Facello v. Department of Economic & Employment Development

HOLLANDER, Judge. Appellants Henry J. Cogdell, Charles A. Facello, and Alonzo S. Williams, who are all former employees of appellee Bethlehem Steel Corporation (“Bethlehem”), elected to retire when Bethlehem closed the particular division in which they worked. Upon retirement, they sought to qualify for unemployment benefits. Appellants’ claims were, however, partially denied by the Board of Appeals (the “Board”) of the Department of Economic and Employment Development (“DEED”), appellee.

At issue is the significance of a single monetary disbursement, called a “Special Payment,” made by Bethlehem to each appellant soon after retirement but prior to the commencement of monthly pension payments. Appellants’ unemployment benefits claims were initially considered by various claims examiners and appeals were taken to the Board. After holding a consolidated evidentiary hearing, the Board determined that part of the Special Payment constituted a periodic retirement payment and a portion constituted accrued vacation time. As a result, each appellant was disqualified from receiving unemployment benefits to the extent the Special Payment constituted a periodic retirement payment.

In all three cases, appellants appealed the Board’s decisions to the Circuit Court for Baltimore City and Bethlehem cross-appealed. ⁵⁷⁸ In a well-reasoned opinion, Judge Marvin B. Steinberg affirmed the Board’s decision that the Special Payment was, in part, a periodic retirement payment. The court reversed, however, the Board’s determination of non-disqualification on the basis of payment for accrued vacation time. Questions Presented The parties present the following two issues for our consideration: 1. “Did the Circuit Court err in affirming the Board’s decision and concluding that the special lump sum payment that Appellants received following their layoff was not a lump sum payment within the meaning of '§ 8—1008(b)(2) of the Labor and Employment Article of the Annotated Code of Maryland.” 2. “Did the Circuit Court err in reversing the Board’s decision and concluding that the period in which the ‘retirement portion’ of the special payment would be allocated to reduce weekly unemployment benefits was the thirteen weeks provided for in the Pension Agreement.” For the reasons discussed below, we conclude that the circuit court did not err. Accordingly, we shall affirm. 1 Factual Background The facts are essentially undisputed; the parties presented their evidence below almost entirely by stipulation.

Cogdell, Facello, and Williams were long-time employees at Bethlehem’s rod mill in Sparrows Point, Maryland; they had been employed there for 41, 36, and 37 years of service, ⁵⁷⁹ respectively. On August 15, 1992, Bethlehem permanently closed its rod mill. In anticipation of the closing, Bethlehem presented the displaced employees with various choices: (1) they could be placed on layoff until a permanent job became available; (2) they could bid on lower paying jobs in the labor pool; or (3) if eligible, they could retire and collect their pension benefits. If an employee chose to retire, the retirement benefits would be paid in accordance with the company’s Pension Agreement.

Appellants each chose to retire and collect pension benefits, although they also intended to seek other employment elsewhere. Pending re-employment, each appellant sought unemployment benefits pursuant to Md.Code Ann., Lab. & Emp’t Art., Title 8 (1992). 2 Under the terms of Bethlehem’s Pension Agreement, 3 an eligible employee who retires is entitled to a “Special Payment,” followed by a monthly pension benefit equal to the “regular pension amount.” The Pension Agreement defines “Special Payment,” in pertinent part, as follows: The Special Payment is the payment for the first three full calendar months following the month in which retirement occurs.... It is a lump sum equal to IS weeks of vacation pay (14 weeks of vacation pay in the case of employees eligible for more than four weeks of regular vacation in the year of retirement), reduced by any regular vacation pay received for the year of retirement.... Under the basic labor agreement a participant entitled to vacation which he has not taken by the time of retirement does not receive that vacation or vacation pay if he is eligible for the Special Payment, but no deduction will be made from the Special Payment for such vacation.

(Emphasis added). Once calculated, the Special Payment is payable at any time during the first three months following retirement, but $1,000 ⁵⁸⁰ must be made available “as soon as possible” within the first month, and the balance must be made payable “as soon as possible thereafter.” The regular pension amount is equal to a percentage (the magnitude depending on the length of service) of the employee’s monthly salary rate at the time of retirement, and is payable in monthly installments beginning in the fourth month after retirement. In September 1992, each appellant received his Special Payment. Cogdell received $9,481, which included four weeks of vacation pay; 4 Faeello received $7,662, which included three weeks of vacation pay; 5 and Williams received $7,595, which included three weeks of vacation pay. 6 Also in September 1992, appellants applied for unemployment benefits.

Further facts will be included where pertinent to our discussion of the issues presented. Discussion I. Procedural Background Because of the closing of Bethlehem’s rod mill at Sparrow’s Point, each appellant would have been entitled to a maximum weekly unemployment benefit of $223, absent the receipt of pension benefits. It is undisputed, however, that appellants were not entitled to unemployment benefits if they also received monthly pension benefits that exceeded the amount of the unemployment benefits. § 8-1008(b). Appellants began to receive monthly pension benefits soon after.

December 1, 1992. The parties agree, therefore,-that ⁵⁸¹ appellants were disqualified from receiving unemployment benefits after that date. What is in dispute is the effect of the single monetary sum paid to each appellant prior to the commencement of the monthly pension benefits. The question is whether the Special Payment disqualified the appellants from unemployment benefits during the thirteen-week period preceding commencement of the regular monthly pension benefits.

The provisions of § 8-1008 are central to this case. It states, in pertinent part, as follows: (a) “Retirement payment ” defined.—In this section, “retirement payment”: (1) means an amount in the form of a pension, annuity, or retirement or retired pay from a trust, annuity, profit sharing plan, insurance fund, annuity or insurance contract, or any other similar lump sum or periodic payment that is based on any previous covered employment for a base period employer under a plan paid for wholly or partly by a base period employer; and (2) does not include a payment from a state or federal workers’ compensation program. (b) Effect of payment.— (1) For each week in which the Secretary finds that an individual who otherwise is eligible for benefits receives a retirement payment: (i) if the weekly amount of the retirement payment computed under subsection (c) of this section at least equals the individual’s weekly benefit amount, the individual is disqualified from receiving benefits for that week; and (ii) if the weekly amount of the retirement payment computed under subsection (c) of this section is less than the individual’s weekly benefit amount, the individual may receive benefits reduced by the amount of the retirement payment. (2) A retirement benefit in the form of a lump sum payment that an employing unit pays as a result of a layoff ⁵⁸² or shutdown, shall not be deductible from, benefits for the period of eligibility. * * * (c) Computation.— (1) To determine the effect of a retirement payment on eligibility for benefits under subsection (b) of this section: (i) if a base period employer paid the full cost of the plan that provides the retirement, the full retirement payment shall be considered; and (ii) if a base period employer paid only part of the cost of the plan that provides the retirement payment, 50% of the retirement payment shall be considered.

(2) To compute the weekly amount of a periodic retirement payment, it shall be prorated on a weekly basis for the period between periodic retirement payments. (3) To compute the weekly amount of a lump sum retirement payment, it shall be allocated to the number of weeks that follow the date of separation from employment in accordance with the number of weeks of pay that an individual received at the individual’s last wage rate. (Emphasis added). As we have pointed out, § 8-1008(b)(2), which is at the heart of this controversy, specifically provides that a “lump sum payment” made as a result of a shutdown will not disqualify the employee from receipt of unemployment benefits.

COMAR 24.02.02.14(A)(2) defines “lump-sum pension” (but not “lump-sum payment”) as “the gross amount of a pension that is paid in one payment. Any pension paid in more than one payment is not a lump-sum pension, even if the installments are paid irregularly.” Further, COMAR 24.02.02.14(A)(5) defines “periodic pension payment” as “the gross amount payable on a recurring basis.” The Board held that appellants’ retirement benefits were paid “as a result of layoff or shut down,” as required by § 8-1008(b)(2), but found that the Special Payment was not a “lump sum payment.” Rather, the Board determined that the ⁵⁸³ Special Payment was merely the first installment of appellants’ regular, monthly pension benefits, and pertained to the initial thirteen week period, before the employees would begin receiving monthly pension payments. Accordingly, the Board concluded that the Special Payment did not fall within the ambit of § 8—1008(b)(2), and therefore each appellant was disqualified from receiving unemployment benefits under § 8-1008(b)(1) during the first thirteen weeks of unemployment. The Board also held, however, that appellants would not be disqualified from receiving unemployment benefits to the extent the Special Payment represented payment for a specified number of weeks of vacation pay.

In other words, the Board considered the Special Pay to consist of discrete weeks of benefits, rather than the aggregate value of the benefits. Accordingly, the Board concluded that each appellant was entitled to unemployment benefits for the particular number of weeks equal to accrued vacation time, without regard to the value of the pension benefits in the Special Payment. Specifically, Cogdell would have been entitled to four weeks of unemployment benefits, because his Special Payment included money for four weeks of vacation. Similarly, Facello and Williams each would have been entitled to three weeks of unemployment benefits.

On appeal, the circuit court agreed with the Board that the appellants were receiving their pensions “as a result of layoff or shut down.” The court further agreed that the Special Payment constituted the first payment of the pension, representing an advance on the first three months of the monthly pension benefits. Additionally, the court concurred that appellants were not necessarily disqualified to the extent the Special Payment represented vacation pay. But, upon careful consideration of § 8-1008(c)(2), the circuit court concluded that the Board was required to deduct the value of the total vacation pay—rather than the number of weeks of vacation it represented—from the total Special Payment, and then to apply the remainder to the disqualification provisions of § 8-1008. Using Cogdell’s ⁵⁸⁴ case as an example, the court’s analysis would have required the Board to reduce Cogdell’s Special Payment of $9481 by $3019 (the total vacation pay) and to reduce the remaining $6462 (nine weeks of regular pension benefits) pro rata over the three month period, to a weekly amount of $497.

Using that method in each appellant’s case, the pro rated pension portion of the Special Payment was greater than the maximum unemployment insurance benefit available. Consequently, the circuit court concluded that, pursuant to § 8-1008(b)(l)(i), each appellant was entirely disqualified. II. “Lump-Sum Payment” Appellants contend that, based on the definition of the Special Payment in the Pension Agreement and notwithstanding the definition in COMAR, the Special Payment was a “lump sum.” Because it was made as a result of a layoff or shutdown, appellants conclude that § 8-1008(b)(2) protects them from disqualification. Appellees assert two arguments in opposition to appellants’ contentions.

First, they claim the retirement benefits were not distributed “as a result of layoff or shut down.” Second, they contend that, consistent with COMAR and notwithstanding the description of the Special Payment in the Pension Agreement, the Board and the circuit court correctly characterized the Special Payment as part of the periodic payments of regular pension benefits for the purposes of § 8-1008(b)(2). We agree with the Board, the circuit court, and appellees that the Special Payment was a part of the periodic pension payments. 7 Accordingly, we hold that appellants were disqualified from receiving unemployment benefits during the initial thirteen week period covered by the Special Payment. We explain. As we have observed, Title 8 of the Labor and Employment Article does not define “lump sum.” Moreover, we are not ⁵⁸⁵ aware of any Maryland case that interprets the definition of “lump sum” as it is used in § 8—1008(b).

Accordingly, we must determine whether the Special Payment is a lump sum for the purposes of disqualification under § 8-1008(b). In order to do so, we must interpret the meaning of the language used, and in particular, the meaning of the phrase “lump sum.” In Rose v. Fox Pool Corp., 335 Md. 351 , 643 A.2d 906 (1994), the Court succinctly summarized the principles of statutory construction that we must now apply. The cardinal rule of statutory construction is to effectuate and carry out legislative intent. Every statute is enacted to further some underlying goal or purpose—“to advance some interest, to attain some end”—and must be construed in accordance with its general purposes and policies.

When called upon to construe a particular statute, we begin our analysis with the statutory language itself since the words of the statute, construed according to their ordinary and natural import, are the primary source and most persuasive evidence of legislative intent. The statute must be construed as a whole so that no word, clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory. When the language of a statute is plain and clear and expresses a meaning consistent with the statute’s apparent purpose, no further analysis of legislative intent is ordinarily required. As we explained, however, in Morris v. Prince George’s County, [ 319 Md. 597 , 573 A.2d 1346 (1990)]: [0]ur endeavor is always to seek out the legislative purpose, the general aim or policy, the ends be accomplished, the evils to be redressed by a particular enactment.

In the conduct of that enterprise, we are not limited to study of the statutory language. The plain meaning rule “ ‘is not a complete, all-sufficient rule for ascertaining a legislative intention....’” The “meaning of the plainest language” is controlled by the context in which it appears. Thus, we are always free to look at the context within which the statutory language appears. ⁵⁸⁶ Even when the words of a statute carry a definite meaning, we are not “precluded from consulting the legislative history as part of the process of determining the legislative purpose or goal” of the law. [ 319 Md. at 603-04 , 573 A.2d 1346 (citations and footnote omitted in Rose) ]. The legislative history of a statute, including amendments that were