Pacific Legal Foundation v. Unemployment Ins. Appeals Bd.

• Citation: 172 Cal.Rptr. 194,29 Cal.3d 101,624 P.2d 244
• Decision Date: 02 March 1981
• Docket Number: S.F. 24139
• Parties: , 624 P.2d 244 PACIFIC LEGAL FOUNDATION, Plaintiff and Appellant, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Appellant.
• Court: United States State Supreme Court (California)

Page 194

172 Cal.Rptr. 194

29 Cal.3d 101, 624 P.2d 244

PACIFIC LEGAL FOUNDATION, Plaintiff and Appellant, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Defendant and Appellant.

S.F. 24139.

Supreme Court of California, In Bank.

March 2, 1981.

Ronald A. Zumbrub, John H. Findley and Sandra M. Robertson, Sacramento, for plaintiff and appellant.

George Deukmejian, Atty. Gen., and Carol Hunter, Deputy Atty. Gen., for defendant and appellant.

John A. Fillion, Jordan Rossen, Detroit, Mich., Stephen P. Berzon, Evelyn R. Frank and Altshuler & Berzon, San Francisco, as amici curiae on behalf of defendant and appellant.

NEWMAN, Justice.

The California Unemployment Insurance Appeals Board (board) challenges a judgment declaring invalid its decision that claimant Thurman Carroll was eligible for benefits. (P-B-292 (Carroll) (1976).) Plaintiff Pacific Legal Foundation cross-appeals from a postjudgment order that denied its motion for attorneys' fees.

Plaintiff sought declaratory relief under Unemployment Insurance Code sections 409 through 409.2. Those statutes permit the board to designate certain of its decisions as precedents, subject to court challenge by "interested person(s) and organization(s)." ¹ Plaintiff was not a party to the proceeding before the board. (See Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1977) 74 Cal.App.3d 150, 141 Cal.Rptr. 474 (Pacific I ).)

The principal issue is whether claimant's job-seeking efforts complied with requirements that, while receiving benefits, he be "available for work" (§ 1253(c)) and conduct "a search for suitable work" as directed by the public employment office. (§ 1253(e).) ²

We conclude the facts stated by the board support its holding that claimant followed the seek-work instructions given him by the public employment office. The board correctly ruled that, by doing so, he fulfilled his duty to seek work for purposes of benefit eligibility. Therefore, we reverse the judgment, but we uphold the order denying attorneys' fees, 161 Cal.Rptr. 214.

1. Facts.

Thurman Carroll, age 64, has long worked as a gardener and caretaker. He lost his caretaker's job in February or March 1975. On June 2, 1975, while seeking unemployment insurance benefits in the Marysville office of the Employment Development Department (EDD), he was instructed to register for work and seek farm labor in addition to gardener-caretaker positions.

On June 14 he was asked to complete a questionnaire about his seek-work efforts for the two weeks just ended. He declared he had responded to three classified advertisements for caretakers and had gone to an employment office. The EDD then denied benefits for those weeks on grounds his compliance with the June 2 instructions had not been diligent, and he had not made himself genuinely available for work.

On appeal he testified as follows at a hearing before an administrative law judge (ALJ): During the two weeks ending June 14 he registered at the Marysville farm labor office. He checked there or at a private employment office for farm work and was told there would be none "until tomatoes started." He scanned three newspapers daily for caretaker work and sought work at two industrial plants, including one where he thought a caretaker was needed.

Asked about his failure to contact farmers personally, he stated that those he knew were not hiring. He indicated that the gas necessary to travel from farm to farm was more than he could afford.

The ALJ upheld the decision to deny benefits on two grounds. First, lack of diligence in seeking farm work as instructed disqualified Carroll for benefits under subdivision (e) of section 1253; second, his failure to take an initiative beyond the EDD's instructions in seeking suitable work meant he was not "available for work" under subdivision (c).

The board disagreed, holding that subdivisions (c) and (e) are separate requirements. A claimant, it said, may not be deemed unavailable for work under (c) if he has complied reasonably with seek-work instructions under (e); and Carroll did so.

Plaintiff sought a judicial declaration that the board's decision was invalid. The trial court adopted the ALJ's reasoning. Exercising its independent judgment, it found that the evidence showed Carroll's failure to comply with EDD instructions to seek farm work. It held that his lack of diligence in searching for all suitable work rendered him unavailable for work under subdivision (c). It issued a declaratory judgment that P-B-292 was invalid and that Carroll was ineligible for benefits. The Board was ordered to modify P-B-292 to conform to the judgment. (See § 409.1.) Plaintiff's subsequent motion for attorneys' fees was denied and these appeals followed.

The board challenges the trial court's rulings under both subdivisions (c) and (e). To respond, we must decide the proper role of the trial and appellate courts in a declaratory relief action under section 409.2 2. Scope of review under section 409.2.

This court recently reaffirmed that a dispute about an employer's liability for unemployment benefits affects both the claimant's and the employer's "fundamental vested rights." Hence, when either challenges a board decision by administrative mandamus (Code Civ.Proc., § 1094.5) the trial court must judge independently the evidence in the administrative record. On appeal, the court's findings, even where contrary to those of the board, cannot be overturned for evidentiary insufficiency if they are substantially supported. (Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770, 775-776, 777-782, 163 Cal.Rptr. 619, 608 P.2d 707.)

But one suing under section 409.2 as an "interested person or organization" may be neither of these original parties. The board's findings have no immediate effect on the unemployment insurance reserve accounts or other interests of third persons. They do not deprive such persons of "fundamental vested rights." (See Interstate Brands, supra, at p. 781, 163 Cal.Rptr. 619, 608 P.2d 707; Sierra Club v. California Coastal Zone Conservation Com. (1976) 58 Cal.App.3d 149, 155-156, 129 Cal.Rptr. 743.) And the declaratory relief statutes, unlike section 1094.5, do not provide for independent-judgment review. (Compare Code Civ.Proc., § 1060 et seq.; see Bixby v. Pierno (1971) 4 Cal.3d 130, 137-140, 93 Cal.Rptr. 234.)

Further, as amicus United Auto Workers International Union argues, the Legislature apparently intended to grant quite limited review rights to the class of "interested" nonparties entitled to seek declaratory relief against a precedent decision. Section 409.2 (Assem.Bill No. 1638 (1975-1976 Reg.Sess.)) is patterned after Government Code section 11350 (formerly § 11440). That statute gives "interested persons" the right to "obtain a judicial declaration as to the validity of any regulation and allows those affected by a regulation to test its legality before risking violation. (Chas. L. Harney, Inc. v. Contractors' Bd. (1952) 39 Cal.2d 561, 564, 247 P.2d 913.)

In almost identical words section 409.2, enacted nearly three decades later, provides a parallel remedy for persons "interested" in a precedent benefit decision. The class includes those who, though "not directly involved in" a benefit case (see Leg. Analyst, Analysis of Assembly Bill No. 1638 (Aug. 20, 1975), p. 1), "may be subject to" a precedent decision. (Pacific I, supra, 74 Cal.App.3d 150, 156, 141 Cal.Rptr. 474; see also p. 154 (noting similar words and intent of former § 11440).)

Section 409.2 recognizes that precedent decisions are akin to agency rulemaking, because they announce how governing law will be applied in future cases. (See Leg. Analyst, supra.) Therefore, the statute gives persons affected by the precedent judicial recourse similar to that available against regulations generally. (See Pacific I, supra, at pp. 155-156, 141 Cal.Rptr. 474, quoting a letter from the bill's author to the Governor, urging that AB 1638 be signed ("... For all practical purposes, precedent benefit decisions are regulations and should be treated accordingly."); cf. 2 Davis, Administrative Law Treatise (2d ed. 1979) § 7:4, p. 15 et seq.) Section 409.2, like section 11350, confers standing on nonparties only to vindicate their concern with the validity of the general rule or policy announced. ³

A challenge to agency rulemaking may involve judicial review of a factual record when the rule must be justified by evidence of specified conditions. (See, e. g., California Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 211-213, 157 Cal.Rptr. 840, 599 P.2d 31; Pitts v. Perluss (1962) 58 Cal.2d 824, 833, 27 Cal.Rptr. 19 377 P.2d 83.) But the board's precedent decisions simply interpret controlling statutes and regulations. Their correctness as precedent relates to law and policy, not to adjudicative fact. (Cf. International Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d 923, 931, fn. 7, 152 Cal.Rptr. 682.) The board's resolution of evidentiary quarrels between claimant and employer is irrelevant to third persons' regulatory interest in the decision.

For similar reasons, a declaratory judgment obtained by a third person under section 409.2 does not alter the rights of the original parties as determined by the board. The third person's concern with the decision as precedent provides no basis to disturb the actual award or denial of benefits in a particular case.

Indeed, if the section were interpreted to mean that third persons not affected by "adjudicatory aspects" of the original proceeding could bring an action to which the original disputants were not parties in which adjudicative facts, as well as orders directly concerning those disputants could be reexamined there would be serious due process problems.

We recognize that a superficial reading of section 409.1, a companion statute not yet discussed, could suggest that a declaration of invalidity under ...