Judge Mary H. Strobel, Case 21STCP01882 2022-12-06 Tentative Ruling

Petitioner Unique Maintenance & Transport, LLC (“Petitioner”) petitions for a writ of administrative mandate directing Respondent Labor Commissioner of the State of California (“Respondent” or “Commissioner”) to set aside a decision finding that Petitioner is a successor to a judgment debtor named Perez Brothers Transport, LLC under Labor Code section 2810.4 and therefore would be placed on a public list.

On May 8, 2019, a Notice to Successor was mailed to Petitioner by the Labor Commissioner’s Office identifying Petitioner as a successor to a port drayage motor carrier, Perez Brothers Transport, LLC, that has an unsatisfied final court judgment, tax assessment, or tax lien. (See AR 26-31, 146.) The Labor Commissioner informed Petitioner that, pursuant to Labor Code section 2810.4, its name would be placed on a publicly available list on the website of the Labor Commissioner’s Office. Petitioner was also notified of its right to contest the successor determination. (AR 26.)

On or about May 24, 2019, Petitioner responded with a Notice of Defense and Request for Hearing. (AR 146, 1.)

An administrative hearing was held before hearing officer Mary Schamer on January 9, 2020. (AR 146.) Multiple witnesses testified and documentary evidence was submitted. (See AR 146-150.)

On April 30, 2021, the Labor Commissioner’s Office mailed to Petitioner an administrative decision, in which Schamer confirmed the successor determination and public listing of Petitioner pursuant to Labor Code section 2810.4. (AR 142-154.)

On June 11, 2021, Petitioner filed a verified petition for writ of mandate challenging the decision. Respondent has answered the petition. On April 1, 2022, Respondent lodged the administrative record. On October 13, 2022, Petitioner filed a three-page opening brief in support of the petition. On November 2, 2022, Respondent timely filed and served an opposition. No reply has been received.

Under CCP section 1094.5(b), the pertinent issues are whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the agency has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (CCP § 1094.5(b).)

In cases reviewing decisions that do not affect a fundamental vested right, the court is directed to review the record for substantial evidence supporting the administrative decision. (JKH Enterprises, Inc. v. Dept. of Industrial Relations (2006) 142 Cal.App.4th 1046, 1057.) “Administrative decisions which result in restricting a property owner's return on his property, increasing the cost of doing business, or reducing profits are considered impacts on economic interests, rather than on fundamental vested rights.” (E.W.A.P., Inc. v. City of Los Angeles (1997) 56 Cal.App.4th 310, 325.) “[T]here is no vested right to conduct a business free of reasonable governmental rules and regulations.” (Northern Inyo Hosp. v. Fair Emp. Practice Com. (1974) 38 Cal.App.3d 14, 23.) This case does not implicate a fundamental vested right and is governed by the substantial evidence test. Petitioner develops no argument to the contrary.

Substantial evidence is relevant evidence that a reasonable mind might accept as adequate to support a conclusion (California Youth Authority v. State Personnel Board (2002) 104 Cal. App. 4th 575, 584-85), or evidence of ponderable legal significance which is reasonable in nature, credible and of solid value. (Mohilef v. Janovici (1996) 51 Cal. App. 4th 267, 305 n. 28.) Under the substantial evidence test, “[c]ourts may reverse an [administrative] decision only if, based on the evidence …, a reasonable person could not reach the conclusion reached by the agency.” (Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 610.)

An agency is presumed to have regularly performed its official duties. (Evid. Code § 664.) “[A] trial court must afford a strong presumption of correctness concerning the administrative findings.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.) The petitioner seeking administrative mandamus has the burden of proof and must cite to the administrative record to support its contentions. (See Alford v. Pierno (1972) 27 Cal.App.3d 682, 691.) A reviewing court “will not act as counsel for either party to an appeal and will not assume the task of initiating and prosecuting a search of the record for any purpose of discovering errors not pointed out in the briefs.” (Fox v. Erickson (1950) 99 Cal.App.2d 740, 742.)

“‘On questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.’” (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) “A challenge to the procedural fairness of the administrative hearing is reviewed de novo on appeal because the ultimate determination of procedural fairness amounts to a question of law.” (Nasha L.L.C. v. City of Los Angeles (2004) 125 Cal.App.4th 470, 482.)

The 45-Day Deadline for Commissioner to Issue a Decision is Directory, not Mandatory

Petitioner briefly states that the decision was not issued with “the 45 days mandatory requirement” and therefore is “void.” (Opening Brief (“OB”) 2.) Petitioner does not cite any statute or regulation in support. Respondent contends that the only 45-day deadline at issue is found in the California Code of Regulations, title 8, section 13886 and that this deadline is directory, not mandatory. (Oppo. 3-4.) The court agrees.

The administrative hearing was held pursuant to Labor Code section 2810.4. Section 2810.4(l) states that the Commission “may adopt regulations and rules of practice and procedure necessary to administer and enforce the provisions of” the statute. Pursuant to this authority, Commissioner adopted hearing procedures set forth in California Code of Regulations, title 8, sections 13883-13887. As relevant here, section 13886 states in part: “Within 45 calendar days of the conclusion of the hearing, the hearing officer shall prepare a written decision based on the record of the proceedings, including the hearing, which shall contain a statement of the factual and legal basis of the decision as provided in Government Code section 11425.50.”

“The word ‘mandatory’ may be used in a statute to refer to a duty that a governmental entity is required to perform as opposed to a power that it may, but need not exercise. As a general rule, however, a ‘‘directory' or 'mandatory' designation does not refer to whether a particular statutory requirement is 'permissive' or 'obligatory,' but instead simply denotes whether the failure to comply with a particular procedural step will or will not have the effect of invalidating the governmental action to which the procedural requirement relates.’ [Citation.] If the action is invalidated, the requirement will be termed ‘mandatory.’ If not, it is ‘directory’ only.” (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1145 [hereafter “CCPOA”].)

“Time limits are usually deemed to be directory unless the Legislature clearly expresses a contrary intent. [Citation.] ‘In ascertaining probable intent, California courts have expressed a variety of tests. In some cases focus has been directed at the likely consequences of holding a particular time limitation mandatory, in an attempt to ascertain whether those consequences would defeat or promote the purpose of the enactment. [Citations.] Other cases have suggested that a time limitation is deemed merely directory 'unless a consequence or penalty is provided for failure to do the act within the time commanded.' (Ibid.) As Morris v. County of Marin, supra, 18 Cal.3d 901, 908, held, the consequence or penalty must have the effect of invalidating the government action in question if the limit is to be characterized as ‘mandatory.’” (CCPOA, supra at 1145.)

Here, Petitioner apparently contends that the 45-day time limit in section 13886 is mandatory. However, Petitioner has not identified any language in section 2810.4 or the pertinent regulations expressing clear intent for this time limit to be mandatory. The regulation does not provide that any decision rendered after the 45-day time period is void. Petitioner does not cite and case authority suggesting that the consequence of Commissioner’s failure to comply with the time limit is to invalidate the decision. The court concludes the time limit is directory, and that the hearing officer’s failure to issue the decision within the 45-day time limit did not invalidate the decision.

Petitioner contends that hearing officer Schamer should have recused herself after it was disclosed that Respondent’s attorney, Jean Hyung Choi, submitted an ex parte request for a witness, Deputy Labor Commissioner Rocio Lisciandro, to attend the entire hearing. (OB 2; see AR 36 [ex parte request].) Petitioner fails to support the argument with any legal analysis.

In any event, the argument is not persuasive. Under the Administrative Procedures Act, the hearing officer arguably had a legal duty to disclose the ex parte communication. (Gov. Code §§ 11430.40, 11430.50.)[1] The hearing officer fully complied with that duty by disclosing the ex parte communication at the hearing and submitted it into evidence. (AR 215-218, 36.)

While an ex parte communication may be grounds for disqualification of a hearing officer in some circumstances (see § 1143.60), not all ex parte communications deprive the appellant of a fair hearing or invalidate the decision. (See Mercury Ins. Co. v. Lara (2019) 35 Cal.App.5th 82, 113-14 [ex parte communication that took place before hearing and did not address the merits did not require dismissal].) Moreover, procedural errors, “even if proved, are subject to a harmless error analysis.” (Hinrichs v. County of Orange (2004) 125 Cal.App.4th 921, 928; see Galland v. City of Clovis (2001) 24 Cal.4th 1003, 1040.)

Here, assuming without deciding that the ex parte communication violated the APA or other rules of procedure, Petitioner fails to show any prejudice. The communication involved a procedural issue of whether Lisciandro could attend the entire hearing and did not relate to the merits. The hearing officer properly disclosed the ex parte communication to Petitioner’s counsel, and subsequently the request was withdrawn. The hearing examiner’s handling of the ex parte communication does not suggest bias. There is no evidence that the hearing officer relied on this communication in her decision or was influenced by it to rule in a particular way. (AR 217-218.)

Petitioner also briefly argues that the assigned hearing officers for Labor Commissioner cases, as a group, are biased because “they are directly of [sic] at time indirectly supervised by the legal department for the Labor Commission, of which Attorney Choi is an active licensed attorney working in that legal unit. (OB 2.)

“Absent a financial interest, adjudicators are presumed impartial.” (Today’s Fresh Start, Inc. v. Los Angeles County Office of Education (2013) 57 Cal.4th 197, 219.) “Bias and prejudice are never implied and must be established by clear averments.” (Burrell v. City of Los Angeles (1989) 209 Cal.App.3d 568, 581-582.)

Petitioner submits no evidence of undue influence by Attorney Choi or other Labor Commissioner attorneys on the assigned hearing officers, including Schamer. Combining investigative and adjudicative functions in an administrative proceeding does not, by itself, constitute a denial of due process. (Breakzone Billiards v. City of Torrance (2000) 81 Cal.App.4th 1205, 1236.) Petitioner fails to prove bias by “clear averments.”

Petitioner appears to contend that certain findings made by the hearing officer are not supported by substantial evidence. (OB 2-3.) However, Petitioner does not identify the findings that it challenges or cite to the record in support of its contentions.

Petitioner fails to comply with local rule 3.231 which requires the opening brief to support each material fact with citation to a page or pages from the administrative record.

When an appellant challenges “the sufficiency of the evidence, all material evidence on the point must be set forth and not merely [his] own evidence.” (Toigo v. Town of Ross (1998) 70 Cal.App.4th 309, 317.) “[T]he challenger must identify (with citations to the record) the factual findings made by the board that he or she is challenging …. And in doing so, the challenger cannot simply ignore the evidence in the record that was relied upon by the board …. Rather, the challenger must explain why that evidence is insufficient to support that finding. (Shenouda v. Veterinary Medical Bd. (2018) 27 Cal.App.5th 500, 513.) Petitioner has not complied with these requirements. For that reason alone, the court finds no prejudicial abuse of discretion in the decision. (See CCP § 1094.5(b).)

Even if Petitioner’s arguments are considered, they are unpersuasive. The hearing officer found that Petitioner is a “successor” to Perez Brothers Transport, LLC pursuant to Labor Code section 2810.4(a)(5)(C), which states that a “port drayage motor carrier” includes “an entity or individual who succeeds in the interest and operation of a predecessor port drayage motor carrier consistent with the provisions of Section 2684.” Section 2684(b), in turn, states that a successor is liable if it meets any one of the following four criteria:

(1) Uses substantially the same facilities or work force to produce substantially the same products for substantially the same type of customers as the predecessor employer.

(2) Shares in the ownership, management, control of labor relations, or interrelations of business operations with the predecessor employer.

(3) Has in its employ in a managerial capacity any person who directly or indirectly controlled the wages, hours, or working conditions of the affected employees of the predecessor employer.

(4) Is an immediate family member of any owner, partner, officer, or director of the predecessor employer or of any person who had a financial interest in the predecessor employer.

The hearing officer found that Petitioner is a port drayage motor carrier and a successor to Perez Brothers Transport, LLC under section 2684(1), (3), and (4). (AR 150-153.) She made several findings in support, including that Petitioner used the same yard location as Perez Brothers Transport, LLC; that Fernando Perez, Jr., the owner of Petitioner, previously worked at Perez Brothers Transport, LLC, and was responsible for safety of the trucks and indirectly controlled working conditions of employees; that Perez Jr.’s father, Fernando Perez Sr., owned Perez Brothers Transport, LLC; and that Perez Brothers Transport, LLC received a gift of $14,997.30 from Petitioner, and transferred a truck worth $20,000 to Petitioner in bankruptcy. (Ibid.)

Petitioner does not challenge any of these findings with legal analysis or citation to the record. Rather, Petitioner argues generally that “Hearing Officer Schramer in the decision only highlighted testimony by the California Labor Commissioner Office in the decision giving absolutely no weight to evidence presented by Unique Maintenance Transportation LLC.” (OB 3.) This is not a fair characterization of the decision, which summarized witness testimony presented by Petitioner. (See AR 146-150.) Moreover, as the trier of fact, the hearing officer was not required to credit or rely upon Petitioner’s testimony.

Without record citation, Petitioner refers to testimony of Perez Jr., Perez Sr., judgment creditor Sergio Martinez, and witness Uma Jimenez. (OB 2-3.) Petitioner does not challenge the findings that it employs commercial drivers that perform port drayage services. Petitioner seems to challenge the successor finding. In particular, Petitioner seems to contend that Petitioner and Perez Brothers Transport, LLC, do not use substantially the same facilities or work force to produce substantially the same products for substantially the same type of customers as the predecessor employer, as required for successor liability under section 2684(1). Thus, for instance, Petitioner asserts that “Unique provided trucking services by transporting ‘small bins’ to and from recycling companies, different from [sic] of Perez Brothers Transport, LLC which transported ‘Large containers’ to the part of Los Angeles.” (OB 2.) Petitioner states that it “was providing truck maintenance services and repairs, and not acting in any capacity on behalf of Perez Brothers Transport, LLC.”

As a preliminary matter, successor liability under section 2684(b) is established if any one of the four criteria is met. Thus, for purposes of writ review, Petitioner has the burden to show that no substantial evidence supports the hearing officer’s findings that Petitioner is a successor under section 2684(b)(1), (3), and (4). Petitioner fails to meet that burden. To the extent Petitioner challenges the successor finding under section 2684(b)(1), that in itself could not establish a prejudicial abuse of discretion because Petitioner could also have successor liability under section 2684(b)(3) or (4). Petitioner does not appear to challenge the findings under those sub-sections.

In any event, the administrative record contains substantial evidence that supports the hearing officer’s findings under section 2684(b)(1), (3), and (4). (Oppo. 8-10.) Among other evidence, the hearing officer’s findings are supported by evidence that Petitioner used the same trucking yard as Perez Brothers Transport, LLC, and shared a client named Corridor Recycling. (AR 152, 229-30, 183, 56-57.) In addition, Perez Jr., the principal of Petitioner, identified himself as a Fleet Manager at Perez Brothers Transport, LLC, during a relevant time period. He was responsible for maintenance and safety at Perez Brothers Transport, LLC, and he indirectly controlled the drivers' working conditions through management of their log books and operation hours to ensure compliance with transportation law. (AR 51, 152, 323, 327, 192-95.) Perez Jr. offered to settle the judgment creditor’s case against Perez Brothers Transport, LLC, which provides some support that he had authority over employee wages at Perez Brothers Transport, LLC. (AR 2, 198, 327.) Perez Brothers Transport, LLC, was owned by Perez Jr.’s father, and bankruptcy records show a monetary gift and a transfer of a semi-truck between these two entities. (AR 153, 371-372, 94.)

Petitioner has not filed a reply addressing this material evidence in the record. (See Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc. (2003) 111 Cal.App.4th 1328, 1345, fn. 16 [failure to address point is “equivalent to a concession”].) “[A] trial court must afford a strong presumption of correctness concerning the administrative findings.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.) Under the substantial evidence test, “[c]ourts may reverse an [administrative] decision only if, based on the evidence …, a reasonable person could not reach the conclusion reached by the agency.” (Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 610.) The hearing officer could reasonably find that Petitioner is a successor to Perez Brothers Transport, LLC, under section 2684(b)(1), (3), and (4). Even if successor liability was not established under sub-provision (b)(1), substantial evidence supports the successor findings under sub-divisions (b)(3) and (4).

Petitioner fails to show that the findings are not supported by substantial evidence or that the hearing officer prejudicially abused her discretion in any finding. (CCP § 1094.5(b).)

[1] Not all ex parte communications are prohibited by the APA, including if it “concerns a matter of procedure or practice, including a request for a continuance, that is not in controversy.” (§ 11430.20(b).) Because neither party addresses this point, the court assumes without deciding that the communication was prohibited by the APA or some other rule of procedure.