Opinion
No. 102539
Decided: May 20, 2008
ON APPEAL FROM THE DISTRICT COURT, OKLAHOMA COUNTY, VICKI ROBERTSON, TRIAL JUDGE.
John E. Miley, Deputy General Counsel, Oklahoma Employment Security Commission, Oklahoma City, Oklahoma, for Appellant.
Sarah J. Timberlake, William C. McAlister, Abowitz, Timberlake Dahnke, P.C., Oklahoma City, Oklahoma, for Appellee.
Identified herein are only those counsel for the parties who have entered an appearance in this cause (as required by Okla.Sup.Ct.R. 1.5(a), 12 O.S.2001, Ch. 15, App.1) and whose names appear on the briefs.
¶ 0 The Oklahoma Employment Security Commission (OESC) determined that the services provided by Beverly Peters — who, as a participant in Oklahoma Goodwill Industries' rehabilitation program, worked at Tinker Air Force Base pursuant to Goodwill's contract with the federal government (under the terms of 41 U.S.C. § 6) — were not exempt from coverage by the provisions of 40 O.S.Supp.2002 § 1-210 (7)(d) of the Oklahoma Employment Security Act. The OESC Assessment Board affirmed the agency decision. The Board found that the employment of all similarly classified persons — i.e., those Goodwill consumers who perform services under the federal contracts as well as those who work at the State office buildings pursuant to Goodwill's contract with the state government (under the terms of 47 O.S.2001 § 001 et seq) — is not exempt from coverage. The district court reversed the Board's order. OESC brings this appeal from the district court's judgment, which stands retained for this court's disposition.
THE TRIAL COURT'S JUDGMENT IS REVERSED AND THE CAUSE REMANDED TO THE OKLAHOMA EMPLOYMENT SECURITY COMMISSION WITH DIRECTIONS TO PROCEED IN A MANNER CONSISTENT WITH TODAY'S PRONOUNCEMENT.
¶ 1 The dispositive issue in this public-law controversy is whether the issues sought to be litigated are barred by the Oklahoma Employment Security Commission's (OESC or Commission) long-standing construction placed on the challenged tax exemption statute and the taxpayer's long-time acquiescence in the Commission's prior administrative practice. Because this theory was not clearly articulated until the last stage of the appellate proceeding, we reverse the trial court's judgment and remand the cause to the Commission to give the parties a full opportunity for resolution of that issue and development of the record for judicial review, if one be brought.
I THE ANATOMY OF LITIGATION
¶ 2 Oklahoma Goodwill Industries, Inc. (Goodwill) is a non-profit organization that provides rehabilitation and remunerative work for severely disabled persons. Individuals who participate in Goodwill's rehabilitation program are classified as consumers. Goodwill assigns consumers to work at its sheltered workshop and thrift shops as well as at Tinker and State offices. Some consumers are placed in private employment. This controversy concerns solely Goodwill's liability for unemployment taxes for those consumers who provide services at Tinker and the State offices pursuant to federal and state set-aside contracts authorized by the so-called "Javits-Wagner-O'Day Act" (JWOD Act) and the "State Use Act." Goodwill's newly appointed president took the position in 2002 that Goodwill consumers working at Tinker and State office under these governmental contracts fall within the statutory exemption from unemployment coverage. Goodwill stopped reporting the wages of these workers on 1 January 2003.
Set-aside contracts are vendor contracts that are set aside for bidding by qualified vendors. See infra notes 3 and 4.
41 U.S.C. §§ 46- 48. The JWOD Act establishes a committee known as the "Committee for Purchase from People Who Are Blind or Severely Disabled" and authorizes it to establish and maintain a list of commodities and services provided by qualified nonprofit agencies for the blind or severely handicapped which it has determined are suitable for procurement by the government (the "procurement list"). 41 U.S.C. §§ 46(a), 47(a). Once a commodity or service has been added to the procurement list, contracting agencies are required to procure that commodity or service from a qualified agency for the blind or severely handicapped if it is available within the time period required. 41 U.S.C. § 48
74 O.S.2001 § 000 et seq. The enactment creates in the Department of Central Services(DCS) a committee known as the "State Use Committee" (§ 001) whose duties include (a) the certification of severely disabled individuals and sheltered workshops as qualified organizations (§ 003(5)) which contract with the State to provide products and services made by severely disabled individuals), and (b) the establishment of the State Use Committee procurement schedule for state agency use (§ 004.). State agencies are required to purchase any needed goods and services on the procurement schedule from the designated nonprofit agencies which provide "employment to people with severe disabilities at the fair market price determined by the Committee if the product or service is available within the period required by the entity." § 007(A). See OAC 580:15-2-2 (2005) (DCS administrative rules).
¶ 3 The OESC's tax enforcement officer investigated several claims for unemployment benefits by Goodwill consumers who had been separated from employment under the state and federal contracts. In reviewing the claim of Beverly Peters, a Goodwill consumer who had been assigned to work at Tinker, OESC determined that the services performed at Tinker did not fall within the statutory exemption (40 O.S.Supp.2002 § 1-210(7)(d)) from unemployment taxes and awarded her unemployment benefits. Following the award and entry of an assessment, Goodwill brought a tax protest before the OESC Assessment Board (Board). The sole issue addressed by the Board was whether the provisions of § 1-210(7)(d) exempt from coverage individuals performing service as part of a rehabilitation work program under the terms of the JWOD Act and the State Use Act. The Board affirmed the OESC determination. Goodwill brought an appeal from the Board's order to the district court. The trial court reversed the order. OESC brings this appeal, which stands retained for this court's disposition.
For the pertinent provisions of 40 O.S.Supp.2002 § 1-210(7)(d) see the text in Part II infra.
The OESC's determination is a 7 January 2003 letter written by OESC's tax enforcement officer to Goodwill. It states in pertinent part:
Oklahoma Goodwill Industries had raised as an issue that the claimant [Beverly A. Peters] was not engaged in liable employment covered by the Act. In a later conversation with the undersigned, Goodwill specifically asserted that claimant et al were exempt under Section 1-210(7)(d):
The OESC urged before the Assessment Board and on appeal in the district court that the quoted text should be liberally construed to effectuate the purpose of the Employment Security Act and that the exemptions from coverage should be narrowly construed against the taxpayer. According to Goodwill the statutory exemption extends to the services provided by Goodwill consumers at both Tinker and State offices under state and federal set aside contracts. OESC argued that the legislature intended by including the wording "in a facility" to exclude from the exemption those workers who perform work outside the facility operated by Goodwill, but not those who work in a Goodwill facility.
Goodwill countered that Goodwill consumers, wherever they perform services that are "rehabilitative in nature," should be exempt from coverage provided they cannot be readily absorbed in the competitive labor market because of their mental or physical limitations and receive some supervision from Goodwill.
The OESC Assessment Board order (December 20, 2004) states in pertinent part:
It is clear the workers on JWOD and State Contract are not sheltered. They are out in work places throughout the city in State and Federal offices and go back and forth between assisted work and work in the competitive labor market. They are not sheltered from unemployment as evidenced by the claims discussed on record. If they are not sheltered from unemployment, it would be especially harmful to also deny them the protection the Act promises and that is likely the reason the legislature used the language it did and why courts have guided us to interpret exemptions from coverage restrictively. If the legislature did not intend the work by those described in subparts (i) and (ii) to be performed "in a facility" it would not have used the language it did. Facility means a specific place. While Goodwill's authority to pay a special minimum wage may track forward from its facility, the exemption from coverage does not. Narrowly construing the language of the Act[,] the service by workers in the set aside programs described are not exempt and the services should be considered employment for the purposes of the Act.
The trial court's order, entered 29 August 2005, states in pertinent part:
[T]he Court finds that the decision of the Assessment Board of the Oklahoma Employment Security Commission (entered on December 20, 2004) that the services performed by Oklahoma Goodwill Consumers are not subject to the . . . exception from covered employment is contrary to law.
Therefore, the Court orders that the decision be vacated and the matter remanded to the Oklahoma Employment Security Commission for entry of an Order finding that the Goodwill Consumers who receive rehabilitation training while performing work on the janitorial contracts at Tinker Air Force Base and at State offices fall within the statutory exception set out in 40 O.S. 2001 § 1-210[ 40-1-210](7)(d).
II THE CHALLENGED TAX EXEMPTION PROVISIONS OF THE EMPLOYMENT SECURITY ACT OF 1980
¶ 4 The purpose of the Employment Security Act of 1980 is to promote employment security through the maintenance of a system of public employment offices and to provide for the payment of unemployment compensation. Section 1-210(7) of the Act provides for certain exemptions from covered employment. The parties disagree whether the terms of § 40 O.S.Supp.2002 § 1-210(7)(d) exclude from unemployment insurance coverage the services performed by the Goodwill consumers working at Tinker and the State offices. Its terms provide:
40 O.S.2001 § 1-101 et seq.
(7) For the purposes of paragraphs (3) and (4) of this section the term "employment" does not apply to service performed:
* * *
(d) by an individual receiving rehabilitation or remunerative work while participating or enrolled in a program in a facility that:
(i) conducts a program of rehabilitation for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury; or
(ii) conducts a program that provides remunerative work for individuals who, because of their impaired mental or physical capacity cannot be readily absorbed into the competitive labor market;
40 O.S.Supp.2002 § 1-210(7).
III THE CRITICAL DISPOSITIVE ARGUMENT RAISED FOR THE FIRST TIME IN THIS COURT ON APPEAL
¶ 5 OESC rested its position below solely on a construction of the challenged statute. On appeal it interposes an alternative basis for upholding the Assessment Board's order. OESC urges that deference should be given to its long-standing administrative practice of treating as covered employment the services of Goodwill consumers who work at Tinker and State offices under state and federal contracts awarded to Goodwill pursuant to the JWOD Act and State Use Act. OESC claims that Goodwill has agreed with this interpretation for over 30 years. According to OESC Goodwill has had an account with OESC since January of 1972 and has reported the wages of the consumers working under the federal and state contracts until 1 January 2003. OESC posits that because during this long period no controversy has arisen over the application of the exemption to the wages of similarly situated individuals, there was no need to make a formal determination with respect to this agency practice. It was not until Goodwill stopped reporting the wages of these consumers and claims were filed by several Goodwill consumers working at Tinker and State offices that an OESC determination and Assessment Board hearing became necessary. OESC notes that the Legislature has amended the statute several times without overriding this administrative construction.
For its deference theory, OESC cites Oral Roberts University v. Oklahoma Tax Com'n, 1985 OK 97, 714 P.2d 1013, 1014-1015.
¶ 6 Goodwill counters there is no record support for the contention that before 1 January 2003 OESC had consistently interpreted the tax exemption statute as not including the services of Goodwill consumers assigned to work at Tinker and the State office buildings. Goodwill claims OESC considered this issue for the first time in 2002. According to Goodwill, the fact that its management had not taken a position on § 1-210(7)(d)'s applicability until a new Goodwill president was appointed in 2002 does not establish that prior to that time it had agreed with OESC's construction of the statute.
IV PUBLIC-LAW LITIGATION
¶ 7 This controversy raises a question of an employer's liability for unemployment insurance taxes. The legal question posed presents for our resolution an issue of public law. When confronting a matter of public law, this court may grant corrective relief on any applicable legal theory dispositive of the case and supported by the record.
Schulte Oil Co., Inc. v. Oklahoma Tax Com'n, 1994 OK 103, §,882 P.2d 65, 69 (a question of tax liability presents a public-law controversy).
This court is utterly free to choose sua sponte its own framework of dispositive legal problem-solving techniques (theories and remedial avenues) to arrive at the most appropriate answer. Yeatman v. Northern Oklahoma Resource Center of Enid, 2004 OK 27, § 5, 89 P.3d 1095, 1101 (when resolving a public-law question, we are free to choose sua sponte the dispositive public-law theory although the wrong one is advanced); Amos v. Spiro Public Schools, 2004 OK 4, §, 85 P.3d 813, 816; Schulte Oil Co., Inc. v. Oklahoma Tax Com'n, supra note 13 at §, 882 P.2d at 69; Davis v. B.F. Goodrich, 1992 OK 14, §, 826 P.2d 587, 592-93 (Opala, C.J., concurring); Reynolds v. Special Indemnity Fund, 1986 OK 64, § 4, 725 P.2d 1265 , 1270; Special Indemnity Fund v. Reynolds, 1948 OK 14, §, 188 P.2d 841, 842.
¶ 8 For the reasons to be explained in Parts V and VII(C) infra, the theory interposed by OESC, if resolved in the agency's favor, would be dispositive of this controversy. Because this theory was first asserted at the final appellate stage and it is not apparent from this record whether OESC's construction of the statutory exemption has been of a long and continued duration, we must remand this cause to the Commission to explore and decide this critical and dispositive issue before any other matter may be reached for resolution on appeal. Both parties are entitled to an opportunity to support or controvert that theory by proof and argument and to develop a record in support of their respective positions before the Commission.
Had this theory been injected below and the record developed, it would not be necessary to remand.
Yeatman v. Northern Oklahoma Resource Center of Enid, supra note 14 at § 5, 89 P.3d at 1101; Amos v. Spiro Public Schools, supra note 14 at §, 85 P.3d at 816; Reynolds v. Special Indemnity Fund, supra note 14 at § 4, 725 P.2d at 1270.
V THE LONG-STANDING AND CONSISTENT CONSTRUCTION OF A TAX STATUTE BY AN AGENCY CHARGED WITH ITS ADMINISTRATION
¶ 9 An agency's long-standing construction of an ambiguous or uncertain statute will not be cast aside without cogent reason. A construction placed upon a tax statute by those charged with its administration and enforcement — especially one of a long and continued duration — must be given great weight. Where the Legislature has convened many times during the period of an agency's long-continued construction of a statute without expressing its disapproval, the lawmakers' silence may be regarded as acquiescence in or approval of the administrative construction. We are reluctant to disturb a long-standing and consistent practice by a taxing authority whose construction of a tax exemption has for decades been acquiesced in by the taxpayer.
Schulte Oil Co., Inc. v. Oklahoma Tax Com'n, supra note 13 at §, 882 P.2d at 69; Oral Roberts University v. Oklahoma Tax Com'n, supra note 12 at §, 714 P.2d at 1015; Berry v. State ex rel. Public Employees Retirement System, 1989 OK 14, §-7, 768 P.2d 898, 900; Mazzio's Corp. v. Oklahoma Tax Com'n., 1989 OK CIV APP 86, § 4, 789 P.2d 632, 634.
United Airlines, Inc. v. State Bd. Of Equalization, 1990 OK 29, § 8, 789 P.2d 1305, 1311-1312; Oral Roberts University v. Oklahoma Tax Com'n, supra note 12 at §, 714 P.2d at 1014-1015; Berry v. State ex rel. Oklahoma Public Employees Retirement System, supra note 17 at ¶¶ 6-7, 768 P.2d at 900; Oklahoma Industries Authority v. Barnes, 1988 OK 98, § 1, 769 P.2d 115, 118 n. 9; Mazzio's Corp. v. Oklahoma Tax Com'n., supra note 17 at § 4, 789 P.2d at 634.
United Airlines, Inc. v. State Bd. Of Equalization, supra note 18, at § 8, 789 P.2d at 1311-1312; Oral Roberts University v. Oklahoma Tax Com'n, supra note 12 at, § 2, 714 P.2d at 1015; Peterson v. Oklahoma Tax Commission, 1964 OK 78, § 6, 395 P.2d 388, 391.
¶ 10 Goodwill has cast an ambiguity upon the terms of § 1-210(7)(d) by proposing a meaning different from that which OESC has followed and is using. We are unwilling to consider an alternative construction of the tax statute which would overturn an interpretation long adhered to by the taxing authority without a clear legislative directive. There has been neither an antecedent precedential court pronouncement nor legislative amendment altering OESC's administrative construction of the statutory exemption. Because the record brought for this appeal has not been fully developed to support OESC's dispositive theory, this cause must be remanded to the Commission for a determination of the agency's long-standing administrative practice.
Goodwill does not invoke here the judiciary's power to make the challenged tax statute conformable to the constitution.
VI GUIDANCE TO THE TRIAL TRIBUNAL FOR PROCEEDINGS TO BE CONDUCTED ON REMAND
¶ 11 The alternative theory interposed by OESC on appeal is entitled to consideration. It raises fact issues as to OESC's long-standing and consistent construction of the challenged statutory exemption. The parties must on remand be accorded an adversarial evidentiary hearing antecedent to any judicial resolution of these issues.
Due process requires an orderly proceeding in which the parties are given an opportunity to be heard and to defend, enforce and protect their rights. Federal constitutional jurisprudence teaches that an opportunity to be heard is an essential element of due process. Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798, 103 S.Ct. 2706, 2711, 77 L.Ed.2d 180 (1983); Boddie v. Connecticut, 401 U.S. 371, 377-379, 91 S.Ct. 780,785-787, 28 L.Ed.2d 113 (1971); Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965); Jackson v. Independent School Dist. No. 16 of Payne County, 1982 OK 74, § 11,648 P.2d 26, 31; Malone v. Malone, 1979 OK 21, § 4,591 P.2d 296, 298.
¶ 12 If in post-remand stages of this case OESC should re-press this theory, it must provide proof by rules, orders or other means that it has consistently and for a long period of time treated the exemption from unemployment insurance coverage as not applying to individuals who, while participating in a rehabilitation program, are working at federal and state governmental facilities under contracts pursuant to the JWOD Act and the State Use Act. The trial tribunal is directed to conduct further inquiry and make all necessary findings with respect to this theory.
It is not the function of this court to make first-instance determinations of fact or legal questions which have not been made at nisi prius. Broadway Clinic v. Liberty Mut. Ins. Co., 2006 OK 29, § 26, 139 P.3d 873 , 880; Davis v. Gwaltney, 1955 OK 362, § 13, 291 P.2d 820, 824.
VII RESPONSE TO THE DISSENT'S CRITIQUE OF THE COURT'S OPINION
¶ 13 The dissenter would entertain the taxpayer's claim to determine whether the terms of 40 O.S.Supp.2002 § 1-210(7)(d) exempt the services of these Goodwill consumers from unemployment insurance coverage. The rationale for reaching this issue and for rejecting the dispositive theory pressed by the court rests on the notion that the latter cannot be addressed unless fully supported by the record. In this view the dissenter is wrong. There is no jurisprudential limitation on this court's power to identify sua sponte the dispositive public-law issue from strong indicia appearing on the face of the record and to remand the cause for that issue's resolution upon the development of a full record.
A. Caselaw Cited In Support Of Dissenter's Legal Proposition
¶ 14 The dissenter concedes that the dispositive issue is one of public importance, but maintains there is no authority in Oklahoma's extant public-law jurisprudence for remanding the cause to supplement the record. The cases cited for this notion provide no support for the dissenter's position.
¶ 15 Schulte Oil Co. v. Oklahoma Tax Commission explains that appellate freedom to "raise and settle public-law issues sua sponte" is circumscribed by the record and that issues "clearly outside the record may not be addressed." Consistent, as we are, with Schulte's teachings, we do not decide today the dispositive issue, nor do we address an issue that is clearly outside the record. We merely observe that the record reveals strong indicia of a long-unchallenged stale controversy over the correctness of the statutory rate's application. We then remand the cause for that issue's resolution. Stidham v. Special Indemnity Fund teaches that it is this court and not the litigant who determines the dispositive issue in public-law litigation. Our identification of that issue is in this case based upon an independent assessment of the record before us, not upon the demand of a litigant. The statement in concurrence in Davis v. B.F. Goodrich notes that this court's freedom to choose sua sponte the dispositive public-law theory when a wrong one was advanced "does not extend to identifying a constitutional flaw not urged by the aggrieved party either here or below, nor to supplying a deficiency in the trial tribunal's record." The rationale for this statement rests (a) on the prudential rule of necessity and (b) on the rule against supplementing the appellate record by materials drawn from elsewhere. Those rules are not invocable here. This case tenders no constitutional issue for resolution and neither are we dealing here with a litigant's attempt to incorporate into the record for appeal purely foreign materials by their attachment to the briefs.
Schulte Oil Co., Inc. v. Oklahoma Tax Com'n, supra note 13 at §, 882 P.2d at 69.
See Part VII(B) infra.
Davis v. B.F. Goodrich, supra note 14, 1992 OK 14, §, 826 P.2d at 593 (Opala, C.J., concurring).
The prudential rule of necessity commands that constitutional issues not be resolved in advance of strict necessity. Davis v. B.F. Goodrich, supra note 14, 1992 OK 14, §, 826 P.2d at 593 (Opala, C.J., concurring).
¶ 16 In short, this case presents absolutely no impediment to this court's exercise of its power to identify a dispositive public-law issue by gleaning it from the face of the record. We remand this cause today for the resolution of an omitted dispositive issue manifested by a fully developed record.
B. The Dispositive Issue The Court Raises Is Apparent On The Face Of The Record
¶ 17 There appear on the face of this record clear indicia of a stale and tardy claim. According to the president of Goodwill (a) after she was appointed to that position in 2002 she decided that the terms of § 1-210(7)(d) exempted the wages of the consumers involved here from unemployment taxes and (b) on 1 January 2003 Goodwill stopped reporting their wages to the OESC. She believed the consumers' wages that had been reported and paid prior to 2002 would have fallen under the statutory exemption. She did not know why Goodwill failed to claim the exemption before 2002, but she believed those pre-2002 wages were wrongly reported.
Transcript of proceedings held on January 28, 2004 before the OESC Assessment Board, page 78 (court reporter's page number), lines 5-8; page 82, lines 1-7; page 118, lines 9-23; page 135, lines 2-10; page 137, lines 8-12; page 212, lines 18-25; page 213, lines 1-3.
The transcript of proceedings held on January 28, 2004 before the OESC Assessment Board shows at pgs. 81-82:
Q. [OESC counsel] And one of the things that's changed was that you stopped reporting wages to us. And that's what I'm saying —
A. [Goodwill president] I think we reported wrongly before. I think it was incorrect. I don't know why it was incorrect before, but I know it was incorrect before. People that had wages reported prior to 2002, who were in the rehabilitation program, would have fallen under this statute. I don't know why that exemption was not claimed at that time.
C. The Public Policy That Compels the Court Today To Concentrate Solely on the Dispositive Issue That Was Not Pressed Below
¶ 18 No taxpayer's claim should go unheard if timely and diligently pressed. But courts will not allow the government to waste its limited resources on claims that have gone unchallenged for an extended period of time. Long-continued construction of the terms of a statute by an agency charged with its administration is entitled to be treated as the legislature's own construction and the sole recourse to which disgruntled taxpayers stand confined is the redress that may be afforded by the legislature. Taxpayers who for many years had paid the tax and then suddenly wake up after sleeping on their right to contest the applicability of an assessed tax rate (or other tax liability) must be deemed to have acquiesced in the tax authority's asserted position. The dissent-proposed solution of this controversy would thrust upon all taxing authorities and upon the courts countless unchallenged tax claims that are stale. If this court were to decide today the issue pressed here by Goodwill, its willingness to oblige that taxpayer would encourage and invite endless taxpayer litigation over the meaning of other tax statutes that stood unchallenged for an extended period.
In United States v. Byrum, 408 U.S. 125, 135, 92 S.Ct. 2382, 2389, 33 L.Ed.2d 238 (1972), the Court stated the approach courts should take when faced with an established principle of tax law:
Courts properly have been reluctant to depart from an interpretation of tax law which has been generally accepted when the departure could have potentially far-reaching consequences. When a principle of taxation requires reexamination, Congress is better equipped than a court to define precisely the type of conduct which results in tax consequences.
See Part V supra.
¶ 19 In short, there is a strong public policy against judicial tolerance of stale tax claims pressed by afterthought. Where on the face of the record appear clear indicia of a long unchallenged claim over the correctness of a statutory tax rate's application, appellate courts must pronounce, as we do today, that the case be returned to the forum whence it came for its decision upon the dispositive issue gleaned from the record.
VIII SUMMARY
¶ 20 In this public-law tax case we are free to choose sua sponte the dispositive theory on appeal. When the taxing authority interposes in a dispute its long-standing interpretation of a tax statute, which has been acquiesced in by the taxpayer and was not during this period of time disapproved by the Legislature, we are loath to disturb the agency's practice. When, as here, the argument is interposed for the first time on appeal and the record in its support has not been fully developed below, we will remand the case to the trial tribunal for an adversarial hearing and resolution of the dispositive issue.
¶ 21 The trial court's judgment is reversed and the cause remanded to the Oklahoma Employment Security Commission with directions to proceed in a manner consistent with today's pronouncement.
¶ 22 EDMONDSON, V.C.J., and HARGRAVE, OPALA, KAUGER, TAYLOR, and REIF, JJ., concur
¶ 23 WINCHESTER, C.J., and WATT and COLBERT, JJ., dissent
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It is the Commission's determination that claimant did not meet Section 1-210(7)(d)(i) or (ii), that claimant was engaged in liable employment covered by the Act.(emphasis added).
¶ 1 The majority recognizes that the only issue properly before this Court on appeal is whether the plaintiff-appellee, Oklahoma Goodwill Industries, Inc. (Goodwill/service provider), is obligated to pay unemployment taxes on consumers receiving rehabilitative or remunerative training while providing services at Tinker Air Force Base (Tinker) and in Oklahoma state offices pursuant to federal and state contracts mandating that individuals with severe handicaps or disabilities be utilized in performing contracted-for commodities or services. Also, the majority concedes that the answer to the question is governed by the terms of 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d) which specifically excludes service providers from the payment of unemployment taxes when conducting programs of rehabilitation or remunerative work for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury, or who, because of their impaired mental or physical capacity, cannot be readily absorbed into the competitive labor market.
Footnotes 3 and 4, respectively, of the majority opinion set forth the essence of the Javits-Wagner-O'Day Act [JWOD Act] and the State Use Act. The majority opinion gives insight into the essence of the acts by providing:
"41 U.S.C. §§ 46-48. The JWOD Act establishes a committee known as the 'Committee for Purchase from People Who Are Blind or Severely Disabled' and authorizes it to establish and maintain a list of commodities and services provided by qualified nonprofit agencies for the blind or severely handicapped which it has determined are suitable for procurement by the government (the 'procurement list'). 41 U.S.C. §§ 46(a), 47(a). Once a commodity or service has been added to the procurement list, contracting agencies are required to procure that commodity or service from a qualified agency for the blind or severely handicapped if it is available within the time period required. 41 U.S.C. § 8" [Emphasis supplied.]
"74 O.S. 2001 § 000 et seq. The enactment creates in the Department of Central Services (DCS) a committee known as the 'State Use Committee' (§ 001) whose duties include (a) the certification of severely disabled individuals and sheltered workshops as qualified organizations (§ 003(5) which contract with the State to provide products and services made by severely disabled individuals), and (b) the agencies are required to purchase any needed goods and services on the procurement schedule from the designated nonprofit agencies which provide 'employment to people with severe disabilities at the fair market price determined by the Committee if the product or service is available within the period required by the entity.' § 007(A). See OAC 580:15-2-2 (2005) (DCS administrative rules." [Emphasis provided.]
The purpose of the Act is to provide a "sheltered" environment permitting individuals with disabilities to work for entities such as Goodwill Services. NISH v. Cohen, 247 F.3d 197 (4th Cir. 2001).
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d) providing:
"(7) For purposes of paragraphs (3) and (4) of this section the term 'employment' does not apply to service performed:
(d) by an individual receiving rehabilitation or remunerative work while participating or enrolled in a a program in a facility that:
(i) conducts a program of rehabilitation for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury; or
(ii) conducts a program that provides remunerative work for individuals who, because of their impaired mental or physical capacity cannot [sic] cannot be readily absorbed into the competitive labor market . . ."
The majority opinion refers to the 2002 version of the statute. Because subsequent amendments to the statute leave the earlier language undisturbed, references are to the current statute.
¶ 2 Despite its apparent recognition of the issue presented and the statute governing the outcome of the cause, the majority does not address the language of § 1-210(7)(d) in which the Legislature expresses its intent to exempt service providers or facilities like Goodwill from the payment of unemployment taxes for programs of rehabilitation and remunerative work which bring individuals who would otherwise be excluded from the competitive labor market into situations where they may be rehabilitated and financially rewarded for the services they provide. The majority then goes on to eviscerate both the general rule that issues not presented to the trier of fact will not be addressed on appeal and the exception allowing an appellate court to address a public law issue dispositive of the cause when supported by the record by giving the defendant-appellant, Oklahoma Employment Security Commission (Employment Commission), "overs" or a "second bite of the apple" by remanding the cause to allow it to develop a theory in support of its cause admittedly first asserted in the appeal before this Court and unsupported by the record evidence.
Not only does the majority do injustice to our prior jurisprudence by enlarging the public policy exception to the general rule, it does so in an opinion which is inconsistent within itself. The opinion provides that "[w]hen confronting a mater of public law, this court may grant corrective relief on any applicable legal theory dispositive of the case and supported by the record." [Emphasis in original.] It also admits that: 1) "it is not apparent from this record whether OESC's construction of the statutory exemption has been of a long and continued duration;" 2) "the record on appeal has not been fully developed to support OESC's dispositive theory;" and 3) "the record has not been fully developed below." These statements, in and of themselves, prohibit the Court from consideration of an administrative construction of the statute as there is nothing in the record to support exploring the public policy exception.
¶ 3 I cannot accede to the majority's refusal to construe the statute or to its mutilation of the general rule regarding issues first presented on appeal and the exception thereto where a public law issue is involved. Rather, I would hold that when the Legislature created the exception for the payment of unemployment taxes for consumers receiving rehabilitative or remunerative training by enacting 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), it intended that facilities such as Goodwill who provide rehabilitative and remunerative services to consumers with severe disabilities in programs designed for those purposes be excused from the payment of unemployment taxes. Therefore, I dissent.
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra.
RELEVANT AND UNDISPUTED FACTS
¶ 4 Goodwill is a non-profit organization which provides rehabilitation and remunerative work to consumers with severe disabilities. These programs are provided in Goodwill's main office and plant buildings in settings known as sheltered workshops. Other consumers are assigned to work at Tinker and in state offices under contracts intended to provide employment to individuals with disabilities. Some consumers function on levels high enough to allow them to be placed in private employment.
¶ 5 Under the contracts with Tinker and the State, the consumers perform supervised custodial services. At least seventy-five percent (75%) of the hours worked under these contracts must be supplied by Goodwill consumers. Goodwill maintains office space at Tinker and in the state office buildings which is utilized to offer rehabilitation services to consumers working as custodians under the respective contracts. Among the supports Goodwill supplies on the location where services are rendered are: 1) team meetings between case workers and trainers; 2) vocational evaluations by the case workers and/or trainers; 3) meetings or conferences with consumers and/or their representatives; and 4) individualized training.
¶ 6 In 2002, Goodwill determined that, pursuant to 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), it was excused from paying unemployment taxes on consumers receiving rehabilitation training while performing janitorial services pursuant to the contracts entered with Tinker and the State. Goodwill discontinued such payments as of January 1, 2003. Thereafter, a claim for unemployment was filed by a consumer who had been in Goodwill's program at Tinker.
Id.
¶ 7 In investigating the claim, the Employment Commission determined that the services performed did not fall within the statutory exemption of § 1-210(7)(d) and awarded the consumer benefits. Goodwill filed a protest with the Employment Commission's Assessment Board (Board) which upheld the award. On appeal to the district court, the award was reversed and judgment entered in Goodwill's favor. The Employment Commission appealed. This Court granted Goodwill's retention request.
¶ 8 a) The Legislature intended that pursuant to 40 O.S. Supp. 2006 § 1-210[ 40-1-210] (7)(d) service providers like Goodwill should be exempt from the payment of unemployment taxes on individuals in programs of rehabilitative and remunerative work specifically designed by federal and state governments to aid individuals with severe disabilities. 1) Policy underlying employment legislation promoting employment of consumers with disabilities.
¶ 9 Contracts similar to those at Tinker and in the state offices provide opportunities for the service provider to produce goods and services in a "sheltered" environment. Relief from the payment of unemployment benefits to non-profit agencies like Goodwill serves as a substantial incentive for charitable organizations to offer rehabilitative services and remunerative work to individuals with disabilities who might be unable to obtain gainful employment elsewhere. Organizations similar to Goodwill act as a safety net for those individuals with disabilities who cannot readily find work. Federal law permits states to shield facilities from clients' unemployment claims to protect their financial viability and their ability to hire employees with disabilities who may not otherwise be employed. The State of Oklahoma has done so through the enactment of 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d).
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra.
¶ 10 Congress and the Oklahoma Legislature have struck the balance in favor of promoting the viability of rehabilitative and remunerative services over the possibility of consumers getting an unemployment check. They have done so because temporary unemployment benefits are poorly suited to help individuals with disabilities. Such benefits often expire before consumers find new employment.
Tyler v. Smith, 472 F.Supp.2d 818 (M.D.La. 2006).
¶ 11 Congress has provided alternative means of support for unemployed individuals with disabilities through supplemental security income (SSI). SSI provides a monthly benefit available to individuals with disabilities and serves as a base income for consumers like those who receive services through Goodwill. It ensures a minimum income level for the aged, the blind and persons with disabilities. Eligible claimants receive a flat monthly rate. The rate is not eliminated by the receipt of earned income through employment. Rather, the monthly benefit rate is reduced by the amount of non-excludable income received by the individual. If such income ceases, the SSI benefit is subject to recalculation. Therefore, Goodwill consumers who become unemployed are not without a monetary remedy should they be unable or unwilling to perform the tasks assigned.
See, 20 C.F.R. § 16.110.
Title 42 U.S.C. § 382; Calef v. Barnhart, 309 F.Supp.2d 425 (E.D.N.Y. 425).
White v. Shalala, 7 F.3d 296, 126 A.L.R.Fed. 767 (2nd Cir. 1993).
The manner in which SSI benefits are calculated is demonstrated the federal district court in Barry v. Shalala, 840 F.Supp.29 (S.D.N.Y. 1993) providing in pertinent part:
" . . . In calculating the SSI benefit amount, the first $20 of monthly income, whether earned or unearned is excluded. For those individuals under age 65 who are disabled but not bline, the balance of any earned income is subject to an additional exclusions of $65.00, and than a final exclusion of one-half of the remainder thereof. . . ."
Tyler v. Smith, see note 7, supra.
2) The Oklahoma statutory scheme and its underlying intent.
¶ 12 Section 1-210(7) of the Employment Security Act (Employment Act), 40 O.S. 2001 § 1-101[ 40-1-101] et seq. provides exemptions from the payment of unemployment taxes by removing certain services performed from the term "employment" within the meaning of the Act. Specifically applicable to the facts presented is subsection (7)(d) providing:
"(7) For the purposes of paragraphs (3) and (4) of this section the term 'employment' does not apply to service performed:
(d) by an individual receiving rehabilitation or remunerative work while participating or enrolled in a program in a facility that:
(i) conducts a program of rehabilitation for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury; or
(ii) conducts a program that provides remunerative work for individuals who, because of their impaired mental or physical capacity cannot be readily absorbed into the competitive labor market . . ."
¶ 13 It is agreed that Goodwill provides the rehabilitative and remunerative services exempted by the statute. Nevertheless, the Employment Commission focuses on an isolated phrase in the statute contending that when consumers are providing services under contracts with Tinker and the State, they are not participating in a program "in a facility" that conducts a program of rehabilitation. Under the Employment Commission's interpretation, the tax exemption is applicable to Goodwill's services only when a consumer is employed in a sheltered workshop or other location owned and operated by Goodwill on property it controls. Goodwill insists that the legislative intent is to allow the exemption when consumers receive rehabilitative and remunerative services under contracts with the federal and state governments intended to promote job skills of consumers with disabilities. I agree with the contention.
A cardinal precept of statutory construction is that where a statute's language is plain and unambiguous, and the meaning clear and unmistakable, no justification exists for use of interpretative devises to fabricate a different meaning. Keating v. Edmondson, 2001 OK 110, § 5, 37 P.3d 882; State ex rel. Dept. of Human Services v. Colclazier, 1997 OK 134 , §, 950 P.2d 824; Matter of Estate of Flowers, 1993 OK 19, § 1, 848 P.2d 1146. Although Goodwill does not assert that the statutory language is so clear as to be beyond this Court's construction, the clear and unmistakable language of the statute exempts Goodwill in mandatory language from the payment of unemployment taxes on its consumers receiving rehabilitative or remunerative training under situations similar to those presented here where the primary purpose of the state and federal contracts is to bring the populace with disabilities into the economic arena by providing jobs where they are limited or nonexistent and where consumers with disabilities would not be able to perform the contracted services without supervision and training. The statute provides that the term "employment" "does not apply" to such situations. [The phrases "shall not apply" and "does not apply" have no difference in meaning . . People v. Neidinger, 40 Cal.4th 67, 51 Cal.Rptr.2d 45, 146 P.3d 502. It is well established in this Court's jurisprudence that the term "shall" generally signifies a legislative mandate equivalent to the term "must," requiring interpretation as a command. Zeier v. Zimmer,Inc., 2006 OK 98, §, 152 P.3d 861; Cox v. State ex rel. Oklahoma Dept. of Human Services, 2004 OK 17, § 1, 87 P.3d 607; United States throughFarmers Home Admin. v. Hobbs, 1996 OK 77, §, 921 P.2d 338; Fuller v. Odom, 1987 OK 64, §, 741 P.2d 449.] It is interesting to note that the majority opinion would place great reliance upon the administrative construction of 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra. Nevertheless, to have persuasive value, the administrative construction must have been reasonable and not clearly wrong. Keating v. Edmondson, this note, supra; Independent Finance Inst. v. Clark, 1999 OK 43 , § 3, 990 P.2d 845, cert. denied, 529 U.S. 1054, 120 S.Ct. 1557, 146 L.Ed.2d 462 (2000). Also, where neither ambiguity nor doubt exists, administrative construction of a statute will not override the plain statutory language. Keating v. Edmondson, this note, supra; Neer v. State ex rel. Oklahoma Tax Comm'n, 1999 OK 41, § 6, 982 P.2d 1071; C.H. Leavell Co. v. Oklahoma Tax Comm'n, 1968 OK 127, § 6, 450 P.2d 211. The dissent is not grounded on this premise as it has not been argued by Goodwill either before this tribunal or in the trial court although this Court is commanded to take judicial notice of the common law, constitutions and public statutes. 12 O.S. 2001 § 201[12-201](A) providing:
"Judicial notice shall be taken by the court of the common law, constitutions and public statutes in force in every state, territory and jurisdiction of the United States."
¶ 14 The term "facility" is not defined in the Employment Act. Nevertheless, the Unemployment Commission's assertion that it should be construed as a physical location is not supported by the statutory language when the general purpose and objective of the statute is considered, i.e. extending employment-like positions to consumers who would otherwise be excluded from the job market.
Legislative intent is not determined from isolated phrases in a statutory framework. Rather, intent is ascertained from the whole act in light of its general purpose and objective. McSorley v. Hertz Corp., 1994 OK 120 , §, 885 P.2d 1343; Oglesby v. Liberty Mutual Ins. Co., 1992 OK 61 , §, 832 P.2d 834; Smicklas v. Spitz, 1992 OK 145, 846 P.2d 362.
¶ 15 The restricted definition the Employment Commission applies to the word "facility" as a physical location is unwarranted. The term "facility" is not a technical word but one in common use. It is to be assigned its plain and ordinary meaning. Furthermore, the Court does not read exceptions into a statutory provision not made by the Legislature. Nothing in the language utilized in 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d) indicates that the use of the term "facility" must necessarily be limited to a particular physical location or plant.
Illinois Bell Telephone Co. v. Miner, 11 Ill.App.2d 44, 136 N.E.2d 1 (1956).
South Tulsa Citizens Coalition, L.L.C. v. Arkansas River Bridge Auth., 2008 OK 4, § 1, 176 P.2d 1217; Stump v. Cheek, 2007 OK 97, §, 179 P.3d 606.
Keating v. Edmondson, see note 13, supra; Chamberlain v. American Airlines, 1987 OK 62, § 5, 740 P.2d 717; City of Bethany v. District Court of Oklahoma County, 1948 OK 38, § 6, 191 P.2d 187; City of Bristow v. Groom, 1944 OK 223, § 1, 151 P.2d 936.
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2
See, State of Connecticut Office of Protection Advocacy for Persons with Disabilities v. Hartford Bd. of Educ., 355 F.Supp.2d 649 (D.Conn. 2005), affd., 464 F.3d 229 (2nd Cir. 2006) [The federal court refused to apply a definition of "facility" interpreted by an agency to include only "residential facilities" determining that a transitional learning academy, maintained by the school district for special needs students was a "facility" providing care or treatment of persons with mental illness.].
¶ 16 "Facility" has been construed as an inclusive term intended to embrace anything which aides in the performance of a duty. When considered in this sense, the term "facility" should not be given a narrow meaning as the Employment Commission argues but one which is inclusive of the programs operated by Goodwill in federal and state facilities where rehabilitative and remunerative services are provided to consumers with disabilities and where Goodwill maintains a physical presence to aid its consumers in accomplishing assigned tasks.
Illinois Bell Telephone Co. v. Miner, see note 15, supra; Nekoosa-Edwards Paper Co. v. Minneapolis, St. P.S.S.M.R.Co., 217 Wis. 426, 259 N.W. 618, 620 (1935).
¶ 17 Another rule of statutory construction contradicts the Employment Commission's construction-based argument that the term "facility" should be given a restricted interpretation to indicate only the exclusion from tax liability services provided at a physical location owned, operated or controlled by Goodwill. Undoubtedly, the term "facility" relates to the entity who will provide the program of rehabilitative or remunerative services to consumers with severe disabilities. Here, that facility is Goodwill. To accept the construction proposed by the Unemployment Commission would require that the statute be interpreted to provide that the tax exemption is available only to a physical location, rather than to a service provider, conducting rehabilitative and remunerative services. A "location" may provide the venue for services, but it cannot extend the rehabilitative or remunerative services contemplated by the legislative enactment. This Court does not attribute nonsensical interpretations to legislative acts nor does it apply an inept or incorrect construction in a manner to defeat the real or obvious purpose of a legislative enactment.
Matter of Unborn Child of Starks, 2001 OK 6, § 7, 18 P.3d 342.
Wylie v. Chesser, 2007 OK 81, § 9, 173 P.3d 64; TRW/Reda Pump v. Brewington, 1992 OK 31, §, 829 P.2d 15.
¶ 18 The fundamental rule of statutory construction is to ascertain and, if possible, give effect to the Legislature's intent and purpose as expressed in a statute. Most assuredly, when 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d) was adopted, the Legislature intended to extend a tax exemption to facilities such as Goodwill who provide rehabilitative and remunerative services to consumers with severe disabilities in programs intended for those purposes. Those services, provided by Goodwill to their consumers at Tinker and in state offices, are the supports envisioned within the statute and are not subject to the assessment of unemployment taxes.
Strong v. Laubach, 2004 OK 21, §, 89 P.3d 1066; Hill v. Board of Education, 1997 OK 111, §, 944 P.2d 930.
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra.
¶ 19 A determination that Goodwill is not obligated to pay unemployment taxes on consumers while receiving rehabilitative services at Tinker and in state offices is supported by extant jurisprudence. In Local Union 1106, International Brotherhood of Electrical Workers, AFL-CIO v. Goodwill Industries of Muskegon County, Inc., 176 Mich.App. 696, 440 N.W.2d 635 (1989), the Michigan Court considered whether Goodwill consumers were "employees" while receiving rehabilitation and placement in competitive employment for purposes of labor relations laws. In the Michigan case, Goodwill treated their individuals in much the same manner as are the Oklahoma consumers. After training, the Michigan consumers were supervised by Goodwill staff and paid a minimum wage to perform labor and janitorial services pursuant to Goodwill's contracts with "churches, public schools, state buildings, and commercial (e.g., doctors') offices." [Emphasis supplied.]
Although the opinion refers to Goodwill's program as a "workshop operation," it is obvious that the consumers custodial services were offered in off-site locations.
¶ 20 The Michigan Court determined that the Goodwill consumers were not employees in the traditional sense. It recognized that the Goodwill consumers were employees only in the "generic" sense of the word and that the employment relationship was "different in many, if not most, significant respects from the normal employment relationship." The consumers were not "hired" for their competence. Rather, they were included within the facility's program not on the basis of competence but on the existence of debilitating conditions.
¶ 21 Based on similar arguments as those presented by the Michigan Court, the Fourth Circuit also determined that Goodwill consumers were not employees for purposes of labor relations laws. In Baltimore Goodwill Industries v. N.L.R.B., 134 F.3d 227 (4th Cir. 1998), the federal tribunal recognized that Goodwill's programs were primarily rehabilitative and atypical compared with private industrial settings. One of the Goodwill contracts specifically considered in the opinion was a governmental contract awarded to the service provider pursuant to the Javits-Wagner-O'Day Act, the same act under which Goodwill consumer's are "employed" at Tinker. The Fourth Circuit noted that contracts falling under the act required that seventy-five percent of the workforce must have a severe physical or mental impairment which so limits the person's functional capabilities that the individual is unable to engage in normal competitive employment over an extended period of time. The federal court found that counseling offered by Goodwill to the consumers was rehabilitative in nature regarding such things as time management and interpersonal relations and that approximately eighty percent of the counselor's time was spent in the counseling and monitoring process.
¶ 22 The highest court in West Virginia considered the issue of unemployment compensation for a claimant receiving rehabilitative training in LeMasters v. Gatson, 193 W.Va. 676, 458 S.E.2d 613 (1995). Like Oklahoma's exemption, the West Virginia statute exempted from the term "employment" services performed "in a facility conducted for the purpose of carrying out a program of rehabilitation". The "facility" inLeMasters was the West Virginia Society for the Blind (Society). Pursuant to a program not unlike Goodwill's here, the consumer was employed as a food services worker in a cafeteria at the United States Department of Energy facility in Morgantown. After being terminated by the Society, the consumer sought unemployment compensation. The West Virginia Court determined that the employment at the facility appeared "to be the very type specifically exempted from unemployment compensation."
¶ 23 Considering statutory language almost identical to that found in40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), the Missouri Appellate Court was asked to determine whether an individual found incompetent to stand trial and delivered to the Fulton State Hospital for treatment was entitled to unemployment compensation following her release from the hospital. As a condition of treatment during the hospital stay, the individual was required to work at a rehabilitation center, Brandt Vocational Enterprises (Brandt). After being released from the hospital, the individual sought unemployment benefits based on that work assignment. In Ragan v. Fulton State Hosp. Div. of Employment Sec., 188 S.W.3d 473 (MoApp. 2006), the Missouri Court held that the hospital was clearly "a facility" within the meaning of the statute and that the wages earned while employed with Brandt did not constitute "employment" within the meaning of the statutory provision. The individual was denied wage credits and deemed ineligible to receive unemployment compensation.
Title 12 O.S. Supp. 2006 § 1-210[12-1-210](7)(d), see note 2, supra.Ragan v. Fulton State Hosp. Div. of Employment Sec., 188 S.W.3d 473 (Mo.App. 2006), providing in pertinent part:
" . . . Section 288.034.1 generally defines 'employment' . . . However, Section 288034.9(4) provides an exception with respect to Section 288.034.8, stating the term 'employment' does not apply to services performed:
In a facility conducted for the purpose of carrying out a program of rehabilitation for individuals whose earning capacity is impaired by age or physical or mental deficiency or injury or providing remunerative work for individuals who because of their impaired physical or mental capacity cannot be readily absorbed in the competitive labor market, by an individual receiving such rehabilitation or remunerative work. . . ."
See also, Matter of the Claim of Richmond, 694 N.Y.S.2d 534, 264 A.D.2d 878 (1999), leave to appeal denied, 94 N.Y.2d 757, 703 N.Y.S.2d 74, 724 N.E.2d 770 (1999), reargument dismissed, 95 N.Y.2d 826, 712 N.Y.S.2d 451, 734 N.E.2d 763 (2000), reargument denied, 95 N.Y.2d 888, 715 N.Y.S.2d 379, 738 N.E.2d 783, reargument dismissed, 95 N.Y.2d 888, 721 N.Y.S.2d 607, 744 N.E.2d 143 (2000) [Claimant was precluded from establishing valid unemployment claim where employer was a nonprofit organization providing rehabilitative services. It cannot be determined from the opinion where the employment actually took place.]; Carter v. Carter, 395 So.2d 1020 (Ala.Civ.App. 1981) [Where an employee was hired as a "sheltered employee", Goodwill would be exempt from the payment of unemployment taxes.]. But see, Wildcat Service Corp. v. Ross, 78 A.D.2d 710, 432 N.Y.S.2d 279 (1980) [Non-profit organization providing rehabilitative services to ex-offenders, ex-addicts, delinquent youths and mothers receiving aid to families with dependent children was not entitled to a refund of unemployment insurance contributions.].
¶ 24 b) The majority's decision to remand the cause for the development of a theory presented for the first time on appeal eviscerates the general rule that this Court will not consider issues not tendered below. Furthermore, it violates the public policy exception to the general rule which allows review of issues of public importance if the record evidence supports a legal theory dispositive of the cause.
¶ 25 The majority recognizes that the Employment Commission "rested its position below solely on a construction" argument regarding 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d). It also appears to pay "lip service" to the general rule that issues not tendered below will not be considered for the first time on appeal. The majority then extends the public policy exception to the general rule outside the boundaries to which the exception is applicable.
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra.
Jernigan v. Jernigan, 2006 OK 22, § 6, 138 P.3d 539 [Majority opinion authored by Opala, J.].
¶ 26 It is undisputed that the Employment Commission argues, for the first time on appeal, the legal theory regarding judicial deference to long-standing administrative practices of interpretation. It is also agreed that the question presented is one of public importance, which, under appropriate circumstances, might warrant this Court's sua sponte application of any legal theory dispositive of the appeal. Nevertheless, the exception to the general rule will not support the majority remanding a cause to correct or supplement a record which does not support the legal theory asserted initially in the appellate tribunal.
¶ 27 The general rule regarding matters presented for the first time on appeal is aptly stated in Jernigan v. Jernigan, 2006 OK 22,138 P.3d 539 [Majority opinion authored by Opala, J.] providing in pertinent part at § 6:
See, Special Indemnity Fund v. Reynolds, 1948 OK 14, §, 188 P.2d 841 providing in pertinent part:
"The general rule of law adopted by practically all courts is that a case will not be reviewed on a theory different from that on which it was tried below, but there are exceptions thereto where 'practical injustice that might result' because 'the parties proceeded on a mutual mistake of law.' . . . Thus where questions of public policy or widespread public interest are involved an appellate court may review a cause on a theory not presented in the trial tribunal. . . ." [Citations omitted.]
" . . . Matters not first presented to the trial court are generally excluded from consideration by an appellate forum. Nothing tendered here warrants a deviation from the general rule that bars from review issues raised for the first time on appeal. . . ." [Footnotes omitted.]
The public law exception and its boundaries are stated in Schulte Oil Co. v. Oklahoma Tax Comm'n, 1994 OK 103, 882 P.2d 65 [Majority opinion authored by Opala, J.] providing in pertinent part at §:
" . . . In public-law litigation the reviewing court is generally free to grant corrective relief upon any applicable legal theory that finds support in the record, but appellate freedom to raise and settle public-law issues sua sponte is circumscribed by the record brought before us for review. Issues clearly outside the record may not be addressed." [Footnotes omitted. Italics in original. Other emphasis supplied.]
Additional insight is gained from Davis v. B.F. Goodrich, 1992 OK 14, 826 P.2d 587 [Opala, C.J. concurring] providing in pertinent part:
" . . . A sua sponte review of a constitutional question which was neither advanced by the briefs nor preserved in the record goes beyond the limits of the Reynolds v. Special Indemnity Fund exception. Reynolds teaches that if in a public-law controversy the aggrieved party's brief advances the wrong reason for reversal, the reviewing court is free to grant corrective relief from the urged error on an applicable theory chosen sua sponte- i.e., a theory that supports the assigned error but was neither advanced below nor on appeal and is dispositive of the issue raised by the aggrieved party. Reynolds is inapposite here. The reversible error of a constitutional dimension isolated by the dissent sua sponte was neither (a) assigned and argued by the aggrieved party, either here or below, nor does it (b) rest on a predicate clearly laid by the trial tribunal's record. Our Reynolds freedom to choose sua sponte the dispositive public-law theory when a wrong one is advanced does not extend to identifying a constitutional flaw not urged by the aggrieved party either here or below, nor to supplying a deficiency in the trial tribunal's record. . . ." [Footnotes omitted. Italics in original. Other emphasis provided.]
¶ 28 In Stidham v. Special Indemnity Fund, 2000 OK 33, ft. #26,10 P.3d 880 [Majority opinion authored by Opala, J.], the Court explains that "the public-law-issue exception does not arm the claimant with a license to demand answers to questions that (a) were overlooked by the parties, (b) were not timely urged for other reasons or (c) are not considered dispositive of the case." [Italics in original. Emphasis supplied.]
See also, Frey v. Independence Fire Casualty Co., 1985 OK 25, 698 P.2d 17 [Majority opinion by Opala, J.] in which the statement is made that a "reviewing court is always limited to the issues actually presented below, as reflected by the record." [Emphasis supplies.}
¶ 29 The majority's attempt to distinguish the above cited causes is nothing more than a hollow response in an attempt to "explain away" controlling jurisprudence. A remand to give the Employment Commission an opportunity for "overs" or a "second bite of the apple" is not supported by our jurisprudence regarding the necessity of presenting any issue sought to be considered on appeal initially to the trier of fact. Furthermore, the public policy exception to the general rule is available only when the issue sought to be raised for the first time on appeal is supported by the record. The majority's position eviscerates the general rule and extends the public policy exception beyond its intended bounds.
¶ 30 c) The majority's allegations that construing the controlling statute on the record presented will result in a landslide of stale claims being filed as an "afterthought" presents a disingenuous picture of the procedural posture of the cause.
¶ 31 The majority presents a misleading procedural framework for the cause and insists that upholding the statutory language will lead to a plethora of stale claims being filed by other non-profit organizations. It was not, as the majority insinuates, Goodwill who randomly brought suit against the Employment Commission for overpaid unemployment taxes. Rather, the cause arose out of a determination by the Employment Commission that the services performed by adults with disabilities were not exempt. Goodwill has made no claim for taxes it overpaid prior to its determination that individuals receiving rehabilitative training in federal and state facilities were not covered by the Unemployment Act. Instead, it is the Unemployment Commission which makes a claim upon Goodwill for underpayment of tax assessments.
¶ 32 The majority has no knowledge of either how many non-profit organizations may be operating under the contracts at issue here. Neither is it aware of whether those same organizations are or are not paying unemployment taxes on their consumers with disabilities. To indicate that there might be "endless litigation" on this precise issue is nothing more than pure speculation.
CONCLUSION
¶ 33 The majority refuses to construe the governing statutory provision. I would do so and hold that 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d) specifically excludes providers from the payment of unemployment taxes when conducting programs of rehabilitation or remunerative work for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury, or who, because of their impaired mental or physical capacity, cannot be readily absorbed into the competitive labor market. The determination is supported by the purpose of legislation favoring employment of consumers with disabilities, the legislative intent, and extant jurisprudence.
Title 40 O.S. Supp. 2006 § 1-210[ 40-1-210](7)(d), see note 2, supra.
¶ 34 Having failed to address the governing statutory provision, the majority determines that the cause should be remanded to supplement a deficient record on a theory presented for the first time on appeal. In so doing, it eviscerates the general rule regarding the necessity of preserving issues on appeal through their presentation to the trier of fact and extends the limited public policy exception beyond bounds supported by this Court's jurisprudence.
¶ 35 I can accede to neither the majority's "restraint" on the first issue nor its's lack thereof on the second. Neither can I ignore the practical results of the majority opinion for consumers with disabilities. Programs like those where Goodwill sends out its consumers with disabilities to job sites to participate in employment opportunities are often the most expensive programs run by non-profit agencies. While aides may be able to assist three to five consumers with disabilities in doing contract work in a sheltered environment, consumers with disabilities who go out to work sites such as Tinker and State offices often need one-on-one assistance to accomplish their work assignments. This may be due to the necessity for assistance with basic personal needs or hand-over-hand help to accomplish tasks such as lifting a trash can high enough to empty it into a larger receptacle. Consumers who suffer physical rather than mental disabilities may be able to operate computers, telephone answering systems, etc., but only with the assistance of adaptive equipment. Because most of the consumers live on the most basic of assistance programs, non-profit agencies often bear the cost of such equipment in order to allow consumers with disabilities to enter into the outside workforce. The bottom-line result of the majority opinion will be that consumers with disabilities who, with assistance, can operate in the community and contribute as citizens will be denied the opportunity because non-profit agencies cannot both bear the higher costs of running the programs and pay unemployment taxes on the same individuals.
¶ 36 I dissent. I refuse to ignore the clear intent of a statutory scheme intended to assist, rather than to hamper, the employment of consumers with disabilities. Neither can I condone the unprecedented extension of either the rule requiring that appellate courts refrain from addressing issues not raised in the trial courts nor expanding the rule that records be built as cases are tried rather than having "overs" with the apparent input of this Court on what must appear in the record in order to prevail the "second time around."