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Dos Almas LLC v. Industrial Claim Appeals Office of State

Court of Appeals of Colorado, Fourth Division

September 20, 2018

Dos Almas LLC, Petitioner,
v.
Industrial Claim Appeals Office of the State of Colorado and Division of Unemployment Insurance Employer Audits, Respondents.

          Industrial Claim Appeals Office of the State of Colorado DD No. 16040-2017

          John F. K. Sabal, Authorized Representative, Palisade, Colorado, of Petitioner

          Cynthia H. Coffman, Attorney General, Evan P. Brennan, Assistant Attorney General, Denver, Colorado, for Respondent Industrial Claim Appeals Office

          No Appearance for Respondent Division of Unemployment Insurance Employer Audits

          OPINION

          LOEB CHIEF JUDGE

         ¶ 1 Petitioner, Dos Almas LLC, seeks review of a final order of the Industrial Claim Appeals Office (Panel). Reversing a hearing officer's decision, the Panel ruled that, for unemployment compensation tax rate liability purposes, Dos Almas is a "successor" employer to WooPig LLC under the statutory criteria in section 8-76-104(1)(a), C.R.S. 2017. We affirm the Panel's order.

         I. Background

         ¶ 2 The relevant facts are not in dispute. Dos Almas began operating a restaurant in Palisade after it acquired nearly all of the assets of WooPig, which previously operated a different restaurant at the same location. After this acquisition, Dos Almas submitted a form to the Department of Labor and Employment (Department), along with a copy of the asset purchase agreement, applying for an unemployment compensation insurance account and a determination of employer liability.

         ¶ 3 Based on these documents, a deputy issued the requested liability determination in August 2016. In this decision, the deputy ruled that Dos Almas was a successor employer to WooPig for unemployment compensation tax rate liability purposes because it met the requirements of section 8-76-104(1)(a) due to this acquisition.

         ¶ 4 In May 2017, Dos Almas appealed the deputy's decision, more than eight months after the applicable twenty-day time limit. See § 8-74-106(1)(a), C.R.S. 2017. Nevertheless, in July 2017, a hearing officer ruled that good cause was shown under the applicable regulatory criteria for permitting this untimely appeal. See Dep't of Labor & Emp't Reg. 12.1.8, 7 Code Colo. Regs. 1101-2; see also § 8-74-106(1)(b).

         ¶ 5 Consequently, an evidentiary hearing was held on this appeal before another hearing officer. At this hearing, the asset purchase agreement and the application by Dos Almas were admitted into evidence, and testimony was provided by the deputy and by one of the owners of Dos Almas.

         ¶ 6 After this hearing, the hearing officer found, consistent with the owner's testimony, that Dos Almas had purchased approximately 90% of WooPig's physical and intangible assets. The hearing officer also made detailed factual findings concerning specific physical and intangible assets that Dos Almas had acquired, consistent with the asset purchase agreement. The hearing officer further found that Dos Almas did not retain WooPig's employees, and that, although it hired one of those employees, that employee was not transferred to Dos Almas as part of the asset sale.

         ¶ 7 Based on these factual findings, the hearing officer ruled that Dos Almas was not a successor to WooPig under the statutory criteria. Although the hearing officer acknowledged that Dos Almas acquired "substantially all" of the physical and intangible assets of WooPig, the hearing officer ruled that Dos Almas did not acquire substantially all of the "total" assets of WooPig because it did not retain the employees as part of the asset sale.

         ¶ 8 The Division of Unemployment Insurance (Division) appealed the hearing ...


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