MEMCO v. Maryland Employment Security Administration

Digges, J., delivered the opinion of the Court. Subsection 6 (e) of the Maryland Unemployment Insurance Law provides in general that an individual shall be disqualified from receiving benefits if his unemployment is the result of a work stoppage caused by a labor dispute other than a lockout. Md. Code (1957, 1969 Repl. Vol.), Art. 95A.

In the present action we are asked to determine whether certain union employees should have been denied unemployment benefits based on the labor dispute disqualification, and, secondarily, whether the subsection’s exception for locked out employees is preempted by federal labor law. We conclude that, under the circumstances of this case, the claimants are not disqualified from receiving compensation inasmuch as the cause of the work stoppage was a lockout and not some other type of labor dispute. Moreover, because the operation of subsection 6 (e) only remotely affects the balance between management and labor in collective bargaining, if it impacts upon that equilibrium at all, there is no impermissible conflict with federal policy. The present case arose following a stoppage of work in connection with a collective bargaining contract dispute between members of appellee Amalgamated Meat Cutters and Allied Workers of North America, Local 593, AFL-CIO, and the District of Columbia Food Employers Labor ⁵³⁹ Relations Association (FELRA). 1 The facts, submitted to the Board of Appeals of the Maryland Employment Security Administration (also an appellee) by joint stipulation of appellant MEMCO 2 and appellee Local 593, are relatively uncomplicated.

FELRA member companies and Local 593 have, over the past several years, negotiated a number of collective bargaining agreements covering meat department employees, including an agreement entered into in 1972 which was effective from September 17 of that year to September 15, 1973. Approximately three months prior to the expiration of this contract, the union notified FELRA that it wished to reopen the 1972-73 agreement and negotiate a new one. Thereafter, negotiations commenced and continued through the middle of October, during which time representatives of Local 593 stated that if FELRA did not agree to its demands, the union had selected Giant Food, Inc., for strike action. In reply, FELRA informed Local 593 that a strike against any one of FELRA’s members would be treated as a strike against the entire association.

As the reader of this opinion might have anticipated, FELRA did not accede to the union’s demands, and the union rejected FELRA’s contract offer. On October 21, Local 593 held two general meetings at which the entire local membership voted to strike all area Giant stores; however, the meat department employees of the other six FELRA member companies were specifically instructed by the union to report to work as scheduled. At 6:15 a.m. on October 22, Local 593 went on strike at Giant’s stores in the Washington, D.G., metropolitan area, but some, if not all, employees of the other FELRA stores reported to their jobs as usual. That afternoon, store managers of the six FELRA members which were not struck told their meat department ⁵⁴⁰ employees to leave work and not to report until further notice; moreover, some Local 593 employees who reported during the afternoon were not permitted to work. 3 The strike and shutdown continued through October 28,1973, at which time the general membership of Local 593 ratified, an agreement which had been reached between the representatives of FELRA and the union.

Claiming to be entitled to compensation for the week they were without work, numerous employees of FELRA members applied to the Department of Employment and Social Services for unemployment compensation, but were denied benefits on the ground that their unemployment was “due to a stoppage of work” existing because of a “labor dispute ... under Section 6 (e) of the Maryland Unemployment Insurance Law.” Eighteen of these claimants, none of whom are Giant employees, appealed that administrative determination to the Board of Appeals. The board reversed the initial denial, stating that the shutdown engaged in by FELRA members constituted a “lockout” within the meaning of the pertinent exception to the labor dispute disqualification provision of the unemployment insurance statute. FELRA members appealed that adverse decision to the Circuit Court for Prince George’s County. There, Judge James F. Couch, Jr., concluded “that the use of the phrase ‘other than a lockout’ in the statute, without any qualifications, means exactly what it says, that if there is a lockout then the employee ... is entitled to his unemployment compensation.” MEMCO subsequently filed an appeal to the Court of Special Appeals, but we granted certiorari before that court considered the case.

Since we agree with the conclusion of ⁵⁴¹ Judge Couch and reject the appellant’s contention with respect to federal preemption, we shall affirm the judgment of the Circuit Court for Prince George’s County. Before commencing our discourse on subsection 6 (e), we pause momentarily to mention that pursuant to subsection 7 (hi the findings of fact of the Board of Appeals, in the absence of fraud, are conclusive so long as they are supported by evidence, and judicial review is confined solely to questions of law. Code (1957, 1969 Repl. Vol., 1976 Cum.

Supp.), Art. 95A, § 7 (h); see, e.g., Allen v. CORE Target City Y. Prog., 275 Md. 69, 74 , 338 A. 2d 237,241 (1975) (citing cases). In the present case, the Board of Appeals made five “findings of fact”: A. That the collective bargaining agreement between the Employer and the Union expired on September 15,1973. B. It further finds that the Employers were members of an association known as FELRA (Food Employers Labor Relations Association), and who were negotiating with the Claimants’ bargaining unit to establish a new agreement. C. It further finds that on October 22, 1973, the Union membership established a picket line at, and thereafter, struck the stores of one of the members of the association.

D. It further finds that subsequent to that action, that members of this Union who were employed at stores not struck were informed by store management that there would be no further work for them, and that this action by the Employers amounted to a lockout. E. It further finds that there was not any labor dispute between the Employers and the Claimants herein involved. Findings A, B, and C, as well as all but the last clause of D, are in accord with the facts as stipulated by the parties; however, MEMCO asserts, and we agree, that the last clause ⁵⁴² of D and all of finding E are legal conclusions. See Philco Corp. v. Unemployment Comp.

Bd. of Review, 430 Pa. 101 , 242 A. 2d 454 , 456 n. 2 (1968). Consequently, we are not bound under subsection 7 (h) by the board’s conclusions in D and E merely because they are labeled “findings of fact.” Rather, our jurisdiction extends to a plenary consideration of whether the Board of Appeals erred, as a matter of law, when it found that the claimants were not disqualified from receiving benefits under the labor dispute disqualification provision. I. Statutory Construction With that standard of review in mind, we turn to the statutory language in controversy. Pursuant to subsection 6 lei as amended by Chapter 153 of the Laws of 1966, an individual is disqualified for benefits: For any week with respect to which the Executive Director finds that his unemployment is due to a stoppage of work, other than a lockout, 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 Executive Director that — (1) He is not participating in or financing or directly interested in the labor dispute which caused the stoppage 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 participating in or financing or directly interested in the dispute; provided, that if in any case separate branches of work which are commonly conducted as separate businesses in separate premises are conducted in separate departments of the same premises, each such department shall, for the purposes of this ⁵⁴³ subsection, be deemed to be a separate factory, establishment, or other premises. [(Emphasis added.)] Notwithstanding the apparent clarity of the language italicized above, the appellant nevertheless argues that in the present action, the claimants should be disqualified from receiving benefits.

MEMCO contends, as we understand it, that the labor dispute disqualification must be interpreted in light of “the mechanics of multi-employer collective bargaining,” and in the context of “the overall objective of the unemployment compensation statute.” In essence, MEMCO proceeds on the premise that the claimants’ unemployment was voluntarily caused inasmuch as the employees’ strike, constituting a labor dispute at every FELRA place of employment, “preexisted and ultimately encompassed the subsequent defensive shutdown.” To understand fully the thrust of MEMCO’s rationale, we must momentarily digress to explain certain aspects of collective bargaining in the context of federal labor law. For a variety of reasons, it has become common in this country for employers to form groups known as multi-employer associations or multi-employer bargaining uñits. As expressed by one commentator, 1 J. Jenkins, Labor Law $ 3.16(1968): The desire to have uniform wage rates throughout a particular industry, the relative lack of economic strength of a comparatively small employer when confronted with giant unions, the necessity for expert advice in a tricky and complicated field, and the economic survival advantage in presenting a common front to union demands, joined with a host of other factors, have all contributed to this development. Two well settled rules apply to multi-employer bargaining situations.

In the first place, each “employer is bound to contracts negotiated by an association by virtue of its membership and its authorization to the association to ⁵⁴⁴ negotiate the contracts.” Paul v. Lindgren, 375 F. Supp. 843, 850 (N.D. Ill. 1974); see NLRB v. Strong, 393 U. S. 357, 359 , 89 S. Ct. 541 , 21 L.Ed.2d 546 (1969). And although under federal law an employer may, upon adequate written notice, unilaterally withdraw from such a unit prior to the commencement of negotiations, once negotiations have begun, withdrawal can be effectuated only on the basis of mutual consent of the employer and the union or in the event of unusual circumstances. Retail Associates, Inc., 120 N.L.R.B. 388 , 395 (1958); see, e.g., NLRB v. Beck Engraving Co., 522 F. 2d 475, 481 (3d Cir. 1975); NLRB v. Central Plumbing Co., 492 F. 2d 1252, 1255 (6th Cir. 1974); Lowe v. O'Conner, 163 Mont. 100 , 515 P. 2d 677, 678 (1973). Considering these principles, we now focus once again on the relationship between Local 593, the union representing all meatcutter employees working for FELRA members, and FELRA, the association representing seven individual retail food employers in the Washington, D.C., area.

After negotiations for a new contract commenced in the summer of 1973, it is clear that all seven of the retailers were bound to accept the agreement as negotiated by FELRA. Viewing the facts in this context, we agree with MEMCO that the selective or “whipsaw” strike against Giant was a technique of exerting economic pressure against all members of FELRA. See NLRB v. Truck Drivers Local 449, 353 U. S. 87 , 90 n. 7, 77 S. Ct. 643 , 1 L.Ed.2d 676 (1957). We also agree that the subsequent shutdown by other members of the association was a purely defensive measure to preserve the integrity of the multi-employer bargaining unit.

Nonetheless, we are unable to concur in the appellant’s ultimate contention—that the claimants here, employees of the stores which defensively shut down following the strike at Giant, are disqualified by virtue of subsection 6 (e) from receiving unemployment benefits. We now consider, and reject, what we discern to be MEMCO’s four arguments urged in support of it's contention. MEMCO initially submits that due to the characteristics underlying the multi-employer collective bargaining ⁵⁴⁵ situation, FELRA should be treated as the single employer of the claimants. Essentially, the appellant's assertion is that when part (Giant) of the employer (FELRA) was struck following a vote of all members of the union, a situation was created which is indistinguishable from that of a partial strike by a small segment of a class of employees.

While it is true in other circumstances that claimants of the same “grade or class of workers” may be disqualified under subsection 6 (e) (2), regardless of whether they participate in a labor dispute, see Bethlehem Steel Co. v. Board, 219 Md. 146, 154 , 148 A. 2d 403, 407-08 (1959), it does not follow that FELRA is the employer of the claimants here for purposes of subsection 6 (e). In fact, the plain language of the statute belies any such interpretation. A claimant is disqualified only if a labor dispute exists “at the factory, establishment, or other premises at which he is or was last employed ....” Clearly, under this wording, the individual place .of employment, not a multi-employer association, is the relevant entity for purposes of determining whether a labor dispute is the cause of a particular employee’s unemployment. With respect to its second argument, MEMCO apparently is asking us to construe the term “lockout” as used in subsection 6 (e) so as not to encompass the actions taken by it in response to the selective strike against Giant.

We are convinced, however, that the claimants’ unemployment was caused by a lockout at the place of their employment. The parties stipulated that only Giant stores were struck, and the record is clear that it was the managers who told the workers at the other FELRA stores to “leave work and not . .. report until further notice.” Since, under these circumstances, the claimants’ employers were directly responsible for the work stoppage at FELRA member stores other than Giant in that they refused to maintain the status quo in spite of the workers’ willingness to continue working under preexisting terms, it is plain that a “lockout” and not a “strike” existed at each claimant’s last place of ⁵⁴⁶ employment. 4 See Philco Corp. v. Unemployment Comp. Bd. of Review, 430 Pa. 101 , 242 A. 2d 454, 455 (1968). Moreover, utilizing the widely accepted definition of the term “lockout” — an employer’s withholding of work from his employees to gain a concession from them — an identical conclusion is reached.

See, e.g., Bankston Creek Collieries v. Gordon, 399 Ill. 291 , 77 N.E.2d 670, 674 (1948); Gorecki v. State, 115 N. H. 120, 335 A. 2d 647, 649 (1975); Marathon Electric Mfg. Corp. v. Industrial Comm., 269 Wis. 394 , 69 N.W.2d 573, 580 (1955); Restatement of Torts § 787, Comment a (1939); Annot., 62 A.L.R.3d 437 , 448-52 (1975). Furthermore, while we agree with MEMCO that it engaged merely in a defensive lockout, we are not at liberty to construe the unqualified wording of the statute as encompassing only offensive lockouts. If the General Assembly had wished to distinguish between the two types of lockouts, it obviously would have expressed that intention by utilizing more explicit language, as has at least one other state’s legislature.

See Colo. Rev. Stat. § 8-73-109 (1973 & 1976 Cum. Supp.); cf. Miss. Code Ann. § 71-5 -513A (5) (a) (1972) (restricted lockout exception to labor dispute disqualification provision).

See also Kania v. Shaffer, 31 Colo. App. 438 , 506 P. 2d 384 (1972). The appellant’s third contention is that, even if there were a lockout, the claimants are nevertheless ineligible for unemployment benefits because their voting for the strike at Giant was tantamount to a voluntary cessation of work at their respective places of employment. For this proposition, MEMCO relies on the California “volitional test.” See McKinley v. California Employment Stabilization Com'n, 34 Cal. 2d 239 , 209 P. 2d 602, 605-06 (1949); Bodinson Mfg.

Co. v. California E. Commission, 17 Cal. 2d 321 , 109 P. 2d 935 , 940 ⁵⁴⁷ (1941). See also Teamsters, Chauffeurs & Helpers, Local Unions v. Board of Review, 10 Utah 2d 63 , 348 P. 2d 558 (1960); Olof Nelson Const. Co. v. Industrial Commission, 121 Utah 525 , 243 P. 2d 951 (1952). Under this approach, workers who become unemployed due to an offensive lockout by their employer are eligible to recover benefits whereas workers who are locked out following a whipsaw strike against a multi-employer bargaining unit may be determined to be “voluntarily” unemployed and thereby be ineligible to recover benefits.

This rule arose in the context of an unemployment compensation • law having no lockout exception to its labor dispute disqualification clause, and apparently was the California Supreme Court’s attempt to effectuate what it perceived to be a legislative intent only to render ineligible those workers who “voluntarily” ceased working. However, in adopting this view, it appears to us that the court did nothing less than usurp the legislature’s function. The overwhelming number of states having statutes similar to California’s apparently agree with our analysis, as they disqualify from benefits workers who strike or are locked out, regardless of their intent. See, e.g., Buchholz v. Cummins, 6 Ill. 2d 382 , 128 N.E.2d 900, 902-03 (1955); Adams v. Industrial Commission, 490 S.W.2d 77, 79-80 (Mo. 1973); Henzel v. Cameron, 228 Or. 452 , 365 P. 2d 498, 502 (1961); In re North River Logging Co., 15 Wash. 2d 204 , 130 P. 2d 64, 65 (1942).

Moreover, the Maryland legislature, by choosing to exempt the lockout situation from labor disputes disqualifying claimants from benefits, has in essence determined what is a voluntary and what is an involuntary cause of unemployment. Therefore, particularly in light of the exception, we are not at liberty to delve into the subjective intent of workers involved in labor disputes. We note that this view is in accord with those courts interpreting statutes similar to this State’s. See, e.g., Kentucky Unemp.

Ins. Com’n v. Louisville Bldrs. Sup. Co., 351 S.W.2d 157, 160-61 (Ky. 1961); Bucko v. J. F. Quest Foundry Co., 229 Minn. 131 , 38 N.W.2d 223, 230 (1949).

See generally Lewis, The Lockout Exception: A Study in Unemployment Insurance Law and Administrative ⁵⁴⁸ Neutrality, 6 Cal.-W.L.Rev. 89, 104-09 (1969). Additionally, we mention that in the present case, we would be hard pressed to conclude that the claimants voluntarily became unemployed even if we were to adopt the California rule. We say this because clearly the selective strike at Giant did not inevitably lead to the defensive lockout of employees of the remaining FELRA member companies. Indeed, the record discloses that the 1973 shutdown was the first such action in FELRA’s bargaining history with Local 593, and was contrary to what occurred in 1970.

In that year, the union struck Grand Union for five days but the other FELRA members did not shut down. Finally, we reject the appellant’s remaining contention, that allowing the claimants to recover benefits would contravene the policy of the unemployment compensation statute. Although the declaration of policy enunciated in section 2 of Article 95A speaks in terms of aiding “persons unemployed through no fault of their own,” these words do not themselves establish a disqualification based on unemployment resulting from the “fault" of the claimant. Bather, the specific provisions set out in section 6 enumerate those grounds the legislature has determined disqualify claimants from receiving benefits. 8m Allen v. CORE Target Y. Prog,, supra, 278 Md. at 76, 88S A. 2d at 241=42.

Consequently, since the legislature has chosen to exclude locked out employees from the labor dispute disqualification, it has concluded that such workers are unemployed “through no fault of their own." The General Assembly has chosen not to distinguish between offensive and defensive lockouts, and, similarly, not to differentiate the single employer bargaining situation from one involving multi-employer bargaining. Under these circumstances, this Court cannot undercut the legislature’s directive by making an independent determination of “fault" with respect to an employee’s unemployment. In sum, we conclude that the