American Federation of Labor & Congress of Industrial Organizations v. Unemployment Insurance Appeals Board

MOSK, J., Dissenting.

The “overriding legislative objective” (Gibson v. Unemployment Ins. Appeals Bd. (1973) 9 Cal.3d 494, 498 [108 Cal.Rptr. 1, 509 P.2d 945]) of the unemployment insurance law is to establish “a system of unemployment insurance providing benefits for persons unemployed through no fault of their own, and to reduce involuntary unemployment and the suffering caused thereby to a minimum.” (Unemp. Ins. Code, § 100.) Accordingly, we have held that “[t]he provisions of the Unemployment Insurance Code must be liberally construed to further the legislative objective of reducing the hardship of unemployment.” (Gibson, supra, 9 Cal.3d at p. 499.) We should do likewise with the Civil Code. Instead, today’s decision undermines the principle stated in Gibson because it “defeats the legislative objective of providing prompt administrative adjudication of claims for unemployment benefits without recourse to technical and formal requirements.” (Id. at p. 496.) I therefore dissent.

When the state wrongfully refuses to pay unemployment benefits, the applicant is entitled to interest on them. (Aguilar v. Unemployment Ins. Appeals Bd. (1990) 223 Cal.App.3d 239 [272 Cal.Rptr. 696].) “Civil Code section 3287, subdivision (a), . . . authorizes the recovery of interest on damages which are certain or capable of being made certain by calculation, where the right to recover has vested on a particular day.” (Tripp v. Swoap (1976) 17 Cal.3d 671, 681 [131 Cal.Rptr. 789, 552 P.2d 749] (Tripp), overruled on another ground in Frink v. Prod (1982) 31 Cal.3d 166, 180 [181 Cal.Rptr. 893, 643 P.2d 476] (plur. opn.); accord, 31 Cal.3d at p. 181 (conc. opn. of Mosk, J.).) Defendant concedes that Civil Code section 3287 authorizes an award of interest on wrongfully denied unemployment benefits.

The narrow question this case presents is whether the applicant must incur the expense and delay of going to court to receive such interest. I conclude that the law envisions, and public policy is most faithfully served by, a rule *1044that an administrative agency may award interest. (See Sandrini Brothers v. Agricultural Labor Relations Bd. (1984) 156 Cal.App.3d 878 [203 Cal.Rptr. 304].) I would so hold here. I cannot believe that the Legislature intended to require individual applicants to file suit in court to recover the relatively small sum represented by interest on benefits, because to so require would be effectively to bar them from recovering interest at all.

“[T]he right to payment of benefits vests when the claimant has established the facts which entitle him to the benefits.” (Aguilar v. Unemployment Ins. Appeals Bd., supra, 223 Cal.App.3d at p. 245.) Stated otherwise, the state’s “obligation becomes a debt due as of the date an applicant is first entitled to receive aid.” (Tripp, supra, 17 Cal.3d at p. 682 [discussing welfare benefits].)

Hence for purposes of awarding interest those benefits are wrongfully withheld when initially denied, rather than when all administrative procedures are exhausted and a court rules that they should have been awarded. The applicant has lost the interest rightfully due him or her, and thus it is correct to treat the interest “not [as] a supplemental benefit but rather [as] a part of the underlying benefit to which a recipient is entitled.” (Knight v. McMahon (1994) 26 Cal.App.4th 747, 754 [31 Cal.Rptr.2d 832] (Knight).) “Interest. . . relates to the extent of recovery inasmuch as it constitutes an element of damages.” (Tripp, supra, 17 Cal.3d at p. 681.)

Given that interest is due an applicant “as of the date an applicant is first entitled to receive aid” (Tripp, supra, 17 Cal.3d at p. 682) when his or her application is wrongfully rejected, the question remains who may undertake the ministerial task of awarding that interest.

Civil Code section 3287, subdivision (a), implies that an administrative agency may do so. In relevant part it provides, without reference to a judgment by a court, that “[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day . . . .” By contrast, subdivision (b) of Civil Code section 3287 provides: “Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.” (Italics added.) “When a statute omits a provision which another statute embracing a similar subject includes, a different legislative intent for each statute is indicated.” (In re *1045Khalid H. (1992) 6 Cal.App.4th 733, 736 [8 Cal.Rptr.2d 414].) The Legislature did not intend to require a judgment before interest could be awarded under subdivision (a) of Civil Code section 3287.

Moreover, as a matter of policy it is inefficient to require an applicant to proceed to court at considerable expenditure of money, time and court resources so that a judge can exercise the rote function of calculating interest. The majority’s result imposes a gross judicial diseconomy. “The general principle that courts should not be burdened with matters which can be adequately resolved in administrative [forums], frequently expressed in the rule requiring exhaustion . of administrative remedies [citations], is founded at least in part on the wisdom of the efficient use of governmental resources. [Citation.] Such use serves the twin goals of avoiding delay and unnecessary expense in vindication of legal rights.” (Woods v. Superior Court (1981) 28 Cal.3d 668, 680-681 [170 Cal.Rptr. 484, 620 P.2d 1032].)

It is not a function of the judiciary to compute sums certain in a proceeding with no controversy requiring resolution. In the different but analogous context of Tripp, supra, 17 Cal.3d at page 682, we observed that “the entire scheme of our welfare laws serves to promote certainty as to the amount of benefits payable by setting forth fixed payment schedules. [Citation.] Once an applicant’s entitlement to benefits is established, the calculation of the amount of such benefits becomes a mechanical exercise of applying the appropriate standard of assistance. The recovery of wrongfully withheld benefits thus is not subject to the uncertainty that would otherwise bar an award of interest.” As the Court of Appeal herein explained, “no discretion is involved in an award of interest. Once an [administrative law judge (ALJ)] determines that retroactive compensation is due, the ALJ must award interest under Civil Code section 3287, subdivision (a). And second, the calculation of the interest due does not involve judgment—it requires simple arithmetic or reference to established tables.” (See Unemp. Ins. Code, § 1280, subds. (a), (d) [schedule of benefits].)

Under these circumstances, the only reasonable policy is to allow resolution of the issue of interest at the administrative level. “Allowing the matter of interest to be decided at the administrative hearing not only prevents courts from being burdened with matters that can be resolved adequately in administrative fora, but also prevents delay and unnecessary expense in vindication of legal rights through a multiplicity of proceedings.” (Knight, supra, 26 Cal.App.4th at pp. 755-756.)

Today’s decision also runs counter to notions of simple fairness to applicants for unemployment benefits. The practical result is to deny them *1046interest to which they are entitled, and although the majority make some cogent observations about certain fine points of legislative intent, they miss the key conclusion: that the Legislature could not have intended such a result. As Knight observed, “[t]he right to interest on retroactive public assistance benefits would become meaningless if public assistance claimants did not have an administrative forum to raise such a claim, given their limited access to legal services. It is tantamount to denying a hearing on the recipient’s right to interest.” (26 Cal.App.4th at pp. 756-757.) So it is with unemployment insurance applicants: it can hardly be said that they are in a much better position than public assistance applicants to vindicate their rights. “ ‘The [unemployment insurance] law deals with a class of persons for whom the Legislature has expressed a particular concern and with a class of persons who are highly unlikely to be skilled either in law or in semantics and, thus, particularly dependent on the administrative agency to help them in securing the benefits that the law provides.’ ” (Gibson v. Unemployment Ins. Appeals Bd., supra, 9 Cal.3d at pp. 498-499.)

With regard to the question whether awarding interest in an administrative forum violates the state Constitution’s judicial power or separation of powers clauses (Cal. Const., art. VI, § 1; id., art. Ill, § 3), the answer is no. “If [loss of] interest [income] is part of the ‘damage’ to a recipient by not being awarded benefits in a timely fashion, then an award of interest is no different than an award of the benefits withheld. It is no more an exercise of ‘judicial power’ by the administrative hearing officer than [is] the award of benefits.” (Knight, supra, 26 Cal.App.4th at p. 756.)

Because the Legislature clearly did not intend that unemployment insurance applicants be denied interest lawfully due them, one would hope it will address the issue presented in this case to correct the majority’s erroneous result.

Werdegar, J., concurred.