Daniel v. Department of Corrections

State Court (North Western Reporter)3/26/2003

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Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
Chie f Justice Justices
Maura D. Corrigan Michael F. Cavanagh

Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________

FILED MARCH 26, 2003

TONY J. DANIEL,

Plaintiff-Appellee,

v No. 120460

DEPARTMENT OF CORRECTIONS,

Defendant-Appellant.

____________________________________

BEFORE THE ENTIRE COURT

WEAVER, J.

In this case we address whether plaintiff, who was

disciplined by, the Department of Corrections (his employer),

for sexually harassing female attorneys, and who suffered

depression as a result of the disciplinary proceedings, is

barred from worker’s compensation benefits pursuant to MCL

418.305. MCL 418.305 provides, “If the employee is injured by

reason of his intentional and wilful misconduct, he shall not

receive compensation under the provisions of this act.” We

hold that MCL 418.305 precludes benefits in this case and,

therefore, we reverse the judgment of the Court of Appeals and

reinstate the Worker’s Compensation Appellate Commission’s

(WCAC’s) order denying plaintiff benefits.

I

Plaintiff worked as a probation officer with defendant

Department of Corrections beginning in 1984. His employment

required him to attend probation violation hearings held in

circuit court several times a month to interact with defense

attorneys representing probationers.

In February 1995, a female defense attorney filed a

complaint with plaintiff’s immediate supervisor alleging that

plaintiff sexually harassed her in August 1994 and February

1995. The attorney testified that it was plaintiff’s failure

to take her rejection of his advances seriously that prompted

her to file her complaint.1 The attorney’s complaint was soon

followed by allegations of sexual harassment by plaintiff from

1
The attorney alleged that in August 1994 plaintiff

obscenely propositioned her. She testified that when she

rejected plaintiff’s advances, he told her that they would

have to be “discreet” since he was married with children.

Then, in the middle of a probation hearing that day, he showed

her a note stating that she would have to lose ten pounds

first. The attorney testified that she and her boss

successfully arranged her schedule to avoid further contact

with plaintiff. However, in February 1995, she was again

scheduled with plaintiff. The attorney testified that

plaintiff doggedly pursued his previous proposition. When

rejected, plaintiff told the attorney that she’d need to lose

twenty pounds and said to her, “[y]ou want me; you know you

want me.”

2

three other female defense attorneys.2

Plaintiff’s supervisor initiated an investigation into

the complaints. Over the following months, she interviewed

the attorneys and other witnesses. When questioned, plaintiff

denied all the allegations. At the close of her

investigation, plaintiff’s supervisor recommended that a

disciplinary conference be held regarding five separate counts

of sexual harassment.

A disciplinary conference was held on June 20, 1995.

Plaintiff continued to deny the allegations. On the advice of

his union representative, however, plaintiff offered nothing

in his own defense. The plaintiff was informed that the

possible discipline ranged from a written reprimand to

dismissal. At the conclusion of the conference, the presiding

official found “a strong basis” on which to conclude that

plaintiff violated Michigan Department of Corrections work

rules as described in all five counts.3 Ultimately, plaintiff

2
It was alleged that plaintiff told one attorney that he

was attracted to Caucasian women and that he was turned on by

a woman’s thighs. It was alleged by another that plaintiff

asked if she would date a black man. A third attorney alleged

that when she was pregnant, plaintiff had asked her if she was

having a girl or boy. When she replied that she was having a

girl, she alleged that plaintiff said, “too bad, a boy means

you had deep penetration.”

3
The work rules at issue prohibit “[s]peech, action,

gesture or movement that causes physical or mental

intimidation, humiliation, or harassment,” and “conduct of an

employee which may adversely affect the reputation of the

Department . . . .”

3

was disciplined for the two counts of sexual harassment

arising from the August 1994 and February 1995 incidents. He

was suspended for ten days without pay.4

After his return to work in August 1995, plaintiff

testified that he felt harassed by both his immediate

supervisor and the defense attorneys who had accused him of

sexual harassment. He felt “out of control,” and, on

January 27, 1996, began being treated by psychologist Daniel

DeWitt. Dr. DeWitt diagnosed plaintiff as suffering from

depression caused by the disciplinary investigation and

proceedings as well as the subsequent stresses at work. As a

result, plaintiff began a leave of absence in February 1996.

In March 1996, Dr. DeWitt felt that plaintiff could work

again, but at a different job for a different supervisor.

Plaintiff submitted a request for reasonable accommodation in

the form of a transfer to another part of the Department of

Corrections. His request was rejected by the department’s

Americans with Disabilities Act Coordinator because

plaintiff’s disability was deemed temporary and not

substantially limiting in nature. In June 1996, plaintiff

filed a claim for worker’s compensation benefits premised on

a mental disability arising from the disciplinary proceedings.

4
Plaintiff subsequently filed a grievance with his union,

claiming the discipline was without just cause and in

violation of his contractual rights. The resolution of the

grievance does not appear in the record.

4

During the time leading to the trial, plaintiff saw three

other doctors at the state’s request.

After four days of trial between March and September of

1998, the magistrate concluded that the “discipline, and post

discipline employment events up to February 2, 1996,

contributed in a significant manner to [plaintiff’s]

development of a disabling condition of depression, anxiety,

and uncontrolled anger.” The magistrate did not address MCL

418.305 or make specific findings regarding whether

plaintiff’s conduct was intentional and wilful or otherwise

not compensable under that section. Rather, the magistrate’s

conclusion that plaintiff was entitled to benefits was based

on the finding that plaintiff’s injury arose out of his

employment pursuant to Gardner v Van Buren Public Schools, 445

Mich 23; 517 NW2d 1 (1994), overruled in part by Robertson v

DaimlerChrysler Corp, 465 Mich 732; 641 NW2d 567 (2002).

However, the magistrate commented:

It is clear to me that Plaintiff’s problems

started with his discipline for the improprieties

of which he was accused. It is difficult to have

much sympathy for this claimant, since he brought

these troubles on himself by his own misconduct.

But compensation, like the rain, falls on the just

and the unjust alike.

The magistrate awarded plaintiff a closed award of worker’s

compensation benefits.

Defendant appealed, raising MCL 418.305 as an affirmative

defense. The WCAC agreed with the essence of the magistrate’s

5

finding that the plaintiff’s injury was self-inflicted, but

concluded that MCL 418.305, “puts up an umbrella to prevent

compensation from falling on this particular ‘unjust’

claimant.”5 The WCAC found that plaintiff was on notice of

the rules that prohibited the conduct for which he was

ultimately accused and disciplined, but had done “it anyway,

in a consistent and repeated pattern over a long period of

time.” The WCAC concluded that plaintiff’s injury arose from

his own intentional and wilful misconduct and, therefore, that

MCL 418.305 precluded an award of benefits.

Plaintiff appealed and, as will be discussed below, the

Court of Appeals reversed the WCAC decision in a two-to-one

decision. The Court of Appeals majority concluded that

plaintiff’s acts did not rise to the level of intentional and

wilful misconduct contemplated by MCL 418.305. 248 Mich App

95 (2001).

In dissent, Judge O’Connell noted that “whether an

individual engaged in wilful and intentional misconduct is a

factual determination” and “that the Legislature, through MCL

418.861a(14), has provided the WCAC with the authority to make

factual findings.” 248 Mich App 109-110. Moreover, Judge

5
The WCAC is empowered to make independent findings of

fact on matters where the magistrate’s findings are lacking,

as long as the record is sufficient for administrative

appellate review and the WCAC is not forced to speculate.

Mudel v Great Atlantic & Pacific Tea Co, 462 Mich 691, 730;

614 NW2d 607 (2000).

6

O’Connell noted, the WCAC’s finding in this case that

plaintiff engaged in wilful and intentional misconduct was

conclusive and binding in the absence of fraud. Id. at 110,

citing Mudel, supra at 701, 711, 712. Judge O’Connell opined

“that the WCAC’s conclusion that plaintiff engaged in wilful

and intentional misconduct was well-grounded,” 248 Mich App

110, in the record and that, therefore, the Court of Appeals

was required to affirm its decision.

We granted defendant’s application for leave to appeal.

466 Mich 889 (2002).

II

We review de novo questions of law. DiBenedetto v West

Shore Hosp, 461 Mich 394, 401; 605 NW2d 300 (2000). Whether

plaintiff’s injury arose by reason of intentional and wilful

misconduct as contemplated by MCL 418.305 is a question of

fact. McMinn v C Kern Brewing Co, 202 Mich 414, 429; 168 NW

542 (1918); Day v Gold Star Dairy, 307 Mich 383, 390; 12 NW2d

5 (1943). On judicial review, “[t]he findings of fact made by

the commission acting within its powers, in the absence of

fraud, shall be conclusive. . . .” MCL 418.861a(14).

III

The focus of our inquiry is solely on the proper

application of MCL 418.305.6 As quoted above, MCL 418.305

6
The Court of Appeals majority and dissent debated the

relevance of Calovecchi v Michigan, 461 Mich 616; 611 NW2d 300

(continued...)

7

provides, “If the employee is injured by reason of his

intentional and wilful misconduct, he shall not receive

compensation under the provisions of this act.” This

provision has remained essentially unchanged since it was

first adopted by the Legislature in 1912 as part of the

original worker’s compensation legislation. See 1912 (1st Ex

Sess) PA 10, part 2, § 2.7

The Court of Appeals majority below divided its analysis

of MCL 418.305 into two parts. It focused first on whether

plaintiff’s mental injury arose “by reason of” his misconduct,

and, second, on whether plaintiff’s misconduct was

“intentional and wilful.” We address and reject the panel

majority’s analysis of each of these questions.

A

“By reason of”

The panel majority first focused on what it termed the

6
(...continued)

(2000), to the interpretation of MCL 418.305. In Calovecchi,

an employee’s alleged misconduct off the job was investigated,

but the allegations were ultimately dismissed. Calovecchi

held that mental injuries caused by acts of discipline may be

compensable under MCL 418.301(1), because “acts of employer
imposed discipline are a predictable part of the working

environment.” Calovecchi, supra, p 625. The majority and

dissent speculated whether Calovecchi would somehow encourage

employers to find employees guilty of alleged misconduct. In

response, we note that MCL 418.305 was not raised by the

parties or addressed at any level in Calovecchi and that such

policy considerations are properly left to the Legislature,

not the courts.

7
The only change has been to the word “employee,” which

was originally spelled “employe.”

8

question of causation, i.e., whether plaintiff was injured “by

reason of” his intentional and wilful misconduct. The

majority rejected the WCAC’s finding that plaintiff’s injury

was “the direct result of his intentional and wilful

misconduct,” by concluding that the question of “who started

it?” was “inapposite to the intention of the WDCA.” 248 Mich

App 103. The majority concluded that plaintiff’s injury was

“too attenuated for [it] to have occurred ‘by reason of’ his

acts,” id., p 102, and that plaintiff “was not injured at the

time of his act,” but was “injured solely because of his

status as an employee . . . .” Id., p 103.

To support its conclusion, the majority analogized to two

cases in which fighting or horseplay between employees

escalated and resulted in physical injuries. See, e.g.,

Crilly v Ballou, 353 Mich 303; 91 NW2d 493 (1958), and Andrews

v Gen Motors Corp, 98 Mich App 556; 296 NW2d 309 (1980).8 Our

review of those cases reveals that they do not support the

panel majority’s causation analysis. Indeed, neither case,

8
Crilly involved an injury caused by employees throwing

shingles and nails at one another. The Court conducted an

exhaustive review of cases involving on-the-job “sportive

assaults” and concluded that injuries received are not outside

the realm of the course of employment and were compensable as

long as they did not rise to the level of intentional and

wilful misconduct. Crilly, supra, pp 326-327. Andrews

involved injuries sustained during a fight between employees.

The Court of Appeals affirmed the Worker’s Compensation Appeal

Board’s award of benefits, concluding that the conduct did not

involve “such a degree of ‘moral turpitude’ . . . so as to

preclude” benefits. Andrews, supra, p 561.

9

nor any other we have found, addressed whether the injuries

were “by reason of” misconduct pursuant to MCL 418.305.

Rather, the causation inquiry in those cases, and our case

law, pertains to the question whether such misconduct can be

said to have arisen out of the course of the employment as

required by MCL 418.301. See Crilly, supra, pp 324-327, and

Andrews, supra, pp 558-559.9

Significantly, defendant no longer disputes, and the

magistrate, the WCAC, and the Court of Appeals agreed, that

plaintiff’s mental disability arose out of and in the course

of his employment pursuant to MCL 418.301(1). Thus, the

majority’s reliance on Crilly and Andrews was misplaced.

Moreover, we decline to impose a more direct causation

requirement than that plainly expressed by the statute. “By

reason of” is defined as “[b]y means, acts, or instrumentality

of.” Black’s Law Dictionary (6th ed). As noted by the Court

of Appeals dissenter, the phrase does not require that an

injury arise contemporaneously with the misconduct. Rather,

as stated by Judge O’Connell:

[I]t cannot be disputed that [plaintiff’s]

misconduct was the starting point for the resultant

9
Whether misconduct that causes an injury arose out of

and in the course of employment under MCL 418.301(1) is a

preliminary question that must be answered affirmatively

before the issue whether that misconduct was “intentional and

wilful” in light of MCL 418.305 is reached. See Bischoff v

American Car & Foundry Co, 190 Mich 229, 231; 157 NW 34

(1916); Clem v Chalmers Motor Co, 178 Mich 340, 344-345; 144

NW 848 (1914).

10

disciplinary proceedings that ultimately caused his

injury. Had plaintiff not engaged in sexual

harassment, he would not have been subjected to the

disciplinary proceedings, and he would not have

been suspended from his job. . . . [T]he

disciplinary proceedings, from which plaintiff’s

mental disability arose, flowed directly and

predictably from plaintiff’s misconduct as surely

as night follows day. [248 Mich App 115-116.]

We agree with Judge O’Connell and conclude that the

record amply supports the WCAC’s finding that plaintiff was

injured “by reason of” his intentional and wilful misconduct.

Because the magistrate failed to address the applicability of

§ 305 to plaintiff’s claim, the WCAC acted within its

authority in engaging in supplemental fact-finding and in

concluding that plaintiff’s injury—although it may well have

arisen out of employment events—was nevertheless barred

because it occurred by reason of his intentional and wilful

misconduct.10 Therefore, as constrained by our limited

judicial appellate review, we abide by the findings of fact by

the WCAC. Mudel, supra, p 700.

B

“Intentional and Wilful”

The Court of Appeals majority next concluded that

plaintiff’s acts did not amount to “intentional and wilful

10
Indeed, the WCAC’s fact-finding in this regard is

consistent with the magistrate’s finding that plaintiff

“brought these troubles on himself by his own misconduct.”

Therefore, we cannot agree with Justice Cavanagh, who opines

in dissent that the WCAC improperly substituted its own

findings for those of the magistrate.

11

misconduct” under MCL 418.305. The majority reasoned that

plaintiff’s conduct, though “voluntary, crude, and

unprofessional,” did not rise to “intentional and wilful

misconduct” as it has been interpreted in this state. 248

Mich App 104.

Our case law has consistently distinguished “intentional

and wilful misconduct” from acts of negligence and gross

negligence. Benefits are awarded despite MCL 418.305 where an

employee is injured by his own negligence. See, e.g., Gignac

v Studebaker Corp, 186 Mich 574; 152 NW 1037 (1915); Day,

supra. However, this Court has held that benefits are

precluded under the statute where an employee was injured by

conduct of a quasi-criminal nature. Fortin v Beaver Coal Co,

217 Mich 508, 510; 187 NW 352 (1922). Fortin described

“quasi-criminal” conduct as “involving the intentional doing

of something with knowledge that it is dangerous and with

wanton disregard of consequences . . . .” Id.

Although plaintiff denies that he made the comments of

which he is accused, his denials were not believed at any

level reflected in the record. At the disciplinary

conference, “a strong basis” was found to support the

allegations. The magistrate found that plaintiff had “brought

these troubles on himself by his own misconduct.” The WCAC

found that “[p]laintiff knew what he was doing was wrong” and

yet he persisted. Even the Court of Appeals majority called

12

the plaintiff’s behavior “voluntary, crude, and

unprofessional.” 248 Mich App 104. Nevertheless, the

majority decided that plaintiff’s behavior did not rise to a

level of moral turpitude that could be called “intentional and

wilful.” Id.

In our view, the WCAC’s conclusion that plaintiff’s

misconduct was voluntary is amply supported by the record.

His repeated acts of sexual harassment were well beyond the

realm of mere negligence or gross negligence. That said, it

has long been understood that the question whether misconduct

is “intentional and wilful” is one of fact. McMinn, supra, p

429, and Day, supra, p 390.11 On judicial review, “[t]he

findings of fact made by the commission acting within its

powers, in the absence of fraud, shall be conclusive.” Mudel,

supra, p 700. Thus, the Court of Appeals panel majority’s

rejection of the WCAC’s findings regarding whether plaintiff’s

misconduct was “intentional and wilful” and its substitution

of its own fact-finding on the issue does not comport with its

11
In Crilly, supra, p 327, we noted:

[T]his exclusion of acts of a degree of moral

turpitude, it will be observed, is by the

legislature itself, not a judicial retrogression to

principles of tort. Further than this in

definition we do not attempt to go. The precise

future line of demarcation will be marked out, in

the traditional manner, by the case-to-case

decision. [Emphasis supplied.]

13

limited judicial appellate review. We, therefore, reverse the

judgment of the Court of Appeals.

C

We note one final disagreement with the panel majority’s

reasoning. Regarding whether the plaintiff knew his conduct

was prohibited, the panel majority found persuasive the fact

that, although plaintiff’s comments were alleged to have been

made over several years, he “suffered no adverse consequences

from his behavior” until 1995. 248 Mich App 103. It reasoned

that “[p]laintiff’s history of conduct in this case indicates

that the rule was not strictly enforced and there are no facts

in the record indicating otherwise.” Id., p 105. While this

Court has concluded that MCL 418.305 does not operate to

preclude benefits where an employee was injured while

violating a work rule that had not been enforced by the

employer, see, e.g., Rayner v Sligh Furniture, Co, 180 Mich

168; 146 NW 665 (1914), the record in this case reflects that

plaintiff’s immediate supervisor had conducted several

investigations into other alleged violations of work rules by

other employees during her supervisory tenure. More

critically, that plaintiff’s accusers did not file formal

complaints triggering the enforcement process is not

demonstrative of the defendant’s enforcement, or lack thereof,

of workplace rules.

IV

14

For the reasons stated, we reverse the judgment of the

Court of Appeals and reinstate the WCAC order denying benefits

to this plaintiff.

Elizabeth A. Weaver

Maura D. Corrigan

Clifford W. Taylor

Robert P. Young, Jr.

Stephen J. Markman

15

S T A T E O F M I C H I G A N

SUPREME COURT

TONY J. DANIEL,

Plaintiff-Appellee,

v No. 120460

DEPARTMENT OF CORRECTIONS,

Defendant-Appellant.

___________________________________

CAVANAGH, J. (dissenting).

I respectfully disagree with the majority’s conclusion

that plaintiff is precluded from receiving worker’s

compensation benefits for his mental injury. The majority

relies on the intentional and wilful misconduct exclusion in

MCL 418.305 to hold that, though plaintiff’s depression was a

result of defendant’s disciplinary proceedings, such

disciplinary proceedings were necessitated by plaintiff’s

intentional and wilful misconduct, i.e., plaintiff’s sexual

harassment of female attorneys. I would affirm the decision

of the Court of Appeals and award benefits to plaintiff.

I agree with the Court of Appeals majority that the

connection between plaintiff’s acts and his injury is too

attenuated for the injury to have occurred “by reason of” his

acts. The majority rejects this position, fearing it would

impose a requirement that the injury arise contemporaneously

with the employee’s misconduct. However, saying that

plaintiff’s acts of sexual harassment and his injury are “too

attenuated,” does not necessarily impose a requirement that

the injury arise contemporaneously with the misconduct.

In this case, plaintiff’s injury followed not only

plaintiff’s own conduct, but also action taken by defendant.

One must consider not only the amount of time that elapsed

between the employee’s conduct and the injury, but also the

events that occurred during that time. The disciplinary

proceedings conducted by defendant in this case occurred after

plaintiff’s misconduct, but before his mental injury.

Therefore, one could conclude, as the magistrate did, that the

discipline was the cause of plaintiff’s mental injury.

Additionally, the Worker’s Compensation Appellate

Commission improperly substituted its own findings for those

of the magistrate. The magistrate found that “[p]laintiff’s

problems started with his discipline,” and that “plaintiff’s

discipline and post-discipline employment events up to

February 2, 1996, contributed in a significant manner to”

plaintiff’s mental injury. Findings of fact by the magistrate

are to be considered conclusive by the WCAC if supported by

2

“competent, material, and substantial evidence on the whole

record.” MCL 418.861a(3); Holden v Ford Motor Co, 439 Mich

257, 261; 484 NW2d 227 (1992).

The WCAC majority found that the record supported the

magistrate’s finding that defendant’s discipline of plaintiff,

which followed the sexual harassment, was the direct cause of

plaintiff’s injury. Its review should have ended there, but

the WCAC improperly replaced the magistrate’s finding that

plaintiff’s injury was caused by defendant’s disciplinary

proceedings with its own finding that plaintiff’s injury was

caused by his intentional and wilful conduct. The WCAC

exceeded the scope of its review; therefore, the magistrate’s

finding that plaintiff’s injury was the result of the

disciplinary proceedings should be upheld.

Because I would affirm the judgment of the Court of

Appeals and reinstate plaintiff’s benefits, I, respectfully,

dissent.

Michael F. Cavanagh

Marilyn Kelly

3

Daniel v. Department of Corrections

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