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Harry G. Stratigos D/B/A Dairy Queen v. Department of Labor and Industry

November 28, 2012

HARRY G. STRATIGOS D/B/A DAIRY QUEEN, PETITIONER
v.
DEPARTMENT OF LABOR AND INDUSTRY, OFFICE OF UNEMPLOYMENT COMPENSATION TAX SERVICES, RESPONDENT



The opinion of the court was delivered by: P. Kevin Brobson, Judge

Submitted: September 14, 2012

BEFORE: HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION BY JUDGE BROBSON

Harry G. Stratigos (Mr. Stratigos), d/b/a Dairy Queen, pro se, petitions for review of the decision by the Department of Labor and Industry (Department) to affirm the decision of the Office of Unemployment Compensation Tax Services (OUCTS), which denied Mr. Stratigos' request to re-determine-i.e., reduce-his unemployment compensation (UC) contribution rate.*fn1 For the reasons set forth below, we affirm.

The facts of this case are undisputed. On October 11, 1995, Mr. Stratigos registered a Dunkin' Donuts franchise for Pennsylvania UC taxes.

(Amended Reproduced Record (A.R.R.) at 51.) Mr. Stratigos first paid wages as an employer on September 8, 1995. (A.R.R. at 51.) On October 8, 2008, Mr. Stratigos notified the UC Field Accounting Office (FAO) that, on June 13, 2008, he had discontinued operation of his Dunkin' Donuts franchise and ceased paying wages as an employer. (Id. at 46.) Also, Mr. Stratigos informed the FAO that he did not transfer all or any part of the Dunkin' Donuts franchise to another Pennsylvania business. (Id.)

In September 2008, Mr. Stratigos acquired a Dairy Queen franchise. (Id. at 17.) On October 17, 2008, by filing the PA Enterprise Registration Form, Mr. Stratigos registered the Dairy Queen franchise for, inter alia, UC taxes and services. (Id. at 32-33, 49.) Furthermore, he indicated on the registration form that he was a sole proprietor of the Dairy Queen franchise and that he had not acquired the franchise or any part of it, including any assets, from another business. (Id. at 32-34.) He also indicated on the registration form that he first paid wages as an employer on November 7, 2008, and that he did not provide employment prior to the acquisition of the Dairy Queen franchise. (Id. at 33.) Finally, because Mr. Stratigos did not identify any predecessors of his Dairy Queen franchise on the registration form, he did not apply for the experience record and reserve account balance (Experience) of any predecessor.*fn2 (Id. at 34-35.) Mr. Stratigos' UC contribution rate for 2009 was .018370. (Id. at 18.)

On December 31, 2009, OUCTS informed Mr. Stratigos that his UC contribution rate for the year 2010 would be .084792-i.e., 8.4792 percent. (Id. at 36.) Mr. Stratigos appealed. (Id. at 41.) In his January 6, 2010, appeal letter, Mr. Stratigos argued that he had relied on the advice of an OUCTS' representative in forgoing the acquisition of his predecessor's Experience.*fn3 (Id.) Specifically, he argued that the OUCTS' representative advised him that "[he] would [not] incur a substantial increase if [his] Reserve Balance was positive after all of the employees were called back to the new Dunkin['] Donut[s] ownership group."*fn4 (Id.) He also argued that, because the Dunkin' Donuts franchise renovations caused the temporary layoffs, OUCTS should not take into account the UC benefits that the laid-off employees collected as a result of the temporary layoffs in fiscal year 2009. (Id.) According to Mr. Stratigos, those benefits were an anomaly and, therefore, unlikely to recur. (Id.) On March 11, 2010, OUCTS denied Mr. Stratigos' 2010 contribution rate appeal. (Id.) OUCTS determined:

The basic reason for the rate assigned to [Mr. Stratigos] is that unemployment compensation benefits collected by former employees, in the amount of $1,579.00 and $26,384.00 were charged to [Mr. Stratigos'] account for the fiscal years 2008 and 2009. Notices of these charges were forwarded to [him] at the time compensation was paid. (Id.)

On March 20, 2010, Mr. Stratigos appealed OUCTS' denial to the Department.*fn5 (Id. at 17-18.) He essentially repeated the arguments contained in his first appeal before the Department. In discussing his reliance on the OUCTS' representative's advice, Mr. Stratigos asserted:

I was concerned that my rate would increase detrimentally if I kept my old experience and rate. My accountant had advised me and I suggested to the [Department] representative that I transfer [Mr. Fafalios'] rate since it was the lowest, at .018370, like mine. I was advised by this unemployment office employee to continue using my experience rate especially since I had a Reserve Balance of 31,740 as of 6/30/08 as opposed to transferring [Mr. Fafalios'] rate. I was told specifically that since my reserve balance was so high, I would not incur a substantial increase if my Reserve Balance was positive after all of the employees were called back to the new [renovated] Dunkin['] Donut[s]. . . . I relied on one of the employees at the [Department] instead of transferring [Mr. Fafalios'] rate of the [Dairy Queen franchise] that I purchased. This was my desire, but I was told not to.*fn6

(Id.) Interestingly, the additional evidence Mr. Stratigos submitted to the Department during the appeal indicated that his accountant, Constantine M. Scoumis (Mr. Scoumis), had advised him to acquire Mr. Fafalios' Experience. (Id. at 50.) Indeed, Mr. Scoumis even filled out parts of the application form relating to the acquisition of a predecessor's Experience, and he instructed Mr. Stratigos to complete the remainder of the form by obtaining all necessary information from Mr. Fafalios. (Id. at 50-51, 58.) Notwithstanding the advice of Mr. Scoumis, Mr. Stratigos relied on the OUCTS' representative's advice that his 2010 experience-based contribution rate would not substantially increase because of his high reserve balance. (Id. at 50-51.)

On March 21, 2012, the Department issued its decision, affirming OUCTS' determination. (Id. at 14.) The Department concluded that, although Mr. Stratigos might have discussed his compensation rate with an OUCTS' representative, it was improper for Mr. Stratigos to have relied on the representative's proffered advice on that matter. (Id. at 6-7, 13.) The Department found that, despite the representative's advice, "[Mr. Stratigos] was not prevented from applying for [the transfer of Mr. Fafalios' Experience], either implicitly or explicitly." (Id. at 13.) Also, the Department found that Mr. Stratigos did not challenge the statutory formula for computing experience-based UC contribution rates or the three-year averages. (Id. at 11-13.) Moreover, it found that the Law contains no provision by which it allows OUCTS to exempt any properly assessed benefit charges from its computation of experience-based compensation rates. (Id.) Ultimately, the Department concluded that the 2009 benefit charges and the reserve account balance were properly calculated and appropriately used in the computation of Mr. Stratigos' 2010 experience-based compensation rate. (Id.) Mr. Stratigos now petitions this Court for review.

On appeal,*fn7 Mr. Stratigos propounds two arguments. First, Mr. Stratigos argues that the Department committed an error of law by concluding that an OUCTS' representative's advice on his 2010 compensation rate did not prevent him from applying for Mr. Fafalios' Experience. Second, he appears to argue that the ...


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