Thursday, March 15, 2018

corporations - corp. officer liability - participation theory

B & R Resources  v. Dept. of Envir. Protection – Cmwlth. Court – 3-15-18

Under Pennsylvania law, a corporate officer can be liable in tort for his own wrongful conduct on behalf of the corporation, even though the corporation is not a sham and there is no basis for piercing the corporate veil. Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 89-90 (Pa. 1983); Francis J. Bernhardt, III, P.C. v. Needleman, 705 A.2d 875, 878 (Pa. Super. 1997); Bank of Landisburg v. Burruss, 524 A.2d 896, 901 (Pa. Super. 1987).

This basis of individual liability, known as the participation theory, is predicated on the corporate officer’s own actions and participation in the corporation’s wrongful conduct, rather than the corporation’s status and his relationship to the corporation. Wicks, 470 A.2d at 89-90. In Wicks, our Supreme Court explained: “The general, if not universal, rule is that an officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor; but that an officer of a corporation who takes no part in the commission of the tort committed by the corporation is not personally liable to third persons for such a tort, nor for the acts of other agents, officers or employees of the corporation in committing it, unless he specifically directed the particular act to be done or participated, or cooperated therein.” …

Liability under this theory attaches only where the corporate officer is an actor who participates in the wrongful acts. Therefore, corporate officers may be held liable for misfeasance. Nevertheless, corporate officers and directors may not be held liable for mere nonfeasance. Thus, the mere averment that a corporate officer should have known the consequences of the liability-creating corporate act is subject to a motion to strike for impertinence and proof of that averment alone is insufficient to impose liability.

Tuesday, March 13, 2018

UC - overpayment - fault - claimant's state of mind

Cumpston v. UCBR – Cmwlth. Court – March 12, 2018 – unreported* memorandum opinion

Held:  Board’s finding that overpayment was due to claimant’s fault was “unsupported by either the record or [the Board’s] own factual findings.

The term “fault” in Section 804(a) of the Law is defined as “an act to which blame, censure, impropriety, shortcoming or culpability attaches.” . . . . A “blameworthy act requires a showing of the actor’s state of mind” and “embodies . . . knowing recklessness or gross negligence.” . . . .A finding of fault “requires conduct ‘of such a degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to the employer.’” . . . . “Conduct designed improperly and intentionally to mislead [the Department] is sufficient to establish a fault overpayment.” . . . .  However, where the claimant’s failure to provide information is due to negligence, mistake, or confusion, he or she cannot be held liable for a fault overpayment . . . .

Here, the Board made no factual findings regarding Claimant’s state of mind; it merely found that she “did not disclose that she refused continued work in a different department.” . . . .This finding, however, is belied by the record. Although Claimant testified that she did not believe she was offered a job, the record establishes that she did, in fact, notify the Department of a discussion about continuing work in another department.  Claimant also testified to these facts at the hearing, and neither the referee nor the Board discredited that portion of Claimant’s testimony

Most significant, perhaps is the Board’s own finding, in addressing the penalty provisions of Section 801 of the Law, that Claimant “did not knowingly make a false statement” to the Department when she applied for benefits.

This case is also reported in the PLAN Legal Update , which is searchable and can be accessed without a password.
*An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

UC - sideline business - net income

Lerch v. UCBR – Cmwlth. Court – March 12, 2018

Held:  The UCBR improperly calculated claimant’s income from a sideline business by failing to deduct all of her reasonable business expenses, instead of the very limited ones authorized by 34 Pa. Code sec. 65.121, which had previously been held to be improper by two court decisions.  The case was remanded with directions to the Board to recalculate claimant’s UC benefits, consistent with the court holdings as to what is “net income.”

- The term “’net earnings’ must have its plain everyday meaning...[which is] what remains after deducting expenses.”
- “The Board is not free to continue following a regulation that an appellate court has deemed unauthorized.”

Friday, March 09, 2018

UC - able and available - sec. 401(d)(1)

Cotto v. UCBR – Cmwlth. Court – MARCH 9, 2018 – unreported memorandum opinion*

The court affirmed the UCBR conclusion that the claimant did not show that she had an attachment to the job market,  in that she had failed to indicate what job that she could perform in which she could miss work on a regular basis, have a modified work schedule when she does attend work, attend frequent doctor’s appointments, and sleep as necessary throughout the day. R.R. at 179a. We discern no error in the UCBR’s conclusion.

Claimant’s restrictions so limited her availability “as to effectively remove [her] from the labor market.” Rhode, 28 A.3d at 243 (quoting Harwood, 531 A.2d at 826).   The court was sympathetic to Claimant’s health restrictions, but held that she did not produce any evidence of what job she is capable of performing within her restrictions or “that there is a reasonable opportunity for securing such work[.]”   The UCBR properly determined Claimant was not able and available for work. Rhode, 28 A.3d at 243.


From the opinion

Section 401(d)(1) of the UC Law provides, in part, that ‘[c]ompensation shall be payable to any employee who is or becomes unemployed and who . . . [i]s able to work and available for suitable work.’ The burden of proving availability for suitable work is on the claimant. An unemployed worker who registers for unemployment is presumed to be able and available for work.  This presumption is rebuttable by evidence that a claimant’s physical condition limits the type of work he is available to accept or that he has voluntarily placed other restrictions on the type of job he is willing to accept. If the presumption of availability is rebutted, the burden shifts to the claimant to produce evidence that he is able to do some type of work and that there is a reasonable opportunity for securing such work.

‘The real question is whether [the c]laimant has imposed conditions on his employment which so limit his availability as to effectively remove him from the labor market.’ Harwood v. UCBR, . . . 531 A.2d 823, 826 ([Pa. Cmwlth.] 1987). Rhode v. UCBR, 28 A.3d 237, 242-43 (Pa. Cmwlth. 2011)  “‘[T]he determination of whether a claimant is available for work as required by Section 401(d)[(1)] of the Law is a question of fact for the [UCBR.]’” Craig v. UCBR, 442 A.2d 400, 401 (Pa. Cmwlth. 1982) (quoting Goodwin v. UCBR, 378 A.2d 1308, 1310 (Pa. Cmwlth. 1977)). Further, “the [UCBR] is the ultimate fact-finder in [UC] matters and is empowered to resolve all conflicts in evidence, witness credibility, and weight accorded the evidence. . . . Where substantial evidence supports the [UCBR’s] findings, they are conclusive on appeal.” Ductmate Indus., Inc. v.  UCBR, 949 A.2d 338, 342 (Pa. Cmwlth. 2008) (citations omitted).

*An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

Tuesday, March 06, 2018

UC - findings, reasons - both parties absent from hearing

Kremis v. UCBR – Cmwlth. Court – March 5, 2018 – unreported memorandum decision*

The court remanded the case for a) further findings of facts and reasons, so that the court could exercise appellate review OR b) order a new hearing, where
            - neither party attended the referee hearing
            - the referee based his decision, for the employer, solely on documents
            - the referee made only two findings of fact – 1) claimant work dates, and 2) that claimant quit his job
            - the referee did not offer any reasons for his finding that claimant quit his job.

From the opinion:

Absence of parties – Neither party appeared at the hearing.  “When that occurs, 34 Pa. Code sec. 101.51 provides:  If any party duly notified of the date, hour and place of a hearing fails to attend a hearing without proper cause, the hearing may be held in his absence. In the absence of all parties, the decision may be based upon the pertinent available records. (Emphasis added.) See also Gadsden v. Unemployment Compensation Board of Review, 479 A.2d 74 (Pa. Cmwlth. 1984) (holding that 34 Pa. Code § 101.51, taken together with Section 502 of the Law,4 allows referees to decide the merits of a UC claim, even in the absence of both parties)

Findings and reasons:   “While 34 Pa. Code § 101.51 provides that in the absence of the parties, the Referee may make a decision based upon the pertinent available records, the Referee is still not excused from making findings and explaining the rationale for the determination. Eckert v. UCBR, 483 A.2d 1059 (Pa. Cmwlth. 1984). Where findings are not made which may be legally determinative of a claimant’s eligibility for unemployment benefits, it is not possible for this Court to perform appellate review. McGoldrick v. UCBR, 526 A.2d 461, 463 (Pa. Cmwlth. 1987). . . . Neither the Referee nor the Board explained why they accepted Employer’s version of events rather than Claimant’s version that he was terminated without just cause.”

*An unreported Commonwealth Court case may not be cited binding precedent but can be cited for its persuasive value.  See 210 Pa. Code § 69.414(b) and Pa. R.A.P.  3716

UC - willful misconduct - employer rule v. statute

Crabbe v. UCBR – Cmwlth. Court – February 28, 2018 – en banc – 28 pp.

Held: Claimant committed willful misconduct by failing to get her background checks updated by the date specified in her employer’s regulations, July 1, rather than the deadline specified in the relevant statute, December 31. 

Majority -- The majority found that claimant, the manager for a Police Athletic League facility,  had waived the argument about the disparity between the ER rule and the statute and that, even if she hadn’t, she committed willful misconduct by violating the ER rule.  The majority relied heavily on the fact that claimant had received numerous reminders about the need to renew her background checks---even though date specified by the ER and the UC authorities was not consistent with the date in the relevant statute.

 Dissent---The two dissenters “would hold that in a willful misconduct case, the failure of the employer to explain why its new rule deviates from the predicate statutory requirements is fatal to its attempts to defeat unemployment compensation for the terminated employee. Stated differently, [they]I would reverse the denial of unemployment benefits because Employer failed to explain why its new rule was reasonable in light of the deviation from the predicate statutory requirements.” 

The dissent also noted that ‘[a]t the time of termination, Claimant had two of the three clearances required. Further, she had paperwork establishing that she applied for the third clearance. In fact, she applied with the help of her supervisor. Claimant physically received the last clearance after she was terminated. . . .However, there were no findings by the UC authorities, and hence no fact-based discussion by the Majority, as to why Claimant’s “paper trail” or “proof of applications” did not satisfy Employer’s new rule. To the contrary, the UC authorities, after noting Employer’s “paper trail” rule . . . . found that Claimant was escorted from the building . . . .did not have all the clearances submitted to the employer as required under the Law.” . . . .The UC authorities made no findings whatsoever as to the dates of Claimant’s applications or her ‘paper trail.’”

The dissent also noted that the “ ‘proof of applications’ question was specifically raised in Claimant’s appeal to the Board, but the Board never answered it. . . . .(“Claimant had previously been told that as long as she documented her continuing efforts to get the certification, she would not be terminated. [Employer] terminated her despite this promise.”). This unexplained gap in factual findings, together with the referee’s erroneous legal statement as to the statutory compliance date for Claimant, cause real concern whether the UC authorities’ misunderstanding of the predicate statutory requirements clouded their judgment as to conduct amounting to willful misconduct.”

Without citing any supporting case law, both the dissent and majority recognized that “an employer’s prerogative to impose rules which are more stringent than those set by the General Assembly.”

Friday, March 02, 2018

employment - licensure - cosmetologist - criminal conviction - mitigating evidence

Bentley v. State Board of Cosmetology – Cmwlth. Court – February 28, 2018

Held:  Decision of Board suspending cosmetologist’s license for three years reversed and case remanded, with directions to the Board to consider the unrebutted evidence in mitigation that she presented.

Employee has been licensed since 2007.  In 2013 and 2014, she was convicted of felony drug offenses, for which she served two years in prison.  She disclosed the convictions to the Board.  She was re-employed within a couple of months after her release.   

A year after her release, the Board directed her to show cause why her license shouldn’t be suspended.  Her current employer offered strong supportive evidence.  The Board relied solely on the criminal records.  The hearing examiner found her credible and entered eleven (11) findings about the mitigating evidence.  The Board did not adopt any of the findings, stating only that the mitigating evidence was “modest” and otherwise giving it no consideration.   The Board did not explain if it disagreed with the mitigation findings or why it did not adopt them.  

A professional licensing board may use a hearing examiner to take evidence, but the ultimate fact finder is the board. Pellizzeri v. Bureau of Professional and Occupational Affairs, 856 A.2d 297, 301 (Pa. Cmwlth. 2004). An administrative agency is not required to adopt the hearing examiner’s proposed findings of fact. See Bucks County Public Intermediate Unit No. 22 v. Department of Education, 529 A.2d 1201 (Pa. Cmwlth. 1987). However, in reaching its decision, the Board must review the entire record and consider all evidence, including evidence of mitigating circumstances. See Markel v. Bureau of Professional and Occupational Affairs, State Board of Vehicle Manufacturers, Dealers and Salespersons, (Pa. Cmwlth., No. 1800 C.D. 2013, filed May 8, 2014) (unreported). Here, the Board’s adjudication recited that it “reviewed the entire record,” but its “conclusory recital cannot be reconciled with the Board’s adjudication, which does not address the hearing examiner’s extensive findings on and discussion of  the mitigating evidence.”

Before the Board can suspend a cosmetologist’s license, it must give the person notice of the charges and the opportunity for a hearing. See Section 13(a) of the Beauty Culture Law, 63 P.S. §519(a). 4 The purpose of the hearing is to allow licensees an opportunity to “defend against the allegations in the Order to Show Cause or to present evidence in mitigation of any penalty which may be imposed upon [them] or any of [their] licenses, certifications, registrations, permits or other authorizations to practice [cosmetology].” Order to Show Cause, 2/29/2016, at 5-6; R.R. 6a-7a (emphasis added). Where a licensee presents mitigating evidence, the Board must consider that evidence. See Nguyen v. Bureau of Professional and Occupational Affairs, State Board of Cosmetology, 53 A.3d 100, 109 (Pa. Cmwlth. 2012) (when imposing discipline, Board must compare mitigating evidence of record to seriousness of misconduct). The procedures in the Beauty Culture Law apply even though the substantive basis for the Bureau’s enforcement action was CHRIA. The Board suspended Bentley’s license under Section 9124(c)(1) of Criminal History Record Information Act (CHRIA), 18 Pa. C.S. §9121 et seq. , which is a general statute that applies to every Pennsylvania licensing agency.

By contrast, the statute by which the employee holds a license is the Beauty Culture Law, and it authorizes a license suspension only for misconduct related to the practice of cosmetology.  63 P.S. §519(a) (emphasis added). This has been construed to mean that a cosmetologist’s “license can be revoked ‘for gross incompetency or dishonest or unethical practices’ but, like the [Barber License] Law, does not include any reference to revocation for criminal convictions.” Kirkpatrick v. Bureau of Professional and Occupational Affairs, State Board of Barber Examiners, 117 A.3d 1286, 1293 (Pa. Cmwlth. 2015) (internal quotation omitted).   

CHRIA is a general law that authorizes, but does not require, an agency to suspend a license upon the licensee’s felony conviction. CHRIA does not provide standards for the exercise of the agency’s discretion under Section 9124(c)(1). By contrast, the specific, and more relevant statute, is the Beauty Culture Law, and it does not authorize any discipline for criminal convictions unrelated to the practice of the profession. This makes a licensee’s evidence of mitigating circumstances critical where presented.

Here, the Board did not take any steps to sanction the employee immediately upon her conviction. Instead, it waited for over a year after her release from prison to take any action, from which it had the discretion to forbear. The Board’s capricious disregard of the mitigation evidence constitutes a violation of its responsibility to review, with care, such evidence.   Accordingly, the court vacated the Board’s adjudication and remanded the case tothe Board to consider the evidence of mitigation.

Thursday, February 22, 2018

consumer - UTPCPL - non-resident plaintiff

Danganan, et al. v. Guardian Protection Services – Pa. S.Ct. – February 21, 2018

Non-resident plaintiff permitted to sue business headquartered in Pennsylvania, despite lack of nexus between this state and the transaction/injury in question. 

Plaintiff’s claims were brought exclusively under the Pa. consumer protection law, 73 P.S. 201-1, et seq., under which there is “no textual basis” for imposing any nexus requirement.  There are no residency or geographic restrictions in the statutory definitions of “person” or “trade and commerce.” 

In this case, a homeowner in Washinton, D.C., entered into a three-year contract with a Pennsylvania company for home security services.  Before the end of the contractual term, the homeowner moved to California and notified the company of his intent to cancel the contract.   When the company refused to honor the cancellation and continued to bill the homeowner, the latter sued in CCP Philadelphia.  The company moved to dismiss the case, claiming that non-Pennsylvania residents could only sue under UTPCPL if there was a sufficient nexus between the transaction/injury and the forum state (Pennsylvania), such that the improper conduct primarily and substantially occurred in Pennsylvania.  The Court rejected this position, as set out above.

Wednesday, February 14, 2018

contracts - statute of limitations - contract under seal

Driscoll v. Arena – Pa. Super.  – February 12, 2018  (2-1)

Held:  A contract which does not have “seal” or “L.S.” or other language to indicate that it was signed under seal is subject to the regular contract statute of limitation of four (4) years,  42 Pa. C.S. 55245(a)(8) and not the extended 20-years SOL for contracts under seal, 42 Pa. C.S. 55245(b)(1).

That result is not changed by the inclusion of a paragraph entitled “waiver” which includes the following language: ““Borrower intends this to be a sealed instrument and to be legally bound thereby.”

The court recognized that contracts under seal are a “vestige of the past.” 

Ed. note:  What the court did not say is that the seal practice is a trap for all but the very most sophisticated parties, and that virtually no one has the slightest idea of what “seal” means or does.   This seems like something that could be challenged in an appropriate case.  See, e.g., Investors Loan Corp.v. Perez, 74 D & C 2d149 (C.P.Adams 1975).


If the case is old, the link may have become stale and may not work, but you can use the case name, court, and date to find the opinion in another source (e.g., Westlaw, Lexis, Google Scholar)