Aircraft Mechanics Fraternal Association Members v. Northwest Airlines, Inc., No. A05-2128 (Minn. App. 9/12/2006)
| Decision Date | 12 September 2006 |
| Docket Number | No. A05-2379.,No. A05-2128.,A05-2128.,A05-2379. |
| Parties | Aircraft Mechanics Fraternal Association Members, Relators (A05-2128), Respondents (A05-2379), v. Northwest Airlines, Inc., Respondent (A05-2128), Relator (A05-2379), Department of Employment and Economic Development, Respondent. |
| Court | Court of Appeals of Minnesota |
Appeal from the Department of Employment and Economic Development, File No. 1442705.
Nicholas P. Granath, Seham, Seham, Metz & Petersen, LLP, (for AMFA Members)
Timothy R. Thornton, Elizabeth M. Brama, Briggs and Morgan, (for Northwest Airlines, Inc.)
Linda A. Holmes, Minnesota Department of Employment and Economic Development, and Frank E. Villaume, (for Department of Employment and Economic Development)
Considered and decided by Worke, Presiding Judge; Willis, Judge; and Hudson, Judge.
UNPUBLISHED OPINION
In these consolidated appeals, striking member technicians and inspectors challenge the decision by the unemployment-law judge (ULJ) affirming his earlier decision that they were disqualified from receiving unemployment benefits. The ULJ determined that a 25% pay reduction was insufficient to constitute a constructive lockout, under which the technicians and inspectors would have qualified for benefits. The employer, Northwest Airlines, Inc. challenges the decision by the ULJ affirming his earlier decision that the striking Aircraft Mechanics Fraternal Association cleaners and custodians were qualified to receive unemployment benefits, determining that a 25% pay reduction constituted a lockout as to the cleaners and custodians. Because we conclude that, under Sunstar Foods, Inc. v. Uhlendorf,310 N.W.2d 80 (Minn. 1981), the 25% pay cuts imposed on both the technicians and inspectors, as well as the cleaners and custodians, constituted a constructive lockout so as to entitle both groups to unemployment benefits, we affirm the ULJ's decision with regard to the cleaners and custodians, but we reverse the ULJ's decision with regard to the technicians and inspectors.
Northwest Airlines, Inc. (Northwest) is a common carrier operating within the statutory framework of the Railway Labor Act (RLA), 45 U.S.C. § 151-188. The Aircraft Mechanics Fraternal Association (AMFA) represents a bargaining unit at Northwest that includes members of two crafts: technicians and inspectors, as well as cleaners and custodians. The two crafts have different job classifications, functions, and pay rates. The parties entered into a collective-bargaining agreement effective May 2001; under the RLA and the agreement, the agreement became subject to amendment in May 2005. In 2003, Northwest notified AMFA representatives of financial problems within the airline industry, including Northwest's own financial situation, and sought concessions from the union. Following procedures prescribed by the RLA, in October 2004, the parties exchanged early notices indicating an intent to amend the bargaining agreement. Negotiations were unsuccessful.
When negotiations stalled, Northwest requested mediation assistance from the National Mediation Board (NMB) in January 2005. The airline, which announced a loss of $458 million for the first quarter of 2005, sought approximately $176 million in annual concessions from the union and began strike-contingency-planning meetings in June 2005. Both parties requested a release from the NMB. This release, granted on July 20, 2005, triggered a 30-day "cooling off" period, after which both parties could engage in self-help: the airline, to impose terms and conditions of employment, and the union, to strike. Although negotiations continued, an agreement was not reached, and on August 18, Northwest submitted to the union a "last best offer," which included pay reductions of 25% for both crafts, as well as reductions to benefits and the elimination of some job-security provisions. AMFA negotiating committee members, who retained authority to determine whether to submit the proposal to union membership, deemed the offer unacceptable and declined to offer it for a vote.
On August 19, the airline announced that new terms and conditions of employment would be imposed when the deadline for self-help arrived the next day. The terms and conditions reduced the base-pay rate for each position by approximately 25%; reduced holidays; reduced vacation-accrual rates; reduced sick-leave accruals; and reduced shift premiums. AMFA directed its members to walk off the job at the deadline, 12:01 a.m. on August 20, 2005, and announced a strike. At the deadline, AMFA members walked off the job.
During the last hours before the deadline, several AMFA members were requested to leave NWA property and escorted from their work sites. The employees were paid until the end of their shift. The airline later reported that security concerns about vandalism led to the removal of these workers.
On September 6, 2005, Northwest announced the elimination of all cleaner and custodian positions, making job offers to replacement employees. The airline also announced its intention to begin hiring replacement workers to fill the technicians' and inspectors' jobs. The next week, Northwest began hiring replacement technicians and inspectors. On September 15, the airline filed for bankruptcy protection.
More than 1,600 AMFA members representing technicians and inspectors, as well as cleaners and custodians, established benefit accounts to obtain unemployment benefits with the Department of Employment and Economic Development. After department adjudicators made their decisions, appeals were taken. An unemployment-law judge (ULJ) held a consolidated hearing to consider the benefit claims of all of the AMFA members. But the ULJ issued separate decisions on the claims of the members of the two crafts. The ULJ's decisions granted benefits to the cleaners and custodians, but denied benefits to the technicians and inspectors.
On reconsideration, the ULJ modified his reasoning but reached the same conclusions in both decisions. The ULJ ruled that benefits applicants who stop working because of a labor dispute are not eligible for benefits, unless an exception exists for applicants who stop working because of a lockout. The ULJ determined that, under Sunstar Foods, Inc. v. Uhlendorf, 310 N.W.2d 80 (Minn. 1981), a 25% reduction in base-pay rate, as well as benefit reductions, did not constitute a constructive lockout for the technicians and inspectors because their pay rate approximated that of the average technician in the industry, so that the terms imposed were not so unreasonable that the workers had no choice but to leave. In a separate decision, however, the ULJ determined that the cleaners and custodians were subject to a constructive lockout and thus eligible to receive unemployment benefits. He reasoned that their imposed pay reduction, although also reducing the base-pay rate by 25%, represented a greater impact because they had a pay scale near the average annual wage paid to a Minnesota worker. In this consolidated certiorari appeal, AMFA members appeal the determination as to the technicians and inspectors; Northwest appeals the determination as to the cleaners and custodians.
In review of a determination of eligibility for unemployment-compensation benefits, this court may affirm the unemployment-law judge's decision, remand it for further proceedings, or reverse or modify it
if the substantial rights of the petitioner[s] may have been prejudiced because the findings, inferences, conclusion, or decision are:
(1) in violation of constitutional provisions;
(2) in excess of the statutory authority or jurisdiction of the department;
(3) made upon unlawful procedure;
(4) affected by other error of law;
(5) unsupported by substantial evidence in view of the entire record as submitted; or
(6) arbitrary or capricious.
Minn. Stat. § 268.105, subd. 7(d) (Supp. 2005).
Findings of the ULJ must be viewed in the light most favorable to the decision. White v. Metro. Med. Ctr., 332 N.W.2d 25, 26 (Minn. 1983). When reviewing questions of law, such as whether an employee had good reason to quit, this court conducts de novo review. Peppi v. Phyllis Wheatley Cmty. Ctr., 614 N.W.2d 750, 752 (Minn. App. 2000).
As a preliminary matter, AMFA members argue that the ULJ improperly refused to consider evidence that Northwest eliminated jobs in the bargaining unit and that Northwest's resumption of operations with replacement workers affirmatively ended the status of the applicants as employees who stopped working because of a labor dispute. Minnesota unemployment-benefits law provides that "[a]n applicant [for benefits] who has stopped working because of a labor dispute at the establishment where the applicant is employed shall be ineligible for unemployment benefits" for each week a labor dispute is in active progress and the applicant is participating or actively involved in the labor dispute. Minn. Stat. § 268.085, subd. 13b(a) (2004). The parties do not disagree with the ULJ's determination that all of the applicants initially became unemployed because of a labor dispute. See Minn. Stat. § 179.01, subd. 7 (2004) (); Minn. Stat. § 268.085, subd. 13b(e) (2004) (). But AMFA members maintain that Northwest's elimination of jobs for AMFA members and hiring of replacement workers effectively ended the labor dispute, so that the dispute was no longer in active progress, and members should not be deemed ineligible to receive unemployment benefits. We disagree.
Under Minnesota law, the hiring of replacement workers does not change the determination that a labor...
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