Cree, Inc. v. LIRC

2021 WI APP 4
COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION

Case No.: 2019AP1671

† Petition for Review filed

Complete Title of Case:

CREE, INC.,

PETITIONER-RESPONDENT,

V.

LABOR AND INDUSTRY REVIEW COMMISSION,

RESPONDENT-CO-APPELLANT,

DERRICK PALMER,

RESPONDENT-APPELLANT.†

Opinion Filed: December 9, 2020
Submitted on Briefs: July 16, 2020
Oral Argument: October 1, 2020

JUDGES: Neubauer, C.J., Reilly, P.J., and Gundrum, J.
Concurred:
Dissented:

Appellant
ATTORNEYS: On behalf of the respondent-appellant, the cause was submitted on the
briefs of Alan C. Olson and Nicolas M. McLeod of Alan C. Olson &
Associates, S.C., New Berlin. There was oral argument by Alan C.
Olson.
Co-Appellant
ATTORNEYS: On behalf of the respondent-co-appellant, the cause was submitted on
the briefs of Anthony D. Russomanno, assistant attorney general, and
Joshua L. Kaul, attorney general. There was oral argument by Stephen
C. Kilpatrick.

Respondent
ATTORNEYS: On behalf of the petitioner-respondent, the cause was submitted on the
brief of Laura A. Lindner and Casey M. Kaiser of Littler Mendelson,
P.C., Milwaukee. There was oral argument by Robert H. Duffy and
Casey M. Kaiser.

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2021 WI App 4

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
December 9, 2020
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.

Appeal No. 2019AP1671 Cir. Ct. No. 2019CV703

STATE OF WISCONSIN IN COURT OF APPEALS

CREE, INC.,

PETITIONER-RESPONDENT,

V.

LABOR AND INDUSTRY REVIEW COMMISSION,

RESPONDENT-CO-APPELLANT,

DERRICK PALMER,

RESPONDENT-APPELLANT.

APPEAL from an order of the circuit court for Racine County:
MICHAEL J. PIONTEK, Judge. Reversed.

Before Neubauer, C.J., Reilly, P.J., and Gundrum, J.
No. 2019AP1671

¶1 GUNDRUM, J. Derrick Palmer and the Labor and Industry Review
Commission (LIRC) appeal the circuit court’s reversal of LIRC’s decision finding
Cree, Inc. unlawfully discriminated against Palmer when it rescinded a job offer for
a Lighting Schematic Layout Applications Specialist (Applications Specialist)
position upon learning of his conviction record. We agree with Palmer and LIRC
that based upon the particular facts of this case, Cree failed to meet its burden to
show that the circumstances of Palmer’s criminal offenses substantially relate to the
circumstances of the Applications Specialist position, a burden Cree would have
had to meet in order to excuse its otherwise unlawful employment discrimination as
to Palmer. As a result, we reverse the circuit court’s decision.

Background

¶2 Palmer filed a discrimination complaint with the Wisconsin
Department of Workforce Development alleging that Cree unlawfully discriminated
against him when it rescinded a job offer for an Applications Specialist position
based upon his conviction record. An Equal Rights Officer issued an Initial
Determination concluding there was probable cause to believe Cree “may have
violated the Wisconsin Fair Employment Law” by “refusing to hire or employ
[Palmer] because of [his] conviction record.” Following an evidentiary hearing, an
Administrative Law Judge (ALJ) determined that Cree had not unlawfully
discriminated against Palmer. Palmer appealed, and LIRC determined otherwise,
reversing the ALJ.

¶3 LIRC found that Cree manufactures and sells lighting products. The
job posting for the Applications Specialist position at Cree’s Racine facility
described the position in the following manner:

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No. 2019AP1671

[P]erforms a mixture of design, presales and post sales
customer support responsibilities. In this role you will
design and recommend the installation of appropriate
lighting equipment and systems, create lighting site plans
and 3D models, use local building code requirements to
perform energy calculations, and also interact directly with
customers. You will be part of a team, while applying
project management skills to drive your own projects to
completion.

LIRC found that if hired for this position, Palmer would have been working at an
over 600,000 square foot facility with more than 1100 employees, including about
500 women, which facility “includes a manufacturing space, storage areas with
racks of parts, plus offices, conference rooms, ‘cubicle farms,’ breakrooms, and the
like.” Palmer would have been primarily assigned to work “in the ‘cubicle farm’
area, but would have access to the rest of the facility.” While the facility has security
cameras, they are primarily located “in areas where people tend to get injured on the
job and at the entries and exits to the facility”; “office areas and conference rooms
tend not to be covered by cameras.”

¶4 LIRC also found that

[p]art of the [Applications Specialist] job is to help
customers determine where lighting products should go.
The position interacts with engineering teams to understand
the technical aspects of products, and interacts with clients
to create drawings and deliver them to the clients. There is
regular customer interaction, typically by telephone or
email, although local clients might travel to the facility
because the respondent has demonstration rooms. The job
also entails occasional travel to a client location in order to
do design work. In addition, the job includes some trade
show travel, which involves car rental, staying at a hotel, and
interacting with clients on the trade show floor. There is no
supervision when traveling.

¶5 Cree offered Palmer the Applications Specialist position contingent
on a drug screen and background check, but subsequently rescinded the offer
because it learned of his 2012 convictions for strangulation/suffocation, fourth-

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No. 2019AP1671

degree sexual assault, battery, and criminal damage to property related to a domestic
incident with a live-in girlfriend.1 In addition to these convictions, LIRC found that
Palmer also had a 2001 battery conviction related to a “domestic incident” with a
girlfriend; however, Cree was not aware of that at the time it rescinded the offer to
Palmer.2

¶6 LIRC found that Cree rescinded Palmer’s job offer based solely on his
conviction record. It further concluded that Cree had failed to meet its burden under
WIS. STAT. § 111.335(1)(c)1. (2015-16)3 of demonstrating that Palmer had “been
convicted of any felony, misdemeanor or other offense the circumstances of which
substantially relate to the circumstances” of the Applications Specialist job. LIRC
expressed that

[t]he fact that there are female employees in the plant with
whom the complainant could potentially become involved in
a personal relationship that might end badly is a scenario
requiring a high degree of speculation and conjecture, and
one that goes well beyond any reasonable concern about job-
related conduct. Moreover, the ability to meet females and
form personal relationships with them is not a circumstance
unique to the job at issue, but describes virtually any
employment situation in which female workers might be

1
Associate general counsel for Cree, Melissa Garrett, testified that she made the decision
to rescind the employment offer to Palmer and did so because of the results of a criminal
background check, which showed the 2012 convictions. Garrett was also informed that the charges
related to a domestic incident with a live-in girlfriend.
2
Because all of the parties appear to agree that the substantial-relationship test of WIS.
STAT. § 111.335(3)(a)1. (2017-18) allows for consideration of Palmer’s pre-2012 criminal record
even if such record was not known to Cree at the time it made the challenged employment decision,
we proceed under this assumption, although we do not decide the issue.

All references to the Wisconsin Statutes are to the 2017-18 version unless otherwise noted.
3
WISCONSIN STAT. § 111.335(1)(c)1. (2015-16) was subsequently renumbered to WIS.
STAT. § 111.335(3)(a)1. while this case was being litigated. This decision will generally refer to
the current statutory number found in the 2017-18 version of the statutes.

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No. 2019AP1671

present. The commission does not believe that the mere
presence of females in the work place can form the basis for
finding a substantial relationship, absent any reason to
believe that the complainant would have the type of contact
with female employees that might raise a red flag for an
employer considering whether to hire an individual with a
record of having committed fourth degree sexual assault.

LIRC further found that Cree had

presented no evidence indicating that the complainant would
be supervising or mentoring female employees, nor is there
anything to suggest that he would be working closely with
female employees. While the record indicates that the job
would entail occasional trade show travel, the evidence does
not establish that the complainant would be traveling with
females on business trips, and there is no basis to conclude
that he would be sharing cars, staying at the same hotels, or
socializing with females in the course of his business travel.
It cannot be found based on this record that the complainant
would have had significant personal interactions with female
employees in the context of his job.

¶7 LIRC found there was no basis in the record to conclude that Palmer
would be “performing his services in private homes or other isolated settings” or
otherwise “meeting one-on-one with clients in private settings.” It noted that the
evidence from the hearing indicated that “the people [Palmer] would interact with
would be builders or construction companies,” “most of [Palmer’s] customer
interactions would be by telephone or email, and while [he] might occasionally meet
personally with customers, these meetings would take place either at trade shows or
at the customer’s … showroom or other industrial setting.” “[T]here is nothing in
the record,” LIRC continued, “regarding the types of interactions with co-workers
or with the public that might raise a concern that [Palmer] would act in a violent

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No. 2019AP1671

manner.”4 Cree “did not contend that [Palmer] would be required to deal with angry
or irate customers or that there were any conflicts presented in his relationships with
the public.”

¶8 LIRC determined that

[f]inding a substantial relationship in this case [between the
circumstances of Palmer’s offenses and the circumstances of
the Applications Specialist job] would require a conclusion
that unsupervised contact with other people is in and of itself
a circumstance that might lead [Palmer] to engage in violent
conduct. However, the commission has consistently
declined to conclude that the mere presence of other human
beings is a circumstance that creates a substantial
relationship.

4
In its appellate brief, Cree relies heavily upon the testimony of Lee Motley, a senior
recruiting specialist for Cree, and Garrett that the work environment at Cree was “stressful.” Both
the ALJ and LIRC, however, found their testimony on this point to not be credible. While a
different credibility finding on this point may have made a difference in our consideration of this
case, we are bound by LIRC’s credibility findings, see Xcel Energy Servs. v. LIRC, 2013 WI 64,
¶48, 349 Wis. 2d 234, 833 N.W.2d 665, and thus are not at liberty to consider the testimony related
to stressful aspects of the work environment at Cree.

Cree also relies heavily upon the testimony and opinion of Cree witness Dr. Darald Hanusa.
Cree uses Hanusa’s testimony to connect domestic violence and workplace violence. LIRC,
however, gave Hanusa’s testimony no weight, specifically finding it “unhelpful,” because
“[a]mong other problems, … Hanusa stated that someone who had successfully completed a
domestic violence pro[gram] would not pose a significant risk of workplace violence, but did not
take into consideration the fact that [Palmer] successfully completed anger management classes as
well as training on ‘criminal thinking,’ which focused on dealing with conflict, high risk situations,
and effective communication, including in the context of work relationships.” As with credibility
determinations, we are restrained by LIRC’s determinations as to the weight to be given to
evidence, see Milwaukee Symphony Orchestra, Inc. v. DOR, 2010 WI 33, ¶31, 324 Wis. 2d 68,
781 N.W.2d 674 (“[T]he weight and credibility of the evidence are for the agency, not the reviewing
court, to determine.” (alteration in original; citation omitted)), and thus are not at liberty to give
any weight to Hanusa’s testimony.

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No. 2019AP1671

LIRC concluded that Cree had unlawfully discriminated against Palmer. Cree
appealed the decision to the circuit court, and the court reversed. Palmer and LIRC
now appeal.5

Discussion

¶9 Wisconsin law prohibits an employer from refusing to hire a
prospective employee on the basis of his or her conviction record. WIS. STAT.
§§ 111.321, 111.322. The employer may, however, so discriminate if “the
circumstances of [any felony, misdemeanor, or other offense] substantially relate to
the circumstances of the particular job” for which the employee is being considered.
WIS. STAT. § 111.335(3)(a)1. In this case, it is undisputed that Cree rescinded its
offer to hire Palmer for the Applications Specialist job solely due to his 2012
convictions. Thus, the issue before us is whether Cree’s decision was nonetheless
lawful on the basis that the circumstances of Palmer’s convictions substantially
relate to the circumstances of the Applications Specialist position.

¶10 In an employment discrimination case, such as this one, we review
LIRC’s decision, not that of the circuit court. See Rice Lake Harley Davidson v.
LIRC, 2014 WI App 104, ¶21, 357 Wis. 2d 621, 855 N.W.2d 882. As to LIRC’s
findings of fact, they “are conclusive on appeal as long as they are supported by
credible and substantial evidence.” Id., ¶46. In the case now before us, Cree
develops no challenge to LIRC’s factual findings.

¶11 Determining whether the circumstances of Palmer’s prior convictions
substantially relate to the circumstances of the Applications Specialist job requires
us to apply the statutory language of WIS. STAT. § 111.335(3)(a) to the facts of this

5
We held oral argument on October 1, 2020.

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No. 2019AP1671

case. This is a matter of law we review de novo. Wisconsin Bell, Inc. v. LIRC,
2018 WI 76, ¶29, 382 Wis. 2d 624, 914 N.W.2d 1. When we review only matters
of law, we give no deference to the legal decisions of the agency. See Tetra Tech
EC, Inc. v. DOR, 2018 WI 75, ¶84, 382 Wis. 2d 496, 914 N.W.2d 21.

¶12 The purpose of the substantial-relationship test is to “[a]ssess[]
whether the tendencies and inclinations to behave a certain way in a particular
context are likely to reappear later in a related context, based on the traits revealed.”
County of Milwaukee v. LIRC, 139 Wis. 2d 805, 824, 407 N.W.2d 908 (1987). “It
is the circumstances which foster criminal activity that are important ….” Id.
“[F]actual inquiry” may be made for the purpose of “ascertaining relevant, general,
character-related circumstances of the offense or job.” Id. at 825. The employer
bears the burden of demonstrating that the circumstances of the offense(s)
substantially relate to the circumstances of the particular job. See id. at 820; Gibson
v. Transportation Comm’n, 106 Wis. 2d 22, 29, 315 N.W.2d 346 (1982) (“[T]he
Department … satisfie[d] its burden of establishing that the circumstances of the
felony for which petitioner was convicted substantially relate to the license for
which he applied.” (emphasis added)).

¶13 Cree asserts that its Racine facility where Palmer would have worked
is very large, having “many unobserved ‘nooks and crannies,’” locations that are
very loud, and approximately 1100 employees about 500 of whom are women, and
the employees have access to almost all areas of the facility, creating significant
opportunity with which Palmer could “commit additional crimes against persons

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No. 2019AP1671

and property.” Cree also states that Palmer “would have … regularly interact[ed]
with female coworkers whom he could later harm outside of work.”6

¶14 Palmer’s criminal record does demonstrate a “tendenc[y] and
inclination[] to behave a certain way in a particular context”— to be physically
abusive toward women in a live-in boyfriend/girlfriend relationship. See County of
Milwaukee, 139 Wis. 2d at 824. In light of Palmer’s criminal history, if the question
before us was whether Palmer is likely to again be violent toward another woman
with whom he is in a live-in boyfriend/girlfriend relationship, the answer would
almost certainly be “yes.” But that is not the question before us. The question is
whether Cree met its burden to show that Palmer’s past domestic abuse is
substantially related to the circumstances of the Applications Specialist job Palmer
applied for. Based upon LIRC’s findings, to which we are limited, we cannot
conclude that it has.

¶15 Cree presented no evidence suggesting Palmer has ever been violent
in a circumstance other than a live-in boyfriend/girlfriend relationship or even
suggesting he has ever had such a relationship that in any way stemmed from or was
related to his employment. And as LIRC found, Cree presented no evidence
suggesting Palmer would be supervising, mentoring or even working closely with
female employees. We agree with LIRC that it would require “a high degree of
speculation and conjecture” to conclude that Palmer would develop a live-in
boyfriend/girlfriend relationship through the Applications Specialist job and also

6
Cree further writes: “The fact that he would have been engaging in unsupervised travel
with male and female coworkers and meeting alone with customers, both male and female, in
various potentially isolated locations also raises significant concerns.” Because much of this
assertion is in conflict with facts as found by LIRC, and because Cree presented little evidence
regarding opportunities for wrongdoing during “unsupervised travel” and fails to develop an
argument related to such opportunities, we do not address this point. See ABKA Ltd. P’ship v.
Board of Rev., 231 Wis. 2d 328, 349 n.9, 603 N.W.2d 217 (1999) (we do not address undeveloped
arguments).

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No. 2019AP1671

agree that the mere contact with others at the facility and on the job is not
substantially related to Palmer’s domestic violence. Cree’s position appears to be
less focused on the circumstances of the particular job Palmer applied for and more
focused on the general sense that Palmer is not fit to be unconfined from prison and
participating in the community at all due to his prior crimes, even though he has
long since finished serving the confinement portion of his sentence.

¶16 In enacting this scheme protecting against conviction-based
discrimination, the legislature chose not to exempt from its application certain
particularly disturbing offenses. The legislature could have exempted convictions
for attempted first-degree intentional homicide, first-degree sexual assault, or other
offenses, such as the strangulation/suffocation, fourth-degree sexual assault, battery,
and criminal damage to property offenses of which Palmer was convicted. It could
have easily done that, but chose not to. Thus, courts are left with the task of trying
to faithfully apply the law as the legislature enacted it, which is with general
language allowing for conviction-based employment discrimination only where the
circumstances of a conviction are “substantially relate[d]” (not “somewhat related”)
to the circumstances of the particular job. Based upon the facts presented, as LIRC
found them, we must agree with LIRC and Palmer that Cree failed to establish a
substantial relationship between the circumstances of Palmer’s prior convictions
and the circumstances of the Applications Specialist job.

By the Court.—Order reversed.

10