Court Opinion

ID: 2652820
Source: CourtListenerOpinion
Date Created: 2014-02-10 20:55:43.473881+00
Date Added: 2024-06-11T09:10:57.934361
License: Public Domain

Filed 2/10/14
                           CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            SECOND APPELLATE DISTRICT

                                    DIVISION EIGHT

STEPHANIE KELLEY,                                B244098

        Plaintiff and Respondent,                (Los Angeles County
                                                 Super. Ct. No. BS 135139)
        v.

CALIFORNIA UNEMPLOYMENT
INSURANCE APPEALS BOARD,

        Defendant and Respondent;

MERLE NORMAN COSMETICS, INC.,

        Real Party in Interest and Appellant.

        APPEAL from a judgment of the Superior Court for the County of Los Angeles.
James C. Chalfant, Judge. Affirmed.
        O’Melveny & Myers, Michael G. McGuinness and Usama Kahf for Real Party in
Interest and Appellant.
        Teren Law Group and Pamela M. Teren for Plaintiff and Respondent.
        Phillip Juntai Matsumoto, Office of the Attorney General, for Defendant and
Respondent.

                        ____________________________________
       Merle Norman Cosmetics, Inc., appeals from the judgment overturning the
California Unemployment Insurance Appeals Board’s decision to deny unemployment
benefits to Stephanie Kelley. We affirm because there was substantial evidence that
Kelley did not constructively quit and was instead fired.

                       FACTS AND PROCEDURAL HISTORY

1.     Factual Overview

       In May 2010 Stephanie Kelley went on a stress leave from her job as marketing
director for Merle Norman Cosmetics, Inc., one month after she filed a claim with the
California Department of Fair Employment and Housing alleging that the company was
retaliating against her for reporting ongoing sexual harassment.
       Kelley’s physician eventually cleared her to return to work as of November 15,
2010. In the interim she hired a lawyer to represent her for a possible civil action against
Merle Norman. Beginning on November 13, Kelley’s lawyer had an email exchange
with counsel for Merle Norman concerning certain assurances Kelley wanted before she
returned. Merle Norman characterized this as the imposition of unreasonable conditions
and therefore terminated Kelley’s employment.
       Kelley applied for unemployment benefits, but Merle Norman contended she was
ineligible for those benefits under the seldom-used “constructive voluntary quit” doctrine
because Kelley insisted on conditions that Merle Norman had no obligation to satisfy,
making it impossible to take Kelley back. The state’s Employment Development
Department (EDD) agreed and denied her claim for benefits. That decision was reversed
on appeal to an administrative law judge. The California Unemployment Insurance
Appeals Board (the Board) disagreed, and reinstated the EDD’s denial of her claim.
Kelley then brought an administrative mandate action, where the trial court found that
Kelley had not constructively quit.

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2.     The email Exchange

       Kelley was medically cleared to return to work as of November 15, 2010. In the
months before, counsel for Merle Norman and Kelley had discussed a possible settlement
of Kelley’s sex harassment claim. On November 13, 2010, Kelley’s lawyer – Pam Teren
– sent an email to Merle Norman’s lawyer – Mike McGuiness. Teren wrote that Kelley
was ready and able to return to work on November 15, and reminded McGuiness of her
previous request for materials that would help Kelley’s transition back to work: (1) a
written job description; (2) a written statement of goals and objectives; (3) written
confirmation of her job title, duties, pay, and benefits; and (4) the status of her earlier
request for vacation during the upcoming Christmas holiday period.
       Teren followed up with another email less than 20 minutes later. Teren restated
the requests from the previous email, and added another: written confirmation that
Kelley would not be subjected to retaliation for her earlier complaints of sex harassment.
Teren wrote that Kelley could not continue on unpaid leave and needed to return to work.
She asked McGuiness to “[p]lease . . . provide me . . . [or Kelley] the above materials and
let me know of any documents or information beyond what has already been provided to
expedite Ms. Kelley’s return to work.” Teren concluded by alerting McGuiness to
another concern: she had heard that a Merle Norman executive said she had already
found a replacement for Kelley, and that she would make sure Kelley would be dismissed
after returning. Teren cautioned that if this were true, it would be further evidence of
retaliation. Teren said she raised the issue because she and McGuiness had been sharing
information as part of their efforts to settle the matter. Teren was still open to
negotiations concerning the threatened civil action, but said again that Kelley could no
longer afford to remain on unpaid leave and needed to resume work immediately.
       McGuiness replied the next day. He said Merle Norman had gone to great lengths
to accommodate Kelley. The company was willing to return her to work and provide her
with a supportive environment, but considered the conditions set forth in Kelley’s emails
to be “unreasonable under the circumstances.” For instance, McGuiness wrote, Kelley

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had been off work for seven months and exhausted all her vacation time. Given the poor
economy, the company could not give her more vacation time. As for the other
conditions, McGuiness said it would be best if Kelley met with her supervisor upon her
return to discuss her job duties and expectations. McGuiness assured Teren that Merle
Norman would not retaliate and did not tolerate such behavior. He added that the
allegation that the executive made statements about replacing and firing Kelley was false
and slanderous. He proposed that Kelley resume work on November 30, 2010, so the
company could prepare for her return. Finally, McGuiness said that Merle Norman had
already offered Kelley a severance package, but invited Teren to submit a further
settlement proposal.
       Teren replied to that email on November 17, 2010. She said that Kelley still had
almost 100 hours of vacation time left. In the past Merle Norman routinely allowed
employees to take vacation during the holidays. If that practice had changed, then Kelley
expected to be treated like everyone else and would work through the holidays. If not,
and Kelley was being singled out in that regard, such treatment would be further evidence
of retaliation by the company. She disagreed that the request to get written confirmation
of Kelley’s duties and compensation was unreasonable. “I do not understand why Merle
Norman cannot provide [this] information immediately. Please either have the company
provide this or explain why this cannot be provided promptly.” Teren said that Kelley
wanted to start November 15 due to her financial difficulties, not November 30 as
McGuiness proposed, but offered a compromise start date of November 22. Finally,
Teren made a settlement demand of $300,000.
       McGuiness replied on November 18. He wrote that Merle Norman had been
willing to take Kelley back despite learning of “performance deficiencies” while she was
on leave. But then Kelley “imposed conditions on her return to work which I advised
you were unacceptable to Merle Norman. In your email to me of November 17, Ms.
Kelley continues to insist on conditions for her return to work that Merle Norman already
has advised you it is unwilling to meet. In addition to these pre-conditions, your email of
November 13 falsely accused [a company executive] of stating that she . . . already had

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replaced Ms. Kelley and that her return to work would result in dismissal. Under all of
the current circumstances, and given that Merle Norman does not agree to the conditions
that Ms. Kelley has set for her return to work, Merle Norman considers Ms. Kelley’s
employment to be terminated as of today, November 18.”1

3.     Intermediate Rulings

       The EDD denied Kelley’s claim for unemployment benefits because it believed
Kelley had set conditions for her return to work that Merle Norman did not meet and that
she voluntarily quit when she did not return to work at the end of her medical leave. The
administrative law judge hearing the appeal of that decision saw things differently, and
found that Merle Norman had fired Kelley for reasons that did not amount to misconduct
that disqualified her for unemployment benefits. The Board rejected the administrative
law judge’s ruling, finding instead that Kelley had been more interested in pursuing a
lawsuit against Merle Norman, and chose not to return unless Merle Norman provided a
written job description and a guarantee of holiday vacation time, concessions that she had
no right to demand.2
       The trial court found that even though Teren’s emails were to some extent
posturing for the threatened civil action, those emails contained requests, not ultimatums
or conditions. Therefore, she did not place Merle Norman in a position where its only
reasonable alternative was to fire her. At a minimum, the company should have waited to
see whether Kelley showed up for work on November 30, as it requested. As a result, the
trial court found that Kelley did not constructively quit.

1     The “slanderous statement” component of Merle Norman’s decision to terminate
Kelley is not at issue on appeal.

2      Kelley did not file a written opposition with the Board.

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                               STANDARD OF REVIEW

       Using independent review, the trial court examines the record of the administrative
proceedings to determine whether the administrative agency’s findings are supported by
substantial evidence. (Natkin v. California Unemployment Insurance Appeals Board
(2013) 219 Cal. App. 4th 997, 1002.) We will affirm the trial court’s findings if they are
supported by substantial evidence. However, if the evidence is undisputed, we treat it as
an issue of law subject to independent review. (Ibid.) If facts are undisputed and are
subject to reasonable conflicting inferences, we adopt the inferences found by the trial
court. (Shamblin v. Brattain (1988) 44 Cal. 3d 474, 478-479.)
       To the extent we interpret statutory language or administrative regulations, the
rules of statutory construction apply. (Hoitt v. Dept. of Rehabilitation (2012)
207 Cal. App. 4th 513, 523-524.) Our primary task is to determine the Legislature’s
intent. We first examine the words used in the statute and give them a plain and
commonsense meaning. If the language is clear and unambiguous, there is no need for
construction or for resort to indicators of the Legislature’s intent. (Bode v. Los Angeles
Metropolitan Medical Center (2009) 174 Cal. App. 4th 1224, 1236-1237.) A statute’s
literal meaning must be aligned with its purpose. Its meaning may not be determined
from a single word or sentence. Instead, the words must be construed in context, and
provisions relating to the same subject matter or that are part of the same statutory
scheme must be read together and harmonized to the extent possible. (Ibid.)
       We must select a construction that: best fits the Legislature’s apparent intent;
promotes instead of defeats the statute’s general purpose; and avoids absurd or
unintended consequences. (Khajavi v. Feather River Anesthesia Medical Group (2000)
84 Cal. App. 4th 32, 46.) The statute cannot be construed in a way that would make its
provisions void or ineffective, especially if that would frustrate the underlying legislative
purpose. (Ibid.)

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                                       DISCUSSION

1.      The Law Governing Eligibility For Unemployment Benefits

        California enacted its unemployment insurance scheme to provide “benefits for
persons unemployed through no fault of their own [in order to] reduce involuntary
unemployment and the suffering caused thereby to a minimum.” (Unemp. Ins. Code,
§ 100.)3 Unemployment insurance benefits are a property right. (See Interstate Brands
v. Unemployment Ins. Appeals Board (1980) 26 Cal. 3d 770, 775-776.) The
unemployment insurance laws are remedial and therefore must be liberally construed
where benefits determinations are concerned. (Messenger Courier Assn. of Americas v.
California Unemployment Ins. Appeals Bd. (2009) 175 Cal. App. 4th 1074, 1094.)
        A person is disqualified for unemployment benefits if “he or she left his or her
most recent work voluntarily without good cause or . . . has been discharged for
misconduct connected with his or her most recent work. [¶] An individual is presumed
to have been discharged for reasons other than misconduct in connection with his or her
work and not to have voluntarily left his or her work without good cause unless his or her
employer has given written notice to the contrary to the [EDD] as provided in
Section 1327, setting forth facts sufficient to overcome the presumption . . . [which] . . . is
rebuttable.” (§ 1256.)4 This presumption applies at each stage of the proceedings, from
the EDD’s initial eligibility determination through a superior court administrative
mandate action. (O’Connell v. Unemployment Ins. Appeals Bd. (1983) 149 Cal. App. 3d
54, 58-59.) In order to overcome this presumption, the employer must prove by a

3       All further undesignated section references are to the Unemployment Insurance
Code.

4      Under section 1327, an employer disputing a former employee’s eligibility for
unemployment insurance benefits must supply facts supporting the claim of ineligibility
within 10 days after notice of the employee’s benefits claim was mailed. The Board’s
decision that found Kelley was ineligible for benefits stated that Merle Norman had
complied with this requirement, and on appeal Kelley does not contend otherwise.

                                              7
preponderance of the evidence that the claimant quit without good cause or was fired for
misconduct. (Perales v. Department of Human Resources Dev. (1973) 32 Cal. App. 3d
332, 340-341.)
         Under the Unemployment Insurance Code the director of the EDD has the
authority to adopt regulations for the administration of the EDD’s functions, or that are
reasonably necessary to enforce his own functions. (§§ 305, 306.) Effective May 1980
the EDD adopted a regulation that defines when a voluntary leaving of work occurs under
section 1256. (Cal. Code Regs., tit. 22, § 1256-1.)5 Regulation 1256-1 “relates to a
voluntary leaving of work within the meaning of Section 1256 of the code and contrasts it
with those situations in which an individual leaves work involuntarily as the result of a
discharge, a layoff, a disciplinary suspension or any other cessation of employment.”
(Regulation 1256-1(a).)
         An employee voluntarily leaves work when the employee “is the moving party
causing his or her unemployment.” (Regulation 1256-1(b).) An employee involuntarily
leaves work “when the employer is the moving party in causing the unemployment of an
employee at a time when the employee is able and willing to continue working.”
(Regulation 1256-1(c).) Whether an employee leaves voluntarily or involuntarily
depends on which party initiated the termination of employment. (Regulation 1256-
1(d).)
         Under Regulation 1256-1(f), an employee who is discharged may be deemed to
have voluntarily quit. Under the heading “Constructive Voluntary Leaving” that section
provides: “In some cases, the employee is deemed to have left work voluntarily even
though the apparent cause of termination is the employee’s discharge by the employer.
Such a leaving is a constructive voluntary leaving and it occurs when an employee
becomes the moving party by engaging in a voluntary act or course of conduct which
leaves the employer no reasonable alternative but to discharge the employee and which

5        We refer to this as Regulation 1256-1.
                                              8
the employee knew or reasonably should have known would result in his or her
unemployment.”
       This is followed by three examples of conduct that would qualify as a constructive
voluntary leaving. In the first, a truck driver loses his driver’s license due to a drunk
driving conviction and the employer discharges him “because [he] is no longer able to
continue operating the employer’s delivery truck.” In the second, an employee refuses to
join a labor union, or fails to pay union dues, within the period required by a collective
bargaining agreement with the employer. As a result he is discharged “as required by the
agreement with the union.” In the third, a cannery employee hired to work Monday
through Saturday decides after several years for personal reasons that he will no longer
work on Saturdays, and he is discharged “due to [his] refusal to work Saturdays.”

2.     The Evidence Shows That Kelley Did Not Constructively Quit

       Merle Norman contends that we should exercise independent review of the facts
because as a matter of law the emails from Kelley’s lawyer constituted unreasonable
demands or ultimatums that left it no reasonable alternative but to discharge her. As a
result, according to the company, she constructively quit. To support this contention it
relies on Regulation 1256-1 and a trio of reported decisions that predate enactment of that
regulation. As set forth below, we conclude that the evidence was very much in dispute
and was sufficient to support the trial court’s judgment. We begin with Regulation 1256-
1.
       Although we extend some deference to administrative regulations adopted to
interpret or implement a statute, the ultimate responsibility for interpreting a statute lies
with us. (Sharon S. v. Superior Court (2003) 31 Cal. 4th 417, 436.) Because we have not
found or been provided with any administrative interpretations of Regulation 1256-1, we
interpret it under the ordinary rules of statutory construction. (Manriquez v. Gourley
(2003) 105 Cal. App. 4th 1227, 1235.)
       Under Regulation 1256-1, an employee is deemed to have quit “by engaging in a
voluntary act or course of conduct which leaves the employer no reasonable alternative

                                               9
but to discharge the employee . . . .”6 The three examples given with this regulation
involve widely differing scenarios: a truck driver who loses his driver’s license, an
employee who refuses to join a union or pay his union dues, and a cannery worker on a
Monday through Saturday schedule who suddenly refuses to work on Saturdays. The
common thread that runs through each example is clarity of meaning and certainty of
effect: the actions of the first two made it actually impossible for them to continue
working at all, while the worker in the third example actually refused to show up for
work one-sixth of the time.
       By contrast, this case is, at most, rife with ambiguity about the meaning of the
emails from Kelley’s lawyer. Teren’s emails never used the terms “demands” or
“conditions”. Instead, she referred to the items she wanted as requests and at no time said
that Kelley would not return to work if Merle Norman did not comply. In fact, Teren
made it clear that Kelley was having financial difficulties and needed to return to work as
soon as possible, and it was McGuiness who proposed a later start date. Merle Norman
fired Kelley without ever having asked whether she would refuse to show up for work
unless the information was provided.
       We believe this set of facts supports the trial court’s findings that Kelley’s
requests were not conditions or ultimatums and that Merle Norman had a reasonable
alternative to firing Kelley: it could have waited to see whether she reported for work
after the company declined to provide the requested information. As just mentioned, the
evidence suggests yet another alternative – Merle Norman could have asked whether
Kelley would report for work despite the company’s refusal to supply the information.7
In short, even if the emails amounted to some form of pre-litigation poker, Merle Norman

6       Neither the parties nor any of the various adjudicatory bodies to consider this
matter have focused on the second half of this sentence: that the employee knew or
should have known that his actions would leave the employer no reasonable alternative to
firing him.

7      We express no opinion on whether Kelley’s requests were reasonable or not.
                                             10
could not simply declare itself the winner – it had to call and see whether Kelley was
bluffing.
       Our interpretation of the evidence is consistent with the express legislative policies
behind the unemployment compensation laws and the presumption that an employee was
either discharged in the absence of misconduct or quit with good cause. It is also
consistent with the three reported decisions cited by Merle Norman.
       As noted, these decisions pre-date the adoption of Regulation 1256-1. The first is
Evenson v. Unemployment Ins. Appeals Bd. (1976) 62 Cal. App. 3d 1005 (Evenson). The
unemployment claimant in Evenson was fired from his job after he refused to pay union
dues, as required by a collective bargaining agreement. The Evenson court interpreted
section 1256 to mean that a claimant was ineligible for benefits if he was at fault in
causing his unemployment. (Id. at p. 1016.) Because the claimant chose not to pay dues
after receiving two warnings, his choice was the direct cause of his unemployment,
meaning he left work voluntarily. (Ibid.) The court concluded that there was not good
cause for this decision, making him ineligible for benefits. The doctrine of “constructive
voluntary quit” was not mentioned, but the Evenson holding is in accord with its
principles.
       The facts in Evenson match those of the second example provided by Regulation
1256-1. As already discussed, that fact pattern does not apply here because Teren’s
emails did not contain ultimatums or conditions and because an employee who chooses
not to pay union dues has committed an act that unambiguously makes it impossible for
the employer to retain him.8
       The second decision is Douglas v. Unemployment Ins. Appeals Bd. (1976)
63 Cal. App. 3d 110 (Douglas). The claimant in Douglas requested a three-month leave of

8      We assume that the Evenson decision factored into the drafting of Regulation
1256-1. The same is true of Hildebrand v. Unemployment Ins. Appeals Bd. (1977)
19 Cal. 3d 765, which reversed a judgment that awarded unemployment benefits to an
employee of a vegetable packing company who was fired after refusing to work anymore
on Saturdays. The employee had worked a Monday through Saturday schedule for some
time despite knowing that her religious beliefs prohibited working on Saturdays.
                                             11
absence in order to accompany her husband out of state to his new job. The employer
said she could leave, but did not promise she could return. Instead, the employer said it
would take her back only if her replacement did not work out. The Douglas court
affirmed the trial court’s judgment upholding the denial of unemployment benefits
because, by taking a leave of absence without assurance that her job would be available
upon her return, the employee voluntarily quit without good cause under section 1256.
(Id. at pp. 116-120.) That fact pattern is also inapplicable here.
       The third decision is Steinberg v. Unemployment Ins. Appeals Bd. (1978)
87 Cal. App. 3d 582 (Steinberg). The claimant in Steinberg was a clerk-typist who chose
not to speak to her co-workers because she did not get along with them. She was fired
after disobeying the employer’s order to speak to a complaining co-worker. The
Steinberg court reversed a judgment that affirmed the administrative denial of her
unemployment benefits. Steinberg is the only reported decision to employ the term
“constructive voluntary quit,” deriving the term from an eligibility rule contained in an
EDD benefit determination guide. (Id. at p. 585.)
       The rule applied to a claimant who “set in motion the chain of events which
resulted in the employer’s having no choice except to terminate him.” Three
requirements had to be satisfied to invoke it: (1) the claimant voluntarily committed
some act; (2) that act made it impossible for the employer to utilize his services; and
(3) the claimant knew or reasonably should have known the act would jeopardize his job
and possibly result in his termination. (Steinberg, supra, 87 Cal.App.3d at p. 585.)
       Prior decisions had declared employees ineligible for benefits under section 1256
when they were fired for refusing to carry out an employer’s reasonable orders, the
Steinberg court noted. (Steinberg, supra, 87 Cal.App.3d at p. 586.) The Steinberg court
said that the constructive voluntary quit doctrine was simply an additional permutation of
section 1256. “It is the voluntary placing of oneself outside the employable sphere which
determines whether the person has constructively voluntary quit.” (Id. at pp. 586-587.)
Because there was insufficient evidence that the claimant’s silent treatment of her co-
workers violated some condition of her employment or had a negative effect on the

                                             12
company as a whole, the court concluded that the employee’s order to speak was not
reasonable. As a result, no constructive voluntary quit could be found. (Id. at p. 587.)
       Even if the Steinberg court had held that a constructive voluntary quit occurred
because the employer’s order to speak was reasonable, we would still find that decision
inapplicable. There is no evidence that Kelley refused any reasonable order to return to
work without the information she sought, because no such order was given. To sum up,
the constructive voluntary quit doctrine requires the employer to overcome a rebuttable
presumption against a finding of constructive quit. This can only be done by substantial
evidence that an employee took some action that actually prevented the employer from
retaining the employee, or made some unequivocal demand as a condition to his
continued employment that the employer had no obligation to meet and that the employee
reasonably knew would result in termination. The doctrine does not apply to those
situations in which the employee makes requests or inquiries about employment matters,
even though the employer may consider such speech irritating or ungracious.

                                     DISPOSITION

       The judgment is affirmed. Respondent shall recover her appellate costs.

                                                 RUBIN, J.
WE CONCUR:

              BIGELOW, P. J.

              GRIMES, J.

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