Bedwell v. Appeal Bd. of Mich. Employment Sec. Commission

• Decision Date: 07 September 1962
• Docket Number: No. 66,66
• Parties: Jack L. BEDWELL et al., Plaintiffs and Appellee, v. APPEAL BOARD OF THE MICHIGAN EMPLOYMENT SECURITY COMMISSION, Michigan Employment Security Commission, and Whitehall Leather Company, Division of General Shoe Corporation, Defendants and Appellants.
• Court: Michigan Supreme Court

Page 920

116 N.W.2d 920

367 Mich. 415

Jack L. BEDWELL et al., Plaintiffs and Appellee, v. APPEAL BOARD OF THE MICHIGAN EMPLOYMENT SECURITY COMMISSION Michigan Employment Security Commission, and Whitehall Leather Company, Division of General Shoe Corporation Defendants and Appellants.

No. 66.

Supreme Court of Michigan.

Sept. 7, 1962.

Beaumont, Smith & Harris, Detroit, by Frank E. Cooper, Detroit, Sessions & Barlow, Muskegon, for Whitehall Leather Co., defendants and appellants.

Marcus, McCroskey, Finucan & Libner, Muskegon (Paul A. Williams, Grand Rapids, of counsel), for plaintiffs and appellees.

Before the Entire Bench.

DETHMERS, Justice.

This is an unemployment compensation case. The ultimate issue is whether the facts in the case bring it within the disqualification-for-benefits provisions of C.L.S.1956, § 421.29, subd. (1)(b) (Stat.Ann.1960 Rev. § 17.531 subd. [b]), applicable to unemployment due to a stoppage of work existing because of a labor dispute. The appeal board found that the stoppage of work was caused by a labor dispute, but the circuit court, on certiorari, held that it was caused by the defendant employer's desire to reduce its production and the inventory of its product in process of production and that the decision of the appeal board was against the great weight of the evidence. On defendants' appeal here the question is whether the circuit court was correct in so holding with respect to the decision of the appeal board.

Defendant employer, hereinafter called the defendant, is engaged in the manufacture of leather, which involves several successive processing steps. It is a wholly-owned subsidiary of General Shoe Corporation, which buys all of its production.

On April 8, 1957, the union representing defendant's employees served a 60-day notice on defendant that the collective bargaining contract between them would terminate on June 8, 1957. The contract contained the following clause:

'(C) SPOILAGE & PROPERTY PROTECTION.

'(1) Should a strike or work stoppage occur, all perishable stock in process shall be worked into a nonperishable state, which means working the stock into crust. Necessary care shall be given the skins and hides on the Company's premises to prevent spoilage; and maintenance requirements for the proper operation of the Tannery are hereby guaranteed to the Company.'

Defendant claimed that if a strike occurred and all work stopped at once, with hides in the several stages of processing, those not completed would be subject to puterfaction and obsolescence, with a threatened potential loss to defendant of $122,850. At a meeting between union and company officials on April 26th defendant so informed the union and requested that an agreement be made that the necessary employees would continued to work past the June 8th strike deadline in order to finish up all work in process and thus avoid such loss. This the union refused, stating that, unless a new contract were entered into by June 7th, a strike would commence at midnight of that date. Defendant advised that, unless such agreement were made, it would be necessary for it to discontinue the initial step in the leather processing with consequent layoffs of employees engaged in that step, not later than May 20th, with similar subsequent, progressive discontinuances and layoffs in the successive steps, in order to insure that there would be no unprocessed or unfinished hides subject to spoilage or obsolescence left, if or when a strike should commence and operations cease on June 8th. Later, defendant approached the union again with a proposal for such agreement and advised that, if not agreed upon, initial layoffs would have to begin on May 6th to make certain that everything in process would be completed by June 8th. The proposed agreement was not approved by the union.

The initial layoffs commenced, accordingly, on May oth and followed progressively in the succeeding steps. On June 6th a new contract was entered into and a strike averated. The employees then were called back to work, commencing on June 10th in the initial stage and thereafter, step by step, in the remaining stages.

Claims for compensation are for the period of the indicated temporary layoffs.

In its decision the appeal board said:

'In the instant case, the claimant, through the union, caused the collective bargaining agreement to be terminated on midnight, June 7, 1957, and refused the employer's request to put into effect an extension agreement that would have continued operations after June 7, 1957. Because of this action on the part of the union, the employer was compelled to take the action it did on May 6, 1957, by dropping the 'soaking' operation.

'The record establishes that on the basis of past experience it would take between 18 1/2 and 19 1/2 days to bring the leather to the crust stage where spoilage through putrefaction could be averted temporarily and between 24 or 25 days to finish the goods in process to a point where they would be ready for shipment. The employer concluded that because of the work in process and and the threatened work stoppage it was necessary to discontinue 'soaks' on May 6. The employer further contended that had it not been for the labor dispute the work stoppage of May 6th would not have occurred. In support of this contention the employer's unrebutted testimony established that it had not wanted to discontinue 'soaks'; that several attempts were made to extend the primary contract in order to continue the 'soak' operation up to the termination date of the primary contract; that there was never a problem of being unable to sell its inventory, so the large inventory at the time of negotiations was of little concern; that over the past 16 years there had never been a question of the parent company not taking all the production of the employer; that general economic conditions were such as to make the employer confident that the arrangement would be continued; and, that having failed in getting an agreement to extend production beyond June 7, 1957, the employer, fearful that it would lose over $100,000 in leather spoilage if it continued full production to June 7, 1957, discontinued the initial processing on May 6, 1957. * * *

'The union advised the...