evidence on record that may detract from or support it. Id. § 17A.19(10)(f)(3).

Even if the evidence on record could lead a reasonable fact finder to a different

conclusion, we are not called to decide if the record supports a different finding;

rather, our review is limited to determining whether the record supports the

finding actually made by the agency. IBP, Inc. v. Al-Gharib, 604 N.W.2d 621,

632 (Iowa 2000). “Accordingly, the district court and the appellate court should

not consider the evidence insubstantial merely because the court may draw

different conclusions from the record.” Gits Mfg. Co. v. Frank, ___ N.W.2d ___,

___, 2014 WL 5286513, at *2 (Iowa 2014).
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       II. Background Facts and Proceedings.

       Tenco Industries, Inc. provides services to persons with disabilities,

including assisted-living residential housing.     Petitioner Stacy Jordan began

working for Tenco in 1998 as a residential instructor.

       On March 8, 2012, Jordan was given a “counseling statement,” a written

statement that Tenco considered the equivalent of a verbal warning.             The

statement indicated Jordan had committed three violations: “Inappropriate

Behavior,”    “Rudeness       to   Individuals/Parents/Guardians,      etc.,”    and

“Insubordination.” The statement described various instances and behaviors on

Jordan’s part that her supervisors deemed unacceptable, including that while

Jordan’s client logs had noted she was having problems with a client, Jordan did

not “approach[] the coordinators about this problem[]” to try to “remedy the

situation.” The statement laid out changes Jordan was to make, and it noted she

would be assigned to work in a different house.             The statement further

specified: “Possible consequences: If [Jordan’s] behavior continues it will result in

more disciplinary action which could mean termination.”         Jordan signed the

statement on March 8, acknowledging she had “read and underst[ood] this

Counseling Statement” and that she also understood her “signature verified that

the issues were addressed.”

       Jordan’s work location was changed to a different Tenco residential house

“with the hopes that . . . the change in staff would help ease the combativeness

of the [other] one.” However, about two weeks later, Jordan received a second

written counseling statement. Four violations occurring March 21 were indicated

on the statement: “Unsatisfactory Performance,” “Violation of Company Policies
                                         5


& Procedures,” “Rudeness to Individuals/Parents/Guardians, etc.,” and “Failure

to Follow Instructions.” The statement referenced staff reports that Jordan had

failed to follow Tenco’s policies concerning writing incident reports, for which she

was previously counseled. The statement also included a report that Jordan had

refused to help a client “clean up himself who had soiled himself and that she

then had a ‘negative’ attitude toward him.” As a result, Tenco suspended Jordan

for one day without pay, and the statement specified that “[a]ny further infractions

could lead to termination.” Jordan refused to sign the statement, explaining in

writing that she felt she had “not been rude to any of [the] individuals [she]

care[d] for” and that she had “performed [her] job’s responsibilities to the best of

[her] abilities.”

        Two weeks later, it was reported Jordan had left a client in soiled

undergarments “for over an hour” and, “[w]hen asked about changing him,

[Jordan] stated, ‘I will just wait for his shower because I don’t want to clean him

up twice.’” It was also reported Jordan would tell that same client to return to his

room “anytime the individual would come out of his room.”           A third written

counseling statement for these violations was issued to Jordan on April 6, 2012,

stating “[t]hese behaviors are both neglecting an individual’s care and restricting

his rights” and that “[a]s of today, [Jordan’s] employment at Tenco is terminated.”

        Jordan sought unemployment benefits, and in May 2012, Iowa Workforce

Development issued its decision finding Jordan was eligible to receive benefits.

Tenco appealed, asserting Jordan’s employment was terminated for misconduct

and her request for benefits should be denied.
                                          6


         Hearings in June and August were held before an administrative law judge

(ALJ).      There, two witnesses for Tenco testified, essentially repeating the

reasons stated in the written statements as the basis of Tenco’s finding of

misconduct on the part of Jordan and its termination of her employment. Jordan

testified and defended her conduct, testifying she felt she had handled herself

appropriately based upon how she had been previously trained and Tenco’s

policies.    She also denied ever stating she was leaving the client in soiled

undergarments because she did not want to clean him up twice and that she

made the client stay in his room. Finally, Jordan argued Tenco failed to follow its

own policies for investigating claims of abuse or neglect and in terminating her

employment.

         In response to Jordan’s testimony, Tenco’s employee witness testified that

Jordan’s leaving the client in soiled undergarments “was not viewed necessarily

as abuse but as . . . denial of [the client’s] right to be treated with dignity.”

Tenco’s employee witness admitted Tenco had not done an investigation of the

final incident, but she testified the client was non-verbal, so the client could not

give her a statement. She testified she had obtained a written statement from

the worker training with Jordan that night.       Though the statement was not

admitted into evidence, the employer’s witness read the statement, dated April 4,

2012, into the record:

         [Jordan left the client in] a messy Depends for an hour before his
         shower, wouldn't let him go to his room, said he would take his
         clothes off. After his shower told him to go to bed around 8:00 or
         8:30 p.m. He would come out and she told him to go back to bed.

The witness testified that according to Tenco’s policies, leaving a client
                                         7


        in a messy Depends is not treating them with dignity. Also the
        individuals have the right to move about freely in their home. They
        are to be as independent as possible to live in their homes so
        restricting him to his room was not allowing him his right to move
        about freely in his home.

The witness admitted the trainee’s written statement did not include Jordan’s

statement she was not cleaning up the client twice. Jordan denied the witness’s

claims.

        On August 29, 2012, the ALJ issued its ruling finding in favor of Tenco.

The ALJ essentially found Tenco’s witnesses more credible than Jordan, finding

truthful all of the reported accusations in the three counseling statements, but for

the one claim Tenco itself found was false. The ALJ specifically found that,

under “[Tenco’s] policy, and basic human decency, [Jordan’s] actions failed to

treat the client with dignity and respect.” Based upon these factual findings, the

ALJ found that Jordan

        was warned about her behaviors, but it appears she disregarded
        those warnings. Her treatment of the client April 3, 2012, was
        unacceptable, inappropriate, and unprofessional. Consequently,
        the [ALJ] concludes [Jordan’s] conduct demonstrated a willful
        disregard of the standards of behavior the employer has the right to
        expect of employees and shows an intentional and substantial
        disregard of the employer’s interests and the employee’s duties and
        obligations to the employer. The employer has met its burden of
        proving disqualifying job misconduct. . . . Therefore, benefits are
        denied.

        Jordan appealed the decision of the ALJ to the EAB, and the EAB affirmed

the ALJ’s decision, adopting the ALJ’s factual finding and legal conclusions as its

own. Jordan’s request for a rehearing was denied.

        Jordan filed a petition for judicial review of the EAB’s decision in January

2013.     She asserted the EAB’s decision was not supported by substantial
                                         8


evidence because Tenco failed to establish misconduct. She asserted Tenco’s

failure to specify rules and policies she allegedly violated and to submit

supporting documentation of its allegations fell short of the statutory definition of

misconduct, viewing the record as a whole.

       Following arguments on her petition, the district court entered its ruling

affirming the EAB’s decision. The court found Tenco’s hearsay evidence was

admissible and “indicia of its reliability was found through the record.” The court

noted that although “Jordan’s testimony contradicted [the] statement, she did not

object to its admissibility at the time, nor did she cross examine the employer

concerning this statement.” The court found the hearsay statement was “not the

sort of allegation an employer would be likely to make lightly” and the

“believability of the hearsay statement is further enhanced by reason of

[Jordan’s] prior conduct in the weeks leading up to her termination.” The court

ultimately concluded the hearsay statement met the “necessary levels of

trustworthiness, credibility, and accuracy,” allowing the ALJ to rely upon it in

making its decision. Additionally, the court found the ALJ was not required to

make specific credibility findings in its ruling, and the ALJ essentially finding

Jordan’s testimony was not credible did not warrant a finding that substantial

evidence did not support the EAB’s decision.

       Jordan now appeals, arguing the district court erred in affirming the EAB.

She asserts the same issues raised before the district court, challenging the

ALJ’s reliance on the hearsay statement and the ALJ’s lack of specific credibility

findings. We address her arguments in turn.
                                         9


       III. Discussion.

       A. Credibility.

       We start with Jordan’s argument that the district court erred in finding the

agency was not required to specifically set forth its credibility findings. As noted

by Jordan, Iowa Code section 17A.16(1) provides that the agency “decision shall

include an explanation of why the relevant evidence in the record supports each

material finding of fact.”

       This duty on the part of the agency is intended to allow a reviewing
       court “to ascertain effectively whether or not the presiding officer
       actually did seriously consider the evidence contrary to a finding,
       and exactly why that officer deemed the contrary evidence
       insufficient to overcome the evidence in the record supporting that
       finding.” Arthur E. Bonfield, Amendments to Iowa Administrative
       Procedure Act, Report on Selected Provisions to Iowa State Bar
       Association and Iowa State Government 42 rptr. cmt. (1998) . . . ;
       accord Catalfo v. Firestone Tire & Rubber Co., 213 N.W.2d 506,
       510 (Iowa 1973) (“[The commissioner’s] decision must be
       sufficiently detailed to show the path he has taken through
       conflicting evidence. When he disregards uncontroverted expert
       medical evidence he must say why he has done so.”); see also
       Tussing v. George A. Hormel & Co., 417 N.W.2d 457, 458 (Iowa
       1988) (finding commissioner’s failure to state any reasons for
       rejecting overwhelming evidence, including medical evidence, that
       work-related injury occurred on date in question required reversal).

Schutjer v. Algona Manor Care Ctr., 780 N.W.2d 549, 560 (Iowa 2010). This

duty is not intended to be a burdensome one, and the fact-finder is not required

“to discuss each and every fact in the record and explain why or why not [he or

she] has rejected it.” Id. The fact-finder’s decision need only be “sufficiently

detailed to show the path he has taken through conflicting evidence.” Id.

       Here, two different stories were presented at the hearing as to what

occurred, and the ALJ was required to determine which story it found most

credible. There is no question the ALJ, and subsequently, the EAB, did not
                                         10


express the step-by-step reasoning process that led them to the conclusion that

Tenco’s witnesses were more credible than Jordan, but the decisions of the ALJ

and EAB, the ultimate fact-finders here by law, found Tenco’s version to be more

credible.   We must therefore agree with the district court that the lack of a

specific statement concerning the agency’s credibility determination was not a

fatal flaw in its determination that sufficient evidence supported the agency’s

decision.

       B. Misconduct and Hearsay.

       Turning to the agency’s finding of misconduct, as we have noted above,

our review of the agency’s factual findings is circumscribed by statute. See Iowa

Code § 17A.19(10)(f); Greenwood Manor, 641 N.W.2d at 839; Sellers, 531

N.W.2d at 646. If an agency has been clearly vested with the authority to make

factual findings on a particular issue, then a reviewing court can only disturb

those factual findings if they are “not supported by substantial evidence in the

record before the court when that record is reviewed as a whole.” Iowa Code

§ 17A.19(10)(f); Burton, 813 N.W.2d at 256. This review is limited to the findings

that were actually made by the agency and not other findings the agency could

have made. Meyer v. IBP, Inc., 710 N.W.2d 213, 218 (Iowa 2006).

       Iowa Code section 96.5(2)(a) provides that if it found the ex-worker “has

been   discharged     for   misconduct    in   connection    with   the   individual’s

employment . . . [t]he individual shall be disqualified for benefits . . . .” The Iowa

Administrative Code defines misconduct as follows:

              “Misconduct” is defined as a deliberate act or omission by a
       worker which constitutes a material breach of the duties and
       obligations arising out of such worker’s contract of employment.
                                        11


      Misconduct as the term is used in the disqualification provision as
      being limited to conduct evincing such willful or wanton disregard of
      an employer’s interest as is found in deliberate violation or
      disregard of standards of behavior which the employer has the right
      to expect of employees, or in carelessness or negligence of such
      degree of recurrence as to manifest equal culpability, wrongful
      intent or evil design, or to show an intentional and substantial
      disregard of the employer’s interests or of the employee’s duties
      and obligations to the employer. On the other hand mere
      inefficiency, unsatisfactory conduct, failure in good performance as
      the result of inability or incapacity, inadvertencies or ordinary
      negligence in isolated instances, or good faith errors in judgment or
      discretion are not to be deemed misconduct within the meaning of
      the statute.

Iowa Admin. Code r. 871-24.32(1)(a).

      Jordan challenges the hearsay statement read into the record by Tenco’s

witness and accepted as fact by the ALJ and EAB. Ordinarily, where the “record

is composed solely of hearsay evidence, a reviewing court will examine the

evidence closely in light of the entire record to see whether it rises to the

necessary levels of trustworthiness, credibility and accuracy required by

reasonably prudent persons in the conduct of their serious affairs.” Schmitz v.

Iowa Dep’t of Human Servs., 461 N.W.2d 603, 607-08 (Iowa Ct. App. 1990); see

also Iowa Code § 17A.14(1) (“A finding shall be based upon the kind of evidence

on which reasonably prudent persons are accustomed to rely for the conduct of

their serious affairs, and may be based upon such evidence even if it would be

inadmissible in a jury trial.”); Clarke v. Iowa Dep’t of Revenue & Fin., 644 N.W.2d

310, 320 (Iowa 2002) (holding that hearsay evidence is admissible and may

constitute substantial evidence for an ALJ’s opinion); Gaskey v. Iowa Dep’t of

Transp., 537 N.W.2d 695, 698 (Iowa 1995) (“[H]earsay evidence is admissible at

administrative hearings and may constitute ‘substantial evidence.’”). However,
                                           12


where no objection to the hearsay evidence was made before the ALJ, the

objection to the evidence is waived. Christiansen v. Iowa Bd. of Educ. Exam’rs,

831 N.W.2d 179, 192 (Iowa 2013).

       Here, the ALJ found Jordan had done what Tenco’s employees said she

had done. Moreover, the ALJ factually found Jordan’s actions violated Tenco’s

policies. These determinations were for the agency to make. The district court

concluded “that the [EAB]’s application of the law to the facts of this case was

justified. Substantial evidence in the record shows that [Jordan] mistreated a

nonverbal client of her employer. The [EAB] reasonably found that [Jordan] had

engaged in ‘misconduct’ such that she was disqualified from receiving

unemployment benefits.” We agree. Consequently, we affirm the district court’s

judicial-review ruling, affirming the agency’s decision.

       IV. Conclusion.

       Because we conclude the agency was not required to make specific

credibility findings in its decision, the unchallenged hearsay evidence was

admissible, and substantial evidence in the record supported the agency’s

findings of facts and determination that Jordan’s conduct constituted misconduct,

we affirm the district court’s judicial-review ruling.

       AFFIRMED.
