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decided: December 12, 1985.


No. 45 Western District Appeal Docket, 1984. Appeal from Order of Commonwealth Court Dated December 6, 1983 at No. 2177 C.D. 1982, Affirming Decision and Order of August 5, 1982 of the Unemployment Compensation Board of Review, Decision No. B-208624


John Stember, Frank J. Piatek, Neighborhood Legal Services, Pittsburgh, for appellant.

Richard L. Cole, Jr., Dept. of Labor & Industry, Unemployment Compensation Bd., Chief Counsel, Charles G. Hasson, Acting Deputy Chief Counsel, Richard F. Faux, Associate Counsel, Barry M. Hartman, Chief Counsel, Harrisburg, for appellee.

Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Larsen, J., files a concurring opinion in which Papadakos, J., joins. McDermott, J., concurs in the result and files a concurring opinion.

Author: Hutchinson

[ 509 Pa. Page 269]


This is an unemployment compensation claimant's appeal by allowance of a Commonwealth Court decision affirming the Unemployment Compensation Board's denial of benefits. Reversing a referee's decision for appellant, Commonwealth Court and the Board held appellant's employer had met its burden of showing willful misconduct under Section 402(e) of our Unemployment Compensation Law, Act of December 5, 1936, Second Ex. Session, P.L. (1937) 2897, as amended, 43 P.S. § 802(e), which precludes benefits.

Appellant contends the referee's award of benefits was based on resolution of a question of credibility in his favor and that Mr. Justice Larsen's opinion*fn1 in Treon v. Unemployment Compensation Board of Review, 499 Pa. 455, 453 A.2d 960 (1982), requires appellee Board to defer to its referees' credibility determinations in resolving questions of primary fact or at least to explain why it refused to adopt them. Appellant generalizes this contention by arguing that a factual finding by an administrative agency is not supported by substantial evidence on the whole record if that finding of fact depends on evidence discredited by the referee who conducted the hearing. He contends an administrative decision based on such a finding is arbitrary governmental action in violation of due process.

We reject these arguments and affirm Commonwealth Court. Treon involved the Board's rejection of a referee's

[ 509 Pa. Page 270]

    finding based on uncontradicted evidence. Here, the evidence of appellant's misconduct was conflicting. Appellant's more general argument disguises an attack on the settled interpretation of Section 504 of the Act, as amended by the Act of December 5, 1974, P.L. 771, § 10, 43 P.S. § 824 (Supp. 1985), which we have consistently held makes the Board the ultimate finder of fact with power to substitute its judgment for that of its referees on disputed facts. Without a legislative change in this section of the law, we are not inclined to disturb its settled meaning.*fn2 Appellant's related due process argument resolves itself into the proposition that the legislature can constitutionally entrust an administrative power to find facts resolving conflicting evidence on grounds of credibility only to the board or official who conducts the hearing at which the record is made, a proposition we cannot endorse.

We accept the statement of facts in appellant's brief, which follows:

Walter Peak [appellant] worked as a warehouseman for I. Samuels and Sons in New Castle, Pennsylvania, from 1980 until August, 1982, when he was discharged for allegedly violating an employer rule. The [appellant] filed an application for Unemployment Benefits which was denied by the local office of Employment Services (OES) under Section 402(e) of the Unemployment Compensation Law (Act). Mr. Peak filed an appeal and a hearing was held before Referee Paul Sneed at which the employer, [appellant] and several witnesses testified.

Most of the facts in this case are not in dispute. The employer permitted Peak a one hour lunch break which [appellant] could take at his discretion. (NT p. 10) In November or December, 1981, Peak and Russell Hedland, a co-worker went to lunch together leaving an inexperienced employee at the warehouse. (NT p. 27) After learning of this, the employer instructed Peak and Hedland not to leave the warehouse unless there was an experienced employee available to watch it. (NT pp. 28,

[ 509 Pa. Page 27135]

) Four months later, on March 17, 1982, Peak and Hedland again went to lunch together. (NT p. 26) However, this time an experienced warehouseman, Mr. Malizia, and a new employee remained on duty. (NT p. 18) Unbeknownst to [appellant], Malizia had health problems and, according to the employer, had been given permission by the employer to go home at any time, though he did not leave on March 17, 1982. (NT p. 20) When the employer learned that Peak and Hedland had gone to lunch together, he fired both of them. (NT p. 12)

Only a single fact was in dispute before the Referee: the nature of the employer's rule about lunch. The [appellant] and Hedland testified that Samuels had only prohibited them from leaving the warehouse together when there were no experienced employees on duty. (NT pp. 28, 35) Since Malizia, who the employer concedes is an experienced employee, was at work on the day in question, Peak and Hedland believed they were free to go to lunch together. The employer, on the other hand, contends that he told Peak and Hedland many times that when one went out to lunch, the other must remained behind. (NT p. 8) The employer testified that he feared that Malizia's health problems might cause him to leave work and, if Peak or Hedland were not present, there would be no employees capable of managing the warehouse. (NT p. 22)

Appellant's Brief at 3-4 (footnotes omitted).

On these facts, the referee found:

There was a conflict in testimony between [Hedland] and employer concerning whether the employer had specifically instructed [Hedland] not to take his lunch break at the same time as Mr. Peak or whether he had merely instructed [Hedland] not to leave the warehouse uncovered during the lunch hour. The Referee finds that [Hedland's] interpretation of the employer's instruction was reasonable . . . .

Referee's Decision at 2.

The Board reversed, finding:

[ 509 Pa. Page 272]

Claimant was discharged for violating a direct order from his employer that he should not take a lunch break at the same ...

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