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COURT OF APPEALS
DECISION
DATED AND FILED
March 22, 2011
A.
John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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DISTRICT III
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Superior Beverages, LLC,
Petitioner-Appellant,
v.
Labor and Industry Review Commission and Jerry Axtell,
Respondents-Respondents.
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APPEAL
from an order of the circuit court for Douglas County: KELLY
J. THIMM, Judge. Affirmed.
Before Hoover,
P.J., Peterson and Brunner, JJ.
¶1 PER CURIAM. Superior Beverages, LLC,
appeals an order affirming a decision of the Labor and Industry Review
Commission. The Commission determined Superior owed lost wages
to its former employee, Jerry Axtell, because it terminated him without
reasonable cause after he suffered a workplace injury, contrary to Wis. Stat. § 102.35(3). Superior
argues it had a valid business reason for terminating Axtell, which amounts to
reasonable cause. However, because the
Commission reasonably concluded Superior’s
business justification was pretextual, we affirm.
BACKGROUND
¶2 Superior,
a wholesale beer distributor, hired Axtell in July 2004 to work as a route
salesperson or driver. Axtell was
responsible for delivering beer to Superior’s
customers. His duties included driving a
delivery truck, unloading product, and cultivating relationships with customers
to promote increased sales.
¶3 On March 18, 2006, Axtell injured his back while hauling two
kegs of beer. He missed approximately
six weeks of work due to the injury, and when he returned he was placed on
light duty status for six additional weeks.
After that, Axtell was cleared to work without restrictions. However, on September 11, 2006, he strained
his back while bending over to pick up cases of beer from a pallet. He was off of work for one week, but he returned
without restrictions on the morning of September 18. That afternoon, his employment was
terminated.
¶4 Axtell’s supervisor, Ray Haaker, told Axtell he was being
laid off for “lack of work” stemming from a drop in sales. Haaker told Axtell that Superior “may be in touch with him in the
event that we would need him back at some point.” Superior
never contacted Axtell about coming back to work. However, in April 2007, Superior ran an ad in a local newspaper
seeking to hire “a full-time driver/route delivery person.”
¶5 Axtell filed a claim with the Department of Workforce
Development, contending Superior
unreasonably refused to rehire him following a workplace injury, contrary to Wis. Stat. § 102.35(3). At a hearing before the administrative law
judge (ALJ), Axtell testified that Superior’s
sales are stronger in the summer months and drop off every winter. Despite this seasonal fluctuation, Superior did not lay off
any drivers during the winter of 2004-05 or the winter of 2005-06. Furthermore, when Axtell was hired, he was
told Superior
“prided themselves on never having to [lay off] a driver; that no matter what,
they find something for you to do when it’s slow …. [b]ecause they will always
need [you] in the spring.” Axtell
testified he was the only driver fired in September 2006, even though two other
drivers had less seniority.
¶6 Haaker also testified at the hearing. He admitted that Superior
experiences seasonal fluctuation in sales but that business “always pick[s] up
in the summer.” Haaker also conceded
Axtell was the first driver ever laid off because of a seasonal downturn. However, he contended that things were
different at the time of Axtell’s termination because sales were down
“substantially.” Don Warmington, Superior’s owner and
manager, similarly testified that the company faced unique economic challenges
in 2006:
[T]he business climate has changed. Our sales have been down the last three
years. We went from unparalleled growth
of 10 to 15 percent to [sic] we hit a .08 alcohol for driving, we’ve got
smoking bans, we’ve got increased fuel costs, we’ve got people switching from
beer to wine, we’ve got people deciding that they’re going to be
healthier. Our sales have started to go
down[.]
The thrust of
Warmington’s testimony was that, due to unprecedented economic challenges, Superior had a valid
business reason to terminate Axtell’s employment. Yet, despite these economic challenges, Haaker
conceded Superior
terminated just one driver, which represented only a five-percent reduction in
its driving workforce.
¶7 When questioned about why Superior chose to fire Axtell, instead of
another driver, Haaker admitted Axtell had received good performance reviews
and was not fired for poor performance. Warmington
testified Superior
fired Axtell because Axtell no longer had a regular delivery route when he
returned to work in September 2006. Axtell’s
previous routes had been given to other employees, and Axtell was “essentially
a fill-in” driver. Warmington testified it
is crucial for a driver to have a regular route in order to develop and
maintain rapport with customers. However,
Haaker conceded Superior
fired Axtell instead of another driver who also lacked a regular route. Furthermore, that other driver had only been
hired five months before Axtell’s termination and was still in training at the
time.
¶8 The ALJ concluded Superior’s business
reason for firing Axtell was pretextual and therefore determined Superior terminated him
without reasonable cause. The Commission
affirmed the ALJ’s decision. Superior appealed to the
circuit court, which affirmed the Commission. Superior
now appeals the circuit court’s order.
DISCUSSION
¶9 To recover under Wis.
Stat. § 102.35(3), an employee must show that he or she sustained
an injury in the course of employment and was subsequently terminated or denied
rehire. Ray Hutson Chevrolet, Inc. v. Labor
& Indus. Review Comm’n, 186 Wis. 2d
118, 122, 519 N.W.2d 713 (Ct. App. 1994).
“If the employee makes [this] showing, the burden shifts to the employer
to show a reasonable cause for the refusal to rehire.” Id. The employer may meet this burden by showing
“that it refused to rehire an injured employee because the employee’s position [was]
eliminated to reduce costs and … increase efficiency[.]” Id.
at 123.
¶10 Here, the only disputed issue is whether Superior met its burden of showing reasonable
cause for terminating Axtell. We review
the Commission’s decision, not the circuit court’s. See
Stafford
Trucking, Inc. v. Department of Indus., Labor & Human Relations,
102 Wis. 2d
256, 260, 306 N.W.2d 79 (Ct. App. 1981). The reasonable cause inquiry presents a mixed
question of fact and law. Ray
Hutson, 186 Wis. 2d
at 122. We sustain the Commission’s
findings of fact if they are supported by substantial and credible evidence. Id.;
see also Wis. Stat. § 102.23(6).
Whether the employer’s purported reason for refusing to rehire was
pretextual is a question of fact. Ray
Hutson, 186 Wis. 2d
at 124. “Once the facts are established,
whether they give rise to reasonable cause is a question of law.” Id.
at 122.
¶11 The parties dispute what level of deference we should apply to
the Commission’s reasonable cause determination. Citing Ray Hutson, Superior argues the Commission is not
entitled to any deference. There, we
reviewed the Commission’s reasonable cause determination without deference
because we concluded, “Nothing in [the Commission’s] decision shows it has had
other occasions to construe the phrase ‘reasonable cause’ in [Wis. Stat. § 102.35(3)] when a
refusal to rehire was based on elimination of an employee’s position to reduce
expenses.” Id. at 123.
¶12 However, we agree with Axtell that the Commission is entitled
to great weight deference. We give great
weight deference when:
(1) the agency was charged by the legislature with the
duty of administering the statute; (2) ... the interpretation of the agency is
one of long-standing; (3) ... the agency employed its expertise or specialized
knowledge in forming the interpretation; and (4) ... the agency’s
interpretation will provide uniformity and consistency in the application of
the statute.
Harnischfeger
Corp. v. Labor & Indus. Review Comm’n, 196 Wis. 2d 650, 660, 539 N.W.2d 98 (1995). We have previously held, as a general matter,
that the Commission’s interpretation of Wis.
Stat. § 102.35(3) is entitled to great weight deference because of “the
experience [the Commission] has acquired in interpreting the statute since its
enactment in 1975[,]” the existence of “sufficient case law to guide [the
Commission] in its application of the statute[,]” and the Commission’s “expertise
in administering cases under the worker’s compensation statutes.” See
Hill
v. Labor & Indus. Review Comm’n, 184 Wis. 2d 101, 110, 516 N.W.2d 441 (Ct. App. 1994). Moreover,
since Ray Hutson was decided in 1994, the Commission has had ample
opportunity to construe the phrase “reasonable cause” in § 102.35(3). A
search of the Commission’s decisions on the Department of Workforce
Development’s website indicates that the Commission has had at least
seventy-four opportunities to review unreasonable refusal to rehire claims,
forty-nine of which were related to the question of whether the employer had
“reasonable cause.” At least five of
these cases dealt directly with the issue of whether an employee was terminated
for a legitimate business reason. Thus, the concern we expressed in Ray
Hutson about the Commission’s lack of experience applying
§ 102.35(3) is no longer present, and the Commission’s reasonable cause
determination is entitled to great weight deference.
¶13 Superior
nevertheless contends we should not defer to the Commission because its
“decision in the present case does not indicate that the Commission has had the
opportunity to review the reasonable cause standard as it applies to layoffs in
a drastic economic downturn.” Superior’s position
appears to be that, because the Commission has never before seen the narrow,
specific facts of this case, the Commission is not entitled to deference. However, “[t]he correct test under Wisconsin
law is whether [the Commission] has experience in interpreting a particular
statutory scheme, not whether it has ruled on precise, or even substantially
similar, facts before.” Town
of Russell Volunteer Fire Dep’t v. Labor &
Indus. Review Comm’n, 223 Wis. 2d
723, 733, 589 N.W.2d 445 (Ct. App. 1998). As outlined above, the Commission has
considerable experience interpreting Wis.
Stat. § 102.35(3). See supra, ¶12 n.2. Accordingly, we apply the great weight
deference standard and uphold the Commission’s reasonable cause determination as
long as it is reasonable. See Harnischfeger
Corp., 196 Wis. 2d
at 661.
¶14 The Commission made the following factual findings in support
of its conclusion that Superior did not have reasonable cause to terminate
Axtell: (1) Superior’s business was
cyclical and slowed down every year; (2) Superior had dealt with the cyclical nature
of its business in the past without laying off drivers; (3) Superior had a
history of shifting workers around to avoid layoffs, but did not try to do so
in Axtell’s case; (4) Axtell was the only driver laid off in 2006; (5) Axtell
was laid off the same day he returned to work without restrictions; (6) Superior
discharged Axtell instead of a similarly situated employee with less seniority;
and (7) Superior made no attempt to rehire Axtell when it was seeking drivers
in 2007, despite the fact that Axtell had received good performance
reviews. Substantial and credible
evidence supports these factual findings.
See supra, ¶¶3-7.
¶15 The Commission also made the factual finding that Superior’s purported business
reason for terminating Axtell was pretextual.
In so doing, the Commission noted that the ALJ “did not credit”
Warmington and Haaker’s testimony, and the Commission’s review of the record
did not indicate any reason to overturn the ALJ’s credibility finding. We must accept the Commission’s determination
that Warmington and Haaker’s testimony was not credible. See Link
Indus., Inc. v. Labor & Indus. Review Comm’n, 141 Wis. 2d 551, 558, 415 N.W.2d 574 (Ct.
App. 1987).
¶16 Based on these factual findings, the Commission reasonably
determined that Superior
terminated Axtell without reasonable cause.
The only reason Superior
presented for Axtell’s termination was “lack of work” stemming from a business
slowdown. However, the Commission found
this reason pretextual. Although
Warmington and Haaker testified Superior
needed to terminate Axtell because of unprecedented economic conditions, the
ALJ and Commission found their testimony incredible. The evidence indicated Superior’s
business fluctuated seasonally, but Superior
had never before laid off a driver due to seasonal downturns. Moreover, several months after Axtell was
terminated, Superior’s
business picked up enough that it advertised for a full-time delivery driver. Superior
did not contact Axtell about this position, despite having told him that it
might be in touch about future employment opportunities. These facts support the Commission’s
determination that Superior
did not terminate Axtell for a valid business reason, and therefore did not
have reasonable cause.
¶17 Furthermore, even if Superior legitimately needed to terminate
a single employee to remedy a decline in sales, it would be reasonable to
conclude Axtell was chosen as a result of his work injury. Superior
chose to terminate Axtell instead of a similarly situated employee with less
seniority. Like Axtell, that employee
did not have a regular delivery route. Additionally,
the other employee was still in training.
Superior
never articulated a reason for choosing to fire Axtell instead of the less-senior
employee. Based on this evidence, the
Commission could reasonably conclude Superior
chose Axtell because of his workplace injury, and therefore terminated him
without reasonable cause.
By the Court.—Order affirmed.
This opinion will not be
published. See Wis. Stat. Rule
809.23(1)(b)5.