Schulte v. Transportation Unlimited, Inc., C8-83-1072

• Decision Date: 21 September 1984
• Docket Number: No. C8-83-1072,C8-83-1072
• Citation: 354 N.W.2d 830
• Parties: John SCHULTE, Relator, v. TRANSPORTATION UNLIMITED, INC. and Commissioner of Economic Security, Respondents.
• Court: Minnesota Supreme Court

Page 830

354 N.W.2d 830

John SCHULTE, Relator, v. TRANSPORTATION UNLIMITED, INC. and Commissioner of Economic

Security, Respondents.

No. C8-83-1072.

Supreme Court of Minnesota.

Sept. 21, 1984.

Syllabus by the Court

1. A notice to a discharged worker informing him that his new employer had appealed a determination of the worker's eligibility for unemployment compensation violated due process protections when it failed to apprise the employee that he could be liable for benefits previously paid and any repayment required would be charged against future unemployment compensation claims.

Valerie J. Bogart, Minneapolis, Minn., for relator.

Transportation Unlimited, Inc., pro se.

Hubert H. Humphrey, III, Atty. Gen., Laura E. Mattson, St. Paul, for respondents.

Considered and decided by the court en banc without oral argument.

TODD, Justice.

Jon Schulte filed for and received unemployment compensation after being discharged by Transportation Unlimited, Inc. He received benefits from September 25, 1982 to February 5, 1983 when he returned to work. On February 3, 1983 Schulte received a notice of appeal by Transportation Unlimited, Inc. which he ignored since he was returning to work. In May of 1983 Schulte again was unemployed. He sought benefits which were denied because of a determination in the prior appeal that he was not entitled to benefits. Schulte appealed the denial of benefits and sought to reopen the prior proceedings. The commissioner denied the appeal. We reverse.

Schulte was employed by Transportation Unlimited, Inc., a truck leasing company, from August 1981 until September 25, 1982 as an over-the-road truck driver. Schulte was based in Minneapolis but received his assignments from a company client, the Firestone Company. He was discharged by Transportation for allegedly logging in his log book in a manner not in compliance with Department of Transportation regulations. Schulte argued at the hearing that this practice was not only condoned but expected of drivers so they could circumvent regulations which made trucking less profitable.

Schulte was determined eligible to receive unemployment compensation benefits on October 21, 1982. He received benefits for four months until February 5, 1983 and then returned to work. In the meantime Schulte's Ohio employer appealed and Schulte received a notice for a hearing in Ohio on February 3, 1983 (scheduled for the employer's convenience) and one in Minnesota on March 30, 1983. Since Schulte had returned to work he saw no need to attend either hearing. The appeal tribunal, in Schulte's absence, reversed the determination of the claims deputy, and concluded Schulte was discharged for misconduct. Schulte, again, saw no need to continue these proceedings and, therefore, did not appeal since he was gainfully re-employed.

In May 1983, Schulte again became unemployed and applied for benefits. The Department of Economic Security sent him a Notice of Overpayment on June 1, 1983 which stated that he owed the unemployment compensation fund $3,312.00 for all benefits erroneously paid to him. The notice also stated that his new benefits would be withheld until this amount was fully recovered. This is undisputably the first time Schulte received a notice regarding liability for an overpayment.

On June 8, 1983, Schulte appealed the overpayment notice as allowed by Chapter 268 and additionally requested a reopening of the appeal tribunal hearing on the merits.

On July 14, 1983, the commissioner denied Schulte's request to reopen because it was not made within the statutory time limit for appeals, Minn.Stat. Sec. 268.10, subd. 5 (1982), and dismissed the appeal for lack of jurisdiction. Schulte seeks a reversal of this decision and a remand for a de novo hearing before the appeal tribunal.

Schulte maintains he was inadequately notified of the consequences for failing to follow up subsequent appeals reversing an initial determination of eligibility for benefits. He argues the notice apprising him of an appeal is constitutionally defective unless it meaningfully describes what is at stake if the initial decision is reversed. The notice, he contends, should contain language advising persons that a reversal will result in automatic liability for repayment of benefits previously paid and received.

The issue presented is whether a discharged employee is denied due process of law when a notice reversing a grant of unemployment benefits fails to apprise him that he would be liable for benefits previously paid and any repayment required would be charged against future unemployment claims.

Two notices are involved in this dispute and are subject to this discussion. The first is the notice that an appeal to the appeals tribunal was being taken from the determination made by the claims deputy. The second is the notice of determination by the appeals tribunal stating that Schulte could appeal its reversal of the claims deputy. Neither notice informed Schulte that as a consequence of this reversal he would be required to repay benefits previously paid, although Minn.Stat. Sec. 268.10, subd. 2(1) (1982) provides that if a determination favorable to relator is reversed on appeal "any benefits paid under the award of such initial determination * * * shall be deemed erroneous payments." Minn.Stat. Sec. 268.18, subds. 1, 4 (1982) authorize the commissioner to collect overpayment by civil action or by deducting future unemployment compensation benefits payable to an individual within a six-year period.

Unemployment benefits are an entitlement protected by the procedural due process requirements of the fourteenth amendment. See Ross v. Horn, 598 F.2d 1312, 1317-18 (3d Cir.1979), cert. denied, 448 U.S. 906, 100 S.Ct. 3048, 65 L.Ed.2d 1136 (1980); Graves v. Meystrik, 425 F.Supp. 40 (E.D.Mo.1977), aff'd mem., 431 U.S. 910, 97 S.Ct. 2164, 53 L.Ed.2d 220 (1977). Having determined in this case that due process applies, "the question remains what process is due." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972).

The individual's interests and the agency's interests must be balanced in each case to determine whether due process requires additional or different procedures. See generally, Marshaw, J., The Supreme Court's Due Process Calculus for Administrative Adjudication in Matthews v. Eldridge: Three Factors in Search of a Theory of Value, 44 U.Chi.L.Rev. 28 (1976). Adequacy of the notice is challenged here. Schulte argues that knowledge of what is at stake is needed to make an intelligent decision as to whether it is worth the time and effort to attend appellate hearings. In support of this proposition he quotes Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950) which held:

This right to be heard has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest. * * * An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. * * * The notice must be of such nature as reasonably to convey the required information * * * and it must afford a reasonable time for those interested to make their appearance. * * *

Id. at 314, 70 S.Ct. at 657 (emphasis added and citations omitted).

The cryptic due process language underscored above is relied upon by Schulte to establish that the consequences of proposed governmental action must be communicated so that a person knows whether to "appear or default, acquiesce or contest." Without knowing the specific consequences of proposed governmental action, a person cannot make an informed choice. One federal court addressed the adequacy of notice in the context of the federal food stamp program. Willis v. Lascaris, 499 F.Supp. 749 (N.D.N.Y.1980). In Willis, a county department of social services proposed to reduce the amount of food stamps to all recipients since a public assistance heat allowance was being given to the recipients. The notice to the recipients stated the above information and notified them that a hearing could be requested. Id. at 751. Finally, the notice alluded to the possibility that free legal advice might be available. Id.

The principal challenge to the notice was that it violated due process since it failed to state the amount, if any, a food stamp recipient's allotment would be reduced. The notice also did not contain sufficient information to enable recipients to appreciate whether the department's computation of their food stamp allotment, upon adding the heat allowance, was accurate. Id. at 753. Analyzing the notice given, the court followed and quoted the balancing test enunciated in Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970):

[t]he extent to which procedural due process must be afforded the recipient is influenced by the extent to which he may...