Case 03-06 Shannon Motors vs. State of RI

JABOUR, M. This matter is before the Court on the complaint of Shannon Motors, Inc., filed pursuant to Rhode Island General Laws § 42-35-15, seeking judicial review of a final decision rendered by the respondent, Board of Review, Department of Labor and Training, (hereinafter cited as “the Board”) which upheld the decision of the Referee Carl Capozza that the claimant, Victor DiAngelo (hereinafter cited as “claimant”) was entitled to receive employment security benefits. This matter has been referred to me for the making of findings and recommendations pursuant to section 8-8-16.2 of the General Laws.

The claimant was employed at Shannon Motors, Inc. for fifteen months. His last day of work was August 9, 2002. He filed a claim for Employment Security benefits on August 9, 2002. In a Director’s decision dated September 11, 2002, it was determined that the claimant voluntarily left his job without good cause, within the meaning of Section 28-44-17 of the Rhode Island Employment Security Act. The claimant filed a timely appeal of that decision. A hearing on the appeal was held on October 9, 2002, at which time the claimant, his witness and an employer representative appeared and testified.

The claimant was employed as an automobile salesman at a used car dealership for approximately fifteen months. During the course of his employment, the claimant was paid commissions according to a pay plan arranged between himself and the employer. Prior to November 2001, the claimant had problems concerning the pay plans implemented during that period in that problems arose concerning payment of commissions. Those problems were resolved and a new pay plan was ratified in November of 2001. The claimant was thereafter to be paid in accordance with a pay plan based on certain percentages of the amount of the sale over and above the inventory value of the automobile sold plus cleanup costs, etc. Additionally, the claimant was to be paid an additional percentage when cars held 100 days or more in inventory were sold. From November 2001 through July 2002, the claimant questioned certain discrepancies he believed occurred concerning sales and was advised that that was the way it was. On July 10, 2002, the claimant sold an automobile which had been on the inventory list for more than 100 days and according to calculations, should have received a commission of $356.00. The vehicle he had sold was inventoried at $456.00. At the time of commission, the employer arbitrarily assigned an additional $1,000.00 to the inventory cost of the vehicle thereby reducing the claimant’s commission by approximately $250.00. Upon subsequent complaint by the claimant, the employer reduced the $1,000.00 added to the cost of the vehicle by $500.00, but the claimant was ultimately deprived of his full commission based on the original inventory. Because the claimant believed he could no longer rely on the integrity of his employer and the pay plan structure, he determined he could no longer work for that employer and voluntarily left his employment on August 9, 2002 when he received all the monies that the employer would pay him as commissions.

The issue in this case is whether or not the claimant left work voluntarily with good cause within the meaning of Section 28-44-17 of the Rhode Island Employment Security Act.

An individual who leaves work voluntarily must establish good cause for taking that action or else be subject to disqualification under the provisions of Section 28-44-17.

In order to show good cause for leaving one’s employment, an individual must either show the job was unsuitable, or that he was placed in a situation which left him no reasonable alternative but to leave that employment. Based upon the most credible testimony of the claimant and his witness, I find that the claimant was placed in a situation where he could no longer continue in this employment and be assured that he would be paid his commissions according to pay plans in effect. The failure of the employer to adhere to the agreed pay plan created a credibility issue under which the claimant no longer could continue. The recurring problems concerning commissions caused the claimant’s job to become unsuitable. Based on the facts and circumstances of this case, it is determined that the claimant voluntarily left his job with good cause, within the meaning of the above Section of the Act and, therefore, he will be entitled to benefits provided he meets all requirements of the law.

On October 25, 2002, the Referee held that the claimant voluntarily left work with good cause. For this reason, Employment Security benefits cannot be denied under the provisions of Section 28-44-17 of the Rhode Island Employment Security Act.

A timely appeal was filed and the matter was heard before the Board of Review on November 8, 2002. The decision of the Referee was reviewed in accordance with Section 28-44-47 of the Rhode Island Employment Security Act, 1956. After review and consideration of all the evidence submitted to the Referee and the Referee’s decision, the Board concluded that the decision of the Referee is hereby declared to be the decision of the Board of Review and incorporated by reference herein.

1. That the findings of the Appeal Tribunal on the factual issues which are hereby incorporated by reference constitute a proper adjudication of the facts; the conclusions of the Appeal Tribunal as to the applicable law thereto are correct and proper and such findings and conclusions are hereby affirmed.

2. For the purposes of judicial review in accordance with Section 28-44-51, the decision of the Appeal Tribunal shall be deemed to be the decision of the Board of Review.

Thereafter, Shannon Motors, Inc. filed a complaint for judicial review; jurisdiction for review of the Board’s decision is vested in the District Court by Rhode Island General Laws § 28-44-52.

The standard of review is provided by Rhode Island General Laws § 42-35-15(g), a section of the state Administrative Procedures Act, which provides as follows:

have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Thus, on questions of fact, the District Court "* * * may not substitute its judgment for that of the agency and must affirm the decision of the agency unless its findings are ‘clearly erroneous.’”[1] The Court will not substitute its judgment for that of the Board as to the weight of the evidence on questions of fact.[2] Stated differently, the findings of the agency will be upheld even though a reasonable mind might have reached a contrary result.[3]

The Supreme Court of Rhode Island recognized in Harraka v. Board of Review of Department of Employment Security, 98 R.I. 197, 200, 200 A.2d 595, 597 (1964) that a liberal interpretation shall be utilized in construing and applying the Employment Security Act:

* * * eligibility for benefits is to be determined in the light of the expressed legislative policy that "Chapters 42 to 44, inclusive, of this title shall be construed liberally in aid of their declared purpose which declared purpose is to lighten the burden which now falls upon the unemployed worker and his family.” G.L.1956, § 28-42-73. The legislature having thus declared a policy of liberal construction, this court, in construing the act, must seek to give as broad an effect to its humanitarian purpose as it reasonably may in the circumstances. Of course, compliance with the legislative policy does not warrant an extension of eligibility by this court to any person or class of persons not intended by the legislature to share in the benefits of the act; but neither does it permit this court to enlarge the exclusionary effect of expressed restrictions on eligibility under the guise of construing such provisions of the act.

The issue before the Court is whether the decision of the Referee (as adopted and ratified by the Board) was supported by reliable, probative, and substantial evidence in the record and whether or not it was clearly erroneous or affected by error of law.

An individual who leaves work voluntarily must establish good cause for taking that action or else be subject to disqualification under the provisions of Section 28-44-17, which provides:

“28-44-17. Voluntary leaving without good cause. -- An individual who leaves work voluntarily without good cause shall be ineligible for waiting period credit or benefits for the week in which the voluntary quit occurred and until he or she establishes to the satisfaction of the director that he or she has subsequent to that leaving had at least eight (8) weeks of work, and in each of those eight (8) weeks has had earnings of at least twenty (20) times the minimum hourly wage as defined in chapter 12 of this title for performing services in employment for one or more employers subject to chapters 42 – 44 of this title. For the purposes of this section, voluntarily leaving work with good cause shall include sexual harassment against members of either sex. For the purposes of this section, voluntarily leaving work without good cause shall include voluntarily leaving work with an employer to accompany, join or follow his or her spouse in a new locality in connection with the retirement of his or her spouse, or failure by a temporary employee to contact the temporary help agency upon completion of the most recent work assignment to seek additional work unless good cause is shown for said failure; provided, that the temporary help agency gave written notice to the individual that the individual is required to contact the temporary help agency at the completion of the most recent work assignment to seek additional work.”

“[‘E]ligibility for benefit payments [is] not to be forfeited because the termination of the employment was voluntary but only that, being voluntary, it was without good cause.’ Harraka v. Board of Review of Department of Employment Security, 98 R.I. 197, 201, 200 A.2d 595, 597 (1964). See also, §28-44-17. The question of whether an employee had good cause to leave his or her job is, in the first instance, a question of fact. Whitelaw v. Board of Review of the Department of Employment Security, 95 R.I. 154, 157, 185 A.2d 104, 105 (1962). On review, however, “the determination of what circumstances will constitute good cause [is] a question of law to be resolved by this court.” Murphy v. Fascio, 115 R.I. 33, 36, 340 A.2d 137, 139 (1975).” Powell v. Department of Employment Security, Board of Review, 477 A.2d 93, 96.

In this case, the Board adopted the Referee’s findings of facts and conclusions of law in reaching its decision. A review of the entire record demonstrates that there is substantial, probative and credible evidence to support the findings of facts, conclusion and decision of the Board. At the referee’s hearing, the claimant, a witness for the claimant and an employer’s representative gave testimony. The claimant testified:

CL: “I make my pay based on the difference between what the vehicle costs us, between all its associated costs and what I sell it.”

CL: “. . . There had been over a period of time . . . discrepancies . . . from the outlined pay plan that was written and agreed upon by the . . . parties . . . myself, the manager . . . and the owner, Gary Gosselin.”

CL: “Now, I confronted Gary on this. I -- I had actually went to our manager, Jeff Rosa, first, and he said you have to take it up with Gary, and I confronted Gary on this and asked him, inquired why, and he said it was just the way it was.”

CL: “No, he said that the vehicle was worth more than that, and I’m not paying ya that amount of money.”

The claimant’s witness, Maria Izzo, executive assistant to the owner testified that she was responsible for computing sales staff commissions. She testified:

“A. Um, it’s just been my -- the way it was done, I was doing commissions for two and a half years. Um, I would compute them, and I would send them over to Mr. Gosselyn, and he would review them and actually redo them.

Um, and then they were given back to me or I would have to sit with him, um, while he went over some of the things to show me what changes he’d made.

Um, I was asked on quite a few occasions to add in work that was not done to a vehicle to raise the cost of the vehicle so it lessens the commission.

On findings of fact, as to the weight of the evidence, this Court shall not substitute its judgment for that of the administrative agency.

Upon careful review of the evidence, this Court should find that the decision of the Board was not “clearly erroneous in view of the reliable, probative and substantial evidence on the whole record,” and that said decision was not “arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.” Rhode Island General Laws § 42-35-15(g)(5)(6).

I recommend that this Court find that the decision of the Board of Review was made upon lawful procedure and was not affected by error of law. Rhode Island General Laws § 42-35-15(g)(3),(4). Neither was it clearly erroneous in view of the reliable, probative and substantial evidence on the whole record nor arbitrary or capricious. Rhode Island General Laws § 42-35-15(g)(5),(6).

[1] Guarino v. Department of Social Welfare, 122 R.I. 583, 584, 410 A.2d 425 (1980) citing R.I. Gen. Laws § 42-35-15(g)(5).

[2] Cahoone v. Board of Review of the Department of Employment Security, 104 R.I. 503, 246 A.2d 213 (1968).

[3] Cahoone v. Board of Review of Department of Employment Security, 104 R.I. 503, 246 A.2d 213, 215 (1968). See also D'Ambra v. Board of Review, Department of Employment Security, 517 A.2d 1039, 1041 (R.I. 1986).