STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the contribution liability or
status, under chapter 108, Wis. Stats., of

GOLDBERG TRUCKING, Employer
ROBERT GOLDBERG

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 367887, Hearing Nos. S9200706AP, S9200729AP, S9200730AP


Pursuant to the timely petition for review filed in the abovecaptioned matter, the commission has considered the petition and all relief requested. The commission has reviewed the applicable records and evidence and finds that the appeal tribunal's findings of fact and conclusions of law are supported thereby. The commission therefore adopts the findings and conclusions of the appeal tribunal as its own except as herewith modified:

1. Delete the first sentence of the first paragraph following the "COLLATERAL ESTOPPEL" section heading on page 2 of the Findings of Fact and Conclusions of Law, and substitute the following therefor:

"On February 18, 1988, an initial determination was issued which found, based on an audit covering the period of 1986 and the first two calendar quarters of 1987, that the employer's drivers were employes and that the employer was subject to the Wisconsin Unemployment Compensation Law effective January 1, 1986."

2. Delete the paragraph which begins at the bottom of page 2 and continues to page 3 of the Findings of Fact and Conclusions of Law, and substitute the following therefor:

"Collateral estoppel is a species of issue preclusion, the general rule on which is that when an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim. Hlavinka v. Blunt. Ellis & Loewi, 174 Wis. 2d 381, 396, 497 N.W.2d 756 (Ct. App. 1993).

The doctrine of collateral estoppel has been applied in UC cases before in other circumstances. In Harry and Amollie Laurence, Hrg. No. 7892,S (LIRC, March 29, 1989), an employer disputing a person's employee status in a contribution liability case was deemed collaterally estopped by a previous determination, in a benefit case involving that person, that he was an employe. Additionally, in Panzigrau v. DILHR/Job Service Division, Hrg. No 87201658EC (LIRC, July 29, 1988) the commission held that the employer (in that case, the DILHR Job Service Division) was collaterally estopped from claiming that the employe intended to conceal material facts in making a UC claim, by a previous determination, in a concealment case involving the same incident, that there was no intent to conceal.

Collateral estoppel can be applied even in a subsequent action involving a different claim. Hlavinka, supra, 174 Wis. 2d at 396, because collateral estoppel does not necessarily have to be applied to the entire action, and need not always be dispositive of the entire action in which it is invoked. It is a doctrine that can be invoked to preclude relitigation of particular factual issues.

In this case, the prior determination was that, in 1986 and in the first half of 1987, Goldberg's drivers were his employes. It is appropriate to hold that Goldberg is precluded from relitigating this particular fact.

Whether Goldberg's drivers were employes in 1986 and the first half of 1987 is of course not the issue in this case, which concerns the question of whether Goldberg's drivers were employees in certain subsequent quarters. However, the status of these drivers in the immediately preceding period is certainly evidence which is relevant to the question of their status in the quarters at issue. The collateral estoppel effect of the prior determination here should not be that the entire case is resolved, but rather that Goldberg is bound by the determination that they were employees in the 6 calendar quarters immediately preceding the quarters at issue.

While that fact is thus simply one of a number of facts to be considered in deciding the ultimate issue of the: drivers' status in the quarters in question, it is a particularly significant one. It allows the inquiry to focus somewhat more narrowly than it normally would. Conventionally, it is necessary first to determine if certain persons are providing services for the putative employer within the meaning of sec. 108.02(12)(a), Stats., and if that is the case, it is necessary to consider all of the factors that bear on the two questions in sec. 108.02 (12) (b) 1. and 2. , Stats., of whether the persons are free from direction and control and whether the persons are performing their services in an independently established business, trade or profession. However, the putative employer bears the burden of proving that persons providing services for it meet the two conditions specified in (12) (b) 1. and 2. , Stats. If an employer which has been determined to have employees in certain quarters does not assert that there has been a change in the nature of the relationship between itself and those persons in immediately subsequent quarters, it is justifiable to conclude as a matter of law that the employer cannot meet its burden of proof that the persons are not employes in those subsequent quarters. If such an employer does make an assertion that there has been a change, the primary question is whether the change has in fact occurred and, if so, whether that change is adequate to require a different result."

3. Following the first full paragraph on page 6 of the Findings of Fact and Conclusions of Law, insert the following paragraph:

"As noted above, it is also relevant that Goldberg is bound by the finding that, during 1986 and the first half of 1987, all of his drivers were employes and not independent contractors. The only changes in the relationship with his drivers to which Goldberg has pointed are quantitative (as opposed to qualitative) changes in the compensation package, a scheme for creating a part-"ownership" status that did not in fact create a freely transferrable ownership interest, and an additional layer of leases that even Goldberg concedes do not. change the net effect of the relationship. Against this stands all of the other indications which existed in 1986-87, and which as noted above also existed in the quarters at issue herein, that the drivers are not engaged in independently established trades, businesses or professions."

DECISION

The decisions of the appeal tribunal are modified to conform with the foregoing and, as modified are hereby affirmed.

Dated and mailed April 28, 1994
110 : CD8559   EE 421  PC 770

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ James R. Meier, Commissioner


MEMORANDUM OPINION

The question in this case is whether certain truck drivers are employees of Robert Goldberg. The case involves three separate (but essentially identical) ATDs covering different calendar quarters. The collateral estoppel issue arises out of an earlier decision, involving this same employer and covering the immediately preceding period.

Collateral estoppel -- The UC Act has a provision relating to the possible applicability of collateral estoppel from a UC decision to another proceeding, sec. 108.101, Stats., which was created only recently and has since been amended. In this case, the previous LIRC decision finding Goldberg's truck drivers to be employes was issued by LIRC on May 19, 1989, before sec. 108.101, Stats. (which was created by 1989 Act 77) became effective on January 4, 1990. However, the commission's decision was appealed to court and affirmed on April 9, 1991, and the court decision affirming the commission is therefore subject to the provisions of Sec. 108.101, Stats. in its original version, in which it provided:

Any finding of fact or law, determination, decision or judgment made by the department, an appeal tribunal, the commission or any court with respect to rights or liabilities under this chapter is not admissible or binding in any separate action or proceeding between an employe and his or her present or previous employer involving an issue or factual dispute other than an issue or factual dispute that was contested in the finding, determination, decision or judgment brought before the department, an appeal tribunal, the commission or any court, regardless of whether the prior finding, determination, decision or judgment was between the same or related parties or involved the same facts.

This statute was amended by 1991 Act 89 (effective as to decisions issued on or after January 5, 1992), after which amendment it provided:

No finding of fact or law, determination, decision or judgment made with respect to rights or liabilities under this chapter is admissible or binding in any action or administrative or judicial proceeding in law or in equity not arising under this chapter, unless the department is a party or has an interest in the action or proceeding because of the discharge of its duties under this chapter.

The commission believes that this amendment was intended primarily to clarify the section, and thus it can be seen as reflecting its original intent: to limit the extent to which UC decisions can be used as preclusive in other types of cases (i.e., in the language of the current statute, cases "not arising under this chapter", or in the language of the original statute, a "separate action or proceeding . . . involving an issue or factual dispute other than an issue or factual dispute that was contested" in the previous action). This being its intent, it would not preclude application of collateral estoppel in situations in which results in one UC status case involving an employee/ independent contractor issue are invoked in a subsequent case of the same type involving the same employer and the same issue.

The ALJ herein decided that collateral estoppel should not be applied because the facts had changed, and she stated that "one of the conditions [for application of collateral estoppel] requires that the action arise from the same set of facts". As noted above, however, collateral estoppel can be applied even in a subsequent action involving a different claim. Hlavinka, supra, 174 Wis. 2d at 396. In this case, the fact that Goldberg's drivers were employes in the quarters immediately preceding those at issue is thus established. It does not completely determine the result in the case, but it is evidence having substantial bearing on the case.

Employee /Independent Contractor -- There is no dispute that, just as was found to be the case in the earlier decision, Goldberg is a licensed carrier who has written agreements with drivers who operate tractors and trailers owned or leased from the owners by Goldberg.

The only changes Goldberg alleges involve the calculation of the payments to drivers, a supposed sale of an ownership interest in the trucks to the drivers, and a change whereby the trucks were not only leased to the drivers but then leased back to Goldberg.

The quantitative changes in the amounts paid to the drivers do not, in the commission's view, have controlling significance on the employe/independent contractor issue.

The supposed sale of an ownership interest in the trucks was a program Goldberg had in place for part of the time at issue, in which each driver was credited with 2.5% of the gross revenue they brought in as payment towards the purchase of the truck. This interest in the truck, however, was not transferable to anyone except someone else who might end up driving the truck for Goldberg. Thus, as the commission noted in its earlier decision, it was, at best, like the supposed ownership interest in the business in Princess House v. DILHR, 111 Wis. 2d 46, 330 N.W.2d 169 (1983), which could only be sold to other persons licensed by Princess House and was thus not "freely transferrable".

The "lease-back" change seems particularly insubstantial. Even Goldberg himself acknowledged in the hearing in this matter that "the net effect was the same".

In the commission's opinion, none of these changes are material or significant enough to require a different result. What is significant is what has remained the same. The commission also agrees with all of the findings made by the administrative law judge and concludes that they too require the result arrived at herein.

It is notable that Goldberg asserted at hearing that his arrangement with his drivers was somewhat like the one that Cledis Peterson, of Peterson Produce, had with his drivers. Peterson's drivers have also been found to be employes rather than independent contractors, a finding that was affirmed by the Dane County Circuit Court. Peterson Produce Inc. v. LIRC,  Case No. 91-CV-0184 (Dane Co. Cir. Ct., 10/7/91). The arrangement in Peterson's case is like the one Goldberg has: Peterson owns the trucks and carrier authority, bills the customers and received the gross payments, and pays the drivers a fixed cut in addition to covering some of their operating expenses. The court's explanation of why Peterson's drivers are not engaged in an independently established trade, business or profession is germane to Goldberg's case.

cc: Attorney Peter Zeeh


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