Ahnne v. Department of Labor and Indus. Relations

• Decision Date: 18 October 1971
• Docket Number: No. 5000,5000
• Citation: 489 P.2d 1397,53 Haw. 185
• Parties: Andre D. AHNNE et al., Claimants-Appellants, Appellees, v. DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS, State of Hawaii, and Qantas Airways, Limited, Appellees-Appellants.
• Court: Hawaii Supreme Court

Page 1397

489 P.2d 1397

53 Haw. 185

Andre D. AHNNE et al., Claimants-Appellants, Appellees, v. DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS, State of Hawaii, and Qantas Airways, Limited, Appellees-Appellants.

No. 5000.

Supreme Court of Hawai'i.

Oct. 18, 1971.

Syllabus by the Court

1. As used in unemployment compensation statutes, the phrase 'stoppage of work' means a substantial curtailment of the business activities at the employer's establishment.

2. In order to determine whether a substantial curtailment of business activities has occurred in an 'establishment,' the court must first define the perimeters of the 'establishment' in question.

3. Where an airline's airport facility and city ticket office are several miles apart and function as separate business entities, they constitute separate 'establishments.'

4. No substantial curtailment of business activities occurred at an airline's airport establishment where there were only minor variations in the number of planes and passengers handled, the amount of cargo and baggage carried, and the amount of revenue produced, despite the fact that isolated activities such as ticket sales and ground services provided other airlines were curtailed.

5. Where virtually no ticket sales were made at an airline's city ticket office, a substantial curtailment of business activities had occurred at that establishment.

6. The labor dispute disqualification is not applicable where a labor dispute at one establishment causes a stoppage of work at another establishment.

7. Where there was no controversy between an airline and its city ticket office employees concerning their representation or the terms or conditions of their employment, the labor dispute disqualification was inapplicable, despite the presence of a labor dispute at the airline's airport establishment.

Peter A. Donahoe, and John A. Hoskins, Honolulu (Amthony & Waddoups, Honolulu, of counsel), for appellees-appellants.

Benjamin C. Sigal, Shim, Sigal & Ono, Honolulu, for claimants-appellants-appellees.

Before RICHARDSON, C. J., MARUMOTO, ABE and LEVINSON, JJ., and MENOR, Circuit Judge, in place of KOBAYASHI, J., absent due to illness.

ABE, Justice.

The International Association of Machinists and Aerospace Workers, AFL-CIO Local 1979, called a strike against the Qantas Airways, Ltd. on December 17, 1967 and set up picket lines. Other employees, who were not on strike, respected the picket lines and remained away from work. Of the total of 161 employees, approximately 131 of them stayed away from their jobs. During the strike period, Qantas brought in 29 employees to supplement the local staff that remained on duty. The strike lasted from December 18, 1967 to February 22, 1968.

Unemployment compensation claims were filed by 57 striking employees and 56 other employees who respected the picket lines. The claims for benefits were denied by the Administrator of the Unemployment Insurance Division of the Dept. of Labor & Industrial Relations, State of Hawaii, and the employees appealed to the Appeal Referee. After a hearing, the referee affirmed the decision of the administrator. Subsequently, upon the motion of the employees for reopening and reconsideration of the case, a rehearing was held on September 6, 1968. After the rehearing, the referee reaffirmed his decision in denying benefits. The employees appealed to the First Circuit Court.

The case was heard on appeal by the Circuit Court on the record. The trial court, while accepting the referee's Statement of Facts, disagreed with his conclusion and held that during the strike period there was no 'stoppage of work' at the establishment of Qantas. Thus, the trial court reversed the referee's decision and held that the employees were entitled to unemployment compensation. Qantas appealed from the judgment entered by the trial court.

The sole issue before us is whether during the strike there was 'stoppage of work' at the 'establishment or other premises' of Quntas, where the employees were last employed, within the meaning of HRS § 383-30(4) which provides as follows:

§ 383-30 Disqualification for benefits. An individual shall be disqualified for beneifts:

* * *

* * *

(4) Labor dispute. For any week with respect to which it is found that his 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; * * *. ¹

In Inter-Island Resorts v. Akahane, 46 Haw. 140, 377 P.2d 715 (1962), we noted that the phrase 'stoppage of work' was derived from the British National Unemployment Insurance Act of 1935, 25 Geo. V, c. 8, § 26(1). Undoubtedly, the British legislature must initially have felt that unemployment caused by a labor dispute is 'voluntary' and should not be compensated. The British courts, however, quickly interpreted the phrase 'stoppage of work' to refer 'not to the cessation of the workman's labor, but to a stoppage of work carried on in the factory, workshop or other premises at which the workman is employed.' Ministry of Labour, Analytical Guide U.I.Code 7, Part III, § 43 (1939 ed.); Brit.Ump. 1480/1927, BU-495 (1927); Brit.Ump. 609, BU-493 (1921).

Under that interpretation, even an employee who voluntarily went on strike would receive compensation. so long as the employer's business activities were not substantially curtailed. Whether or not compensation was awarded turned on the degree to which the employer's business activities were affected by the worker's unemployment. If no substantial reduction occurred, compensation was awarded; if a substantial reduction took place, compensation was denied.

That result has been defended on the ground that while compensation ought to be generally awarded, where a strike substantially reduces the employer's business activities, compensation is unnecessary because it is likely that the employer will quickly be forced to come to terms with his employees. M. I. Shadur, Unemployment Benefits and the 'Labor Dispute' Disqualification, 17 U.Chi.L.Rev. 294, 308 ff. (1950). It is very unlikely that any legislature or court actually had that curious rationale in mind. Cases abound in which a dispute continues indefinitely despite a substantial curtailment in the employer's activity. Rather, it seems more likely that the substantial curtailment requirement was a product of the British courts' unwillingness to deny compensation in every case in which a labor dispute caused employees to cease working. The courts fastened on the 'stoppage of work' language to impose an additional condition which must be present before an employee is disqualified from receiving benefits. Other courts followed that interpretation, not because it adopted a sensible dividing line between cases in which benefits should be granted and cases in which benefits should be denied, but because the interpretation was a handy device to soften the harshness of the disqualification provision.

In any event, it is today perfectly clear that when the stoppage of work language was transposed from the British legislation to United States unemployment compensation acts, it carried with it the peculiar interpretation devised by the British judiciary. United States courts have almost unanimously assumed that their legislatures chose the 'stoppage of work' language with the British interpretation of the phrase in mind. See Totorica v. Western Equipment Co., 88 Idaho 534, 401 P.2d 817 (1965); Fontaine v. Board of Review of Dept. of Emp. Sec., 100 R.I. 37, 210 A.2d 867 (1965); Monsanto Chemical Co. v. Thornbrough, 229 Ark. 362, 314 S.W.2d 493 (1958); Bilodeau v. Maine Employment Sec. Comm., 153 Me. 254, 136 A.2d 522 (1957).

Accordingly, in Inter-Island Resorts v. Akahane, 46 Haw. 140, 148, 377 P.2d 715, 720 (1962) and in Meadow Gold Dairies-Hawaii v. Wiig, 50 Haw. 225, 227-228, 437 P.2d 317, 319 (1968), we held that the phrase 'stoppage of work' means a 'substantial curtailment of the business activities at the employer's establishment rather than unemployment on the part of the striking employee.'

In this case, therefore, the applicants will be disqualified from receiving benefits only if it is determined that a 'substantial curtailment' of business activity occurred at their employer's 'establishment.' In the determination of this question, it is necessary for us to decide what is the 'establishment' or 'establishments' of Qantas involved here.

Other courts have had occasion to determine and define 'establishments' of employers in connection with claims for unemployment benefits involving strikes. Most decisions define 'establishment' by examining one or more factors, hereinafter discussed, which link an employee to the unit in which he works. ² An occasional court has given special emphasis to the 'functional integration' of interrelated plants, and grouped separate locations into a single establishment, but that approach has been generally rejected. ³ The factor most courts emphasize in determining when employees occupy distinct establishments is the physical location where the employees work. Employees working in a separate geographical situs are classified into a separate establishment. ⁴

No particular policy justifies greater or lesser emphasis on either of these factors. The different approaches are generally defended in accordance with the policy to expand or contract the labor dispute disqualification. ⁵

California cases adopt a unique 'volitional test' which in effect groups employees into the same establishment, even though they occupy distant premises, if it appears that each group shares responsibility for the existence of the labor dispute. Gardner v. State Director of Employment, 53 Cal.2d 23, 346 P.2d 193 (1959); Caldwell v. Bruning, 64 Cal.2d 111, 48 Cal.Rptr. 849, 410 P.2d 353 (1966); Artigues v. California Dept. of Employment, 259 Cal.App.2d 409, 66 Cal.Rptr. 390 (1st Dist.1968). While the California approach...