Holland Motor Exp., Inc. v. Michigan Employment Sec. Commission

• Decision Date: 24 July 1972
• Docket Number: No. 2,Docket Nos. 10863--10865,2
• Citation: 201 N.W.2d 308,42 Mich.App. 19
• Parties: HOLLAND MOTOR EXPRESS, INC., Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION et al., Defendants-Appellees. GREAT LAKES EXPRESS COMPANY, Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION and Roy Hines, Defendants-Appellees. SAGINAW TRANSFER CO., INC., Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION et al., Defendants-Appellees
• Court: Court of Appeal of Michigan — District of US

Page 308

201 N.W.2d 308

42 Mich.App. 19

HOLLAND MOTOR EXPRESS, INC., Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION et al.,

Defendants-Appellees.

GREAT LAKES EXPRESS COMPANY, Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION and Roy Hines,

Defendants-Appellees.

SAGINAW TRANSFER CO., INC., Plaintiff-Appellant, v. MICHIGAN EMPLOYMENT SECURITY COMMISSION et al., Defendants-Appellees.

Docket Nos. 10863--10865.

Court of Appeals of Michigan, Division No. 2.

July 24, 1972.

Released for Publication Oct. 27, 1972.

R. Ian Hunter and John W. Ester, Matheson, Bieneman, Veale & Parr, Detroit, for plaintiffs-appellants.

Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., E. J. Setlock, Asst. Atty. Gen., for MESC.

David Loeffler, Goldberg, Previant & Uelmen, Milwaukee, Wis., for individual defendants-appellees.

Before R. B. BURNS, P.J. and HOLBROOK and QUINN, JJ.

HOLBROOK, Judge.

Appellants, at all material times, were motor common carriers engaged in the transportation of commodities between points in Michigan and other states, including Illinois. Each appellant had terminal facilities in Chicago and at various points in Michigan. Appellees (hereinafter called claimants) were employees of appellants (hereinafter called employers) at their various Michigan terminals.

On March 31, 1967, various collective bargaining agreements governing the terms and conditions of the employment of the claimants with the employers expired. Negotiations between the employers represented by Trucking Employers, Inc. (TEI) and the unions of the claimants represented by International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America (IBT) for new contracts began in March and continued into April, 1967.

The negotiations were unsuccessful in arriving at a new agreement. As a result, the local unions involved began selective strikes and picketing. To counter this, TEI, as a defensive measure, ordered its members to lock out their employees in Michigan. Claimants were locked out from April 10 through April 15, 1967. Their claims for unemployment benefits for this period were denied by the Michigan Employment Security Commission (MESC), the referee, and the appeal board. No appeal from the denial of their claims for this week was taken by the claimants and, therefore, their entitlement to benefits for the week ending April 15, 1967, is not at issue here.

The employers were also parties to separate bargaining agreements with three union locals in Chicago who represented their Chicago-based employees. The contracts with these locals also expired on March 31, 1967. The Central Motor Freight Association (CMFA) represented the employers in these negotiations. Two of the Chicago union locals were associated with IBT; the other local was an independent union. The negotiations between CMFA and the three Chicago locals did not go as well as the negotiations in the cases involved in Michigan. Therefore, when the claimants in Michigan were back to work on April 15, 1967, the locals in Chicago had not yet reached a settlement with the employers. As a result, selective strike activity was commenced by the Chicago locals. Thereafter, the CMFA instructed the employers to close all of their Chicago facilities which was done effective April 23, 1967.

Since much of the employers' business involved the transportation of goods between Chicago and their Michigan terminals, there was insufficient work for all of the employers' Michigan-based employees as a result of the lockout in Chicago. Accordingly, the employers laid off some of their employees in Michigan, including claimants herein.

An agreement with the three Chicago locals was reached on May 5, 1967, and claimants thereafter were recalled to work. Claimants filed their claims for unemployment benefits with the commission for the period from April 23 to May 6, 1967.

The Commission, at the administrative level, determined and redetermined that the claimants were not entitled to benefits for these two weeks because they were involved in a labor dispute within the meaning of § 29(8) of the Michigan Employment Security Act. ¹

The referees who heard the appeals of the claimants reversed the Commission. They held that the claimants were unemployed during the two weeks in question because of a lockout in another establishment of their employer and, were therefore, not subject to disqualification under the provisions of § 29(8). The appeal board affirmed this determination. On appeal to the Ingham County Circuit Court the three cases were consolidated for hearing. The employers did not claim that the referees or the appeal board improperly interpreted and/or applied § 29(8). Instead, the employers alleged that § 29(8) on its face and applied to the facts in these cases violated their right to equal protection of the law and penalized them for exercising certain rights granted them under the National Labor Relations Act in violation of the supremacy clause of the U.S. Constitution. From an adverse judgment, the employers appeal.

I.

Whether or not § 29(8) of the Michigan Employment Security Act (MESA) denied to the employers the equal protection of the law so as to be unconstitutional under both state and Federal law?

Section 29(8) of the MESA provides 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 shut-down or start-up operations caused by such 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 shut-down or start-up operations caused by such labor dispute, in any other establishment within the United States which is functionally integrated with such establishment and is operated by the same employing unit. No individual shall be disqualified under this subsection 29(8) if he is not directly involved in such dispute.' (Emphasis supplied.)

The essence of the employers' contentions are as follows: Both a strike and a lockout are recognized as legitimate economic weapons under proper circumstances in a labor dispute. Under § 29(8), claimants would have been disqualified for unemployment benefits for the period involved if the layoff would have been the result of a strike instead of a lockout. Because both a strike and a lockout are legitimate economic weapons, there is no rational basis for distinguishing between them with respect to disqualification for unemployment benefits. Because there is no basis for distinguishing between them, when the act excepted lockouts as it pertains to its effects on benefits, it is unconstitutional in that it is an arbitrary and discriminatory classification that denies the employers equal protection of the law. It is the employers' claim that they are therefore entitled to have the claimants disqualified on the same basis as if the strike had been a cause of the layoff involved.

The Michigan Constitution of 1963, art. 1, §§ 1, 2 affords the same rights of equal protection as its counterpart in the Constitution of the United States. Fox v. Michigan Employment Security Commission, 379 Mich. 579, 153 N.W.2d 644 (1967). The use of a lockout and a strike under proper circumstances is lawful. National Labor Relations Board v. Truck Drivers Local Union No. 449, 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676 (1957). In Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78--79, 31 S.Ct. 337, 340, 55 L.Ed. 369, 377 (1911), the U.S. Supreme Court enumerated the following rules by which it tests the contention that the equal protection of the law has been denied:

'1. The equal protection clause of the Fourteenth Amendment does not take from the State the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion in that regard, and avoids what is done only when it is without any reasonable basis and therefore is purely arbitrary. 2. A classification having some reasonable basis does not offend against that clause merely because it is not made with mathematical nicety or because in practice it results in some inequality. 3. When the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not rest upon any reasonable basis, but is essentially arbitrary.'

It is clear that a statute passed by the Legislature will be presumed to be valid unless the contrary clearly appears. Every reasonable presumption or intendment must be indulged in favor of the validity of an act, and it is only when invalidity appears so clearly as to leave no room for reasonable doubt that it violates some provision of the constitution that a court will refuse to sustain its validity. Cady v. Detroit, 289 Mich. 499, 286 N.W. 805 (1939).

In In Re Phillips, 305 Mich. 636, 641--642, 9 N.W.2d 872, 874 (1943), it was said:

"Legislation is not unconstitutional because it is legislation of a particular kind and character, or because it benefits a particular class. If the object and purpose of the legislation is legitimate and within the terms of the Constitution, the mere fact that there is a classification, so long as the law operates equally upon those within the particular class, does not render it unconstitutional.

"(I)t is only in cases where it is manifest upon the face of a statute that a classification therein is based upon no reason, but is purely an arbitrary act, that courts may and must, for that reason, declare unconstitutional.'

'The burden of showing that the challenged legislation creates an irrational classification is on the party assailing the statute.'

In Fox, supra, 379 Mich. p. 588, 153 N.W.2d p. 647, it was...