Haggard v. Division of Employment Sec.

Decision Date20 November 2007
Docket NumberNo. SC 88577.,SC 88577.
Citation238 S.W.3d 151
PartiesMary Jeanette HAGGARD d/b/a Jenny's Housecleaning, and Jenny's Housecleaning, Inc., Appellants, v. DIVISION OF EMPLOYMENT SECURITY, Respondent.
CourtMissouri Supreme Court

Joel I. Krieger, Kansas City, MO, for Appellants.

Marilyn Green, Division of Employment Security, Jeremiah W. (Jay) Nixon, Atty. Gen., James R. Layton, State Solicitor, Jefferson City, MO, for Respondent.

Thomas M. Larson, Deputy United States Atty., Kansas City, MO, Peter D. Keisler, John F. Wood, Catherine L. Hanaway, Douglas N. Letter, Jeffrica Jenkins Lee, Washington, D.C., for Amicus Curiae.

MARY R. RUSSELL, Judge.

Mary Jeanette Haggard, doing business as Jenny's Housecleaning and Jenny's Housecleaning, Inc. (collectively "Haggard"), appeals the decision of the Labor and Industrial Relations Commission ("LIRC") finding that her workers were employees who were paid "wages" under Missouri employment security law. This Court took transfer of the case after opinion by the court of appeals. MO. CONST. art. V, sec. 10. The question before this Court is whether DES's representation by a non-lawyer in its employment security proceedings violates Rule 5.29(c) and voids the decision. Although this Court finds that DES was improperly represented, there is no error in the LIRC's decision and it is affirmed.

I. Background

Haggard owns a residential housecleaning service. She engages others to work in the business as house cleaners. In 2005, the Division of Employment Security ("DES") determined that the monies Haggard paid her workers in performance of cleaning services were "wages" covered by Missouri's employment security law.1 As such, the DES determined that Haggard was subject to payment of employment taxes. Haggard appealed to DES's appeals tribunal, where she appeared with counsel. DES was represented in the appeal by a non-lawyer managerial employee. The appeals tribunal affirmed DES's decision, and Haggard appealed to the LIRC. The LIRC affirmed, and Haggard seeks review of its decision.

II. Standard of Review

Article V, section 18 provides for judicial review of the LIRC's decision to determine if it is "supported by competent and substantial evidence upon the whole record." Section 288.210, RSMo 2000,2 provides for judicial review of employment security decisions and states in relevant part:

The findings of the commission as to the facts, if supported by competent and substantial evidence and in the absence of fraud, shall be conclusive, and the jurisdiction of the appellate court shall be confined to questions of law. The court, on appeal, may modify, reverse, remand for rehearing, or set aside the decision of the commission 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.

Section 288.210.

III. Was DES required to be represented by an attorney?

Initially, Haggard maintains that the LIRC erred in affirming the DES appeals tribunal's decision because DES was improperly represented by a non-lawyer managerial employee. She argues that this DES employee violated the prohibition against the unauthorized practice of law when he asked questions of witnesses and made a closing statement on DES's behalf. She contends that DES was required to be represented by a lawyer because it is not the type of entity to which Rule 5.29(c) provides an exception for the unauthorized practice of law. She asserts that the tribunal's decision is void and should be set aside because DES was improperly represented.

A. Preventing the Unauthorized Practice of Law

This Court regulates the practice of law and, although the General Assembly cannot interfere with this Court's power to determine what is the unauthorized practice of law, the legislature has provided penalties for acts determined to be the unauthorized practice of law. Reed v. Labor and Indus. Relations Comm'n, 789 S.W.2d 19, 20 (Mo. banc 1990); see section 484.010.3 This Court has said:

One is engaged in the practice of law when he, for a valuable consideration appears in a representative capacity as an advocate in proceedings pending or prospective, before any court, commissioner, referee, board, body, committee, or commission constituted by law or authorized to settle controversies, and there, in such representative capacity, performs any act or acts for the purpose of obtaining or defending the rights of their clients under the law.

Reed, 789 S.W.2d at 21 (internal citations omitted).

The unauthorized practice of law is prohibited so that the public is protected for provision of services deemed to require special fitness and training by those not having needed legal qualifications. Bray v. Brooks, 41 S.W.3d 7, 13 (Mo.App.2001). One cannot consent to the unauthorized practice of law, such that there can be no waiver of protections of section 484.010. See id.

B. DES must be represented by counsel before its appeals tribunal

This Court promulgated Rule 5.29 to address the unauthorized practice of law, but carved out an exception for representation in employment security proceedings. Rule 5.29(c) provides:

In any employment security proceeding before the state division of employment security, a corporation, partnership or other business entity authorized by law may be represented by an officer of the entity or a person in the full time employment of the entity in a managerial capacity who shall be afforded the opportunity to participate in the proceeding.

Rule 5.29(c).4

At issue in Haggard's case is whether DES is included under Rule 5.29(c)'s exception permitting non-lawyer representation in employment security proceedings. DES contends that it may be considered a "business entity" under Rule 5.29(c), such that it need not be represented by legal counsel in its employment security cases. It asserts that it has been effectively represented by non-lawyer managerial employees for many years.

The express language of Rule 5.29(c) provides an exception for only a "corporation, partnership or other business entity authorized by law." DES is not a "business entity authorized by law"—it is a state agency. As such, DES is not entitled to be represented by a non-lawyer employee pursuant to Rule 5.29(c) at any of its proceedings.5

C. Failure to object to use of non-attorney

The parties disagree what effect DES's lack of attorney representation has on Haggard's case. Haggard asserts that the LIRC was without jurisdiction and its decision was void under Reed because DES was not represented by counsel before the appeals tribunal. DES maintains that the LIRC's jurisdiction was not defeated because DES was represented by a non-lawyer.

In Reed, this Court held that a corporation was required to be represented by an attorney in an unemployment compensation benefits case before the LIRC. 789 S.W.2d at 23. This Court stated that matters pending at the time the Reed opinion was issued would be unaffected, but new filings that were filed by non-attorneys would be considered untimely filed and null and void. Id. Reed opined that the LIRC should have rejected any applications for review by non-lawyers. Id. at 23-24. This Court's decision in Reed was followed by the promulgation of Rule 5.29(c), such that corporations may now be represented by non-lawyers in employment security matters.

This case is distinguishable from Reed because the application for review in this case was filed by Haggard's counsel, not by the party who was represented by a non-lawyer. Even were that not the case, however, this Court is not persuaded by Haggard's assertions that the LIRC's decision is null and void pursuant to Reed. This Court rejects any interpretation of Reed that suggests DES's failure to comply with Rule 5.29(c) is a jurisdictional issue. To the extent that Reed suggests that a judgment is null and void solely because a party to the decision was represented by a non-lawyer, it is no longer to be followed. Contrary to Haggard's assertions, nothing mandates dismissal of this action because DES was improperly represented by a non-lawyer unless the error was raised and preserved.

During her hearing, Haggard made no objection to DES's representation by its non-lawyer managerial employee. Haggard's counsel only raised concerns that the DES employee would serve as DES's representative at the hearing as well as its chief witness. Haggard did not raise the issue of the employee's non-lawyer status until she sought judicial review of the LIRC's decision. Her failure to object at the time of the hearing waived this issue.6 She is not entitled to relief in her employment security case because DES was not properly represented.

Haggard also cites to Bray, 41 S.W.3d at 13, for the proposition that the unauthorized practice of law is not subject to waiver, consent, or lack of objection by the victim. The objection in this case, however, is not from the victim. DES claims it is unaffected by its failure to have a lawyer at Haggard's hearing. Consequently, in this case there are not concerns about undermining the purposes behind the prohibitions against the unauthorized practice of law. In any event, since representation by one not authorized to practice law is not jurisdictional and does not render a decision void, if it is not raised and preserved, it is waived.

IV. Was the LIRC's decision supported by competent and substantial evidence?

Haggard argues that the LIRC erred in finding that her workers were employees and not independent contractors.

Section 288.034.5, RSMo Supp.2006, provides:

Service performed by an individual for remuneration shall be deemed to be employment subject to [Missouri's employment security] law unless it is shown to the satisfaction of the division that such services...

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