may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Delta Management Associates, Inc.,
Premier Financial Corp.,
Commissioner of Economic Security,
Department of Economic Security,
Filed April 1, 1997
Department of Economic Security
File No. 386T95
Scott R. Carlson, Duckson & Carlson, PLLP, 10 South Fifth Street, #700, Minneapolis, MN 55402 (for Relator)
Kent E. Todd, Department of Economic Security, 390 N. Robert Street, St. Paul, MN 55101 (for Respondent)
Considered and decided by Lansing, Presiding Judge, Crippen, Judge, and Peterson, Judge.
Relator Premier Financial Corporation argues the representative of respondent Commissioner of Economic Security erred in concluding that it succeeded to the employment experience rating record of Delta Management Associates of St. Paul, Incorporated. We affirm.
The Department introduced two reports that Premier had submitted in support of its experience rating record application. The report to determine liability stated that Premier had purchased, leased, or assumed part or all of another Minnesota business and was doing business under Delta's name. The report to determine succession stated that Premier had acquired all of Delta's Minnesota business activities and assets and 70% or more of Delta's employment positions. This report also indicated that Premier intended to continue the same business that was conducted by Delta and was continuing the same services, service policies, suppliers, purchasing policies, customers, market area, management policies, work schedules, and fringe benefits. Miroslavich signed the report to determine liability, but the report to determine succession was not signed.
The representative of the Commissioner of Economic Security concluded that Premier succeeded to Delta's experience rating record. The representative determined that Clausen and Miroslavich used the assets they had bought from Delta and their knowledge of Delta's practices to organize Premier and to continue in the debt collection business. The representative found that although the report to determine succession was not signed, it was credible evidence. The representative concluded that the credible evidence showed Premier had acquired Delta's organization, trade, or business or substantially all of its assets and had continued the essential character of Delta's business.
must "be viewed in the light most favorable to the decision, and if there is evidence reasonably tending to sustain them, they will not be disturbed."
Imprint Tech., Inc. v. Commissioner of Econ. Sec., 535 N.W.2d 372, 375 (Minn. App. 1995) (quoting White v. Metropolitan Med. Ctr., 332 N.W.2d 25, 26 (Minn. 1983)). The Commissioner's representative's conclusions of law, however, do not bind the reviewing court. Id.
Minn. Stat. § 268.06, subd. 22(a) (Supp. 1995) provides:
When an employing unit succeeds to or acquires the organization, trade or business or substantially all the assets of another employing unit which at the time of the acquisition was an employer subject to this law, and continues such organization, trade or business, the experience rating record of the predecessor employer shall be transferred as of the date of acquisition to the successor employer for the purpose of rate determination.
Because the experience rating record determines the amount of the employer's future contributions to the reemployment insurance system, transferring an experience rating record
is fair and logical only when the essential character of the business is continued so that the employment experience of the successor is likely to be that of its predecessor.
Easy St. W. v. Commissioner of Econ. Sec., 345 N.W.2d 250, 255 (Minn. App. 1984).
Premier first argues that the Commissioner's representative improperly considered the report to determine succession because this document was not signed. We disagree. The rules of evidence do not apply to reemployment insurance hearings. Minn. Stat. § 268.105, subd. 1 (Supp. 1995). The reemployment insurance judge may receive any probative evidence that
is the type of evidence on which reasonable, prudent persons are accustomed to rely in the conduct of their serious affairs.
Minn. R. 3310.2922 (1995). The Commissioner's representative's decision shall be based on the record before the reemployment insurance judge. Minn. R. 3310.3000 (1995).
Here, Premier neither objected to the introduction of the report to determine succession nor denied that its agents had prepared the report. In fact, Premier's attorney indicated at the hearing that "they" had not understood the terms in the report when it was prepared. The information in the unsigned report was consistent with the information in the signed report. The date stamps on the reports show that both were received at the same time by the same Department employee. Given these facts, the representative properly considered the report to determine succession.
Premier next argues that because Clausen and Miroslavich actually bought Delta's assets, Premier did not acquire Delta's trade or business or substantially all its assets. We disagree. The application of Minn. Stat. § 268.06, subd. 22(a) "transcends form and focuses on the substance and nature of the transaction." Mid-America Festivals Corp. v. Commissioner of Dep't of Econ. Sec., 349 N.W.2d 270, 273 (Minn. 1984). Because Premier's co-owners bought Delta's assets and transferred them to Premier, the substance of the transaction in this case was a sale from Delta to Premier. Adopting Premier's technical reading of Minn. Stat. § 268.06, subd. 22(a) would destroy the definition of successor employer whenever an individual bought a business's assets and then immediately transferred them to a new business entity. See Imprint, 535 N.W.2d at 376 (interpreting Minn. Stat. § 268.06, subd. 22(a) to find that employer was not successor simply because he technically bought predecessor's assets from bankruptcy trustee who actually held legal title to assets would destroy meaning of successor employer whenever predecessor was in bankruptcy).
Premier claims the Commissioner's representative did not find that it acquired Delta's organization, trade, or business or substantially all its assets and that the record would not have supported such a finding. But the representative stated in his memorandum that Premier acquired Delta's organization, trade, or business or substantially all its assets. The report to determine succession stated that Premier acquired all of Delta's Minnesota business activities and assets and 70% or more of Delta's employees. The report to determine liability indicated that Premier was doing business under Delta's name at Delta's former location. Premier said at the hearing that it used Delta's letterhead and business cards. This evidence supports the representative's decision. See id. (to determine whether successor acquired trade or business, courts examine whether successor bought predecessor's name, assets, possession of premises, customer lists, accounts, and employees).
Premier finally argues that it did not continue Delta's trade or business. To determine whether an employer has continued the essential character of the predecessor's business, courts look for continuation of management, employees, and clientele. Easy St., 345 N.W.2d at 255. Courts also look for continuation of the predecessor's names and products. Imprint, 535 N.W.2d at 378. Here, the report to determine succession stated that Premier intended to continue Delta's business and was continuing the same services, service policies, customers, market area, management policies, work schedules, and fringe benefits. The report also indicated that Premier had retained 70% or more of Delta's employees. The report to determine liability showed that Premier was doing business under Delta's name. Finally, although Premier specialized in one area, it continued in the debt collection business. These facts support the representative's decision that Premier continued the essential character of Delta's business.