Opinion
Civil Action No. 99A-05-001.
Date Submitted: October 8, 1999.
Date Decided: January 14, 2000.
Appeal from decision of Unemployment Insurance Appeal Board — Reversed and Remanded
David H. Williams, Esquire and Ellen Marie Cooper, Esquire, Morris, James, Hitchens Williams, Wilmington, Delaware, Attorneys for Appellant United Propane, Inc.
Craig A. Karsnitz, Esquire, Young Conaway Stargatt Taylor, LLP, Georgetown, Delaware, Attorney for Appellee Deborah Sowers-Vescovi.
MEMORANDUM OPINION
This action is before the Court on appeal from a decision of the Unemployment Insurance Appeal Board ("UIAB") granting unemployment benefits to the Appellee, Deborah Sowers-Vescovi ("Claimant"), for an unspecified period after December 29, 1998. The Appellant, United Propane, Inc. ("United"), appeals this decision on the grounds that the UIAB made various errors of law in reaching its decision.
United urges on appeal that the UIAB committed errors of law and failed to address several pivotal legal issues raised by the evidence before it. United further urges that the decision below, and the earlier decisions upon which it was predicated, is tainted by two primary errors of law. First, it argues that the UIAB erred as a matter of law by never determining whether the Claimant was indeed "eligible" for benefits before deciding that she was not "disqualified" from receiving benefits. Second, United urges that the UIAB erred as a matter of law by adopting the Referee's theory and decision that the Claimant's leave of absence in December, 1998, constituted a discharge and not a lay-off. Had it been considered a lay-off, then a "just cause" analysis would be inappropriate.
United also argues that the UIAB failed to address several legal issues raised by the evidence before it. First, they argue, the fact that the Claimant signed a non-compete agreement raises issues of her availability to work and hence her eligibility for benefits. Second, even if qualified and eligible for benefits beginning in December, 1998, the UIAB failed to address whether the Claimant's official termination in March, 1999, disqualified her from receiving benefits after that date. United asks that the UIAB be reversed, or in the alternative, that the case be reversed and remanded for additional findings consistent with the applicable law.
The Claimant, in her Answering Brief argues that the UIAB heard and ruled on the only issue put before it, specifically, the issue of whether the Claimant was discharged for cause and not entitled to benefits. Thus, the Claimant argues, the other issues raised by United are not properly before this Court. United, however, argues in reply that these issues are necessarily raised by, and imbedded in, the evidence before the Claims Deputy, Referee, and UIAB.
For the reasons stated below, this Court reverses the decision of the UIAB and remands for additional proceedings in accordance with this opinion.
STATEMENT OF FACTS AND STAGE OF PROCEEDINGS
United, a Maryland corporation, supplies propane products to customers in various areas in the region including Rehoboth Beach, Delaware. Claimant was employed by United in April, 1998, as a manager in its Rehoboth Beach office.
Prior to joining United, Claimant was employed by a competitor, Suburban Propane ("Suburban"). While with Suburban, Claimant signed a non-compete agreement prohibiting her from working for another propane distributor within 75 miles for one year and prohibiting her from soliciting customers or from attempting to hire Suburban employees for two years. Claimant asserts that at the time she was employed by United, she informed them of the non-compete clause. There is some question whether United also knew the terms of the agreement. United, however, states that at the time it hired the Claimant it was not aware of the non-compete agreement and that the only thing said was that the Claimant had signed some legal papers with Suburban and needed to look into them before accepting employment with United.
In July, 1998, Suburban wrote to United informing it of the non-compete agreement and its terms. Moreover, the letter threatened United with suit unless it terminated Claimant's employment relationship. Nothing more happened until October, 1998, when Suburban filed suit against both United and Claimant for violation of the non-compete agreement and damages resulting therefrom.
On December 29, 1998, United placed Claimant on what they called an unpaid leave of absence. United took this measure in response to Suburban's suit and as a good faith effort to work things out in a way satisfactory to all involved. United testified that they were trying to find a United facility to which they could move Claimant that would not violate the non-compete clause or would otherwise be acceptable to Suburban. While on leave, Claimant retained her benefits and tenure with the company. United also paid $5,000.00 towards Claimant's attorney's fees.
Shortly after being placed on the unpaid leave of absence, Claimant applied to the Department of Labor for unemployment insurance benefits. On January 11, 1999, the Claims Deputy issued its Notice of Determination. In it, the Deputy made the following Findings of Fact and Determination:
Findings of Fact. Claimant was employed approximately 8 months with United Propane until 12/29/98, at which time she was placed on a leave of absence by the employer. The claimant had previously worked for a competitor and had signed a non-compete clause. Due to legal litigation, in a good faith effort to solve the problem, the employer placed claimant on a leave of absence. It is determined that claimant is an unemployed individual thru [sic] no fault of her own and will be entitled to receipt of benefits.
Determination. You (Claimant) are eligible for receipt of benefits, if otherwise qualified and eligible, effective with or for week ending 01/02/1999.
United appealed the decision of the Claims Deputy. A hearing before the Appeals Referee was held on February 8, 1999. Both the Claimant and United, through its representative, President Darsh Patel, appeared pro se. In the Referee's Decision, the Referee made the following findings of fact:
This tribunal finds that the claimant signed a non-compete agreement with her former employer, Suburban Propane. At the time she was hired by the employer representative, the claimant did not inform her of the specifics of the non-compete agreement. In July 1998, the employer learned of the agreement because Suburban Propane notified them that they were planning to sue them. At that time, they learned the specifics of the agreement. In October, Suburban Propane filed suit against the employer for violating the non-compete agreement. On December 29, the employer placed the claimant on an unpaid leave of absence in an effort to work out the lawsuit with Suburban Propane. Because it is the employer who has prevented the claimant from continuing her work with them, this tribunal finds that, for unemployment compensation purposes, the claimant has essentially been discharged from her job.
In the "Conclusion of Law" section of the Referee's Decision, the Referee starts out by citing 19 Del. C. § 3315(2). This is the "disqualification" portion of the statute. The Referee then goes on to apply a "just cause" analysis to the discharge she found. The Referee then determined that the Claimant's failure to disclose the non-compete agreement provided United the "just cause" necessary to discharge the Claimant. The Referee reversed the decision of the Claims Deputy and declared the Claimant was " DISQUALIFIED" from receiving unemployment insurance benefits. Referee's Decision, at 3 (emphasis original). The Claimant appealed this decision to the Unemployment Insurance Appeal Board.
Prior to the UIAB hearing, United informed Claimant on March 21, 1999, that she was being terminated for cause. In response to the Claimant's request, United provided the following reasons for her discharge: (1) misrepresentation of the contractual relationship with Suburban; (2) unsatisfactory work performance; (3) loss of company goodwill; and (4) falsifying company documents. The Record on Appeal contains a list of the specific instances of alleged misconduct by the Claimant.
The UIAB hearing was held on April 7, 1999, and as before, both parties appeared pro se. Following the hearing, the UIAB reversed the decision of the Referee. The primary reason for the reversal appears to be the Board's view that United had "just cause" in July, 1998, when it first learned of the non-compete agreement, but that United, by continuing Claimant's employment until December, 1999, had lost the "just cause" at that time. The UIAB stated that "[t]he employer could not resurrect her prior conduct to find wilful or wanton misconduct in December." Therefore, the UIAB ruled that:
The decision of the Appeals Referee is reversed. The claimant was discharged from her work without just cause in connection with her work. If otherwise qualified she is eligible to receive unemployment benefits beginning with the week in which she first filed a valid claim.
United now appeals the UIAB decision to grant unemployment insurance benefits. The appeal is presently before this Court. The case with Suburban has settled and no longer provides the backdrop to these proceedings.
STANDARD OF REVIEW
In reviewing the decisions of the UIAB, this Court must determine whether the findings and conclusions of the UIAB are free from legal error and supported by substantial evidence in the record. See Unemployment Insurance Appeal Board v. Martin, Del. Supr., 431 A.2d 1265 (1981); Ponchvatilla v. United States Postal Service, Del. Super., C.A. No. 96A-06-19, Cooch, J. (June 9, 1997), Mem. Op. at 2; 19 Del. C. § 3323(a) ("In any judicial proceeding under this section, the findings of the [UIAB] as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the Court shall be confined to questions of law."). In looking for "substantial evidence," the Court is looking for "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Gorrell v. Division of Vocational Rehabilitation and Unemployment Insurance Appeal Board, Del. Super., C.A. No. 96A-01-001, Graves, J. (July 31, 1996), Letter Op. at 4. Moreover, "[i]t is not the appellate court's role to weigh the evidence, determine credibility questions or make its own factual findings, but merely to decide if the evidence is legally adequate to support the agency's factual findings." McManus v. Christina Service Co., Del. Super., C.A. No. 96A-06-013, Silverman, J. (January 31, 1997), Opinion and Order at 4.
DISCUSSION
Delaware's unemployment insurance program is primarily a creature of statute See, Del. C., Title 19, Chapter 33. Interpretation of these statutory provisions is found in many judicial opinions from Delaware's courts. Thus, any analysis concerning issues arising under the unemployment insurance program must necessarily include both the statutory and judicially created aspects of the law.
The meat of the Delaware Code's unemployment insurance provisions is found in 19 Del. C. § 3314 and 3315. Section 3314 addresses a claimant's eligibility for benefits under the program and Section 3315 states when an otherwise eligible claimant is nonetheless disqualified from receiving unemployment insurance benefits.
Sections 3314 and 3315 establish a two-tier test which the Department of Labor ("Department") must employ in determining whether an unemployed individual is entitled to unemployment benefits. First, the Department must determine if the individual is eligible. If the individual is eligible, the Department must determine if the individual is disqualified.Division of Unemployment Insurance v. Unemployment Insurance Appeal Bd., Del. Super., C.A. No. 89A-MY-2, Ridgely, J. (April 11, 1990), ORDER at 5. See also, McManus at 5.
In general, a claimant is "eligible" for benefits under § 3314 if the claimant "is registered for work, has made a claim for benefits, is able to work, and is actively seeking work."Sikorski v. Boscov's Department Store, Del. Super., C.A. No. 95A-01-003, Ridgely, P.J. (September 22, 1995), ORDER at 5 (citing Johnson v. Crysler Corp., Del. Supr., 178 A.2d 459, 461 (1962)). Most controversies concerning a claimant's eligibility for benefits concern the last two requirements. "The two quoted statutory terms, `able to work' and `available to work,' though complementary, are not synonymous. Each has a separate meaning and must be satisfied for the award of benefits." Petty v. University of Delaware, Del. Supr., 450 A.2d 392, 395 (1982). While Petty does not separately discuss the "able to work" requirement, it does provide the standard for determining whether a person is "available to work." "As so defined, the term `availability' for employment incorporates both the requirement of ability to work and qualification through skill, training or experience for a particular occupation, commonly expressed in terms of `an identifiable labor market.'" Id.
As noted above, however, eligibility itself is not the end of the inquiry for the claimant must also not be disqualified for benefits by any provisions of § 3315. One way an individual may be disqualified from receiving benefits is by leaving "work voluntarily without good cause attributable to such work. . . ." 19 Del. C. § 3315(1). Moreover, a person "discharged from the individual's work for just cause" will be disqualified from receiving unemployment benefits.
Finally, when making the determination of whether a claimant is both eligible and not disqualified, the UIAB and other officials must "make adequate findings of fact and conclusions of law" on the "pivotal issues" raised by the claimant's application.Konstantopoulos v. Unemployment Insurance Appeal Board, Del. Super., CA. No. 90A-MY-6, Barron, J. (April 2, 1991), ORDER at 2. An appellate court reviewing a decision by the UIAB can only do so if the record contains an adequate statement of the findings by the Board. Id.
Although there are occasions when the Court can readily infer subordinate findings and conclusions from the ultimate findings on the record, if the Court cannot determine from the ultimate findings and the record whether the Board based its decision upon a correct theory of law or whether its findings are based upon competent evidence, the necessity for the inclusion of subordinate findings is apparent.Id. (citing Board of Public Educ. v. Rimlinger, Del. Supr., 232 A.2d 98, 101 (1967)).
In applying the law set forth above to the present case, I am satisfied the case should be remanded to the UIAB for additional findings. The record on appeal indicates that the UIAB failed to address all the issues necessary for determining whether Claimant is both eligible and not disqualified from receiving unemployment insurance benefits. This constitutes an error of law.
This case is procedurally quite similar to McManus and Division of Unemployment Insurance ("Division"). In McManus, the Court remanded the case to the UIAB where the Board "passed over the eligibility analysis in favor of its `disqualification' analysis." McManus, supra at 5. In Division, both the Claims Deputy and the Appeals Referee made findings on the issue of eligibility before addressing disqualification. The UIAB, however, made no findings on eligibility and instead addressed only the issue of disqualification. Here too, the Court remanded the case for additional findings. Division at 3.
This case presents the same problem. The UIAB is required to apply a two-step test but has glossed over or skipped the first step. This error first appears in the Claims Deputy's Notice of Decision. There, the only determination the Deputy made was that Claimant was "eligible for receipt of benefits, if otherwise qualified and eligible. . . ." Notice of Decision (emphasis added). The Findings of Fact, however, do not reflect that the Deputy considered the factors required by § 3314 for eligibility. That is, there is no showing that the Deputy considered whether the claimant was both able to work and available to work. The decision of the Appeals Referee suffers from the same flaw. It skips straight to a determination that Claimant was discharged and that the discharge was for "cause" thus disqualifying Claimant for benefits. Finally, the decision of the UIAB does not indicate that the Board considered any issue other than whether the Claimant was discharged for just cause.
The transcripts of the prior proceedings included in the record also indicate that the eligibility of Claimant for benefits was never addressed. Almost all of the testimony revolves around what, and when, the parties knew about the non-compete agreement and whether that provided "just cause" for discharging the Claimant. For these reasons, it appears that the UIAB did not address the Claimant's eligibility for benefits before deciding whether the Claimant was disqualified. This constitutes an error of law.
I must note that in McManus, in denying a motion for reargument, the Court stated that "[i]n some instances the UIAB may be able to resolve a case by merely establishing that an individual is disqualified from benefits, but this is not that sort of case." McManus v. Christina Service Co., Del. Super., C.A. No. 96A-06-013, Silverman, J. (February 26, 1997) The Court provided no hint of what cases those may be. Because there are questions of the Claimant's eligibility, this case is not one where the first step may be skipped.
There are several subsidiary issues raised by the facts in the record on appeal that bear on the Claimant's eligibility for benefits. First, because the Claimant is prevented from working by the noncompete agreement, that may or may not affect whether she is available for work and able to work. Second, there appears from the record to be two distinct time periods for which the Claimant may or may not be eligible for benefits. The first is the period from December, 1998, to March, 1999, when the Claimant was allegedly on a leave of absence. The second period is that after March 21, 1999, when the Claimant was officially discharged by United. The transcript of the hearing before the UIAB indicates the Board specifically steered clear of discussing the events of March, 1999. Illustrative is the following exchange:
Board Member: But when did you terminate her?
Darsh Patel: In March, March 21st.
Board Member: Well there's no sense in getting into that.
Transcript at 19.
For the UIAB to fully and accurately address and decide the issue of eligibility, it must include an analysis of these issues with the other factors giving rise to eligibility.
While the above discussion focuses on those issues that should be addressed in determining eligibility under § 3314, there are also unaddressed issues in determining "disqualification" under § 3315. For instance, the UIAB, the Referee, and the Claims Deputy have all treated this as a "discharge" case and thus looked to see if the Claimant was discharged for "just cause." If she were, she would not be entitled to benefits. There is some issue of whether this should be treated as a "discharge" or a "lay off" case. If it is a discharge case, then a "just cause" analysis is appropriate. 19 Del. C. § 3315(2). If however, the period from December, 1998, to March, 1999, is a considered a "lay-off," then § 3315 would not apply. Where a claimant is temporarily laid off § 3314(3) provides for when that claimant is eligible for benefits. Only after that determination would you look to see if that claimant is disqualified under any of the provisions of § 3315. For these reasons, this issue should also be considered before making a final determination in this case.
In the present case, the Claimant argues that these issues, raised by United in their Opening Brief are not properly before this Court. She cites the case of Wilmington Trust Co. v. Conner for the general rule that issues not raised in prior proceedings shall not be heard on appeal. Wilmington Trust Co. v. Conner, Del. Supr., 415 A.2d 773, 781 (1980). I am satisfied that these were underlying issues that did not percolate to the top because the parties were pro se. The eligibility issue is one that does not arise frequently, but under the facts of this case, needs to be addressed more directly.
CONCLUSION
"A reviewing court must have confidence that not only are an administrative body's findings firmly supported by substantial evidence, but that the fact finder has applied the appropriate standards in reaching the ultimate determination." Future Ford Sales. Inc. v. Public Service Comm'n., Del. Supr., 654 A.2d 837, 845 (1995). This record does not provide such confidence. There is no evidence that the UIAB fully considered whether the claimant was eligible for benefits before deciding that she was not disqualified. This is an error of law. Moreover, the facts of the case raise other issues that were not considered by the UIAB in reaching its decision. This too constitutes an error of law. Neither party was represented by counsel at any stage of the proceedings leading up to this appeal. Thus, while their arguments were poorly framed and did not neatly address the two-part test for benefits, they did center around the issue the two pro se parties considered most important. The UIAB should have performed both steps of the test regardless of how these parties framed the issues.
The UIAB has not made adequate findings of fact and conclusions of law on "pivotal issues" as required by Konstantopoulos, supra. This Court would need the subordinate findings identified above before it could be sure that the UIAB based its decision on the correct theory of law. For these reasons, the Court reverses the decision of the UIAB and remands to the UIAB for additional findings.
IT IS SO ORDERED.