STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

SOUTH EAST CABLE LLC, Employer

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 256251, Hearing No. S0400261MW


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the file, including transcripts of the proceedings held before the ALJ. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Introduction -- The ultimate issue in this case is whether South East Cable LLC is liable for certain contributions on payroll in 2001, 2002, 2003 and the first half of 2004, as determined by an initial determination issued by the department on October 25, 2004. The ALJ decided that South East Cable was liable based on a theory that an earlier (and now-final) decision concerning South East Cable had "collateral estoppel"  (1)  effect. He did this without conducting an evidentiary hearing. South East Cable has appealed.

The case presents not only the issue of whether and to what extent issue preclusion applies, but also a procedural question about how the potential applicability of that doctrine affects the right to have a hearing. 

Procedural history -- Documents appended by the department to a brief it filed with the ALJ in this matter, would support the following findings concerning the procedural history of this matter. (2)

On July 19, 2001, the department issued an initial determination finding that South East Cable was an employer subject to the UI law effective January 1, 2001. South East Cable appealed. Following a hearing, an administrative law judge acting as an Appeal Tribunal for the department issued a decision on May 16, 2003, which affirmed the subjectivity determination.

The decision that South East Cable was a subject employer was based on its employment of six individuals in 2001: Wayne Reszel, Kevin Morgan, Allen Yanke, Craig Thompson, Grover Thompson and Moses Wells. The decision reviewed the evidence in the record bearing on the question of whether any of these individuals were shown to have satisfied the required number of tests under § 108.02(12)(bm), and found that the required showing had not been made. The decision concluded by stating,

The determination is affirmed. Accordingly, Wayne Reszel, Kevin Morgan, Allen Yanke, Craig Thompson, Grover Thompson and Moses Wells and anyone else performing similar services under similar circumstances are statutory employees of the appellant

The decision was appealed to LIRC, which affirmed it on October 29, 2003. South East Cable attempted to commence an action for judicial review of LIRC's decision, but it did so late, and the appeal was eventually dismissed by the circuit court. That dismissal was not appealed. Thus, the October 29, 2003 LIRC decision affirming the May 16, 2003 Appeal Tribunal decision and the July 19, 2001 determination, is now final.

On October 25, 2004, the department issued another initial determination involving South East Cable, this one determining that it was liable for contributions on certain described payroll in all four quarters of 2001, 2002, and 2003 and the first two quarters of 2004. For the quarters at issue in 2002, 2003 and 2004, the amounts were all estimated because South East Cable had never filed any quarterly tax reports.

South East Cable filed a timely request for hearing on this determination. This request for hearing asserted that the determination was in error because the individuals who it had paid during the quarters at issue were independent contractors.

The matter eventually came on for hearing on June 30, 2006. The hearing notice had stated that the issues for hearing included:

whether, for the time period stated in the Initial Determination, individual(s) described as employees in the Initial Determination or the Summary of Proposed Audit Adjustments are employees of the appellant

The initial determination did not specifically identify any of the individuals on the basis of which it determined the contribution liability it established. In addition, the file does not contain copies of the Summary of Proposed Audit Adjustments or anything else from the audit report, so it cannot be looked to in order to determine the names of the individuals who the department determined had been providing services for South East Cable as employees during the quarters at issue.

At the beginning of the proceedings held on June 30, 2006, the ALJ solicited the parties' views as to the issues and their positions. Counsel for the department articulated its position as being that:

(1) as to 2001, the previous, final, decision was completely preclusive under the doctrine of issue preclusion, so that no evidence should be allowed on that, and

(2) as to 2002-2004, the previous, final, decision would be completely preclusive if there had been no material changes in the relevant facts, and South East Cable had the burden of showing that there had been such changes if it wanted to avoid having the previous decision apply.

Counsel for South East Cable expressed disagreement with the department's position regarding preclusion, but principally argued that he should be given an opportunity to respond in writing to the department's arguments about the application of issue preclusion, this being the first time the department had raised that issue in this case. Ultimately, the parties and the ALJ agreed that the hearing would be continued, and a briefing schedule was agreed upon for submission of written argument on the issue preclusion issue. It was also agreed that South East Cable would provide the department with information about the specific individuals who had provided services for it in 2002-2004 and the amounts which had been paid to them. The hearing was then adjourned without any testimony having been taken.

The matter came on for hearing again on January 22, 2007. At the hearing, counsel for South East Cable requested more time to prepare and serve its responsive brief, in view of the fact that it had only received the department's brief 10 days before, whereas under the original briefing schedule it was to have been allowed two weeks to respond to the department's brief. It was eventually agreed that the hearing would be continued once again to allow time for South East Cable to file its responsive brief.

At that point, the ALJ indicated that one possible outcome after his consideration of the further briefing was that, if he decided that the doctrine of issue preclusion applied,

[I]t may foreclose any future hearing at all, or it will still call for a hearing even if it apply -- even if the doctrine applies on the factual issues of whether people already named in the earlier decision are subject to any changing circumstances in their -- the conditions of their work since the time period covered by that earlier decision. And another additional factual issue that could be covered in a later hearing is whether people -- individuals not covered by the earlier decision have been working during the time period in question under substantially different circumstances than the named employees.

After thus identifying these factual issues which would be presented if he decided the doctrine of issue preclusion applied, the ALJ directed counsel for South East Cable to include in his brief "the equivalent of an offer of proof" on these factual issues about whether there were changed circumstances in 2002-2004. He described was he was seeking as "an offer of proof in your brief as to what things -- what factual matters you believe would be proven through testimony." He indicated that based on considering that submission, he would decide whether there would be a hearing or not, and if so, what its scope would be. After a briefing schedule was set, the hearing was then adjourned without any testimony having been taken.

South East Cable thereafter filed a brief which argued that, while issue preclusion did concededly apply as to services of individuals in 2001, it did not apply to services after that time. South East also argued that

South East Cable, LLC, is not obligated to show, prior to the fact finding hearing before LIRC (sic), as collateral estoppel does not apply.

and that

As this is a new matter dealing with employees during a period of time not covered in the previous order, it is South East Cable, LLC's belief that proof of the parties being independent contractors, rather than employees, need only be presented at the time of hearing, and not prior to it. The issue as to whether or not South East Cable operated with independent contractors or employees is an issue of fact, and no assumption can be made as to how South East Cable operated in the past, but how it operated during a period of time in question.

(South East Cable's March 2, 2007 brief, p. 4) (emphasis added). In its brief, South East Cable made no direct assertion about what it would or could prove as far as any change in the circumstances under which individuals provided services for it.

Thereafter, and without holding any further proceedings, the ALJ issued a decision which consisted, in its entirety, of the following:

The department's initial determination held: that for the first quarter of 2003 (sic(3)  through the second quarter of 2004, the employer owed contributions, filing penalties and interest.

To determine if the types of payments mentioned above are in fact owed requires a resolution of the issue as to whether certain individuals performing services for the employer were employees of the employer.

A decision issued by the Labor and Industry Review Commission in October of 2003 found that individuals performing the same type of services as are involved here were employees of the employer. The decision applied to certain named individuals as well as anyone else performing similar services under similar circumstances. The employer's attempt to appeal that decision was unsuccessful and it became final.

The employer contends that there need not be demonstrated a change of circumstances involving the individuals in question and their relationship with the employer, since the issuance of the LIRC decision, in order for the hearing to proceed. The appeal tribunal disagrees. Absent this showing, it is held that the doctrine of collateral estoppel must be applied.

The appeal tribunal therefore finds that the individuals in question are statutory employees of the employer, within the meaning of section 108.02(12) of the statutes.

It is this decision which is now before the commission for review. 
 

Arguments of the parties -- In its brief in support of application of issue preclusion, the department relies on four LIRC decisions, Harry and Amollie Laurence (LIRC, March 29, 1989); Midwest Speedways (LIRC, August 26, 1991); Bruce Hendricks Const. (LIRC, July 30, 1993), and Froelichs On Main (LIRC, September 30, 1993), asserting that they show that LIRC has adopted the doctrine of issue preclusion as potentially applicable in UC "status" cases (cases arising under § 108.10 involving coverage or tax liability of employers). The department argues that based on these decisions, there is "no doubt" that issue preclusion applied with respect to the first situation described above, that being the matter of the services performed in 2001 by the specific individuals named in the previous, final decision. With respect to the services performed for South East Cable in 2002-2004, the department points to this language in Harry and Amollie Laurence:

The Commission is willing to apply the doctrine of collateral estoppel in this case not only because the appellant already had the opportunity to litigate the precise question presented in the previous proceeding, but also because, judging from the arguments raised in the appellant's petition for review, it does not appear that the appellant would advance any new facts or raise any new arguments in relitigation of this issue that would lead to a different result.

and this language in Midwest Speedways:

In their petition for Commission review, the appellants challenge the Appeal Tribunal's finding that they are estopped from further litigating the "common paymaster" issue because the appellants failed to seek timely judicial review of a previous Commission decision on the issue. The appellants believe the finding is ludicrous. However, a party must file for judicial review of an adverse Commission decision within 30 days after the decision is mailed, sees. 102.23 (1) anc108.09 (7)(a), Stats. The time period for filing a petition for judicial review of a Commission decision may only be extended only under exceptional circumstances not present here. See sec. 102.23 (1)(a), Stats. The appellants may see some distinction between the common paymaster issue previously decided in 1989 and the issue they now raise, but they did not clearly explain that distinction in their petition. The common paymaster issue has been fully litigated and is closed.

The department sees this language as supporting its theory that South East Cable must first "show" a distinction or difference in circumstances with respect to any persons that have performed services for them after the years 2001 before "proceeding". (Department's Brief, p. 4). The department does not otherwise address, however, the question of how exactly this must be "shown" -- or what it means for South East Cable to be allowed to "proceed". In other words, it does not address the question of whether South East Cable can be required to submit factual assertions in writing before it is even allowed an opportunity to prove at a hearing that there were sufficient "difference[s] in circumstances".

With respect to the question of whether issue preclusion applies, South East Cable appears to take the position that the previous decision did no more than to determine that it was subject to the UC Act as of January 1, 2001, and therefore it does not have any preclusive effect as to anything occurring after that date. It also argues that issue preclusion only applies when issues have been litigated in circuit court. Finally, South East Cable argues that Amtronix Industries Ltd. v. LIRC, 115 Wis. 2d 108, 339 N.W. 2d 802 (Ct. App. 1983) supports its position because if issue preclusion applied as the department argues, the Amtronix decision could not have turned out as it did.

With respect to the question of how it would be required to show a change in circumstances if issue preclusion was applicable to subsequent periods unless such a change was "shown", South East Cable has argued that it is entitled to a hearing at which it may attempt to make such a showing. 
 

Discussion -- The first question which must be decided is whether the final LIRC decision of October 29, 2003, has issue preclusion effect.

As the cases relied on by the department illustrate, the commission has acknowledged the potential applicability of the doctrine of issue preclusion to UI cases in a variety of circumstances. Panzigrau v. DILHR (LIRC, Jul. 29, 1988) (effect of concealment decision on subsequent benefit eligibility case); Harry and Amollie Laurence (LIRC, March 29, 1989) (effect of benefit eligibility decision on subsequent contribution liability status case); Midwest Speedways (LIRC, August 26, 1991) (effect of choice-of employer /"common paymaster" status decision on subsequent status case involving same parties); Bruce Hendricks Construction (LIRC, July 30, 1993) (effect of contribution liability status decision on contribution liability status case involving subsequent quarters); Froelichs On Main (LIRC, September 30, 1993) (effect of choice-of employer /"employee leasing" decision on subsequent case involving same issue and quarters); John Schimmer Veal (LIRC, Jan. 31, 1994) (effect of contribution liability status decision on contribution liability status case involving subsequent quarters); Goldberg Trucking (LIRC, April 28, 1994) (effect of contribution liability status decision on contribution liability status case involving subsequent quarters). Reviewing courts have upheld the commission's application of issue preclusion. DILHR v. Panzigrau and LIRC (Dane Co. Cir. Ct., Case No. 88 CV 4739, July 27, 1989); Bruce Hendricks Construction v. DILHR and LIRC (Polk Co. Cir. Ct., Case No. 93 CV 300, August 28, 1995).

South East Cable's argument that issue preclusion only applies when issues have been litigated in circuit court, is wrong. The references in the authorities relied upon by South East Cable to "final judgments" between parties, clearly were not intended in the context of those cases to indicate a limitation in the applicability of issue preclusion to matters litigated in circuit court as opposed to administrative tribunals. In any event, the subsequent decision of the Wisconsin Supreme Court in Lindas v. Cady, 183 Wis. 2d 547, 515 N.W.2d 458 (1994), makes it clear that issue preclusion effect may be given to decisions arrived at by administrative tribunals after litigation before those tribunals.

South East Cable's argument based on Amtronix Industries Ltd. is also without merit. In Amtronix, an audit report issued in 1974 determined that certain individuals providing services as "subcontractors" to Amtronix' predecessor in interest were providing their services as independent contractors. A subsequent audit report covering a period of time after 1974 led to the issuance of a determination in 1978 that individuals who had been providing services as "subcontractors" to Amtronix had done so as employees. The Court of Appeals upheld the substance of the determination (that is, that the individuals were performing their services as employees), but it did so only as of the date of the 1978 determination forward, holding that as far as issues of contribution liability for services prior to that date, the doctrine of equitable estoppel applied to preclude the department from requiring payment of the contributions in question (based on the department's earlier representation that the services could be reported as being provided by independent contractors rather than employees). South East Cable's argument, that if issue preclusion were applicable the department would not have been allowed to determine that the individuals were employees at all, disregards the department's recognition that if there are changed circumstances then issue preclusion may not apply to periods subsequent to those covered by an earlier decision.

By virtue of Wis. Stat. § 108.101, the application of issue preclusion is effectively limited in some circumstances. Thus, a UI decision in a benefit case is not binding in a UI status case, and vice versa; and a decision originating outside of the UI system is also not binding in any UI case. (4)   However, § 108.101 does not contain anything limiting the effect which a decision in one UI status case may have in a subsequent UI status case. Midwest Speedways, Bruce Hendricks Construction, Froelichs On Main, Goldberg Trucking, and John Schimmer Veal were all cases in which a previous decision in a status case was given at least some degree of issue preclusion effect in a subsequent status case. The commission therefore concludes that it is appropriate to consider application of the doctrine of issue preclusion in this case.

The next question which must be decided is the extent to which the final LIRC decision of October 29, 2003 should be given issue preclusion effect. Because of the circumstances here, including the fact that the previous decision involved services provided by certain named individuals in calendar year 2001, there are different considerations presented with respect to these three situations:

1) services by the named individuals in 2001;

2) services by the named individuals in 2002-2004; and

3) services by other individuals in 2002-2004

The findings of fact and conclusions of law in the Appeal Tribunal Decision which was affirmed by the commission in its October 29, 2003 decision included this:

Wayne Reszel, Kevin Morgan, Allen Yanke, Craig Thompson, Grover Thompson and Moses Wells performed these services for pay for the appellant in 2001...The appellant paid well over $6,000 to these individuals for their services in 2001.

(emphasis added). The subsequent findings and conclusions of the Appeal Tribunal Decision that the services of Wayne Reszel, Kevin Morgan, Allen Yanke, Craig Thompson, Grover Thompson and Moses Wells were performed as employees, were clearly in regard to the services which the decision found them to have performed "in 2001".

South East Cable's argument that the previous decision does not have any preclusive effect as to anything occurring after January 1, 2001, is faulty in that it relies on a mischaracterization of what the previous decision involved. While it is true that the ultimate legal effect of the previous decision was to determine that South East Cable was subject to the Act as of January 1, 2001, it arrived at this legal conclusion based on its determination as to the nature of the services provided by the individuals in question in 2001. Pursuant to Wis. Stat. § 108.02(13), an employing unit becomes an employer subject to the UI Act as of the beginning of any calendar year if it paid or incurred liability to pay wages for employment in a certain amount either in that year or in the preceding calendar year. The previous decision found South East Cable to be subject to the UI Act as of the beginning of 2001, because of its finding that the individuals in question provided services for South East Cable as employees in 2001. That last finding was one of the facts conclusively determined by that decision.

There is no colorable argument to be made that the previous decision did not decide the issue of whether the named individuals provided services as employees in 2001. The commission believes that it is clear that, at a minimum, issue preclusion applies to prevent South East Cable from contending that those individuals did not perform their services as employees in 2001.

With regard to the remaining time periods at issue in the instant case (calendar years 2002 and 2003 and the first two quarters of 2004), and the services which may have been performed in those time periods by individuals who also provided services on 2001, or by others who had not done so, the situation is more complicated.

Whether an individual's services are provided in "employment" under the UI Act is a question that is highly dependent on facts specific not only to the employing unit but also to that individual. The factual circumstances under which one individual provides services to an employing unit may be different from the factual circumstances under which another individual provides similar services; one may have significantly more attributes of an independent business operator, for example, even though the services they provide are similar. In addition, the factual circumstances under which an individual provides services to an employing unit may change over time; for example, an individual who initially provides services as an employee may progressively acquire more attributes of an independent business operator.

The commission's now-final decision of October 29, 2003 stated that in addition to the six named individuals found to have performed their services as employees in 2001, "anyone else performing similar services under similar circumstances" was also an employee. The commission agrees with the argument of the department, that if individuals performed services for South East Cable in 2002-2004 which were similar to the services performed for South East Cable in 2001 by the six individuals named in the commission October 29, 2003 decision, and which were performed under similar circumstances, then that previous decision should be given issue preclusion effect on the question of whether those services were performed in covered "employment". However, the questions of whether the services performed for South East Cable in 2002-2004 were "similar" to the services performed by the named individuals covered in the decision concerning 2001 services, and whether those services were performed "under similar circumstances", are questions of fact -- questions on which no hearing has ever been held and no decision has ever been issued.

The commission agrees with the argument of the department, that South East Cable has the burden of proof on these factual questions. This is consistent with the well-established rule, applicable in all cases (i.e., whether or not an issue preclusion question is presented), that Wis. Stat. § 108.02(12) effectively places the burden on the putative employer to prove that individuals who perform services for it for pay do so as independent contractors rather than as employees. However, this allocation of the burden of proof does not resolve the question presented here about the methods of proof which will be permitted.

As described above, the ALJ concluded that he could limit the methods by which South East Cable was allowed to attempt to prove the facts it needed to prove: specifically, he concluded that he could require South East Cable to submit a written description of the facts it contended it would prove if it was given the opportunity to have a hearing, and that he could deny it that opportunity if what was submitted did not satisfy him. For the following reasons, the commission disagrees with this conclusion by the ALJ.

First and foremost, the idea that a party in a UI case could be denied a hearing based on their failure to file some sort of separate written submission prior to the hearing, appears to be inconsistent with the clear requirements of the UI Act. Wis. Stat. § 108.09 provides:

(4) Appeals. (a) Opportunity to be heard. Unless the request for hearing is withdrawn, each of the parties shall be afforded reasonable opportunity to be heard, and the claim thus disputed shall be promptly decided by such appeal tribunal as the department designates or establishes for this purpose. (5)

By its terms, § 108.09(4)(a) requires that if a party files a timely request for hearing from a determination, and if that request is not withdrawn, the party "shall" be afforded "reasonable opportunity to be heard".

It could be argued that where all of the material issues in a case had been litigated and decided in a previous case, such that application of issue preclusion was arguably appropriate, the qualification in § 108.09(4)(a) that a "reasonable" opportunity to be heard is required could be interpreted to allow a limitation on the right to an actual hearing. However that may be, this is not such a case, because the material issues litigated and decided in the previous case were whether the services provided by six named individuals, in 2001, were provided by them as employees, while the material issues presented by this case also include whether the services provided by those individuals or other individuals, in 2002 to 2004, were provided by them as employees. Because there are different factual issues presented, it is hard to see how the requirement in § 108.09(4)(a) for "reasonable opportunity to be heard" could be satisfied, as to those different factual issues, by a mere opportunity to file an "offer of proof" with an ALJ.

The commission finds support for the foregoing conclusions in a number of the decisions cited above.

It is clear from the commission's decision in Bruce Hendricks Construction (LIRC, July 30, 1993), that a hearing was actually held in that case. The question of whether there was a sufficient change in circumstances to avoid the preclusive effect of the previous decision, was evaluated by considering what evidence was presented at the hearing on that "change of circumstances" issue:

The appeal tribunal reached his decision by giving collateral estoppel effect to a 1985 decision of the commission involving the appellant which was eventually affirmed by the Court of Appeals. The appeal tribunal in this case found that no evidence presented at the hearing established that the employment relationship between the carpenters and the appellant had changed since the earlier decision. Consequently, the appeal tribunal concluded that that the earlier decision precluded the parties from relitigating that issue.

Bruce Hendricks Construction (emphasis added). Similarly, in John Schimmer Veal (LIRC, Jan. 31, 1994) a hearing was held in the subsequent case. Thus, in its decision in that case, the commission discussed and analyzed testimony which had been given at the hearing in the subsequent case in order to arrive at a decision on whether it had been satisfactorily proved that the nature of the services and the circumstances under which they were performed had changed from the time of the calendar quarters covered by the earlier decision and the subsequent calendar quarters covered by the later case.

It is also clear that a hearing was held in the subsequent case in Goldberg Trucking (LIRC, April 28, 1994). It is also worthwhile to note the observations the commission made in that case about the limitations on the potential applicability of issue preclusion from an earlier status decision to a subsequent status case involving a later period of time. It said:

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.

There is nothing in the Goldberg Trucking decision which indicates that the ALJ there required the employer to make any kind of written submission prior to the hearing describing what evidence of changed circumstances it would attempt to offer if it was given the opportunity for a hearing. On the contrary, it is clear from the decision that a hearing was actually held in that case, at which the employer was given the opportunity to present evidence bearing on the question of whether there had been a change in circumstances, and that what the commission was doing in deciding the case was looking at the evidence which had been presented at that hearing to see if it established that there had been a sufficient change in circumstances from those on which the earlier decision was based, that the earlier decision should not be given preclusive effect. The references in the Goldberg Trucking decision to the question of whether the employer "asserts" that there was a change on circumstances appear, in this context, to have been to the "assertions" made by the employer at hearing through the argument and evidence it presented at that time.

In the commission's decisions in Harry and Amollie Laurence (LIRC, March 29, 1989); Midwest Speedways (LIRC, August 26, 1991); and Froelichs On Main (LIRC, September 30, 1993), it is not made clear what procedures were followed with regard to hearing. For that reason, though, it can be said at the very least that those decisions offer no particular support for the idea that a party can be denied the opportunity for a hearing at which it can attempt to offer proof of changed circumstances sufficient to avoid application of issue preclusion.

The only case in which the commission appears to have effectively upheld the complete denial of a hearing based on giving issue preclusion effect to a previous decision, is Panzigrau v. DILHR (LIRC, Jul. 29, 1988). However, the situation in that case was distinguishable from the situation herein. In Panzigrau, the previous decision concerned the same event (a failure to report certain facts when filing for benefits in certain weeks) and the same question about that event (whether the claimant had intended to conceal). The previous decision, which was that there had been no intent to conceal, completely resolved the issue in the subsequent case, leaving no issues which needed to be heard. Here, as discussed above, there are significant factual issues which were neither litigated nor decided in the earlier case.  
 

Conclusion -- Subject to the limitations created by Wis. Stat. § 108.101, the doctrine of issue preclusion may be applied in a UI case to limit relitigation of factual issues which were litigated and decided in a previous UI case. However, a decision in a UI status case that services provided for an employing unit by a particular individual in certain calendar quarters were provided by that individual as an employee, does not conclusively establish that services provided for that employing unit by that individual, or other individuals, in subsequent calendar quarters, were provided by those individuals as employees. While such a conclusion may ultimately be appropriate if the employing unit is not able to prove that the services and the circumstances in which the services were provided were materially different in such subsequent calendar quarters, the employing unit is entitled to an opportunity to make that proof at a hearing. Its right to have such an opportunity for hearing may not be made contingent on first satisfying the ALJ by way of a written "offer of proof" that it is entitled to be given such a hearing.

For the foregoing reasons, the commission concludes that the ALJ erred by deciding this case on the merits without first providing South East Cable with an opportunity for hearing. It therefore issues the following:

ORDER

The July 20, 2007 decision of the administrative law judge in this matter is set aside. This matter is remanded to the department for hearing, and a new decision to be issued after such hearing.

Dated and mailed April 10, 2008
southea . srr : 110 :  PC 713  PC 715   PC 729

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

cc:
Attorney Mark S. Tishberg
Attorney Jorge L. Fuentes



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Footnotes:

(1)( Back ) The Wisconsin Supreme Court decided some years ago that the terms "claim preclusion" and "issue preclusion" should be adopted to replace the older terms "res judicata" and "collateral estoppel." Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723 (1995). Notwithstanding the use of "collateral estoppel" in the ALJ's decision and in the parties' arguments, the commission will (except when actually quoting them) use the preferred term "issue preclusion" in this decision.

(2)( Back ) It should be noted that, there having been no evidentiary hearing held, and no documents ever having been received as exhibits, it is not strictly accurate to say that the findings described here are supported by the record, since there is no "record" as such.

(3)( Back ) This is evidently no more than a typographical error. It is not disputed that the initial determination in this case covered contribution liability for all four quarters of each of the years 2001, 2002, and 2003, and the first two quarters of 2004.

(4)( Back ) For this reason, the application of issue preclusion as occurred in Harry and Amollie Laurence (LIRC, March 29, 1989) would no longer be appropriate.

(5)( Back ) The fact that this provision mentions disputed claims does not limit its applicability;   it is expressly made applicable to status cases by § 108.10(2).

 


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