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McPherson Timberlands v. Unemployment Ins. Comm.
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MAINE SUPREME JUDICIAL COURT				Reporter of Decisions
Decision:	1998 ME 177
Docket:	Pen-97-488	
Argued:	April 9, 1998
Decided:	July 17, 1998	


Panel:	WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, and SAUFLEY, JJ.




McPHERSON TIMBERLANDS, INC. v. UNEMPLOYMENT INSURANCE COMMISSION


SAUFLEY, J.

	[¶1]  McPherson Timberlands, Inc. appeals from the judgment of the
Superior Court (Penobscot County, Mead, J.) affirming the Unemployment
Insurance Commission's decision that timber harvesting services performed
for McPherson by Albert W. Withee constituted employment pursuant to 26
M.R.S.A. § 1043(11)(E) (1988).  Specifically, McPherson argues that the
Commission erred in finding that Withee's timber harvesting work was
neither outside the usual course of McPherson's timber management and
marketing business nor performed outside all the places of that business. 
We affirm the judgment.
	[¶2]  McPherson is in the business of managing and marketing forest
products from its own land and the land of others.  It advertises its interest
in buying timber from other landowners through both mailings and word of
mouth.  When McPherson enters into agreements with landowners, its
agreements provide either that McPherson "is engaged in the business of
felling and hauling timber" and "is able and willing fully to cut the specified
timber on said lands and haul and deliver said timber," or that McPherson
handles "the organization of the harvest and delivery of forest products to
mill destinations including layout and supervision, providing the necessary
men and equipment, state permiting [sic] and administrative reporting."{1} 
Although McPherson did, at one time, harvest timber with the use of its own
equipment, it does not currently own the equipment necessary for timber
harvesting.  It therefore enters into arrangements with woodcutters who
have access to this equipment for the actual harvest of timber.  It then sells
the harvested timber to various paper companies and sawmills, deriving as
much as two-thirds of its total profit from these sales.  
	[¶3]  In December 1993, McPherson contracted with a landowner to
harvest timber from the landowner's Mariaville property.  McPherson then
entered into an agreement with Withee whereby Withee would harvest
timber for McPherson from the Mariaville property.  The agreement
specified that Withee was to harvest only trees with a minimum diameter of
six inches, that McPherson would pay Withee directly for his services, and
that Withee would be responsible for all labor, material, tax, and insurance
expenses associated with the harvesting operation.  The agreement
contained no reference to the owner of the Mariaville property.
	[¶4]  Withee's work at the Mariaville property involved inspecting
trees, determining which trees met the six-inch minimum diameter
specification, and cutting those trees.  He provided his own skidder and
chainsaw, paid his own taxes and insurance, and set his own schedule. 
Although McPherson did not provide Withee with any training, it did
monitor his work to ensure that he complied with state law and with the
landowner's goals.  Withee, however, had no contact with the landowner and
assumed that McPherson owned the property.  Once a week, a McPherson
forester would visit the property to check on Withee's progress.  If the
forester discovered trees that should have been cut but were not, he marked
them and instructed Withee to cut them.  McPherson also paid Withee
directly for his work. 
	[¶5]  After he completed his work at the Mariaville property, Withee
filed an application for unemployment benefits, identifying McPherson as his
most recent employer.  The Department of Labor, Bureau of Employment
Security, Unemployment Compensation Tax Division investigated Withee's
claim and determined that Withee's work for McPherson constituted
employment and that McPherson was liable to the State for unemployment
taxes relating to that employment.  McPherson appealed that determination
to the Unemployment Insurance Commission.  The Commission affirmed the
agency's determination twice, once after an initial evidentiary hearing and
again after hearing additional evidence in response to McPherson's request
for reconsideration.  Following reconsideration, the Commission found that
McPherson failed to prove that Withee's timber harvesting work was outside
the usual course of McPherson's timber management and marketing
business or that Withee's work was performed outside all of McPherson's
places of business pursuant to 26 M.R.S.A. § 1043(11)(E)(2), otherwise
known as part B of the ABC test.  McPherson sought review of the
Commission's decision in the Superior Court pursuant to 26 M.R.S.A.
§ 1194(8) (Supp. 1997), 5 M.R.S.A. § 11001-11007 (1989), and M.R. Civ. P.
80C.  The court affirmed the decision of the Commission, and this appeal
followed.
	[¶6]  Where, as here, the Superior Court reviews a decision of the
Commission as an intermediate appellate court, we review the Commission's
decision directly.  See Gerber Dental Ctr. Corp. v. Maine Unemployment Ins.
Comm'n, 531 A.2d 1262, 1263 (Me. 1987).  Our review of the 
Commission's
decision is limited to determining whether the Commission correctly
applied the law and whether its fact findings are supported by any
competent evidence.  See Outdoor World Corp. v. Maine Dept. of Labor,
Unemployment Ins. Comm'n, 542 A.2d 369, 371 (Me. 1988).  We will not
disturb a decision of the Commission unless the record before the
Commission compels a contrary result.  See id. 
	[¶7]  26 M.R.S.A. § 1043(11)(E), otherwise known as the ABC test,
provides that:
	Services performed by an individual for remuneration shall
be deemed to be employment subject to this chapter unless and
until it is shown to the satisfaction of the bureau that:

	(1) ["A"]  Such individual has been and will continue to be
	free from control or direction over the performance of
	such services, both under his contract of service and in
	fact;

	(2) ["B"]  Such service is either outside the usual course of
	the business for which such service is performed, or that
	such 	service is performed outside all of the places of
	business of 	the enterprise for which such service is
	performed; and

	(3) ["C"]  Such individual is customarily engaged in an
	independently established trade, occupation, profession or
	business.
The putative employer bears the burden of rebutting the presumption of
employment created by this provision and must meet that burden as to each
of the provision's three parts.  See Gerber, 531 A.2d at 1263.  Although
McPherson met its burden regarding parts A and C, it failed to convince the
Commission on either of the two alternative prongs of part B of the ABC test. 
McPherson must therefore establish on appeal that the record before the
Commission compelled it to find either that Withee's services were outside
the usual course of McPherson's business or that his services were
performed outside of all of the places of McPherson's business.
I. Usual Course of Business
	[¶8]  Describing itself as a real estate and timber management
company, McPherson argues that Withee's timber harvesting work was
outside the usual course of its business because it does not currently own any
timber harvesting equipment and thus does not engage in the business of
timber harvesting.  The Commission, however, was "unwilling to
countenance the specious distinction between marketing, managing and
overseeing timber harvesting operations and the actual physical process of
harvesting the timber."  (Emphasis added).  On the facts before it, the
Commission found that Withee's work was not "merely incidental to"
McPherson's business, but, rather, was an "integral part of" that business. 
Accordingly, the Commission concluded that McPherson failed to prove that
Withee's services were outside the usual course of McPherson's business.
	[¶9]  McPherson asserts that the Commission's use of the phrase
"integral part of" represents an error of law because it places a higher
burden on the employer than is intended by the statute.  To the contrary,
however, the use of phrases such as "integral part of" and "merely
incidental to" represents an attempt to describe the connection between
the services performed and the usual course of the business being reviewed. 
	[¶10]  Our decisions addressing part B of the ABC test reflect this
attempt at description.  In Maine Unemployment Compensation Comm'n v.
Maine Sav. Bank, 136 Me. 136, 3 A.2d 897 (1939), a bank argued that it was
not liable for unemployment taxes relating to workers hired to repair real
estate owned by the bank because those workers were not engaged to
perform work that was part of the bank's "usual trade, occupation,
profession, or business" as required by section 19(e) of Maine's
Unemployment Compensation Law (P.L. 1935, ch. 192, § 19(e) (effective
Dec. 18, 1936)).{2}  Id. at 138, 3 A.2d at 898.  We agreed with the bank and
concluded that the repair work for which the workers were hired was
"merely incidental to" and not part of the bank's usual business.  Id. at 141,
3 A.2d at 899.  
	[¶11]  A year later, relying on the "merely incidental to" language of
the Maine Savings decision, an owner of two tenement houses argued that
he was not liable for unemployment taxes relating to workers he hired to
maintain and repair his tenement buildings because the maintenance and
repair work was merely incidental to his business as an owner of real estate. 
See Maine Unemployment Compensation Comm'n v. Androscoggin Junior,
Inc., 137 Me. 154, 164, 16 A.2d 252, 258 (1940).  In contrast to the work
at issue in Maine Savings, however, the repair and maintenance work at
issue in Androscoggin Junior was determined to be "part of [the employer's]
usual business" and not merely incidental to it.  Id.
	[¶12]  Two more recent opinions addressing part B of the ABC test
demonstrate the need for the Commission to look carefully at the individual
facts of each case to determine whether the work at issue is outside the
usual course the employer's business.  Neither opinion uses the phrases
"integral part of" or "merely incidental to," relying instead on other phrases
to describe the connection between the services rendered and the business
of the putative employer.  In Gerber Dental Ctr. Corp. v. Maine
Unemployment Ins. Comm'n, 531 A.2d at 1262, the owner and operator of
dental centers argued that it was not responsible for unemployment taxes
relating to the dentists it hired to provide dental services to patients at its
centers.  See id.  We affirmed the Commission's decision that the dentists'
work was not outside the usual course of Gerber's business where, inter alia,
Gerber publicly advertised itself as a provider of dental services, employed
all the administrative support staff necessary to handle appointments,
billing, and collections, and derived its sole income from the patients'
payments for dental services.  See id. at 1264.  In Gerber, we determined
that the "nature of Gerber's operation," that is, the provision of "full range"
dental services, supported the Commission's finding that the services
provided by the dentists were not outside the usual course of Gerber's
business.  Id. (emphasis added).  
	[¶13]  Similarly, in Outdoor World Corp. v. Department of Labor, Maine
Unemployment Ins. Comm'n, 542 A.2d at 369, the owner and operator of
campgrounds from Maine to Florida argued that it was not responsible for
unemployment taxes relating to the salespeople it hired to sell
memberships to its campgrounds.  See id. at 370-71.  We affirmed the
Commission's decision that the salespeoples' work was not outside the usual
course of Outdoor World's business where, inter alia, the agreement
between Outdoor World and its salespeople provided that Outdoor World was
in "the business of developing membership campgrounds and offering the
sale of such memberships to the general public[,]" and the salespeoples'
work was "directed exclusively" towards the sale of such memberships.  Id.
at 371 (emphasis added). 
	[¶14]  Here, regardless of the descriptive language chosen, there is
competent evidence in the record to support the Commission's conclusion
that Withee's timber harvesting work was not outside the usual course of
McPherson's timber management and marketing business.  McPherson's
business encompassed locating, obtaining, and selling timber at a profit. 
McPherson advertised its interest in buying timber from other landowners
and held itself out as a harvester and marketer of the timber.  
McPherson was then involved with the harvesting both before and after
the felling of the trees.  Withee's activities were directed solely at 
assisting McPherson in obtaining the timber.  McPherson set specifications
for Withee's work and oversaw that work to ensure that the specifications 
were met.  It was McPherson, and not the landowner, who paid Withee for his 
work.  Withee had no contact with the landowner and assumed that McPherson 
owned the property.  Finally, McPherson sold the timber Withee harvested to
various paper companies and sawmills, deriving a significant portion of its 
profit from those sales. 
	[¶15]  Although many different business relationship may be formed in
the course of harvesting and selling timber, the evidence in this record does
not compel a result contrary to the Commission's conclusion that Withee's
work was not outside the usual course of McPherson's business pursuant to
section 1043(11)(E)(2). 
II. Place of Business
	[¶16]  McPherson next argues that the Mariaville property where
Withee harvested timber was not a place of its timber management and
marketing business because the property was not its home office.  The
Commission, however, determined that Withee's work occurred within
McPherson's "business territory" and was therefore not performed outside
all the places of McPherson's business. 
	[¶17]  We reject McPherson's argument that an employer's place of
business is limited to the location of its home or central office.  If the
employer has a significant and business-related presence at the location in
dispute, it may be found to have a place of business there.  See Clayton v.
State, 598 P.2d 84, 86 (Alaska 1979) (construing state statute identical to
section 1043(11)(E)(2)); Miller v. Washington Emp. Sec. Dept., 476 P.2d
138, 140-41 (Wash. Ct. App. 1970) (same).{3}  In construing a statute identical
to section 1043(11)(E)(2), the Vermont Supreme Court concluded that the
phrase "places of business" includes not only a business's home office or
headquarters but also the business territory in which the business operates. 
See in re Bargain Busters, Inc., 287 A.2d 554, 558-59 (Vt. 1972).
	[¶18]  The record here does not compel a result contrary to the
Commission's conclusion that Withee's work was not performed outside all
of the places of McPherson's business.  McPherson contracted directly with
the landowner to harvest timber from the Mariaville property and had
representatives on the property during the harvesting to assure compliance
with that contract.  Its contractual relationship with the landowner, its
interest in the timber on the property, and its physical presence on the
property support the Commission's conclusion that, while Withee was
harvesting timber at the Mariaville property, the property was within
McPherson's business territory and was therefore a place of McPherson's
business pursuant to section 1043(11)(E)(2).
	The entry is:
Judgment affirmed.

Attorneys for plaintiff: Spencer Ervin, Esq. Largay Law Offices, P.A. 293 State Street Bangor, ME 04401 William S. Wilson, Jr., Esq., (orally) One Monument Way, Suite 200 Portland, ME 04101 Attorney for Amicus Curiae: William S. Wilson, Jr., Esq. One Monument Way, Suite 200 Portland, ME 04101 (for Maine Forest Products Council) Attorneys for defendant: Andrew Ketterer, Attorney General Gwendolyn D. Thomas, Asst. Atty. Gen., (orally) Pamela Waite, Asst. Atty. Gen. 6 State House Station Augusta, ME 04333-0006
FOOTNOTES******************************** {1} While the record contains both agreements, no evidence was produced indicating which of the two was used in the instant case. {2} This language from section 19(e), which defines "employing unit" in the context of Maine's Unemployment Compensation Law, has remained the same through R.S. ch. 24, § 19 (1944) and R.S. ch. 29, § 3 (1954), and is now codified at 26 M.R.S.A. § 1043(10) (1988). The similar language of the ABC test, which defines "employment" in the context of Maine's Unemployment Compensation Law, was also first enacted in P.L. 1935, ch. 192, § 19(g)(6), has also remained the same through the 1944 and 1954 Revisions, and is now codified at 26 M.R.S.A. § 1043(11)(E). {3} Both Clayton and Miller involved factual scenarios compellingly similar to the facts of this case. In Clayton, a lumbermill proprietor received a lease to harvest timber from state- owned land and then engaged a number of woodsman to harvest the timber and deliver it to his mill. See Clayton, 598 P.2d at 85. In Miller, a logging contractor entered into a contract to harvest timber from a parcel of land, engaged a couple of woodsman to fell and buck the timber, and then had his own logging crew yard and load the timber. See Miller, 476 P.2d at 139. In each case, the court found that the logging site was clearly a "place of business" of the putative employer pursuant to a state statute identical to section 1043(11)(E)(2). See id. at 140-41; Clayton, 598 P.2d at 86.