Court Opinion

ID: 5137570
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:40:35.353975+00
Date Added: 2024-06-11T08:24:03.219374
License: Public Domain

2013 UT App 73
_________________________________________________________

               THE UTAH COURT OF APPEALS

                       JEFFREY C. KENDELL,

                            Petitioner,

                                 v.

             DEPARTMENT OF WORKFORCE SERVICES,
                 WORKFORCE APPEALS BOARD,

                            Respondent.

                     Memorandum Decision
                       No. 20111105‐CA
                      Filed March 21, 2013

                Original Proceeding in this Court

               Jeffrey C. Kendell, Petitioner Pro Se
             Suzan Pixton, Attorney for Respondent

        JUDGE CAROLYN B. MCHUGH authored this
Memorandum Decision, in which JUDGES WILLIAM A. THORNE JR.
            and STEPHEN L. ROTH concurred.

McHUGH, Judge:

¶1     Petitioner Jeffrey C. Kendell seeks judicial review of orders
of the Workforce Appeals Board (the Board) concluding that he
was ineligible to receive unemployment benefits while out of the
country and imposing an overpayment and civil penalty for fraud.
We set aside the Board’s decision and direct the Board to
reconsider its decision consistent with this decision.

¶2    Kendell first began filing claims for unemployment
insurance benefits on April 15, 2010. On July 15, 2010, Kendell
              Kendell v. Department of Workforce Services

traveled to Europe and remained there through August 22, 2010.
Kendell testified that he traveled to Germany to apply for a specific
job, even though he was aware that he was not authorized to work
in that country. While in Germany, Kendell visited Italy and Spain,
but testified that these trips were for vacation purposes only.

¶3       When Kendell first applied for unemployment benefits, the
Department of Workforce Services (the Department) sent him the
Claimant Guide: Unemployment Insurance Benefits (the Claimant
Guide), which provided instructions regarding a claimant’s
responsibility to be able and available for work while receiving
unemployment benefits, including the requirements a claimant
must fulfill when filing for benefits outside of the state. The
Claimant Guide instructs, “You must be physically and mentally
able to work full‐time.” It then explains, “You are required to
report [that] you are not available for work when any condition
exists that could prevent you from working, accepting work or
seeking full‐time work. This includes, but is not limited to: travel
. . . .” Of particular importance to this petition for review, the
Claimant Guide provides, in relevant part:

       Out‐of‐State Filing

       ....

       You are required to notify the Claims Center if you
       travel or move to a location outside the United States.
       Depending on the circumstances, travel or relocation
       to a foreign country could affect your continued
       eligibility for unemployment benefits.

¶4      Kendell testified that he read and understood the Claimant
Guide and that he was aware of the provisions stating that travel
to a foreign country could affect his eligibility for unemployment
benefits. Kendell also acknowledged that he was required to report
to the Department any condition or situation which could prevent
him from accepting work, including travel, and that he was

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            Kendell v. Department of Workforce Services

required to notify the Department if he traveled to a location
outside the United States. At no point, however, did Kendell notify
the Department that he traveled to Europe.

¶5      While abroad, Kendell filed for benefits from July 17, 2010,
through August 21, 2010. For each week that Kendell applied for
benefits, he was required to answer the following question:
“During the week, were you physically able to work and available
for full‐time work?” On each occasion, Kendell responded, “Yes.”

¶6     On July 6, 2011, the Department sent Kendell a “Notice of
Issue,” informing him that “a question exists concerning your
unemployment benefits.” The notice also warned him of a potential
overpayment penalty for the weeks from July 17, 2010, through
August 21, 2010—the period Kendell filed for unemployment
benefits while he was in Europe.

¶7      After receiving the notice, Kendell spoke with a Department
investigator on July 11, 2011. The next day, the Department issued
a decision concluding that because Kendell was not available for
full‐time employment due to his travel in a foreign country that
lacked a reciprocal unemployment agreement with the United
States, he was ineligible to receive unemployment benefits during
that time. See Utah Code Ann. § 35A‐4‐403(1)(c) (LexisNexis Supp.
2012)1 (stating that an unemployed individual is eligible to receive
benefits only if that individual “is able to work and is available for
work”). See generally id. § 35A‐4‐106(4) (2011) (granting the
Department authority to enter into a reciprocal agreement for
unemployment benefits with a foreign government).

¶8    Kendell filed an administrative appeal of that decision.
Representing himself at a telephone hearing before an

1. Because the 2012 amendments to the statute do not affect our
analysis, we cite the current version of the Utah Code for the
reader’s convenience.

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            Kendell v. Department of Workforce Services

Administrative Law Judge (ALJ) on August 10, 2011, Kendell
argued that he was always available for work, as evidenced by the
fact that he had continued to make the requisite number of job
contacts during his time in Europe.2 Kendell asserted that he was
available by cellular telephone and email, and that he had sufficient
airline miles to obtain a flexible return ticket that would have
allowed him to return to the United States within twenty‐four
hours.

¶9      After the evidentiary hearing, the ALJ issued two decisions.
First, the ALJ concluded that Kendell was not available for full‐
time work during the period he was in Europe because

       he was [traveling] in foreign countries which [did]
       not have a reciprocal agreement with the United
       States concerning the payment of unemployment
       benefits. [Kendell] did not have permission to work
       in any of these countries, and his availability was
       limited by the time necessary to return to the United
       States if he were offered employment.

As a result, the ALJ denied Kendell employment benefits for the
weeks ending July 17, 2010, through August 21, 2010. In the second
decision, the ALJ determined that Kendell should be assessed a
fraud penalty because he “willfully made a false statement or
misrepresentation or knowingly failed to report a material fact to
obtain” benefits while traveling in Europe. Specifically, the ALJ
concluded that Kendell knew he was required to notify the
Department if he traveled outside of the United States, but failed
to do so. In reaching this conclusion, the ALJ reasoned,

2. In addition to testifying that he applied to work for one
company located in Germany during his trip, Kendell provided a
detailed list of employment contacts that indicated he had filed two
job applications for each of the six weeks at issue in this appeal.
The Board does not challenge this evidence.

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            Kendell v. Department of Workforce Services

       It is unclear how [Kendell] failed to understand how
       his being in Europe interfered with his immediate
       availability for full‐time work. For [Kendell] to accept
       employment, it would be necessary to incur the high
       costs of adjusting the return date of a flight to the
       United States. Moreover, [Kendell’s] availability
       would be delayed by the travel time involved if it
       were necessary to return to the United States to
       accept an offer of work.

       The element of willfulness has been established.
       [Kendell] filed unemployment claims affirming his
       availability for employment when traveling in a
       foreign country clearly limited his availability to
       return to work.

As a result, the ALJ’s decision established an overpayment in the
amount of $2,070 for benefits received, as well as a civil penalty of
$2,070, for a total overpayment of $4,140. The ALJ also disqualified
Kendell from receiving benefits for forty‐three additional weeks.

¶10 Kendell appealed the ALJ’s decisions to the Board. In his
appeal, Kendell provided additional evidence indicating that he
“had enough [airline] miles to redeem for a one way ticket back to
the United States at any time” without incurring any additional
expenses. On October 13, 2011, the Board issued its decision
adopting the ALJ’s findings and affirming the ALJ’s decisions in
their entirety. In its reasoning and conclusions of law, the Board
noted,

       Traveling outside of the United States or Canada
       immediately renders a claimant ineligible for benefits
       unless the purpose of the trip is to seek, apply for, or
       accept work in a country where the claimant is
       eligible to work and the trip is less than two weeks.
       Unemployment benefits are not intended to

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            Kendell v. Department of Workforce Services

       subsidize vacations, or other travel outside the
       United States.

Contrary to the ALJ’s ruling, however, the Board indicated that
“[Kendell] did conduct a work search while in Europe and could
have returned immediately.” Nevertheless, the Board concluded,

       under the law and the rules[, Kendell] is not
       considered to be able and available for work when he
       was outside of the United States. [Kendell] was out
       of the country for more than two weeks, and was not
       looking for work in countries where he had work
       authorization. Furthermore[,] none of the countries
       [Kendell] traveled to have a reciprocal agreement
       with the United States. [Kendell] was not able and
       available for full‐time work when he was outside of
       the United States.

Kendell requested reconsideration on November 1, 2011, which the
Board denied. Kendell now petitions this court for review of the
Board’s decision.

¶11 Kendell first challenges the Board’s decision that he was not
eligible for unemployment benefits while he was in Europe on the
ground that the Board misinterpreted the controlling
administrative rule. We apply an intermediate standard of review
to an agency’s interpretation of its own rules, “deferring to an
agency’s interpretation as long as it is both reasonable and
rational.” Westside Dixon Assocs. LLC v. Utah Power & Light
Co./PacifiCorp, 2002 UT 31, ¶ 7, 44 P.3d 775. Our determination of
reasonableness is guided by the fundamental principle that an
agency’s rules “must be construed in a manner consistent with the
statute . . . .” SF Phosphates Ltd. v. Auditing Div., Utah State Tax
Comm’n, 972 P.2d 384, 386 (Utah 1998).

¶12 Kendell also challenges the Board’s decision to impose a
fraud penalty, arguing that it was based on a misconstruction and

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              Kendell v. Department of Workforce Services

misapplication of the underlying statute and is not supported by
substantial evidence. “An agency’s interpretation and application
of law is generally reviewed for correctness, but when the [Utah]
Legislature has granted the agency discretion to interpret or apply
the law, we apply an intermediate standard of review.” Dorsey v.
Department of Workforce Servs., 2012 UT App 364, ¶ 9, 294 P.3d 580.
“When we review an agency’s application of the law to a particular
set of facts, we will review the agency’s decision with only
moderate deference. Thus, we will uphold [the Board’s] decision
so long as it is within the realm of reasonableness and rationality.”
Carbon Cnty. v. Department of Workforce Servs., 2012 UT App 4, ¶ 12,
269 P.3d 969 (alteration in original) (citations and internal quotation
marks omitted), cert. granted, 280 P.3d 421 (Utah 2012).

¶13 Kendell argues that he was available for work while
traveling in Europe as required by Utah Code section 35A‐4‐403.
See Utah Code Ann. § 35A‐4‐403(1)(c) (LexisNexis Supp. 2012)
(stating that an unemployed individual is eligible to receive
benefits only if that individual “is able to work and is available for
work”). The Board’s determination that Kendell was unavailable
primarily rested on its interpretation of administrative rule R994‐
403‐112c, which addresses foreign travel as a factor affecting a
claimant’s availability. The rule states, in relevant part,

       a claimant who is engaged in an activity for more
       than half the normal workweek that would prevent
       the claimant from working, is presumed to be
       unavailable and therefore ineligible for benefits. . . .
       When a claimant is away from his or her residence
       but has made arrangements to be contacted and can
       return quickly enough to respond to any opportunity
       for work, the presumption of unavailability may be
       overcome.

       ....

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            Kendell v. Department of Workforce Services

       Unemployment benefits cannot be paid to a claimant
       located in a foreign country unless the claimant has
       authorization to work there and there is a reciprocal
       agreement concerning the payment of
       unemployment benefits with that foreign country.
       An exception to this general rule is that a claimant
       who travels to a foreign country for the express
       purpose of applying for employment and is out of
       the United States for two consecutive weeks or less is
       eligible for those weeks provided the claimant can
       prove he or she has a legal right to work in that
       country. A claimant who is out of the United States
       for more than two weeks is not eligible for benefits
       for any of the weeks.

Utah Admin. Code Ann. R994‐403‐112c(2) (LexisNexis 2010).3
Based on this rule, the Board denied benefits to Kendell because he
was in Europe for more than two weeks and did not have
authorization to work in any country there. Additionally, the Board
determined Kendell was ineligible for benefits because none of the
countries he traveled to had a reciprocal agreement with the United
States.

¶14 After briefing was completed, this court issued a decision in
Dorsey v. Department of Workforce Services, 2012 UT App 364, 294
P.3d 580, rejecting the Board’s interpretation of rule R994‐403‐112c
as “impos[ing] a disability not mentioned in the statute,

3. The agency has since revised this rule, removing the reference
to foreign travel for two weeks or less, see Utah Admin. Code Ann.
R994‐403‐112c(2)(a)(i)(B) (LexisNexis Supp. 2012), and adding a
subsection to address reporting requirements for travel outside of
the United States, see id. R994‐403‐112c(2)(a)(i)(C). Unless otherwise
noted, we cite the 2010 version of the Utah Administrative Code,
which reflects the version in effect at the time Kendell filed for
benefits.

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            Kendell v. Department of Workforce Services

impermissibly restricting the meaning of the availability
requirement, and thus . . . not ‘in harmony’ with the statute.” Id.
¶¶ 19–22. In making this determination, the Dorsey court held that

      the touchstone of rule R994‐403‐112c(2)(a), as with
      section 35A‐4‐403(1)(c), is availability. Foreign and
      domestic travel are relevant to the determination of
      availability, but are not grounds for denying
      eligibility to a traveler who demonstrates, as
      [c]laimant has, that he is able to work and is available
      for work during each and every week for which [he]
      made a claim for benefits under this chapter. Thus,
      with foreign travel, the presumption of unavailability
      in rule R994‐403‐112c(2)(a) may be overcome not
      only by showing that the claimant was seeking work
      in a foreign country under the conditions specified in
      rule R994‐403‐112c(2)(a)(i), but also by showing that
      the claimant made arrangements to be contacted and
      could return quickly enough to respond to any
      opportunity for work.

Id. ¶ 23 (second alteration in original) (footnote, citations, and
internal quotation marks omitted).

¶15 Because Dorsey’s holding is controlling here, we asked the
parties to submit supplemental briefing to address its impact.
Those briefs each stressed different aspects of the evidentiary
record in an attempt to distinguish or follow Dorsey’s conclusion
that the claimant there had proved availability. However, unlike in
Dorsey, the Board here never addressed the issue of whether
Kendell could have returned from Europe quickly enough to
respond to any opportunity for work and thereby overcome the
presumption of unavailability created by his absence from the
United States.

¶16 Indeed, there does not appear to be any focus on or analysis
of this issue in the decisions of the ALJ and the Board. In its

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            Kendell v. Department of Workforce Services

determination that Kendell was not able and available for work, the
ALJ primarily relied on Kendell’s travel to foreign countries, where
he did not have permission to work and which lacked reciprocal
agreements with the United States. And although Kendell testified
that he “was available to fly back . . . on a moment[’]s notice,” the
ALJ appeared to reject this assertion when it concluded that
Kendell should have known that his “availability would be delayed
by the travel time involved if it were necessary to return to the
United States to accept an offer of work” and “the high costs of
adjusting the return date of a flight to the United States.” In
contrast, and despite the Board having “adopt[ed] in full the factual
findings” of the ALJ and having “affirmed and adopted in full” the
ALJ’s ultimate decisions, the Board’s reasoning states that Kendell
“could have returned immediately.” The lack of any discussion or
analysis, combined with its seemingly inconsistent adoption of the
ALJ’s decision, suggests that the Board was making an assumption
for the purposes of argument, rather than making a factual
determination regarding Kendell’s ultimate availability.
Essentially, the Board held that even if Kendell could be
immediately available for work, R994‐403‐112c dictated that he was
not available for purposes of unemployment benefit eligibility
simply because he was out of the country.

¶17 Given the Board’s erroneous interpretation of rule R994‐403‐
112c, which has now been rejected by Dorsey, we must set aside the
Board’s decision. We therefore direct the Board to reconsider
whether Kendell was able and available for work in light of our
decision in Dorsey.

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