APPEAL from a judgment of the Superior Court of Sacramento County, Gail D. Ohanesian, Judge. (Retired judge of the Sacramento Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed. (Super. Ct. No. 34-2008-00007709-CU-WM-GDS).
The opinion of the court was delivered by: Robie, J.
CERTIFIED FOR PUBLICATION
In this mandamus proceeding, plaintiff Merchandising Concept Group sought to (1) compel defendant California Unemployment Insurance Appeals Board (the Appeals Board) to set aside its reassessment decision that plaintiff's workers were employees and not independent contractors (which resulted in upholding a tax assessment levied by the Employment Development Department against plaintiff); (2) "[r]etain jurisdiction" over the Employment Development Department (which conducted the audit that first concluded the workers were employees); and (3) refund taxes "erroneously collected" by the Employment Development Department.
The question on appeal is whether Merchandising Concept Group is entitled to judicial review of the Appeals Board's reassessment decision. The answer is "no." As we explain, the Legislature has not provided for judicial review of the Appeals Board's reassessment decision; rather, it has provided for an action against the director of the Employment Development Department for refund of any taxes paid by the claimant, provided the claimant has filed a claim for refund with the Department and the Appeals Board has issued an order or decision regarding the petition for review of the Department's denial of the claim for refund. This is an adequate remedy at law.
Here, Merchandising Concept Group filed a claim for refund but failed to exhaust its administrative remedies by waiting for a decision from the Appeals Board regarding the petition for review of the denial of the claim for refund. As such, we affirm the superior court's judgment entered after it sustained a demurrer without leave to amend the petition for writ of mandate.
FACTUAL AND PROCEDURAL BACKGROUND
Merchandising Concept Group contracted with clothing manufacturers to provide attractive product displays to promote sales of goods in retail stores. The people who made the displays were called detailers, and Merchandising Concept Group classified them as independent contractors.
The Employment Development Department audited Merchandising Concept Group and determined the detailers were not independent contractors but employees subject to employment tax-related deductions. The Employment Development Department issued an assessment totaling approximately $110,000 plus a penalty on Merchandising Concept Group based on the reclassification of 148 of its workers.*fn1
Merchandising Concept Group challenged the assessment and penalty by filing a petition for reassessment with an administrative law judge. The administrative law judge affirmed the assessment but reversed the penalty, finding the failure to file adequate tax returns was made on advice of counsel, on which Merchandising Concept Group reasonably relied.
Both Merchandising Concept Group and the Employment Development Department appealed to the Appeals Board, which affirmed the administrative law judge's decision and denied the petition for reassessment. The Appeals Board stated this was a "final decision." Attached to its decision was an "[i]nformation [s]heet" that stated, among other things, "[t]he petitioner may seek judicial review of any portion of this decision denying or dismissing any portion of its claim for refund by filing an action in the Superior Court in the County of Sacramento against the Employment Development Department (EDD) Director." "Judicial review of a decision other than as set forth above may be obtained only upon conclusion of the administrative process, including the payment of sums owed and the filing of a claim for refund with [the Employment Development Department]."
Merchandising Concept Group paid the assessment, filed a claim for refund with the Employment Development Department, and filed a petition for writ of mandate in the superior court asking the court to direct the Appeals Board to set aside its reassessment decision, "[r]etain jurisdiction" over the Employment Development Department, and refund taxes "erroneously collected" by the Employment Development Department.
The Appeals Board demurred to the petition for writ of mandate on the following three grounds: (1) Merchandising Concept Group had an adequate legal remedy in the form of a suit for refund, (2) Merchandising Concept Group failed to exhaust its administrative remedies, and (3) the Appeals Board was not a proper party to an employment tax challenge.
The trial court sustained the demurrer without leave to amend on all three grounds and entered ...