Sweeney v. Board of Review, Division of Employment Sec., Dept. of Labor and Industry

• Decision Date: 12 January 1965
• Docket Number: No. A--17,A--17
• Citation: 43 N.J. 535,206 A.2d 345
• Parties: Peter J. SWEENEY, Claimant-Appellant-Cross-Respondent, v. BOARD OF REVIEW, DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT OF LABOR AND INDUSTRY, State of New Jersey, Respondent-Respondent-Cross-Appellant, and Breyer Ice Cream Division of National Dairy Products, Respondent.
• Court: New Jersey Supreme Court

Page 535

43 N.J. 535

206 A.2d 345

Peter J. SWEENEY, Claimant-Appellant-Cross-Respondent, v. BOARD OF REVIEW, DIVISION OF EMPLOYMENT SECURITY, DEPARTMENT

OF LABOR AND INDUSTRY, State of New Jersey,

Respondent-Respondent-Cross-Appellant,

and

Breyer Ice Cream Division of National Dairy Products, Respondent.

No. A--17.

Supreme Court of New Jersey.

Argued Nov. 2, 1964.

Decided Jan. 12, 1965.

Edward A. Kaplan, Jersey City, for respondent-cross-appellant Board of review.

Thomas Grant Bernard, Orange, for appellant-cross-respondent (Bernard & Bernard, Orange, attorneys).

The opinion of the Court was delivered by

WEINTRAUB, C.J.

The Division of Employment Security demanded that Peter J. Sweeney repay unemployment compensation benefits totaling $450. The demand rested upon the Division's determination that Sweeney was disqualified because his unemployment was attributable to a labor dispute. The agency's Appeal Tribunal and Board of Review agreed. The Appellate Division affirmed. 81 N.J.Super. 90, 194 A.2d 746 (1963). Sweeney petitioned for certification. So also did the Board of Review which complained of the holding of the Appellate Division that a transcript of the testimony before the agency had to be furnished without charge to the claimant. We granted both petitions. 41 N.J. 600, 198 A.2d 445 (1964).

I.

The Unemployment Compensation Law provides in N.J.S.A. 43:21--5(d) that an individual shall be disqualified:

'For any week with respect to which it is found that his unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed;'

subject to provisos not here involved.

Sweeney was employed in the production department of the Newark plant of the Breyer Ice Cream Division of the National Dairy Products Corporation (Breyer). He was a member of Teamsters Union Local 680 which, together with Locals 338 and 757, was a party to a collective bargaining agreement with Breyer and other employers in the ice cream business in the Greater New York and Northern New Jersey area.

On March 2, 1962 Breyer posted a notice that all manufacturing operations in the production department of the Newark plant would be discontinued because of economic conditions, and that all employees of the production department would be laid off on March 31. About the middle of that month negotiations began for a new collective bargaining agreement, the existing one being due to expire on April 30. Local 680 objected to the proposed shutdown of the production department, and it is agreed that two of the major issues involved in the negotiations were the proposed shutdown and a demand for a guarantee of employment for all employees. A strike of the entire Newark plant was threatened if Breyer pressed its plan to close the production department. Breyer canceled the March 2 notice mentioned above. On April 23 it posted a like notice fixing April 30 as the date of layoff. This notice was replaced on April 27 with another fixing May 4 as the final date.

On May 1 Local 757 called a strike against one of the Greater New York employers. The Industry Labor Committee, deeming this to be a 'whipsaw' tactic designed to fragmentize the bargaining unit, notified the three locals that the employer members would immediately suspend operations at all plants. Breyer locked out its employees on May 2.

A new contract was reached on July 3. On July 9 all departments of the Newark plant reopened and Sweeney returned to work. The resumption of production became feasible because another company agreed to have ice cream manufactured for it by Breyer at the Newark plant.

A.

The Unemployment Compensation Law seeks to ameliorate the impact of involuntary unemployment. R.S. 43:21--2, N.J.S.A. If the failure of the employer and the employees to agree upon a basis for continued employment leads to unemployment, the unemployment is neither voluntary nor involuntary in an absolute sense. The situation presents a legislative policy question, whether the employees should be able to draw upon the statutory fund to assist them during the dispute. The Legislature adopted an attitude of 'neutrality,' I.e., that the fund may not be used, Febbi v. Board of Review, 35 N.J. 601, 606, 174 A.2d 481 (1961); Westinghouse Electric Corp. v. Board of Review, 25 N.J. 221, 227--228, 135 A.2d 489 (1957), with however some significant limitations. N.J.S.A. 43:21--5(d), quoted above, requires 'a stoppage of work which exists because of a labor dispute.' Thus the employer too must experience the impact of inactivity on account of the labor dispute. Further the statute requires that 'his (the claimant's) unemployment' be due to such labor-dispute work-stoppage. Hence the mere existence of a labor dispute is not enough to disqualify.

Accordingly in Radice v. New Jersey Dept. of Labor and Industry, 4 N.J.Super. 364, 67 A.2d 313 (App.Div. 1949), the disqualification was deemed to end when the employer replaced the strikers and resumed normal operations. Although the labor dispute continued, there was no longer a 'work stoppage' and hence the unemployment could no longer be attributed to a work stoppage caused by a labor dispute. In Great A. & P. Tea. Co. v. New Jersey Dept. of Labor, 29 N.J.Super. 26, 31, 101 A.2d 573, 575 (App.Div. 1953), where the work stoppage and unemployment were initially caused by a labor dispute, it was held that when the employer decided to end the business operation involved, it 'brought the work stoppage to an end, for there was no work available from that time one.' The disqualification thereupon ended. To the same effect are Intertown Corp. v. Appeal Board, 328 Mich. 363, 43 N.W.2d 888 (Sup.Ct.1950); Marathon Electric Mfg. Corp. v. Industrial Comm., 269 Wis. 394, 69 N.W.2d 573, 70 N.W.2d 576 (Sup.Ct.1955). The validity of that view was accepted in Gerber v. Board of Review, 36 N.J.Super. 322, 115 A.2d 575 (App.Div.1955), affirmed 20 N.J. 561, 120 A.2d 436 (1956), where it was found that the discontinuance of the operations was temporary, rather than permanent as in Great A. & P. Tea Co., and for that reason the work stoppage and the unemployment of the claimants continued to be the result of the labor dispute.

Elsewhere it is generally agreed that the existence of a labor dispute is not itself enough to lead to disqualification; the labor dispute must be the cause of the unemployment. See Shadur, 'Unemployment Benefits and the 'Labor Dispute' Disqualification,' 17 U.Chi.L.Rev. 294, 313--17 (1950); Williams, 'The Labor Dispute Disqualification--A Primer and Some Problems,' 8 Vand.L.Rev. 338, 344--45 (1955); Lewis, 'The Law of Unemployment Compensation in Labor Disputes,' 13 Lab.L.J. 174, 183 (1962); Note, 10 Geo.Wash.L.Rev. 604, 615 (1942). Accordingly courts have held that 'if unemployment is originally caused by a lack of work and a labor dispute develops during the unavailability of work, the dispute does not disqualify the employee until work becomes available and he refuses the work because of the dispute.' 81 C.J.S. Social Security and Public Welfare, § 187 p. 281; Bryant v. Hayden Coal Co., 111 Colo. 93, 137 P.2d 417 (Sup.Ct.1943); Muncie Foundry Division of Borg-Warner Corporation v. Review Board, 114 Ind.App. 475, 51 N.E.2d 891 (App.Ct.1943); Jones & Laughlin Steel Corp. v. Unemployment Compensation Board of Review, 202 Pa.Super. 209, 195 A.2d 922 (Super.Ct.1963).

B.

No doubt there was a labor dispute in the case before us, see Ablondi v. Board of Review, 8 N.J.Super. 71, 76, 73 A.2d 262 (App.Div.1950); and the fact that there was a lockout rather than a strike is here of no moment. Mortensen v. Board of Review, 21 N.J. 242, 245--246, 121 A.2d 539 (1956); Schoenwiesner v. Board of Review, 44 N.J.Super. 377, 130 A.2d 648 (App.Div.1957).

The critical question is whether Sweeney's unemployment was the product of a work stoppage caused by the labor dispute. We think it was not. We could not say it was unless we found Breyer's notice of termination of its manufacturing operations was merely a pretense in the course of labor negotiations. There is nothing in the record to suggest that Breyer was other than dead earnest. It did not even purport to cancel the notice of layoff when it locked out its employees. Indeed its general manager testified as to the notice of layoff:

'Q. So the notice you sent out was an (in?) anticipation of lack of work, not by virtue of the labor dispute?

A. That's right.'

The labor dispute disqualification presupposes an employer willing to provide work and employees willing to work, but with the parties in disagreement as to the basis for continued work. If the employer refuses to provide work for an employee upon any terms, then, although a strike or lockout may ensue, it cannot be said as to that employee that his unemployment or the work stoppage is attributable to the dispute. Here, Sweeney did not refuse an opportunity to continue his employment. His unemployment, far from being the product of a labor dispute, was in part the genesis of it. His unemployment was due to Breyer's decision to shut down the production department for unrelated economic reasons. Accordingly he was not disqualified under N.J.S.A. 43:21--5(d).

We add that earlier decisions of the Board of Review which have come to our attention are in harmony with the view we take here. In one matter the claimant was discharged and he, together with others who were discharged, picketed the employer's establishment to regain his job. The Board found there was no disqualification, saying 'The picketing of the plant may be regarded as a labor dispute, but the cessation of work was not due thereto; rather the labor dispute was due to the discharge.' 5 Unemployment Compensation Interpretation Service, Benefit Series, No. 10, p. 133 (March 26, 1942--Docket No. BR--3878). In another case the Board held there was no disqualification because the stoppage of work was...