New York Telephone Co., Western Elec. Co., American Tel. & Tel. Co., Lone Lines Dept. and Empire City Subway Co. (Ltd.)

• Citation: 566 F.2d 388
• Decision Date: 09 November 1977
• Docket Number: D,No. 1553,1553
• Parties: 96 L.R.R.M. (BNA) 2921, 82 Lab.Cas. P 10,206 NEW YORK TELEPHONE COMPANY, Western Electric Company, American Telephone & Telegraph Company, Long Lines Department, and Empire City Subway Company (Limited), Plaintiffs-Appellees, v. NEW YORK STATE DEPARTMENT OF LABOR, Louis L. Levine, Industrial Commissioner of the New York State Department of Labor, New York State Department of Taxation & Finance, and James H. Tully, Jr., State Commissioner of Taxation& Finance, Defendants-Appellants. ocket 77-7337.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 388

566 F.2d 388

96 L.R.R.M. (BNA) 2921, 82 Lab.Cas. P 10,206

NEW YORK TELEPHONE COMPANY, Western Electric Company American Telephone & Telegraph Company, Long Lines Department, and Empire City Subway Company (Limited), Plaintiffs-Appellees, v. NEW YORK STATE DEPARTMENT OF LABOR, Louis L. Levine Industrial Commissioner of the New York State Department of Labor, New York State Department of Taxation & Finance, and James H. Tully, Jr., State Commissioner of Taxation&amp Finance, Defendants-Appellants.

No. 1553, Docket 77-7337.

United States Court of Appeals Second Circuit.

Argued July 22, 1977.

Decided Nov. 9, 1977.

Maria L. Marcus, Asst. Atty. Gen. of the State of New York, New York City (Louis J. Lefkowitz, Atty. Gen. of the State of New York, Samuel A. Hirshowitz, First Asst. Atty. Gen. of the State of New York, Nicholas G. Garaufis, Asst. Atty. Gen. of the State of New York, New York City, of counsel), for defendants-appellants.

David L. Benetar, New York City (George E. Ashley, William P. Witman, Stanley Schair, Mark H. Leeds, Aranow, Brodsky, Bohlinger, Benetar & Einhorn, New York City, of counsel), for plaintiffs-appellees.

Doran, Colleran, O'Hara, Pollio & Dunne, Garden City, N. Y. (Richard L. O'Hara, Robert A. Kennedy, Garden City, N. Y., of counsel), for amicus curiae New York State AFL-CIO.

Richard H. Markowitz, Robert C. Cohen, Markowitz & Glanstein, New York City, for Local 1, International Union of Elevator Constructors, AFL-CIO, as amicus curiae.

Lawrence M. Cohen, Jeffrey S. Goldman, Lederer, Fox & Grove, Chicago, Ill., Thomas W. Misner, Dow Chemical Company, Midland, Mich., for amicus curiae Dow Chemical Co.

Frank J. Donner, Robert Z. Lewis, James G. Mauro, Jr., New York City, Sipser, Weinstock, Harper, Dorn & Leibowitz, New York City, Eisner, Levy, Steel & Bellman, New York City, Winn Newman, Washington, D. C., Cammer & Shapiro, New York City, Vladeck, Elias, Vladeck & Lewis, New York City, for amici curiae: District 65, Distributive Workers of America; International Union of Electrical, Radio and Machine Workers, AFL-CIO-CLC; United Electrical, Radio and Machine Workers of America (UE); District 1199, National Union of Hospital & Health Care Employees, Retail, Wholesale and Department Store Union, AFL-CIO; District 3, International Union of Electrical, Radio and Machine Workers of America; District Council 1707, Community and Social Agency Employees Union, American Federation of State and Municipal Employees, AFL-CIO; Furriers Joint Council of New York, AFL-CIO; Joint Board, Fur, Leather and Machine Workers Union, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO; Butcher District Council of New York, Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO; International Brotherhood of Teamsters & Warehousemen, Brewery Delivery Employees Local # 46; Local 101, Utility Division, Transportation Workers Union of America, AFL-CIO; Local 140, Bedding, Curtain and Drapery Workers Union, United Furniture Workers of America, AFL-CIO; Local 259, International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; Shopmen's Local 455, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO; Professional and Administrative Staff Association, Museum of Modern Art; United Store Workers Union, Retail, Wholesale and Department Store Union, AFL-CIO; Association of Legal Aid Attorneys, New York, New York; Legal Services Staff Association, New York, New York; Metropolitan Opera Orchestra Committee, New York, New York; United Optical Workers Union, Local 408, International Union of Electrical, Radio and Machine Workers of America, AFL-CIO; Architectural and Engineering Guild Local 66, American Federation of Technical Employees, AFL-CIO.

Nixon, Hargrave, Devans & Doyle, Rochester, N. Y. (Eugene D. Ulterino, Gail A. Kreusch, Rochester, N. Y., of counsel), for amici curiae in support of affirmance.

Before MESKILL, Circuit Judge, BRYAN ^* and STEWART, ^** District Judges.

MESKILL, Circuit Judge:

New York's Unemployment Insurance Law permits employees who are involved in a "strike, lockout, or other industrial controversy" to collect unemployment compensation after a waiting period of eight weeks. N.Y.Lab.Law §§ 590.9, 592.1 (McKinney 1977). The district court held this statute invalid under the supremacy clause, U.S.Const. art. VI, cl. 2, finding that it alters the balance in the collective bargaining relationship and therefore conflicts with the federal labor policy favoring the free play of economic forces in the collective bargaining process. 434 F.Supp. 810 (S.D.N.Y.1977). We reverse.

Approximately seventy percent of the Bell System's ¹ non-management employees are represented by the Communications Workers of America, AFL-CIO ("CWA"). Prior to 1971, the long-standing collective bargaining format between members of the Bell System and the CWA was one of pattern-settlement. Under this format, the parties would select two Bell System companies with early contract expiration dates as pattern-setters. When an agreement was reached with the pattern-setters, it became the standard for settlement on national issues in the rest of the Bell System.

On April 30, 1971, the contracts of the chosen pattern-setters were due to expire. No agreement was reached, however, and those contracts, along with all other Bell System contracts that were due to expire, were mutually extended on a day-to-day basis. In June, the CWA International recommended a nationwide strike, which began on July 14. On July 18, an agreement in principle subject to ratification by mail, was reached, and the CWA ordered all employees back to work on July 21. Despite the International's directive, roughly 38,000 CWA members employed by the New York Telephone Company ("Telco") remained on strike in New York. Western Electric Company ("Weco") employees and American Telephone & Telegraph Company, Long Lines Department ("Long Lines") employees also stayed off the job.

On August 14, 1971, the employees of all Bell System companies except Telco and Empire City Subway Company (Limited) ("Empire") ratified the contract. The strike continued in New York for seven months, until February, 1972. Weco and Long Lines employees respected the picket lines of the striking Telco and Empire employees. During the strike, $43,000,000 in unemployment insurance benefits was paid, at an average rate of $75 per week, to 29,000 Telco employees and charged to Telco's account; $5,000,000 in benefits was paid to 4,150 Weco employees; $500,000 in benefits was paid to 350 Long Lines employees; and $100,000 in benefits was paid to 125 Empire employees. Had the strike not been settled, these payments would have continued until July of 1972. New York's unemployment insurance system is financed entirely by employer contributions, so the cost of making these payments was borne by the struck employers.

In a preemption case such as this one, "the crucial inquiry (is) whether Congress intended (this field to) be unregulated because (it was) left 'to be controlled by the free play of economic forces.' " Lodge 76, International Association of Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132, 140, 96 S.Ct. 2548, 2553, 49 L.Ed.2d 396 (1976), quoting NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 92 S.Ct. 373, 30 L.Ed.2d 328 (1971). Accordingly, we must examine congressional intent. ² Those courts that have considered Congress' intent with respect to the payment of unemployment benefits to strikers have found it "ambiguous." Grinnell Corp. v. Hackett, 475 F.2d 449, 454-57 (1st Cir.), cert. denied, 414 U.S. 858, 94 S.Ct. 164, 38 L.Ed.2d 108 (1973); Hawaiian Telephone Co. v. Hawaii Department of Labor & Industrial Relations, 405 F.Supp. 275, 286 (D.Hawaii 1976). We do not agree. Here, as in most preemption cases, a positive expression of congressional intent is lacking, and the Court must resort to the drawing of inferences. In the instant case, the evidence upon which those inferences must be based is not "ambiguous" but is relatively one-sided.

The question whether striking workers should be entitled to benefit from various forms of social welfare legislation has been a significant political issue since the early 1930s. In Grinnell, the First Circuit considered congressional awareness of the issue prior to the enactment of the National Labor Relations Act and the Social Security Act:

In July 1933, the Federal Emergency Relief Administration (FERA) ruled that it would not "attempt to judge the merits of labor disputes" but would treat unemployed strikers like all other unemployed persons for purposes of relief. Brown, Public Relief 1929-39, 270 (1940). This policy became a bone of contention during the textile strike of September 1934. Bernstein, The Turbulent Years: A History of the American Worker 1933-41 (1971). Congress could hardly have been unaware of this policy when in 1935 it passed in close succession both the National Labor Relations Act . . . and the Social Security Act . . ..

475 F.2d at 454. The National Labor Relations Act, Pub.L.No. 74-198, 49 Stat. 449 (July 5, 1935), as amended, 29 U.S.C. § 151 et seq. ("NLRA"), makes no mention of unemployment compensation. On the other hand, Title IX of the Social Security Act, Pub.L.No. 74-271, §§ 901-910, 49 Stat. 639-45 (Aug. 14, 1935), which is now the Federal Unemployment Tax Act, 26 U.S.C. §§ 3301-09, was part of a legislative program "to stimulate the creation of and payment to State unemployment compensation funds." United States v. Spencer, 65 F.Supp. 763, 764 (D.Mass.1946) (Wyzanski, J.), aff'd in part, rev'd in part sub nom. Massachusetts v. United States, 160 F.2d 614 (1st Cir. 1947), aff'd, 333 U.S. 611, 68 S.Ct. 747, 92 L.Ed. 968 (1948). It was designed to deal with the urgent national problem of unemployment. See Steward Machine Co. v. Davis, 301 U.S. 548, 586-88, 57 S.Ct. 883, 81 L.Ed. 1279 (193...