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decided: November 30, 1982.


Appeal from the Order of the Unemployment Compensation Board of Review in case of In Re: Claim of Richard L. Emerich, No. B-197152.


Alfred C. Phillips, with him C. Grainger Bowman, McNees, Wallace & Nurick, for petitioner.

Gerald I. Roth, for claimant, Richard L. Emerich.

Judges Blatt, Williams, Jr. and Craig, sitting as a panel of three. Opinion by Judge Craig.

Author: Craig

[ 70 Pa. Commw. Page 183]

Employer Caloric Corporation appeals an order of the Unemployment Compensation Board of Review, which held that claimant Richard L. Emerich, a former Caloric employee, was not disqualified from receiving benefits under Section 402(e) of the Unemployment

[ 70 Pa. Commw. Page 184]

Compensation Law,*fn1 which precludes payment of benefits to individuals terminated from employment for willful misconduct.

At the hearing before a referee, the employer's only witness, its director of personnel, testified that the claimant was fired for selling company products for personal gain.*fn2 To support this allegation, the employer offered in evidence four exhibits, which included copies of checks payable to the claimant and correspondence between the claimant and the California company to whom he allegedly sold the products.*fn3 The claimant's counsel objected to the admission of these exhibits on the ground that they were hearsay, but the referee permitted their introduction into the record, with the understanding that claimant's counsel had entered the proper objection.

The employer's witness then testified that the employer had fired the claimant after discovering the documents, although he acknowledged that he never had discussed these allegations with the claimant.

[ 70 Pa. Commw. Page 185]

Subsequently, the employer's counsel requested that the claimant be called as a witness, but the claimant's attorney advised the claimant to take the Fifth Amendment privilege against self-incrimination because of a pending FBI investigation into possible criminal activity by the claimant. After the claimant's refusal to testify, no further evidence was presented.

The board held that the employer did not meet its burden of establishing that the claimant had been discharged because of willful misconduct. See Boyer v. Unemployment Compensation Board of Review, 51 Pa. Commonwealth Ct. 191, 195, 415 A.2d 425, 428 (1980). The board considered the four exhibits to be hearsay and therefore found that there was no competent evidence in the record to support a finding of willful misconduct.

The employer challenges the decision, contending that the four exhibits, taken together with the fact of the claimant's exercise of his privilege against self-incrimination, constitute evidence that would support a finding of willful misconduct.

The claimant responds, saying that the exercise of the privilege does not constitute evidence, and that because the four exhibits are uncorroborated hearsay evidence to which an objection was properly made, the board's holding is correct under our decision in Walker v. Unemployment Compensation Board of Review, 27 Pa. Commonwealth Ct. 522, 367 A.2d 366 (1976).*fn4

[ 70 Pa. Commw. Page 186]

In reviewing this appeal, we must consider whether (1) the four exhibits that were introduced into evidence by the employer constitute hearsay, and (2) whether the exercise by the claimant at the hearing of his Fifth Amendment privilege against self-incrimination can be treated as evidence sufficient to explain, as well as corroborate, those exhibits.

The Exhibits

Hearsay evidence, of course, is an out-of-court statement offered for the purpose of proving the truth of the matter asserted therein. Carney v. Pennsylvania Railroad Co., 428 Pa. 489, 240 A.2d 71 (1968), Baird v. Unemployment Compensation Board of Review, 30 Pa. Commonwealth Ct. 118, 372 A.2d 1254 (1977). Where evidence is not offered to prove the truth of the matter therein contained, but only offered to show that something was communicated between the sender and the receiver of the communication, the hearsay rule does not exclude the evidence. Whitfield v. Reading Co., 380 Pa. 566, 112 A.2d 113 (1955).

The claimant testified, before exercising his privilege, that the signature on one of the exhibits was his. Lacking a clear offer of proof in the record, we conclude that, at most, the one exhibit authenticated by the claimant's signature admission is admissible to prove the existence of communication.

Nevertheless, although at least one of the exhibits could be viewed with suspicion, they tend to prove only that the claimant corresponded with the California firm. These exhibits, standing alone, simply do not prove the allegations of wrongdoing.

[ 70 Pa. Commw. Page 187]

For the latter purpose, they would be inadmissible as uncorroborated hearsay, unless we should conclude that corroboration was supplied by the claimant's refusal to testify, to which we now turn.

The Claimant's Exercise of His Fifth Amendment Privilege Against Self-Incrimination

The Fifth Amendment "not only protects the individual against being involuntarily called as a witness against himself in a criminal prosecution but also privileges him not to answer official questions put to him in any other proceeding, civil or criminal, formal or informal, where the answers might incriminate him in future criminal proceedings." Lefkowitz v. Turley, 414 U.S. 70, 77 (1973).

Here, the claimant feared that his testimony could be used against him in a future criminal trial as a result of a pending FBI investigation, and thus he had a right to exercise his privilege.

However, as distinguished from the situation in criminal cases,*fn5 the Fifth Amendment "does not forbid adverse inferences against parties to civil actions where they refuse to testify in response to probative evidence offered against them: the Amendment 'does not preclude the inference where the privilege is claimed by a party to a civil cause.'" Baxter v. Palmigiano, 425 U.S. 308, 318 (1976), citing 8 J. Wigmore, Evidence 439 (McNaughton Rev. 1961).*fn6 Therefore,

[ 70 Pa. Commw. Page 188]

    the board properly could draw some inference from claimant's exercise of the Fifth Amendment.

The pivotal question in our inquiry, however, is whether the inference which may result from claimant's exercise of his privilege -- either alone or in conjunction with the exhibits -- can constitute "substantial evidence"*fn7 to satisfy our longstanding requirement that the employer has the burden of establishing that the discharge was for willful misconduct. Kentucky Fried Chicken of Altoona, Inc. v. Unemployment Compensation Board of Review, 10 Pa. Commonwealth Ct. 90, 309 A.2d 165 (1973).*fn8

In our recent decision, Harring v. Unemployment Compensation Board of Review, 70 Pa. Commonwealth Ct. 173, A.2d (1982), we held that, although a trier of fact may draw an adverse inference from a party's silence, such inference cannot be used as a substitute for the employer's failure to introduce substantial

[ 70 Pa. Commw. Page 189]

    evidence to meet its burden of proving that an employee's discharge resulted from willful misconduct. We emphasized that the inference merely goes to the credibility of the evidence already introduced. See Schwegel v. Goldberg, 209 Pa. Superior Ct. 280, 228 A.2d 405 (1967).

The United States Supreme Court, in Baxter,*fn9 noted the limited application of the adverse inference, saying:

"It is thus indisputed that an inmate's silence in and of itself is insufficient to support an adverse decision by the Disciplinary Board. . . . Here, [the prisoner] remained silent at the hearing in the face of evidence that incriminated him; and, as far as this record reveals, his silence was given no more evidentiary value than was warranted by the facts surrounding his case. This does not smack of an invalid attempt by the State to compel testimony without granting immunity or to penalize the exercise of the privilege. [It] is merely a realistic reflection of the evidentiary significance of the choice to remain silent."

Id. at 317-318.*fn10

In emphasizing the existence of other evidence, the Court distinguished a number of its decisions, including Garrity v. New Jersey, 385 U.S. 493 (1967) and Lefkowitz, where it held that the refusal to submit

[ 70 Pa. Commw. Page 190]

    to interrogation and to waive the Fifth Amendment privilege, standing alone and without regard to other evidence, generally could not result in loss of employment or opportunity to contract with the state.*fn11

The refusal to allow the exercise of the privilege to satisfy the employer's burden of proving willful misconduct, absent any other evidence, characterized the Pennsylvania Supreme Court's decisions in Darin Unemployment Compensation Case, 398 Pa. 259, 157

[ 70 Pa. Commw. Page 191]

A.2d 407 (1960), and Ault v. Unemployment Compensation Board of Review, 398 Pa. 250, 157 A.2d 375 (1960).*fn12 We understand the judicial concern to be that, although the inference may suggest an admission of guilt or wrongdoing as to some matter, that matter could be unrelated to that which the employer bears the burden of proving.*fn13 See Ratner, Consequences of Exercising the Privilege Against Self-Incrimination, 24 U. Chi. L. Rev. 472, 492-93 (1957).

In Ault, where an employee was discharged after exercising his privilege before a United States Senate subcommittee, our Supreme Court said:

An employer may discharge an employee for any reason or no reason, absent contractual

[ 70 Pa. Commw. Page 192]

    restrictions. But an unemployed person may not be denied benefits for any reason or no reason: The Act allows denial only for wilful misconduct connected with his work. . . . Since a man may be discharged for any reason or no reason his ensuing right to unemployment benefits is dependent on whether the discharge was for wilful misconduct. The Compensation authorities must show that it was. The Compensation Act requires that otherwise he should get the benefits. Hence he has the right to await charges and meet them as he thinks best.

Id. at 257, 157 A.2d at 379.*fn14

In so holding, the court emphasized that:

Difficulty of proof has never been allowed as an excuse for dispensing with it.

Id. at 255, 157 A.2d at 378.

In summary, although we recognize that the use of the self-incrimination privilege at an unemployment compensation hearing may support an inference, that inference goes only to the credibility of that evidence introduced by the party who has the burden of proof. Here, the only evidence introduced by the employer, the four exhibits, merely indicated that the claimant had communicated with the California firm. Alone, those letters did nothing to establish willful misconduct. See McAndrew v. Unemployment Compensation Board of Review, 178 Pa. Superior Ct. 98, 113 A.2d 157 (1955). Given the lack of effective evidence, see Lipshutz v. Unemployment Compensation Board of Review, 8 Pa. Commonwealth Ct. 257, 303 A.2d 231 (1973), we agree with the board that the employer has

[ 70 Pa. Commw. Page 193]

    failed to meet its burden of proving that the discharge of claimant was for willful misconduct.


Now, November 30, 1982, the decision of the Unemployment Compensation Board of Review, dated July 13, 1981, at No. B-197152, is hereby affirmed.



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