In the matter of the unemployment benefit claim of
CRAIG I KIRCHER, Employee
Involving the account of
STRICTLY WALLEYE HEADQUARTERS, Employer
On July 25, 1992, the Department of Industry, Labor and Human Relations (the department) issued an initial determination which held that the employe was discharged but that misconduct was not established. The employer filed a timely petition for commission review and a hearing was held before Administrative Law Judge Theresa M. Larson on August 26, 1992. Judge Larson affirmed the initial determination and, on August 28, 1992, issued an appeal tribunal decision finding that the employe was discharged, but not for misconduct.
The employer then filed a timely petition for commission review of the appeal tribunal decision under sec. 108.09 (6)(a), Stats., on September 18, 1992. On April 29, 1993, after a credibility conference with Judge Larson, the commission affirmed the appeal tribunal decision. In its decision, however, the commission noted that it would reconsider its decision if, within the one year period under sec. 108.09 (6) (c), Stats., the employe were convicted of the theft for which he was discharged.
On July 26, 1993, the commission received a motion for reconsideration from the employer. Attached to the motion was a photocopy of a certified copy of a "Judgment of Conviction and Order of Probation." The judgment, entered on April 15, 1993, adjudged the employe guilty of misdemeanor theft on a plea of no contest. By order dated August 26, 1993, the commission set aside its April 29, 1993 decision and remanded this case to the department for additional testimony.
Administrative Law Judge LeAnn R. Prock held a remand hearing on behalf of the commission on April 5, 1994. The employe did not appear. The exhibits of the remand hearing and a synopsis of the hearing testimony have now been submitted to the commission. Based on the applicable law, records and evidence in this case, and after consulting with Administrative Law Judge Larson, the commission makes the following:
The employe worked as the manager of a retail business owned by the employer. His first day of work was May 1, 1992, and he worked full-time until his discharge on July 1, 1992 (week 27). At the time of the discharge, the employer told the employe that he was discharged because of his attitude, customer complaints, and the employer's suspicion that he had stolen cash and merchandise. The employe denied the allegation of theft.
On August 10, 1992, the employer reported its allegations of theft to the Minocqua Police Department. A criminal complaint was filed on September 15, 1992. The complaint was based largely on the investigation of Detective Sergeant Gary D. Saari, and the statements of the employe's estranged girlfriend and one of the employer's owners. The employe eventually pleaded no contest to misdemeanor theft and a conviction on that plea was entered on April 15, 1993.
Detective Saari testified at the remand hearing before Judge Prock. He stated that the employe's girlfriend, Lisa Warmuth, told him during the investigation of the case that the employe would return from work daily with at least $50 in cash, as well as merchandise, telling her he had ways of covering his tracks. She provided Detective Saari with packaging from merchandise totaling $116.51 and told him that the employe had brought that merchandise home in one day. He also testified that when the employe was arrested, the police seized from his home several items of the same description as the merchandise that was allegedly stolen.
Detective Saari also testified that several other individuals, customers or business associates of the employer, told him that they paid amounts to the employe on account for the employer which the employer later claimed it never received.
The employer's owner testified that the items seized by the police were returned to him, and that they came from his retail business. The owner was fairly certain the items could not have been purchased from competitors. He also testified that the employe could not purchase any merchandise from the employer's business without one of the owners being present. He also testified about the customers who reported paying sums to the employe for which the employer could find no record.
Finally, Ms. Warmuth testified that the employe brought home cigarettes, other merchandise and cash from the employer's business almost every day. The employe specifically told her he took the money from the employer's till and she believed him because he did not have the money when he left for work. He also told her he deserved the merchandise and cash because he worked hard and did not get paid enough. He also told her to burn the merchandise packaging, but she kept some of the packaging on one occasion when the couple were fighting. She testified she provided the packaging to Detective Saari.
The employe, as noted above, did not appear at the remand hearing. At the original hearing before Judge Larson, however, he testified that he had obtained $1,000 worth of the employer's merchandise on credit or by working odd jobs for the employer. He denied taking anything that the employer did not know about.
An employe who is discharged for misconduct is ineligible for benefits until he requalifies under sec. 108.04 (5), Stats. The supreme court has defined misconduct as conduct amounting to a wilful or wanton disregard of the employer's interests, as is shown by deliberate violations or disregard of standards of behavior which an employer has the right to expect from its employes. Boynton Cab. Co. v. Neubeck, 237 Wis. 249, 259-60 (1941); Wehr Steel Co., v. ILHR Dept. 106 Wis. 2d 111, 116 (1982). Further, an employer has the burden of proving misconduct, Consolidated Const. Co. v ILHR Dept., 71 Wis. 2d 811, 820 (1976), and the commission has consistently held that clear and convincing evidence is necessary to prove theft when an employer alleges misconduct on that ground, Ronald Mueller v. Keilkamp Trucking., Inc., hearing no. 89-605632 MW (LIRC, June 7, 1991). See also: Kruse v Horlamus Industries, 130 Wis. 2d 357, 363-64 (1986).
As the commission noted in its prior decision, circuit courts have held that public policy requires the denial of unemployment compensation benefits when an individual is found guilty of a criminal charge of theft from an employer, even in cases where the conviction is entered after the unemployment compensation hearing and when no evidence of theft was introduced at the hearing. Two decisions to this effect written by the late Justice George R. Currie, sitting as reserve judge, are notable: Koss Corporation v. DILHR and William Gray, Dane County Circuit Court case no. 153-261 (July 5, 1977); Harley-Davidson Motor Company v DILHR & Donald E Simmerman, Dane County Circuit Court case no. 161-226 (November 13, 1978). (1) On the other hand, the commission acknowledges the Supreme Court has held that under the common law a criminal conviction, whether based on a plea of no contest or upon the verdict of guilty, is generally not admissible in a subsequent civil action as evidence of the facts on which the conviction is based. In Matter of Estate of Safran, 102 Wis. 2d 79, 94 (1981).
However, the commission need not determine whether the common law rule described in Safran applies in this case. The commission concludes that the record on remand in this case provides clear and convincing evidence of theft, apart from the fact of the employe's conviction of misdemeanor theft. Ms. Warmuth's testimony establishes that the employe removed cash and numerous items of merchandise from the employer's business, while indicating to her that he took the items came in. Several of these items were recovered by the police and the owner's testimony establishes they were removed without permission. In addition, although the hearsay statements of customers related by the employer and Detective Saari may not be used as the sole basis for a finding of fact under sec. ILHR 140.12 (1), Wis. Adm. Code, they do substantiate Ms. Warmuth's testimony that the employe stole cash from the employer.
Finally, the employe did not appear at the remand hearing to refute the allegations made against him. True, the employe did deny any misconduct at the original hearing held before he pleaded no contest to misdemeanor theft. However, the commission generally accords little weight or less weight to a party's testimony at a prior hearing when that party fails to appear at a later remand hearing, especially when the party is aware that the prior testimony may be discounted. Fabu Mogaka v. ARC Community Corrections, (LIRC, March 8, 1990). In this case, the commission's remand order, a copy of which was attached to the notice of hearing, should have provided sufficient notice to the employe that his testimony at the hearing before Judge Larson would be called into question.
The commission therefore finds that in week 27 of 1992, the employe was discharged for misconduct connected with his work, within the meaning of sec. 108.04 (5), Stats.
The commission further finds that the employe was paid benefits in the amount of $225 for each of weeks 29 through 35 of 1992. This amounts to a total of $1,575 for which the employe was neither eligible nor entitled, within the meaning of sec. 108.03 (1), Stats. Pursuant to sec . 108.22 (8) (a) , Stats., he is required to repay such sum to the Unemployment Reserve Fund.
The appeal tribunal decision is reversed. Accordingly, the employe is ineligible for benefits beginning in week 27 of 1992, 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 $1,575 to the Unemployment Reserve Fund.
For purposes of computing benefit entitlement: Base period wages from work for the employer prior to the discharge shall be excluded from any computation of maximum benefit amount for this or any later claim. If the employe was also paid base period wages from work by other covered employers, the excluded wages shall be used to determine benefit eligibility. However, any benefits otherwise chargeable to a contribution employer's account shall be charged to the fund's balancing account.
Dated and mailed June 24, 1994
101 : CD8000 MC 630.14 PC 740
/s/ Pamela I. Anderson, Chairman
/s/ Richard T. Kreul, Commissioner
/s/ James R. Meier, Commissioner
The commission conferred with Administrative Law Judge Larson, pursuant to Transamerica Ins. Co. v. ILHR Dept., 54 Wis. 2d 272, 28348 (1972). Judge Larson noted that the employer offered little concrete evidence at the original hearing; except the testimony and written statement of the employe's estranged girlfriend. Judge Larson did not find that testimony particularly credible, given the bad feelings between Ms. Warmuth and the employe. Judge Larson also noted Ms. Warmuth's reference to some. secret which the employe held over her in an unrelated matter. She also wondered why the employer did not perform an inventory or audit to document its allegations of theft. Given the record as it stood after the original hearing and the higher burden of proof that applies in theft cases, Judge Larson's finding that the employer did not establish misconduct was appropriate.
However, consistent , with Harley-Davidson, supra, and Koss Corporation, supra, the commission remanded this case for further hearing upon learning of the employe's conviction for theft. At the remand hearing, Ms. Warmuth's testimony was corroborated in several important aspects by Detective Saari. Further, the hearsay statements from customers concerning missing cash payments at least were related by Detective Saari as well as the employer's owner, increasing the reliability of the statements. This hearsay, while circumstantial in nature and alone an insufficient basis for a finding of fact, supports the credibility of Ms. Warmuth's testimony that the employe took cash from the employer's till., Given this additional evidence, not available to Judge Larson (and possibly not available to the employer at the time given that the criminal case was pending), the commission reached a different assessment of Ms. Warmuth's testimony.
NOTE: The Department will withhold benefits due for future weeks of unemployment in order to offset payment of U. C. and other special benefit programs that are due to this state, another state or to the federal government.
Contact the Unemployment Compensation Division, Collections Unit, P.O. Box 7888, Madison, WI 53707, to establish an agreement to repay the overpayment.
Federal law does allow for waiver of an overpayment of EUC when the overpayment was not the fault of the claimant and recovery would cause extraordinary hardship. An application for waiver can be obtained by sending a letter to: Unemployment Compensation Division, EUC Unit, P.O. Box 7965, Madison, WI 53707.
Craig I Kircher
Anderson OBrien Shannon Rice & Bertz
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(1)( Back ) Reported respectively in 12 Unemployment Insurance Reporters, pars. 2020.407 and 2020.409 (CCH, 1993).