INTERSTATE BRANDS v. UNEMPLOYMENT INSURANCE APPEALS BOARD (1979)

The board appeals from a judgment ordering it, in effect, to deny unemployment insurance benefits to a group of employees who lost work by reason of a lockout by their employer. We reverse the judgment.

During the spring and fall of 1972 there were conducted a series of negotiations between unions of persons employed in the production and delivery of bakery goods and a group of employers in that industry. Those negotiations having reached an impasse in November of 1972, the Bakery and Confectionary Workers Union (B & C), called a strike against the Northern California plants of a member of that employer group ITT Continental Bakeries. In response to that strike, the presently involved employer Interstate Brands locked out its employees, members of B & C, from its Northern California plants. When the strike against ITT Continental spread to Southern California. Interstate Brands also locked out its B & C employees from its plants in that area. The board found that the employees so locked out were entitled to unemployment insurance benefits. On a petition for a writ of mandate, the trial court overturned that order.

The underlying issue in this case is whether the employees involved had voluntarily left work as part of a labor dispute, as the term voluntary has been construed in McKinley v. California Emp. Stabilization Com. (1949) 34 Cal.2d 239, 209 P.2d 602. The board held that they had not; the trial court held that they had.

I

We are required, first, to determine a procedural issue. In ruling on the petition for a writ of mandate, the trial court, expressly, adopted and followed the so-called “independent judgment” test and rejected the “substantial evidence” test. We conclude that the trial court erred in so acting.

In Bixby v. Pierno (1971) 4 Cal.3d 130, 93 Cal.Rptr. 234, 481 P.2d 242, the Supreme Court said (at p. 144, 93 Cal.Rptr. at p. 243, 481 P.2d at p. 251):

“If the administrative decision does not involve, or substantially affect, any fundamental vested right, the trial court must still review the entire administrative record to determine whether the findings are supported by substantial evidence and whether the agency committed any errors of law, (fn. 11 omitted) but the trial court need not look beyond that whole record of the administrative proceedings.

“Whether the judicial review of the administrative decision should be restricted to determining if such decision is supported by substantial evidence on the whole record or should be extended to an independent examination by the court, depends on whether or not such decision affects a fundamental vested right of the individual.” (Italics omitted.) The use of that two-pronged test has been followed and applied in later cases. (Harlow v. Carleson (1976) 16 Cal.3d 731, 129 Cal.Rptr. 298, 548 P.2d 698; Dickey v. Retirement Board (1976) 16 Cal.3d 745, 129 Cal.Rptr. 289, 548 P.2d 689.)

Both parties agree that, where an employee seeks to overturn a decision by the board that denied him unemployment benefits, his petition for mandate involves a right that is both vested and fundamental. However, when it is the employer who seeks to avoid payment of unemployment benefits, the right sought to be protected is neither “vested” as is the case of denial of benefits, the revocation of a previously granted license, or the revocation of hospital staff privileges. Nor is the right fundamental. The board's decision here does not, on any record before the board, the trial court or us, operate to prevent the employer from engaging in its business;^[FN1] it operates only to increase, in a relatively minor amount, the employer's cost of doing that business.^[FN2] As the Supreme Court pointed out in Bixby, 4 Cal.3d at pp. 145-146, 93 Cal.Rptr. at p. 245, 481 P.2d at p. 253, courts give less importance to “the preservation of purely economic privileges.” It follows that the employer here was entitled to no more than a determination by the trial court that there was, or was not, substantial evidence before the board to support its decision.

II

The test to be applied in determining whether an employee, out of work because of a lockout, is barred by section 1262 of the Unemployment Insurance Code,^[FN3] as interpreted in McKinley is whether the employment by an employer of a lockout is an event reasonably to be anticipated by employees and their union as a consequence of a strike initiated by the union. One factor bearing on the reasonableness of such anticipation is the fact, as in McKinley and other cases relied on by the employer, that the union was bargaining with a tightly knit group of employers who had clearly manifested their intention to treat a strike against one employer member of such a group as being a strike against all members. In the case at bench, the board argues that the record shows that, at times during the six-month period during which the negotiations were carried on, some of the members had not followed the “ strike against one is a strike against all” practice, but that, at times, some of the employers (including on one occasion this employer) had departed from the practice. However, the record also shows that, during the final negotiating process, the union was expressly advised that, if a strike was called against any member over the issue then in dispute, that strike would be treated as a strike against all members. Resolving that evidence, and the conflicting inferences to be drawn from it, the board concluded that the union had reasonably believed that, in spite of the formal notice, the earlier practice of violating the unity practice would again be departed from.^[FN4] We cannot say that the record before the board, on that issue, was not substantial and thus compelled a decision in favor of the board.

The judgment is reversed.

FOOTNOTES

1.  The case at bench is, thus, unlike Transcentury Properties, Inc. v. State of California (1974) 41 Cal.App.3d 835, 116 Cal.Rptr. 487, where the administrative decision had the effect of totally barring a projected large real estate development.

2.  The only effect of the board's order on this employer is possibly to increase the amount it must hereafter pay into the unemployment insurance fund. We are not told what the past record of this employer is, or the amount of additional contribution the order would require. At the worst, the employer's contribution cannot amount to over 3.9% Of his average payroll, no matter what its record. Nothing in the record shows that any increase in contribution would be so great as to drive this employer out of business.

3.  “An individual is not eligible for unemployment compensation benefits, and no such benefit 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.”

4.  In fact, two members of the group did not lock out their employees.

KINGSLEY, Acting Presiding Justice.

JEFFERSON and ALARCON, JJ., concur.