This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).






Ann R. Walters,





Midway Animal Hospital,



Commissioner of Employment and Economic Development,




Filed June 14, 2005

Reversed; motion to strike granted

Randall, Judge


Department of Employment and Economic Development

File No. 6870 04



Nancy S. Flury, Lindquist & Vennum LLC, 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for relator)


Lee B. Nelson, Linda A. Holmes, Minnesota Department of Employment and Economic Development, 332 Minnesota Street, Suite E200, St. Paul, MN  55101-1351 (for respondent commissioner)


Ned E. Ostenso, Merrigan, Brandt, and Ostenso, P.A., 25 Ninth Avenue North, P.O. Box 458, Hopkins, MN  55343 (for respondent Midway Animal Hospital)


            Considered and decided by Randall, Presiding Judge, Minge, Judge, and Poritsky, Judge.*

U N P U B L I S H E D   O P I N I O N


            On certiorari appeal from the decision by the commissioner’s representative that relator was disqualified from receiving unemployment benefits because she was discharged for employment misconduct, relator argues that (a) the evidence does not support the findings of insubordination or that the finding that the president was not retaliating against relator; and (b) her actions were appropriate and in good faith.  We conclude there is no credible evidence to support the commissioner’s representative’s finding.  We reverse.


            Relator Ann Walters and Dr. Jean Miller opened respondent Midway Animal Hospital (Midway) in March 2000.  Dr. Miller is a licensed veterinarian, and relator worked at Midway as a practice manager and veterinary technician.  Relator and Dr. Miller were both the initial investors in Midway, and each made equal capital contributions to finance the veterinary hospital.[1]  Under Minn. Stat. § 319B.07 (2000), relator was prohibited from maintaining an interest as a shareholder in the hospital because she is not a licensed veterinarian.  Thus, Dr. Miller was listed as the sole owner and shareholder of Midway, and the acting president and Chief Financial Officer (CEO).  In exchange for her economic interest in the hospital, relator received a deferred compensation agreement that would provide her with a payout if she were terminated from the business.  In addition, the compensation agreement provided that relator would receive one-half of the sale price of the hospital in the event the business was sold.  

            In late 2003, Dr. Miller contemplated selling the business.  Midway had previously been valued at $300,000, and Dr. Miller was exploring the option of selling the business to another veterinarian for $150,000.  Dr. Miller had no intention of giving $75,000 to relator.  Dr. Miller’s sale was contingent upon relator giving up her right to one-half the value of the business in exchange for relator staying on at Midway as the manager and entering into a new business association with the new owner.  Relator refused to sign the release agreement.  Relator testified at the hearing that Dr. Miller responded to her refusal to go along with Dr. Miller’s version of the sale by stating she was going to make relator’s “life a living hell.”

            On January 20, 2004, Dr. Miller presented relator with a performance review plan.  The performance plan, which was the first performance review plan Dr. Miller gave relator in her four years of employment at Midway, outlined Dr. Miller’s “concerns” about relator’s incorrect billing, insubordination, unnecessary phone calls, and improper scheduling of appointments.  The performance plan also redefined relator’s job duties, advised relator not to give medical advice to clients, and required relator to “punch-in.”  The performance plan further warned relator that her job was in jeopardy if her performance did not improve.    

            A week later, on January 26, 2004, Dr. Miller met with relator to discuss her first week on the performance plan.  At the meeting, Dr. Miller noted that relator was not “punching-in” and not arriving at work at the proper time.  The performance review stated that relator spent too much time talking on the phone and generally performed poorly at work.  Because she felt that she was Dr. Miller’s business partner, relator told Dr. Miller that she would not follow the direction in the job performance correction plan, and since she was Dr. Miller’s business partner, she would “punch-in” when Dr. Miller “punched-in.”

            Relator and Dr. Miller met again on February 2, 2004, to discuss the performance plan.  The February 2 review raised several issues, including relator’s refusal to “punch-in,” Dr. Miller’s claim of relator’s unprofessional conduct, and scheduling errors that occurred as a direct result of relator’s refusal to follow Dr. Miller’s instructions.  However, rather than talking about the subject, relator insisted upon discussing the sale of the business.  Eventually, the conversation became heated.  Relator called Dr. Miller “narcissistic, dishonest and a liar.”  Dr. Miller claims she felt “threatened” by relator, so Dr. Miller told relator that she was fired, and that relator should turn in her keys.  Relator retorted that Dr. Miller could not fire her because they were business partners.  Relator subsequently left the building.  Later, Dr. Miller “discharged” relator due to her unsatisfactory job performance, her failure to follow the performance correction plan, direction, and instructions from Dr. Miller, and relator’s yelling, name-calling, and threatening behavior.

            Relator established a benefit account with the Minnesota Department of Employment and Economic Development.  A department adjudicator initially determined that relator was discharged from employment with Midway for reasons other than employment misconduct, and was not disqualified from receiving benefits.  Midway appealed, and following a de novo hearing, a department unemployment law judge affirmed the initial determination that relator was entitled to benefits.  Upon further appeal to the commissioner, the commissioner’s representative reversed the decision of the unemployment law judge, and concluded that relator was discharged because of employment misconduct and was, therefore, disqualified from receiving unemployment benefits.  This certiorari appeal followed.



            This court examines the decision of the commissioner’s representative rather than the decision of the unemployment law judge.  Kalberg v. Park & Recreation Bd., 563 N.W.2d 275, 276 (Minn. App. 1997).  Appellate courts defer to the commissioner’s representative’s findings of fact if they are reasonably supported by the evidence in the record.  Ress v. Abbott Northwestern Hosp., Inc., 448 N.W.2d 519, 523 (Minn. 1989).  The commissioner’s representative’s findings will only be disturbed if the record could not reasonably tend to support the findings.  Schmidgall v. Filmtec Corp., 644 N.W.2d 801, 804 (Minn. 2002).  However, whether an employee’s acts constitute misconduct is a question of law reviewed de novo by this court.  Ress, 448 N.W.2d at 523.

An employee discharged for employment misconduct is disqualified from receiving unemployment benefits.[2]  Minn. Stat. § 268.095, subd. 4 (Supp. 2003).  Minn. Stat. § 268.095, subd. 6(a) provides the definition for employment misconduct:

Employment misconduct means any intentional, negligent, or indifferent conduct, on the job or off the job (1) that displays clearly a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that displays clearly a substantial lack of concern for the employment.[3] 


Such conduct on the part of an employee, particularly after repeated warnings, is evidence that the employee disregards the employer’s interests or lacks concern for the employment.  See, e.g., McLean v. Plastics, Inc., 378 N.W.2d 104, 107 (Minn. App. 1985); Little v. Larson Bus Serv., 352 N.W.2d 813, 815 (Minn. App. 1984); Evenson v. Omnetic’s, 344 N.W.2d 881, 883 (Minn. App. 1984).

            Here, relator argues that the evidence does not support the commissioner’s findings as to insubordination, or that Dr. Miller was not retaliating against relator for her refusal to sign the waiver and release of her deferred compensation agreement.  We agree.  Both the department adjudicator and the unemployment law judge found that relator was not discharged for employment misconduct.  The commissioner reversed the decision of the unemployment law judge on the basis that relator was “insubordinate,” and was therefore discharged for employment misconduct.  We conclude there is just no credible evidence to support the commissioner’s finding. 

            The record shows that relator, although not technically an owner of record, was an initial 50/50 investor in Midway with Dr. Miller.  The record reflects that both relator and Dr. Miller made equal capital contributions to finance the veterinary hospital, and that both relator and Dr. Miller co-signed the lease agreement on the building where Midway is located.  The record reflects that because relator could not legally hold title as an owner of the business, relator was compensated for her financial investment by way of the deferred compensation agreement.  The evidence is clear that the parties co-existed in their business arrangement without any major conflicts until late 2003, when Dr. Miller received an offer to sell the business for approximately $150,000, which was one-half of the estimated value of the business, and cut relator out of half of those proceeds.  Relator was supposed to give up her half of the sale proceeds in return for the chance to strike a new or similar deal with a new prospective owner.  Relator refused Dr. Miller’s request that relator sign a waiver of the deferred compensation agreement.  That waiver would have required relator to give up half the sale price of the business in return for staying on as the manager and entering into a new business association with the new owner.  The record shows no firm offer by the new owner to relator.  We conclude relator’s refusal to sign Dr. Miller’s waiver was a reasonable business decision, and, as a matter of law, is not employment misconduct.

            As noted, immediately following this dispute, Dr. Miller, for the first time, subjected relator to a performance review plan and criticized her work, and a total breakdown of the relationship followed.  Relator testified that Dr. Miller had told her she would make relator’s “life a living hell.”  The facts, the record, and the chronology demonstrate that Dr. Miller was retaliating against relator for her refusal to sign a waiver of relator’s right to the deferred compensation agreement.  We reverse the commissioner’s decision that relator was discharged for employment misconduct.


            Respondent Midway moved to strike portions of relator’s reply brief because it consisted of matters outside of the record.  An appellate court may not base its decision on matters outside the record on appeal, and that matters not produced and received in evidence below may not be considered.  Thiele v. Stich, 425 N.W.2d 580, 582-93 (Minn. 1988).  Because relator’s reply brief contains matters that are outside of the record, respondent’s motion to strike is granted.       

            Reversed; Motion to strike granted. 

* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI., § 10.

[1] Relator and Dr. Miller are also co-owners of another corporation called MAH Leasing, which leased equipment to Midway.

[2] This court includes the following footnote in all unemployment cases citing to Minn. Stat. § 268.095, subds. 1, 4, 7, and 8(a) (Supp. 2003): The revisor’s office inadvertently substituted the term “ineligible for” for the term “disqualified from” in Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (Supp. 2003).  See Minn. Stat. § 268.095, subds. 1, 4, 7, 8(a) (2002) (using term “disqualified from”); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 11 (making other changes to Minn. Stat. § 268.095, subd. 1, but retaining term “disqualified from”); 2003 Minn. Laws 1st Spec. Sess. ch. 3, art. 2, § 20(j), (k) (directing revisor to change the term “disqualified from” to “ineligible for” only in Minn. Stat. § 268.095, subd. 12, and then to renumber to Minn. Stat. § 268.085, subd. 13b).

[3] The statutory definition in effect at the time of the discharge is the definition that controls.  See Brown v. Nat’l Am. Univ., 686 N.W.2d 329, 332 (Minn. App. 2004), review denied (Minn. Nov. 16, 2004).