JOANNE JONES v. BOARD OF REVIEW DEPARTMENT OF LABOR NOVAKANE LLC (2013)

Appellant Joanne Jones appeals from a final decision of the Board of Review (Board) which found her unemployment claims invalid under N.J.S.A. 43:21–19(i)(7)(C) and determined she was liable for a refund of benefits received.   Our examination of the record satisfies us that the Board's final decision was properly premised on facts in the record and is consonant with relevant statutory provisions.   Accordingly, we affirm.

I.

The record discloses the following facts and procedural history leading to the administrative determination under review.

Beginning in 2006 Jones was employed as a manager, on a seasonal basis, for Novakane, LLC. Novakane was wholly owned by Jones' husband.   Jones and her husband filed federal joint tax returns.   Any income, profits, losses and expenses attributable to Novakane were reported on the Jones' joint federal tax returns.

Jones filed a claim for unemployment benefits effective November 11, 2007. $5202 in benefits were paid for the weeks ending November 17, 2007, through March 8, 2008.   Jones then filed a claim for unemployment benefits effective November 16, 2008. $5840 in benefits were paid on that claim for the weeks ending November 22, 2008 through March 7, 2009.   A year later, Jones filed another claim for unemployment benefits effective November 15, 2009, and $397 in benefits were paid for the week ending November 21, 2009.

On November 25, 2009, the Deputy and the Director of the Division of Unemployment and Disability Insurance (Division) mailed Jones a determination in which the Deputy found she was ineligible for benefits on the claims dated November 11, 2007, November 16, 2008, and November 15, 2009 on the ground that she was unavailable for work, N.J.S.A. 43:21–4(c), and the Director found that Jones was liable for a refund of benefits.   Jones appealed the Deputy and the Director's determination to the Appeal Tribunal.   In a February 23, 2010 decision, the Appeal Tribunal affirmed the Deputy's determination that Jones was ineligible for benefits and the Director's determination that Jones was liable for a refund of all benefits paid.   Jones appealed to the Board and on August 30, 2010, the Board remanded the matter to the Appeal Tribunal for a new hearing and decision.

Following a second hearing, on November 19, 2010, the Appeal Tribunal again affirmed the Deputy's determination that Jones' unemployment claims dated November 11, 2007, November 16, 2008, and November 15, 2009 were invalid under N.J.S.A. 43:21–19(i)(7)(C).  Additionally, it affirmed the Director's decision, finding Jones liable, in accordance with N.J.S.A. 43:21–16(d) and N.J.A.C. 12:17–14.2, for refund in the sum of $5202 received as benefits for the weeks ending November 17, 2007 through March 8, 2008 against the claim dated November 11, 2007;  $5840 received as benefits for the weeks ending November 22, 2008, through March 7, 2009 against the claim dated November 16, 2008;  and $397 received as benefits for the week ending November 21, 2009 against the claim dated November 15, 2009.

Jones again appealed the Appeal Tribunal's decision to the Board.   On May 28, 2011, the Board affirmed the Appeal Tribunal's decision.   It is from that determination that Jones appeals.

II.

Established precedents guide our task on appeal.   Appellate review of an administrative agency decision is limited.   See In re Herrmann, 192 N.J. 19, 27 (2007).   The burden is on Jones in her appeal to demonstrate grounds for reversal.  McGowan v. N.J. State Parole Bd., 347 N.J.Super. 544, 563 (App.Div.2002);  see also Bowden v. Bayside State Prison, 268 N.J.Super. 301, 304 (App.Div.1993) (holding that “[t]he burden of showing the agency's action was arbitrary, unreasonable or capricious rests upon the appellant”), certif. denied, 135 N.J. 469 (1994).

“Appellate courts ordinarily accord deference to final agency actions, reversing those actions if they are ‘arbitrary, capricious or unreasonable or [if the action] is not supported by substantial credible evidence in the record as a whole.’ ”   N.J. Soc'y for the Prev. of Cruelty to Animals v. N.J. Dep't of Agric., 196 N.J. 366, 384–85 (2008) (quoting Henry v. Rahway State Prison, 81 N.J. 571, 579–80 (1980)) (alteration in original).   Under the arbitrary, capricious and unreasonable standard, the reviewing court is guided by three major inquiries:  (l) whether the agency's decision conforms with relevant law;  (2) whether the decision is supported by substantial credible evidence in the record;  and (3) whether in applying the law to the facts, the administrative agency clearly erred in reaching its conclusion.  In re Stallworth, 208 N.J. 182, 194 (2011).   When an agency decision satisfies such criteria, the reviewing court accords substantial deference to the agency's fact-finding and legal conclusions, while acknowledging the agency's “ ‘expertise and superior knowledge of a particular field.’ ”  Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 10 (2009) (quoting Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992)).   A reviewing court should not substitute its own judgment for the agency's even though it might have reached a different conclusion.   Stallworth, supra, 208 N.J. at 194;  see also In re Taylor, 158 N.J. 644, 656 (1999) (discussing the narrow appellate standard of review for administrative matters).

III.

On appeal, Jones argues that the Board erred when it disregarded Novakane as a separate entity from her husband.

N.J.S.A. 43:21–19(i) defines employment under the New Jersey Unemployment Compensation Law. N.J.S.A. 43:21–19(i)(7)(C) provides that employment shall not include, “[s]ervice performed by an individual in the employ of his son, daughter or spouse, and service performed by a child under the age of 18 in the employ of his father or mother.”

Here, the Appeal Tribunal found:

The evidence shows that the claimants services during the base year of her employment against each of the unemployment claims in question were performed for an LLC that, under N.J.A.C. 12:16–11.2 is defined as a sole proprietorship, that proprietorship being owned by her spouse.   Therefore, those services were not in “employment” and cannot be used to establish a valid unemployment claim.

The Board's decision to affirm the Appeal Tribunal determination that Novakane was disregarded as an entity separate from its owner, Gordon Jones, in accordance with N.J.S.A. 42:2B–69(b), and that, since Jones was employed by her husband, her services were not in “employment,” but were exempt, was not arbitrary, capricious or unreasonable.

N.J.A.C. 12:16–11.2(c) clearly states that “[a]n LLC consisting of one member shall be classified as a sole proprietorship ․ and where the LLC is disregarded for Federal income tax purposes, the member shall be considered the employer with regard to all individuals performing services for the LLC.” Novakane was a single member limited liability company.   The income, profits, losses and expenses attributed to Novakane were reported on the Jones' joint federal tax return.

We are therefore satisfied that the record supports the Board's finding that Jones' unemployment claims are invalid under N.J.S.A. 43:21–19(i)(7)(C) and that she is required to repay all unemployment benefits received pursuant to N.J.S.A. 43:21–16(d).

Affirmed.

PER CURIAM