Bauserman v Unemployment Insurance Agency – 20.09

Bauserman v Unemployment Insurance Agency
Digest No. 20.09

MCL 600.6431

Cite as: Bauserman v Unemployment Insurance Agency, unpublished decision of the Court of Claims, entered May 10, 2016 (Case No. 15-000202-MM).

Bauserman v Unemployment Insurance Agency, unpublished opinion per curiam of the Court of Appeals, issued July 18, 2017 (Docket No. 333181).

Court: Court of Claims and Court of Appeals
Appeal pending: Yes
Claimant: Bauserman
Employer: N/A
Date of decision: May 10, 2016; July 18, 2017

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View/download the full Court of Appeals decision

View/download the full complaint

HOLDING: The Court of Claims held that the Agency’s motion to dismiss was denied because plaintiffs complied with the notice provisions of MCL 600.6431, the Court has subject matter jurisdiction, and the plaintiffs’ claims are not barred by governmental immunity.

The Court of Appeals reversed the Court of Claims holding. The case was remanded for entry of an order granting summary judgment for the Agency

The matter is currently under review by the Michigan Supreme Court.

FACTS: Named plaintiff was terminated from his employment and applied for unemployment benefits. He received benefits for a over a year. While he was receiving benefits, he received from his former employer a lump sum deferred payment of his pro rated bonus from the previous year, which he earned prior to his termination. MIDAS detected a discrepancy and concluded that plaintiff received benefits while he was earning income.

The UIA sent a request for information relative to ineligibility or disqualification to plaintiff’s online MiWAM account, however he was not checking the account as he was no longer receiving benefits at the time. When he finally saw the message months later, he began writing to the Agency to explain the lump sum. The Agency never responded.

Eventually, they notified plaintiff that he had been overpaid benefits and would be assessed a penalty. Plaintiff again contacted the Agency explaining the bonus. Then the United States Department of Treasury notified plaintiff that his federal income tax refund had been seized by the State of Michigan to collect on his unemployment debt. Similar action was taken by the State of Michigan Treasury.

Finally, Plaintiff received a redetermination that its earlier fraud determination was null and void. Plaintiff had filed a complaint in the Court of Claims alleging that the Agency’s fraud detection program, and its collection and seizure of assets, violated the due process clause of the Michigan Const 1963, Art 1, § 17.

DECISION: The Court of Claims decided that plaintiffs’ causes of action did not accrue when Agency first notified them of their liability for unemployment but rather when the Agency issued a redetermination which concluded that the plaintiff had not received UIA benefits fraudulently. The administrative process fails to afford sufficient relief to plaintiff’s challenging an entire statute and policy, therefore a constitutional court claim is viable and there is no governmental immunity.  The Agency’s motion to dismiss on lack of standing is denied.

The Court of Appeals decided that the plaintiffs’ cause of action accrued when “the wrong on which they base their claim was done.” The Court decided the garnishment of wages and interception of tax returns was not the initial event given rise to their claim. Rather, when the Agency issued notices of its determinations and the plaintiffs were not given requisite notice or opportunity to be heard was the initial wrong.

RATIONALE: The Court of Claims found that the plaintiffs’ causes of action did not accrue when the Agency first notified them of their liability for unemployment benefits and penalties, but much later. The causes of action accrued when the Agency issued a redetermination that concluded that plaintiffs had not received UIA benefits fraudulently. At the time the Agency issued the redetermination, then plaintiffs could fully allege the elements of the claim. The amended complaint was filed within six months of the redetermination dates, therefore the plaintiffs complied with statutory requirements.

Furthermore, the Court found that the administrative process by which the plaintiffs could appeal within the Agency failed to afford sufficient relief to plaintiffs wishing to challenge the entire statutory and policy scheme. Therefore the Court found no governmental immunity existed in this case.

The Court of Appeals found that the forfeiture of monetary assets was the damage resulting from the wrongful conduct of the Agency and therefore did not rise to the event given cause for a claim. The Court said this is consistent with the Michigan Supreme Court’s recent decision in Frank v Linkner, 894 NW2d 574 (2017) where the court held that the plaintiffs’ argument “conflates monetary damages with harm.” Frank involved a shareholder oppression action not an unemployment benefits action.

Since the parties did not dispute the date of named plaintiff’s notices of redetermination were December 3, 2014, the action filed on September 9, 2015 is well beyond the six months following the event that gave rise to the cause of action.

Digest author: Sara Posner, Michigan Law, Class of 2017
Digest updated: December 5, 2017

 

UIA v Redlin

UIA v Redlin

Digest No. 19.11

19 USC § 2291(a)(5)

Cite as: Unemployment Insurance Agency v Redlin, unpublished opinion of the Lenawee County Circuit Court, issued January 11, 2006 (Docket No. 182123).

Appeal pending: No

Claimant: Matthew Redlin

Employer: N/A

Date of decision: January 11, 2006

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HOLDING: Agency was not established where a claimant relied on the faulty advice of a Michigan Works! employee who was acting beyond the scope of his authority, regarding filing for Trade Readjustment Allowance benefits.

FACTS: Claimant filed for Trade Readjustment Allowance (TRA) benefits. All claimants who file for benefits are referred to Michigan Works!, Michigan Works! is changed with processing both training authorizations and waivers. Here, Claimant acted on faulty advice of a Michigan Works! Employee and was determined to be ineligible for benefits by the Agency for non-compliance with 19 USC § 2291(a)(5). The Administrative Law Judge reversed the Agency’s determination and found the Claimant eligible for TRA benefits. The Michigan Employment Security Board of Review affirmed this decision on a theory of agency by estoppel. The Board of Review reasoned that since the Agency’s Fact Sheets refer claimants to Michigan Works! and since a claimant, with no knowledge of the “system”, should not be expected to know that an employee of the Agency “acted beyond the scope of his authority”, the ALJ properly found the employee was the Agency’s agent by estoppel.

DECISION: The holding of the Michigan Employment Security Board of Review is reversed. Claimant is not entitled to TRA benefits.

RATIONALE:  The Board of Review’s reliance on the theory of estoppel was contrary to law.

Digest author: Cydney Warburton, Michigan Law, Class of 2017

Digest updated: 11/19/2017

 

Krauseneck v Department of the Army – 20.07

Krauseneck v Department of the Army
Digest no. 20.07

Section 20

Cite as: Krauseneck v Dep’t of the Army, unpublished opinion of the Tuscola Circuit Court, issued February 3, 2004 (Docket No. 03-21657-AE).

Appeal pending: No
Claimant: Kyle J. Krauseneck
Employer: Department of the Army
Docket no.: B2002-15115-RO1-166448W
Date of decision: February 3, 2004

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CIRCUIT COURT HOLDING: When a person is honorably discharged from military service before completing 365 days or more of continuous service, and that individual was discharged for being medically unfit, he or she is eligible for benefits. But if the reason for the honorable early discharge had been failure to meet physical standards, i.e. height, weight or physical fitness, then the person would be ineligible for benefits.

FACTS: Claimant was honorably discharged from the Army after serving six months of active duty. The Army discharged claimant for failing to meet “procurement medical fitness standards.” Claimant filed for benefits.

DECISION: Claimant was discharged because of a medical disqualification pursuant to 20 CFR 614.2(2)(ii)(B).

RATIONALE: In cases involving individuals whose credit weeks are based on service in the military, the military determines who is and who is not eligible pursuant to Section 11(h). Pursuant to 20 CFR 614.2(2)(ii)(D) an honorably discharged service member is eligible for benefits for “inaptitude” if the service was continuous for 365 days or more. Pursuant to 20 CFR 614.2(2)(ii)(B), a service member discharged for completing his terms of active service because of “medical disqualification” is eligible for benefits without having to have served 365 days or more. In this case, the claimant underwent a medical examination by a physician, and the physician determined that claimant was medically unfit for further service under the Army’s medical fitness standards. This case does not involve the claimant’s failure to meet the Army’s physical fitness standards or failing to meet the physical height and weight standards. The term ‘Physical Standards’ under 5 USC 8521(a)(1)(B)(ii)(IV) refers to the “basic height, weight and fully bodied entrance requirements plus the basic physical fitness requirements as measured by the Army’s bi-annual APFT and not to the findings by Army medical personnel as to whether [a service member] is medically unfit for continued service.”

Digest Author: Board of Review (original digest here)
Digest Updated: 11/04

C & L Leasing Co v State of Michigan, BW&UC – 20.08

C & L Leasing Co v State of Michigan, BW&UC
Digest no. 20.08

Section 41

Cite as: C & L Leasing Co v State of Michigan, BW&UC, unpublished opinion of the Macomb Circuit Court, issued March 11, 2003 (Docket No. 02-4341-AE).

Appeal pending: No
Claimant: N/A
Employer: C & L Leasing Company
Docket no.: L2001-00056-RO1-2795
Date of decision: March 11, 2003

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CIRCUIT COURT HOLDING: An employer will not be considered to be an “employee leasing company” unless the employer satisfiesall of the requirements of UA Rule 190.

FACTS: Employer’s (C & L) secretary/treasurer testified that employer performed payroll services and provided employees to two other companies, Michigan Awning and Panel Laminations. Ownership of the three companies was intertwined among various family members and in-laws. Employer’s business and Michigan Awning operated out of employer’s secretary/treasurer’s residence. Employer’s secretary/treasurer’s husband and his parents had supervisory control over the employees.

DECISION: Employer is not an employee leasing company. Payroll of workers at the “client” companies is reassigned to the individual companies.

RATIONALE: To be eligible for employee leasing company status, an employer must satisfy all of the requirements of Rule 190. Employer failed to show it met the requirements of Rule 190(2). Employer did not “in fact” hire, promote, reassign, discipline and terminate the leased employees, as required by Rule 190(2)(b). Employer did not hold itself out to the general public as available to provide leasing services, as required by Rule 190(2)(f). Employer’s solicitation letter represented employer as in the business of providing payroll and administrative services.

Digest Author:  Board of Review (original digest here)
Digest Updated: 11/04

Waknin v Chamberlain – 20.06

Waknin v Chamberlain
Digest no. 20.06

Cite as: Waknin v Chamberlain, 467 Mich 329 (2002).

Appeal pending: No
Claimant: N/A
Employer: N/A
Docket no.: N/A
Date of decision: November 19, 2002

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SUPREME COURT HOLDING: A criminal conviction after trial is admissible as substantive evidence of conduct at issue in a civil case arising out of the same occurrence.

FACTS: Plaintiff Waknin brought a civil action against defendant Chamberlain for assault and battery. Defendant had been previously convicted of the assault and battery of plaintiff. The circuit court excluded evidence of defendant’s criminal conviction from the civil case on the basis of Wheelock v Eyl, 393 Mich 74 (1974), and MRE 403.

DECISION: The trial court abused its discretion in barring the admission of evidence of the defendant’s conviction by a jury.

RATIONALE: The rule of Wheelock, as it pertains to the use of evidence of a criminal conviction in subsequent civil cases, did not survive the adoption of the Michigan Rules of Evidence. MRE 403 provides that relevant evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice. Evidence is not inadmissible simply because it is prejudicial. In every case, each party attempts to introduce evidence that causes prejudice to the other party. It is only when unfair prejudice substantially outweighs the probative value of the evidence that the evidence is excluded. In this case, defendant had an opportunity and an incentive to defend himself in the criminal proceeding. That the defendant was found guilty beyond a reasonable doubt, a standard of proof greater than the preponderance of the evidence in the civil case, is highly probative evidence. Accordingly, the probative value of the evidence of the defendant’s conviction was not substantially outweighed by the danger of unfair prejudice.

The Court expressed no opinion regarding whether pleas of nolo contendere are admissible as substantive evidence in subsequent civil proceedings.

Editor’s Note: Also see Section 14 of the MES Act which indicates, in part, that decisions of a court of record which have become final “may be introduced into any proceeding involving a claim for benefits and the facts therein found and the . . .decisions therein made shall be conclusive unless substantial evidence to the contrary is introduced by or on behalf of the claimant.”

Digest Author:  Board of Review (original digest here)
Digest Updated: 1/04

Seligman & Associates, Inc v MESC – 20.03

Seligman & Associates, Inc v MESC
Digest no. 20.03

Section 44(2)

Cite as: Seligman & Assoc, Inc v MESC, unpublished opinion of the Court of Appeals of Michigan, issued May 6, 1987 (Docket No. 85110).

Appeal pending: No
Claimant: N/A
Employer: Seligman & Associates, Inc.
Docket no.: N/A
Date of decision: May 6, 1987

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COURT OF APPEALS HOLDING: The value of lodging provided to resident caretakers for the convenience of the employer is not considered wages under the Act.

FACTS: The employer operates numerous apartment complexes. The employer provides rent-free apartments to the apartment caretakers and requires them to live on the premises to be available to handle tenant complaints that may arise.

DECISION: The employer is entitled to a refund of contributions paid based on inclusion of the value of the lodging in calculation of wages.

RATIONALE: The reasonable cash value of lodging is to be considered wages only if it is extended as full or partial remuneration for the services rendered. There is no showing that the lodging was intended as partial compensation for the employees.

“This interpretation of the definition of wages is consistent with the United States Supreme Court’s interpretation of the definition of wages under the Federal Unemployment Tax Act (FUTA) in Rowan Co, Inc v United States, 452 US 247 (1981). In Rowan the Supreme Court held that for the purposes of FUTA wages do not include the value of meals and lodging provided for the convenience of the employer.”

Digest Author:  Board of Review (original digest here)
Digest Updated: 12/91

Wiersma v. Michigan Bell Telephone Co – 9.05

Wiersma v. Michigan Bell Telephone Co
Digest no. 9.05

Section 28a

Cite as: Wiersma v. Michigan Bell Telephone Co, 156 Mich App 176 (1986).

Appeal pending: No
Tribunal: Michigan Court of Appeals
Appellant: Michigan Bell Telephone (employer)
Docket no.: B82 5578 84393
Date of decision: July 24, 1986

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COURT OF APPEALS HOLDING: Even though claimant failed to request to preserve credit weeks within 45 days, she made diligent attempts to file and was misled by the MESC. As such the MESC is estopped from denying her entitlement to preserve credit weeks.

FACTS: On 1-26-81 claimant was placed on an approved disability leave for back problems until 4-4-81. Claimant was then on 3 weeks vacation and subsequently began a pregnancy related disability leave. While on leave, claimant was told the employer was closing the office where she had worked. Claimant contacted the MESC by phone and twice in person and was informed she needed to be willing and able to work and be unemployed; and 10-1-81 was the last day she could file for benefits. Her child was born 9-27-81 and she was released to return to work 12-3-81. When claimant applied for benefits she was denied because of insufficient credit weeks. Despite opportunities before and after she applied, the MESC never explained to her about preservation of credit weeks.

DECISION: Claimant is entitled to preserve credit weeks under Section 28a.

RATIONALE: Claimant diligently sought to preserve her rights, but she was affirmatively misled by the MESC. “We hold, under the circumstances of this case, that the MESC cannot misinform a claimant in regard to her rights or the appropriate procedures to take and then deny her benefits because she did not know her rights or because she took inappropriate procedural steps.”

“Second, the MESC may be equitably estopped in this case. An equitable estoppel arises where: (1) a party by representations, admissions or silence induces another party to believe facts; (2) the other party detrimentally relies and acts on this belief; and (3) the other party will be prejudiced if the first party is allowed to deny the existence of the facts…. Information regarding a claimant’s ability to obtain benefits may well be considered a “fact” in this context where the bureaucracy of an administrative agency is involved.”

Digest Author: Board of Review (original digest here)
Digest Updated: 11/90