Utah Paiute Tribal Housing v. Workforce Services

2019 UT App 191
THE UTAH COURT OF APPEALS
U TAH P AIUTE TRIBAL H OUSING A UTHORITY I NC .,
Petitioner,
v.
DEPARTMENT OF WORKFORCE S ERVICES,
WORKFORCE A PPEALS B OARD,
Respondent.
Opinion
No. 20190164-CA
Filed November 21, 2019
Original Proceeding in this Court
James W. Jensen, Attorney for Petitioner
Amanda B. McPeck, Attorney for Respondent
JUDGE DIANA HAGEN authored this Opinion, in which
JUDGES GREGORY K. O RME and D AVID N. M ORTENSEN concurred.
HAGEN, Judge:
¶1 	Utah Paiute Tribal Housing Authority Inc. (the Housing
Authority) seeks judicial review of a Workforce Appeals Board
(the Board) decision that a former employee (the Employee) was
terminated 	without 	just 	cause 	and 	is 	thus 	entitled 	to
unemployment 	benefits. 	Because 	the 	Board’s 	findings 	and
conclusions are supported by substantial evidence, we decline to
disturb the Board’s decision.

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	2 	2019 UT App 191
BACKGROUND1
¶2 	This case concerns the dismissal of the Employee from her
employment with the Housing Authority, a Utah corporation
that assists members of the Paiute Indian Tribe of Utah in
obtaining 	affordable 	housing.2 	During 	the 	course 	of 	her
employment, the Employee reported to the Housing Authority’s
executive director. The executive director, in turn, reported to
the 	Board 	of 	Commissioners 	(the 	Commissioners), 	an
organization comprised of representatives from the different
bands of the Paiute Indian Tribe. Although the Paiute Indian
1. In reviewing a decision of the Board, “we view the facts in the
light most favorable to the [Board’s] findings” and recite them
accordingly. See Evolocity, Inc. v. Department of Workforce Services,
2015 UT App 61, ¶ 2 n.2, 347 P.3d 406.
2. “To provide and maintain housing for the needy, Congress
enacted the Housing Act of 1937.” Housing Auth. of Kaw Tribe of
Indians of Okla. v. City of Ponca City, 952 F.2d 1183, 1185 (10th Cir.
1991); 	accord 	42 	U.S.C. 	§ 	1437 	(1988). 	Consistent 	with 	this
mandate, the Department of Housing and Urban Development
(HUD) has promulgated regulations for the creation of Indian
housing authorities. Id. Indian housing authorities, such as the
petitioner, may receive federal grants or apply to HUD for loans
that enable the housing authorities to develop or maintain low-
income 	housing 	for 	members 	of 	the 	tribes 	they 	serve. 	See
Marceau v. Blackfeet Housing Auth., 540 F.3d 916, 928 (9th Cir.
2008) 	(discussing 	how 	the 	Housing 	Act 	empowers 	Indian
housing authorities to apply to HUD for loans); Amerind Risk
Mgmt. Corp. v. Malaterre, 585 F. Supp. 2d 1121, 1127 (D.N.D.
2008) (discussing an Indian housing authority that received
federal grants to maintain reservation housing), rev’d on other
grounds, 633 F.3d 680 (8th Cir. 2011).

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	3 	2019 UT App 191
Tribe 	has 	its 	own 	tribal 	council 	(the 	Tribal 	Council) 	that
authorizes the Housing Authority’s funding, the Tribal Council
does not fall directly within the Housing Authority’s chain of
command.
¶3 	About one year into her employment with the Housing
Authority, the Employee began to suspect that the executive
director was misusing Housing Authority funds. She believed
that 	the 	Commissioners 	were 	reflexively 	supportive 	of 	the
executive director and would not take complaints about him
seriously. The Employee also testified that other individuals had
previously complained to the Tribal Council about the executive
director’s spending, but the Tribal Council had indicated that “it
was powerless to do anything without proof of wrongdoing.”
¶4 	The 	Employee 	began 	collecting 	documents 	that 	she
believed supported her suspicions that the executive director
was misusing funds. She obtained a copy of a per diem check
from the Housing Authority made out to the executive director.
She 	also 	acquired 	a 	copy 	of the 	executive 	director’s travel
arrangements and corporate credit card statement, intending to
use the documents to show that the executive director had
inflated the amount of his per diem check and misused Housing
Authority funds on hotels and rental cars.
¶5 	The 	Employee 	reported 	her 	suspicions 	to 	the 	Tribal
Council and provided the supporting documents. As a result,
the 	Tribal 	Council 	cancelled 	a 	scheduled 	meeting 	with 	the
Commissioners and provided the Commissioners with copies of
the documents. The Commissioners responded by alerting the
executive director of the allegations made by the Employee. The
executive director then terminated the Employee for violating
the 	Housing 	Authority’s 	non-disclosure 	policy, 	which 	the
Employee had previously agreed to, by revealing confidential
information.

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	4 	2019 UT App 191
¶6 	Following her termination, the Employee made a claim
for unemployment benefits. The Utah Department of Workforce
Services 	denied 	her 	claim, 	finding 	that 	the 	Employee 	was
discharged 	for 	“just 	cause.” 	The 	Employee 	appealed 	to 	an
administrative law judge (the ALJ), and the ALJ upheld the
original decision. The Employee appealed the ALJ’s decision to
the Board, which found that the Employee was terminated
without 	just 	cause. 	The 	Board 	accordingly 	reversed 	the
determination of the ALJ and held that the Employee was
entitled to unemployment benefits. The Housing Authority now
seeks judicial review of the Board’s decision.
ISSUE AND STANDARD OF REVIEW
¶7 	The Housing Authority challenges the sufficiency of the
evidence 	to 	support 	the 	Board’s 	determination 	that 	the
Employee was terminated without just cause. This court “will
uphold 	the 	Board’s 	decision 	if 	its 	factual 	findings 	and
determinations are supported by substantial evidence 	when
viewed in light of the whole record.” Needle Inc. v. Department of
Workforce Services, 2016 UT App 85, ¶ 6, 372 P.3d 696 (cleaned
up). 	“Substantial 	evidence 	is 	that 	quantum 	and 	quality 	of
relevant evidence that is adequate to convince a reasonable mind
to support a conclusion and is more than a mere scintilla but
something less than the weight of the evidence.” Id. (cleaned up).
Additionally, 	this 	court 	defers 	to 	“the 	Board’s 	credibility
determinations and its resolution of conflicts in the evidence.” Id.
ANALYSIS
¶8 	“An employee is ineligible for unemployment insurance
benefits 	if 	the 	Board 	concludes 	that 	the 	employee 	was
discharged for just cause.” Davis v. Department of Workforce
Services, 2015 UT App 93, ¶ 8, 348 P.3d 352; see also Utah Code

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	5 	2019 UT App 191
Ann. § 35A-4-405(2)(a) (LexisNexis 2015). “To establish ‘just
cause,’ three elements must be present: culpability, knowledge,
and control.” Autoliv ASP, Inc. v. Department of Workforce Services,
2001 UT App 198, ¶ 17, 29 P.3d 7; see also Utah Admin. Code
R994-405-202. 	Here, 	the 	Board 	concluded 	that 	the 	Housing
Authority 	failed 	to 	show 	all 	three 	elements—including
culpability. 	Because 	“the 	employer 	must 	satisfy 	all 	three
requirements to avoid paying unemployment compensation on
the ground the employee was fired for just cause,” and because
the employer has failed to establish culpability, we need not
consider the “knowledge” and “control” elements. See Provo City
v. Department of Workforce Services, 2012 UT App 228, ¶ 13 n.6,
286 P.3d 936 (citing Utah Admin. Code R994-405-202).
¶9 	To 	establish 	culpability, 	“[t]he 	conduct 	causing 	the
discharge must be so serious that continuing the employment
relationship would jeopardize the employer’s rightful interest.”
Utah Admin. Code R994-405-202(1). However, “[i]f the conduct
was an isolated incident of poor judgment and there was no
expectation it would be continued or repeated, potential harm
may not be shown.” Id. “The claimant’s prior work record is an
important factor” in this determination because “[a]n employer
might not be able to demonstrate that a single violation, even
though harmful, would be repeated by a long-term employee
with an established pattern of complying with the employer’s
rules.” Id.
¶10 	The Board’s determination that the Employee’s conduct
did not pose a serious risk to the Housing Authority’s rightful
interests 	is 	supported 	by 	substantial 	evidence. 	While 	the
Housing 	Authority 	has 	an 	interest 	in 	maintaining 	the
confidentiality of its financial records, this is not a typical breach
of confidentiality case. Rather, the Employee, rightly or wrongly,
suspected fraud, and the reporting of such suspicions is not
adverse to an employer’s rightful interests, but is very much

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	6 	2019 UT App 191
consistent 	with 	them. 	Further, 	it 	was 	reasonable 	for 	the
Employee to believe that the Tribal Council was an appropriate
entity 	to 	report 	her 	suspicions 	to. 	After 	all, 	the 	Housing
Authority was distributing money on behalf of the tribe and
required 	the 	Tribal 	Council’s 	authorization 	to 	operate. 	The
Employee also had reason to believe that the Commissioners
would not take her suspicions seriously if she reported the
suspected fraud to them.
¶11 	Even if the Employee made errors of judgment either in
reporting 	to 	the 	wrong 	entity 	or 	by disclosing 	confidential
information that was not strictly necessary to blow the whistle
on suspected wrongdoing, such an error would, at most, amount
to an isolated instance of poor judgment. This is especially true
given 	the 	fact 	that 	the 	Employee 	did 	not 	have 	any 	other
instances 	of 	misconduct 	during 	her 	time 	at 	the 	Housing
Authority.
¶12 	The Housing Authority argues that the Employee did not
act in good faith because she (1) was aware of and agreed to the
Housing Authority’s nondisclosure policy, (2) “surreptitiously
obtained 	confidential 	and 	privileged 	information 	and
documentation” that was outside the scope of her employment,
(3) turned over that information and documentation to the Tribal
Council without authorization, and (4) sent derogatory text
messages about the executive director. But the Board weighed
the evidence and ultimately rejected the Housing Authority’s
arguments. And “it is the province of the Board, not appellate
courts, to resolve conflicting evidence, and where inconsistent
inferences can be drawn from the same evidence, it is for the
Board to draw the inferences.” Dinger v. Department of Workforce
Services, 2013 UT App 59, ¶ 20, 300 P.3d 313 (cleaned up). Where
“the evidence is disputed, as it was here, we defer to the Board’s
assessment of credibility and resolution of conflicting evidence.”
See id. (cleaned up).

Utah Paiute Tribal Housing Authority Inc. v.
Department of Workforce Services
20190164-CA 	7 	2019 UT App 191
¶13 	Accordingly, the Housing Authority is unable to satisfy
the culpability prong of the just cause analysis, and we decline to
disturb the Board’s decision.
CONCLUSION
¶14 	The Board’s determination that the Housing Authority
failed 	to 	establish 	culpability 	is 	supported 	by 	substantial
evidence. Therefore, the Housing Authority has failed to show
that the Employee was terminated for just cause, and we decline
to disturb the Board’s decision that the Employee is entitled to
unemployment benefits.