520 South Mich. Ave. Assoc.S v. The Dep't of EMPLOYMENT Sec.

• Decision Date: 07 September 2010
• Docket Number: No. 1-09-2095.,1-09-2095.
• Citation: 935 N.E.2d 612,404 Ill.App.3d 304,343 Ill.Dec. 604
• Parties: 520 SOUTH MICHIGAN AVENUE ASSOCIATES, d/b/a The Congress Plaza Hotel and Convention Center, Plaintiff-Appellant v. The DEPARTMENT OF EMPLOYMENT SECURITY, an Administrative Agency in the State of Illinois; Brenda A. Russell, Director of Illinois Department of Employment Security; Local 1, Unite Here, f/n/a/ Hotel Employees and Restaurant Employees International Union; et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

404 Ill.App.3d 304

935 N.E.2d 612

343 Ill.Dec. 604

520 SOUTH MICHIGAN AVENUE ASSOCIATES, d/b/a The Congress Plaza Hotel and Convention Center, Plaintiff-Appellant

v.The DEPARTMENT OF EMPLOYMENT SECURITY, an Administrative Agency in the State of Illinois; Brenda A. Russell, Director of Illinois Department of Employment Security; Local 1, Unite Here, f/n/a/ Hotel Employees and Restaurant Employees International Union; et al., Defendants-Appellees.

No. 1-09-2095.

Appellate Court of Illinois,First District, First Division.

Sept. 7, 2010.

COPYRIGHT MATERIAL OMITTED.

Bradley Wartman, Esq., Peter Andjelkovich, Esq., Peter Andjelkovich & Associates, Chicago, IL, for Plaintiff-Appellant.

N. Elizabeth Reynolds, Angie M. Cowan, Allison, Slutsky & Kennedy, P.C., Carl J. Elitz, Assistant Attorney General, Lisa Madigan, Attorney General, State of Illinois, Chicago, IL, for Defendants-Appellees.

Justice GARCIAdelivered the opinion of the court:

Plaintiff520 South Michigan Avenue Associates, doing business as the Congress Plaza Hotel & Convention Center (Congress Plaza), appeals from the decision of the Illinois Department of Employment Security and its Director (collectively, the Director) that its employees, striking since June 15, 2003, were “not ineligible” for unemployment benefits after the week ending July 5, 2003, a decision the circuit court confirmed.Congress Plaza contends the claimants remained ineligible under section 604 of the Illinois Unemployment Insurance Act (the Act), which provides a claimant is “ineligible for benefits for any week his * * * unemployment is due to a stoppage of work which exists because of a labor dispute.”820 ILCS 405/604(West 2008).In a supplemental decision, the Director found that the “stoppage of work” ended July 5, 2003, because Congress Plaza had resumed substantially normal operations.Congress Plaza challenges this decision, contending a shortage of workers remained, its occupancy remained low, and it had to contend with a noisy, disruptive picket line, all of which preclude a finding that substantially normal operations had resumed.

The Director and the claimants, members of Local1 UNITE HERE, the union representing the striking employees, ¹ contend Congress Plaza's own admissions to the Department's written inquiries that it had suffered no curtailment in the operations of the hotel within two to three weeks after the start of the strike support the Director's decision, which is subject to review for clear error.The Director and claimants argue that it was Congress Plaza's burden to establish the stoppage of work was ongoing by showing that its business continued to suffer significantly, a burden Congress Plaza failed to carry.We agree on all counts and affirm.

BACKGROUND

On June 15, 2003, members of Local 1 went on strike against the Congress Plaza Hotel & Convention Center.The union members were employed in various guest service positions such as housekeeper, laundry attendant, cook, steward, server, bartender, and bell attendant.The striking members represented between 130 and 185 of the approximately 220 individuals employed by Congress Plaza.The employees established a picket line outside the hotel that continued through at least July 15, 2004.

Shortly after the start of the strike, some of the union members filed for unemployment benefits.On June 18, 2003, Congress Plaza filed an eligibility protest with the Department pursuant to section 2720.130(a) of Title 56 of the Administrative Code(56 Ill. Adm.Code § 2720.130(a), amended at 18 Ill. Reg. 16340, eff.October 24, 1994), contending the claimants were ineligible for unemployment benefits under section 604 of the Act because of the strike.On various dates thereafter, the Department made numerous inquiries of the hotel regarding the level of its business operations.Congress Plaza's director for human resources, Mark Souder, responded in writing to the inquiries.Mr. Souder indicated 94 permanent employees were working at the hotel as of July 29, 2003.Congress Plaza was also using outside temporary workers to fill guest services positions as needed.Sixteen union members had crossed the picket line and returned to work at this point, and a total of twenty-seven did so by July 13, 2004.

In August 2003, the Department submitted a written inquiry to Mr. Souder: “Do you feel that the hotel's level of operation is substantially normal despite the strike?”On August 12, 2003, Mr. Souder responded “Yes.”In correspondence dated August 27, 2003, the Department asked the very same question, with a follow-up question, “If yes, why?”Mr. Souder responded, “Yes.All services normally provided for the guests are being provided.”To the questions, “What is the extent of curtailment in operations?What is the percentage?”Mr. Souder responded, “None.0%.”To the question, “How many managers are being utilized and to what extent is [any] work being neglected?”, Mr. Souder responded, “All the managers of the Hotel.No work is being neglected.”

On September 23, 2003, and again on September 29, 2003, the Department, through Carolyn Vanek, mailed nearly identical correspondence to Mr. Souder to confirm its understanding of a telephone conversation Ms. Vanek had with Mr. Souder on September 22, 2003.Ms. Vanek reiterated that Mr. Souder had “estimated operations returned to ‘substantially normal’ within the * * * two to three week period” after the strike began.In the September 29 correspondence, she informed the hotel, “To be clear, once operations are substantially normal, Section 604 of the Unemployment Insurance Act, which generally provides that striking or locked-out workers are ineligible for benefits, is no longer applicable.”

Following the September 29 correspondence concerning the continued applicability of section 604, on September 30, 2003, Mr. Souder wrote to Cheryl Howard, manager of the Labor Dispute Unit at the Department, asserting, “Overall, ‘operations' at the hotel have not returned to a ‘substantially normal’ level.”He explained his conflicting responses to the Department's written inquiries.“[Ms. Vanek] did not define what she meant by these terms and I responded to them in the limited context of the questions she asked: i.e., guest service.”He asserted that Congress Plaza's business levels had suffered due to the strike and because of the disruption caused by the picket line.He pointed to union literature boasting its action against the hotel had caused over $400,000 in lost revenue.

Claims Adjudicator

Following Congress Plaza's written protest that the claimants were ineligible for unemployment benefits under section 604, the claims adjudicator ruled on January 9, 2004, that the claimants were ineligible from June 15, 2003, through the week ending July 5, 2003, but “not ineligible” for any week thereafter.The adjudicator determined that while the hotel was not operating at precisely the same level as before the strike, the hotel was running at substantially normal operation levels with the use of management personnel, service workers that had crossed the picket line, and temporary workers from four or five different agencies.Congress Plaza appealed the adjudicator's decision pursuant to section 800 of the Act. 820 ILCS 405/800(West 2008).An administrative hearing was conducted pursuant to section 801 before the Director's representative.820 ILCS 405/801(West 2008).

Director's Representative

At the administrative hearing beginning on July 13, 2004, Lucinda Scharbach, an organizer for the union, testified she spends 20 percent of her time trying to persuade potential guests not to patronize the hotel.In one “Strike Alert”she e-mailed an individual regarding an upcoming conference at the hotel and “strongly recommended” the individual inform conference guests of substandard conditions at the hotel and of the union's intentions to stage loud demonstrations during the conference.Ms. Scharbach participated in large demonstrations outside the hotel on Labor Day in 2003 and on June 16, 2004.Dan Miller, a lead union organizer, testified that since the strike began, demonstrations were held at the hotel on seven or eight occasions involving more than 100 individuals.

On behalf of Congress Plaza, Mark Souder testified that picketing workers would sometimes use bull horns or bang drums outside the hotel.The picket line typically included about 20 striking employees, but larger rallies would occur about once per month.Mr. Souder testified customers would occasionally complain, and one guest sought “some sort of restitution from the hotel” for the inconvenience caused by one of the larger rallies.According to Mr. Souder, another guest complained to police that a union supporter had assaulted him.Mr. Souder also testified that a hotel doorman complained that two striking employees had shouted racial epithets at him, which the union denied.

According to Mr. Souder, he had to devote a large amount of time in December 2003 to assist employees that had crossed the picket line when the union gave notice that their health insurance benefits were set to terminate at the end of the year.The highly publicized nature of the strike also triggered a large number of job applicants, requiring Mr. Souder to devote considerable time explaining that Congress Plaza was not hiring permanent replacements, but using temporary workers.Mr. Souder conceded that his involvement with some of these matters fell within his job description and thus the work was not directly attributable to the strike.

Mr. Souder testified the high turnover among the temporary workers required him to spend time training new replacements.He admitted, however, that the annual turnover of employees during the years leading up to the strike was also high, between 40% and 60%.

Mr. Souder testified that the temporary workers performed 50% to 75% of the work previously done by the striking employees.This meant...