Opinion
A100875.
10-10-2003
PETER LEWIS et al., Plaintiffs and Respondents, v. MATTHEW KATZ et al., Defendants and Appellants.
In 1970, the Labor Commissioner voided contracts between Matthew Katz (Katz) and some of the founding members of the music group "Moby Grape," Peter Lewis (Lewis), Donald J. Stevenson (Stevenson), and Jerry Miller (Miller) (collectively, respondents). Following this ruling, Katz appealed pursuant to Labor Code section 1700.44; the appeal was dismissed in 2002 for failure to prosecute pursuant to Code of Civil Procedure section 583.310. Subsequently, respondents moved to confirm the Labor Commissioners 1970 ruling, which the trial court granted. The court entered judgment in favor of respondents and Katz appeals.[] We uphold the lower courts ruling.
The other parties appealing are entities owned by Katz: After You Publishing Company, Matthew Katz Productions, and San Francisco Sound.
BACKGROUND
In 1966, Lewis, Stevenson, Miller, and others formed the musical group Moby Grape. Later that year, the members of the band entered into personal management agreements and publishing agreements with Katz, the original manager of Moby Grape.
On March 27, 1969, respondents filed an action with the Labor Commissioner requesting to set aside their contracts with Katz because of fraud, breach of fiduciary duty, and violations of the Labor Code sections 1700 to 1700.46 (Talent Agencies Act (Act)). Following a hearing, the Labor Commissioner ruled on February 25, 1970 that the contracts were void for failure to comply with the Act. Further, the commissioner found that respondents were not liable to Katz for any sums spent in furtherance of their musical careers.
On March 5, 1970, Katz filed in the superior court an appeal from the Labor Commissioners ruling pursuant to Labor Code section 1700.44. In August 1973, an attorney working for the second manager of Moby Grape executed stipulated settlements on the claims between Katz and respondents. Respondents neither signed the agreement nor attended the settlement conference. The agreement provided Katz with all rights and entitlements to income associated with the copyrighted Moby Grape publishing interests, and it gave Katz ownership of the band name Moby Grape.
In 1994, respondents filed a declaratory relief action in the superior court against Katz to set aside the settlement agreement. The court granted summary judgment against Katz and set aside the 1973 settlement agreement. Katz appealed, and numerous other legal actions followed.
After much litigation in the 1990s, Katz and respondents joined in a request to dismiss Katzs appeal of the 1970 ruling by the Labor Commissioner for failure to bring this case to trial within five years (Code Civ. Proc., § 583.310). On June 12, 2002, the court granted the request to dismiss. Respondents moved to confirm the determination and award of the Labor Commissioner, which the court granted on September 30, 2002. The court entered judgment and Katz filed a timely notice of appeal.
DISCUSSION
Katz contends that the trial court erred in granting the motion to confirm the Labor Commissioners determination and award. Katz argues that, because an appeal from the Labor Commissioners decision is tried de novo in the trial court and respondents had the burden of proving their claims in this trial (see, e.g., Buchwald v. Katz (1972) 8 Cal.3d 493, 501), the courts dismissal of the appeal pursuant to Code of Civil Procedure section 583.310 resulted in their failure to prove their claims against him. This argument is creative, but clearly erroneous. Under this reasoning, an aggrieved party would only need to file an appeal and then dismiss it to ensure that the other party would never have a remedy.
The litigation that is the subject of this appeal began when respondents filed claims against Katz with the Labor Commission pursuant to the Act (Lab. Code, §§ 1700-1700.46). This Act is a remedial statute designed to protect those seeking employment. (Buchwald v. Superior Court (1967) 254 Cal.App.2d 347, 350.) Under the Act, the Labor Commissioner has the authority to hear and determine various disputes. Such disputes must be heard by the commissioner, and all remedies before the commissioner must be exhausted before the parties can proceed to the superior court. (Id. at p. 358.) Once an administrative agency has "fundamental jurisdiction over the parties and the subject matter, then its determination may ordinarily be attacked only by appeal or other direct review, and unless successfully so attacked, the determination is res judicata of the matter determined, and beyond collateral attack. (Armstrong v. Armstrong (1976) 15 Cal.3d 942, 951 . . . .)" (REO Broadcasting Consultants v. Martin (1999) 69 Cal.App.4th 489, 501 (REO).) The aggrieved party may appeal the decision in the superior court pursuant to Labor Code section 1700.44, subdivision (a).[]
Labor Code section 1700.44, subdivision (a), provides in relevant part: "In cases of controversy arising under this chapter, the parties involved shall refer the matters in dispute to the Labor Commissioner, who shall hear and determine the same, subject to an appeal within 10 days after determination, to the superior court where the same shall be heard de novo. . . ."
In the situation before us, the Labor Commissioner ruled in favor of respondents. Katz filed a timely appeal. However, there was no appeal or direct review because the appeal was dismissed.
Katz argues that, since respondents would have had the burden of proof in a trial de novo,[] the dismissal of the appeal, which is considered a judgment on the merits, establishes that they were unsuccessful in their claims. This reasoning is muddled. Katz filed the appeal and had the burden of prosecuting the action. Had there been a trial de novo, respondents would then have had the burden of proof, but no trial occurred. Instead, Katz failed to pursue his appeal; thus, no appeal or direct review occurred. Accordingly, the original decision by the Labor Commissioner stands. (See REO, supra, 69 Cal.App.4th at p. 501.)
Katz cites a number of cases to support his argument that respondents have the burden of proof in a trial de novo. (E.g., Collier & Wallis, Ltd. v. Astor (1937) 9 Cal.2d 202, 205; Sinnamon v. McKay (1983) 142 Cal.App.3d 847, 852.) There is no dispute that respondents would have had the burden of proof had a trial de novo occurred.
Katz attempts to analogize this situation to nonbinding arbitration cases and principally relies on Howard v. Thrifty Drug & Discount Stores (1995) 10 Cal.4th 424 (Howard). In Howard, our Supreme Court considered the interrelationship of the 1979 Judicial Arbitration Act (Code Civ. Proc., § 1141.10 et seq.) and the requirement to prosecute an action within five years (id., § 583.310). Following the arbitrators award, the defendant moved to vacate the judgment and for a trial de novo, which the court ultimately granted. (Howard, supra, at pp. 430-431.) More than five years later, the plaintiff moved to set the case specially for trial, and the court dismissed. (Ibid.) The Supreme Court reversed the dismissal on the basis of violating Code of Civil Procedure section 583.310, because it held that a portion of the time was tolled and the five-year time period had not yet lapsed. (Howard, supra, at p. 439.) The Supreme Court, however, affirmed on the grounds that the court had the discretionary power to dismiss under Code of Civil Procedure section 583.410. (Howard, supra, at pp. 440-443.)
No party in the case before us has argued that the five-year time-limit under Code of Civil Procedure section 583.310 has not lapsed. Indeed, Katz joined in respondents request to dismiss based on the failure to prosecute within the statutory period. Katz argues that, similarly to the situation in Howard, respondents had the burden of prosecuting their claim once he filed his request for a trial de novo. A decision by the Labor Commissioner, however, is not analogous to a ruling in a nonbinding judicial arbitration. The purpose of nonbinding arbitration is to reduce the civil backlog and encourage pretrial settlement and to economize the resolution of civil disputes. (Code Civ. Proc., § 1141.10, subds. (a) & (b).) Indeed, the rules are so dissimilar that an untimely request for a trial de novo may be considered by the court in a nonbinding arbitration case (see, e.g., Howard, supra, 10 Cal.4th at p. 431; see also Civ. Proc., § 1141.20, subd. (a)), while the court has no jurisdiction over an untimely request for a trial de novo following the Labor Commissioners decision (REO, supra, 69 Cal.App.4th at p. 495; see also Lab. Code, § 1700.44). More significantly, a judicial arbitration award "shall be final unless a request for a de novo trial is filed within 30 days after the date the arbitrator files the award with the court." (Code Civ. Proc., § 1141.20, subd. (a).) Thus, the arbitration award is vacated once a trial de novo is filed. In contrast, the award of the Labor Commissioner is not vacated when a trial de novo is requested; the commissioners decision remains unless successfully attacked by appeal or other direct review. (See, e.g., REO, supra, 69 Cal.App.4th at p. 501.)
In addition, the judicial arbitration statutes make it clear that submitting a claim to arbitration does not suspend the running of the statute of limitations (except under those conditions specified by statute) on the plaintiff for commencing his or her action in court. (Code Civ. Proc., § 1141.17, subd. (a).) Under the statutes, the burden remains with the plaintiff to pursue within the statutory period his or her claims in a trial de novo. In contrast, the Supreme Court has analogized the procedure for appealing a decision by the Labor Commissioner to the procedure for appealing from small claims court. (Buchwald v. Katz, supra, 8 Cal.3d at p. 502, fn. 8.) Under the small claims procedures, the burden is on the appealing party (not necessarily the plaintiff) to pursue the appeal in a timely fashion and failure to do so results in the dismissal of the appeal. (Ibid., see also Code Civ. Proc., § 116.795; Cal. Rules of Court, rule 155(c).)
Moreover, even judicial arbitration awards are enforceable when the losing party dismisses the appeal. (E.g., Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 340.) The Milheiser court explained: "When parties withdraw requests for a trial de novo or voluntarily dismiss their complaints, they repudiate their previous election for a trial de novo. This factually restores the repudiating parties to their legal positions before electing the trial de novo, and triggers award finalization under [Code of Civil Procedure] section 1141.20." (Ibid., fn. omitted.) Here, Katz voluntarily joined in the request to dismiss his appeal.
Accordingly, we hold that the trial court properly confirmed the 1970 decision and award of the Labor Commissioner after dismissing the appeal from the 1970 decision for failing to prosecute within the statutory period.
DISPOSITION
The judgment is affirmed. Respondents are awarded costs.
We concur: Haerle, Acting P. J., Ruvolo, J.