Caterpillar, Inc. v. Department of Employment Security

304 Ill. App. 3d 492

• Court: Appellate Court of Illinois
• Decided: April 22, 1999
• Docket: 3—97—1022 through 3—97—1027 cons.
• Status: Published

Opinions

JUSTICE BRESLIN

delivered the opinion of the court:

The fundamental issue on appeal is whether striking workers whose employment is terminated by their employer are ineligible for unemployment benefits pursuant to section 604 of the Unemployment Insurance Act (Act) (820 ILCS 405/100 et seq. (West 1996)). We find that section 604 applies to individuals on strike, but does not act to disqualify employees who are discharged for alleged misconduct while on strike. Accordingly, we affirm.

FACTS

The defendants are six striking workers whose employment was terminated by Caterpillar, Inc. (Caterpillar), prior to the resolution of a labor dispute between Caterpillar and its employees for alleged misconduct on the picket line. The strike began in June 1994. In anticipation of the strike, Caterpillar issued a pamphlet entitled “Rules of Conduct for Striking Employees” (rules). The rules disseminated to all employees set forth grounds for discharge based on certain conduct. It was because of alleged violation of these rules that Caterpillar later discharged the defendants.

Since they were involuntarily unemployed, the defendants filed claims for unemployment benefits with the Illinois Department of Employment Security (Department). Caterpillar responded, insisting that the defendants were ineligible to receive benefits under sections 602(A) and 604 of the Act. Pursuant to section 602(A), an individual is ineligible if he has been discharged for the deliberate and willful violation of reasonable company rules governing employee performance on the job. Section 604 disqualifies claimants unemployed due to a labor strike.

At the conclusion of hearings on the matters, a Department claims adjudicator granted each defendant’s request for benefits. After unsuccessfully appealing the decisions to a Department referee ¿nd the Board of Review (Board), Caterpillar filed complaints for administrative review in the circuit court and now appeals to this court, claiming that: (1) the defendants are not eligible for benefits pursuant to section 604 of the Act because they were discharged while on strike; (2) the procedural route taken during administrative review was inappropriate; and (3) defendant Michael Steagall’s determination of eligibility under section 602(A) of the Act was against the manifest weight of the evidence (3—97—1027).

ANALYSIS

I.

Section 604 Eligibility

In general, the purpose of the Act is to alleviate the economic burden of involuntary unemployment on an employee. 820 ILCS 405/100 (West 1996). Upon filing a claim for unemployment benefits, workers are eligible for benefits once they register with the Illinois Job Service. 820 ILCS 405/500(A) (West 1996). However, the legislature has carved out several exceptions to a claimant’s eligibility for benefits under the Act. Section 604 of the Act provides, in part:

“An individual shall be ineligible for benefits for any week with respect to which it is found that his total or partial unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed.” 820 ILCS 405/604 (West 1996).

At the outset, four of the defendants claim that Caterpillar has waived any argument regarding section 604 eligibility because the letters of appeal they received failed to raise the adjudicator’s decision as to section 604 as an issue. While we acknowledge that the appeal letters did not mention a section 604 argument, we note that the issue was fully challenged and argued at every stage of the administrative proceeding. The defendants were well aware of Caterpillar’s position. Thus, in the exercise of our discretion, we find the plaintiffs section 604 contentions have not been waived and are properly before this court. See Ruane v. Amore, 287 Ill. App. 3d 465, 677 N.E.2d 1369 (1997) (although not specifically mentioned in notice of appeal, record indicated that issue was raised below and was integral part of appeal; thus, it was not waived).

Turning now to the merits of the case, the two primary arguments presented by Caterpillar are the same issues it raised before the second district in Caterpillar, Inc. v. Doherty, 299 Ill. App. 3d 338, 701 N.E.2d 1163 (1998). In that case, Caterpillar appealed an identical determination by a claims adjudicator that a discharged employee who was previously on strike was eligible for unemployment benefits. The employee was discharged due to misconduct for threatening a nonstriking worker in violation of Caterpillar’s rules. The court noted that the plain language of section 604 demands that an employee’s unemployment be “due to a stoppage of work which exists because of a labor dispute.” (Emphasis in original.) Doherty, 299 Ill. App. 3d at 343, 701 N.E.2d at 1167. Applying this language to the facts of the case, it found that the defendant was not unemployed due to the labor dispute. No longer could the unemployed claimant return to Caterpillar once the dispute was resolved. Caterpillar’s actions in terminating his employment ended any such expectation. Accordingly, the court held that once an employee was discharged or terminated, he or she was no longer disqualified from receiving benefits under section 604 since the individual was no longer unemployed because of a labor dispute. Doherty, 299 Ill. App. 3d at 345-46, 701 N.E.2d at 1168-69.

We agree with the policy determinations and holdings reached in Doherty. In the instant case, the defendants were initially unemployed due to a labor dispute. Thereafter, they were discharged for alleged misconduct. Upon such discharge, they were no longer unemployed due to a labor dispute. They were unemployed because Caterpillar believed they had willfully violated company rules governing their behavior as employees. Because section 604 applies only to persons who are on strike and not to those who are terminated, the defendants are not barred from eligibility for unemployment benefits by section 604.

Caterpillar insists that if the Board’s decision is allowed to stand, it would operate to encourage misconduct and violence. It contends that striking employees who might otherwise be ineligible for benefits could easily circumvent the statute by engaging in misconduct that would prompt their discharge. However, this argument fails when considering the Act and its exceptions as a whole. As demonstrated by this case, employees discharged for misconduct are ineligible to receive benefits as well. Pursuant to section 602(A), if the evidence establishes that an employee has been properly discharged due to violence or other acts of misconduct, the unemployed individual is disqualified from receiving unemployment benefits. 820 ILCS 405/602(A) (West 1996).

We further disagree with Caterpillar’s broad claim that ineligible workers are disqualified from receiving benefits as long as the strike continues, regardless of discharge, due to the section 604 provision “or was last employed.”

In Bridgestone/Firestone, Inc. u. Aldridge, 179 Ill. 2d 141, 688 N.E.2d 90 (1997), a group of claimants sought unemployment benefits from Bridgestone even though Bridgestone was in the middle of a labor dispute. While on strike, the claimants had obtained interim employment from which they were later discharged. The supreme court focused on the fact that the claimants were no longer unemployed due to a labor dispute where they were last employed. Applying this rationale, it held that as long as the discharged claimants could prove that they procured an interim job in good faith, they should be entitled to receive unemployment benefits chargeable to Bridgestone despite the ongoing labor dispute of which they had been a part. Bridgestone, 179 Ill. 2d at 156, 688 N.E.2d at 97.¹ Accordingly, we find that the defendants are not disqualified from receiving benefits under section 604.

II.

Administrative Procedure

Section 800 of the Act requires:

“Whenever a ‘determination’ of a claims adjudicator involves a decision as to eligibility under Section 604, appeals shall be taken to the Director or his representative designated for such purpose.” 820 ILCS 405/800 (West 1996).

The claims adjudicator made a partial decision of ineligibility under section 604. Consequently, we agree with Caterpillar’s contention that the Department did not follow the proper appellate procedure. However, we find that any procedural error was harmless because section 604 does not apply to striking workers who are discharged in the middle of a strike. See Doherty, 299 Ill. App. 3d at 345-46, 701 N.E.2d at 1168-69.

III.

Defendant Steagall’s Eligibility Under Section 602(A) (3—97—1027)

An administrative agency’s factual findings are held to be prima facie true; therefore, we are limited to determining whether they are against the manifest weight of the evidence. La Salle Partners, Inc. v. Illinois Property Tax Appeal Board, 269 Ill. App. 3d 621, 646 N.E.2d 935 (1995).

While on strike, Steagall was discharged for striking vehicles entering and exiting a Caterpillar facility on June 20, 1995. A witness for Caterpillar testified that he saw Steagall walking in front of vehicles and shaking his fist, but he did not recall whether the plant received any complaints about Steagall’s conduct or whether any vehicles were prevented from entering the plant. Steagall testified that' he was present at the picket line on the day in question, but he did not strike any vehicle. Another witness corroborated his testimony. Consequently, we find that the Board’s conclusion that Steagall was not engaged in misconduct is not contrary to the manifest weight of the evidence.

For the foregoing reasons, the judgment of the circuit court of Peoria County is affirmed.

Affirmed.

HOLDKIDGE, EJ., concurs.

1 The dissent suggests that our construction of section 604 renders the words “or was last employed” meaningless as there no longer exists a situation to which the phrase would apply. However, the facts of Bridgestone clearly demonstrate an alternative application.