Eastalco Aluminum Co. v. Board of Appeals, Dept. of Employment and Training

• Decision Date: 01 September 1987
• Docket Number: No. 181,181
• Citation: 314 Md. 460,551 A.2d 121
• Parties: EASTALCO ALUMINUM COMPANY v. BOARD OF APPEALS, DEPARTMENT OF EMPLOYMENT AND TRAINING and John H. Jones et al. ,
• Court: Maryland Court of Appeals

Page 460

314 Md. 460

551 A.2d 121

EASTALCO ALUMINUM COMPANY v. BOARD OF APPEALS, DEPARTMENT OF EMPLOYMENT AND TRAINING and John H. Jones et al.

No. 181, Sept. Term, 1987.

Court of Appeals of Maryland.

Dec. 27, 1988.

N. Peter Lareau (Darrell R. VanDeusen, Venable, Baetjer and Howard, all on brief), Baltimore, for appellant.

Amy S. Scherr, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., both on brief), Baltimore, Robert Fulton Dashiell (I. Duke Avnet, David S. Epstein, Wartzman, Rombro, Omansky, Blibaum & Simons, P.A., all on brief), Baltimore, for appellee.

J. Cookman Boyd, Jr., Rob Ross Hendrickson, Boyd, Benson & Hendrickson, all on brief, Baltimore, amicus curiae for The Maryland Chamber of Commerce.

William H. Zinman on brief of Baltimore, amicus curiae for The Maryland State & D.C. AFL-CIO.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS and BLACKWELL, JJ.

BLACKWELL, Judge.

This unemployment compensation case involves an interpretation of Maryland Code (1957, 1985 Repl.Vol.), Article 95A, § 6(e), which provides in pertinent part that individuals shall be disqualified for unemployment benefits if their "unemployment is due to a stoppage of work, other than a lockout, which exists because of a labor dispute ..." (emphasis added). ¹ We granted certiorari to determine whether the employees' refusal to accept available work offered by the employer, at terms specified by the employer, constitutes a "lockout." Because we answer this issue in the affirmative, the employees in the present case were entitled to unemployment compensation and the ruling of the circuit court was correct.

The following factual background was included in the Findings of Fact of the Special Examiner, which were later adopted by the Board of Appeals of the State Department of Employment and Training. ² Appellant, Eastalco Aluminum Company (Eastalco), and the United Steelworkers of America, Local Union 7886 (Union) were parties to a collective bargaining agreement which expired at midnight on July 31, 1986. In May of 1986, Eastalco and the Union notified each other of their mutual desire to commence negotiations in an effort to reach a new agreement. The parties held several meetings, two of which were held immediately preceding the expiration of the contract. Throughout the negotiations, Eastalco proposed that the Union accept certain concessions in the terms and conditions of employment. ³ The Union insisted that it was unwilling to accept the concessions. ⁴ The parties were unable to reach an agreement by midnight, July 31, 1986.

During the last days of negotiation prior to the actual stoppage of work, the plant was substantially damaged by unknown individuals. Eastalco used additional security personnel in an effort to protect the plant equipment. Management was also utilized in an attempt to minimize damage and continue production. At approximately 6:30 p.m. on July 31, 1986, Eastalco began replacing Union employees with management personnel and outside non-union employees. Despite the transition, the Union personnel who had been scheduled to work that evening were paid for their full shift. Subsequent to July 31, 1986, any Union person who desired to enter the plant facilities was permitted to do so, but the individual had to be accompanied by security personnel.

Prior to and at the time the parties broke off negotiations on July 31, 1986, Eastalco informed the Union that work was available for employees after the contract expired under the terms and conditions of the proposal which the company had presented to the Union at that time. ⁵ The Union rejected this offer and instead proposed that the Company extend the agreement which was about to expire. The Union offered to continue working until a new collective bargaining agreement could be reached. When the parties were unable to agree upon the terms and conditions under which the employees would work after expiration of the agreement, the Union established picket lines.

At no time did Eastalco offer the Union the opportunity to continue working under the terms and conditions of the expired contract. ⁶ After July 31, 1986, the Union reiterated its offer to return to work under the terms of the expired contract pending negotiations. Eastalco again rejected the offer, insisting that the employees could return to work only under the terms and conditions of its proposal. The Union changed its picket signs to read "Locked Out," and the employees applied for unemployment benefits.

The Special Examiner found that a work stoppage did occur at the Eastalco plant, and that the employees "were locked out because of the insistence [of] the employer to gain concessions from them." ⁷ The Examiner reasoned that the claimants were "locked out" as a result of not being "permitted to continue working under the terms of their agreement, and it was the employer who was seeking a change in the status quo which caused the unemployment of the claimants." Pursuant to § 6(e), the claimants were eligible for unemployment benefits.

Subsequently, the Board of Appeals affirmed the conclusions of the Special Examiner, and stated:

Using the words of the Memco decision [Memco et al. v. Maryland Employment Security Administration, et al., 280 Md. 536, 545-6, 375 A.2d 1086, 1092 (1977) ] quite literally, the Board finds that the employer's refusal to maintain the status quo and allow the workers to continue working under the same terms and conditions as previously, in the face of the employees' explicit offer to do so, constitutes a lockout within the meaning of Section 6(e) of the law.

The Board of Appeals concluded that this application of the lockout exception gives an "adjudicating body a definable yardstick with which to judge such a situation without becoming entangled in the equities of the parties' collective bargaining positions, and the whole history of the industry in question." The Board of Appeals determined that it was inappropriate to review the respective merits of the labor dispute. The only relevant consideration is whether the claimants are entitled to unemployment benefits under the Maryland statute.

The Circuit Court for Frederick County affirmed the reasoning of the Board of Appeals. ⁸ Eastalco appealed to the Court of Special Appeals. We granted certiorari prior to a decision by that court to determine the proper construction of § 6(e) of the Act.

Pursuant to Art. 95A, § 7(h), "the findings of the Board of Appeals as to the facts, if supported by competent, material and substantial evidence in view of the entire record, and in the absence of fraud, shall be conclusive, and the jurisdiction of said court shall be confined to questions of law." As otherwise stated, a reviewing court shall apply the substantial evidence test to the final decisions of an administrative agency, but it must not itself make independent findings of fact or substitute its judgment for that of the agency. Board of Education of Montgomery County v. Paynter, 303 Md. 22, 35, 491 A.2d 1186, 1192 (1985). However, this does not reduce the function of a reviewing court to determine whether the administrative agency made an error of law. Id. at 35, 491 A.2d at 1192-93. The scope of review concerns whether a reasoning mind could have reached the factual conclusion the agency reached. Id.; see also Baltimore Lutheran High School v. Emp. Sec. Admin., 302 Md. 649, 662, 490 A.2d 701, 708 (1985); Bulluck v. Pelham Wood Apts., 283 Md. 505, 512-13, 390 A.2d 1119, 1123 (1978) (citations omitted). ⁹ The appellate court also must review the agency's decision in a light most favorable to the agency, since decisions of administrative agencies are prima facie correct and carry with them the presumption of validity. Id. [303 Md.] at 35-36, 491 A.2d at 1193.

In the present case, the Findings of Fact, as adopted by the Board of Appeals, are supported by competent, material and substantial evidence contained in the record. We shall therefore limit our discussion to the merits of the Board's conclusion of law that the claimants were subject to a lockout, within the meaning of § 6(e).

I STATUTORY BACKGROUND

The express public policy purpose of the Unemployment Insurance Law of Maryland (Unemployment Law), Art. 95A, § 2, is to provide "unemployment reserves to be used for the benefit of persons unemployed through no fault of their own." This "Declaration of Policy" section states that economic insecurity due to unemployment is a serious menace to the state, that involuntary unemployment is a subject of general interest, and that the systematic accumulation of funds is necessary to provide benefits for periods of unemployment. In our application of the Unemployment Law, we should bear in mind the remedial nature of unemployment compensation, from which flow the principles that such laws should be read liberally in favor of eligibility, and that disqualification provisions are to be strictly construed. Sinai Hospital of Baltimore, Inc. v. Department of Employment and Training, et al., 309 Md. 28, 40, 522 A.2d 382, 388 (1987); Allen v. Core Target City Youth Program, 275 Md. 69, 75, 338 A.2d 237, 241 (1975).

In Employment Security Administration v. Browning-Ferris, Inc., 292 Md. 515, 438 A.2d 1356 (1982), Chief Judge Murphy noted for the Court "that § 2 does not create any general disqualification based on fault." Id. at 525, 438 A.2d at 1362. See also Memco v. Maryland Employ. Sec. Admin., 280 Md. 536, 548, 375 A.2d 1086, 1093 (1977). As we stated in Memco:

Although the declaration of policy enunciated in section 2 of Article 95A speaks in terms of aiding 'persons unemployed through no fault of their own,' these words do not themselves establish a disqualification based on unemployment resulting from the 'fault' of the claimant.

Rather, the specific provisions set out in section 6 enumerate those grounds the legislature has determined disqualify claimants from receiving benefits.

Id., ...