Court Opinion

ID: 7876181
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:11:27.616335+00
Date Added: 2024-06-11T16:31:24.194057
License: Public Domain

CRIPPEN, Judge,
dissenting.
I respectfully dissent. The Commissioner engages here in a misapplication of statutory law, and it is important that this action be reversed.
As we observed three years ago, analysis of Minnesota Statutes § 268.06, subd. 22 (1986), requires examination of its history. Easy Street West v. Commissioner of Economic Security, 345 N.W.2d 250, 253 (Minn.Ct.App.1984).
The topic of subdivision 22 is “employment experience record transfer.” This title has been repeated periodically by the legislature in the course of subdivision amendments. As we held in Easy Street, it is evident from its history that subdivision 22 is a law designed to shield the public from efforts of employers to obtain a low experience rating by means of buying out a business. Id. at 253-54. This ruling was adopted by the supreme court in Mid-America Festivals Corp. v. Commissioner of Department of Economic Security, 349 N.W.2d 270, 273-74 (Minn.1984).
The series of amendments to subdivision 22 have tightened its restrictions on transfer of experience ratings. In its present form, ratings transfers can occur only when (1) the new owner is a successor to business assets and (2) “continues” the same business operation, taking into account the management, the employees and the clientele of the old and new operations. Easy Street, 354 N.W.2d at 255. See Mid-*59America, 349 N.W.2d at 274; Minn.Stat. § 268.06, subd. 22(a).
Given this history of the subdivision, both Minnesota appellate courts have barred use of the rating transfer law as a sword, attempts by the Commissioner to impose a higher experience rating on the new operator of a business. Easy Street, 345 N.W.2d 250; Mid-America, 349 N.W.2d 270. We complained in Easy Street:
In 1984, when we are experiencing, a recession of a magnitude such as has not occurred for over three decades, the Commissioner is attempting to use the language that was applicable for unfair attempts to secure a lower rate to now postulate that a successor employer, as long as he purchases substantially all of the assets of his predecessor and continues such organization, trade or business, is stuck with the predecessor’s poor experience rating.
The shield has become a sword against newly-formed small businesses.
Easy Street, 345 N.W.2d at 254.
Here, the Commissioner makes another sword-like use of subdivision 22. Here too, the target for the Commissioner’s action is the small operator who purchases the assets of a financially troubled business. It is undisputed that he has properly refused to transfer an old experience rating to relator. Relator is entitled to this transfer only if he both “succeeds to or acquires” the old business and “continues” it. Minn. Stat. § 268.06, subd. 22(a). For rating transfer purposes, there is no succession of businesses here. However, the Commissioner concludes that there is succession for purposes of requiring an acquisition report and imposing on a nonreporting new operator the original owner’s liability for unpaid unemployment compensation contributions. The action is taken with disregard for the potential injustice of saddling a new business operator with the requirement to pay another’s debts.
Is the Commissioner’s action sanctioned and invited by subdivision 22, subsection (c)? Not in my opinion. Again, it is necessary to look at the history of the statute.
Subsection (c) was enacted in 1975. 1975 Minn.Laws ch. 336, § 9. It demanded a notice evidently aimed at facilitating a purchaser’s claim for transfer of an experience rating. The subsection provided a penalty (liability for unpaid employer contributions) for those who failed to furnish the notice. As we suggested in 1984, this subsection was among “formal and definite standards” on transfer procedure enacted in 1975, two years after the 1973 legislative decision to permit transfer determinations without a cumbersome procedure of special investigations on transfer questions. Easy Street, 345 N.W.2d at 253.
There is little question as to the meaning and effect of subsection (c) in the context of statutory law between 1975, when it was enacted, and 1979, when subsection (a) was further amended. During this four-year period, (1) a successor operator (one who “succeeds to or acquires the organization”) was qualified, under subsection (a), for transfer of an experience rating; and (2) the successor operator (again, one who “succeeds to or acquires the organization”) was subject, under subsection (c), to imposition of a penalty for failing to report on his acquisition. As originally enacted, subsection (c) merely facilitated application of the transfer addressed in subsection (a). Those who could get an old experience rating under subsection (a) were subject to a reporting obligation under subsection (c). Subsection (c) was an integral part of the subdivision on “employment experience record transfer.”
It is evident that the concept of subdivision (c) was peculiar from the time of its enactment. As just noted, it affected only those who could get an old experience rating under subsection (a). Put in other words, those who were not eligible for a rating transfer were also free from the requirement for reporting, and the risk of a nonreporting penalty. The requirement for reporting, so limited to those who could take an old rating, did not serve well to facilitate reporting and decisionmaking aimed at determining whether purchasers were eligible or ineligible for an established rating. Such, however, was the law — there *60was an identical definition of those who were eligible for taking an old rating and those who had to report.
In 1979, the Minnesota Legislature added the “continues” restriction to subsection (a). 1979 Minn.Laws ch. 181, § 7. Five years later, in Easy Street, we determined the significance of this restriction. Did this change in subsection (a) alter the meaning and the effect of subsection (c)? Not in my opinion.
We have found nothing in the 1979 enactment, and nothing in related legislative history, to suggest a decision of the legislature in 1979 to expand the reporting requirement of subsection (c) to buyers not eligible under subsection (a) for a transfer of experience ratings. There is no evidence of a design by the 1979 legislature to create a new contribution collection remedy— to transform a penalty clause, related to a reporting rule, into a contribution collection device. There is no justification for reading into the statutory shield of subdivision 22 an insidious sword.
It is contended that the Commissioner’s action is permitted by our holding in Easy Street. We noted there, while attempting to highlight the new continuation requirement of subsection (a), that subsection (c) dealt with one criterion (succession) and subsection (a) dealt with two criteria (succession and continuation). Easy Street, 345 N.W.2d at 254. We noted that succession under subsection (c) involved the consequence of contribution liability. It is specious to consider these comments as authority on the issue in the immediate case. The observations were casual dicta, noted to aid in explaining a holding. The issue of the immediate case was not before the court in Easy Street, and there is no indication the question was anticipated or deliberately considered. Illustrative of the depth of study on the issue in 1984 is the fact that liability under subsection (c) was discussed without mention of the prior condition of a reporting violation.
We are asked here to collaborate with the Commissioner in creating authority permitting a new device for collection of unemployment compensation contributions from unwitting purchasers of small businesses. Assuming there is a shred of merit in the new process, only the legislature can properly make it part of our law.