United Steel Workers of America v. Meierhenry

• Citation: 608 F. Supp. 201
• Decision Date: 15 March 1985
• Docket Number: Civ. No. 83-3085.
• Parties: The UNITED STEEL WORKERS OF AMERICA, AFL-CIO-CLC, and United Steelworkers of America, Local Union No. 7044, Plaintiffs, v. Judith MEIERHENRY, In her capacity as Secretary of the South Dakota Department of Labor, Defendant.
• Court: U.S. District Court — District of South Dakota

608 F. Supp. 201

The UNITED STEEL WORKERS OF AMERICA, AFL-CIO-CLC, and United Steelworkers of America, Local Union No. 7044, Plaintiffs, v. Judith MEIERHENRY, In her capacity as Secretary of the South Dakota Department of Labor, Defendant.

Civ. No. 83-3085.

United States District Court, D. South Dakota, C.D.

March 15, 1985.

John G. Engberg, Peterson, Engberg & Peterson, Minneapolis, Minn., Dennis W. Finch, Finch & Viken, Rapid City, S.D., for plaintiffs.

Ronald W. Banks, Banks & Johnson, Rapid City, S.D., for defendant.

MEMORANDUM OPINION

DONALD J. PORTER, District Judge.

FACTUAL BACKGROUND

Plaintiff (union) is the representative of the production and maintenance employees of the Homestake Mining Company (Homestake) in Lead, South Dakota.¹ On May 31, 1982, Homestake had 1,345 employees involved in production and maintenance. Of these, 1,141 belonged to the Union, while 204 did not.

A contract between Homestake and the union expired on May 31, 1982, and, upon a majority vote of its members, the union commenced a strike against Homestake on June 1, 1982. At least some of the employees, both union and non-union, attempted to go to work that day, but all were turned back by Homestake. Homestake essentially shut down its operations until the signing of a new contract on September 26, 1982.

During the strike, many of the idled employees applied to the South Dakota Department of Labor for unemployment compensation benefits. Initially, all applicants, whether union or non-union, were denied benefits. In August, 1982, the Department of Labor reversed its decision, and granted benefits to the non-union applicants. This was based on an interpretation of SDCL 61-6-19, which prohibits the payment of unemployment benefits to claimants unemployed because of a labor dispute unless the claimant is not participating in, financing, or directly interested in the dispute and does not belong to the class of workers involved in the dispute, or unless the claimant is locked out by the employer. The decision granting benefits to Homestake's non-union employees states:

The claimants do not belong to the union that is involved in the labor dispute. In addition, the claimants are not participating in or financing the labor dispute, but would be directly interested in the labor dispute in that any changes in wages, hours or working conditions, which resulted from the labor dispute, will apply to the claimants ... However, the claimants have been available for work since the labor dispute commenced, but the employer has declined to allow them to commence work. In view of this circumstance, the claimants would, in effect, be locked out from their employment by the employer. Since the claimants are locked out from their employment by the employer, they would be eligible for the receipt of unemployment insurance benefits.

On the other hand, union employees continued to be held ineligible for benefits. The State Department of Labor decision observed that most union applicants were engaged in picketing, that they had financed the strike in their payment of union dues from which strike benefits were paid, and that they were directly interested in the outcome of the strike. It made no difference that some seemed to oppose the strike; the decision found

Some claimants might be willing to cross a picket line to resume work for the employer and feel that since the mine is shut down they are locked out from employment from the employer. However, the claimants do belong to Local 7044 of the United Steelworkers of American union whose membership did vote to go on strike against the employer. As members of the union which went on strike against the employer, the claimants would have initiated the labor dispute prior to any employment being withheld by the employer. Consequently, it cannot be said that the claimants are locked out by the employer. In view of all the above factors, the Referee must hold that the claimants are ineligible for the receipt of unemployment insurance benefits.

Defendant, in her capacity as the Secretary of the state Department of Labor, affirmed these decisions. In her deposition, defendant stated that "we were not necessarily making a determination on eligibility based on union membership. The thing that made the determination is whether they were out of work through no fault of their own."

Following this decision, non-union employees received unemployment benefits in the approximate amount of $129 per week. Union employees received, during the course of the strike, union strike benefits which began at $40 per week, gradually rising to $67 per week by the last week of the strike. For several weeks, the union operated a cooperative food store for union members, and also established a strike kitchen that served lunches to union members and their families during the strike.

At least several members of the union attempted to resign their union membership during the strike to establish eligibility for unemployment benefits. These attempts were not successful, as union rules allowed resignations only during the month of November, and in any event, the state would apparently not have paid any unemployment benefits to claimants who had been union members at the commencement of the strike. After the strike had ended, however, approximately 124 individuals did resign from the union. While it is plain that dissatisfaction with union leadership was a factor in many of these resignations, it is also clear that the availability of unemployment benefits was a factor in at least some of these resignations. Plaintiff was able to produce the testimony of seven employees who either resigned or attempted to resign from the union who identified the unemployment benefits issue as the principal or a leading factor in their decisions to resign. The record also indicates that an undetermined number of other union members resigned because of the unemployment compensation issue.

DISCUSSION

I.

Initially, defendant claims this case must be controlled by the court's decision in United Steelworkers of America v. Block, 578 F.Supp. 1417 (D.S.D.1982). United Steelworkers certainly considered many of the same issues as the present case, involving, as it did, the same "locked out" distinction between the Homestake's union and non-union employees in their eligibility for food stamps during the same 1982 strike. The principle point on which the United Steelworkers case turned, however, was the finding that plaintiff had no standing to bring the action. While United Steelworkers recognized that "an organization, such as a union, has standing to assert the ... rights of its members," 578 F.Supp. at 1419, the court found that "the union failed to establish that it lost a single member, present or prospective, on account of the grant of food stamps to non-union employees." 578 F.Supp. at 1421. Here, the union has, as indicated by the factual summary, established the loss of at least several members because of defendant's unemployment benefits policy, and a resultant reduction in dues paid to it by those lost members. Assuming the correctness of the standing decision in United Steelworkers, the court is satisfied that plaintiff here has shown an injury to it as a result of defendant's policy and may assert the claims in the complaint.²

II.

Mindful of its obligation to avoid, wherever possible, deciding cases on constitutional grounds when other grounds for decision exist, the court turns first to plaintiff's argument that defendant's interpretation of South Dakota unemployment compensation guidelines is preempted by 29 U.S.C. § 157, generally referenced as Section 7 of the National Labor Relations Act (NLRA):

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.

A violation of these rights constitutes an unfair labor practice under 29 U.S.C. § 158(a)(1) (Section 8(a)(1) of the NLRA).

Cases dealing with NLRA preemption are innumerable, and frequently confusing. One of the Supreme Court's most recent decisions in the area, Brown v. Hotel and Restaurant Employees, ___ U.S. ___, 104 S.Ct. 3179, 82 L.Ed.2d 373 (1984), makes this much clear:

If the state law regulates conduct that is actually protected by federal law, however, pre-emption follows ... as a matter of substantive right. Where, as here, the issue is one of an asserted substantive conflict with a federal enactment, then "the relative importance to the state of its own law is not material ... for the Framers of our Constitution provided that the federal law must prevail."

___ U.S. at ___, 104 S.Ct. at 3187, 82 L.Ed.2d at 384. As the court in the leading case of San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 244, 79 S.Ct. 773, 779, 3 L.Ed.2d 775 (1959), states, "when it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 8 29 U.S.C. § 158, due regard for the federal enactment requires that state jurisdiction must yield." The question plaintiff puts to the court, therefore, is whether the South Dakota unemployment compensation law conflicts with the rights contained in 29 U.S.C. § 157.

Curiously, the precise issue presented here does not appear to have previously arisen. The case that comes closest, and upon which defendant relies most heavily, is New York Telephone Co. v. New York State Department of Labor, 440 U.S. 519, 99 S.Ct. 1328, 59 L.Ed.2d 553 (1979). Initially, it might be noted that a majority of the court in New York Telephone Co. was unable to agree upon an opinion, and joined only in the judgment that the NLRA did not preempt a state from paying unemployment compensation to strikers. To the extent that this meant that all persons idled by a strike, whether union or non-union...