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 September 20, 2018

No. 17CA2147 Dos Almas LLC v. ICAO — Taxation — Unemployment; Labor and Industry — Colorado Employment Security Act — Premiums and Coverage — Transfer of Experience and Assignment of Rates

In this unemployment tax case, a division of the court of

appeals interprets and applies certain statutory provisions for

determining whether an employer that acquires “substantially all of

the assets” of another employer becomes a “successor” employer to

the predecessor for unemployment tax rate liability purposes. If the

statutory criteria in section 8-76-104(1)(a), C.R.S. 2017, are

satisfied, the acquiring employer “succeeds” to the predecessor’s

unemployment experience rating record and account for the purpose

of determining the unemployment tax rate for the successor.

Affirming the Panel’s decision, the division holds that Dos

Almas’s asset acquisition satisfied these statutory criteria. First, the division holds that the finding that Dos Almas acquired 90% of the

physical and intangible assets of the predecessor supports the

conclusion that it acquired “substantially all” of the predecessor’s

“assets.” The division further holds that employee retention is

irrelevant to the successor issues under the applicable “substantially

all of the assets” provisions of section 8-76-104(1)(a), although such

retention is relevant under other statutory criteria, not at issue in

this case, which provide alternative ways of becoming a successor

employer.

Finally, the division rejects Dos Almas’s due process challenges

as unpreserved and inadequately developed. COLORADO COURT OF APPEALS

Court of Appeals No. 17CA2147 Industrial Claim Appeals Office of the State of Colorado DD No. 16040-2017

Dos Almas LLC,

Petitioner,

v.

Industrial Claim Appeals Office of the State of Colorado and Division of Unemployment Insurance Employer Audits,

Respondents.

ORDER AFFIRMED

Division IV Opinion by CHIEF JUDGE LOEB Hawthorne and Berger, JJ., concur

Announced September 20, 2018

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 ¶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

1 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

2 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 officer’s decision to the Panel.

¶9 On review, the Panel reversed the hearing officer’s decision.

The Panel upheld the hearing officer’s factual findings, but it

reached a different conclusion based on those factual findings.

In particular, based on the finding that Dos Almas had acquired

90% of WooPig’s physical and intangible assets, the Panel ruled

3 that Dos Almas had acquired “substantially all” of WooPig’s

“assets” and thereby met the statutory criteria in section

8-76-104(1)(a) to be WooPig’s successor for unemployment

compensation tax rate liability purposes. The Panel further ruled

that the findings concerning WooPig’s employees were irrelevant

under the applicable criteria in section 8-76-104(1)(a) because

employees are not “assets” under those statutory provisions.

¶ 10 This appeal by Dos Almas followed.

II. Discussion

¶ 11 Dos Almas contends that the Panel erred in ruling that it is

a successor to WooPig for unemployment compensation tax rate

liability purposes under the circumstances here. We disagree.

A. Good Cause Issues

¶ 12 We first reject the argument raised in the Panel’s answer

brief that Dos Almas’s untimely appeal from the deputy’s

decision requires dismissal of this appeal for lack of subject

matter jurisdiction. This argument is based on the faulty

premise that the initial hearing officer could not permit that

untimely appeal for good cause shown.

4 ¶ 13 As noted in the July 2017 hearing officer’s decision, Dos

Almas’s appeal from the deputy’s decision was filed in May 2017,

262 days late. Also, as the Panel’s answer brief points out, under

current law, the Department’s regulations provide that an

untimely appeal from a deputy’s decision shall be dismissed and

the deputy’s decision shall become final if the untimely appeal is

received more than 180 days beyond the expiration of the timely

filing period. See Dep’t of Labor & Emp’t Reg. 12.1.3.2, 7 Code

Colo. Regs. 1101-2 (effective Dec. 30, 2017). However, the

Panel’s reliance on these provisions is misplaced because they

were not in effect at the relevant times.

¶ 14 To the contrary, the regulatory provisions concerning an

absolute 180-day time limit for a late appeal from a deputy’s

decision were first adopted on August 14, 2017, and were

effective on September 5, 2017. Dep’t of Labor & Emp’t Reg.

12.1.3.2, 7 Code Colo. Regs. 1101-2 (expired Dec. 12, 2017).

There was no outside time limit for a late appeal from a deputy’s

decision under the regulations in effect when Dos Almas filed its

untimely appeal in May 2017 or when the first hearing officer

made her good cause determination in July 2017. Moreover, the

5 Division did not challenge this good cause determination in the

administrative proceedings that followed before the second

hearing officer and the Panel.

¶ 15 Under these circumstances, the propriety of the first hearing

officer’s good cause determination is not properly before us, and

there is no jurisdictional defect requiring the dismissal of this

appeal.

B. Successor Issues Under Applicable Statutory Criteria

¶ 16 Next, we reject Dos Almas’s argument that it is not a

successor employer to WooPig for unemployment tax rate liability

purposes under the applicable statutory criteria in section

8-76-104(1)(a).

¶ 17 Section 8-76-104(1)(a) provides, in pertinent part, that an

employing unit “that becomes an employer because it acquires all

of the organization, trade, or business or substantially all of the

assets of one or more employers” subject to the Colorado

Employment Security Act (CESA) “shall succeed to the entire

experience rating record of the predecessor employer,” and the

predecessor employer’s account “shall pass to the successor for

6 the purpose of determining” the successor’s unemployment

compensation tax rate.

¶ 18 At issue in this appeal is whether Dos Almas acquired

“substantially all of the assets” of WooPig as required under

these provisions so as to become a successor employer to WooPig

for purposes of determining Dos Almas’s unemployment

compensation tax rate. Like the Panel, we conclude that Dos

Almas’s asset acquisition satisfied these statutory requirements.

¶ 19 The second hearing officer found from the evidence

presented that Dos Almas had purchased approximately 90% of

WooPig’s physical and intangible assets, including extensive

equipment for the operation of the restaurant business and all

marketing and internet-related intangibles. Because these

factual findings are supported by substantial evidence in the

record, we must accept them on appeal. See § 8-74-107(4),

C.R.S. 2017; Yotes, Inc. v. Indus. Claim Appeals Office,

.

¶ 20 Notwithstanding Dos Almas’s arguments concerning the

assets it did not acquire, the hearing officer’s findings concerning

Dos Almas’s acquisition of 90% of WooPig’s physical and

7 intangible assets support the conclusion that Dos Almas

acquired “substantially all” of WooPig’s assets, as required under

the applicable statutory criteria. We also note that the changes

Dos Almas made in operating and marketing the restaurant

business after this transaction do not alter the fact that Dos

Almas first acquired “substantially all” of WooPig’s assets, which

is all that was necessary to satisfy the applicable statutory

criteria. Consequently, we agree with the Panel that the hearing

officer’s established factual findings support the conclusion that

Dos Almas is a successor employer to WooPig for unemployment

compensation tax rate liability purposes under the applicable

statutory criteria in section 8-76-104(1)(a). See § 8-74-107(6).

¶ 21 Contrary to Dos Almas’s further argument, we also agree

with the Panel that the lack of employee retention in the asset

purchase transaction is irrelevant to the successor issues in this

case.

¶ 22 In this regard, we note that employee retention is a factor

under other statutory provisions in CESA that govern alternative

ways in which an entity can become a successor employer for

unemployment compensation tax rate liability purposes. In

8 particular, an entity can also become a successor employer

under separate criteria in section 8-76-104(1)(a) by acquiring “all

of the organization, trade, or business” of a predecessor

employer, and section 8-76-104(11)(c) defines “trade” or

“business” as including “an employer’s work force.” Employee

retention can also provide an alternative way in which an entity

can become a successor employer under the provisions of section

8-76-104(9).

¶ 23 Nevertheless, Dos Almas was not determined to be a

successor employer under those statutory provisions, but instead

under the statutory criteria in section 8-76-104(1)(a) concerning

acquisition of “substantially all of the assets” of a predecessor

employer. Under these statutory provisions, employee retention,

or lack of employee retention, is irrelevant to the successor

issues because a predecessor’s employees are simply not “assets”

under the plain meaning of that statutory term. See

§ 8-74-107(6).

¶ 24 Dos Almas also contends that the statutory requirements in

section 8-76-104(1)(a) were not satisfied because it asserts that it

9 did not become an employer simply “because” of its acquisition of

WooPig’s assets. This argument is also unpersuasive.

¶ 25 As noted by Dos Almas, the statutory language in section

8-76-104(1)(a) refers to an entity becoming an employer

“because” it acquires either “all of the organization, trade, or

business” of a predecessor or “substantially all of the assets” of a

predecessor. Contrary to Dos Almas’s argument, however, this

condition was also satisfied in this case.

¶ 26 Here, the record shows that, in its initial application to the

Department, Dos Almas checked a box on the form indicating

that it was completing this application “as a result of a business

acquisition.” The owner completing this application certified,

under penalty of perjury, that this information was true,

accurate, and complete to the best of his knowledge. Moreover,

Dos Almas admits in its opening brief that its acquisition of

WooPig’s assets was “part of” its process of becoming an

employer.

¶ 27 Because Dos Almas has acknowledged the causal link

between its acquisition of WooPig’s assets and becoming an

employer, we conclude that it became an employer “because” of

10 its asset acquisition within the meaning of this statutory term in

section 8-76-104(1)(a).

¶ 28 In essence, Dos Almas contends that the statutory term

“because” should be read as “only because,” and that this

condition was not satisfied because there were also other steps in

the process of becoming an employer. We perceive no basis for

this interpretation in the statutory language, and we will not read

a limitation into the provisions of section 8-76-104(1)(a) that is

not supported by the statutory language used. See Tesmer v.

Colo. High Sch. Activities Ass’n,

(Colo. App.

2006) (holding, in a different context, that the statutory phrase

“because of” required only a showing of “but for” causation,

without any requirement to show a “sole” cause); see also Indus.

Claim Appeals Office v. Colo. Dep’t of Labor & Emp’t,

(in interpreting other CESA provisions, court declined to

read limitation into statute that did not contain limiting

language).

¶ 29 In short, based on the established factual findings and the

applicable provisions of section 8-76-104(1)(a), the Panel properly

ruled that Dos Almas became a successor employer to WooPig for

11 unemployment compensation tax rate liability purposes due to

its acquisition of “substantially all” of WooPig’s assets.

C. Due Process Issues

¶ 30 We also reject Dos Almas’s arguments that its due process

rights were somehow violated by the determination that it is a

successor employer for unemployment compensation tax rate

liability purposes. As noted in the Panel’s answer brief, the

nature and the contours of Dos Almas’s due process arguments

are unclear, but these arguments are unpersuasive in any event.

¶ 31 First, to the extent that Dos Almas is raising as-applied due

process challenges to the successor liability determination under

the pertinent statutory criteria, such challenges have not been

preserved for our review. Because Dos Almas did not raise such

challenges in the administrative proceedings before the second

hearing officer and the Panel, we decline to address them on

appeal. See § 8-74-107(1); Goodwill Indus. of Colo. Springs v.

Indus. Claim Appeals Office,

, 1045 (Colo. App.

1993); see also Magin v. Div. of Emp’t,

(Colo.

App. 1995).

12 ¶ 32 Next, to the extent that Dos Almas is raising facial

challenges to the constitutionality of the pertinent statutory

criteria in section 8-76-104(1)(a), we also decline to address any

such challenges because Dos Almas has not cited any supporting

legal authority and has not adequately developed any such

arguments. See People v. Hicks,

(Colo. App.

2011) (declining to address due process argument asserted on

appeal without reference to any supporting legal authority); see

also Biel v. Alcott,

(Colo. App. 1993) (stating that

an appealing party has the burden to provide supporting

authority for arguments on appeal and that a failure to do so will

result in affirmation).

¶ 33 Finally, it appears that Dos Almas essentially contends that

application of the statutory criteria in section 8-76-104(1)(a) in

determining the successor liability issues is “unfair” because it

asserts that additional or different criteria should be considered.

In this regard, we note that arguments concerning possible

inequities arising from the application of the limited existing

statutory criteria should be directed to the General Assembly

rather than to this court. See Manpower, Inc. v. Indus. Comm’n,

13

(Colo. App. 1983) (changes to statutory

criteria for unemployment compensation successor liability are

for General Assembly, not the courts); see also Lewis v. Colo.

Dep’t of Labor & Emp’t,

(Colo. App.

1996) (changes to other CESA provisions to address possible

inequities are for legislative branch, not the courts).

III. Conclusion

¶ 34 The Panel’s order is affirmed.

JUDGE HAWTHORNE and JUDGE BERGER concur.

14