State of Maryland Commission on Human Relations v. Kaydon Ring & Seal, Inc.

DEBORAH S. EYLER, Judge. The Maryland Commission on Human Relations (“Commission”), the appellant, challenges a judgment of the Circuit Court for Baltimore City reversing the Commission’s decision that Kaydon Ring & Seal, Inc. (“Kaydon”), the appellee, terminated Andre Henry from employment because of his race, thereby committing an unlawful employment practice. The Commission presents two issues on appeal, which we have rephrased: I. Did the circuit court err in failing to apply the correct standard of review and in exceeding its authority?

II

Was there substantial evidence in the record to support the Commission’s decision? For the following reasons, we shall reverse the judgment of the circuit court, vacate the Commission’s decision, and remand the case to the Commission for further proceedings not inconsistent with this opinion. ⁶⁷³ FACTS AND PROCEEDINGS On September 2, 1994, Andre Henry filed with the Commission an employment discrimination complaint against Kaydon. Henry, who is black and was born in Jamaica, alleged that Kaydon had discriminated against him by terminating his employment on the basis of his race and national origin. The Commission investigated Henry’s complaint and on November 16, 1995 issued a finding of probable cause.

On May 21, 1996, after conciliation efforts failed, the Commission filed a statement of charges against Kaydon with the Office of Administrative Hearings. The First ALJ Decision On January 7 and 8, 1997, an Administrative Law Judge (“ALJ”) held an evidentiary hearing on the charges. The Commission called as witnesses Henry; a Commission supervisor; and six present or former employees of Kaydon. Kay-don called two of its employees.

Numerous documents were admitted into evidence. On August 28, 1997, the ALJ issued a written decision making factual findings, listed numerically, including the following. Kaydon is a Baltimore company that manufactures seals and gaskets. On June 1, 1994, it hired Henry to work as a machine shop operator in Intermediate Shop B, section 708 of its plant.

Henry had some previous machine operating experience and held an associate’s degree in aviation maintenance technology and a master of mechanics certificate from Eastern Airlines. Upon being hired, Henry was placed on probation, as are all new employees at Kaydon. Kaydon’s rules require that new employees serve a probationary period of between 60 and 120 days. Larry Fiddler, a white male, worked as the “lead man” in Intermediate Shop B. Fiddler’s duties included telling the machine operators which machines to run.

Steve Skinner, also a white male, was the foreman in two sections of Interme ⁶⁷⁴ diate Shop B, including section 708. When Henry was hired, Skinner had held the foreman’s position for nine years. As foreman, Skinner was Henry’s immediate supervisor and was solely responsible for evaluating his performance. The criteria Skinner used to evaluate employees were safety, quality of work, productivity, and attitude.

Skinner assessed employees based on what he was told about their performance and what he observed first hand. Sixty percent of the people Skinner supervised and evaluated were black. Skinner had full authority and discretion to fire the probationary employees he was charged with supervising. New employees at Kaydon received little formal training.

Instead, they were immediately put to work manufacturing products, and were assigned to various machine operators who showed them the proper methods for operating the machines. Thus, new employees received “on the job” training. During his period of probation, Henry operated the cam-turn machine, the outside diameter machine, the inside diameter machine, and the auto vent machine. Several of the employees who testified at the hearing trained him to operate those machines.

Kaydon imposed production goals and efficiency requirements on all employees, including probationary employees. Kaydon officials talked to the machine operators about the productivity requirements they were supposed to meet. Skinner expected the employees he supervised to perform their jobs well. He had a short temper, and would become upset with employees who were not performing up to his expectations.

Henry had problems with his job performance, including low productivity and gross efficiency ratings, sitting down on the job, leaving his assigned work area without permission, and leaving early for breaks and lunch. Henry’s productivity ratings and gross efficiency ratings were significantly lower than those of other employees in the same department. Skinner discussed these performance problems with Henry. Skinner was not satisfied with the quality of Henry’s work. ⁶⁷⁵ On August 12, 1994, Skinner extended Henry’s probationary period for 60 days, for additional training.

At the same time, Skinner and Arnold Ford, a Union Representative, met with Henry and told him his performance was unsatisfactory. When Kaydon hired Henry, it also hired two other machine operators: Steve Butz and Tom Morgan. Both men are white and American born. Like Henry, Butz and Morgan were put on probation and received “on the job” training.

Butz had previous experience as a machine operator. He performed satisfactorily during his probationary period at Kaydon. After 60 days, Skinner decided, based on Butz’s performance, that Butz had successfully completed his probation. Butz completed his probation by outperforming Henry and Morgan.

Unlike Butz, Morgan was not an efficient employee and did not perform satisfactorily, in Skinner’s view. For that reason, Morgan did not successfully complete his probationary period. Morgan’s father also was employed by Kaydon. At Kaydon, it was not unusual for an employee to be given special treatment because one of his parents was a Kaydon employee.

This preferential treatment, a form of nepotism, was extended to Kaydon employees of all races and national origins. During his probationary period as a machine operator, Morgan applied for a trucker’s job at Kaydon. The job, which paid less than the machine operator’s job, was advertised plant-wide. Morgan was the only person who made a bid for the trucker’s job.

He did not apply for any other jobs at Kaydon. Morgan was qualified for the trucker’s job, and was offered the job for that reason. Morgan accepted the offer. Henry did not apply for the trucker’s job or any other job at Kaydon.

Ten days after Henry’s probation was extended, Skinner fired him. Skinner did so “because he was angry that a lot of production was lost as a result of [Henry’s] not operating all the machines Skinner had assigned him to operate that day.” ⁶⁷⁶ After Henry was discharged, Kaydon offered the next machine operator’s job to a black man. That person did not appear for his physical examination, however, and therefore was not hired. Black and white employees and employees of various national origins were hired by Kaydon to work in the departments supervised by Skinner.

Skinner fired employees who were black, white, and of various national origins. From September 1992 to September 1994, in addition to Henry, four employees were discharged in section 708: a white American female fired for attendance problems; a white American male fired for missing time; a white Russian bom male who was terminated for inability to perform; and a black American male who was terminated for inability to perform. Both white and black employees successfully completed probation while being supervised by Skinner. Skinner did not consider race or ethnicity when he trained or terminated employees.

No one ever told him that Henry felt harassed or discriminated against based on race or national origin. After making those findings, the ALJ proceeded to address the Commission’s charges, under Md.Code (1994), article 49B, section 16(a), that Kaydon had terminated Henry’s employment because of his race or national origin. The ALJ decided the charges by applying the analytical framework for evaluating claims of employment discrimination under Title VII of the Civil Rights Act of 1964, as articulated by the United States Supreme Court in McDonnell Douglas v. Green, 411 U.S. 792 , 93 S.Ct. 1817 , 36 L.Ed.2d 668 (1973). Under the McDonnell Douglas framework, applicable when the complainant does not have direct proof of an intent to discriminate, the complainant first must establish a prima facie case of discrimination.

Prima facie proof gives rise to a rebuttable presumption of discrimination, which shifts the burden of production to the employer to state a legitimate, non-discriminatory reason for the action complained about. When the employer does so, the complainant then must prove, ⁶⁷⁷ by a preponderance of the evidence, that the employer’s stated reason for the termination was a pretext. Texas Dep’t of Cmty. Affairs v. Burdine, 450 U.S. 248, 255 , 101 S.Ct. 1089 , 67 L.Ed.2d 207 (1981); Killian v. Kinzer, 123 Md.App. 60, 68 , 716 A.2d 1071 (1998); Brandon v. Molesworth, 104 Md.App. 167, 188 , 655 A.2d 1292 (1995), aff'd in part, rev’d in part, 341 Md. 621 , 672 A.2d 608 (1996).

The ALJ decided that the Commission had established a prima facie case of intentional discrimination and that Kaydon then met its burden of production by stating a legitimate, nondiscriminatory reason for terminating Henry: namely, that Henry’s job performance, including his performance on the day he was fired, was unsatisfactory, both independently and relatively, that is, in comparison to other employees in the same position. The ALJ concluded that the Commission did not meet its burden of showing, by a preponderance of the evidence, that the reason articulated by Kaydon for firing Henry was a pretext. In particular, the ALJ found unpersuasive the testimony of Henry’s co-employees that they were surprised about his termination because they thought he was performing up to par. The ALJ noted that the employees were not charged with evaluating Henry’s performance and, unlike Skinner, were not in a position to do so.

The ALJ found that the evidence about Henry’s productivity and efficiency ratings, especially when compared to such data for other employees, supported Skinner’s assessment that Henry was not performing satisfactorily. The ALJ also rejected arguments by the Commission that Kaydon had treated Butz and Morgan preferentially to Henry, thus evidencing that the company’s decision to terminate Henry was motivated by his race or national origin, and not by his poor performance. The ALJ found that Butz had graduated from probation because he had performed well and that Morgan had been hired in the trucker’s job because he was qualified for it and was the son of another Kaydon employee. The ALJ found no evidence at Kaydon of a pattern of hirings or terminations based on race or national origin over ⁶⁷⁸ the nine year period in which Skinner had acted as foreman, up to the time Henry was fired.

The ALJ stated, “I find it clear, from the testimony and the documentary evidence produced at the hearing, that [Henry’s] low productivity and unsatisfactory work performance led to his termination.” On these findings, the ALJ dismissed the discrimination complaint. The First Administrative Appeal— Unlawful Discrimination The Commission appealed the ALJ’s decision to the Appeal Board of the Commission (“Appeal Board”), which reviewed the matter on the record. On June 9, 1998, the three member Appeal Board issued a memorandum opinion and order vacating the ALJ’s decision and remanding the case for further proceedings. The Appeal Board found that all of the ALJ’s enumerated findings of fact were supported by substantial evidence in the record and “affirmed ... and adopted” them.

The Appeal Board stated, however, that the Commission’s regulations governing decisions of an ALJ in an employment discrimination case require the ALJ’s order to “include ‘findings of fact and conclusions of law upon each material issue of fact and law presented in the record[,]’ ” (quoting Code of Maryland Regulations (“COMAR”) 14.03.01.09H(1)) (emphasis in Appeal Board’s opinion), and concluded that the ALJ’s decision did not meet that standard because it omitted findings about evidence the Commission had presented about “racial animosity on the part of Steve Skinner.” In particular, the Appeal Board cited testimony by several current and former employees of Kaydon who had been supervised by Skinner that Skinner treated black employees more harshly than white employees by cursing and yelling at them, talking down to them, and reprimanding them for infractions that he would overlook when committed by whites; and testimony by Henry that Skinner had treated him with ⁶⁷⁹ disrespect, by not calling him by name, snapping his fingers and whistling at him, and shouting and yelling at him. In addition, the Appeal Board pointed out evidence in the record that Skinner “may have singled out Henry to be terminated” on the day he was fired. According to Henry’s testimony, he was operating two of the three machines he was assigned that day because Fiddler had told him to operate only two of them. When Skinner confronted him about operating only two machines, he told Skinner he was acting under Fiddler’s orders.

Skinner did not check with Fiddler to verily whether that was the case. Instead, Skinner became angry and fired him. The Appeal Board concluded that because the ALJ’s decision did not address these items of evidence, which the Appeal Board characterized as “material,” the decision could not be reviewed and required a remand for the ALJ “to prepare legally adequate findings of fact and conclusions of law....” The Appeal Board acknowledged that the ALJ’s decision included a statement that he had considered and rejected all proposed findings of fact not included in his opinion but stated that “on the crucial factual issues presented by the Commission pertaining to racial animosity on the part of Skinner and disparate treatment of Henry based on his race, a general, catch-all ruling ... does not satisfy the principles of review of ALJ decisions by the Appeal Board or the Commission’s own regulations.” The Second ALJ Decision—Unlawful Discrimination On remand, the ALJ reviewed the evidence adduced at the January 1997 hearing and issued a second decision, dated December 2, 1998. The ALJ’s enumerated findings of fact included all those in his first decision and the following: • Skinner extended Henry’s probation because he had to speak to him numerous times about his poor performance; and Skinner was not obligated to extend Henry’s probation at all. ⁶⁸⁰ • On the morning of the day he was fired, Henry was assigned to work three machines.

When Skinner walked by and saw that one of the machines was not running, he thought nothing of it. Later, at about 2:30 p.m., Skinner walked by and saw that one of the machines still was not running. He asked Henry why, and Henry replied that Fiddler had said not to run the machine. Skinner again told Henry to operate the machine.

Skinner was angry, and walked away to try to cool off. Instead, he decided to terminate Henry’s employment, because he believed that a lot of production had been lost as a result of Henry’s not running all the machines he had been assigned. Skinner terminated Henry without checking with Fiddler to see if Fiddler in fact had told Henry not to operate one of the machines. • In dealing with black employees on a daily basis, Skinner often treated them less favorably than white employees. “He had a tendency to yell and scream at some blacks in a way that he would not do with whites.” • Skinner did not consider race or ethnicity when he trained or terminated employees. The ALJ proceeded to analyze the employment discrimination claim much as he had done in the first decision, under McDonnell Douglas v. Green.

He concluded that the Commission had made out a prima facie case of employment discrimination, for the same reasons he originally so concluded; that Kaydon had articulated a legitimate, non-discriminatory business reason for terminating Henry’s employment, to wit, his unsatisfactory job performance; and that the Commission had not met its burden of showing by a preponderance of the evidence that the reason articulated by Kaydon was pretextual. With respect to the latter issue, the ALJ found: Based upon its Remand Order, it appears [the Appeal Board] has inferred from the record that [Kaydon] has engaged in unlawful employment discrimination with regard to [Henry]. It is reasonable to infer that because Skinner ⁶⁸¹ generally treats blacks in the work place with less dignity than he does whites, he is biased toward blacks. One could also infer that from the evidence that because Skinner treated blacks less favorably than whites he would be more likely to fire a black employee due solely to the employee’s race.

Such inferences, however, must be tempered by the other evidence of record. Mere rhetoric is not evidence. In the instant case, the Commission did not support its allegations with credible evidence. Whether [Henry] was terminated for poor performance or due to the color of his skin raises a genuine issue of fact.

The Commission seems to believe that because Skinner treated blacks with less respect than he did whites, it has proven that Skinner engaged in unlawful employment discrimination by terminating [Henry] for a discriminatory purpose. As noted above, that is one possible inference. However, I do not believe that a fair view of the totality of the evidence supports such an inference. While there was some general testimony that blacks were sometimes kept on probation longer than whites, other evidence of specific acts of unlawful employment discrimination was not present.

No creditable [sic] evidence was presented that black employees were disciplined, not promoted or otherwise subjected to unlawful employment discrimination by [Kaydon], None of those to whom these alleged practices occurred verified the testimony in that regard. In fact, Mr. Watkins testimony was less than convincing____ [Henry] testified that on the day of his firing Skinner told him to leave the work floor and that he was being fired because he could not “cut it.” That testimony is, I believe, consistent with Skinner’s testimony that he fired [Henry] after a specific incident following a history of performance problems. Skinner was angry that, in his view, [Henry] was not following instructions and his failure to do so caused production deficiencies. It is also unrefuted that Skinner was under no obligation to extend [Henry’s] probation.

A ⁶⁸² better supervisor might have attempted to verify [Henry’s] reason for not running all of the machines, but Skinner did not. This does, in fact, support the other evidence that Skinner was the kind of person who angers quickly and does not always react in a calm rational manner. However, it does not show that his reason for terminating [Henry] was pretextual. The ALJ issued a second order dismissing the complaint.

The Second Administrative Appeal— Unlawful Discrimination The Commission again appealed to the Appeal Board. On September 15, 1999, the Appeal Board, by a two-to-one vote, issued a decision and order reversing the ALJ’s decision that Kaydon did not engage in unlawful employment discrimination on the basis of race; affirming the ALJ’s decision that Kaydon did not engage in unlawful employment discrimination on the basis of national origin; and remanding the case for further proceedings to determine the appropriate relief to which Henry might by entitled. The Appeal Board’s decision was made from a review of the record, after oral argument of counsel. The Appeal Board determined that all the findings of fact made by the ALJ, as set forth in the “Findings of Fact” section of his opinion (including the ALJ’s original factual findings), were supported by substantial evidence in the record, and therefore were “affirmed.” It noted, however, that it did not consider “conclusive” the ALJ’s factual findings that Skinner fired Henry because he was angry and believed a lot of production had been lost and that Skinner did not take race or ethnicity into consideration when he trained or terminated employees, even though there was evidence in the record to support those findings.

After describing the “ultimate issue” in the case as “whether the evidence in the record as a whole supports a finding that Kaydon ... unlawfully discriminated against Andre Henry on the basis of his race and/or national origin[,]” the Appeal ⁶⁸³ Board found, “having considered the entire record, ... that the Commission in this case did sustain its burden of proof with respect to unlawful discrimination on the basis of race.... ” We shall discuss the Appeal Board’s second decision in depth in our discussion of the issues. The Third ALJ Decision—Remedy On second remand, the ALJ held an evidentiary hearing at which Henry testified for the Commission and Kaydon called its director of human resources. The ALJ incorporated by reference his prior findings and made additional findings, including extensive findings relevant to the issue of economic loss. The ALJ found the Commission had “presented virtually no evidence to establish that [Henry] would have been retained by [Kaydon] in another capacity or what economic loss [Henry] may have incurred, if any, as a result of benefits he did not received [sic] by virtue of his termination by Kaydon.” On that basis, the ALJ concluded that the Commission had not met its burden of proving actual economic loss resulting from discrimination.

The ALJ further found that even if he assumed that, absent unlawful discrimination, Henry would have stayed at Kaydon and been hired in a trucker’s job, as Morgan had been, the evidence showed that Henry would not have earned as much money as he actually earned from employment he obtained elsewhere after Kaydon discharged him. The ALJ concluded that Henry was not entitled to back pay or to the remedy of reinstatement. The Third Administrative Appeal—Remedy The Commission filed a third appeal with the Appeal Board. The Appeal Board concluded that Henry was entitled to $20,328.60 in back pay but was not entitled to reinstatement.

The Appeal Board’s back pay award equaled the difference between the sum Henry would have earned had he continued work in the machine operator’s job at Kaydon for 36 months after his termination date and the sum he actually earned at ⁶⁸⁴ other employment during that period. The Appeal Board issued an order directing Kaydon to pay that sum to Henry. On February 7, 2001, the Commission adopted the Appeal Board’s decision as its final agency action. The Action for Judicial Review On March 6, 2001, Kaydon filed in the Circuit Court for Baltimore City an action for judicial review and a motion to stay enforcement of the administrative order.

The motion to stay was granted after the Commission consented to it and Kaydon posted a bond. In the meantime, a petition the Commission filed in the same court for enforcement of the administrative order was consolidated with the action for judicial review. The parties filed memoranda and on November 27, 2001, the court held a hearing at which it entertained argument of counsel. On February 28, 2002, the court issued a memorandum decision and order reversing the decision of the Board and the Commission and ordering that judgment be entered in favor of Kaydon.

DISCUSSION (i) The Commission is a state agency established by section 1 of article 49B of the Maryland Code and having as one of its duties the adjudication of claims of unlawful discrimination. Art. 49B, § 3(c). Section 16 of article 49B prohibits discriminatory employment practices, including discharging a person from employment because of his race or national origin. A person claiming employment discrimination may file a complaint with the Commission, see art. 49B, section 9(a), which will conduct an investigation.

Art. 49B, § 10(a). If the investigation reveals “probable cause for believing a discriminatory act has been or is being committed within the scope” of article 49B, the Commission’s staff must undertake to eliminate the discrimi ⁶⁸⁵ nation by agreement, see section 10(b) and, if no agreement is reached, enter a finding to that effect and issue a written complaint to the respondent. The case then is set in for a hearing before a hearing examiner. § 11(a). Under section 2, the Commission is authorized to appoint hearing examiners, who shall be attorneys, and the hearing examiners “shall conduct hearings, make findings of fact, and draw conclusions of law in discrimination cases assigned” to them.

Section 2(b). Pursuant to COMAR 14.03.01.09A, the Commission has delegated to ALJs with the Office of Administrative Hearings the role of acting as hearing examiners. As hearing examiners, the ALJs have the powers and duties given them in accordance with COMAR 28.02.01.08A and B. The hearing is an evidentiary proceeding at which the respondent “may submit testimony and shall be fully heard” and may examine and cross-examine witnesses. § 11(b). At its conclusion, the hearing examiner must prepare a provisional order, section 2(b), which must include “findings of fact and conclusions of law upon each material issue of fact and law presented on the record.” COMAR 14.03.01.09H(1).

In the absence of a timely appeal, the hearing examiner’s decision and order become the final decision and order of the Commission. § 2(b); COMAR 14.03.01.09H(5). “If upon all the evidence, the hearing examiner finds that the respondent has engaged in any discriminatory act within the scope of [Article 49B], the hearing examiner shall so state in the findings” and shall issue a cease and desist order. § 11(e). When the discriminatory act in question is an unlawful employment practice, the hearing examiner may include as a remedy reinstatement or hiring of the former employee with or without back pay, or other appropriate equitable relief. § 11(e); COMAR 14.03.01.09H(2). “If upon all the evidence” the hearing examiner finds “the respondent has not engaged in any alleged discriminatory act within the scope of [Article 49B],” the hearing examiner “shall state [his or her] findings of fact and shall similarly issue and file an order dismissing the complaint.” § 11(g). See also COMAR 14.03.01.09H(3). ⁶⁸⁶ In addition to their other duties, the commissioners serve as the “Appeal Board” for administrative review of decisions of the hearing examiners. § 3(d). The Appeal Board is comprised of three commissioners.

COMAR 14.03.01.10D. “[A]s determined by the rules of procedure of the Commission, [the Appeal Board] may allow any party affected by the [hearing] examiner’s decision to introduce additional relevant testimony or evidence at the time of an appeal from the [decision of the] hearing examiner.” § 3(d). See also COMAR 14.03.01.10E(5). Thus, the Appeal Board may accept new evidence but is not authorized to conduct a de novo evidentiary hearing. Section 11(g) applies to the Appeal Board as it does to the hearing examiners.

Thus, “[i]f upon all the evidence, ... the Commission finds that the respondent has not engaged in any alleged discriminatory act within the scope of the particular subtitle, it shall state its findings of fact and shall similarly issue and file an order dismissing the complaint.” Section 11(g). COMAR 14.03.01.10, entitled “Review by the Appeal Board of Decisions of the Administrative Law Judge,” provides, in pertinent part, that the person appealing the decision of the ALJ “shall set forth in writing a concise statement of issues upon which th[e] appeal is taken,” together with a memorandum of law in support. COMAR 14.03.01.10B. The “appellee or appellees” then shall file an answer and supporting memorandum.

COMAR 14.03.01.10C. The Appeal Board may permit oral argument or decide the appeal without oral argument, COMAR 14.03.01.10E(1) and (2), and “may permit the admission of additional evidence not produced at a public hearing, upon a request made and good cause shown by the party proposing admission of the new evidence.” COMAR 14.03.01.10E(5). The Appeal Board “may affirm, reverse, or modify” the hearing examiner’s decision. COMAR 14.03.01.10F(1).

In making its determination, the Appeal Board “shall consider: (a) [t]he entire record; or (b)[u]pon agreement of the parties, ... the statement of the case, including the decision of the [hearing examiner].” Id. ⁶⁸⁷ The “entire record” standard of administrative review was adopted by the Commission effective October 9, 1998, shortly before the second administrative appeal in this case. Maryland Register, Vol. 25, Issue 21, at 1575. Before then, the regulation provided that the Appeal Board could “affirm, reverse, or modify” the hearing examiner’s decision “in accordance with the standards as set forth in State Government Article, § 10-222(h), Annotated Code of Maryland.” See Maryland Register, Vol. 25, Issue 4, at 269 (setting forth proposed action on COMAR 14.03.01.10F(1). That section sets forth (and set forth then) the “substantial evidence” standard that governs judicial review of factually based decisions of administrative agencies, under the Maryland Administrative Procedure Act.

Thus, prior to October 9, 1998, the Appeal Board reviewed decisions of hearing examiners using the same “substantial evidence” standard governing judicial review of agency decisions. Thereafter, and at the time relevant to this case, the Appeal Board has reviewed decisions of hearing examiners upon consideration of the “entire record.” (ii) In this case, the outcome of the Appeal Board’s “entire record” administrative review (that is, the Appeal Board’s second decision) was that it found, contrary to the ALJ’s determination, that Kaydon had intentionally discriminated against Henry by terminating him from employment because of his race. In the second administrative appeal, the Commission posed three questions to the Appeal Board: 1) “Whether the Appeal Board may vacate the [ALJ’s] decision ... and issue a decision of its own finding that Kaydon discriminated against ... Henry in violation of Article 49B and order[] the relief sought by the Commission in its Statement of Charges?”; 2) “Whether the [ALJ] erred in his decision upon remand by the Appeal Board by failing to make a finding of fact as to each material issue of fact such as to require the Appeal Board to vacate the decision?” and 3) “Whether the ALJ erred in his decision upon remand by the Appeal Board by failing to make legally ⁶⁸⁸ adequate findings of fact and conclusions of law such as to require the Appeal Board to vacate the decision?” With respect to the first issue, the Commission argued that the new “entire record” standard of review applicable to administrative appeals under article 49B gave the Appeal Board broad discretion to substitute its judgment for that of the ALJ, including discretion to resolve credibility issues not resolved by the ALJ or to resolve those issues differently than did the ALJ.

The Appeal Board ruled that it did not have to address that issue because its decision was being made “based on its consideration of the entire record including the [ALJ’s] assessment of the credibility of witnesses” and “differ[ed] from that of the [ALJ] because the [Appeal] Board believe[d] that the application of the law to the facts in the record, and the inferences to be drawn therefrom, require[d] a different result.” The Appeal Board rejected the Commission’s second issue, ruling that the ALJ’s second decision met the requirement of COMAR 14.03.01.09H(1), that the proposed order contain findings of fact and conclusions of law on each material issue of fact and law presented. The Appeal Board then turned to the third and final issue, stating: “The ultimate issue for the Appeal Board to resolve in this case is whether the evidence in the record as a whole supports a finding that [Kaydon] unlawfully discriminated against ... Henry on the basis of his race and/or national origin.” The Appeal Board acknowledged the record contained evidence tending to support Kaydon’s claim that Henry was discharged for legitimate, non-discriminatory reasons, namely his record of poor performance. It found, however, that, notwithstanding that evidence, “the preponderance of the evidence supported] the Commission’s argument that Henry was terminated intentionally due to the fact that he is black.” The Appeal Board identified two primary factors supporting its conclusion: “(1) the evidence of Steve Skinner’s racially motivated treatment of black workers on the job, and (2) the differential treatment afforded a white employee, Tom Mor ⁶⁸⁹ gan, who was similarly situated to Henry.” With respect to the first factor, after quoting the ALJ’s observation that it would be possible to infer from Skinner’s poor treatment of blacks in the workplace that he might fire a worker for being black (without then quoting the next portion of the ALJ’s opinion, in which he found that the evidence considered as a whole did not support a finding that Skinner had terminated Henry on account of his race), the Appeal Board commented: “Skinner’s pattern of treating black workers less favorably than white workers on the job suggests that any decision by Skinner to terminate the employment of a black employee should be subjected to close scrutiny.” With respect to the second factor, the Appeal Board reviewed the evidence about Morgan’s having bid for, and received, the trucker’s job at Kaydon.

Citing the testimony of employee Ralph Lane, the Appeal Board stated that there was evidence in the record that Skinner had responded to Morgan’s performance problems by suggesting he apply for the trucker’s job but had responded to Henry’s inquiries about transferring to the trucker’s job by saying it would be against the union contract for a probationary employee to transfer to another job at Kaydon. At the evidentiary hearing, Skinner had denied telling Henry that. The Appeal Board acknowledged Skinner’s testimony but found he had treated Henry differently than Morgan by not standing in Morgan’s way when Morgan applied for the trucker’s job but firing Henry abruptly “without investigating whether a firing was justified or not” that is, whether Fiddler had told him not to run one of the machines on the day of the firing. The Board finished its opinion by stating: The [Board] concludes that Skinner’s different treatment on the job of black employees and white employees who worked under his supervision, the company’s award of a trucker’s job to Morgan, a white employee similarly situated to Henry, and Skinner’s different response to and treatment of Morgan and Henry, both of whom were not, in Skinner’s view, performing satisfactorily, constitute proof by a pre ⁶⁹⁰ ponderance of the evidence that Henry was unlawfully terminated by Kaydon because of his race.

(Footnote omitted.) The Appeal Board reversed the ALJ’s second decision