Doerr v. Universal Engineering Division, Houdaille Industries, Inc.

• Citation: 90 Mich.App. 455,282 N.W.2d 352
• Decision Date: 05 June 1979
• Docket Number: Docket No. 78-389
• Parties: Carl DOERR, George Kays, John Stafford, Richard Fabbro, Arthur Huffman, Okay Kean, Eugene Krascell, John Peariso, John Ratza, Marcus Rumel, William Scott, Oscar Sears and Ida Wenzell, Plaintiffs-Appellants, v. UNIVERSAL ENGINEERING DIVISION, HOUDAILLE INDUSTRIES, INC., and the Michigan Employment Security Commission, Defendants-Appellees.
• Court: Court of Appeal of Michigan (US)

Page 352

282 N.W.2d 352

90 Mich.App. 455

Carl DOERR, George Kays, John Stafford, Richard Fabbro Arthur Huffman, Okay Kean, Eugene Krascell, John Peariso John Ratza, Marcus Rumel, William Scott, Oscar Sears and Ida Wenzell, Plaintiffs-Appellants, v. UNIVERSAL ENGINEERING DIVISION, HOUDAILLE INDUSTRIES, INC. and the Michigan Employment Security Commission Defendants-Appellees.

Docket No. 78-389.

Court of Appeals of Michigan.

June 5, 1979.

Released for Publication Aug. 22, 1979.

Marston, Sachs, Nunn, Kates, Kadushin & O'Hara, P. C. by Charles Looman, Flint, Jordan Rossen, Assoc. Gen. Counsel, Detroit, for plaintiffs-appellants.

Dykema, Gossett, Spencer, Goodnow & Trigg by Cameron H. Piggott and James D. Tracy, Detroit, for Universal.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen. by Felix E. League, Asst. Atty. Gen., for MESC.

Beaumont, Smith & Harris by J. Walker Henry, Detroit, amicus curiae.

Before BASHARA, P. J., and V. J. BRENNAN and MAHER, JJ.

V. J. BRENNAN, Judge.

The facts giving rise to the present controversy are set forth in the dissenting opinion of Judge Bashara. The question to be resolved is whether the unemployment of the plaintiffs at bar was the result of a labor dispute in active progress.

As Judge Bashara points out, the pertinent inquiry concerns the "efficient cause" of the unemployment. Accordingly, if the primary or controlling reason for the lockout is adverse economic conditions, then the resultant unemployment is not "due" to a labor dispute. As stated by Judge Bashara this is a question of fact. However, upon my review, the record sufficiently indicates that the lockout was prompted almost entirely by economic factors. Thus the Board's decision is not supported by "competent, material and substantial evidence".

The collective bargaining agreement in effect prior to the lockout provided it was to remain in force:

"until June 1, 1971 and thereafter for successive periods of sixty (60) days unless either party shall, on or before the 60th day prior to expiration, serve written notice on the parties of the desire to terminate."

On April 1, 1971, the Employer served notice to terminate and proposed a meeting to "discuss the terms and conditions for the new agreement". At the first of some 20 meetings the union made clear its willingness to continue work under the terms of the prior contract. Throughout the negotiations, the employer painted a rather bleak economic picture of the industry with decreasing sales, increasing competition from abroad and a declining profit level. This was emphasized repeatedly as was the fact that the employer had fallen to a loss position.

The union restated its willingness to work without a new contract with the "understanding" that any new agreement be retroactive. The union again made it clear that it had no intention to strike. Judge Bashara interprets the retroactivity aspect of the new agreement as a demand conditioning the union's offer to work without a contract. The record is unsupportive of this interpretation, and the union's communication is more readily interpreted as a mere optimistic assertion as to the retroactivity of any new contract. The fact that the new agreement as entered into was not retroactive is equally indicative of the nondemand nature of the retroactivity.

In any event the factual determination as to the cause of the unemployment involves a balancing of the various factors mentioned above. The union's mere assertion of retroactivity, which occurred only once and was never mentioned by the employer as precipitating the lockout, is clearly outweighed by the fact that the employer, during an economic slowdown, terminated the contract and repeatedly emphasized the general adverse economic position of the industry. Upon due consideration of the above, I conclude that the lockout was really a disguised layoff and not the result of a labor dispute. The plaintiffs are therefore entitled to MESC benefits.

I concur in Judge Bashara's opinion relating to constitutionality and the rights of the states to enact their own unemployment compensation acts.

I would reverse.

BASHARA, Presiding Judge, dissenting.

This is an appeal from the Genesee Circuit Court affirming a Michigan Employment Security Appeal Board's determination denying unemployment benefits to plaintiffs and upholding the constitutionality of the legislative provision under which the denial was unauthorized.

Plaintiffs are employees of defendant company. They were represented for collective bargaining purposes by the United Auto Workers Union. The UAW and Universal Engineering Division, Houdaille Industries, Inc., had been bound by a collective bargaining agreement which expired by its terms on June 1, 1971.

On April 1, 1971, the Company gave notice of its intent to terminate the agreement as of May 31, 1971. A series of some 23 meetings were held by representatives of both sides concerning wages, seniority, length of the new contract and flexibility of the work force.

During the negotiations, the UAW expressed a desire to continue working under the existing agreement, even beyond the date of expiration. However, it indicated that such continuation of work was contingent on making any new agreement retroactive to the June 1st expiration date.

On May 26, 1971, the company sent a letter to the union announcing that unless their final proposals were accepted, it planned to close the plant. The union responded with counter proposals on May 28 and May 30.

On May 31, 1971, the company indeed locked out its employees. Two weeks later, negotiations were resumed. The lockout was terminated on August 23, 1971. The employees returned to work without a contract. The new contract was signed and ratified on January 13, 1972. By its terms, it was effective December 27, 1971.

The employees applied to the Michigan Employment Security Commission for unemployment benefits during the period of the lockout. The multi-claimant benefit section of the MESC determined that their unemployment was due to a "labor dispute in active progress", and disqualified them from receiving benefits by virtue of M.C.L. § 421.29(8); M.S.A. § 17.531(8). This finding was confirmed by a hearing referee at an evidentiary hearing, and by the Appeal Board.

The Genesee Circuit Court upheld the Appeal Board's determination that the claimants' unemployment was due to "a labor dispute in active progress", but found that § 29(8), the applicable section of the Employment Security Act, was unconstitutional in that it deprived claimants of equal protection under the law. On motion for rehearing, the court reversed itself under the authority of Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977).

Plaintiffs first contend that the finding of the Appeal Board that plaintiffs were unemployed due to a labor dispute in active progress is not supported by the evidence. The relevant portion of the applicable statute, M.C.L. § 421.29(8); M.S.A. § 17.531(8), is as follows:

"An individual shall be disqualified for benefits for any week with respect to which his total or partial unemployment is due to a labor dispute in active progress, or to shutdown or start-up operations caused by that labor dispute, in the establishment in which he is or was last employed, or to a labor dispute, other than a lockout, in active progress, or to shutdown or start-up operations caused by that labor dispute, in any other establishment within the United States which is functionally integrated with the establishment and is operated by the same employing unit."

Any attempt to answer the question of whether, under the facts of this case, a labor dispute was in active progress must begin with a definition of the term "labor dispute". The term has been clearly defined by our Supreme Court as "a controversy between employer and employees regarding hours, wages, conditions of employment". General Motors Corp. v. Employment Security Comm., 378 Mich. 110, 117, 142 N.W.2d 686, 688 (1966), citing Lillard v. Employment Security Comm., 364 Mich. 401, 420, 110 N.W.2d 910 (1961). Cf., M.C.L. § 421.29(8)(b); M.S.A. § 17.531(8)(b), M.C.L. § 423.2(b); M.S.A. § 17.454(2)(b).

We next consider the meaning of the words "due to". Plaintiffs argue that the standard must be one of absolute causation. In other words, the disqualification would occur only if the sole reason for plaintiffs' unemployment was due to a labor dispute.

Rather, I would opt for the theory espoused by the MESC as the "efficient cause" or "cause-in-fact" concept. The application of this test is to ask whether plaintiffs would have been unemployed despite the labor dispute. If so, then the unemployment was not "caused by" or "due to" the labor dispute. On the other hand, if the unemployment would have occurred because of the labor dispute, in spite of any other reason including economics, the causality necessary to prove disqualification has been established.

In point of fact, all of the cases relied on by plaintiffs in support of the "absolute cause" theory are actually cases standing for the "cause-in-fact" proposition. See Scott v. Budd Co., 380 Mich. 29, 155 N.W.2d 161 (1968); Abbott v. Unemployment Compensation Comm., 323 Mich. 32, 34 N.W.2d 542 (1948); Dann v. Employment Security Comm., 38 Mich.App. 608, 196 N.W.2d 785 (1972).

Finally, it should be noted that no labor dispute is ever decided in a vacuum. Practical considerations such as economics guide both management and labor in determining whether a strike lockout should be effectuated, and how long it should be in effect.

Having defined the terms, we are thus led to a resolution of the question. The issue is one of fact. Bedwell v. Employment Security Comm., 367 Mich. 415, 116 N.W.2d 920 (1962); Baker v. General Motors Corp., 74 Mich.App. 237, 254 N.W.2d 45 (1977).

By constitution, statute and case law, findings of the Appeal Board must be left...