California: Setting Aside Stipulations on Basis of Inadvertence

Here’s an interesting writ denied case regarding the issue of when stipulations may be set aside and when they may not. We’ll be reporting this case in the upcoming January 2025 issue of California Compensation Cases.

Infinity Staffing Services, Inc., Arch Insurance Company, administered by Sedgwick Claims Management, Petitioners v. Workers' Compensation Appeals Board, Enrique Vargas, Respondents

90 Cal. Comp. Cases —, 2024 Cal. Wrk. Comp. LEXIS 73

Court of Appeal of California, Sixth Appellate District

October 24, 2024 Writ of Review Denied

Civil No. H052231

Prior History: W.C.A.B. No. ADJ12980584—WCJ Pauline H. Suh (SJO); WCAB Panel: Commissioner Capurro, Chair Zalewski, Commissioner Dodd [see Vargas v. Infinity Staffing Services, 2024 Cal. Wrk. Comp. P.D. LEXIS 146 (Appeals Board noteworthy panel decision)]

Disposition: Petition for writ of review denied

CALIFORNIA COMPENSATION CASES HEADNOTES

Stipulations—Setting Aside—WCAB, granting reconsideration and amending WCJ's decision, awarded applicant who suffered industrial injury to his back, right hip and right shoulder while working as laborer on 8/30/2019 permanent disability benefits at rate of $290 per week, as derived from applicant's stipulated weekly earnings of $554.13, when WCAB found that applicant was statutorily entitled to this permanent disability rate based upon WCJ's finding that he was not seasonal worker, and that WCJ erred in awarding applicant permanent disability at rate of $160 per week based upon parties' stipulation, because WCJ's finding that applicant was not seasonal worker constituted good cause to set aside stipulation, which could not reasonably be taken at face value because it appeared to represent “fudge” halfway between applicant's position that he was not seasonal worker and defendant's position that applicant was seasonal worker with much lower actual earning capacity. [See generally Hanna, Cal. Law of Emp. Inj. and Workers' Comp. 2d §§ 26.06[2], 28.02; Rassp & Herlick, California Workers' Compensation Law, Ch. 16, §§ 16.23, 16.45[2]; Ch. 19, § 19.05[3].]

CALIFORNIA COMPENSATION CASES SUMMARY

Applicant claimed that he suffered an industrial injury to his right shoulder, right hip and back on 8/30/2019 while employed by Defendant Infinity Staffing Services, Inc., as a laborer. The matter ultimately proceeded to trial on various issues, including PD and whether Defendant overpaid TTD. Defendant's overpayment argument was predicated on the theory that Applicant was a seasonal worker and that TTD payments were not due during the off-season. The parties stipulated at trial that Applicant's earnings at the time of his injury were $554.13 per week, warranting a PD indemnity rate of $160.

On 6/9/2023, the WCJ issued her first F&A, wherein she found that Applicant was not a seasonal employee but was rather a regular employee entitled to TTD payments year-round. Based on this finding, no credit for TTD overpayment was awarded. The WCJ further found that Applicant suffered 62 percent PD, payable at the rate of $160 per week. However, the WCJ listed the total PD sum due as $106,502.50, the amount that would have been appropriate if the PD rate had been $290 per week. The WCJ subsequently issued an Amended F&A correcting the total amount of PD due to reflect the sum of $58,760, consistent with the $160 PD rate stipulation.

Applicant challenged the WCJ's finding regarding the total sum of PD, asserting that the WCJ should have set aside the parties' stipulation to a PD rate of $160 per week because Applicant was not a seasonal worker and was, therefore, entitled to PD at the weekly rate of $290 based on his earnings. In response, the WCJ rescinded the first F&A and set the matter for trial on the issues of whether Applicant's correct PD rate was $160 or $290 and whether there was good cause to set aside the parties' stipulation to $160. At trial, the parties stipulated to all the findings in the first F&A, except with respect to Applicant's weekly PD rate. Applicant's attorney submitted a declaration stating that he did not intend to agree that $160 was the correct PD rate, but rather intended to stipulate that $160 per week was the PD rate Defendant had previously paid in this matter.

On 2/15/2024, the WCJ issued an F&A, finding no good cause to relieve Applicant of his stipulation to a weekly PD rate of $160. The WCJ reasoned that Applicant had multiple chances prior to submission of this matter to withdraw from the stipulation but failed to do so, and that if the stipulation was a mistake, the mistake was unilateral on Applicant's part. Applicant sought reconsideration, contending in relevant portion that the WCJ erred in calculating PD benefits at the rate of $160 per week instead of $290 per week because Applicant was not a seasonal worker and was entitled to the statutory maximum based on his earnings. Defendant did not dispute the finding that Applicant was not a seasonal worker but argued that Applicant was bound by his stipulation even if it resulted in an award that was inconsistent with the statutory scheme for calculating PD rate.

The WCAB granted reconsideration and amended the WCJ's decision to award Applicant PD at the weekly rate of $290, to which the WCAB found he was clearly entitled under Labor Code §§ 4453 and 4658 based upon the WCJ's determination that he was not a seasonal worker. Citing County of Sacramento v. W.C.A.B. (Weatherall) (2000) 77 Cal. App. 4th 1114, 92 Cal. Rptr. 2d 290, 65 Cal. Comp. Cases 1, the WCAB explained that stipulations are binding on the parties unless there is good cause for relief, which includes mutual mistake of fact or law, duress, fraud, undue influence, and procedural irregularities. The WCAB emphasized that whether or not good cause exists must be analyzed in the context of each case.

Here, the WCAB noted, the WCJ determined in the first F&A that Applicant was not a seasonal worker for the purposes of TTD overpayment. Neither party challenged this finding during any of the proceedings following issuance of the decision, and it was implicitly accepted by the parties at the second trial when they stipulated to all the findings in the first F&A, other than PD rate. The WCAB explained that the weekly PD rate is set under Labor Code § 4658(e) at two-thirds of average weekly earnings, and that average weekly earnings for purposes of PD are capped at $435 per month. Given Applicant's stipulated weekly earnings of $554.13, he would ordinarily be entitled to PD at a rate of $290, the statutory maximum, rather than the statutory minimum of $160. Consequently, the WCAB noted, the stipulation to $160 was contrary to the statutorily-required method of computation and, if taken at face value, seemingly represented either a mutual mistake of law or an attempt to deliberately stipulate to a PD rate unauthorized by statute.

The WCAB observed that there would be good cause to set aside the stipulation if it were based on a mutual mistake of law. Similarly, if the stipulation represented an attempt to stipulate to a statutorily unauthorized PD rate, the WCJ would be required to set it aside because parties cannot stipulate to circumvent the law. However, the WCAB ultimately determined that there was no mutual mistake nor did the parties deliberately stipulate to an unauthorized PD rate. Instead, given the course of litigation, the WCAB believed the stipulation entered the record due to inadvertence surrounding the parties' dispute over whether Applicant was a seasonal worker, and that it should be set aside on that basis:

… [T]he parties clearly did not intend to stipulate to applicant's seasonal status, because they (1) stipulated to weekly earnings of $554.13 per week without providing any other evidence as to applicant's earning capacity, and, more importantly, (2) necessarily submitted the question of whether applicant was a seasonal worker to the WCJ for decision as part of the dispute regarding TTD overpayments. [WCAB's Footnote omitted] Obviously, applicant “did not intend to stipulate away [his] case while urging it.” (See Burrows v. State (1968) 260 Cal.App.2d 29; 33, 66 Cal. Rptr. 868 [stipulation that was a result of misunderstanding of the proper application of the governing law did not serve to bar plaintiffs' case].)  Just as obviously, defendant did not intend to stipulate to weekly earnings of $554.13 at the same time it was contending that applicant was a seasonal worker whose actual earning capacity was much lower, and to whom it had overpaid out of-season TTD benefits.

In short, it appears that the stipulation cannot reasonably be taken at face value. [WCAB's Footnote: This interpretation is also reasonably consistent with the Declaration submitted by applicant's attorney, stating that he intended to stipulate to the fact that defendant had paid PD at $160 per week, not that he agreed that the correct PD rate was $160 per week. (Declaration, at p. 1.) However, we make our ruling based upon the legal reasoning stated herein, and not based upon the contents of the Declaration itself.] It appears to represent a “fudge” halfway between the position of applicant, that he was not a seasonal worker and therefore had average weekly earnings of $554.13 (and therefore a PD rate of $290 per week), and the position of defendant, that he was entitled to PD only at the minimum rate of $160 per week (because he was a seasonal worker with much lower actual earning capacity). Given the WCJ's determination that applicant was not a seasonal worker, the stipulation to the $160 per week PD rate is, to again borrow the words of the Burrows Court, “nothing but an erroneous legal conclusion which the trial court should not have accepted.” (Burrows, supra, 260 Cal. App. 2d at 34.)

In light of the above, we believe the WCJ erred in refusing to set aside the stipulation … .

Defendant filed a Petition for Writ of Review, asserting in relevant portion that the WCAB erred in finding good cause to set aside the parties' stipulation to PD rate. Applicant filed an Answer, contending in pertinent part that the WCAB correctly vacated the stipulation because it was entered due to inadvertence surrounding whether or not Applicant was a seasonal worker.

WRIT DENIED October 24, 2024.

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