Maddocks v. Unemployment Insurance Commission
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2001 ME 60
Docket:	Han-00-492
Submitted
on Briefs:	February 28, 2001
Decided:	April 17, 2001

Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and
CALKINS, JJ.

LEONARD C. MADDOCKS

v.

UNEMPLOYMENT INSURANCE COMMISSION

DANA, J.

	[¶1]  Leonard C. Maddocks appeals from a judgment entered in the
Superior Court (Hancock County, Mead, J.) affirming the Maine
Unemployment Insurance Commission's decision that the satellite
installation services performed for Maddocks constituted employment. 
Specifically, Maddocks contends that the Commission violated his due
process rights and that he was prejudiced by the Commission's reliance on
inadmissible evidence.  We affirm in part and vacate in part.

BACKGROUND

	[¶2]  Maddocks engages individuals to install satellite systems.  In
1995, the Bureau of Unemployment Compensation of the Maine Department
of Labor determined that pursuant to 26 M.R.S.A. § 1043(11)(E) (1988), the
satellite installer, Michael Walsh, was Maddocks's employee for
unemployment compensation purposes. Maddocks appealed the
determination, and after a hearing, the Commission concluded that
Maddocks failed to establish that the services performed by Walsh were
those of an independent contractor rather than an employee.  The Superior
Court affirmed, holding there was competent evidence to support the
Commission's decision, and Maddocks's due process rights were not
violated.  We likewise affirmed the Commission's decision.  Maddocks v.
Maine Unemployment Ins. Comm'n, No. 97-100 (Me. June 3, 1997) (mem.).
	[¶3]  In 1998 Maddocks was notified by the Bureau that as an
employer, he was required to pay unemployment insurance contributions for
all wages he had paid since becoming an employer.  Maddocks was issued
one assessment for 1994 and another assessment for 1995 through 1996. 
Maddocks appealed the assessments.{1}
	[¶4]  At the Commission hearing, the following people were present:
Maddocks; three commissioners; and two representatives from the Bureau,
Matthew Halloran and Lloyd Black.  Maddocks and Halloran were sworn, but
Black was not.  The Commission indicated that Black was present as a
nonparticipant, nonwitness.  After a dispute concerning whether Maddocks
had received certain materials, the hearing was continued.
	[¶5]  At the second hearing, the same people were present, with the
addition of a legal secretary for the Bureau.  The legal secretary was the only
person who was sworn at the second hearing.  One of the commissioners
indicated that prior to the hearing, he had requested that either Black or
Halloran discuss the Bureau's procedure for generating assessments. 
Maddocks said he wanted to question the person who prepared some of the
documents offered by the Bureau, but the preparer was unavailable and had
not been subpoenaed.  Maddocks objected to the admission of the
documents.  He did not present evidence to establish that the assessments
were incorrect, or that the individuals referred to in the documents were
not his employees.
	[¶6]  The Commission admitted the Bureau's exhibits finding them
"the kind of evidence upon which reasonable persons are accustomed to
rely in the conduct of serious affairs," within the meaning of 5 M.R.S.A.
§ 9057(2) (1989). In response to Maddocks's objection, the Commission
offered to hold another hearing at which Maddocks could cross-examine the
author of the documents if Maddocks in good faith believed the documents
were in error.  Maddocks did not request a further hearing.  The
Commission concluded that the Bureau had established that services had
been performed for remuneration and that Maddocks had not established
that the individuals were not his employees pursuant to 26 M.R.S.A.
§ 1043(11)(E).  On Maddocks's appeal, the Superior Court affirmed,
concluding, inter alia, that Maddocks failed to establish that the individuals
were not his employees or that his due process rights had been violated. 
This appeal followed.

I.  DUE PROCESS

	[¶7]  Maddocks complains that he was prevented from presenting
evidence and that the Commission communicated ex parte with the Bureau. 
"The essential requirement of due process in the administrative context is
that a party be given notice and an opportunity to be heard."  Martin v.
Unemployment Ins. Comm'n, 1998 ME 271, ¶ 15, 723 A.2d 412, 417.  The
Commission was required to afford Maddocks "a reasonable opportunity for
a fair hearing, the conduct of which is governed by Subchapter IV of the
Administrative Procedures Act (APA)." Id. (quotations and citations omitted). 
When "the Superior Court reviews a decision of the Commission as an
intermediate appellate court, we review the Commission's decision directly"
to determine if "the Commission correctly applied the law and whether its
fact findings are supported by any competent evidence."  McPherson
Timberlands, Inc. v. Unemployment Ins. Comm'n, 1998 ME 177, ¶ 6, 714
A.2d 818, 820.
	[¶8]  First, the APA provides that "every party shall have the right to
present evidence and arguments on all issues . . . ."  5  M.R.S.A. § 9056(2)
(1989).  The record reflects that during the hearings, Maddocks was given
an opportunity to present testimony and documents on all issues. 
Throughout both hearings, the commissioners requested that Maddocks
produce evidence to support his position and indicated their willingness to
listen to his testimony.
	[¶9]  Second, the APA provides that the members of the Commission
are not permitted to communicate about "any issue of fact, law or
procedure" with any party ex parte.   5 M.R.S.A. § 9055(1) (1989).  Although
the record indicates that one of the commissioners communicated ex parte
with both Black and Halloran, Maddocks was informed of the
communications and then failed to object during the hearing.  Thus,
Maddocks cannot raise the issue on appeal.   See New England Whitewater
Ctr., Inc. v. Dep't of Inland Fisheries and Wildlife, 550 A.2d 56, 58, 60 (Me.
1988) (finding that issues, including those implicating constitutional
questions, "not raised at the administrative level are deemed unpreserved
for appellate review," and pro se litigants are not afforded special
consideration); MacCormick v. MacCormick, 513 A.2d 266, 268 & n.2 (Me.
1986) (finding that if a party knows a judge had ex parte communications,
the issue is waived if the party does not object before judgment is entered).
	[¶10]  Because Maddocks was given notice of the hearing, was given an
opportunity to be heard, and failed to object to the ex parte communications
during the hearing, Maddocks was afforded the essential requirements of
due process.  See Martin, 1998 ME 271, ¶¶ 15-16, 723 A.2d at 417.

II.  EVIDENCE

	[¶11]  Maddocks contends the Commission violated the APA
evidentiary rules by relying on evidence that was not the kind "upon which
reasonable persons are accustomed to rely in the conduct of serious affairs." 
5 M.R.S.A. § 9057(2).  As a result of this violation, Maddocks contends that
he was prejudiced, and the Commission lacked substantial evidence to
support its decision.
	[¶12]  "We will not overrule findings of fact supported by substantial
evidence" and "will not disturb a decision of the Commission unless the
record before the Commission compels a contrary result."  Lewiston Daily
Sun v. Unemployment Ins. Comm'n, 1999 ME 90, ¶ 7, 733 A.2d 344, 346
(quotations and citations omitted).  Evidentiary matters in administrative
proceedings are governed by 5 M.R.S.A. § 9057 (1989).{2}  "The mere
admission of incompetent evidence by an administrative agency does not
relieve the party appealing from the agency's order of his burden to show
prejudice resulting therefrom."  Maine Real Estate Comm'n v. Jones, 670
A.2d 1385, 1387 (Me. 1996).  "Only when the agency is shown to have
relied upon incompetent evidence to the prejudice of the complaining party
can the admission of such evidence require reversal of the agency decision." 
Id. (quoting In re Maine Clean Fuels, Inc., 310 A.2d 736, 749 (Me. 1973)).
	[¶13]  The Maine Employment Security Law defines "employment"
broadly as including services "performed for wages or under any contract of
hire, written or oral, expressed or implied."  26 M.R.S.A. § 1043(11) (Supp.
2000).  Section 1043(11)(E) provides: "Services performed by an individual
for remuneration shall be deemed to be employment subject to this chapter
unless and until it is shown to the satisfaction of the bureau that . . ." the
three prongs of the ABC test are satisfied.{3}  26 M.R.S.A. § 1043(11)(E). 
Before Maddocks is required to satisfy the ABC test, however, the Bureau's
burden is to establish that certain individuals performed services for
Maddocks for compensation.  See id.; Nyer v. Maine Unemployment Ins.
Comm'n, 601 A.2d 626, 627 (Me. 1992) ("Once triggered, the employer
may rebut the presumption of employment only by proving all three prongs
of what is commonly known as the 'ABC' test . . . .").  Therefore, before we
consider whether Maddocks met the ABC test, we must determine whether
the Bureau established that Maddocks paid individuals for services during
the assessment period.  See id.
	[¶14]  The Commission found that the Bureau met its burden by
introducing reports, prepared by a Bureau employee, of compensation paid
by Maddocks to certain "satellite installers" and that the Bureau employee
had obtained the information in the reports from an employee of and from
records of the Bureau of Taxation which information, in turn, was based on
information supplied by Maddocks.  Maddocks strongly objected to the
admission of the reports because the Bureau employee who prepared them
was not available for him to cross-examine.  Instead, the Bureau introduced
the documents through the unsworn testimony of Lloyd Black, the author's
superior.
	[¶15]  Maddocks contends, on appeal, that the Commission erred in
relying on the documents because Black, through whom the documents
were introduced, had not been sworn.  The APA provides that:  "All
witnesses shall be sworn."  5 M.R.S.A. § 9057(3).  Because Maddocks failed
to object to Black's unsworn testimony during the hearing, we would not
generally review the issue on appeal, New England Whitewater, 550 A.2d at
60; however, we have held that "[w]hen a party is not aware, or is not
chargeable with responsibility to be aware, of the requirement to swear
witnesses, as for example when a party is not represented by counsel, the
failure to make timely objection regarding such omission rarely will lead to a
forfeiture by procedural default," Sewall v. Spinney Creek Oyster Co., Inc.,
421 A.2d 36, 39-40 (Me. 1980).  Thus, we will consider Maddocks's
contention despite his failure to object during the hearing.  See Sewall, 421
A.2d at 39-40.
	[¶16]  The circumstances here are distinguishable from those in
Sewall, where we determined that the failure to swear witnesses was a fatal
deficiency.  See id. at 40.  As part of the Commission's decision to admit the
evidence, it stated it would "entertain the employer's request for [a] further
hearing to cross-examine the preparer of the documents to which the
employer objects . . . ."  Maddocks chose, however, not to take advantage of
this opportunity.  Because the Commission's offer provides the essential
fairness afforded by the APA evidentiary rules, it cured the defect created by
the Commission's failure to swear Black.  Therefore, Maddocks was not
prejudiced by the unsworn testimony, and in these circumstances, although
the Commission should have sworn Black, its failure to administer the oath
was not a fatal deficiency.
	[¶17]  Maddocks also contends the documents are not "the kind of
evidence upon which reasonable persons are accustomed to rely in the
conduct of serious affairs" because of our decision in Heal v. Maine
Employment Sec. Comm'n, 447 A.2d 1223 (Me. 1982).  In Heal, we found
the Commission relied on two documents to make its decision.  Id. at 1225-
26.  We determined that the record did not describe "the circumstances
under which the statements were obtained"; "[t]he documents on their face
[did] not supply any assurance of reliability"; the documents were "a second
or third-hand hearsay account of the crucial fact in litigation"; the
statements in the documents were unsworn; "the identity of the hearsay
informant [was] uncertain"; and "the extent of the informant's personal
knowledge [was] unknown."  Id. at 1226.  As a result, the documents were
inadmissible.  Id.
	[¶18]  In the present case, Black established a foundation for
admitting the documents by describing the process and the circumstances
in which the information was obtained.  Moreover, Black identified himself
as being in charge of field advisors and examiners, identified the person who
prepared the documents, and verified that the field advisor and examiner
who signed the documents was the employee who secured the information. 
Finally, the Commission offered Maddocks an opportunity to cross-examine
the author of the documents at a subsequent hearing if Maddocks had a good
faith belief that the documents were incorrect. Thus, because Black's
testimony and the procedure adopted by the Commission established the
reliability of the documents, we determine that the documents that the
Commission relied on are "the kind of evidence upon which reasonable
persons are accustomed to rely in the conduct of serious affairs."  5 M.R.S.A.
§ 9057(2).
	[¶19]  Next, we consider whether the documents trigger the
presumption that certain individuals performed services for Maddocks for
compensation during the assessment periods.  The documents establish that
Maddocks paid Michael Walsh in 1994-1995{4} and other identified
individuals in 1996.  Other than the compensation paid to Walsh, the
documents do not provide the names of the individuals who allegedly
received indicated amounts of compensation from Maddocks during 1994
and 1995.  Thus, the Bureau triggered Maddocks's obligation to rebut the
presumption of employment for the 1996 assessments, but except for
Walsh, the Bureau failed to trigger Maddocks's obligation to rebut the
presumption of employment for the 1994 and 1995 assessments.

III.  ABC TEST

	[¶20]  Because the Commission correctly determined that the
presumption was triggered for Walsh in 1994 and 1995 and for the listed
individuals in 1996, Maddocks had a burden to satisfy the ABC test for those
individuals.  See Nyer, 601 A.2d at 627.  "If an employer fails to satisfy any of
the three prongs of the [ABC] test, the worker is deemed an employee . . . ." 
Lewiston Daily Sun, 1999 ME 90, ¶ 11, 733 A.2d at 347.  Maddocks did not
present any evidence from which the Commission could conclude that the
individuals were not employees.  See Martin, 1998 ME 271, ¶ 18, 723 A.2d
at 418.  As a result, the Commission did not err in finding Maddocks failed
to meet his burden of establishing that he did not employ Walsh in 1994 and
1995 and the other individuals in 1996.  See id.
	The entry is:

Judgment finding Maddocks liable for the
1996 assessment affirmed; judgment finding
Maddocks liable for the 1994 and 1995
assessments vacated, with the exceptions of
the contributions that correspond to the wages
paid to Walsh by Maddocks.  Remanded to the
Superior Court for remand to the Commission
with instructions to calculate the 1994 and
1995 assessments based solely on the amounts
Maddocks paid Walsh for his services, as
established in the record of the proceeding
before the Commission.

For plaintiff:

Leonard C. Maddocks
27 Downeast Highway
Ellsworth, ME 04605

Attorneys for defendant:

G. Steven Rowe, Attorney General
Pamela W. Waite, Asst. Attorney General
Elizabeth Wyman, Asst. Attorney General
6 State House Station
Augusta, ME 04333-0006

FOOTNOTES******************************** {1} . Maddocks's lawyer initially appealed the assessments, but Maddocks later wrote a letter to the Commission indicating that he was proceeding pro se. {2} . 5 M.R.S.A. § 9057 provides in pertinent part: 2. Evidence. Evidence shall be admitted if it is the kind of evidence upon which reasonable persons are accustomed to rely in the conduct of serious affairs. Agencies may exclude irrelevant or unduly repetitious evidence. 3. Witnesses. All witnesses shall be sworn. {3} . The ABC test in 26 M.R.S.A. § 1043(11)(E) states: (1) Such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; (2) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and (3) Such individual is customarily engaged in an independently established trade, occupation, profession or business. {4} . The record indicates that Walsh received the following compensation from Maddocks: $1,317.50 for 1994 and $4,405 for the first quarter of 1995.