Olof Nelson Const. Co. v. Industrial Commission

243 P.2d 951, 121 Utah 525, 1952 Utah LEXIS 164

• Court: Utah Supreme Court
• Decided: April 29, 1952
• Docket: 7633
• Status: Published

Opinions

WOLFE, Chief Justice.

Certiorari to review a decision of the Board of Review of the Industrial Commission, awarding unemployment compensation to defendant claimants. Plaintiffs are members of the Associated General Contractors of America, Intermountain Branch, commonly termed the “A. G. C.” This association is composed of approximately 75 general contractors who are engaged in general building, highway and heavy construction business in the State of Utah. The 75 members employ in excess of 5,000 employees. The eight individual defendants are representative claimants of the 5,000 who became unemployed as a result of a labor dispute between the unions and the A. G. C. All employees are members of one of the Six Basic Craft Unions, affiliated with the American Federation of Labor, namely: (1) International Hod Carriers, Building and Common Laborers Union, (2) United Brotherhood of Carpenters and Joiners of America, (3) International Union of Operating Engineers, (4) International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, (5) International Association of Bridge, Structural and Ornamental Iron Workers and (6) Operative Plasterers and Cement Finishers International Association.

From 1922, when the Intermountain Branch of A. G. C. received its charter, until 1941, very little collective bargaining was conducted between the Six Basic Craft Unions and the individual contractors or with A. G. C. From 1941 to 1945, wages in the State of Utah, as elsewhere in the United States, were frozen as a result of the war. However, during the war years, certain inequities were ironed out and changes were made in wage rates and wage classifications through the mutual efforts of the Association and each of the Six Basic Crafts. In 1945, the Labor Committee of the Association and the International Union of Operating Engineers negotiated a state-wide collective bargaining agreement embracing the working rules and wages and wage classifications for that particular craft. The following year, master state-wide labor agreements were negotiated between the Association and the Six Basic Crafts individually. These agreements were negotiated and executed by the Labor Committee of the A. G. C. for and on behalf of all members of the Association. By 1948, the scope of collective bargaining in the industry had expanded to include all the Six Basic Crafts into one combined master labor agreement with the A. G. C. This wage contract was binding only on those contractors who signed it or granted the Labor Committee power of attorney to do so for them.

In 1949, a similar state-wide master contract was executed between the Unions and the A. G. C. This agreement was to run until June 1, 1951 with a reopening clause for wages only, June 1, 1950. Individual members of the Association became signators to the agreement subsequent to its execution, thereby binding their respective construction companies. Since 1945, all contracts expressly provided that the Six Basic Crafts and the Labor Committee of A. G. C. recognize each other as the collective bargaining representative of its members. Thus, employers as a unit and employees as a unit have successfully bargained for several years through their respective agencies.

On February 27, 1950, the Secretary of the Building Trades Council, representing the Six Basic Crafts, advised the Association by letter of the Union’s desire to open the wage provision of the ’49-’51 contract and revise the wage rates upward. A series of meetings between the A. G. C. Labor Committee and the Six Basic Crafts were unsuccessful in arriving at a new wage scale. On May 18th, the Association directed a letter to the Secretary of the Building Trades Council and each of the Six Basic Crafts stating

“that a strike against any individual contractor who is a signator [to the agreement] will be regarded as a strike against all.”

The Union’s reply was that they did not concur in this position taken by the employers. The parties remained deadlocked until the June 1st deadline. The Secretary of the Building Trades Council then notified the Association that pickets would be assigned to the Ellis W. Barker Professional Building job in Salt Lake City and the Earl S. Paul job in Ogden. A strike vote had been obtained and picketing commenced at those two places on Friday, June 2nd. By Monday afternoon, June 5th, the A. G. C. members who were signators to the labor agreement, numbering approximately 70 members and affecting some 5,000 workmen, closed down their construction projects and laid the men off those jobs. The construction companies shut down as a result of their united action to consider a strike against one a strike against all.

Negotiations between the Labor Committee of the Association and the representatives of the Six Basic Crafts were resumed on June 6, 1950 and on June 7th a satisfactory agreement was reached establishing a new wage scale and extending the life of the labor contract to June 1, 1953. The picketing ceased the evening of June 7th and all workmen returned to their jobs June 8, 1950. None of the claimants involved in this case were employed by the two employers whose jobs were struck. They were employed by the A. G. C. members who shut down their operations pursuant to the prearranged strategy to retaliate by lockout against any strike that might be directed at an individual member’s construction project. The claimants duly reported for work until their respective employers shut down their operation.

The issue involved is whether the claimants should be disqualified from receiving unemployment compensation benefits under the provisions of Section 42-2a-5, Utah Code Annotated, 1943. The statute provides:

“An individual shall be ineligibale for benefits or for purposes of establishing a waiting period: * * *

“(d) For any week in which it is found by the commission that his unemployment is due to a stoppage of work which exists because of a strike involving his grade, class, or group of workers at the factory or establishment at which he is or was last employed.

“(1) If the commission, upon investigation, shall find that a strike has been fomented by a worker of any employer, none of the workers of the grade, class, or group of workers of the individual who is found to be a party to such plan, or agreement to foment a strike shall be eligible for benefits * *

The defendants contend that the facts make it clear that there was no strike at any of the operations other than the two at which pickets were established and therefore the claimants were not ineligible to receive unemployment compensation benefits. All italicized portions of this opinion are the emphasis of the author.

The Appeals Referee ruled that the claimants were not on strike, that the stoppage of work was not due to a strike at the factory or establishment where the individual was last employed. Consequently, benefit payments were allowed for the period in question. In accordance with Section 42-2a-10(d), Laws of Utah 1949, the decision of the Appeals Referee was appealed to the Board of Review of the Industrial Commission. Such Board of Review ruled:

“In view of the fact that there have been two previous decisions [claims supervisor and appeals referee] it is the decision of this Board of Review that any further hearing on appeal be and is hereby denied”.

The plaintiff contractors, as employer contributors under the Employment Security Act then commenced an action in this court against the Board of Review to secure judicial review of its decision. Section 42-2a-10(i), Laws of Utah 1949; Rule 72(c), Utah Rules of Civil Procedure.

Defendants’ claim to compensation is based upon its contention that the correct interpretation of our disqualification provision is that the claimant is ineligible for benefits when his unemployment (stoppage of work) is caused by a strike at the factory or establishment where he was last employed. The statute conveys an equally plain meaning when interpreted to state that the claimant is ineligible when he is unemployed because a stoppage of work exists due to a strike which involves his grade, class or group of workers. The Appeals Referee ruled in accordance with labor’s contention, — that the claimant’s eligibility is dependent upon whether or not the strike existed at his place of employment. This interpretation makes the geographical location or existence of the strike the determinative factor governing payment of unemployment benefits. The Associated General Contractors maintain that such an interpretation was not intended by the Legislature, that unemployment benefits should not be paid where a strike involves the grade, class or group of workers of which claimant is a member. It is fair to state that our 1935 and 1936 Legislature probably did not consider the language chosen with respect to the fact situation now presented before us. Multi-employer bargaining units were not in operation at that time. But the legislative intent to determine the eligibility of claimants for unemployment compensation does not seem to limit the disqualification provision to cases where strikes exist at the particular factory or establishment where claimant was employed. The contrary view seems more clearly expressed. The original provision passed in 1935 stated:

“An employe shall not be entitled to benefits: * * * (3) If he has left or lost his employment due to a trade dispute involving the employer by whom he was employed, so long as such trade dispute continues; * * Ch. 38, Section 8(3), Limitation on Payment of Benefits, Laws of Utah 1935. (Emphasis added.)

The following year the statute was amended to read:

“An individual shall be ineligible for benefits: * * * (d) For any week in which it is found by the commission that his total or partial [total or partial, now deleted] unemplofment is due to a stoppage of work which exists because of a strike involving his grade, class, or group of workers at the factory or establishment at which he is or was last employed.”

Subdivision (1) was then added, which provides:

“If the commission, upon investigation, shall find that a strike has been fomented by a worker of any employer, none of the workers of the grade, class, or group of workers of the individual who is found to be a party to such plan, or agreement to foment a strike, shall be eligible for benefits; * * Ch. 1, Sec. 5, Disqualification for Benefits, Laws of Utah, Special Session 1936.

We do not believe that the amendment in 1936 was intended to change the fundamental theory of disqualification stated in the 1935 act. The amendment was designed to refine and clarify the disqualification provision. Expression of this theory of ineligibitly was no easy matter. The emphasis in the original provision is that no benefits were to be paid where the unemployment was due to a trade dispute involving the employer of the claimant. The 1936 amendment substituted the words: “Stoppage of work which exists because of a strike” for “trade dispute” and “involving his grade, class, or group of workers at the factory or establishment at which he is or was last employed” for “involving the employer by whom he was employed”. It makes no difference whether the principle of disqualification is expressed in terms, relating to the employer or the employee. In order to have a trade dispute involving the employer, or a strike involving the grade, class or group of workers, there must exist an employment relationship. In both the 1935 and 1936 versions of disqualification, it is the temporary termination of the employment relationship which is being described. The purpose of adding subdivision (1) was to make it clear that the meaning of the 1935 act was not to be changed. Benefits were not to be paid where a strike or trade dispute involved either the employer or the grade, class, or group or workers at their place of employment, in such a way as to cause the unemployment or work stoppage. None of the workers of the grade, class or group of workers of the individual who is found to be a party to such plan or agreement to foment a strike shall be eligible for benefits.

This construction of these two provisions, 42-2a-5(d) and (d) (1) is consistent with the interpretation given them in Members of Iron Workers’ Union of Provo v. Ind. Comm., 104 Utah 242, 139 P. 2d 208. In that case, the Iron Workers’ Union was defeated in an election which certified the rival Steel Workers Organizing Committee (S. W. O. C.) as the bargaining agent at the Pacific States Cast Iron Pipe Co. The S. W. O. C. called a strike. Although the members of the Iron Workers’ Union did not participate in the strike vote, they refused to cross the picket line and subsequently sought unemployment compensation benefits. Mr. Justice McDonough, speaking for this court, at page 252 of 104 Utah, at page 212 of 139 P. 2d, stated:

“If a strike involves his ‘grade, class, or group’ of workers, an employee is ineligible to unemployment benefits when stoppage of work is ‘caused’ by members thereof. The words ‘grade’ and ‘class’ have reference generally to the type of work being performed, as to skills or as to expertness in those skills. The word ‘group’ may be synonymous in a given instance with ‘class or grade’, but it may include several classes or grades or even involve the workers of an entire plant. A strike involves the ‘grade, class, or group’ of an employee within the meaning of the statute if the dispute which results in the strike is with reference to wages, hours or conditions of employment of a group of which he is a member. * * * The provisions of (d) (1) hereinabove quoted, providing that where a strike is fomented hy an employee, the workers who are of his ‘grade, class, or group’ are ineligible for benefits serves to make clear that the construction here given of the quoted words voices the legislative intent. It is not only those who foment the strike or bring it about who a/re ineligible, but the group to which such persons belong- — -however inclusive — the group for whose benefit the strike is called.” (Italics added.)

In the present case the Six Basic Craft Unions bargained together as one group with the Labor Committee of the A. G. C. In view of the history of the negotiations between these two groups, the bargaining unit is the “group involved” in this case.

Defendants admit that a labor dispute existed which concerned all A. G. C. employer-members and their employees belonging to one of the Six Basic Crafts. There is no doubt that the union’s objective in striking the two jobs was to apply economic pressure to assist the bargaining representatives of the Six Basic Crafts in obtaining an industry-wide wage raise. The unions were successful in this strategy. But defendant's argue that the work stoppage must exist because of a strike and in this case it was not caused by the strike, but by the employer-instigated lockout. This requires a determination of the fundamental issue in this case — what caused the work stoppage and resulting unemployment?

Six briefs have been filed in this action citing numerous cases from other jurisdictions and arguing many propositions and distinctions bearing upon this problem. These cases are helpful, but each opinion in the cited case is concerned with the particular statutory language of the act there under consideration. Two well reasoned cases concerning the same fact situation as we have here before us, reaching opposite results, are Bucko v. J. F. Quist Foundry Co., 229 Minn. 131, 38 N. W. 2d 223, and McKinley v. California Employment Stabilization Commission, 34 Cal. 2d 239, 209 P. 2d 602. In the Bucko case, several Minneapolis employers operating foundries, associated themselves together to form a multi-employer bargaining unit. When the union struck one foundry during a labor dispute, the other association members carried out their prior intention of considering a strike against one as a strike against all and retaliated by locking out their employees. The Supreme Court of Minnesota upheld the decision granting unemployment compensation to those men who had been locked out. The court stated that the fact that a strike was called against three employers did not compel the other nine to close their shops and though a labor dispute existed in all establishments,

“it cannot be said that unemployment in the nine establishments was due to anything but the lockout.” [229 Minn. 131, 38 N. W. 2d 235.

The Minnesota statute provided that an individual shall be disqualified for benefits if his unemployment is found to be 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. * * *”

The statute more specifically stated,

“Nothing in this subsection shall be deemed to deny benefits to any employee who becomes unemployed because of a lockout * * 1943 Minn. Session Laws, c. 650, § 5, subd. F, M. S. A. § 268.09, subd. 1(6).

The California view expressed in the McKinley case was derived from two prior decisions. In Bodinson Mfg. Co. v. California Employment Commission, 17 Cal. 2d 321, 109 , the court held that members of a machinist’s union who refused to cross the pieket line of the welder’s union established at the plant where both groups worked, were ineligible for unemployment compensation. This decision is cited and relied upon by this court in Lexes v. Ind. Comm., 121 Utah 551, 243 P. 2d 964. The Bodinson case established the fundamental theory that disqualification for benefits “depends upon the fact of voluntary action” by the claimant. Subsequently, Bunny’s Waffle Shop v. California Employment Comm., 24 Cal. 2d 735, 151 P. 2d 224, 227, was decided in which case the reverse situation to the facts of the instant case occurred. An association of restaurant owners sought to compel their employees to recognize the multi-employer unit as the bargaining agency for each individual employer, by reducing wages 25% and establishing a six-day week split shift instead of a five-day week straight shift. The employees left their jobs rather than accept the reduced wage scale. The court in determining that the employees were not ineligible for unemployment benefits because of the trade dispute stated:

“The economic weapon in the present case was created by the employers and directed against their employees, and it alone, rather than the trade dispute that occasioned it, was the cause of the leaving of work.”

Thus the court stated in the McKinley case, at page 605 of 209 P. 2d, commenting on the Bunny’s Waffle Shop decision,

“* * * that, in reality, the form of the cessation of employment is not controlling and the determinative factor is the volitional cause of the work stoppage. In other words, although the employees left work of their own choice, that choice was not freely made but was compelled by the economic weapon which the employers used. This is the only sound and fair way to apply the subjective volitional test stated in Bodinson Mfg. Co. v. California Employment Comm. * * *"

In McKinley v. California Employment Stab. Comm., supra, the employer association comprised all of the Sacra-mentó Machine Shop baking industry. The Bakery and Confectionary Worker’s Union struck the Butter Cream Plant, a member of the association. The association carried out their prearranged plan of retaliating against the strike by an association-wide lockout. The California disqualification provision reads:

“An individual is not eligible for benefits * * * (a) If he left his work because of a trade dispute and for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed.” Gen. Laws Cal. Act. 8780d, § 56.

The court stated at page 606 of 209 P. 2d:

“At no time did the union purport to be directing any action solely against the Butter Cream plant; instead, the union continued throughout to deal directly with the association for the purpose of obtaining a new master contract. To say, therefore, that the act of striking the one plant did not shut down work in other plants of the association which were subject to the labor negotiations for the purpose of obtaining a master contract is wholly unrealistic. Industry-wide negotiations had been established by these employers and consistently carried on for over 10 years.”

Other quotations which emphasize the California position are:

“It seems clear that under such industry-wide, single contract negotiation, economic action by either side, whether strike or lockout, would be considered by each of the parties as action against the entire group struck or locked out. * * * The selection of a certain plant or plants for a shut-down by strike at a particular time was a mere matter of strategy in the conduct of the trade dispute which equally involved all of the bakeries and their employees. This, in effect, applied the union’s economic sanctions against each employer and brought about the unemployment of all of its members. Had the association acted first by closing down one of the members plants and the union followed with a strike against all of the remaining plants, it would be equally clear that the volitional act causing unemployment was the initial shutdown.”

Thus, as Mr. Justice Schauer stated in his concurring opinion at page 608 of 209 P. 2d the court held

“that it was proper to relate responsibility for the work stoppage to the party who created its actual and directly impelling cause.”

Another important decision bearing upon the right of the A. G. C. to consider a strike against one as a strike against all is that of Morand Bros. Beverage Co. v. National Labor Rel. Bd., 7 Cir., 190 F. 2d 576. In that case the employer bargaining unit was the Illinois and the Chicago Wholesale Liquor Dealers’ Association. When negotiations for a labor agreement with the Liquor Wine Salesmen’s Union reached an impasse, the union struck the Old Rose Distributing Co. The association carried out its preconceived plan, known by the union, of opposition to any strike by a concerted association-wide lockout. An unfair labor practices complaint was filed against the members of the association, charging them with the discriminating discharge of their salesmen. The National Labor Relations Board affirmed the decision of the Trial Examiner which held that the action of the employers in retaliating against the strike by the use of the lockout constituted an unlawful discrimination on the part of the employers against their employees. In reversing this position, Judge Swaim of the Seventh Circuit Court of Appeals, at page 582 of 190 F. 2d stated:

“Concluding, then, that the Union, unable to agree with the Associations upon a satisfactory contract, had a right to strike against Old Rose, or, for that matter, any or all of the Associations’ members, it becomes important to determine what retaliatory measures were available to petitioners. Old Rose, of course, had a clear right to replace its striking employees. National Labor Relations Board v. Mackay Co., 304 U. S. 333, 345, 58 S. Ct. 904, 82 L. Ed. 1381. The other petitioners, we believe, could quite properly and realistically view the strike, as they did, as a strike which, though tactically against but one petitioner, was, in the strategic sense, a strike against the entire membership of their Associations, aimed at compelling all of them ultimately to accept the contract terms demanded by the Union. * * * Consequently, once petitioners had exhausted the possibilities of good faith collective bargaining with the Union through their Associations, any or all of them were free to exercise their right to lock out their salesmen without waiting for a strike, just as the Union was free to call a strike against any or all of them.”

As we pointed out in the Lexes case, the declared policy of the Unemployment Reserve Law, as it was called in 1935, is to establish

“financial reserves for the benefit of persons unemployed through no fault of their own.”

The provisions of the statute disqualifying employees from unemployment compensation is to prevent workers from obtaining benefits when there is work available which they decline to accept. Thus the individual is ineligible for benefits, 42-2a-5, U. C. A. 1943:

“(a) For the week in which he has left work voluntarily without good cause * * *.

“(h) For the week in which he has been discharged for misconduct ❖ * *

“(c) If the commission finds that, being unemployed and otherwise eligible for benefits, he has failed, without good cause, either to apply for available, suitable work when so directed by the employment office or the commission or to accept suitable work when offered him * * *.

“(d) For any week in which it is found by the commission that his unemployment is due to a stoppage of work which exists because of a strike involving his grade, class, or group of workers at the factory or establishment at which he is or was last employed.”

Our conclusion is that the various disqualification provisions of our Employment Security Act reveal that the underlying legislative intent is for the commission to determine the claimant’s eligibility by adhering to the volitional test as announced in the Bodinson, Bunny’s Waffle Shop and McKinley cases in California. The Supreme Court of Minnesota in the Bucko case, supra, at page 232 of 38 N. W. 2d stated:

“It is our belief that under our statute, once it is established that the unemployment is due to a lockout, the exception to the disqualification applies regardless of whether the employe participates in the labor dispute or not.” (Italics added.)

The court then held that the unemployment was not due to the prior strike of the employees but to the subsequent retaliatory lockout. In so holding, the Minnesota court did acknowledge that the issue was a determination of what caused the unemployment.

Our conclusion in this case is that the sounder view is to recognize these large scale bargaining units as the groups involved within the meaning of the Employment Security Act. Their number and scope are increasing. Both labor and management have seen fit to resort to such a device for a uniform, expedient means of negotiating their agreements. There is no dispute that the economic sanction of the A. F. of L. in this case was directed against the entire employer association. The strike was called for and on behalf of every employee covered by the agreement. It therefore directly involved all these claimants, at each particular place of employment at which they were last employed. The strike was fomented by claimants through their duly authorized union representatives. They are members of the group which gained a raise in wages because of the strike and are parties to the scheme or plan to foment it. Therefore they are not entitled to unemployment benefits. The order of the Industrial Commission is reversed. Costs are awarded to the plaintiffs.

McDonough, j., concurs.