Filed 6/1/00; part. pub. order 6/15/00 (see end of opn.)

APPEAL from the Superior Court of San Bernardino County. Frederick A. Mandabach, Judge. Reversed with directions.

Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, Steven H. Gentry, and Fred Timothy Winters for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Charlton G. Holland, III, Senior Assistant Attorney General, John H. Sanders, Supervising Deputy Attorney General, and Carolyn D. Fuson, Deputy Attorney General, for Defendant and Respondent and Real Party in Interest and Respondent Employment Development Department.

1. Introduction

Southwest Research Institute, a Texas nonprofit corporation, appeals from a judgment denying its petition for a peremptory writ of mandate. On appeal, Southwest contends that, for purposes of paying unemployment benefits, Jeffery Yingst was an independent contractor, not an employee, of Southwest. For several years, Yingst worked as a vendor for Southwest, obtaining gasoline samples for testing. Respondent, the Employment Development Department, defends the benefit decision of the California Unemployment Appeals Board, affirming the administrative law judge’s decision that Yingst was an employee, not an independent contractor.

Southwest raises two primary issues on appeal. First, Southwest argues that the trial court applied the wrong standard of review to Southwest’s petition. Second, Southwest contends that, using the proper standard of review, it was error to find that Southwest controlled the "manner and means" of Yingst’s work for Southwest, thus making Yingst an employee of Southwest. We reject the former but agree with the latter and therefore we reverse.

2. Standard of Review

In Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770, 781, the court reiterated the principle that the trial court, in reviewing a benefit decision of the Appeals Board, exercises its independent judgment on the whole record to determine if the weight of the evidence supports the decision. Southwest argues that the trial court did not do so in this case, pointing to a comment from the court: "And although it’s a close[] call it appears to me that the, there is substantial evidence supporting the administrative law judge’s finding." Similar language, as used by Judge Mandabach here, has been used by other courts to describe the independent standard of review. In Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd. (1991) 235 Cal.App.3d 1363, 1366, the court said, "The function of the superior court in reviewing decisions granting or denying unemployment insurance benefits is to exercise its independent judgment on the evidence and inquire whether the administrative agency’s findings are supported by the weight of the evidence." Furthermore: "In exercising its independent judgment, a trial court must afford a strong presumption of correctness concerning the administrative findings, and the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence." (Fukuda v. City of Angels (1999) 20 Cal.4th 805, 817.)

We disagree that use of the phrase "substantial evidence," instead of "weight of the evidence," signifies that the trial court applied the wrong standard. At the outset of the hearing on Southwest’s petition, the attorney for Southwest reminded the court: "The Court has the ability and the obligation to exercise it’s [sic] independent judgement in this matter. I think that’s important by reviewing the record." Judge Mandabach responded, "And I have reviewed the record which has been submitted. . . . [¶] In light of your -- the arguments both of you have made." The foregoing demonstrates that the court was cognizant of its duty to make an independent review and the subsequent colloquy between counsel and the court also shows that the court engaged in an independent review of the record.

At the appellate level, the usual standard of review is whether there is substantial evidence to sustain the findings of the trial court: "‘While the superior court exercises its independent judgment on the administrative evidence, California law accords the appellate court a much narrower scope of review, confining it to an inquiry whether the superior court’s findings are supported by substantial evidence. [Citation.] The appellate court’s review of the superior court judge’s gleanings from the administrative transcript is just as circumscribed as its review of a jury verdict or judge-made finding after a conventional trial. On appeal, after the superior court has applied its independent judgment to the evidence, all conflicts must be resolved in favor of the respondent and all legitimate and reasonable inferences made to uphold the superior court’s findings; moreover, when two or more inferences can be reasonably deduced from the facts, the appellate court may not substitute its deductions for those of the superior court.’ (Lacy v. California Unemployment Ins. Appeals Bd. (1971) 17 Cal.App.3d 1128, 1134.)" (Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd., supra, 235 Cal.App.3d at pp. 1366-1367; Fukuda v. City of Angels, supra, 20 Cal.4th at p. 824.)

An exception to the substantial evidence standard of review exists when the facts are not in dispute. Under those circumstances, the appellate court conducts its review as a question of law. (Baugh v. Rogers (1944) 24 Cal.2d 200, 206; Amador v. Unemployment Ins. Appeals Bd. (1984) 35 Cal.3d 671, 685; Sanchez v. Unemployment Ins. Appeals Bd. (1984) 36 Cal.3d 575, 585.)

Finally, the cases also refer to a hybrid standard of review in which the facts are not disputed but are subject to conflicting inferences. As explained in the Interstate Brands case: "Whereas it has been held that a trial court may not set aside an administrative determination as unsupported by the evidence . . . when that determination is supported by undisputed facts . . . this rule is inapplicable when the facts, although undisputed, are subject to conflicting inferences with respect to the crucial issue. In such a case the trial court, if authorized as it is here to exercise its independent judgment on the evidence, may draw its own inferences from the evidence in the record, and if the inferences so drawn are supported by substantial evidence, they are binding on the reviewing court." (Interstate Brands v. Unemployment Ins. Appeals Bd., supra, 26 Cal.3d at p. 774, fn. 2; Saathoff v. City of San Diego (1995) 35 Cal.App.4th 697, 700-701.)

In the present case, the facts are not disputed but they are subject to conflicting inferences with respect to the crucial issue of whether Southwest controlled the matter and means of Yingst’s work. Southwest acknowledges this in its reply brief when it states: "Clearly, the dispute is over the interpretation of the evidence in light of the relevant legal tests." Accordingly, since we are not presented purely with a question of law, we shall apply the substantial evidence test and give deference to the reasonable inferences in support of a finding that Yingst was an employee as a matter of law. But, even if we were exercising our independent judgment on the undisputed facts, we would reach the same conclusion that Yingst was an independent contractor.

3. Employment or Independent Contractor Relationship

The most important gauge of whether an employment relationship exists is "whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired." (Tieberg v. Unemployment Ins. App. Bd. (1970) 2 Cal.3d 943, 946; Empire Star Mines Co. v. Cal. Emp. Com. (1946) 28 Cal.2d 33, 43, overruled on another point in People v. Sims (1982) 32 Cal.3d 468, 479-480, fn. 8; Cal. Code Regs., tit. 22, § 4304-1.) Southwest has the burden of proof: "The burden of establishing an independent contractor relationship is upon the party attacking the determination of employment. [Citations.]" (Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd., supra, 235 Cal.App.3d at p. 1367.)

In the present case, the parties agree as to how Yingst performed his work for Southwest. As described in the ALJ decision:

"The services which the claimant performed for the employer were on an occasional and sporadic basis. They were not a part of his usual means of producing income. [Yingst was employed as a dietitian.]

"The employer’s business involves the collection of samples of gasoline from retail service stations which are then tested to assure compliance with various federal, state, and industry standards. The claimant would be contacted and asked if he wished to take an assignment to make such a collection. If he agreed, he would be sent containers and paperwork by the employer, along with instructions as to the location of the station from which he was to obtain the sample.

"The claimant was required to follow very precise and detailed instructions as to the manner in which he was to collect the samples and in the manner in which he was to package them and ship them back to the employer. He was not to be paid unless he precisely followed all the instructions as to the collection and shipping of the samples as well as the proper completion of the paperwork. The only discretion afforded the claimant in performing the duties for the employer was that the sample had to be collected within a seven-day period and it was up to him as to the day and time when he would actually collect the sample. The employer however had further restrictions which required that the sample be shipped within one day after its collection and the claimant was not permitted to ship the sample either on a Sunday or in a manner which would result in the sample being delivered on a Saturday.

"The claimant did receive training from the employer in his duties and his work required no particular expertise or skill as the directions for the performance of those duties were explicit."

Other evidence presented at the administrative hearing established that the instructions given to Yingst by Southwest and the requirement of a one-day training session were dictated by the United States Environmental Protection Agency (EPA), the Reformulated Gasoline Survey Association (RFG), and the Federal Aviation Association (FAA). The field auditor who made the initial determination that Yingst was an employee commented that the instructions were more detailed than necessary for FAA compliance. But he admitted at the administrative hearing that he had no familiarity with the requirements of the FAA and the EPA. The written instructions given to Yingst, however, bear the initials "RFGC" for "Reformulated Gasoline Compliance Survey."

Except for the Saturday/Sunday limitation on collection, Yingst worked according to his own schedule. The only aspects of gasoline collection controlled by Southwest are the form of the invoice used for the vendor and the amount paid for each sample. Yingst worked occasionally for Southwest and was paid between $20 and $50 for each sample plus mileage. For each job, Yingst signed a purchase order identifying himself as an independent contractor. He also signed an affidavit stating that he believed he was an independent contractor and not an employee.

Based on the foregoing, the ALJ concluded (1) that Southwest controlled the manner and means of Yingst’s work and (2) that he was an employee not an independent contractor. The trial judge, based on his independent review, agreed. But we disagree that the former was a reasonable inference or the latter a correct legal conclusion based on the evidence.

According to the Empire Star Mines case, where the method of performing a task is dictated by health and safety regulations imposed by the government, the principal is not exercising the manner and means of control as an employer. In that case, a mining company imposed certain requirements on miner-lessees in accordance with safety orders of the California Industrial Accident Commission. The appellate court agreed with the trial court’s finding that these requirements did not constitute exercise of the manner and means of control by the mining company so as to establish an employment relationship. (Empire Star Mines Co. v. Cal. Emp. Com., supra, 28 Cal.2d at pp. 40-41, 44-45.)

Neither the ALJ’s decision, the trial court’s ruling, or the state’s brief on appeal discuss this important distinction. Furthermore, there is no evidence that Southwest could discharge Yingst, except that it might stop calling him to collect samples. Therefore, we do not find sufficient evidence in the record from which it is reasonable to infer a finding that Southwest controlled the manner and means of Yingst’s work.

Nor is there sufficient evidence of secondary factors that reasonably shows an employment relationship. (Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at p. 950, fn. 4; Santa Cruz Transportation, Inc. v. Unemployment Ins. Appeals Bd., supra, 235 Cal.App.3d at pp. 1371-1372, fn. 1.) Yingst was regularly employed as a dietitian while performing sporadic work for Southwest. Other employment suggests the existence of an independent contractor relationship. (Idaho Times Pub. Co. v. Industrial Accident Board (1942) 63 Idaho 720, 126 P.2d 573, 577.)

After receiving some training, Yingst worked without any direct supervision in the field. He was not performing unskilled work under supervision and on site. As to these factors, the evidence again favors an inference and finding of an independent contractor relationship. (Cal. Code Regs., tit. 22, § 4304-1, subds. (a)(2) and (3) and (b)(3); Briggs v. California Emp. Com. (1946) 28 Cal.2d 50, 51-53.)

While it is true that Southwest provided Yingst with the "instrumentalities" necessary to collect gasoline samples, it is once again true that these items were federally mandated and not indicia of an employment relationship.

The fact that Yingst worked occasionally and sporadically on an as-needed basis points to the independent, non-employment, character of his work. (Cal. Code Regs., tit. 22, § 4304-1, subds. (a)(5) and (b)(3); Dart Industries v. Dept. of Labor & Emp. (Fla.App. 1992) 596 So.2d 725.) The fact that Yingst was paid by the job, and not by the hour, favors Southwest’s position. (Cal. Code Regs., tit. 22, § 4304-1, subds. (a)(6) and (b)(3).) Yingst’s belief that he was not an employee, although not conclusive, is also a significant factor for consideration. (Cal. Code Regs., tit. 22, § 4304-1, subds. (a)(8) and (b)(5); Tieberg v. Unemployment Ins. App. Bd., supra, 2 Cal.3d at p. 952.)

The single factor favoring the state’s position is that Yingst was doing work for Southwest that was part of its regular business. (Cal. Code Regs., tit. 22, § 4304-1, subd. (a)(7) and (10).) But that sole factor, when balanced against all the other factors is too weak to support a finding of an employment relationship.

4. Disposition

Upon review of the undisputed facts and the reasonable inferences to be made from them, we do not discern substantial evidence supporting the trial court’s decision that Yingst was an employee of Southwest. The facts and inferences compel the contrary conclusion that he was an independent contractor.

We reverse the judgment of the superior court and order that a peremptory writ of mandate issue as prayed, directing that the Appeals Board decision be set aside on the grounds that Yingst was not an employee of Southwest and directing the Department not to charge any unemployment compensation benefits against Southwest.

The prevailing party shall recover its costs.

Filed 6/15/00

THE COURT:

A request having been made to this Court pursuant to California Rules of Court, rule 978(a), for publication of a nonpublished opinion heretofore filed in the above entitled matter on June 1, 2000, and it appearing that the opinion meets the standard for publication as specified in California Rules of Court, rule 976(b),

IT IS ORDERED that said opinion be certified for publication with the exception of part 2, pursuant to California Rules of Court, rule 976(b).