Plymouth-Stamping, Div. of Eltec Corp. v. Lipshu
| Decision Date | 12 September 1990 |
| Docket Number | DIVISION,PLYMOUTH-STAMPIN,Docket No. 83206 |
| Citation | 436 Mich. 1,461 N.W.2d 859 |
| Parties | OF ELTEC CORPORATION, Plaintiff-Appellant, v. Mike LIPSHU, Jr., Maudie M. Harris, Ruth Seidenstricker, Betty Orr, Donald McClung, Edward G. Cowger, Mary Berry, Jane Cucinella, LaVerne Riddle, Charles Woodward, Janet L. Smith, Deloris Cunningham, Bobby J. Hickman, Estella Lindsey, Annie Brown, Arlene Johnson, Defendants-Appellees, and Michigan Employment Security Commission, Defendant. |
| Court | Michigan Supreme Court |
Kim Arthur Siegfried, Asst. Gen. Counsel, United Steelworkers of America, AFL-CIO. CLC, Allen Park, for amicus curiae, United Steelworkers of America, AFL-CIO. CLC.
Charles H. Tobias, Kevin I. Green, Honigman Miller Schwartz and Cohn, Detroit, for amicus curiae, Guardian Industries Corp.
ARCHER, Justice (for affirmance).
We granted leave limited to the issue whether the employee-claimants, who were engaged in a strike against their employer, were disqualified for unemployment benefits pursuant to the labor dispute provisions of the Michigan Employment Security Act, M.C.L. Sec. 421.29(8); M.S.A. Sec. 17.531(8), when they were permanently replaced during the course of the strike. 1
I believe the workers' disqualification ended upon their permanent replacement and any remand must instruct the MESC to determine the suitability of any available work under Sec. 29 of the MESA.
In the fall of 1980, workers and management of the Plymouth-Stamping, Division of Eltec Corporation were unable to come to an agreement for the renewal of a collective bargaining agreement that expired on September 1, 1980. Negotiations broke down when workers refused to agree to management demands for wage and benefit concessions equaling approximately thirty percent of the workers' current wages. The workers stayed on the job for one week after the expiration of the old contract, but on September 9, the workers struck the company. The company never ceased production during the strike, operating first with the efforts of management and members of the families of company executives.
As the strike progressed, the company gradually hired replacements. At the end of December, 1980, the company informed the replacements that the company considered them permanent; that is, they would be retained even in the event the strike was settled. On January 15, 1981, the company's attorney informed the union's chief negotiator that the striking workers had been permanently replaced. In the event the strike was settled, the workers could reapply for work and would be rehired only as openings became available. If they wished to work at Plymouth-Stamping, the strikers could only do so under terms imposed by the company. Any strikers who agreed to return to Plymouth-Stamping would have to accept the same terms offered the new replacement workers.
Upon learning of their permanent replacement, the striking workers applied for unemployment benefits. The Employment Security Commission initially denied benefits, reasoning that the workers were disqualified pursuant to the labor dispute disqualification provision of the MESA, M.C.L. Sec. 421.29(8); M.S.A. Sec. 17.531(8). The workers appealed to the MESC, which conducted a hearing.
At the hearing, the company claimed that it only replaced the workers and did not "discharge" or "terminate" them. The company president testified that between January, 1981, and May, 1982, a total of thirty-seven openings occurred within the strikers' bargaining unit. The record discloses, however, that the company informed the union of the existence of only seven of those openings in February or March of 1981 when, while in the coffee room of the union office, the company's attorney told the union negotiator that he had seven openings he "can offer."
While the union ultimately acceded to the economic demands of the company's final proposal, the company refused the strikers' last and only demand, that the company rehire the strikers as a group, and not one at a time. Consequently, these claimants refused to apply for work at Plymouth-Stamping.
A referee found that the workers were entitled to unemployment compensation after January 15, 1981, the date on which they were notified through their union representative of their permanent replacement. The MESC Board of Review affirmed this decision as did the Wayne Circuit Court and the Court of Appeals. 2 I would also affirm.
The facts of this case disclose the following: In the late 1970's and early 1980's, Plymouth-Stamping, like many other companies involved in the automotive industry, experienced difficult times. Like other companies in the industry, Plymouth-Stamping responded by demanding wage and benefit concessions from its workers--thirty percent cuts in wages and benefits. The wages and benefits the company offered the union actually decreased as negotiations proceeded. As the opinion for reversal aptly points out, the National Labor Relations Board found that the company was engaged in legal "hard bargaining."
Faced with the company's demands, the workers had three choices. They could accede to the company's demands (as did many workers in similar situations), they could quit, or they could strike.
Had the workers quit, they most likely would have been eligible for unemployment compensation. Leaving work because of substantial changes in wages or conditions of employment constitutes "good cause attributable to the employer" such that a worker will not be disqualified from receiving unemployment compensation under Sec. 29(1)(a) of the MESA. 3 Copper Range Co. v. Unemployment Compensation Comm., 320 Mich. 460, 31 N.W.2d 692 (1948); Keith v. Chrysler Corp., 390 Mich. 458, 213 N.W.2d 147 (1973). Cf. Lasher v. Mueller Brass Co., 62 Mich.App. 171, 233 N.W.2d 513 (1975).
However, the workers wanted to keep their jobs and hoped for a better deal, so they struck. They struck, presumably, with a clear understanding that, under state law, they would receive no unemployment compensation while on strike, while, under clear federal precedent, they could lose their jobs to permanent replacements. I do not believe they contemplated that they could both lose their jobs and be ineligible for unemployment compensation.
What employers will now understand, however, is that this Court has put them in a "heads I win, tails you lose" situation. Employers who face economic downturns now have every incentive to demand large concessions from unions in the hope of precipitating a strike. If such a labor dispute occurs, the employer can hire permanent replacements at the terms last offered the union. At that point, the company has an entirely new workforce at terms the company dictates. To the extent any of the former employees become members of the new workforce, it is only as vacancies occur and only according to the company's terms. After today, none of the workers whose jobs are filled by replacements will be entitled to unemployment compensation.
After permanently replacing the strikers, the company has effectively laid off its workforce and hired another, perhaps smaller, complement of workers willing to work at terms the company dictates. Under federal labor law, these workers have the right to decertify the union if the company asks for an election, and the replaced workers will have no rights to vote in that election if it is held twelve months after the strike began. While the workers suffer the hardships, the employer pays no costs in terms of future assessments for unemployment compensation funds so long as the striking workers refuse to become, in effect, permanent replacements themselves.
Such a result cannot have been the intention of the Legislature when it enacted Sec. 29(8). This provision was intended to promote state "neutrality" in labor disputes by preventing strikers from receiving benefits ultimately assessed against the struck employer. It was also intended to deny unemployment benefits to workers who voluntarily cause their unemployment. It cannot have been intended as a weapon with which employers can hire a cheaper labor force without taking the responsibility the MESA places on employers in almost all other situations--the responsibility of contributing to an insurance scheme intended to insulate unemployed workers and their families from the harshest effects of involuntary unemployment.
The facts of this case are closely analogous to those presented this Court forty-two years ago in Copper Range Co., supra. In that case, a mining company, at the expiration of a collective bargaining agreement, offered its workers a renewal contract at substantially lower wages, an offer which the workers refused. The miners were willing to work, but only for the wages they drew under the expired contract. Due to submarginal profitability, the mining company decided to close the mine instead of paying a higher wage. The company then challenged the workers' claims for unemployment compensation, not under the labor dispute disqualification provisions, but by charging that the workers, by refusing a new contract at reduced wages, had voluntarily left work without good cause attributable to the employer. This Court held in favor of the workers, stating,
"To place the stamp of judicial approval upon the contentions of appellee in the instant case would be tantamount to the issuance of a notice to all employers in Michigan that, whenever they are confronted with economic loss, they can demand an abrogation of their working agreements and reduce...
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