Bartelt Custom Automotive, Inc. v. LIRC

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
May 4, 2021
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2020AP800 Cir. Ct. No. 2019CV6942

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I

BARTELT CUSTOM AUTOMOTIVE, INC.,

PLAINTIFF-APPELLANT,

V.

LABOR AND INDUSTRY REVIEW COMMISSION AND KEVIN D. WARLOW,

DEFENDANTS-RESPONDENTS.

APPEAL from an order of the circuit court for Milwaukee County:
LAURA GRAMLING PEREZ, Judge. Reversed and cause remanded with
directions.

Before Brash, P.J., Dugan and Donald, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2020AP800

¶1 PER CURIAM. Bartelt Custom Automotive, Inc. (BCA), appeals
an order of the circuit court affirming an order of the Labor and Industry Review
Commission (LIRC) which found that BCA failed to provide Kevin Warlow with
suitable employment following a work-related injury, in violation of WIS. STAT.
§ 102.35(3) (2019-20).1 BCA argues that LIRC’s determination, which reversed
the decision of an Administrative Law Judge (ALJ), violated its due process rights
because LIRC made a witness credibility determination without having the benefit
of the ALJ’s personal impressions of the witnesses. We agree. Accordingly, we
reverse and remand the matter to LIRC for a new hearing.

BACKGROUND

¶2 BCA is a company that performs metal fabrication and machining.
In September 2016, BCA hired Warlow as a welder. Although BCA initially
contacted Warlow regarding an opening as a press brake operator, Warlow
expressed disinterest in the position and was eventually hired as a welder.

¶3 On January 9, 2017, Warlow sustained a work-related injury and
was on medical leave for seven weeks. Warlow received workers compensation
benefits for his injury. In the interim, BCA hired a general laborer to help with a
variety of tasks, including, but not limited to welding, assembly, and press brake
operation. When Warlow returned to work on February 28, 2017, BCA’s
president, Doug Bartelt, told Warlow that work was slow and that Warlow would
be laid off. A press brake operator position was available at that time, but it does
not appear as though Bartelt offered that position to Warlow.

1
All references to the Wisconsin Statutes are to the 2019-20 version unless otherwise
noted.

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¶4 On October 4, 2017, Warlow filed a claim pursuant to WIS. STAT.
§ 102.35(3), arguing that BCA unreasonably refused to rehire Warlow when he
returned to work. At a hearing before ALJ William Phillips, Jr., Warlow and
Bartelt both testified. Warlow testified that when he returned to work, Bartelt told
him that work was “slow” and that he would be laid off. Warlow indicated that he
was not offered a brake press operator position at that time, stating that the only
discussion he ever had with Bartelt regarding working as a press brake operator
took place before he was hired as a welder in September 2016. Warlow stated that
he was not interested in the press brake operator position in September 2016.

¶5 Bartelt also testified, telling the ALJ that prior to Warlow’s return,
he hired a general laborer to replace a discharged employee, but that he did not
have any welding work available when Warlow returned. Bartelt admitted that a
press brake operator position was available. Bartelt was also asked about his
answer to Warlow’s hearing application, dated December 11, 2017, which
contained a handwritten statement stating: “but offered [Warlow] a press brake
position [on February 28, 2017,] which he declined.” Bartelt stated that he did not
recall writing that statement, nor did he recall whether he actually offered Warlow
the press brake operator position. Bartelt did recall, however, that Warlow was
“very adamant about … not wanting to run a press brake” when Warlow was hired
in September 2016 because Warlow indicated that he was scared of the press
brake machine.

¶6 ALJ Phillips found that BCA did not unreasonably refuse to rehire
Warlow. In his decision, ALJ Phillips stated:

While I accept Bartelt’s representations that he had no
welding work available on February 28, 2017, he was
relying on a pre-employment conversation of September
201[6] relative to the fabricator’s job.

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No. 2020AP800

Be that as it may, the record supports the
proposition that BCA did not behave in an unreasonable
fashion that would rise to liability. On the contrary, when
Warlow was released to return to work, BCA had no
suitable employment available and in the months following
the separation, BCA only had work for which the applicant
was not qualified.

¶7 Warlow petitioned LIRC for review of the ALJ’s decision. LIRC
reversed ALJ Phillips’s decision, determining that BCA had an obligation to offer
Warlow the press brake operator position when he returned to work after his
injury. LIRC’s decision stated:

The fact that there was a discussion of the press
brake position at the time of the applicant’s original hire,
and at that time the applicant expressed disinterest in the
position, does not mean that the employer was under no
obligation to offer him the press brake position available on
February 28, 2017. At the time of hire, the applicant
obviously was given the opportunity to work as a welder.
If there had been no welding position available at that time
the applicant might very well have accepted a press brake
position. Under the relevant law … the applicant was
entitled to be informed of the press brake position that was
open and available on February 28, 2017, and to be offered
that position. The employer did not establish any
reasonable cause for not offering it to him, and given his
status as a returning, injured employee, the failure to do so
was not fair, just, or fit under the circumstances.

¶8 LIRC’s decision also noted that it was unable to consult with ALJ
Phillips regarding his impressions of witness credibility because ALJ Phillips
passed away before LIRC issued its decision. LIRC stated, however, that its
decision was not based on witness credibility, but rather, the uncontested fact that
BCA had employment available when Warlow returned. Specifically, LIRC
stated:

[In] his decision ALJ Phillips made no specific factual
findings contrary to those made by the commission, with
the exception of the following finding: “... when Warlow
was released to return to work, BCA had no suitable

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No. 2020AP800

employment available[.]” This finding was demonstrably
incorrect because even Douglas Bartelt acknowledged that
the press brake position was available, and that the
applicant was qualified to perform that job. ALJ Phillips
did not find that Bartelt offered this position to the
applicant on February 28, 2017. The commission’s
decision rests upon the uncontested fact that there was
suitable employment available when the applicant returned,
and upon the failure of the employer to carry its burden to
demonstrate that this employment was offered to the
applicant.

(Footnote omitted.)

¶9 BCA sought judicial review of LIRC’s decision in the circuit court
arguing that it was denied due process because LIRC made credibility
determinations without the benefit of ALJ Phillips’s personal witness impressions
and without the benefit of the hearing transcript, as it had not yet been prepared
when LIRC issued its decision. The circuit court affirmed LIRC. This appeal
follows.

DISCUSSION

¶10 On appeal, BCA argues that it was denied due process when LIRC
determined that BCA had suitable employment for Warlow upon his return
because: (1) LIRC’s decision involved credibility determinations made without
input from ALJ Phillips and without the benefit of the hearing transcript; (2) LIRC
erroneously interpreted the term “suitable employment” pursuant to WIS. STAT.
§ 102.35(3); and (3) LIRC was unaware of contradictory testimony taken at the
hearing regarding whether BCA had reasonable cause not to offer Warlow the
press brake operator position because LIRC did not have the hearing transcript
when it issued its decision.

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No. 2020AP800

¶11 On appeal, we review LIRC’s decision and not that of the circuit
court. See Stoughton Trailers, Inc. v. LIRC, 2007 WI 105, ¶26, 303 Wis. 2d 514,
735 N.W.2d 477. LIRC’s findings of fact are conclusive on appeal as long as they
are supported by credible and substantial evidence. Michels Pipeline
Constr., Inc. v. LIRC, 197 Wis. 2d 927, 931, 541 N.W.2d 241 (Ct. App. 1995);
see also WIS. STAT. § 102.23(6).

¶12 Where a party seeks review of an ALJ’s findings or order, LIRC is
not bound by the ALJ’s decision, as LIRC, “on review, may either affirm, reverse
or modify the findings or order in whole or in part, or set aside the findings and
order and remand … for further proceedings. Such actions shall be based on a
review of the evidence submitted.” WIS. STAT. § 111.39(5)(b). Our review, then,
is of LIRC’s findings, not those of the ALJ. See Xcel Energy Servs., Inc. v.
LIRC, 2013 WI 64, ¶56, 349 Wis. 2d 234, 833 N.W.2d 665.

¶13 Additionally, the Wisconsin Supreme Court has held that for issues
of credibility, “special deference is to be paid (by the agency setting aside an
examiner’s findings) to the face-to-face examiner or fact-finder.”
Transamerica Ins. Co. v. DILHR, 54 Wis. 2d 272, 282-83, 195 N.W.2d 656
(1972) (quotation marks and citation omitted). When an administrative agency
reverses the examiner’s credibility, concerns of due process and “[f]undamental
fairness require[] that administrative agencies, as well as courts, set forth the
reasons why a fact-finder’s findings are being set aside or reversed, and spell out
the basis for independent findings substituted.” Id. at 284. This reasoning is
typically set forth in a memorandum opinion, which accompanies a LIRC
decision. See id. at 283.

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¶14 Here, LIRC contends that it did not reverse ALJ Phillips on the basis
of credibility; rather, LIRC contends that it reasonably inferred that Warlow’s
disinterest in the press brake operator position may have been temporary and
contingent upon the circumstances, making the job suitable employment when
Warlow returned from his injury.

¶15 Contrary to LIRC’s assertions, we conclude that LIRC’s findings
were speculative and indeed relied upon credibility determinations. At the time
LIRC issued its decision, it did not have the hearing transcript available and had
no way of knowing the status of Warlow’s interest in the press brake operator
position. LIRC assumed that Warlow’s disinterest may have been temporary, but
offered no support for this assumption.

¶16 Moreover, and again contrary to LIRC’s assertions, LIRC’s decision
involved a credibility determination that was different from the determination
made by ALJ Phillips. LIRC found that Warlow “credibly” testified that he was
not offered the press brake operator position upon his return to work and that the
position availability was inconsistent with Bartelt’s contention that “there was
barely enough work for the employer’s then-current employees.” On the other
hand, ALJ Phillips “accept[ed]” Bartelt’s reliance on his “pre-employment
conversation” with Warlow when determining that BCA did not have suitable
employment available for Warlow. While neither LIRC nor ALJ Phillips
explicitly addressed witness credibility, both made implicit findings that ran
contrary to one another.

¶17 Because of ALJ Phillips’s passing, LIRC was unable to discuss his
impressions of the witnesses’ credibility. ALJ Phillips’s notes from the hearing do
not address the credibility issue. LIRC’s decision, therefore, was based on

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No. 2020AP800

speculation that Warlow might have accepted the press brake operator position if
offered to him, and on its implicit finding that Warlow was the more credible
witness. We conclude that a new hearing before an ALJ is warranted. We
therefore reverse LIRC’s decision and remand the matter for a new hearing.
Accordingly, we need not address BCA’s remaining arguments.

¶18 For the foregoing reasons, we reverse and remand with directions.

By the Court.—Order reversed and cause remanded with directions.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

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