SPX Corporation v. Dorais

Full title: SPX CORPORATION, Plaintiff and Appellant, v. PATRICK DORAIS, as Acting…

Court: Court of Appeals of California, Third District.

Date published: Nov 13, 2003

No. C041863 (Cal. Ct. App. Nov. 13, 2003)

Opinion

C041863.

11-13-2003

SPX CORPORATION, Plaintiff and Appellant, v. PATRICK DORAIS, as Acting Chief, etc., et al., Defendants and Respondents.

Kolkey

The Bureau of Automotive Repair (BAR), the defendant here, successfully petitioned to decertify the smog check equipment known as "BAR-97," which is manufactured by SPX Corporation (SPX), on the ground that SPX had failed to furnish a software update within the six-month period mandated by Health and Safety Code section 44036, subdivision (f)(1).¹ SPX sought a writ of administrative mandamus to challenge the administrative law judges decision in BARs favor. (Code Civ. Proc., § 1094.5.) But the superior court, applying the substantial evidence test, denied the writ. (Id., § 1094.5, subd. (c).)

1 Unless otherwise designated, all further statutory references are to the Health and Safety Code.

SPX appeals and contends, among other things, that the superior court should have used the independent judgment test, which requires the court to weigh the evidence.

We agree and shall reverse: If an administrative decision substantially affects a fundamental vested right, the trial court must review the administrative decision exercising its independent judgment. (Bixby v. Pierno (1971) 4 Cal.3d 130, 143.) Here, SPX has a fundamental vested right in maintaining the certification that it received for its BAR-97 smog check equipment. Courts have recognized that fundamental vested rights include the right to continue operating an established business in which a person has made a substantial investment. (Goat Hill Tavern v. City of Costa Mesa (1992) 6 Cal.App.4th 1519, 1529 (Goat Hill)). SPXs certification would appear to so qualify here. SPXs certification took four years and over 20,000 hours of engineering time to achieve, and the certified equipment is used by approximately 1,500 smog check stations — about 25 percent of such facilities in California. Once decertified, SPX could not sell its BAR-97 equipment in California, and no smog check station could use it. (§ 44036, subd. (b).) The loss of such a certification, in which a significant investment has been made, "is too important . . . to relegate . . . to . . . administrative extinction" by a body lacking judicial power, but instead requires the careful judicial scrutiny that the independent judgment test affords. (Bixby v. Pierno, supra, 4 Cal.3d at p. 144.)

FACTUAL AND PROCEDURAL BACKGROUND

I. General Background

BAR is the state agency responsible for developing and administering an inspection program that reduces motor vehicle emissions. (§§ 44001.5, 44002.)

Vehicles are tested at privately operated smog check stations, which are authorized to issue certificates of compliance with emission standards. (§§ 44010, 44012, 44013, 44015.) These licensed smog check stations must use testing equipment certified by BAR, including a test analyzer system. (§ 44036, subd. (b).) BAR adopts and revises the standards for certification and decertification of the testing equipment. (Ibid.)

The first test analyzer system, referred to as BAR-74, was certified in 1974.² A series of analyzers followed (e.g., BAR-80, BAR-84, BAR-90), culminating in BAR-97 — the test analyzer system at issue here. Each system became more complex and sophisticated in order to meet the increasingly stringent state and federal emission reduction standards. (§§ 44000, 44001.)

2 BAR distinguishes between current and prior systems by referencing the year in which the system was implemented, such as BAR-74.

II. BAR-97

BAR-97 equipment is used to perform an enhanced smog check in urbanized areas of the state where air quality standards have not been attained. (§ 44003, subd. (b).) However, BAR-90 continues to be used elsewhere in California.

Whereas BAR-90 analyzers test emissions while the vehicle is in idle, BAR-97 equipment includes a treadmill-like device that allows simulation of driving conditions in order to test emissions. BAR-97 equipment also includes various sensors that measure the exhaust of the vehicle and the integrity of the vehicles emission control system. And the BAR-97 equipment contains a modem that connects to a BAR database, referred to as the "VID," in order to transmit and receive information.

The certification process to produce the BAR-97 analyzer system began in 1995 when BAR developed draft specifications for the equipment and provided them to interested manufacturers. Initially, manufacturers were required to submit financial information to BAR to demonstrate that they had the necessary resources to perform the work, including a minimum net worth of $1,000,000 and a service network. (§ 44036.1.) Once BAR agreed that these requirements were met, BAR met with the manufacturers to review the equipment specifications and to determine which criteria necessitated a modification of existing equipment. This specification review continued until most manufacturers believed that they could develop the equipment.

After the specification review, the manufacturers had to build prototype equipment and go through a lengthy testing process to show that the various components of the equipment could meet the specifications, including those for the "gas bench" and the dynamometer (i.e., treadmill-like device).

III. SPXs Certification

SPX is one of four manufacturers of BAR-97 analyzer systems certified by BAR.

SPX built the prototype equipment and submitted extensive test data to BAR to show that the equipment could meet its specifications. SPX then submitted the prototype to BAR, where the engineering staff performed a series of tests. SPX employees worked with BAR staff on the test series.

In mid-1997, SPXs BAR-97 equipment was granted a "component approval that verified that the gas bench met the accuracy requirements of the BAR-97 specification." Soon thereafter, the dynamometer received component approval.

In February 1998, BAR granted full certification to SPX that all components in the software performed as an integrated system in accordance with the BAR-97 specifications. Indeed, SPX became the first manufacturer to receive component and full system approval. SPX had devoted an estimated 20,000 hours of employee time in engineering the BAR-97 equipment to obtain the certification.

SPXs BAR-97 certification permitted SPX to sell its BAR-97 analyzer system in California. As a result, approximately 1,500 smog check stations use SPXs BAR-97 equipment, which is in excess of 25 percent of the total number of stations statewide. The price paid by smog check stations for the equipment ranges from $30,000 to $40,000.

SPXs certification document states that "BAR Certification is the final certification issued to a complete EIS [(Emissions Inspection System)] that has been found to be in full compliance with the BAR-97 Specification." However, because the federal government was pressing BAR, under the threat of sanctions, to promptly implement the program, completion of certain items was deferred to July 1998.³ Accordingly, the certification document provides that it "shall expire on July 1, 1998[,] when the deferred items in the BAR-97 Specifications are approved and installed." The BAR-97 certification also contemplated that periodic updates would be required during its term. The certification document states: "If modifications are made after this approval, SPX must submit the changes along with appropriate test data to the bureau prior to the release/sale of the updated equipment."

3 At the administrative hearing on decertification of SPXs BAR-97 system, there was some conflict in testimony on the deferred items. A witness for SPX testified that certain items were clearly deferred, but "[t]he definition of those items w[as] . . . undefined." A witness for BAR testified that the principal deferred items were a multitask capability and BAR-97s capacity for communicating with a vehicles onboard diagnostic computer, which monitors the performance of the vehicles emission control system. (See § 44036, subd. (b)(10).)

As a condition of the BAR-97 certification, SPX also signed BARs "Manufacturer Assurance Agreement." The agreement was meant to assure BAR that future software and hardware updates would be certified, installed, and maintained in accordance with BARs specifications and implementation requirements. In the agreement, SPX acknowledged that software updates would be necessary and would be installed by the dates specified by BAR.

Both the BAR-97 certification document and the Manufacturer Assurance Agreement also set forth sanctions that could be imposed if SPX failed to comply with their requirements. The certification cautioned that failure to comply with BAR-97 specifications and the conditions of the Manufacturer Assurance Agreement could result in decertification of future installations or sales, or in full decertification for serious uncorrected problems. The Manufacturer Assurance Agreement also noted that section 44036 provided for the assessment of penalties not to exceed $1,000 per day for failure to furnish or install software updates as specified.⁴

4 Section 44036, former subdivision (f), as then applicable, provided: "(1) Equipment manufacturers shall furnish to the department, and shall install, software updates as specified by the department. The department shall allow equipment manufacturers six months, from the date the department issues its proposed specifications for periodic software updates, to obtain department approval that the updates meet the proposed specifications and to install the updates in all equipment subject to the updates. During the first 30 days of the six-month period, the manufacturers shall be permitted to review and to comment upon the proposed specifications. However, notwithstanding any other provision of this section, the department may order manufacturers to install software changes in a shorter period of time upon a finding by the department that a previously installed update does not meet current specifications. A manufacturers failure to furnish or install software updates as so specified is cause for the department to decertify the manufacturers test analyzer system or to issue a citation to the manufacturer. The citation shall specify the nature of the violation and may specify a civil penalty not to exceed one thousand dollars ($1,000) for each day the manufacturer fails to furnish or install the specified software updates by the specified period. In assessing a civil penalty pursuant to this subdivision, the department shall give due consideration, in determining the appropriateness of the amount of the civil penalty, to factors such as the gravity of the violation, the good faith of the manufacturer, and the history of previous violations.
"(2) The citations shall be served pursuant to subdivision (c) of Section 11505 of the Government Code. The manufacturer may request a hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. A request for a hearing shall be submitted in writing within 30 days of service of the citation, and shall be delivered to the office of the department in Sacramento. Hearings and related procedures under this subdivision shall be conducted in the same manner as proceedings for adjudication of an accusation under that Chapter 5, except as otherwise specified in this article.
"(3) If within 30 days from the date of service of the citation, the manufacturer fails to request a hearing, the citation shall be deemed the final order of the department.
"(4) Any failure to comply with the final order of the department for payment of a civil penalty, or to pay the amount specified in any settlement executed by the licensee and the Director of Consumer Affairs, is cause for decertification of the manufacturers test analyzer system." (§ 44036, former subd. (f), as enacted in Stats. 1997, ch. 803, § 12, pp. 15-16.)
Subdivision (f) of section 44036 was amended in 2001, subsequent to BARs commencement of this proceeding, in ways not material to this appeal, which resulted in the renumbering of the subparts of subdivision (f). (Stats. 2001, ch. 357, § 4, pp. 8-9.) We shall refer in this opinion to the subparts as numbered under former subdivision (f).

IV. The Addenda

Updates to the BAR-97 specifications were made by a series of addenda issued by BAR, some before and some after the BAR-97 certification. Addenda 1, 2, 3, and 4 were issued prior to certification. Addendum 5, issued in May 1998, originally contained deferred items from the original BAR-97 specification as well as some new items. But since the manufacturers had agreed that there would be no charge to smog check stations for the deferred items, BAR issued in August 1998 a new version of Addendum 5 and Addendum 6, which separated the deferred items from the new items, for which SPX could charge.

None of the manufacturers met the deadline for Addendum 5, or Addenda 5 and 6 combined; therefore, BAR set new deadlines. Then, at the manufacturers suggestion, to avoid two installations in the analyzers in use, Addenda 5 and 6 were combined into Addendum 7, which also added new specifications.

BAR then made a series of revisions to Addendum 7, specifying additional items and setting new deadlines for manufacturers to provide and install the update. Specifically, BAR initially issued Addendum 7 in November 1998 (after the supposed expiration of the SPX certification), with a deadline of June 1999 for manufacturers to provide the update. That deadline passed without BAR receiving updated software from any manufacturer. BAR thereafter sent a letter to manufacturers setting a new series of deadlines, with a final deadline of April 2000. In November 1999, BAR issued a new Addendum 7 with additional changes and extended the deadline to May 2000. Finally, BAR made additional changes to Addendum 7 and issued another version in December 1999, setting a deadline of July 2000 for installation of the software in BAR-97 analyzers.

In this final revision of Addendum 7 in December 1999, BAR stated that the software revision was final. BAR also stated: "Pursuant to Section 44036 of the California Health and Safety Code, the release of this December 10, 1999 version of the required software revision starts the six-month period for equipment manufacturers to obtain approval from [BAR] of their software revisions and to install the revised software in all affected analyzers. Section 44036 also provides a thirty-day period (within the established six-month schedule) for manufacturers to review and comment upon the revised specifications. [BAR] does not intend to make any further changes to the required software revision, except for those changes that may be made as a result of comments received from the manufacturers during the comment period and changes made to correct errors."

Although BAR did not receive any comments from SPX during the 30-day comment period, SPX did not submit any software by July 2000. In fact, all four of the BAR-97 manufacturers failed to meet the deadline for approval and installation of Addendum 7 software.

V. The Petition to Decertify

In September 2000, BAR filed a petition to decertify the BAR-97 system manufactured by SPX on the ground that SPX had failed to submit the Addendum 7 software update for approval or install the software in SPXs BAR-97 units in California by the July 2000 deadline. BAR sought a hearing and an order decertifying SPX as a provider of BAR-97 systems and from providing future emission systems in California.

An administrative law judge (ALJ) conducted a hearing in which the parties presented testimony and documentary evidence.⁵ SPX defended in part based on evidence that the July 1, 2000 deadline for Addendum 7 could not be met and that performance was impossible.

5 Some weeks before the hearing, SPX filed a petition for writ of prohibition in the superior court and a request for a stay of the administrative proceeding. The court denied the request for a stay, and SPX filed a petition for a writ of mandate with this court, contending that the superior court abused its discretion in denying the stay of the administrative proceeding. We denied the petition.

Yet, despite the fact that as of the date of the hearing, all of the manufacturers had failed to install the software, the ALJ issued a proposed decision finding that cause existed to decertify SPXs BAR-97 analyzer system in California, because SPX had failed to submit to BAR for approval, and had failed to install, the requisite software by the July 2000 deadline. The ALJ, however, found that BARs petition to decertify SPX from providing future emissions systems in California exceeded the scope of section 44036, former subdivision (f)(1). And while the proposed order invalidated SPXs BAR-97 system, it stayed the invalidation for three years subject to terms and conditions of probation, including, inter alia, a prohibition on future sales of SPXs BAR-97 emissions systems until SPX had fully complied with the Addendum 7 updates and installed them. The order also required SPX to reimburse BAR $52,182.50 for investigation and prosecution costs pursuant to Business and Professions Code section 125.3.

The proposed decision was subsequently adopted as the decision of the director of the Department of Consumer Affairs.⁶

6 BAR is in the Department of Consumer Affairs and is under the control and supervision of the director of the department. (Bus. & Prof. Code, § 9882.)

SPX thereafter filed a petition for a writ of mandate in the superior court to vacate the administrative decision.⁷ (Code Civ. Proc., § 1094.5.) After a hearing, the superior court denied the petition and entered judgment for BAR. SPX appeals from the judgment.

7 Besides BAR, SPX named as respondents the acting chief of BAR, Patrick Dorais, the Department of Consumer Affairs, and its director, Kathleen Hamilton. The same parties are named as respondents on appeal. We shall refer to the respondents collectively as "BAR."

DISCUSSION

I. Jurisdiction

SPX contends that "BAR lacked jurisdiction to conduct a decertification proceeding." SPX claims that while "the issuance of a citation is subject to the [Administrative Procedure Act (Gov. Code, § 11340 et seq.)], the initiation of a decertification action is not."

"It is fundamental that an administrative agency has only such power as has been conferred upon it by the [C]onstitution or by statute and an act in excess of the power conferred upon the agency is void. [Citations.] A writ of administrative mandate will lie to correct acts in excess of jurisdiction. (Code Civ. Proc., § 1094.5, subd. (b).)" (BMW of North America, Inc. v. New Motor Vehicle Bd. (1984) 162 Cal.App.3d 980, 994; see American Federation of Labor v. Unemployment Ins. Appeals Bd. (1996) 13 Cal.4th 1017, 1042; Larson v. State Personnel Board (1994) 28 Cal.App.4th 265, 273-274, 280.) An agency may even act in excess of its jurisdiction in the conduct of an administrative proceeding where the procedure followed diverges from that authorized by the governing statutes. (1 Cal. Administrative Mandamus (Cont.Ed.Bar 2003) § 6.25, pp. 167-168; see also City and County of San Francisco v. Padilla (1972) 23 Cal.App.3d 388, 400; National Auto. & Cas. Ins. Co. v. Downey (1950) 98 Cal.App.2d 586, 592.)

The determination of BARs jurisdiction to conduct the decertification proceeding here pursuant to the Administrative Procedure Act requires us to apply and interpret the statutory scheme, which we review de novo on appeal. (See Usher v. County of Monterey (1998) 65 Cal.App.4th 210, 215-216 (Usher); see also Gilliland v. Medical Board (2001) 89 Cal.App.4th 208, 211-212 (Gilliland); Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal.App.4th 655, 667.)

At all relevant times herein, section 44036, former subdivision (f),⁸ authorized the Department of Consumer Affairs (within which BAR is an agency) to decertify a manufacturers test analyzer system and to issue citations. It further specified the Administrative Procedure Act to govern the procedures for the imposition of citations:

8 As noted earlier (see fn. 4, ante), section 44036, subdivision (f), was amended in ways immaterial to this discussion in 2001, which, among other things, resulted in the renumbering of the subparts of subdivision (f). (Stats. 2001, ch. 357, § 4.)

"(1) . . . A manufacturers failure to furnish or install software updates as so specified is cause for the department to decertify the manufacturers test analyzer system or to issue a citation to the manufacturer. The citation shall specify the nature of the violation and may specify a civil penalty not to exceed one thousand dollars ($1,000) for each day the manufacturer fails to furnish or install the specified software updates by the specified period. . . .

"(2) The citations shall be served pursuant to subdivision (c) of Section 11505 of the Government Code. The manufacturer may request a hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. A request for a hearing shall be submitted in writing within 30 days of service of the citation, and shall be delivered to the office of the department in Sacramento. Hearings and related procedures under this subdivision shall be conducted in the same manner as proceedings for adjudication of an accusation under that Chapter 5, except as otherwise specified in this article." (§ 44036, former subd. (f), as amended by Stats. 1997, ch. 803, § 12, italics added.)

Thus, while the statute clearly authorizes the Department of Consumer Affairs to make a decision to decertify equipment, the procedures for decertification, as opposed to citations, are less clear.

Citing section 44036, former subdivision (f), SPX argues that since "the [L]egislature specifically limited application of the [Administrative Procedure Act] to the prosecution of citations, the ALJ was completely without jurisdiction here."

But former subdivision (f)(2) of section 44036 did not necessarily preclude the use of administrative adjudications for decertifications simply by virtue of its reference to "Chapter 5" for the procedures governing the imposition of citations. (Chapter 5 sets forth the procedures for formal administrative hearings.) The statute was merely silent on the procedures for decertifications.

However, the Administrative Procedure Act has two chapters that address administrative adjudications: Chapter 4.5 (Gov. Code, § 11400 et seq.), which contains general provisions for administrative adjudications, and chapter 5 (Gov. Code, § 11500 et seq.), which sets forth the procedures for formal administrative hearings. (Gov. Code, § 11400 ["This chapter and Chapter 5 (commencing with Section 11500) constitute the administrative adjudication provisions of the Administrative Procedure Act"].) Specification of the procedures under chapter 5 for citations did not imply that the administrative adjudication procedures under chapter 4.5 would not apply to other department actions.⁹

9 Chapter 5, the formal hearing procedures, applies where "determined by the statutes relating to that agency" or where the "agency [was] created on or after July 1, 1997, unless the statutes relating to the proceeding provide otherwise." (Gov. Code, § 11501, subds. (a) & (b).) Thus, the formal hearing procedures apply to citations because a statute — Health and Safety Code section 44036, former subdivision (f)(2) — so provided.

And Government Code section 11410.10 is a default provision that provides for the application of the Administrative Procedure Act. It provides that "[t]his chapter [(Chapter 4.5)] applies to a decision by an agency if, under the federal or state Constitution or a federal or state statute, an evidentiary hearing for determination of facts is required for formulation and issuance of the decision." (Gov. Code, § 11410.10.)

Thus, we consider whether the federal or state Constitution requires an evidentiary hearing for the determination of facts to support a decertification.

"Both the United States and the California Constitutions guarantee that government may not deprive an individual of `life, liberty, or property without due process of law. (U.S. Const., 5th & 14th Amends.; Cal. Const., art. I, § 7.)" (Traverso v. People ex rel. Dept. of Transportation (1993) 6 Cal.4th 1152, 1160 (Traverso).) The state must comply with procedural due process before it may deprive its citizens of a property interest in a government benefit in which they have a legitimate claim of entitlement. (People ex rel. Dept. of Transportation v. Lucero (1980) 114 Cal.App.3d 166, 171.) And the threshold inquiry is whether a protected property interest exists. (Ibid.)

The property interests protected by due process take many forms, of course, and include intangible interests that a person has acquired.¹⁰ (See Board of Regents v. Roth (1972) 408 U.S. 564, 576-577 [33 L.Ed.2d 548, 560-561]; Skelly v. State Personnel Bd. (1975) 15 Cal.3d 194, 206-208 (Skelly); People ex rel. Dept. of Transportation v. Lucero, supra, 114 Cal.App.3d at pp. 171-172.) But when a person has a legally enforceable right to receive a government benefit bestowed under state law (provided certain facts exist), that right is a property interest protected by due process. (People ex rel. Dept. of Transportation v. Lucero, supra, at p. 172.)

10 "A corporation is a `person within the meaning of the state and federal constitutional guaranties, of due process, and is generally afforded the same protection, by those provisions, as are individuals, with respect to property rights." (13 pt. 1 Cal.Jur.3d (1989) Constitutional Law, § 275, p. 691.)

California courts have found that permits or similar authorizations are property interests entitled to procedural due process. In Traverso, for instance, the California Supreme Court found that an advertising billboard, subject to a state statute permitting the state Department of Transportation to revoke the permit or license therefor and remove (or destroy) the billboard on 10 days written notice, was a protectible property interest which could not be denied without a hearing: "The value of a billboard, and thus its potential for achieving protected property status, derives primarily from its use as an advertising medium. It is uncontradicted that a single billboard can generate several thousand dollars per month in advertising revenues." (Traverso, supra, 6 Cal.4th at p. 1161, italics added.)

Similarly, in Alta-Dena Dairy v. County of San Diego (1969) 271 Cal.App.2d 66, the Court of Appeal concluded that a businesss right to distribute certified raw milk products was protected by due process, where a state statute authorized a local health officer to prohibit the sale of milk where good cause existed to believe it was contaminated. (Id. at p. 71.) The court said: "Where, as here, the order of an administrative officer adversely affects a valuable and existing property right, where it is made without notice or hearing under a regulation which makes no provision for hearing or administrative review, the fundamental principles of due process come into play." (Id. at p. 77, italics added; see also Mohilef v. Janovici (1996) 51 Cal.App.4th 267, 285 [nuisance abatement proceeding that prohibited ranch owner from keeping ostriches and emus owned as part of commercial ventures implicated a protected property interest].)

In this case, SPXs BAR-97 certification is a valuable and existing right. Section 44036 specifies that certification is a prerequisite to the sale and use of a test analyzer system. SPX qualified for and received that certification after a significant investment. Moreover, each unit sells for $30,000 to $40,000, and approximately 1,500 smog check stations use SPXs BAR-97 equipment, which constitutes more than 25 percent of the market. The continuation of this certification has additional value, beyond additional sales, because SPX can charge for software updates (over and above the deferred items that SPX agreed to provide for free). Indeed, SPX estimated that the potential revenue from installation of the Addendum 7 software was $1.7 million. Finally, section 44036, former subdivision (f)(1), provided that the "failure to furnish or install software updates" constituted "cause" for decertification of the manufacturers test analyzer system, suggesting that a manufacturer could not be decertified at will. Thus, SPXs statutory right to continued certification was a valuable government benefit which SPX could enforce and which required compliance with procedural due process before it could be withdrawn. (See Skelly, supra, 15 Cal.3d at p. 207.)

Although the certification document here stated that it would expire on July 1, 1998, "when the deferred items in the BAR-97 Specifications are approved and installed," this date was never treated as an actual expiration date. BAR has added to and revised the BAR-97 specifications and extended the deadline for compliance. And BAR has not taken the position on appeal that the BAR-97 certification of SPXs system had expired and that decertification proceedings were not necessary.

Having established that SPX has a protectible interest in the continued certification of its BAR-97 system, the question remains whether due process requires an "evidentiary hearing for determination of facts" within the meaning of Government Code section 11410.10, before decertification may be ordered, thereby triggering the application of chapter 4.5 of the Administrative Procedure Act.¹¹ (See Traverso, supra, 6 Cal.4th at p. 1163.)

11 The Law Revision Commission comments to Government Code section 11410.10 describe the requisite "evidentiary hearing" that triggers the application of the Administrative Procedure Act as the same as that which triggers an administrative mandamus proceeding under Code of Civil Procedure section 1094.5, subdivision (a), which applies where the agency has issued a final decision "`as the result of a proceeding in which by law a hearing is required to be given, evidence is required to be taken, and discretion in the determination of facts is vested in the [agency]." (Cal. Law Revision Com. com., 32C Wests Ann. Gov. Code (2003 supp.) foll. § 11410.10, pp. 150-151.)

"Procedural due process is a flexible concept that does not establish universally applicable procedures for resolution of all types of issues. The process which is due may depend upon a variety of factors, including the nature of the interest involved, the nature of the proceeding and the possible burden on that proceeding." (Sommerfield v. Helmick (1997) 57 Cal.App.4th 315, 320; see Machado v. State Water Resources Control Bd. (2001) 90 Cal.App.4th 720, 725-726 (Machado).)

"Under the California Constitution, the extent to which procedural due process is available depends on a weighing of private and governmental interests involved. [Fn. omitted.] . . . Specifically, determination of the dictates of due process generally requires consideration of four factors: the private interest that will be affected by the individual action; the risk of an erroneous deprivation of this interest through the procedures used and the probable value, if any, of additional or substitute safeguards; the dignitary interest of informing individuals of the nature, grounds and consequences of the action and of enabling them to present their side of the story before a responsible governmental official; and the government interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirements would entail." (Rodriguez v. Department of Real Estate (1996) 51 Cal.App.4th 1289, 1297; accord, Van Atta v. Scott (1980) 27 Cal.3d 424, 434.)

Here, the statutory language of Health and Safety Code section 44036 and the consideration of the private and governmental interests persuade us that an evidentiary hearing is required before the department can decertify a manufacturers test analyzer system. First, the private interest affected by decertification is considerable, as we have explained. (See Golden Day Schools, Inc. v. State Dept. of Education (2000) 83 Cal.App.4th 695, 709.) It encompasses not only the interest of SPX in the certification of equipment achieved only after a great expenditure of resources, but the interest of owners of smog check stations who use the equipment.¹² Second, the risk of an erroneous deprivation of the interest is great, given the complexity of the determination whether SPX violated Health and Safety Code section 44036, former subdivision (f)(1), given, among other things, the revisions to Addendum 7, the changing and expired deadlines, the technical prospects of meeting the specifications, and the stipulated failure of all four manufacturers to meet the final deadline. Third, for the same reasons, SPXs dignitary interest is served by an evidentiary hearing whereby SPX has an effective opportunity to present its side of the story to an ALJ whose professional function is to adjudicate administrative disputes. (Gov. Code, §§ 11370.3, 11502.) And fourth, the Department of Consumer Affairs selected the administrative formal hearing process, indicating that the governments interest was not burdened (and indeed was furthered) by a full evidentiary hearing procedure. Indeed, in assessing what process is due, a reviewing court must give substantial deference to the good faith judgment of the agency in its determination of the procedures that afford fair consideration of a private partys interests. (Machado, supra, 90 Cal.App.4th at p. 726; Mohilef v. Janovici, supra, 51 Cal.App.4th at p. 289.)¹³

12 At the hearing, the former chief of BAR testified that the authority given under section 44036, former subdivision (f)(1), to decertify equipment if a software update deadline was missed was a "nuclear bomb blast. . . . [¶] We recognized that decertification would have enormous impact on the entire program because it would in essence put people out of business who were using that equipment and therefore defeat the whole purpose of the program which is to find cars that are failing and get them fixed."

13 This courts decision in California Radioactive Materials Management Forum v. Department of Health Services (1993) 15 Cal.App.4th 841, 857-858 (Radioactive Materials), disapproved on another ground in Carmel Valley Fire Protection Dist. v. State of California (2001) 25 Cal.4th 287, 305, footnote 5, does not suggest otherwise. There, we declined to imply a requirement of a formal administrative hearing to grant or amend a license for the disposal of low-level radioactive waste. But the applicable statute specified that such a hearing was only required to suspend or revoke a license. The statute required merely a "hearing on the record" at the request of interested parties in a proceeding to grant or amend a license. (Id. at pp. 856-857.) We observed that the Administrative Procedure Act applies only to agencies where its procedures are made applicable by statute. (Radioactive Materials, at p. 857, citing Gov. Code, § 11501, subd. (a).) And this court said: "We cannot imply a requirement of an APA-type adjudicatory hearing for granting or issuing a license. Where the Legislature has carefully employed a term or phrase in one place and has excluded it in another, it should not be implied where excluded." (Radioactive Materials, at p. 857.) Here, however, there was no express exclusion of hearing procedures for decertification (or another procedure specified therefor). Moreover, subsequent to Radioactive Materials, the Legislature enacted the 1995 revision to the Administrative Procedure Act, which included the addition of Government Code section 11410.10, expressly making administrative adjudicatory procedures applicable where an evidentiary hearing was required by constitutional due process or statute. (Stats. 1995, ch. 938, § 21.)

Of course, our conclusion that an evidentiary hearing under the Administrative Procedure Act is required for the formulation and issuance of a decision to decertify does not mean that the formal procedures under chapter 5 must apply. Government Code section 11410.10 "does not specify what type of adjudicative proceeding should be conducted" when an evidentiary hearing is required and the Administrative Procedure Act applies. (Cal. Law Revision Com. com., 32C Wests Ann. Gov. Code (2003 supp.), foll. § 11410.10, p. 151.)

However, an agency may select the administrative adjudicatory procedures to apply, including the formal hearing procedures under chapter 5, where the statutes relating to the agency are silent on the type of administrative adjudicatory procedure to follow. Government Code section 11415.10, subdivision (a), provides: "The governing procedure by which an agency conducts an adjudicative proceeding is determined by the statutes and regulations applicable to that proceeding. If no other governing procedure is provided by statute or regulation, an agency may conduct an adjudicative proceeding under the administrative adjudication provisions of the Administrative Procedure Act."

The Law Revision Commission explains: "The first sentence of subdivision (a) of Section 11415.10 is drawn from Section 11501[,subdivision] (a) (formal hearing procedure applies to agency as determined by statutes relating to agency). The second sentence enables an agency to use the procedures provided in this chapter [(Chapter 4.5)] [(administrative adjudication: general provisions)] and Chapter 5 [(formal hearing procedure)] without further action in a case where there is no other applicable governing procedure." (Cal. Law Revision Com. com., 32C Wests Ann. Gov. Code, supra, foll., § 11415.10, p. 155.)

Accordingly, Health and Safety Code section 44036, former subdivision (f)(2), assures that the formal hearing procedures of chapter 5 apply for citations; Government Code section 11410.10 requires that at least chapter 4.5 of the Administrative Procedure Act applies to the decision to decertify. And given that constitutional due process requires an evidentiary hearing to decertify a test analyzer system, and that no governing procedure was arguably specified in Health and Safety Code section 44036 for doing so, the department was authorized by Government Code section 11415.10 to use the formal administrative hearing procedures under chapter 5 in making that decision. Thus, neither the agency nor the ALJ acted in excess of jurisdiction in the administrative proceeding in this case.¹⁴

14 Further, SPX makes no argument that only the general administrative adjudicatory procedures under Chapter 4.5 should have been used. Its contention is instead that BAR was not authorized to make the decision pursuant to the Administrative Procedure Act.

SPX counters that under section 44036, former subdivision (f)(1), "decertification can be ordered only following trial in a court of law." But nothing in the language of section 44036 suggests (or requires) this course. (Compare Gilliland, supra, 89 Cal.App.4th at pp. 210-211 [interpreting statute authorizing civil penalty against licensee "`in any action brought by the Attorney General" to require a court action by the Attorney General, because the word "action" signifies a civil proceeding].) To the contrary, Government Code section 11410.10 requires application of the general provisions for administrative adjudications to the decertification decision here. And due process does not necessarily require a court action. (7 Witkin, Summary of Cal. Law (9th ed. 1988) Constitutional Law, § 518, p. 715 ["Procedural due process does not require a trial before a court"]; see also 2 pt. 1A Cal.Jur.3d (1999) Administrative Law, § 428, p. 433, fn. 44 ["constitutional requirement of due process is met by a fair hearing before a regularly established administrative agency"]; Estate of Sobie (1939) 30 Cal.App.2d 525, 529 [due process does not entitle person to a hearing before any particular board, tribunal or court].)

Accordingly, there is no basis to interpret section 44036, former subdivision (f), to require BAR or the Department of Consumer Affairs to file a court action, rather than institute an administrative hearing, to decertify a test analyzer system, and neither BAR nor the department lacked jurisdiction to decertify SPXs BAR-97 equipment pursuant to a formal administrative adjudicatory hearing.

II. Standard of Review

We next consider whether the trial court erred by reviewing the departments decertification decision on the basis of the substantial evidence test.¹⁵

15 The trial court stated, "[I]t is clear to me that the standard here is not with this Court, is not one of independent judgment. [¶] This isnt a license or a permit. Its at its core a right that arises from a contractual agreement, an acceptance of a statutory obligation by this company that leaves [sic] this Court to the conclusion, my confidence rating is high, that it is at its core a decision for me whether or not there is substantial evidence to support the ALJs decision as ultimately adopted with regard to this issue of whether or not there was impossibility of performance."

SPX contends: "The standard applied by the superior court was wrong. SPXs BAR-97 certification is a license to do business and, as such, constitutes a fundamental vested right. Because the loss of a fundamental vested right implicates due process, a trial court reviewing an administrative decision regarding those rights is required to conduct a full and independent review of the evidence."

Under Code of Civil Procedure section 1094.5, for purposes of reviewing the validity of a final administrative decision, the trial courts inquiry extends to the questions "whether the respondent has proceeded without, or in excess of jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of discretion. Abuse of discretion is established if . . . the order or decision is not supported by the findings, or the findings are not supported by the evidence." (Code Civ. Proc., § 1094.5, subd. (b).)

The standard of review comes into play on the question of prejudicial abuse of discretion: "Where it is claimed that the findings are not supported by the evidence, in cases in which the court is authorized by law to exercise its independent judgment on the evidence, abuse of discretion is established if the court determines that the findings are not supported by the weight of the evidence. In all other cases, abuse of discretion is established if the court determines that the findings are not supported by substantial evidence in light of the whole record." (Code Civ. Proc., § 1094.5, subd. (c).)

However, "[t]he Legislature left to the courts the determination of which cases merit independent judgment review and which require only substantial evidence review in administrative mandamus proceedings in the superior court." (San Benito Foods v. Veneman (1996) 50 Cal.App.4th 1889, 1895 (San Benito Foods).)

Under the case law, "[i]f an administrative decision substantially affects a fundamental vested right, the trial court must exercise its independent judgment on the evidence and find an abuse of discretion if the findings are not supported by the weight of the evidence." (Goat Hill, supra, 6 Cal.App.4th at pp. 1525-1526.) "By carefully scrutinizing administrative decisions which substantially affect vested, fundamental rights, the courts of California have undertaken to protect such rights, and particularly the right to practice ones trade or profession, from untoward intrusions by the massive apparatus of government." (Bixby v. Pierno, supra, 4 Cal.3d at p. 143, fn. omitted.)

Whether a fundamental vested right is involved is determined on a case-by-case basis. (Bixby v. Pierno, supra, 4 Cal.3d at p. 144.) A right may be deemed fundamental on either or both of two bases: "(1) the character and quality of its economic aspect; (2) the character and quality of its human aspect." (Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770, 780.) Although in analyzing the fundamental nature of a right, our high court has manifested less sensitivity to the preservation of purely economic privileges, it has nonetheless cautioned that "[t]his does not mean . . . that rights whose most visible dimension is an economic one will for that reason remain in all cases something less than `fundamental . . . ." (Id. at p. 780, fn. 6.) Ultimately, "`"[i]n deciding whether a right is `fundamental and `vested, the issue in each case is whether the `"affected right is deemed to be of sufficient significance to preclude its extinction or abridgment by a body lacking judicial power." [Citation.]" [Citation.]" (Cadiz Land Co. v. Rail Cycle (2000) 83 Cal.App.4th 74, 111 (Cadiz); accord, Bixby v. Pierno, supra, 4 Cal.3d at p. 144; Bauer v. City of San Diego (1999) 75 Cal.App.4th 1281, 1295 (Bauer); Goat Hill, supra, 6 Cal.App.4th at p. 1526.)

We conclude that SPXs certification, which embodies the valuable right of selling BAR-97 equipment in various urban areas and its updates, is of sufficient significance to preclude its revocation solely by a body lacking judicial power.

Courts have recognized that fundamental vested rights include "the right to continue operating an established business in which [a person] has made a substantial investment." (Goat Hill, supra, 6 Cal.App.4th at p. 1529; Cadiz, supra, 83 Cal.App.4th at p. 111 [the independent judgment test "typically applies to classic vested rights, such as the right to continued operation of ones business"]; see also Bauer, supra, 75 Cal.App.4th at p. 1295; Beverly Hills Fed. S. & L. Assn. v. Superior Court (1968) 259 Cal.App.2d 306, 316-317.)

Courts have likewise determined that the continuation of a license or permit necessary to do business is a fundamental vested right, whose revocation or suspension must be reviewed on mandamus by a court exercising its independent judgment. (See, e.g., Bauer, supra, 75 Cal.App.4th at p. 1295 [conditional use permit for liquor store operation]; San Benito Foods, supra, 50 Cal.App.4th at p. 1897 [food processors license];¹⁶ Goat Hill, supra, 6 Cal.App.4th at pp. 1530-1531 [renewal of conditional use permit for tavern]; Almaden-Santa Clara Vineyards v. Paul (1966) 239 Cal.App.2d 860, 865-866 [farm products processors license].)

16 The ALJ in this case likened SPXs BAR-97 certification to the food processors license in San Benito Foods.

While the manufacturers are not themselves licensed, certification of their test analyzer system is analogous to a license to do business, because it is required to engage in the business of selling, servicing, and updating the particular smog check equipment. The dictionary defines license as "a permission granted by competent authority to engage in a business or occupation or in an activity otherwise unlawful." (Merriam-Websters Collegiate Dict. (10th ed. 2001) p. 669; cf. Bus. & Prof. Code, § 23.7 [defining license to mean a "license, certificate, registration, or other means to engage in a business or profession" regulated by the code].)

A BAR-97 certificate comes within such a definition of a license. Without certification, SPX cannot sell its equipment; it cannot be used; and SPX, as a manufacturer of such equipment, is out of this line of business. (§ 44036, subd. (b).) In short, continued certification is absolutely necessary to the continued operation of SPXs business of providing smog check equipment in those urban areas where BAR-97 equipment is required.

Further, SPX had to make a substantial investment to obtain the license, suggesting that deprivation would have a significant impact: SPX expended 20,000 hours of engineering time; and it devoted over four years in obtaining the initial BAR-97 certification, which involved providing input on the specification process, building a prototype unit, and conducting extensive testing. And the statutory scheme required "cause" in order to decertify (§ 44036, former subd.(f)), suggesting that certification could not be freely withdrawn.

Moreover, unlike cases applying the substantial evidence test for governmental agency decisions that make the cost of business more onerous, such as the denial of an owners application for a rent increase (San Marcos Mobilehome Park Owners Assn. v. City of San Marcos (1987) 192 Cal.App.3d 1492) or the decision to require gas stations to install gasoline vapor recovery systems (Mobil Oil Corp. v. Superior Court (1976) 59 Cal.App.3d 293), SPXs line of business was subject to being shut down by a decertification decision.

Finally, SPXs right was vested because SPX already possessed it. "[I]n determining whether the right is sufficiently basic and fundamental to justify independent judgment review, the courts have considered the degree to which that right is `vested, that is, already possessed by the individual. [Citation.] . . . Once the agency has initially exercised its expertise and determined that an individual fulfills the requirements to practice his profession, the agencys subsequent revocation of the license calls for an independent judgment review of the facts underlying any such administrative decision." (Bixby v. Pierno, supra, 4 Cal.3d at p. 146.)

We conclude that SPX had a fundamental vested right to the continued certification of BAR-97 equipment.

BAR raises a number of arguments against application of the independent judgment test, but we find them unpersuasive.

First, BAR claims that a line of cases applying the substantial evidence test to determinations of the New Motor Vehicle Board regarding disputes involving the termination or modification of new motor vehicle franchises are analogous. (See, e.g., Duarte & Witting, Inc. v. New Motor Vehicle Bd. (2002) 104 Cal.App.4th 626, 632; Kawasaki Motors Corp. v. Superior Court (2000) 85 Cal.App.4th 200, 204 (Kawasaki); Automotive Management Group, Inc. v. New Motor Vehicle Bd. (1993) 20 Cal.App.4th 1002, 1009-1010; British Motor Car Distributors, Ltd. v. New Motor Vehicle Bd. (1987) 194 Cal.App.3d 81, 90.)

We disagree. In these cases, the administrative decisions alone did not "substantially affect" a fundamental vested right, which would trigger the independent judgment test (Goat Hill, supra, 6 Cal.App.4th at pp. 1525-1526), because the governmental agency was not terminating or modifying the franchise. Rather, a private party — the franchisor — was terminating or modifying the franchisees right. The governmental agency only permitted the franchisor to so modify or terminate the franchise. But the governmental agency itself was not impairing the franchisees economic interest. Conversely, where the decision of the governmental agency restrained the franchisor from terminating or modifying the franchise, the decision did not infringe (but promoted) the franchisees rights and merely impacted the franchisors right to withdraw from the contractual relationship, which withdrawal was not deemed a fundamental right. In short, the New Motor Vehicle Board adjudicated private rights; it did not grant or revoke rights. Rather, these cases "deal[] with regulatory interference with contractual rights" (Kawasaki, supra, 85 Cal.App.4th at p. 204), not the governments right to deprive a party of a license.

Furthermore, these cited New Motor Vehicle Board decisions (e.g., Duarte & Witting, Inc. v. New Motor Vehicle Bd., supra, 104 Cal.App.4th at p. 632) largely follow, without analysis, earlier cases, which themselves were based on the erroneous premise that "the preservation of purely economic interests does not affect the fundamental vested rights of the petitioner." (British Motor Car Distributors, Ltd. v. New Motor Vehicle Bd., supra, 194 Cal.App.3d at p. 90; accord, Automotive Management Group, Inc. v. New Motor Vehicle Bd., supra, 20 Cal.App.4th at pp. 1009-1010; Champion Motorcycles, Inc. v. New Motor Vehicle Bd. (1988) 200 Cal.App.3d 819, 824.) As we have noted, the California Supreme Court has now ruled that "rights whose most visible dimension is the economic one" do not necessarily "remain in all cases something less than `fundamental . . . ." (Interstate Brands v. Unemployment Ins. Appeals Bd., supra, 26 Cal.3d at p. 780, fn. 6.) Thus, these cases are not only distinguishable, but are based on a questionable rationale, which makes them unpersuasive for our purposes here.

BAR next counters that SPX is "a diverse multi-billion dollar, multi-national corporation with numerous divisions, and is a Fortune 500 company. It is traded on the New York and Pacific Stock Exchanges. Californias BAR-97 certification affects one system, in one state, manufactured by one division of [SPX]. [Fn. omitted.] It can hardly be said that the certification represents a fundamental right to [SPX] under any analysis currently existing in California law." BAR also points out that SPX continues to retain its BAR-90 certification and therefore that the decertification does not put SPX entirely out of business in California.

But we disagree that an administrative action must extinguish a company before the right to continue an existing business can be deemed a fundamental vested right. We see no principled basis for concluding that the fundamental vested nature of the right to continue an established business, recognized in the Goat Hill line of cases, cannot arise from a significant and valuable line of business into which an entity has invested extensive resources. Otherwise, what constitutes an established business would be artificially framed by whether a separate corporate structure was created for the particular product line.

Moreover, BARs position that the right to continue manufacturing a product line cannot be considered a fundamental vested right is unlikely to encourage the private commitment of resources necessary to produce equipment as complex as a certified BAR-97 system. Only four manufacturers make certified BAR-97 equipment. The elimination of one manufacturer by an administrative process that lacks independent judicial review does not further the goals of a state program that is dependent on a public-private partnership and whose purpose, in the words of former BAR Chief Keller, is to "find cars that are failing and get them fixed." Rather, such an administrative process could discourage private-sector participation in the program.¹⁷

17 Kenneth Martin Keller, BAR chief from 1995 to 1999, testified that section 44036 "never envisioned that the state itself would be in the business of designing, manufacturing and distributing emission control equipment. The statute always envisioned that this would be done in partnership with private sector interests."

Next, BAR argues that the analogy between a license and BAR certification is inapposite, because "a license is something that generally attaches to a person or an entity, which allows or authorizes the holder to pursue some occupation or carry on some business," while "certification is attached to a machine and the attendant software."

This distinction is similarly formalistic. Only SPX makes and sells its BAR-97 system, and it cannot continue to engage in the business of selling this system without certification. As long as the investment in this line of business is significant, we do not see how the right to carry on such a line of business can be deemed lesser in nature than a license that attaches to a person to carry on a business. Indeed, even BARs pleading in the administrative action reflects the conceptual difficulty of distinguishing between certification of a manufacturer and the certification of the manufacturers equipment. BARs petition for decertification did not merely refer to certification of the equipment; it alleged that "SPX is subject to decertification," requested an order "[d]ecertifying SPX/ATEG Corporation as a provider of BAR-97 Emissions systems in the State of California," and prayed to "[d]ecertify[] SPX/ATEG Corporation from providing future emissions systems in the State of California." (Italics added.) Thus, BARs pleading in the administrative proceeding makes no distinction between certification of SPX and its BAR-97 system.

BAR next argues that "the right of [SPX] arises from California law and the Manufacturer Assurance Agreement, a contractual agreement" and accordingly contends that this right is neither fundamental nor vested. But we do not see how the fact that SPXs right arises from both statute and contract makes it less than a fundamental vested one. Again, we look to the character of the right. A right bestowed by the government on the basis of statute, and confirmed by contract, which right entailed a significant investment of resources to establish, qualifies as a fundamental vested right. (E.g., Goat Hill, supra, 6 Cal.App.4th at p. 1529; Cadiz, supra, 83 Cal.App.4th at p. 111.)

Nor was the certification a mere contract right based on the Manufacturer Assurance Agreement. Indeed, the Manufacturer Assurance Agreement is neither mentioned in BARs petition to decertify nor cited as a legal basis for decertification in the ALJs decision adopted by the Department of Consumer Affairs. Instead, the Manufacturer Assurance Agreement functioned as a supplement to section 44036 so as to clarify and specify what needed to be done by way of software updates mandated by the statute.¹⁸ In fact, a review of the agreement does not disclose any separate rights accruing to SPX under the agreement. Rather, it specifies requirements for BAR-97 systems that parallel, and expressly incorporate, section 44036 requirements, including the statutory deadline of six months to furnish and install software updates. (§ 44036, subd. (b) & former subd. (f).) SPXs right to continued certification of its BAR-97 system lies in section 44036, not in the Manufacturer Assurance Agreement.

18 BARs chief of engineering research testified that the commitment in the Manufacturer Assurance Agreement to provide additional items came about because "we probably had some past experience where when we had outstanding items or problems, they werent always complied with. There might have been a lack of understanding between ourselves and the manufacturers that could have contributed to that. [¶] We wanted to make sure that we got those conditions down so that there was some clarity as to what our expectations were from SPX, and if applicable, a timetable in which those items would be taken care of in the future."

BAR next argues that "BAR-97 certification is not a vested right" because "the certification is made so contingent on the preconditions of the approval of updates, and completion of the deferred items as contemplated by the certification itself, the Manufacturer[] Assurance Agreement and California law, that the completion of each update creates what amounts to a new certification." Thus, BAR argues, "the disciplinary action below is functionally more like a denial of a new certification (or a granting of one with conditions) than it is like a revocation of an existing and `vested certification."

BARs argument largely turns on whether each update amounts to a new certification. If each update is a new application, the distinction between the denial of the application and the revocation of an existing permit could be invoked. Denial of an application for a license or permit is generally reviewed under the substantial evidence standard, because a "person who merely applies for a license or permit to engage in a profession, trade or other regulated activity has no vested right." (8 Witkin, Cal. Procedure (4th ed. 1997) Extraordinary Writs, § 292, pp. 1095-1096, and cases cited therein.) But the right becomes vested once possessed by the party. (Bixby v. Pierno, supra, 4 Cal.3d at p. 146.)

Here, the BAR CERTIFICATION of BAR-97, issued in February 1998, states that SPX is granted BAR certification of its system based on tests in compliance with the provisions of section 44036 and that "BAR Certification is the final certification issued to a complete EIS [(Emissions Inspection System)] that has been found to be in full compliance with the BAR-97 Specification."

Thus, not only does BARs certification belie BARs argument, but its claim that "completion of each update creates what amounts to a new certification" would turn every certification of smog check equipment into an indefinite, rolling application process, because section 44036, subdivision (f), contemplates software updates for certified equipment.

However, the terms of the statute do not require recertification of the test analyzer systems already certified following each update; instead, the failure to furnish or install the software updates within the specified six-month period are grounds for decertification. (§ 44036, former subd. (f)(1).) As noted by the court in Goat Hill, "Interference with the right to continue an established business is far more serious than the interference a property owner experiences when denied a conditional use permit in the first instance." (Goat Hill, supra, 6 Cal.App.4th at p. 1529.) The Goat Hill court therefore rejected the contention that the expiration of the conditional use permit there meant that the business owner had no fundamental vested right to continue the business. (Ibid.) Likewise, we conclude that the obligation to provide updates does not turn a manufacturer of certified equipment into a perennial applicant for certification.

Finally, citing Kawasaki, BAR distinguishes Goat Hill, because that case "involved a citys refusal to renew a conditional use permit," whereas, here, "we are dealing with regulatory interference with contractual rights." (Kawasaki, supra, 85 Cal.App.4th at p. 204.)

However, as we have explained, SPXs right to continued certification of its BAR-97 system is based on statute — section 44036, subdivision (f) — not contract. Further, the decertification here is more like the revocation of a conditional use permit than a mere regulatory interference with private rights: As mentioned in response to an earlier argument by BAR, a private party has not certified or decertified SPXs BAR-97 system; a state agency did so pursuant to statute. It is the state agency that is withdrawing the privilege granted by the agency. Therefore, the decertification is not a mere regulation of contractual rights, but the revocation of a statutory right.

Accordingly, we conclude that the nature of the right deprived by decertification is a fundamental vested right that requires application of the independent judgment test.

And since the trial court expressly stated that it was instead employing the substantial evidence test, which it indicated was critical to its determination that SPX had not established an impossibility defense,¹⁹ it erred.

19 After concluding that the substantial evidence test applied, the trial court expressly referred to it three times in rejecting SPXs impossibility defense: "But there is substantial evidence here to support [the] failure of substantial effort, resources and commitment by SPX at key time frames during the development process. There is substantial evidence to support that there was a failure particularly at that point in time that the [ALJ] emphasized . . . after the last extension had been made to July 1 of 2000, to assert impossibility of performance. [¶] And there are proper inferences that can arise therefrom. You look at the record as a whole, there is substantial evidence to support the decision that had the resource commitment been made with a full effort that the project could have been completed in the time frame as originally envisaged." (Italics added.)

"The trial courts failure to apply the appropriate standard of review precludes meaningful review of the merits of this appeal. `This is so because on appeal from a judgment in a case where the trial court is required to exercise its independent judgment, our review of the record is limited to a determination whether substantial evidence supports the trial courts conclusions . . . . It follows that where the trial court has failed to perform its duty, we are unable to perform ours . . . ." (Mardesich v. California Youthful Offender Parole Bd. (1999) 69 Cal.App.4th 1361, 1370; see also Fukuda v. City of Angels (1999) 20 Cal.4th 805, 824.) Reversal is accordingly required. (San Benito Foods, supra, 50 Cal.App.4th at p. 1897; Webster v. Trustees of Cal. State University (1993) 19 Cal.App.4th 1456, 1462-1463.)²⁰

20 For this reason, we do not address SPXs contentions as to whether the weight of the evidence supported the ALJs findings which rejected SPXs defenses that it was impossible to timely develop Addendum 7, that the application of the six-month deadline was arbitrary and capricious, and that decertification was barred by waiver, laches, and estoppel. On remand, the trial court will have the opportunity to review the evidence on these matters applying the proper standard.

III. Discovery

For the benefit of the trial court on remand,²¹ we address SPXs contention that the ALJ rendered the proceedings procedurally unfair by barring SPX from (1) "obtaining discovery or eliciting testimony about the other manufacturers in support of its impossibility defense" and (2) "obtaining any evidence regarding the BARs working law and its response (or lack thereof) to the other manufacturers failure to meet the Addendum 7 deadline."²²

21 An administrative mandamus hearing is a trial. (2 Cal. Administrative Mandamus, supra, § 14.1, pp. 510-511; Code Civ. Proc., § 1094.5, subd. (a).) Our reversal of the trial courts judgment requires a new trial. Under Code of Civil Procedure section 43, where a new trial is granted, the appellate court "shall pass upon and determine all the questions of law involved in the case, presented upon such appeal, and necessary to the final determination of the case." (See also 9 Witkin, Cal. Procedure, supra, Appeal, § 697, p. 733.)

22 SPX also complains that the ALJ ruled that SPX could not question BAR witnesses about (i) other manufacturers inability to comply with Addendum 7 or (ii) BARs decision to petition to decertify SPXs BAR-97 system. But SPX offers no argument or authority on appeal in support of any contention that this was error. "`This court is not required to discuss or consider points which are not argued or which are not supported by citation to authorities or the record." (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) Since SPX confines its analysis to the denial of its petition to take depositions of other manufacturers engineers, we shall do so as well.

A. Standard of Review Applicable to Discovery Rulings

In cases under the Administrative Procedure Act, as here, discovery is governed by statute. (Gov. Code, §§ 11507.6-11507.7.) The denial of discovery permitted by statute triggers an inquiry whether there was a fair trial and whether there was a prejudicial abuse of discretion — two of the grounds for review in an administrative mandamus proceeding. (Code Civ. Proc., § 1094.5, subd.(b); 1 Cal. Administrative Mandamus, supra, § 6.44, pp. 183-184.)

Where procedural issues are reviewed in administrative mandamus proceedings, "foundational factual findings must be sustained if supported by substantial evidence; however, the ultimate determination of whether the administrative proceedings were fundamentally fair is a question of law to be decided on appeal." (Rosenblit v. Superior Court (1991) 231 Cal.App.3d 1434, 1443.)

Courts have specifically used this standard in connection with judicial review of the denial of discovery in administrative adjudications (e.g., Anserv Ins. Services, Inc. v. Kelso (2000) 83 Cal.App.4th 197, 207-209) or in connection with the refusal of the right to present certain evidence (e.g., Southern Cal. Underground Contractors, Inc. v. City of San Diego (2003) 108 Cal.App.4th 533, 542).

While "[i]t may as easily be said that the substantial evidence standard is more suitable in this context, based on the fact intensive nature of the trial courts findings on the procedure used and the fairness of it," "[i]n an abundance of caution, we [shall] use the more protective de novo standard, where licensing rights are involved." (Anserv Ins. Services, Inc. v. Kelso, supra, 83 Cal.App.4th at p. 205.)

B. Prehearing Depositions

Pursuant to Government Code section 11511, SPX filed a petition with the ALJ to take the depositions of six out-of-state witnesses, four of whom were engineers employed by two other manufacturers of certified BAR-97 systems — SnapOn Diagnostics and Environmental Systems Product Holdings, Inc. (ESP) — and two of whom were identified only as the persons most knowledgeable at these companies.

SPX stated in its petition that the testimony of each named witness was material, because the identified employees had knowledge of Addendum 7 "specifications" and of "technical issues relating to Addendum 7." SPX also claimed that the testimony of the persons most knowledgeable at SnapOn and ESP was material because of their knowledge of their companies compliance with Addendum 7. And SPX declared that the requested testimony was "highly relevant" to SPXs defense that Addendum 7 was a complete overhaul of the system, not a periodic software update, and that BAR had expanded and changed the software requirements beyond the scope of the original update. While the petition did not refer to the defense that compliance with Addendum 7 was "impossible," that defense was suggested by SPXs counsel at the hearing before the ALJ.

At the hearing, counsel for BAR stipulated that none of the other manufacturers had complied with Addendum 7. The ALJ thereafter denied SPXs petition, ruling that the testimony of SPXs competitors was not relevant to SPXs compliance with its statutory obligations and that it would be unduly time-consuming and would unnecessarily confuse the issues within the meaning of Evidence Code section 352.²³

23 Evidence Code section 352 provides: "The court in its discretion may exclude evidence if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury."
The rules of evidence applicable to administrative hearings, however, are not found in the Evidence Code, but in the Government Code. Government Code section 11513, subdivision (c), provides: "The hearing need not be conducted according to technical rules relating to evidence and witnesses, except as hereafter provided. Any relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of the evidence over objection in civil actions."
Nonetheless, Government Code section 11513, subdivision (f), incorporates the provisions of Evidence Code section 352 in part: "The presiding officer has discretion to exclude evidence if its probative value is substantially outweighed by the probability that its admission will necessitate undue consumption of time."
The Law Revision Commission comment for this section states: "The `irrelevant and unduly repetitious standard formerly found in Section 11513 is replaced in subdivision (f) by the general standard of Evidence Code Section 352. The basic standard of admissibility of relevant evidence is stated in subdivision (c); nothing in subdivision (f) authorizes admission of irrelevant evidence." (Law Revision Com. com., 32C Wests Ann. Gov. Code, supra, foll. § 11513, p. 225.)

Reviewing the ALJs decision, the trial court ruled that the ALJ did not abuse its discretion in denying the petition and that the denial was also justified under an Evidence Code section 352 analysis.

We conclude that the ALJs ruling did not deny SPX a fair proceeding or constitute a prejudicial abuse of discretion, that is, a failure to proceed in the manner required by law, for three reasons: Deposition discovery is not permitted under the Administrative Procedure Act; SPX did not satisfy the requirements of Government Code section 11511 for purposes of taking depositions to present the testimony of unavailable witnesses at the hearing; and the probative value of the testimony was substantially outweighed by the undue consumption of time necessary to present it.

First, the Administrative Procedure Act does not authorize deposition discovery. Depositions in administrative proceedings are governed by Government Code section 11511.²⁴ Government Code section 11511 permits the taking of depositions, but limits their availability to witnesses whose testimony is material and who are unable or cannot be compelled to attend. (See Kenneally v. Medical Board (1994) 27 Cal.App.4th 489, 499 (Kenneally).)

24 Section 11511 provides in relevant part: "On verified petition of any party, an administrative law judge or, if an administrative law judge has not been appointed, an agency may order that the testimony of any material witness residing within or without the state be taken by deposition in the manner prescribed by law for depositions in civil actions . . . . The petition shall set forth the nature of the pending proceeding; the name and address of the witness whose testimony is desired; a showing of the materiality of the testimony; a showing that the witness will be unable or cannot be compelled to attend; and shall request an order requiring the witness to appear and testify before an officer named in the petition for that purpose. . . ." (Italics added.)

But depositions under Government Code section 11511 are "not for the purpose of discovery, but to secure evidence for use at the hearing." (Shively v. Stewart (1966) 65 Cal.2d 475, 479; see Romeo v. Hern (1969) 276 Cal.App.2d 787, 790; Cal. Administrative Hearing Practice (Cont.Ed.Bar 2d ed. 2002) § 5.17, p. 228 (rev. 4/03).)

Instead, the exclusive right to discovery under the Administrative Procedure Act is governed by Government Code section 11507.6, and that section makes no provision for deposition discovery. Specifically, Government Code section 11507.5 provides that "[t]he provisions of Section 11507.6 provide the exclusive right to and method of discovery as to any proceeding governed by this chapter" (italics added), and Government Code section 11507.6 does not authorize deposition discovery. Nor is there a separate common law or constitutional right to take prehearing depositions. (See Cimarusti v. Superior Court (2000) 79 Cal.App.4th 799; Mohilef v. Janovici, supra, 51 Cal.App.4th at p. 301; Kenneally, supra, 27 Cal.App.4th at p. 500; Blinder, Robinson & Co. v. Tom (1986) 181 Cal.App.3d 283, 289 (Blinder); Stevenson v. State Bd. of Medical Examiners (1970) 10 Cal.App.3d 433, 440 (Stevenson).)

Accordingly, SPX had no right to take the depositions of two witnesses described only as the "person[s] most knowledgeable" on a subject. This concept is borrowed from the Civil Discovery Act of 1986, Code of Civil Procedure section 2016 et seq. Section 2025, subdivision (d), of the Code of Civil Procedure permits a party to name an entity as the deponent, describe the matters on which the examination is requested, and require the entity to designate the person "most qualified" to testify. The purpose of the provision is to eliminate having to find out who in the organization has the information sought. (Weil & Brown, 2 Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2002) ¶ 8:474, p. 8E-19 (rev. #1 2003); Maldonado v. Superior Court (2002) 94 Cal.App.4th 1390, 1396.) But unlike Code of Civil Procedure section 2025, subdivision (d), Government Code section 11511 requires in all cases that the party petitioning to take depositions set forth "the name and address of the witness whose testimony is desired." The right to take the deposition of the most knowledgeable person employed at an entity is not permitted by the language of Government Code section 11511, and is a discovery technique, not merely a basis for preserving testimony.

Likewise, SPX sought the depositions of four named individuals, but the record suggests that they were for discovery, not the preservation of testimony of unavailable witnesses. First, SPX only noted that their testimony would be relevant to certain subjects, reflecting a discovery purpose. Second, our impression that these depositions were desired for discovery is bolstered by SPXs characterization of them in its appellate briefs as "requests for discovery." Since deposition discovery is not permitted, the petition was properly denied.

In any event, even if SPX did not seek the depositions of the named individuals for discovery, its request nonetheless failed to satisfy the requirements of Government Code section 11511. To obtain depositions in formal administrative proceedings, a partys petition must set forth "a showing of the materiality of the testimony." (Gov. Code, § 11511.) Since the only purpose of depositions in administrative proceedings is to secure testimony to present at the hearing, an adequate showing should be in the nature of an offer of proof as to the materiality of the testimony. (See Blinder, supra, 181 Cal.App.3d at p. 296.) A "minimal and conclusory showing or offer of proof" to support a claim that the proposed testimony is material to the issues is insufficient. (Ibid.; Stevenson, supra, 10 Cal.App.3d at pp. 437-440.)

SPXs petition presented little by way of an offer of proof or other showing to demonstrate that these witnesses could be expected to give material testimony that should be preserved. The testimony of the named witnesses was described as material principally because they had knowledge of "technical issues" and "specifications" relating to Addendum 7. But this hardly described how the testimony was material to SPXs contentions. Indeed, SPXs description of the materiality of these witnesses testimony, expressed in terms of their knowledge concerning a general subject, indicated that the purpose of the depositions was information-gathering, not the preservation of material testimony.

SPXs petition also asserted that the testimony of all six witnesses would "relate directly to SPXs defense that Addendum 7 is not a periodic software update, as contemplated by section 44036[, former subdivision](f)(1) . . ., but is a comprehensive and complex set of new requirements" and would "relate to the BARs conduct in expanding, and then repeatedly changing, the software requirements . . . ." SPX asserts that this testimony would "relate . . . to SPXs defense" or "relate to the BARs conduct in expanding . . . software requirements . . . ." But this still fails to advise the ALJ of the substance of the testimony. It merely asserts that the testimony will "relate" to a defense or to a subject. Significantly, SPX never alleged the substance of the testimony, such as whether the witnesses would state that meeting the deadline for Addendum 7 was impossible or that Addendum 7 was a comprehensive set of new requirements.

Finally, since the purpose of depositions in an administrative proceeding is not discovery but to obtain testimony to present at trial (Gov. Code, § 11511), it is appropriate to apply Government Code section 11513 to determine the propriety of admitting or excluding such testimony, including the presiding officers discretion "to exclude evidence if its probative value is substantially outweighed by the probability that its admission will necessitate undue consumption of time." (Gov. Code, § 11513, subd. (f).) We reject SPXs objection that the ALJ improperly relied on Evidence Code section 352 (the general standard incorporated in Government Code section 11513, subdivision (f)) "not just to exclude evidence, but to deny discovery of evidence in the first instance." Even assuming that SPX had shown that the testimony would demonstrate that the timely completion of Addendum 7 was either impossible or impractical given the dedication of a reasonable level of resources, the potential of such testimony to consume time during the proceedings was obvious: Each engineer would testify at length on his respective companys efforts regarding Addendum 7 and be subject to cross-examination. The result of this testimony would be mini-hearings to ascertain the experience of other manufacturers with the Addendum 7 specifications, requiring a comparison of the human and financial resources that each manufacturer put into the process.

Thus, we conclude that there was no denial of a fair trial or a prejudicial abuse of discretion in the denial of SPXs petition to take depositions, because (1) the deposition testimony was improperly sought for discovery purposes; (2) the materiality of the testimony was not sufficiently presented in SPXs petition in accordance with Government Code section 11511; and (3) it was not an abuse of discretion to conclude that the probative value of the testimony was substantially outweighed by the unwarranted amount of time necessary to present it. (Gov. Code, § 11511.)

C. Document Discovery

SPX also requested document discovery from BAR. Dissatisfied with BARs response (at least in part), SPX moved to compel the production of documents allowed under Government Code section 11507.6, subdivision (e), which permits discovery of "`[a]ny other writing or thing which is relevant and would be admissible in evidence." The contested documents concerned BARs decision to initiate a decertification proceeding against SPX but not the other manufacturers, including all documents related to other manufacturers compliance with Addendum 7. SPX stated that the documents were discoverable because "they relate to SPXs defense of impossibility."

At the hearing on the motion, SPX cited RLI Ins. Co. Group v. Superior Court (1996) 51 Cal.App.4th 415 (RLI), where the court allowed an insurer discovery of documents setting forth the calculations used by the Department of Insurance to determine rate rollbacks mandated by Proposition 103 for 10 other insurers. (Id. at p. 434.) Since the regulations did not define how this determination was to be made, the court held that the insurer was entitled to discovery of the departments "working law" (i.e., its practices in applying regulations). (Id. at pp. 434-435.) SPX argued that it similarly was entitled to the discovery of BARs "working law" as to how BAR determined which noncompliant manufacturer to decertify, since section 44036 provided no guidance.

The ALJ denied the motion to compel, ruling that the documents were not relevant and would have the effect of confusing the issues and unduly consuming time as set forth in Evidence Code section 352. The ALJ commented that BARs choice concerning which manufacturers to prosecute was a legitimate exercise of prosecutorial discretion. And the ALJ found no merit to the claim that SPX was being singled out for a discriminatory prosecution.

In the mandamus proceeding before the superior court, SPX argued that the writ should issue because the ALJs denial of discovery deprived SPX of due process and a fair trial. The superior court ruled, however, that the ALJ did not abuse his discretion in denying discovery concerning the alleged "working law" or the selective prosecution defense. It also found that denial was justified under an Evidence Code section 352 analysis.

We conclude that there was no denial of the right to a fair trial or a prejudicial abuse of discretion by the ALJs denial of the motion. (Code Civ. Proc., § 1094.5, subd. (b).)

SPX claims on appeal that it was entitled to documents regarding BARs "working law" with respect to the decision to file the petition for decertification against SPX and not the other manufacturers for the following reason: "Since the statute provides no guidance on the circumstances justifying decertification as opposed to citation, and the BAR has not specified standards for or promulgated any regulations articulating the standards it will apply in making such determinations, the BAR is left to develop the standards on a case-by-case basis, creating a body of working law. The BARs working law, in turn, is clearly discoverable."

In SPXs appellate briefs, it supports this point with one case, RLI. But that case is distinguishable. As noted, in RLI, supra, 51 Cal.App.4th at page 434, the insurer sought discovery of "documents setting forth specific calculations from the Department [of Insurance] files on the [rate] rollbacks of 10 insurers" under Proposition 103, which mandated a one-time, 20 percent rollback of insurance rates. But in compelling production of the documents, the appellate court relied heavily on Insurance Code section 1861.08, subdivision (e), which was also part of Proposition 103 and which provides that "`discovery shall be liberally construed" in rate rollback and ratemaking hearings. (RLI, supra, at pp. 433-434.) And the Court of Appeal said: "This statutory mandate requires that doubts as to discoverability should be resolved in favor of ordering disclosure." (Id. at p. 434.) Further, the court found that the particular documents were relevant because the criteria the Department of Insurance applied to reach its rollback determinations were "highly relevant given that the regulations do not define how such determination should be made" (ibid.) and that its "practices in applying its regulations" were relevant (id. at p. 435).

But, here, we are not considering the manner in which BAR applies a statute or regulation, but its prosecutorial discretion to enforce the statute. It is one thing to claim that a regulatory statute is being enforced in different ways based on varying standards. It is another to claim that the agency is improperly exercising prosecutorial discretion in not enforcing a statute. The only basis upon which to contest the exercise of prosecutorial discretion is to claim discriminatory enforcement. (See Murgia v. Municipal Court (1975) 15 Cal.3d 286, 297.) Prosecutorial discretion permits the choice, among possible defendants, whether to prosecute, which to prosecute, and in what order to prosecute, so long as the choice is not based on an unjustifiable standard. (People v. Superior Court (Lyons Buick-Opel-GMC, Inc.) (1977) 70 Cal.App.3d 341, 344 (Lyons).) Here, notwithstanding SPXs contention to the contrary, there was no basis for a claim of discriminatory or selective prosecution.

Discriminatory prosecution is a denial of equal protection to persons who are deliberately singled out for prosecution based upon an unjustifiable standard, such as race, religion, or some other arbitrary classification unrelated to a legitimate law enforcement interest. (See Balayut v. Superior Court (1996) 12 Cal.4th 826, 831-833 (Balayut). The elements of discriminatory prosecution are (1) that the defendant has been deliberately singled out for prosecution on the basis of some invidious criterion, and (2) that the prosecution would not have been pursued but for the discriminatory purpose of the prosecuting authorities. (See id. at p. 832.) When a defendant establishes these elements, the action must be dismissed unless the authorities establish a compelling reason for selective enforcement. (Id. at pp. 831-832.)²⁵

25 While the theory of discriminatory enforcement evolved in connection with criminal prosecutions, it is based on constitutional principles of equal protection and is applicable to the administrative enforcement of noncriminal laws. (See, e.g., Cilderman v. City of Los Angeles (1998) 67 Cal.App.4th 1466, 1470; Overturf v. California Horse Racing Bd. (1978) 86 Cal.App.3d 979, 984-986.)

But there must be "`some evidence" tending to show the existence of the essential elements of the defense — discriminatory effect and discriminatory intent — in order to obtain discovery in aid of such a claim. (United States v. Armstrong (1996) 517 U.S. 456, 468 [134 L.Ed.2d 687, 701] (Armstrong); People v. Superior Court (Baez) (2000) 79 Cal.App.4th 1177, 1189-1190 (Baez).) Such a showing is necessary before obtaining discovery regarding discriminatory prosecution because such a claim invades the special province of the executive branch; the showing is therefore designed to create a significant barrier to litigation of insubstantial claims. (Armstrong, supra, at pp. 463-464 [134 L.Ed.2d at pp. 697-698]; Baez, supra, at p. 1189.)

SPXs prima facie showing is at most some evidence of discriminatory effect — that BAR filed a petition to decertify SPXs system, but not other manufacturers systems. But there is absolutely no evidence of discriminatory intent — that BAR selected SPX on the basis of some unjustifiable standard. (Balayut, supra, 12 Cal.4th at p. 833.) We cannot, as SPX does, simply say "`Why SPX?" and presume that BAR acted on the basis of some invidious criterion. Instead, SPX must provide "`some evidence" that BAR would not have initiated decertification proceedings against SPX but for its membership in a constitutionally protected, or suspect, class, or its exercise of a statutory or constitutional right. (Armstrong, supra, 517 U.S. at p. 464 ; Wayte v. United States (1985) 470 U.S. 598, 608 [84 L.Ed.2d 547, 556].) A showing of discriminatory effect without some additional evidence of discriminatory intent is not enough for SPX to obtain discovery in support of a theory of discriminatory prosecution. (Baez, supra, 79 Cal.App.4th at pp. 1191-1196.) Therefore, SPX was not entitled to the documents regarding BARs decision to seek the decertification of SPXs BAR-97 system in aid of a theory of selective prosecution.²⁶

26 SPX claims that it "introduced tangible evidence of . . . BARs selective enforcement" at the hearing in the form of an internal e-mail from a BAR employee warning that waiving compliance by SnapOn could be admissible against BAR on a theory of selective prosecution. We have reviewed the e-mail and observe that it discusses a possible claim of "selective prosecution" because another manufacturer was noncompliant and BAR had not initiated decertification proceedings against that manufacturer. But the evidence does not indicate any intent to discriminate against SPX on the basis of some unjustifiable standard, such as race or religion. The e-mail merely raises a concern, which reflects caution but is ultimately unfounded. Moreover, this evidence was not submitted with SPXs motion to compel or referred to in it.

We conclude that the ALJ did not abuse his discretion in declining to compel discovery of documents pertaining to BARs decision to pursue decertification of SPXs BAR-97 system but not other manufacturers systems.

IV. Cost Award

We also reject SPXs contention that the costs of investigation and enforcement in the amount of $52,182.50 awarded by the ALJ to BAR were not authorized by Business and Professions Code section 125.3, subdivision (c).²⁷ That section is a catchall statute that authorizes any agency within the Department of Consumer Affairs which issues an order in resolution of a disciplinary proceeding to recover the reasonable costs of investigation and prosecution, if the licensee is found to have violated the licensing act. (Bus. & Prof. Code, § 125.3, subd. (a); Cal. Administrative Hearing Practice, supra, § 7:124, p. 397.)

27 Subdivision (c) of section 125.3 of the Business and Professions Code provides: "A certified copy of the actual costs, or a good faith estimate of costs where actual costs are not available, signed by the entity bringing the proceeding or its designated representative shall be prima facie evidence of reasonable costs of investigation and prosecution of the case. The costs shall include the amount of investigative and enforcement costs up to the date of the hearing, including, but not limited to, charges imposed by the Attorney General."

SPX concedes that this section is applicable to this proceeding and that investigative and enforcement costs may be recovered under that section. We therefore do not address whether the section is applicable to this proceeding. "`This court is not required to discuss or consider points which are not argued . . . ." (Kim v. Sumitomo Bank, supra, 17 Cal.App.4th at p. 979.)

However, SPX contends that the award here included costs incurred after the commencement of the hearing and exceeded sums reasonably incurred. It argues that "[t]o support its cost request, the BAR submitted only a declaration summarizing the total amount of costs allegedly incurred by the DAG [(Deputy Attorney General)] and his legal analyst through August 19, 2001[,] and an unverified summary chart of salary and other expenses for time spent by BAR employees on the case."

We reject these arguments.

First, SPX does not identify which costs were incurred after the hearing commenced. And the submissions from the Attorney Generals office and BAR suggest that the costs awarded were incurred before the hearing. Specifically, the expenses represented by the hours worked by the lawyer and the legal assistant from the Attorney Generals office are expressly declared to have been incurred before the hearing. And we note that the costs attributable to the hours worked by seven BAR employees on the SPX case could not have been simply incurred over the three-day hearing. One BAR employee is reported to have worked 180 hours, and the other six employees hours range between 40 and 150. These hours obviously could not have simply been incurred over the three days of the hearing. Although the document summarizing these costs bears the date of the last day of the three-day hearing, a reasonable inference is that the statement was prepared to summarize activities in advance of the hearing, but submitted at the end of it. In the absence of evidence to the contrary, we must presume that the Attorney Generals office and BAR prepared their statements of costs in accordance with the statute. (See Evid. Code, § 664 [presumption that official duty is regularly performed].) SPX does not point to any such evidence. And error must be affirmatively shown by the appellant. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)

We also reject SPXs objection that the costs were unreasonable because the Attorney Generals declaration and BARs summary lacked detail concerning the date the costs were incurred and the time attributable to each task. Subdivision (c) of section 125.3 of the Business and Professions Code merely provides that a "certified copy of the actual costs, or a good faith estimate . . . where actual costs are not available" shall be prima facie evidence of such costs. The declaration from the Attorney Generals office specified the time expended and the corresponding costs for which BAR would be billed, noting that those costs were less than the total costs that would be charged for services up to the date of the hearing. Similarly, BARs summary reported actual hours worked and the employees actual hourly rates. Admittedly, the declaration from the Attorney Generals office provided some description of the activities performed, while BARs summary did not. But Business and Professions Code section 125.3 does not specify the level of detail required in a certified copy of actual costs.²⁸

28 The ALJ noted that BARs cost summary was certified by its seal. But Business and Professions Code section 125.3, subdivision (c), also requires a statement of costs to be signed by the entity or its designated representative in order to serve as prima facie evidence of the reasonable costs of investigation and enforcement. The declaration from the Attorney Generals office was signed under penalty of perjury by the deputy attorney general who represented BAR at the hearing. Although BARs summary was not signed, SPX did not object below, and does not contend on appeal that BARs statement was insufficient for this reason. Any objection on that basis is therefore waived as the omission could easily have been addressed if timely raised. (In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 117.)

Finally, we note that BAR added employee benefits and overhead percentages to its costs summary, which were more in the nature of estimated costs, but the ALJ denied them, ruling that BAR did not establish that these costs were reasonable.

If, on remand, the trial court, applying the independent judgment test, again determines that the ALJ properly ruled that SPX violated section 44036, former subdivision (f)(1), and was subject to discipline, the ALJs award of costs shall be imposed.

DISPOSITION

The order denying SPXs petition for writ of mandate is reversed. The superior court shall reconsider the petition by applying the independent judgment test in reviewing the ALJs decision. SPX shall recover its costs on appeal. (Cal. Rules of Court, rule 27(a)(1).)

We concur: SCOTLAND, P.J. and RAYE, J.