( Boudreau )
( Creek County - Donald D. Thompson )
Randall S. Pickard Tulsa, Oklahoma
John E. Miley Deputy General Counsel Oklahoma Employment Security Commission Oklahoma City, Oklahoma For Appellant
MEMORANDUM OPINION
The Oklahoma Employment Security Commission (OESC) appeals a judgment of the district court overturning OESC's determination of the unemployment merit rating of Frank Chrisco d/b/a Chrisco Company. The issue on appeal is whether Chrisco became an acquiring employer of Process Manufacturing Company for the purposes of computing his unemployment merit rating. Having reviewed the record and applicable law, we find that he did not and affirm the trial court's judgment.
Process was incorporated in 1974. It originally produced gas dehydration equipment. Chrisco conducts a sole proprietorship, established in 1985. His business is steel fabrication.
In April 1986, the gas dehydration industry having deteriorated substantially, Process was no longer viable, and its owner was looking for a buyer. Because its business had been failing for some time, Process had terminated sufficient numbers of employees so that its OESC merit rating was bad. By April 1986 Process had only four employees.
On the other hand, Chrisco's steel fabrication business was a growing one, adding employees. Chrisco had a policy of hiring new employees from the unemployment rolls. Therefore, in April 1986, Chrisco's OESC merit rating was good.
In April 1986, Chrisco purchased Process's stock. Although Process was in a different industry than Chrisco, Process had buildings, equipment, and welding certificates that were useful to Chrisco. Chrisco did not purchase Process for the purpose of continuing its operations; nevertheless, he agreed with the seller to continue Process's operations to the extent necessary to support its current customers until they could find new suppliers. Process's original business thus was allowed, and encouraged, to die out. Chrisco made no attempt to continue or expand Process's original business of gas dehydration.
From April 1986 to September 30, 1987, Process's original gas dehydration business continued to decline until it completely disappeared. As a result, during that time three of the four Process employees were terminated and were either hired by Chrisco or obtained other employment. On September 30, 1987, the final Process employee was terminated and then hired by Chrisco.
Process, however, did not cease to exist as a corporate entity; instead, it changed industries. Chrisco tr. of his steel fabrication business to Process in April 1986, because the welding certificates were in Process's name. To minimize the effect of Process's bad OESC merit rating, Process did not hire employees to operate the steel fabrication business transferred from Chrisco. Instead, it leased employees from Chrisco for that purpose. The two companies retained their separate identities, and Process, with the bad merit rating, had no employees, while Chrisco, with the good merit rating, had all the employees.
Having terminated all of its employees, Process stopped sending quarterly reports to the OESC after September 1987. When it did not receive a report from Process for the fourth quarter of 1987, the OESC investigated and determined that Chrisco became an acquiring employer on September 30, 1987, when the last Process employee was terminated. The OESC combined Process's rating with Chrisco's and Chrisco's contribution rating jumped from 0.8% to 7.4% as a result. Chrisco unsuccessfully appealed this nine-fold increase and then petitioned the district court
The district court reviewed the record before the OESC and determined that the OESC's decision was clearly erroneous as well as arbitrary and capricious. Thus, the court reversed the OESC's decision. The OESC appeals the district court's decision.
STANDARD OF REVIEW
The district court may review a decision by the OESC regarding an employer's expected contribution.