DocketNumber: C081125
Citation Numbers: 223 Cal. Rptr. 3d 857, 16 Cal. App. 5th 145, 82 Cal. Comp. Cases 1115, 2017 Cal. App. LEXIS 887
Judges: Mauro
Filed Date: 9/15/2017
Status: Precedential
Modified Date: 10/19/2024
*148The California Self-Insurers' Security Fund (SISF) assumed the workers' compensation obligations of Mainstay Business Solutions (Mainstay), a temporary staffing and employee leasing business, when Mainstay defaulted on its obligations to self-insure. SISF then sued Mainstay, Mainstay's clients and others to recover its costs and liabilities. Among other things, the trial court granted SISF's motion for judgment on the pleadings against Mainstay's clients, finding that SISF stated a cause of action under *149Labor Code section 3744, subdivision (c),
As a threshold procedural matter, SISF contends (1) writ review is not appropriate because the main issue presented has been rendered moot by the enactment of section 3701.9. On the merits, Mainstay's clients contend (2) SISF's claim is subject to the exclusive remedy provisions of the Workers Compensation Act (§ 3200 et seq.) (the Act) and must be brought before the Appeals Board; and (3) their agreements with Mainstay in compliance with section 3602, subdivision (d) serve to bar SISF's civil action.
We conclude SISF can bring a section 3744, subdivision (c) action against Mainstay's clients in superior court and the section 3602, subdivision (d) defense by Mainstay's clients does not bar SISF's action. We will deny the petition for writ of mandate and/or prohibition by Mainstay's clients.
BACKGROUND
We draw the following facts from the third amended complaint and the matters of which the trial court took judicial notice.
Mainstay, a division of the Blue Lake Rancheria Economic Development Corporation, is a tribal government-sponsored entity of Blue Lake Rancheria, a federally recognized Indian tribe. Mainstay operated a temporary staffing business, assigning temporary workers to its clients. It also operated an employee leasing business in which employees of Mainstay's clients were placed on Mainstay's payroll and leased back to the clients.
*860*150A dispute arose in 2004 between the California Department of Industrial Relations (DIR) and the California Department of Insurance (collectively, the State), on the one hand, and Blue Lake Rancheria and Mainstay, on the other. The State alleged Mainstay failed to comply with State laws requiring employers to pay workers' compensation and to secure the payment of such compensation by obtaining a certificate of consent to self-insure (certificate) or purchasing insurance through an authorized insurer. Mainstay urged that as a government-sponsored entity of a federally recognized Indian tribe it was not required to comply with State workers' compensation laws. The dispute resulted in a civil action that was ultimately resolved through a settlement agreement.
As part of the settlement agreement, Mainstay agreed to seek, and DIR agreed to issue, a certificate. In addition, Mainstay and Blue Lake Rancheria agreed to unconditionally waive sovereign immunity for "any proceedings under the workers' compensation laws," including a waiver in favor of SISF for the purpose of enforcing Mainstay's workers' compensation obligations.
DIR issued the certificate effective March 1, 2005. The workers provided by Mainstay had no other connection with Mainstay and they worked *151off-reservation for non-tribal employers throughout the State. The workers agreed to be bound by tribal law and to make claims in tribal court to enforce certain employment rights against Mainstay, with the exception of workers' compensation claims. Agreements between Mainstay, Blue Lake Rancheria and Mainstay's clients provided that Mainstay's certificate would cover workers' compensation benefits for the workers. Mainstay's clients benefitted from the arrangement because they avoided higher insurance premiums and did not need to obtain a certificate in their own name.
Mainstay became insolvent and defaulted on its obligations under the certificate. The Legislature had previously established SISF to provide for the continuation of workers' compensation benefits that are due to injured workers when a private self-insured employer defaults on the payment of its workers' compensation obligations. (§ 3740) On or about April 19, 2011, DIR ordered SISF to assume the workers' compensation liabilities of Mainstay pursuant to section 3701.5. (§ 3701.5, subds. (a), (b).)
SISF assumed the workers' compensation liabilities of Mainstay and has since administered over 1,000 such workers' compensation claims. SISF received approximately $16.9 million in collateral posted in connection with Mainstay's certificate, but that collateral was exhausted on or about October 4, 2012. As of March 31, 2014, SISF paid and assumed liabilities totaling $49,872,412 for the injured-worker claims, well in excess of the Mainstay collateral.
*861SISF sued Mainstay, Mainstay's clients and others to recover its excess costs and liabilities. Mainstay's clients obtained summary adjudication of other causes of action, but SISF obtained judgment on the pleadings on the third cause of action based on section 3744, subdivision (c) [SISF is authorized to seek reimbursement from Mainstay's clients for the amounts SISF paid and the liabilities it assumed in excess of the security deposit posted for Mainstay's certificate, together with reasonable administrative and legal costs]. The trial court granted the request by Mainstay's clients to certify the order on the third cause of action for immediate review under Code of Civil Procedure section 166.1.
STANDARD OF REVIEW
A motion for judgment on the pleadings serves the same function as a general demurrer. ( Lance Camper Manufacturing Corp. v. Republic Indemnity Co . of America (1996)
DISCUSSION
I
As a threshold matter, SISF argues writ review is not appropriate because *862the main issue presented has been rendered moot by the enactment of section 3701.9.
Effective January 1, 2013, a "leasing employer," a "temporary services employer," or any employer which the director of DIR determines to be in the business of providing employees to other employers can no longer obtain a certificate. (§ 3701.9, subd. (a).) A "leasing employer" and a *153"temporary services employer" are employing units that contract with clients to supply workers to perform services for the client and perform all of the following functions: (1) negotiate with clients for such matters as time, place, type of work, working conditions, quality, and price of the services; (2) determine assignments or reassignments of workers, even though workers retain the right to refuse specific assignments; (3) retain the authority to assign or reassign a worker to other clients when a worker is determined unacceptable by the client; (4) assign or reassign the worker to perform services for a client; (5) set the rate of pay of the worker, whether or not through negotiation; (6) pay the worker from its own account or accounts; and (7) retain the right to hire and terminate workers. ( Unemp. Ins. Code, § 606.5, subd. (b).) A certificate that has been issued to an employer described in section 3701.9 shall be revoked by the director not later than January 1, 2015. (§ 3701.9, subd. (b).)
The third amended complaint alleges DIR issued Mainstay a certificate, a fact we deem to be true for purposes of a motion for judgment of the pleadings. SISF does not claim section 3701.9 changed the fact that Mainstay's certificate satisfied the compensation security obligations for Mainstay and Mainstay's clients during the relevant time period. Accordingly, section 3701.9 does not render moot the issue presented: whether the agreements between Mainstay's clients and Mainstay (a self-insured employer) pursuant to section 3602, subdivision (d) bars SISF's civil action. A writ of mandate lies to challenge the trial court's order denying Mainstay's clients' motion for judgment on the pleadings. ( Fire Ins. Exchange v. Superior Court (2004)
II
A
Mainstay's clients argue SISF's claim is subject to the exclusive remedy provisions of the Act and must be brought before the Appeals Board.
*154Section 3600 generally provides for workers' compensation liability irrespective of fault. (§ 3600, subd. (a).) When an employer sends an employee to do work for another employer and both have the right to exercise control over the employee, the employee may have two employers, a general employer and a special employer. ( *863Kowalski v. Shell Oil Co. (1979)
With certain exceptions set forth in the Act, the employer liability provided in section 3600 is the exclusive remedy of the employee or his or her dependents against the employer. (§§ 3600, subd. (a), 3602, subd. (a); Flowmaster, Inc. v. Superior Court (1993)
Section 5300 lists the proceedings that shall be instituted before the Appeals Board and not elsewhere "except as otherwise provided in Division 4 [.]" Division 4 includes section 3744, which provides that SISF has the right to reimbursement from "an insolvent self-insurer" in "any action to collect against the self-insured as debtor." ( § 3744, subd. (a)(1).) In addition, SISF is a party in interest in "any action to obtain the security deposit for the payment of compensation obligations" of the insolvent self-insurer ( § 3744, subd. (b) ) and SISF has "the right to bring an action against any person to recover compensation paid and liability assumed by the fund, including, but not limited to, any excess insurance carrier of the self-insured employer, and any person whose negligence or breach of any obligation contributed to any underestimation of the self insured employer's total accrued liability as reported to the director." ( § 3744, subd. (c).)
Section 3744, subdivision (c) expressly provides that SISF can bring "an action" to recover compensation paid and liability assumed by SISF. While the statute does not define the word "action," that word generally means a judicial proceeding. ( Thornton v. California Unemployment Ins. Appeals Bd . (2012)
Section 3744 is an exception to section 5300. A specific provision relating to a particular subject-here, an action by SISF for reimbursement of compensation it has paid-governs with respect to that subject as against the more general provisions of section 5300. (See, e.g., San Francisco Taxpayers Assn. v. Board of Supervisors (1992)
B
Nevertheless, Mainstay's clients assert various arguments to the contrary, which we address in turn.
Mainstay's clients argue a 1986 amendment to section 3744, subdivision (c) limited the class of persons against whom an action could be brought.
Mainstay's clients next argue that although section 3744, subdivision (e) provides that venue in a section 3744 action shall be in the Sacramento County Superior Court at the election of SISF, we cannot apply that provision retroactively to this action. It is true that the Legislature added subdivision (e) to section 3744 in 2012 when it passed Senate Bill No. 863, and it became effective on January 1, 2013. (Stats. 2012, ch. 363, § 24, p. 3743.) But section 84 of Senate Bill No. 863 states: "This act shall apply to all pending matters, regardless of date of injury, unless otherwise specified in this act, but shall not be a basis to rescind, alter, amend, or reopen any final award of workers' compensation benefits." (Stats. 2012, ch. 363, § 84, p. 3795.) Accordingly, subdivision (e) applies to all pending matters, including *865this action. However, even if the venue provision in subdivision (e) did not apply, section 3744, subdivision (c) authorizes SISF to bring this action against Mainstay's clients.
Mainstay's clients further maintain the trial court's ruling is contrary to Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001)
In addition, Mainstay's clients cite Snyder v. Michael's Stores, Inc . (1997)
III
Mainstay's clients argue SISF's civil action is barred because they entered into agreements with Mainstay in compliance with section 3602, subdivision (d). Section 3602, subdivision (d) says that a special employer may secure the payment of compensation for employees by means of an agreement requiring the general employer to obtain workers' compensation coverage for the employees, and under such circumstances, both employers shall have secured the payment of compensation and "shall not be subject to civil, criminal, or other penalties" for failure to provide workers' compensation coverage. (§ 3602, subd. (d)(2).)
Section 3602, subdivision (d) protects employers from tort liability and penalties, but SISF's action does not seek tort liability or penalties. Rather, it seeks reimbursement based on the statutory grant of a right of action. (§§ 3602, subd. (a), 3744, subd. (c).) No conflict exists, but even if it did, the more specific provisions of section 3744, subdivision (c) would control. ( San Francisco Taxpayers Assn., supra, 2 Cal.4th at p. 577,
Because we conclude compliance with section 3602, subdivision (d) does not bar SISF's action against Mainstay's clients, we need not decide whether SISF judicially admitted that the agreements between Mainstay's clients and Mainstay comply with section 3602, subdivision (d) or whether SISF should be judicially estopped from disputing such fact.
The petition for writ of mandate and/or prohibition is denied. The stay previously issued is vacated upon the finality of this decision. SISF shall recover its costs in this original proceeding. ( Cal. Rules of Court, rule 8.493(a).)
We concur:
BLEASE, Acting P. J.
NICHOLSON, J.
Undesignated statutory references are to the Labor Code.
For the purposes of this case, Mainstay's clients include (1) 99 Cents Only Stores Laurel Canyon, Inc., (2) Adam Nutrition, Inc., (3) Adventure Lanka, Inc., (4) All American Containers of Southern California, LLC, (5) American Cargo Express, Inc., (6) AMR Staffing, Inc., (7) Aware Products, LLC, (8) Barstow Cooler Service, Inc. doing business as BCS Mechanical, (9) Beacon Property Management, Inc. (10) Brook Furniture Rental, Inc., (11) Brookvale International, LLC, (12) Buff and Shine Manufacturing, Inc., (13) Burbank Recycling, Inc., (14) California Cartage Company, Inc., (15) Cimarron Office Furniture Services, Inc., (16) Coneybeare, Inc., (17) Cool-Pak, LLC, (18) Custom Goods, LLC, (19) Diverse Staffing, Inc., (20) DSC Logistics, Inc., (21) EPM Sales & Leasing, LLC, (22) Extra Space Storage, Inc., (23) Fillmore Convalescent Center, LLC, (24) Four Seasons Roofing, Inc., (25) Goglanian Bakeries, Inc., (26) Green Thumb Produce, Inc., (27) H.O.T. Services, Inc., (28) Harvest Farms, Inc., (29) Heritage Paper Co., (30) Hilton Worldwide, Inc., (31) Hireground Personnel Services, Inc., (32) Hydraulics International, Inc., (33) Ideal Staffing Services, Inc., (34) IDS USA Inc., (35) Ilad, Inc., (36) Inland Empire Environmental, Inc., (37) Integrated Distribution Systems, Inc. doing business as Dart Logistics Services, (38) J.M.A.C. International, Inc., (39) Jack H. Caldwell & Sons, Inc., (40) Jain Irrigation, Inc., (41) Jessie Lord Bakery, LLC, (42) Jet Delivery, Inc., (43) JRCS, Inc., doing business as Julie-Rene's Cleaning Service, (44) L.S. Owens Construction, Inc., (45) La Voie & Sons Construction, (46) Larry J. Viveiros Construction, Inc., (47) Lompoc Senior Living GP, LLC, (48) Los Angeles Poultry Co., Inc., (49) Marcus Food Co., (50) Maruzen of America, Inc., (51) McGrath Moving & Storage, Inc., (52) McGuire Builders, Inc., (53) Michael Kors (USA), Inc., (54) Midas Express, Inc., (55) Mission Provider Services, Inc., (56) Mountain House Golf Course, LLC, (57) Mylo Janitorial, Inc., (58) Nippon Express U.S.A., Inc., (59) Nutmeg Construction, Ltd., (59) On Time Staffing, Inc., (60) People's Care Senior Services, LLC, (61) Performance Team Freight Systems, Inc., (62) Pflug Packaging & Fulfillment, Inc., (63) Price Transfer, Inc., (64) Priority Personnel Services, Inc., (65) Professional Courier & Logistics, Inc., (66) Protrades Connection, (67) Providian Staffing Corporation, (68) Quest Staffing Services, Inc., (69) QUIK Mfg., Co. doing business as QMC, (70) R. Haupt Roofing Construction, Inc., (71) Raycott Healthcare Management Group, LLC, (72) Recycle America Co., LLC, (73) Reliable Resources, Inc., (74) Republic Waste Services of Southern California, LLC, (75) Schmidt Industries, Inc. doing business as Prime Plating, (76) Secure Home Improvements, Inc., (77) Sharp Healthcare, (78) Sierra Employment Services, Inc., (79) Source Interlink Companies, Inc., (80) Southern Cal Seafood, Inc., (81) Southwind Foods, LLC, (82) Square H Brands, Inc., (83) Staff Support Depot, Inc., (84) Staffchex, Inc., (85) Staff-It Group, Inc., (86) Stockton Unified School District, (87) Team-One Employment Specialists, LLC, (88) The Hedy Company, Inc. doing business as Hedy Holmes Staffing Services, (89) The Mailing House, Inc., (90) The Solaria Corporation, (91) Torn & Glasser, Inc., (92) Trichromatic-West, Inc., (93) Tri-Star Plastics, Inc., (94) US Staffing Corp., (95) USC Intermodal Services, Inc., (96) Valley Relocation and Storage of Northern California, Inc., (97) Visiting Angels/Living Assistance Services G Home Care Enterprises, L.L.C, (98) Wallner Tooling/Expac, Inc., (99) Western States Roof Systems, Inc., (100) Willmark Communities, Inc., (101) WM Recycle America, LLC, and (102) Woods Roofing, Inc.
Code of Civil Procedure section 166.1 provides, "Upon the written request of any party or his or her counsel, or at the judge's discretion, a judge may indicate in any interlocutory order a belief that there is a controlling question of law as to which there are substantial grounds for difference of opinion, appellate resolution of which may materially advance the conclusion of the litigation. Neither the denial of a request for, nor the objection of another party or counsel to, such a commentary in the interlocutory order, may be grounds for a writ or appeal."
Mainstay's clients ask us to take judicial notice of (1) an enrolled bill report for Assembly Bill No. 1285; (2) analyses of Assembly Bill Nos. 1285 and 2724 by staff of the Senate Committee on Industrial Relations; and (3) an analysis of Assembly Bill No. 2724 by the Department of Finance. We grant the request as to those exhibits. (Evid. Code, §§ 452, subd. (c), 459 ; In re J.W. (2002)
SISF moved to strike portions of the reply filed by Mainstay's clients in this court on April 26, 2016 on the ground that Mainstay's clients raised new matter in their reply. The motion is denied.