RENDERED: OCTOBER 28, 2021 TO BE PUBLISHED 

# Supreme Court of Kentucky

2019

- SC

- 0 477

- D G

KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION APPELLANT

ON REVIEW FROM THE COURT OF APPEALS V. NO. 2017

- CA

- 0 1 156 JEFFERSON CIRCUIT COURT NO. 16

- CI

- 002236

MICHAEL NICHOLS ; AND NORTON HEALTHCARE, INC. APPELLEES

OPINION OF THE COURT BY CHIEF JUSTICE MINTON

REVERSING AND REMANDING We granted discretionary review to address the specific question of law of
whether a non
- attorney employee appearing on behalf of a corporation at unemployment insurance (UI) referee hearing s as authorized by KRS 1 341.470(3) is engaging impermissibly in the p ractice of law. After reviewing the matter, we find Nichols lacks standing to que stion the validity of KRS 341.470(3). So we reverse the decision of the Court of Appeals that invalidated
KRS 341. 470(3) on constitutional grounds , finding it helpful to correct the Court of Appeals panel’s interpretation of this Court’s precedent, Turner v.

1 Kentucky Revised Statute.2

K entucky Bar Ass’n

. 2 Because our decision today does not address the merits of Nichols’s appeal, we remand the case to the Court of Appeals to address the
merits.

I. FACTUAL AND PROCEDUR AL BACKGROUND Michael Nichols worked for Norton Healthcare as a Clinical Engineering Sterilization Maintenance Specialist from 2014 to 2015. In that role, he perform ed after

- hours equipment maintenance and repair s on an on
- call basis.
I n late Septembe r of 2015 , Nichols told his supervisor that he no longer wanted

to do the on

- call work. Norton alleges that in October 2015 Nichols was asked to complete annual

- maintenance, but he failed to do so, causing Norton to be
in violation of regulatory requirements. Norton further contends that the next
month it discovered Nic hols had falsified the documents of his annual
maintenance review and he had submitted a purchase order for an outside vendor to perform the work . Nichols took responsibility for these infractions , and Norton discharged him for misconduct related to his w ork

. Nichols made a claim for UI benefits. In his application, he reported that
he was separated from his employment by layoff due to a lack of work. 3
Nichols ’s claim was denied , he appealed , and a referee hearing was held to

2 980 S.W.3d 560 (Ky. 1998).

3 In appealing the referee’s findings to the Kentucky Unemployment Commission (KUIC) , Nichols argued that when he noted in his application that he was discharged for a “lack of work , ” he thought that meant his failure to complete his assigned tasks. KUIC ultimately denied Nichols ’s unemployment benefits because he failed to report honestly the reason he was discharged. That issue is unrelated to the legal issues we address in this r eview.3

determine the reason he was discharged

. 4 Two days of referee hearing s were held at which appeared Nichols, his counsel, a r eferee serving as fact

- finder,
and Nichols’s main supervisor when he was employed at Norton, Scott Skinner,
who was Norton’s employee

- representative

. At th e first hearing, the r eferee asked Skinner questions about the documentation and facts of Nichols’s discharge. At the second hearing,
Skinner questioned Nichols. Nichols was represented by counsel at both these hearings. Following the second hearing, th e r eferee rendered a decision finding
that Nichols was discharged for misconduct associated with his work

. Nichols appealed to KUIC , which affirmed the r eferee’s decision.
Nichols then sought judicial review in the Jefferson Circuit Court in
which he ar gued that KUIC committed three err ors: 1) it failed to support its factual findings by substantial evidence, 2) it erred by plac ing the bur den o n him to show his lack of misconduct, and

— the issue before us today

— 3 ) the proceedings before the r eferee and the KUIC were unconstitutional ly conducted
because of Skinner's appearance as a non

- attorney representative on behalf of
Norton. As to the third i ssue, Nichols argued that KRS 341.470(3)(a) violates the separation

- of

- powers doctrine of the Kentucky Constitution because only the judicia l department of state government can determine who may engage in the practice of law

. 5 So , Nichols argued, Skinner’s appearance on behalf of

4 A referee hearing is the initial proceeding in unemployment insurance claims. A referee serves as the fact

- finder to determine the factual basis of the employee’s separation from employment.

5 See KY. C ONST . § 116.4

Norton was i n violation of SCR 6 3.020. 7 Nichols alleged he w as harmed by this
violation because Skinner testified falsely about the reason for which Nichols was discharged and the allegedly false testimony would have been prevented if an attorney had appeared on behalf of Norton at the hearing

. The circuit court

u pheld the statute , finding no violation of the separation

- of

- powers doctrine
because a UI hearing is not a proceeding in the court of justice, so an attorney is not required. Nichols appealed to the Court of Appeals , which reversed the circuit
court’s ru ling a fter finding that corporations must be represented by counsel at UI referee hearings. In reaching that decision , the appellate panel relied on
Turner , which held that workers’ compensation specialists were non
- lawyer representatives improperly engaged in the practice of law. 8 The specialists

were neither licensed attorneys themselves n or s upervised by a licensed attorney , but they mediat ed claims between employees and employers. 9 The Court of Appeals panel found an employee

- representative at t he UI referee

6 Supreme Court Rule.

7 SCR 3.020 (“ The practice of law is any service rendered involving legal knowledge or legal advice, whether of representation, counsel or advocacy in or out of court, rendered in respect to the rights, duties, obligations, liabilities, or business relation s of one requiring the services. But nothing herein shall prevent any natural person not holding himself out as a practicing attorney from drawing any instrument to which he is a party without consideration unto himself therefor. An appearance in the small claims division of the district court by a person who is an officer of or who is regularly employed in a managerial capacity by a corporation or partnership which is a party to the litigation in which the appearance is made shall not be considered as unau thorized practice of law.” ).

8 980 S.W.3d at 565.

9 Id . at 564.5

hearing to be comparable to the workers’ compensation specialists in Turner ,

so it held that KRS 341.470(3) encroach es upon the judiciary’s constitutional
rule

- making power related to the practice of law. Upon review, we find Nichols lacks s tanding to contest the constitutional validity of KRS 341.470(3) beca use he has failed to show an injury in fact or that he has suffered any harm from Norton ’s lack of legal representation. Because Nichols lacks standing to bring this claim, our analysis stops there , and we are constrained to remand this case to the Court of Appeals to review the merits of Nichols’s appeal. But w e do hold that the Court of Appeals panel misinterpreted Turner

.

II. ANALYSIS A. Nichols lacks standing to contest the constitutionalit y of KRS 341.470(3). A court may only rule on the merits of justiciable issues, or , in other
words , matters that involve an actual case or controversy. 10 One key component of justiciability is the standing requirement. 11 In Commonwealth
Cabinet for Health & Fam

. Servs., Dep't for Medicaid Servs. v. Sexton ex rel. Appalachian Reg'l Healthcare, Inc. , 12 we adopted the federal courts’ standard for
constitutional standing

. 13 I f not otherwise provided by statute, a plaintiff only
ha s standing to bring a claim if th at plaintiff alleges “a personal injury fairly

10 Overstreet v. Mayberry , 603 S.W.3d 244, 250 (Ky. 2020).

11 Id . at 252.

12 566 S.W.3d 185, 196 (Ky. 2018)

. 13 Id

.6

traceable to the defendant's allegedly unlawful conduct and [ that injury is] likely to be redressed by the requested relief.” 14 Sexton also clarified that constitutional standing cannot be waived , and it is a court’s duty to ensure it only address es purely justiciable claims

. 15 So, as Sexton instructs, our analysis of the issues in the present case begin s with assessing whether Nichols has standing to contest the constitutional validity of KRS 341.470(3)

. We ask then if Nichols ’s right to UI benefits has been i mpaired , if that harm is
traceable to a non
- attorney ’s appearance for Norton at Nichols’s referee hearing , and if his harm would be remedied by a holding that the statute violates the separation

- of

- powers doctrine.
W e fi rst ask if Nichols has alleged an injury in fact. 16 In order to confer standing, an injury cannot be speculative but instead must be direct and
imminent. 17 In Merrick v. Smith , our predecessor court held “[i]t is an elementary principle that constitutionality of a law or its application is not open to challenge by a person or persons whose rights are not injured or jeopardized thereby.” 18 Thus, for Nichols to have standing to c laim that KRS 341.470(3) violates the separation

- of

- powers doctrine , he must show that his

14 Id

. 15 Id . at 192 (“ We hold that all Kentucky courts have the constitutional duty to ascertain the issue of constitutional standing, acting on their own motion, to ensure that only justiciable causes proceed in court, because the issue of constitutional standing is not waivable. ”).

16 Id

. at 196.

17 Id

. 18 347 S.W.2d 537 , 538 (Ky. 1 961).7

right to UI benefits w as injured or placed in jeopardy by it s violation

. We find
that Nichols has failed to show that KRS 341.470(3) allowing non

- attorneys to appear on behalf of their corporate employer has prejudi ced him because he
was denied benefits for reasons entirely independent of Scott Skinner’s appearance at the referee hearing. 19
The KUIC ’s order affirming the referee’s decision to deny Nichols’s unemployment benefits stated:
Claimant knowingly misreprese nted or concealed the nature of his separation from the captioned employer a fact relevant and material to the determination of the benefit entitlement. Without question . . . he is disqualified from receiving benefits, on this basis

. . . . Finally we note that if Claimant had prevailed on the separation issues [the issue of why he was discharged] disqualification would nonetheless be imposed. If a claimant knowingly misrepresents or withholds a fact relevant to the determination of benefit en titlem ent, he has violated the above

- cited statute [ KRS 34 1 .370(2)] whether or not said fact would have adversely affected his entitlement to benefits.
The order clarifies that regardless of whether Skinner reported inaccurate
information at Nichols’s referee hearing, Nichols would have been denied
benefits anyway because he himself reported false information on his application for benefits. It cannot be said , then , that KRS 341.470(3) permitting Skinner to appear on Norton’s behalf at the referee hearing has prejudiced Nichols ’s chance to receive UI benefits. KUIC’ s denial of Nichols’s

19 Steel v. Meek , 226 S.W.2d 542, 543 ( Ky. 1950) ( holding that appellant lacked standing to challenge the constitutionality of an absentee voting statute that failed to make provisions for certain disabled groups where appellant failed to show that he, himself, was prejudiced by the alleged discrimination).8

benefits is entirely unrelated to KRS 341.470(3)

. An allegation of harm so unrelated to the claimed constitutional violation does not amount to an injury
in fact sufficient to support standing.
The circumstances here are like those in Veltrop v. Commonwealth , where

a Court of Appeals panel held that the defendant had failed to allege a sufficient injury in fact

. 20 The defendant argued that a statute violated the separation

- of

- powers doctrine by limiting the time that breath or blood test
results in DUI cases could be taken

. 21 The statute at issue required that the
results from a test given beyond the two

- hour limit were inadmissible as evidence

. 22 The defendant argued that the statute was unconstitutional because the legislature had exceeded its authority by creating a rule of court procedure

. 23 The Court of Appeals found the defendant lacked standing to
contest the separation

- of

- powers issue

. 24 T he issue of whether the statute violated the separation

- of

- powers doctrine had no relevance or application t o the defendant ’s case because her blood test had been given within the two

hour time limit

. 25 Because the defendant ’s rights were not injured in a manner
that would make the issue of whether the statute violated the separation

- of

-

20 269 S.W.3d 15 , 18 (Ky. App. 2008).

21 Id . at 17.

22 Id

. 23 Id

. 24 Id . at 18.

25 Id

.9

powers doctrine relevant to her case, she lacked an injury sufficient to confer standing to challenge the statute

. 26 Likewise, here, Nichols has no injury that would make KRS 341.470(3) ’s potential constitutional violati on applicable to his case. Nichols’s claim was ultimately denied f

or reasons unrelated to the statute permitting Skinner to represent Norton at the referee hearing. Therefore, Nichols has not shown a concrete, particularized injury that would make KRS 341.470(3) ’s violating the separation

- of

- powers doctrine relevant to his case. Consequently, w e find th at
Nichols has not alleged a particularized way he was prejudiced b y KRS 341.470(3)’s purported viol ation of the separation

- of

- powers doctrine. Thus,
Nichols lacks an injury in fact sufficient to support standing to bring this constitutional challenge. Further, even if we overlooked the ultimate reason t hat KUIC denied
Nichols benefits and instead focused solely on KUIC ’s ruling that the referee’s findings of fact were supported by substantial evidence , Nichols would still lack standing to claim that KRS 341.470(3) violates the separation

- of

- powers doctrine

. While KUIC ’s substantial

- evidence holding could have been a ffected by a non

- attorney appearing on Norton’s behalf, making KRS 341.470(3) relevant to the case, Nichols would still lack standing for failure to show causation and redressability.

26 Id

.10

An examination of Cahoo v. Fast Enterprises , 27 a federal district court

case , supports our finding. In Cahoo , the plaintiffs alleged the ir due

- process rights had been harmed by the state’s automated computer system that processed unemployment insurance claims

. 28 The plaintiffs argued the system had many shortcomings , among them reporting claims as fraudulent when they were not

. 29 The plaintiffs brought suit against two corporate entities that
created the software and managed the system

. 30 The federal court held that the plaintiffs had alleged a sufficient injury in fact because their applications
had been inaccurately report ed as fraudulent. 31 The court also found the plaintiffs met the causation standing requirements because the automated system was under the direct control of the corporate entities. 32 The court even noted that although one corporate entity was much more involved than the other, it had “ contributed to the formation of the policie s and the implementation of the system” th at caused their harm. 33 Overa ll, the injury in fact, the plaintiffs’ unemployment insurance claims being erroneously reported

27 508 F. Supp. 3d 162 (E.D. M ich. 2008).

28 Id . at 167.

29 Id . at 177.

30 Id . at 176.

31 Id . (“ Even if the Court accepts the defendants’ arguments at face value and assumes that UIA employees were involved in the plaintiffs’ fraud adjudications at every step of the way, the plaintiffs individually have still demonstrated an injury in fact, namely, the deprivation of their property interests in unemployment benefits without adequate pre

- or post

- deprivation process. ”).

32 Id . at 178.

33 Id

.11

as fraudulent, was directly related to the wrongful conduct, i.e., the management and creation of the system. 34 In contrast to the plaintiff s in Cahoo , Nichols cannot show how the
denial of his UI benefits is fairly traceable to Norton’s sending a non

- lawyer to the referee hearing. In ACLU v. N at’l Sec. Agency , 35 the plaintiff ’ s lack of standing became clear w hen a panel of the Sixth Circuit Court of Appeals broke down the causal chain from the alleged harm to the wrongful conduct. 36 Overall, six different causal “steps” were needed before the injury could be
traced to the wrongful conduct

. 37 After assessing that at least two of the links were uncertain, the court held the plaintiffs lacked standing for failing to
establish causation. 38 We find similarly here that the causal chain from the alleged wrongful conduct to the alleged harm is too atte nuated to support a finding that Nichols has standing. For example, for this Court to find that the denial of benefits to Nichols is fairly traceable to Skinner ’s appearing on behalf of Norton at the hearing , we would have to f

ind that employee

- representatives are engaging in the practice

34 Id

. (“ These actions amounted to active management and supervision by CSG. And alth ough CSG did not run MiDAS, it monitored the system's performance and conducted cost

- benefit analyses. Doing so should have alerted it to the potentially unconstitutional adjudications and collection practices, and it certainly learned about them in June 2 015, when the Auditor General published its report. That may fall short of establishing proximate cause, but it satisfies the “fairly traceable” requirement for standing.”).

35 493 F.3d 644 (6 th Cir. 2007).

36 Id . at 674.

37 Id

. 38 Id . at 674

- 75.12

of law, which violates the separation

- of

- powers doctrine , that the information Skinner gave was false, that Skinner knew the information he was giving was false, that an attorney appearing on behalf of Norton would have known
Skinner was giving false information, and that the presentation of false testimony a ffected the outcome of the referee hearing. As in ACLU , there are too many “steps” that hinge on uncertainty in the causal chain for us t o find that any injury suffered is fairly traceable to Skinner ’s appear ance
. Nichols ’s own arguments only help us further conclude that too much uncertainty remains to find causation has been established. He alleges that Skinner, Norton’s employee

- repre sentative at the referee hearing, presented false information through testimony and documents contai n ing incorrect
information about his responsibilities at work . But Nichols fails to show how an attorney being required to appear on behalf of Norton at the hearing would have prevented such harm. While attorneys have ethical obligations requiring
the m to avoid presenting false evidence, their duty o nly extends to falsehoods
of which they are aware
. 39 Here, it has not been proven that Skinner knew the information he was presenting was incorrect, and even more unlikely an attorney appearing on behalf of Norton would have known. Nichols also notes
that fact

- witnesse s, such as Skinner, are p laced under oath at the hearing and

are subject to the penalty of perjury. This further diminishes any extra protection Nichols asserts attorneys could provide against false testimony.

39 SCR 3.13 0 (3 .3 ).13

Finally, Nichols appeared with counsel . He could have alerted his attorney
about Skinner’s testimony , and his counsel could have addressed them through questioning at the hearing.
Once the causal connection between Nichols ’s alleged injury (the denial of his benefits) and the wrongful conduct (No rton ’s being represented by a non

attorney) is broken down, it is clear that , unlike the direct connection in Cahoo , too many uncertainties exist to establish that Nichols ’s denial of benefits is fairly traceable to a non
- attorney appearing on behalf of Norton

. Because Nichols cannot show that his injury was caused by Norton’s lack of counsel at the hearing, he lacks standing to bring his claim. Lastly, while resolving the case at hand on Nichols’s lack of
constitutional standin g , we feel compelled to address the Court of Appeals panel’s interpretation of our holding in Turner v. K entucky Bar Ass’n

. 40 In
Turner , we held that workers ’ compensation specialists were engaging in the practice of law because they were advising workers’ compensation claimants

a nd mediating claims. 41 We held “ l egal representation by a lay person before an adjudicatory tribunal, however informal, is not permit ted

. . . [and] such representation involves advocacy that would constitute the practice of law.” 42 The Court of Appeals panel felt that Turner compelled treat ment of the administrative proceedings at hand similarly to the treatment given to circuit

40 980 S.W.2d 560 (Ky. 1998).

41 Id . at 565.

42 Id . at 564.14

actions in which attorneys are required to r e p re sent corporations

. To clarify , our holding in Turner did not rest on the type of proceeding before us but instead on the actions being taken by the non

- attorney specialists in the proceedings . It was not th at the specialists were simply performing work in
admi ni strative tribunals but that they were mediating claims and advising claimants on their legal remedies without themselves being licensed attorneys

or working under the direct supervision of a licensed attorney. 43 If no legal
advice is being given or legal rights are being adjudicated , it is unlikely this
Court would find that the non
- attorney is engaging in the practice of law.

III. CONCLUSION For the reasons stated above, we remand to the Court of Appeals to resolve Nichols’s remaining claims. Conley, Hughes, Keller, VanMeter, JJ. , and Special Justice Jeff re y Edwards, sitting

. All concur. Lambert and Nickell, JJ., not sitting.

COUNSEL FOR APPELLANT KUIC: Amy Cubbage Sam Flynn John Ghaelian Maria “ Tess ” Russell Linda Keeton

COUNSEL FOR APPELLEE MICHAEL NICHOLS: Robyn Smith Law Office of Robyn Smith

43 Id . at 565.15

J. Gregory Troutman Troutman Law Office, PLL C

COUNSEL FOR APPELLEE NORTON HEALTHCARE , INC.: Donna King Perry Jeremy S

. Rogers Alina Klimkina Dinsmore & Shohl LLP

COUNSEL FOR AMICUS CURIAE THE UNITED STATES: Timothy D. Thompson U.S. Attorney’s Office, Wester n District of Kentucky
Brad Hinshelwood U.S. Department of Justice

COUNSEL FOR AMICUS CURIAE KENTUCKY CHAMBER OF COMMERCE, ET AL.: Jay E. Ingle Jackson Kelly PLLC

COUNSEL FOR AMICUS CURIAE COMMONWEALTH OF KENTUCKY:
Daniel Cameron Victor B. Maddox Heather L. Becker Office of the Attorney General