FIFTH DIVISION September 19, 2014

No. 1-13-1813

ZLATA PETROVIC, ) Appeal from the ) Circuit Court of Plaintiff-Appellee, ) Cook County. ) v. ) ) THE DEPARTMENT OF EMPLOYMENT ) SECURITY, DIRECTOR OF ) EMPLOYMENT SECURITY, ) No. 12 L 51037 and THE BOARD OF REVIEW OF THE ) DEPARTMENT OF EMPLOYMENT ) SECURITY, ) ) Defendants-Appellants ) ) (American Airlines, ) Honorable ) Robert Lopez Cepero, Defendant). ) Judge Presiding.

JUSTICE McBRIDE delivered the judgment of the court, with opinion. Justices Gordon and Reyes concurred in the judgment and opinion.

OPINION

¶1 In January 2012, plaintiff Zlata Petrovic was fired from defendant American Airlines

(American) after she gave a gift and a first class upgrade to a passenger without authorization.

Petrovic filed a claim for unemployment benefits with defendant Illinois Department of

Employment Security (the Department). Defendant Board of Review (Board) denied Petrovic's

claim on the ground that she was discharged for misconduct. Petrovic filed a complaint for

administrative review in the trial court, and the trial court reversed the Board's finding.

¶2 The state defendants appeal, arguing that the Board's decision finding that Petrovic was

discharged for misconduct and denying her claim was not clearly erroneous. Additionally, No. 1-13-1813

Petrovic asserts that the state defendants lack standing to appeal the trial court decision when

Petrovic's employer, American, is not participating in the appeal.

¶3 Plaintiff was employed by American from June 1988 to January 2012. At the time of her

termination, plaintiff worked as a tower planner for the airline. Plaintiff was discharged in

January 2012 for misconduct. Plaintiff filed a claim for unemployment benefits with the

Department.

¶4 In February 2012, American filed a letter in response to plaintiff's claim. The letter stated

that plaintiff was "discharged for violation of a reasonable and known policy." The incident

occurred on January 1, 2012.

"The claimant left her work area without her manager's

approval to secure an undocumented upgrade for a friend of a

friend. The claimant is not authorized to offer upgrades. During

this exchange she did not collect the required fees associated with

this upgrade, (-$7,143.50 discrepancy), failed to advise the agent

working the flight, and failed to advise the load control of the

upgrade. She was previously issued a performance discussion on

July 14th, 2011 regarding being out of her work area.

Only authorized employees may issue an upgrade and

employees are expected to remain in their work area during the

course of their shift unless given permission by their manager to

leave. The claimant was made aware of this policy through PC

based training."

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¶5 In March 2012, the claims adjudicator denied plaintiff's request for unemployment

benefits, finding that plaintiff was ineligible because she was discharged for misconduct

connected with work. Plaintiff filed a request for reconsideration and appealed to the

Department's referee.

¶6 On April 18, 2012, a telephone hearing was conducted by an administrative law judge.

Both plaintiff and American participated without counsel. Bob Cumley, plaintiff's supervisor,

appeared as American's representative.

¶7 Cumley testified that on January 1, 2012, plaintiff ordered a bottle of champagne for a

passenger traveling to London Heathrow. Plaintiff also went downstairs to accommodate the

passenger with the champagne or take it from catering. Plaintiff also requested an upgrade for

the passenger from business class to first class without following policies and procedures.

Plaintiff went to the gate and asked gate agents and flight attendants if it was possible to upgrade

the passenger. Plaintiff did not receive permission for her actions. Cumley stated that American

does "not give first class seats away."

¶8 Cumley further stated that a passenger service report filed at the end of the shift indicated

that plaintiff told the flight attendant that the upgrade was for a friend of a friend and she "just

wanted to make the passenger feel special." Cumley said that plaintiff's duties did not have

anything to do with upgrades or making passengers feel special. Her position dealt with the

movement of the planes. Cumley also testified that the procedure for moving a passenger also

affects the load audit necessary for an accurate weight and balance number. This weight issue

can be "a very large issue when it comes to moving an airplane safely."

¶9 Plaintiff testified at the hearing that the passenger was a friend of a friend from another

airline. The friend called and asked if there was anything plaintiff could do and she thought she

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could probably get a bottle of champagne and ask for an upgrade. She asked catering for the

champagne, and no one told her no or said they no longer gave champagne to passengers. She

stated that "we used to do these things in the past." Plaintiff then went downstairs and asked the

flight attendant if it was possible to upgrade a person she knew and was told, "Oh, no problem."

Plaintiff left the airplane and advised the gate agent that the upgrade might happen. Plaintiff said

that "anybody could have said, 'no, we don't do this.' "

¶ 10 Plaintiff stated that the "documents from witnesses" showed that she did not upgrade the

passenger herself and she did not "have the authority and the action does not meet the definition

of misconduct." When asked by Cumley if she asked a member of management, plaintiff

responded that she was not aware that she needed to do so because "multiple times we solve our

own problems."

¶ 11 In April 2012, the administrative law judge affirmed the decision of the local office that

plaintiff was ineligible for unemployment benefits.

"The evidence showed that the employer discharged the claimant

for misconduct within the meaning of section 602A [of the

Unemployment Insurance Act (820 ILCS 405/602(A) (West

2010))]. Employers cannot have rules covering every improper

act by an employee. There are some acts of misconduct that are so

serious and so commonly accepted as wrong that employers need

not have rules covering them. In this case, the claimant's action in

giving away the employer's champagne and a free upgrade to first

class was unacceptable by any standard. Her action resulted in

financial loss to the employer. Because of these considerations the

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claimant's actions amount to misconduct within the meaning of

Section 602A."

¶ 12 In April 2012, plaintiff appealed the administrative law judge's decision to the Board. In

June 2012, the Board issued its decision affirming the administrative law judge, finding that the

decision was supported by the record and the law. The Board stated that it found the record

adequate and it was unnecessary to take further evidence.

¶ 13 In July 2012, plaintiff filed a complaint for administrative review in the trial court. In

May 2013, the trial court issued a written order reversing the Board's decision.

"The Court cannot find any competent evidence in the record that

would support a finding that Plaintiff gave the passenger

champagne or that Plaintiff herself moved the passenger to first

class. Mere speculation by someone who did not have personal

knowledge of the incident does not constitute competent

evidence."

¶ 14 This appeal followed.

¶ 15 Initially, plaintiff contends on appeal that the Department, the Director, and the Board

lack standing to appeal the trial court's decision because American did not appeal. Relying on

Speck v. Zoning Board of Appeals,

(1982), plaintiff argues that the Department as

the agency that participated at the administrative level cannot appeal a reversal of its own

decision.

¶ 16 In Speck, the supreme court held that the zoning board's "obligation to the public is fully

discharged when it conducts a hearing and, with due consideration to the public interest,

determines the propriety of granting or denying a variation."

. "Its responsibility to

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protect the public interest does not authorize the Board to act as a representative of the public for

the purpose of vindicating its own decision on appeal. It is apparent that, in assuming the role of

advocate, the Board's required duty of impartiality is compromised."

¶ 17 However, the supreme court later in Braun v. Retirement Board of the Firemen's Annuity

& Benefit Fund,

(1985), differentiated between the functions of a tribunal,

such as a zoning board, and one with "extensive managerial responsibilities," such as the

retirement board, which has an interest in disbursing and maintaining a pension fund.

¶ 18 Recently, the Fourth District considered and rejected the same argument advanced by

plaintiff in this case. In Farris v. Department of Employment Security,

, the plaintiff asserted that "the Board lacks standing because its role is merely that

of an impartial tribunal for claims between an employee and the employer, and the Department

and its Director lack standing because they are merely trustees of the unemployment insurance

fund."

¶ 19 The Farris court found the reasoning in Braun applicable to the functions of the

Department.

"As the guardians of the unemployment insurance fund, the

Department and its Director have a duty to protect the fund from

diminution in the form of disbursements to ineligible claimants.

Private employers cannot be relied upon to serve as the fund's sole

defense against unqualified claims. As the facts of this case

illustrate, a claimant seeking unemployment benefits can obtain

administrative review in the circuit court at virtually no cost. Here,

the circuit court (for whatever reason) even appointed counsel to

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represent plaintiff pro bono. The corporate employer, on the other

hand, must retain private counsel if it wishes to participate at the

circuit court level. See, e.g., Downtown Disposal Services, Inc. v.

City of Chicago,

,

(2011) ('[C]orporations must appear in court through a licensed

attorney, rather than a layperson.'). In the face of an erroneous

claim by an ineligible claimant, the cost to an employer of paying

out the claim will almost always be less than the cost of hiring

legal counsel to defend against the claim at the circuit court level–

much less the appellate court level." (Emphasis in original.) Id. ¶

29.

¶ 20 The court further observed that the Unemployment Insurance Act stated that the Director

" 'shall be deemed to have been a party to any administrative proceeding before the Board of

Review and shall be represented by the Attorney General in any judicial action involving any

such decision.' " (Emphasis omitted.) Id. ¶ 30 (quoting 820 ILCS 405/1100 (West 2012)). "The

legislature has also entrusted the Department and its Director with protecting the fund and

handling its assets in accordance with the Act." Id. ¶ 31 (citing 820 ILCS 405/2100(A) (West

2012)).

"If 'extensive managerial responsibilities' are ever sufficient to

confer standing upon an administrative agency to prosecute an

appeal, as the supreme court held in Braun (Braun,

,

), then that criterion surely applies in this

case. Given the above-cited provisions of the Act, the practical

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need for an advocate to defend the decisions of the Board in the

circuit court and guard against erroneous payouts from the

unemployment fund, and the extensive managerial responsibilities

of the Department and its Director, we conclude that the legislature

intended to confer standing upon the Department, its Director, and

the Board to prosecute appeals from adverse circuit court

decisions."

¶ 21 We find the analysis in Farris to be well reasoned and adopt it in the instant case. We

additionally observe that in Speck, the supreme court specifically considered the statutory

language granting the zoning board's powers and authority. The court noted that under the

applicable statute, the zoning board "is intended to function in an adjudicatory or quasijudicial

capacity. Primarily, the Board is empowered to conduct hearings, render decisions regarding

applications for variations, and decide appeals from orders of the zoning administrator. It is

noteworthy that nowhere in the ordinance is the Board authorized, expressly or implicitly, to

assume the role of advocate for the purpose of prosecuting an appeal." Speck,

.

¶ 22 In contrast, the Unemployment Insurance Act, as quoted in Farris, clearly grants the

Director the ability to participate in judicial actions as a party. See 820 ILCS 405/1100 (West

2012). This distinction in the statutory language is significant and indicates the legislature's

intent for the Department, the Board, and the Director to be able to prosecute the appeal of

claims made to its fund. Accordingly, we hold that the Department, the Board, and the Director

have standing to bring this appeal.

¶ 23 We now turn to the issue on appeal. The Board argues that it did not err in finding that

plaintiff was discharged for misconduct when she left her post and boarded the airplane to

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procure a first class upgrade without authorization or payment and gave away a bottle of

champagne.

¶ 24 When a party appeals the circuit court's decision on a complaint for administrative

review, the appellate court's role is to review the administrative decision rather than the circuit

court's decision. Siwek v. Retirement Board of the Policemen's Annuity & Benefit Fund,

(2001). The Administrative Review Law provides that judicial review of an

administrative agency decision shall extend to all questions of law and fact presented by the

entire record before the court. 735 ILCS 5/3-110 (West 2010). Further, “[t]he findings and

conclusions of the administrative agency on questions of fact shall be held to be prima facie true

and correct.” 735 ILCS 5/3-110 (West 2010). “The standard of review, ‘which determines the

degree of deference given to the agency's decision,’ turns on whether the issue presented is a

question of fact, a question of law, or a mixed question of law and fact.” Comprehensive

Community Solutions, Inc. v. Rockford School District No. 205,

(2005)

(quoting AFM Messenger Service, Inc. v. Department of Employment Security,

(2001)).

¶ 25 “A mixed question of law and fact asks the legal effect of a given set of facts.”

Comprehensive Community,

. Stated another way, a mixed question is one in

which the historical facts are admitted or established, the rule of law is undisputed, and the issue

is whether the facts satisfy the statutory standard, or whether the rule of law as applied to the

established facts is or is not violated. AFM Messenger,

. A mixed question of

law and fact is reviewed under the clearly erroneous standard. Comprehensive Community,

. "Whether an individual was properly terminated for misconduct in connection

with her work is a question that involves a mixed question of law and fact, to which we apply the

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clearly erroneous standard of review." Woods v. Illinois Department of Employment Security,

.

¶ 26 The clearly erroneous standard of review lies between the manifest weight of the

evidence standard and the de novo standard, and as such, it grants some deference to the

agency’s decision. AFM Messenger,

. “[W]hen the decision of an

administrative agency presents a mixed question of law and fact, the agency decision will be

deemed ‘clearly erroneous’ only where the reviewing court, on the entire record, is ‘left with the

definite and firm conviction that a mistake has been committed.’ ” AFM Messenger,

(quoting United States v. United States Gypsum Co.,

(1948)). "If there

is any evidence in the record to support the Board's decision, that decision is not contrary to the

manifest weight of the evidence and must be sustained on review." Woods,

.

¶ 27 "The Unemployment Insurance Act (Act) (820 ILCS 405/100 et seq. (West 2004)) was

enacted to provide economic relief to individuals who become involuntarily unemployed."

Manning v. Department of Employment Security,

(2006). The

individual seeking unemployment benefits carries the burden of proving eligibility.

However, individuals who are discharged for misconduct are ineligible for benefits.

(citing

820 ILCS 405/602(A) (West 2004)). "Misconduct can be premised on either a particular

incident of a violation of an employer's rules that triggered the employee's discharge, or the

employee's cumulative violations of the employer's rules taken as a whole." Alternative Staffing,

Inc. v. Illinois Department of Employment Security,

.

¶ 28 Under section 602(A), three elements must be proven to establish misconduct: "(1) there

was a deliberate and willful violation of a rule or policy of the employing unit, (2) the rule or

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policy was reasonable, and (3) the violation either harmed the employer or was repeated by the

employee despite a previous warning or other explicit instruction from the employing unit."

Woods,

(citing 820 ILCS 405/602(A) (West 2008)).

¶ 29 "In determining whether an employer was harmed, the employee's conduct should be

viewed in the context of potential harm, and not in the context of actual harm." Manning,

. "Additionally, an employer is not required to prove the existence of a

reasonable rule by direct evidence, and a court may find the existence of a reasonable rule 'by a

commonsense realization that certain conduct intentionally and substantially disregards an

employer's interests.' "

(quoting Greenlaw v. Department of Employment Security,

(1998)). "Standards of behavior that an employer has a right to expect

constitute a reasonable rule or policy."

"Such a rule or policy does not need to be written or

otherwise formalized."

"Willful conduct stems from an employee's awareness of, and

conscious disregard for, a company rule." Livingston v. Department of Employment Security,

(2007).

¶ 30 Here, it is undisputed that plaintiff sought an upgrade for a friend of a friend without

management authorization or payment. Plaintiff admitted that she left her position in the tower

and boarded the airplane, speaking to the flight attendant and gate agent regarding the upgrade.

Plaintiff asserts she was unaware that these actions were against American's policies and

procedures. American stated in the record that the upgrade from business class to first class was

a cost difference of approximately $7,100, and the airline did not "give away" first class seats.

American also noted that the change in seat can affect the weight and load balance of the

airplane which is important in the airplane's safe operation. American's written response in the

record indicated that plaintiff was made aware of the policy that only authorized employees may

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issue an upgrade "through PC based training." Plaintiff only responds that she was unaware of

any rule or policy. She does not dispute that American's statement in the record that she received

the computer-based training.

¶ 31 Further, as previously noted, reasonable rules are not required to be proven by direct

evidence. Based on the record before us, a reasonable rule would require an employee that lacks

authorization to offer an upgrade to seek approval before taking such action. Plaintiff was aware

that she did not have authority to perform the actions she took and only offered a defense that

others could have declined her and she did not know she could not offer an upgrade without

payment or authorization. Additionally, plaintiff's action caused a potential loss of $7,100 to

American and potential safety concerns when the weight balance differs from the listed seat

assignments. Plaintiff engaged in misconduct as defined in section 602(A).

¶ 32 As the administrative law judge found:

"There are some acts of misconduct that are so serious and so

commonly accepted as wrong that employers need not have rules

covering them. In this case, the claimant's action in giving away

the employer's champagne and a free upgrade to first class was

unacceptable by any standard. Her action resulted in financial loss

to the employer."

¶ 33 After reviewing the entire record, we cannot say that the Board erred in finding that

plaintiff was terminated for misconduct. The Board's determination that plaintiff's actions which

caused a $7,100 upgrade to first class to be issued without management approval constituted

misconduct such that she was disqualified to receive unemployment benefits was not clearly

erroneous.

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¶ 34 Based on the foregoing reasons, we reverse the judgment of the circuit court of Cook

County and reinstate the order of the Board of Review.

¶ 35 Reversed.

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