Judge Mitchell L. Beckloff, Case 18STCP02718 2022-08-24 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 18STCP02718, Date: 2022-08-24 Tentative Ruling

Petitioner, Benjamin Taylor doing business as BLT Cleaning Services, seeks a court order compelling Respondent, California Department of Industrial Relations, Division of Labor Standards Enforcements (the Department), to set aside its August 22, 2018 Findings and Order on Citation WA-101301, Case No. 35-CM-028205-15 (the Decision), assessing him for unpaid minimum wages, overtime premiums, liquidated damages, and civil penalties.

While the parties dispute whether Petitioner violated the Labor Code through his BLT Cleaning Services business, the underlying facts are largely undisputed.

Petitioner advertises as a vendor of home cleaning services. (AR 228-229.) Petitioner’s online system provides a list of available cleaning services and matches the services to be provided to house cleaners. (AR 232-233.) The parties dispute whether the house cleaners using Petitioner’s online system are independent contractors or employees.

On or about December 29, 2015, Deputy Labor Commissioner Jocelyn Lopez and Deputy Labor Commissioner Frank Capetillo conducted an inspection and audit of Petitioner’s records, using Petitioner’s appointment log and PayPal records obtained pursuant to an investigative subpoena. (AR 19-54, 191-192, 195-196.) Lopez conducted an audit of nine house cleaners for the period of November 1, 2013 through December 31, 2015. (AR 181, 198-205.)

On December 21, 2016, Lopez issued Citation Number WA 101301. Lopez assessed Petitioner $11,470 in unpaid minimum wages, $478.50 in unpaid overtime premiums, $12,962.98 in liquidated damages, and $2,550 in corresponding penalties. (AR 56.)

On January 10, 2018, the hearing officer conducted a hearing on the appeal. (AR 179.)

At the hearing, Deputy Commissioner Juliet Ovalle testified on the Department’s behalf. Petitioner testified on his own behalf. (AR 79.)

At the start of the hearing, the hearing officer explained she would “take any documentation that the parties would like to submit . . . .” (AR 188.) The hearing officer advised all such documents should be submitted “before the hearing is concluded because after the hearing conclude[d],” she may be unable “to check anything.” (AR 189.) Petitioner asked if he could “send it electronically.” The hearing officer stated anything she received had to be “in paper form today.” (AR 189.)

In response, Petitioner requested “the hearing be extended . . . .” (AR 189.) The hearing officer interrupted Petitioner and denied his request. (AR 189.) The hearing officer stated, “We – we gave ample notice of the hearing and with the hearing the instructions go out as to what is going to take place.” (AR 189.) Petitioner indicated the Department did not advise him he could not send documents to the hearing officer electronically. (AR 189. [“That wasn’t stated to me.”])

Ovalle testified the Department calculated the penalties due based upon Lopez’s review of two types of evidence: (1) appointment logs for cleaning jobs (scheduled through Petitioner and his online system); and (2) PayPal records showing amounts paid by Petitioner to the persons who performed those scheduled cleaning jobs. (AR 196, 205.) Ovalle verified Petitioner had provided the Department with payroll records. (AR 195-196, 205, 249.) The Department presented and introduced documentary evidence used for the audit including the appointments log and PayPal summary provided by Petitioner. (AR 11-170.)

Petitioner testified on his behalf. Petitioner explained that a portion of the amount charged for each cleaning job is paid to Petitioner and a portion is paid to the house cleaner. (AR 212.) The amount collected and paid differed based on the form of payment. (AR 213-217.) When customers paid in cash, the house cleaner collected the cash and notified Petitioner of the amount collected. (AR 213-217) When customers paid by credit card, Petitioner collected the payment and then disbursed the amount due to a house cleaner from the funds collected, less any amounts paid in cash which may have been retained by the house cleaner. (AR 213-217.) Petitioner explained the amounts paid to house cleaners were always calculated as follows: hours worked multiplied by the rate per hour, minus cash payments received by the house cleaner directly from the service’s customer. (AR 213-217.) Petitioner paid any balance due to the house cleaners through PayPal. (AR 213-217.)

Petitioner’s records were on his laptop computer. During the hearing, he showed the hearing officer his records. (AR 221.) He indicated to the hearing officer he “was gonna present it electronically.” (AR 221.) The hearing officer allowed Petitioner to show her the records on his computer; she did not receive the electronic documents as an exhibit. (AR 221.) The hearing officer explained she could “look to see what we have but it’s not gonna be an exhibit.” (AR 221.) The hearing officer invited Petitioner to show her “how [he] entered it.” (AR 221.)

Petitioner then testified showing the record of one housecleaner—Peggy. (AR 221.) He displayed the records for the hearing officer. (AR 221-222.) Petitioner acknowledged the dates shown on his computer were “off” for Peggy in at least two ways.[1] (AR 222.) Petitioner explained his accounting for Peggy to the hearing officer. (AR 222.) The hearing officer questioned Petitioner during his presentation of evidence on his computer. (AR 223-226.) The hearing officer saw the records about which Petitioner testified. (AR 223 [lines 7-9].) Petitioner later testified his proof that house cleaners received cash from him were in text messages. (AR 275.) Petitioner did not request the hearing officer look at any text messages. (AR 275.)

On September 6, 2018, the hearing officer issued the Decision. She affirmed the citation and ordered Petitioner to pay $27,461.48. (AR 178-184.)

The hearing officer found the Department met its burden of proof, and Petitioner did demonstrate the house cleaners were independent contractors. (AR 181-182.) Accordingly, the wages, hours, and working conditions for the house cleaners are regulated by the Labor Code. (AR 181-182; see also AR 182-283 [relevant Labor Code provisions].)

Petitioner seeks relief from the court pursuant to Code of Civil Procedure section 1094.5.

Under Code of Civil Procedure section 1094.5, subdivision (b), the issues for review of an administrative decision 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 respondent 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. (Code Civ. Proc., § 1094.5, subd. (b).)

Petitioner’s three challenges to the Decision are all grounded in fair trial—his claim the Department violated his “procedural due process . . . .” (Opening Brief 3:9.) The fairness of an administrative proceeding is reviewed as a question of law under the independent judgment standard. (Doe v. Westmont College (2019) 34 Cal.App.5th 622, 634.)

In addition, Evidence Code section 664 creates a presumption “that official duty has been regularly performed.” (Evid. Code, § 664.) “In a section 1094.5 proceeding, it is the responsibility of the petitioner to produce a sufficient record of the administrative proceedings; ‘. . . otherwise the presumption of regularity will prevail, since the burden falls on the petitioner attacking the administrative decision to demonstrate to the trial court where the administrative proceedings were unfair, were in excess of jurisdiction, or showed’ prejudicial abuse of discretion.” (Elizabeth D. v. Zolin (1993) 21 Cal.App.4th 347, 354.)

As a threshold matter, the Department argues the court should deny the petition because Petitioner untimely filed his brief. It is undisputed Petitioner’s Opening Brief is untimely. Nonetheless, the Department opposed on the merits and identifies no prejudice caused by the delay. Petitioner also provides an attorney declaration explaining medical issues prevented the timely filing.

“Petitioner’s due process rights were violated. Petitioner brought relevant documents to the hearing but the hearing officer refused to consider the documents because they were in electronic form. [Citation.] When Petitioner requested a continuance of the hearing so that he could provide the documents in paper form as the hearing officer demanded, his request was summarily denied by the hearing officer who incorrectly claimed that Petitioner had been provided notice of how the hearing would be conducted. [Citation.] Although the hearing officer contended that Petitioner had been informed of the requirements for the hearing [citation], in fact, the notice of the hearing provided to Petitioner contains no instructions regarding the format in which evidence must be presented, nor did the subpoena for the records indicate that any particular format was required. [Citations.]” (Opening Brief 8:22-9:4.)

As noted earlier, Code of Civil Procedure section 1094.5, subdivision (b) provides a writ of mandate may issue where an administrative agency decided a matter without a “fair trial.” (Code Civ. Proc. § 1094.5, subd. (b).) “Generally, a fair procedure requires ‘notice reasonably calculated to apprise interested parties of the pendency of the action . . . and an opportunity to present their objections.’ ” (Doe v. University of Southern California (2016) 246 Cal.App.4th 221, 240.) “Fair hearing requirements are ‘flexible’ and entail no ‘rigid procedure.’ “ (Doe v. Allee (2019) 30 Cal.App.5th 1036, 1062; see also Horn v. County of Ventura (1979) 24 Cal.3d 605, 617. [“The general application of due process principles is flexible, depending on the nature of the competing interests involved.”])

Petitioner raised three issues presented in his Opening Brief to support his position the Decision should be set aside. The court addresses each issue in turn.

Did the Department violate Petitioner’s due process right by “refusing to notify Petitioner in advance that all evidence he sought to present must be presented in paper hard copy (paper) format and that electronic evidence would not be accepted”?

There can be no dispute the Department did not advise Petitioner that any exhibits he wished to admit into evidence would have to be in paper form. (AR 4.) In fact, there is no discussion concerning exhibits in the Department’s notice of hearing. (AR 4.) The notice of hearing merely advises witnesses with knowledge of the facts could be brought to the hearing. (AR 4.)

Evidence “means testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of a fact.” (Evid. Code § 140.) Evidence is broadly defined. It includes “the testimony of witnesses, tangible objects, sights (such as a jury view or the appearance of a person exhibited to the jury), sounds (such as the sound of a voice demonstrated for a jury), and any other thing that may be presented as a basis of proof.” (Law Rev. Comments, Evid. Code § 140.)

It is indisputable that the hearing officer received evidence from Petitioner. Thus, the Department did not exclude “all evidence” Petitioner sought to introduce during the administrative hearing. To be sure, Petitioner introduced evidence during the hearing. The hearing officer merely advised she could not receive electronic evidence as an exhibit.

Moreover, the hearing officer did not refuse to review the electronic materials Petitioner brought to the hearing with him on his laptop computer. Certainly, it would have been more convenient for his testimony if Petitioner had paper copies of exhibits with him, but the hearing officer reviewed the materials with Petitioner during the hearing. The hearing officer did not tell Petitioner she would not review any materials he presented on his laptop computer. Moreover, the Department provided paper copies of documents created by Petitioner to the hearing officer. Petitioner explained those documents using the materials on his laptop computer during his testimony. (See AR 189. [“She has everything there, I guess.”] See also 213. [“We’ll share it. . . Explain it to us.”]) The hearing officer indicated it was “fine” Petitioner had to use his laptop to explain the evidence. (AR 213.) The hearing officer did not receive the material on Petitioner’s laptop from Petitioner as an exhibit, but she reviewed the material with him during the hearing—his testimony and the material on his laptop computer was evidence.

The hearing officer never stopped Petitioner from testifying. (AR 242. [“Go ahead and continue.”] AR 256, 260, 262 [“And that’s it”].) The hearing officer also never indicated she would not consider the electronic material Petitioner presented to her during his testimony. Petitioner does not identify any prejudice he suffered from the hearing officer’s unwillingness to receive electronic exhibits from Petitioner.

Under the circumstances here, the court finds Petitioner has not demonstrated the Department deprived him of a fair trial based on the hearing officer’s failure to receive electronic exhibits from him during the administrative hearing.

Did the Department violate Petitioner’s due process rights by “refusing to accept evidence offered by Petitioner in digital format (even though the hearing officer accepted testimony from the Deputy Labor Commissioner based on evidence presented in electronic format, and also allowed the Division to introduce exhibits which consisted of papers copies representing only a small portion of the electronic evidence which the Deputy Labor Commissioner stated was being relied upon)”?

As discussed above, the hearing officer did not receive Petitioner’s electronic exhibits into evidence. Petitioner, however, showed the electronic evidence to the hearing officer and reviewed it with her during his testimony. The hearing officer thus considered the electronic material—she just did not receive it as an exhibit.

Petitioner’s argument the hearing officer allowed the Department to rely on electronic records is not supported by the administrative record. Petitioner explains:

“The Deputy Labor Commissioner testified that the Division relied upon electronic records (the appointment log and the Paypal records), however, it only provided paper copies of a small portion of those electronic records at the hearing. [Citation.] . . . However, while the Deputy Labor Commissioner testified to only providing about 25 pages, in fact, as acknowledged in the Labor Commissioner’s opposing brief, the administrative record contained all of the documents contained on the flash drive, i.e., 172 pages. . . . If the full electronic file had not been admitted into evidence as the Labor Commissioner now claims, how did 172 pages get included within the administrative record when the Deputy Labor Commissioner testified that only about 25 paper copies representing a small portion of the records on the flash drive had been provided at the hearing?” (Reply Brief 1:10-2:1.)

The record undermines Petitioner’s claim. After marking and receiving a two-page document as the Department’s Exhibit 2 during the hearing, the Department discussed Petitioner’s appointment log. Ovalle testified she had “only . . . around 25 pages of the log.” (AR 195.) She explained the log consisted of “100 and – it’s more than 100 pages, so [she] didn’t print out the whole thing, but [she did] have the flash drive with the complete file.” (AR 195.)

The hearing officer marked and received the appointment log as Exhibit 3. (AR 11.) Exhibit 3, consistent with Ovalle’s testimony, consists of only 24 pages (AR 19-43; Tab 7; See Table of Contents to AR.) Nothing suggests the hearing officer received the contents of the flash drive into evidence.

Similarly, the PayPal summary on the flash drive consists of 157 pages. The Department introduced into evidence only 10 of those pages as its Exhibit 4. (AR 11.) Nothing suggests otherwise. (AR 195 [flash drive of entire file], 196 [10 of 157 pages], AR 45-54; Tab 8; See Table of Contents to AR.)

The administrative record does not support Petitioner’s claim the hearing officer received electronic exhibits from the Department but not Petitioner. Petitioner has not identified unfairness based upon disparate treatment.

Finally, the court notes the Department explained it conducted its audit of Petitioner’s business based upon the records provided by Petitioner. The Department informed the hearing officer how it reached its conclusions using samples of the documents. Nothing required the hearing officer to receive all of Petitioner’s records into evidence to uphold the Department’s citation. To the extent Petitioner contends the “small portion of electronic evidence” used by the Department was inaccurate or misleading, Petitioner had a full opportunity to challenge the Department’s conclusions.

Did the Department violate Petitioner’s due process rights by “refusing to grant Petitioner’s request for a continuance so that he could present the evidence in paper format as required by the hearing officer”?

Without question, the hearing officer gave short shrift to Petitioner’s request for a continuance. (AR 189.) The hearing officer interrupted Petitioner’s request and ruled on it before Petitioner had an opportunity to explain his need to continue the proceedings. The hearing officer also incorrectly reported to Petitioner that Petitioner had been advised he could not rely on electronic exhibits. (AR 189.) While the hearing officer may have broad discretion on the issue of a continuance, such discretion must be reasonably exercised. A snap judgment without considering the reasons Petitioner sought the continuance does not demonstrate the exercise of discretion.

Nonetheless, while the hearing officer may have erred in her consideration of Petitioner’s request for a continuance, any such error was not prejudicial. As discussed earlier, Petitioner had an opportunity to testify, and he did so using the electronic records on his laptop computer. The hearing officer viewed the records with Petitioner as he testified. The hearing officer’s review of the electronic records and Petitioner’s testimony did not prevent Petitioner from presenting his defense. The hearing officer provided Petitioner with as much time as he needed to testify and reviewed all of the materials he referenced.

While the hearing officer may have erred in not fully considering Petitioner’s request for a continuance, any error was not prejudicial based on the circumstances.

Petitioner Has Waived Any Claim the Decision Is Not Supported by Substantial Evidence.

In his Opening Brief, Petitioner expressly raised three issues presented. Petitioner’s Opening Brief does not use the term “substantial evidence,” and Petitioner’s argument is all based on due process. (Opening Brief 8:19-10-8.)

For the first time in his Reply Brief, Petitioner argues the Decision is not supported by substantial evidence. Petitioner had the burden of demonstrating in his Opening Brief, by citation to the administrative record, that the evidence does not support the administrative findings. (See Alford v. Pierno (1972) 27 Cal.App.3d 682, 691.) By failing to raise the issue in his Opening Brief, Petitioner has waived the issue.

[1] While it is not entirely clear, it appears there was a difference in the information provided by Petitioner to Lopez and that shown electronically at the hearing. (AR 222.)