TIMOTHY ALSIP, JUDY
APPLEGATE, JEFF BENTON, DWAYNE BOCK,
CURTIS BYKES, WILLIE MAY
CHAPMAN, JEFFREY COLLINS, HAROLD
CUSHARD, KEITH DIMARIO, JAMES
DOOLAN, FLOYD FANCHER, TIM
FULLER, RICHARD FURNISH,
FREDRICK GULLETT, LEE HEIL, SAMUEL
HICKS, ROSCOE HUNTER, LARRY
INDERHEES, STEVE JENKINS,
MAURICE JOHNSON, TERESA
JOHNSON, JIM JONES, LARRY JONES,
MARK KLOSTERMAN, CHRIS KUHN,
SAMUEL LATHAM, THOMAS LAWSON,
DENNIS LITTLE, CAROLYN
LUCKEY, GERALD McINTOSH, GENO MEYER,
GARY MILLER, LARRY MOATS,
ESTEL MURRAY, KENNETH PARRISH,
PAUL PENNINGTON, ANNE
PENNINGTON, RICK ROMANS, RICK
SCHUSTER, CAROL SICKLER, GREG
SOMMER, HOMER TRAMMELL, CLIFF
TRIPPLETT, MONROE
TURNER, TERRY VANDERVER, RALPH WEST, JIM
WILSON,
LELIA WINKLER, BAKERY, CONFECTIONERY AND TOBACCO
WORKERS,
Plaintiffs-Appellants,
vs.
KLOSTERMAN BAKING COMPANY and
ADMINISTRATOR, OHIO BUREAU
OF
EMPLOYMENT SERVICES,
Defendants-Appellees.
APPEAL No. C-950721
COURT OF APPEALS OF OHIO, FIRST APPELLATE DISTRICT, HAMILTON
COUNTY
1996 Ohio App. LEXIS 3385
August 14, 1996, Date Of Judgment Entry On Appeal
CASE STATUS: THESE ARE NOT OFFICIAL
HEADNOTES OR SYLLABI AND ARE NEITHER APPROVED IN ADVANCE NOR
ENDORSED BY THE COURT. PLEASE REVIEW THE CASE IN FULL.
Civil Appeal From: Hamilton County
Court of Common Pleas. TRIAL NO. A-9500337.
HEADNOTE
UNEMPLOYMENT COMPENSATION
SYLLABUS
In the judicial review of an unemployment compensation case, the
court of appeals must review the entire record without giving any
deference to the findings of the trial court; the administrative
decision should not be disturbed unless it is unlawful,
unreasonable, or against the manifest weight of the evidence.
When a work stoppage is due to a lockout, employees are entitled
to unemployment compensation; when, however, a work stoppage is due
to a labor dispute other than a lockout, there is no right to
unemployment compensation benefits.
To determine whether a work stoppage is due to a strike or a
lockout, the status quo test is to be applied; under this test, the
administrator and board must determine which side, union or
management, first refused to continue operations under the status
quo after the contract had expired but while negotiations were
ongoing.
In the application of the status quo test, the reason why an
employer does not agree to an extension of the status quo is
irrelevant.
When union members voluntarily worked for a period of time under
a unilaterally implemented employer proposal, in the absence of any
negotiations for a new agreement, there was, in law, no newly
created status quo for the purpose of determining whether a
subsequent work stoppage amounted to a lockout.
When negotiations between the parties resumed after a period in
which union members worked under a unilaterally implemented
employer proposal, the legally relevant status quo was that which
existed prior to the expiration of the collective-bargaining
agreement, and the pivotal issue should have been which party first
departed from that status quo following the resumption of
negotiations.
DISSENT: Unemployment compensation was properly denied when the
union members, by taking a strike vote and then continuing to work
under the employer's proposal, waived any rights based upon their
willingness to remain employed at the status quo.
COUNSEL
Leonard S. Sigall, Esq., No. 0001245, 6470 East Main Street,
Reynoldsburg, Ohio 43068, for Plaintiffs-Appellants.
Graydon, Head & Ritchey, Thomas A. Brennan, Esq., No. 0018143,
and Daniel E. Burke, Esq., No. 0040186, 1900 Fifth Third Center, P.
O. Box 6464, Cincinnati, Ohio 45201, for Defendant-Appellee
Klosterman Baking Co., Inc.
Betty D. Montgomery, Attorney General of Ohio, and David E. Lefton,
Esq., No. 0029438, 1700 Carew Tower, 441 Vine Street, Cincinnati,
Ohio 45202, for Defendant-Appellee Administrator, Ohio Bureau of
Employment Services.
JUDGES
MARIANNA BROWN BETTMAN PAINTER, J., CONCURS. DOAN, J.,
DISSENTS.
AUTHOR: BETTMAN
OPINION
OPINION.
MARIANNA BROWN BETTMAN, P.J.
I. PROCEDURAL POSTURE
This is an appeal from the denial of unemployment compensation
benefits. The claimants are Timothy Alsip and 47 other employees of
the Klosterman Baking Company. They applied for unemployment
compensation benefits in connection with a work stoppage which
began June 19, 1994. After a hearing before a hearing officer of
the Ohio Bureau of Employment Services ("OBES"), the Administrator
of the OBES issued a decision which held that the employees were
not entitled to unemployment benefits during the work stoppage. The
Unemployment Compensation Board of Review ("Board") affirmed this
decision. The claimants appealed to the court of common pleas,
which found the decision of the Board to be lawful, reasonable and
not against the manifest weight of the evidence, and accordingly
upheld the denial of benefits. This appeal ensued. Appellants are
the claimants; appellees are Klosterman and the Administrator of
the OBES.
II. FACTS
Klosterman is a wholesale baker of breads and rolls. Klosterman
and Local No. 57 of the Bakery, Confectionery & Tobacco Workers
Union ("Union") had entered into a collective bargaining agreement
("Original CBA") which was in effect from September 1990 through
September 25, 1993. In anticipation of the expiration of the
Original CBA, on August 25, 1993, Klosterman and the Union entered
into negotiations. The parties met six times before the contract
expired. On August 25, 1993, Klosterman submitted a proposal for a
one-year contract which included reductions in wages based upon
what Klosterman claimed was necessary due to the financial
condition of the company.1 Klosterman unilaterally implemented this
proposal on September 24, 1993, one day before the Original CBA was
due to expire.
During the negotiations, neither party offered or requested to
continue operating according to the terms and conditions of the
Original CBA beyond its expiration date of September 25, 1993.
However, the company vice-president testified that when the Union
was told that the employer proposal was to be implemented, the
Union "suggested that they wanted to continue negotiations,
however, they didn't have an economic counter-proposal that was,
that warranted, quite frankly."
Although the Union had taken a strike vote and was willing to go
out on strike at the expiration of the contract, the union
employees worked under the terms of the unilaterally implemented
employer proposal continuously from September 25, 1993, until June
19, 1994. There was no evidence in the record that they entered
into any written or verbal agreement to do so.
Negotiations between the parties resumed on June 16, 1994.
Dissatisfied with the course of negotiations and frustrated with
the amount of overtime its members were working, the Union decided
to engage in a work stoppage, and so informed the company on June
19, 1994.
Klosterman hired temporary replacement workers and has continued
operations. The company at all times has maintained that work was
available to union employees under the terms of the employer
proposal of September 24, 1993. All the striking employees
indicated on their application for determination of unemployment
benefits that they expected to return to work at Klosterman.
III. LEGAL ANALYSIS
A. Standard of Review
In their first and third assignments of error, the claimants
argue that the trial court abused its discretion in finding the
decision of the Unemployment Compensation Board of Review lawful,
reasonable, and not against the manifest weight of the evidence.
Specifically, the claimants argue that the trial court erred in
failing to find the decision of the Board that the claimants are
unemployed due to a strike incorrect as a matter of law. Because
this is an unemployment compensation administrative appeal, this
court now must also review the entire record, giving no deference
to the trial court's finding. Tzangas v. Ohio Bureau of
Employment Services (1995), 73 Ohio St. 3d 694, 653 N.E.2d
1207. We will not reverse unless the decision of the Board is found
to be unlawful, unreasonable, or against the manifest weight of the
evidence. R.C. 4141.28(O)(1); Tzangas, supra.
B. Purpose of Unemployment Compensation
All parties to this appeal agree that the legal issue around
which this case turns is whether the June 19 work stoppage was a
lockout. If a work stoppage is due to a lockout, employees are
entitled to unemployment compensation. If a work stoppage is due to
a labor dispute other than a lockout, there is no right to
unemployment compensation benefits.2 Under the facts of this case
and under the law which has developed, this principle is more
easily stated than applied. The reason for this is that courts have
failed to keep a clear distinction between the law of unemployment
compensation and the law dealing with unfair labor practices. In
our view, a confusion of the two has resulted in some incorrect
interpretations in unemployment compensation cases.3
The purpose of unemployment compensation is to provide financial
assistance to individuals who are able and willing to work, but who
find themselves unemployed through no fault of their own.
Salzl v. Gibson Greeting Cards (1980), 61 Ohio St.
2d 35, 39, 399 N.E.2d 76, 79. Within the statutory framework of the
Unemployment Compensation Act, workers engaged in a work stoppage
generally do not qualify for unemployment compensation benefits;
however, employees who have been locked out are unemployed through
no fault of their own and thus are entitled to such benefits. R.C.
4141.29(D)(1)(a). Therefore, the definition of "lockout" becomes
crucial.
The Ohio Supreme Court has approved the definition of a lockout
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, Inc. v.
Bailey (1958), 168 Ohio St. 351, 354, 155 N.E.2d 202, 205;
Bays v. Shenango Co. (1990), 53 Ohio St. 3d 132,
133, 559 N.E.2d 740, 742. It is interesting that both of these
cases approve this definition, because the parties to this action
disagree about the effect of the Bays decision on
the earlier decision in Zanesville .
C. Adoption of Status Quo test
In Bays, all members of the court approved what
is known as the "status quo" test for determining when a work
stoppage is due to a lockout. This test was fully developed in the
Pennsylvania case of Erie Forge & Steel Corp. v.
Unemployment Comp. Bd. of Review (1960), 400 Pa. 440,
443-445, 163 A.2d 91, 93-94, commonly known as the Vrotney
Unemployment Compensation case (" Vrotney ").4
Under this test, the Administrator and the Board must determine
"which side, union or management, first refused to continue
operations under the status quo after the contract had technically
expired, but while negotiations were continuing." Bays,
supra, at 135, 559 N.E.2d at 743, quoting Philco
Corp. v. Unemp. Comp. Bd. of Review (1968), 430 Pa. 101,
103, 242 A.2d 454, 455. The union need only offer to continue
operations under the status quo for a reasonable period of time
pending further negotiations; the employer need only accept the
union's offer to continue operations under the status quo for a
reasonable period of time pending further negotiations.
Bays, supra, at 134, 559 N.E.2d at 743, citing
Vrotney at 443-445, 163 A.2d at 93.
We believe that one reason why this test has often been more
easily stated than applied is because the appellate court in
Oriti v. Bd. of Review (1983), 7 Ohio App. 3d 311,
455 N.E.2d 720, which was the first Ohio court to recognize the
status quo test, also erroneously engrafted an economic
unreasonableness exception onto the test. According to
Oriti, an employer may refuse to accept the
employees' offer to extend the status quo if "[it] has a compelling
reason for failing to so agree such that the extension of the
contract would be unreasonable under the circumstances."
Id. at 314, 455 N.E.2d at 724.
While this economic unreasonableness exception is also discussed
in Bays, we believe it was not adopted by the
Bays court as part of the status quo test, and
properly so. An absolutely crucial part of the Pennsylvania case
law on which the Bays court relies is the theme
that in the context of entitlement to unemployment compensation
benefits the employer's justification for altering the
status quo should not be considered. Local
730 v. Unemployment Compensation Bd. of Review (1984), 505
Pa. 480, 486-487, 480 A.2d 1000, 1003-1004; Lee Natl.
Corp. v. Unemployment Compensation Bd. of
Review (Bokosky Unemployment Compensation Case), (1965)
206 Pa. Super. 96, 105, 211 A.2d 124, 128; Levy,
supra at 802. The status quo test is to be
objective, not subjective.
In other words, in the application of the status quo test, the
reason why an employer does not agree to an
extension of the status quo is irrelevant. This is wholly
appropriate, as a hearing examiner in an unemployment compensation
case is not in a position to evaluate the legitimacy of that
reason. This is what in our view is the flaw in those cases which
use some form of employer economic justification as part of the
analysis of the status quo test. These courts are confusing what
might be fair in a negotiating session with fault for a work
stoppage. This includes
Oriti, supra ;
Johnson v. OBES (1993), 82 Ohio App. 3d 293, 611
N.E.2d 896 (if employer fails to agree to accept employees' offer
to extend existing agreement, inquiry focuses on whether employer
had compelling reason for failing to agree to extension); and
Zanesville, supra (dire economic straits of public
utility justification for not continuing status quo). Thus, we
agree with the claimants that Zanesville is either
limited to its facts because it involves a public utility, or has
been overruled sub silentio.
While it is clear from Bays that the conduct of
both sides, labor and management, will be scrutinized in the
application of the status quo test, it is also clear from the
court's extensive reliance on Vrotney that the
legitimacy of the reasons for the employer's
refusal to extend the status quo is irrelevant in this context.5
What is especially pertinent from Vrotney is that
while "an ultimatum laid down by the employer that work will be
available only on his (employer's) terms" may be a perfectly
legitimate position in a bargaining session before the expiration
of the collective-bargaining agreement, it is not a manifestation
of a desire to maintain the status quo or an acceptable excuse not
to do so.
While the court in Bays was unanimous in
adopting the status quo test, the justices sharply disagreed in the
application of the test to the case before it. What is also clear
from the majority in its application of the status quo test is that
the pertinent time in which to apply the test is after the
collective-bargaining agreement has expired and while new
negotiations are in progress. This is crucial to our analysis in
this case.
D. Application of Status Quo Test to Klosterman Work
Stoppage
The quirk in this case is that after the Original CBA expired,
neither side immediately offered to continue working under the old
conditions. Instead, on September 24, 1993, the day before the
Original CBA expired, Klosterman unilaterally implemented its
employer proposal, and the union workers voluntarily worked under
the terms and conditions of this proposal until June 16, 1994. At
that time negotiations resumed. The administrative
record contains testimony from a union official that at this time
the Union offered to resume work under the Original CBA while
negotiations continued. However, the record also contains testimony
that Klosterman considered this an offer for a new contract and not
an offer to continue working under the status quo (the Original
CBA). Klosterman refused this offer.
Negotiations broke down after a few sessions and a work stoppage
occurred on June 19, 1994. That is the date on which the claimants
argue they were locked out, and thus entitled to unemployment
compensation benefits.
The hearing officer found that when Klosterman implemented its
unilateral offer the day before the Original CBA expired, a new
status quo was created. He then applied the Bays
test to the new status quo, and found that it was the employees who
refused to continue working under the status quo; thus, the work
stoppage was other than a lockout, and the claimants were not
entitled to benefits. This analysis is erroneous and contrary to
law.
We agree with our colleagues in Johnson, supra,
to the extent that they held that there is no support in law "for
the proposition that a company's unilaterally implemented final
offer can create a "new" status quo in the absence of a newly
ratified collective-bargaining agreement. Id. at
300, 66 N.E.2d at 901. See, also, Local 730, 505
Pa., at 488-489, 480 A.2d at 1004-1005. The
Johnson court further said:
We find nothing in either Bays or
Oriti which would indicate that the term "status
quo" refers to anything but that period during which the parties
agree to maintain the existing terms and conditions of employment
manifested by the pre-existing collective bargaining agreement.
Because the status quo is the terms and conditions of the
pre-existing collective bargaining agreement, a priori the analysis
of whether a strike or lockout occurred must take place at that
point in time when either party first refuses to continue under the
terms of the pre-existing agreement while negotiations continue.
Johnson, supra, at 300, 66 N.E.2d at 901.
The reason for this should be apparent. The entire point of
preserving the status quo is that it has already been bargained for
by both sides. In another of the Pennsylvania cases which have
formed so much a part of Ohio precedent in this area of law,
Fairview School District v. Unemployment Compensation Board
of Review (1982), 499 Pa. 539, 454 A.2d 517, the rationale
for the status quo requirement is clearly stated, namely, that
during the period between contracts the employer may continue
operations and the employees may continue working while both sides
continue to negotiate in good faith. 499 Pa. at 546-47, 454 A.2d at
521.
Bays also requires that the status quo test
must be applied while negotiations are ongoing. Bays,
supra, at 135, 559 N.E.2d at 743, quoting
Philco, 430 Pa. at 103, 242 A.2d at 455. From
September 24, 1993, the day Klosterman unilaterally implemented its
employer proposal until June 16, 1994, when the parties returned to
the table, there were no negotiations going on. Thus, we hold that
the period of time between September 24, 1993, and June 16, 1994,
when negotiations resumed, is of no legal consequence as far as the
analysis of this case is concerned. The status quo was temporarily
abandoned by both sides. Negotiations were not ongoing. This was
nothing more than a brief period in which the employees worked
under reduced terms. Additionally, no unemployment compensation
benefits are being sought for this period. Accordingly, the Board's
decision is contrary to law. Therefore, the first and third
assignments of error are sustained.
E. Exclusion of Evidence
In their second assignment of error, the claimants argue that
the Administrator and the Board of Review erroneously ruled
irrelevant and inadmissible complaints issued by the National Labor
Relations Board ("NLRB") against Klosterman based upon unproven
allegations by the Union. As we discussed above, a hearing officer
from the Bureau of Employment Services cannot evaluate the behavior
of the union and the employer according to the National Labor
Relations Act. Federal labor law does not apply and confuses the
relevant focus of the hearing officer's inquiry: "Are the employees
unemployed through no fault of their own?" The complaints were
correctly ruled irrelevant and inadmissible by the hearing officer.
The second assignment of error is overruled.
IV. CONCLUSION
We hold, based on the foregoing analysis, that the decision of
the Board was contrary to law, and the judgment of the trial court
upholding that decision is accordingly reversed. We hereby enter
the judgment that should have been entered in the trial court: the
Board's decision is vacated and the matter is remanded to the Board
for a proper application of the status quo test in
Bays. We re-emphasize that our decision is based
only on Ohio's unemployment compensation law and is unrelated to
any other labor issues among the parties. The Bays
test in this case must be applied to the status quo which existed
before the original collective-bargaining agreement expired, and it
must be applied to the time when negotiations resumed on June 16,
1994. Further, the status quo test is to be applied without
reference to the employer's economic circumstances.
PAINTER, J., CONCURS.
DOAN, J., DISSENTS.
DISPOSITION
Judgment Appealed From is:
Reversed and Judgment Entered Remanding Matter to Board of Review
with Instructions
DISSENT
DOAN, J., DISSENTING.
I have no qualm with the majority's analysis of the general law
regarding the status quo continuation of employment. The honest
disagreement I have is that the majority has misconstrued the facts
of this case.
The vote to strike was taken in late September of 1993, not June
16, 1994. Thus, the strike vote action was taken when no
negotiations were on going and there was no offer from the union to
continue operations under the status quo. I must therefore conclude
that after the September 1993 strike vote, the employees went to
work under new terms which they accepted because the union had not
offered a status quo continuance of work. I reason that the
employees individually, and as a union, waived the necessary
prerequisite conditions to continue employment at the status quo.
It is not credible to determine that new negotiations some nine
months later between the company and union can somehow bootstrap
these facts to a status quo implementation of employment.
The union-company relationship was waived in late September of
1993 and was non-existent in June of 1994. The negotiations in June
of 1994 must therefore be viewed as negotiations to organize the
employees into a union shop once again with a newly proposed
contract.
I would affirm the determination of the trial court.
OPINION FOOTNOTES
1 The company's implemented proposal reduced pay by an average of $
2.50 per hour, eliminated the night premium and the Sunday
differential, and changed the overtime calculation from over eight
hours per day to over forty hours per week. Additionally, employees
with seniority of 25 years lost one week of vacation and the
company's pension contribution was reduced by $ .90 per hour.
2 R.C. 4141.28 provides in its 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 * * * .
3 We are indebted to the analysis in Levy, Unemployment
Compensation: The Ohio Supreme Court Rules on the Use of the Status
Quo Test for Determining When a Work Stoppage Is Due to a Lockout
Bays v. Shenango Co., 53 Ohio St. 3d 132, 559
N.E.2d 740 (1990), 16 U. Dayton L.Rev. 793 (1990), on which we rely
in parts of this opinion.
4 Pennsylvania statutory law on unemployment compensation
benefits is virtually identical to Ohio's. Pennsylvania has had an
extensive line of case law in the areas of work stoppage and
unemployment, to which the Ohio Supreme Court has elected to give
great deference.
5 On the other hand, some courts have adopted the "futility"
doctrine in scrutinizing the conduct of the employees, holding that
if the offer to maintain the status quo would be futile, the
employees need not make such an offer and they will not be deemed
to have refused to extend the status quo. Philco,
430 Pa. at 104, 242 A.2d at 456. This is not, as it may seem at
first blush, a double standard for employers and employees. It is a
recognition of the fact that the employees have the burden of
proving that the work stoppage was through no fault of their own in
order to qualify for benefits.