Central Foundry Division of General Motors Corp. v. Holland

• Decision Date: 25 March 1976
• Docket Number: No. 13138,13138
• Citation: Central Foundry Division of General Motors Corp. v. Holland, 345 N.E.2d 143, 36 Ill.App.3d 998 (Ill. App. 1976)
• Parties: CENTRAL FOUNDRY DIVISION OF GENERAL MOTORS CORPORATION, a Delaware Corporation, Plaintiff-Appellant, v. Kenneth W. HOLLAND, Director, Department of Labor, et al., Defendants- Appellees.
• Court: Appellate Court of Illinois

Page 143

345 N.E.2d 143

36 Ill.App.3d 998

CENTRAL FOUNDRY DIVISION OF GENERAL MOTORS CORPORATION, a Delaware Corporation, Plaintiff-Appellant, v. Kenneth W. HOLLAND, Director, Department of Labor, et al Defendants- Appellees.

No. 13138.

Appellate Court of Illinois, Fourth District.

March 25, 1976.

Pope, Ballard, Shepard & Fowle, Ellis A. Ballard, Thomas D. Nyhan, John B. Lashbrook, Chicago, for the Central Foundry Division of General Motors Corp., Frazer F. Hilder, Gen. Counsel, General Motors Corp., Detroit, Mich., Larry L. Lessen, Sebat, Swanson, Banks, Lessen & Garman, Danville, of counsel.

Harold A. Katz, Michael B. Erp, Chicago, for Local 579, United Automobile, Aerospace and Agricultural Implement Workers of America, and the Individual Employee Claimants; Katz & Friedman, Chicago, William J. Scott, Atty. Gen., Chicago, John D. Whitenack, Asst. Atty. Gen., of counsel.

CRAVEN, Justice.

This appeal is by plaintiff Central Foundry Division of General Motors Corporation (Central Foundry) from a judgment of the circuit court of Vermilion County affirming a decision of the Illinois Department of Labor that defendant-claimants were not ineligible for unemployment benefits. The Department and the trial court found that the unemployment of defendant-claimants was not due to a stoppage of work existing because of a labor dispute at the Central Foundry premises in Danville, Illinois. The sole issue on review is whether that finding is contrary to the manifest weight of the evidence. We judge it is not and affirm.

All of the claimants are employed at the Central Foundry plant, which is a geographically separate foundry unit of General Motors (GM) and is the only GM plant in Danville, Illinois. Central Foundry is a supplier of automobile and truck parts, producing gray iron metal castings (engine parts, transmission parts, axle parts, Etc.) primarily for GM cars and trucks (about 80 percent of Central Foundry's business), but also for GM's competitors (about 20 percent of Central Foundry's business). Central Foundry is a wholly owned division of GM, but is not a 'captive' foundry. It receives no orders from other GM plants solely as a consequence of its status as a GM division. It competes for work and customers as though it were wholly independent of GM. All hiring is done locally and seniority is not accorded to other GM employees transferring to Danville. All purchases of materials necessary to operate Central Foundry are initiated locally. All bills of lading are prepared in Danville. All shipments are made directly to its customers from Danville. Central Foundry treats all of its customers alike, which includes GM and GM's competitors. Central Foundry grants no price reductions to GM and receives no subsidies from GM.

Claimants are members of the United Auto Workers, Local Union No. 579, which is an affiliate of the International Union, United Automobile, Aerospace and Agricultrual Implement Workers of America (International Union). Two collective bargaining agreements govern the working conditions at Central Foundry. A national labor agreement covers all 400,000 GM employees. It is bargained in Detroit through negotiations between the International Union and GM. In addition, local agreements exist between the local unions and the GM divisions; these contracts come up for renegotiation at the same time as the overall national agreement, and are bargained locally at the various GM plants involved. The national and local agreements governing claimants were due to expire at 11:59 p.m., December 14, 1970. Notices of termination of the contract between GM and the unions were exchanged, setting an effective expiration date of September 14, 1970. Negotiations at the national level, at which claimants were represented through the International Union's sub-council No. 5, commenced July 15, 1970. Negotiations between Central Foundry and Local No. 579 commenced July 20, 1970.

In August 1970, the International Union informed GM that if no agreement was reached, a 'selective strike' would be directed against G.M. A selective strike is a collective bargaining strategy employed by the International Union. Only the strike target is shut down. Competing companies are deliberately not struck, but rather are kept in business in order to maximize economic pressure on the target company. The International Union starts with the contracts at Ford, Chrysler, and GM, which all come up for negotiation on the same date. Bargaining for new contracts commences with simultaneous negotiations with these three companies separately. If agreement is not reached, the International Union designates one of the three as a strike target, and then a strike is called against that company. Bargaining then proceeds to a conclusion with that company, while negotiations with the other two are held in abeyance. The contract ultimately reached with the target company is then used as a pattern for agreements with the other companies. When GM is the strike target, the selective strike strategy requires that certain GM plants are not struck. The reason is that GM is a major supplier of certain parts to Ford, Chrysler, and American Motors. These companies would have to shut down if GM stopped delivering their parts. Therefore, any division of GM (such as Central Foundry) which supplies parts to Ford, Chrysler, or American Moters continues in operation. Those divisions shut down as orders drop off from the struck GM plants.

Following the commencement of the national strike, the regular 19 1/2 percent of Central Foundry's production for customers such as Ford, Chrysler, and American Motors continued. Production for usage in GM cars and trucks was virtually halted as a result of the stop orders issued by the other GM divisions to which Central Foundry normally ships. As production was curtailed, employees were sent home. While the contract negotiations continued, 1181 out of a total of 2017 Central Foundry workers became unemployed. In addition, approximately 45 workers previously laid off continued to await recall.

During the negotiations, none of the members of Local No. 579 refused to work at Central Foundry. No picketing occurred at the plant. A formal operating policy during the no-contract period was established by management and presented to claimants. The existing local grievance policy and pension plan was continued. The wage rates which prevailed before termination of the old contract were maintained. The company's decision was to continue operations at Danville to the extent that business warranted. Local No. 579 encouraged its members to work during this period. No harassment in any form took place. During this time, Claimants who were sent home from work obtained advances from the union, subject to the obligation to repay if and when they received unemployment compensation. The amounts advanced were the same amounts as the strike benefits paid by the International Union to its members on strike at other GM plants.

An agreement between Central Foundry and Local No. 579 was ratified November 16, 1970. The International Union and GM reached an agreement which became effective November 23, 1970. The national contract provided increased wages and benefits for all union members, including claimants. Because of unresolved local issues at other GM plants, full production at Central Foundry was delayed until December 12, 1970. On October 13, 1970, a claims adjuster for the Illinois Department of Labor determined that claimants were not ineligible for unemployment compensation. After a de novo hearing before a representative of the Illinois Director of Labor, the following findings of fact were made:

'1. There was a curtailment of production at the Central Foundry in Danville, Illinois, during the period from September 15, 1970 to December 12, 1970.

2. The aforesaid curtailment of production was not due to a labor dispute existing at the aforesaid premises during the period from September 15, 1970 to December 12, 1970.

3. The aforesaid curtailment of production was due to a labor dispute between the International U.A.W. and certain General Motors plants which were geographically isolated from the Central Foundry at Danville, Illinois.

4. The unemployment of the claimants herein was not due to a stoppage of work which existed because of a labor dispute at the establishment at which each was last employed during the appropriate periods from September 15, 1970 to December 12, 1970.'

On administrative review, the trial court affirmed the decision of the Department of Labor as being supported by the manifest weight of the evidence, specifically finding:

'(c) The unemployment of the defendant-claimants was not due to a stoppage of work existing because of a labor dispute at the premises of the plaintiff at Danville, Illinois.'

The crux of this appeal is whether the work stoppage and resulting unemployment at Central Foundry were the result of a labor dispute at Central Foundry. Claimants' position is that, given that Central Foundry was maintained in operation as part of a national strike strategy, any labor dispute existing at Central Foundry did not cause the work stoppage and resulting unemployment; and that the unemployment was the result of a curtailment in production caused by the labor dispute between the International Union and certain GM plants geographically isolated from Central Foundry, which caused a stop in purchase orders. Central Foundry's position is that the situation at Central Foundry was a part of the labor dispute between GM and the International Union, and that therefore the labor dispute which caused the work stoppage and unemployment was at Central Foundry. Both parties agree that the local contract negotiations are irrelevant to this appeal.

Section 604 of the Unemployment Compensation Act provides:

'An individual shall be ineligible for benefits for any week with respect to which it is found that his total or...