ORITI ET AL.,
APPELLEES,
vs.
BOARD OF REVIEW, OHIO BUREAU
OF EMPLOYMENT SERVICES ET AL.,
APPELLANTS
Nos. 44918, 44919, 44920, 44921,
44922, 44923, 44924, 44953
COURT OF APPEALS OF OHIO, EIGHTH APPELLATE DISTRICT, CUYAHOGA
COUNTY
455 N.E.2d 720, 7 Ohio App. 3d 311, 7 Ohio B. Rep. 394
March 31, 1983, Decided
HEADNOTE
Unemployment compensation -- Labor -- Eligibility for
benefits -- "Lockout," construed -- R.C. 4141.29(D)(1)(a) --
Contract expires -- Employees offer to continue working under terms
of pre-existing agreement pending settlement of labor dispute --
Failure of employer to accept offer constitutes a lockout unless
employer shows it has a compelling reason for failing to agree to
the extension.
SYLLABUS
Where employees offer to continue working under the terms of a
pre-existing collective bargaining agreement pending final
settlement of a labor dispute, the failure of the employer to
accept such an offer constitutes a "lockout" within the meaning of
R.C. 4141.29(D)(1)(a) unless it is demonstrated that the employer
has a compelling reason for failing to agree to the extension.
COUNSEL
Mr. Thurlow Smoot, for appellees.
Messrs. Jones, Day, Reavis & Poque, Mr. Stuart O.
H. Merz and Mr. John R. McCulloh, for
appellants.
JUDGES
PARRINO, J. PATTON, C.J., and JACKSON, J., concur.
AUTHOR: PARRINO
OPINION
{*311} This appeal is taken from a decision of the court of
common pleas holding that claimants-appellees, present and former
employees of Eaton Corporation, were eligible to receive
unemployment compensation benefits because they were locked out in
the course of a labor dispute with Eaton.
Union officials representing claimants bargained with Eaton
management personnel through the latter months of 1979 for the
purpose of negotiating a new contract to succeed the existing one
which was to expire on October 31, 1979.
On October 30, 1979, union representatives withdrew all sixty of
their demands involving non-economic issues.
On October 31, management presented its final offer with respect
to economic issues.
Alfred Smith, chief union negotiator, testified that management
also required that the union accept all of management's demands
dealing with non-economic issues before agreement could be reached.
The union rejected management's contract proposals.
Smith testified that he endeavored to get a contract extension
from Malcolm Daisley, chief management negotiator, on October 31,
but that Daisley refused to agree to an extension. When Smith asked
what the wages and working conditions would be in the interim,
Daisley did not respond.
The old contract expired without a new one having been agreed
upon. At that point the employees ceased to work. Negotiations were
later resumed and continued through November and December. A new
agreement was negotiated on December 21, 1979 and the employees
returned to work on January 2, 1980.
Daisley admitted that Smith offered to extend the contract and
that he refused to accept the offer. Although Daisley stated that
there was no intention on his part to cut pay rates, he admitted
that he did not tell this to Smith. Furthermore, Daisley at no
point testified that he had communicated to the employees that they
could continue working at the existing pay rates or under the other
terms and conditions of the expired contract.
Smith also testified that no strike meeting was called and that
no authorization to picket was given by the union.
A letter from Daisley to Smith, dated November 7, 1979, which
was introduced {*312} into evidence as Claimant's Exhibit No. 9,
includes the following paragraphs:
"The former Agreement has expired. As we indicated in our
discussions during negotiations, we are not willing to continue
operations under the terms and conditions of that Agreement.
"Please be advised that the plant is open and that we are
willing to resume our discussions provided that there is an
intention to make those discussions meaningful."
James Jochum, a tool design employee, testified that in prior
years when the contract had been extended the company had put up
notices indicating that there had been an extension and that the
employees were to return to work. He observed no such notices on
this occasion.
There was conflicting evidence as to whether the plant grounds
were in fact open to the employees, whether employees carried
strike signs, whether employees "picketed" the plant grounds or
were merely "milling around" and whether employees were turned away
by plant personnel or were told by plant personnel that the plant
was open.
The Board of Review determined that the employees were
unemployed due to a labor dispute other than a lockout and were
therefore not entitled to benefits.
The court of common pleas reversed the decision of the board and
concluded that the manifest weight of the evidence indicated that
the employer caused the claimants' unemployment by requesting that
the claimants work without any knowledge of their wages or working
conditions, which terms the claimants could not reasonably be
expected to accept.
Three assignments of error are set forth on appeal. We address
appellants' first and second assignments of error together since
they raise similar issues.
"I. The court of common pleas must be reversed because its
finding that the decision of the Board of Review was 'unreasonable
and against the manifest weight of the evidence' is not supported
by the evidence and consequently the court has impermissibly
substituted its judgment for that of the Board of Review.
"II. Eaton's refusal to extend the previous employment contract
did not constitute a lockout."
These assignments of error are without merit.
R.C. 4141.29 provides in pertinent part:
"(D) Notwithstanding division (A) of this section, no individual
may serve a waiting period or be paid benefits under the following
conditions:
"(1) For any week with respect to which the administrator finds
that:
"(a) His unemployment was due to a labor dispute other than a
lockout * * *."
"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." Zanesville
Rapid Transit v. . Bailey (1958), 168 Ohio St. 351, 354 [7
O.O.2d 119].
Under the facts of this case it is clear that, contrary to the
request of union officials, the employer refused to extend the
terms of the expired collective bargaining agreement while
negotiations continued. In fact, the employer admits on appeal that
it was unwilling to extend the contract.
To decide whether this situation may be considered a lockout, we
turn to the reasoning of the Pennsylvania Supreme Court as set
forth in Vrotney Unemployment Compensation Case
(1960), 400 Pa. 440, 443-445, 163 A. 2d 91:
"In the very delicate and sensitive negotiations which are
involved in the development of a new collective bargaining
agreement to replace one that is nearing its expiration, all
parties must be sincere in their desire to maintain the continued
operation of the employer's enterprise. The law contemplates that
collective bargaining will be conducted in good faith, with a
sincere purpose to find a basis for agreement. Neither an adamant
{*313} attitude of 'no contract, no work' on the part of the
employees, nor an ultimatum laid down by the employer that work
will be available only on his (employer's) terms, are serious
manifestations of a desire to continue the operation of the
enterprise. While either or both of these positions may
legitimately be taken by the parties during the bargaining
negotiations prior to the expiration of the existing contract, when
the contract has in fact expired and a new agreement has not yet
been negotiated, the sole test * * * of whether the work stoppage
is the responsibility of the employer or the employees is reduced
to the following: Have the employees offered to continue working
for a reasonable time under the pre-existing terms and conditions
of employment so as to avert a work stoppage pending the final
settlement of the contract negotiations; and has the employer
agreed to permit work to continue for a reasonable time under the
pre-existing terms and conditions of employment pending further
negotiations? If the employer refuses to so extend the expiring
contract and maintain the status quo, then the resulting work
stoppage constitutes a 'lockout' and the disqualification for
unemployment compensation benefits in the case of a 'stoppage of
work because of a labor dispute' does not apply."
The rationale set forth in Vrotney has been followed in
subsequent decisions by the courts of Pennsylvania. See
School Dist. of the City of Erie v. .
Unemployment Compensation Bd. of Review (1980), 48
Pa. Commw. 460, 409 A. 2d 982; McKeesport Area School
Dist. v. . Unemployment Compensation Bd. of
Review (1979), 40 Pa. Commw. 334, 397 A. 2d 458;
Woodford v. . Unemployment Compensation
Bd. of Review (1979), 47 Pa. Commw. 232, 407 A. 2d 916;
Philco Corp. v. . Unemployment
Compensation Bd. of Review (1968), 430 Pa. 101, 242 A. 2d
454; Toma v. . Unemployment Compensation
Bd. of Review (1971), 4 Pa. Commw. 38, 285 A. 2d 201.
The Supreme Court of New Hampshire in McIntire
v. . State (1976), 116 N.H. 361, 359 A. 2d 619,
appears to have adopted this rationale as well.
As a further clarification of the rationale set forth in
Vrotney, it has been held that where the employer
claims at some point in the course of the negotiations that it is
not reasonable to continue to maintain the status quo,
i.e., that the plant must be closed or that work could
continue only under modified conditions, it must be demonstrated
that the employer's refusal is essential to the continued operation
of the business. Unemployment Compensation Bd. of
Review v. . Sun Oil Co. (1975), 19 Pa.
Commw. 447, 338 A. 2d 710, affirmed (1978), 476 Pa. 589, 383 A. 2d
519.
We believe that the reasoning of the Pennsylvania courts is
sound and is consistent with Ohio cases bearing upon this issue.
See Baker v. . Powhatan Mining
Co. (1946), 146 Ohio St. 600 [33 O.O. 84];
Zanesville Rapid Transit v. . Bailey,
supra; Alden v. . U.S. Industrial Chemicals
Co. (1966), 9 Ohio App. 2d 5 [38 O.O.2d 21];
Lorain Coal & Dock Co. v. .
Atkinson (1941), 34 Ohio Law Abs. 591;
United States Coal Co. v. . Unemployment
Compensation Bd. of Review (1940), 66 Ohio App. 329 [20
O.O. 166]; Zura v. . Standard Slag
Corp. (1965), 13 Ohio Misc. 317 [42 O.O.2d 15].
In Baker v. . Powhatan Mining co.,
supra, the court held that a union had engaged in a strike
where it refused to accept a contract extension unless the company
agreed that the terms finally negotiated would be applied
retroactively.
The court in Baker quotes extensively from the
case of Sandoval v. . Indus.
Comm. (1942), 110 Colo. 108, 117, 122, 130 P.2d 930,
934-936, in which the Colorado Supreme Court stated pertinently as
follows:
"* * * employment at the old contract rate and under the old
conditions was available. The employers were under no contract duty
to offer more; on the other {*314} hand, the miners were under no
contract obligations to work for the same wages and under the same
conditions; but it was the employees who were seeking a change in
the status quo and not the employers. The miners
refused to work unless the status quo was
modified.
"* * *
"The terms of the expired contract, the negotiations of March
22, and all prior dealings between the men and the operators,
indicate an intended continuance after the expiration of the
contract of the employer-employee relationship. The operators still
wanted to employ the men and the men still wanted to work. During
the interim the operators were willing to maintain the
status quo and the men wanted to change it * *
*."
The Baker court itself made the following
observation at page 617:
"It should be borne in mind that the claimants at all times had
the opportunity to continue or resume employment at the very same
work previously performed by them and under the same terms and
conditions which had prevailed for two years."
The court in Baker therefore appears to have
adopted the status quo principle in determining
whether a labor stoppage is to be considered a strike. We believe
that, in like manner, the status quo principle
should be applied in determining whether a labor stoppage is to be
considered a lockout. See Alden v. . U.S.
Industrial Chemicals Co., supra; Zura v. .
Standard Slag Corp., supra.
The reasoning of the Supreme Court in Zanesville Rapid
Transit v. . Bailey, supra, is consistent
with the status quo principle cited in
Baker. There it was clearly demonstrated that
maintenance of the status quo would result in
serious financial hardship to the employer. The refusal to extend
the contract without a ten percent cut in pay was not therefore
unreasonable and did not constitute a lockout. To phrase it
differently, an extension of the expiring contract for any period
of time would have been unreasonable under the facts of that
case.
The court in Zanesville cites to the case of
Almada v. . Administrator (1951),
137 Conn. 380, 77 A.2d 765, for guidance in determining whether the
conduct of an employer is such that a lockout may be said to have
occurred. The court in Almada held that where
changes in the terms of employment are such that an employee could
not reasonably be expected to accept them, the action of the
employer constitutes a lockout.
The Pennsylvania courts have given further definition to the
reasonableness standard by holding, in effect, that the refusal to
maintain the status quo is presumptively unreasonable. We are
persuaded that this "bright line" standard comports with the
realities of the collective bargaining situation and should be
followed.
We therefore hold that where employees offer to continue working
under the terms of a pre-existing collective bargaining agreement
pending final settlement of a labor dispute, the failure of the
employer to accept such an offer constitutes a lockout unless it is
demonstrated that the employer has a compelling reason for failing
to so agree such that the extension of the contract would be
unreasonable under the circumstances.
A decision as to whether a lockout has occurred must be made
with this standard in mind, a standard which the Board of Review
clearly did not apply.
While the employees in the case sub judice
offered to continue to work under the terms of the pre-existing
agreement, the employer refused. Even assuming
arguendo that the evidence supported a finding
that the employer kept the plant open to employees, the employer
failed to specify the terms and conditions under {*315} which the
employees could continue to work.1
The record does not establish that the parties could not have
continued under the terms of the expired agreement until a new one
had been negotiated. No argument has been raised, and the evidence
does not support a conclusion, that the employer was in such
straitened financial circumstances that it would have been
unreasonable to extend the existing contract. In fact a raise in
pay and benefits was offered to the employees prior to the work
stoppage.
We therefore conclude that the action of the company constituted
a lockout and that the determination of the Board of Review, which
failed to apply the appropriate standard as set forth herein, is
against the manifest weight of the evidence and contrary to law.
See R.C. 4141.28(O); Hepner v. . Bd. of
Review (1978), 11 O.O. 3d 144, 147.
"III. The refusal to undertake available work and picketing
constituted a strike, which is a basis for disqualification from
unemployment compensation."
This assignment of error is without merit.
An additional argument raised by appellants in this assignment
of error is that picketing by employees necessarily meant that the
employees were on strike. We disagree.
Picketing is consistent with a lockout. It would not be unusual
in the case of a lockout to find employees attempting to dissuade
persons, e.g., substitute workers, from entering
the plant grounds to take over their jobs.
A fair reading of the record leads to the inescapable conclusion
that the work stoppage was caused by the employer's refusal to
extend the contract.
Accordingly, the judgment of the court of common pleas is
affirmed.
Judgment affirmed.
DISPOSITION
Judgment
affirmed.
OPINION
FOOTNOTES
1 The Board of Review found as follows: "Although the prior
contract had been extended, the company would have paid existing
wage rates. The other terms of employment were not established."
Clearly, this does not amount to an offer to extend the existing
contract.
Furthermore, the finding that the company would have paid
existing wage rates misinterprets the evidence adduced. While
Daisley stated that he would have paid existing rates, he also
admitted that he did not tell this to Smith. Moreover, his only
communications to the union were refusals to extend the contract.
He did not indicate exceptions to that blanket refusal and refused
to specify the terms and conditions under which the men would be
working when asked by Smith.