Coday v. Div. of Emp't Sec.

• Decision Date: 25 February 2014
• Docket Number: No. SC93361.,SC93361.
• Citation: 423 S.W.3d 775
• Court: Missouri Supreme Court
• Parties: Melissa CODAY, Appellant, v. DIVISION OF EMPLOYMENT SECURITY, Respondent.

423 S.W.3d 775

Melissa CODAY, Appellant,

v.DIVISION OF EMPLOYMENT SECURITY, Respondent.

No. SC93361.

Supreme Court of Missouri, En Banc.

Feb. 25, 2014.

Martin L. Perron and Maria V. Perron, The Perron Law Firm PC, St. Louis, for Coday.

Bart A. Matanic, Jefferson City, for Division of Employment Security.

PAUL C. WILSON, Judge.

Claimant Melissa Coday received $320 in unemployment benefits and $25 in federal stimulus benefits for each of the 48 weeks from May 9, 2009, to March 6, 2010, and $320 in “waiting week” benefits for the week of March 13, 2010. The Labor and Industrial Relations Commission (“the Commission”) subsequently found that she willfully failed to disclose that she was working during this period and, therefore, that she must return part of her benefits and pay certain penalties. This Court granted transfer pursuant to Rule 83.04 and has jurisdiction over the appeal. See Mo. Const. art. V, § 10. Finding sufficient competent evidence in the record for all of the Commission's actions, except for the amount of one of the penalties, the Court remands with instructions to reassess that penalty. The Commission's decisions are affirmed in all other respects.

I. Facts

Coday worked at Sullivan Private Label Company for 20 years before the financial crisis in 2008 threatened her compensation and job security. In anticipation of a reduced salary, Coday began working part-time for Design Design, a wholesale supplier of holiday and other print goods, in July 2008. Coday continued working for Design Design after she was laid off from Sullivan in May 2009 and up until she again obtained full-time employment in March 2010. On average, she worked 10 to 15 hours a week, receiving orders from retail customers and submitting them to Design Design. Most of her work was done from home, but occasionally she visited customers to deliver catalogues, show new merchandise, and take orders.

For her services, Design Design paid Coday 14 percent of the orders paid for by customers in her area, regardless of whether Coday placed the order or the customer ordered directly from Design Design. Coday was not paid for any order, however, until the order was shipped and paid for. Because Design Design offered extended payment terms to certain customers, it could be several months before Coday was paid for some orders. As she worked, Coday knew the time she spent soliciting or relaying orders, the value of each order, and her expected compensation, but she did not know when and whether an entire order would ship, or when and whether that customer would pay in full. On or about the 20th of each month, Design Design would direct deposit Coday's compensation based on orders for which it had received payment during the preceding month and would specify the orders for which Coday was being paid. Coday did not maintain records of her hours or the basis for compensation expected or received, nor did she submit any such evidence from Design Design. As a result, Coday's own statements about her work and Design Design's records of her monthly gross pay were the only evidence in the record of her employment and earnings during this period.

Even though she was working for and being paid by Design Design, Coday filed weekly claims for unemployment benefits with the Division of Employment Security (“Division”) from May 2009 to March 2010. The Division's online system, through which Coday filed most of her claims, prompted her each week with the yes-or-no question: “Did you do any work this week?” Coday claims she initially sought guidance from the Division by phone and in person, but, having failed to reach anyone who could answer her questions, Coday admits that she answered “no” to that question each week. Consequently, she was not prompted for—and did not provide—her earnings information.

Several months after Coday had stopped claiming benefits, the Division conducted a routine audit and discovered Coday's employment with Design Design. Following this discovery, the Division issued five rulings pursuant to section 288.380.¹ First, the Division determined that Coday willfully failed to disclose earnings and other facts material to her claims from May 3 to October 3, 2009, which resulted in her being overpaid benefits during that period (“Overpayment I”). As directed by the statute, the Division also assessed a penalty in the amount of 25 percent of the overpaid benefits (“Penalty I”). The Division later determined that Coday willfully failed to disclose earnings and other facts, resulting in an overpayment of benefits for the period from October 4, 2009, to March 6, 2010 (“Overpayment II”), and imposed a penalty for that period (“Penalty II”). Citing Overpayment I and Penalty I as “a prior fraud overpayment,” however, the Division assessed Penalty II in the amount of 100 percent (rather than 25 percent) of Overpayment II. Finally, the Division determined that Coday had been overpaid benefits for the week of March 13, 2010, her “waiting week” (“Waiting Week Overpayment”). ²

Ultimately, the Division's Appeals Tribunal and the Commission reviewed and upheldeach of the Division's determinations.³ Coday appealed the Commission's five decisions under section 288.210, RSMo 2000.

II. Standard of review

Courts review agency decisions to determine whether they are “supported by competent and substantial evidence upon the whole record.” Mo. Const. art. V, § 18; Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 222–23 (Mo. banc 2003). If supported by such evidence (and in the absence of fraud), the Commission's findings of fact are conclusive, “the jurisdiction of the appellate court shall be confined to questions of law,” and the court may modify, reverse, remand for rehearing, or set aside the Commission's decision “on the following grounds and no other:”

(1) That the commission acted without or in excess of its powers;

(2) That the decision was procured by fraud;

(3) That the facts found by the commission do not support the award; or

(4) That there was no sufficient competent evidence in the record to warrant the making of the award.

§ 288.210.

III. Analysis

Coday argues that no competent and substantial evidence supports the Commission's decisions. Coday challenges the substance of the Division's findings that her violations were willful, its method of prorating her monthly wages, and its imposition of penalties. Coday also contends that the Division erred procedurally by determining Overpayment II, Penalty II and the Waiting Week Overpayment more than a year after her benefit year had ended, and that the Commission erred by denying her appeals of those determinations as untimely. Lastly, Coday contests the Commission's ruling that she was ineligible for waiting week benefits because that decision was predicated on the errors alleged above. Except for her objection to the amount of Penalty II, the Court rejects each of Coday's arguments.

A. Coday fraudulently and willfully failed to disclose facts material to her claims

The Commission's decision that Coday intentionally misreported to the Division and willfully failed to disclose earnings and other facts material to her claims was supported by competent and substantial evidence.⁴ Findings of intentional misrepresentation and willfulness are governed by section 288.380, which provides, in pertinent part:

9. (1) Any individual or employer who receives or denies unemployment benefits by intentionally misrepresenting, misstating, or failing to disclose any materialfact has committed fraud. After the discovery of facts indicating fraud, a deputy shall make a written determination that the individual obtained or denied unemployment benefits by fraud and that the individual must promptly repay the unemployment benefits to the fund.

[....]

10. An individual who willfully fails to disclose amounts earned during any week with respect to which benefits are claimed by him or her, willfully fails to disclose or has falsified as to any fact which would have disqualified him or her or rendered him or her ineligible for benefits during such week, or willfully fails to disclose a material fact or makes a false statement or representation in order to obtain or increase any benefit pursuant to this chapter shall forfeit all of his or her benefit rights [....]

§ 288.380. Coday maintains that she could not have acted fraudulently or willfully because she lacked the specific intent to obtain benefits in violation of the law ⁵ and that she reasonably was ignorant of the proper manner to report her hours and earnings to the Division.

First, Coday misstates the meaning of “willfulness” under section 288.380. “Willfulness” generally does not require a specific intent to break the law. Instead, it requires only that a person intend the consequences of his or her acts or act with a wrongful purpose. In the civil context applicable here, “willfulness” suggests only that an action is voluntary or intentional, rather than inadvertent or accidental. Coday's claim that she lacked the specific intent to obtain benefits unlawfully, therefore, is irrelevant. What matters is that she intended to and did obtain benefits by voluntarily, consciously, or intentionally failing to disclose her work for (and earnings from) Design Design.

Coday's invocation of Welsh v. Mentor Mgmt., Inc., 357 S.W.3d 277 (Mo.App.2012), and Tenge v. Washington Grp. Int'l, Inc., 333 S.W.3d 492 (Mo.App.2011) likewise is misplaced. Those cases involved determinations of work-related misconduct barring benefits under section 288.050.2, which may be “an act of wanton or willful disregard of the employer's interest” or “negligence in such degree or recurrence as to manifest culpability, wrongful intent or evil design.” § 288.030.1(23). This standard is notably narrower than the standard for willfulness under section 288.380, and that is the way it must be; most incidents of workplace misconduct bear a remote relationship, if any, to the unemployment...