Bridgestone/Firestone, Inc. v. Employment Appeal Bd.

• Decision Date: 22 October 1997
• Docket Number: No. 96-1267,96-1267
• Citation: 570 N.W.2d 85
• Parties: BRIDGESTONE/FIRESTONE, INC., Appellant, v. EMPLOYMENT APPEAL BOARD, Appellee, and Stanley M. Abrahamson, et al., Appellees.
• Court: Iowa Supreme Court

Page 85

570 N.W.2d 85

BRIDGESTONE/FIRESTONE, INC., Appellant, v. EMPLOYMENT APPEAL BOARD, Appellee, and Stanley M. Abrahamson, et al., Appellees.

No. 96-1267.

Supreme Court of Iowa.

Oct. 22, 1997.

Thomas W. Foley, John B. Tuffnell, and Thomas M. Zurek of Nyemaster, Goode, McLaughlin, Voigts, West, Hansell & O'Brien, P.C., Des Moines, for appellant.

William C. Whitten, Des Moines, for appellee Board.

Ed Skinner of Skinner & Beattie, Altoona, and Mark T. Hedburg of Hedburg, Ward, Owens, & Vonderhaar, Des Moines, for appellee claimants.

Considered by LARSON, P.J., and CARTER, LAVORATO, NEUMAN, and SNELL, JJ.

LAVORATO, Justice.

The issue we face in this judicial review proceeding is whether a letter the employer sent striking workers notifying them that they were being permanently replaced severed the employment relationship between the employer and these claimants. The agency found there was such a severance of employment and that the severance was the cause of the unemployment. The agency therefore concluded that the striking workers who applied for unemployment benefits (claimants) were not disqualified from such benefits under the provisions of Iowa Code section 96.5(4) (1993), a labor dispute disqualification provision. Because there was no evidence of misconduct, the agency allowed unemployment benefits to the claimants.

The district court concluded there was substantial evidence to support these findings as to those claimants who received the letter and affirmed the agency's award of benefits to them. We affirm on this issue.

Contrary to the agency, the district court found that not all of the claimants had received the replacement letter. The district court therefore remanded the case to the agency for a determination of whether under section 96.5(4) a work stoppage existed because of a labor dispute thereby barring those claimants who did not receive the replacement letter from receiving unemployment benefits. The effect of this remand order was to reverse the agency's decision awarding unemployment benefits as to these claimants. We affirm the district court's remand on this issue.

I. Background Facts and Proceedings.

Bridgestone produces tires for automobiles, trucks, and implements. Many of Bridgestone's Des Moines production employees are members of United Rubber Workers Local 310 (Union). Members of the Union went on strike on July 12, 1994. The strike ended on May 22, 1995, when the Union unconditionally offered to return to work. This appeal, however, concerns events that happened mid-way through the strike in January 1995.

Although Bridgestone began hiring temporary replacements as soon as the strike began, the company began hiring permanent replacements on January 4, 1995. Between January 7 and February 19, 1995, Bridgestone sent letters to a number of striking workers. Neither party introduced a copy of the actual letter sent. Nevertheless there is in evidence a copy of a letter Bridgestone sent to an employee who was on strike at the company's facility in Indiana. No one disputes that the contents of this letter represent what was sent to the striking workers in the case before us.

The letter stated in part:

Bridgestone/Firestone, Inc ... sent you a certified letter dated January 4, 1995, informing you that you had been permanently replaced and that you are entitled to certain preferential hiring rights. There has been some confusion about that letter.

To return to active employment, you must make an unconditional offer to return to work. Should you decide to do so, if there are no vacancies in your position or a substantially equivalent position, you will then be placed on the preferential hiring list, and will be offered reinstatement to your previous position or a substantially equivalent position as such vacancies arise. Absent such an unconditional offer to return to work, we will assume that you are remaining on strike.

Before the strike ended, none of the permanently replaced striking workers unconditionally offered to return to work. Instead, they filed for unemployment compensation. A Job Service representative granted the unemployment compensation in a series of determinations from January 31 to March 3, 1995. Bridgestone promptly appealed each determination on the ground that the claimants were disqualified from receiving benefits because their unemployment was due to a work stoppage because of a labor dispute. See Iowa Code § 96.5(4) (stating claimants are disqualified from unemployment benefits if their "unemployment is due to a work stoppage because of a labor dispute").

By agreement, the parties consolidated the claims which totaled 604, submitted them to an administrative law judge (ALJ) on a certified record, and waived an evidentiary hearing. Of the 604 claimants, 501 had received the permanent replacement letter mentioned earlier; 103 had not.

Before submission, the ALJ wrote to the parties pointing out that the Job Service representatives' decisions had allowed benefits "upon a finding that the individual has been permanently replaced and thus is no longer unemployed as the result of a work stoppage incident to a labor dispute while others have received benefits upon a finding that the work stoppage has ended due to increased production at the employer's local facility." The ALJ suggested to the parties that the hearing on the merits "include evidence concerning which employees have received replacement letters and evidence as to the present level of productivity at the employer's facility."

The certified record the parties submitted to the ALJ contained evidence as the ALJ had requested. Based on this evidence, the ALJ found that "the stoppage of work ended January 15, 1995, because of the employer's renewed production activity." The ALJ therefore concluded that disqualification for unemployment benefits under Iowa Code section 96.5(4) ended on that date. In reaching its decision on this issue, the ALJ relied on Crescent Chevrolet v. Iowa Department of Job Service, 429 N.W.2d 148 (Iowa 1988) (holding that unemployment caused by labor dispute and its consequent work stoppage such as would disqualify claimants from unemployment benefits under Iowa Code section 96.5(4) ends when employer's operations are returned to a substantially normal basis, which may be before or after termination of underlying labor dispute).

The ALJ also found that the disqualification for benefits under Iowa Code section 96.5(4) no longer operated once the claimants had been permanently replaced. Acknowledging the issue of unemployment benefits for permanently replaced workers constituted an issue of first impression in Iowa, the ALJ wrote:

The language of Pennsylvania's labor dispute statute is similar to that of Iowa Code section 96.5(4). See 43 Pa. Cons.Stat. § 802(d). In Canonsburg Gen'l Hosp. v. Unemployment Compensation Bd. of Review, 156 Pa.Cmwlth. 533, 628 A.2d 503 (1993), the [court] ruled that the hiring of replacement workers, absent evidence of and a finding that continuing employment without rehiring was available to the striking workers, establishes that the striking workers have been terminated. The Supreme Court of Pennsylvania affirmed the Commonwealth Court in a per curiam decision. See Canonsburg [General Hosp. v. Unemployment Compensation Bd. of Review], 540 Pa. 531, 658 A.2d 790, 790 (1995).

Conflicting results have been reached by some of Iowa's neighboring states when they have considered the impact of replacement workers. It must be noted, however, that the wording of the labor dispute provisions in their respective unemployment insurance laws are significantly different than the wording used by Iowa and Pennsylvania. Finding no contrary result in reported cases from other states having similar labor dispute language, the administrative law judge accepts Canonsburg [ ] as persuasive authority.

The ALJ therefore found the permanent replacement of striking employees severed the employment relationship. Because the relationship was severed, the claimants' unemployment under section 96.5(4) was no longer "due to a stoppage of work which exists because of a labor dispute." For that reason the disqualification in section 96.5(4) no longer applied to these claimants.

Because 301 claimants were sent replacement letters during the week of January 1, 1995, the ALJ concluded that these claimants were unemployed due to a stoppage of work through the week ending January 7, 1995, and were no longer disqualified as of January 8. The remaining 200 claimants who were sent replacement letters did not receive letters until after January 14. They were therefore no longer disqualified after January 14. As mentioned, there were 103 claimants who did not receive replacement letters. They were also no longer disqualified after January 14 because the ALJ had determined that the work stoppage had ceased as of January 15 when Bridgestone's operations had returned to a substantially normal basis.

Bridgestone appealed to the Employment Appeal Board, challenging the ALJ's finding on the permanent replacement issue and the cessation of work stoppage issue. Contrary to the evidence, the board incorrectly assumed that all 604 claimants had received the permanent replacement letter. The board therefore limited its decision to the permanent replacement issue. In deciding the permanent replacement issue, the board relied on an administrative rule which provided:

The relationship between employer and employee continues during the period of the labor dispute unless severed by the employer or employee.

a. If the relationship is severed by the employer, Section 96.5(2) concerning discharge for misconduct shall govern.

b. If the relationship is severed by the employee, Section 96.5(1) concerning voluntary leaving shall govern.

Iowa Admin. Code r. 345--4.34(3) (now codified at Iowa Admin. Code r. 871--24.34 (1997)).

In affirming the decision of the ALJ as to the eligibility of all...