Grinnell Corporation v. Hackett, No. 72-1275

• Decision Date: 15 March 1973
• Docket Number: 72-1276.,No. 72-1275
• Parties: GRINNELL CORPORATION, Plaintiff-Appellant, v. Mary C. HACKETT, Director of the Department of Employment Security of the State of Rhode Island and John J. Affleck, Director of the Department of Social and Rehabilitation Services of the State of Rhode Island, Defendants-Appellees, The Chamber of Commerce of the United States of America and The Greater Providence Chamber of Commerce, Intervenors, Appellants.
• Court: U.S. Court of Appeals — First Circuit

475 F.2d 449 (1973)

GRINNELL CORPORATION, Plaintiff-Appellant, v. Mary C. HACKETT, Director of the Department of Employment Security of the State of Rhode Island and John J. Affleck, Director of the Department of Social and Rehabilitation Services of the State of Rhode Island, Defendants-Appellees, The Chamber of Commerce of the United States of America and The Greater Providence Chamber of Commerce, Intervenors, Appellants.

Nos. 72-1275, 72-1276.

United States Court of Appeals, First Circuit.

Heard November 9, 1972.

Decided March 15, 1973.

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George M. Vetter, Jr., Providence, R. I., with whom William R. Powers III, Providence, R. I., David D. McKenney, West Barrington, R. I., and Hinckley, Allen, Salisbury & Parsons, Providence, R. I., were on brief, for Grinnell Corporation.

Lawrence M. Cohen, Chicago, Ill., with whom Milton Smith, Denver, Colo., O. F. Wenzler, Washington, D. C., Jeffrey S. Goldman, Chicago, Ill., Guy J. Wells, Providence, R. I., Gerard C. Smetana, Chicago, Ill., Lederer, Fox & Grove, Chicago, Ill., and Gunning, LaFazia, Gnys & Seyla, Inc., Providence, R. I., were on brief, for The Chamber of Commerce of The United States of America and The Greater Providence Chamber of Commerce.

Warren H. Pyle, Boston, Mass., with whom Angoff, Goldman, Manning, Pyle & Wanger, Boston, Mass., were on brief, for intervenor, United Steelworkers of America, AFL-CIO.

W. Slater Allen, Jr., Asst. Atty. Gen., with whom Richard J. Israel, Atty. Gen., was on brief, for defendants-appellees.

Before COFFIN, Chief Judge, ALDRICH and McENTEE, Circuit Judges.

COFFIN, Chief Judge.

This case brings before us again the complex question whether state financial aid to striking workers, here unemployment compensation benefits, is preempted by the federal labor statutes and policy. We initially wrestled with that preemption question in a case involving state and federal welfare benefits made available to strikers. ITT v. Minter, 435 F.2d 989 (1st Cir. 1970), cert. denied, 402 U.S. 933, 91 S.Ct. 1526, 28 L. Ed.2d 868, reh. den., 404 U.S. 874, 92 S.Ct. 27, 30 L.Ed.2d 120 (1971). See Note, Welfare for Strikers: ITT v. Minter, 39 U.Chi.L.Rev. 79 (1971).¹

On March 20, 1972, after unsuccessful negotiations for a new collective bargaining agreement between the plaintiff and Local 4756 of the United Steelworkers of America, all 585 of the plaintiff's employees went on strike. Some of them applied for and received welfare assistance, both state General Assistance, § 40-6-8 General Laws of Rhode Island (R.I.G.L.) (1971 Pocket Supp.), and federally assisted AFDC-U benefits (aid to families with unemployed fathers), R.I.G.L. § 40-6-7, 42 U.S.C. § 607; and food stamps, 7 U.S.C. §§ 2011-25.² As of the week ending May 13, 1972, 404 of the plaintiff's employees received unemployment compensation benefits, R.I.G.L. § 28-44-1 et seq., under a special provision which permits payments of such benefits, after the general one-week waiting period (§ 28-44-14) and a special additional six-week period, to individuals "unemployed because of a strike", R.I.G.L. § 28-44-16.

On May 15, plaintiff filed the complaint in this case, seeking a preliminary and permanent injunction against the defendants Hackett and Affleck, who are the directors, respectively, of the Departments of Employment Security and Social and Rehabilitation Services of the State of Rhode Island. The defendants moved to dismiss for failure to state a claim upon which relief could be granted and subsequently filed an answer alleging failure to state a claim, lack of conflict between the federal and state statutes, and failure to join an indispensable party, the local union. The United Steelworkers of America, AFL-CIO, and the Chambers of Commerce of the United States and Greater Providence sought and were granted leave to intervene.

On May 30 and 31, the district court held a hearing on the motion for preliminary injunction at which the plaintiff presented three witnesses, two of whom, Armand Thieblot and Ronald Cowin, were co-authors of a study entitled "Welfare and Strikes: The Use of Public Funds to Support Strikers". The book, which was also introduced as an exhibit, was explicitly an attempt to answer some of the empirical questions which we indicated in Minter a court would have to consider in deciding the preemption issue. An affidavit by Herbert Northrup, the supervisor of the project at the University of Pennsylvania School of Finance which led to the book, was also introduced as an exhibit. Defendants presented two brief witnesses, one of whom was the defendant Hackett, and one exhibit, "Handbook of Labor Statistics 1971" published by the United States Department of Labor.

In its opinion, issued on June 15, the district court attempted to discern whether under Minter it could consider evidence as to the impact of unemployment benefits on federal labor policy and, if so, whether such evidence could overcome the state interest supporting the unemployment compensation scheme. It initially quoted at length the relevant portions of our opinion in Minter, which had come to us on a denial of a preliminary injunction on the pleadings. We there first noted that in labor preemption cases involving an alleged tangential frustration of national labor policy, rather than a direct overlap of state and federal regulations of labor activities as in San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L. Ed.2d 775 (1959), "a balancing process seems called for . . . in which both the degree of conflict and the relative importance of the federal and state interests are assessed." 435 F.2d at 992. After noting our hesitance at making any a priori judgments regarding either the extent of conflict or the relative strengths of the federal and state interests, we described some of the questions of general scope which a court would have to consider, as to both issues, if a case went beyond the pleadings. We then stated that

"This very catalogue of data relevant to a macrocosmic weighing, which a court, if called upon would have to undertake, indicates the preferable forum to be the Congress." 435 F.2d at 993-994,

and noted the strong likelihood that Congress was aware of this problem. We concluded:

"In sum, wholly apart from the inadquacy of the evidence before the district court, we have substantial doubt that a significant frustration of federal collective bargaining policy is effected by the granting of welfare benefits to indigent strikers or that, even so, the state interest is so insubstantial compared to the federal interest that Congress must be supposed to have deprived the state of such power to serve that interest." 435 F.2d at 994.

The district court here, after quoting these and other passages, found "no distinctive difference" between the Rhode Island unemployment scheme and the Massachusetts welfare scheme upheld in Minter; ruled that the former's purpose was "to protect citizens against economic vicissitudes" and was "hardly abandoned" by the six-week waiting period; noted that "it also appears that many of the Grinnell strikers would be receiving welfare were they not receiving unemployment compensation", that Congress was not unaware of the problem, and that the state interest in "the well-being of its unemployed and ultimately for the health of the local community" was substantial. The court then held that the preemption issue was not justiciable but that in any case "The state's interest is so substantial that this Court will not conclude that Congress has excluded such state action." Grinnell Corp. v. Hackett, 344 F.Supp. 749, 753-754 (D.R.I.1972). For these reasons, it denied the preliminary injunction, granted the motion to dismiss and made no findings on the issue of infringement of the federal collective bargaining process. The plaintiff and the two Chambers of Commerce appealed from the subsequent order to that effect.³

We are unable to affirm the district court on either ground of decision. First, we continue to believe, as we indicated in Minter, that the preemption issue is justiciable, albeit complex. Moreover, for reasons that we will develop more fully later, on the present record we are not able to determine whether the state interest in unemployment compensation is the same, or as substantial, as the state interest in welfare, as the district court seemed to believe, and we have substantial doubts whether that issue need even be reached. At the same time, we have serious doubts whether the existing record is sufficient to meet the plaintiff's burden of showing the probability of establishing that the Rhode Island unemployment compensation program substantially disturbs the collective bargaining process. Since, however, it is not for us to make findings of fact, we vacate the denial of a preliminary injunction. We also reverse the dismissal of the complaint for failure to state a cause of action, being unable to rule categorically that no evidence could be presented which would support the claim, see Dow Chemical Co. v. Taylor, supra, n. 3 (refusing to dismiss complaint alleging federal preemption of unemployment benefits to strikers). Since a remand is necessary, and further evidence may be presented, we will discuss the issues in the order that we believe a court should generally follow when faced with this question. After considering justiciability, we will examine whether "Congress has unmistakably ordained" that states not exercise power in this area. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963); Armour & Co. v. Ball, 468 F.2d 76 (6th Cir. 1972). Finding no such clear manifestation, we will then comment on the nature of the infringement issue, the inadequacy of the present record and suggest possible other evidence that might be more relevant and persuasive. Finally we will consider the state interests and the factual inquiries that might be...