Opinion ID: 1165064
Heading Depth: 1
Heading Rank: 3

Heading: Scope of review under section 409.2.

Text: (1) This court recently reaffirmed that a dispute about an employer's liability for unemployment benefits affects both the claimant's and the employer's fundamental vested rights. Hence, when either challenges a board decision by administrative mandamus (Code Civ. Proc., § 1094.5) the trial court must judge independently the evidence in the administrative record. On appeal, the court's findings, even where contrary to those of the board, cannot be overturned for evidentiary insufficiency if they are substantially supported. ( Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770, 775-776, 777-782 [163 Cal. Rptr. 619, 608 P.2d 707].) But one suing under section 409.2 as an interested person or organization may be neither of these original parties. The board's findings have no immediate effect on the unemployment insurance reserve accounts or other interests of third persons. They do not deprive such persons of fundamental vested rights. (See Interstate Brands, supra, at p. 781; Sierra Club v. California Coastal Zone Conservation Com. (1976) 58 Cal. App.3d 149, 155-156 [129 Cal. Rptr. 743].) And the declaratory relief statutes, unlike section 1094.5, do not provide for independent-judgment review. (Compare Code Civ. Proc., § 1060 et seq.; see Bixby v. Pierno (1971) 4 Cal.3d 130, 137-140 [93 Cal. Rptr. 234, 481 P.2d 242].) Further, as amicus United Auto Workers International Union argues, the Legislature apparently intended to grant quite limited review rights to the class of interested nonparties entitled to seek declaratory relief against a precedent decision. Section 409.2 (Assem. Bill No. 1638 (1975-1976 Reg. Sess.)) is patterned after Government Code section 11350 (formerly § 11440). That statute gives interested persons the right to obtain a judicial declaration as to the validity of any regulation ... and allows those affected by a regulation to test its legality before risking violation. ( Chas. L. Harney, Inc. v. Contractors' Bd. (1952) 39 Cal.2d 561, 564 [247 P.2d 913].) In almost identical words section 409.2, enacted nearly three decades later, provides a parallel remedy for persons interested in a precedent benefit decision. The class includes those who, though not directly involved in a benefit case (see Leg. Analyst, Analysis of Assem. Bill No. 1638 (Aug. 20, 1975) p. 1), may be subject to a precedent decision. ( Pacific I, supra, 74 Cal. App.3d 150, 156; see also p. 154 [noting similar words and intent of former § 11440].) (2a) Section 409.2 recognizes that precedent decisions are akin to agency rulemaking, because they announce how governing law will be applied in future cases. (See Leg. Analyst, supra. ) Therefore, the statute gives persons affected by the precedent judicial recourse similar to that available against regulations generally. (See Pacific I, supra, at pp. 155-156, quoting a letter from the bill's author to the Governor, urging that AB 1638 be signed [... For all practical purposes, precedent benefit decisions are regulations and should be treated accordingly.]; cf. 2 Davis, Administrative Law Treatise (2d ed. 1979) § 7:4, p. 15 et seq.) Section 409.2, like section 11350, confers standing on nonparties only to vindicate their concern with the validity of the general rule or policy announced. [3] (3) A challenge to agency rulemaking may involve judicial review of a factual record when the rule must be justified by evidence of specified conditions. (See, e.g., California Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 211-213 [157 Cal. Rptr. 840, 599 P.2d 31]; Pitts v. Perluss (1962) 58 Cal.2d 824, 833 [27 Cal. Rptr. 19, 377 P.2d 83].) But the board's precedent decisions simply interpret controlling statutes and regulations. Their correctness as precedent relates to law and policy, not to adjudicative fact. (Cf. International Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d 923, 931, fn. 7 [163 Cal. Rptr. 782, 609 P.2d 1].) The board's resolution of evidentiary quarrels between claimant and employer is irrelevant to third persons' regulatory interest in the decision. (2b) For similar reasons, a declaratory judgment obtained by a third person under section 409.2 does not alter the rights of the original parties as determined by the board. The third person's concern with the decision as precedent provides no basis to disturb the actual award or denial of benefits in a particular case. Indeed, if the section were interpreted to mean that third persons not affected by adjudicatory aspects of the original proceeding could bring an action to which the original disputants were not parties  in which adjudicative facts, as well as orders directly concerning those disputants could be reexamined  there would be serious due process problems. We recognize that a superficial reading of section 409.1, a companion statute not yet discussed, could suggest that a declaration of invalidity under section 409.2 has consequences beyond the precedential effect of a board decision. Section 409.1 states that whenever a court judgment reverses or declares invalid a precedent decision, the board must modify the decision to conform in all respects to the judgment, and the modified decision supersedes the original for all purposes. (Italics added.) [4] Yet the separate reference in section 409.1 to reversals and declarations of invalidity reflects, we think, the distinction between the review rights accorded the original parties on the one hand and interested third persons on the other. In actions brought by the former, the court may review the administrative record and reverse the board decision, altering the outcome between those parties. The board's conforming modifications take account of that effect, and the decision is supersede[d] to the full extent the reversal may require. A judicial declaration of invalidity obtained by a third person, however, does not alter the operative impact between claimants and employers. Under section 409.1, the original decision is to be modified and supersede[d] ... for all purposes only to the extent of the judgment thus limited. It follows that in a third-party declaratory action under section 409.2 the courts may only determine whether the board decision accords with the law that would govern were the rule announced articulated as a regulation. There should be no review of the underlying record or new evidence to discover whether the board correctly resolved disputes on adjudicative facts. The board's version of those facts may not be disturbed unless it lacks substantial support on the face of the decision. And whatever result a court reaches on the merits, the declaratory judgment may not alter the result between the parties. In deciding whether the board's application of governing law may be upheld, reviewing courts will apply settled standards. Statutory construction is a matter of law for the courts ( Carmona v. Division of Industrial Safety (1975) 13 Cal.3d 303, 310 [118 Cal. Rptr. 473, 530 P.2d 161]), and administrative interpretations must be rejected where contrary to statutory intent. ( Mooney v. Pickett (1971) 4 Cal.3d 669, 681 [94 Cal. Rptr. 279, 483 P.2d 1231].) But because of the agency's expertise, its view of a statute or regulation it enforces is entitled to great weight unless clearly erroneous or unauthorized. ( International Business Machines v. State Bd. of Equalization, supra, 26 Cal.3d at pp. 930-931; Rivera v. City of Fresno (1971) 6 Cal.3d 132, 140 [98 Cal. Rptr. 281, 490 P.2d 793].) Courts may not substitute their judgment for that of the agency on matters within the agency's discretion. (See Credit Ins. Gen. Agents Assn. v. Payne (1976) 16 Cal.3d 651, 656-657 [128 Cal. Rptr. 881, 547 P.2d 993].)