Liberty Trucking Co. v. Department of Industry, Labor and Human Relations

• Citation: 204 N.W.2d 457,57 Wis.2d 331
• Decision Date: 27 February 1973
• Docket Number: Nos. 258--260,s. 258--260
• Parties: , 60 A.L.R.3d 1 LIBERTY TRUCKING COMPANY, Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and William P. Brown, et al., Respondents. NEUENDORF TRANSPORTATION CO., INC., Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and Virgil Benson, et al., Respondents. CHIPPEWA MOTOR FREIGHT, INC., Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and William Anderson, et al., Respondents.
• Court: United States State Supreme Court of Wisconsin

Page 457

204 N.W.2d 457

57 Wis.2d 331, 60 A.L.R.3d 1

LIBERTY TRUCKING COMPANY, Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and William P. Brown, et al., Respondents.

NEUENDORF TRANSPORTATION CO., INC., Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and Virgil Benson, et al., Respondents.

CHIPPEWA MOTOR FREIGHT, INC., Appellant, v. DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, and William Anderson, et al., Respondents.

Nos. 258--260.

Supreme Court of Wisconsin.

Feb. 27, 1973.

Michael, Best & Friedrich, Milwaukee, for appellants; Lee J. Geronime, Jacob L. Bernheim, and Thomas E. Obenberger, Milwaukee, of counsel.

Uclair W. Brandt, Chief Counsel, for DILHR; Arnold J. Spencer, Madison, of counsel.

Goldberg, Previant & Uelmen, Milwaukee, for other respondents; David Loeffler, Milwaukee, of counsel.

HALLOWS, Chief Justice.

Each case concerns the question of whether the trucking company's workers employed in its Wisconsin terminals are eligible for unemployment compensation as a result of their unemployment during a strike-lockout occuring at the employer's Chicago terminal. The single issue presented is whether the trucking system, including the terminal constitutes the 'establishment' in which the employees were employed within the meaning of sec. 108.04(10), Stats.

Employees, by sec. 108.02(18), Stats., ¹ are presumed to be eligible for unemployment benefits, but sec. 108.04(10) Stats., ² makes ineligible an employee who partially or totally loses his employment because of a strike or other bona fide labor dispute in active progress in the 'establishment' in which he is employed.

Certain facts are basic to the three cases. Each appellant is a multi-terminal common carrier having its principal terminal in Chicago, Illinois, and other terminals in Wisconsin. Each is engaged in the transportation of property in interstate commerce by motor vehicle for compensation. Each is within the coverage of the Interstate Commerce Act (49 U.S.C.A., sec. 301 et seq.) and is subject to regulation by the Interstate Commerce Commission (49 U.S.C.A, sec. 302(a)). Each operates under a certificate of public convenience and necessity and its operations are limited to specified routes and between fixed terminals. In addition, Neuendorf, which also operates intrastate, is regulated by the Wisconsin Public Service Commission, pursuant to ch. 194, Stats. The predominant proportion of the business conducted at the Wisconsin terminals is directly related to the transportation of freight in and out of the respective Chicago terminals.

The three appellants, with other trucking companies, are members of Trucking Employers, Inc. (TEI) and had given it authority to negotiate basic national labor contracts with the International Brotherhood of Teamsters (IBT), which negotiated on behalf of the trucking-industry employees who were members of various local unions affiliated with IBT. The appellants also were members of the Central Motors Freight Association (CMFA), which carried on negotiations in Illinois with various local unions for local agreements to supplement the national contract.

In January of 1970, TEI and IBT started negotiations to replace the contract which was due to expire on March 31, 1970. While a national contract was reached on April 2d or 3d, 1970, its ratification was delayed by the locals pending various negotiations. At this time, intermittent strikes occurred in Chicago, but the employees of the appellants did not strike in Wisconsin. On April 10, 1970, the appellants with other trucking companies locked out all their employees in Chicago because of the local selective strikes at various terminals in Chicago by Local Union 705. This lockout existed through July 6, 1970, when a local Chicago agreement was reached.

During the lockout, no freight moved in or out of the Chicago terminals to the Wisconsin terminals. None of the appellants' Wisconsin terminals was the object of the strike or of picketing. Operations at all the Wisconsin terminals continued; but as a result of the Chicago lockout, a substantial number of employees at the Wisconsin terminals became unemployed because freight shipments could not go to and from the Chicago terminals.

The Wisconsin employees who lost their employment because of the labor dispute at the Chicago terminals filed claims for unemployment benefits. The appellants objected on the ground their employees were ineligible for benefits under sec. 108.04(10), Stats., because the strike-lockout in Chicago was in the 'establishment' in which they were employed. The appeals tribunal and the department found the employees were eligible for unemployment compensation because although there was a strike or lockout which caused their unemployment, the Chicago terminals were not the 'establishment' or a part thereof in which the employees were employed. The circut court affirmed the findings and conclusion.

There is no question the lockout and strike at the Chicago terminals constituted a bona fide labor dispute. See A. J. Sweet v. Industrial Comm. (1962), 16 Wis.2d 98, 114 N.W.2d 141, rehearing denied, 16 Wis.2d 98, 114 N.W.2d 853. Both parties rely on Spielmann v. Industrial Comm. (1940), 236 Wis. 240, 295 N.W. 1, and Schaeffer v. Industrial Comm. (1940), 11 Wis.2d 358, 105 N.W.2d 762, for their respective conclusions. The appellants argue their 'entire transportation system, as delineated and defined by terminal points and connecting routes, constitutes, as a matter of law, the 'establishment' within the meaning of sec. 108.04(10), Stats.'

Regardless of how other states ³ have construed the word 'establishment' in their unemployment act, Wisconsin has adopted three factors which it considers important in determining when separate plants, factories, or other facilities of the same employer constitute one 'establishment.' These factors, which were first used by the department are functional integrality, general unity, and physical proximity. See Spielmann v. Industrial Commission, supra. The element of general unity involves a consideration of both unity of employment and unity of management, with the former deserving more weight than the latter. Schaeffer v. Industrial Commission, supra. ⁴ Several attempts have been made to formalize the element of physical distance into a mathematical certitude, but as yet no such measuring stick has been adopted. ⁵ Functional integrality is an element which was most prominent in Spielmann and the concept includes not only the interdependence of the separate plants or the facilities but also a meshing or synchronizing of the work so their separateness of location is minimized. The factor of functional integrality means more than dependence. Generally, in varying degrees, all plants of one employer related to a product are interdependent. It is the degree of normal dependency and the synchronization of the relationship in the manufacturing of the product or the rendering of the service and the relationship of the place or locale of the strike to the place or area of employment which must be considered under the element of functional integrality.

However, no element is controlling and it is clear the 'establishment' in a multi-plant company may be all the plants or only one plant. Likewise, in a singleplant company, it can mean only a single plant. The 'establishment' does not mean the company or its business or a permanent commercial organization as such. The use of the phrase, 'labor dispute is in active progress in the establishment in which he is or was employed,' refers to something tangible and to something other than an organization and connotes a general work area which in most cases would be a physical facility, such as a building or a plant constituting a complex of several buildings. A labor dispute in common usage is generally referable to a work area and the picketing is focused on such an area or facility.

In Spielmann, this court found the 'establishment' to include an auto body manufacturing plant in Milwaukee and the assembly plant 40 miles away in Kenosha. The factor emphasized there was the functional integrality, although both general unity and physical proximity were found. In Spielmann, the manufacturing of the product, i.e., autos, was so highly specialized and integrated that the production lines in both locations were synchronized to the degree they might have been alongside of each other in the same building. In Schaeffer, the court found separate plants approximately 80 miles apart not to be so functionally integrated as to constitute one 'establishment.' Although there was dependence of one plant upon the paper pulp manufactured by the other plant to the extent that up to 86 percent of the pulp produced was used, there was not the synchronization which existed in Spielmann.

The present case is unlike Spielmann and Schaeffer because we are not dealing with a manufactured product, but a service, and consequently, 'establishment' must be considered in this context. We think, however, the three factors are relevant to services although their application may vary. In considering functional integrality, we look at the effect of the strike to determine the integration. In the case of Liberty Trucking Company, at least 90 percent of the goods hauled to each of the three Wisconsin terminals came from Liberty's Chicago terminal and at least 90 percent of the traffic from each of the Wisconsin terminals at Beloit, Janesville, and Madison, went to the Chicago terminal. During the lockout, Liberty's business decreased to about 10 percent of normal. In the case of Neuendorf, 85 percent of its normal business involved freight to and from the Chicago terminal and its Wisconsin terminals. During the first two weeks after the lockout, only 13.5 percent of its normal business was transacted; but beginning with the fifth week after the lockout, the freight increased at the Wisconsin...