Superior Glass, Inc. v. Johnson, A16-1433

• Decision Date: 01 May 2017
• Docket Number: A16-1504,A16-1433
• Citation: 896 N.W.2d 137
• Parties: SUPERIOR GLASS, INC., Relator, v. Lucas JOHNSON, Respondent (A16-1433), Shawn Strang, Respondent (A16-1504), Department of Employment and Economic Development, Respondent.
• Court: Minnesota Court of Appeals

896 N.W.2d 137

SUPERIOR GLASS, INC., Relator,

v. Lucas JOHNSON, Respondent (A16-1433),Shawn Strang, Respondent (A16-1504),Department of Employment and Economic Development, Respondent.

A16-1433

A16-1504

Court of Appeals of Minnesota.

Filed May 1, 2017

Steven C. Overom, Christopher S. Davis, Jr., Maki & Overom, Ltd., Duluth, Minnesota (for relator).

Lucas Johnson, Wright, Minnesota (pro se respondent).

Shawn Strang, Cloquet, Minnesota (pro se respondent).

Lee B. Nelson, Keri A. Phillips, Department of Employment and Economic Development, St. Paul, Minnesota (for respondent department).

Considered and decided by Kirk, Presiding Judge; Schellhas, Judge; and Bratvold, Judge.

OPINION

SCHELLHAS, Judge

In this consolidated certiorari appeal, relator argues that unemployment-law judges (1) erred in determining that its employees are eligible for unemployment-insurance benefit accounts in Minnesota, and (2) applied Minn. Stat. § 268.035, subd. 12(a), to result in double taxation of relator in violation of the Dormant Commerce Clause. We affirm.

FACTS

Relator Superior Glass Inc. is a Wisconsin company with company headquarters in Superior, Wisconsin. Respondent-employees Lucas Johnson and Shawn Strang performed work for Superior Glass in both Minnesota and Wisconsin during 2015 and 2016, but Superior Glass laid them off for a period of time in 2016. Both employees applied for unemployment-insurance benefits with respondent Minnesota Department of Employment and Economic Development (DEED) because they lived in Minnesota.

The employees earned wages during 2015 and 2016, and in support of their benefits applications, provided DEED with detailed logs of hours worked, broken down by day and by job. Based on that information, DEED determined how many hours each employee had worked in Minnesota and established base periods for the determination of benefits. See Minn. Stat. § 268.035, subd. 4 (2016) (defining "base period" and explaining how to determine base period). DEED determined that both employees were eligible to receive unemployment-insurance benefits because both worked more than 50% of their hours in Minnesota during certain calendar quarters in the base periods and therefore performed their employment primarily in Minnesota during those quarters. DEED further determined that, for the quarters during which Johnson and Strang performed their employment primarily in Minnesota, their entire employment with Superior Glass was "covered employment," as defined in Minn. Stat. § 268.035, subd. 12(a)(1)(i).¹ As to each employee, DEED notified Superior Glass that "[u]nder Minnesota Statute section 268.047, subd. 1, any unemployment benefits paid will be used in computing the future unemployment tax rate of SUPERIOR GLASS."

Superior Glass appealed DEED's determinations of eligibility. Unemployment-law judges (ULJs) conducted telephone hearings, affirmed DEED's determinations, and affirmed their decisions after reconsideration. This consolidated certiorari appeal follows.

ISSUES

I. Did the ULJs err in determining that the employees' entire employment during calendar quarters in which the employees performed work primarily in Minnesota was "covered employment," as defined in Minn. Stat. § 268.035, subd. 12(a)(1)(i) ?

II. Does the ULJs' application of Minn. Stat. § 268.035, subd. 12(a), subject Superior Glass to double taxation in violation of the Dormant Commerce Clause?

ANALYSIS

I

Superior Glass does not contest the ULJs' findings that Johnson and Strang worked more than 50% of their hours in Minnesota during certain calendar quarters. Rather, Superior Glass argues that the ULJs misinterpreted "covered employment," as defined in Minn. Stat. § 268.035, subd. 12(a), and therefore erred in determining that Johnson and Strang were eligible for unemployment-insurance benefit accounts in Minnesota.

We may affirm the ULJs' decisions or remand the cases for further proceedings, or we may reverse or modify the decisions if the substantial rights of a relator may have been prejudiced because the decisions are, among other things, "in violation of constitutional provisions" or "in excess of the statutory authority or jurisdiction of the department." Minn. Stat. § 268.105, subd. 7(d)(1), (2) (2016). We are not bound by the ULJs' conclusions of law but are free to exercise our independent judgment. Markel v. City of Circle Pines , 479 N.W.2d 382, 384 (Minn. 1992).

These consolidated appeals require us to interpret Minn. Stat. § 268.035, subd. 12(a). "Statutory interpretation is a question of law that [appellate courts] review de novo." Engfer v. Gen. Dynamics Advanced Info. Sys., Inc. , 869 N.W.2d 295, 300 (Minn. 2015). "[The] goal in interpreting a state statute is to ascertain and effectuate the intent of the Legislature." Id. (citing Minn. Stat. § 645.16 (2014) ).

The supreme court has noted that "the unemployment compensation statute is remedial in nature and must be liberally construed to effectuate the public policy set out in Minn. Stat. § 268.03, which states that the unemployment benefits provisions are to be used for the benefit of persons unemployed through no fault of their own." Jenkins v. Am. Express Fin. Corp. , 721 N.W.2d 286, 289 (Minn. 2006). "Unemployment benefits are paid from state funds and are not considered ... as paid by an employer." Minn. Stat. § 268.069, subd. 2 (2016). "Unemployment insurance taxes ... accrue and become payable by each employer for each calendar year on the taxable wages that the employer paid to employees in covered employment ...." Minn. Stat. § 268.051, subd. 1(a) (2016) (emphasis added); see also Minn. Stat. § 268.035, subd. 23(a) (explaining the method the commissioner must use to "calculate the state's average annual wage and the state's average weekly wage"), (b) ("For purposes of calculating the amount of taxable wages, the state's average annual wage applies to the calendar year following the calculation.") (2016).

Minnesota Statutes section 268.035, subdivision 12(a), defines "covered employment." The portion of the statute pertinent to this case provides that:

(a) "Covered employment" means the following unless excluded as "noncovered employment" under subdivision 20:

(1) an employee's entire employment during the calendar quarter if:

(i) the employment during the quarter is performed primarily in Minnesota;

Minn. Stat. § 268.035, subd. 12(a)(1)(i) (emphasis added). In its reply brief, Superior Glass suggests that the statute is ambiguous based on information on DEED's website. But Superior Glass did not argue ambiguity in its principal brief. Generally, issues not raised in an appealing party's principal brief cannot be raised in a reply brief and may be considered forfeited. Moorhead Econ. Dev. Auth. v. Anda , 789 N.W.2d 860, 887 (Minn. 2010). In any event, we agree with DEED that the statute is not ambiguous.

"Statutory language is ambiguous only if, as applied to the facts of the particular case, it is susceptible to more than one reasonable interpretation." Engfer , 869 N.W.2d at 300. "If the statutory language is unambiguous, [appellate courts] must enforce the plain meaning of the statute and not explore the spirit or purpose of the law." Id. "[Appellate courts] give words and phrases their plain and ordinary meaning." Id. Minnesota Statutes section 268.035 does not define the word "primarily." "To determine the plain meaning of a word, [appellate courts] often consider dictionary definitions." Shire v. Rosemount, Inc. , 875 N.W.2d 289, 292 (Minn. 2016). The dictionary defines "primarily" as "[c]hiefly; mainly" or "at first; originally." The American Heritage Dictionary of the English Language 1393 (4th ed. 2006). One definition refers to quantity and the other focuses on the sequence of events.

Reading "primarily" in the context of Minn. Stat. § 268.035, subd. 12(a)(1)(i), we conclude that the only reasonable interpretation of "primarily" is "[c]hiefly; mainly" because the context of Minn. Stat. § 268.035, subd. 12(a)(1)(i), suggests a quantitative, not sequential, meaning. See Cocchiarella v. Driggs , 884 N.W.2d 621, 625 (Minn. 2016) ("When a word has a variety of meanings, [appellate courts] examine the context in which the word appears."). We further conclude that, as applied to the facts of this case, "primarily" is not susceptible to more than one reasonable interpretation.

Applying the unambiguous quantitative meaning of "primarily"—chiefly or mainly, we conclude that an employee's entire employment during the calendar quarter is "covered employment" under Minn. Stat. § 268.035, subd. 12(a)(1)(i), if the employment is performed chiefly or mainly in Minnesota. Because Johnson and Strang performed more than 50% of their employment in Minnesota during certain calendar quarters, they performed their employment chiefly or mainly in Minnesota during those quarters. The ULJs therefore properly determined that Johnson and Strang performed their employment primarily in Minnesota during the subject quarters.

Superior Glass nevertheless argues that Johnson's and Strang's employment cannot be "covered employment" because Minnesota's statutory definition of "covered employment" must be read alongside "Localization of Work Provisions" that are attached to a 2004 Unemployment Insurance Program Letter from the U.S. Department of Labor to state workforce agencies (localization provisions). See U.S. DEPT. OF LABOR, Unemployment Insurance Program Letter No. 20-04 (May 10, 2004), https://wdr.doleta.gov/directives/attach/UIPL20-04.cfm. Superior Glass also argues that information on DEED's website should be read together with the localization provisions because "the language in the statute ... can be traced back [to] the Federal Localization of Work Provisions." Indeed, DEED's website reflects a previous version of Minn. Stat. § 268.035, subd. 12(a)(1), as follows:

When an employee performs services in Minnesota and at least one other state, use the following information to determine whether wages paid to the worker must

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