Applegate v. Palladium Pub. Co.

• Decision Date: 05 February 1980
• Docket Number: Docket No. 78-4144
• Citation: 95 Mich.App. 299,290 N.W.2d 128
• Parties: Paul F. APPLEGATE, Plaintiff, and Michigan Employment Security Commission, Plaintiff-Appellant, v. PALLADIUM PUBLISHING COMPANY, Defendant-Appellee. 95 Mich.App. 299, 290 N.W.2d 128
• Court: Court of Appeal of Michigan — District of US

Page 128

290 N.W.2d 128

Paul F. APPLEGATE, Plaintiff and Michigan Employment Security Commission Plaintiff-Appellant, v. PALLADIUM PUBLISHING COMPANY, Defendant-Appellee.

Docket No. 78-4144.

95 Mich.App. 299, 290 N.W.2d 128

Court of Appeals of Michigan.

Feb. 5, 1980.

Rehearing Denied April 3, 1980.

Released for Publication April 4, 1980.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., Edward Jan Setlock, Asst. Atty. Gen., for plaintiff-appellant.

John H. Spelman, St. Joseph, for Palladium Publishing.

Paul F. Applegate, in pro. per.

Stuart F. Meek, Jr., St. Joseph, for UAW.

[95 MICHAPP 301] Before WALSH, P. J., and KELLY and OPPLIGER, ^* JJ.

WALSH, Presiding Judge.

The Michigan Employment Security Commission (hereinafter called the MESC) appeals the order of the Berrien County Circuit Court reversing a decision of the Michigan [95 MICHAPP 302] Employment Security Appeal Board. The appeal board's decision affirmed a determination that Paul F. Applegate (hereinafter called the plaintiff), former employee of defendant Palladium Publishing Company, was entitled to unemployment compensation benefits under the Michigan Employment Security Act, M.C.L. § 421.1 et seq., M.S.A. § 17.501 et seq.

Palladium Publishing Company is a union shop. In the spring of 1975 the company and its employees' representative, Twin Cities Typographical Union, Local 762, negotiated a 3 year contract commencing June 1, 1975, and ending May 31, 1978. The contract provided that the union was the exclusive bargaining representative of certain employees, including plaintiff. The contract raised the amount of pension benefits payable to covered employees. The pension plan is totally funded by the employer. In addition, the contract contained the following provision for mandatory retirement:

"The union agrees that an employee in the composing room or photoengraving department who reaches the age of 65 shall retire on the first of the month following the day he reached 65. Employees who are 65 or older as of May 31, 1975, must retire within 90 days after May 31, 1975."

Plaintiff was employed by Palladium as a compositor from August 20, 1944, until August 29, 1975. At the time of execution of the 1975 contract, plaintiff was over 65 years old. He was advised by the union representative that he would have to retire within 90 days of the effective date of the contract. Since his August 29, 1975, retirement, plaintiff has received monthly pension benefits from Palladium and monthly social security retirement benefits.

[95 MICHAPP 303] Plaintiff did not protest his mandatory retirement. He registered with the local MESC office as being available for work. On September 10, 1975, he applied for unemployment compensation benefits. A determination was made by the commission on October 10, 1975, awarding benefits to him. On November 3, 1975, a redetermination was issued which held that plaintiff was not disqualified for benefits under M.C.L. § 421.29(1)(a); M.S.A. § 17.531(1)(a) (hereinafter referred to as § 29(1)(a)). That subsection provides: "An individual shall be disqualified for benefits in all cases in which he: (a) Has left work voluntarily without good cause attributable to the employer or employing unit." It was ruled that plaintiff was entitled to benefits for 26 weeks at $97 per week. The weekly rate was reduced to $75 to reflect plaintiff's receipt of retirement benefits. M.C.L. § 421.27(f); M.S.A. § 17.529(f). The redetermination was affirmed by a referee on May 14, 1976. Palladium appealed to the Employment Security Appeal Board, which affirmed the referee's decision.

Palladium appealed the appeal board's decision. The circuit court reversed, finding that plaintiff was ineligible for benefits under § 29(1)(a). The court found that plaintiff had left work voluntarily in accordance with the contract negotiated on his behalf by the union. Under the circuit court's ruling, plaintiff must serve 13 requalifying weeks and 13 weeks of benefits will be deducted from his maximum benefit entitlement M.C.L. § 421.29(3), (4); M.S.A. § 17.531(3), (4).

The issue presented is one of first impression in Michigan. Does a union member employee who is compelled to retire under the terms of a collective bargaining agreement reached between his union and his employer leave his job "voluntarily without[95 MICHAPP 304] good cause attributable to the employer" so that he is disqualified for unemployment compensation benefits under § 29(1)(a) of the employment security act?

There is currently a split of authority concerning proper resolution of this issue. See Anno. Unemployment Compensation: Eligibility of Employee Laid Off According to Employer's Mandatory Retirement Plan, 50 A.L.R.3d 880, § 3(a), p. 886, § 4(a), p. 895; 1 B CCH Unemployment Ins. Rep. PP 1975.340, 1975.3404; p. 4493-29; 76 Am.Jur.2d, Unemployment Compensation, § 60, p. 959.

The leading case following the view that persons retired pursuant to mandatory provisions in collective bargaining agreements are eligible for unemployment compensation benefits is Campbell Soup Co. v. Board of Review, 13 N.J. 431, 100 A.2d 287 (1953). The New Jersey Supreme Court held in that case that the claimants had left work involuntarily. The court found unimportant the fact that the claimants, through their agent, the union, had voluntarily subscribed to the collective bargaining agreement. The court noted that each of the claimants had resisted termination and had left against his will. Using a subjective approach the court found the test to be whether the individual employee wanted to continue working.

The contrary and, we think, better reasoned approach was taken by the Supreme Court of Minnesota in Bergseth v. Zinsmaster Baking Co., 252 Minn. 63, 89 N.W.2d 172 (1958). There the court found that, by being a member of the union, the employees had ratified or joined in the decisions of the union and were bound by those decisions. "Any other result would destroy the principles of collective bargaining and render union-management contracts meaningless." 252 Minn. at 70, 89 N.W.2d at 177.

[95 MICHAPP 305] We find unacceptable and unworkable the "subjective" approach of the Campbell court. See 50 A.L.R.3d at 883. Instead, we adopt the analysis of the Bergseth case and affirm the circuit court's ruling that plaintiff is disqualified for unemployment benefits due to his "voluntary" termination of employment. Action taken by employees under a contract negotiated for them by their authorized agent must be considered their voluntary acts. In effect, plaintiff agreed to terminate his employment voluntarily pursuant to the collective bargaining agreement. As observed by the Ohio court in Marcum v. Ohio Match Co., 4 Ohio App.2d 95, 98, 212 N.E.2d 425, 427 (1965), plaintiff, "through his agent, entered into this contract. He chose to accept its benefits including the pension. He must also abide by the duties called for by such agreement." ¹

The MESC argues that, if the collective bargaining agreement is considered a binding agreement by plaintiff to voluntarily terminate his employment with Palladium at retirement age, the agreement is void as contrary to M.C.L. § 421.31; M.S.A. § 17.533, which provides in pertinent part:

"No agreement by an individual to wave (sic ), release, or commute his rights to benefits or any other rights under this act from an employer shall be valid."

[95 MICHAPP 306] Several courts have rejected similar arguments. In Bergseth, supra, for example, the court found that the agreement did not waive benefits to which the employees would otherwise have been entitled. "Rather it is an agreement for the voluntary termination of employment and is, therefore, not prohibited." 252 Minn. at 72 89 N.W.2d at 178. See also Richardson v. Maine Employment Security Comm., 229 A.2d 326, 331 (Me., 1967): "For a right to be waived, released or commuted the right must first exist, though inchoately. There is no right in the mandatory retiree under the facts before us to unemployment benefits upon which this statute can operate."

Under M.C.L. § 421.27(f) unemployment compensation benefits must be reduced by certain retirement benefits. In light of this provision we must stress the limited scope of our holding. It is not our opinion that persons who retire are disqualified from receiving unemployment compensation benefits. On the contrary, our decision is limited to those persons whose contractual mandatory retirement is the cause of their unemployed status. As noted by the Ohio court:

"The reference to the reduction of benefits in the event retirement pay is received does not create a right to receive such benefits. However, if a new job is obtained, and a sufficient length of service is performed, then benefits may be paid in the event of a subsequent lay-off." Marcum v. Ohio Match Co., supra, 4 Ohio App.2d at 98, 212 N.E.2d at 427.

Because we find that plaintiff voluntarily left his work without good cause attributable to his employer, ² we affirm reversal of the...