Article: Legally Insufficient Notice and UIA Determinations

Legally Insufficient Notice and Unemployment Insurance Agency Determinations
By: Leila McClure, Marina Hunt, and Steve Gray
University of Michigan Law School Unemployment Insurance Clinic
April 2016

Sections: 421.32a, 421.33

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Frequently, unemployment insurance claimants and employers must rely only on short letter determinations and redeterminations (notices) they receive from the Agency that provide little or no information about why the Agency has taken the action of which it is notifying the party. This confuses most parties and can often prevent them from adequately responding to a negative action taken against them by the Agency. The sparse or confusing notices prevent them from either making, effective protest and appeal decisions, or unable to prepare for hearings. The following article discusses the circumstances in which Agency  notices are legally insufficient and what effect that should have on administrative proceedings.

Agency Required to Comply with US Department of Labor Standards
In the administration of its duties enumerated in the Michigan Employment Security Act, the State of Michigan must “cooperate with the appropriate agency of the United States under the Social Security Act.” M.C.L. 421.11(a). Per this requirement, the Unemployment Insurance agency is statutorily required to comply with relevant regulations promulgated by the Department of Labor.

Relevant Department of Labor Notice Standard
Section 6013 of Appendix A to Part 602 of the Employment Security Manual requires the State of Michigan to include “in written notices of determination furnished to claimants sufficient information to enable them to understand the determinations, the reasons therefor, and their rights to protest, request reconsideration, or appeal.” 20 CFR § 602 App. A, 6013(C)(2)

With regards to disqualification from benefits, the Department of Labor provides that: “If a disqualification is imposed, or if the claimant is declared ineligible for one or more weeks, he must be given not only a statement of the period of disqualification or ineligibility and the amount of wage-credit reductions, if any, but also an explanation of the reason for the ineligibility or disqualification. This explanation must be sufficiently detailed so that he will understand why he is ineligible or why he has been disqualified, and what he must do in order to requalify for benefits or purge the disqualification. The statement must be individualized to indicate the facts upon which the determination was based, e.g., state, “It is found that you left your work with Blank Company because you were tired of working; the separation was voluntary, and the reason does not constitute good cause,” rather than merely the phrase “voluntary quit.” Checking a box as to the reason for the disqualification is not a sufficiently detailed explanation. However, this statement of the reason for the disqualification need not be a restatement of all facts considered in arriving at the determination.” 20 CFR § 602 App. A, 6013(C)(2)(h) (2012) (Emphasis Added).

In the Department of Labor Advisory, Unemployment Insurance Program Letter, No. 01-16 concerning “Federal Requirements to Protect Individual Rights in State Unemployment Compensation Overpayment Prevention and Recovery Procedures, the Department of Labor specifically instructed on what qualifies as sufficient notice for fraud determinations. To satisfy federal law, the individual accused of fraud must “be provided with a written determination which provides sufficient information to understand the basis for the determination and how/when an appeal must be filed and must also include the facts on which the determination is based, the reason for allowing or denying benefits, the legal basis for the determination, and potential penalties or consequences.” USDOL Unemployment Insurance Program Letter No. 1-16, page 2 (emphasis added). The Letter also provides a description of the information that must be included in a written determination:

  1. A summary statement of the material facts on which the determination is based;
  2. The reason for allowing or denying benefits; and
  3. The conclusion of the decision based on the state’s law

Relevant Michigan Law
In Snyder v. RAM Broadcasting, No. 82 23718 AE, Washtenaw Circuit Court (April 26, 1983) (Digest No. 16.39), the Circuit Court held that a “Notice of Hearing which [does] not give a plain statement that claimant’s eligibility pursuant to Section 28(1)(a)… might be raised was not an adequate notice of the issue when it merely used the words ‘Ability/Availability/Seeking Work/Eligibility.’” The reasoning the court used in deciding this notice was inadequate was that it was “not a plain statement of the matters asserted,” meaning that “words and phrases divided by slashes and followed by a string citation to given sections of the Act do not provide a reasonably understandable notification that an issue will be considered, especially where the notification is intended for a lay person.”

Recently in Proulx v. Horiba Subsidiary Inc., 14-006880-241108 (Oct. 2, 2014) (Digest No. 18.21), an unpublished decision by the Michigan Compensation Appellate Commission (MCAC), the body held in part that the agency’s fraud redetermination was insufficient because “it merely provide[d] a conclusory statement with no fact-finding to support it.”

Agency Practice
The Unemployment Agency’s practice of sending conclusory statements of disqualification or findings of misrepresentation violates both the mandatory Department of Labor standards and existing Michigan law. Examples of insufficient notice under the Department of Labor standard include:

  • “Your actions indicate you intentionally misled and/or concealed information to obtain benefits you were not entitled to receive”
  • “You quit your job with COMPANY on DATE due to other personal reasons”
  • Redeterminations including only the underlying issue and relevant statute number, such as: “Ability 28(1)(c)”

Good Cause to Re-Open
Pursuant to UIA Rule 270(1)(e), ““fail[ure] to receive a reasonable and timely notice” is good cause for reconsideration and reopening. Section 32(a) of the MESA provides that “the claimant and other interested parties shall be promptly notified of the determination and the reasons for the determination.” Based on the failure to comply with Department of Labor standards and existing Michigan law, any agency determination or redetermination is void if it does not include:

  • An explanation of the reason for the ineligibility or disqualification that is sufficiently detailed so that the claimant knows why he or she is ineligible
  • Information about what the claimant must do to appeal or requalify for benefits
  • Individualized facts to indicate how the decision was reached

Effect of Insufficient Notice

Void ab initio
Insufficient notice of an agency decision makes that decision null and can be treated as void ab initio. The Michigan Court of Appeals has held that a failure to give proper notice as required by the applicable statute “is a jurisdictional defect that renders the subsequent proceedings void.” Kanouse v Montcalm County Drain Comm’r, unpublished opinion per curium of the Court of Appeals, issued March 19, 2002 (Docket No. 236285), p 2. Likewise, the Court of Appeals held in a workers’ compensation case that improper notice renders a subsequent judgment potentially voidable. Abbott v Howard, 182 Mich App 243 (1990).

Procedural Due Process
The notion that insufficient notice renders a subsequent decision void also comes from a two-step analysis:

(1) Inadequate notice is a violation of procedural due process rights, and

(2) Decisions that relied on a lack of due process cannot be sustained.

Under step (1), it is clear from U.S. Supreme Court jurisprudence that proper notice is fundamental to due process. See, e.g., Mullane v Central Hanover Bank & Trust Co., 339 US 306 (1950). In a case specifically about the rights of welfare recipients, the U.S. Supreme Court said that due process requires “timely and adequate notice detailing the reasons for” an agency decision, and“[t]hese rights are important in cases such as those before us, where recipients have challenged proposed terminations.” Goldberg v Kelly, 397 US 254 (1970). See also Cosby v Ward, 843 F2d 967 (CA 7, 1988) (failure to provide adequate written notice of issues to be raised at unemployment compensation hearing violated fair hearing requirement).

Under step (2), courts have voided judgments that were founded on violations of procedural due process. Often these cases fall under procedural rules such as FRCP 60(b)(4) and MRCP 2.612(c)(1)(d), which allow courts to provide relief from judgments that are void. Courts have interpreted those rules as applying to judgments that arose from inadequate process. See, e.g., In re Ruehle, 307 BR 28 (Bankr CA 6, 2004) (upholding a lower court’s decision to vacate an order where one party was denied due process of law).

Lack of Jurisdiction

An ALJ’s Authority
Where there is an occurrence of insufficient notice or a void determination, an Administrative Law Judge has the authority to dismiss or adjourn a hearing based on lack of jurisdiction over the matter. An ALJ’s authority to return jurisdiction can be inferred from both the Michigan Employment Security Act and the MAHS hearing rules issued by LARA. Section 33 of the Act authorizes MAHS to accept cases on appeal and then give them to Administrative Law Judges so long as they deal with redeterminations issued by the agency in accordance with Section 32a. MESA 421.33(1). Section 32a(1) details the agency’s decision-making process, by which a determination or redetermination is issued at each step, followed by “a hearing on the redetermination before an administrative law judge.” MESA 421.32a(1). According to these rules, the ability to have a hearing with an ALJ is contingent upon the existence of an agency decision. Without a valid determination or redetermination, the judge does not have jurisdiction over the case under MESA.

Also, it is standard practice for an ALJ to return a matter to the Agency when they can’t find an Agency determination to support it. ALJs commonly return matters to the Agency when no determination can be found in their system or in the hearing file.  Legally insufficient notice is akin to that situation.

The administrative hearing rules, issued by LARA for MAHS, support the principle that the ALJ has broad discretion in deciding how to handle a case, including issues that arise before or after hearings and questions of jurisdiction. For example, Rule 106 contains a lengthy list of powers that the ALJ has, including the power to, “on an administrative law judge’s own initiative, adjourn hearings.” Department of Licensing and Regulatory Affairs Michigan Administrative Hearing System Administrative Hearing Rules (eff. January 15, 2015), R 792.10106(1)(o). In addition, Rule 110 allows the ALJ to decline to consider a document that was not properly served on all parties, which is another form of inadequate notice. Id. R 792.10110(8).

Application to Good Cause
The fact that a claimant or employer received insufficient notice in the determinations provides her with good cause for filing a late appeal. The Agency’s administrative code provides that ‘good cause’ for reconsideration under MCL 421.32a includes among other things failure “to receive a reasonable and timely notice, order, or decision.” Mich Admin Code R 421.270(1)(e). Where a determination is legally insufficient on its face, it does not provide reasonable notice as required by 270(1)(e). On that basis, there is good cause for reopening, rehearing, or late appeals.

Appropriate Remedies
There are two possible appropriate remedies when the UIA has provided notice that does not meet the Department of Labor standards. First, a notice could be deemed unreasonable on its face. With a finding of unreasonable notice, the notice can be voided and jurisdiction should return to the Agency to issue a notice that complies with the above-mentioned standards. Alternatively, the unreasonable notice could form the basis for good cause for reopening or late appeal. Under a finding for good cause for reopening or late appeal, a case would then proceed on the underlying merits of the unemployment claim.

About the Authors

– Leila McClure, University of Michigan Law School, Class of 2016

– Marina Hunt, University of Michigan Law School Class of 2017

– Steve Gray, Clinical Assistant Professor and Director of the University of Michigan Law School Unemployment Insurance Clinic

Michigan Rule of Evidence 803-6 (“the business record exception”) and UI Administrative Hearings

Michigan Rule of Evidence 803-6 (“the business record exception”) and
Unemployment Insurance Administrative Hearings
By Jacob Coate and Steve Gray
University of Michigan Law School Unemployment Insurance Clinic
February 2016

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The nature of Unemployment Insurance hearings typically implicates a great degree of out-of-court testimony. Perhaps more than any other exception to hearsay, Rule 803-6 is used by employers to admit this testimony. Broadly construed (and often argued by employers) the rule permits admission of all documents created at a place of business or tangentially relating to business activities.

This broad construction greatly jeopardizes the rule and creates a perverse incentive in the creation of documents. As such both the Michigan Supreme Court and the United States Supreme Court (in the context of the parallel Federal Rule of Evidence 803-6) have rejected such a broad construction. Instead, specific elements must be met before a document may qualify for admission under the rule. And even when those elements have been met, the document will not qualify if there is a reason to believe either the source of information or manner of preparation is untrustworthy.

This brief article seeks to flesh out both the elements of the rule as well as the more nuanced contours of its application as they relate to Unemployment Insurance hearings.

Rule Against Hearsay and Its Application in Administrative Proceedings
The Michigan Administrative Procedures Act makes the Michigan Rules generally applicable in administrative hearings. MCL 24.275. We assume, for the sake of this article, that hearsay is generally inadmissible in contested cases. If hearsay is generally inadmissible, the question presented here is: How and when should the business record exception be applied to admit hearsay?

Michigan Rule of Evidence 802 makes hearsay evidence inadmissible. MRE 801(c) defines hearsay:

“Hearsay” is a statement, other than the one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.

Text of MRE 803-6

“A memorandum, report, record, or data compilation, in any form, of acts, transactions, occurrences, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the  memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by certification that complies with a rule promulgated by the supreme court or a statute permitting certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term “business” as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.”

Elements of Rule 803-6

The document must be made at or near the time of the event it describes.

The document must be made by a person with personal knowledge[1] of the event described.

Business Practice
It must be the regular and consistent practice of the firm to record such events and produce such reports.

All of the above elements must be established by either the custodian of the document or a qualified witness[2] or, properly authenticated pursuant to MRE 902-11 which requires an accompanying written declaration under oath by its custodian or other qualified person certifying the necessary elements.

The Application of Rule 803-6

Hearsay within Hearsay
The business record exception applies to the statements made by the author of the document itself. A business record may contain other statements other than statements made by the author. In these instances of hearsay within hearsay, the statement made by someone other than the author must also satisfy an exception to hearsay. See Merrow v. Bofferding, 458 Mich. 617, 625 (1998).

The Animating Principle behind the Rule
“Unusual reliability is regarded as furnished by the fact that in practice regular entries have a comparatively high degree of accuracy (as compared to other memoranda) because such books and records are customarily checked as to correctness by systematic balance-striking, because the very regularity and continuity of the records is calculated to train the record- keeper in habits of precision, and because in actual experience the entire business of the nation and many other activities constantly function in reliance upon entries of this kind.” Solomon v. Shuell, 435 Mich. 104 (1990).

Even when the literal requirements of the rule are met, if either the source or method of preparation seem untrustworthy, it will not be admissible.  Solomon v. Shuell, 435 Mich. 104, 123 (1990).

Burden of Proof
The burden rests entirely upon the party seeking the admission of the document. The offering party must prove all the elements of 803-6. See e.g., Williams v. Jerviss Fehtke Ins. Co., unpublished opinion per curiam of the Michigan Court of Appeals, issued Sept. 29 2015, Docket No. 323434.

“Regular Course of Business”
In the case Solomon v. Shuell, 435 Mich. 104 (1990), the Michigan Supreme Court considered when a document is properly considered “in the regular course of business.” In doing so it analogized to the federal case, Palmer v. Hoffman, 318 U.S. 109 (1943) (United State Supreme Court holding that an accident report created by the railroad company did not qualify for the rule). The Michigan Supreme Court found the following factors persuasive in analyzing 803- 6:

  • Even when it is in the regular course of the business to record such events, the document should not be admitted when it “has little or nothing to do with the management or operation of the business.”
  • The report should be made “for the systematic conduct of the enterprise as a railroad business.”
  • When the primary utility of the document is for litigation or future disputes, it should not be admitted.
  • Even when the report is made under a duty to report, the anticipation of highly probable litigations makes it inadmissible.
  • The potential motivation to lie in the face of inter-disciplinary action should also argue against admission. It is important to note that this motivation to lie does not go to weight, but goes to the admissibility of the document.

By direct analogy this would mean that discharge reports or disciplinary reports kept in an employee’s personal file are not “kept in the regular course of business” as defined by the Michigan Supreme Court.

See Rule 602 for clarification

[2] Again, see Rule 602 for expansion on “qualified witness.”

About the Authors

– Jacob Coate, University of Michigan Law School Class of 2017

– Steve Gray, Clinical Assistant Professor and Director of the University of Michigan Law School Unemployment Insurance Clinic

Liu v. R & E Automated Systems – 16.89

Liu v. R & E Automated Systems
Digest No. 16.89

Section 421.28(1)(c)

Cite as: Liu v R & E Automated Sys, unpublished order of Michigan Compensation Appellate Commission, entered October 28, 2015 (Docket No. 14-032454-244075W).

Appeal pending: Yes
Claimant: Shu Liu
Employer: R & E Automated Systems LLC
Docket no.: 14-032454-244075W
Date of decision: October 28, 2015

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HOLDING: The ALJ’s order should be set aside since the Agency’s initial determination set forth a completely theory of ineligibility than was set forth at the hearing.

FACTS: This case was brought before the Appellate Commission pursuant to the claimant’s appeal from an order denying reopening by an ALJ. The claimant requested a rehearing of the ALJ’s amended decision. The ALJ issued an order denying the reopening.

DECISION: The claimant is not ineligible for benefits. The portion of the ALJ’ s decision that found the claimant ineligible for benefits under Section 28(1)(c) of the Act is reversed.

RATIONALE: The ALJ should have allowed rehearing to at least correct the errors in the amended decision. These issues were the reason the Appellate Commission set the order aside. When the initial determination was made, the issue was framed as “Your non-citizen documentation confirming you are lawfully present in the United States expired on September 17, 2014.” At the hearing, the Agency admitted that the actual issue was that the claimant’s work visa had expired. Since this was a completely different issue than that which is set forth in the determination, the decision should be set aside. The Agency cannot set forth one explanation for ineligibility in a determination, then appear at a hearing on appeal of the determination and proceed on an alternate theory of ineligibility. A claimant cannot be expected to foresee and prepare for an issue other than that which the Agency set forth in its determination. This is contrary to basic due process. For these reasons, the Commission reversed the portion of the ALJ’s decision that found the claimant ineligible for benefits under Section 28(1)(c) of the Act. The claimant is not ineligible under Section 28(1)(c).

Digest Author: Cydney Warburton, Michigan Law, Class of 2017
Digest Updated: 1/6/2016

Wilcox v. Bay City American Legion 18 – 16.88

Wilcox v. Bay City American Legion 18
Digest No. 16.88

Section 421.33, Admin. Rules 792.11411(10), 792.11415(5), and 792.11431

Cite as: Wilcox v Bay City American Legion 18, 2015 Mich ACO 14-015959-244230W

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Appeal pending: Yes
Claimant: Deborah E. Wilcox
Employer: Bay City American Legion 18
Tribunal: Michigan Compensation Appellate Commission
Date of decision: August 31, 2015

HOLDING: An Administrative Law Judge’s (ALJ) encouragement to an unrepresented Claimant, who in good faith misunderstood the scope of the hearing, caused the claimant to withdraw her appeal. The ALJ did not explain to the Claimant the ramifications of withdrawing, which constitutes good cause to reopen the appeal.

FACTS: Claimant was employed by Dore and Associates but was laid off. During this period of unemployment, claimant accepted a part-time position as a bartender with American Legion, but broke her ankle outside of work shortly after accepting the position. On doctor’s orders, Claimant withdrew from her position and was disqualified under Section 29(1)(b) of the Michigan Employment Security Act for voluntarily leaving her position with American Legion. Claimant received a hearing on September 11, 2014 with Bay City American Legion 18 as the employer for the hearing. During the hearing, the unrepresented Claimant articulated that she did not understand why or how her employment with American Legion would affect her claim, which she believed was established based on income earned from Dore and Associates. The Administrative Law Judge (ALJ) suggested it was unnecessary for the claimant to pursue the matter and encouraged her to withdraw her appeal. The claimant followed the ALJ’s suggestion and withdrew her appeal. The ALJ never explained the ramifications of withdrawing an appeal. After obtaining representation, Claimant filed a request to the ALJ to reopen her appeal, arguing that a good faith misunderstanding of the scope of the hearing constituted good cause for reopening as ruled in Jaeger v. Sears, Roebuck and Co., Digest No. 1620. The ALJ denied the request, and the claimant appealed the denial.

DECISION: The ALJ erred in denying claimant’s request to reopen her appeal, and thus, the appeal has been reopened. The matter is remanded to the Michigan Administrative Hearings System for a new hearing with a different ALJ.

RATIONALE: Pursuant to Administrative Rule 792.11415(5), the Michigan Compensation Appellate Commission (MCAC) will only review an ALJ’s denial of a request for reopening if it decides there is good cause for reopening. Administrative Rule 792.11402(v) defines “good cause” as reliance on incorrect information from the agency, ALJs, the hearing system, or the MCAC. The ALJs failure to explain the ramifications of withdrawing an appeal to the claimant constitutes good cause under this rule, and thus, the appeal is reopened. If the MCAC grants a request for reopening, Administrative Rule 792.11431 requires the decision on the appeal to be decided according to the “record already made” at the initial hearing. Because the hearing featured no testimony or evidence, the claimant’s appeal must be remanded for a new hearing.

Digest Author: Sean Higgins, Michigan Law, Class of 2017
Digest Updated: 1/6/2016

Hodge v. US Security Associates, Inc. – 16.91

Hodge v. US Security Associates, Inc.
Digest No. 16.91

Section 421.29; Section 421.38

Cite as: Hodge v US Security Associates, Inc., unpublished opinion of the Mich. Sup. Ct., issued February 6, 2015 (Docket No. 149984).

Appeal pending: No
Claimant: Carnice Hodge
Employer: U.S. Security Associates, Inc.
Date of decision: February 6, 2015

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HOLDING: A reviewing court is not at liberty to substitute its own judgment for a decision of MCAC that is supported with substantial evidence.

FACTS: Claimant was a security guard at an airport. Claimant was fired for accessing publicly available flight departure information on a computer at the request of a traveler in violation of the employer’s policy regarding the unauthorized use of computer equipment. The Administrative Law Judge (ALJ) disqualified claimant from unemployment benefits for committing misconduct under Section 421.29. The Michigan Compensation Appellate Commission (MCAC) affirmed, holding that the decision was made in conformity with the facts as developed at the hearing and properly applied the law to the facts. The Wayne Circuit Court reversed, concluding that claimant’s conduct did not warrant a denial of benefits because claimant was violating the employer’s policy in order to help a customer, and the Michigan Court of Appeals affirmed the Wayne Circuit Court’s reversal.

DECISION: The Court of Appeals judgment is reversed and the MCAC judgment is reinstated.

RATIONALE: The Wayne Circuit Court and the Court of Appeals applied an incorrect standard of review by substituting their own assessment of the relative severity of claimant’s violation of her employer’s rules for the assessment of MCAC. A reviewing court is not at liberty to substitute its own judgment for a decision of MCAC that is supported with substantial evidence. A circuit court must affirm a decision of the ALJ and MCAC if it conforms to law and if competent, material, and substantial evidence supports it. The ALJ was the only adjudicator who actually heard testimony and observed the demeanor of the witnesses while testifying, reviewed all the evidence in the record, and made findings of fact based on credibility of witnesses and weight of the evidence. MCAC’s assessment of claimant’s conduct was made within the correct legal framework and was therefore authorized by law and not contrary to law, so the courts below improperly reweighed the evidence in order to reach a different assessment in violation of Section 421.38 and Const. 1963, art 6, § 28.

Digest author: Winnie Chen, Michigan Law, Class of 2017

Digest updated: 11/19/2017

McPhee v. Robert Gittleman Law Firm, PC – 16.87

McPhee v. Robert Gittleman Law Firm, PC

Digest no. 16.87

Sections 38(1)34(2) and 29(1)(a)

Cite as: McPhee v Robert Gittleman Law Firm, PC, Unpublished Opinion of the Court of Appeals of Michigan, Issued September 14, 2014 (Docket No. 314452).

Appeal Pending: No
Claimant: John S. McPhee (Appellant)
Employer: Robert Gittleman Law Firm, PC (Appellee, along with Department of Licensing & Regulatory Affairs Growth/Unemployment Insurance Agency)
Tribunal: Court of Appeals of Michigan
Date of decision: Sept. 14, 2014

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Holding: Because the circuit court failed to apply the proper standard of review to the MCAC’s findings, the Court of Appeals found that claimant was entitled to unemployment compensation.

Facts: In 2008, claimant worked in Robert Gittleman’s law firm. In 2010, claimant announced his candidacy for district judge. Claimant informed Gittleman of his intentions and, indicated that he would be leaving the firm if he won the election. Claimant eventually lost the election, but, in the interim, Gittleman had placed an advertisement and hired a new associate, ultimately leaving claimant without employment. The underlying dispute arising from these facts is whether claimant voluntarily left his employment at the law firm or whether he was fired.

On November 2010, the agency approved benefits. The employer protested, and the ALJ determined that claimant was ineligible for unemployment benefits because he had left without good cause attributable to his employer. The MCAC reversed the ALJ, explaining that, “If the Claimant had told the Employer he would be leaving regardless of the outcome of the election…we would agree [that claimant had resigned]. However, the Claimant merely informed the Employer of his candidacy and advised that it make contingency plans in the event he won.”

The circuit court reversed because it determined that the MCAC “improperly substituted its judgment for that of [the] ALJ and in doing so committed an abuse of discretion.” On appeal, the Court of Appeals reversed.

Decision: The Agency issued a determination that claimant was eligible for unemployment. The ALJ reversed. The MCAC reversed. The circuit court reversed. The Court of Appeals reversed the circuit court.

Rationale: The statutory language [MCL 421.34(2) plainly permits the MCAC, “on the basis of evidence previously submitted,” to reverse the ALJ in regard to both the ALJ’s ultimate decision and its “findings of fact.” In contrast, MCL 421.38(1) requires that the [circuit] court may reverse an order or decision only if it finds that the order or decision is contrary to law or is not supported by competent, material, and substantial evidence on the whole record.  By focusing instead on whether the MCAC abused its discretion by departing from the ALJ’s factual findings, the circuit court applied an improper standard of review

Digest author: James C. Robinson
Digest updated: 3/15

Bouchard v. Lavdas Enterprises, Inc. – 16.84

Bouchard v. Lavdas Enterprises, Inc.
Digest No. 16.84

Section 421.33(1)

Cite as: Bouchard v Lavdas Enterprises, Inc., unpublished opinion of the Macomb County Circuit Court, issued June 14, 2013 (Docket No. 2012-4168-AE).

Appeal pending: No
Claimant: Patricia J. Bouchard
Employer: Lavdas Enterprises, Inc.
Date of decision: June 14, 2013

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HOLDING: Claimant, through her attorney, was present at the hearing for the purpose of prosecuting her appeal pursuant to MCL 421.33.

FACTS: The Unemployment Insurance Agency issued a redetermination in which it found Claimant ineligible to receive unemployment benefits and ordered Claimant to pay restitution.

Claimant appealed the redetermination and Claimant’s counsel appeared at the hearing without Claimant present. The ALJ held that Claimant was required to appear at the hearing and that her failure to do so constituted a failure to prosecute her appeal pursuant to MCL 421.33. As a result, the ALJ dismissed Claimant’s appeal. The Board of Review affirmed the ALJ’s decision.

DECISION: The decisions of the ALJ and Board of Review are reversed and the case is remanded for a re-hearing before an ALJ.

RATIONALE: Per MCR 2.117(B)(l), “an appearance by an attorney for a party is deemed an appearance by the party. Unless a particular rule indicates otherwise, an act required to be performed by a party may be performed by the attorney representing the party.” Further, MCL 421.31 provides: “any individual claiming benefits in any proceeding before the commission or a court may be represented by counsel or other duly authorized agent.”

Based upon the above-referenced authority, the Court was satisfied that Claimant’s failure to personally appear at the hearing did not constitute a failure to prosecute her appeal.

Digest author: Stephanie Marshak, Michigan Law, Class of 2016
Digest updated: October 20, 2017

Jenkins v. UIA – 16.83

Jenkins v. UIA
Digest No. 16.83

Section 421.38

Cite as: Jenkins v UIA, unpublished opinion per curiam of the Court of Appeals, issued March, 7, 2013 (Docket Nos. 309625 & 309644).

Appeal pending: No
Claimant: Gary Jenkins
Employer: Unemployment Insurance Agency
Date of decision: March 7, 2013

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HOLDING: The courts only have subject matter jurisdiction with respect to Unemployment Insurance matters once all administrative proceedings are complete.

FACTS: On November 8, 2011, the ALJ mailed a decision holding that claimant was entitled to benefits under MCL 421.1 et seq. conditioned on Claimant’s being “otherwise eligible and qualified.” Claimant submitted the ALJ’s decision to the UIA, but the UIA refused to pay. Instead, the UIA initiated an investigation in order to determine whether MWJ Construction (Claimant’s employer) was an “employer” within the meaning of the MESA.  Claimant then filed a complaint requesting the circuit court to issue a writ of mandamus ordering the director of the agency to pay Claimant benefits. On January 27, 2012, the circuit court ordered the UIA to pay Claimant benefits. The UIA did not pay and on February 20, 2012, Claimant filed an ex parte motion for an order to show cause regarding why the UIA should be held in civil contempt for failure to comply with the court’s order. Two days before the show-cause hearing, the UIA tendered a check to the court in the full amount due to Claimant. The check was payable to the court and Claimant. At the show-cause hearing, the court found that the tendered check did not comply with the court order because it was payable to the court and Claimant instead of being payable solely to Claimant. The court found the UIA in contempt of court, ordered the UIA to pay Claimant in accordance with the January 27 order, and ordered the UIA to pay attorney fees and costs in connection with the contempt proceedings. The UIA appealed as of right from the order granting Claimant’s request for a writ of mandamus. Additionally, the UIA appeals by leave granted from an order finding the UIA in civil contempt.

DECISION: The court vacated both orders because the circuit court did not have subject matter jurisdiction in these matters.

RATIONALE: Direct review by the courts is only available when all administrative remedies available within the agency have already been exhausted by the parties. MCL 24.301. This is required because: (1) an untimely resort to the courts may result in delay and disruption of an otherwise cohesive administrative scheme; (2) judicial review is best made upon a full factual record developed before the agency; (3) resolution of the issues may require the accumulated technical competence of the agency or may have been entrusted by the Legislature to the agency’s discretion; and (4) a successful agency settlement of the dispute may render a judicial resolution unnecessary. Int’l Business Machines Corp v Dep’t of Treasury, 75 Mich App 604, 610; 255 NW2d 702 (1977).

Here, the standard procedures under MCL 421.33 were not followed with respect to the questions of whether MWJ Construction was an “employer” and whether plaintiff’s claim was valid. The ALJ did not explicitly decide whether MWJ Construction was an employer in the order, and the order was conditioned on Claimant’s being “otherwise eligible and qualified.”  As a result, the UIA was in the process of determining whether MWJ Construction was an employer, at the time the circuit court took jurisdiction. Since the administrative process was ongoing, the circuit court’s assumption of jurisdiction was in error.

Digest author: Cydney Warburton, Michigan Law, Class of 2017
Digest updated: 3/30/2016

Carter v. MLP MFG, Inc. – 16.75

Carter v. MLP MFG, Inc.
Digest No. 16.75

Section 421.38, Section 421.29

Cite as: Carter v MLP MFG, IncMuskegon Circuit Court, No. 02-41720-AE (February 18, 2003).
Appeal pending: No
Claimant: David Carter
Employer: MLP MFG, Inc.
Date of decision: February 18, 2003

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HOLDING: When both an agent and an attorney have filed an appearance, an order must be served to both of them to fulfill Section 421.1101 (now rescinded).

FACTS: The administrative law judge issued an opinion dated July 20, 2001, which affirmed an agency determination denying the claimant unemployment benefits because of misconduct. The claimant’s agent appealed this opinion. The Board of Review affirmed the decision with an opinion dated November 9, 2001. On December 10, 2001, the claimant’s counsel filed his appearance and a timely request for a rehearing of the November 9, 2001 decision. The Board issued an order denying the application for rehearing on January 24, 2002. This January 24, 2002 order was not sent to the claimant’s attorney. Consequently, on April 29, 2002, the claimant’s attorney moved the Board to reopen the matter so that the claimant could file a timely appeal with the circuit court. In an order dated June 28, 2002, the Board denied the application for reopening, but acknowledged sending a copy of the January 24, 2002 order to the claimant and the claimant’s agent, but not the claimant’s attorney. On July 2, 2002, the claimant filed this appeal to the circuit court.

DECISION: The Board of Review erred in failing to send the claimant’s counsel a copy of the January 24, 2002 order.  When both an agent and an attorney have filed an appearance, an order must be served to both of them to fulfill Section 421.1101 (now rescinded), which is to be read in a manner that does not produce an unjust result, even if the literal language of the rule suggests otherwise. Therefore the July 2, 2002 filing of this appeal was timely, and this Court will adjudicate the appeal on the merits. This Court finds that the ALJ’s decision was not contrary to law and therefore affirms the previous decision disqualifying the claimant for benefits.

RATIONALE: In construing administrative rules, courts apply principles of statutory construction. However, there is an exception “when a literal reading of the statutory language would produce an absurd and obviously unjust result and would be clearly inconsistent with the purposes and policies of the act in question.” AG v LS Wood Preserving, Inc, 199 Mich App 149, 155 (1993). Reading Section 421.1101(1) literally (“A decision, notice, or order shall be served on each party and on the agent or attorney of record of each party . . .” (emphasis added)) would provide an unjust result in this case, as the purpose and policy of the rule is to provide notice. Thus the Board of Review needed to send the January 24, 2002 order to both the claimant’s agent and the claimant’s counsel, even though the rule uses the word “or.” Hence, the 30-day appeal period of Section 421.38(1) was tolled until the Board of Review issued its final order on June 28, 2002, and the July 2, 2002 filing of appeal was timely. Nevertheless, this Court finds that the ALJ’s decision was not contrary to law and was supported by competent, material, and substantial evidence on the whole record. The ALJ found the testimony of the cliamant’s supervisor to be credible. In doing so, he found that the claimant had engaged in three “no-call, no-show” absences which constitutes misconduct within the meaning of Section 421.29.

Digest author: Winne Chen, Michigan Law, Class of 2017
Digest updated: 11/19/2017

Gordon v. Miller Apple – 16.82

Gordon v. Miller Apple
Digest No. 16.82

Section 421.54

Cite as: Gordon v Miller Apple, unpublished opinion of the Michigan Compensation Appellate Commission, issued October 3, 2012 (Docket No. B2011-11754-RM9-228743W).

Court: Michigan Compensation Appellate Commission
Appeal pending: No
Claimant: Thomas Gordon
Employer: Miller Apple, LP
Date of decision: October 3, 2012

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HOLDING: The Michigan Compensation Appellate Commission (MCAC) 1) reversed an Administrative Law Judge (ALJ) order denying rehearing, and 2) found the claimant had not committed fraud under Section 54(b).  

FACTS:  The Agency found Claimant disqualified for benefits and liable for penalties under the fraud provision of Section 54(b).  Claimant did not contest his ineligibility, but did deny that he had committed fraud under the statute.  Because both cases involve similar facts and points of law, they were docketed together for a hearing pursuant to Administrative Rule R421.1205.  Because the ALJ was unavailable, those hearings were cancelled and rescheduled for a subsequent date at 11:00am and 12:00 pm respectively.  Claimant’s attorney received only one of these notices of hearing, and thus told Claimant to arrive at noon on the day of the hearing.  When Claimant failed to appear for his 11:00 am hearing, he found the claim had been dismissed.  The ALJ subsequently found no good cause for Claimant’s failure to appear and denied his request for rehearing.  On the question of fraud, Claimant testified that while he did not contest his ineligibility, he did not commit fraud under Section 54(b).  Claimant had not reported his irregular part time earnings, but immediately began reporting them when informed of this requirement.

DECISION: The Commission made two holdings: on the question of Claimant’s request for rehearing, the Commission found good cause for Claimant’s failure to appear and set aside the ALJ order denying rehearing.  On the question of fraud, the Commission reversed the Agency determination finding fraud under Section 54(b), finding that Claimant did not intentionally misrepresent a material fact to obtain benefits to which he was not entitled.

RATIONALE: On the question of Claimant’s request for rehearing, the Commission found that the attorney’s failure to receive both notices of hearing established good cause for Claimant’s failure to appear at his first scheduled hearing.  On the question of fraud, the Commission found Claimant’s testimony credible in showing he did not intentionally misrepresent a material fact to the Agency to obtain benefits he was not entitled to, and thus did not commit fraud within the meaning of Section 54(b).  Here, Claimant incorrectly reported irregular part-time income to the Agency, but called the Agency to determine if and how to report these earnings.  As soon as Claimant discovered his error, he began reporting his earnings.  The Commission thus found that while he remained ineligible for benefits, he did not commit fraud under Section 54(b).

Digest author: Laura Page, Michigan Law, Class of 2018
Digest updated: December 27, 2017