ZANESVILLE RAPID TRANSIT, INC., APPELLANT,

vs.

BAILEY ET AL.; BUREAU OF UNEMPLOYMENT COMPENSATION ET AL.,

APPELLEES

No. 35546
SUPREME COURT OF OHIO
155 N.E.2d 202, 168 Ohio St. 351, 7 Ohio Op. 2d 119
December 24, 1958, Decided

APPEAL from the Court of Appeals for Muskingum County.

 HEADNOTE

 

 

 
Unemployment compensation -- Eligibility to benefits -- Section 4141.29, Revised Code -- "Lockout" construed -- Employer's imposition of change in wages -- Reduction of wages as condition to continuing contract -- Not "lockout," when.>

 STATEMENT OF THE CASE

 

 

 
Forty-four of the defendants in this case, hereinafter called employees, were employed by the Zanesville Rapid Transit, Inc., hereinafter called the company, under a company-union agreement between the company and Local 637, International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America, A. F. L., hereinafter called the union. The agreement expired November 30, 1954.

 

For some time prior to the expiration of the company-union agreement, the company had experienced difficulty in making a profit. On September 13, 1954, the president of the company sent a letter to the secretary-treasurer of the union, which letter, exclusive of formalities, reads:

 

"In accordance with our agreement with you we wish to notify you of our desire to cancel our contract agreement at its expiration on December 1, 1954. We have no quarrel with your union, officers, or members -- this is a question of survival.

 

"At this time we do not know what our plans will be or whether we may wish to continue operations after December 1. We will be very glad to meet with you or your committee to discuss the seriousness of this situation."

 

On the following day, September 14, 1954, the union replied to the effect that the employees were willing to continue working under the prevailing terms until a new agreement was completed or, in the alternative, upon the giving of a five-day notice to terminate the current agreement.

 

Several meetings were held thereafter. Some were attended only by representatives of the company and the union, others were attended by the employees, and there were some which were attended by members of the city council, civic representatives and the federal mediator. Exhibits in the record in the way of newspaper clippings indicate this was a matter of concern to the entire city of Zanesville.

 

When it became apparent to the company that it was not going to get any desired relief from the city council in the form of increased fares or reduced schedules, the company president transmitted the following letter, dated November 30, 1954, to the union:

 

"Effective December 1, 1954, wages of all Zanesville Rapid Transit, Inc., employees covered by this contract will be reduced ten per cent until January 15, 1955. If city council passes legislation that we request and it is signed by the mayor before January 15, we agree that we will restore the ten per cent reduction taken from the employees and it will be payable to them immediately upon this amendment to the ordinance becoming effective. If this ordinance is passed and does not become effective, the above wage payment will not be made. We also agree that if this becomes effective we will go along with the present contract as it now stands."

 

Prior thereto, on October 4, 1954, at a meeting of the employees, a strike vote was taken and approved by a vote of 21 to 3. On October 14, 1954, the union sent to the Regional Office of the Federal Mediation and Conciliation Service a notice of the proposed termination of the company-union agreement and, in the letter of transmittal with that notice, said in part:

 

"Enclosed please find a notice of dispute filed with you in regards to the Zanesville Rapid Transit, Inc., of Zanesville, Ohio."

 

Upon receipt of the letter advising of the ten per cent wage cut, the employees met and rejected the company proposal. None of the employees reported for work on December 1, 1954. Although the record indicates that on the morning of December 1, 1954, a placard indicating that the union was on strike appeared on a tree stump in front of the company garage, it was removed later that day, and no placarding or picketing occurred.

 

On December 3, 1954, the company offered to renew the contract without change, provided that the city council passed legislation to relieve the financial condition of the company. This offer was rejected by the employees.

 

On December 8, 1954, the company offered work in accordance with the prior contract, the agreement to expire in 1956, the employees to share in company profits in excess of $ 30,000, and all to become effective upon city council's first reading of a proposed change in the bus franchise. This proposal was likewise rejected by the employees.

 

Thereafter, meetings were held in the office of the Federal Mediation and Conciliation Service, and an agreement between the company and the union was ultimately reached. On January 8, 1955, the employees returned to work, and the operation of the company was resumed.

 

Claims of the employees for unemployment compensation were allowed by the Administrator of the Bureau of Unemployment Compensation on the theory that the unemployment was not due to any fault of the claimants but was due to a lockout within the meaning of the Ohio Unemployment Compensation Act.

 

A protest to the administrator's determination was filed by the company, and, upon the disallowance of the protest by the administrator, an appeal was taken to the Board of Review. Following a hearing before a referee, the decision of the administrator that a lockout existed and that by reason thereof the employees were entitled to compensation was affirmed.

 

Upon appeal, the Court of Common Pleas of Muskingum County found that neither a "strike" nor a "lockout" existed, but that because the employees were unemployed due to a "layoff" they were entitled to compensation.

 

An appeal was taken to the Court of Appeals for Muskingum County, and a majority of that court affirmed the judgment of the Court of Common Pleas. All three members of the Court of Appeals prepared written opinions.

 

The matter is before this court upon the allowance of the company's motion to certify the record.

 COUNSEL

 

 Messrs. Schwenker, Teaford, Brothers & Solsberry and Messrs. Meyer, Johnson & Kincaid, for appellant.
 Mr. William Saxbe, attorney general, Mr. Eugene P. Everhart and Mr. John W. Hardwick, for appellees.

 JUDGES

 

WEYGANDT, C. J., STEWART, TAFT, MATTHIAS, BELL and HERBERT, JJ., concur. ZIMMERMAN, J., dissents.
 AUTHOR: PER CURIAM

 OPINION

 

 

 
{*354} Section 4141.29, Revised Code, so far as pertinent to this appeal, reads as follows:

 

"(C) Notwithstanding division (A) of this section, no individual may serve a waiting period or be paid benefits for the duration of any period of unemployment with respect to which the administrator finds that such individual:

 

"* * *

 

"(2) Lost his employment or has left his employment by reason of a labor dispute other than a lockout at the factory, establishment, or other premises at which he was employed, as long as such labor dispute continues * * *."

 

As stated in the decision of the referee, "there is no doubt that a labor dispute existed in the instant case, nor has there been any attempt by the parties to contend otherwise."

 

The determinative question is whether, in this case, there was "a labor dispute other than a lockout."

 

Were we concerned only with a question of fact, we would be disposed, as was the majority of the Court of Appeals, to leave undisturbed the "conclusions of fact" found by the referee and the Board of Review. Brown-Brockmeyer Co. v. Roach, 148 Ohio St., 511, 76 N.E.2d, 79. The controlling facts in this case, however, are all stipulated. It remains only to determine whether, as a matter of law, under all the admitted facts of this case a "lockout" existed.

 

A lockout has been defined as a cessation of the furnishing of work to employees or a withholding of work from them in an effort to get for the employer more desirable terms. Iron Molders' Union v. Allis-Chalmers Co., 166 F., 45, 52, 20 L. R. A.(N. S.), 315, 91 C. C. A., 631; 25 Words and Phrases, 566; 33 Ohio Jurisprudence (2d), 189, Section 65.

 

Such a definition does not circumscribe all the manifestations of an alleged lockout situation. It does not, of course, confine a lockout to an actual physical closing of the place of employment. See Barnes v. Hall, 285 Ky., 160, 146 S. W. (2d), 929.

 

A detailed discussion of the term may be found in Almada v. Administrator, Unemployment Compensation Act, 137 Conn., 380, 77 A. (2d), 765, where the court said:

 

"The imposition by the employer of changes in working conditions or wages, even though they deprive the employees of {*355} some advantage they already possess, does not necessarily constitute a lockout. Changes in the terms of employment might still be such that under all the circumstances the employees would be expected in reason to accept them rather than quit work. To constitute a lockout * * * the conditions of further employment announced by the employer must be such that the employees could not reasonably be expected to accept them and they must manifest a purpose on the part of the employer to coerce his employees into accepting them or some other terms. * * *

 

"* * * The point is that, in order to constitute a lockout, the conduct of the employer in laying down terms must lead to unemployment inevitably in the sense that the employees could not reasonably be expected to accept the terms and, in reason, there was no alternative for them but to leave their work. The real test whether the imposition by the employer of changed conditions of employment is a withholding of work so as to constitute a lockout lies in the question whether the conditions imposed are such that his employees could not be expected to continue work under them and, in reason, they had no other course open to them but to leave their employment."

 

If the facts in this case had been that the request to continue work at reduced wages was made unexpectedly and without any opportunity for prior negotiations, we might be inclined to agree that such request was unreasonable. However, the undisputed facts in this case are that for at least two and a half months before the expiration of this contract the union was aware of the straitened circumstances of the company and of its announced intention not to continue the contract. A notice of the inability to agree was filed with the Federal Mediation and Conciliation Service some six weeks prior to the expiration of the contract.

 

It must be borne in mind that the company here, unlike the ordinary private corporation which can pass its increased costs on to its customers, is a public utility dependent upon the action of the city council in negotiating a franchise to operate at all in the city of Zanesville.

 

In the light of all these circumstances, the ten per cent wage cut announced by the company as a condition of further employment {*356} was not an unreasonable one and did not manifest a purpose on the part of the company to coerce the employees into accepting it. Since it was not such conduct as must lead to unemployment inevitably, in the sense that the employees could not reasonably be expected to accept it, it did not constitute a lockout under the statute.

 

This view of the case precludes the necessity of our considering the interesting question of whether, assuming that a lockout occurred on December 1, 1954, such lockout ended with the offer of the company made on December 8, 1954.

 

The judgment of the Court of Appeals sequentially affirming the decisions of the administrator and the Board of Review is reversed.

 

Judgment reversed.

 DISPOSITION
 

Judgment reversed.