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


MICHAEL R KRAMER, Employe

ALM  LTD, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 99001397WU


An administrative law judge 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 evidence submitted to the administrative law judge. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employe worked for the employer, a transportation brokerage, for about two and a half years as a dispatcher/broker. The employe was in charge of contacting shippers in trucking companies to arrange freight transportation. His last day of work was March 8, 1999 (week 11).

In January of 1999 the employer's owner told the employe he had heard the employe was starting his own business. The employe denied this. The employe was told that if it was true, the employer would consider it a conflict of interest and they would need to part ways.

In March of 1999 the employer again heard a rumor that the employe was starting his own business. The employer checked its reports, which indicated that business was down and that the employe was not booking enough loads. This lead the employer to suspect the employe was calling shippers and then, instead of putting them into the employer's computer system, booking the loads on his own and collecting the commissions. However, the employe denied diverting the employer's customers from it in this manner and stated that he did not operate a competing business while employed by the employer.

The employer also believed the employe was working for a company called Swen Transportation at the same time he worked for the employer. The employer based this suspicion primarily on the fact that the employe continued to do business with that company through the employer after January 31, 1999, in spite of the fact that it was on a credit hold. The employe was, in fact, considering opening a branch office for Swen Transportation, although he insisted that any contact with that company about starting a business was done from his home and that all calls placed from the employer were work-related. In addition to his contacts with Swen Transportation, the employe had been contacting other customers of the employer's from his home during his lunch hour and non-work times in order to determine whether they would be interested in shipping with him in the event he opened his own brokerage.

On March 8, 1999, the employer's owner called the employe and again asked him if he was starting his own business. The employe indicated that he had no definite plans to do so, but was looking at options. The employer's owner notified the employe he was discharged.

The issue to be decided is whether the employe's discharge was due to misconduct connected with his employment.

In Boynton Cab v. Neubeck, 237 Wis. 249, 296 N.W. 636 (1941), the leading case with respect to the meaning of the term "misconduct" as applied to unemployment compensation in the United States, the court said, in part, as follows:

". . . the intended meaning of the term `misconduct' . . . is limited to conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employe, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employe's duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed `misconduct' within the meaning of the statute."

The employer contended the employe was stealing its customer list with the intent of using it in his own business as well as diverting business from the employer and profiting from those actions. Although it was not demonstrated that the employe was diverting business from the employer while he worked for it--the employe denied engaging in a competing business at the same time he worked for the employer, and the fact that loads were down is not sufficient proof to the contrary- -the evidence does establish that he was misappropriating the employer's customer list with the intent of using it in his own business. At the hearing the employe testified that on one occasion he telephoned a customer on his lunch hour to ascertain whether, "hypothetically," if he were to start his own business the customer would use him. Further, in a previous statement to a claims investigator, which was incorporated into the record and which the employe contended was basically accurate, he indicated that during his employment with the employer he had been applying with other carriers to offer services through his own business with the hopes that they would follow him if he started up a business, and that at least one customer expressed an interest in switching his patronage to the employe.

The employe maintained that his actions were permissible because he made the calls from his home and not at the work place. The employe also stated that he did not make a copy of the employer's customer lists, as he already knew their telephone numbers by heart from calling them so often while employed by the employer. He further contended that the employer's customers are accessible to any carrier or broker and were not under contract with the employer. The commission does not believe these factors excuse the employe's actions. The question of whether the employe photocopied the employer's customer list or had it memorized is irrelevant, since the salient fact is that he obtained the names and telephone numbers of the customers through his association with the employer. Moreover, the mere fact that the employe made the telephone calls from his home does not excuse his conduct. It was a breach of his debt of loyalty to the employer to contact its customers while he still worked for it in order to solicit their interest in a competing business, regardless of whether he did so from his home. Finally, the fact that the customers were not under contract with the employer did not give the employe the right to try to draw them away from it at the same time he was working for the employer. The employe was notified by the employer that it would consider his actions in engaging in a competing business to be a conflict of interest, and the commission believes his actions in attempting to establish a business through the employer's customer base were undertaken in wilful and substantial disregard for the employer's interests.

The commission, therefore, finds that in week 11 of 1999, the employe was discharged for misconduct connected with his employment, within the meaning of Wis. Stat. § 108.04(5).

The commission further finds that the employe was paid benefits in weeks 12 through 19 of 1999 in the total amount of $2,128, for which he was not eligible and to which he was not entitled, within the meaning of Wis. Stat. § 108.03(1). Pursuant to Wis. Stat. § 108.22(8)(a), he is required to repay such sum to the Unemployment Reserve Fund.

The commission further finds that waiver of benefit recovery is not required under Wis. Stat. § 108.22(8)(c), because although the overpayment did not result from the fault of the employe as provided in Wis. Stat. § 108.04(13)(f), the overpayment was not the result of a department error. See Wis. Stat. § 108.22(8)(c)2.

DECISION

The appeal tribunal decision is reversed. Accordingly, the employe is ineligible for benefits beginning in week 11 of 1999 and until seven weeks have elapsed since the end of the week of discharge and he has earned wages in covered employment performed after the week of discharge equaling at least 14 times his weekly benefit rate which would have been paid had the discharge not occurred. He is required to repay the sum of $2,128 to the Unemployment Reserve Fund.

Dated and mailed July 20, 1999
kramemi.urr : 164 : 5 MC 610.04

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

James A. Rutkowski, Commissioner


NOTE: The commission did not confer with the administrative law judge regarding witness credibility and demeanor. The commission's reversal is not based upon an assessment of witness credibility, The employe's own unrebutted testimony indicates he was contacting the employer's customers in hopes of using them in his own business, actions which the commission regards as misconduct as a matter of law.


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