Aaron v. Ohio Bur. of Emp. Serv.

• Decision Date: 22 October 1998
• Docket Number: No. 97 C.A. 61.,97 C.A. 61.
• Citation: 720 NE 2d 159,130 Ohio App.3d 376
• Parties: AARON et al., Appellees, v. OHIO BUREAU OF EMPLOYMENT SERVICES et al., Appellants.
• Court: Ohio Court of Appeals

130 Ohio App.3d 376

720 NE 2d 159

AARON et al., Appellees, v. OHIO BUREAU OF EMPLOYMENT SERVICES et al., Appellants.

No. 97 C.A. 61.

Court of Appeals of Ohio, Seventh District, Mahoning County.

Decided October 22, 1998.

COPYRIGHT MATERIAL OMITTED

Frederick G. Cloppert, Jr. and William J. Steele, for appellees.

Betty D. Montgomery, Attorney General, Frank J. Reed, Jr. and Stefan J. Schmidt, Assistant Attorneys General, for appellant Administrator, Ohio Bureau of Employment Services.

John M. Kunst, Jr. and Robert J. Reid, for appellant General Motors Corporation.

COX, Judge.

This matter presents a timely appeal from a judgment rendered by the Mahoning County Common Pleas Court reversing the decision of appellant, Ohio Bureau of Employment Services Board of Review, denying appellees unemployment compensation benefits and ordering the board to remove appellees' disqualifications and direct the administrator to pay appellees' claims. There are over five thousand appellees, all of whom are employees of appellant, General Motors Corporation, and work at the assembly plant in either Lordstown, Ohio or Wentzville, Missouri.

The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the "International UAW") represents General Motors Corporation ("GM") employees in both local and national collective bargaining agreements ("CBA") with GM. These agreements govern union-represented employees at each plant. Local agreements are negotiated between a particular GM plant and a UAW local and address specific plant issues. National agreements are made between GM and the International UAW and govern general terms and conditions of employment for all UAW members.

As with the dual CBA structure, strikes may take two forms. First, the International UAW may call a strike of all UAW locals or selectively call strikes of certain UAW locals. Second, a UAW local may strike at a particular plant with the International UAW's approval.

In 1996, UAW Local 696 ("Local 696") was operating under both a national CBA, effective November 15, 1993 to September 1996 (the "National Agreement"), and a local CBA made in March 1994 (the "Local Agreement") with Delphi Chassis Systems, in Dayton, Ohio ("Delphi"). Despite these agreements, local issues concerning subcontracting, general grievances, manpower, health and safety, and sourcing remained disputed.

As GM's critical brake component facility, Delphi actively produces antilock braking systems ("ABS") for GM's automobiles. GM utilizes a "ball screw" mechanism on its ABS compared to the solenoid-based braking system ("SBS") used by other manufacturers such as Bosche. Although the ball screw mechanism was cost-effective and reliable in its early development stage, the SBS technologically surpassed it. This new technology concerned both Local 696 and GM. Unable to develop an SBS timely, union-represented employees at Delphi faced outsourcing, and, as a result job loss. Comparatively, GM feared that it would lose global market competitiveness without an SBS and contemplated ways to implement an SBS quickly so as to remain competitive with other auto manufacturers presently using the system. GM notified the International UAW that it intended to introduce Bosche's SBS, and that consequently, that use would require outsourcing.

The National Agreement contains a provision known as Appendix L, which covers product sourcing at GM's assembly plants. Sourcing refers to both insourcing and outsourcing of GM products. With insourcing, GM begins to manufacture products previously produced by a non-GM supplier. In contrast, outsourcing is a procedure whereby GM obtains a product from a non-GM provider that GM previously produced in-house. Sourcing issues have created tension between the International UAW and GM, particularly regarding GM's contractual commitments under Appendix L. The provision states in part:

"It is an objective of the Corporation to grow the business and to continue to rely upon its employees and facilities as the source of its products." Agreement between General Motors Corporation and the UAW, October 24, 1993 (Effective November 15, 1993).

Disagreement arose between GM and the International UAW as to what "grow the business" meant. GM interpreted "grow the business" as cost-effectiveness coupled with competitiveness so as to attract new business, whereas the International UAW interpreted it to mean simply more jobs. Additionally, GM and the International UAW disagreed on the right to strike over sourcing, and after much debate, GM prevailed. The National Agreement provided that sourcing issues are subject to grievance and arbitration procedures and are not strikeable issues.

Unable to resolve disputed local issues on health and safety, general grievances, subcontracting, manpower, and particularly, sourcing, GM and Local 696 remained at odds. On September 17, 1995, Local 696 successfully obtained authorization from the International UAW to strike at Delphi. On March 5, 1996, Local 696 initiated a work stoppage at Delphi. The strike ended on March 21, 1996, and union-represented employees resumed work on March 22, 1996.

The Delphi strike affected not only Delphi but most of GM's North American operations. As a result of GM's functional integration system, all but three of GM's assembly plants were forced to close or severely curtail their operations. Functional integration has two important aspects, one involving product manufacture and the other concerning logistics and distribution of those products. GM utilizes specifically tooled parts and components in many of its automobiles and is the sole source supplier of these parts and components. If the supplier plant stops manufacturing its product, all of GM's production stops, as sole source products cannot be procured elsewhere.

As with product manufacture, logistics and distribution have some disadvantages. Efficient distribution depends on GM's "just in time" inventory system. With "just in time" inventory, products are delivered to GM plants just in time for assembly, thus eliminating the costs associated with maintaining large inventories. Although cost effective, this system can cause an assembly plant that is dependent on sole-source products to experience an immediate product shortage if the supplier stops production.

GM's functional integration system and the Delphi strike forced many GM assembly plants to cease operation temporarily, particularly the assembly plants in Lordstown, Ohio and Wentzville, Missouri. These plants depended on direct parts shipment from Delphi to operate. Without Delphi, they could not obtain the necessary brake components and had none inventoried to use until the strike ended. Ultimately, the lack of parts left appellees unemployed.

Although the Delphi strike had an intense impact on other GM plants, the strike settlement did not. The settlement did not change the terms and conditions of employment in the National Agreement, nor did it alter the terms and conditions of employment set forth in the Local Agreement. The strike settlement added two hundred seventy-five employment positions at Delphi, which could benefit union members if reassigned to that plant. Furthermore, only Local 696 members received strike fund payments from the International UAW even though all UAW members involuntarily contributed to the fund and all UAW locals could use the fund, including Local 1112, which represented Lordstown.

Appellees filed for unemployment benefits. The matter was referred to a staff hearing officer of the Ohio Bureau of Employment Services ("OBES"). A hearing was conducted on April 2 and 3 of 1996. Subsequently, on April 15, 26 and June 28, the hearing officer issued decisions, determining that union-represented employees at Delphi became unemployed due to a labor dispute other than a lockout. The hearing officer stressed that the resolution of issues raised during the Delphi strike would reasonably be expected to affect the resolution of the same or similar issues at Lordstown. The hearing officer found that appellees were therefore directly interested in the Delphi labor dispute, and consequently, were unemployed due to that labor dispute. Accordingly, the hearing officer held that appellees were not entitled to unemployment compensation.

Lordstown and Wentzville claimants filed separate applications for appeal with the OBES board of review on May 3, 1996 and July 19, 1996, respectively. The Board of Review disallowed the applications for appeal, thereby affirming the hearing officer's decisions. Appellees appealed separately to the Mahoning County Common Pleas Court. At this level, the two cases were consolidated for administrative purposes. The lower court reversed the board's decision, finding that appellees were entitled to unemployment compensation benefits, and ordered the administrator to pay appellees' claims. The within appeal followed.

At the outset, our standard of review on appeal must be discussed. R.C. 4141.28(0)(1) sets forth the standard of review to be applied in unemployment compensation cases and states as follows:

"If the court finds that the decision was unlawful, unreasonable, or against the manifest weight of the evidence, it shall reverse and vacate such decision or it may modify such decision and enter final judgment in accordance with such modification; otherwise such court shall affirm the decision."

The Ohio Unemployment Compensation Act, R.C. 4141.01 et seq., "does not create distinctions between the scope of review of common pleas courts and appellate courts." Tzangas, Plakas & Mannos v. Ohio Bur. of Emp. Serv. (1995), 73 Ohio St.3d 694, 696-697, 653 N.E.2d 1207, 1210. In reviewing the board's decision, an appellate court must apply the same standard of review as the lower court. Thus, an appellate court may reverse the board's decision only if it is unlawful, unreasonable, or against the manifest weight of the...