Simpson v. Unemployment Ins. Comp. Appeals Bd.

• Decision Date: 25 November 1986
• Citation: 187 Cal.App.3d 342,231 Cal.Rptr. 690
• Court: California Court of Appeals Court of Appeals
• Parties: Diane L. SIMPSON, Petitioner and Respondent, v. UNEMPLOYMENT INSURANCE COMPENSATION APPEALS BOARD, Respondent and Appellant; EMPLOYMENT DEVELOPMENT DEPARTMENT, Real Party in Interest. B014855.

Page 690

231 Cal.Rptr. 690

187 Cal.App.3d 342

Diane L. SIMPSON, Petitioner and Respondent, v. UNEMPLOYMENT INSURANCE COMPENSATION APPEALS BOARD, Respondent and Appellant;

EMPLOYMENT DEVELOPMENT DEPARTMENT, Real Party in Interest.

B014855.

Court of Appeal, Second District, Division 3, California.

Nov. 25, 1986.

John K. Van de Kamp, Atty. Gen., Anne S. Pressman and Karen L. Fried, Deputy Attys. Gen., for respondent and appellant.

David B. Simpson, Los Angeles, for petitioner and respondent.

No appearance for real party in interest.

LUI, Acting Presiding Justice.

We are faced with the question of whether wages for employment in the public sector can be used in determining eligibility for "state disability insurance (SDI)" benefits, which are available to workers in the private sector. We hold that, under the We reverse the trial court's grant of a petition for a writ of mandate ordering appellant, California Unemployment Insurance Compensation Appeals Board (Appeals Board), to award SDI benefits to respondent, Diane Simpson. Since Simpson has not prevailed in this action, her motion for attorney's fees under Code of Civil Procedure section 1021.5 must be denied.

Unemployment Insurance Code, they cannot.

FACTUAL AND PROCEDURAL BACKGROUND

From mid-1971 through mid-1980, Diane Simpson (Simpson) worked in the private sector, earning wages subject to SDI tax. From September 1980 through October 1982, she worked at the University of California at Los Angeles (UCLA), where she was covered by the university's Nonindustrial Disability Insurance (NDI) Plan. Simpson again worked for a private employer from February 1983 through mid-July 1983; SDI worker contributions were withheld from her pay.

In July 1983, Simpson became disabled ¹ and filed a claim for SDI benefits with the California Employment Development Department (EDD). Subsequently, she received a Notice of Determination from EDD, indicating that her claim had been disallowed because "[d]uring the base period established on your claim [i.e., January 1982-December 1982], you were not paid wages for employment by employers of not less than three hundred dollars ($300.00) ... [n]ecessary to qualify for benefits." ² In telephone conversations with EDD personnel, Simpson's attorney was informed that the sole reason for ineligibility was that during the base period Simpson had worked for the university and had therefore not contributed to the SDI fund.

Simpson appealed. A hearing was held before an administrative law judge (ALJ). The ALJ affirmed the EDD's determination, explaining, "[T]he evidence establishes that the claimant was a state employee rendering service for a public entity, and as such was limited to disability benefits provided by Section 2781 of the code.[ ³ The claimant did not receive wages during the base period that were taxable for disability insurance [i.e., SDI]. Therefore, although application of these code provisions seems harsh in the claimant's case, that is the law."

Simpson filed an appeal with the Appeals Board. The Appeals Board affirmed the decision of the ALJ, adopting the ALJ's statement of facts and reasons for decision as its own.

Simpson petitioned the superior court for a writ of mandate under Code of Civil Procedure section 1094.5. An alternative writ of mandate was later filed, ordering the Appeals Board to show cause why its decision in Simpson's case should not be set aside.

The Appeals Board filed an answer. In her reply, Simpson argued, "An individual is entitled to collect benefits under the particular state plan that she is contributing to at the time of her disability. It would make no sense to disqualify that individual solely because, at some earlier date, she had been contributing money to the State under the name of the other State plan." (Emphasis added.)

At the hearing on the matter, the following colloquy took place:

"THE COURT: ... [p ] I had some questions I was going to ask and then when Mr. Simpson's [Simpson's attorney] very well done reply memorandum came in, he answered them all, so I don't have to ask them. [p ] But the questions were going to be: What would the petitioner have received if she had still been employed by the university at the time of disability? [p ] She would have received non-industrial disability benefits from that fund [i.e., the Disability Fund].

"MR. SIMPSON: That's correct.

"THE COURT: Who would have paid them? [p ] It's the same fund, is it not ?

"MR. SIMPSON: That's correct.

"THE COURT: That is what he answered to me in his reply memorandum. [p ] So that seems to me ... to indicate very clearly that the petitioner is entitled to her benefits.... [p] It's the same pot no matter which fund it is, which policy it is [i.e., SDI or NDI]. The Controller has the one fund there. So that is why I don't understand the State's position."

After the hearing, the court granted the petition, and ordered the Appeals Board to set aside its decision in Simpson's case and to include in her "base period" the wages she had earned as an employee of UCLA.

Simpson moved for attorney's fees under Code of Civil Procedure section 1021.5. After a hearing, the motion was granted.

The Appeals Board filed a timely notice of appeal.

APPELLANT'S CONTENTIONS ON APPEAL

Appellant contends:

1. The trial court's judgment was improper because, as a matter of law, SDI benefits are limited to employees whose "base period" wages were subject to SDI tax.

2. The court abused its discretion by awarding attorney's fees under Code of Civil Procedure section 1021.5, since none of the requirements of that section was met.

DISCUSSION

I The Trial Court Based Its Decision on an Erroneous Assumption Urged by Simpson: UCLA Employees Are Not Covered by Section 2781 and Do Not Contribute to the Disability Fund

When an employee working in the private sector becomes disabled, the employee is not automatically entitled to SDI benefits; part 2 of the code (Disability Insurance) imposes a number of requirements. This appeal involves a dispute over the meaning of the code's requirement of "base period y(3)27 wages for employment by employers of not less than three hundred dollars ($300)." (§ 2652.) ⁴ The specific issue presented here is whether earnings must be subject to SDI tax in order to qualify as SDI "base period wages."

Simpson argues that, since her public sector university employment fits one of the definitions of employment in part 2, her university wages should qualify as base period wages for private sector SDI eligibility under section 2652.

Even if this argument could be supported logically (see Discussion, pt. II-B, post, at pp. 695-697), it would fail, because it is based on an incorrect assumption. Although the parties and the fact-finders below assumed that Simpson's university employment fit within the definition of employment applicable to section 2781 (NDI) of part 2 of the code, this assumption is erroneous. Thus, the trial court's conclusion--that Simpson paid NDI tax into the Disability Fund while at UCLA and therefore should be able to draw SDI from that fund now--was based on incorrect information.

Section 2606 of part 2 defines the word "employment" for purposes of the entire part. For employment by a public entity, ⁵ the definition is limited to only six types of service. The fourth type is "[s]ervice performed by a state employee to the extent provided by Section 2781."

Section 2781 must be read together with sections 19878-19885 of the Government Code. ⁶ Taken together, section 2781 and section 19878 of the Government Code provide disability insurance for "state employees," who are defined as members of the Public Employees' Retirement System When Simpson became disabled, she was a member of the University of California Retirement System (UCRS). Therefore, she was not a "state employee" for purposes of NDI eligibility under section 2781. Instead, she was covered by the university's own "NDI" plan, which is not legislatively mandated. ⁷

(PERS), members of the State Teachers' Retirement System (STRS), or employees of the Legislature.

Although it is widely perceived as a state agency like all others, the University of California was established as a public corporation by an organic act (Stats. 1867-1868, ch. 244, p. 248), and was perpetuated as a public trust by the Constitution of 1879 (Cal. Const., art. IX, § 9). The general government and superintendence of the University is vested in the Regents of the University (Cal. Const., art. IX, § 9, subd. (a)).

Under section 9 of article IX of the Constitution, the Regents' powers of organization and government are broad, while the Legislature's power to regulate the university and the Regents is quite limited. This contrasts with the comprehensive power of regulation the Legislature exercises over other state agencies.

As interpreted by the courts, article IX bestows on the university a general immunity from legislative regulation. " ' "The Regents have the general rule-making power in regard to the University ... and are ... fully empowered with respect to the organization and government of the University...." [Citations.] "[T]he power of the Regents to operate, control, and administer the University is virtually exclusive. [Citations.]" ' " (San Francisco Labor Council v. Regents of University of California (1980) 26 Cal.3d 785, 788, 163 Cal.Rptr. 460, 608 P.2d 277.)

As the court explained in Regents of University of California v. Superior Court (1976) 17 Cal.3d 533, 537, 131 Cal.Rptr. 228, 551 P.2d 844, "the University is intended to operate as independently of the state as possible. [Fn. omitted.]"

There are three areas in which legislative regulation of the university exists: "First, the Legislature is vested with the power of appropriation, preventing the regents from compelling appropriations for salaries. [Citations.] [p] Second, it is well settled that general police power regulations governing private persons and...