Opinion
DOCKET NO. A-2910-12T1 DOCKET NO. A-3704-13T1
10-28-2015
IAN T. SHEARN, Appellant, v. BOARD OF REVIEW, and NEWARK MORNING LEDGER CO., Respondents.
Sciarra & Catrambone, L.L.C., attorneys for appellant (Matthew R. Curran, of counsel and on the briefs). John J. Hoffman, Acting Attorney General, attorney for respondent Board of Review (Lisa A. Puglisi, Assistant Attorney General, of counsel; Alan C. Stephens, Deputy Attorney General, on the brief). Respondent Newark Morning Ledger Co. has not filed a brief.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Reisner and Leone. On appeal from the Board of Review, Department of Labor and Workforce Development, Docket Nos. 292,066 and 421,141. Sciarra & Catrambone, L.L.C., attorneys for appellant (Matthew R. Curran, of counsel and on the briefs). John J. Hoffman, Acting Attorney General, attorney for respondent Board of Review (Lisa A. Puglisi, Assistant Attorney General, of counsel; Alan C. Stephens, Deputy Attorney General, on the brief). Respondent Newark Morning Ledger Co. has not filed a brief. PER CURIAM
Appellant Ian T. Shearn appeals two final agency decisions of respondent the Board of Review (Board). The first appeal, No. A-2910-12, challenges the Board's finding he was liable for re-payment of overpaid unemployment compensation benefits in the amount of $19,600 based on: (1) a reduction in benefits due to his pension compensation; and (2) periods of ineligibility due to Shearn's failure to satisfy the requirement that he actively seek employment during each week for which benefits were received. The second appeal, No. A-3704-13, challenges the Board's denial of Shearn's request for waiver of his re-payment liability based on economic hardship. We affirm in both consolidated appeals.
I.
Shearn worked for respondent Newark Morning Ledger Co. ("the Ledger") as a journalist from December 1998 until his separation in December 2008. On December 7, 2008, he filed a successful claim for unemployment benefits with the Division of Unemployment and Temporary Disability Insurance (Division) of the New Jersey Department of Labor and Workforce Development (Department). He collected $560 per week in unemployment benefits through March 27, 2010.
Effective December 2009, Shearn began receiving payments from the Ledger's employer-financed pension. The monthly pension income was $1,551.20. During the period Shearn was receiving unemployment benefits, he was also compensated for various freelance jobs as a journalist or consultant. There is no dispute that Shearn consistently notified the Division about all income he received, sometimes in advance of payment.
On July 20, 2010, the Deputy of the Division issued a Request for Refund of Unemployment Benefits, indicating that due to his freelance and pension income, Shearn was "ineligible for benefits from 06/28/2009," was "not available for work," and had been compensated at an excessive rate. The Division held him liable to refund $21,840. Shearn appealed.
During roughly two and a half years of administrative proceedings, the Tribunal held a total of five hearings, which included two postponements to provide Shearn with opportunities to provide documentation. The Board remanded twice, instructing the Tribunal to make further inquiries and findings of fact regarding Shearn's search for employment, pension benefits, and freelance income.
Shearn's freelance income is not at issue before us, as the Tribunal and Board later concluded that "[t]he freelance work is not a bar to benefits," as "these earnings will not be applied" to reduce his benefit amount.
The Tribunal issued its ultimate decision on October 23, 2012. The Tribunal found that, because Shearn had not demonstrated that he was actively seeking work, he was ineligible for unemployment benefits for the twelve weeks between June 28, 2009, and September 19, 2009; the four weeks between October 11, 2009, and November 7, 2009; the twenty weeks between November 15, 2009, and April 3, 2010; and the eighteen weeks between April 11, 2010, and August 14, 2010. The Tribunal also found his weekly unemployment benefit had to be reduced from $560 to $202 due to his pension income. As a result of these findings, the Tribunal found Shearn liable for a refund in the amount of $19,600. He appealed to the Board.
On January 15, 2013, the Board issued its final decision, affirming the Tribunal, with modifications that are not at issue on appeal. Shearn now appeals this decision in No. A-2910-12.
On February 23, 2013, Shearn submitted a request for a waiver of recovery of overpayment of benefits. The Division denied his request, and required repayment in $500 minimum monthly installments. He appealed to the Tribunal and a hearing was held in September 2013. A representative from the Division testified that his request was denied because his income as reported did not indicate that repayment would be a hardship and "recovery of the amount [he] was overpaid [was] not patently contrary to the principles of equity as defined by the New Jersey Administrative Code."
The Tribunal affirmed the denial of waiver. Shearn appealed to the Board, and the Board affirmed in a final agency decision dated January 31, 2014. Shearn now appeals this decision in No. A-3704-13.
II.
Our capacity to review the Board's decisions "is limited." Brady v. Bd. of Review, 152 N.J. 197, 210 (1997). "If the Board's factual findings are supported 'by sufficient credible evidence, courts are obliged to accept them.'" Ibid. (citation omitted). Our review "is limited to determining whether the agency acted arbitrarily, capriciously, or unreasonably." Lourdes Med. Ctr. of Burlington Cnty. v. Bd. of Review, 197 N.J. 339, 360 (2009). We must hew to that standard of review.
Shearn argues that the decisions of the Board are not supported by sufficient credible evidence. Specifically, he argues the Board failed to provide "a clear and concise demonstration that the litigants have been heard and their arguments considered." To the contrary, the Board and the Tribunal each considered this case three times, the Board remanded the case to the Tribunal twice for further fact finding, and the Tribunal adjourned hearings on multiple occasions to provide Shearn with additional time to collect supporting documents. Thus, the well-developed record undermines his general assertion that the Board did not consider his allegations and diligently investigate his claim.
A.
Shearn argues the Board failed to make sufficient factual findings in support of its holding that he was not actively seeking work during the weeks he was held ineligible for benefits. However, as explained below, his argument does not actually turn on whether the agency made sufficient findings of fact, but on his dispute with how the Board had defined "actively seeking work" under N.J.S.A. 43:21-4(c)(1).
Unemployment benefit eligibility is determined on a weekly basis. N.J.S.A. 43:21-4 provides in pertinent part that "[a]n unemployed individual shall be eligible to receive benefits with respect to any week eligible only if" the individual "has demonstrated to be actively seeking work." N.J.S.A. 43:21-4(c)(1). Thus, our Legislature has required that benefit recipients demonstrate that they are actively seeking work for each week that benefits are received.
The Division has interpreted this provision to require that a claimant make three contacts per week. In the Department's handbook for unemployment claimants, the Division stated that among the requirements for maintaining benefit eligibility is that a claimant "must actively seek work." State of New Jersey Department of Labor and Workforce Development, Unemployment Insurance: Your Rights and Responsibilities [hereinafter Unemployment Handbook] at 10. "This means that for each week of benefits which you claim, you must make an active search for work and do all that is reasonable to secure reemployment. The [Division] considers a minimum of three (3) different employer contacts for each week a reasonable search for work." Ibid. (emphasis added).
The most current iteration of the Unemployment Handbook is available online at http://lwd.dol.state.nj.us/labor/forms_pdfs/ui/PR-94.pdf (Revised January 1, 2014). It is not contended that the pertinent provisions differed in the 2009-2010 period at issue here.
The Division explained that various methods of reaching contacts will satisfy this requirement, including "Telephone, Internet, and In-Person contacts, as well as sending resumes." Ibid. The Division advised claimants that they "may be requested to furnish [their] contacts with prospective employers" to the Division, and that the Division "may communicate with these employers to verify [a claimant's] contact with them for work." Ibid. The Unemployment Handbook provides a template for such recordkeeping, and clearly indicates what relevant information should be retained by a claimant. Ibid. Further, claimants are "advised that the unemployment week runs from Sunday through Saturday," and that benefit eligibility determinations are made on the basis of each week. Ibid.
The Unemployment Handbook constitutes a "regulatory guidance document" under the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15. The APA generally provides that an agency may "only implement rules that have been adopted in accordance with [the Act's] rule-making requirements." N.J.S.A. 52:14B-3a(a). However, the APA permits agencies to issue "regulatory guidance documents," which it defines as "any policy memorandum or similar document used by a State agency to provide technical or regulatory assistance or direction to the regulated community to facilitate compliance with State or federal law or a rule adopted pursuant to [the APA]." N.J.S.A. 52:14B-3a(d). "No State agency shall utilize regulatory guidance documents that have not been adopted as rules . . . unless the agency makes such documents readily available to the regulated community through appropriate means, including but not limited to posting in a prominent place on the website for the agency." N.J.S.A. 52:14B-3a(b). A regulatory guidance document that has not been formally adopted as a rule may not: "(1) impose any new or additional requirements that are not included in the State or federal law or rule that the regulatory guidance document is intended to clarify or explain; or (2) be used by the State agency as a substitute for the State or federal law or rule for enforcement purposes." N.J.S.A. 52:14B-3a(c).
The Unemployment Handbook does not substitute for State law, or impose any new or additional requirements. Rather, it clarifies statutory requirements to provide guidance to the general public on the Division's interpretation of the statute for which it is responsible. The Division made the handbook readily available to unemployment claimants by posting it on the Division's website, where claimants go weekly to report and request weekly benefits. Thus, the Unemployment Handbook qualifies as a "regulatory guidance document" under N.J.S.A. 52:14B-3a.
We consider what level of deference we should afford the Unemployment Handbook. "[I]nterpretations of the statute and cognate enactments by agencies empowered to enforce them are given substantial deference in the context of statutory interpretation." In re Young, 202 N.J. 50, 63 (2010). Though "we are in no way bound by the agency's interpretation of a statute," we defer to an agency's interpretation of the statutes within the sphere of its authority, unless the interpretation is "plainly unreasonable." US Bank, N.A. v. Hough, 210 N.J. 187, 200 (2012) (internal quotation marks and citations omitted). "We do so because 'a state agency brings experience and specialized knowledge to its task of administering and regulating a legislative enactment within its field of expertise.'" Ibid. (citation omitted).
Here, the Division has interpreted the "actively seeking work" requirement of N.J.S.A. 43:21-4(c) to mean that an individual must make a minimum of three employment contacts per week. That interpretation is not plainly unreasonable. The Division could reasonably determine that weekly unemployment benefits are paid in part to sustain claimants while they seek employment during that week. It is not unreasonable to require a claimant to expend some effort to contact employers in each week they receive such funding. Nor is three such contacts an unreasonable number over seven days' time. Thus, we afford the interpretation "great deference." See US Bank, supra, 210 N.J. at 200.
Nor is the Board's interpretation at odds with judicial interpretation of the requirement of "proof that the claimant be 'actively seeking work.'" Carpet Remnant Warehouse, Inc. v. N.J. Dep't of Labor, 125 N.J. 567, 588 (1991) (quoting N.J.S.A. 43:21-4(c)). The claimant "must do more than being passively available for work." Worsnop v. Bd. of Review, 92 N.J. Super. 260, 265 (App. Div. 1966). A claimant "must seek work actively" and "make 'a diligent search for work.'" Edmundson v. Bd. of Review, 71 N.J. Super. 127, 131 (App. Div. 1961) (quoting Breskin v. Bd. of Review, 46 N.J. Super. 338, 344 (App. Div. 1957) (finding it inadequate for a claimant to make six applications over three months). "'Merely registering with the State Employment Service for work is not sufficient; nor is registering plus asking relatives and friends if they know of any opportunities for work. Similarly, reading newspaper want ads and telephoning a few places will not suffice[.]'" Worsnop, supra, 92 N.J. Super. at 265 (quoting Breskin, supra, 46 N.J. Super. at 343; other citations omitted). "One who seeks unemployment benefits must make more than these minimal efforts to find employment to satisfy the statutory requirements." Ibid. (finding it inadequate for the claimant "to contact his union hall daily").
We have stated that "[i]t is impossible to establish a norm against which the conduct of every applicant can be compared to ascertain whether there has been a compliance with the statutory mandate to seek employment. The facts of each case must be examined to determine whether a claimant actively sought work." Campbell v. Bd. of Review, 50 N.J. Super. 187, 190 (App. Div. 1958). We do not read Campbell as precluding the Division from making regulatory efforts to advise claimants of what it "considers . . . a reasonable search for work." Unemployment Handbook, supra, at 10. Moreover, the Unemployment Handbook notes that "the definition of an 'Active Work Search' . . . [is] tailored to each individual, depending on where they live, their skills, experience and past salary." Id. at 10. In any event, the facts of the case were extensively considered here.
We note that N.J.A.C. 12:17-1.1(d) states that "[t]he Commissioner may relax these rules for good cause on a case-by-case basis." We need not address whether exceptions can be granted on a case-by-case basis from the three-contacts-per-week standard because Shearn neither requested nor showed a basis for such an exception.
In August 2010, Shearn provided the Tribunal with evidence of his employment search in the form of a list of contacts. In that list, he indicated that, for example, he made fifty-five (55) contacts on September 25, 2009, and forty-four (44) contacts on November 14, 2009. By contrast, he listed only six employer contacts in the twelve weeks between June 28, 2009, and September 19, 2009; two employer contacts in the four weeks between October 11, 2009, and November 7, 2009; two employer contacts in the twenty weeks between November 15, 2009, and April 3, 2010; and four employer contacts in the eighteen weeks between April 11, 2010, and August 14, 2010. For those weeks, the Tribunal and Board determined he was ineligible for unemployment benefits because he was not actively seeking work.
In his second submission dated June 27, 2011, Shearn "attempted to 'piece together' his efforts to obtain employment from the two years prior." He averred he checked various internet employment sites "daily," and made repeated telephone calls to friends and colleagues regarding possible employment. He also stated that in summer 2010, he applied to local bars, restaurants, and retail establishments, due to his inability to find work in his field.
Shearn argues there is no indication in the record that the Tribunal and the Board ever considered his second submission. However, Shearn provided this second submission as an attachment to his second notice of appeal to the Board, and mailed it again to the Tribunal. Shearn also testified to the general contents of his second submission more than once before the Tribunal, and the Tribunal mentioned his alleged additional telephone calls. When the Board certified the items in the record for the appeal to this court, it stated that Shearn's second notice of appeal to the Board and attached submissions were part of the record. Accordingly, we will not assume the Board was not aware of his second submission.
In any event, Shearn's second submission does not show that Shearn was eligible during the periods he was found ineligible by the Board. Although he claimed he averaged 3.5 job applications per week from July 1, 2009, to August 31, 2010, he did not certify that he made three employment contacts in any of the weeks the Board found he was ineligible. His listing of his contacts with bars, restaurants, and similar employers lacked specific dates, and added only about twenty-five employer contacts for the eighteen weeks between April 11, 2010, and August 14, 2010.
Further, the types of contacts Shearn alleged in his certification — asking friends if they know of any opportunities for work and reading internet job postings, the electronic equivalent of reading newspaper want ads — are the type of inquiries we have repeatedly found inadequate. See Worsnop, supra, 92 N.J. Super. at 265 (citing Boyer v. Bd. of Review, 4 N.J. Super. 143 (1949) (finding that asking friends and relatives if they know of any job openings is insufficient); and De Rose v. Bd. of Review, 6 N.J. Super. 164 (1950) (finding that reading newspaper want ads and telephoning a few places is insufficient)).
Thus, Shearn's second submission did not show that he complied with the requirements for benefit eligibility set forth in the Unemployment Handbook. "Claimants bear the burden of proof to establish their right to unemployment benefits." Brady, supra, 152 N.J. at 218. Shearn failed to carry that burden.
B.
Shearn also seeks reversal based on the Division's failure to provide him with alleged audio recordings of conversations he claims to have had with Division employees. He testified Division employees told him that he did not have to report his pension income, but just "pay the taxes on it," and that he did not have to notify the Division until he "actually received a check" for his pension. His counsel argued the tapes would show employees told him "that he's fine he should continue to collect benefits."
Shearn asserts that if he could prove an employee told him he did not have to disclose certain income, the Board is equitably estopped from penalizing him. However, the Board did not penalize Shearn for not disclosing any income. Rather, the Board simply applied the income he admittedly received, determined his benefit rate was too high, and held him liable only for repayment of benefits he was ineligible to receive.
Moreover, Shearn's testimony was solely about disclosure, not about whether his pension income would affect his benefit rate. Even his counsel asserted only that Division employees told Shearn he would continue to receive benefits, not that his benefit rate would be unaffected. In any event, Shearn did not allege that he changed his position or detrimentally relied on any such statements. "[T]he party alleging equitable estoppel[] has the burden to prove that [the defendant's] conduct established the three prerequisites to equitable estoppel -- representation, reliance, and detriment." Miller v. Miller, 97 N.J. 154, 167 (1984).
Thus, even if such recordings existed and showed that Division employees told Shearn what he alleges, he would still be liable for overpayment of benefits:
When it is determined by a representative or representatives designated by the Director of the Division . . . that any person, whether (i) by reason of the nondisclosure or misrepresentation by him or by another of a material fact . . . , or (ii) for any other reason, has received any sum as benefits under this chapter . . . while any conditions for the receipt of benefits imposed by this chapter . . . were not fulfilled in his case, or while he was disqualified from receiving benefits, or while otherwise not entitled to receive such sum as benefits, such person, unless the director (with the concurrence of the controller) directs otherwise by regulation, shall be liable to repay those benefits in full.If there has been an overpayment of benefits for any reason, "[t]he sum shall be deducted from any future benefits . . . or shall be paid by the individual to the division for the unemployment compensation fund, and such sum shall be collectible in the manner provided for by law[.]" Ibid.
[N.J.S.A. 43:21-16(d)(1) (emphasis added).]
"N.J.S.A. 43:21-16(d) requires the full repayment of unemployment benefits received by an individual who, for any reason, regardless of good faith, was not actually entitled to those benefits." Bannan v. Bd. of Review, 299 N.J. Super. 671, 674 (App. Div. 1997). "The recovery of improperly paid unemployment compensation benefits furthers the purpose of the unemployment compensation laws," by "preserv[ing] the Unemployment Trust Fund for the payment of benefits to those individuals entitled to receive them." Ibid. "The public interest clearly is not served when the Unemployment Trust Fund is depleted by the failure to recoup benefits erroneously paid to an unentitled recipient, however blameless he or she may have been." Ibid.
Moreover, 42 U.S.C.A. § 503(a)(9) "requires that a state recover improperly paid unemployment compensation benefits." Bannan, supra, 299 N.J. Super. at 675. "[W]hen payments are made to ineligible claimants, the monies in the state's unemployment compensation fund are not being used for the proper administration of that fund, in violation of 42 U.S.C.A. § 502(a)." Ibid. "[I]f a state did not recoup monies expended in improper payments, the United States Secretary of Labor would be required to cease approving federal grants to that state." Ibid.
Furthermore, the "doctrine of equitable estoppel is rarely invoked against a government entity," except to prevent a "manifest injustice." Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 20 (2006) (internal quotation marks and citation omitted).
The application of estoppel to unemployment compensation refunds is further complicated by the fact that virtually every recipient of unemployment benefits who by definition lacks adequate sources of income and relies upon the initial representation that benefits will be paid, uses the payments to meet expenses and faces difficulty repaying sums that are subsequently determined to have been erroneously disbursed.In Zimmerman v. Bd. of Review, 132 N.J. Super. 316 (App. Div. 1975), a claimant similarly claimed he did not have to repay improperly-paid unemployment benefits because he relied on a conversation he had with an employee of the Division. Id. at 319. We held that "our cases are clear that we cannot here apply estoppel against this governmental agency." Id. at 324. "The advice allegedly given the claimant by a Division employee . . . does not require a finding that he complied with the applicable regulations or that the Division is estopped from asserting that he failed to do so." Id. at 323.
[Bannan, supra, 299 N.J. Super. at 676.]
Accordingly, we reject Shearn's argument that failure to provide him with any alleged recordings constituted reversible error.
III.
Finally, we affirm the Board's decision that Shearn was not entitled to a waiver of repayment of benefits. The Director has the discretion to waive repayment, but only in particularly narrow circumstances:
Upon request of the claimant or the claimant's representative, the Director may grant the claimant a full waiver of recovery of an overpayment of benefits only after the Director has determined that the claimant has not misrepresented or withheld any material fact in obtaining benefits and only under the following circumstances: (1) Where the claimant is deceased; (2) Where the claimant is disabled and no longer able to work; or (3) Where the recovery of the overpayment, as determined by the Director with the Controller's concurrence, would be patently contrary to the principles of equity.
[N.J.A.C. 12:17-14.2(a) (emphasis added).]
Shearn is neither deceased nor does he claim to be disabled, so he must show that repayment is patently contrary to the principles of equity. Moreover, an agency's exercise of discretion is "entitled to respectful review under an abuse of discretion standard." Serenity Contracting v. Fort Lee, 306 N.J. Super. 151, 157 (App. Div. 1997), certif. denied, 153 N.J. 214 (1998).
"For purposes of determining under [N.J.A.C. 12:17-14.2(a)(3)] whether the recovery of the overpayment would be 'patently contrary to the principles of equity,' the Director and Controller shall consider whether the terms of a reasonable repayment schedule would result in economic hardship to the claimant." N.J.A.C. 12:17-14.2(d). Here, the Director did not order Shearn to repay benefits in one lump sum, but rather offered him a repayment plan based on monthly installments of $500. The Board's determination that such a payment would not constitute an economic hardship for Shearn was not made "arbitrarily, capriciously, or unreasonably." Lourdes Med. Ctr., supra, 197 N.J. at 360.
The Board held: "Considering the fact that the claimant is receiving income from a pension, and even foresees the possibility of earning [freelance] remuneration from work, in addition to his spouse[']s contribution to household expenses, it cannot be said the claimant has demonstrated that recovery of the overpayment would be patently contrary to the principles of equity."
With his request for waiver, Shearn submitted a disclosure form listing substantial assets. He also supplied joint tax returns for himself and his spouse for the relevant years of 2009 and 2010, which showed they had a combined income of $287,547 and $146,329 respectively. He reported $278,614 in combined income for the twelve-month period prior to February 2013. His individual income for that period was in excess of $46,000, which included pension and freelance income.
Shearn complains that the Board considered his wife's income. Shearn asserted that he and his spouse have "a very clear financial arrangement" whereby their "assets are separated." However, he testified they had a joint account "to take care of household expenses; to which [they] both contribute and [from which they] pay the bills." The Board found the spouse's income was relevant only because he testified that she helps to pay the monthly household expenses.
All these facts indicated that repaying $500 per month would not result in economic hardship to Shearn. We note the Internal Revenue Service defines economic hardship as that which "will cause an individual taxpayer to be unable to pay his or her reasonable basic living expenses." 26 C.F.R. § 301.6343-1(b)(4).
Given the low repayment amount per month, Shearn's income and assets, and wife's contribution to their living expenses, Shearn failed to show that repayment of the overpayment would be patently contrary to the principles of equity. Thus, the Board's denial was not an "abuse of discretion." See Serenity Contracting, supra, 306 N.J. Super. at 157.
To the extent that Shearn's equitable estoppel argument in his first appeal overlaps with his waiver argument in the second appeal, we find the argument without merit as to the second appeal as well. Even if Shearn had been misled into believing that his unemployment benefits would not be reduced by the amount of his pension, he has not proven that requiring repayment would be patently inequitable in this case. --------
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION