Case Title: JUDGE v. STATE DEPARTMENT OF EMPLOYMENT

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-07-15T00:00:00Z

Document:
JUDGE v. STATE DEPARTMENT OF EMPLOYMENT2002 WY 10950 P.3d 686Case Number: 01-121Decided: 07/15/2002

APRIL TERM, A.D. 2002

                                                                                                            

ROBERT 
E. JUDGE, 

Appellant(Petitioner) 
,

v.

DEPARTMENT 
OF EMPLOYMENT,

UNEMPLOYMENT 
INSURANCE

COMMISSION,
Appellee(Respondent) 
.

W.R.A.P 12.09 Certification 
from the District Court of Natrona County

The 
Honorable W. Thomas Sullins, Judge

Representing 
Appellant:

Donald 
L. Painter of Casper, Wyoming. 

Representing 
Appellee:

Hoke 
MacMillan, Attorney General; John W. Renneisen, Deputy Attorney General; and Joe 
Scott, Senior Assistant Attorney General.

Before 
HILL, C.J., and GOLDEN, LEHMAN*, KITE, and VOIGT, JJ. 

*Chief 
Justice at time of expedited conference.

            
HILL, Chief Justice. 

[¶1]      Appellant, Robert 
E. Judge (Judge), challenges a determination made by the Department of 
Employment, Unemployment Insurance Commission (Commission), that disqualified 
him from receipt of benefits for a 52-week period because he knowingly filed a 
claim that contained a false statement or misrepresentation of a material 
fact.

[¶2]      We will 
affirm.

[¶3]      Judge broaches 
this issue:

Whether, 
contrary to Wyo. Stat. § 27-3-311(e), [Judge] knowingly filed a claim for 
benefits which contained a false statement or misrepresentation of a material 
fact as determined by the [Commission].

The 
Commission expresses the issue somewhat differently:

Whether 
the Unemployment Insurance Commission's findings that Robert E. Judge worked and 
received pay during weeks for which he knowingly filed claims representing that 
he had not, are supported by substantial evidence.

[¶4]      On June 20, 2000, 
Judge filed a claim with the Unemployment Insurance Division (Division) for 
unemployment compensation benefits that covered the weeks of June 4-10, 2000, 
and June 11-17, 2000.  In that 
application,1 he answered the questions asked of 
him as follows:

1.  Did you work during this week?  If yes,             
NO

     complete section 
1.

2.  Were you able and available for work . . 
. ?                  
YES

3.  Did you actively seek work? . . . .                                   
YES

4.  Did you refuse any job offers or job 
referrals                
NO

     during this 
week?

     If YES, complete 
section 3.

5.  Have you returned to work 
full-time?                              
NO

     That is, did you work 
more than 35 hours?

     If YES, complete 
section 4.

6.  Did you receive holiday, vacation,                                 
NO

     severance, 
self-employment, social 

     security, retirement 
or any other type

     of pay this week?  If YES, complete section 
2.

Each 
claim form concludes with the following admonition above the signature 
line:  "I certify that all 
statements on this claim are true to the best of my knowledge.  I am not receiving benefits from any 
other state.  I know that the law 
provides penalties for false statements."

[¶5]      During the time 
period for which these claims were submitted, Judge was "working"2 for High Mountain Welding and 
Manufacturing (HMWM).  The 
explanation Judge used to justify his answers was that he was not "working for 
wages"3 during the time period at issue in 
this case; rather, he had merely "donated" his time to a corporation he owned, 
and that he had "rented" welding equipment to HMWM, which he then operated for 
"free."  Judge also asserted that he 
was always available for "work," because HMWM understood that if Judge found 
other "work," he would quit providing services to HMWM.  Payments for the "work" Judge performed 
for HMWM were made to Sheridan Corporation, a corporation owned and operated by 
Judge and his wife but which had no employees.  Judge was disqualified from receiving 
unemployment compensation benefits for a 52-week period beginning June 4, 2000, 
on the basis that his claim contained a false statement or misrepresentation of 
a material fact.4

[¶6]      Wyo. Stat. Ann. § 
27-3-311(e) (LexisNexis 2001)5 provides:

(e) Any 
person who knowingly files a claim for benefits which contains a false statement 
or misrepresentation of a material fact, as determined by the department, shall 
be disqualified from receiving benefits for a fifty-two (52) week period 
beginning the week in which the false statement or misrepresentation was made or 
the date that notice of the overpayment determination or decision is mailed to 
the person who filed the claim.

[¶7]      Judge indicated 
to the Division that he wanted to appeal his disqualification from receiving 
benefits.6  A hearing on the appeal was held on 
December 26, 2000.  It was agreed 
that all parties had notice of the hearing.7  The only issue that was to be considered 
at the hearing was "whether or not Mr. Robert Judge knowingly filed a claim for 
benefits which contained a false statement or misrepresentation of a material 
fact."  The proceedings before the 
Division's Appeals Examiner in this matter were informal, and the procedures 
used were well explained to all participants.  It is clear that the burden of proof was 
on the Division.

[¶8]      It was evident 
from the outset of the hearing that the Division had received information from 
HMWM that Judge had worked for it during the period of time for which he claimed 
unemployment benefits.  Steve 
Badgett (Badgett), the owner of HMWM, testified at the hearing that Judge worked 
for him during that time period.  
Badgett also testified that he did not rent equipment from Judge and 
that, although Judge asked that the remuneration paid to him be designated as 
"equipment rental," he refused to do that after Badgett's bookkeeper told him he 
had to designate it as "contract labor."  
Further, Badgett's testimony indicated that Judge was paid by the hour 
for his work, and Badgett viewed the payments he made to Judge as wages.  However, Badgett had to concede that the 
time cards showing the numbers of hours Judge worked had the name Sheridan 
Corporation on them and the notation, "equipment rental."  Judge did not fill out a W-4 for his 
employment, nor was he covered by worker's compensation or unemployment 
compensation.

[¶9]      Judge testified 
that he did not work for Badgett for wages, but that he donated his working time 
to his corporation and only charged Badgett for the rental value of the 
equipment used in performing the work (he emphasized that, although his 
corporation rented the equipment to Badgett, no one was permitted to operate it 
except Judge himself).  Judge 
contended that Badgett was confused because "he doesn't realize we are two 
different entities."  Judge 
testified that he filed for unemployment for the time he worked for Badgett 
because he was "donating" his time and, thus, he "wasn't employed."  Judge was asked if he understood the 
reporting requirements pertinent to unemployment insurance claims.  He answered thus:

JUDGE:  Well, I know that if I received any 
money I would have to claim it, but any money received by Sheridan Corporation 
wouldn't be money that I made, unless Sheridan Corporation paid me money, and 
Sheridan Corporation couldn't afford to pay me, and so I didn't get 
anything.

VINCENT 
[Appeals Examiner]:  Did you receive 
any money from Sheridan Corporation during this time?

JUDGE:  Sheridan Corporation purchased welding 
equipment from me, along with purchasing other welding equipment, including new 
equipment, including a new portable welder.  And those would all be in the accounting 
sheets under fixed assets.

. . . 
.

JUDGE:  Well, I just wanted to say that Sheridan 
Corporation does not have any employees, and a corporation does not have to pay 
its officers.  And, uh, so if I'm 
doing things for Sheridan Corporation and the company can't pay me, I don't get 
paid.  But, I have an interest in 
Sheridan Corporation, and then also that on the uh, time sheets, where it says 
uh, number one, and it says did you work during this week.  I took that to mean did you work for 
wages this week.  And since I didn't 
work for wages, I didn't think that was a uh, misrepresentation to put down that 
I did not earn any wages.

. . . 
.

JUDGE:  OK then, then the other thing I would 
like to tell is that I add to my case here, is that Mr. Badgett, I asked him 
almost weekly to produce a W4 and hire me, and the reason for that is, in that 
line of work um, if you guys know anything about the welding field, a person 
should make sure they're covered by Workers' Compensation insurance at the 
least, and of course it good to have the uh, um, unemployment insurance, and so 
a person does not have to accept employment without that if, if, if, they, and I 
can't see why the State would, would require someone to accept employment 
without, from a corporation without a W4.  
So I was insisting on that, and when, every time that the subject come 
up, I told him I would like to do a W4, and be hired, and he would not hire me, 
so I never was employed, even though I kept asking to be 
employed.

[¶10]   On January 8, 2001, the Appeals 
Examiner issued his findings that Judge had worked during the relevant time 
period and was aware of his obligation to provide "true information" when 
submitting his claim for benefits.  
The Examiner also found that Judge had worked and earned wages and, thus, 
had submitted a claim containing a false statement or misrepresentation of a 
material fact.

[¶11]   Judge was entitled to appeal the 
above-described determination to the Unemployment Insurance Commission and he 
did so.  3 Weil's Code of Wyoming 
Rules, Department of Employment, Unemployment Insurance Division, Chapter 30, 
Section 7, 025 050 001-12 (2001).  
On March 21, 2001, the Commission affirmed Judge's disqualification from 
benefits.  Judge then filed a 
petition for review in the district court pursuant to W.R.A.P. 12.  By order entered on June 1, 2001, the 
matter was certified to this Court under W.R.A.P. 12.09(b)(1),(3), and (6).8

[¶12]   In synthesizing the standard of 
review for a case such as this, we must look beyond the usual formula found in 
Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2001), though that statute is a part 
of the mix.  First, we note the 
standard of review we articulated in Wyoming Department of Employment v. 
Porter, 986 P.2d 148, 150 (Wyo. 1999):

Review 
of the Commission's decision proceeds as if the matter had come directly to us, 
and we afford no special deference to the district court's determinations.  Wyoming Department of Employment, 
Division of Unemployment Insurance v. Banks, 854 P.2d 709, 711 
(Wyo.1993).  The Wyoming 
Administrative Procedure Act defines and limits our authority in review of 
administrative decision-making:

      (c) To the extent 
necessary to make a decision and when presented, the reviewing court shall 
decide all relevant questions of law, interpret constitutional and statutory 
provisions, and determine the meaning or applicability of the terms of an agency 
action.  In making the following 
determinations, the court shall review the whole record or those parts of it 
cited by a party and due account shall be taken of the rule of prejudicial 
error.  The reviewing court 
shall:

      (i) Compel agency 
action unlawfully withheld or unreasonably delayed; and

      (ii) Hold 
unlawful and set aside agency action, findings and conclusions found to 
be:

      (A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

      (B) Contrary to 
constitutional right, power, privilege or immunity;

      (C) In excess of 
statutory jurisdiction, authority or limitations or lacking statutory 
right;

      (D) Without 
observance of procedure required by law; or

      (E) Unsupported 
by substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute.  

Wyo. 
Stat.  § 16-3-114(c) 
(1990).

Gibson 
v. Wyoming Division of Unemployment Insurance, 907 P.2d 1306, 1309 (Wyo.1995).  "We 
will affirm an agency's legal conclusion only if it is in accordance with the 
law."  Haynes v. State ex rel. 
Wyoming Workers' Compensation Division, 962 P.2d 876, 878 
(Wyo.1998).

[¶13]   We include with that, this 
guideline quoted from Hat Six Homes v. Department of Employment, 6 P.3d 1287, 1291 (Wyo. 2000):

            
In reviewing unemployment benefit cases, we have 
said:

      The standard of 
review of an agency determination is well-established.  Unemployment benefit cases involving 
contended misconduct normally present mixed questions of law and fact.  Henson v. Employment Sec. Dept. of 
State, 113 Wash. 2d 374, 779 P.2d 715 (1989).  See generally Natrona County School 
Dist. No. 1 v. McKnight, 764 P.2d 1039 (Wyo.1988).  A reviewing court is "confined to the 
matters explicitly referenced in W.S. 16-3-114(c) and W.R.A.P. 12.09."  Cook v. Zoning Bd. of Adjustment for 
the City of Laramie, 776 P.2d 181, 184 (Wyo.1989).  

"On 
appeal from a district court's consideration of an agency action, this court is 
not bound by the conclusions of the reviewing court.  Rather, using the same evidentiary 
materials and the same review standards as the district court, we conduct an 
independent inquiry into the matter, just as if it had proceeded directly to us 
from the agency."  

Southwest 
Wyoming Rehabilitation Center v. Emp. Sec. Com'n of Wyoming, 781 P.2d 918, 920 (Wyo.1989).  
(Accord Employment Sec. Com'n of Wyoming v. Bryant, 704 P.2d 1311, 
1314 (Wyo.1985) and Matter of North Laramie Land Co., 605 P.2d 367, 373 
(Wyo.1980).)   Our deference 
for findings of fact is reserved for the fact-finder which, in this case, is 
ESC.  Department of Revenue and 
Taxation of State of Wyoming v. Casper Legion Baseball Club, Inc., 767 P.2d 608 (Wyo.1989).  See Zezas Ranch, 
Inc. v. Board of Control, 714 P.2d 759, 764 (Wyo.1986).  

Western 
Gas Processors, Ltd., 786 P.2d  at 870 (footnote omitted).

      We review an 
agency's findings of fact by applying the substantial evidence standard.  DeWall v. State ex rel. Wyoming 
Workers' Safety and Compensation Division, 960 P.2d 502, 503 
(Wyo.1998).  This Court examines the 
entire record to determine whether substantial evidence supports the agency's 
findings.  Id. Substantial 
evidence is relevant evidence which a reasonable mind may accept in support of 
an agency's conclusions.  Id. 
We will not substitute our judgment for that of the agency when substantial 
evidence supports its decision.  
Id. We do not, however, grant the same deference to an agency's 
conclusions of law.  Nelson v. 
Sheridan Manor, 939 P.2d 252, 255 (Wyo.1997).  We affirm an agency's conclusions of law 
when they are in accordance with law.  
Corman v. State ex rel. Wyoming Workers' Compensation Division, 
909 P.2d 966, 970 (Wyo.1996).  
Unemployment benefit cases which involve the contention that an employee 
was discharged for misconduct connected with his work normally present mixed 
questions of law and fact.  
Wyoming Department of Employment, Division of Unemployment Insurance 
v. Rissler & McMurry Company, 837 P.2d 686, 688 (Wyo.1992);  Employment Security Commission of 
Wyoming v. Western Gas Processors, Ltd., 786 P.2d 866, 870 (Wyo.1990).  

SF 
Phosphates, Ltd., 976 P.2d  at 201.

[¶14]   Finally, we must also include this 
principle in our review:

            
Provisions of an unemployment compensation statute imposing 
disqualifications for the benefits available thereunder should be strictly 
construed in favor of the claimant.  
This rule is a corollary to the rule requiring generally liberal 
interpretation of such statutes as a whole so that they may achieve their benign 
purpose.  A disqualifying provision 
should not be enlarged by implication or by adding to one such provision words 
found only in another.

76 Am. 
Jur. 2d, Unemployment Compensation § 14 (1992), Johnides v. St. 
Lawrence Hospital, 457 N.W.2d 123, 125 (Mich.App. 1990), Ress v. Abbott 
Northwestern Hospital, Inc., 448 N.W.2d 519, 523 (Minn. 1989), Armstrong 
v. Neel, 725 S.W.2d 953, 955 (Tenn.App. 1986), and see 
Unemployment Compensation Commission v. Renner, 143 P.2d 181, 189 (Wyo. 
1943).

[¶15]   The Wyoming Employment Security 
Law9 is designed to provide a form of 
unemployment insurance so that workers who become unemployed may receive 
benefits under the provisions of that act.  
The preprinted form used for submitting an application for benefits is 
worded in terms that are simple, direct, and easily understood.  When asked the question, did you 
work?  Judge answered, "No," 
although no stretch of the meaning of the word "work" could permit him to give 
such an answer, without risk of being accused of making a false statement or a 
misrepresentation of the fact that was the most significant bit of information 
in his application.  His own 
testimony is that he did work.  The 
preprinted form provided Judge with ample opportunity to explain his theory of 
his claim, without the need to resort to falsity.  We conclude that substantial evidence, 
as set out more fully above, supports the Commission's decision to disqualify 
Judge from benefits.  See 
Gipson v. Iowa Department of Job Services, 315 N.W.2d 834, 837-38 (Iowa 
App. 1981), Whitney v. Board of Review of Industrial Commission of Utah, 
585 P.2d 780, 781-82 (Utah 1978), and see generally, John C. Williams, 
Annotation, Criminal Liability for Wrongfully Obtaining Unemployment 
Benefits, 80 A.L.R.3d 1280, esp. § 7 (1977).

[¶16]   Moreover, Judge clearly 
misapprehended the interaction of the law, which governs the operation of 
corporations, the law pertinent to federal corporate and individual taxation, 
and the law applicable to unemployment benefits.  That misapprehension may have been 
grounded in part in ignorance, but as is almost universally true, ignorance of 
the law is no defense.  See 
Gaudina v. Haberman, 644 P.2d 159, 166 (Wyo. 1982).

[¶17]   For these reasons, the decision of 
the Commission is affirmed.

FOOTNOTES

   1In addition, 
Judge submitted claims for the time period between June 18, 2000, and August 26, 
2000, wherein he supplied the same answers.

   2The word "work" 
is not defined by the statutes or applicable rules and regulations, and we will 
accord it its usual meaning given the context:  "[T]he labor, task or duty that affords 
one his customary means of livelihood."  
Webster's Third New International Dictionary 2634 (1986).  We note that, in context, "work" means 
much the same thing as "employment," and employment is defined by Wyo. Stat. 
Ann. § 27-3-104 (LexisNexis 2001), though it takes a bit more reading that just 
consulting a dictionary to get to the bottom of it:

§ 27-3-104.  "Employment" defined; generally; 
exceptions.

     (a)  As used in this act, 
"employment" means service:

(i)  Performed by an employee 
defined under 26 U.S.C. § 3306(i) including service in interstate commerce, 
except 26 U.S.C. § 3121(d)(2) does not apply;

(ii)  Subject to any federal 
tax against which credit may be taken for contribution payments into any state 
unemployment fund;

(iii)  Required to be 
employment under this act as a condition for full tax credit against the tax 
imposed by 26 U.S.C. § 3301 through 3311; and

(iv)  Otherwise specified 
under W.S. 27-3-104 through 27-3-108.

     (b)  An individual who performs 
service for wages is an employee for purposes of this act unless it is shown 
that the individual:

(i)  Is free from control or 
direction over the details of the performance of services by contract and by 
fact;

(ii)  Repealed by Laws 1991, 
ch. 153, § 1.

(iii)  and (iv) Repealed by 
Laws 1995, ch. 121, § 3.

(v)  Represents his services 
to the public as a self-employed individual or an independent contractor; 
and

(vi)  May substitute another 
individual to perform his services. 

   3"Wage" is 
defined by Wyo. Stat. Ann. § 27-3-102((a)(xviii) (LexisNexis 
2001):

§ 23-3-102.  Definitions generally.

. . . .

(xviii)  "Wage" means 
remuneration payable for services from any source including commissions, bonuses 
and cash.  The reasonable cash value 
of remuneration other than cash or check shall be prescribed by rule of the 
commission.  To the extent the 
following are not considered wages under 26 U.S.C. 3301 through 3311, "wage" 
does not include:

(A)  For purposes of W.S. 
27-3-503 through 27-3-509, remuneration greater than fifty-five percent (55%) of 
the statewide average annual wage calculated pursuant to W.S. 27-3-303(a) and 
rounded to the lowest one hundred dollars ($100.00), which is paid during any 
calendar year to an individual by each employer or a predecessor within any 
calendar year including employment under any other state unemployment 
compensation law unless the amount is subject to a federal tax against which 
credit may be taken for contributions paid into any state unemployment 
fund;

(B)  Any premium paid by an 
employing unit under a plan, system or into a fund for insurance or annuities to 
provide an employee or class of employees retirement, sickness or accident 
disability, medical and hospitalization expenses for sickness or accident 
disability or death benefits if the employee cannot receive any part of this 
payment instead of the death benefit or any part of the premium if the benefit 
is insured and cannot assign or receive cash instead of the benefit upon 
withdrawal from or termination of the plan, system, policy or services with the 
employing unit;

(C)  A payment by an employing 
unit not deducted from an employee's remuneration for the tax imposed under 26 
U.S.C. § 3101;

(D)  Dismissal payments which 
the employing unit is not obligated to make;

(E)  That portion of tips or 
gratuities not reportable under 26 U.S.C. § 
3306(s);

(F)  The value of any meals or 
lodging furnished by and for the convenience of the employer to the employee if 
the meals are furnished on the business premises of the employer or in the case 
of lodging, the employee is required to accept lodging on the business premises 
of his employer as a condition of his employment;

(G)  Remuneration received by 
an employee as sick pay following a six (6) month continuous period of 
illness;

(H)  Any benefit under a 
cafeteria plan specified by 26 U.S.C. § 125, excluding 
cash;

(J)  Wages of a deceased 
worker paid to a beneficiary or estate following the calendar year of the 
worker's death;

(K)  Services received under 
any dependent care assistance program to the extent excluded from gross income 
under 26 U.S.C. § 129;

(M)  Wages paid to a disabled 
worker during the year in which he became entitled to disability insurance 
benefits under the Social Security Act;

(N)  Services or benefits 
received under any educational assistance program;

(O)  Any benefit or other 
value received under an employee achievement award;

(P)  The value of any 
qualified group legal services plan to the extent payments are excluded from 
gross income under 26 U.S.C. § 120;

(Q)  Costs of group term life 
insurance;

(R)  Any loan repayment which 
is repaid at interest rates below established market 
rates;

(S)  Any moving 
expenses;

(T)  Employer contributions to 
any qualified retirement and pension plan or individual retirement account and 
distributions from qualified retirement and pension plans and annuities under 26 
U.S.C. § 403(b);

(U)  Benefit payments under 
any supplemental unemployment compensation plan; 
and

(W)  Any benefits paid under 
the Wyoming Worker's Compensation Act or any other worker's compensation law of 
another state.

   4The document 
memorializing this action does not appear in the record. 

   5This statute has 
a parallel criminal component:

§ 27-3-702.  Obtaining benefits by fraud; 
disqualification of benefits; penalties.

     (a)  No person shall, for himself 
or any other person, knowingly make a false statement or misrepresentation or 
knowingly fail to disclose a material fact to obtain or increase benefits or 
other payments under this act or other state or federal law.  Any person violating this section is 
guilty of:

(i)  A misdemeanor punishable 
by a fine of not more than seven hundred fifty dollars ($750.00), imprisonment 
for not more than ninety (90) days, or both, if the amount of benefits obtained 
in violation of this section is less than five hundred dollars ($500.00); 
or

(ii)  A felony punishable by 
imprisonment for not more than five (5) years, a fine of not more than five 
thousand dollars ($5,000.00), or both, if the amount of benefits obtained under 
fraud is five hundred dollars ($500.00) or greater.

     (b)  Upon conviction the court 
shall require the defendant to make restitution to the department in the amount 
of benefits or other payments improperly paid due to the defendant's fraud.  Each false statement, misrepresentation 
or failure to disclose a material fact is a separate offense.  This section shall not preclude 
prosecution under any other applicable law.

     (c)  In addition to the penalties 
provided by this section, a person convicted under this section or any other 
applicable law shall be disqualified from receiving benefits in any week 
beginning within a two (2) year period immediately following 
conviction.

Wyo. Stat. Ann. § 27-3-702 (LexisNexis 
2001). 

   6The document 
memorializing this action does not appear in the record. 

   7The document 
used to provide notice does not appear in the 
record.

   8Judge's brief 
was not filed in this Court until November 6, 2001, because of extensions of 
time sought by him, and granted by this Court.

   9Wyo. Stat. Ann. 
§ 27-3-101 (LexisNexis 2001).