                         This opinion will be unpublished and
                         may not be cited except as provided by
                         Minn. Stat. § 480A.08, subd. 3 (2012).

                              STATE OF MINNESOTA
                              IN COURT OF APPEALS
                                    A13-2342


                                   Frederick Wright,
                                       Relator,

                                          vs.

                                     Atterro, Inc.,
                                     Respondent,

                 Department of Employment and Economic Development,
                                     Respondent.


                                Filed August 18, 2014
                                      Reversed
                                  Halbrooks, Judge


                 Department of Employment and Economic Development
                                 File No. 31470761-3

Peter B. Knapp, Joshua M. Erspamer (certified student attorney), William Mitchell Law
Clinic, St. Paul, Minnesota (for relator)

Atterro, Inc., Minneapolis, Minnesota (respondent)

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

       Considered and decided by Halbrooks, Presiding Judge; Hudson, Judge; and

Reilly, Judge.
                        UNPUBLISHED OPINION

HALBROOKS, Judge

      Relator challenges the decision of an unemployment-law judge (ULJ) that he is

ineligible to receive unemployment benefits, resulting in an overpayment of benefits in

the amount of $2,304. Because the ULJ’s determination that relator quit his employment

due to management concerns is not supported by the evidence in the record, we reverse.

                                        FACTS

      Relator Frederick Wright was employed by respondent Atterro Inc., d/b/a Prostaff

Personnel Services (Prostaff), a temporary-staffing-service agency that assigns its

employees to companies seeking short-term or temporary staff. From January 2012 to

July 2013, Prostaff assigned Wright to work as a material handler for Datacard. It is

undisputed that Wright was a good employee and well-liked at Datacard, which resulted

in Datacard offering Wright a position of permanent employment. Wright accepted the

offer, and his employment was to transfer from Prostaff to Datacard on July 22, 2013.

      From July 15 to 18, 2013, Wright did not appear for his scheduled shifts at

Datacard. Due to his absences, Datacard rescinded its offer of permanent employment.

Wright contacted Prostaff about his absences at Datacard, and from July 18 to 23 his

employment at both facilities was “in limbo.” On July 23, Wright sought unemployment

benefits from respondent Minnesota Department of Employment and Economic

Development (DEED). DEED determined that Wright was eligible for unemployment

benefits because he had completed a temporary work assignment at Prostaff and

requested additional work within five days of completing the assignment.         Prostaff


                                           2
appealed DEED’s determination of eligibility, asserting that Wright should not receive

unemployment benefits because he failed to attend work and did not provide proper

notice to his employer.

      On September 4, 2013, the ULJ conducted a telephone hearing to determine if

Wright was eligible to receive unemployment benefits. Stephanie Hammer, a talent

manager at Prostaff, appeared on its behalf; Wright appeared pro se. Hammer testified

that Wright’s assignment at Datacard ended because he failed to attend work and did not

notify either Datacard or Prostaff that he would be absent until July 18. Hammer further

claimed that Wright missed work “because . . . he was drinking on Friday night [July 12]

and spent a lot of money,” and that he was “ashamed of the situation so he’[d] been

staying in his apartment ever since.” Hammer claimed that sometime during July 18 to

23, when Wright’s employment at Datacard and Prostaff was “in limbo,” she spoke with

managers at Datacard, who agreed to reemploy Wright temporarily “because they really

liked him as an employee.” Hammer contended that on July 23, Wright was informed of

Datacard’s decision to reemploy him. She testified that, in her absence, another Prostaff

employee, Becca, spoke to Wright. According to Hammer, Wright told Becca that he

was not willing to return to Datacard because he had concerns about Datacard’s

management.

      At the hearing, Wright denied that his absences were due to drinking alcohol,

insisting that he had missed work because of stomach pain caused by ulcers. Wright

testified that he notified his employers that he would be absent from July 15 to 18,

contacting them before his scheduled shift each day.       With regard to the July 23


                                           3
telephone conversation, Wright stated that Becca informed him that Prostaff had decided

to keep him as an employee but that she said nothing about reassigning him to temporary

work at Datacard. Wright stated that eight or nine months earlier, he may have voiced

concerns about his job security at Datacard because of a new manager, but any past

concerns he may have had would not have prevented him from working at Datacard.

      Before the telephone hearing concluded, Wright’s cell-phone battery died, and he

was disconnected. The ULJ attempted to call Wright back, but was unsuccessful. The

ULJ subsequently proceeded to question Hammer for another seven minutes. Due to the

timing of the disconnection, Wright did not have an opportunity to cross-examine

Hammer.

      The day after the hearing, the ULJ issued an order determining that Wright is

ineligible for unemployment benefits because he quit his employment at Prostaff without

good cause. The ULJ found that Wright went out drinking and spent a substantial

amount of money on July 12, failed to attend work “because he was not feeling well and

was embarrassed about his drinking and spending,” and failed to call Prostaff or Datacard

to report that he would be absent. The ULJ also found that on July 23, “Wright indicated

he was not willing to return to Datacard because he had concerns about the Datacard

managers.”   By the date of the ULJ’s order, Wright had been overpaid $2,304 in

unemployment benefits.

      Wright filed a request for reconsideration, challenging the ULJ’s determination

that he quit his employment. With his request, Wright submitted his cell-phone records

indicating that he had called either Datacard or Prostaff on the dates he was absent from


                                           4
work. Wright also noted that he had worked at Datacard on Saturday, July 13, the day

after he had allegedly been drinking.        Finally, Wright alleged that the ULJ had

improperly participated in ex parte communication when the ULJ continued the

telephone hearing after Wright was disconnected.          The ULJ affirmed the earlier

determination, concluding that even if Wright had called his employers on the dates in

question, “the ultimate issue was the final conversation Wright had with Prostaff on July

23, 2013,” and Wright’s cell-phone records did not clarify what was said during that

conversation. The ULJ concluded that Hammer’s testimony was more credible with

regard to what was said between Wright and Becca on that date. The ULJ further

concluded that it had not engaged in ex parte communication. This appeal follows.

                                     DECISION

       Wright challenges the ULJ’s determination that he quit his employment at

Prostaff.   On review, this court may affirm a ULJ’s decision, remand for further

proceedings, or reverse if the substantial rights of the relator are prejudiced because the

findings, inferences, conclusion, or decision are

                      (1) in violation of constitutional provisions;
                      (2) in excess of the statutory authority or jurisdiction
              of the department;
                      (3) made upon unlawful procedure;
                      (4) affected by other error of law;
                      (5) unsupported by substantial evidence in view of the
              entire record as submitted; or
                      (6) arbitrary or capricious.

2014 Minn. Laws ch. 271, art. 1, § 1 (to be codified at Minn. Stat. § 268.105, subd. 7(d)

(2014)).



                                             5
      The ULJ determined that Wright quit his employment because of his concerns

about the management at Datacard. When addressing why Wright did not have good

cause to quit his employment, the ULJ reasoned that

              [t]here are no specific concerns on the record and Prostaff
              was never told of any specific concerns Wright had. There is
              no evidence to show that Wright’s concerns would compel
              and [sic] average, reasonable worker to quit and become
              unemployed rather than remaining in the employment.
              Further, Wright was willing to accept the Datacard job offer
              shortly before he quit. Wright did not quit for a good reason
              caused by the employer under the Minnesota unemployment
              insurance law.

      We conclude that the ULJ’s finding that Wright quit his employment is

unsupported by substantial evidence in the record. Wright testified that he would have

accepted a temporary assignment at Datacard. And as the ULJ noted, there are “no

specific concerns on the record” relating to any problems Wright had with Datacard’s

management.    The record establishes that Wright was well-liked at Datacard.       And

Hammer testified that Datacard agreed to reemploy Wright “because they really liked

him as an employee.” Hammer stated that she “knew how good of a worker he was at

Data[c]ard and [she] liked working with him.” In addition, it is undisputed that Datacard

offered Wright permanent employment shortly before his absences occurred, and Wright

accepted Datacard’s offer.    The ULJ’s conclusion that Wright quit because of his

concerns about the management at Datacard is inherently inconsistent with the ULJ’s

finding, and the record’s support, of Wright’s acceptance of permanent employment with

Datacard shortly before his absences occurred.




                                           6
       The only evidence that supports the ULJ’s conclusion that Wright had concerns

about Datacard’s management is Hammer’s hearsay testimony speculating as to what was

said between Wright and Becca on July 23. Hearsay is admissible in unemployment-

benefit hearings. Minn. R. 3310.2922 (2013). But “[w]hen the credibility of a witness

testifying in a hearing has a significant effect on the outcome of a decision, the [ULJ]

must set out the reason for crediting or discrediting that testimony.” 2014 Minn. Laws

ch. 251, art. 2, § 15 (to be codified at Minn. Stat. § 268.105, subd. 1(d) (2014)). Further,

the ULJ’s credibility determination must be supported by substantial evidence.

Wichmann v. Travalia & U.S. Directives, Inc., 729 N.W.2d 23, 29 (Minn. App. 2007).

Here, the ULJ found that “Hammer’s testimony was more credible than Wright’s

testimony because it was more detailed, specific, followed a more logical chain of events

and was more reasonable under the circumstances.” This finding is not supported by the

record.

       At the beginning of the hearing, Hammer implied that she was the one who

informed Wright on July 23 that he would be reassigned to Datacard. Near the end of the

hearing, after Wright’s cell phone had been disconnected, Hammer clarified that she was

out of the office when the July 23 call took place. Even the ULJ expressed his surprise

when Hammer stated that she was relying on notes written by Becca for her testimony.

              Q      Okay. And, Ms. Hammer, Mr. Wright is also
                     contending that when you talked to him sometime on
                     around the 23rd . . . you only told him that you would
                     keep him as a Prostaff [employee] for short term
                     assignments but not at Data[c]ard, do you agree with
                     that?



                                             7
             A      I do not. I could see I did say that if he didn’t choose
                    Data[c]ard we would only do short term because his
                    reliability was obviously questionable to us. So we
                    would have him do short term assignments to build up
                    his credibility with Prostaff again. I could see where
                    he got that. But he was offered a chance to go back to
                    Data[c]ard.
             Q      Do you believe you were clear on that during the
                    conversation?
             A      Yes. And I know my co-worker Becca told him that as
                    well because she’s the one who spoke to him when he
                    declined.
             Q      Oh, I see. Okay. So . . .
             A      Yeah. She took the call. I was out of the office.
             Q      Oh, so you’re just looking at notes as to where that
                    Becca talked to him?
             A      Yup.

      Hammer claimed that Wright was a well-liked employee who had recently

accepted Datacard’s offer of full-time employment. She then claimed that, although

Wright had never mentioned any problems before, he suddenly refused to work at

Datacard because of his concerns about their management. On this record, we cannot

affirm the ULJ’s determination that Hammer’s testimony followed a “more logical chain

of events” or that it was “more reasonable under the circumstances.”

      Finally, the procedure implemented in administering Wright’s case warrants

reversal of the ULJ’s ineligibility determination. During the telephone hearing, Hammer

made serious allegations relating to Wright’s alcohol use. She also testified that the

reason Wright’s employment ended was because he failed to notify his employers that he

would be absent. Due to the unfortunate disconnection of Wright’s cell phone, Wright

was unable to cross-examine Hammer. A large portion of the ULJ’s initial ineligibility

determination discussed Wright’s alleged intoxication and the events surrounding July 15


                                            8
to 18. But the ULJ’s factual findings relating to the events from July 15 to 18 were

shown to be clearly erroneous after Wright submitted his request for reconsideration.

With his request for reconsideration, Wright included his cell-phone records establishing

that he called either Datacard or Prostaff on the dates that he was absent. Additionally, in

his request for reconsideration, Wright asserted that he worked at Datacard for five hours

on Saturday, July 13. This again refutes the ULJ’s findings that “Wright did not go to

work because he was not feeling well and was embarrassed about his drinking and

spending.”

       In this case, we conclude that the ULJ improperly refused to order another

hearing.   See 2014 Minn. Laws ch. 251, art. 2, § 16 (to be codified at Minn. Stat

§ 268.105, subd. 2(c) (2014)) (stating that a ULJ must order an additional hearing if a

party shows that evidence not submitted at the initial hearing would likely change the

outcome of the decision or show that evidence at the initial hearing was likely false).

Additionally, the ULJ failed to discuss or inquire as to whether Wright had quit his

employment as described in 2014 Minn. Laws ch. 251, art. 1, § 14 (to be codified at

Minn. Stat. § 268.095, subd. 2(d) (2014)), the provision governing when employees who

work at a staffing-service agency “quit” their employment. Failure to consider that

Wright was employed at a staffing-service agency may have further prejudiced Wright.

See Lamah v. Doherty Emp’t Grp., Inc., 737 N.W.2d 595, 598 (Minn. App. 2007) (“An

employee who has completed an assignment but refuses to accept further assignments is

not disqualified from unemployment benefits because the employment relationship has

ended and the refusal does not constitute a quit.”).


                                              9
      Viewing the record as a whole, we conclude that Wright’s substantial rights were

prejudiced. The lack of evidence to support the ULJ’s finding that Wright quit his

employment and the manner in which Wright’s claims were handled warrants reversal of

the ULJ’s ineligibility determination. Because we reverse on this basis, we need not

address the issue of whether the ULJ engaged in ex parte communication by continuing

the telephone hearing after Wright’s cell phone became disconnected.

      Reversed.




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