Ruberoid Co. v. California Unemployment Ins. Appeals Bd.

• Decision Date: 31 January 1963
• Court: California Supreme Court
• Parties: , 378 P.2d 102 The RUBEROID CO., Plaintiff and Respondent, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Irving Perluss, as Director of Employment, etc. et al., Defendants and Appellants. L.A. 26914.

Page 878

27 Cal.Rptr. 878

59 Cal.2d 73, 378 P.2d 102

The RUBEROID CO., Plaintiff and Respondent, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD, Irving Perluss, as Director of Employment, etc. et al., Defendants and Appellants.

L.A. 26914.

Supreme Court of California, In Bank.

Jan. 31, 1963.

Stanley Mosk, Atty. Gen., and Herschel T. Elkins, Deputy Atty. Gen., for defendants and appellants.

Paul, Hastings, Janofsky & Walker and Dennis H. Vaughn, Los Angeles, for plaintiff and respondent.

Gibson, Dunn & Crutcher, Willard Z. Carr, Jr., Los Angeles, and Charles P. Scully, San Francisco, as amici curiae on behalf of plaintiff and respondent.

TOBRINER, Justice.

We face the question in this case whether the statutory provision as to 'a trade dispute' bars the collection of unemployment insurance by a striking employee whom the employer has discharged and permanently replaced. We hold that since the permanent replacement at once prevents any choice or volition on the part of the worker to return to the job and since it severs the trade dispute as the cause of the unemployment, the disqualification of the section no longer operates. We set forth hereafter in more detail the basis for this conclusion.

Defendants appeal from a judgment vacating certain decisions granting unemployment compensation benefits to specified claimants and directing the issuance of a writ of mandate ordering the removal of all charges against the plaintiff's or its predecessor's unemployment reserve account because of the award of such benefits.

The facts are undisputed. Plaintiff's predecessor, The Mastic Tile Corporation of America, manufactured floor tile at its plant in Long Beach until about September 30, 1959, when plaintiff, the Ruberoid Company, acquired its assets. The Department of Employment transferred and assigned Mastic's reserve account to plaintiff as the 'successor employer.' Plaintiff continued thereafter to maintain and operate the plant. The International Chemical Workers Union, Local Union No. 1, AFL-CIO, represented Mastic's employees; the present claimants for unemployment insurance benefits were members of that union.

The collective bargaining agreement between Mastic and the union expired on September 1, 1958. The parties failed to reach a successor agreement, and all of Mastic's 281 employees, 265 of whom were members of the union, went out on strike on September 21, 1958. The union immediately established picket lines.

On October 2, 1958, Mastic sent to all employees a letter stating that it intended to resume operations and that all employees who did not return to work on or before October 7, 1958, would be permanently replaced. ¹ About 40 employees returned to work. Mastic then began hiring replacements for those who did not return. On October 17, 1958, Mastic mailed to all employees still on strike notice that they had been permanently replaced and enclosed a check for their pro rata vacation pay to the date of the strike. ²

On November 3, 1958, Mastic filed a representation petition with the National Labor Relations Board, requesting that an election be held to determine whether Local Union No. 1 represented a majority of Mastic's employees. The board determined that the strikers who had not returned had been permanently replaced and were ineligible to vote in the ensuing representation election. On March 13, 1959, the board held an election; only the new and returned employees participated. The board certified that the old union no longer represented Mastic's employees as the exclusive bargaining representative. On March 28, 1959, the picketing ceased and the strike terminated.

Between October 17, 1958, the time of notice of their permanent replacement and March 28, 1959, the end of the strike, 15 claimants (i. e., striking employees who filed claims for unemployment insurance benefits) applied for work at Mastic. Eight of these claimants were not hired. Of the seven claimants who were re-employed, one was hired two days after application, one, ten days after application, two, thirty days after the application; three, sixty days after the application. Upon resumption of work, the rehired employees lost all former rights based on prior employment with Mastic, such as seniority privileges; they returned as new employees.

During the course of the strike employees at various times filed claims with the Department of Employment of the State of California; the department granted unemployment compensation benefits for the period from October 17, 1958, to the time of re-employment at Mastic or elsewhere. The California Unemployment Insurance Appeals Board affirmed. Respondent then initiated this proceeding in mandamus to set aside the board's decisions. The trial was a trial de novo; the parties, however, submitted the matter on the records of the administrative proceedings.

The trial court found that the claimants continued to be unemployed 'solely by reason of * * * the trade dispute' and their refusal 'in accordance with their Union principles, to cross the picket line.' The court concluded that the evidence did not support the appeal board's determination that the permanent replacement was the direct and proximate cause of their unemployment after October 17, 1958. Accordingly, the trial court entered a judgment which set aside the appeal board's decisions granting unemployment insurance benefits. The court further ordered the removal of all charges against the reserve account of respondent or Mastic with respect to any benefits paid to the claimants, except for periods of unemployment subsequent to unsuccessful applications for re-employment made between October 17, 1958, and March 28, 1959.

Section 1262 of the Unemployment Insurance Code provides. 'An individual is not eligible for unemployment compensation benefits, and no such benefit shall be payable to him, if he left his work because of a trade dispute. Such individual shall remain ineligible for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed.'

We have recognized that this section expresses the two-pronged and balanced purpose of the state to maintain its neutrality in trade disputes. As Justice Traynor states in Matson Terminals, Inc. v. Cal. Emp. Comm. (1944) 24 Cal.2d 695, 707, 151 P.2d 202, 209: 'The act establishes a policy of neutrality in trade disputes by provisions that the payment or withholding of benefits should not be used to aid either party to a trade dispute. Thus the provision disqualifying a worker who leaves his work because of a trade dispute § 56(a) is balanced by the provision that other unemployed workers shall not be required to fill the vacated jobs or lose their right to unemployment insurance benefits. § 3(b)(1), Gen.Laws 1937, Act 8780d. The payment of benefits to a claimant who leaves his work because of a trade dispute would conflict with this policy just as would the withholding of payments because a claimant refused to become a strikebreaker.'

We have construed the section in light of the whole legislative design of relieving workers from the ill effects of unemployment which they have neither willed nor caused. Thus we have said that the disqualification of the section must rest upon two elements: the worker must voluntarily leave or remain away from his employment and the worker must leave or remain away from his employment because of a trade dispute. As we shall describe in more detail, the first prerequisite involves a volitional test and the second, a causational test.

Bodinson Mfg. Co. v. California E. Comm. (1941) 17 Cal.2d 321, 109 P.2d 935, establishes the volitional test, holding that the unemployment must result from the voluntary act of the employee and not from the acts of others. In sustaining the disqualification of the worker who voluntarily refused to cross the picket line of a union other than his own, we said: 'In brief, disqualification under the act depends upon the fact of voluntary action, and not the motives which led to it. The legislature did not seek to interfere with union principles or practices. The act merely sets up certain conditions as a prerequisite to the right to receive compensation, and declares that in certain situations the worker shall be ineligible to receive compensation. Fairly interpreted, it was intended to disqualify those workers who voluntarily leave their work because of a trade dispute.' (P. 328, 109 P.2d p. 940; emphasis added.) To the same effect: Matson Terminals, Inc. v. Cal. Emp. Comm., supra (1944) 24 Cal.2d 695, 151 P.2d 202; McKinley v. California Emp. etc. Comm. (1949) 34 Cal.2d 239, 209 P.2d 602.

The causational test finds it's genesis in the clear language of the statute. The section denies benefits for the period an employee remains out of work 'by reason of the fact that the trade dispute is still in active progress' (emphasis added.) Thus in Mark Hopkins, Inc. v. Cal. Emp. Comm. (1944) 24 Cal.2d 744, 151 P.2d 229, 154 A.L.R. 1081, we faced the question whether an employee who had taken another job during a trade dispute and thereafter had again become unemployed should then receive benefits during the course of the trade dispute. We held that in order to break the causal chain the subsequent employment must represent a bona fide attempt at permanent employment. Nothing that '(a) claimant is thus ineligible for benefits if the trade dispute is the direct cause of his continuing out of work,' (p. 748, 151 P.2d p. 231) we said: 'The termination of a claimant's disqualification by subsequent employment thus depends on whether it breaks the continuity of the claimant's unemployment and the causal connection between his unemployment and the trade dispute. Such employment must be bona fide and not a device to circumvent the statute.' (Ibid.)

In the instant case neither the volitional nor causational test operates...