FREDERICK V PROM, Employee

KLEMM TANK LINES, Employer

The department determination issued on March 28, 2003, bearing ID No. 030188311 and designating Carl Klemm Inc., UI Account No. 065655, as the party employer, is set aside. This matter is remanded to the department for it to reissue that determination, making U. S. Oil Co., Inc., UI Account No. 051921, a party thereto.

Dated and mailed August 28, 2003
promfre . upr : 110 : 1   PC 715  PC 740 

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

(*)( Back ) Because the determination at issue in this case was never treated by the department as having been appealed, no Hearing Number was ever assigned.  The Hearing Number shown here (03607199MW) has now been assigned to this matter for identification purposes.

The commission is granted the authority by Wis. Stat. § 108.09(6)(c), on its own motion and for reasons it deems sufficient, to set aside any final determination of the department within 2 years from the date thereof upon grounds of mistake or newly discovered evidence, and to take further action within the commission's authority under § 108.09(6)(d). For the reasons described below, the commission is satisfied that the determination issued by the department on March 28, 2003, bearing ID No. 030188311, should be set aside upon grounds of mistake.

Background -

Frederick Prom was laid off from his job as a truck driver with U. S. Oil Co., Inc. ("U. S. Oil") on March 6, 2003. It is not disputed that his separation was due to the fact that U. S. Oil was selling part of its business to Klemm Tank Lines ("Klemm"). Klemm and U. S. Oil had entered into an agreement whereby Klemm agreed to offer jobs to all of the drivers being laid off by U. S. Oil from the part of its business being sold.

Klemm did indeed offer jobs to all of the laid-off U. S. Oil drivers, including Prom. Klemm's offer of work to Prom provided that he would be paid by the mile. Prom had been paid by the hour while driving for U. S. Oil. Prom believed that the difference in how pay was to be figured would have a significant negative financial impact on him. For that reason, he turned down the job he was offered by Klemm. He then applied for UI benefits.

The department conducted an investigation into both the circumstances of Prom's separation from his employment with U. S. Oil, and his refusal of the job offer from Klemm. During the course of the investigations, the department sent U. S. Oil a UCB-16 form, which asked for information about the nature of the separation, and which also stated, "Report any and all other eligibility issues that apply to this claim". U. S. Oil responded by returning the form with a notation that read:

"Division was sold - employee was offered position with company that purchased division at substantially the same pay"

Thus, from the very beginning U. S. Oil clearly raised the job offer refusal issue with the department. It subsequently sent the department a letter which again asserted that the purchasing company had offered Prom a position at substantially the same pay as U. S. Oil had paid him, and thereafter it confirmed that assertion in a telephone conversation with the investigator.

Two initial determinations were eventually issued concerning Prom's claim.

One determination (ID No. 030188311), issued on March 28, 2003, found that Prom had good cause to refuse the job offer made to him by Klemm, on the theory that it was effectively an offer of work at a lower rate of pay and Prom had not had sufficient time to canvas the job opportunities in his labor market. This determination identified only Klemm as the employer. A copy of this determination was mailed to Klemm, but no copy was mailed to U. S. Oil.

Another determination (ID No. 030196821), issued on April 2, 2003, found that Prom had been discharged by U. S. Oil and that his discharge had not been for misconduct connected with his employment. This determination identified U. S. Oil as the employer and a copy was mailed to U. S. Oil.

This second (separation) determination stated at the bottom,

Benefits are allowed with respect to this issue only. Actual payment of benefits will depend on the resolution of another issue.

U. S. Oil did not disagree with the determination that Prom was not discharged for misconduct; it had never contended that he was. However, as described above, U. S. Oil was aware of the fact that Klemm was offering jobs to its former drivers such as Prom. Therefore, and particularly in reference to the notation about the "other issue", U. S. Oil contacted the department to ask about that matter. According to U. S. Oil, it was advised by a claim specialist for the department that the other issue "did not relate to U. S. Oil and was nothing for U. S. Oil to be concerned with."

It was not correct, that the resolution of the job offer refusal issue "did not relate to U. S. Oil and was nothing for U. S. Oil to be concerned with". Prom's claim for UI benefits potentially affected the unemployment account of U. S. Oil, since it had been his employer. If it were determined that Prom was eligible for benefits notwithstanding his refusal of an offered job, U. S. Oil's UI reserve account could be charged for benefits paid to Prom; if it were determined that Prom was ineligible because of his refusal of an offered job, U. S. Oil's reserve account would be spared such charges. By way of contrast, Prom's claim did not affect the UI reserve account of Klemm, because it had never been his employer.

U. S. Oil was evidently not reassured by the representations made to it by the department's claim specialist, and it attempted to file an appeal. U. S. Oil's appeal letter, filed on April 16, 2003, identified itself as an appeal of ID No. 030196821, which was the April 2, 2003 determination addressing the separation issue. This is not surprising, since this was the only determination U. S. Oil had actually been sent and knew the number of. However, the appeal stated that U. S. Oil intended to appeal "the determination awarding unemployment benefits" to Prom, and it stated,

We are appealing the determination of benefits because, upon discharge from employment with U. S. Oil Co., Inc., Mr. Prom, a truck driver, was offered but refused suitable work with another trucking company.

In response to this appeal, the department issued a "Confirmation Of Timely Appeal" form, referencing ID No. 030196821. Thereafter, it issued a Notice of Hearing (again referencing ID No. 030196821) stating that the issues for hearing would be:

Whether the employee was erroneously paid unemployment benefits that must be repaid to, or waived by, the department.

Whether the employee's separation from employment was a quitting, a discharge for misconduct, or a suspension or termination because the employee was unable to do, or unavailable for, suitable work otherwise available with the employer, and whether the employee was able and available for work.

This is the standard set of issues used by the department in cases of an appeal from a determination concerning a separation issue. Subsequently, however, the department issued an amended hearing notice. It included the issues noted above, but also added a statement that the issues would include:

Whether the claimant received a bona fide offer of work; was duly recalled by a former employer; had good cause for failing to accept that offer; and whether the claimant was otherwise able to work and available for work.

This amended hearing notice contained the "Important Message", "[t]his Notice is amended to show the correct issue(s) appealed from." Thus it appears that, at least as of this point, the department apparently was intending to allow U. S. Oil to have a hearing on the job offer refusal issue.

Subsequently, however, the Senior ALJ at the Milwaukee Hearings Office contacted U. S. Oil's attorney and informed him that the ALJ scheduled to preside at the hearing did not have jurisdiction to hear the appeal with respect to the job offer refusal issue, and that U. S. Oil would only be allowed to be heard on the issue of Prom's separation from U. S. Oil. The Senior ALJ stated that U. S. Oil lacked standing to challenge the department's determination on the job offer refusal issue. Finally, the Senior ALJ stated that because the determination on the job offer refusal issue was mailed on March 28, 2003, U. S. Oil's appeal letter, which was filed on April 16, 2003, was untimely as an appeal of that determination - despite the fact that the determination had only been mailed to Klemm.

Notwithstanding these indications from the Senior ALJ, U. S. Oil appeared at the scheduled hearing. However, the presiding ALJ reiterated the position which the Senior ALJ had previously taken, and he would not allow U. S. Oil to be heard on the job offer refusal issue. He then asked whether U. S. Oil still wanted to proceed with hearing on the separation issue; and not surprisingly in view of the fact that it had never disputed the department's determination on that issue, U. S. Oil indicated that it did not. Therefore, the ALJ treated this as a request to withdraw the hearing request, and on May 27, 2003 he issued an appeal tribunal decision ("ATD") dismissing the appeal on the basis of withdrawal.

U. S. Oil then filed a letter indicating that it was intended as an appeal of the withdrawal ATD decision, as well as both of the determinations. The department treated this as an attempt to petition for review of the withdrawal ATD, and forwarded the file to the commission.

The commission is satisfied that U. S. Oil is not actually seeking to appeal either the determination concerning the separation issue (which was addressed in ID No. 030196821), or the withdrawal ATD which dismissed U. S. Oil's appeal of that determination. Rather, U. S. Oil is clearly seeking to challenge, and to be given the right to be heard on, the job offer refusal issue, which was addressed in ID No. 030188311. However, the department did not make U. S. Oil a party to that determination. No appeal was ever filed from that determination by a party thereto, and it is now final. Therefore, the only authority which the commission has with respect to that determination is the authority set forth in Wis. Stat. § 108.09(6)(c) which applies, inter alia, to final determinations.

Discussion -

U. S. Oil was not a party to the determination concerning the job offer refusal issue - but that is simply because the department chose not to make it a party. The question is, whether it should have been made a party.

The relevant statutory provisions make a number of references to "parties" to determinations:

108.09 Settlement of benefit claims
. . .
(2) Computation And Determination
. . .
(b) The department shall issue determinations whenever necessary to resolve any matters which may bar, suspend, terminate or otherwise affect the employee's eligibility for benefits.
. . .
(d) A copy of each determination shall be mailed to the last-known address of each of the parties, except that a party's copy of any determination may be given to such party instead of being mailed.

(2r) Hearing Request. Any party to a determination may request a hearing as to any matter in that determination if such request is made in accordance with procedure prescribed by the department and is received by the department or postmarked within 14 days after the determination was mailed or given to such party, whichever first occurs.
. . .
(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.

However, these provisions do not say who the "parties" are supposed to be. The department's rules are similarly uninformative:

DWD 140.01 Hearings and Appeals. (1) Appeal Rights. Any party to a determination issued under ss. 108.09 or 108.10, Stats., has the right to an appeal. An appeal as to any matter in a determination is a request for hearing and shall be filed with the department by the appellant or its representative. Each determination issued under ss. 108.09 or 108.10, Stats., shall specify the time limit within which any appeal is required to be filed with the department under ch. 108, Stats.

(2) Time Limit For Filing (a) An appeal shall be filed after a copy of the determination is mailed or given to a party, whichever first occurs, as specified under ss. 108.09 or 108.10, Stats. If a party first receives a determination after the statutory appeal period has expired and through no fault of that party, the statutory appeal period as specified under ss. 108.09 or 108.10, Stats., shall extend from the date the party receives the determination. An appeal received within these time limits is timely filed.

DWD 140.02 Representation of parties. Any party may appear on the party's own behalf at any hearing under this chapter or appear with or by a representative. . .

DWD 140.03 Notice of pending appeal. The department shall promptly notify the parties in writing of the appeal after an appeal is received. . .

Again, as in the statutes, there are numerous references to the "parties" to determinations and appeals, but no indication of how it is determined who is a party.

Thus, the statute and rules are ambiguous. It is therefore necessary to interpret the language of those provisions in such a way as to supply a definite meaning for "party to a determination" and similar terms.

The commission believes that Cornwell Personnel Associates, Ltd. v. DILHR and Truszynski, 92 Wis. 2d 53, 284 N.W.2d 706 (Ct. App. 1979) is instructive on the question of what the most appropriate interpretation is. In Cornwell, the employee had worked for Bucyrus-Erie Co., and after his employment ended he established a benefit claim and began receiving benefits, which were charged to the account of Bucyrus-Erie. During the time he was claiming, the employee also began doing some work as a temporary with Cornwell Personnel Associates. That relationship then ended, and the department began an investigation into the circumstances of the separation in order to determine if it affected the claimant's eligibility. Cornwell reported to the department, that it considered the employee to have quit his job with it.

Had the employee quit his job with Cornwell under circumstances that called for a suspension of benefit eligibility under Wis. Stat. § 108.04(7), this would have had an effect on Bucyrus-Erie, because the claimant would have stopped drawing benefits on its account. However, and significantly for the issues presented in the Cornwell case, it would not have had an effect on Cornwell. This is because the claimant had not worked enough weeks for Cornwell for it to have any liability for his benefits.

After investigating, the department determined that the claimant had good cause to quit under § § 108.04(7)(c) and (e). The department therefore issued a determination to this effect, but in a reflection of the same practice that is seen in this case, the department sent a copy only to Cornwell, and not to Bucyrus- Erie.(2)

Cornwell then filed a request for hearing from the determination. After a hearing, at which Cornwell appeared but the claimant did not, the administrative law judge issued a decision affirming the determination. Cornwell then appealed to the commission, which also affirmed. Cornwell then commenced a proceeding for judicial review.

At that point, the commission argued that the proceeding should be dismissed because under Wis. Stat. § 102.23(1) such a proceeding may only be commenced by an "aggrieved party", and because Cornwell's unemployment compensation account was not affected by the decision on the employee's claim, it was not an "aggrieved party". The Court of Appeals agreed, and ordered the matter dismissed. In so doing, the court explained:

The issue on this appeal is therefore whether Cornwell is a "party aggrieved" within the meaning of sec. 102.23(1), Stats. Cornwell contends that it is such a party, despite the fact that its unemployment reserve account was not affected by the commission's decision. It asserts that it has an interest as a contributor to the unemployment compensation fund in assuring the proper administration of that fund. It argues that if ineligible employees are allowed to obtain benefits, all employers will eventually be required to contribute more than at present to sustain the benefits. It also contends that the department, by failing to inform it that its own unemployment reserve account was not in jeopardy in these proceedings, is estopped from raising its lack of standing to seek judicial review. We reject these contentions.
. . .
Cornwell does not and cannot allege any "injury in fact" to its "substantial interests" from the commission's decision. Its account was immune from liability at the time the decision was made. Its interest in seeking that the act is properly administered and that persons not qualified for benefits do not receive them by inadvertence or dishonesty, which is shared in common with all employers subject to the Unemployment Compensation Act, is far more remote than the interests at stake in Wisconsin's Environmental Decade, supra. In that case the complaint alleged a direct harm to the environment which would occur from the Public Service Commission's actions, though the injury would be "remote in time." [citation omitted]. In this case Cornwell merely asserts the possibility that if persons wrongfully receive benefits, all employers may eventually be required to contribute more to the reserve funds. Its claim is purely speculative. Courts are not the proper forum for citizens to "air generalized grievances" about the administration of a governmental agency.

92 Wis. 2d 61-62. What is significant about Cornwell is its clear suggestion, that if an employer's unemployment reserve account was affected by a decision concerning a claimant's eligibility, that employer would be able to establish "injury in fact" to its "substantial interests".

In addition, Cornwell is of particular importance because the court was presented with and discussed the type of situation presented in this case, that being the department's refusal to allow an employer actually affected by an issue to participate in its adjudication. First, the court recognized, although it did not reach, the question about who should be considered a "party" to a determination:

Neither the department nor Cornwell addresses the question whether Cornwell was a "party" within the meaning of sec. 108.09(7) (a). We assume for purposes of this appeal, without so holding, that it was. n8

n8 It could be argued that Cornwell was not a "party" within the meaning of sec. 108.09(7) (a), Stats., but that it was merely an employer from whom the department was entitled to solicit information pursuant to secs. 108.08(2) and 108.09(1), n.1 supra. As this issue was not raised, we do not examine it.

92 Wis. 2d at 60. Later in its decision, the court issued a clear criticism of the department's practice of not allowing employers actually affected by claims to participate in their adjudication. The court said:

Cornwell asserts that if it is not allowed standing in this action, no other employer will be able to contest the commission's allegedly wrongful decision. That may be true. It is apparent from the record that the true employer-interest, Bucyrus-Erie, was not notified of any of the hearings or proceedings within the department, despite the fact that its reserve account was the only one affected by any of those proceedings. While we cannot condone a system which does not inform a party in interest of proceedings affecting that interest, the department's failure in this regard does not convert Cornwell's participation in the proceedings into standing to seek judicial review.

92 Wis. 2d at 62 (emphasis added). The court here was unmistakably expressing the opinion, that the employer whose account was potentially affected by the benefit claim, Bucyrus-Erie, was (as contrasted to Cornwell) a true party in interest, which should have been informed of the determination. The court's statement, that it "cannot condone a system which does not inform a party in interest of proceedings affecting that interest", militates in favor of an interpretation of the relevant provisions of § 108.09 under which "party to a determination" and similar terms would be construed to include employers whose reserve accounts are potentially affected by determinations.

Another Wisconsin court decision which the commission finds to be important to this issue is Brandt v. LIRC, 166 Wis. 2d 623, 480 N.W.2d 494 (1992). In that decision, the Wisconsin Supreme Court addressed the issue of who was an "adverse party" required to be joined in a proceeding for judicial review of a commission decision in a UI case. While Brandt concerned only interpretation of statutory provisions concerning judicial review of UI decisions, it nevertheless established a rule that, when logically extended back to the earlier stages of UI adjudication, essentially compels the conclusion that U. S. Oil should have been treated as a "party" to the job offer refusal determination here.

In Brandt, the issue was whether the plaintiff employee in a UI judicial review had complied with the requirement of Wis. Stat. § 102.23(1)(a) that in any such judicial review proceeding, "the adverse party shall also be made a defendant". The commission had argued to the court that employers are always adverse parties to claims by employees because employers are adversely affected by unemployment compensation claims. The commission had pointed out that benefits that are paid to an employee are charged to the employer's account, and that as a result, the employer's tax rate will increase as charges are made to the account, or will be credited if it is found that an employee was overpaid. The court accepted this argument completely, expressly holding that "an employer is an adverse party in unemployment compensation judicial review proceedings". Considering different factors which were urged to be relevant to determining whether an employer was an "adverse party", the court clearly gave the greatest weight to the effect that a claim could have on an employer's account. Thus, the court stated,

To begin, we state that it is our opinion that the factors outlined by Brandt do not conclusively determine an adverse party. In addition, we believe that it cannot be said that a party is adverse because an employer, or an agent on behalf of the employer, appeared at the hearing. The employer may have attended the hearing for other purposes.

We also find that Brandt is incorrect in stating that Brandt Contractors, Inc. is not a party in whose favor the award was made. The unemployment compensation program provides benefits to unemployed workers. The benefits are funded by a tax on employers. See sec. 108.18, Stats. The level of taxes is directly affected by the number of the employers' workers who are unemployed. See sec. 108.18(4). Consequently, every time an employee files a claim for benefits, an "adverse" effect is created because allowance of a claim can result in an increase in the tax level applicable to the employer in and of itself or in combination with other claims.

Conversely, should Brandt be required to reimburse the fund, the employer will receive credit. Robert L. Brandt claimed unemployment benefits for seven years. Benefits paid to him were charged to the account of his employer, Brandt Contractors, Inc. A final determination that the benefits were erroneously paid results in restoring the amount paid to the employer's account. Such crediting will increase the amount of the employer's reserve and could have the effect of reducing its tax rate.
. . .
Thus, the interest of Brandt Contractors, Inc. is adverse to that of Robert L. Brandt because of the effect of an eligibility determination on its account. The effect is adverse, even though the impact may not be immediate. We therefore hold that an employer is an adverse party when an employee appeals an unemployment compensation benefits decision to circuit court.

166 Wis. 2d at 632-34 (emphasis added).

While Brandt concerns the question of whether an employer is an "adverse party" within the meaning of and for the purposes of Wis. Stat. § 102.23, the commission believes that it necessarily implies that an employer whose account is potentially affected by a benefit claim must be considered a "party" within the meaning of and for the purposes of § 108.09. This is because there is a single path along which such proceedings move, beginning with initial determinations by the department and continuing to hearings before ALJs, then to commission review, and then to judicial review proceedings in court. Brandt clearly holds that an employer whose account is affected by a claim is an essential participant at the judicial review end of this process. However, this is impossible if such employers are excluded from participating at the initial determination end of the process, because there is no way for them to join the process "midstream" if they have not been made a party at the beginning. (3) It is a cardinal principle of statutory construction, that the words of a statute should be interpreted in such a way as to avoid unreasonable and absurd results. Schwartz v. ILHR Dept., 72 Wis. 2d 217, 222, 240 N.W.2d 173 (1976). Interpreting "party to a determination" and similar terms in Wis. Stat. § 108.09 to include employers whose reserve accounts are potentially affected by determinations avoids this problem.

Finally, the commission considers that the decision of the Wisconsin Supreme Court in Boynton Cab v. Giese and Ind. Comm., 237 Wis. 237, 296 N.W. 630 (1941), points toward the desirability of construing "party to a determination" and similar terms in Wis. Stat. § 108.09 in such a fashion.

The fourteenth amendment to the United States Constitution guarantees that no state shall "deprive any person of life, liberty, or property without due process of law." In Boynton Cab v. Giese, the Wisconsin Supreme Court suggested that the interest of an employer in not having their unemployment contribution rate affected by the granting of an employee's benefit claim, is a "property" interest sufficient to bring into play the protections of the due process clause. In Giese, the employee (Giese) claimed benefits and the employer (Boynton Cab) asserted that he had been discharged for misconduct. A department deputy conducted an investigation and issued an initial determination concluding that the discharge had not been for misconduct. The employer appealed and a hearing was held before an appeal tribunal, which affirmed the initial determination. On further appeal, the Industrial Commission also affirmed. The employer then commenced a proceeding for judicial review, arguing among other things that the issuance of the initial determination based on an ex parte investigation was a denial of procedural due process. In rejecting this argument, the Wisconsin Supreme Court relied on the fact that, whatever the nature of the process that led to the initial determination, the employer had a right to appeal it and to have a hearing. Thus, the Court stated:

Whatever may have been the nature of the evidence upon which the deputy acted, it does not appear that appellant was aggrieved by his mere "initial determination" upon but an administrative investigation, which was not binding upon appellant inasmuch as it was entitled to and duly granted, upon its request, a hearing with a trial de novo before the tribunal under subs. (2) to (5) of sec. 108.09, Stats.

237 Wis. at 240-41 (emphasis added). The Court observed that there was no showing that the appeal tribunal proceedings had been affected by the evidence which had been presented ex parte to the department deputy. The Court further observed that in view of "the evident intention under sec. 108.09 (2) to (5), Stats., that the deputy's investigation and initial determination shall be superseded in the event of a request by appellant for a hearing by an appeal tribunal," and the fact that appellant was granted such a hearing, appellant could not be deemed to have been denied due process of law. In other words, the court was saying that the fact that the investigation did not satisfy the requirements of due process did not matter because the right to appeal and have a hearing and a decision de novo did provide due process. The clear implication was, that if the situation were such that there was no right to appeal and have a hearing and a decision de novo, there would be a problem. That is precisely that situation here: U. S. Oil was denied the right to appeal the determination that affected its interests and it was not given an opportunity for hearing on the issues it involved.

Another important and well-accepted principle of statutory interpretation, is that a construction of a statute which gives rise to serious doubt of its constitutionality should be avoided where a different construction, which will avoid such doubt, is permissible under the terms of the statute. Swanke v. Oneida County, 265 Wis. 92, 99, 60 N.W.2d 756, 62 N.W.2d 7 (1953). Such a different construction is permissible here. The phrase "party to a determination" and similar terms in Wis. Stat. § 108.09 may be interpreted to include employers whose reserve accounts are potentially affected by determinations. The commission concludes that such an interpretation is appropriate.

Conclusion -

Based on the foregoing analysis, the commission concludes that the department's issuance of the job refusal determination in this case involved a "mistake", within the meaning of Wis. Stat. § 108.09(6)(c), because U. S. Oil was not made a party to that determination when it should have been under a proper interpretation of the provisions of Wis. Stat. § 108.09. For that reason, the commission has ordered that the determination be set aside. The department is further ordered to reissue that determination, making U. S. Oil a party thereto. As a "party to [the] determination", within the meaning of Wis. Stat. § 108.09(2r), U. S. Oil will then have the right to file a request for hearing as to that determination, should it choose to do so.

cc: 
U. S. Oil Co., Inc.
Attn: Attorney Joseph A. Durocher

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(2)( Back ) Presumably, Cornwell had been listed on the determination as the employer. In any event, it is clear from the Cornwell decision, that the determination was sent to Cornwell but not to Bucyrus-Erie.

(3)( Back ) This was illustrated here by the department's refusal to allow U. S. Oil to appeal the determination. Under Wis. Stat. § 108.09(2r), "any party to a determination" may appeal. Because U. S. Oil was not made a "party to [the] determination", it was then denied the right to appeal it.

uploaded 2003/09/02