Opinion
Rehearings Denied Jan. 19, 1970.
Opinion on pages 1024 to 1032 omitted.
HEARING GRANTED
See 2 Cal.3d 943 for ensuing opinion.
Kaplan, Livingston, Goodwin, Berkowitz & Selvin, Beverly Hills, for real party in interest and appellant.
No appearance for respondent below.
Thomas C. Lynch, Atty. Gen., and Herschel T. Elkins, Deputy Atty. Gen., for petitioner and respondent.
[82 Cal.Rptr. 887]Selvin & Cohen and Paul P. Selvin, Los Angeles, amici curiae (for Writers Guild of America, West, Inc.), in behalf of petitioner and respondent.
GUSTAFSON, Associate Justice.
The Department of Employment believed that certain persons paid by Lassie Television, Inc., for writing television plays in the years 1959, 1960 and 1961 were employees of Lassie Television with respect to whom employer and worker contributions for unemployment insurance should have been made. The department assessed Lassie Television for the amount of the alleged deficiencies. Lassie Television resisted the determination, but a referee upheld the department's position. In a similar case involving a different employer a different referee reached the opposite conclusion. Lassie Television appealed its case and the department appealed the other case. The California Unemployment Insurance Appeals Board consolidated both cases and on a very extensive record found that in neither case were the writers employees of the entities which paid them for their work.
Lassie Television, Inc., was subsequently acquired by Wrather Corporation, the appellant herein, but for convenience we will refer to both corporations as Lassie Television.
The department then brought this action in the superior court. That court vacated the board's decision on the ground that the writers were employees. Lassie Television appeals.
The superior court initially refused to entertain the action on the ground that the Director of Employment had no standing to bring it. This court by mandate compelled the superior court to hear the case. (Tieberg v. Superior Court (1966) 243 Cal.App.2d 277, 52 Cal.Rptr. 33.)
The respondent below (California Unemployment Insurance Appeals Board) and the other real party in interest below (Filmaster, Inc.) have not appealed.
The court below was required to exercise its own independent judgment on the evidence contained in the administrative record and we must uphold the trial court's judgment if it is supported by substantial evidence. (General Motors Corporation v. California Unemployment Insurance Appeals Board (1967) 253 Cal.App.2d 540, 61 Cal.Rptr. 483.) However, as the Supreme Court recognized in Isenberg v. California Employment Stabilization Commission (1947) 30 Cal.2d 34, 180 P.2d 11 and as the department's counsel agreed at oral argument, effective enforcement of the unemployment insurance laws would be impossible if upholding a conclusion of the status of a person as an employee or an independent contractor is done under the guise that the conclusion is a permissible inference of ultimate fact even though the evidentiary facts are not in conflict. The result would be that on the same evidentiary facts (as was the case here before the two referees) one person could be found to be an employee while another person under the identical circumstances could be found to be an independent contractor. The evidentiary facts in this case are not in dispute. For all practical purposes the trial court found the facts to be the same as the board found them to be. The difference in result was occasioned by the trial court's view of the effect of a written contract. Under the doctrine of Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 44 Cal.Rptr. 767, 402 P.2d 839, we find that the trial court's interpretation of the contract is erroneous and, because the board correctly found that the writers were independent contractors, that the judgment of the trial court must therefore be reversed.
Lassie Television was an independent producer of television films (primarily for the series known as "Lassie") for use on commercial television. A writer desiring to profit from his idea for a story would approach a producer who he thought would be receptive. The writer would either orally outline his story to the producer or submit a short written narrative. If the producer found the story interesting, it would ascertain whether a sponsor found it [82 Cal.Rptr. 888]so. Before approaching a sponsor, the producer might ask the writer to make many changes in the story idea in order to interest a sponsor and the writer naturally cooperated if he thought he might ultimately satisfy the sponsor. Up to this point there was no relationship (either of employee or independent contractor) of the writer to the producer.
But when the producer received sponsor approval, the first order of business was the execution of a contract between the writer and the producer. The contract entitled "Standard Form Freelance Film Television Writer's Contract" commits the writer to "render his services hereunder and devote his best talents, efforts and abilities in accordance with the instructions and directions of the Producer". The standard form was the result of collective bargaining between Writers Guild of America, West, Inc. (of which most of the writers were members), and the Alliance of Television Film Producers, Inc. (of which Lassie was a member). The bargaining resulted in a Television Film Basic Agreement which was incorporated by reference in the standard form contract between a writer and a producer.
The basic agreement provided for minimum amounts which a producer would pay to a writer, the use by a producer of only Guild writers, additional compensation to the writer for reruns and for theatrical performances, limitation of the extent to which a writer could be required to make revisions in his work, contributions by the producer to a pension fund for the writers, screen credit to the writer and many other items. At the heart of the basic agreement was the provision that any contract with a writer "shall be only on a freelance (non-exclusive) basis".
The basic agreement provided for the employment of a writer at a fixed sum to prepare "stories, adaptions, treatments, scenarios, continuities, teleplays, dialogue, scripts, sketches, plot, outlines, narrative synopses, routines and narrations for use in the production of television film". Employee was defined as any person who prepared any of the aforementioned items or made revisions, modification or changes therein as to whom the producer "has the right by contract to direct the performance of personal services in writing or preparing [any of the aforementioned items] or in making revisions, modifications or changes [therein]".
After a contract was signed between a producer and a writer for a fixed dollar amount to create, e.g., a teleplay, the writer did the work on his own time, at his own expense, in his own way, with his own instrumentalities and at his own home or office. If the producer wanted some change in the first draft, it could make the change itself. If the producer lacked the skill to make the changes itself and asked the writer to do so, the producer was obviously not directing the manner in which the change was to be accomplished, but was only specifying the end result. When the producer requested the writer to make a change, the writer attempted to satisfy the producer principally to maintain or enhance the writer's reputation because the writer was paid the fixed sum stated in the contract even if his material never was used. The time involved to complete the average contract was less than a month and the writer would ordinarily be working under several contracts with the same or other producers during the period of time when he was completing the contract in question.
With respect to providing a fund from which unemployment compensation may be paid, the Legislature was not required to, and never did, require contributions from employers and employees only as "employers and employees" are defined by common law. Thus an agricultural laborer and his employer are not required to make contributions. (Un.Ins.Code, §§ 625, 626.) However, the basic definition of employment as "service * * * performed for wages or under any contract of hire, written or oral, express or implied" (Un.Ins.Code, § 601) does contemplate the common law concept of master-servant (i.e., employer-employee) [82 Cal.Rptr. 889]as opposed to that of employer-independent contractor. (Empire Star Mines Co. v. California Employment Commission (1946) 28 Cal.2d 33, 168 P.2d 686.) As set out in Restatement, Second, Agency, § 220:
"(1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control.
"(2) In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered:
"(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
"(b) whether or not the one employed is engaged in a distinct occupation or business;
"(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
"(d) the skill required in the particular occupation;
"(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
"(f) the length of time for which the person is employed;
"(g) The method of payment, whether by the time or by the job;
"(h) whether or not the work is a part of the regular business of the employer;
"(i) whether or not the parties believe they are creating the relation of master and servant; and
"(j) whether the principal is or is not in business."
It is important to note that in nearly every case where one performs services for another, the other has control or the right to control in the sense of being able to compel or preclude certain action. A patient may refuse to submit to an operation by a physician, but the physician may continue to treat the patient by other means; the client may refuse to settle a case, but the lawyer may continue to represent him; an architect may be told that his plans are not acceptable, but he may revise them to suit his client. This is not the type of control which makes the physician, lawyer or architect an employee because it is not control "with respect to the physical conduct in the performance of the services".
The court below held that the standard form contract between a producer and a writer as a matter of law made the writer an employee because (1) the parties agreed that the relationship created was that of employer and employee and (2) the producer had a right of control.
As to the first point, it is clear that, whether for the purpose of escaping payment of unemployment insurance contributions or for other reasons, a person who is an employee by the tests referred to above does not lose that status because the contract pursuant to which he renders his services calls him an "independent contractor". (Lewis v. Constitution Life Co. (1950) 96 Cal.App.2d 191, 215 P.2d 55.) Similarly, whether for the purpose of getting the benefit of unemployment compensation or for other reasons, a person who is an independent contractor by the tests referred to above does not lose that status because the contract pursuant to which he renders his service calls him an "employee". (Mark Hopkins, Inc. v. California Employment Stabilization Commission (1948) 86 Cal.App.2d 15, 193 P.2d 792.)
That brings us to the second point. The contract between the producer and the writer recites merely that the writer will render his services " in accordance with the instructions and directions of the Producer". (A lawyer similarly renders his services "in accordance with the instructions and directions of the" client.) This language does not expressly permit the producer to control "the physical conduct [of [82 Cal.Rptr. 890]the writer] in the performance of the services". We thus turn to the actual conduct of the writers and Lassie to ascertain whether such control was in fact exercised. We find no evidence that Lassie tried to control, or that the writers thought that Lassie was entitled to control, the physical conduct of the writers in their performance of services. In fact the standard contract itself (by reference to the Television Film Basic Agreement) makes it crystal clear that the writer is engaged "on a freelance (nonexclusive) basis" this negating the idea that the producer could order the writer to be at a designated place at a specified time with a particular brand of typewriter to write a particular scene for a play.
The trial court expressly rejected the test employed by the board, i.e., the factors described in subdivision (2) of section 220 of Restatement, Second, Agency. It did so in the mistaken belief that Empire Star compelled this result. Empire Star, however, merely said that one is an employee of another if the other "has the authority to exercise complete control". (Italics added.) Authority that broad obviously would include control "with respect to the physical conduct in the performance of the services". Since by no reasonable view of the evidence could Lassie be deemed to have had "complete control" of a writer, the board was not only authorized, but was required, to consider the factors which it considered. On the basis of these factors it found that the writers were not employees of Lassie. It would unduly extend this opinion to set forth the evidence with respect to each factor. Suffice it to say that we cannot see how the board could have reached any conclusion other than that the writers were independent contractors.
The department invites our attention to section 601.5 of the Unemployment Insurance Code which asserts was adopted in 1965 in response to the board's decision in this case.
"For the purpose of this division only, 'employment' includes any service in an artistic or literary capacity performed by an individual pursuant to a collective bargaining agreement between an employer and a labor organization in the motion picture, radio or television industry where the employer has the right to control and direct the services to be performed and the individual is defined as an employee under the terms of the collective bargaining agreement."
While we are aware of no legislative history indicating that the Legislature deemed the language to be declarative of existing law, no such legislative history would make the section applicable to this case because the law existing in 1965 was unquestionably different from that contained in the statute. (Learner Company v. County of Alameda (1965) 234 Cal.App.2d 278, 44 Cal.Rptr. 535.)
It is interesting to note that the department does not make the same argument about section 654 of the Unemployment Insurance Code which says that employment "does not include service performed by a free-lance jockey or exercise boy who is regularly licensed by the California Horse Racing Board". This legislation in effect "reversed" Isenbert v. California Employment Stabilization Commission (1947) 30 Cal.2d 34, 180 P.2d 11, which held that a free-lance jockey was an employee. Moreover, it is questionable whether a contract between a writer and Lassie calling for the writer to render his services "in accordance with the instructions and directions of the Producer" would, under the evidence in this case, constitute a contract where Lassie "has the right to control and direct the services to be performed" by the writer. The legislation, in other words, may not have achieved the results obviously intended even with respect to cases arising after its effective date.
The judgment is reversed with directions to enter judgment denying the writ of mandate as to Lassie.
WOOD, P.J., and LILLIE, J., concur.