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A Delaware trial court has reversed a decision by the state's Unemployment Insurance Appeal Board and ruled that an employee who was fired for allegedly soliciting customers for a competitor – without first being warned – was not entitled to receive unemployment insurance benefits.

The Case

Civic Health Services, LLC (“CHS”), the operator of the Seaford Pharmacy in Seaford, Delaware, said that it terminated Elizabeth A. Imbragulio, who delivered drugs for CHS to its customers, without notice because she was encouraging CHS's customers to use a pharmacy where her son worked.

Ms. Imbragulio sought unemployment insurance benefits, and CHS objected.

The Unemployment Insurance Appeal Board (the “Board”) found that CHS had no policy prohibiting the conduct that CHS asserted Ms. Imbragulio had engaged in and that CHS had terminated Ms. Imbragulio without first warning her against such conduct. Given this, the Board concluded that Ms. Imbragulio had been terminated without just cause, reasoning that Ms. Imbragulio's conduct was not sufficiently serious to justify her termination.

CHS challenged the Board's decision in court.

The Court's Decision

The court concluded that the Board had erred as a matter of law.

In its decision, the court explained that, under Delaware law, an individual discharged for “just cause” was disqualified from receiving unemployment insurance benefits. The court added that “just cause” was defined as a “wilful or wanton act” in violation of either the employer's interests, the employee's duties, or the expected standard of conduct; that “wanton” conduct was conduct that was heedless, malicious, or reckless, but not done with actual intent to cause harm; and that “wilful” conduct implied actual, specific, or evil intent. The court pointed out that wilful or wanton conduct constituted grounds for immediate dismissal without notice if it was sufficiently serious.

The court then rejected the Board's conclusion that Ms. Imbragulio's solicitation and encouragement of CHS's customers to switch to another pharmacy where her son worked was not a sufficiently serious infraction so as to justify her termination without a prior warning because Ms. Imbragulio's solicitation was not equivalent to “hostile and directly-competitive acts” given evidence that CHS tolerated “other employees working for other pharmacies.”

In the court's view, that CHS allowed employees to work at a competing pharmacy did not automatically imply that it was acceptable to directly solicit CHS's customers for a competing pharmacy.

The court decided that the Board “misapplied the applicable law” in reaching its decision. It stated that Ms. Imbragulio's conduct “was certainly against CHS's interests” given that customers were “the lifeblood of a business” and a business could “not exist without them.”

The court found that Ms. Imbragulio's solicitation of CHS's customers for the pharmacy where her son worked “was both an act of disloyalty and threatening to the very existence of CHS's business.” As such, the court added, it certainly was “serious” – and, indeed, “directly hostile to her employer.”

The court stated that a business had “every right to expect that its employees will not sabotage its interests.” Therefore, the court concluded that, as a matter of law, Ms. Imbragulio's conduct justified her immediate termination without notice.

The case is Civic Health Services, LLC v.  Imbragulio, No. S19A-01-001 ESB (Del. Super. Ct. May 1, 2019). Attorneys involved include: Tasha M. Stevens, Esquire, Fuqua, Willard, Stevens & Schab, P.A., Georgetown, DE. Elizabeth A. Imbragulio, Seaford, DE.

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Meyerowitz is the director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He can be contacted at [email protected].