Opinion
No. 161 C.D. 2011
09-04-2012
Christopher Nicolais, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
This case was assigned to this panel before January 7, 2012, when Judge Pellegrini became President Judge.
This case was re-assigned to the authoring judge on July 23, 2012.
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE BROBSON
Petitioner Christopher Nicolais (Claimant) petitions for review of the order of the Unemployment Compensation Board of Review (Board). The Board affirmed an order of a Referee that determined Claimant ineligible for benefits pursuant to Section 402(b) of the Unemployment Compensation Law (Law), relating to voluntarily quitting employment without cause of a necessitous and compelling nature. For the reasons set forth below, we affirm the Board's order.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. § 802(b). Section 402(b) of the Law provides that an employee shall be ineligible for compensation for any week "[i]n which his unemployment is due to voluntarily leaving work without cause of a necessitous and compelling nature, irrespective of whether or not such work is in 'employment' as defined in this act."
Claimant applied for unemployment compensation benefits after he voluntarily resigned from his position as controller for Jaydor Company (Employer). The Altoona UC Service Center (Service Center) granted Claimant's application for benefits, and Employer appealed the Service Center's determination. A Referee conducted a hearing, during which Claimant and Employer presented testimony regarding the circumstances of Claimant's employment and resignation.
Following the hearing, the Referee reversed the Service Center's determination, finding Claimant ineligible for unemployment compensation based on Section 402(b) of the Law. (Certified Record (C.R.), Item No. 14.) The Referee reasoned that Claimant failed to demonstrate that he had necessitous and compelling reason to leave his job and failed to make the required "good faith and reasonable effort to maintain the employment relationship as he did." (Id.)
Claimant appealed to the Board, which affirmed the Referee's determination and denied Claimant unemployment compensation benefits. (Board's Opinion, attached to Petitioner's brief.) In so doing, the Board issued the following findings of fact:
1. The claimant was last employed as a controller by the Jaydor Company from November 2009 and his last day of work was June 11, 2010.
2. The employer was experiencing financial difficulties as it was not being paid by builders during the economic downturn.
3. The claimant was in charge of all of the company finances and spoke with the employer about the companies financial difficulties.(Board's Opinion.) The Board also found that:
4. At times the employer would ask its employees not to cash their checks until the end of the day on payday.
5. The employer did not miss any payroll dates.
6. The employer was experiencing difficulty in paying vendors.
7. The claimant did not consider the employer's practices to pay the owners ethical when it was in such financial difficulty.
8. The claimant did not express to the employer that he considered its practices to be unethical or that its financial difficulties were causing him to consider quitting his employment.
9. On June 14, 2010, the claimant called off sick.
10. On June 15, 2010, the claimant quit his job without notice because he was concerned over the state of the company's finances and did not consider its practices to be ethical.
[T]he Claimant quit his employment without notice because he was concerned over the state of the company's finances and did not consider its practices to be ethical. The employer was experiencing financial difficulties, but had not missed payroll for its employees or its subcontractors. The employer did have difficulty paying its vendors. The claimant alleged that the employer's taxes were not paid, but did not offer any specifics. The claimant also did not inform the employer that the state of employer's finances or practices were causing him concern with his job or that he was thinking of quitting his job.(Board's Opinion at 2.)
Based upon the above facts, the Board concluded that Claimant failed to sustain his burden to show cause of a necessitous and compelling nature to quit and failed to communicate his problems to Employer in order to provide Employer with an opportunity to accommodate the problems. Thus, Claimant was not eligible for benefits under Section 402(b) of the Law. Claimant then petitioned this Court for review.
On appeal, Claimant identifies only one issue in his statement of questions involved:
Though Claimant initiated this appeal pro se, counsel entered his appearance for Claimant on May 4, 2011, secured an extension of time to file a brief on Claimant's behalf, and filed that brief on May 21, 2011.
Whether a corporate employer that engages in financial dealings which the corporate controller, responsible for corporate finances, believes unethical and illegal is necessitous and compelling justification for that controller to voluntarily leave his job and remain eligible for unemployment compensation benefits.(Petitioner's brief at 4.) As noted above, however, the Board denied Claimant benefits for two reasons. First, the Board concluded that Claimant's reason for quitting was not necessitous and compelling. Second, and most important to our analysis here, the Board concluded that Claimant did not make a reasonable effort to preserve his employment by notifying Employer of his concern that Employer's practices were illegal or unethical. Under Rule 2116(a) of the Pennsylvania Rules of Appellate Procedure, "[n]o question will be considered unless it is stated in the statement of questions involved or is fairly suggested thereby."
With the exception of eight words on page 9 of his brief, Claimant devotes the three pages of his written appellate argument to the issue stated in its statement of questions involved—i.e., whether the reason Claimant quit his employment was necessitous and compelling. The eight words on page 9 of Claimant's brief appear in the context of Claimant's argument on that question: "[Claimant] had no choice but to quit after exhausting all other avenues with his employer." (Emphasis added.) Claimant, however, does not expand upon this point anywhere in his brief. See Pa. R.A.P. 2119; see Purple Orchid, Inc. v. Pa. State Police, 572 Pa. 171, 176-77, 813 A.2d 801, 804 (2002) (holding issue waived by failure to address and develop in appellate brief).
The Board expressly found in finding of fact number 8 that "[C]laimant did not express to [E]mployer that he considered its practices to be unethical or that its financial difficulties were causing him to consider quitting his employment." (Board's Opinion, Finding of Fact (F.F.) No. 8.) The Board also found in finding of fact number 9 that Claimant "quit his job without notice." (Id., F.F. No. 9.) "In unemployment compensation proceedings, the Board is the ultimate fact-finder, empowered to determine the credibility of witnesses and resolve conflicts in evidence." Lee v. Unemployment Comp. Bd. of Review, 33 A.3d 717, 721 (Pa. Cmwlth. 2011). In cases like this one, where a claimant has failed to challenge any specific findings of fact, this Court has held that the Board's findings are conclusive on appeal. Salamak v. Unemployment Comp. Bd. of Review, 497 A.2d 951, 954 (Pa. Cmwlth. 1985).
Even if we were to interpret Claimant's petition for review and brief as challenging whether substantial evidence exists to support Board finding of fact number 8 and the legal conclusion that flows from that finding, Claimant should not succeed on that issue. "We are to review the case in the light most favorable to the party who prevailed before the Board, drawing all logical and reasonable inferences from the testimony in order to determine if substantial evidence exists." Earnest v. Unemployment Comp. Bd. of Review, 30 A.3d 1249, 1253 n.5 (Pa. Cmwlth. 2011). Employer testified that Claimant did not notify Employer of his ethical concerns prior to quitting. (Certified Record (C.R.), Item No. 13 at pp. 13-15.) Claimant testified to the contrary. Moreover, Employer's testimony constitutes substantial evidence of record to support the Board's finding that "[C]laimant did not express to [E]mployer that he considered its practices to be unethical or that its financial difficulties were causing him to consider quitting his employment." (Board's opinion, F.F. No. 8.)
We reach this conclusion without considering extrarecord documents, i.e. emails, which Claimant improperly submitted with this appeal and which were not part of the record made by the Referee, because extrarecord materials may not be considered on appeal. Tener v. Unemployment Comp. Bd. of Review, 586 A.2d 733, 738 (Pa. Cmwlth. 1990). Nevertheless, we note that an examination of the emails in question indicate only that Claimant informed Employer of general and specific financial difficulties the company faced, not that Claimant had ethical or legal concerns regarding Employer's financial practices or that Claimant was contemplating quitting his employment due to those concerns. Thus, even if we were to consider the emails, they do not substantiate Claimant's contention that he notified Employer of his concerns that Employer's financial practices were unethical or illegal.
The only issue preserved by Claimant for our review is the question of whether Claimant's reason for quitting his job was necessitous and compelling. But in order to be eligible for benefits under Section 402(b) of the Law, a claimant must do more:
To show a necessitous and compelling cause, the claimant must establish that: (1) circumstances existed that produced real and substantial pressure to terminate employment; (2) like circumstances would compel a reasonable person to act in the same manner; (3) he acted with ordinary common sense; and (4) he made a reasonable effort to preserve his employment.Fiedler v. Unemployment Comp. Bd. of Review, 18 A.3d 459, 461 (Pa. Cmwlth. 2011) (emphasis added). Although Claimant's brief could be read liberally as an argument that he established the first three proof points, it contains no argument upon which this Court can or should disturb any of the Board's factual findings or its ultimate legal conclusion: "Based on the record before it the Board must conclude that the claimant has not sustained his burden to show cause of a necessitous and compelling nature to quit his job nor did he communicate the problem to the employer to give the employer the opportunity to accommodate the claimant's problem." (Board's Opinion at 2 (emphasis added).)
Accordingly, we affirm the order of the Board.
/s/_________
P. KEVIN BROBSON, Judge
ORDER
AND NOW, this 4th day of September, 2012, the order of the Unemployment Compensation Board of Review is hereby AFFIRMED.
/s/_________
P. KEVIN BROBSON, Judge BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge OPINION NOT REPORTED DISSENTING OPINION BY JUDGE McCULLOUGH
Because a corporate controller who quits his job with a financially troubled employer rather than succumb to continued pressure to engage in unethical and/or illegal activity (inter alia, issue checks with knowledge of insufficient funds) has necessitous and compelling reasons for leaving his employment, I am compelled to dissent from the Majority's decision to deny unemployment compensation benefits.
Clearly, given the foregoing, Claimant has established the requisite "necessitous and compelling" reason for leaving his employment so as to be eligible for benefits under the Unemployment Compensation Law (Law).
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §§751-914.
Claimant Christopher Nicolais seeks review of the July 8, 2011 order of the Unemployment Compensation Board of Review (Board) which denied him benefits on the basis of section 402(b) of the Law, 43 P.S. §802(b). I respectfully submit that the Board's decision is erroneous, and the Majority's adaptation of it, I fear, places employees in the untenable position of having to choose whether to engage in illegal and/or unethical activities on behalf of their employers or exercise prudence and terminate their employment at the risk of forfeiting unemployment benefits. Moreover, even if Claimant's employer did not order him to engage in illegal acts, I believe that Claimant followed a prudent course of action in leaving his employment. Accordingly, I would reverse the Board's order.
Claimant commenced working for the Jaydor Company (Employer) in August 2004, eventually becoming its controller. He left Employer in August 2008 to pursue a business venture and returned to Employer as its controller in November 2009. He continued as Employer's controller until he resigned on June 15, 2010. He filed for unemployment benefits thereafter.
The local service center granted Claimant's application for benefits. As per its notice of determination, the local job center found, inter alia, that Claimant quit because of Employer's business ethics and concluded that Claimant satisfied his burden under section 402(b) of the Law to demonstrate that he had a necessitous and compelling reason for quitting and that he had exhausted all alternatives prior to quitting.
Employer appealed that decision, and a referee conducted a hearing at which Claimant, appearing pro se, and two Employer witnesses (including its owner) testified. The referee reversed the local job center's determination and held that Claimant was ineligible for benefits. Claimant, again pro se, appealed to the Board, which affirmed the referee's decision.
The Board found that Employer was experiencing financial difficulties due to the economic downturn, that Claimant was responsible for Employer's finances, and that he had spoken with Employer about its financial difficulties. (Findings of Fact Nos. 2, 3.) Although Employer did not miss any payroll dates, these difficulties included asking employees not to cash their checks until the end of the day on payday and difficulty in paying vendors. (Findings of Fact Nos. 4, 5, 6.) The Board also found that Claimant did not consider Employer's practices of paying its owners to be ethical when it was in such financial difficulty. (Finding of Fact No. 7.) However, the Board found that Claimant did not express to Employer that he considered its practices to be unethical or that its financial difficulties were causing him to consider quitting his employment. (Finding of Fact No. 8.) The Board found that Claimant quit his job without notice "because he was concerned over the state of Employer's finances and did not consider its practices to be ethical." (Finding of Fact No. 10.)
Based on the foregoing, the Board concluded:
In this case, the claimant quit his employment without notice because he was concerned over the state of the company's finances and did not consider its practices to be ethical. The employer was experiencing financial difficulties, but had not missed payroll for its employees or subcontractors. The employer did have difficulty paying its vendors. The claimant alleged that the employer's taxes were not paid, but did not offer any specifics. The claimant also did not inform the employer that the state of employer's finances or practices were causing him concern with his job or that he was thinking of quitting his job. Based on the record before it the Board must conclude that the claimant has not sustained his burden to show cause of a
necessitous and compelling nature to quit his job nor did he communicate the problem to the employer to give the employer the opportunity to accommodate the claimant's problem. Therefore, the Board determines that the claimant is not eligible for benefits under Section 402(b) of the Law.(Board op. at 2.) Accordingly, the Board affirmed the referee's decision and Claimant filed the instant appeal.
Our scope of review is limited to determining whether constitutional rights were violated, whether the adjudication is in accordance with the law, or whether necessary findings of fact are supported by substantial evidence. Section 704 of the Administrative Agency Law, 2 Pa. C.S. §704; Shrum v. Unemployment Compensation Board of Review, 690 A.2d 796, 799 n. 3 (Pa. Cmwlth.), appeal denied, 548 Pa. 663, 698 A.2d 69 (1997).
On appeal, Claimant contends that the Board erred in determining that he did not have necessitous and compelling cause to quit his employment. I agree.
Necessitous and compelling cause is found where the claimant demonstrates that: circumstances existed which produced real and substantial pressure to terminate the claimant's employment; like circumstances would compel a reasonable person to act in the same manner; the claimant acted with ordinary common sense; and the claimant made a reasonable effort to preserve his employment. Brown v. Unemployment Compensation Board of Review, 780 A.2d 885 (Pa. Cmwlth. 2001).
A claimant has a necessitous and compelling cause to terminate employment where the work demanded by his employer will result in the express violation of law, regulation, or professional ethics or where the duties required by his employer so affect the claimant's professional and personal integrity that a voluntary quit is justified. Ayres v. Unemployment Compensation Board of Review, 598 A.2d 1083, 1087 (Pa. Cmwlth. 1991). Anxiety and emotional distress caused by a claimant's employment can also result in necessitous and compelling cause to terminate employment. Judd v. Unemployment Compensation Board of Review, 496 A.2d 1377, 1379 (Pa. Cmwlth. 1985).
In Share v. Commonwealth, 512 A.2d 794 (Pa. Cmwlth. 1986), this Court reversed the Board's denial of unemployment benefits to an accountant who quit her job because her supervisor directed her to record a $1,200 sale item at $1,000 and a $7,500 Commonwealth appropriation at $7,000. The claimant, Ms. Share, refused, recorded the proper amounts and notified the employer's audit committee. She voluntarily quit her position before any action was taken by the audit committee.
Although Ms. Share quit before the employer's audit committee could take action, we reversed the Board's denial of benefits on the basis of our prior decision in Zinman v. Unemployment Compensation Board of Review, 305 A.2d 380 (Pa. Cmwlth. 1973). In so doing, this Court stated:
[W]e believe no more need be said than that a request to an accountant to enter inaccurate financial information on the books and records of an employer so affects that accountant's personal integrity that the accountant is able to terminate employment voluntarily and still remain eligible for benefits. Even if the directives of the supervisor did not order the employee to engage in an illegal act, these directives were such that we believe the claimant followed a prudent course in leaving the employer's employ and that benefits be allowed.Share, 512 A.2d at 122 (emphasis added).
Similarly, in Zinman, the claimant quit and refused to return to work because she disapproved of several newly instituted office practices, including that of recording telephone conversations, even though the employer "exempted" the claimant from having to record her calls. This Court again reversed the Board's denial of benefits, holding that the claimant's refusal to work was for cause of a compelling nature even though she was to be exempted from the practice she objected to. We noted that "[t]he practice was at best highly questionable and the avoidance of association with an enterprise so engaged seems to us to have been the path of prudence." Zinman, 305 A.2d at 381.
A review of the evidence in this case shows that Claimant may have been in a situation far more dire and troublesome than the claimants in either Share or Zinman. Claimant testified that the "budget was never followed by anybody," that "[m]ore checks were sent out than we had the money to send out every week and, in turn, the checks would bounce, they'd come back" and that Claimant "didn't want anything to do with any issues with the company due to the fallout from checks bouncing." (N.T. 10/15/10 at 6.) Claimant also testified about a litany of serious concerns with the manner in which Employer conducted its business, and he specifically stated that he was required to send out checks knowing that some of them were going to bounce, that he was the one physically putting the checks in the mail, and that he discussed these issues with Employer and was told that he, Claimant, was to take care of it. (Id. at 6-7.) Claimant offered additional evidence, including e-mails and his resignation letter, to demonstrate that he exercised reasonable efforts to preserve his employment, i.e., that he told Employer of his qualms about the business practices and the need to address the financial issues and suggested remedies such as taking out a loan and not using company money for the owner's purchase of cars. (Id. at 6-9; Exhibit 15, Certified Record (C.R.) Item No. 7 at 4.)
"N.T. 10/15/10" refers to the transcript of the referee's hearing. --------
Significantly, neither Share nor Zinman required the claimant to establish more in the way of notice. Nonetheless, in this case the record supports Claimant's efforts to preserve employment. Employer's owner even testified that Claimant "was expressing some anguish to Dolores" about the issues, but not directly to him. Significantly, Dolores Martela was the bookkeeper. (N.T. at 1.) Further, she testified she could not verify the owner's claim that Claimant did not discuss issues with him. (N.T. at 14-16.) Neither the referee nor the Board found this testimony incredible. In Fleegler v. Unemployment Compensation Board of Review, 528 A.2d 264 (Pa. Cmwlth. 1987), this Court held that it was sufficient for the claimant to bring his safety concerns to his dispatcher and it was not necessary to notify the terminal manager, and I believe that the same rationale should apply here.
Moreover, a number of the 43 exhibits admitted at the referee's hearing corroborate Claimant's testimony. Exhibit 15 is Claimant's e-mail resignation notice to Employer and includes the following passages:
"[F]rom the company's financial standpoint no one wants to look at the p&l statements and realize the financial shape the company is in (the receivables are much lower than the payable for example)"; and(C.R. Item No. 7 at 4.)
"[H]ow I am told to send out checks to suppliers that we do not have money after payroll and Amarr is in the budget for the week."
Other exhibits, which were not objected to or challenged by the Employer at the referee's hearing, demonstrate the seriousness of Employer's financial situation. Exhibit 24, dated June 11, 2010, (Claimant's last day on the job) is an e-mail from one Steven Spohn, AVP Commercial Lending for TD Bank, regarding a returned overdraft of Employer's; it references the bank's inability to process a loan payment and seeks to process that payment from another account so as to "get you off of the bank's delinquency report." (C.R. Item No. 7 at 13.) Another e-mail dated June 1, 2010, Exhibit 25, from Keith B. Good of Amarr Garage Doors to Claimant and Employer's owner states that a purchase order pick-up is on hold. (Id. at 14.) Employer's credit issues with Amarr are also identified in Exhibit 26, an e-mail from Amarr's Gami Lloyd dated June 7, 2010, to Employer's owner and Claimant. (Id. at 15.) Exhibit 27 is a June 7, 2010, e-mail advising that a $6,431.00 order with Pioneer Loading Dock Equipment is on hold. (Id. at 16.) Exhibit 29 is a June 8, 2010, e-mail declining Employer's application for credit, and Exhibit 30 is a June 1, 2010, D&B alert concerning Employer. (Id. at 19, 20.)
Exhibit 35 is a May 25, 2010, e-mail addressed from Claimant to Employer advising of "payables coming up not listed" with a total in excess of $200,000.00. (C.R. Item No. 7 at 25.) While Exhibit 36 is not a financial matter per se, the subject matter is potentially much more serious - an employee purportedly driving a company vehicle with a DUI incident. (Id. at 26.) Exhibit 39 is an e-mail from another employee to Claimant questioning what is going on with Employer and indicating that this employee must inform a third party why "we are blowing off their jobs in MD and DE." (Id. at 29.)
In affirming the referee's decision, the Board made its own findings of fact. These findings of fact, insofar as they go, mimic those of the referee, but they do not include the following additional factual findings of the referee:
4. In his e-mail resignation notice to Employer, Claimant stated that he had received several phone calls from contractors stating that they were told "that this whole ordeal was caused by (Claimant) over the past six months regarding the employer's financial standpoint".
* * *
6. Claimant apologized in the resignation e-mail for the short notice while mentioning that he could not be in a high tension environment that is constantly uncertain.(Referee's Findings of Fact Nos. 4, 6, and 10.) However, without explanation, the Board capriciously disregarded the foregoing evidence as well as the referee's additional findings of fact in disposing of Claimant's appeal. Furthermore, the Board's statement that Employer did not miss payroll for its subcontractors is belied by the record, specifically, the emails reflecting that orders were on hold and that jobs were being "blown off."
* * *
10. Employer's financial situation was causing Claimant stress on his job.
Pursuant to our decisions in Share and Zinmam, I believe that the Board erred in concluding Claimant did not establish necessitous and compelling cause for leaving his employment. No more need be said than that a request to a controller to enter inaccurate financial information or draft checks with insufficient funds so affects his personal integrity that he is able to terminate employment voluntarily and remain eligible for benefits. Notwithstanding the entitlement to benefits under these circumstances, I also believe the evidence is sufficient to demonstrate that Claimant made a reasonable effort to inform Employer that his personal integrity was at issue and that Employer ignored Claimant's repeated pleas to conduct its business in a more ethical manner. Accordingly, I would reverse.
/s/_________
PATRICIA A. McCULLOUGH, Judge