Sharon Anderson, Relator v. YUM Design, LLC, Department of Employment and Economic Development

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-1876
Sharon Anderson,
Relator,
vs.
YUM Design, LLC,
Respondent,
Department of Employment and Economic Development,
Respondent
Filed July 25, 2016
Affirmed
Worke, Judge
Department of Employment and Economic Development
File No. 33702439-4
Munazza Humayun, Prior Lake, Minnesota (for relator)
Patrick Gerard Knight, Berns Knight, P.A., Plymouth, Minnesota (for respondent
employer)
Lee B. Nelson, Department of Employment and Economic Development, St. Paul,
Minnesota (for respondent department)
Considered and decided by Hooten, Presiding Judge; Worke, Judge; and Smith,
Tracy M., Judge.
UNPUBLISHED OPINION
WORKE, Judge
Relator challenges an unemployment-law judge’s (ULJ) decision that she is
ineligible for unemployment benefits because she was discharged for the employment
misconduct of starting a business competitive with her employer. We affirm.
FACTS
Respondent-employer YUM Design, LLC runs a home-manager business and
stages homes that are on the market. A home manager lives in a home while it is on the
market to maintain upkeep and prepare it for sale. The staging business predictably
follows the ebbs and flows of the real-estate market; some months are busier than others.
In August 2013, relator Sharon Anderson started as a home manager for YUM.
Shortly thereafter, YUM’s president, Karen Galler, enlarged the scope of Anderson’s
position. Because Anderson would have access to confidential information, she was
required to sign a non-compete agreement, which she did in September 2013. By the
latter part of 2014, Anderson was a secondary stager.
In December 2014, Anderson gave very little notice for a vacation, which
inconvenienced YUM. After Anderson’s vacation, Galler offered her less work because
other people were available to do the work and she felt that Anderson was unhappy with
the employment.
In early 2015, Galler saw an advertisement for a new staging business that
included a picture of Anderson. On March 9, 2015, Galler asked Anderson to terminate
her competing business. After Anderson stated that she had no intention of terminating
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her business, Galler discharged Anderson and asked her to return the key she had to
YUM’s warehouse.
Anderson applied for unemployment benefits with respondent Department of
Employment and Economic Development (DEED), claiming that she had been
discharged for violating a non-compete agreement after seeking new work when her
hours were reduced. DEED initially concluded that Anderson was eligible for
unemployment benefits, and YUM appealed. A ULJ held a telephone hearing, with the
stated purpose of gathering evidence to determine whether Anderson was discharged for
employment misconduct.1
Anderson testified that she did not quit her employment; instead, “[Galler] just
said she didn’t want [her] anymore.” Anderson testified that she started her staging
business in February 2015, because business at YUM had significantly dropped. She also
wanted more control of the business and her schedule. Despite acknowledging that she
did staging at YUM and does staging for her own business, Anderson testified that she
did not believe that she was a competitor because YUM also does the home-management
program and her new business does not. Anderson also stated that Galler seemed to be
focusing more on selling real estate than on staging, leading her to believe that Galler was
going to discontinue staging altogether.
The ULJ found that Galler discharged Anderson on March 9, 2015, after Anderson
refused to terminate her business that directly competed with YUM. The ULJ concluded
1
The ULJ also considered whether Anderson was an employee or an independent
contractor, but that is not at issue on appeal.
3
that Anderson was discharged for employment misconduct and ineligible for
unemployment benefits.
Anderson requested reconsideration, arguing that the non-compete agreement was
invalid and that she was not in competition with YUM because YUM “no longer had any
viable staging business with which to compete.” Anderson submitted “additional
evidence,” including a statement that she had been “effectively laid off” after working
few hours in November 2014, and had been “constructively laid off . . . on December 1,
2014,” after being offered only limited work. A ULJ noted the claims Anderson raised in
her request for reconsideration, but determined that Anderson’s decision to start a
competitive business amounted to employment misconduct regardless of whether the
non-compete agreement was valid because Anderson’s conduct breached a duty of
loyalty to her employer. The ULJ found Galler’s testimony credible because it was
“straightforward, direct, and certain”; conversely, the ULJ found Anderson’s testimony
“less certain” and “vague.” Anderson petitioned for a writ of certiorari.
DECISION
We may affirm, modify, or reverse the decision of the ULJ or remand the case for
further proceedings if the substantial rights of the relator may have been prejudiced
because the findings, inferences, or decision are unsupported by substantial evidence in
the record, or are arbitrary or capricious. Minn. Stat. § 268.105, subd. 7(d)(5)-(6) (Supp.
2015).
We view the ULJ’s factual findings in the light most favorable to the decision and
will not disturb them provided that evidence substantially sustains them. Rowan v.
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Dream It, Inc., 812 N.W.2d 879, 882 (Minn. App. 2012). Substantial evidence is
“(1) such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more
than any evidence; or (5) the evidence considered in its entirety.” Minn. Ctr. for Envtl.
Advocacy v. Minn. Pollution Control Agency, 644 N.W.2d 457, 466 (Minn. 2002).
Credibility determinations are the exclusive province of the ULJ. Skarhus v. Davanni’s
Inc., 721 N.W.2d 340, 345 (Minn. App. 2006).
Issue raised
Anderson attempts to divert our attention from the issue of misconduct by
suggesting that she was laid off. Anderson claims that “[t]he date of discharge means the
difference between eligibility and ineligibility”—if she was laid off in early February
2015, she is eligible for unemployment benefits, but if she was discharged on March 9,
2015, for starting a competing business, she is ineligible for unemployment benefits. She
claims that she is eligible for unemployment benefits because “[t]here is not even a
scintilla of evidence in the record to support the ULJ’s finding that the discharge occurred
on March 9, 2015.” Based on the record before us, there are two problems with
Anderson’s claim.
First, Anderson is incorrect in asserting that there is no evidence to support the
ULJ’s finding that she was discharged on March 9, 2015. Galler testified that she ended
the working relationship on March 9, 2015, after Anderson refused to terminate her
competing business. Moreover, Anderson testified that she did not quit her
employment—Galler “just said she didn’t want [her] anymore.” Anderson did staging
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work in January and February and received checks in both months, but did not do any
more staging work after March 9. There is substantial evidence to support the ULJ’s
finding that Anderson was discharged on March 9, 2015.
Second, Anderson failed to raise the issue of being laid off at the hearing before
the ULJ.2 When she applied for unemployment benefits, Anderson claimed that she was
discharged after she was accused of violating a non-compete agreement. While she also
claimed that she needed to start a business because her hours had been reduced, she never
claimed that she was laid off and had no work available.
Additionally, the ULJ made clear at the hearing that the issue was whether
Anderson was discharged for employment misconduct. The ULJ did not state, and
Anderson did not suggest, that the ULJ was to decide whether Anderson had been laid
off.
At the hearing, Anderson testified that she started her staging business in February
2015 because business at YUM had significantly dropped and Galler appeared to be
focused on selling real estate. But, again, she did not claim that she had been laid off.
And Galler explained that she gave Anderson less work because Anderson had given
short notice to take a vacation and seemed unhappy.
In her request for reconsideration, Anderson claimed that she had “additional
evidence,” including a statement that she had been “effectively laid off” after working
few hours in November 2014, and had been “constructively laid off . . . on December 1,
2
Though this issue was not raised before the ULJ, we examine the claim because it is
indirectly linked to the issue of when Anderson was discharged from employment.
6
2014.” In her brief, she states that she was “seasonally laid off . . . in early February
2015.” Not only are her statements unclear as to when she was laid off—November,
December, or February—but the record shows that she continued to work in January and
February, received checks in both months, and started her staging business only two days
after receiving her last check. Moreover, although Anderson raised the issue of being
laid off in her request for reconsideration, she offers no explanation as to why she failed
to raise the issue at the hearing before the ULJ.
Thus, because Anderson failed to raise the claim that she was laid off at the
evidentiary hearing, the ULJ did not consider it or make relevant findings, and we,
therefore, will not consider it on appeal. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.
1988) (stating that an appellate court will not consider matters not argued to and
considered by the district court); Peterson v. Ne. Bank–Minneapolis, 805 N.W.2d 878,
883 (Minn. App. 2011) (“[B]ecause this issue was not raised before the ULJ, it is not
properly before this court on review.”).
Misconduct
Our sole issue to resolve is whether the ULJ erred in determining that Anderson
was discharged for employment misconduct. Employment misconduct is “any
intentional, negligent, or indifferent conduct, on the job or off the job that displays clearly
. . . a serious violation of the standards of behavior the employer has the right to
reasonably expect of the employee.” Minn. Stat. § 268.095, subd. 6(a)(1) (2014). An
employee discharged for employment misconduct is ineligible to receive unemployment
benefits. Id., subd. 4(1) (2014).
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Whether an employee committed misconduct is a mixed question of fact and law.
Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002). “Whether the
employee committed a particular act is a question of fact.” Skarhus, 721 N.W.2d at 344.
But whether an employee’s act constitutes disqualifying misconduct is a question of law,
which we review de novo. Schmidgall, 644 N.W.2d at 804.
The ULJ found that Anderson started a business competitive with her employer.
There is no dispute that Anderson started a business. We must determine whether that act
constitutes employment misconduct.
“A single incident can constitute misconduct when an employee deliberately
chooses a course of conduct that is adverse to the employer.” Id. at 806. An employer
has a legitimate interest in protecting itself against “the deflection of trade or customers
by the employee by means of the opportunity which the employment has given him.”
Webb Publ’g Co. v. Fosshage, 426 N.W.2d 445, 450 (Minn. App. 1988) (quotation
omitted). An employee owes a duty of loyalty to the employer that prohibits the
employee from competing with the employer during the employment. Rehab. Specialists,
Inc. v. Koering, 404 N.W.2d 301, 304 (Minn. App. 1987).
Anderson testified that she did not believe that her staging business was in
competition with YUM because YUM also does the home-management program and her
business does staging only. She also believed that she was not in competition because,
according to Anderson, Galler appeared to be focusing more on selling real estate and
less on staging. But Galler testified that Anderson’s claims were “absolutely ridiculous.”
Galler testified that she had no intention of terminating the staging business just because
8
the real-estate market, and so too the staging business, are slower in January and
February. The ULJ found Galler’s testimony to be credible. See Skarhus, 721 N.W.2d at
345.
The evidence supports the ULJ’s finding that Anderson was discharged for
starting a business that was a direct competitor of her employer. This reason for
discharge is employment misconduct that makes an individual ineligible for
unemployment benefits.
Affirmed.
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