(Super. Ct. No. 34-2008-80000038-CU-WM-GDS)
The opinion of the court was delivered by: Blease , J.
Employment Development Dept. v. Cal. Unemployment Ins. Appeals Bd. CA3
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
In this appeal, we consider whether defendant Employment Development Department (Department) must comply with the procedural requirements set forth in Unemployment Insurance Code section 1127.5, subdivisions (a), (b), and (c)*fn1 before issuing an assessment against employers determined to be unified enterprises under sections 135.1 and 135.2. While this case was pending on appeal, we issued an opinion in Employment Development Department v. California Unemployment Insurance Appeals Board (Screaming Eagle, Inc.) (2010) 190 Cal.App.4th 178, review denied February 16, 2011, S189314 (Screaming Eagle), holding that the Department need not comply "with section 1127.5, subdivisions (a), (b), and (c) as a prerequisite to the Department's issuance of assessments against employers determined to be unified enterprises under sections 135.1 and 135.2." (Id. at p. 193.)*fn2 The trial court reached the same conclusion in this case. Accordingly, we shall affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In late 2003, an auditor with the Department's Unemployment Rate Manipulation Team prepared a report in which she concluded that real parties in interest -- Summit Resources Services, Inc.; CASUB-56, Inc.; AZ SUB-49, Inc.; CASUB-60, Inc.; Summit Services, Inc.; Amlease Corporation; SOI-23 of FL, Inc.; Strategic Outsourcing, Inc.; SOI-16 of TN, Inc.; SOI-27 of CA, Inc.; CASUB-56, Inc.; EOI, Inc.; and SOI of AR, Inc. (Summit entities) -- constitute a unity of enterprise under sections 135.1 and 135.2.*fn3
On December 31, 2003, the Department sent a "NOTICE OF DUPLICATE ACCOUNTS AND NOTIFICATION OF ASSESSMENT" to the Summit entities, stating in part: "[W]e find that you were assigned duplicate employer account numbers. California law provides that a business enterprise may have only one account number for payroll tax reporting purposes." The notice advised that the Department had discontinued all but one of the account numbers assigned to the Summit entities and directed that all further payroll contributions be reported under Summit Resources Services, Inc.'s account number at the rate of 5.4 percent. According to the notice, the purpose of the Department's review was "to ensure that employers subject to the California Unemployment Insurance Code have properly reported their workers under the correct account number and [unemployment insurance] Rate. This promotes a level playing field for business competition within the state. Unemployment insurance experience rates in California are calculated utilizing a formula based on the reserve account balance and average base payroll of the business. Switching payroll to lower rated accounts, for the purpose of lowering [unemployment insurance] taxes is called State Unemployment Tax Avoidance (SUTA dumping) and may constitute intent to evade or fraud under Section 1128(a) of the California Unemployment Insurance Code."
The accompanying "NOTICE OF ASSESSMENT" assessed the Summit entities $625,993.58, including penalty and interest, for the period January 1 through September 30, 2003. The notice was issued in accordance with section 1127. Under "EXPLANATION," the notice said, "[y]ou have used multiple [Department] account numbers for the purpose of circumventing the California Unemployment Insurance rating system."
On January 29, 2004, the Summit entities filed a petition for reassessment with the Board, arguing the Department erred in not following the procedures set forth in section 1127.5 subdivisions (a)-(d) in issuing the assessment. Meanwhile, they paid the assessment in full, converting their petition for reassessment into a petition for refund. (§ 1179.5.)
On June 14, 2007, the Summit entities moved to strike the Department's December 31, 2003, notice of duplicate accounts and assessment and to dismiss the proceedings. The motion was based on the ground, among others, that the Department failed to comply with the requirements of section 1127.5, subdivisions (a), (b), and (c) prior to issuing the assessment.
The administrative law judge (ALJ) agreed with the Summit entities and set aside the December 31, 2003, assessment and the notice of duplicate accounts and assessment. The Department appealed, and on March 13, 2008, the Board affirmed the decision in its entirety.
The Department filed a petition for writ of mandate and administrative mandamus in the trial court. The court granted the petition for writ of administrative mandate, directed the Board to set aside its March 13, 2008, decision, and enter a new and ...