Opinion
No. 259.
Argued September 5, 1973. —
Decided October 30, 1973.
APPEAL from a judgment of the circuit court for Dane county: GEORGE R. CURRIE, Reserve Circuit Judge, Presiding. Reversed.
For the appellants there was a brief by Uclair W. Brandt, Department of Industry, Labor Human Relations chief counsel, attorney; and Goldberg, Previant Uelman and Albert J. Goldberg of counsel, attorneys for William A. Abel, et al., of Milwaukee; and oral argument by Albert J. Goldberg.
For the respondent there was a brief by Carroll E. Metzner, Roger L. Gierhart, and Aberg, Bell, Blake Metzner, all of Madison, and Allan L. Bioff, Leonard Singer, and Watson, Ess, Marshall Enggas, all of Kansas City, Missouri, and oral argument by Carroll E. Metzner and Mr. Bioff.
A brief amicus curiae was filed by Davis, Kuelthau, Vergeront, Stover Leichtfuss, S.C., attorneys, and Walter S. Davis and John P. Savage of counsel, all of Milwaukee, for Wisconsin Manufacturers' Association.
This case involves a claim for unemployment compensation. The Kansas City Star Company, Flambeau Paper Company Division (respondent and hereinafter referred to as employer) operates a paper mill in Park Falls, Wisconsin, and employs there approximately 380 production workers. Most of the employees are represented by either the United Papermakers and Paperworkers, Local No. 445, or the International Brotherhood of Pulp, Sulphite and Paper Mill Workers, Local No. 119. These two unions have bargained jointly with the employer for the past thirty years, and recently had a two-year contract dated August 1, 1969.
Section 1 of this contract provided that it:
". . . shall be in effect August 1, 1969, and shall remain in effect until July 31, 1971, inclusive, and from year to year thereafter, unless terminated in accordance with the provisions of Section 2, below."
The agreement also provided that any party who desired to change any provision of the contract must give written notice of such desire to the other party at least sixty days in advance of the contract's anniversary date. If such notice was given negotiations would commence and if agreement was not reached before the, anniversary date of the contract, the terms of that contract would continue in effect unless it was specifically terminated as provided in section 2.
Section 2 provided:
"(a) At any time after the anniversary date, if no agreement on the questions at issue has been reached, either party may give written notice to the other party of intent to terminate the agreement in (not less than) thirty days. All the provisions of the agreement shall remain in full force and effect until the time set forth has elapsed. During this period, attempts to reach an agreement shall be continued.
"(b) If the parties have failed to resolve their differences before the time set forth has elapsed, all obligations under this agreement are automatically cancelled."
Both unions gave the requisite notice to the employer by letters dated May 10 and 12, 1971, that certain contract provisions should be renegotiated. Bargaining sessions were conducted on June 11th and intermittently thereafter for approximately six weeks. The unions sought increased wages and changes in fringe benefits such as pensions, vacations and group insurance. The employer sought changes in certain work rules, wage differentials and contract language. Initially, the unions sought a wage increase of 10 percent (minimum 29 cents per hour) for the first year and an increase of 32 cents per hour during the second year. During meetings on July 1st and 2d the employer offered a wage increase of 6 percent (no minimum) the first year and 20 cents per hour the second year. Other counteroffers were made regarding fringe benefits. The employer's most important proposed work rule changes were not accepted. On July 23d the employer increased its proposed wage hike for the first year to 6 1/2 percent and for the second year to 22 cents per hour. These proposals were not satisfactory to the unions and it appeared that an impasse had been reached. On July 26th a joint meeting of the members of both unions was held and these latest proposals of the employer were rejected by a vote of 210 to 4. Moreover, the employer was notified that on July 27th the unions had agreed to strike by a vote of 291 to 19. A federal mediator then requested that a meeting be held on August 5th, but the unions and the employer adhered to their previous positions at that meeting. At the end of the meeting, both unions tendered notices to the employer that stated, under section 2 of the labor agreement "we do hereby terminate [the/this] agreement." Both notices advised that the unions would be willing to meet any time during the requisite thirty-day period to try to resolve their differences.
On the following day, August 6th, the employer mailed each union a letter which stated it had received the unions' letters of August 5th. In its letters of August 6th the employer stated that, as a result of the unions' actions, all offers made earlier in the current negotiations were withdrawn and in the thirty-day interim period, if it was the unions' desire to meet with the company bargaining committee, they were to contact the assistant general manager and employer negotiator.
Meanwhile, on August 2d the employer notified its pulpwood suppliers of the threat of a strike in its plant and that unless an agreement was reached soon it would be necessary to discontinue receiving pulpwood. On August 6th the employer sent a notice of pulpwood embargo to its suppliers and a radio news release was issued in an attempt to notify those suppliers who might be out in the woods; the employer was discontinuing receiving pulpwood by railroad cars as of August 9th and by truck as of 4 p. m. on August 10th. No further orders for materials were placed and those suppliers with blanket orders were notified not to ship. Over 300 letters were sent to the employer's customers notifying them that it would be incapable of filling any orders that specified a delivery date beyond September 4th in order that those customers could arrange for another source of supply. The consequent result was that the employer's new orders went from an average 5,105 tons per month down to 487 tons in September, and 275 tons for October 1st through October 25th. The employer's shipments went from an average of 5,198 tons per month to 329 tons in September, and 545 tons in October. Some paper had to be purchased from other sources in order to fulfill the customers' needs for which the employer had already committed itself.
On August 15th, by Executive Order No. 11615, President Nixon ordered a freeze on prices, rents, wages and salaries for ninety days. At a meeting on August 19th of the unions and the employer held at the request of the federal mediator, both unions submitted substantially similar letters in which they referred to their letters of August 5th, giving notice of contract termination. Both letters of August 18th stated in part:
"In light of President Nixon's ninety day freeze on wages and prices, this letter will serve as a withdrawal of that termination notice and of our desire to continue to work under the terms of the existing agreement, unless, or until, a new termination is sent or full agreement reached on a new contract."
On August 19th the employer answered these latest letters of the unions, stating that it could find no provision in the present labor contract which authorized the withdrawal of the unions' termination notices after once being tendered. The employer offered to accept the withdrawal notices provided it would have the unions' guarantee in writing that the notices of termination would not be reinstated prior to one year from the date of notice of withdrawal. The employer gave as a reason for its position on this point that it had already begun winding down operations and had turned down orders in anticipation of an impending strike, and that this placed it in a very untenable position as far as its customers were concerned, and its ability to be a firm supplier of their needs. In its letter, the employer further stated that it was almost impossible for it to continue to insure its customers of its reliability if it was faced with a reinstatement of termination notice, and that it considered it essential to have a one-year guarantee.
There is conflict in the testimony whether the unions had given oral assurances to the employer that they would not strike for ninety days. The employer testified that no such assurance had been made, whereas Mr. Shank, a union vice-president, claimed it had.
The employer proceeded to wind down its operations until September 2d, when approximately 24 employees were laid off. Approximately 23 more were laid off at the beginning of the business day on September 3d, and the remaining employees were laid off at the end of the business day on September 3d. On September 4th the plant did not operate and no employees worked.
On September 10th the employer offered to withdraw its demand for certain changes in work rules and to give a 4 percent across-the-board increase in wages in return for a one-year extension of the present contract. The unions refused, but offered to extend the contract for a 6 1/2 percent across-the-board increase. No agreement was reached and further sessions were also conducted on September 27th, 28th, 30th and October 1st, 5th, 6th, 15th, 18th, 19th, 20th, and 22d. Apparently, on December 11th, the parties agreed to the terms of a new contract.
After work at the employer's plant had discontinued, the employees filed for unemployment compensation. The employer claimed that these employees had lost their employment as a result of a bona fide labor dispute in active progress and, therefore, were not entitled to unemployment benefits under sec. 108.04 (10), Stats.
An initial determination was filed on September 24th by a deputy of the unemployment compensation division which was in accord with the employer's position that the employees had lost their employment as a result of a bona fide labor dispute in active progress and were disqualified for benefits by sec. 108.04 (10), Stats., which section provides as follows:
"LABOR DISPUTE. An employee who has left (or partially or totally lost) his employment with an employing unit because of a strike or other bona fide labor dispute shall not be eligible for benefits from such (or any previous) employer's account for any week in which such strike or other bona fide labor dispute is in active progress in the establishment in which he is or was employed."
This determination was appealed and while pending, the Department of Industry, Labor Human Relations (ILHR Department), pursuant to authority granted in sec. 108.09 (6) (a), Stats., transferred the proceedings to itself by order dated October 18, 1971. A hearing was conducted before Examiner Max J. Peltin, acting as the commission's deputy, on October 25th consolidating all the claims of the employees. On the basis of this hearing, the commission voted two-to-one to reverse the initial determination of the deputy.
Specific findings were entered, as pertinent here, as follows:
". . .
"The commission does not consider that the employees lost their employment with the employer because of a bona fide labor dispute within the intent and meaning of section 108.04 (10).
"The employees had the contract right to terminate their agreements upon 30-day notices pursuant to section 2. They gave the employer such notices. The employees also took a strike vote and gave approval to the union officers to call a strike after the contracts were terminated.
"The employees' actions were in accordance with the contract provisions and appeared in good faith. At most the strike vote was an indication that a strike might occur.
"In 1969 the unions served 30-day termination notices upon the employer as provided by section 2 of the contract. No strike occurred in 1969 because agreement was reached immediately prior to the end of the 30-day period by the unions and the employer. During this period the employer did not give any notices to suppliers and customers of the contract termination or attempt to in any way `wind down' its operations.
"The employer knew on August 19, 1971, that the employees would not strike after the termination of the contract on September 3, because of the unions' letters withdrawing the termination notices and indicating a willingness to continue to work under the terms of the existing contracts until new terminations of the contracts were sent or new contracts consummated.
"The employer refused to accept the unions' withdrawals of the contract terminations unless the unions agreed in writing that new contract terminations would not be reinstated for a one-year period.
"The employer's contention that the termination notices were strike threats loses its persuasiveness in view of the employee's withdrawal of the termination notices. It appears that the good faith efforts by the unions to continue the contracts required the employer to accept the withdrawal notice even though the contract is silent as to the unions' right to withdraw the termination notices.
"The employer's actions in laying off over 20 employees on September 2, and about the same number on September 3, were in direct violation of contract provisions that there would be no lockouts during the period of the agreements. Accordingly, if these actions amounted to lockouts, these lockouts would not be bona fide labor disputes.
"In view of the fact that the employer had assurance on August 18, 1971, that no strike would take place as previously threatened, the employer's actions in continuing to `wind down' its business operations and to lay off all of its production employees on September 2 and 3 were not required, necessary or warranted business decisions on the part of the employer.
"Since the employer terminated the employment of the employees solely because of economic worries over the preservation of its relations with its suppliers and its customers, this was a business judgment and did not constitute a `bona fide labor dispute' as contemplated by section 108.04 (10). Accordingly, the employees lost their employment as a result of the employer's actions in shutting down the plant. This action in effect was a layoff which was not as a result of a bona fide labor dispute. See Barrett v. Wasson Coal Co. (1949), 404 Ill. 11, 87 N.E.2d 769.
"The commission therefore finds that each of the employees lost his employment with the employer in week 36 of 1971 but that such employment was not lost because of a bona fide labor dispute in active progress in the establishment in which he is or was employed, within the meaning of section 108.04 (10) of the Wisconsin Statutes."
After the complaint was filed asking review of the department's position by the circuit court for Dane county, a judgment reversing the department's decision was entered. In its memorandum decision the trial court determined that the evidence gave rise to but one reasonable inference with respect to three crucial issues: (1) A labor dispute existed on September 4, 1971; (2) this labor dispute was bona fide; (3) the unemployment of the employees resulted from a bona fide labor dispute within the meaning of sec. 108.04 (10), Stats.
The department and the individual claimants appeal.
Further facts are set forth in the opinion.
The two issues that are dispositive of this appeal are:
1. What is the meaning of a bona fide labor dispute as set forth in sec. 108.04 (10), Stats.?
2. Does the evidence support the findings by the department that the employees did not lose their employment because of a bona fide labor dispute in active progress in the establishment in which they were employed?
Meaning of bona fide labor dispute.
A "labor dispute" within the meaning of sec. 108.04(10), Stats., is "`any controversy concerning. . . employment relations, or any other controversy arising out of the respective interests of employer and employee . . . .'"
Spielman v. Industrial Comm., (1940), 236 Wis. 240, 250, 295 N.W. 1; Kenneth F. Sullivan Co. v. Industrial Comm. (1964), 25 Wis.2d 84, 88, 130 N.W.2d 194; accord, Annot. (1953), 28 A.L.R. 2d 287, 297.
The term "bona fide" is not specifically defined in ch. 108, Stats., and therefore it must be "interpreted in accordance with the common and approved usage thereof and in accordance with other accepted rules of statutory construction." The term generally "`signifies a thing done really, with a good faith, without fraud or deceit, or collusion . . .' . . . Bona fide means real, actual, genuine . . . ."
Sec. 108.02(21), Stats.
Bridgeport Mortgage Realty Corp. v. Whitlock (1941), 128 Conn. 57, 61, 20 A.2d 414.
The term "bona fide labor dispute," within the disqualifying sec. 108.04(10), Stats., means a controversy regarding the terms of employment which in fact exists and is not merely pretextural or reigned on the part of the employer in an attempt to avoid his obligations under the law.
One of the purposes of the Unemployment Compensation Act was to "prevent an employer from financing a strike against himself."
Kenneth F. Sullivan Co. v. Industrial Comm., supra, footnote 1, at page 88.
Department's finding of fact — no bona fide labor dispute.
A benefit claimant is presumed eligible for benefits and the party (the employer here) resisting payment of benefits has the burden of proving that the case comes within the disqualifying provision of the law (here, a bona fide labor dispute existed).
Boynton Cab Co. v. Giese (1941), 237 Wis. 237, 296 N.W. 630.
In reviewing the department's finding that the unemployment of the employees was not because of a bona fide labor dispute in active progress our standard of review is of course that we must accept the department's determinations on such findings of fact if supported by credible evidence on the record as a whole. The credibility of the witnesses and the weight of the evidence is within the province of the department. In R. T. Madden, Inc. v. ILHR Department, this court extensively reviewed the tests which had been used to explain the proper scope of review and held:
Milwaukee Transformer Co. v. Industrial Comm. (1964), 22 Wis.2d 502, 509, 510, 126 N.W.2d 6.
Neff v. Industrial Comm. (1964), 24 Wis.2d 207, 213, 128 N.W.2d 465; Copland v. Department of Taxation (1962), 16 Wis.2d 543, 555, 114 N.W.2d 858.
(1969), 43 Wis.2d 528, 547, 169 N.W.2d 73.
"It is our conclusion the test should be whether there is any credible evidence in the record sufficient to support the finding made by the department. The assumption in that test is, of course, that the evidence is relevant, that it is evidentiary in nature and not a conclusion of law, and that it is not so completely discredited by other evidence that a court could find it incredible as a matter law. This is clearly not the same as a reviewing court's weighing conflicting credible evidence to determine what shall be believed."
Moreover, "[ill conflicting inferences may be drawn from the evidence, it is the function of the department to conclude which inference (if reasonable) controls, and not the function of this court." In Kessler v. Industrial Comm. this court explained:
Baez v. ILHR Department (1968), 40 Wis.2d 581, 585, 162 N.W.2d 576; Fitzgerald v. Globe-Union, Inc. (1967), 35 Wis.2d 332, 337, 151 N.W.2d 136.
(1965), 27 Wis.2d 398, 400, 134 N.W.2d 412.
"[W]here the evidentiary facts are not in dispute but permit of different inferences the drawing of one of such inferences is a finding of fact within the province of the Industrial Commission. Gant v. Industrial Comm. (1953), 263 Wis. 64, 56 N.W.2d 525. This court has held, however, . . . that if the evidentiary facts are not in dispute and permit of only one reasonable inference, the drawing of that inference is a question of law and not of fact. . . ."
The department made lengthy findings, which we have already quoted, amplifying its determination that "The commission does not consider that the employees lost their employment with the employer because of a bona fide labor dispute within the intent and meaning of section 108.04(10)."
Although there is a dispute on the record as to whether or not the employer was given notice that there would be no renewal of the termination notice while the price and wage freeze was in effect, there was clearly evidence that the employer was given oral assurance of this. This is a factual determination which is within the department's responsibility to make.
The department, having decided that the termination notice had been withdrawn, could have determined as a matter of fact that the layoffs were not while a bona fide labor dispute was in progress but were by way of a layoff for economic reasons.
In concluding that the loss of employment in this case was not due to a bona fide labor dispute, the department relied heavily on Barrett v. Wasson Coal Co. In Barrett, an Illinois coal mine was closed down pending negotiations of a new contract and the employer tried to defeat the employees' claim of unemployment benefits by asserting sec. 7(d) of the Illinois Unemployment Compensation Act (Ill. Rev. Stat. 1947, ch. 48, par. 223). This was a labor dispute exception similar to sec. 108.04(10), Stats. The owner of the mine claimed he refused to sign the labor contract because he did not understand its terms. However, during negotiations, the owner explained, "`I can't operate until the government lets me know for sure what I am going to get for the coal.'" The division of unemployment compensation found, and the Supreme Court of Illinois agreed, that ". . . there was no labor dispute . . . . There was no dispute concerning hours or terms of employment about which the parties were trying to agree." The loss of employment in that case was not because of a labor dispute but because the government's policy on coal had not been clearly established, a circumstance beyond the control of both parties. In the present case, the immediate cause of the lack of jobs was the rapid decline in orders for paper and the general winding down of operations by the employer. Customers and suppliers were notified and operations were wound down. With the attendant decrease in orders and general business at the paper mill, soon there was no work to be done. The plant was shut down. Although there is no evidence here which indicates the employer had an independent reason, such as the governmental policy regarding coal in Barrett, for closing its paper mill, from the record as a whole the department could find that a bona fide labor dispute did not exist at the time of the layoff and the layoffs were for business reasons, the reasons being the kind designed to give rise to legitimate unemployment compensation claims within the framework of the Wisconsin Unemployment Compensation Law.
(1949), 404 Ill. 11, 87 N.E.2d 769.
Id. at page 14.
Id. at pages 16, 17.
By the Court. — Judgment reversed.
When their former employer closed down the paper plant in which they had been working, the former employees applied for unemployment compensation benefits for the weeks of joblessness that followed the permanent closing of their former place of employment. Even if a labor dispute was involved in the management decision to close the plant down, the former employees are entitled to unemployment compensation benefits under sec. 108.04(10), Stats., except ". . . for any week in which such . . . bona fide labor dispute is in active progress in the establishment . . ." in which they were employed. (Emphasis supplied.) With the plant permanently closed, there was no labor dispute left, much less one in active progress. There was no employer or employees to do the disputing. There was only a former employer and its former employees. There were no wages, hours or working conditions about which to dispute. Payroll and positions ended when the plant closed down. Whatever its reasons for so doing, when management permanently closed down the paper plant, any disagreement with its former employees was interred along with the plant operations. The state agency holding that the former employees are entitled to unemployment compensation benefits is upheld solely for the reason that a permanently closed mill or factory cannot have a labor dispute in active progress any more than a corpse can have a toothache.
I am authorized to state that Mr. Justice BRUCE F. BEILFUSS and Mr. Justice CONNOR T. HANSEN join in this concurring opinion.