Delaware Division of Unemployment Insurance v. Sullivan

• Court: Superior Court of Delaware
• Decided: August 21, 2025
• Docket: N25A-02-006 FWW
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

DELAWARE DIVISION OF ) UNEMPLOYMENT INSURANCE, ) ) Appellant, ) ) C.A. No. N25A-02-006 FWW v. ) ) ELIZABETH SULLIVAN, ) UNITED STATES POSTAL ) SERVICE, AND UNEMPLOYMENT ) APPEAL BOARD, ) ) Appellees. )

Upon Appeal from the Unemployment Insurance Appeal Board, AFFIRMED.

MEMORANDUM OPINION

Submitted: August 15, 2025 Decided: August 21, 2025

Victoria Counihan, Esquire, Deputy Attorney General, DEPARTMENT OF JUSTICE, 820 N. French Street, Wilmington, DE 19801, attorney for Appellant Department of Labor, Division of Unemployment Insurance.

Ryan J. Senall, Esquire, Deputy Attorney General, DEPARTMENT OF JUSTICE. 820 N. French Street, Wilmington, DE 19081, attorney for Appellee Unemployment Insurance Appeal Board.

Elizabeth Sullivan, Wilmington, DE, pro se, Appellee.

United States Postal Service, P.O. Box 970100, Greensboro, NC 24797, Appellee.

WHARTON, J. I. INTRODUCTION

Appellant Delaware Department of Labor Division of Unemployment

Insurance (“Division”) brings this unusual appeal from the Unemployment

Insurance Appeal Board’s (“the Board”) Decision on Remand. The appeal is

unusual in two respects. First, the fact that the Division is participating in the appeal

at all is unusual given that it usually refrains from doing so. Second, while the

Division purports to ask the Court to reverse the Board, what it really wants the

Court to do is to go back to the Board’s original decision and review that decision

on a different basis than the Court did originally. It professes no interest in the

outcome of that review.

On November 12, 2024, another judge of this Court reversed and remanded a

decision of the Board denying then appellant Elizabeth Sullivan (“Sullivan”)

unemployment insurance benefits.1 The Court, invoking Superior Court Civil Rule

107(f), held that Sullivan’s employer, the United States Postal Service (“USPS”)

had procedurally defaulted by failing to participate in the appeal. 2 It remanded the

case to the Board “for further proceedings consistent with this opinion.” 3 But the

Board, instead of simply following the Court’s direction and entering a decision

1 Sullivan v, Unemployment Insurance Appeal Board, 2024 WL 4751562 (Del. Super. Ct. Nov. 12, 2024). 2 Id. at *3. 3 Id. at *4. 2 awarding Sullivan benefits, conducted another hearing. 4 The Board reversed its

earlier decision, despite again finding that Sullivan was not entitled to

unemployment insurance benefits. 5 The Board felt constrained to take that action

due to this Court’s reversal of its original decision defaulting Sullivan’s employer,

USPS. The Board “interpreted the Court’s decision as an order to declare [Sullivan]

‘qualified’ for unemployment benefits – an interpretation that rendered the Board’s

factual findings inconsequential.”6

In this appeal, all parties again were sent notice of the brief schedule

established by the Court.7 The Division filed its opening brief on May 14, 2025.8

Unlike in the original appeal, the Board participated and submitted an answering

brief. 9 Sullivan answered on June 4th, 10 but consistent with its refusal to participate,

USPS did not. The Division appealed for the limited purposes of addressing whether

the Board was:

compelled on remand to find [Sullivan] qualified for the receipt of unemployment benefits in the face of testimony and evidence to the contrary, and to argue the Division’s position that the lack of participation by [USPS] at the

4 Decision of the Unemployment Insurance Appeal Board on Remand from Superior Court Appeal, at 2, Appeal Docket No. 27133962 (Feb. 5, 2025). (“Decision on Remand”). 5 Id. 6 Id. 7 D.I. 6 8 Division’s Op. Br., D.I. 7. 9 Board’s Ans. Br., D.I. 8. 10 Sullivan’s Ans. Br. (incorrectly captioned Reply Brief), D.I.9. 3 administrative level or on appeal to this Court should not dictate the determination of whether [Sullivan] is legally entitled to employment benefits. 11

The Board determined to participate in this appeal because it shares the

Division’s concerns regarding a party who prevails at the Board level, but defaults

on appeal.12 It is the Board’s position that the Court should apply its usual standard

when considering appeals without defaulting a party who does not participate on

appeal. 13

After carefully considering the arguments of the Division, the Board, and

Sullivan, the Court finds that the Board unnecessarily conducted a second hearing,

but correctly entered the order this Court directed it to enter. For that reason, the

decision of the Board is AFFIRMED. The Court appreciates the considerations the

Division and Board have brought to the Court’s attention, many for the first time,

and will give them considerable weight when the Court reviews future appeals from

the Board’s decisions. But, because of the unusual procedural posture of this case

and the nature of relief the Division seeks, it declines to issue an opinion on the

merits as the Division asks. It does, however, for whatever guidance it may provide,

share its thoughts on the merits.

II. FACTS AND PROCEDURAL HISTORY

11 Division’s Op. Br. at 3, D.I. 7. 12 Board’s Ans. Br., at 8-9. 13 Id. 4 Sullivan was employed by USPS as a “City Carrier Assistant I” earning

$19.93 per hour from November 2022 to January 24, 2023.14 She was a casual

employee working towards becoming a regular employee.15 Issues developed

between Sullivan and her supervisor regarding undelivered packages and mail.16

Eventually, when things came to a head, Sullivan resigned on January 22, 2023,

believing resignation would not limit her opportunities for future federal

employment. 17

A hearing was held before an Appeals Referee on May 16, 2023 after a

Department of Labor Claims Deputy denied Sullivan’s request for unemployment

benefits. 18 The Appeals Referee affirmed the decision of the Claims Deputy, finding

that Sullivan voluntarily resigned from her position without good cause,

disqualifying her from unemployment insurance benefits. 19

Sullivan appealed that denial to the Board. A hearing was held on July 26,

2023 at which Sullivan appeared pro se while USPS did not send a representative.20

The Board considered Sullivan’s testimony and exhibits, as well as the evidence

14 Sullivan v. Unemployment Insurance Appeal Board, 2024 WL 4751562 at *1 (Del. Super. Ct. Nov. 12, 2024). 15 Id. 16 Id. at *1-2. 17 Id. at *2. 18 Id. at *1. 19 Id. at *2. 20 Id. at *2. 5 presented to the Appeals Referee, the Referee’s Decision, and Sullivan’s Notice of

Appeal.21 The Board affirmed the Referee’s decision, holding as the Referee did,

that Sullivan voluntarily resigned without good cause, disqualifying her from

benefits. 22

Sullivan appealed to this Court. All parties were notified of the Court’s

briefing schedule.23 Sullivan filed an opening brief and counsel for the Board wrote

saying it would not be participating because the appeal was on the merits and it did

not have an interest in seeking to have its decision affirmed on appeal. 24 The

Division also elected not to participate. 25 Consistent with its failure to appear before

the Board, USPS failed to file an answering brief despite it being issued a “Final

Delinquent Brief Notice.” 26 The Court, applying Superior Court Civil Rule 107(f)’s

default provision, reversed the Board and remanded the matter to it.

On remand, the Board held another hearing on December 4, 2024 to afford

Sullivan the opportunity to present additional evidence. 27 Sullivan appeared,

testified, and admitted evidence, but USPS did not.28 The Board “reviewed her

21 Id. 22 Id. 23 Id. at *1. 24 Id. 25 Id. at n. 5. 26 Id. 27 Decision on Remand at 1. 28 Id. at 2. 6 testimony and found no basis to change its September 18, 2023 decision – finding

that [Sullivan] had voluntarily quit her job without good cause.” 29 Nevertheless,

In the wake of the December 4, 2024 Board hearing, the Board reconsidered the Superior Court’s November 12, 2024 reversal order. The Board struggled to reconcile its duty to render fact-based decisions with the Court’s reversal mandate. Ultimately, the Board interpreted the Court’s decision as an order to declare [Sullivan] “qualified” for unemployment benefits – an interpretation that rendered the Board’s factual findings inconsequential. 30

The Board then entered an Order finding Sullivan qualified to receive

unemployment insurance benefits after her employment terminated on January 22,

2023. 31

The Division, as a statutory party-in-interest in a judicial action involving any

decision of the Board under 19 Del. C. § 3322(b), appeals.32 It contends in its

Opening Brief that: (1) the Board committed legal error in its interpretation and

application of the Court’s decision reversing and remanding this case; and (2) the

Court should refrain from exercising its discretion under Rule 107(f) where an

appellee fails to file an answering brief for public policy, administrative, and

standard of review reasons. 33 In its Answering Brief, the Board concurs with the

29 Id. 30 Id. 31 Id. 32 Division’s Op. Br. at 3., D.I. 7. 33 Id. at 8. 7 Division’s concerns and raises two additional points regarding the use of Rule

107(f). In her Answering Brief, Sullivan urges the Court to affirm the outcome

before the Board. USPS failed to file an answering brief.

III. STANDARD OF REVIEW

The standard of review under which this Court reviews the Board’s decision

is deferential, and the Board’s decision will only be modified in unusual

circumstances. The Board’s decision must be affirmed so long as it is (1) supported

by substantial evidence and (2) free from legal error.34 A finding of substantial

evidence requires such relevant evidence that a reasonable mind might accept as

adequate to support a conclusion.35 While a preponderance of evidence is not

necessary, substantial evidence means “more than a mere scintilla.”36 Because the

Court does not weigh evidence, determine questions of credibility, or make its own

factual findings, it must uphold the decision of the Board unless the Board “acts

34 Unemployment Ins. Appeal Bd. of Dept. of Labor v. Duncan, 337 A.2d 308, 309 (Del. 1975). 35 Oceanport Ind. v. Wilmington Stevedores, 636 A.2d 892, 899 (Del. Super. Ct. 1994) (citing Olney v. Cooch, 425 A.2d 610, 614 (Del. 1981)); see also, Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951). 36 Breeding v. Contractors-One-Inc., 549 A.2d 1102, 1104 (Del. 1988); Universal, 340 U.S. at 477 (“Accordingly, it must do more than create a suspicion of the existence of the fact to be established. . . . [I]t must be enough to justify, if the trial were to a jury, a refusal of a directed verdict when the conclusion sought to be drawn is one of fact for the jury.”). 8 arbitrarily capriciously” or its decision “exceeds the bounds of reason.” 37 This

Court's role is to correct errors of law and to review the factual findings of the Board

below to determine if such findings are sufficiently supported by the record and are

the product of an orderly and logical deductive process.38

IV. THE PARTIES’ CONTENTIONS

The Division makes two points – first that the Board committed legal error

when it interpreted and applied the Court’s decision reversing and remanding the

matter, and second, for a number of reasons, the Court should refrain from exercising

it discretion in applying Rule 107(f) where an appellee fails to submit an answering

brief. 39 In the Division’s view, the Court’s instructions on remand did not require

the Board to ignore the facts presented by Sullivan or to ignore that she had the

burden of showing she was entitled to benefits. 40 The Division’s position is that the

Board misinterpreted the Court’s decision when it determined that it was required to

find Sullivan qualified to receive benefits and that misinterpretation constituted legal

error.41

37 PAL of Wilmington v. Graham, 2008 WL 2582986, at *4 (Del. Super. Ct. June 18, 2008). 38 Levitt v. Bouvier, 287 A.2d 671, 673 (Del.1972). 39 Division’s Op. Br. at 8, D.I. 7. 40 Id. at 9-10. 41 Id. at 10. 9 The Division supports its second point by citing additional considerations the

Court may not have taken into account when it made its original decision defaulting

USPS. First, there is contrary Superior Court precedent on this exact issue, citing to

Lafferty-Eaton v. T.D. Bank NA 42 and subsequent cases. 43 In Lafferty-Eaton, the

Court reversed its original decision to default an non-appearing employer under Rule

107(f) after being presented with the Board’s policy argument that doing so unfairly

burdened the Unemployment Insurance Trust Fund by placing the burden for the

default not on the defaulting employer, but on all of the other employers who paid

into the fund.44 Second, Employing Rule 107(f) eliminates the statutorily mandated

standard of review for Board decisions found in 19 Del. C. § 3323(a). 45 Third, the

use of Rule 107(f) creates inconsistent decisions for similarly situated claimants

based on whichever judge hears the appeal. 46 Fourth, the use of Rule 107(f)

undermines the administrative process by, in effect, ignoring that process when an

employer who prevailed administratively defaults on appeal. 47 Fifth, the use of Rule

107(f) disregards the assignment of the burden of proof. 48 Sixth, defaulting non-

participating employers risks violating the federal requirement that states only pay

42 2014 WL 824294 (Del. Super. Ct. Feb. 20, 2014). 43 Division’s Op. Br. at 12-17, D.I. 7. 44 Id. at v13-14. 45 Id. at 17-18. 46 Id. at 19-20. 47 Id. at 20-23. 48 Id. at 23-24. 10 claims when due, thereby jeopardizing federal funding under the Social Security

Act. 49 Finally, claimants who are not entitled to benefits under state law get a

windfall.50

The Board also is participating in this Appeal. In its response to whether it

committed legal error, the Board expresses its belief that its decision was required

by the Court’s reversal and remand order. 51 The Board shares the Division’s

concerns regarding Rule 107(f) and adds two more of its own.52 The Board is

concerned that the Court has not typically used Rule 107(f) in the circumstances

present here and the rule, if applied uniformly, could result in prejudice to

unemployment claimants where they are the defaulting party on appeal.53 Sullivan

contests the Board’s finding that she voluntarily quit her employment and insists that

Rule 107(f) was properly applied.54

Much of Sullivan’s sometimes heated Answering Brief (incorrectly labeled

Reply Brief) is devoted to re-arguing the merits of her claim for unemployment

insurance benefits and criticizing her former employer, the Claims Deputy, Appeals

Referee, the Board, and Department of Justice attorneys representing the Division

49 Id. at 24-25. 50 Id. at 25-26. 51 Board’s Ans. Br. at 4-7, D.I. 8. 52 Id. at 8. 53 Id. at 8-9. 54 Sullivan’s Ans. Br. D.I. 9. 11 and the Board. 55 Both of those themes run throughout her responses to each of the

issues raised by the Division. She also complains that this appeal should have been

assigned to the judge who decided her original appeal. 56

In its Reply, the Division, in addition to reiterating its request that the Court

decide the appeal on the merits, provides a discussion of the standard the Court

should employ if it considers whether Sullivan had good cause to voluntarily

resign. 57 It also clarifies that it only is seeking the Court to refrain from using its

discretion to apply Rule 107(f) in circumstances whether the appellee fails to appear

55 See, e.g., “The Board can’t be trusted to make sound unbiased decisions based off facts and so this is how we end up with unnecessary appeals such as this one. Luckily there is a Superior Court to see through the foolishness because the UIAB/DOJ combo is the worst. The employer, claims deputy, appeals referee, the Board and DOJ all seem to work in concert to deny, deny, and more deny. The fake fact finding missions that are crafted to be an unnecessary waste of time, misleading and based off their own bias’s conclusions and ill feelings, rather than facts.” Sullivan’s Ans. Br. at 9-10, D.I. 11; “In fact, the USPS management was caught in a lie and instead of the DOJ addressing the lie they’d rather throw a thousand case study’s [sic] at the Court in an attempt to once again give them a chance to not be held accountable for their actions and tell the court how unfairly the employer have [sic] been treated in clear MAGA fashion.” Id. at 3. The Court notes that all of the relevant factual events in this matter occurred before the current President was inaugurated. The Board’s Decision was mailed one day after he was inaugurated. Further there has not been an Attorney General of Delaware of this President’s political party since 2005. It is unlikely anybody was “treated in clear MAGA fashion” in this matter. 56 Sullivan’s Ans. Br. at , D.I. 11. 57 Division’s Reply Br. at 2-4, D.I. 13. 12 on appeal, and not the appellant.58 It reasons that an appellant who fails to file an

opening brief has voluntarily abandoned its appeal.59

V. DISCUSSION

A. The Board Did Not Commit Legal Error When It Awarded Unemployment Benefits to Sullivan at the Court’s Direction.

Ordinarily, the resolution of any appeal from a Board decision would turn on

the discrete issues of whether there was substantial evidence to support the Board’s

decision and whether that decision was free from legal error. Unfortunately, USPS’

persistent refusal to participate in most administrative and all appellate proceedings,

both originally and on remand, has disrupted the ordinary process. As a result, the

Board has become confused, the claimant justifiably upset, and the Court frustrated.

In the initial proceeding, the Court relied on Rule 107(f) to deal with the non-

participation of USPS. It did so without the benefit of any contribution from either

the Division or the Board, which both abstained despite USPS’ failure to

substantially participate in the administrative process. Rule 107(f) provides:

If any brief, memorandum, deposition, affidavit, or any other paper which is or should be a part of the case pending in this Court, is not served and filed within the time and in the manner required buy these Rules or in accordance with any other order of the Court or stipulation of counsel, the Court may, in its discretion, dismiss the proceeding if the plaintiff is in default, consider the motion to be abandoned, or summarily grant or deny the motion, such as the

58 Id. at 6. 59 Id. 13 situation may present itself, or take any other action as it deems necessary to expedite the disposition of the case.

Clearly, Rule 107(f)’s default sanction was a remedy available to the Court, in its

discretion, to deal with USPS’ non-participation. The Division does not challenge

that fact, but argues the Court should refrain from exercising that discretionary

option. When an appellee fails to comply with Rule 107, this Court may reverse an

agency’s decision, notwithstanding the legal or factual soundness of that decision.60

The Court did exactly that initially in this case.

On appeal, this Court must affirm the Board’s decision if it is free from legal

error and is supported by substantial evidence. In this appeal, USPS’ failure to

participate does not warrant the invocation of Rule 107(f) against it because, as the

losing party below, it did not take an appeal. The Division appealed and fully

participated.

The Division contends that the Board committed legal error. It asks the Court

to reverse the current Board’s decision now on appeal (the February 5, 2025

decision), and render a decision on the merits of the Board’s earlier decision that

60 See, e.g., Hunter v. First USA/Bank One, 2004 WL 838715, at *5 (Del. Super. Ct 2004) (“[I]n this case, the Court finds that there exists a significant violation of a statutory precept, in this instance, its own Civil Rule 107(e). Therefore, despite the formidable “substantial evidence” found to exist by the Board, the Court has no other alternative but to reverse the Board’s decision due to Appellee’s failure to diligently prosecute and file its brief pursuant to Rule 107(e).”). 14 was the subject of the Court’s original order. 61 It disclaims any interest in the

outcome of such a merits-based decision.62 It argues that the Court’s remand order

did not require the Board “to ignore the facts presented by the Claimant or to ignore

that the Claimant had the burden of proof to show she was entitled to benefits.” 63 In

the Division’s view, the Board “misinterpreted or misapplied” this Court’s decision

when it found Sullivan was not entitled to benefits but ordered that she receive

them. 64

The Court reversed the Board’s decision and remanded the matter to the Board

“for further proceedings consistent with this opinion. On remand, the United States

Postal Service is estopped from asserting that Elizabeth Sullivan voluntarily resigned

without good cause.” 65 The Court did not reverse the Board’s decision only for it to

produce the same result on remand that it had reversed on appeal. Such a result

would have been inconsistent with the Court’s direction on remand. Nor did it

reverse the matter for the Board to engage in further fact finding with the result that

the Board tied itself in knots when that fact finding produced a result inconsistent

with the Court’s direction. It estopped USPS from further contesting the Court’s

decision in order to foreclose further fact finding. The Court knew full well that the

61 Division’s Op. Br. at 27, D.I. 7. 62 Division’s Reply Br. at 2, D.I. 13. 63 Division’s Op. Br. at 9-10, D.I. 7. Id. at 9-10. 64 Id. 65 Id. at *3-4. 15 Board denied Sullivan benefits. Yet it reversed anyway. It did not reverse so the

Board could repeat the exercise of denying Sullivan benefits. It reversed the Board’s

decision so that it would enter an order in Sullivan’s favor.

The Board’s decision on remand indicates that, at least on some level, it

understood the Court’s direction – “Ultimately, the Board interpreted the Court’s

decision as an order to declare Claimant “qualified’ for unemployment benefits – an

interpretation that rendered the Board’s factual findings inconsequential.”66 If the

Board understood the Court’s Order to require it to declare Sullivan qualified for

benefits and its fact findings to be inconsequential, there was no rational reason to

hold a second hearing. 67 Nevertheless, despite muddying the waters by conducting

that second hearing, ultimately the Board entered a decision “consistent with” the

Court’s order. Accordingly, the Board did not commit legal error. Its decision is

AFFIRMED.

B. The Policy, Administrative, and Standard of Review Considerations Have Merit But Are Not Dispositive.

66 Remand Decision, at 2. 67 In its decision reversing the Board, the Court relied heavily on Payne v. Unemployment Insurance Appeals Board, 2023 WL 166271 (Del. Super. Ct. Jan. 12, 2023). In Payne, the Court, just as it did here, invoked Rule 107(f) to reverse a decision of the Board because the appellee/employer failed to participate in the appeal. Id. at * 1. It remanded the matter to the Board using identical language as the Court did here. Id. at * 3. And, just as in Sullivan’s appeal here, both the Board and the Division notified the Court that it would not be participating in the appeal. Id. at 1. Unlike in Lafferty-Eaton, the Board did not ask the Court to alter or amend its decision. Also, according to counsel at argument, unlike here, the Board simply followed the Court’s remand order and did not conduct a second evidentiary hearing. 16 The Division (and the Board) points out various policy, administrative, and

standard of review considerations which it thinks should lead the Court to

“reconsider its procedural decision in this case and decline to exercise its discretion

under Rule 107 to default an employer who is an appellee in an appeal from a

decision of the Board.” 68 Those considerations do not fall neatly under either of the

bases which might justify the Court reversing the Board – legal error or lack of

substantial evidence to support the Board’s decision. Therefore, they cannot form a

basis for reversing the Board. That is not to say, however, that they lack merit or

that the Court should not consider applying them going forward. The Court now

addresses the considerations suggested by the Division and the Board.

1. The Division’s Considerations.

a. There is Superior Court Precedent on This Exact Issue.

The Division views Lafferty-Eaton, for all intents and purposes, as

dispositive.69 In Lafferty-Eaton, the Court, on the application of the Board to alter

68 Id. at 11. 69 “This Court in the future will decline to follow those cases [cases defaulting an appellee]” Division’s Op. Br. at 14. “The Lafferty-Eaton decision was expressly meant by this Court to be precedential on this issue, and the Division submits it should consistently control the Court’s response to a failure by an employer/appellee to file an Answering Brief in an appeal from a decision of this particular Board in all cases.” Id. at 15. “The Court appeared to be departing from or not aware of the precedent set by the Lafferty-Eaton case, which expressly intended to overrule the Rule 107 default line of cases. Id. at n. 25. “The Division argues that as a general policy, this Court should apply the Lafferty-Eaton precedential decision in all cases.” 17 or amend its original decision defaulting the employer under Rule 107(f), reversed

itself. 70 It did so on the representation by the Board that the burden of paying

uninsurance benefits would fall not only on the defaulting employer, but also on “the

whole of assessed employers in this state” who contribute to the Delaware

Unemployment Compensation Fund (“Fund”). 71 The Court, reversing itself and

deeming that burden a manifest injustice, stated that it did not seek to “punish” the

employers that pay into the Fund.72

In its Opening Brief, the Division represented to the Court that USPS did not

pay into the Fund, but rather, was a “reimbursable employer.” 73 Reimbursable

employers are government employers and some non-profits that do not pay taxes

into the Fund and constitute perhaps 1% of employers.74 Obviously, if USPS were

a reimbursable employer, much of the force of the Division’s argument would be

diminished. No Delaware employers who pay into the Fund would be “punished”

because the Fund would be made whole for the benefits paid to Sullivan. Similarly,

Id. at 16. “The Court directly and clearly stated that the Lafferty-Eaton holding was intended to apply to all similar cases in the future.” Id. at 17. “[The Court] specifically stated that in the future, the Court would decline to follow the line of cases using Rule 107 to default employer/appellees in appeals from the Board. Id. at 18. 70 Lafferty-Eaton, 2014 WL 824294, at *4. 71 Id. at *1. 72 Id. at 3. 73 Division’s Op. Br. at 16, D.I. 7. 74 Id. 18 since that argument was the sole rationale in Lafferty-Eaton for the Court reversing

itself, that case would lose its precedential force in this case.

At argument, however, counsel for the Division sought to “correct the record”

by informing the Court that USPS is not a reimbursable employer. According to

counsel for the Division, because of the way Sullivan’s unemployment benefits were

calculated, her USPS employment was not the employment used to determine her

benefits. It was her prior employment with an employer who did contribute to the

Fund. Nevertheless, interested in the category of “reimbursable employers,” on

August 4th, the Court wrote counsel for the Division asking her for more information

on that subject.75 In response, on August 15th, the Division confirmed that USPS is

a reimbursable employer, but, in this case, it was not responsible for Sullivan’s

unemployment benefits.76

The Court in Lafferty-Eaton accepted the position of the Board without

examining to what degree its original opinion “punished” other employers who

contributed to the Fund. In reality, there was no real punishment at all. As of June

30, 2024, the Fund had cash assets of approximately $360,500,000.00. 77 Thousands

75 D.I. 22. 76 D.I. 24. 77 Delaware Auditor of Accounts, “Delaware Unemployment Compensation Fund FY24,” “Special Report – Fiscal Year Ended June 30, 2024.” https://auditor.delaware.gov/wp-content/uploads/sites/209/2024/12/Delaware- Unemployment-Compensation-Fund-2024-Special-Report.pdf. The Auditor of Accounts Special Report noted that “In January 2023, accounting records at DOLUI 19 of Delaware employers contribute to the Fund.78 Here, Sullivan received benefits of

$9,568.00. Although it is unknown how often defaults occur 79 and in what total

amount those defaults burden the Fund as a whole, in the end, the effect of appellate

defaults on the thousands of individual contributors almost certainly is de minimus.80

Not to mention, there would be no undue burden at all in those appeals where the

Court finds for a appellant/employee on the merits. It is apparent that, despite the

obvious appeal of not seeking to “punish” other contributors to the Fund, when the

real amount of any “punishment” inflicted on those other contributors is taken into

account, that appeal is entirely illusory. When viewed in its proper context, the

actual precedential value of Lafferty-Eaton and cases following it is minimal.

b. This Use of Rule 107 Eliminates the Standard of Review of Board Decisions.

[Department of Labor Division of Unemployment Insurance] indicate that an employee overrode internal controls relating to Employees at DOLUI. Subsequently, that employee directed staff to create two fraudulent employer refund checks for $86,827.31 on January 17, 2023, and $94,357.37 on March 16.” Id. It would appear that a single employee of DOLUI “punished” the contributors to the Fund far more than employers who defaulted on appeal. 78 Id. An unknown number ot “reimbursable employers” do not contribute to the Fund or what percentage of the total number of employees they represent. 79 The Division cites three cases, including this one, where employer/appellees were defaulted since Lafferty-Eaton was decided in 2014. 80 Sullivan’s benefits represent .0000265% of the cash assets of the fund as of June 30, 2024. 20 The Division argues that when the Court procedurally defaults an appellee

under Rule 107, it fails to apply the standard of review set out by statute. 81

According to 19 Del. C. § 3323(a), “In any judicial proceeding under this section,

the findings of the Unemployment Insurance Appeals Board as to the facts, if

supported by evidence and in the absence of fraud, shall be conclusive, and the

jurisdiction of the Court shall be confined to questions of law.” With regard to the

factual findings of the Board, it is well settled that the scope of this Court’s review

of the Board’s decision on appeal “is limited to a determination of whether there was

substantial evidence sufficient to support the findings.” 82 But a procedural default

is, by definition, not a review of the factual findings of the Board nor of the law it

applied, and therefore, does not eliminate the standard of review. The case simply

did not proceed far enough on appeal for the standard of review to come into play.83

c. This Use of Rule 107 Creates Inconsistent Decisions for Similarly Situated Claimants.

The Division is concerned that the inconsistent application of Rule 107 – some

judges employ it and some, following Lafferty-Eaton, do not – causes similarly

81 Division’s Op. Br. at 17, D.I. 7. 82 Unemployment Insurance Appeal Board v. Duncan, 337 A.2d 308 (Del. 1975). 83 The Division asks the Court to “decline to exercise its discretion” not to apply Rule 107. Division’s Op. Br. at 11, D.I. 7. But, if the application of Rule 107 truly did eliminate the standard of review, the Court would not have discretion to apply it in the first place. 21 situated claimants to receive differing results. 84 Ideally, the 21 judges of this Court

would all speak with the same voice when confronted with the same questions. But,

just as all litigants and all litigations are not the same, neither are the views of all

members of this Court. Uniformity of treatment for similarly situated litigants is

important, but so too is the principle that:

The efficiency and effectiveness of our judicial system relies heavily on the diligent actions of those involved in legal disputes. Filing deadlines are in place to promote such judicial efficiency. Because of this, the inexcusable failure of a party to respond when required to do so cannot be treated lightly by this Court. 85

Unfortunately, in a world where a certain balance must be struck between

competing interests with multiple variables, uniformity is not always possible.

d. This Use of Rule 107 Undermines the Administrative Process.

The Division complains that defaulting an employer/appellant on appeal

undermines the administrative process in light of the “extensive and sometimes time-

consuming administrative processes at the administrative agency level”. 86 The

Board captured this sentiment in its remand decision when it noted that the Court’s

Remand Order “rendered the Board’s factual findings inconsequential.” 87 The

84 Division’s Op. Br. at 19, D.I. 7. 85 Sprung v. Selbyville Cleaners, 2007 WL 1218683, at *1 (Del. Super. Ct. Apr. 23, 2007). 86 Division’s Op. Br. at 21, D.I. 7. 87 Remand Decision, at 2. 22 Division notes that frequently, an employer who is successful before the Board

might reasonably forego the expense of hiring counsel to represent it on appeal.88

These points are important ones worthy of the Court’s serious consideration

whenever it contemplates a Rule 107(f) default, especially when a victorious

employer must bear the expense of hiring counsel to represent it on appeal. 89 But,

it is difficult to understand how the administrative process is undermined to any

greater degree than when the Court reverses the Board on the merits. In the Court’s

view, the Division should focus its displeasure with any undermining of the

administrative process on the defaulting employer.

e. This Use of Rule 107 Disregards Who Has the Burden of Proof.

During the administrative process and before the Board, the burden of proof

was on Sullivan to show that she resigned her job for good cause and that she had

exhausted her administrative remedies with her employer. The Division contends

that procedurally defaulting USPS via Rule 107(f) disregards that burden. True, it

does. It is a legitimate concern which the Court should take seriously. But,

defaulting a non-appearing appellee also affirms the appellate process by sanctioning

a willful failure to follow the Court’s directions on appeal.

88 Division’s Op. Br., at 22, D.I. 7. 89 Here the Court assumes USPS has adequate resources to be represented by counsel. 23 f. Defaulting Non-Participating Employers Risks Violating the Federal Requirements that State’s Only Pay Claims “When Due.”

The Division cites § 303(a)(1) of the Social Security Act’s requirement that

states must have methods of administration in place to reasonably ensure the full

payment of unemployment compensation when due.90 It also cites guidance from

the U.S. Department of Labor interpreting the “when due” requirement to also

require states to ensure that payment of benefits is not made when payments are not

due. 91 The Division is concerned that:

defaulting a non-participating employer “requires the Board to find a claimant qualified to receive unemployment benefits in the face of factual evidence before the Board to the contrary, the Court could be seen as requiring the Division to pay benefits to a claimant when those benefits are not due under the qualification and eligibility provisions of the Delaware Unemployment Code. The Division is concerned that payments of benefits that are not due could potentially be seen by the U.S. Department of Labor as a conformity or compliance issue for the Division in a federal audit. 92

Leaving aside the question of whether the Division might have larger

compliance concerns than paying Sullivan unemployment benefits, 93 the Court

90 Division’s Op. Br. at 24, D.I. 7. 91 Id. at 24-25. 92 Id. at 25 (emphasis added). 93 See, Delaware Auditor of Accounts Report “Division of Unemployment Insurance FY23” “Agreed-Upon Procedures – Fiscal year Ended June 30, 2023,” https://auditor.delaware.gov/wp-content/uploads/sites/209/2025/04/Department-of- Labor-Division-of-Unemployment-Insurance-AUP-Report-FY23.pdf. “DOLUI has 24 suspects that the prohibition against paying benefits when they are not due may have

some connection to fraud and not to judicially directed payments. Nevertheless,

should the Division’s inchoate concern become more fully formed, the Court would

consider it an important consideration arguing against a Rule 107(f) disposition.

g. Claimants Who Are Not Entitled to Benefits Under State Law Get a Windfall.

The Division worries that extending Rule 107(f) defaults to other types of

unemployment appeals, “could require the Board to award benefits to claimants in

more egregious circumstances” and result in windfalls to those claimants. 94 Those

other more egregious circumstances include: (1) when a claimant committed fraud

by returning to work without reporting their earnings; (2) when a claimant filed a

claim in another state for the same work; or (3) when a claimant was unable,

unavailable, or refused to work.95 All are valid concerns and the Court agrees it

should not exercise its discretion under Rule 107(f) to default an employer in those

circumstances and any like circumstances.

2. The Board’s Considerations

received a Disclaimer Opinion on its audited financial statements for three audit reports: the Fiscal Year 2023 and Fiscal Year 2024 Delaware Annual Comprehensive Financial Reports (AFCR), and the Fiscal Year Federal Uniform Guidance Single Audit. These disclaimers indicate an inability to audit DOLUI due to a lack of fiscal and accounting data.” (emphasis added). 94 Division’s Op. Br. at 27, D.I. 7. 95 Id. 25 The Board agrees with the Division’s concerns and adds two of its own. The

Court addresses them next.

a. The Court Has Not Typically Used Rule 107(f) in These Circumstances.

The Board cites an additional six cases where the Court decided an appeal

from the Board on the merits after a defaulting employer/appellee failed to

participate in briefing on appeal. 96 The point is well taken and the Court’s comments

in Sec. B(1) above apply here as well.

b. Such Use of Rule 107(f), Applied Uniformly, Could Result in Prejudice to Unemployment Claimants

The Board is concerned should the Court apply Rule 107(f) against a claimant

who has previously been awarded benefits but does not submit an answering brief.97

On remand, the Board would be required to seek repayment from someone it

believes is entitled to benefits. 98 A successful claimant before the Board has an

obvious incentive to defend the Board’s decision on appeal. Further, unlike

defaulting employers, financial considerations rarely prohibit a successful claimant

from participating pro se on appeal. Therefore, the Court should consider the totality

of the circumstances and exercise caution before defaulting a successful claimant on

appeal.

96 Board’s Ans. Br. at 8, D.I. 8. 97 Id. 98 Id. at 9. 26 C. An Analysis on the Merits

The Court understands the Division and the Board to have no interest in the

outcome of the case on the merits. Nonetheless, were the Court to take up the

Division’s invitation to decide the appeal on the merits, it would find for Sullivan.

The decision of the Board on remand is brief. It has only the following to say

about the evidence at the second hearing, “Claimant testified and admitted evidence.

The Board reviewed her testimony and evidence and found no basis to change its

September 18, 2023 decision – finding that Claimant had voluntarily quit her job

without good cause.”99 In its somewhat more expansive 2023 decision, the Board

found that Sullivan failed to meet her burden to demonstrate that she had good cause

for her voluntary resignation.100

In order to establish good cause for a voluntary resignation, Sullivan needed

to demonstrate: (1) she voluntarily left her employment for reasons attributable to

issues within USPS’ control and under circumstances in which no reasonably

prudent employee would have remained employed; and (2) she first exhausted all

reasonable alternatives to resolve the issues before voluntarily terminating her

employment. 101

99 Id. 100 Decision the Unemployment Insurance Appeal Board on Appeal from the Decision of Ksenija V. Milutinovic, Appeal Docket No. 27133962, at 3 (September 18, 2023). (Sept. 2023 Decision). 101 Thompson v. Christiana Care Health Sys., 25 A.3d 778, 782-83 (Del. 2011). 27 In explaining its decision, the Board focused on the second prong – the

exhaustion of all reasonable alternatives - paying scant attention to the first prong.

The Board held:

[I]n order for Claimant to prevail, she must show more than just being dissatisfied because of suboptimal work conditions. She must show that she notified Employer of the problem, requested a solution, and gave Employer enough time to correct the problem before quitting. None of Claimant’s exhibits establish that Claimant alerted Employer of the issues she was having. The multiple text communications between claimant and her supervisors fail to voice complaints or concerns about her job. The majority of text message complaints that Claimant introduced into evidence were sent to an unknown friend or colleague. 102

The Court was unpersuaded in its first Order that Sullivan had failed to meet

her burden. It noted that under the usual standard of review Sullivan faced a

“daunting challenge,” but observed that challenge was:

… not insurmountable given that the record does not support the finding that Sullivan failed to inform her employer of resolvable problems and make a good faith effort to resolve them before leaving, especially given USPS's failure to provide any evidence otherwise. In fact, the record reflects that Sullivan exhausted all reasonable alternatives before resigning. At a minimum, Sullivan brought the issues to the attention of her supervisor, an individual with authority to make necessary adjustments. One month later, after informing her employer, Sullivan was faced with two options: (1) continue with her employment with the understanding that she would be fired, and thereby possibly permanently

102 Id. 28 excluded from federal employment; or (2) resign. Faced with these choices, Sullivan resigned.103

While not necessary to the ruling in the initial Order, and, therefore dicta,

these comments leave little doubt how that Court would have ruled on the merits.

This Court sees no reason to depart from the prior Court’s assessment that Sullivan

exhausted her remedies. After carefully reviewing the Board’s decision, the Court

concludes that the Board did not make an explicit finding based on the first prong.

But, given the choice of resigning in order to preserve federal employment

opportunities or be fired, no reasonably prudent employee would have chosen to

remain employed. Sullivan left her employment for reasons attributable to USPS

under circumstances where no reasonably prudent employee would have remained

employed. She voluntarily left her job with good cause. There being no substantial

evidence to support the Board’s decision on either prong, if pressed to find on the

merits, the Court would find for Sullivan.

V. CONCLUSION

Accordingly, for the reasons stated above, the decision of the Unemployment

Insurance Appeal Board is AFFIRMED.

By affirming the Board, the Court does not mean to say that the policy

considerations offered by the Division and the Board are unhelpful or that the Court

103 Sullivan, 2024 WL 4751562, at n. 46. 29 does not appreciate them bringing them to the Court’s attention. Most, if not all, of

the policy considerations advanced by the Division and joined by the Board, many

for the first time in this appeal, have considerable merit. The Court intends to give

them serious consideration whenever the Court encounters a defaulting appellee in

future appeals from a decision of the Board.

In this case, however, the Court finds them insufficiently compelling to

reverse the Board.

IT IS SO ORDERED.

/s/ Ferris W. Wharton Ferris W. Wharton, J.