Montana Ready Mixed Concrete Ass'n v. Board of Labor Appeals

No. 13727
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977

MONTANA READY MIXED CONCRETE
ASSOCIATION, a corporation,

Plaintiff and Appellant,

BOARD OF LABOR APPEALS, et al.,
Defendants and Respondents.

Appeal from: District Court of the First Judicial District,
Honorable Gordon R. Bennett, Judge presiding.
Counsel of Record:
For Appellant:
Burton and Waite, Great Falls, Montana
Leslie S. Waite I11 argued, Great Falls, Montana
For Respondents:

Moody Brickett argued, Helena, Montana
Hilley and Loring, Great Falls, Montana
Emilie S. Loring argued, Great Falls, Montana
McKittrick and Duffy, Great Falls, Montana
D. Patrick McKittrick argued, Great Falls, Montana

Submitted: December 2, 1977

Decided: DEC 2 $ 1 n
g
Filed : 6Ec q:ij4
a " .
Mr. Justice Frank I. Haswell delivered the Opinion of the Court.

This case concerns the administrative proceeding and deci-
sion of the Board of Labor Appeals and certain claimants represented
by the Joint Council of Teamsters #23 and Local Union No. 400, and
their employers who are members of the !Montana Ready Mixed Concrete
Association. The administrative proceedings were held during the

year 1972. The appeal tribunal on April 14, 1975, found that the

claimants were disqualified from receiving unemployment benefits.
An appeal was made to the Board of Labor Appeals, and after hearing
the matter, the Board on September 22, 1975, reversed the decision
of the appeal tribunal and found that the claimants were entitled

to unemployment compensation benefits. Thereafter, the employer
filed a petition for review of the Board's decision in the District
Court of the 1st Judicial District, Lewis and Clark County. On
January 31, 1977, the District Court issued its opinion sustaining
the decision of the Board and denying the employer's petition for

judicial review. From this decision this appeal is taken.
In this case the Montana Ready Mixed Concrete Association,

hereinafter referred to as the employer, had an agreement with the
Joint Council of Teamsters #23 and International Union of Operating

Engineers, Local No. 400, hereinafter referred to as the employees.
This agreement covered wages, hours, and working conditions. The
expiration date of this agreement was February 29, 1972.
Prior to the expiration of the agreement, the employees,

through their unions, opened the agreement for renegotiation. On
March 1, 1972, negotiations were resumed. In the afternoon the
employer notified the employees that their last proposal was not
acceptable and resubmitted its last proposal as its final offer.

At the conclusion of this meeting the employees' unions agreed to
take the employer's last offer to its members for a vote. The
employer stated its members would lock up their plants on Monday,

March 6, 1972, unless it received notice of acceptance of its pro-
posal by noon, Sunday, March 5, 1972. The employer's offer was

thereafter rejected. On Monday, March 6, the employer closed its
plants, and the employees who reported for work were not allowed to

work. Employment was withheld from them until March 16, 1972, when
a settlement was negotiated and the plants reopened. The focal
question is whether an impasse had been reached during the 1972

negotiations between the parties which would exclude the employees
from unemployment compensation benefits. The unions deny this and

insist that there had been only three negotiating sessions, that
there had been movement by both sides, and that there was no evi-
dence that continued negotiations, as requested by the unions,
would have been unsuccessful.
The employer filed another suit in Federal Court entitled

"Montana Ready Mix and Concrete Productions Assoc. v. The State
of Montana et al." In that case, the employer claimed the Board
of Labor Appeals had interfered with the employer's collective

bargaining rights and sought to enjoin the Board from enforcing
its decision. U. S. District Judge Russell E. Smith granted judg-
ment to the State of Montana, holding that the Montana Unemployment
Compensation Law, as written, is neutral and does not in any way
impinge on the collective bargaining process.
The issues presented for review are:

1. Whether the Board and District Court erred in inter-
preting the Montana Unemployment Disqualification Law?
2. Whether the Board's decision improperly intruded upon
and interfered with the employer's federally protected right to
bargain collectively and to engage in a lockout?
This appeal centers around the Montana Unemployment Compen-

sation Law Section, which is section 87-106, R.C.M. 1947. Subsection
(d) provided as follows in 1972:
 "87-106. Disqualification for benefits. An indi-
vidual shall be disqualified for benefits--

"(d) For any week with respect to which the commission
finds that his total 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, provided that this subsection
shall not apply if it is shown to the satisfaction of
the commission that--
"(1) He is not participating in or financing or directly
interested in the labor dispute which caused the stop-
page of work; and
"(2) He 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 parti-
cipating in or financing or directly interested in
the dispute;
"Provided, that if in any case separate branches of
work which are commonly conductecl as separate businesses
in separate premises are conducted in separate depart-
ments of the same premises, each such department shall,
for the purpose of this subsection, be deemed to be a
separate factory, establishment, or other premises;
provided, further, that if the commission, upon inves-
tigation, shall find that such labor dispute is caused
by the failure or refusal of any employer to conform
to the provisions of any law of the state wherein the
labor dispute occurs or of the United States pertaining
to collective bargaining, hours, wages or other condi-
tions of work, such labor dispute shall not render the
workers ineligible for benefits."
The labor dispute disqualification is a two step procedure.

First, if the commission finds that unemployment is due to a labor
dispute where the claimant was last employed, the claimant is dis-

qualified. Secondly, the disqualification is removed if the com-
mission finds that the employee is not participating or directly
interested and he does not belong to the grade or class of workers
who are participating. The Montana Unemployment Compensation Act
does not define "labor dispute". The employer insists that the
employees were "locked out" and that a "lockout" is automatically
a labor dispute. The language of the statute lends no help. There-

fore, this Court must determine whether it was the intent of the
legislature in enacting section 87-106(d), R.C.M. 1947, that this
section apply where the employer locks out the employees.

The vital question is whether the unemployment was caused
by a labor dispute. The word "lockout" is meaningless unless it
is applied to the circumstances of the case. The Board of Labor

Appeals held that the claimants were not unemployed because of a

"labor dispute". In Ross v. Review Board of ~ndianaEmployme~t
Security Division, (1nd.App. 1961), 172 N.E.2d 442, 448, the court,
in upholding an award of unemployment compensation benefits, held:
" * * * The existence of differences between
labor and management does not ipso facto con-
stitute a labor dispute causing a stoppage of
work. * * * "
The court went on to say:

" * * * While labor may use the strike and
management may use the lockout, neither can use
the Employment Act as a weapon, that is, in the
case of management as a weapon to disqualify
workers from unemployment benefits, and in the
case of labor in using the strike and at the same
time hoping to avoid disqualification for unemploy-
ment benefits."
In the instant case the record is unclear as to the state of the
negotiations at the time of the lockout. The record shows that
negotiations between the employer and the bargaining agents of the
employees were in progress all the time prior to the closing of

the plants. After attempts to consummate a new contract, the
employer decided a labor dispute existed and closed the plants,
thus arriving at a lockout status.
We conclude that good faith negotiations between representa-

tives of management and labor, where the facts show that the bar-
gaining is in a fluid state and no impasse has occurred, gives
neither party the right to declare a labor dispute. To hold other-
wise would be to defeat the purpose of the law. Such an interpre-
tation would defeat the objective of contract negotiations in all
industries. To promote the general welfare it is necessary to
encourage good faith collective bargaining at all times. If we were
to interpret every difference of opinion between employer and
employee as a labor dispute, we can perceive a situation where no
one could receive unemployment benefits and labor-management rela-

tions would be in chaos.

However, in this case it is disputed whether or not bargain-
ing was in a fluid state or whether an impasse had in fact been
reached. To be sure, there was argument and wrangling between the
negotiators over the terms of the proposed new contract. The true
reason for the lockout at the employer's businesses is not clear

from the record. However, it does not seem that the lockout was
used to improve the bargaining power of the employer and therefore,
we will give the employer the benefit of the doubt and hold that in

this case the lockout arose from a labor dispute.
Since this Court finds that the lockout arose from a "labor
dispute", it becomes necessary to determine whether the disquali-
fication section was intended by the legislature to apply to the
factual situation presented by this case. Section 87-102, R.C.M.

1947, sets out clearly the public policy behind the unemployment
compensation act. This section states:

"Declaration of state public policy. As a
guide to the interpretation and application of this
act, the public policy of this state is declared
to be as follows: Economic insecurity due to
unemployment is a serious menace to the health,
morals, and welfare of the people of this state.
Involuntary unemployment is therefore a subject of
general interest and concern which requires appro-
priate action by the legislature to prevent its
spread and to lighten its burden which now so often
falls with crushing force upon the unemployed worker
and his family. The achievement of social security
requires protection against this greatest hazard
of our economic life. This can be provided by
encouraging employers to provide more stable employ-
ment and by the systematic accumulation of funds
during periods of employment to provide benefits
for periods of unemployment, thus maintaining pur-
chasing power and limiting the serious social con-
sequences of poor relief assistance. The legislature,
therefore, declares that in its considered judgment
the public good, and the general welfare of the
citizens of this state require the enactment of this
measure under the police powers of the state for the
compulsory setting aside of unemployment reserves to
be used for the benefit of persons unemployed through
no fault of their own." (Emphasis added.)
 This section declares a legislative purpose of providing
for payment of benefits to persons unemployed through no fault of

their own. In this case, the employer contends the employees par-

ticipated in the labor dispute through their representative unions
and that they were interested in the outcome of the lockout and

therefore section 87-106(d) mandates their disqualification. Both
subsections (1) and ( 2 ) provide for the disqualification where the
employee is directly interested in the labor dispute. The respondents
contend that they were not participants in the lockout, they were
victims of it. In reviewing the negotiations prior to the lockout,

it is apparent that the employees had not threatened the employer
with a strike or a work slowdown. The lockout was not brought on
by the action of the employees except for the fact that they voted
to reject the employer's last offer. It appears as though no demands
had been made except for those ordinarily incident to any negotiating
procedure. There was no testimony that a strike vote had ever been
taken or was even contemplated by the employees. The employees'
representative unions were willing to continue negotiations and
so informed the employer prior to the lockout.
Where an employer lockout has resulted in disqualification

from benefits there have been additional facts, not present in
this case, showing voluntary action on the part of the employees
precipitating the employer's action. It would be difficult for
reasonable minds to reach the conclusion that the lockout was pre-

cipitated by the union or the employees in view of the fact that
the unions' attitude was that of negotiating any differences which
the employees had through the collective bargaining process and
the action of the employees seeking to return to work and being
refused employment by the employer. The employees involved were
unemployed through no fault of their own. The ~istrictCourt was

correct in sustaining the administrative decision of the ~ o a r dof
Labor Appeals granting them unemployment compensation.
 Employer further contends that the disqualification
statute, although neutral on its face, was improperly applied in

this case and therefore interfered with the employer's federally
protected right to bargain collectively and to engage in a lockout.
The many cases cited by the employer involving federal preemption
and conflict with state law do not deal with this problem, but
rather with state action which interferes with federal regulation

of labor relations. The employer has cited none, and we can find
no case which holds as a matter of law that the preemption doctrine
is applicable to the situation here.
The case of Super Tire Engineering Co. v. McCorkle, 416
U.S. 115, 94 S.Ct. 1694, 40 L ed 2d 1 (1974) is distinguishable
on the facts and does not support employer's position. In McCorkle
the U. S. Supreme Court declared that it was the intent of Congress

to make maintenance of government neutrality contingent on treating
otherwise eligible strikers no differently from nonstrikers in the
receipt of public assistance. It is important to note that this
case dealt with employees who were on strike. It did not deal with
employees who were ready, willing, able and available for work who
had been precluded from performing their job by a lockout. In

McCorkle-theCourt found no merit in the contention that eligibility
of strikers for public assistance frustrates national labor policy
of free collective bargaining by altering relative economic strength
of parties.
Here, we find that the decision of the Board, affirmed by
the District Court, does not interfere or intrude upon federal
labor policy. The decision of the District Court is affirmed.

Justice
We Concur:

L.
.
Justice

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