Local 730 v. Commonwealth, Unemployment Compensation Board of Review

HUTCHINSON, Justice,

dissenting.

The facts of this case, as found by the Referee, 1 plainly establish that the cause of this work stoppage was a strike begun by Trane’s employees and not a lockout by Trane. Dissatisfied with the improved conditions the employer instituted two and one-half months after their old contract had expired, under which improved conditions they had worked for 33 days, these workers withheld their labor. Therefore, I would reverse Commonwealth Court and reinstate the order of the Unemployment Compensation Board of Review denying benefits to the employees.

The Referee determined that the parties were bound by a collective bargaining agreement which was effective from June 26, 1976 until its expiration date, April 1, 1979. Between February 27, 1979 and March 29, 1979 the Union and Employer held many bargaining sessions but failed to reach agreement. At the collective bargaining session on March 29, 1979, the Union’s chief negotiator submitted a written offer to the Employer, Trane, to continue working for a reasonable period of time under the terms and conditions of the old contract after it expired on April 1, 1979. Although the Employer’s negotiator indicated this offer was not agreeable, the employees did report for work on April 2, 1979 and continued to work under the terms of the expired contract until June 18, 1979, a period of two and one-half *492 months. During that time, the Employer continued to observe and maintain all of the provisions of the expired contract.

At a collective bargaining session on June 15, 1979 the Employer presented a list of changes to the union’s negotiating team. Each one of these changes improved the working conditions of the men in the unit. None made them worse. 2 The Union’s negotiating team refused to submit the changes to the Union’s membership for a vote. On June 18, 1979, the Employer implemented the proposals, including across-the-board hourly wage increases and an improved benefit package. 3

*493 The employees worked under these new and improved terms and conditions until July 20, 1979. On July 21, 1979, the Union finally honored the Employer’s request to submit the changes to its membership for a vote. The employees then voted to reject the improved terms and conditions which they had worked under for the past thirty-three days, and to strike. On that day, they initiated their work stoppage. It is this work stoppage which the majority terms a lockout. On October 9, 1979 the Union and Employer agreed on the terms of a new collective bargaining contract and the employees returned to work on October 10, 1979.

*494 The majority’s holding that the Employer’s implementation of superior terms and conditions of employment was, constructively, a lockout, simply because that action disturbed the status quo ante, undermines the purposes for which our General Assembly enacted the Unemployment Compensation Law and ignores the legislative intent underpinning Section 402(d). The majority’s application of the Vrotney 4 rule to the facts of this case shows once again how the insensible extension of a per se rule, adopted for the convenience of courts, can lead to an inappropriate result when applied in a mechanical and arbitrary fashion. The Vrotney rule, with its emphasis on the disturbance of the status quo ante to separate strikes from lockouts, may sometimes be a valuable aid to reasoning. It is not a substitute for reasoning.. The world of collective bargaining is not comfortably encased in a clockwork universe.

Our Legislature has stated the purpose of the Unemployment Compensation Law in that statute’s “Declaration of Public Policy”:

Economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of the Commonwealth. Involuntary unemployment and its resulting burden of indigency falls with crushing force upon the unemployed worker, and ultimately upon the Commonwealth and its political subdivisions in the form of poor relief assistance. Security against unemployment and the spread of indigency can best be provided by the systematic setting aside of financial reserves to be used as compensation for loss of wages by employes during periods when they become unemployed through no fault of their own. The principle of the accumulation of financial reserves, the sharing of risks, and the payment of compensation with respect to unemployment meets the need of protection against the hazards of unemployment and indigency. The Legislature, therefore, declares that *495 in its considered judgment the public good and the general welfare of the citizens of this Commonwealth require the exercise of the police powers of the Commonwealth in the enactment of this act for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.

43 P.S. § 752 (emphasis supplied). Our Court has repeatedly emphasized that this declaration “ ‘is not merely a perfunctory preface, but is, rather, the keystone upon which the individual sections of the Act must be interpreted and construed.’ ” Penn Hills School District v. Unemployment Compensation Board of Review, 496 Pa. 620, 625 , 437 A.2d 1213, 1215 (1981) (quoting Department of Labor and Industry, Bureau of Employment Security v. Unemployment Compensation Board of Review, 418 Pa. 471, 476 , 211 A.2d 463, 466 [1965]). Accordingly:

“Subsequent provisions as to eligibility (section 401, 43 P.S. § 801), or ineligibility (section 402, 43 P.S. § 802), for compensation must all be read and construed as subject to this basic and fundamental declaration. If it is clear that a person’s unemployment is the result of his own fault, he is not eligible for compensation under the Act.”

Barclay White Co. v. Unemployment Compensation Board of Review, 356 Pa. 43, 49 , 50 A.2d 336, 340 , cert. denied sub nom. Seifing v. Barclay White Co., 332 U.S. 761 , 68 S.Ct. 63 , 92 L.Ed. 347 (1947) (quoting Department of Labor and Industry v. Unemployment Compensation Board of Review, 148 Pa.Superior Ct. 246, 248, 24 A.2d 667, 668 [1942]).

In keeping with the foregoing policy considerations, our Legislature in Section 402(d) commands that workers whose “unemployment is due to a stoppage of work, which exists because of a labor dispute (other than a lockout)” must be denied unemployment compensation benefits. The purpose of this provision is “to prevent the worker from becoming the innocent pawn of forces and movements beyond his control.” Philco Corporation v. Unemployment Compensation Board of Review, 430 Pa. 101, 110 , 242 A.2d 454, 459 *496 (1968) (quoting Department of Labor and Industry, Bureau of Employment Security v. Unemployment Compensation Board of Review, 418 Pa. 471, 478 , 211 A.2d 463, 467 [1965]). “It is certainly not intended to provide additional strike benefits for union members.” Philco, 430 Pa. at 110 , 242 A.2d at 459 .

Before the rule first enunciated in Vrotney became entrenched in our law, our courts had defined “strike” and “lockout” in practical terms which reflected the common usage of the words. See 1 Pa.C.S. § 1903 (in the construction of statutes “words and phrases shall be construed ... according to their common and approved usage”). For example, in Armour Leather Company v. Unemployment Compensation Board of Review, 192 Pa.Superior Ct. 190, 195, 159 A.2d 772, 775 (1960), Superior Court defined a “strike” as:

the act of quitting work done by mutual understanding by a body of workmen as a means of enforcing compliance with demands made on their employer. Webster’s New International Dictionary (2nd Edition).

(Footnote omitted.) Similarly, the courts recognized that the lockout is the employer’s counterpart of a strike. Small Tube Products, Inc. v. Unemployment Compensation Board of Review, 198 Pa.Superior Ct. 308, 315, 181 A.2d 854, 858 (1962). Our courts have further recognized that a lockout “may be present in varying factual situations, and no definition can comprehend all of its manifestations.” Id. However, the courts have consistently observed that “[t]he gist of a lock-out is an employer’s withholding of work from his employes in order to gain a concession from them.” Westinghouse Electric Corporation v. Unemployment Compensation Board of Review (Hughes Unemployment Compensation Case), 187 Pa.Superior Ct. 252, 259, 144 A.2d 685, 688 (1958) (quoting Burleson Unemployment Compensation Case, 173 Pa.Superior Ct. 527, 533, 98 A.2d 762, 766 [1953]). See Small Tube Products, Inc. v. Unemployment Compensation Board of Review, 198 Pa.Superior Ct. at 315, 181 A.2d at 858 ; Arm *497 our Leather Company, 192 Pa.Superior Ct. at 195, 159 A.2d at 775 ; Hershey Estates v. Unemployment Compensation Board of Review, 191 Pa.Superior Ct. 159, 164, 155 A.2d 470, 473 (1959), affirmed 400 Pa. 446 , 163 A.2d 535 (1960); Kendall Refining Company v. Unemployment Compensation Board of Review, 184 Pa.Superior Ct. 95, 100, 132 A.2d 749, 752 (1957); Weimer v. Unemployment Compensation Board of Review, 176 Pa.Superior Ct. 348, 352, 107 A.2d 607, 609 (1954).

The rule set forth in Vrotney requires the compensation authorities and reviewing court to look at who first disturbed the status quo. It was originally developed to further inquiry into “whether the final cause and responsibility or fault for the work stoppage, within the meaning of the policy section of the Law (Section 3, 43 P.S. § 752) lies with the employer or with the employes.” Westinghouse, 187 Pa.Superior Ct. at 258-59, 144 A.2d at 688 . See Morris v. Unemployment Compensation Board of Review, 169 Pa.Superior Ct. 564, 568, 83 A.2d 394, 397 (1951). The majority’s use of it here to find a “lockout” by an employer who improves his workers’ lot is a substitute for inquiry which ignores the plain meaning of the statutory term lockout and serves no other purpose than judicial convenience.

The majority correctly states that, in assessing fault for the work stoppage, the issue is whether the actions of the employer and employees evince a reasonable desire and effort to maintain the employer’s operations and the employment status.

Neither an adamant 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.

Majority at 485 (quoting Vrotney Unemployment Compensation Case, 400 Pa. 440, 444 , 163 A.2d 91, 93 [1960]).

In the instant case, Trane’s employees worked under the same terms and conditions for two and one-half months *498 following the expiration of their collective bargaining agreement. The Employer then proposed increases in hourly wages and an improved benefit package. The Union refused to submit the proposals to its membership whereupon the Employer unilaterally implemented them. There is no evidence in the record to suggest that the Employer used coercive tactics in an attempt to get the Union to accept the new terms and conditions. There is likewise no evidence that the Employer issued an ultimatum threatening to withhold work until the employees agreed to a new contract incorporating only its proposals. Moreover, the majority’s contention that the implementation of beneficial changes is inherently coercive is simply a non sequitur on the facts of the case.

This was not the usual situation in which employees are presented with Hobson’s choice. Here they enjoyed higher wages and better fringe benefits for thirty-three days before voting to strike. At no time during this period did the Employer threaten to implement employment terms worse than those the employees had under the expired collective bargaining agreement or suggest any action which would otherwise pose a threat to their job security. They were neither intimidated nor enticed by a “carrot on the stick” offered by the Employer in the form of better employment terms. They eventually rejected the new terms and went out on strike, apparently until they obtained a contract containing terms more desirable from their point of view.

The facts of this case, as found by the Referee, show that the Employer made a sincere effort to continue both its operations and the workers’ employment status. The employees, on the other hand, initiated a work stoppage to gain further concessions from their Employer. They walked off their jobs voluntarily; they would have lost nothing had they remained. Such unemployment resulted from their will and desire to gain concessions from their Employer. It was not an involuntary result or the fault of the Employer. An employer’s implementation of beneficial changes in wages or working conditions after negotiations *499 fail to produce a contract does not convert a later work stoppage from a strike to a lockout for unemployment compensation purposes where the men and women choose to work under those improved conditions for more than a month. See Gladieux Food Services, Inc. v. Unemployment Compensation Board of Review, 479 Pa. 324, 330 , 388 A.2d 678, 681 (1978) (in determining the reason for a claimant’s unemployment our Court must “confine our inquiry to the immediate cause and avoid the maze that would result from an attempt to ascertain indirect or chronologically remote causes”).

The majority states that the Vrotney formula was “designed to encourage the continuation of the work relationship under terms previously agreed to by the parties during that difficult period between the expiration of the old agreement and before the new terms of employment [have] been agreed upon.” Majority at 486. The majority further explains that, “[i]n addition, the rule is designed to foster a climate, during the period between contracts, conducive to good faith negotiations on an equal basis.” Id. at 490.

The federal Labor Management Relations Act, 29 U.S. C.A. § 141 et seq., and the Pennsylvania Labor Relations Act, 43 P.S. § 211.1 et seq., were enacted for the purpose of promoting the policy objectives which the majority focuses on in this unemployment compensation case. By engrafting federal and state labor law into our unemployment compensation statute, our courts, in their decisions since Vrotney, have fostered the goals of labor law and, at the same time, have increasingly lost sight of those policy objectives which prompted the Legislature to enact the Unemployment Compensation Law.

It may be appropriate, under certain circumstances, for courts to look to appropriately analogous principles of labor law relating to collective bargaining in applying provisions of the Unemployment Compensation Law. This is not such a case and, indeed, the arguably appropriate analogy of “impasse” points the other way. The unemployment compensation proceeding is not the proper place in which to *500 adjudicate alleged violations of either state or federal labor law or to affirmatively promote policies addressed by the statutes governing labor relations. See, e.g., D'Amato v. Unemployment Compensation Board of Review, 196 Pa. Superior Ct. 76, 78 , 173 A.2d 680, 682 (1961) (“[t]he principle objective of the Unemployment Compensation Law is to alleviate economic distress in individual cases[;] ... [t]he Law is not designed or intended to implement or to impede collective bargaining between unions and employers”); Carl Colteryahn Dairy, Inc. v. Unemployment Compensation Board of Review, 46 Pa. Commonwealth Ct. 319, 326 , 407 A.2d 71, 74 (1979) (“a compensation proceeding is not the place to adjudicate an alleged collective bargaining agreement violation or á claimed unfair labor practice”). See also Burleson v. Unemployment Compensation Board of Review, 173 Pa.Superior Ct. at 534, 98 A.2d at 766 ; Unemployment Compensation Board of Review v. Homsher, 21 Pa. Commonwealth Ct. 576, 579-80 , 347 A.2d 340, 342 (1975).

I believe the result reached by the majority today comes from a misplaced emphasis on labor policy considerations at the expense of the concerns addressed by the express language of the Unemployment Compensation Law. Under that law this result is anomalous at best. Section 402(d) speaks of “stoppage of work” and “lockout,” not “disruptions in the status quo.” This provision of the statute simply makes striking employees ineligible for unemployment compensation benefits. Had the Employer in this case continued its operations indefinitely under the terms of the expired agreement, a work stoppage by the employees would be characterized as a “strike” even under the Vrotney standard, and, therefore, ¡the employees would have been ineligible for unemployment benefits. It is wrong to hold, as the majority does, that employees who initiate a work stoppage when the Employer has properly implemented better terms and conditions of employment than those contained in the old collective bargaining agreement, have been constructively “locked out” of their place of employ *501 ment. Today the majority ignores the meaning of the terms “strike” and “lockout” and, in the process, distorts the basic purpose of the Unemployment Compensation Law which is to compensate workers whose loss of employment occurs through no fault of their own, not those who choose to temporarily withhold their labor in order to force their employer into additional economic concessions.

For the foregoing reasons, I respectfully dissent.

FLAHERTY, J., joins in this Dissenting Opinion.

. The Unemployment Compensation Board of Review agreed with the Referee’s determinations and affirmed his decision in a brief statement and order.

. Although I do not believe the federal law of unfair labor practices controls our Unemployment Compensation Law’s definition of “lockout," there is not a hint in this record that the Employer’s implementation of these beneficial changes was an unfair interference with the rights the federal Labor Management Relations Act guarantees to the workers or their Union. Indeed, the Employer’s actions appear consonant with federal labor law. Specifically, the United States Supreme Court has distinguished the increases at issue here from unilateral increases higher than any offer submitted to the union during negotiations, the implementation of which demonstrates the employer’s refusal to bargain in good faith. For example, in N.L.R.B. v. Crompton-Highland Mills, Inc., 337 U.S. 217, 224-25 , 69 S.Ct. 960, 963-64 , 93 L.Ed. 1320 (1949), after holding unilateral implementation without presentation across the table is an unfair labor practice, the Court observed that:

We do not here have a unilateral grant of an increase in pay made by an employer after the same proposal has been made by the employer in the course of collective bargaining but has been left unaccepted or even rejected in those negotiations. Such a grant might well carry no disparagement of the collective bargaining proceedings. Instead of being regarded as an unfair labor practice, it might be welcomed by the bargaining representative, without prejudice to the rest of the negotiations. See Re W. W. Cross & Co. 77 NLRB (F) 1162; Re Exposition Cotton Mills Co. 76 NLRB (F) 1289; Re Southern Prison Co. 46 NLRB (F) 1268.

See also N.L.R.B. v. Katz, 369 U.S. 736, 746, n. 12 , 82 S.Ct. 1107, 1113, n. 12 , 8 L.Ed.2d 230 (1962); Gulf States Manufacturers, Inc. v. N.L.R.B., 579 F.2d 1298, 1326-27 (5th Cir.1978); N.L.R.B. v. Landis Tool Co., 193 F.2d 279, 281-82 (3d Cir.1952).

. The Referee apparently had no difficulty in determining that all the changes improved the workers’ terms of employment and enumerated the various changes as follows:

*493 FIRST YEAR

EFFECTIVE 12:01 a.m. June 18, 1979

INSURANCE Raise From

-Life Insurance §9,000 to §10,000

-AD&D §9,000 to §10,000

-(Employees with Supplemental Life Insurance will have that raised by ; like amount)

-X-Ray and Lab Maximum §175/yr. to §200/yr.

-X-Ray and Lab Schedule Remove Schedule

-Surgical Maximum §600 to §650 (Reasonable & Customary)

-Hospital Maternity §350 max. to same as other hospitalizations

-Home Care Benefit (New Nurse's coverage in the home)

§105/wk. to §112/wk. -Accident & Sickness

-Major Medical

-§25,000/disability to §100,000 Lifetime per person

§100 deductible/disability in 3 months to §100 deductible/person per

-§250 family deductible per year (Special new feature)

-§2,000 annual restoration to restore any major medical used previous

VACATION

-Add six weeks after 30 years of service (Will be effective this vacation year)

PENSION

-Raise formula from §8.50 to §9.00

-Add early retirement reduction factors (Can retire at ages 62, 63, and 64 at only 2% reduction in benefit per year as opposed to previous 5% per year reduction)

WAGES

-55$ ACCROSS THE BOARD (EFFECTIVE 6-18-79)

. See Vrotney Unemployment Compensation Case, 400 Pa. 440 , 163 A.2d 91 (1960). '