Interstate Brands v. Unemployment Ins. Appeals Bd.

• Decision Date: 10 April 1980
• Parties: , 608 P.2d 707 INTERSTATE BRANDS, Plaintiff and Respondent v. UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Appellant. L.A. 31113.
• Court: California Supreme Court

Page 619

163 Cal.Rptr. 619

26 Cal.3d 770, 608 P.2d 707

INTERSTATE BRANDS, Plaintiff and Respondent v. UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Appellant.

L.A. 31113.

Supreme Court of California.

April 10, 1980.

Evelle J. Younger and George Deukmejian, Attys. Gen., and Victor D.Sonenberg, Deputy Atty. Gen., for defendant and appellant.

Mitchell, Silberberg & Knupp, Harry J. Keaton and William L. Cole, Los Angeles, for plaintiff and respondent.

Cox, Castle & Nicholson, George M. Cox, John S. Miller, Jr., Los Angeles, David A. Garcia, San Francisco, Dale L. Brodsky, Berkeley, and Majorie E. Cox, Los Angeles, as amici curiae for plaintiff and respondent.

MANUEL, Justice.

The California Unemployment Insurance Appeals Board (Board) appeals from a judgment ordering the issuance of a peremptory writ of mandate directing it to set aside its order granting unemployment insurance benefits to certain employees of plaintiff Interstate Brands, to strike all pertinent charges made to plaintiff's reserve account (Unempl.Ins.Code, § 1025 et seq.), ¹ and to undertake any necessary further proceedings. We affirm.

The facts, although quite complex and subject to a variety of conflicting inferences, are basically undisputed. For our purposes they may be briefly summarized as follows: In 1972, plaintiff and several other major wholesale bakers of northern and southern California, pursuant to a longstanding practice, entered into multi-employer collective bargaining negotiations with certain labor unions representing their employees--the Bakery & Confectionary Workers International Union (B & C) in the south and the Teamsters Union in the north. In November of the same year, it appearing that these negotiations had reached an impasse over a work-week issue, the affected unions--first the Teamsters in the north, then a week later B & C in the south--struck against one member of the bakery bargaining group, ITT Continental Bakery. Plaintiff Interstate Brands, having previously informed the affected unions that it would consider a strike against any member of the employer group to be a strike against any member of the employer group to be a strike against it as well, proceeded to lock out its employees--first in the north, then in the south--as each of the affected unions struck. The strike and lockout persisted for nearly a month in the south; in the north more than two months elapsed before a settlement was reached.

Various of plaintiff's employees made application for unemployment insurance benefits. The referee, applying the so-called "volitional test" (see generally 1 Witkin, Summary of Cal.Law (8th ed. 1973) Agency and Employment, §§ 68-69, pp. 690-693), determined that such benefits were precluded by the provisions of section 1262. That section states: "An individual is not eligible for unemployment compensation benefits, and no such benefits shall be payable to him, if he left his work because of a trade dispute. Such individual shall remain ineligible for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed." An appeal was taken to the Board ( § 1336), which reversed the decision of the referee, concluding on the basis of the record below that the applicant employees were not "voluntarily unemployed" and thus were eligible for benefits.

Plaintiff sought judicial review by means of a petition for mandate pursuant to section 1094.5 of the Code of Civil Procedure. The trial court, concluding that the decision of the Board had substantially affected the plaintiff's fundamental, vested rights (see Bixby v. Pierno (1971) 4 Cal.3d 130, 144, 93 Cal.Rptr. 234, 481 P.2d 242), proceeded to exercise its independent judgment on the evidence and to determine whether the Board's findings were supported by the weight of the evidence. Concluding that they were not, it ordered issuance of the writ of mandate which is the subject of the instant appeal. In essence the court's judgment, which we here review ordered reinstatement of the referee's decision precluding the award of benefits.

1] The Board contends that the trial court erred in its review of the record before it by exercising its independent judgment on the evidence rather than limiting itself to an assessment of its substantiality in light of the whole record. (See Code Civ.Proc., § 1094.5, subd. (c).) ² It is urged in essence that our 1971 Bixby decision had the effect of altering the basic standard for determining under what circumstances independent review was appropriate. Prior to that decision, it is pointed out, independent review was authorized in all cases in which a "vested right" was affected by the administrative decision sought to be reviewed (see generally Merrill v. Department of Motor Vehicles (1969) 71 Cal.2d 907, 914-915, 80 Cal.Rptr. 89, 458 P.2d 33, and cases there cited). Bixby, however--so the argument continues added a separate new requirement for independent review, i.e., that the right be "fundamental" (Bixby, supra, 4 Cal.3d at pp. 143-147, 93 Cal.Rptr. 234, 481 P.2d 242). Thus, the Board urges, the fact that an affected right is "vested" in the pre-Bixby sense is no longer sufficient in and of itself to warrant independent review by the trial court; it must also appear that the right is "fundamental." Because the courts, in determining whether an affected right rises to this level, "do not alone weigh the economic aspect of it, but the effect in human terms and the importance of it to the individual in the life situation" (Bixby, supra, at p. 144, 93 Cal.Rptr. at p. 244, 481 P.2d at p. 252), and because the right here in question--i.e., plaintiff Interstate Brands' right to be free from erroneous charge against its unemployment insurance reserve account ( § 1026)--is, it is urged, of relatively minor consequence when viewed against this standard, ³ the Board concludes that this is not a proper case for the exercise of independent judgment on the evidence by the trial court.

2] We do not agree. In our view this rather mechanistic line of reasoning betrays a fundamental misapprehension of our Bixby opinion and the principles underlying it. For reasons which we set forth below, we hold that the trial court, in its review of the record in this case, properly exercised its independent judgment on the evidence.

Before undertaking an assessment of the effect of our Bixby decision in the area which here concerns us, we briefly examine the state of the law governing the scope of judicial review of Board decisions which had emerged prior to Bixby. In Thomas v. California Emp.Stab.Com. (1952) 39 Cal.2d 501, 247 P.2d 561, 23 had held that a claimant for unemployment insurance benefits who,. having been declared ineligible for such benefits by the Board, sought judicial review of this determination by mandate, was entitled to an independent review of the evidence. We there stated: "Any person deprived of a property right by [a statutory agency with statewide jurisdiction] is entitled to a limited trial de novo in the superior court. (Laisne v. State Board of Optometry, 19 Cal.2d 831, 123 P.2d 457; Moran v. Board of Medical Examiners, 32 Cal.2d 301, 196 P.2d 20; Dare v. Board of Medical Examiners, 21 Cal.2d 790, 136 P.2d 304.) In our opinion the benefits provided for by the Unemployment Insurance Act are property rights within the meaning of the term as used in the cases requiring a trial de novo." (39 Cal.2d at p. 504, 247 P.2d at p. 562.)

Our Thomas decision, however, did not explicitly decide whether an employer, like a claimant was entitled to an independent judicial review of the evidence following a Board determination of eligibility for benefits. This question was put to rest the following year in the case of Chrysler Corp. v. California Emp. etc. Com. (1953) 116 Cal.App.2d 8, 253 P.2d 68 (hg. den.). "[I]t seems clear," the court there held, "that under the procedure established by the Unemployment Insurance Act for contributions by employers to the unemployment fund, petitioner has a direct pecuniary interest in any payments made to a claimant which may be charged against his reserve-account. As an inducement for uninterrupted business operations and to minimize labor turnover, the act provides for a rate of contributions by an employer based upon the ratio of the employer's average base payroll to the amount of revenue with which he is credited on the books of the Employment Stabilization Commission. This is the so-called merit rating provision of the statute.... Any final decision of the administrative tribunal which awards benefits to a claimant has the effect of depleting an employer's reserve-account, and may thereby adversely affect his rate of contribution to the fund during a particular rating period. It is of direct financial advantage to an employer to prevent inroads on his reserve account chargeable to benefit payments in order to protect his merit rating or to become eligible for a reduced rate of contribution. The imposition of an erroneous charge against an employer's account, with the attendant consequence of his having to pay an increased contribution, amounts to a wrongful deprivation of property. The petitioner, as a contributing employer, has a vital interest in the status or condition of its reserve account and since the administrative decision here in question may affect its financial responsibility to the unemployment fund, a sufficient right of property is involved to entitle it to a limited trial de novo as to the property of the charges made against its account." (116 Cal.App.2d at pp. 14-15, 253 P.2d at pp. 71-72, italics added.)

In the 18 years which elapsed between Chrysler and our 1971 Bixby decision, the rule stated in Chrysler was uniformly followed in cases involving employers who sought judicial review of adverse eligibility decisions by the Board. (See, e.g., Cal. Portland...