BMS Limited 1999 v. Department of Workforce Services

2014 UT App 111
_________________________________________________________
THE UTAH COURT OF APPEALS
BMS LIMITED 1999, INC.,
Petitioner,
v.
DEPARTMENT OF WORKFORCE SERVICES AND JAMES R. CAPSON,
Respondents.
Memorandum Decision
No. 20130499-CA
Filed May 22, 2014
Original Proceeding in this Court
Rick D. Roskelley and Dustin L. Clark, Attorneys
for Petitioner
Kathleen Bounous, Attorney for Respondent
Department of Workforce Services
JUDGE JOHN A. PEARCE authored this Memorandum Decision, in
which JUDGE STEPHEN L. ROTH and SENIOR JUDGE RUSSELL W.
BENCH concurred.1
PEARCE, Judge:
¶1 BMS Limited 1999, Inc., doing business as RLS of Utah,
challenges the Workforce Appeals Board’s decision that James R.
Capson had been an RLS employee rather than an independent
contractor. This decision rendered Capson eligible for
unemployment benefits under Utah’s Employment Security Act.
See generally Utah Code Ann. §§ 35A-4-101 to -508 (LexisNexis
1. The Honorable Russell W. Bench, Senior Judge, sat by special
assignment as authorized by law. See generally Utah Code Jud.
Admin. R. 11-201(6).

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 2 2014 UT App 111
2011 & Supp. 2013); Utah Admin. Code R994-102 to -508. We
decline to disturb the Board’s decision.
¶2 RLS operates a logistics business that delivers parts to
automotive dealers on demand. In April 2010, RLS and Capson
entered into an agreement titled ‚Independent Contractor
Agreement (Co-Op),‛ under which Capson would deliver
automotive parts to RLS’s customers. The agreement specified
that Capson would function as an independent contractor. This
arrangement ended at some point before May 2012, when
Capson filed for unemployment benefits and listed RLS as his
former employer.
¶3 A Department of Workforce Services representative
determined that RLS had employed Capson. An administrative
law judge (the ALJ) reviewed that determination and ruled that
RLS had not met its burden of demonstrating that Capson had in
fact been an independent contractor. RLS appealed to the Board,
which reviewed the ALJ’s ruling and agreed that RLS had
employed Capson. The Board reasoned that although RLS had
not exercised direction and control over Capson, Capson was not
independently established in a similar line of work.
¶4 The Board’s written decision examined all of the factors
listed in the relevant regulation, Utah Administrative Code
R994-204-303(1)(b). The Board found that Capson had not owned
a delivery business prior to his relationship with RLS, did not
have a separate place of business or a business license, had not
advertised his delivery services, and had not intended to
establish an independent business. The decision also determined
that some factors weighed in favor of independent contractor
status. The Board recognized that Capson had provided his own
delivery vehicle and trailer and that he could realize a profit or
loss separately from RLS. The Board nonetheless concluded that
the ‚totality of the circumstances‛ indicated that Capson was not
independently established in his trade, occupation, profession,
or business and had therefore been an RLS employee.

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 3 2014 UT App 111
¶5 RLS petitions for review, asserting that the Board erred in
determining that Capson was not independently established.2
Specifically, RLS contends that the Board improperly considered
whether Capson had established his parts delivery business
before contracting with RLS. RLS also contends that the Board
and the ALJ incorrectly weighted the factors identified in Utah
Administrative Code R994-204-303(1)(b).
¶6 Utah’s Employment Security Act is intended to ‚lighten
the burdens of persons unemployed through no fault of their
own‛ by ‚pay*ing such+ workers for a limited time while they
seek other employment.‛ Utah Admin. Code R994-102-101(1).
Former employees are generally eligible for unemployment
benefits while independent contractors are not. Id. R994-204-302.
Utah law presumes that a paid or contracted worker is an
employee unless the putative employer can demonstrate that the
worker (1) is independently established in work of the same
nature and (2) has been free from control or direction over the
means of performing the work. Utah Code Ann. § 35A-4-204(3)
(LexisNexis 2011); Utah Admin. Code R994-204-303.
¶7 When the Board decides whether a claimant was an
employee or an independent contractor, the regulations
implementing the Act demand ‚[s]pecial scrutiny of the facts‛ in
order to ensure that ‚the form of a service relationship does not
obscure its substance.‛ Utah Admin. Code R994-204-303. The
regulations also list several factors ‚as aids in the analysis‛ but
recognize that ‚*t+he degree of importance of each factor varies
2. RLS’s petition alleges that both the Board’s decision and the
ALJ’s ruling were erroneous. However, our review is limited to
the final agency action—the Board’s decision reviewing the
ALJ’s findings and affirming the ALJ’s ruling. See Utah Code
Ann. § 78A-4-103(2)(a)(i) (LexisNexis 2012); id. § 63G-4-403(2)(a)
(2011). We review the ALJ’s ruling only to the extent that the
Board relied upon it.

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 4 2014 UT App 111
depending on‛ the nature of the work performed. Id. The
administrative code further advises that ‚some factors do not
apply to certain services and . . . should not be considered.‛ Id.
Finally, our supreme court has instructed that ‚the Employment
Security Act should be liberally construed in favor of affording
benefits.‛ Superior Cablevision Installers, Inc. v. Industrial Comm’n,
688 P.2d 444, 447 (Utah 1984).
¶8 RLS first contends that the Board erred by determining
that Capson’s delivery business was not established
independently of his work for RLS. In support of this contention,
RLS argues that ‚*t+he Board and ALJ erroneously read into the
phrase ‘independently established trade or business’ the
requirement that Capson’s business exist prior to, rather than
contemporaneously with, providing delivery services‛ to RLS.
We review the Board’s interpretation of a regulation for
correctness. See Carlos v. Department of Workforce Servs., 2013 UT
App 279, ¶ 5, 316 P.3d 957 (explaining that the Board’s
interpretation of the applicable statute is reviewed for
correctness); see also State v. Mooney, 2004 UT 49, ¶ 9 n.1, 98 P.3d
420 (‚Like issues of statutory interpretation, we review the trial
court’s interpretation of a regulation for correctness . . . .‛).
¶9 Here, the Board did not interpret the regulation in the
manner RLS asserts. RLS does not point to any language in the
Board’s decision or the ALJ’s ruling that suggests that either read
the regulation as requiring prior establishment of an
independent business. Moreover, we can discern nothing in the
Board’s decision indicating that the Board applied a requirement
of prior existence. Indeed, the Board specifically stated that the
ALJ ‚did not find *Capson+ was required to have been a delivery
driver prior to his relationship with RLS. Rather, the [ALJ]
looked at all the factors surrounding *Capson’s+ business
practices, one of which was that he had not created his
profession as a delivery driver prior to his relationship with
RLS.‛

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 5 2014 UT App 111
¶10 That finding leads RLS to also argue that ‚*t+he Board and
ALJ erred because they based their decisions in part on Capson’s
business activities prior to contracting with RLS.‛ RLS appears to
claim that because the regulations express the factors in the
present tense, the Board was forbidden from even considering
Capson’s activities prior to his relationship with RLS. We review
the Board’s application of statutes and regulations for
correctness. See Carlos, 2013 UT App 279, ¶ 5.
¶11 Nothing in the Act or its regulations limits the Board’s
ability to consider this type of probative information while
carrying out its duty to scrupulously scrutinize the substance of
the relationship. See Utah Admin. Code R994-204-303. Under
RLS’s reading, the Board would be hobbled in the performance
of that duty because it could not consider, for example, whether
a claimant had operated an independent and substantially
similar business prior to engaging in the disputed work.
Moreover, our supreme court has previously upheld an
administrative board’s determination that a claimant was not
independently established in similar work when that board
relied in part on evidence that the claimant ‚was not an
independently established cable installer prior to his
relationship‛ with a cable-installing entity. Superior Cablevision,
688 P.2d at 447.3 Accordingly, the Board did not err by
considering evidence that Capson had not established his
delivery services business prior to his relationship with RLS.
3. RLS asserts that Superior Cablevision Installers, Inc. v. Industrial
Commission, 688 P.2d 444 (Utah 1984), is of limited application
here because it was decided before Utah Administrative Code
R994-204-303(1)(b) promulgated the seven guiding factors for
determining whether a claimant is independently established.
However, R994-204-303(1)(b) does not place greater restrictions
on the types of evidence the Board may consider and even notes
that the factors are listed ‚only as aids in the analysis of the facts
of each case.‛

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 6 2014 UT App 111
¶12 RLS next contends that ‚*t+he balance of factors
establishes that Capson was customarily engaged in an
independently-established trade.‛ This challenge may be read as
either an assertion that the Board was required to give equal
weight to all of the factors the Administrative Code outlines or a
challenge to the weight actually assigned to each factor by the
Board. To determine whether the Board erred by treating some
factors as more relevant than others, we look to the Board’s
interpretation and application of the regulation. Accordingly, we
review the Board’s analysis for correctness. See Carlos, 2013 UT
App 279, ¶ 5. The regulation notes that ‚an independently
established trade . . . or business is created and exists apart from
a relationship with a particular employer and does not depend
on a relationship with any one employer for its continued
existence.‛ Utah Admin. Code R994-204-303(1)(a). The
regulation then lists seven factors that are ‚intended only as aids
in the analysis‛ of whether an individual was independently
established in his or her trade. Id. R994-204-303. ‚The degree of
importance of each factor varies depending on the service and
the factual context in which it is performed.‛ Id. Accordingly,
because the relevance of a given factor will differ depending on
the nature of the work performed, the Board may reasonably
determine that a numerical minority of factors establishes the
preponderance of the evidence once the weight of those factors
is taken into account. See id. In short, the phrase ‚preponderance
of the evidence‛ does not necessarily equate to ‚preponderance
of the factors,‛ and the application of the test is more
sophisticated than simply tallying the factors for and against.
The Board therefore did not err by considering some factors as
more persuasive than others.
¶13 We next consider the alternate reading of RLS’s
contention—whether the Board erred by assigning to each factor
the weight that it did. RLS argues that ‚the Board and ALJ
fixated on two criteria to the exclusion of the preponderance of
the evidence.‛ RLS devotes much of its brief to assertions that
the Board and ALJ should have placed greater weight on certain

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 7 2014 UT App 111
factors. The appropriate weight to assign to each factor is a fact-
sensitive question that will differ in every case due to the
individuality of fact patterns and the vagaries of various
vocations. See Utah Admin. Code R994-204-303. Accordingly,
this is a ‚fact-like‛ determination and, as a matter of institutional
competence, we grant deference to the Board’s weighting of the
factors. See, e.g., Murray v. Utah Labor Comm’n, 2013 UT 38, ¶¶ 33,
36–39, 308 P.3d 461 (‚*A+ mixed question arises when an
agency . . . must apply a legal standard to a set of facts unique to
a particular case.‛); Jex v. Utah Labor Comm’n, 2013 UT 40, ¶ 16,
306 P.3d 799 (deferring to an administrative decision on a ‚fact-
intensive‛ mixed question that did ‚not lend itself easily to
consistent resolution through a uniform body of appellate
precedent‛ (citation and internal quotation marks omitted)).4
¶14 Here, the Board found that the factors suggesting Capson
was not independently established—including that Capson had
not previously owned a delivery business, did not possess a
business license, and had never advertised his delivery
services—were more compelling than the factors suggesting that
he was independently established—including that Capson
provided his own truck and trailer and could recognize a profit
or loss separately from RLS. On this record, we cannot conclude
that the Board erred by weighting the factors as it did.
Accordingly, the Board did not err by determining that RLS had
not shown that Capson was both independently established and
4. In its brief, the Board contends that RLS’s challenge to the
sufficiency of the evidence should be rejected due to RLS’s
failure to adequately marshal. It does not appear that RLS
mounted such a challenge. To the extent that RLS’s argument
may be construed as an attack on the sufficiency of the evidence
supporting the Board’s findings or ultimate decision, we note
that such an argument is inadequately briefed and thus fails to
carry RLS’s burden of persuasion. Utah R. App. P. 24(a)(9). We
therefore decline to address it.

BMS Limited 1999, Inc. v. Department of Workforce Services
20130499-CA 8 2014 UT App 111
free from RLS’s control and direction. We therefore decline to
disturb the Board’s decision.