PLYMOUTH STAMPING, DIVISION OF ELTEC CORPORATION v. LIPSHU
Case Details
- Citation
- 436 Mich. 1
- Judge(s)
- Cavanagh, J., concurred with Boyle, J.; Riley, C.J., and Griffin, J., concurred with Brickley, J.
- Procedural Posture — the stage the case had reached
- appeal
- State
- Michigan
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
The Michigan Supreme Court held that strikers permanently replaced during a labor dispute are eligible for unemployment benefits from the time of replacement, but remanded for further proceedings to determine whether a continuing labor dispute remained a substantial contributing cause of unemployment and whether suitable work was available to individual claimants.
Excerpt
PLYMOUTH STAMPING, DIVISION OF ELTEC CORPORATION v LIPSHU Docket No. 83206. Argued October 4, 1989 (Calendar No. 1). Decided September 12, 1990. Mike Lipshu, Jr., and other employees of Plymouth Stamping, Division of Eltec Corporation sought unemployment compensation benefits after the company proposed during contract negotiations with the employees’ union that replacement employees, hired by Plymouth while a strike was in progress, would be permanently retained. The initial decision by the Employment Security Commission denying unemployment compensation benefits on the basis of the labor dispute disqualification provisions of the Employment Security Act, MCL 421.29(8); MSA 17.531(8), was reversed after it was determined at an evidentiary hearing that the strikers were entitled to unemployment benefits from the date the employer hired permanent replacements. The mesc Board of Review affirmed. The Wayne Circuit Court, William Leo Cahalan, J., affirmed. The Court of Appeals, D. E. Holbrook, Jr., P.J., and Hood and N. J. Kaufman, JJ., affirmed, holding that, although strikers should be disqualified from receiving benefits during a strike even if an employer hires replacements, that disqualification should end when and if the employer announces that the replacements will remain as permanent employees (Docket No. 95816). Plymouth Stamping appeals. I. In opinions by Justice Archer, by Justice Boyle, joined by Justice Cavanagh, and by Justice Levin, the Supreme Court held: Strikers who are permanently replaced by their employer during the course of a strike are not disqualified for unemployment benefits under MCL 421.29(8); MSA 17.531(8), but are _eligible for benefits from the time of replacement until a subsequent event renders the labor dispute a substantial contributing cause of their unemployment. References Am Jur 2d, Unemployment Compensation § 80. Unemployment compensation: labor dispute disqualification as applicable to striking employee who is laid off subsequent employment during strike period. 61 ALR3d 766. II. In opinions by Justice Levin, and by Justice Brickley, joined by Chief Justice Riley and Justice Griffin, the Supreme Court further held: The case is remanded to the Employment Security Commission for further proceedings. Justice Archer stated that as of January, 1981, the substantial contributing cause of the workers’ unemployment was the fact that their jobs ceased to exist. Because the workers no longer voluntarily ceased their employment after they had been permanently replaced, they were eligible for unemployment compensation. To the extent their refusal to apply for work with their former employer after their replacement caused their unemployment, they cannot be disqualified absent a finding that they refused to apply for available work, suitable under §§ 29(6) and 29(7). The decisions of the mesc, the circuit court, and the Court of Appeals should be affirmed. The question presented in this case is one of mixed law and fact, and the decision of the Supreme Court should have as its authority the intent of the Legislature. Where, as in this case, the Legislature has not made clear whether it intended that striking workers who have been permanently replaced be disqualified from receiving unemployment compensation, the Court must construe the act as written to give effect to probable intent. Because the act is remedial, it requires liberal construction. Under the Employment Security Act, all unemployed workers are intended to be compensated except where expressly excluded. Examination of the categories of exempted workers reveals that unemployment compensation was intended to be withheld only where unemployment is caused by a worker’s voluntary act. Permanently replaced employees are neither truly discharged nor do they actually remain employees; rather, they fall into a special category of idled workers whose status under the act can only be defined by the authors of the act. Section 29(8) prohibits unemployment compensation for workers who are out of work because of direct participation in a strike; the disqualification ends, however, where the workers are discharged by the employer. Applying § 29(8) to the facts of this case, it is undisputed that the workers initially were disqualified from receiving unemployment compensation because their unemployment was due to a labor dispute in which they were directly involved. However, in January, 1981, that situation changed when the company permanently replaced them, i.e., their unemployment no longer was voluntary, and a labor dispute no longer was the cause of their unemployment. Rather, the substantial contributing cause of their unemployment was that their jobs ceased to exist. Under § 29(7)(a), the refusal of individual strikers to break ranks with the union and cross picket lines to apply for any available work did not render their unemployment voluntary. The fundamental flaw in the reasoning of the opinion for reversal lies in the importance it places on the union’s continuing demand that permanently replaced strikers return to jobs only as a group. While a permanently replaced worker may be disqualified for refusing to apply for available work, the refusal should not be measured under § 29(8). Workers are not required to apply unconditionally for available work. Under §§29(l)(c) and (e), disqualification will obtain where a worker fails without good cause to accept suitable work of which the worker had notice. Under §§ 29(6) and (7), whether work is suitable depends on a worker’s background and situation and does not include positions made vacant because of a labor dispute, positions that offer substantially less favorable conditions than those prevailing locally, or positions that require resignation from a union. Thus, it would be error to order remand to determine when work became available to each worker without also ordering that a determination be made regarding whether the work was suitable. Remand is not required, however, because the issue regarding a permanently replaced worker’s duty to apply for work with a former employer is not properly before the Court. The labor dispute disqualification ended upon the strikers’ permanent replacement. While the plaintiff challenged the workers’ eligibility for compensation under .§ 29(8), it did not charge that they refused suitable work under §§ 29(l)(c) and (e). The burden of proving disqualification is on the employer. In this case, the employer did not sustain the burden. The opinion for reversal errs in basing the workers’ disqualification on individual failure to apply for work with the plaintiff in the face of their union’s decision to demand group reinstatement. It is not clear that the Legislature intended to create a duty in a union to drop a demand for group reinstatement as a precondition to members’ receipt of unemployment benefits. Creation of such a duty would force a union to abandon collective action, to cease being a union. In addition, had the union dropped its demand, it would have been open to charges that it violated federal labor law by failing to fulfill its duty of fair representation. Justice Boyle, joined by Justice Cavanagh, stated that the labor dispute disqualification provision of the Employment Security Act, § 29(8), ceased to control when the employer notified the strikers that they had been permanently replaced. Permanent replacement severs the causal connection between a strike and unemployment, thereby terminating the labor dispute disqualification. An employer enjoys the protection of § 29(8) only so long as it does not act to alter the employment relation. Permanent replacement of an employee disturbs the status quo of that relation and destroys both the policy considerations and the fundamental underlying assumption behind the disqualification. Whether the employer intended to discharge or merely replace the striking employees is irrelevant to the resolution of this case; rather, it is the fact of permanent replacement, not the particular intent of the employer, that destroys the underlying assumption behind the labor dispute disqualification and thereby prevents its application to the replaced strikers. Given the parties’ presentation of the issue in the Supreme Court, it is inappropriate to address the question whether some other provision of the act may bar the claimants’ recovery. Remand is also inappropriate since the employer has already had the opportunity to prove which of the sixteen permanently replaced employees would have been reinstated. Its failure to do so should not entitle it to another opportunity, but rather should be outcome determinative. Justice Levin stated that when the employer, exercised its right to hire permanent replacements, the strike was not at that moment a substantial contributing cause of the claimants’ unemployment, and the claimants were eligible for benefits from that time forward until any succeeding events again rendered the labor dispute a substantial contributing cause of the claimants’ unemployment. The present record is not sufficient for a determination regarding individual claimants of whether the labor dispute, at some point after the employer’s exercise of its right to hire permanent replacements, again became a substantial contributing cause of the unemployment, requiring remand to the Employment Security Commission for further factual development regarding the availability of work at Plymouth Stamping after the employer first conferred permanent status on the replacement employees, and regarding other bases regarding the claimants’ eligibility for benefits. Justice Brickley, joined by Chief Justice Riley and Justice Griffin, stated that where, as in this case, the facts presented indicate that economic strikers decline to accept a limited number of vacancies offered by an employer, and as a condition of ending the strike demand instead the immediate reinstatement of all strikers, all such strikers should remain disqualified from receiving unemployment benefits because of the continuance of a labor dispute in active progress. While the Employment Security Act reflects a primary legislative purpose of protecting wage earners against the evils incident to involuntary unemployment, the labor dispute disqualification provisions of the act enunciate an explicit preference to deny compensation for employees unemployed because of direct participation in an active labor dispute. The labor dispute disqualification provision explicitly precludes the strikers in this case from receiving unemployment benefits because a labor dispute continued in active progress even after the employer permanently replaced them. The union initially offered to return to work unconditionally and to end the labor dispute. However, the striker’s demand to return only as a group rather than as vacancies occurred constituted a new demand, separate from the earlier economic demands, which continued the labor dispute and constituted a substantial contributing cause of the strikers unemployment. While the strikers remained on strike over the issue of reinstatement, their demand for group reinstatement also precluded reemployment of those strikers for whom vacancies existed and foreclosed a determination of which strikers would have been eligible for benefits because of the presence of replacement employees and the reemployment of strikers who would have been rehired as future openings occurred. Decisions by an mesc referee and the mesc Board of Review may be reversed on appeal only where the decisions are contrary to law or are not supported by competent, material, and substantial evidence on the whole record. In this case, however, the legal conclusions of the board and the courts below are error because of the failure to recognize any legal distinction between the termination or permanent discharge of strikers during a strike, as compared with the situation of strikers whose positions have been permanently filled but who retain first call on immediately available and future vacancies but nevertheless continue to strike. Permanently replaced economic strikers are entitled to unemployment compensation where the employer informs them that they either must return to work or face termination. In this case, the strikers did not allege that the employer informed the strikers of termination; to the contrary, the employer testified that it notified the union of the existence of vacancies as they occurred. The strikers did not present evidence indicating an intent by the employer to discharge or terminate them. The record indicated that at least half of the strikers had jobs waiting for them, and the others had reasonable prospects of future reemployment. Thus, the labor dispute continued to be a substantial contributing cause of unemployment. The fact that some, but not all, of the strikers had been replaced should not automatically entitle all the strikers to unemployment benefits as long as they continued the strike. The determination of whether the labor dispute qualifications of MCL 421.29(8); MSA 17.531(8) apply should proceed case by case, on the basis of a determination of whether the labor dispute in active progress continued to be a substantial contributing cause of unemployment. In this case, even though the bargaining position of the strikers to decline any job vacancy unless and until all strikers could return should result in their disqualification, we concur in the remand to the mesc to determine the number of positions that became available after the employer hired permanent replacements, the date when each position became available, which claimant was entitled to fill each position, and whether the employer notified the union of each vacancy. Any striker for whom a position became available during the strike should be ineligible for benefits from the time each position became available. Affirmed and remanded. 168 Mich App 21; 424 NW2d 530 (1988) affirmed. Unemployment Compensation — Labor Dispute Disqualification — Eligibility for Benefits. Strikers who are permanently replaced by their employer during the course of the strike are not disqualified for unemployment benefits under the Employment Security Act, but are eligible for benefits from the time of replacement until a subsequent event renders the labor dispute a substantial contributing cause of their unemployment (MCL 421.29[8]; MSA 17.531[8]). Fitzgerald, Hodgman, Cox, Cawthorne & McMahon (by William L. Hooth) for the appellant. Rothe, Mazey, Mazey & Hamburger, P.C. (by William Mazey), for the appellees. Amici Curiae: Sachs, Nunn, Kates, Kadushin, O’Hare, Helveston & Waldman, P.C. (by Theodore Sachs and Mark Brewer), for Michigan State AFL-CIO. Kim Arthur Siegfried, Assistant General Counsel, United Steelworkers of America, AFL-CIO*CLC, for United Steelworkers of America, AFL-CIO-CLC. Honigman, Miller, Schwartz & Cohn (by Charles H. Tobias and Kevin I. Green) for Guardian Industries Corp. Archer, J. (for affirmance). We granted leave limited to the issue whether the employee-claimants, who were engaged in a strike against their employer, were disqualified for unemployment benefits pursuant to the labor dispute provisions of the Michigan Employment Security Act, MCL 421.29(8); MSA 17.531(8), when they were permanently replaced during the course of the strike. I believe the workers’ disqualification ended upon their permanent replacement and any remand must instruct the mesc to determine the suitability of any available work under § 29 of the MESA. FACTS AND PROCEEDINGS In the fall of 1980, workers and management of the Plymouth Stamping Division of Eltec Corporation were unable to come to an agreement for the renewal of a collective bargaining agreement that expired on September 1, 1980. Negotiations broke down when workers refused to agree to management demands for wage and benefit concessions equaling approximately thirty percent of the workers’ current wages. The workers stayed on the job for one week after the expiration of the old contract, but on September 9, the workers struck the company. The company never ceased production during the strike, operating first with the efforts of management and members of the families of company executives. As the strike progressed, the company gradually hired replacements. At the end of December, 1980, the company informed the replacements that the company considered them permanent; that is, they would be retained even in the event the strike was settled. On January 15, 1981, the company’s attorney informed the union’s chief negotiator that the striking workers had been permanently replaced. In the event the strike was settled, the workers could reapply for work and would be rehired only as openings became available. If they wished to work at Plymouth Stamping, the strikers could only do so under terms imposed by the company. Any strikers who agreed to return to Plymouth Stamping would have to accept the same terms offered the new replacement workers. Upon learning of their permanent replacement, the striking workers applied for unemployment benefits. The Employment Security Commission initially denied benefits, reasoning that the workers were disqualified pursuant to the labor dispute disqualification provision of the mesa, MCL 421.29(8); MSA 17.531(8). The workers appealed to the mesc, which conducted a hearing. At the hearing, the company claimed that it only replaced the workers and did not "discharge” or "terminate” them. The company president testified that between January, 1981, and May, 1982, a total of thirty-seven openings occurred within the strikers’ bargaining unit. The record discloses, however, that the company informed the union of the existence of only seven of those openings in February or March of 1981 when, while in the coffee room of the union office, the company’s attorney told the union negotiator that he had seven openings he "can offer.” While the union ultimately acceded to the economic demands of the company’s final proposal, the company refused the strikers’ last and only demand, that the company rehire the strikers as a group, and not one at a time. Consequently, these claimants refused to apply for work at Plymouth Stamping. A referee found that the workers were entitled to unemployment compensation after January 15, 1981, the date on which they were notified through their union representative of their permanent replacement. The mesc Board of Review affirmed this decision as did the Wayne Circuit Court and the Court of Appeals.1 would also affirm. i The facts of this case disclose the following: In the late 1970’s and early 1980’s, Plymouth Stamping, like many other companies involved in the automotive industry, experienced difficult times. Like other companies in the industry, Plymouth Stamping responded by demanding wage and benefit concessions from its workers—thirty percent cuts in wages and benefits. The wages and benefits the company offered the union actually decreased as negotiations proceeded. As the opinion for reversal aptly points out, the National Labor Relations Board found that the company was engaged in legal "hard bargaining.” Faced with the company’s demands, the workers had three choices. They could accede to the company’s demands (as did many workers in similar situations), they could quit, or they could strike. Had the workers quit, they most likely would have been eligible for unemployment compensation. Leaving work because of substantial changes in wages or conditions of employment constitutes "good cause attributable to the employer” such that a worker will not be disqualified from receiving unemployment compensation under § 29(l)(a) of the mesa. Copper Range Co v Unemployment Compensation Comm, 320 Mich 460; 31 NW2d 692 (1948); Keith v Chrysler Corp, 390 Mich 458; 213 NW2d 147 (1973). Cf. Lasher v Mueller Brass Co, 62 Mich App 171; 233 NW2d 513 (1975). However, the workers wanted to keep t
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