M & A Acquisition Corp. v. ICAO

2019 COA 173

• Court: Colorado Court of Appeals
• Decided: November 21, 2019
• Docket: 19CA0679
• Status: Published

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY November 21, 2019

2019COA173

No. 19CA0679, M & A Acquisition Corp. v. ICAO — Labor and Industry — Colorado Employment Security Act — Benefit Awards

As a matter of first impression, the division concludes that the

ICAO Appeals Panel erroneously treats section 8-73-108(5)(e)(IX.5),

C.R.S. 2019 as the exclusive applicable provision for disqualifying

an employee from unemployment compensation eligibility when the

employee’s separation from employment resulted from a positive

drug test administered pursuant to the employer’s drug policy. COLORADO COURT OF APPEALS 2019COA173

Court of Appeals No. 19CA0679 Industrial Claim Appeals Office of the State of Colorado DD No. 48631-2018

M & A Acquisition Corp./West Star Aviation, Inc.,

Petitioner,

v.

Industrial Claim Appeals Office of the State of Colorado and Ryan D. Holm,

Respondents.

ORDER SET ASIDE AND CASE REMANDED WITH DIRECTIONS

Division VII Opinion by JUDGE TOW J. Jones and Fox, JJ., concur

Announced November 21, 2019

Bechtel Santo & Severn, Michael C. Santo, Emily E. Tichenor, Grand Junction, Colorado, for Petitioner

No Appearance for Respondents ¶1 In this unemployment compensation benefits case, M & A

Acquisition Corp. seeks review of a final order of the Industrial

Claim Appeals Office (Panel). The Panel affirmed a hearing officer’s

decision awarding benefits to Ryan D. Holm. M & A discharged

Holm because he tested positive for marijuana.

¶2 M & A contends that the Panel erred by limiting its analysis to

a single disqualifying subsection of the statute, section 8-73-

108(5)(e)(IX.5), C.R.S. 2019, and by expressly declining to consider

other potentially applicable disqualifying subsections. We agree

and therefore set aside the Panel’s order and remand for further

proceedings.

I. Background

¶3 We derive the following information concerning Holm’s job

separation from the hearing officer’s findings.

¶4 Holm worked for M & A as a full-time aircraft mechanic. He

was injured at work in February 2017. Although he returned to

work for a few days in April and May 2017, he was eventually

placed on a medical leave of absence on May 30, 2017.

¶5 While on medical leave, Holm needed to go into M & A’s office

every other week to make payments on a loan against his

1 retirement account. In November 2017, while Holm was in the

office making a loan payment, a person in human resources notified

him that his name had been pulled for a random drug test. M & A

had a written policy requiring employees to submit to random drug

tests if their names came up for such testing. Holm was aware of

this policy. Holm tested positive for marijuana, and M & A

thereafter discharged him based on the test result.

¶6 The hearing officer found that Holm was still an M & A

employee and therefore subject to the drug testing policy but was

not working when he was tested. The hearing officer determined

that because Holm had been on a leave of absence since May 30,

2017, and had not performed work for M & A since that date, he

was not at fault for the job separation. Consequently, the hearing

officer awarded Holm benefits on a no-fault basis. See § 8-73-

108(1)(a) (setting forth the guiding legislative principle that

“unemployment insurance is for the benefit of persons unemployed

through no fault of their own”).

¶7 M & A appealed the decision to the Panel, arguing that Holm

was disqualified from receiving benefits under three statutory

provisions: (1) “[v]iolation of a statute or of a company rule which

2 resulted or could have resulted in serious damage to the employer’s

property or interests”; (2) “[o]ff-the-job use of not medically

prescribed intoxicating beverages or controlled substances . . . to a

degree resulting in interference with job performance”; and (3)

“failure to meet established job performance or other defined

standards.” § 8-73-108(5)(e)(VII), (VIII), (XX).

¶8 On review, the Panel affirmed the hearing officer’s decision but

applied a different rationale. It concluded that “when an individual

is separated from employment due to a positive drug test

administered pursuant to the employer’s drug policy, the provisions

of [section] 8-73-108(5)(e)(IX.5), C.R.S. are exclusive” and

disqualification “is not warranted under one of the more general

disqualification provisions.” Hence, the Panel declined to consider

whether the three other possible disqualifying subsections urged by

M & A applied.

¶9 Because marijuana was not present in Holm’s system “during

working hours” as required by subsection (IX.5), the Panel

concluded that he was not disqualified from receiving benefits

under that subsection. Based on its conclusion that subsection

(IX.5) was the only potentially applicable disqualifying subsection,

3 the Panel reasoned that since its requirements were not met, Holm

was not at fault for the separation and was entitled to an award of

benefits.

II. Discussion

¶ 10 M & A contends that the Panel erred by considering only

subsection (IX.5) and by expressly declining to consider other

possible disqualifying subsections. We agree.

¶ 11 We may set aside a Panel decision if, among other reasons, it

is erroneous as a matter of law. See § 8-74-107(6), C.R.S. 2019;

Whitewater Hill, LLC v. Indus. Claim Appeals Office, 2015 COA 5,

¶ 10. We review de novo an agency’s legal conclusions, including

its interpretation of statutes. Whitewater Hill, ¶ 10.

¶ 12 As pertinent here, subsection (IX.5) provides for

disqualification from the receipt of benefits based on the

presence in an individual’s system, during working hours, of not medically prescribed controlled substances . . . as evidenced by a drug or alcohol test administered pursuant to a statutory or regulatory requirement or a previously established, written drug or alcohol policy of the employer and conducted by a medical facility or laboratory licensed or certified to conduct such tests.

§ 8-73-108(5)(e)(IX.5).

4 ¶ 13 Nothing in the language of this subsection supports the

Panel’s conclusion that it should be applied exclusively in certain

circumstances. Furthermore, the Panel’s conclusion that

subsection (IX.5) applies exclusively directly conflicts with the

following language in section 8-73-108(5)(e): “[I]f a separation from

employment occurs for any of the following reasons, the employer

from whom such separation occurred must not be charged for

benefits which are attributable to such employment and . . . a

payment of such benefits must not be made from [the

unemployment compensation] fund . . . .” (Emphasis added.) The

statute then lists twenty-five separate subsections, each of which

describes a separate possible circumstance or reason supporting

benefit disqualification. See § 8-73-108(5)(e)(I)-(XXIV). Section 8-

73-108(4), which lists the statute’s various qualifying provisions,

contains the same “any of the following reasons” language.

¶ 14 Thus, the statute contemplates that hearing officers and the

Panel will consider all potentially applicable qualifying and

disqualifying provisions. See Mattison v. Indus. Comm’n, 33 Colo.

App. 203, 206-07, 516 P.2d 1143, 1145 (1973) (noting that where

cases “fall within two or more provisions of the Act . . . the

5 Commission has wide latitude in determining which section will be

applied” and that if “the facts of a case are covered specifically by

one section of the statute, that provision must be applied”); see also

Dailey, Goodwin & O’Leary, P.C. v. Div. of Emp’t, 40 Colo. App. 256,

259, 572 P.2d 853, 855 (1977) (stating that “the facts in a given

case [must] be examined to ascertain if they bring the matter within

any statutory category”).

¶ 15 To support its conclusion that Holm’s firing based on the

positive drug test only triggers consideration of subsection (IX.5),

the Panel stated as follows: “In our view, the reasoning of the court

of appeals in Board of Water Commissioners v. Industrial Claim

Appeals Office, 881 P.2d 476 (Colo. App. 1994) and the fact that the

General Assembly subsequently enacted [section] 8-73-

108(5)(e)(IX.5) is controlling.” We are not persuaded that either

Board of Water Commissioners or the enactment of subsection (IX.5)

supports the Panel’s conclusion.

¶ 16 First, contrary to the Panel’s assertion, Board of Water

Commissioners was announced on August 11, 1994, more than a

month after subsection (IX.5) became effective on July 1, 1994. See

Ch. 321, sec. 1, § 8-73-108(5)(e)(IX.5), 1994 Colo. Sess. Laws 1998.

6 Thus, to the extent the Panel considered subsection (IX.5) to be a

legislative response to Board of Water Commissioners, it was in

error.

¶ 17 Furthermore, nothing in Board of Water Commissioners itself

supports the Panel’s conclusion that subsection (IX.5) should be

applied exclusively. In that case, the claimant was fired because he

tested positive for cocaine in violation of the employer’s substance

abuse policy. Bd. of Water Comm’rs, 881 P.2d at 477. However, the

hearing officer awarded the claimant benefits, concluding that

although he had been fired for violating a company rule, the

employer had not established the requisite “serious damage” or

“endangerment” to support disqualification under section 8-73-

108(5)(e)(VII). Bd. of Water Comm’rs, 881 P.2d at 477-78. The

hearing officer also determined that the claimant was not

responsible or “at fault” for the separation. Id. at 478.

¶ 18 The Panel affirmed. Id. It rejected the employer’s argument

that the claimant should be disqualified under two subsections

specifically relating to controlled substances, section 8-73-

108(5)(e)(VIII) and (IX). Bd. of Water Comm’rs, 881 P.2d at 478.

7 ¶ 19 On review, a division of this court reversed. Based on the

evidentiary record, the division concluded that the claimant was (1)

at fault for the job separation and (2) disqualified from receiving

benefits under a statutory subsection the Panel and the hearing

officer had not even considered — section 8-73-108(5)(e)(XX) (failure

to meet established job performance or other defined standards).

Bd. of Water Comm’rs, 881 P.2d at 478.

¶ 20 In our view, Board of Water Commissioners does not support

the Panel’s conclusion that it should only consider a single

disqualifying subsection in this type of job separation scenario. To

the contrary, it supports the apparent legislative intent expressed in

section 8-73-108 that hearing officers and the Panel should

consider all potentially applicable subsections of the statute.

¶ 21 Moreover, the employer’s failure to satisfy the specific

requirements for disqualification under subsection (IX.5) does not,

in our view, justify ignoring other more general and potentially

applicable subsections. We note that the Board of Water

Commissioners division chose to consider and apply a more general

subsection — section 8-73-108(5)(e)(XX) — even though the

evidence in that case did not support applying other disqualifying

8 subsections, including two that more specifically addressed

controlled substances. Indeed, construing subsection (IX.5) to

apply exclusively would effectively nullify or render meaningless

section 8-73-108(5)(e)’s language that disqualification is required if

“any of the following reasons” contained in the twenty-five

subsections exists. See Yotes, Inc. v. Indus. Claim Appeals Office,

2013 COA 124, ¶ 14 (courts must give consistent, harmonious, and

sensible effect to all parts of a statute and avoid an interpretation or

construction that renders any language meaningless).

¶ 22 It appears the Panel may have invoked the canon of statutory

interpretation dictating that the specific overrides the general. See

§ 2-4-205, C.R.S. 2019. However, where statutory provisions

appear to conflict, they “shall be construed, if possible, so that

effect is given to both.” Id. In other words, the specific-overrides-

general canon “is only applicable when ‘a conflict between two

statutory provisions is irreconcilable.’” Young v. Brighton Sch. Dist.

27J, 2014 CO 32, ¶ 16 (emphasis in Young) (quoting Martin v.

People, 27 P.3d 846, 860 (Colo. 2001)).

¶ 23 Any conflict among the provisions at issue in this case is not

irreconcilable. Subsection (IX.5) disqualifies an individual for the

9 sole reason that he or she had a positive drug or alcohol test while

working, essentially dispensing with the need for an employer to

establish any impairment of the employee’s abilities or adverse

effect on the employer’s business. However, subsection (VII) would

apply where an employee violates an employer’s rule prohibiting

drug use, whether on or off the job, but an employer would be

required to demonstrate that the employee’s drug use had, or could

have had, adverse impacts on the company. Similarly, subsection

(VIII) could be applied to off-the-job drug use but requires proof that

the drug use interfered with the employee’s job performance. And

subsection (XX), when applied in a drug use or testing scenario,

requires the employer to establish that an employee’s drug use or

failed drug test caused him or her to fail to meet an established job

performance or other defined standard. Because there is no

irreconcilable conflict, all provisions of the statute are amenable to

harmonious construction, and thus must be given effect.

¶ 24 For these reasons, we agree with M & A’s contention that the

Panel erred by limiting its analysis in this case solely to subsection

(IX.5).

10 ¶ 25 We note the Panel ultimately concluded that Holm was not at

fault for the discharge, and we acknowledge that such a conclusion

could, by itself, support an award of benefits. See Cole v. Indus.

Claim Appeals Office, 964 P.2d 617, 618 (Colo. App. 1998) (“[E]ven if

the findings of the hearing officer may support the application of

one of the disqualifying sections of the statute, a claimant may still

be entitled to benefits if the totality of the circumstances establishes

that the claimant’s separation occurred through no fault of her

own.”). But it appears that the Panel’s fault analysis was based

solely on its erroneous conclusion that subsection (IX.5) applies

exclusively.

¶ 26 We conclude that the proper remedy is to set aside the Panel’s

order and remand for it to consider whether the findings and the

evidence should support disqualifying Holm under any of the other

statutory subsections asserted by M & A. In doing so, we express

no opinion as to the merits of M & A’s contentions that Holm is

disqualified under any of the three provisions, particularly in light

of the hearing officer’s factual finding that Holm’s use of marijuana

did not interfere with his performance at work. We also note that,

on remand, the Panel is to review the matter on the record before it,

11 and consider only those arguments previously asserted by M & A.

The Panel should also determine whether Holm was at fault for the

separation using the generally recognized legal standards for that

inquiry. See Mesa Cty. Pub. Library Dist. v. Indus. Claim Appeals

Office, 2017 CO 78, ¶ 18; Cole, 964 P.2d at 618-19.

III. Conclusion

¶ 27 The Panel’s order is set aside, and the case is remanded for

further proceedings consistent with the views expressed in this

opinion.

JUDGE J. JONES and JUDGE FOX concur.