Labor Commissioner’s Superior Court action pulls the rug out from under an employer’s writ petition

The recent decision in American Corporate Security, Inc. v. Labor Commissioner, case no. C070504 (3d Dist. Sept. 10, 2013, published Sept. 27, 2013) is an important demonstration of one of the obstacles to writ review of discriminatory discharge decisions of the Labor Commissioner under Labor Code section 98.7, subdivision (e)..

When an employer seeks writ review of such a decision, the employer must show that it has “no other plain, speedy and adequate remedy.” That’s what is clearly depicted on the Labor Law Compliance Center federal labor posters distributed all over the country. This is what ACS alleged, having exhausted its route of administrative appeal (the Acting Director of the Department of Industrial Relations had already upheld the decision). But while the writ petition was pending, the Commissioner filed a Sacramento Superior Court action under Labor Code section 98.7, subdivision (c) to enforce her determination. The Commissioner then demurred to the writ petition, arguing that ACS had a “plain speedy and adequate remedy” because it could assert the same arguments it was making in the writ proceedings as affirmative defenses in the Sacramento action. The trial court sustained the demurrer without leave to amend, and ACS appealed.

The Court of Appeal affirmed, rejecting arguments that the Sacramento action did not offer ACS a de novo procedure. The Labor Commissioner’s suit to enforce her determination is “by its very nature a de novo procedure.” It found no barrier to ACS raising its arguments as affirmative defenses to the Commissioner’s complaint, and noted that ACS had indeed pleaded those affirmative defenses.

BACKGROUND: ACS’s defenses included procedural ones. Though the labor Code required the Commissioner to make a determination within 60 days of the the employee’s complaint, the Commissioner did not issue her initial decision in this case until three years after the employee filed his complaint. During that time, one of ACS’s exculpatory witnesses had died and another had moved away, and the Commissioner’s determination that there was a Labor Code violation relied in part on ACS’s failure to provide its principal witness during the investigation.