Court Of Appeals Decision Does Great Harm To Employee Rights In Indiana

The Indiana chapter of the National Employment Lawyers Association (NELA) recently brought to my attention a recent decision by the Indiana Court of Appeals which does great harm to the rights of employees in this state who believe their employer wrongfully terminated them from their employment. When an employee is terminated from his or her job, one of the first acts the employee takes is to file for unemployment benefits in most cases. Indiana law has always been understood to preclude any determination made in an unemployment decision from being used as evidence to prove or disprove a wrongful termination claim. A decision rendered late last year by Court of Appeals Judge Cale Bradford, however, turns that legal truism on its head.

The case in question is Uylaki v. Town of Griffin, No. 45A05-0706-CV-307 (2007). The plaintiff in this case worked as a truck driver for the Town of Griffin. Uylaki injured his back in an automobile accident. About three months later, he asked his supervisor for time off because he was having trouble weaning himself from prescription drug pain-killers he had been prescribed by his physician. The supervisor issued Uylaki a disciplinary action form, which advised him to provide proof that he had enrolled in a substance abuse program by a date certain or he would be terminated. Uylaki attempted to enroll in such a program but was denied admission until his physician had weaned him from the pain medications. Uylaki provided the denial notice by the appointed deadline rather than proof of admission to a substance abuse program. His supervisor promptly fired him. Uylaki applied for unemployment benefits, which were denied. He appealed the decision with the aid of an attorney but was still turned down for benefits.

That Uylaki was denied unemployment benefits is no surprise. What is surprising is Judge Bradford's ruling that the fully adjudicated unemployment claim precluded him from bringing a wrongful termination claim. Ulyaki's wrongful termination claim asserted he had been terminated by his employer because he exercised a statutory right or refused to violate the law, one of the bases Indiana courts permit an employee to bring an action for wrongful termination. Judge Bradford held that the unemployment hearing acted as an adjudication of his wrongful termination claim. He wrote in his opinion:

There is no dispute that Uylaki’s unemployment insurance claim was within the jurisdiction of the Department, that the Department was acting in a judicial (as opposed to rule-making) capacity when it denied his claim, and that the Board’s final disposition could have been appealed to this Court, even though it was not. In our view, this case turns on the question of whether both parties had a fair opportunity to litigate the issue of whether Uylaki was discharged for good cause . . .

We believe that Uylaki had a fair opportunity to fully litigate the issues, even if he may not have fully exploited that opportunity.

In my own handling of wrongful termination cases on behalf of clients, it is not uncommon for my employee client to have adjudicated an unemployment benefit claim on his or her own successfully before coming to me. It is typically the attorney for the defendant employer who will be the first to raise the issue of precluding the admission of any findings from the unemployment hearing in the civil case for wrongful termination. Indeed, this is what Indiana's unemployment law says. The pertinent statutory provisions read as follows:

“Any testimony or evidence submitted in due course before the board, the department, the review board, an administrative law judge, or any duly authorized representative of any of them shall be deemed a communication presumptively privileged with respect to any civil action except actions to enforce the provisions of this article.” I.C. 22-4-17-9

“Any finding of fact, judgment, conclusion, or final order made by a person with the authority to make findings of fact or law in an action or proceeding under this article is not conclusive or binding and shall not be used as evidence in a separate or subsequent action or proceeding between an individual and the individual's present or prior employer in an action or proceeding brought before an arbitrator, a court, or a judge of this state or the United States regardless of whether the prior action was between the same or related parties or involved the same facts.” I.C. 22-4-17-12(h)

The statutory law on this point could not be more clear. Yet the Court of Appeals decision doesn't even elude to the existence of these statutory provisions. Unfortunately, it does not appear the plaintiff in this case is going to appeal the decision, allowing this decision to stand. As a fellow employment lawyer described this case, it's an "abomination." "Now our clients should not file for unemployment for fear of being stopped from bringing a claim regarding their termination in court, but in so do they will be leaving themselves wide open to the defense that they failed to mitigate their damages," the attorney lamented. The attorney could not be more right. Indiana law for employees has just gone from bad to worse.