United Steelworkers of America AFL-CIO-CLC v. Johnson

• Decision Date: 07 October 1987
• Docket Number: AFL-CIO-CLC,No. 7044,A,No. 85-5101,7044,85-5101
• Citation: 830 F.2d 924
• Parties: 126 L.R.R.M. (BNA) 2585, 56 USLW 2210, 107 Lab.Cas. P 10,164, Unempl.Ins.Rep. CCH 21,869 The UNITED STEELWORKERS OF AMERICA, and United Steelworkers of America, Local Unionppellees, v. Julie M. JOHNSON, in her capacity as Secretary of the South Dakota Department of Labor, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 924

830 F.2d 924

126 L.R.R.M. (BNA) 2585, 56 USLW 2210,

107 Lab.Cas. P 10,164,

Unempl.Ins.Rep. CCH 21,869

The UNITED STEELWORKERS OF AMERICA AFL-CIO-CLC, and United Steelworkers of America, Local Union No. 7044, Appellees, v. Julie M. JOHNSON, in her capacity as Secretary of the South Dakota Department of Labor, Appellant.

No. 85-5101.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 12, 1987.

Decided Oct. 7, 1987.

Wayne F. Gilbert, Rapid City, S.D., for appellant.

John G. Engberg, Minneapolis, Minn., for appellees.

Before LAY, Chief Judge, HEANEY, ROSS, ^* McMILLIAN, ARNOLD, JOHN R. GIBSON, FAGG, BOWMAN, WOLLMAN and MAGILL, Circuit Judges, En Banc.

FAGG, Circuit Judge.

The State of South Dakota appeals from the district court's order holding that the State's basis for denying unemployment compensation benefits to union claimants during the course of the labor dispute impermissibly conflicted with and was preempted by section 7 of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 157. See United Steelworkers v. Meierhenry, 608 F.Supp. 201, 208-09 (D.S.D.1985). A panel of this court affirmed. See United Steelworkers v. Johnson, 799 F.2d 402, 409-10 (8th Cir.1986). On rehearing en banc we also affirm.

The relevant facts are largely undisputed and may be briefly stated. In 1982 the United Steelworkers of America (Union) was the certified bargaining representative for the employees of Homestake Mining Company (Homestake), located in Lead, South Dakota. Because South Dakota was a right-to-work state, Homestake employees had no obligation to belong to the Union. See S.D. Const. art. VI, Sec. 2; S.D.Codified Laws Sec. 60-8-3 (1978). Those Homestake employees who chose not to join the Union worked alongside union employees and enjoyed the benefits of the Union-negotiated collective bargaining agreement. Nonunion employees paid no union dues and were not allowed to participate in union decisions.

On May 31, 1982, a three-year collective bargaining agreement between Homestake and the Union expired. At a union meeting held that same day a majority of Homestake's union employees voted to strike. In response, Homestake closed down all operations and refused entry to all employees, union and nonunion alike, who attempted to go to work.

As the dispute deepened, both union and nonunion employees applied for unemployment compensation benefits. Initially, the South Dakota Department of Labor (Department) denied all claims for benefits made by Homestake employees. The denials flowed from the language of section 61-6-19 of the South Dakota Codified Laws. This statute provides that no benefits will be paid to any employee whose "unemployment is due to a stoppage of work which exists because of a labor dispute at the * * * establishment * * * at which [the employee] is or was last employed." S.D. Codified Laws Sec. 61-6-19 (1978). Homestake employees, union and nonunion alike, were unemployed as a direct result of a labor dispute. Thus, the employees fell within the general prohibition against benefits contained in section 61-6-19.

Both union and nonunion claimants appealed. In analyzing their claims, the chief appeals referee for the Department found inapplicable two of the three exceptions to the general prohibition contained in section 61-6-19. These exceptions remove an employee from the general prohibition if

(1) [The employee] is not participating in or financing or directly interested in the labor dispute which caused the stoppage of work; and

(2) [The employee] does not belong to a grade or class of workers of which, immediately before the commencement of the stoppage, there were members employed at the premises at which the stoppage occurs, any of whom are participating in or financing or directly interested in the dispute.

Id. Sec. 61-6-19(1), (2).

Under the circumstances of this case, the referee concluded that all claimants were either participating in, financing, or directly interested in the labor dispute and were of the same grade or class of workers involved in the labor dispute. See id. Thus, the union and nonunion claimants could not come under the first two exceptions to section 61-6-19. Neither party to this appeal challenges the referee's determination concerning the inapplicability of these exceptions.

Seizing on the third and final exception to the general prohibition of section 61-6-19, the referee found that nonunion claimants had been "locked out" of their employment by Homestake. See id. Sec. 61-6-19(3). The referee wrote:

The claimants do not belong to the union that is involved in the labor dispute. * * * [T]he claimants have been available for work with the employer 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.

(Emphasis added.) Because nonunion employees were available for work but were prevented from working by Homestake, the referee determined those employees were locked out and thus were eligible to receive unemployment benefits under section 61-6-19(3).

Under the same statutory exception, however, the referee denied benefits to all union claimants. Focusing his decision on the employees' union membership, the referee concluded union claimants were not locked out within the meaning of section 61-6-19(3). He wrote:

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 [by] the employer. However, the claimants do belong to Local 7044 of the United Steelworkers of America 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.

(Emphasis added.)

The referee made no attempt to identify or distinguish those union employees who were willing to work despite the strike from those union employees who were unwilling to work because of the strike. Rather, all union employees as a class were denied benefits based on their union membership. More to the point, in sharp contrast with nonunion claimants, the referee made no inquiry and treated as irrelevant any consideration of whether individual union claimants were available to work despite the position taken by the Union as a whole.

The South Dakota Secretary of Labor affirmed on appeal, again relying only on section 61-6-19(3). In the wake of these rulings, a number of union employees attempted to resign from the Union in an effort to become eligible for unemployment benefits. See Pattern Makers' League v. NLRB, 473 U.S. 95, 105 S.Ct. 3064, 87 L.Ed.2d 68 (1985) (union members have the right to resign from a union at any time and avoid imposition of union discipline).

The Union then filed this lawsuit in federal district court. Among other contentions the Union asserted South Dakota was prohibited under section 7 of the NLRA from denying unemployment benefits to union claimants based on their membership in the union.

The district court agreed and concluded South Dakota's application of the lockout exception contained in section 61-6-19(3) impermissibly conflicted with section 7 of the NLRA. As a result, the district court enjoined South Dakota from construing section 61-6-19(3) "to allow the payment of unemployment compensation benefits to non-union employees idled by a strike while the same grade or class of employees who are members of a union are denied unemployment benefits based upon their membership in a union." Meierhenry, 608 F.Supp. at 209.

At the core of this case is the potential conflict between an employee's federally protected rights under section 7 and a state's strong interest in implementing an unemployment compensation plan consistent with the needs of its citizens. The potential for conflict was created during the summer of 1935 when, within a span of five weeks, Congress enacted two significant pieces of legislation. The first piece of legislation was the National Labor Relations Act, ch. 372, 49 Stat. 449 (1935). The second was the Social Security Act, ch. 531, 49 Stat. 620 (1935).

In adopting the NLRA, Congress specifically recognized and guaranteed to all workers the rights of free association and self-organization. 49 Stat. at 449-50, 452. As amended, section 7 of the NLRA, in broad uncompromising language, provides: "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 * * *." 29 U.S.C. Sec. 157. In equally clear language, however, section 7 provides that employees in right-to-work states like South Dakota "shall also have the right to refrain from any or all [union] activities." Id.; see id. Sec. 164(b). The exercise of these federally sanctioned rights in right-to-work states naturally leads to situations in which union and nonunion employees work together as part of the same company.

As indicated, Congress also enacted the Social Security Act in the summer of 1935. Title IX of that Act was created to provide a "valuable first line of defense" against the problem of unemployment. Report of the Committee on Economic Security, H.R.Doc. No. 81, 74th Cong., 1st Sess. 11 (1935) (hereinafter Report ); see also id. at 3. Specifically, Title IX established an extensive federal-state cooperative system under which state-based unemployment compensation programs now operate. See 49 Stat. at 639-45; Report, supra, at 13, 16; see also New York Tel. Co. v. New York State Dep't of Labor, 440 U.S. 519, 536 & n. 27, 99...