Kelley v. Cal. Unemployment Ins. Appeals Bd.

• Decision Date: 10 February 2014
• Docket Number: B244098
• Citation: 223 Cal.App.4th 1067,167 Cal.Rptr.3d 802
• Court: California Court of Appeals Court of Appeals
• Parties: Stephanie KELLEY, Plaintiff and Respondent, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Respondent; Merle Norman Cosmetics, Inc., Real Party in Interest and Appellant.

223 Cal.App.4th 1067

167 Cal.Rptr.3d 802

Stephanie KELLEY, Plaintiff and Respondent,

v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Respondent;Merle Norman Cosmetics, Inc., Real Party in Interest and Appellant.

B244098

Court of Appeal,

Second District, Division 8, California.

Filed February 10, 2014

See 3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency and Employment, § 485 et seq.

APPEAL from a judgment of the Superior Court for the County of Los Angeles. James C. Chalfant, Judge. Affirmed. (Los Angeles County Super. Ct. No. BS 135139)

O'Melveny & Myers, Michael G. McGuinness and Usama Kahf, Los Angeles, for Real Party in Interest and Appellant.

Teren Law Group and Pamela M. Teren, Redondo Beach, for Plaintiff and Respondent.

Phillip Juntai Matsumoto, Office of the Attorney General, Los Angeles, for Defendant and Respondent.

RUBIN, J.

Merle Norman Cosmetics, Inc., appeals from the judgment overturning the California Unemployment Insurance Appeals Board's decision to deny unemployment benefits to Stephanie Kelley. We affirm because there was substantial evidence that Kelley did not constructively quit and was instead fired.

FACTS AND PROCEDURAL HISTORY

1. Factual Overview

In May 2010 Stephanie Kelley went on a stress leave from her job as marketing director for Merle Norman Cosmetics, Inc., one month after she filed a claim with the California Department of Fair Employment and Housing alleging that the company was retaliating against her for reporting ongoing sexual harassment.

Kelley's physician eventually cleared her to return to work as of November 15, 2010. In the interim she hired a lawyer to represent her for a possible civil action against Merle Norman. Beginning on November 13, Kelley's lawyer had an email exchange with counsel for Merle Norman concerning certain assurances Kelley wanted before she returned. Merle Norman characterized this as the imposition of unreasonable conditions and therefore terminated Kelley's employment.

Kelley applied for unemployment benefits, but Merle Norman contended she was ineligible for those benefits under the seldom-used “constructive voluntary quit” doctrine because Kelley insisted on conditions that Merle Norman had no obligation to satisfy, making it impossible to take Kelley back. The state's Employment Development Department (EDD) agreed and denied her claim for benefits. That decision was reversed on appeal to an administrative law judge. The California Unemployment Insurance Appeals Board (the Board) disagreed, and reinstated the EDD's denial of her claim. Kelley then brought an administrative mandate action, where the trial court found that Kelley had not constructively quit.

2. The email Exchange

Kelley was medically cleared to return to work as of November 15, 2010. In the months before, counsel for Merle Norman and Kelley had discussed a possible settlement of Kelley's sex harassment claim. On November 13, 2010, Kelley's lawyer—Pam Teren—sent an email to Merle Norman's lawyer—Mike McGuiness. Teren wrote that Kelley was ready and able to return to work on November 15, and reminded McGuiness of her previous request for materials that would help Kelley's transition back to work: (1) a written job description; (2) a written statement of goals and objectives; (3) written confirmation of her job title, duties, pay, and benefits; and (4) the status of her earlier request for vacation during the upcoming Christmas holiday period.

Teren followed up with another email less than 20 minutes later. Teren restated the requests from the previous email, and added another: written confirmation that Kelley would not be subjected to retaliation for her earlier complaints of sex harassment. Teren wrote that Kelley could not continue on unpaid leave and needed to return to work. She asked McGuiness to “[p]lease ... provide me ... [or Kelley] the above materials and let me know of any documents or information beyond what has already been provided to expedite Ms. Kelley's return to work.” Teren concluded by alerting McGuiness to another concern: she had heard that a Merle Norman executive said she had already found a replacement for Kelley, and that she would make sure Kelley would be dismissed after returning. Teren cautioned that if this were true, it would be further evidence of retaliation. Teren said she raised the issue because she and McGuiness had been sharing information as part of their efforts to settle the matter. Teren was still open to negotiations concerning the threatened civil action, but said again that Kelley could no longer afford to remain on unpaid leave and needed to resume work immediately.

McGuiness replied the next day. He said Merle Norman had gone to great lengths to accommodate Kelley. The company was willing to return her to work and provide her with a supportive environment, but considered the conditions set forth in Kelley's emails to be “unreasonable under the circumstances.” For instance, McGuiness wrote, Kelley had been off work for seven months and exhausted all her vacation time. Given the poor economy, the company could not give her more vacation time. As for the other conditions, McGuiness said it would be best if Kelley met with her supervisor upon her return to discuss her job duties and expectations. McGuiness assured Teren that Merle Norman would not retaliate and did not tolerate such behavior. He added that the allegation that the executive made statements about replacing and firing Kelley was false and slanderous. He proposed that Kelley resume work on November 30, 2010, so the company could prepare for her return. Finally, McGuiness said that Merle Norman had already offered Kelley a severance package, but invited Teren to submit a further settlement proposal.

Teren replied to that email on November 17, 2010. She said that Kelley still had almost 100 hours of vacation time left. In the past Merle Norman routinely allowed employees to take vacation during the holidays. If that practice had changed, then Kelley expected to be treated like everyone else and would work through the holidays. If not, and Kelley was being singled out in that regard, such treatment would be further evidence of retaliation by the company. She disagreed that the request to get written confirmation of Kelley's duties and compensation was unreasonable. “I do not understand why Merle Norman cannot provide [this] information immediately. Please either have the company provide this or explain why this cannot be provided promptly.” Teren said that Kelley wanted to start November 15 due to her financial difficulties, not November 30 as McGuiness proposed, but offered a compromise start date of November 22. Finally, Teren made a settlement demand of $300,000.

McGuiness replied on November 18. He wrote that Merle Norman had been willing to take Kelley back despite learning of “performance deficiencies” while she was on leave. But then Kelley “imposed conditions on her return to work which I advised you were unacceptable to Merle Norman. In your email to me of November 17, Ms. Kelley continues to insist on conditions for her return to work that Merle Norman already has advised you it is unwilling to meet. In addition to these pre-conditions, your email of November 13 falsely accused [a company executive] of stating that she ... already had replaced Ms. Kelley and that her return to work would result in dismissal. Under all of the current circumstances, and given that Merle Norman does not agree to the conditions that Ms. Kelley has set for her return to work, Merle Norman considers Ms. Kelley's employment to be terminated as of today, November 18.” ¹

3. Intermediate Rulings

The EDD denied Kelley's claim for unemployment benefits because it believed Kelley had set conditions for her return to work that Merle Norman did not meet and that she voluntarily quit when she did not return to work at the end of her medical leave. The administrative law judge hearing the appeal of that decision saw things differently, and found that Merle Norman had fired Kelley for reasons that did not amount to misconduct that disqualified her for unemployment benefits. The Board rejected the administrative law judge's ruling, finding instead that Kelley had been more interested in pursuing a lawsuit against Merle Norman, and chose not to return unless Merle Norman provided a written job description and a guarantee of holiday vacation time, concessions that she had no right to demand.²

The trial court found that even though Teren's emails were to some extent posturing for the threatened civil action, those emails contained requests, not ultimatums or conditions. Therefore, she did not place Merle Norman in a position where its only reasonable alternative was to fire her. At a minimum, the company should have waited to see whether Kelley showed up for work on November 30, as it requested. As a result, the trial court found that Kelley did not constructively quit.

STANDARD OF REVIEW

Using independent review, the trial court examines the record of the administrative proceedings to determine whether the administrative agency's findings are supported by substantial evidence. (Natkin v. California Unemployment Insurance Appeals Board (2013) 219 Cal.App.4th 997, 1002, 162 Cal.Rptr.3d 367.) We will affirm the trial court's findings if they are supported by substantial evidence. However, if the evidence is undisputed, we treat it as an issue of law subject to independent review. (Ibid.) If facts are undisputed and are subject to reasonable conflicting inferences, we adopt the inferences found by the trial court. (Shamblin v. Brattain (1988) 44 Cal.3d 474, 478–479, 243 Cal.Rptr. 902, 749 P.2d 339.)

To the extent we interpret statutory language or administrative regulations, the rules of statutory construction apply. (Hoitt v. Dept. of Rehabilitation (2012) 207 Cal.App.4th 513, 523–524, 143 Cal.Rptr.3d 461.) Our primary task is to determine the Legislature's intent. W...