General Elec. Co. v. Director of Division of Employment Sec.

• Decision Date: 14 June 1965
• Docket Number: No. 2,2
• Citation: 208 N.E.2d 234,349 Mass. 358
• Parties: GENERAL ELECTRIC COMPANY v. DIRECTOR OF the DIVISION OF EMPLOYMENT SECURITY et al. (of 1965).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 234

208 N.E.2d 234

349 Mass. 358

GENERAL ELECTRIC COMPANY v. DIRECTOR OF the DIVISION OF EMPLOYMENT SECURITY et al. (No.

2 of 1965).

Supreme Judicial Court of Massachusetts, Essex.

Argued May 68 1965.

Decided June 14, 1965.

Laurence S. Fordham, Boston, for petitioner.

Joseph S. Ayoub, Asst. Atty. Gen. (Israel L. Cohen, Boston, with him), for Director of Division of Employment Security.

Warren H. Pyle, Boston, for claimant David W. Black.

Before SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.

CUTTER, Justice.

These claimants for unemployment compensation are employees of the company. On November 20, 1961, twenty-two welders employed by the company in the same building with the claimants, who are not welders, went on strike. As a result, there was no work for nine sheet metal workers, who are among the claimants. '[A]pproximately twenty additional employees [at least some of whom are also claimants] * * * were laid off at various times as the work dried up.' The work of the welders and the claimants was in various respects closely interdependent. The welders and the claimants belong to the bargaining unit of production and maintenance employees represented by the same union local.

Three hundred and fifty additional employees were notified not to report to work on Monday, December 4, 1961. Over the weekend of December 2-3, 1961, however, the company used laboratory and management personnel to do some welding work, and on December 4, 1961, it 'farmed out' certain welding work needed in the assembly of company products. This was done 'to get parts welded and to make them available to the people in the shop and to meet customers' schedules.' As a consequence, some employees who had been laid off, or notified not to report for work, were recalled. The welders remained on strike until January 8, 1962.

The director, on January 3, 1962, approved the claims filed by the claimants because of the company's 'decision to have work which ordinarily would be performed by the claimants done by an outside organization.' The company requested a hearing before the board of review 'on the ground that the employees involved * * * [were] not entitled to benefits as they were out of work due to a labor dispute.'

The board of review found essentially the facts stated above. It pointed out that '[a]s a result of the strike * * * work for employees who worked hand-in-hand with the welders or who worked on parts either before or after they would have been welded, dwindled' and the 'to continue production and * * * save the jobs of about three hundred and fifty people, the [c]ompany decided to 'farm out' * * * the welding operation.' The board also found that 'twenty-seven claimants were not recalled during the * * * dispute,' that 'there certainly was a labor dispute,' that 'there was no work stoppage of any consequence and that production continued at the same rate at which it existed prior to the strike.' The board, ignoring the undisputed evidence that the disruption of usual production was a direct consequence of the welders' strike, concluded that the 'claimants' unemployment was directly brought about by the * * * [company's] decision to farm the work out,' and 'that whatever took place was not such a stoppage of work * * * [as] the statute ¹ requires.' The board affirmed the director's determinations.

The company then filed a petition for review in the District Court, which on August 6, 1964, affirmed the board's decision. The company appealed. The district judge filed a report, which includes a transcript of the evidence before the board.

The question for decision is whether, within G.L. c. 151A, § 25(b), see fn. 1, there was 'a stoppage of work which exists because of a labor dispute at the factory * * * or other premises' where the claimants were employed in November, 1961. There appears to be no dispute concerning the basic facts.

Two Massachusetts cases ² have dealt with § 25(b) in respects here relevant. In Adomaitis v. Director of Div. of Employment Security, 334 Mass. 520, 136 N.E.2d 259, this court dealt with 'a general reduction of work in the plant, and * * * [did] not reach the question * * * whether individual or group refusals to work which do not diminish the work done in the plant can * * * be work stoppages' (emphasis supplied). It was held (pp. 523-524, 136 N.E.2d p. 261), '[T]he words 'stoppage of work' have a wider meaning than 'strike' or 'lockout" and that the 'board was right in holding in effect that where a labor dispute blocks a substantial amount of work which would otherwise be done it has stopped that much of the work and there is therefore a 'stoppage of work which exists because of a labor dispute.'' The court declined (p. 525, 136 N.E.2d p. 261) to limit the exclusions from unemployment benefits 'to cases where all work had stopped.'

In Worcester Telegram Publishing Co., Inc. v. Director of Div. of Employment Security, 347 Mass. 505, 198 N.E.2d 892, this court held that, upon the termination of a stoppage of work because of a labor dispute, strikers permanently displaced could then receive unemployment benefits for periods after fully normal operations in the employers' plant had been resumed (in the absence of circumstances like, or analogous to, those which appeared in Howard Bros. Mfg. Co. v. Director of Div. of Employment Security, 333 Mass. 244, 130 N.E.2d 108; see note, 78 Harv.L.Rev. 1273).

In the case before us normal operations of the company's plant were materially obstricted by the welders' labor dispute from shortly after November 20, 1961, until January 8, 1962. Plant production would have been seriously curtailed except for the company's efforts to prevent the welders' strike from putting a great number of other employees out of work. The labor dispute directly caused those company efforts. Unfortunately, the company seems to have been unable to avoid laying off some employees who worked either closely with the welders or in processes very directly dependent upon the welders' work. The welders' work and the claimants' work was not carried on in the company's plant during most, if not all, of the period of dispute. There was a work stoppage in the sense that an important segment of the production process was forced out of the company's plant by the labor dispute.

If the company's management had been less efficient and had not quickly transferred the welders' work elsewhere, substantially more employees would have been laid off, and the delivery of end products from the plant would probably have soon been substantially reduced. Plainly, such a reduction in ultimate deliveries would have been regarded as a substantial stoppage of work. ³ See Hughes, 9300 Mass.Bd.Rev. p. 5. See also Magner v. Kinney, 141 Neb. 122, 129-131, 2 N.W.2d 689 (30% decrease in total business); Mortensen v. Board of Review, 21 N.J. 242, 244-245, 121 A.2d 539, 541 'diminution of the volume of work * * * otherwise * * * available'. Cf. Cumberland & Allegheny Gas Co. v. Hatcher, W.Va., 130 S.E.2d 115, 123. Although in the present case, there is no evidence that end product deliveries were materially curtailed by the labor dispute, the question remains whether such a curtailment is essential to a 'stoppage of work' under § 25(b). The work stoppage relied on by the company is that caused by the welders' failure to produce component parts of end products which put fifty employees, including the welders, out of work by December 1, 1961, and threatened to put 350 more persons out of work by December 4. We are thus faced with the novel question--whether such a stoppage of work in the company's plant itself, and the consequent transfer of work from the plant, created a disqualification of the claimants under § 25(b), in the absence of a substantial and continuing disruption of end product deliveries.

The cases elsewhere indicate that the term 'stoppage of work,' in the disqualification clause of statutes much like § 25(b), 'refers to the effect upon the employer's operations produced by the labor dispute or, in other words, to resulting unemployment. * * * [I]t declares disqualification of a class * * * whose unemployment is the result of the curtailment or stoppage of the employer's operations. It does not refer to the cessation of work by the individual employee or employees.' See Magner v. Kinney, 141 Neb. 122, 129-131, 2 N.W.2d 689, 693, ⁴ See also Mountain States Tel. & Tel. Co. v. Sakrison, 71 Ariz. 219, 225, 225 P.2d 707 (very substantial curtailment); Inter-Island Resorts, Ltd. v. Akahane, 46 Hawaii, 140, 146-151; Abbott Publishing Co. v. Annunzio, 414 Ill. 559, 568-571, 112 N.E.2d 101; Lawrence Baking Co. v. Unemployment Compensation Commn., 308 Mich. 198, 209, 13 N.W.2d 260, 154 A.L.R. 660; Cumberland & Allegheny Gas Co. v. Hatcher, W.Va., 130 S.E.2d 115....