Mills v. Unemployment Insurance Appeals Board

The superior court announced that after reviewing the evidence it had concluded that the Board’s decision was not supported by the weight of the evidence. Specifically, there was insufficient evidence to support the Board’s finding that the claimants’ employment had been terminated by Windigo.

Windigo thereafter submitted a proposed judgment. The Board objected to the judgment on the ground that it purported to affect matters which were not in issue before the Board. The trial court overruled the Board’s objections and signed the judgment. The Board filed a timely notice of appeal.

The Evidence

Windigo is a California corporation which manufactures carpet yarn. On February 2, 1976, most of Windigo’s employees (some 186 persons who worked as machine operators), who were members of United Rubber Workers Union Local 703, engaged in a strike. The president of the company, Ms. Beatrice Fritz, sent a letter to the striking employees in an attempt to convince them to return to work. That letter stated in part: “We are now calling you back to work on February 16, 1976. If you do not return to work by February 16, the company, under the National Labor Relations Act, has the right to permanently replace you.” (Italics added.) Although several employees did return to work, the majority of the employees remained on strike. Soon thereafter, Windigo began hiring new employees. As new workers were hired, the plant gradually resumed fulltime operations. By mid-April (approximately two months after the strike commenced), the plant was in operation seven days a week and three shifts per day; at that time Windigo had approximately one hundred thirty workers. By the time of the administrative hearing on July 21, 1976, Windigo had approximately 195 workers employed.

The main point of controversy at the administrative hearing was whether the hiring of the new employees by Windigo constituted permanent replacement of the strikers, such as to terminate their employment with Windigo and make them eligible for unemployment benefits. At a prior superior court hearing, Ms. Fritz had described the new employees as “permanent replacements for the strikers”; however, she also stated that not all of the strikers had been replaced. Windigo’s officers testified that the company still had positions available at the time of the administrative hearing which could be filled by striking union

members who wanted to return to work. Ms. Fritz stated that at the time of the hearing, Windigo had sufficient orders to put 60 more machine operators to work. She explained that there had been a large increase in the demand for Windigo’s product.

The evidence at the administrative hearing also established that although the striking employees were told by a union representative that they had been permanently replaced, several employees went to the plant to see if they could return to work; they were permitted to resume working and were reinstated with full seniority. Several employees who returned to work submitted declarations reciting that to their knowledge no strikers were turned away when they asked to return to work. There was no evidence to rebut Windigo’s contention that any striker who wished to return to work was promptly reinstated.

The Admissibility of New Evidence at the Administrative Mandamus Hearing

Appellant challenges the superior court’s ruling admitting Windigo’s declarations into evidence on two basic grounds. First, it is argued that Windigo failed to lay a proper foundation for such evidence by showing that it was relevant evidence which, in the exercise of reasonable diligence, could not have been produced or was improperly excluded at the administrative hearing. (Code Civ.Proc., § 1094.5, subd. (e).) Appellant asserts that the new evidence could either have been produced at the administrative hearing by due diligence or was of events which occurred after the date of the hearing and should have been excluded as irrelevant under the limited judicial review permitted by section 1094.5. Second, appellant argues that the receipt of the declarations into evidence over objection violated the evidentiary rules governing civil trials since the declarations constituted inadmissible hearsay. For the reasons to be explained, we hold that the trial court in an administrative mandamus proceeding may admit declarations into evidence over a general hearsay objection, and such declarations are not made inadmissible by their reference to posthearing events; however, in this case certain of the declarations and portions of others should have been excluded either because Windigo failed to lay the foundation required by section 1094.5, subdivision (e) or because they contained conclusions not based on personal knowledge. Although certain declarations were erroneously admitted, we further conclude that the error does not require a reversal

In keeping with the principle of limited judicial review of agency decisions, appellant asks us to restrict the newly discovered evidence principle articulated in section 1094.5, subdivision (e) to evidence that was in existence at the date of the administrative hearing so that it would have been produced at the hearing if the petitioner had known of its existence. Appellant seeks to draw an analogy from the general rule of appellate review of trial court decisions that error cannot be predicated upon matters occurring after the trial court has rendered its judgment. The appeal reviews the correctness of the judgment or order as of the time of its rendition; leaving later developments to be handled in subsequent litigation. (See People’s Home Sav. Bank v. Sadler (1905) 1 Cal.App. 189 , 192 [ 81 P. 1029 ]; 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, § 220, p. 4210-4211.) However, judicial review of administrative agency decisions is not the same as normal appellate review. Mandamus review of agency decisions is grounded on the fact that the agency does not have full judicial power in the constitutional sense; such power is vested only in the courts of record (Cal. Const., art. VI, § 1; see art. Ill; Bixby v. Pierno (1971) 4 Cal.3d 130 , 141-144 [ 93 Cal.Rptr. 234 , 481 P.2d 242 ]). For this reason, the independent judgment review under section 1094.5 has been described as a limited trial de novo where, to save the time and expense required to remand the case to the agency for reconsideration in the light of the new evidence, the superior court is authorized to consider the new evidence in reviewing the administrative decisions if it chooses to do so. This accords with the traditional rule that mandamus, unlike certiorari, is an equitable proceeding designed to achieve justice where no other remedy is available. (Dare v. Bd. of Medical Examiners (1943) 21 Cal.2d 790 , 796-801 [ 136 P.2d 304 ].) “[Administrative mandamus did not thereby acquire a separate and distinct legal personality. It is not a remedy removed from the general law of mandamus or exempted from the latter’s established principles, requirements and limitations.” (Grant v. Board of Medical Examiners (1965) 232 Cal.App.2d 820 , 826 [ 43 Cal.Rptr. 270 ].)

When the Legislature granted the superior court the discretion to receive “relevant evidence which, in the exercise of reasonable diligence, could not have been produced at the administrative hearing,” it reasonably may be inferred that it meant to authorize the receipt of

or statutory rules of evidence or by technical or formal rules of procedure but may conduct the hearings and appeals in such manner as to ascertain the substantial rights of the parties. . . (Unemp. Ins. Code, § 1952.) The regulations adopted by the Employment Development Department provide “[a]ny relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of such evidence over objection in civil actions.” (Cal. Admin. Code, Appeals Board, tit. 22, § 5038, subd. (c).) Under this standard, affidavits by persons as to facts within their personal knowledge would qualify as competent evidence provided the opposing party’s right to cross-examine is fully protected.

Code of Civil Procedure section 1094.5, subdivision (e) authorizes the court to admit such evidence as is relevant and which, in the exercise of reasonable diligence, “could not have been produced or which was improperly excluded at the [administrative] hearing.” The words “such evidence” reasonably may be construed to mean the type of evidence that could have been produced at the administrative hearing but for the agency’s wrongful exclusion or the petitioner’s inability to produce it by due diligence. If an affidavit should be wrongly excluded at the administrative hearing, it would be admissible in the superior court. Similarly, if by the exercise of due diligence a party was unable, to present evidence at the administrative hearing which could have been admitted by way of affidavit, he should be permitted to introduce the same evidence in the superior court by affidavit. In short, we see no reason why evidence relevant to the agency decision should not be admitted in the superior court under the same rules as those governing the admissibility of evidence at the administrative hearing. We conclude therefore that Code of Civil Procedure section 1094.5, subdivision (e) constitutes statutory authority for the use of affidavits as direct evidence at administrative mandamus hearings in the superior court, subject of course, to the rules governing the right of cross-examination and to the prohibition against double hearsay.

We now examine the declaration offered by the Board in response to the Windigo declarations. The Board filed a declaration by Kermit Nichols, a supervisor in the unemployment insurance section of the

Hanford office of the Employment Development Department, to the effect that he had reviewed the files on the Windigo trade dispute to determine whether any of the claimants had reported to his office that they had applied for work at Windigo after the date the trade dispute began. He then stated, “The following people reported that they had applied for work at Windigo Mills . . .” thus implying they had tried to return to their job while the dispute was pending. Although Windigo acknowledged the Board’s right to present evidence by affidavit, it objected on the specific ground that Nichols’ declaration contained inadmissible double hearsay in that it was based on statements made to him by third parties. Such objection was valid, and the trial court properly excluded the declaration (Evid. Code, § 1200).

The Administrative Record Supports the Judgment

Appellant concedes that the standard for judicial review of decisions of the Unemployment Insurance Appeals Board is the independent judgment standard rather than the substantial evidence test, citing Kilpatrick’s Bakeries, Inc. v. Unemployment Ins. Appeals Bd. (1978) 77 Cal.App.3d 539 [ 143 Cal.Rptr. 664 ] (hg. den.). Thus, the trial court properly weighed the evidence at the administrative hearing.

The scope of our appellate review, however, is limited to a determination of whether the trial court’s decision is supported by substantial evidence. The judgment will be upheld if there is any credible evidence in support of the superior court findings; any contraiy evidence must be disregarded. (Moran v. Board of Medical Examiners (1948) 32 Cal.2d 301 [ 196 P.2d 20 ]; see also Deering, Cal. Administrative Mandamus, supra, § 15.25, pp. 280-281.)

Of primary importance in the present case is the rule that an applicant for unemployment insurance benefits has the burden of establishing eligibility. (Loew’s Inc. v. California Emp. etc. Com. (1946) 76 Cal.App.2d 231 , 238 [ 172 P.2d 938 ]; Jacobs v. California Unemployment Ins. Appeals Bd. (1972) 25 Cal.App.3d 1035 , 1039, fn. 7 [ 102 Cal.Rptr. 364 ].)

In Ruberoid Co. v. California Unemployment Ins. Appeals Board (1963) 59 Cal.2d 73 [ 27 Cal.Rptr. 878 , 378 P.2d 102 ], the Supreme Court explained the effect of Unemployment Insurance Code section 1262 (see fn. 1, ante) as follows: “[T]he disqualification of the section must rest upon two elements: the worker must voluntarily leave or remain away from his employment because of a trade dispute. . . . [T]he first prerequisite involves a volitional test and the second, a causational test.” (Id., at p. 77.) Whether the employees voluntarily remain away from work because of the labor dispute is a determination that must be made in the context of particular facts (Isobe v. Unemployment Ins. Appeals Bd. (1974) 12 Cal.3d 584 , 589 [ 116 Cal.Rptr. 376 , 526 P.2d 528 ]).

In the present case, it is undisputed that the claimants voluntarily left work because of a labor dispute. The only question is whether they remained away from work voluntarily because of the dispute. Evidence to support the trial court’s determination that this was the case is as follows: Ms. Fritz testified that there were openings for the strikers despite the hiring of the new employees. She testified that due to increased demand, the plant had openings in every job classification, including 60 openings for machine operators. The evidence before the ALJ also demonstrated that a number of striking employees who had requested to return to work had been reinstated with full benefits. Importantly, there was no evidence suggesting that any employee who wanted to work had been refused a job. Moreover, even if there were insufficient openings for all the strikers, this would not compel the trial court to find all of the claimants eligible. In Isobe v. Unemployment Ins. Appeals Bd., supra, 12 Cal.3d 584 , only 85 percent of the strikers’ jobs remained open. Some of the strikers had been permanently replaced, yet the court held that since the majority of the jobs were still open, the workers who did not return to fill the openings were ineligible for benefits (id., at pp. 589-590, fn. 7). That the new workers were hired on a permanent basis does not mean that the striking workers had been permanently discharged where, as in the instant case, there were always jobs available due to the dramatic increase in the employer’s business during the strike period.

In Thomas v. California Emp. Stab. Com. (1952) 39 Cal.2d 501 [ 247 P.2d 561 ], it is suggested that unless there is an unequivocal act by the employer discharging the strikers, the claimants must demonstrate willingness to return to work in order to be eligible for unemployment benefits. In that case the employer had sent out termination notices yet the employees were held ineligible to receive benefits because there was

no evidence that the notices had anything to do with the claimants’ decision to remain out of work. None of the claimants had testified that he would have returned to work if he had not been discharged or that he would have been willing to cross the picket line (id., at pp. 505-506). The employer’s action of sending out the termination notices was not viewed as sufficient to break the causal connection between the labor dispute and the claimants’ unemployment, because the employer equivocated as to whether the employees were terminated. During the period that the termination notices were issued, the employer was also sending out requests to the employees to return to work. (See cone, opn., Traynor, J., 39 Cal.2d at pp. 507-508.) Since there was no unequivocal discharge of the employees, the majority in Thomas found it significant that the employees had not demonstrated their willingness to return to work.

The evidence in the present case does not establish that the employer acted unequivocally to terminate the strikers. Although the employer did hire some permanent workers to replace strikers and keep the plant operating, this does not compel a result that all of the strikers were terminated thereby becoming eligible for benefits (see Rice Lake Creamery Co. v. Industrial Commission (1961) 15 Wis.2d 177 [ 112 N.W.2d 202 ], holding that permanent replacement of strikers does not terminate the employment status of the strikers as a matter of law).

Appellant contends that Ruberoid, supra, compels a finding that the claimants in the present case had been permanently discharged and thus were entitled to benefits. In Ruberoid the employer had sent a letter to its striking employees stating that “[ujnless you report ... for work . . . , you will be permanently replaced” (italics added, 59 Cal.2d at p. 75, fn. 1). In Ruberoid the employer also sent the strikers notice that they had been permanently replaced and enclosed a check for their pro rata vacation pay to the date of the strike. Also, in Ruberoid, upon applying for work, eight of the strikers were not rehired (59 Cal.2d at p. 76). In the present case, Ms. Fritz’ letter to the strikers merely informed them that Windigo “had the right” to permanently replace them if they did not return to work. The evidence shows that all strikers who requested the right to return to work were immediately hired and all seniority privileges were reinstated.

We hold there is substantial evidence in the administrative record to support the trial court’s implied finding that the striking employees could have returned to work if they had wanted to cross the picket line; therefore, there is adequate support for the trial court’s decision that the

claimants were ineligible for unemployment benefits under the provisions of section 1262.

The Judgment and Orders Issued by the Trial Court

Appellant’s final contention is that the trial court erred by including in its judgment certain orders concerning the charging of unemployment benefits to Windigo’s reserve account. The portions of the judgment objected to are as follows:

“It Is Further Ordered that Petitioner’s Unemployment Insurance Reserve Account shall not be charged with the payments illegally made to the striking employees listed in Exhibit ‘A’ hereto, that Petitioner’s Unemployment Insurance Contributions shall not be increased by reason of the payments illegally made to the striking employees and that an increase in Petitioner’s rate of contribution which has already occurred because of the illegal charge to Petitioner’s Reserve Account shall be and is hereby reversed. Petitioner’s rate of contribution shall be recomputed in accordance with the terms of this Judgment;

“It Is Further Ordered that if the Petitioner’s Unemployment Insurance Reserve Account has been charged with all or any of the payments made to the striking employees listed in Exhibit ‘A’ hereto, such entries shall be reversed and Petitioner’s Unemployment Insurance Reserve Account should be credited with the amounts erroneously charged.

“It Is Further Ordered that any further claims for Unemployment Insurance Benefits by any employee of Petitioner who became unemployed by result of the aforementioned trade dispute be denied or if they are not denied, payments to such claimants shall be made from the Employment Development Department Balancing Account and not from Petitioner’s Reserve Account.”

Appellant contends that the above orders were improper because they were not within the trial court’s jurisdiction and because certain portions of the above order were in violation of Unemployment Insurance Code section 1338. That section provides that: “If the Appeals Board issues a decision allowing benefits the benefits shall be paid regardless of any further action taken by the director, the Appeals Board, or any other administrative agency, and regardless of any appeal or mandamus, or