Philco Corp. v. Unemployment Compensation Bd. of Review

• Citation: 430 Pa. 101,242 A.2d 454
• Parties: PHILCO CORPORATION v. UNEMPLOYMENT COMPENSATION BOARD OF REVIEW of Commonwealth of Pennsylvania. Appeal of Walter H. CLARK, Claimant-Intervenor.
• Decision Date: 09 January 1968
• Court: United States State Supreme Court of Pennsylvania

Page 454

242 A.2d 454

430 Pa. 101

PHILCO CORPORATION v. UNEMPLOYMENT COMPENSATION BOARD OF REVIEW of Commonwealth of

Pennsylvania.

Appeal of Walter H. CLARK, Claimant-Intervenor.

Supreme Court of Pennsylvania.

Jan. 9, 1968.

Rehearing Denied Feb. 15, 1968.

Harry R. Kozart, Philadelphia, for appellant

Ronald Souser, Morgan, Lewis & Bockius, Philadelphia, for appellee, Philco Corp.

Sydney Reuben, Asst. Atty. Gen., Harrisburg, for appellee, UCBR.

Before BELL, C.J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

OPINION OF THE COURT

ROBERTS, Justice.

The narrow question presented by this appeal is whether a work stoppage which began on April 27, 1964 at the Philadelphia plant of appellee (Philco Corporation) was the result of a strike or a 'lock-out', as the latter term is used in the Act of December 5, 1936, P.L. (1937) 2897, § 402, as amended, 43 P.S. § 802(d). Under this statute an employee is not eligible for unemployment compensation pursuant to a work stoppage flowing from a labor dispute, unless that stoppage was caused by a lock-out. Since we hold that the work stoppage here involved was the result of a strike by the employees of Philco, it follows that the Bureau, the referee and the Superior Court correctly denied benefits to the claimant. ¹

This is but another of those troublesome areas where the legal test as distilled from previous cases is easy to verbalize, but most difficult to apply to any given set of facts. Since the purpose of our unemployment compensation system is to compensate an individual when work has been denied him through no fault of his own, logically the test of whether a work stoppage resulted from a strike or a lock-out requires us to determine which side, union or management, first refused to continue operations under the status quo after the contract had technically expired, but while negotiations were continuing. As this Court stated in Vrotney Unemployment Compensation Case, 400 Pa. 440, 444--445, 163 A.2d 91, 93--94 (1960), the question we must answer to decide on whose shoulders lay the responsibility for the work stoppage is the following:

'Have the employes offered to continue working for a reasonable time under the pre-existing terms and conditions of employment so as to avert a work stoppage pending the final settlement of the contract negotiations; and has the employer agreed to permit work to continue for a reasonable time under the pre-existing terms and conditions of employment pending further negotiations? If the employer refuses to so extend the expiring contract and maintain the status quo, then the resulting work stoppage constitutes a 'lockout'. * * *'

Further refinements of this test reveal additional legal principles which are Into the legal framework outlined above, we must now attempt to fit the facts of this case. Initially, however, we acknowledge that our scope of review is limited not only by statute, but also by previous decisions of this Court as well as the Superior Court. The Act of December 5, 1936, P.L. (1937) 2897, § 510, as amended, 43 P.S. § 830 states:

necessary for a proper resolution of the present controversy. As the Superior Court opinion below correctly notes, when, as here, the work stoppage takes the Form of a strike, the burden is upon the union to show that it made the initial 'peace' move by offering to continue the status quo. Clark Unemployment Compensation Case, 209 Pa.Super. 239, 242--243, 223 A.2d 909, 911 (1966); see Klima Unemployment Compensation Case, 205 Pa.Super. 489, 211 A.2d 23 (1965). However, since it is conceded in the present controversy that no such offer was made, the union must rely on the so-called 'futility' doctrine as set out in Irvin Unemployment Compensation Case, 198 Pa.Super. 308, 181 A.2d 854 (1962), holding that the union need not offer to continue the status quo if it appears that such an offer would definitely not be accepted by management.

'In any appeal to the Superior Court the findings of the board or referee, as the case may be, As to the facts, if supported by the evidence and in the absence of fraud, shall be conclusive * * *.' (Emphasis supplied.)

See also, Progress Mfg. Co. v. Unemployment Compensation Bd. of Review, 406 Pa. 163, 167, 176 A.2d 632, 634 (1962); Vrotney Unemployment Compensation Case, 400 Pa. 440, 445--446, 163 A.2d 91, 94 (1960). Nevertheless, even assuming arguendo that the Board made a finding of fact, rather than law, when it said in its opinion that 'the reason for the work stoppage must be assessed against the employer' because it would have been futile for the union to have asked for an extension of the status quo, we hold that this finding is Not supported by legally sufficient evidence, as required by the statute. ²

The contract between union and management was scheduled to expire on Saturday, April 25, 1964. As early as November of the preceding year, it became apparent to all concerned that the company was in such serious financial straits that substantial contract revisions would be pressed for by management. These revisions were actually presented to the union on March 23, 1964, the first day of formal negotiations. It is uncontradicted that from this date forward the company insisted at the bargaining table that acceptance of these terms It addition to the company's strong bargaining position, and Meredith's alleged statement of March 26th, the union claims that its belief in a no contract-no work position by management was strengthened by a speech, delivered to the workers on March 10, 1964 by Mr. Beck, the company president. However, we have carefully combed every would of this speech and fail to find a single statement, even a hint, that no work would be available on Monday, April 27, 1964 if the union did not acquiesce. The strongest language in the entire speech was that Philco's business would be a 'waste of time, money, and effort' without the new contract, and that the plant's 'ultimate survival' was at stake. This language does not approach the threatening tone of the speech delivered by management in Irvin, supra, the case upon which the union relies to support its claim of futility. In Irvin, the union had suggested a two week extension of the status quo pending further negotiations. At the end of this two week period, the union was again prepared to offer an extension, but before this offer could be made, the company president stated that anyone who reported for work the next day could do so only on his terms. On these facts, it was of course held that the employees were locked out even though the work stoppage took the form of a strike, and even though a second extension of status quo was never actually sought by the union.

by the union was necessary for company survival. However, the record is unclear as to whether management ever told the union that the company would definitely close down after the existing contract expired if these new terms were not accepted. Mr. Block, the chief union negotiator, testified that Mr. Meredith, 'general manufacture manager' of Philco's consumer products division, did state at the March 26, 1964 bargaining meeting that the plant would close unless Philco's demands were met. However, Block admitted on cross-examination that he never once after that date brought up the subject of post contract work availability. Furthermore, Meredith himself strongly denied having ever made the alleged statement, and introduced documentary evidence (travel vouchers) to show that he was in Iowa on the 26th of March.

The union here next contends that prior to April 27, 1964, the company began making plans for a work stoppage. Specifically, it was testified to below that on Friday, April 24, 1964, workers were told to put preservative grease on certain machines, and that even before that, the company had begun to stock extra food for its supervisory personnel, and had constructed a special gate for these men to use in case the main entrance to the plant was picketed. However, none of these measures are in any way inconsistent with normal management preparations for a Strike. They do not foreshadow a Company induced work stoppage, any more that the union's preparation of picket signs would indicate that a subsequent work stoppage must be the fault of labor.

After more than twenty bargaining sessions, continuing from March 23, 1964 to the morning of April 25, it appears that neither side was willing to make any significant concessions. Therefore, the union held a membership meeting on Saturday afternoon, April 25, at which time the men voted not to report for work the following Monday. At no time did the union offer to extend the status quo; nor did the company make a similar offer, although several representatives did testify that work Was available on Monday. They justified management's failure to inform the union of this work on the ground that such information would have weakened Philco's position at the bargaining table. On the basis of this evidence the Board concluded that it would have been futile for the union to have requested an extension of the status quo, or to have reported to the plant on Monday, ready for work. With this conclusion Even to laymen, and certainly to experienced labor representatives, the realities of the bargaining process are far from unknown. Both labor and management usually approach the bargaining table fully conscious that the bridge between the old and new contracts will not be crossed before both sides have aired ideas ranging from constructive suggestions to threats of the most dire consequences. As the Superior Court said in Hogan Unemployment Compensation Case, 169 Pa.Super. 554, 561, 83 A.2d 386, 390 (1951): 'the incidents common to all types of bargaining must be expected and indulged; e.g., wordy chaffering, haggling over details, maneuvering for position, feigned ultimatums, offers of compromise settlements, and the like.' Thus we do not feel that a...