Opinion
No. 1988 C.D. 2013
06-17-2014
Jamie L. Schlorff, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
Jamie L. Schlorff (Claimant) petitions for review of an order of the Unemployment Compensation Board of Review (Board) affirming the Referee's denial of unemployment compensation benefits pursuant to Section 402(e) of the Unemployment Compensation Law (Law) because Claimant violated a Confidentiality and Non-Compete Agreement (Non-Compete Agreement) she entered into with Bionix Development Corporation (Employer) by refusing to sign a Settlement, Release and Assignment Agreement (Settlement Agreement). For the reasons that follow, we affirm.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(e). That section provides, in relevant part:
An employe shall be ineligible for compensation for any week -
***
(e) In which his unemployment is due to his discharge or temporary suspension from work for willful misconduct connected with his work, irrespective of whether or not such work is "employment" as defined in this act.
Claimant was employed as a full-time product development engineer with Employer from 1992 until April 12, 2013. On February 18, 1997, Claimant executed the Non-Compete Agreement, which required her to assist in the preparation and prosecution of any patent applications filed by Employer and in the protection and defense of Employer's rights to any such patents or ideas.
The Agreement provides, in relevant part:
3. Assistance Regarding Patents. Employee agrees to disclose all such ideas and, from time to time, as requested by the Company or its authorized representative, and at the company's expense shall make application for letters patent, for such discoveries and inventions in such country or countries as the Company may designate, and shall assign and transfer unto the Company the entire right, title and interest therein. Employee further agrees that, upon request and without additional compensation, Employee will promptly assist the Company in every reasonable manner in the preparation and prosecution of any such patent application filed by the Company and in the documentation, perfection, maintenance, protection and defense of the Company's rights to the Ideas, including without limitation, making further application(s) for United States and foreign patents on the Ideas (including substitute, continuation, continuation-in-part, divisional and reissue applications) through any patent attorney or patent agent designated by the Company whenever requested by the Company by executing assignments to the Company and/or their nominees, and giving all reasonable assistance in the preparation and prosecution of said application(s) and in any proceedings related to said application(s) or any patent(s) resulting therefrom, such as giving testimony and executing all papers considered necessary by the Company.(Certified Record at 3) (emphasis added).
In 2010, after a lawsuit was filed by a third party regarding a patentable improvement which Claimant had developed, Claimant executed a Confirmatory Assignment (Assignment) of that invention and its patent rights to Nova Design Technologies, Ltd. (Nova Design), a subsidiary of Employer. In 2013, Employer reached a settlement with the third party and requested that Claimant execute the Settlement Agreement which stated that she would not later assert patent rights in the invention that was the subject of the litigation. However, Claimant refused to sign the Settlement Agreement and Employer discharged her for willful misconduct because she failed to comply with the Non-Compete Agreement's requirement that she sign all papers that the company considered necessary regarding patents that she developed while working for the company.
Claimant filed for unemployment compensation benefits with the UC Service Center, which denied benefits, and Claimant appealed. Before the Referee, Andrew Milligan (Milligan), Employer's Chairman and Chief Executive Officer, testified that Employer is the parent company of a series of single member LLC companies, including Nova Design. He stated that Employer was involved in patent infringement litigation and had negotiated a settlement with the opposing party, and as a condition of that settlement, everyone involved in the lawsuit was required to sign the Settlement Agreement. He testified that he informed Claimant that it was necessary for her to sign the Settlement Agreement in order to settle the litigation, and that her failure to do so would result in her termination, but Claimant refused. Milligan stated that Claimant refused to sign the Settlement Agreement because "[s]he wanted the entire settlement from the litigation on the patent infringement case for her own personal compensation." (July 16, 2013 Hearing Transcript at 10).
Claimant testified that when Employer asked her to sign the Settlement Agreement, she stated that she needed to speak to counsel, who ultimately advised her that both the Non-Compete Agreement and Assignment were invalid. Claimant explained that she believed she would be harmed financially by signing the Settlement Agreement because it was her understanding that "when Nova [Design] would make money, I would make money." (Id. at 14). Claimant also stated that she refused to sign the Settlement Agreement because the agreement was related to litigation involving Nova Design and a third party, not Employer. She explained, "I didn't see myself as violating [Employer's] confidentiality agreement because [Employer] had nothing to do with [the Nova Design lawsuit]." (Id. at 18). Claimant testified that Nova Design was a separate company that was not owned by Employer, but presented no evidence in support of that claim.
Crediting Employer's testimony, the Referee found that Employer was the parent company of Nova Design. The Referee concluded that Claimant was aware of the relevant provisions of the Non-Compete Agreement, that Claimant violated the Non-Compete Agreement by refusing to sign the Settlement Agreement, and that Claimant did not have reasonable justification for her refusal. The Referee held that Claimant's actions constituted willful misconduct, making her ineligible for benefits under Section 402(e) of the Law. Claimant then appealed to the Board, which affirmed, adopting and incorporating the Referee's factual findings and legal conclusions and noting "[i]n particular, the Board credits the employer's testimony in its entirety." (Board's October 7, 2013 Order at 1). This appeal by Claimant followed.
Our review is limited to determining whether the Board's decision is in violation of constitutional rights, whether an error of law has been committed, or whether the factual findings are supported by substantial evidence. Philadelphia Housing Authority v. Unemployment Compensation Board of Review, 29 A.3d 99, 101 n.2 (Pa. Cmwlth. 2011).
On appeal, Claimant alleges that the Non-Compete Agreement is void under Pennsylvania law because it was not supported by adequate consideration. Because she believes that the agreement is invalid, Claimant argues that her refusal to sign the Settlement Agreement was reasonable and did not rise to the level of willful misconduct. We disagree. While Claimant testified that she believed the Non-Compete Agreement is invalid, she never provided a legal reason other than it was not supported by adequate consideration. However, continued employment is valid consideration for the assignment of intellectual property rights. See Harsco Corporation v. Zlotnicki, 779 F.2d 906 (3d Cir. 1985) (holding that employer's implied agreement to retain employee for reasonable period of time provided adequate consideration for provision in employment agreement by which employee assigned to employer patent rights to any inventions he conceived during and within scope of his employment). Claimant's belief that the Non-Compete Agreement is invalid is also belied by the fact that she worked for Employer for 16 years under that agreement before even contending that it was invalid.
Claimant also disputes several of the Board's findings of fact relating to her employment history and the relationship between Employer and its subsidiaries. However, the Board is the ultimate fact-finder, empowered to determine the credibility of witnesses and resolve conflicts in evidence. Lee v. Unemployment Compensation Board of Appeal, 33 A.3d 717, 721 (Pa. Cmwlth. 2011). Therefore, we may not disturb those findings on appeal. --------
Accordingly, the order of the Board is affirmed.
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 17th day of June, 2014, the order of the Unemployment Compensation Board of Review dated October 7, 2013, at No. B-556499, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge
Although the Law does not define the term "willful misconduct," the courts have defined it as:
(1) wanton or willful disregard for an employer's interests; (2) deliberate violation of an employer's rules; (3) a disregard for the standards of behavior which an employer can rightfully expect of an employee; or (4) negligence indicating an intentional disregard of the employer's interest or an employee's duties or obligations.Philadelphia Parking Authority v. Unemployment Compensation Board of Review, 1 A.3d 965, 968 (Pa. Cmwlth. 2010). Where a claimant is discharged for a work rule violation, the employer has the burden to show that the claimant was aware that the work rule existed and that the claimant violated the rule. Id. If the employer satisfies its burden, the burden shifts to the employee to show that he or she had good cause for his or her conduct. Grand Sport Auto Body v. Unemployment Compensation Board of Review, 55 A.3d 186, 190 (Pa. Cmwlth. 2012). A claimant has good cause if his or her actions are justifiable and reasonable under the circumstances. Id.