Princess House, Inc. v. Department of Industry, Labor and Human Relations of State

• Court: Wisconsin Supreme Court
• Writing for the Court: HEFFERNAN; This is a review of a court of appeals decision which affirmed a judgment of the circuit court for Dane county, Richard W. Bardwell; Thus; STEINMETZ
• Citation: Princess House, Inc. v. Department of Industry, Labor and Human Relations of State, 330 N.W.2d 169, 111 Wis.2d 46 (Wis. 1983)
• Decision Date: 01 March 1983
• Docket Number: No. 80-2357,80-2357
• Parties: PRINCESS HOUSE, INC., Plaintiff-Appellant-Petitioner, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS OF the STATE of Wisconsin, Leola Stanford and Dianne Giebel Elmer, Defendants-Respondents.

Page 169

330 N.W.2d 169

111 Wis.2d 46

PRINCESS HOUSE, INC., Plaintiff-Appellant-Petitioner, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS OF the STATE of Wisconsin, Leola Stanford and Dianne Giebel Elmer, Defendants-Respondents.

No. 80-2357.

Supreme Court of Wisconsin.

Argued Nov. 30, 1982.

Decided March 1, 1983.

Frank J. Daily and Matthew J. Flynn, Milwaukee, argued, for plaintiff-appellant-petitioner; Quarles & Brady, Milwaukee, and Carl H. Amon, Jr., and Hale & Dorr, Boston, Mass., of counsel.

Thomas E. Smith, Madison, for Dept. of Industry, Labor and Human relations.

Ronald E. Stauffer, Deborah T. Ashford and Hogan & Hartson, Washington, D.C., Jack R. DeWitt, Douglas L. Flygt and DeWitt, Sundby, Huggett & Schumacher, S.C., Madison, for amicus curiae Direct Selling Assn.

HEFFERNAN, Justice.

This is a review of a court of appeals decision which affirmed a judgment of the circuit court for Dane county, Richard W. Bardwell, Circuit Judge, upholding the decision of the Labor and Industry Review Commission and the underlying determination of its appellate tribunal that Princess House is subject to the provisions of the Wisconsin Unemployment Compensation Act and must make contributions to the unemployment compensation fund. We affirm the decision of the Court of Appeals. ¹

Sec. 108.02(3), Stats., determines an employing unit's liability to make contributions to the fund and also the right of a claimant to receive benefits from the fund.

At issue in this review is the application of the criteria established by the legislature in sec. 108.02(3)(a) and (b)1 and 2, Stats., to certain individuals who are dealers or consultants for Princess House:

"(3) EMPLOYEE. (a) 'Employe' means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b) or (c).

"(b) Paragraph (a) shall not apply to an individual performing services for an employing unit if the employing unit satisfies the department as to both the following conditions:

"1. That such individual has been and will continue to be free from the employing unit's control or direction over the performance of his services both under his contract and in fact; and

"2. That such services have been performed in an independently established trade, business or profession in which the individual is customarily engaged." ²

It is the contention of Princess House that the claimants, Princess House dealers, were not employees of Princess House under sec. 108.02(3), Stats., because they performed no services for Princess House; and even if they were employees under sec. 108.02(3)(a), Princess House was exempt from making contributions, because the employees were free from the controls specified in subsec. (3)(b)1 and because any services performed were in an exempted independently established business as provided in subsec. (3)(b)2.

We have considered each of these contentions in turn; and having done so, we conclude that the decision of the court of appeals must be affirmed.

The parties on this review have extensively briefed the question of the appropriate standard of review. Because the evidentiary facts are undisputed, we ordinarily would conclude that the standard by which such facts are to be reviewed is irrelevant. The position taken by the parties is similar. However, the parties point out that this court has never addressed the standard of review subsequent to the statutory revision of 1977, which added (6) to sec. 102.23, Stats.

Sec. 108.10(4), Stats., authorizes an employer to commence an action for judicial review of a commission decision. The scope of the review is specified to be the same as that set forth in sec. 108.09(7). That latter section provides that:

"(b) Any judicial review ... shall be confined to questions of law, and the provisions of ch. 102 with respect to judicial review of orders and awards shall likewise apply to any decision of the commission reviewed under this section...."

Chapter 102 deals with worker's compensation. Sec. 102.23(6), Stats., adopted in 1977, delineates the authority of a court to review orders of the Commission. That statute provides:

"(6) If the commission's order or award depends on any fact found by the commission, the court shall not substitute its judgment for that of the commission as to the weight or credibility of the evidence on any finding of fact. The court may, however, set aside the commission's order or award and remand the case to the commission if the commission's order or award depends on any material and controverted finding of fact that is not supported by credible and substantial evidence."

Prior to the revision of 1977, there was no explicit statutory direction to the courts in respect to the standard to be utilized in reviewing the fact findings of the Department of Industry, Labor and Human Relations (hereinafter DILHR) in respect to awards under the Worker's Compensation Act or the Unemployment Compensation Act. The only statutory direction appeared in sec. 102.23(1)(d), Stats.1975, that a judgment could be set aside only on the grounds:

"1. That the commission acted without or in excess of its powers.

"2. That the order or award was procured by fraud.

"3. That the findings of fact by the commission do not support the order or award."

These generalized standards were given various interpretations by this court from the time of the enactment of the worker's compensation statute to the present. Essentially, the interpretations have had substantially the same meaning, but the language over the years has revealed a variety of nuances.

We said in International Harvester Co. v. Industrial Comm., 157 Wis. 167, 147 N.W. 53 (1914), that the commission did not have the power to make a fact finding not supported by any evidence whatever. In Heileman Brewing Co. v. Industrial Comm., 161 Wis. 46, 152 N.W. 446 (1915), we said a finding will be reversed only when there is no evidence to support it. In Johnstad v. Lake Superior Terminal & Transfer R. Co., 165 Wis. 499, 162 N.W. 659 (1917), we said we would not upset a finding if well supported by the evidence. In Kolman v. Industrial Comm., 219 Wis. 139, 262 N.W. 622 (1935), we said a court could not disturb the commission's findings if supported by competent credible evidence. In Sauk County v. Industrial Comm., 225 Wis. 179, 273 N.W. 515 (1937), findings of fact were to be upheld if sustained by credible evidence.

In Jasperson v. Industrial Comm., 231 Wis. 142, 285 N.W. 391 (1939), we said a finding of fact must be supported by substantial evidence. Brouwer Realty v. Industrial Comm., 266 Wis. 73, 62 N.W.2d 577 (1954), stated that a finding would be sustained if it were supported by any credible evidence which, if unexplained, would support the finding. In Hills Dry Goods Co. v. Industrial Comm., 217 Wis. 76, 258 N.W. 336 (1935), we held that a finding should be sustained if the basis of evidence presented, which if unanswered, would justify a reasonable person to affirm the existence of the fact in question.

Subsequently, R.T. Madden, Inc., v. ILHR Dept., 43 Wis.2d 528, 169 N.W.2d 73 (1969), attempted to reconcile these variously stated standards of review. In Madden, we said:

"It is our conclusion the test should be whether there is any credible evidence in the record sufficient to support the finding made by the department. The assumption in that test is, of course, that the evidence is relevant, that it is evidentiary in nature and not a conclusion of law, and that it is not so completely discredited by other evidence that a court could find it incredible as a matter of law. This is clearly not the same as a reviewing court's weighing conflicting credible evidence to determine what shall be believed. That is solely within the province of the administrative agency.

"It should also be noted, contrary to appellant's contention, that the duty of the applicant is not to prove his case by a preponderance of the evidence, but merely to produce such credible evidence that the findings will rest upon facts and not upon conjecture or speculation.

"...

"... If there is credible, relevant, and probative evidence and that evidence construed most favorably would justify men of ordinary reason and fairness to make that finding, the evidence is sufficient. A finding should rest upon such evidence and not upon a mere scintilla of evidence or upon conjecture and speculation." Pp. 547-48, 169 N.W.2d 73.

This decisional attempt to give some element of consistency to the standard of review was, in effect, codified in 1977, when sec. 102.23(6), Stats., was enacted. Theretofore, the standard of review was developed by the court inferentially on the basis of the language of sec. 102.23(1)(d). See, Consolidated Papers, Inc., v. ILHR Dept., 76 Wis.2d 210, 215, 251 N.W.2d 69 (1977).

Sec. 102.23(6) is a totally new subsection enacted by ch. 195, Laws of Wisconsin 1977. Pertinent to this review is the language authorizing the court to set aside an award if the requisite finding of fact "is not supported by credible and substantial evidence."

Does this set a new or different standard than that explained and approved in Madden ? We think not. The petitioner, Princess House, appears to contend that, under this standard, the court can no longer look to isolated items of evidence that will sustain a finding, but instead must look to the record as a whole. The petitioner's explanation of the present rule is that:

"... by adding the word 'substantial' to the word 'credible,' the legislature has pushed the standard of review along the continuum to the point where the court must give closer consideration to the record as a whole, and must require a substantial basis for the Commission's opinion."

We think the petitioner's contention is merely an echo of what already has been stated in Madden, supra. Therein, we...