Petition for a Writ of Certiorari — Kansas City Star Co. v. Department of Industry, Labor, & Human Relations

Supreme Court brief1974

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AUG S 1974

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In the Supreme Court of the United States

OCTOBER TERM, 1974

No. . 74 -%3 4

THE KANSAS CITY STAR COMPANY, FLAMBEAU

PAPER COMPANY DIVISION,

Petitioner,

vs.

DEPARTMENT OF INDUSTRY, LADOR AND HUMAN

RELATIONS, ET AL..,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

WISCONSIN SUPREME COURT

RUSSELL W. BAKER

1006 Grand

Kansas City, Missouri 64106

Attorney for Petitioner

Of Counsel:

ALLAN L. BIoFF

LEONARD SINGER

Watson, Ess, MARSHALL & ENGGAS

1006 Grand

Kansas City, Missouri 64106

E. L. Menpennatt, INnc., 926 Cherry Street, Kansas City, Mo. 64106, 421-8030

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SUBJECT INDEX

Reference to the Opinions Below ...............

Constitutional Provision Involved .....

Statutes Involved ....................................

Arguments Advanced in Support of Reasons for Allow-

ance of Writ of Certiorari to the Wisconsin Supreme

SIE ie aibcsibiaiicenecins

AUTHORITIES CITED

Almacs, Inc. v. Hackett, 312 F.Supp. 964 (D.R.I. 1970)

American Ship Building Co. v. Labor Board, 380 U:S.

a ar IIE" illest hin cionadl I cantssiaivnlelidbisetacnernasetiadens.Lskniain,

Dow Chemical Co. v. Taylor, 97 F.R.D. 105 (E.D.Mich.

tee ge EES SEES, NON UEEEE eee

Francis v. Davidson, 340 F.Supp. 351 (D.Md.), aff'd per

curiam, 409 U.S. 904 (1972)

Garner v. Teamsters Unicon, 346 U.S. 485, 500 (1953) ..

Grinnell Corp. v. Hackett, 475 F.2d 449 (1st Cir.), cert.

Gen. 414 U.S. 858, B79 (1973) ncn cccceccscesecnccesecscennoneese

H. K. Porter Co. v. Labor Board, 397 U.S. 99 (1970) ....

ITT Lamp Division v. Minter, 435 F.2d 989 (1st Cir.

1970), cert. den. 402 U.S. 933, reh. den. 404 U.S. 874

| gt SAUER A EF pane CORRE OE Nn ee a

Labor Board v. Insurance Agents’ International Union,

361 U.S. 477 (1960)

LAT OMT Re wf

LAL AIT FT PE URINE IE BT HSN PRAT IRINA

YP EN

hte Saati. th catia, Ce

SEEM

eiiiktiesieiee

Lascaris v. Wyman, 31 N.Y.2d 386, 82 LRRM 2634

ho nel A ee Ne RELA

Local 24, Teamsters Union v. Oliver, 358 U.S. 283 (1959)

Local 174, Teamsters Union v. Lucas Flour Co., 369 U.S.

ste sexu edhe RD SAAT OG RE Re

Nash v. Florida Industrial Commission, 389 U.S. 235

Jad ee ee COT, CT eae, Ra aeay

Russo v. Kirby, 453 F.2d 548 (aa Cor. 1971) .......... .

Super Tire Engineering Co. v. McCorkle, ........ US. ..

85 LRRM 2913 (1974) cece eccccceecceeeeceeeeeee

Textile Workers Union v. Lincoln Mills, 353 U.S. 488

RD: arteries diseectonsiciensbacppetefcinpeanscoecdaaiasnasceenc..

re eae)

In the Supreme Court of the United States

OCTOBER TERM, 1974

Pe ke

THE KANSAS CITY STAR COMPANY, FLAMBEAU PAPER

COMPANY DIVISION,

Petitioner,

vs.

DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELA-

TIONS and WILLIAM A. ABEL, GEORGE J. BABLICK,

KENNETH L. BALCZEWSKI, FRANK T. BAROKA, JAMES ;

A. BAROKA, MELVIN K. BEHREANDT, DONALD N. E

BLACK, ORVIL G. BLACK, EUGENE L. BOLAND, CHARLES =

M. BOLZ, CALLIS H. BORNE, EARL E. BOROWSKI, A

DENNIS D. BOURGARD, LESTER R. BOURGARD, ROBERT

J. BRADLE, ANTON D. BRAUNREITER, JOSEPH A. BRIM- :

STEIN, DOLORES H. BRUNS, JAMES E. BUKBEY, MILES g

T. CHRISTIANSON, GARY A. COOLEY, RICHARD C.

COOLEY, ARTHUR C. DANE, WALTER W. DILLON, ERVIN

H. ENGEL, LARRY R. ERICKSON, DARRELL G. FALSTAD,

VERNON L. FALSTAD, JAMES J. FENZL, LAWRENCE P.

FENZL, A. H. FLEISCHFRESSER, DONA E. FRANKE,

LOUIS A. FRANKE, RAYMOND J. FRAN CZ, WIL-

LIAM G. GIERMAN, EDWARD L. GRUBER, LEONARD W.

GRUBER, CHARLES A. GUSTAFSON, PATRICIA A. HAM-

MOND, EDWARD R. HANSON, ROBERT A. HANSON,

ROBERT K. HEIN, TOM E. HEISLER, ALFRED E. HERBST.

ARTHUR J. HERBST, CLARENCE E. HERBST, DELMAR

J. HERBST, DONALD A. HERBST, JAMES E. HERBST,

ROBERT K. HERBST, STEPHEN A. HERBST, BERNARD J.

HILGART, EDWIN S. HILGART, ELMER C. HILGART,

MICHAEL R. HILGART, LAWRENCE J. HILGART, PAT-

RICK J. HILGART. RICHARD T. HILGART, RONALD W.

HILGART, THOMAS W. HILGART, VERNON L. HILGART,

FRANK J. HIRTREITER, FREDERICK HIRTREITER,

CARLIN J. HOFFMAN, WILLIAM J. HOFFMAN, DURWOOD

L. HOGUE, RONALD D. HOGUE, TRAVIS R. HOSEY,

JAMES R. HOTH, MICHAEL J. HUGHES, CHARLES A’

JAGLINSKI, NICHOLAS C. JAROSINSKI, LAWRENCE J.

JOHNSON, HAROLD E. JOHNSTON, KENNETH G. KEILY,

SYLVIUS G. KELNHOFER, JOHN M. KINNEAR, WARREN

A. KIRSTEN, GARY L. KNOTTS, OTTO L. KOENIG, LOUIS

F. KOLLER, JAMES L. KOSHAK, BERNIE F. KOTKE,

GEORGE L. KOZAK, JR., JAMES A. KRONBERGER, RAY-

BC oe ahr

SMART PRY

aS a uae Set

BA MEGAMI

MOND J. KRONBERGER, THEODORE L. KRONBERGER,

THOMAS J. KRONBERGER, WILLIAM F. KRONBERGER,

BERNICE Y. KUNDINGER, EUGENE A. KUNDINGER,

JAMES A. KUNDINGFR, CAROLINE D. KUSE, ANNA M.

LA MERE, GENE E. LANNIGAN, FRANK J. LAPP, FRED-

ERICK M. LENZEN, RICHARD J. LITTLE, EDWARD J.

LIZAK, WILLIAM J. LUCAS, THOMAS L. MADER, ELMER

J. MARTIN, BYRON F. MC CORISON, JOHN H. MC CUE,

RONALD G. MEYER, ARNOLD M. MICHALSKI, GEORGE

F. MICHALSKI, GLENN L. MORGAN, HERBERT D. MOR-

GAN, DONALD E. MURPHY, ERLAND V. NESSMAN,

JOSEPH R. NIEBAUER, RONALD W. NIEBAUER, RICHARD

W. NORTHROP, THEODORE J. OBERNBERGER, CLAYTON

R. OLSON, RICHARD C. OLSON, FRANK J. OSWALD,

DALE L. PACKARD, VERNON E. PALACHECK, FRANK

C. PALECEK, GUST L. PALECEK, MONTE J. PASSER,

EDWARD H. PETERSON, LARRY J. PETERSON , REGINALD

E. PETERSON, LEON E. PODREZ, THOMAS J. POHLE,

RICHARD F. PREISSNER, ISABEL PRITZL, JAMES J.

PRITZL, ALVAN W. RADLINGER, JR., JOHN J. RAD-

LINGER, JOSEPH G. RADLINGER, MIKE R. RADLINGER,

EMERON O. REAS, RAYMOND R. ROMINSKE, PAUL A.

ROSE, JR., GLEN D. SCHERWINSKI, HOWARD E.

SCHERWINSKI, JEROME E. SCHERWINSKI, HENRY P.

SCHMIDT, RICHARD J. SCHMIDT, GEORGE ‘W. SCHNEI-

DER, RONALD J. SCHOCH, HERBERT H. SCHULTZ, JR.,

ROBERT -L. SCHULTZ, JOSEPH A. SEIDL, JOHN D.

SEVERT, RAYMOND M. SKAWINSKI, GERLAD R. SLACK,

WILLIAM F. SLACK, SR., JAMES W. SMETAK, THOMAS

A. SMITH, VERNA I. STEINER, HARLAN J. STULL,

HERSHAL H. STURM, ROBERT E. SUTHERLAND, JEROME

P. SZYMIK, ROGER M. SZYMIK, JAMES A. THIBEDEAU,

NEIL W. THIBEDEAU, ANTHONY C. THIER, JEROME A.

THIER, GEORGE W. THOMS, ELAINE J. TONEY, DAVID

A. TREML, GEORGE A. TREML, LAWRENCE A. TREML,

MICHAEL A. VUCHETICH, GENE D. WALKER, GORDON

D. WALKER, JAMES D. WALKER, HERMAN R. WART-

GOW, CLARENCE L. WATLAND, DENNIS W. WEGNER,

ROBERT W. WEGNER, ERWIN M. WEIBERG, DONALD L.

WEIMER, JERALD F. WEINBERGER, JOSEPH C. WEISS,

GERALD R. BURHANS, ARTHUR °.. CARLSON, HAROLD

J. CHRISTIAN, GUY M. CHRISTIANSON, ROY A. DAR-

ROW, LAWRENCE H. DRAXLER, DONALD A. ENGEL,

MAX A. ERNST, JOE B. FISCHER, ROGER L. FLEMING,

CHARLES L. FUHRMAN, FRANK J. FURTAK, EARL

FRANKE, EARL W. FREDRICK, JAMES R. GAVIN, ALFRED

A. GELINA, RICHARD A. GLAESER, ROBERT Q. GLAESER,

KENNETH L. GOETHLICH, MARTIN A. GOTZ, EDMOND

H. GRIFFIN, EDWARD G. GRUBER, ROBERT J. GRUBER,

ROBERT J. HAMANN, KENNETH HAMMOND, MERTON

C. HANISH, LAWRENCE A. HANNS, GEORGE F. HARD-

GINSKI, WILLIAM R. HELBERG, FOREST E. HERBST,

LEONARD W. HERBST, FRED W. HILGART, JOHN M.

HILGART, ROBERT C. HILGART, WILLIAM A. HILGART,

EDWARD HODEN, RONALD J. HOEFFERLE, RUDOLPH J.

HOEFFERLE, QUENTIN J. HOTH, PATRICK D. HUGHES,

RAYMOND W. JEMIOLA, JOHN H. KARL, ALLAN F.

KEILY, DAVID W. KINNEAR, WILLIAM J. KOLAR,

JOSEPH J. KOLONKO, CHARLES C. KOTKE, GOTLIEB F.

KOTKE, PETER G. KRONBERGER, CLARENCE J. KUN-

DINGER, ELMER =. KUNDINGER, DELMAR H. KLEIN,

BERNARD C. LANGNER, ROBERT D. LA VOIE, DONALD

G. LEITL, JAMES LA VALLEY, DONALD E. LIEBELT,

WILLIAM J. LITTLE, ARNOLD L. LOULA, JOHN O.

LUHTALA, CHARLES W. MADER, GEORGE R. MARTIN,

KEITH F. MC CARDELL, MICHAEL P. MC KEUN, WILLIAM

C. MERTEN, DAVID R. MESSERSCHMIDT, CHARLES A.

MEYER, ANDREW A. MICHALSKI, ROBERT J. MICHAL-

SKI, THOMAS A. MICHALSKI, EDWARD J. MILLER,

THOMAS E. MOCKLER, DENNIS E. MORGAN, TOM R.

MORGAN, JOHN J. MOORE, DALE F. MROTEK, ALFRED

H. MYERS, ROBERT W. NORDALL, FRED J. OSWALD,

JOHN A. PALECEK, JOHN J. PALECEK, JR., LLOYD C.

PALECEK, WILLIAM J. PALECEK, RAYMOND P. PETER-

SON, ALFRED ¢. POHLE, KENNETH F. PRITZL, RONALD

M. RADLINGER, JAMES J. RATHSACK, DOUGLAS R.

REAS, HOWARDL A. RICHTER, HAROLD F. RISSUE, RICH-

ARD D. ROBERTS, DAVID D. ROSE, ARTHUR R. SCHMIDT,

EUGENE A. SCHNEIDER, HARRY W. SCHONDELMAIER,

OSCAR H. SCHRADER, PAUL SEDOVIC, JERRY A. SET-

TERMAN, LAWRENCE R. SETTERMAN, LAWRENCE M.

SINGER, FLOYD M. SLACK, KENNETH J. SLACK, RUS-

SELL G. SLACK, HERMAN A. SPRANGER, JERALD A.

STEINER, GEORGE L. STRIEGEL, JR. ROMAN F-.

STUEBER, VACLAV J. SVEHLA, VICTOR SZYMIK, ERWIN

F. TAFT, BERNARD VAN DEN HEUVEL, FRANK R.

WAGNER, RAYMOND F. WALLNER, SYLVESTER W.

WALLNER, OSCAR W. WARDENSKY, HAROLD W. WAR-

REN, WILLIAM WARTGOW, WALTER WASKO, JR.,

NORMAN L. WEHRMAN, DENNIS C. WEIK, WILLIAM D.

WEIK, HENRY WEINBERGER, RONALD W. WEINBERGER,

WILLIAM J. WEINBERGER, JOSEPH A. WEIS, EDWARD

W. WESTPHAL, DANIEL H. WHITING, RAYMOND J.

WOODIE, ROBERT J. WOODIE, ERNEST F. YUNK, JAMES

W. YUNK, JAMES A. ZIERER, DAVID wW. ZOESCH,

EUGENE R. ZOESCH, WILLIAM A. ZCESCH, GUNNAR

R. REBNE,

Respondents.

SNEED LYE ATPL OS |

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Baciow: SAMAR IM NSLS By

PETITION FOR A WRIT OF CERTIORARI TO THE

WISCONSIN SUPREME COURT

Petitioner prays that a Writ of Certiorari issue to re-

view the judgment and opinion of the Supreme Court of

Wisconsin dated October 30, 1973.

REFERENCE TO THE OPINIONS BELOW

The following court opinions and judgments, some of

which have been reported, have issued in this case:

1. The unreported Judgment and Memorandum

of Decision of t::e Circuit Court of Dane County, Wis-

consin, were entered September 25, 1972 and are

printed in the Appendix beginning at p. A21;

2. The opinion and judgment of the Supreme

Court of Wisconsin is reported at 60 Wis.2d 591, 211

N.W.2d 488 (October 30, 1973) and is printed in the

Appendix beginning at p. A50; |

3. The unreported decision of the Wisconsin Su-

preme Court granting Petitioner’s motion for rehear-

ing was entered January 18, 1974 and is printed in the

Appendix beginning at p. A64; and

4. The opinion and judgment of the Wisconsin

Supreme Court “denying rehearing” is reported at

oan Wis.2d ......... 217 N.W.2d 666 (May 8, 1974) and is

printed in the Appendix beginning at p. A65.

JURISDICTION

The judgment of the Supreme Court of Wisconsin was

entered on October 30, 1973. After Petitioner’s motion for

rehearing was granted on January 18, 1974, the Supreme

Court of Wisconsin entered an order “denying the motion

for rehearing” on May 8, 1974. The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. §§1257(3) and

2101(c).

QUESTION PRESENTED FOR REViEW

Does Wisconsin’s economic support of union members

who are unemployed because of a labor dispute over their

terms and conditions of employment violate and frustrate

the federally mandated process of free and voluntary col-

lective bargaining which requires that union and employer

must rely only on their respective resources when engaging

in lawful economic warfare?

CONSTITUTIONAL PROVISION INVOLVED

Article VI, Paragraph 2:

“The Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all Treaties

made, or which shall be made, under the Authority of the

United States, shall be the Supreme Law of the Land; and

the Judges in every State shall be bound thereby, any

thing in the Constitution or laws of any State to the con-

trary notwithstanding.”

STATUTES INYOLVED

The pertinent provisions of:

1. Wisconsin Unemployment Reserves and Compen-

sation Act, as amended, Chapter 108, Wis.R.Stats. (App.

pp. A72-A87); particularly $108.04 (10), which provides:

OETA TNS PRES RT errr

Buvteowrenccs: ST

“Labor dispute. An employee who has left (or par-

tially or totally lost) his employment with an em-

ploying unit because of a strike or other bona fide la-

bor dispute shall not be eligible for benefits from such

(or any previous) employer’s account for any week

in which such strike or other bona fide labor dispute

is in active progress in the establishment in which he

is or was employed.”

2. The National Labor Relations Act, as amended,

29 U.S.C.A. $141, et seq. (App. pp. A87-A91).

STATEMENT OF THE CASE

Pursuant to Section 1' of the then existing labor con-

tract between Petitioner? and the Unions,’ the Unions noti-

fied Petitioner on May 10, 1971' of their desire to “open

our present labor agreement with your company to negoti-

ate changes, wages and other monetary items and working

conditions”. Thereafter, there were many bargaining ses-

sions between the parties. During these negotiating meet-

ings, the positions of Petitioner and the Unions hardened

with respect to the Unions’ enormous economic demands

and with respect to Petitioner’s proposals for crucial modi-

fications of contractual work ruies. Finally, on July 25,

the Unions’ members voted 210 to 4 reject Petitioner’s fina]

1. See App. pp. A24-A25.

2. Petitioner is The Kansas City Star Company, Flambeau

Paper Company Division.

3. Local 119, Pulp Sulphite and Paper Mill Workers and

Local 445, Paper Makers and Paper Workers Unions will be re-

ferred to as the “Unions”. The Unions negotiate jointly with Pe-

titioner. “Individual Respondents” are claimants for unemploy-

ment compensation who were employees in the units represented

by the Unions.

4. All dates are in 197] unless otherwise designated.

contract proposal and between July 26 and July 28 the

membership voted 219 to 19 to strike Petitioner.

On August 5 the Unions presented contract termina-

tion notices to Petitioner, pursuant to Section 1 of the la-

bor contract. At this time Petitioner and the Unions were

at an impasse in their intense and ongoing labor dispute

over the terms and conditions of a new labor agreement.

Thirty days after service of the termination notices, the

Unions would-be free to strike.

Aware of the time necessary to “wind down” a paper

mill before it can cease operations without damage to

materials or supplies, Petitioner decided to meet the Unions’

strike threat directly by preparing the mill for a temporary

shutdown and by advising its customers and suppliers that

Petitioner would cease business temporarily because of

the labor dispute. Following this strategy, Petitioner

reasoned, would enable it to avoid conceding its bargain-

ing goals while blunting the Unions’ most devastating

weapon: a strike for which Petitioner was not prepared.

Thus, on August 6 and 7 Petitioner suspended its orders

for supplies and on August 10 Petitioner notified its cus-

tomers that it was curtailing the acceptance of orders.

In addition, Petitioner began the long process of prepar-

ing the mill machinery for the temporary cessation of pro-

duction.

It was in these circumstances that on August 19, after

Petitioner had embargoed incoming supplies, turned its

customers over to its competitors, and commenced the

sequential shutdown of operations that the Unions sought

to withdraw their contract termination notices “unless or

until a new termination is sent or full agreement reached

on a new contract.” Faced with the imposition of wage

controls on August 15, 1971, the Unions, on August 19, 1971,

wanted to suddenly reverse their bargaining strategy and

Se |

Pores

withdraw the termination notices—probably to wait to re-

sume bargaining if and when the wage freeze would end.

Petitioner advised the Unions that, under the contract,

the Unions could not unilaterally withdraw the contract

termination notices. But Petitioner counterproposed that

it would accept the Unions’ offer of withdrawal if the

termination notices would not be reinstated within a fixed

time. At the same time Petitioner made two new al-

ternative proposals for a contract settlement.

The Unions rejected Petitioner’s counterproposals both

with respect to the matter of the contract termination

notices and with respect to the new contract proposals.

Because of the disputes between it and the Unions concern-

ing the terms of a new labor contract and the Unions’ pro-

posed withdrawal of the termination notices, Petitioner

continued its preparation for shutdown. As a result of

Petitioner’s shutdown of its: mill due to the labor dispute,

its employees temporarily lost their employment. The

employees claimed unemployment compensation, but the

Department’s* Deputy charged with the initial investiga-

tion and determination of such claims, denied the unemploy-

ment compensation claim.

Subsequently, the Individual Respondents appealed the

Deputy’s decision to the Department. The Department re-

versed the Deputy’s award and granted unemployment com-

pensation to the gndividual Respondents. The Depart-

ment’s award.was, in turn, reversed on Petitioner’s appeal

to the Circuit Court of Dane County. The Circuit Court

held that the Individual Respondents were not entitled to

unemployment compensation. On both Individual Re-

5. “Department” is the Respondent Wisconsin Department

of Industry, Labor and Human Relations; a Commission within

the Department is the state agency invested with power to make

the final determination cf unemployment compensation claims.

spondent’s and the Department’s appeal, the Supreme Court

of Wisconsin reversed the Circuit Court and awarded the

benefits to Individual Respondents. The Wisconsin Su-

preme Court granted Petitioner’s motion for rehearing

but denied it any relief after argument on rehearing. As a

result, union members engaged in a labor dispute over

their terms and conditions of employment with Petitioner

were paid unemployment compensation.

The federal question sought to be reviewed was raised

in the courts below in the following manner, and by the

following methods:

1. In Petitioner’s complaint in the Circuit Court

of Dane County, Wisconsin (App. pp. A91-A93);

2. In Petitioner’s Brief in the Circuit Court of

Dane County, Wisconsin (App. p. A93);

3. In the Brief of Amicus Curiae (Wisconsin

Manufacturers’ Association) in the Cireuit Court of

Dane County, Wisconsin (App. pp. A93-A96);

4. In Petitioner’s principal Brief as Respondent

in the Wisconsin Supreme Court (App. p. A97);

5. In the Brief of Amicus Curiae (Wisconsin

Manufacturers’ Association) in the Wisconsin Supreme

Court (App. pp. A97-A101); and

6. In Petitioner’s Brief in Support of Motion for

Rehearing in the Wisconsin Supreme Court (App. p.

A101).

Neither the Circuit Court nor the Supreme Court passed

directly on the federal issues thus raised, although, in

the dissenting opinion on rehearing in the Wisconsin Su-

preme Court, three Justices stated, in part:

Rewer OLA CRS ry

i . ”

“The Commission’s ruling in this case violated this

mandate of ‘neutrality’ [of the State in labor dis-

putes] and, in effect, required the employer [Peti-

tioner] to contribute financial support to this labor

dispute. If such a change is to be made in the law,

it is the duty and concern of the legislature.” (App.

p. A71).

ARGUMENTS ADVANCED IN SUPPORT OF

REASONS FOR ALLOWANCE OF WRIT OF

CERTIORARI TO THE WISCONSIN

SUPREME COURT

In the instant case the Wisconsin state agency and

the Wisconsin courts have ordered the payment of unem-

ployment compensation to employees who were tempo-

rarily unemployed due to a labor dispute over their terms

and conditions of employment, Notwithstanding the in-

creasing amount of recurring litigation over the issue of

publicly financed economic aid to persons unemployed due

to their involvement in labor disputes,® the Court has

not decided this matter of utmost significance. On the

last occasion on which the issue was before the Court, it

indicated that it should resolve the

“challenge to state policies that have had their impact

and that continue in force, unabated and unreviewed.

The judiciary must not close the door to the resolu-

LRRM 2634 (1973); Dow Chemical Co. v. Taylor, 57 F.R.D. 105

(E.D.Mich. 1972); and Almacs, Ine. v. Hackett, 312 F.Supp. 964

(D.R.I. 1970).

tion of the important questicns these concrete disputes

present.” Super Tire Engineering Co. v. McCorkle,

US. , 85 LRRM 2913, 2918 (1974).

The instant case arises free of the obstacles of moot-

ness or other procedural deficiencies. It squarely presents

the important issue as to whether a State agency may

apply the State’s unemployment compensation laws in der-

ogation of federal law favoring free collective bargaining

by supporting one party in the bargaining. The Wisconsin

Supreme Court's order effectively decided this federal ques-

tion of substance not heretofore decided by this Court;

the order is probably not in accord with either applicable

decisions of this Court or the federal substantive labor law

controlling under the Supremacy Clause of the Constitution.

Thus, it is imperative that the Court review and decide the

propriety of State economic aid to Unions during a labor

dispute.

The payment of public economic aid, as desirable as

that may be in other circumstances, to persons unemployed

because of a labor dispute is in derogation of the policies and

purposes of the National Labor Relations Act, as amended,

as well as the substantive law which this Court has directed

to be fashioned from the policy of the national labor laws.

Textile Workers Union v. Lincoln Mills, 353 U.S. 488 (1957).

As has often been emphasized:

“The goal of federal labor policy, as expressed in the

Wagner and Taft-Hartley Acts, is the promotion of

collective bargaining; to encourage the employer and

the representative of the employees to establish,

through collective negotiating their own charter for

the ordering of industrial relations, and thereby to

minimize industrial strife. [citing cases]” Local 24,

Teamsters Union v. Oliver, 358 U.S. 283, 295 (1959).

VEN AGH Vere

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Bivaisicssrac SE nie Ce aN aC RY Me

Not only has the “Congress intended that the parties should

have wide latitude in their negotiations, unrestricted by

governmental power to regulate the substantive solution

of their differences”, but it has also recognized that:

“[t]he presence of economic weapons in reserve, and

their actual exercise on occasion by the parties, is

part and parcel of the system that the Wagner and

Taft-Hartley Acts have recognized.” Labor Board v.

Insurance Agents’ international Union, 361 U.S. 477,

488-489 (1960).

Economic power is clearly an integral part—possibly unde-

sirable but nevertheless fundamental—of the process of

collective bargaining. The Labor Board is primarily re-

sponsible for defining the federal labor policy and even

it is not allowed to aid or weaken the lawful economic

strength of either party in a labor dispute:

“if the Board could regulate the choice of economic

weapons that may be used as part of collective bar-

gaining, it would be in a position to exercise consider-

able influence upon the substantive terms which the

parties contract. As the parties own devices become

more limited, the Government might have to enter

even more directly into the negotiation of collective

agreements. Our labor policy is not presently erected

on a foundation of government control of the results

of negotiations. See S.Rep. No. 105, 8th Cong., Ist

Sess. p. 2. Nor does it contain a charter for the

National Labor Relations Board to act at large in equal-

izing disparities of bargaining power between em-

ployer and union.” Labor Board v. Insurance Agents’

International Union, supra, 361 U.S. at 490.

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ee ee ioe 5 tan,

The provisions of the Labor Act “do not give the [Labor]

Board a general authority to assess the relative economic

power of the adversaries in the bargaining process and

to deny weapons to one party or the other because of

its assessment of that party’s bargaining power” because

“the right to bargain collectively does not entail any ‘right’

to insist on one’s position free from economic disadvan-

tage”. American Ship Building Co. v. Labor Board, 380

U.S. 300, 309 and 317 (1965).

Based upon these clear and consistent interpretations

of the Labor Board’s power vis-a-vis the economic weapons

of labor and management, there can be no question but

that the controlling federal labor law is as follows:

1. “The ordering and adjusting of competing in-

terests through a process of free and voluntary col-

lective bargaining is the keystone of the federal scheme

to promote industrial peace.” Local 174, Teamsters

Union v. Lucas Flour Co., 369 U.S. 95, 104 (1962);

and

2. The parties to collective bargaining are free

to “rely ultimately on [their] . . . economic strength

to try to secure what [they] cannot obtain through

bargaining” subject to the understanding that parties

to collective bargaining will not “always be secure

and able to achieve agreement even when their eco-

nomic position is weak.” H. K. Porter Co. v. Labor

Board, 397 U.S. 99, 109 (1970).

Thus, it is readily apparent tnat the federal labor law

relies nearly exclusively on the principles of freedom of

contract to determine what parties can do to persuade

each other in collective bargaining. The parties to collec-

tive bargaining must, in the final analysis, rely exclusively

on their ability to barter and, if necessary, their lawful!

power to compel agreement on specific issues.

SLE NS LCL IF LPN EIN ONT TC Tee MP MT RO “a

NE NP eae:

Bisiout-nc RS NEP Bis as ithe

When a State enters labor-management relations

and adds its economic might to one side or the ‘

the federal policy of free and voluntary collective aii.

ing is defeated and handicapped. Nash v. Florida Indus-

trial Commission, 389 U.S. 235 (1967). In Nash the Court

struck down an application of the Florida unemployment

compensation statute which discouraged persons frorn fil-

ing unfair labor practice charges; in the instant case

Wisconsin is using its unemployment compensation statute

to undermine Petitioner’s statutorily protected right in col- -

lective bargaining to employ its unfettered lawful economic

strength against the Unions and Individual Respondents.

Additionally, Wisconsin’s application of its unemployment

compensation laws unlawfully excuses the Unions and In-

dividual Respondents from their obligations to participate in

collective bargaining relying solely on their own economic

fortitude, unaided by the resources of an outside interest.

Thus, here, as in Nash, the application of the State unem-

ployment compensation statute must be reversed because

it is in derogation of fundamental precepts of federal labor

law which are controlling under the Supremacy Clause:

“For a State to impinge in the area of labor combat

designed to be free is quite as much an obstruction

of Federal policy as if the State were to declare picket-

ing free for purpose of or by methods which the fed-

eral Act prohibits.” Garner v. Teamsters Union, 346

U.S. 485, 500 (1953).

The Court should undertake to balance the competing

interests in this case: the State’s social and economic

interest in the provision of aid to the unemployed, on

the one hand, and the federal labor laws’ social and eco-

nomic policy that employer and union, without outside

interference, must construct their own collective bargain-

ing relationship, on the other hand. Reconciliation of these

competing interests is necessary to insure that vital public )

funds are not dislocated to causes or persons in a manner ‘

inconsistent with the purpose of the funds or laws under-

lying labor-management relationships in our society.

pd ce

CONCLUSION

For the foregoing reasons Petitioner respectfully urges

that the Court grant the petition for writ of certiorari.

Respectfully submitted,

RuSSELL W. BAKER

LARTER LRT Eee eS

1006 Grand

Kansas City, Missouri 64106

Atto~-ney for Petitioner

Of Counsel:

ALLAN L. BIOFF

LEONARD SINGER

Watson, Ess, MARSHALL & ENGGAS

1006 Grand

Kansas City, Missouri 64106

_ Se eee

NEE OE 1 WPS OT ET eh ee en ee net

APPENDIX

BEFORE THE DEPARTMENT OF INDUSTRY, LABOR

AND HUMAN RELATIONS

In the matter of the unemployment benefit claims of

LAWRENCE H. DRAXLER, and others, Employes,

Appellants (List Attached)

Hearing Nuinbers 86817 thru 86821, 86998 thru 87331,

87446 thru 87448

Involving the account of KANSAS CITY STAR COM-

PANY, Employer, Respondent, 200 First Avenue,

Park Falls, Wisconsin 54552

INDUSTRY, LABOR AND HUMAN RELATIONS

COMMISSION DECISION

The employer alleged that the employes were ineligi-

ble for unemployment benefits starting with week 36 of

1971, on the ground that they left or lost their employment

because of a strike or other bona fide labor dispute in ac-

tive progress in the establishment in which they were em-

ployed. The commission deputy’s initial determinations

issued in each case suspended benefits starting with week

32 of 1971 or a later week on the ground alleged. The em-

ployes appealed.

While the matter was pending, the Industry, Labor

and Human Relations Commission, pursuant to authority —

granted in section 108.09(6) (a) of the statutes, transferred

the proceedings to itself by an order dated October 18,

1971.

ata ee

od Sh

RTS RR at PE ESA ae Ze

ited Grote 68

‘

An OME Hates ae 6 AAR SLE O NEES Ht BEVIS KE BI BODE IE Pe

Hearing was held at Park Falls on October 25, 1971,

before Max J. Peltin, examiner, acting as deputy for the

Industry, Labor and Human Relations Commission.

APPEARANCES: The employes appeared by Gold-

berg, Previant & Uelmen, attor-

neys, by Albert Goldberg.

The employer appeared by Wat-

son, Ess, Marshall & Enggas, at-

torneys, by Allan L. Bioff.

Based on the applicable records and evidence in this

case, the Industry, Labor and Human Relations Commis-

sion makes the following

FINDINGS OF FACT

The employer is engaged in the manufacture and sale

of fine paper, and has approximately 380 production

workers who are represented by two unions. It has had

joint collective bargaining agreements with the two unions

for about thirty years, and the last such agreement was in

effect from August 1, 1969, until July 31, 1971, and pro-

vided that it shall remain in effect from year to year there-

after unless terminated in accordance with an applicable

provision of the agreement. This agreement provides:

“Section 1 (b) If either party shall desire to

change any provision of this agreement, it shall give

written notice of such desire to the other party at least

sixty (60) days in advance of any anniversary date.

“(c) The giving of notice provided in subsection

(b) above shall constitute an obligation upon both

parties to negotiate in good faith all questions at issue,

with the intent of reaching written agreement prior to

the anniversary date.

ome

“(d) If the parties have not reached agreement

on or before the anniversary date, all the provisions of

the agreement shall remain in effect unless specifically

terminated in accordance with the provisions of Sec-

tion 2, below.”

Section 2 of the agreement provided:

“(a) At any time after the anniversary date, if

no agreement on the questions at issue has been

reached, either party may give writen 1-otice to the

other party of intent to terminate the agreement in

(not less than) thirty days. All the provisions of the

agreement shall remain in full force and effect until

the time set forth has elapsed. During this period, at-

tempts to reach an agreement shall be continued.

“(b) If the parties have failed to resolve their

differences before the time set forth has elapsed, all

obligations under this agreement are automatically

canceled.”

The agreement further provided chat the two unions

are the sole bargaining agencies for all employes eligible

for membership in their respecux. “he purpose of

collective bargaining with respect to ./z,es, hours, and

working conditions; and that all employes covered by the

agreement shall as a condition of employment become

members of one of the unions after thirty days of employ-

ment or the effective date of the agreement or the signing

of the agreement, whichever is later. Certain classes of

employes were expressly excluded from membership in

either of the unions. All of the er1ployes involved in this

case were members of one or the other of the two unions.

By letter, dated May 10, 1971, which was more than

sixty days prior to the termination date of the agreement,

both unions gave the employer notice that they desired to

ae ey |

oP.

COLORES PRNIRINH NE SIEM PEI oy Oe

open the present labor agreement and to negotiate changes,

wages, and other monetary items and working conditions.

After receiving this notice the employer communicated

with the unions with regard to negotiating a new agree-

ment and the first meeting between the employer and

union representatives was held on June 11, 1971. At this

meeting the union presented a list of its demands, includ-

ing a wage increase of 10 percent with a minimum of 29

cents an hour during the first year of the contract and an

increase of 32 cents an hour during the second year, and

increases in various insurance coverages, increase in the

third shift differentials to 20 cents from 14 cents, increases

in vacation allowances and pension benefits. The em-

ployer at that time submitted a list of proposed changes in

the work rules.

Meetings were held thereafter on July 1 and 2 at

which the employer offered a 6 percent increase in wages

without the requested minimum of 29 cents an hour the

first year, and a 20 cents an hour increase in wages the

second year of the contract, made counter proposals re-

garding vacation and pension allowances, agreed to the

unions’ request for an increase in life insurance from

$4,000 to $6,000, agreed to increase the major medical in-

surance coverage from $5,000 to $10,000 but not to $20,000

as requested by the unions, and made counter proposals to

the requested increase in the night shifts’ wage differ-

entials of one cent on each of the seccnd and third shifts,

or 15 cents on each shift. The unions did not accept any

of the employer’s counter proposals, but agreed (at that

meeting or a later meeting) to lower its wage request dur-

ing the first year of the contract from 10 percent to 9 per-

cent. The unions did not agree to any of the most impor-

tant work rule changes proposed by the employer and the

employer made it clear to the unions that all of its mone-

tary proposals were dependent upon their accepting the

employer’s work rule proposals.

Another meeting between the company and the unions

was held about two weeks later, on July 16, at which the

employer did not agree to any higher wage increase than

it had previously offered, did not agree to any higher night

shift differential than it first proposed, but did agree to

changes in some of tne fringe benefits. The unions did not

agree to any of the most important changes in the work

rules proposed by the employer and indicated that they

would not do so, The next meeting was keld on July 23

and at that meeting the employer increased its wage pro-

posal for the first year of the contract from 6 percent to

64 percent and from 20 cents to 22 cents an hour during

the second year of the contract. The unions informed the

employer that its proposals were completely unsatisfactory,

stated that there was no purpose in continuing the meet-

ing, and the meeting was adjourned. No date for a further

meeting was set at that time. Meanwhile, the unions noti-

fied the employer that on July 26 at a joint meeting of the

union membership, the members of the unions had rejected

the latest proposals of the employer by a vote of 210 to 4.

The employer was also notified that on July 27 the unions

had taken a strike vote and had voted 291 to 19 to strike.

A further meeting was held on August 5 at the request

of a federal mediator. The employer did not increase the

wage proposals it had previously made and again informed

the unions that its monetary proposals depended upon the

unions’ acceptance of the work rule changes proposed by

the employer. The unions did not agree to any changes

in their requests and stated they would hold a caucus and

requested the employer negotiator to be available for the

results of the caucus. At 5:40 p.m. each of the unions

handed the employer’s negotiator (the assistant general

manager) notices substantially as follows:

i Seb ria tc ies rs

ear

I ee SMUT SS EORTC hh Gre

SER eng ie

Bice ice’ SHWE

“Pursuant to provisions Section 2, Labor agree-

ment between (employer) and the (union); we do

hereby terminate the agreement.

“We will be glad to meet with you any time dur-

ing the 30 day period to try and resolve our differ-

ences.”

The following day, August 6, 1971, the employer

mailed letters to each of the unions as follows:

“We are in receipt of your letter of August 5, noti-

fying our Company that you have terminated the

Labor Contract under the provisions of Section 2.

“As a result of this action on the part of the Union,

all offers heretofore made by the Company in connec-

tion with our current labor negotiations is hereby

withdrawn.

“During the thirty-day interim period, if it is your

desire to meet with the Company Bargaining Commit-

tee, please contact (the assistant general manager and

employer negotiator).”

On August 2, 1971, the employer notified its pulpwood

suppliers of the threat of a strike in its plant and that un-

less an agreement was reached soon it would be necessary

to discontinue receiving pulpwood. On August 6, the em-

ployer notified its pulpwood suppliers by letter and radio

announcement that, due to an impending strike of its em-

ployes and the serving on it by the unions of notices of

termination of the contract, it was discontinuing receiving

pulpwood by railroad cars as of August 9, 1971, and by

trucks as of 4 p.m. on August 10. It also sent letters to its

suppliers of other materials to discontinue shipments of

those materials. On August 10, it mailed in excess of 300

letters to its customers informing them that it was faced

with a strike on September 5, that it was curtailing accep-

tance of orders to those that it could assure shipment be-

fore the shutdown, and that it could take no further orders

for certain types of paper. The employer sent these letters

to its customers so that they could arrange for other manu-

facturers to supply their needs. The employer did not ac-

cept any orders after August 10 for paper which it would

have had to manufacture after that date, although it did

accept orders that it could fill from inventory. By these

actions the employer instituted a procedure by which it

could cease operations in an orderly manner by the close

of business on Friday, September 3, 1971 (in week 36).

On August 15, 1971, the President of the United States,

by Executive Order No. 11615, ordered that prices, rents,

wages, and salaries shall be stabilized for a period of 90

days effective as of the date of the order at levels not

greater than the highest of those pertaining to a substan-

tial volume of actual transactions during the 30-day period

ending August 14, 1971, and that “no person shall, directly

or indirectly, pay or agree to pay in any transaction wages

and salaries in any form, or to use any means to obtain

payment of wages and salaries in any form, higher than

those permitted hereunder, whether by retroactive in-

crease or otherwise.”

On August 19, 1971, a meeting was held between the

employer and the union at the request of a federal media-

tor. At that meeting each of the unions submitted sub-

stantially similar letters to the employer, as follows:

“On August 5, 1971, we submitted a letter to you

on behalf of (the local union) serving notice of con-

tract termination.

“In light of President Nixon’s ninety day freeze

on wages and prices, this letter will serve as a with-

drawal of that termination notice and of our desire to

continue to work under the terms of the existing

—

agreement, unless, or until, a new termination is sent

or full agreement reached on a new contract.”

The employer replied to the unions by a letter dated

August 19, 1971, as follows:

“We are in receipt of your notice of August 18,

wherein you wish to withdraw your notice of termi-

nation of Contract, dated August 5.

“We can find no provision in the present Labor

Contract which would authorize the withdrawal of

termination notice after once being tendered.

“We will accept the withdrawal notice, provided

we have your guarantee in writing that it will not be

reinstated prior to one year from the date of notice

of withdrawal.

“The reason for the Company’s position on this

point, is that we have already begun winding down our

operations, and we have turned down many orders in

anticipation of an impending strike, and this places us

in a very untenable position as far as our customers

are concerned, and our ability to be a firm supplier of

their needs. It is almost impossible for us to continue

to insure the customer of our reliability if we are faced

with a reinstatement of termination notice, at the

whim of the Union.

“It is essential that we have this one year guaran-

tee for our continued operation.”

At the August 19 meeting the employer proposed ex-

tending the existing contract for one year as long as there

would not be any chance of a strike during that year. The

unions did not accept this proposal and asked if the em-

ployer had any other proposals. The employer then pro-

posed a two-year agreement and submitted its proposed

——

SE a to a NOE A, Oe iia)

two-year agreement, which did not provide for any wage

adjustment because of the price-wage freeze. The unions

rejected the employer’s proposed agreement. The em-

ployer proceeded winding up its operations and its opera-

tions ceased at the end of the business day on September

3. About 24 employes were laid off on September 2, an

additional 23 or 24 at the beginning of September 3, and

the remaining employes were laid off at the end of Sep-

tember 3 (in week 36). Although the employer made a

few shipments in September and October from inventory

and from purchases it made to meet certain commitments,

its operations after September 3 were insignificant and its

plant operations for all practical purposes ceased at the

end of Friday, September 3, 1971.

Further meetings were held in September and October

without any agreement being reached.

Section 108.04(10) of the Wisconsin Statutes provides:

“An employe who has left (or partially or totally

lost) his employment with an employing unit because

of a strike or other bona fide labor dispute shall not be

eligible for benefits from such (or any previous) em-

ployer’s account for any week in which such strike or

other bona fide labor dispute is in active progress in

the establishment in which he is or was employed.”

The Commission does not consider that the employes

lost their employment with the employer because of a

bona fide labor dispute within the intent and meaning of

section 108.04(10).

The employes had the contract right to terminate their

agreements upon 30-day notices pursuant to section 2.

They gave the employer such notices. The employes also

took a strike vote and gave approval to the union officers

to call a strike after the contracts were terminated.

SANSA APT GONE

ALR Ra este aa ’

Ae Aree”

Pere ecee merase ny

Bux. SARI: ec

Al0

The employes’ actions were in accordance with the

contract provisions and appeared in good faith. At most

the strike vote was an indication that a strike might occur.

In 1969 the unions served 30-day termination notices

upon the employer as provided by section 2 of the contract.

No strike occurred in 1969 because agreement was reached

immediately prior to the end of the 30-day period by the

unions and the employer. During this period the employer

did not give any notices to suppliers and customers of the

contract termination or attempt to in any way “wind

down” its operations.

The employer knew on August 19, 1971, that the em-

ployes would not strike after the termination of the con-

tract on September 3, because of the unions’ letters with-

drawing the termination notices and indicating a willing-

ness to continue to work under the terms of the existing

contracts until new terminations of the contracts were sent

or new contracts consummated.

The employer refused to accept the unions’ with-

drawals of the contract terminations unless the ‘unions

agreed in writing that new contract terminations would

not be reinstated for a one-year period.

The employer’s contention that the termination notices

were strike threats loses its persuasiveness in view of the

employe’s withdrawal of the termination notices. It ap-

pears that the good faith efforts by the unions to continue

the contracts required the employer to accept the with-

drawal notice even though the contract is silent as to the

unions’ right to withdraw the termination notices.

The employer’s actions in laying off over 20 employes

on September 2, and about the same number on September

3, were in direct violation of contract provisions that there

would be no lockouts during the period of the agreements.

All

Accordingly, if these actions amounted to lockouts, these

lockouts would not be bona fide labor disputes.

In view of the fact that the employer had assurance

on August 18, 1971, that no strike would take place as

previously threatened, the employer’s actions in continuing

to “wind down” its business operations and to lay off al!

of its production employes on September 2 and 3 were not

required, necessary or warranted business decisions on the

part of the employer.

Since the employer terminated the employment of the

employes solely because of economic worries over the pres-

ervation of its relations with its suppliers and its customers,

this was a business judgment and did not constitute a

“bona fide labor dispute” as contemplated by section

108.04(10). Accordingly, the employes lost their employ-

ment as a result of the employer’s actions in shutting down

the plant. This action in effect was a layoff which was

not as a result of a bona fide labor dispute. See Barrett

v. Wasson Coal Co. (1949), 404 Ill. 11, 87 N.E.2d 769.

The Commission therefore finds that each of the em-

ployes lost his employment with the employer in week 36

of 1971 but that such employment was not lost because of

a bona fide labor dispute in active progress in the establish-

ment in which he is or was employed, within the meaning

of section 108.04(10) of the Wisconsin Statutes.

SPANO TQUE —

TPES NMEA

HEE METAR TNO RS MK 8 ett

Sd Sa tert

Hy ao

Bieatidoaitahannsis eta aes ccivs

Al2

DECISION

The initial determination of the deputy is reversed.

Benefits are allowed to each of the employes if he is other-

wise eligible.

Dated and mailed January 4, 1972.

Industry, Labor and Human Rela-

tions Commission

/s/ Philip E. Lerman

/s/ John C. Zinos

DISSENT

/s/ Joseph R. Kautzer

It is clear from the evidence that there was a labor

dispute in existence, within the meaning of section 108.04

(10) of the statutes, inasmuch as there was a controversy

between the employer and its employes regarding the de-

tails of collective bargaining. It is further apparent that

these employes lost their employment with the employer

in week 36 of 1971 because of such labor dispute. .

Such dispute had its inception in the 60-day notice

served on the employer by the employes in May of 1971

stating that they desired to renegotiate certain provisions

contained in the existing agreement. In conformance

therewith, numerous meetings were held at which pro-

posals and counter proposals were made by each party.

Although no agreement was reached prior to the expira-

tion of the existing labor agreement on J uly 31, 1971, nego-

tiations continued thereafter.

At the meeting of August 5, 1971, the employer and the

unions were still unable to reach agreement as to the terms

and conditions of a new contract. When the unions that

same day gave the employer 30-days’ notice of termination

of the agreement, together with the fact that the employer

Al3

had previously been informed that the membership of the

unions had taken a strike vote and had voted to strike by

a large majority, the employer reasonably concluded that

a strike would occur at the end of the 30-day period. The

employer then proceeded to take steps to wind down its

operations at the end of that period including notifying its

suppliers that it would not accept deliveries after August

9 and 10 and notifying its customers that it would not ac-

cept further orders.

Although the unions purported to withdraw their 30-

day notices of termination of the contzact after President

Nixon issued the Executive Order freezing wages and

prices for a 90-day period, the emplivyer was not obligated

to accept those withdrawals unconditionally. Because of

business considerations, including its reputation as a re-

liable source of its paper products, the employer considered

that it could not accept the unions’ withdrawal of their

notices of termination of the contract without an agree-

ment by the unions not to institute the same procedures at

the conclusion of the 90-day wage-price freeze. Without

such agreement by the unions the employer would have

had to reverse the procedure it had instituted with its

customers and suppliers and then be faced with the same

situation at the expiration of the period of wage-price

freeze and would again have to notify its suppliers to dis-

continue shipments and to notify its customers that it

would be unable to make deliveries and would not accept

orders for its products. Under the circumstances, the em-

ployer’s actions cannot be considered to have been unrea-

sonable.

The employes did not go out on strike and were willing

to continue to work after September 3, 1971. Their un-

employment thereafter was due to employer action and

constituted a lockout. The Wisconsin Supreme Court in

Shae Cele wea:

Sy eae a ee

Bird ERAN RUN ost. od

Al4

A. J. Sweet of LaCrosse, Inc., et al. v. Ind. Com., et al.,

(1962), 16 Wis. (2d) 98, held:

“The statutory words ‘other bona fide labor dispute’

are broad enough to embrace those which culminate

in lockouts. The commission has consistently, over a

period of at least the past twenty-three years, inter-

preted this statute as disqualifying from benefits those

employees who have lost time from work due to a

lockout precipitated by a bona fide labor dispute.”

Although the labor agreement provided that “The

Company agrees that there will be no lockouts during the

period of this Agreement,” this agreement had been termi-

nated by the unions’ notification of such termination and

acceptance of that termination by the employer, and pur-

suant to section 2 (b) of the contract, supra, all obligations

under the agreement were canceled at the expiration of

the 30 days on or prior to September 3, 1971, in accordance

with the notice of termination submitted by the unions.

After such notice of termination and acceptance thereof by

the employer, the agreement could only be reinstated by

mutual consent of both parties or by the making of a new

contract, which did not occur.

The Executive Order of the President did not specifi-

cally refer to strikes or lockouts, but requests were made

by the President’s administration that current strikes be

halted and that no new ones be started during the 90-day

stabilization period. However, since the Executive Order

did not prohibit strikes or lockouts during the 90-day pe-

riod, the employer’s action in discontinuing operations and

locking out its employes was not in contravention of the

Executive Order and was not illegal.

Under the circumstances, there was a labor dispute be-

tween the employer and the employes. Such dispute or

cs naa ae esac cma POP RBI BI BO SR NAME OR at PDO EN PANG,

Al5

controversy arose out of the unions’ demands for contract

changes and precipitated the shutdown. Such shutdown

was a development in the labor dispute, and the causal

connection between such dispute and the unemployment

of the employes in clearly apparent.

The employer acting in good faith in its negotiations

with the employes and, in view of the impasse in the nego-

tiations, the employer’s refusal to accept the unions’ with-

drawal of their notices of contract termination did not con-

stitute a lack of good faith as its action in that regard was

motivated by business factors since it considered that it

could not continue to operate as a reliable supplier of its

products without a new contract or an agreement that the

unions would not serve an additional 30-day notice of con-

tract termination for a period of one year.

Accordingly, it is abundantly clear from the evidence

that the employes lost their employment with the employer

starting with week 36 of 1971 because of a bona fide labor

dispute in active progress in the establishment in which

they were or are emplc:yed, within th: meaning of section

108.04(10), stats.

In my opinion the deputy’s initial determination sus-

pending the employes’ benefit eligibility as of week 36 of

1971 should be affirmed.

a BA tat acne tiny sah AAS ee

SO. 9 URED AE

Al6

LOR 6 OOM RE, A ABD

KANSAS CITY STAR COMPANY—Labor Dispute

Local 119

Balzer, Joe J.

Barker, Robert B.

Behreandt, Kenneth E.

Bichanich, Mike

Billing, Lawrence J.

Bluedorn, Otto C.

Bourgard, Gerald F.

Bourgard, Lavern L.

Boushon, Clifford E.

Bradle, Clarence L.

Brandt, Robert T.

Buechner, Walter B.

Burhans, Gerald R.

Carlson, Arthur W.

Christian, Harold J.

Christianson, Guy M.

Darrow, Roy A.

Draxler, Lawrence H.

Engel, Donald A.

Ernst, Max A.

Fischer, Joe B.

Fleming, Roger L.

Fuhrman, Charles L.

Furtak, Frank J.

Franke, Earl

Fredi ick, EArl W.

Gavin, James R.

Gelina, Alfred A.

Glaeser, Richard A.

Glaeser, Robert Q.

Goethlich, Kenneth L.

Gotz, Martin A.

Griffin, Edmond H.

Gruber, Edward G.

Gruber, Robert J.

Hamann, Robert J.

Hammond, Kenneth

Hanish, Merton C.

Hanns, Lawrence A.

475-01-7927

322-05-0520

395-36-5739

398-10-1280

396-40-8931

392-18-5325

393-38-6813

394-10-5935

399-12-6659

397-03-0830

398-24-5048

392-28-4891

394-18-0747

394-09-8231

392-24-?629

393-023-4234

390-20-3088

395-14-3085

397-32-5003

393-07-6671

395-93-4406

392-30-5317

394-30-0289

396-14-0238

395-07-8436

396-16-3494

390-42-3731

394-14-1176

723-01-3021

387-34-0599

398-24-5046

395-01-0547

721-09-3524

393-03-4481

398-24-5247

388-38-5065

393-03-4353

389-22-3166

389-05-5784

Hardginski, George F.

Helberg, William R.

Herbst, Forest E.

Herbst, Leonard W.

Hilgart, Fred W.

Hilgart, John M., Jr.

Hilgart, Robert C.

Hilgart, William A.

Hodun, Edward

Hoefferle, Ronald J.

Hoefferle, Rudolph J.

Hoth, Quentin, J.

Hughes, Patrick D.

Jemiola, Raymond W.

Karl, John H.

Keily, Allan F.

Kinnear, David W.

Kolar, William J.

Kolonko, Joseph J.

Kotke, Charles C,

Kotke, Gotlieb, F.

Kronberger, Peter G.

Kundinger, Clarence J.

Kundinger, Elmer E.

Klein, Delmar H.

Langner, Bernard C.

Lavoie, Robert D.

Leitl, Donald G.

LeValley, James

Liebelt, Donald E,

Little, William J.

Loula, Arnold L.

Luhtala, John O.

Mader, Charles W.

Martin, George R.

McCardell, Keith F.

McKeun, Michael P.

Merten, William C.

-Messerschmidt, David R.

390-16-2396

399-40-0074

394-18-2115

393-03-4499

388-38-6917

388-28-0530

389-36-3701

393-03-4078

350-24-1013

396-48-1888

389-38-8167

389-18-9454

393-03-4358

320-05-4382

394-26-4926

393-10-994°

522-54-2595

393-09-6665

398-10-0400

359-03-6979

393-03-4289

393-42-1239

394-09-0963

395-07-6375

394-34-5918

394-12-0262

396-16-2601

391-36-1256

358-28-8429

396-38-9101

387-54-9975

398-36-3350

393-36-9652

393-10-8021

395-34-9622

550-26-8030

392-50-8100

394-34-7353

389-40-3356

2394 ‘

Al7

KANSAS CITY STAR COMPANY—Labor Dispute

Local 119

Meyer, Charles A.

Michalski, Andrew A.

Michalski, Robert J.

Michalski, Thomas A.

Miller, Edward J.

Mockler, Thomas E.

Morgan, Dennis E.

Morgan, Tom R.

Moore, John J.

Mrotek, Dale F.

Myers, Alfred H.

Nordall, Robert W.

Oswald, Fred J.

Palecek, John A.

Palecek, John J., Jr.

Paiecek, Lloyd C.

Palecek, William J.

Peterson, Raymond P.

Pohle, Alfred J.

Pritzl, Kenneth F.

Radlinger, Ronald M.

Rathsack, James J.

Reas, Douglas R.

Richter, Howard A.

Rissue, Harold F.

Roberts, Richard D.

Rose, David D.

Schmidt, Arthur R.

Schneider, Eugene A.

Schondelmaier, Harry W.

Schrader, Oscar H.

Sedovic, Paul

Setterman, Jerry A.

Setterman, Lawrence R.

Singer, Lawrence M.

Slack, Floyd M.

Slack, Kenneth J.

Slack, Russell G.

Spranger, Herman A.

398-24-5047

394-09-1532

394-09-2570

396-38-9827

395-32-8692

399-46-7269

396-40-9226

391-54-2936

387018-2752

387-34-2400

393-03-4045

393-03-3904

399-34-4491

397-38-7292

393-03-3937

395-09-6530

394-34-5320

399-30-8658

393-03-4108

388-30-7236

388-48-6823

393-30-8390

397-38-6443

396-38-7537

389-18-1072

390-32-8966

394-44-2851

388-30-3523

392-50-9772

393-03-4252

394-14-1110

393-20-8567

392-44-1832

393-36-5510

395-14-3546

393-03-4734

395-01-2738

389-26-8219

393-07-6547

Steiner, Jerald A.

Striegel, George L., Jr.

Stueber, Roman F.

Svehla, Vaclav J.

Szymik, Victor

Taft, Erwin F.

Van Den Heuvel, Bernard

Wagner, Frank R.

Wallner, Raymond F.

Wallner, Sylvester W.

Wardensky, Oscar W.

Warren, Harold W.

Wartgow, William

Wasko, Walter, Jr.

Wehrman, Norman L.

Weik, Dennis C.

Weik, William D.

Weinberger, Henry

Weinberger, Ronald W.

Weinberger, William J.

Weis, Joseph A.

Westphal, Edward W.

Whiting, Daniel H.

Woodie, Raymond J.

Woodie, Robert J.

Yunk, Ernest F.

Yunk, James W.

Zierer, James A.

Zoesch, David W.

Zoesch, Eugene R.

Zoesch, William A.

nebne, Gunnar R.

Hearing No. 87448

387-52-8984

389-22-0729

395-28-8510

394-18-1557

393-03-4348

393-26-0513

398-36-4920

396-28-9308

470-26-2112

398-18-1671

393-03-3948

390-24-6179

389-28-5977

728-14-0601

398-18-3199

390-42-5384

392-52-7431

372-12-5686

396-50-3327

391-18-8438

395-26-9876

399-03-3073

392-40-2049

393-40-7027

398-24-4531

390-14-9265

388-28-1499

389-34-5952

387-42-3851

392-22-8493

399-42-8176

397-38-7432

PAALTSA

DD sites beseech ae ea hice etic hire Adee ai etl ck, a3

Als

KANSAS CITY STAR COMPANY—Labor Dispute

Local 445

Hanson, Edward R.,

Hanson, Robert A.

Hein, Robert K.

Abel, William A.

Bablick, George J.

Balezewski, Kenneth L.

Baroka, Frank T.

Baroka, James A.

Behreandt, Melvin K.

Black, Donald N.

Black, Orvil G.

Boland, Eugene L.

Bolz, Charles M.

Borne, Callis H.

Borowski, Earl E.

Bourgard, Dennis D.

Bourgard, Lester R.

Bradle, Robert J.

Braunreiter, Anton D.

Brimstein, Joseph A.

Bruns, Dolores H.

Burbey, James E.

Christianson, Miles T.

Cooley, Gary A.

Cooley, Richard C.

Dane, Arthur C.

Dillon, Walter W.

Engel, Ervin H.

Erickson, Larry R.

Falstad, Darrell G.

Falstad, Vernon L.

Fenzl, James J.

Fenzl, Lawrence P.

Fleischfresser, A. H.

Franke, Donald E.

Franke, Louis A.

Frankiewicz, Raymond J.

Gierman, William G.

Gruber, Edward L.

Gruber, Leonard W.

Gustafson, Charles A.

Hammond, Patricia A.

399-34-1857

388-52-0483

389-32-2788

393-42-1383

399-52-4491

393-03-4785

394-16-1875

394-10-6190

475-46-7175

390-32-7541

395-34-7451

388-16-4861

399-52-4964

393-03-4130

387-52-9020

395-32-2016

390-18-3940

390-14-9142

394-05-1552

389-34-6150

399-40-0954

389-42-3312

398-18-0112

393-03-4150

392-28-3264

396-38-8492

399-40-0315

388-28-0532

395-36-5381

397-32-5656

398-07-9651

387-50-8950

398-01-0127

342-30-0807

396-48-1613

397-32-5914

394-05-1475

398-36-4818

470-30-6726

Heisler,

Herbst,

Hilgart,

Hilgart, Lawrence J.

Hilgart,

Tom E.

Alfred E.

Arthur J.

Clarence E.

Delmar J,

Donald A.

James E.

Robert K.

Stephen A.

Bernard J.

Edwin S.

Elmer C.

Michael R.

Patrick J.

Richard T.

Ronald W.

Thomas W.

Vernon L.

Hirtreiter, Frank J.

Hirtreiter, Frederick

Hoffman, Carlin J.

Hoffman, William J.

Hogue, Durwood L.

Hogue, Ronald D.

Hosey, Travis R.

Hoth, James R.

Hughes,

Jaglinski, Charles A.

Jarosinski, Nicholas C.

Johnson, Lawrence J.

Michael J.

Johnston, Harold E.

Keily, Kenneth G.

Kelnhofer, Sylvius G.

Kinnear, John M.

Kirsten,

Warren A.

392-50-8669

390-16-2042

392-44-0735

388-46-9390

393-09-6710

394-20-2779

393-03-4007

393-28-1797

389-34-5492

390-42-6455

393-36-5423

392-30-5834

393-36-5140

399-46-6248

395-10-9908

393-32-7551

389-34-6918

398-07-6897

396-48-1496

399-34-1295

390-42-6723

393-38-6772

388-36-3517

394-44-3264

389-38-1003

393-.03-4362

3£ /-10-1220

389-38-8353

387-44-5384

396-48-1622

392-44-1028

390-16-1370

303-50-1095

395-28-9111

399-12-7742

390-40-4191

395-01-0501

399-40-3729

387-34-9942

s — =

Aha 8

Deh ARO MRIS ys ee LRN

Al19

KANSAS CITY STAR COMPANY.— Labor Dispute

Local 445

Knotts, Gary L.

Koenig, Otto L.

Koller, Louis F.

Koshak, James L.

Kotke, Bernie F.

Kozak, George L., Jr.

Kronberger, James A.

Kronberger, Raymond J.

Kronberger, Theodore L.

Kronberger, Thomas J.

Kronberger, William F.

Kundinger, Bernice Y.

Kundinger, Eugene A.

Kundinger, James A.

Kuse, Caroline D.

Lamere, Anna M.

Lannigan, Gene E.

Lapp, Frank J.

Lenzen, Frederick M.

Little, Richard J.

Lizak, Edware J.

Lucas, William J.

Mader, Thomas L.

Martin, Elmer J.

Mc Corison, Byron F.

McCue, John H.

Meyer, Ronald G.

Michalski, Arnold M.

Michalski, George F.

Morgan, Glenn L.

Morgan, Herbert D.

Murphy, Donald E.

Nessman, Erland V.

Niebauer, Jcseph R.

Niebauer, Roixald W.

Northrop, Richard W.

Obernberger, Theodore J.

Olson, Clayton R.

Olson, Richard C.

308-28-8911

394-14-2557

393-03-4541

389-34-6081

387-44-5598

396-50-4621

388-38-7223

393-34-0342

391-36-0359

399-34-0930

398-26-9982

389-34-7297

392-24-8376

392-30-5673

393-03-4090

393-42-7875

389-22-0647

393-10-7940

393-34-9783

393-36-5640

387-54-7529

396-16-0175

399-40-1475

399-34-1435

388-28-7056

395-48-4075

399-32-4984

389-36-4687

397-42-7570

389-22-1668

398-24-4264

389-30-5218

395-03-0387

393-03-3906

396-40-9620

388-38-5031

389-22-1426

399-12-8904

501-30-0313

Oswald, Frank J.

Packard, Dale L.

Palacheck, Vernon E.

Palecek, Frank C.

Palecek, Gust L.

Passer, Monte J.

Peterson, Edward H.

Peterson, Larry J.

Peterson, Reginald E.

Podrez, Leon E.

Pohle, Thomas J.

Preissner, Richard F.

Pritzl, Isabel

Pritzl, James J.

Radiinger, Alvan W., Jr.

Radlinger, John J.

Radlinger, Joseph G.

Radlinger, Mike R.

Reas, Emeron O.

Rominske, Raymond R.

Rose, Paul A., Jr.

Scherwinski, Glen D.

Scherwinski, Howard E.

Scherwinski, Jerome E.

Schmidt, Henry P.

Schmidt, Richard J.

Schneider, George W.

Schoch, Ronald J.

Schultz, Herbert H., Jr.

Schultz, Robert L.

Seidl, Joseph A.

Severt, John D.

Skawinski, Raymond M.

Slack, Gerald R.

Slack, William F., Sr.

Smetak, James W.

Smith, Thomas A.

Steiner, Verna I.

Stull, Harlan J.

367-14-9189

395-10-2409

389-22-3204

393-10-7942

399-12-7638

397-32-7099

387-24-6556

389-38-6189

395-01-0142

470-28-2388

387-50-8697

356-14-6402

388-18-2765

394-26-3647

396-50-3598

389-36-4611

398-01-3940

386-03-6773

393-03-4113

388-16-4908

394-38-9105

394-44-4717

391-36-2314

396-36-4582

393-03-3907

389-18-2946

387-50-9160

396-36-4944

396-28-9795

396-12-9044

394-09-2569

389-36-4667

359-03-0318

399-48-6738

399-46-6255

398-24-4362

388-38-7436

393-12-4589

327-20-9884

etre pon stiobae 2 A ect NAT IL Sele RE IRE ET A Sot TIE ILE Tite

ear eames :

A20

SLU Rae Rea ed EIR Saat

BIBS L

es SS SID

KANSAS CITY STAR COMPANY—Labor Dispute

Local 445

Sturm, Hershal H.

Sutherland, Robert E.

Szymik, Jerome P.

Szymik, Roger M.

Thibedeau, James A.

Thibedeau, Neil W.

Thier, Anthony C.

Thier, Jerome A.

Thoms, George W.

Toney, Elaine J.

Treml, David A.

Treml, George A.

Treml, Lawrence A.

Vuchetich, Michael A.

Walker, Gene D.

Walker, Gordon D.

Walker, James D.

Wartgow, Herman R.

Watland, Clarence L.

Wegner, Dennis W.

Wegner, Robert W.

393-36-6762

394-14-1042

387-50-7678

389-44-0336

399-30-8291

391-34-9752

392-52-5583

393-36-9891

392-24-7629

394-10-5949

397-42-8828

387-12-6272

388-38-7045

398-07-0570

392-30-6236

395-34-7644

395-48-2969

390-20-4569

502-01-3468

397-48-8907

393-18-0529

Weiberg, Erwin M.

Weimer, Donald L.

Weinberger, Jerald F.

Weiss, Joseph C.

Wendland, Jerome L.

Wirsing, Jonathan R.

Wolf, Grant J.

Wolfe, James A.

Wolfe, William G.

Woodie, Richard W.

Woodie, William E., Jr.

Yunk, Edward W.

Yunk, Richard A.

Zoesch, John C.

Schrader, Edward F.

Hearing No. 87446

Sheedy, Clarence J.

Hearing No. 87447

396-50-2940

387-34-0898

388-52-0258

393-32-9337

388-32-6991

387-50-8133

393-10-9905

399-40-4655

388-38-5522

397-07-8000

398-18-1089

390-18-3985

391-36-1357

388-52-0021

396-38-9023

396-12-8204

amas aaa race i NG AO RL ARN IE RG UB a BN

-A21

STATE OF WISCONSIN

CIRCUIT COURT :

DANE COUNTY

Case No. 135-297

THE KANSAS CITY STAR COMPANY,

FLAMBEAU PAPER CO. DIVISION,

Plaintiff,

vs.

DEPARTMENT OF INDUSTRY, LABOR AND HUMAN

RELATIONS, WILLIAM A. ABEL, et al.,

Defendants.

JUDGMENT

BEFORE HON. GEORGE R. CURRIE, Reserve Circuit

Judge

The above review action having come on for hearing

before the Court, George R. Currie, Reserve Circuit J udge,

presiding, on the 8th day of September, 1972, at the City-

County Building in the City of Madison; and the plaintiff

having appeared by Attorney Allan L. Bioff of the law

firm of Watson, Ess, Marshall & Enggas of Kansas City,

Missouri, and by Attorney Carroll E. Mitzner of the law

firm of Aberg, Bell, Blake & Metzner of the City of Madi-

son; and the defendant department having appeared by

Uclair W. Brandt of the defendant department’s Employ-

ment Security Division, Unemployment Compensation; and

the defendant employees having appeared by Attorney

Albert J. Goldberg of the law firm of Goldberg, Previant

& Uelmen, of the City of Milwaukee; and the Court having

had the benefit of the oral argument and briefs of counsel

and of the brief of amicus curiae; and the Court having

UNS eid BL a eae

Bibvssiir ach ine WONG Aas: Sindee Waa Nese Aw}

A22

filed its Memorandum Decision wherein judgment is di-

rected to be entered as herein provided;

It is Ordered and Adjudged that the order of the de-

fendant Department of Industry, Labor and Human rela-

tions dated January 4, 1972, In the matter of the unem-

ployment benefit claims of Lawrence H. Draxler, and

others, Employes, Appellants, Involving the account of Kan-

sas City Star Company, Employer, Respondent, be, and

the same hereby is, reversed.

Dated this 25th of September, 1972.

By the Court:

/s/ George R. Currie

Reserve Circuit Judge

STATE OF WISCONSIN

CIRCUIT COURT

DANE COUNTY

Case No. 135-297

THE KANSAS CITY STAR COMPANY,

FLAMBEAU PAPER CO. DIVISION A

Plaintiff,

vs.

DEPARTMENT OF INDUSTRY, LABOR AND HUMAN

RELATIONS, WILLIAM A. ABEL, et al.,

Defendants.

MEMORANDUM DECISION

BEFORE HON. GEORGE R. CURRIE, Reserve Circuit

Judge

This is an action to review a decision of the defendant

department dated January 4, 1972, in which it was held

that the individual defendants, who number approximately

A23

340, lost their employment with the plaintiff employer

in week 36 of 1971 but that such employment was not lost

because of a bona fide iabor dispute in active progress in

the establishment in which they were employed within the

meaning of Sec. 108.04(10), Stats. The department’s dep-

uty had made an initial determination that these defendant

employees had lost their employment in such week due to

a bona fide labor dispute in active progress in the estab-

lishment in which employed and therefore were ineligible

for unemployment compensation benefits. The depart-

ment’s decision reversed such initial determination and al-

lowed benefits to each of the employees if otherwise

eligible.

While the matter was pending the department, pur-

suant to authority granted in Sec. 108.09(6)(a), Stats.,

transferred the proceedings to itself by order dated October

18, 1971, but the hearing was conducted before Examiner

Peltin acting as the department’s deputy on October 25,

1971. Thus there was not the usual Appeal Tribunal’s

decision.

STATEMENT OF FACTS

The employer owns and operates a paper mill in Park

Falls, Wisconsin, where it manufactures and sells products

in the fine paper field. It manufactures most of its own

pulp from pulpwood, but also buys some pulp, and em-

ploys approximately 380 production employees. Its only

facilities for storing its manufactured products are its Park

Falls mill.

Part of the production employees are represented for

collective bargaining by the International Brotherhood of

Paper Makers and Paper Workers and its Local No. 445,

and the other part by the International Brotherhood of

——s

Pulp Sulphite and Paper Mill Workers and its Local No.

oO Eee —

OO SLE RRR CECH Se I Eg ERE

ine A etc. CRANE WRASSE

A24

119. For many years the two unions have bargained

jointly with the employer and with successive single collec-

tive bargaining contracts having been entered into. The

last of these contracts was dated August 1, 1969. Material

provisions of this contract are:

“Section 1—CHANGE OR

MODIFICATION OF AGREEMENT

“(a) This agreement shall be in effect August

1, 1969, and shall remain in effect until July 31, 1971,

inclusive, and from year to year thereafter, unless

terminated in accordance with the provisions of Sec-

tion 2, below.

“(b) If either party shall desire to change any

provision of this agreement, it shall give written no-

tice of such desire to the other party at least sixty (60)

days in advance of any anniversary date.

“(c) The giving of notice provided in subsection

(b) above shall constitute an obligation upon both

parties to negotiate in good faith all] questions at issue,

with the intent of reaching written agreement prior to

the anniversary date.

“(d) If the parties have not reached agreement

on or before the anniversary date, all the provisions

of the agreement shall remain in effect unless specifi-

cally terminated in accordance with the provisions of

Section 2, below.

“(e) In the event that the new agreement is con-

summated after August 1 without resort to termination

under Section 2, all the Provisions of said agreement

shall be made retroactive to August 1.

a See ee ee

A25

“Section 2—TERMINATION OF AGREEMENT

“(a) At any time after the anniversary date, if

no agreement on the questions at issue has been

reached, either party may give written notice to the

other party of intent to terminate the agreement in

(not less than) thirty days. All the provisions of the

agreement shall remain in full force and effect until

the time set forth has elapsed. During this period, at-

tempts to reach an agreement shall be continued.

“(b) If the parties have failed to resolve their

differences before the time set forth has elapsed, all

obligations under this agreement are automatically

cancelled.” (Exhibit 3)

On May 10, 1971, the Unions jointly gave the Employer

the 60-day notice provided in Sec. 1(b) of the contract to

open the contract for negotiations. The first bargaining

session was held June 11th. Each side presented the other

with a list of demands for changes (Exs. 6 and 7). The

wage demand of the Union was an increase of 10 per cent

in the first year of a new two-year contract, and 32 cents

per hour during the second year. Further bargaining

meetings were held July 1st and 2nd at which the Em-

ployer submitted a counter proposal of a 6 per cent raise

the first year and 20 cents per hour the second. The Em-

ployer also submitted counter proposals on pensions, vaca-

tions, group insurance, and night differentials which would

have increased these fringe benefits. It was either at these

July 1st and 2nd meetings or the July 16th meeting that

the Unions decreased their demand for a 10 per cent wage

increase to 9 per cent. The Unions also conceded some

of the changes in contract wording demanded by the Em-

ployer but wou!d not agree to any changes in the work

rules requested by the Employer in which it was most

interested.

}

;

ARIAT RULERS

way

a Pal Sc as AUER IRE Se See ,

baba i

co 4

[

ee Sh ET CE LIED LAI OBS AEP Le ie EE OE og rts

[ ————— oe.

wie cams Boaalituae

Spawn Aces

Dersciwercas... miei ha eral dey ea ar uae MDE ee

A26

The next bargaining session was July 16th. In the

meantime the Employer had estimated that to meet the

Unions’ wage demands would cost $500,000 the first year

and an additional $360,000 the second year. At the July

16th meeting each side made some concessions but were

still far apart on the major issues. The Unions would not

agree to any of the six changes in work rules asked by the

Employer, and the Employer made it clear they would

have to be accepted or the Employer would not continue

its wage and fringe benefits package it had offered.

Draxler, president of one of the two Union Locals, then

stated to the Employer representatives that a Union meet-

ing would be arranged for contract rejection and a strike

vote and asked, “How would you like that?” (Tr. 30).

Sherman, assistant general manager of the Flambeau

Paper Company Division, who headed the Employer’s bar-

gaining team, replied that “We were making a great effort

to negotiate a contract.” (Tr. 30).

Another meeting was scheduled for July 23rd. At this

meeting the Unions reduced the demanded wage increase

for the second year from 32 to 28 cents per hour (Tr. 32)

and the Employer increased its wage offer from 6 to 6 and

‘4 per cent for the first year and from 20 to 22 cents per

hour for the second year. (Tr. 33). Sherman, after making

this wage counter proposal, asked if this was interesting

enough so that “we” should continue by giving further

items in the Employer’s proposal (Tr. 53). The Union

representatives replied that this wage proposal was en-

tirely unacceptable, closed their books, picked up their

papers and filed out of the meeting (Tr. 34). No further

meeting was then scheduled.

The Unions on July 26th notified the Employer that at

a joint meeting of the Union membership the last proposals

of the Employer were rejected by a vote of 210 to 4 (Ex.

ace 7

A27

8) and on July 27th the Unions had taken a strike vote and

had voted 291 to 19 to strike (Tr. 36).

On August 2nd the Employer sent a letter to all of its

pulp wood suppliers that the threat of a strike against the

paper mill “looms larger every day,” and that unless an

‘agreement was reached soon, it would be necessary to place

an embargo on pulp wood deliveries. (Ex. 16; Tr. 58-59).

The Employer realized that the suppliers would be harmed

financially if they planned to fill orders that would be sub-

sequently rejected. (Tr. 59).

A federal mediator stepped into the picture and a

meeting between the parties was held August 5th. Both

the Unions and the Employer adhered to their previous

positions (Tr. 38). The Unions asked for time to caucus

and at 20 minutes to 6:00 p.m. handed Sherman a contract

termination notice. (Tr. 39). This notice (Ex. 10) was

addressed to Sherman, signed by officials of both Unions,

and read as follows:

“Pursuant to provisions of Section 2, of our cur-

‘ent Labor Agreement between the Flambeau Paper

Company and Park Falls Local 119 of the International

Brotherhood of Pulp, Sulphite and Paper Mill Work-

ers, we wish to notify you that we do hereby terminate

this agreement.

“We will be glad to meet with you any time dur-

ing the 30 day period to try to resolve our differences.”

The following letter (Ex. 11) was sent to the Unions

by the Employer on August 6th:

“We are in receipt of your letter of August 5,

notifying our Company that you have terminated the

Labor Contract under the provisions of Section 2.

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;

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A28

“As a result of this action on the part of the Union,

all offers heretofore made by the Company in connec-

tion with our current labor negotiations is hereby

withdrawn.

“During the thirty-day interim period, if it is your

desire to meet with the Company Bargaining Commit-

tee, please contact Mr. Walter Sherman.”

On that same day the Employer sent a Notice of Pulp-

wood Embargo to all of its pulpwood suppliers (Ex. 17;

Tr. 41, 62) and issued a news release which Was read over

Radio Station WNBI. The release stated:

“After notification by the concerned unions of a

termination in the labor agreement, Norman Hoefferle,

General Manager of the Flambeau Paper Company in

Park Falls, announced that the orderly winding down

of paper making in the face of an inevitable strike

will begin with a pulpwood embargo. This embargo

will cause the discontinuance of any loading of pulp-

wood cars for the Flambeau Paper Mill after 6: 00 p.m.

on Monday, August 9th. Truck delivered pulpwood

will be accepted at the Flambeau Yard through Tues-

day, August 10th. The Yard will be closed to trucks

after 4:00 p.m. on August 10th. Mr. Hoefferle stated

that the unions have voted to strike and can do so

after 30 days of the offical notice which was received

Thursday afternoon, August 5. All contract proposals

put forth by the management of Flambeau Paper have

been withdrawn, and at this time, negotiations can be

resumed at the request of the unions.” (Exh. 18; Tr.

64).

On August 7, 1971, the Employer sent letters to all of

its suppliers of raw materials (sulphur, chlorine, etc.) with

whom it had blanket orders stating that it was “declaring

~ dr eee annem eRe eNO amnenneeme tons romt ens

A29

a moratorium” on all incoming shipments and advising

that all shipments should be “suspended” after August 9th

(Exhs. 19 and 20; Tr. 41, 64,65). After August 9, no new ;

orders were placed by the Employer for any raw materials.

(Tr. 65). ;

On August 10th the Empleyer sent over 300 letters

(Ex. 21) to customers advising them that the Employer

was faced with a strike September 5th and stating no fur-

ther orders for cut size papers could be accepted, but was

making every effort to fill its present commitments for

delivery (Tr. 41, 66). No new orders were accepted after

August 10th for paper which would have to be manufac-

tured. (Tr. 67). The inevitable and almost immediate re-

sult was to cause virtually all of the Employer’s customers

to place their new orders with other paper mills as evi-

denced by the fact that normal new orders of 5200 tons :

per month declined to 487 tons in September and to 207

tons for October up to October 25th, the date of the hear-

ing before the examiner (Tr. 68).

On August 15th President Nixon issued Executive Or-

der No. 11615 (Ex. 23) stabilizing or freezing prices and

wages for 90 days and establishing the Cost of Living

Council to develop and make recommendations to the

President for policies and mechanisms to curtail inflation-

ary prices and wages after the expiration of the 90 day

period.

On August 19th a meeting 2f representatives of the

Employer and the Unions was held at ‘he instigation of

the federal mediator. At this meeting the Union repre-

sentatives handed to Sherman two letters, one from each

Union, dated August 18th (Exs. 12 and 13). The first

paragraph of each letter referred to the previous letters of

August 5th serving notice of contract termination and the

second paragraph read as follows:

SON ty bot — aes 2? had

A30

“In light of President Nixon’s ninety day freeze

on wages and prices, this letter will serve as a with-

drawal of that terminatior. notice and of our desire to

continue to work under the terms of the existing

agreement, unless, or until, a new termination is sent

or full agreement reached on a new contract.”

aS HRs

The Employer representatives then caucused, made

Xeroxed copies of these two letters, and drafted a letter

in response (Ex. 14) dated August 19th. On returning to

the meeting Sherman handed back to the Union represen-

tatives their letters attempting to withdraw their contract

termination netices (Exs. 12 and 13) and read the Em-

ployer’s response thereto (Ex. 14) and delivered copies

of the same (Tr. 44). The text of Exhibit 14 is:

“We are in receipt of your notice of August 18,

wherein you wish to withdraw your notice of termi-

nation of contract, dated August 5.

Dora. daniels Bea BRAN Ec

et ae,

hai

“We can find no provision in the present labor

Contract which would authorize the withdrawal of

termination notice after once being tendered.

NOAA Ret chanel Soe

“We will accept the withdrawal notice, provided

we have your guarantee in writing that it will not be

reinstated prior to one year from the date of notice

of withdrawal.

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“The reason for the Company’s position on this

point, is that we have already begun winding down

our operation, and we have turned down many orders

in anticipation of an impending strike, and this places

us in a very untenable position as far as our customers

are concerned, and our ability to be a firm supplier of

their needs. It is almost impossible for us to continue

to insure the customer of our reliability if we are faced

with a reinstatement of termination notice, at the

whim of the Union.

AOI EF Dit ta

A31

“It is essential that we have this one year guaran-

tee for our continued operation.”

By August 19th the Employer’s “winding down” pro-

cess was well advanced. Even if it had immediately

started on the 19th “winding up” again it had lost two

weeks of orders which would have resulted in some down

time in September (Tr. 74-75). However, this was not

the reason which motivated the employer in refusing to

accept the Unions’ withdrawal of notices of contract termi-

nation without an assurance that notices of termination

would not again be given within a one year period. That

reason was the adverse effect on the Employer’s business

if one or more notices of termination were again given by

the Unions within the space of a year (Tr. 79, 116). The

effect on the Employer’s business would be catastrophic

for it would seriously impair, if not completely destroy,

the Employer’s reputation as a firm and reliable source of

supply to its customers (Tr. 71, 79, 108, 113).

After reading Exhibit '4 at the August 19th meeting

the Employer offered to extend the existing contract for a

period of one year which the Unions rejected (Tr. 45).

Shank, vice-president of one of the two International

Unions verbally assured the Employer that the Unions

would not strike during the 90 day freeze (Tr. 124). The

Unions inquired what other proposal the Employer had

(Tr. 45). The Employer then submitted a draft of a pro-

posed two year contract (Ex. 15) which the Unions re-

jected (Tz. 45-46).

After the August 19th meeting the Employer con-

tinued its winding down operations. In a winding down

procedure certain portions of the mil] are shut down ahead

of others when the last product passes through (Tr. 151).

The first lay-off occurred on September 2nd of 23 or 24

employees and on September 3rd 22 or 23 more were laid

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A32

off (Tr. 154). The remainder of the work force continued

to work through September 3rd so that the mill closed

down on September 4th with no one working that day (Tr.

155).

On September 10th negotiations were resumed at the

request of the federal mediator between the Unions and

the Employer which was the first meeting between them

subsequent to that of August 19th (Tr. 82-83). Proposals

and counter proposals were exchanged. Further bargain-

ing sessions were held September 28th and 30th, and Octo-

ber Ist, 5th, 6th, 15th, 18th, 19th, 20th and 22nd (Tr. 90).

While not part of the record, the Employer’s brief states

that the parties agreed on the terms of a new agreement

December 11, 1971.

THE MATERIAL PORTIONS OF

THE DEPARTMENT’S DECISION

In view of the issues presented by the briefs submitted

the Court deems the following to be the material portions

of the department’s decision:

“The Commission does not consider that the em-

ployes lost their employment with the employer be-

cause of a bona fide labor dispute within the intent

and meaning of section 108.04(10).”

“In view of the fact that the employer had assur-

ance on August 18, 1971, that no strike would take

place as previously threatened, the employer’s actions

in continuing to ‘wind down’ its business operations

and to lay off all cf its production employes on Sep-

tember 2 and 3 were not required, necessary or war-

ranted business decisions on the part of the employer.

A33

“Since the employer terminated the employment

of the employes solely because of economic worries

over the preservation of its relations with its suppliers

and its customers, this was a business judgment and

did not constitute a ‘bona fide labor dispute’ as con-

templated by section 108.04(10). Accordingly, the

employes lost their employment as a result of the em-

ployer’s actions in shutting down the plant. This ac-

tion in effect was a layoff which was not as a result of

a bona fide labor dispute. See Barrett v. Wasson Coal

Co. (1949), 404 Ill. 11, 87 N.E. 2d 769.

“The Commission therefore finds that each of the

employes lost his employment with the employer in

week 36 of 1971 but that such employment was not lost

because of a bona fide labor dispute in active progress

in the establishment in which he is or was employed,

within the meaning of section 108.04 (10) of the Wis-

consin Statutes.”

THE ISSUES PRESENTED

In the view of the Court the briefs of the parties ne-

cessitate consideration of these issues:

1. What is the scope of the Court’s power to re-

view the above-quoted portions of the department’s

decision?

2. Did a bona fide labor dispute exist within the

meaning of Sec. 108.04(10), Stats., at the time the Em-

ployer closed down its paper mill?

3. If Issue 2 is decided in the affirmative, did the

defendant employees lose their employment because of

such bona fide labor dispute?

4. Assuming September 4th as the contract ter-

mination date, was there a premature lockout which

prevented there being a bona fide labor dispute?

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A34

Issue 2 will be subdivided for consideration into the

following subdivisions:

(a) Definition of a bona fide labor dispute.

(b) Interpretation of Unions’ notice to terminate con-

tract.

contract termination notices.

(d) Nature of dispute that existed between Employer

and Unions at the time of closing of the mill.

(e) Does the reasonableness of Employer’s position

taken during the dispute effect bona fide char-

acter of the dispute?

SCOPE OF COURT’S POWER OF REVIEW

The department’s brief asserts that the material de-

termination of the department in its decision that the em-

ployees did not lose their employment by reason of a bona

fide labor dispute constitutes findings of fact supported by

credible evidence and therefore the Court has no power

to review the same. The brief makes it clear that this

argument embraces both the determination that the ex-

isting dispute between the Employer and the Unions was

not a bona fide labor dispute and the holding that the em-

ployees did not lose their employment because of such dis-

pute.

There is here no dispute with respect to any of the

material facts. In such a situation if but one inference

can reasonably be drawn from such undisputed facts, a

question of law is presented and the finding of the depart-

ment to the contrary is not binding on the reviewing court;

but, if more than one inference can reasonably be drawn,

then the finding of the department is conclusive. Van Roy

LAA ATER IE. EL

A35

v. Industrial Comm. (1958), 5 Wis. 2d 416, 425, 92 N.W. 2d

818; Schmidlkofer v. Industrial Comm. (1953), 265 Wis. 535,

538, 61 N.W. 2d 862.

It is this rule which delineates the Court’s scope of

review in this action.

EXISTENCE OF A BONA FIDE LABOR DISPUTE

(a) Definition

Sec. 108.04 (10), Stats., provides:

“An employe who has left (or partially or totally

lost) his employment with an employing unit because

of a strike or other bona fide labor dispute shall not be

eligible for benefits from such (or any previous) em-

ployer’s account for any week in which such strike or

other bona fide labor dispute is in active progress in

the establishment in which he is or was employed.”

(Italics added.)

Over thirty years ago the Wisconsin Supreme Court

defined a “labor dispute” for purposes of Chapter 108,

Stats., as “any controversy concerning . . . employment

relationships, or any other controversy arising out of the

respective interests of employer and employee...” Spiel-

mann v. Industrial Commission, 236 Wis. 240, 295 N.W. 1,

6 (1940). This definition is in accord with familiar statu-

tory definitions and with case authority of other jurisdic-

tions. 29 U.S.C.A. Secs. 52, 152(9); 28 ALR 2d 287, 297

and cases cited therein.

The words “bona fide” prefixing the words “labor

dispute” in Sec. 108.04(10) refer to the existence of an

actual, as opposed to a pretextual, labor dispute and is

designed to prevent an employer from avoiding his obliga-

tion under the law by fabricating a labor dispute and end-

ing the employment of employees in connection therewith.

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A36

This has been the position of the department. Cargill, Inc.,

Wis. Ind. Comm., 62-A-437 (1962); C. Hennecke Co., Wis.

Ind. Comm., 59-A-100 (1959); Builders’ Company, Wis. Ind.

Comm., 56-A-457 (1956). The legislature did not want

an employer to be able to resist the payment of unemploy-

ment compensation where the labor dispute existed solely

by the employer’s own manufacture. “Bona fide” means

good faith so the test is usually whether the employer acted

in good faith in maintaining that a labor dispute existed.

See Cody v. Industrial Commission, 1960 Dig. Wis. U:C.

Cases 161 (Cir. Ct. 1939). Perlberg v. Odanah Iron Co. v.

Industrial Commission, 1960 Dig. Wis. U.C. Cases 169 (Cir.

Ct. 1955).

Before applying these definitions to the facts of this

case it is necessary to analyze the Unions’ notice to termi-

nate the contract and its subsequent attempt to withdraw

the same, as these play an important role as to whether

a bona fide labor dispute existed at the time of the mill

shutdown.

(b) Interpretation of Unions’ Notice

to Terminate Contract.

At the oral argument before the Court counsel for the

employees contended that the Unions’ notice to terminate

the contract (Ex. 10) was ineffective because it stated no

termination date since an effective notice to terminate

could be given more than 30 days prior to the intended ter-

mination date. However, this notice must be interpreted

in the light of the provisions of Section 2 (a) of the existing

contract (Ex. 3). That section provided for termination

after the expiration date of July 31, 1971, by either party

giving the other written notice of not less than 30 days.

The second paragraph of the Unions’ notice stated, “We

will be glad to meet with you any time during the 30 day

period to try to resolve our differences.” The Employer’s

3 | LOLI LAOREET SN ERE A ELE AEE lh TS 0B og

A37

letter in response dated August 6, 1971 (Ex. 11) stated,

“During the thirty-day interim period, if it is your desire

to meet with the Company Bargaining Committee, please

contact Mr. Walter Sherman.” Thus both sides understood

the effective date of termination to be 30 days from August

Sth which was September 4th. The Court, therefore,

deems it clear that this is the interpretation which must be

placed upon the Unions’ notice to terminate.

The notice says nothing about a strike and, therefore,

in itself is not to be interpreted as a notice that a strike

would take place at the termination of the contract on Sep-

tember 4th. This does not mean that the Employer did

not have good cause to believe a strike would then take

place and to take the steps of “winding down” its mill

operations during the period of August 5th to 19th.

of Contract Termination Notice

The department’s decision makes it clear that the de-

pariment considered that the Unions had the right to uni-

laterally withdraw on August 19th their prior notice of

termination of the collective bargaining contract. Because

none of the briefs of able counsel cite any law on this

question the Court assumes it is an open question in

Wisconsin. ;

The reason why the question has been argued to this

Court appears to be the decision in A. J. Sweet, Inc. v.

Industrial Comm. (1962), 16 Wis. 2d 98, 114, N.W. 2d 141,

145 N.W. 2d 853. There the employees were locked out by

the employer during negotiations for a new bargaining con-

tract. Both the Commission and the Circuit Court deter-

mined that the loss of work by the claimant employees

was not due to a bona fide labor dispute because the lock-

out violated an implied no strike and no lockout provision

a NS

Bieamniarenicons RAW Nes ae eNO Dhaba Ht eS aacd RPA

of the existing contract. The Supreme Court, without ex-

pressly deciding the issue of whether a strike or lockout

in violation of a no strike or no lockout provision of a labor

contract would prevent there being a bona fide labor dis-

pute, reversed on the ground there was no implied no

strike and no lockout provision in the contract. However,

it is logical that, where an employer does lock out his em-

ployees in knowing violation of a no strike and no lockout

contract clause, he does not act in good faith and there is

no bona fide labor dispute within the meaning of Sec.

108.04(10), Stats. The decision in the A. J. Sweet, Inc.

Case is certainly open to that implication as there are cited

at page 108 a Circuit Court decision and an Appeal Tri-

bunal decision so holding.

The Unions gave their notice of termination of con-

tract because it would put them in @ position to strike, as

the Unions’ membership had already authorized the strike

by an overwhelming vote in favor. Without the contract

being terminated they could not legally strike because

Section 14 contained a no strike and no lockout prohibition.

They clearly deemed it advantageous to them to so termi-

nate the contract so that they would use a strike or threat

of strike to gain their large wage increase demands. Then

the President’s 90 day wage freeze intervened and they

deemed it to their advantage to attempt to withdraw their

termination notice. The Employer in the meantime had

acted to its prejudice upon the termination notice and had

started to wind down its operations and had notified its

customers and suppliers tu that effect. It had lost at least

two weeks of orders and there is every likelihood some

customers had placed orders elsewhere. The Employer

deemed it to be to its advantage not to accede to the at-

tempted withdrawal unless it could be assured that the

Unions would not repeat the notice of termination proce-

dure for at least a year. The Employer feared the effect

A39

it would have on its reputation with its customers as a

firm source of supply if it were forced in so short a period

of less than a year to give customers notice of another im-

pending closing of its plant and refusal of orders. The

Unions refused the Employer’s proposal and negotiations

were at an impasse as a result of what transpired at the

August 19th meeting.

It is the conclusion of the Court that one party to a

contract who has given notice of termination effective 30

days hence cannot unilaterally withdraw such termination

notice without the consent of the other party who has

acted upon reliance of such notice of termination.

Furthermore, even if the law should ultimately be de-

termined to be otherwise, this Court would not hold that

the Employer acted in bad faith in assuming that the ter-

mination notice could not be unilaterally withdrawn when

the law was as uncertain on the point as it was here.

(d) Nature of Dispute that Existed Between Employer

and Unions at Time of Closing of Mill

The fact that the parties did not meet between August

19th and the shutdown of the mill on September 4th, or

that there was in effect a Presidential order freezing wages

for 90 days, does not blot out the labor dispute which ex-

isted as of September 4th. The parties were far apart on

the terms of a new labor contract on issues other than

wages. For example, the Unions had not acceded to any

of the more important changes in work rules demanded by

the employer. In addition to the impasse that existed prior

to the August 19th meeting, new disputed issues developed

at that meeting. These were whether the Unions had the

right without the Employer’s consent to withdraw their

notice terminating the collective bargaining contract, and

the demand of the Employer that it would not accept such

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A40

withdrawal unless the Unions agreed that no further ter-

mination of contract notices would be given for a one year

period, which the Unions refused to accede to. Certainly

the matter of when parties to a labor contract can give

notices terminating the contract is an issue in collective

bargaining which makes a dispute over such issue a labor

dispute. This is especially true when upon the termination

of contract the Unions would be put in a position to strike.

There is an implication in the department’s decision

that it considered the Presidentiai 90 day freeze on wage

increases, together with the Unions’ verbal assurance that

they would not strike during those 90 days, as obliterating

any labor dispute between the parties. This just was not

so. The Employer was vitally concerned with not having

to go through another winding down process involving

notifying customers and suppliers of an impending close-

down of operations any time in a year period, not just a

90 day period. Undoubtedly the Unions had as deep a

concern for not tieing their hands against striking for a

year period, thus giving up their most effective weapon in

negotiating the terms of a new contract.

The Court deems it advisable, in view of arguments

advanced to it, to comment with respect to the statutory

words “or other bona fide labor dispute in active progress”

of Sec. 108.04 (19), Stats. A lockout legally resorted to

by an employer in good faith as a weapon to gain objec-

tives from the union in a labor dispute constitutes a “bona

fide labor dispute in active progress” so long as it retains

its original character.

There existed no basis upon the undisputed evidence

in this case for a determination that a labor dispute did

not exist between the parties as of September 4, 1971,

when the Employer’s mil] closed down. Further, no basis

exists for contending that this was a pretextual and not an

actual labor dispute.

Cael Ae he hes Oe a Oe ee ee es

A4l

(e) Does the Reasonableness of the Employer’s Position

Effect the Bona Fide Nature of the Dispute?

The department took the unusual course in its deci-

sion of passing on the reasonableness of the Employer's

position in the labor dispute by stating:

“In view of the fact that the employer had assur-

ance on August 18, 1971, that no strike would take

place as previously threatened, the employer’s actions

in continuing to ‘wind down’ its business operations

and to lay off all of its production employes on Sep-

tember 2 and 3 were not required, necessary or war-

ranted business decisions on the part of the employer.”

This constitutes a sharp break from the past position

taken by the department (formerly the Industrial Com-

mission) even since the enactment of the Wisconsin Un-

employment Compensation Act, that the legislative policy

underlying this Act was for the State to maintain a posi-

tion of neutrality in labor disputes in administering it. In

Marathon Electric Mfg. Corp. v. Industrial Comm. (1955),

269 Wis. 394, 69 N.W. 2d 573, 70 N.W. 2d 576, the Wiscon-

sin Supreme Court quoted this extract from the Commis-

sion’s brief (at p. 405):

“Since the enactment of the first unemployment

compensation law in 1931 the law has contained a pro-

vision suspending eligibility of workers unemployed

because of a strike or a bona fide labor dispute. The

labor dispute provision constitutes a ‘neutrality act’

which the legislature inserted into the Act. It is to

be borne in mind that the unemployment compensa-

tion act was prepared by representatives of labor and

management and the public. In designing this legis-

lation, it was the fear of both employer and employe

representatives that payment of unemployment com-

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A42

pensation, unless appropriate safeguards were taken,

might prove to be an instrument which might be in-

appropriately used, their respective interests con-

sidered, in an industrial controversy. An analysis will

show the wisdom from both the standpoint of labor

and of management of suspending benefit payments in

any situation in which these industrial forces are en-

gaged in a bona fide controversy. This suspension of

benefits places the administrative agency in a neutral

position with respect to the contending forces.

“Under the Wisconsin law, employer contribu-

tions finance the unemployment benefits paid to

workers. Management, therefore, is not desirous that

the funds built up by it could be used to finance a

strike or other form of labor controversy directed

against it. Present law takes a ‘hands off’ approach.

It stays neutral. It does not require that the admin-

istrative agency determine the merits of the labor dis-

pute. If there is a controversy or labor dispute, then

the disputants, are ineligible for unemployment benefits

during the active progress of such dispute.”

The courts of New York and California have taken

the same position, that the Commission administering a

state unemployment compensation act is to maintain a

position of neutrality in labor disputes without giving con-

sideration to the elements of whom it believes to be in the

wrong. The New York Court of Appeals speaking through

Judge Fuld in Hooker Chemical Corporation v. Catherwood

(1966), 19 N.Y. 2d 1, 7, 224 N_E. 2d 72, 75-76, stated:

“. .. even in those disputes which are precipitated

by the apparent breach of an existing agreement, the

determination of fault or misconduct involves ques-

tions of labor relations that are frequently complicated

and recondite. It would have been decidedly unwise

PRISED BELLA OL PE REG TIRES I EEE REE DID i i le LO CO

A43

to vest in officials of a social welfare agency—like

those administering the Unemployment Insurance Law

—the power to decide such matters. They are best

left to agencies especially qualified to deal with them,

namely the Federal and State Labor Boards and labor

arbitrators.”

j Similarly the California court declared in W.R Grace

Co. v. California Employment Commission (1944) 24 Cal.

2d 720, 151 Pac. 2d 215, 221:

“It is not the function of the Commission to eval-

uate the merits of a controversy between an employer

and his employees; if a trade dispute exists and the

employee leaves his work because of it he may not

receive benefits even though the employer is in the

wrong.”

Because the acknowledged legislative policy underlying

the Wisconsin Unemployment Compensation Act was that

the department is to maintain a position of neutrality in

administering the Act, the department violates the Act

and exceeds its powers if it decides that in its view one of

the parties to a labor dispute has taken an unreasonable

position and because of it an existing labor dispute is not

a bona fide one within the meaning of Sec. 108.04(10),

Stats.

In order for the department in this case to determine

that the existing labor dispute as of September 4, 1971, was +

not bona fide there would have to exist evidence from

| which it could be reasonably inferred that the Eraployer

\ pretended a labor dispute existed between the parties

which did not exist. The undisputed evidence simply will

not support drawing such an inference.

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A44

DID THE DEFENDANT EMPLOYEES LOSE THEIR

EMPLOYMENT BECAUSE OF THE EXISTENCE

OF SUCH BONA FIDE LABOR DISPUTE?

Because an existing bona fide labor dispute exists be-

tween an employer and his employees at the time of loss

of employment it does not necessarily follow that the loss

of employment was due to such bona fide labor dispute.

Here the department specifically found it was not, because

the employment of the employees was terminated by the

employer “solely because of economic worries over the

preservation of its relations with its suppliers and its

customers” which “was a business judgment.” (P. 6 of

decision).

During the course of the hearing while Hoefferle, the

president and resident general manager of the Employer’s

Flambeau Paper Company Division, was on the witness

stand he was asked some questions by the examiner (Tr.

111-119). During this questioning by the examiner

Hoefferle was asked about the Employer’s demand at the

August 19th meeting that, as a condition to the Employer

consenting to the Unions withdrawing the contract termi-

nation notice, the Unions assure the Employer that no fur-

ther termination notices would be given by them for a one

, year period. These questions were then asked and these

answers given by the witness (Tr. 116):

“Q. Your plan was to continue on negotiations? The

only thing you insisted upon was no—

A. Strike.

Q. Notice of termination?

A. Right.

Q. And, in fact, no strike?

A. Right. We want a contract. We want to run our

mill but we can’t do it on, on the basis that, that we

A45

are not assured whether we are going to be allowed to

operate because of a reinstatement of the termination

notice and a strike.

Q. Yes, well, of course, once the union agreed not to

strike, that takes away their weapon, of course, and

that is what you were insisting on here, weren’t you?

A. Well, yeah, but for different reasons. I suppose

that is true.

Q. Well—

A. Not for reasons that they would be put in an un-

favorable bargaining position. We were looking for

that twelve months no strike agreement for business

reasons, and for our protectior: and for our customers.

Q. Well, you were quite a ways apart in your nego-

tiations?

A. Yes, we were.

Q. That has been developed pretty thoroughly.”

The Court is satisfied that the department’s finding

that the Employer terminated the employment of the em-

ployees solely as a business judgment made “because of

economic worries over the preservation of its relations

with its suppliers and its customers” is grounded upon the

next to the last above-quoted answer given by Hvefferie.

No other evidence has been found by the Court in reading

the transcript which tends to support such finding, and

none has been cited in the briefs in behalf of the employees

and the department.

It is impossible to divorce such business judgment

from the context of the existing labor dispute. The pve-

ceding above-quoted answers of Hoefferle make this very

clear. There is not one iota of testimony that any business

purpose of the Employer would have been promoted by

the shutdown of the mi!] on September 4th other than to

protect itself against a future notice of contract termina-

tion by the Unions with the concomitant threat of Strike.

‘

Aas ART ARAL DE Ve

Bs SOS ORL AOR

HEINE:

‘

;

A4%6

This was at the heart of the then labor dispute between

the parties.

A perfect illustration of when an employer’s termina-

tion of employment is for a purpose apart from a labor

dispute is afforded by the case of Barrett v. Wasson Coal

Co. (1949), 404 Ill. 11, 87 N.E. (2d) 769, cited by the de-

partment at page 6 of its decision in support of its holding

that the Employer’s termination of employment in this

case was due solely to a business judgment. In that case

the employer ceased production because it did not want

to continue operation until it knew what a change in the

post World War II economic operations would mean as to

the allowable price for its coal. As the Illinois court stated

(87 N.E. 2d at p. 771):

“The evidence shows that the company, feeling

insecure under the then governmental price regula-

tions did not care to gamble on the future outcome

of conditions and its ability to continue meeting its

payroll.... There was no dispute concerning hours

or terms of employment about which the parties were

trying to agree.”

If any one fact was established before the department

in the case at bar, it was that there was a grave dispute

between the parties as to wages, hours and conditions of

employment. In addition, in mid-August, a further dis-

pute between the parties arose concerning the Unions’

right under the Agreement to withdraw their notice of

termination and their refusal to give assurance that notices

of termination would not again be tendered in the near

future. Nevertheless, the department ignored these clear

facts in its decision and supported that decision with au-

thority wholly inapposite to the situation before it.

The piece of evidence which best establishes why the

Employer considered that its own business interests and

A47

those of its customers would be promoted by the winding

down and closing of its mill operations is provided by the

closing paragraph of the letter dated August 10, 1971 (Ex.

21) which it sent to over 300 of its customers which stated:

“If you have any questions concerning this action

on our Company’s part, please do not hesitate to call

as we are taking a firm position with the unions in

an effort to keep the mill profitable and to make us

a better supplier for you.”

The briefs in behalf of the employees and the department

point to no other evidence establishing a business purpose

to be served by such closing down, nor do these briefs

suggest any other purpose for closing the mills,

Courts have consistently held that a labor dispute ex-

ists where an employer ceases operation in order to avoid

the potential injury of a threatened strike and that those

who lose their employment in such circumstances are in-

eligible for unemployment compensation benefits. Re-

vere Sugar Refinery v. Marshall, CCH Unemployment

Comp. {/1980.1459 [Mass. (Boston) 1947]; Lezuch v. Em-

ployment Security Council, CCH Unemployment Comp.

1980.1458 (Mich. Cir. 1958); Schoenweisner v. Board,

(1957) 44 N.J. Super. 377, 130 A.2d 648; Hall v. American

Brake Shoe Co., (1965) 13 Ohio Misc. 35, 233 N.E. 2d 342.

Thus, in Department v. Savage, 82 So. 2d 435 (Ala. App.

1955), a labor dispute which rendered the employees in-

eligible for unemployment compensation benefits was es-

tablished by proof that the union had threatened a strike

and the employer had acted to protect itself by ceasing

production. Similarly in the instant case, the Employer

acted to neutralize the Unions’ economic weapon and to

protect itself and others in light of the certain disruption

arising from the continuing labor dispute. As previously

stressed herein there is entirely lacking here of evidence

A48

giving rise to any inference that the motivation of the

Employer for closing the mill and laying off the employees

was for any reason not directly related to the existing la-

bor dispute.

It is probably immaterial whether the layoff by rea-

son of such closing of the mill was technically a lockout

or not. The Court deems that it was. AJ. Sweet, Inc. v.

Industrial Comm., supra, in accord wit: a consistent twen-

ty-three year interpretation by the Industrial Commission,

held that where unemployment results from a lockout pre-

cipitated by a bona fide labor dispute the employees are

disqualified for benefits under Sec. 108.04(10), Stats.

ASSUMING SEPTEMBER 4TH AS THE CONTRACT

TERMINATION DATE, WAS THERE A PREMATURE

LOCKOUT WHICH PREVENTED THERE BEING A

BONA FIDE LABOR DISPUTE?

At page 6 of the department’s decision it is stated:

“The employer’s actions in laying off over 20 em-

ployes on September 2, and about the same number

on September 3, were in direct violation of contract

provisions that there would be no lockouts during the

period of the agreements. Accordingly, if these ac-

tions amounted to lockouts, these lockouts would not

be bona fide labor disputes.”

Some 22 to 24 employees were laid off on September

2nd and approximately the same number on September

3rd (Tr. 154-156). The reason they were laid off before

September 4th was that in order to close down the mill

some departments at the early stages of the manufactur-

ing process will run out of production before the remain-

ing departments (Tr. 151, 156). As the examiner ob-

served, “Naturally some processes are finished before the

other ones” (Tr. 156). These employees were not laid off

A49

ahead of September 4th for purposes of lockout but be-

cause of lack of production. There is nothing in the con-

tract (Ex. 3) which prevents layoffs due to lack of pro-

duction. Their lack of employment commencing on the

fourth was due to the lockout. The unemployment of these

40 odd employees on the second and third could count

towards weeks of unemployment for benefits unless barred

by provisions of Chapter 108, Stats., other than Sec. 108.04

(10). As September 4th was Saturday and the last day of

the work week, these employees were probably barred

from counting that week as one of partial unemployment

because of their earnings for that week being above their

weekly benefit. rate. Sec. 108.02 (16), Stats.

The brief on behalf of the employees raises the point

that the termination date of the contract under the Unions’

notice of termination was September 4th and that the Em-

ployer had no right to lockout until the following day. No

authorities are cited by the parties on this point of the

right to lockout on the termination date of the contract.

Under Section 1(a) of the contract (Ex. 3) it is clear that

the period of the contract included the termination date

of July 31, 1971. Therefore, it would seem that a 30 day

termination notice would mean the contract remained in

effect the 30th day or September 4th. The above-quoted

paragraph of the decision would by implication indyate

that a lockout on September 4th was not illegal, assiltng

the withdrawal of the termination notice was not effective.

The Court does not consider that if an emplover is

one day too early in locking out his employees that this

renders the whole lockout illegal, but only the first day.

CONCLUSION

To restate the ultimate conclusion of the Court, it is

the Court’s determination that the undisputed evidence

gives rise to but one reasonable inference with respect to

A50

three crucial issues: in the case, and these inferences are:

(1) a labor dispute existed between the Employer and the

Unions at the time of the closing of the mill on Septem-

ber 4, 1971; (2) such labor dispute was a bona fide one;

and (3) the unemployment of the employees resulted from

a bona fide labor dispute within the meaning of Sec. 108.04

(10), Stats. Therefore, there is no credible evidence to

sustain the findings by the department to the contrary,

Let judgment be entered reversing the department’s

decision dated January 4, 1972.

Dated this 25th of September, 1972.

/s/ George R. Currie

Reserve Circuit Judge

No. 259

August Term, 1973

STATE OF WISCONSIN : IN SUPREME COURT

The Kansas City Star Co.,

Flambeau Paper Co. Division,

Respondent,

Vv.

Dept. of IL&HR, William A. Abel,

et al., +

Appellants.

OPINION OF THE WISCONSIN SUPREME COURT

(Filed October 30, 1973)

APPEAL from a judgment of the circuit court for Dane

county: GEORGI. R. CURRIE, Reserve Circuit J udge, Pre-

siding. Reverse J.

This case involves a claim for unemployment compe -

sation. The. Kansas City Star Company, Flambeau Paper

A51

Company Division (respondent and hereinafter referred

to as employer) operates a paper mill in Park Falls, Wis-

consin, and employs there approximately 380 production

workers. Most of the employees are represented by either

the United Papermakers and Paperworkers, Local No. 445,

or the International Brotherhood of Pulp, Sulphite and

Paper Mill Workers, Local No. 119. These two unions

have bargained jointly with the employer for the past

thirty years, and recently had a two-year contract dated

August 1, 1969.

Section 1 of this contract provided that it:

“. +. Shall be in effect August 1, 1969, and shall

remain in effect until July 31, 1971, inclusive, and

from year to year thereafter, unless terminated in ac-

cordance with the provisions of Section 2, below.”

The agreement also provided that any party who de-

sired to change any provision of the contract must give

written notice of such desire to the other party at least

sixty days in advance of the contract’s anniversary date.

If such notice was given negotiations would commence and

if agreement was not reached before the anniversary date

of the contract, the terms of that contract would continue

in effect unless it was specifically terminated as provided

in section 2.

Section 2 provided:

“(a) At any time after the anniversary date, if

no agreement on the questions at issue has been

reached, either party may give written notice to the

other party of intent to terminate the agreement in

(not less than) thirty days. All the provisions of the

agreement shall remain in full force and effect until

the time set forth has elapsed. During this period,

attempts to reach an agreement shall be continued.

SRG ad LN OTR ae Te

A52

“(b) If the parties have failed to resolve their

differences before the time set forth has elapsed, all

obligations under this agreement are automatically

cancelled.”

Both unions gave the requisite notice to the employer

by letters dated May 10 and 12, 1971, that certain contract

provisions should be renegotiated. Bargaining sessions

were conducted on June 11th and intermittently thereafter

for approximately six weeks. The unions sought increased

wages and changes in fringe benefits such as pensions, va-

cations and group insurance. The employer sought changes

in certain work rules, wage differentials and contract lan-

guage. Initially, the unions sought a wage increase of 10

percent (minimum 29 cents per hour) for the first year

and an increase of 32 cents per hour during the second

year. During meetings on July Ist and 2d the employer

offered a wage increase of 6 percent (no minimum) the

first year and 20 cents per hour the second year. Other

counter offers were made regarding fringe benefits. The

employer's most important proposed work rule changes

were not accepted. On July 23d the employer increased

its proposed wage hike for the first year to 6 1/2 percent

and for the second year tu 22 cents per hour. These pro-

posals were not satisfactory to the unions and it appeared

that an impasse had been reached. On July 26th a joint

meeting of the members of both unions was held and these

latest proposals of the employer were rejected by a vote

of 210 to 4. Moreover, the employer was notified that on

July 27th the unions had agreed to strike by a vote of 291

to 19. A federal mediator then requested that a meeting

be aeld on August 5th, but the unions and the employer

adhered to their previous positions at that meeting. At the

end of the meeting, both unions tendered notices to the

employer that stated, under section 2 of the labor agree-

ment “we do hereby terminate [the/this] agreement.” Both

PO al ate Gmaew= eo tn

. . —— Sete

OS CLL AD Ae GE PO BOS OO Ty I a ng aoe Re Fh ET

A53

notices advised that the unions would be willing to meet

any time during the requisite thirty-day period to try to

resolve their differences,

On the following day, August 6th, the employer mailed

each union a letter which stated it had received the unions’

letters of August 5th. In its letters of August 6th the em-

ployer stated that, as a result of the unions’ actions, all

offers made earlier in the current negotiations were with-

drawn and in the thirty-day interim period, if it was the

unions’ desire to meet with the company bargaining com-

mittee, they were to contact the assistant general manager

and employer negotiator.

Meanwhile, on August 2d the employer notified its

pulpwood suppliers of the threat of a strike in its plant

and that unless an. agreement was reached soon it would

be necessary to discontinue receiving pulpwood. On August

6th the employer sent a notice of pulpwcod embargo to

its suppliers and a radio news release was issued in ani at-

tempt to notify those suppliers who might be out in the

woods; the employer was discontinuing receiving pulpwood

by railroad cars as of August 9th and by truck as of 4 p. m.

on August 10th. No further orders for materials were

placed and those suppliers with blanket orders were noti-

fied not to ship. Over 300 letters were sent to the em-

ployer’s customers notifying them that it would be in-

capable of filling any orders that specified a delivery date

beyond September 4th in order that those customers could

arrange for another source of supply. The consequent re-

sult was that the employer’s new orders went from an

average 5,105 tons per month down to 487 tons in Septem-

ber, and 275 tons for October 1st through October 25th.

The employer’s shipments went from an average of 5,198

tons per month to 329 tons in September, and 545 tons in

October. Some paper had to be purchased from other

eater Wes ee ones

A54

sources in order to fulfill the customers’ needs for which

the employer had already committed itself.

On August 15th, by Executive Order No. 11615, Presi-

dent Nixon ordered a freeze on prices, rents, wages and

salaries for ninety days. At a meeting on August 19th of

the unions and the employer held at the request of the

federal mediator, both unions submitted substantially simi-

lar letters in which they referred to their letters of August

5th, giving notice of contract termination. Both letters of

August 18th stated in part:

“In light of President Nixon’s ninety day freeze

on wages and prices, this letter will serve as a with-

drawal of that termination notice and of our desire to

continue to work under the terms of the existing agree-

ment, unless, or until, a new termination is sent or full

agreement reached on a new contract.”

On August 19th the employer answered these latest

letters of the unions, stating that it could find no provision

in the present labor contract which.authorized the with-

drawal of the unions’ termination notices after once being

tendered. The employer offered to accept the withdrawal

notices provided it would have the unions’ guarantee in

writing that the notices of termination would not be rein-

stated prior to one year from the date of notice of with-

drawal. The employer gave as a reason for its position on

this point that it had already begun winding down opera-

tions and had turned down orders in anticipation of an im-

pending strike, and that this placed it in a very untenable

position as far as its customers were concerned, and its

ability to be a firm supplier of their needs. In its letter,

the employer further stated that it was almost impossible

for it to continue to insure its customers of its reliability

if it was faced with a reinstatement of termination notice,

and that it considered it essential to have a one-year guar-

antee.

A55

There is conflict in the testimony whether the unions

had given oral assurances to the employer that they would

not strike for ninety days. The employer testified that

no such assurance had been made, whereas Mr. Shank, a

union vice-president, claimed it had.

The employer pioceeded to wind down its operations

until September 2d, when approximately 24 employees

were laid off. Approximately 23 more were laid off at

the beginning of the business day on September 3d, and

the remaining employees were laid off at the end of the

business day on September 3d. On September 4th the

plant did not operate and no employees worked.

On September 10th the employer offered to withdraw

its demand for certain changes in work rules and te give

a 4 percent across-the-board increase in wages in return

for a one-year extension of the present contract. The

unions refused, but offered to extend the contract for a

6 1/2 percent across-the-board increase. No agreement

was reached and further sessions were also conducted on

September 27th, 28th, 30th and October Ist, 5th, 6th, 15th,

18th, 19th, 20th, and 22d. Apparently, on December 11th,

the parties agreed to the terms of a new contract.

After work at the employer's plant had discontinued,

the employees filed for unemployment compensation. The

employer claimed that these empioyees had lost their em-

ployment as a result of a bona fide labor dispute in active

progress and, therefore, were not entitled to unemploy-

ment benefits under sec. 108.04 (10), Stats.

An initial determination was filed on September 24th

by a deputy of the unemployment compensation division

which was in accord with the employer’s position that the

employees had lost their employment as a result of a bona

fide labor dispute in active progress and were disquali-

ie.

A56

fied for benefits by sec. 108.04 ( 10), Stats., which section

provides as follows:

“LABOR DISPUTE. An employee who has left

(or partially or totally lost) his employment with an

employing unit because of a strike or other bona fide

labor dispute shall not be eligible for benefits from

such (or any previous) employer’s account for any

week in which such strike or other bona fide labor

dispute is in active progress in the establishment in

which he is or was employed.”

This determination was appealed and while pending,

the Department of Industry, Labor & Human Relations

(ILHR Department), pursuant to authority granted in sec.

108.09 (6) (a), Stats., transferred the proceedings to itself

by order dated October 18, 1971. A hearing was conducted

before Examirer Max J, Peltin, acting as the commis-

sion’s deputy, on October 25th consolidating all the claims

of the employees. On the basis of this hearing, the com-

mission voted two-to-one to reverse the initial determi-

nation of the deputy.

Specific findings were entered, as pertinent here, as

follows :

“The Commission does not consider that the em-

ployees lost their employment with the employer be-

cause of a bona fide labor dispute within the intent

and meaning of section 108.04 (10)

“The employees had the contract right to termi-

nate their agreements upon 30-day notices pursuant

to section 2. They gave the employer such notices.’

The employees also took a strike vote and gave ap-

proval to the union officc.s to call a strike after the

contracts were terminated.

— a 2 PQIELE sg LEILA FO LAA AL PELE III! LOOPED AE EA A aE LOE

A57

“The employees’ actions were in accordance with

the contract provisions and appeared in good faith. At

most the strike vote was an indication that a strike

might occur.

“In 1969 the unions served 30-day termination

notices upon the employer as provided by section 2 of

the contract. No strike occurred in 1969 because agree-

ment was reached immediately prior to the end of

the 30-day period by the unions and the employer.

During this period the employer did not give any no-

tices to suppliers and customers of the contract termi-

nation or attempt to in any way ‘wind down’ its

operations.

“The employer knew on August 19, 1971, that the

employees would not strike after the termination of

the contract on September 3, because of the unions’

letters withdrawing the termination notices and in-

dicating a willingness to continue to work under the

terms of the existing contracts until new terminations

of the contracts were sent or new contracts consum-

mated.

“The employer refused to accept the unions’ with-

drawals of the contract terminations unless the unions

agreed in writing that new contract terminations would

not be reinstated for a one-year period,

“The employer’s contention that the termination

notices were strike threats loses its persuasiveness in

view of the employee’s withdrawal of the termination

notices. It appears that the good faith efforts by the

unions to continue the contracts required the em-

ployer to accept the withdrawal notice even though

the contract is silent as to the unions’ right to with-

draw the termination notices.

Oe ate oN

AEP YC FORO DESO BONO DE

SEU Sak new eee a aria a hea ae

Bevtaetsa

A58

“The employer’s actions in laying off over 20 em-

ployees on September 2, and about the same number

on September 3, were in direct violation of contract

provisions that there would be no lockouts during the

period of the agreements. Accordingly, if these ac-

tions amounted to lockouts, these lockouts would not

be bona fide labor disputes,

surance on August 18, 1971, that no strike would take

place as previously threatened, the employer’s actions

in continuing to ‘wind down’ its business operations

and to lay off all of its production employees on Sep-

tember 2 and 3 were not required, necessary or war-

ranted business decisions on the part of the employer.

“Since the employer terminated the employment

of the employees solely because of economic worries

over the preservation of its relations with its sup-

pliers and its customers, this was a business judg-

ment and did not constitute a ‘bona fide labor dispute’

as contemplated by section 108.04 (10). Accordingly,

the employees lost their employment as a result of the

employer’s actions in shutting down the plant. This

action in effect was a layoff which was not as a result

of a bona fide labor dispute. See Barrett v. Wasson

Coal Co. (1949), 404 Tl. 11, 87 N. E.2d 769.

“The Commission therefore finds that each of the

employees lost his employment with the employer in

week 36 of 1971 but that such employment was not

lost because of a bona fide labor dispute in active

progress in the establishment in which he is or was

employed, within the meaning of section 108.04 (10)

of the Wisconsin Statutes.”

After the complaint was filed asking review of the

Department’s position by the circuit court for Dane county,

PEO AIO BO ALE OECD Tas nF Ones Bc

“Faas

A59

a judgment reversing the Department’s decision was en-

tered. In its memorandum decision the trial court de-

termined that the evidence gave rise to but one reasonable

inference with respect to three crucial issues: (1) A labor

dispute existed on September 4, 1971; (2) this labor dis-

pute was bona fide; (3) the unemployment of the em-

ployees resulted from a bona fide ,abor dispute within

the meaning of sec, 108.04 (10 ), Stats,

The Department and the individual claimants appeal.

Further facts are set forth in the Opinion.

WILKIE, J. The two issues that are dispositive of

this appeal are:

1, What is the meaning of a bona fide labor dispute

as set forth in sec. 108.04 (10), Stats,?

2. Does the evidence support the findings by the De-

partment that the employees did not lose their employ-

ment because of a bona fide labor dispute in active prog-

ress in the establishment in which they were employed?

Meaning of Bona Fide Labor Dispute.

A “labor dispute” within the meaning of sec. 108.04

(10), Stats., is “ ‘any controversy concerning . . employ-

ment relations, or any other controversy arising out of the

respective interests of employer and employee... .’”!

The term “bona fide” is not specifically defined in ch.

108, Stats., and therefore it must be “interpreted in ac-

cordance with the common and approved usage thereof

and in accordance with other accepted rules of statutory

construction.”* The term generally “ ‘signifies a thing

done really, with a good faith, without fraud or deceit, or

1. Spielman vy. Industrial Comm. (1940), 236 Wis. 240, 250,

295 N. W. 1; Kenneth F. Sullivan Co. y. Industrial Comm. (1964),

25 Wis.2d 84, 88, 130 N. W.2d 194; accord, Annot. (1953) 28

A.L.R.2d 287, 297.

2. Sec. 108.02(21), Stats.

Se eer ba] pe Tee ee

aa, a! %

ie a

i Sars Pah REMAN ek Se SRA le ete!

AAPA EP DOPEB PEN RO OS EDIE be. 5 Rc LI Be OOS ty See a

A60

collusion...’ . . . Bona fide means real, actual, genu-

The term “bona fide labor dispute,” within the dis-

qualifying sec. 108.04 (10), Stats., means a controversy

regarding the terms of employment which in fact exists

and is not merely pretextural or feigned on the part of

the employer in an attempt to avoid his obligations under

the law.

One of the purposes of the Unemployment Compensa-

tion Act was to “prevent an employer from financing a

strike against himself.’

Department’s Finding of Fact—No Bona Fide Labor Dispute,

A benefit claimant is presumed eligible for benefits

and the party (the employer here) resisting payment of

benefits has the burden of proving that the case comes

within the disqualifying provision of the law (here, a

bona fide labor dispute existed) .°

In reviewing the Department’s finding that the unem-

ployment of the employees was not because of a bona fide

labor dispute in active progress our standard of review is

of course that we must accept the Department’s determi-

nations on such findings of fact if supported by credible

evidence on the record as a whole.’ The credibility of the

witnesses and the weight of the evidence is within the

province of the Department.’ In R. T. Madden, Inc. vy.

3. Bridgeport Mortgage & Realty Corp. v. Whitlock (1941),

128 Conn. 57, 61, 20 Atl.24 414,

4. Kenneth F. Sullivan Co. y. Industrial Comm., supra,

footnote 1, at Page 88.

. 5. Boynton Cab Co. v. Giese (1941), 237 Wis. 237, 296 N. W.

630.

6. Milwaukee Transformer Co. v. Industrial Comm. (1964),

22 Wis.2d 502, 509, 510, 126 N. W.2d 6

7. Neff v. Industrial Comm. (1964), 24 Wis.2d 207, 213, 128

N. W.2d 465; Copland v. Department of Taxation (1962), 16

Wis.2d 543, 555, 114 N. W.2d 858.

$ canter h. Ti as

A61

ILHR Department, this court extensively reviewed the

tests which had been used to explain the proper scope of

review and held:

“It is our conclusion the test should be whether

there is any credible evidence in the record sufficient

to support ihe finding made by the department. The

assumption in that test is, of course, that the evidence

is relevant, that it is evidentiary in nature and not a

conclusion of law, and that it is not so completely

discredited by other evidence that a court could find

it incredible as a matter of law. This is clearly not

the same as a reviewing court’s weighing conflicting

credible evidence to determine what shall be believed.”

Moreover, “[iJf conflicting inferences ma-- -= drawn

from the evidence, it is the function of the « ow ame iO

conclude which inference (if reasonable Te > wad

not the function of this court.’® In Kessler y. Industrial

Comm." this court explained:

“(Where the evidentiary facts are not in dispute

but permit of different inferences the drawing of one

of such inferences is a finding of fact within the prov-

ince of the Industrial Commission. Gant v. Industrial

Comm. (1953), 263 Wis, 64, 56 N. W. 2d 525. This court

has held, however, . . . that if the evidentiary facts

are not in dispute and permit of Only one reasonable

inference, the drawing of that inference is a question

of law and not of fact... .”

The Department made lengthy findings, which we

have already quoted, amplifying its determination that

8. (1969), 43 Wis.2d 528, 547, 169 N. W.2d 73.

9. Baez vy. ILHR Department (1968), 40 Wis.2d 581, 585,

162 N. W. 2d 576; Fitzgerald v. Globe-Union, Inc. (1967), 35

Wis.2d 332, 337, 151 N. W. 2d 136.

10. (1965), 27 Wis.2d 398, 400, 134 N. w. 2d 412.

edule ia Bay babes UO ae AAA os ne

A62

“The Commission does not consider that the employees

lost their employment with the employer because of a

bona fide labor dispute within the intent and meaning of

section 108.04 (10).”

Although there is a dispute on the record as to whether

or not the employer was given notice that there would be

no renewal of the termuination notice while the price and

wage freeze was in effect, there was clearly evidence that

the employer was given oral assurance of this. This is a

factual determination which is within the Department’s re-

sponsibility to make.

The Department, having decided that the termination

notice had been withdrawn, could have determined as a

matter of fact that the layoffs were not while a bona fide

labor dispute was in progress but were by way of a layoff

for economic reasons,

In concluding that the loss of employment in this case

was not due to a bona fide labor dispute, the Department

relied heavily on Barrett v. Wasson Coal Co." In Barrett,

an Illinois coal mine was closed down pending negotiations

of a new contract and the employer tried to defeat the

employees’ claim of unemployment benefits by asserting

sec. 7 (d) of the Illinois Unemployment Compensation

Act (Ill. Rev. Stat. 1947, ch. 48, par. 223). This was a

labor dispute exception similar to sec. 108.04 (10), Stats.

The owner of the mine claimed he refused to sign the la-

bor centract because he did not understand its terms.

Mowever, during negotiations, the owner explained, “ ‘I

can’t operate until the government lets me know for sure

what I am going to get for the coal.’”"?_ The Division of

Unemployment Compensation found, and the Supreme

Court of Illinois agreed, that “. . . there was no labor dis-

11. (1949), 404 Ill. 11, 87 N. E. 2d 769.

12. Id. at page 14.

A63

pute. ... There was no dispute concerning hours or t :;ms

of employment about which the parties were trying to

agree.”"* The loss of employment in that case was not

because of a labor dispute but because the government’s

policy on coal had not been clearly established, a circum-

Stance beyond the control of both parties. In the present

case, the immediate cause of the lack of jobs was the rapid

decline in orders for paper and the general winding down

of Operations by the employer. Customers and suppliers

were notified and operations were wound down. With the

attendant decrease in orders and general business at the

paper mill, soon there was no work to be done. The plant

was shut down. Although there is no evidence here which

indicates the employer had an independent reason, such

as the governmental policy regarding coal in Barrett, for

closing its paper mill, from the record as a whole the De-

partment could find that a bona fide labor dispute did not

exist at the time of the layoff and the layoffs were for

business reasons, the reasons being the kind designed to

give rise to legitimate unemployment compensation claims

within the framework of the Wisconsin Unemployment

Compensztion Law’.

By the Court—Judgment reversed.

ROBERT W. HANSEN (concurring). When their

former employer closed down the paper plant in which

they had been working, the former employees applied for

unemployment compensation benefits for the weeks of

joblessuess that followed the permanent closing of their

former place of employment. Even if a labor dispute was

involved in the management decision to close the plant

down, the former employees are entitled to unemploy-

ment compensation benefits under sec. 108.04(10), Stats.,

except “. . . for any week in which such . . . bona fide

labor dispute is in active progress in the establishment . . .”

13. Id. at pages 16, 17.

ow saioaniiaab tesdnlesschadeat il chibatadsabeppeetaisies as Te ee ey eee

A64

in which they were employed. [Emphasis supplied.] With

the plant permanently closed, there was no labor dispute

left, much less one in active progress. There was no em-

ployer or employees to do the disputing. There was only a

former employer and its former employees. There were no

wages, hours or working conditions about which to dispute.

Payroll and positions ended when the piant closed down.

Whatever its reasons for so doing, when management

permanently closed down the paper plant, any disagree-

ment with its former employees was interred along with

the plant operations. The state agency holding that the

former employees are entitled to unemployment compen-

sation benefits is upheld solely for the reason that a

permanently closed mill or factory cannot have a labor

dispute in active progress any more than a corpse can have

a toothache.

I am authorized to state that Mr. Justice Bruce F. Beil-

fuss and Mr. Justice Connor T. Hansen join in this con-

DECISION OF THE WISCONSIN SUPREME COURT

ON MOTION FOR REHEARING

THE KANSAS CITY STAR CO. v. DEPT. OF INDUSTRY,

LABOR AND HUMAN RELATIONS et al., #259

On the motion for rehearing herein, IT IS ORDERED

that additional briefs be submitted on the following ques-

tion and on such further issues as counsel deems appropri-

ate:

Did the unions have a right to withdraw the employ-

ment agreement termination notice that was given?

Printed briefs shall be filed as follows: Respondents

on or before February 18, 1974: Appellants Reply on or

before March 10, 1974; Respondents reply on or before

March 20, 1974.

A65

OPINION OF THE WISCONSIN SUPREME COURT

ON REHEARING

(Filed May 8, 1974)

No. 259

August Term, 1973

STATE OF WISCONSIN : IN SUPREME COURT

The Kansas City Star Co.,

Flambeau Paper Co. Division,

Respondent,

Dept. of IL&HR, William A. Abel,

etal,

Appellants.

PER CURIAM (on motion for rehearing). The em-

ployment -ontract did not spell out the terms of the right

of the Union to withdraw its termination notice, nor the

existence of a right of the Union to reinstate that notice

prior to the ending date of the contract. In the absence

of a specific provision in the contract as to the right to

withdraw a termination notice, the Department found that

the Union withdrew its termination notice and the Depart-

ment further found that as to the subsequent layoffs there

was then no bona fide labor dispute in progress. These

findings were supported by credible evidence as discussed

in our Original opinion.

We do not reach the question now raised for the first

time by the employer asserting estoppel as to either the

“Department” or the Union. Estoppel was not asserted

before the Department nor was there any point made of

it either in the record before the Department or in the

trial court.

eT e Tee oe ey Ses

A66

ROBERT W. HANSEN (concurring’in denial of mo-

tion for rehearing). In A. J. Sweet, Inc. v. Industrial Comm.

(1961), 16 Wis. 2d 98, 114 N.W. 2d 141, 114 N.W. 2d 853,

this court considered whether a loss of work by claimant

employees due to lockout or plant shutdown by an em-

ployer constituted a bona fide labor dispute under sec.

108.04(10) of the state unemployment compensation act.

On the issue of whether a labor dispute was bona fide

within the meaning of the statute, this court in Sweet held

that “. . . resolving this issue involves the construction

of the agreement between the parties... .” (Id. at page

105.) In Sweet, this court found that the collective

bargaining contracts between the parties “. . . contained

no express language prohibiting either strikes or lockouts

during their term... .” (Id. at page 106.) The court-held

that the contracts contained no express provision or im-

plied promise that “. . . the employers would not utilize

the device of a lockout... .” (Id. at page 110.) It neces-

sarily followed, the court concluded, that the claimant

employees’ loss of time from work was “. . . due to a bona

fide labor dispute within the meaning of sec. 108.04 (10),

Stats.” (Id. at page 110.) In the case before us, the ex-

isting agreement between employer and employees ex-

pressly provided that: “The Company agrees that there

will be no lockouts during the period of this Agreement.”

(labor agreement, page 20.) The employees’ organization

had filed, pursuant to the agreement, a termination of

agreement notice. Subsequentiy and prior to the lockout,

the labor group withdrew that notice, stating: “In light

of President Nixon’s ninety day freeze of wages and prices,

this letter will serve as a withdrawal of that termination

notice and of our desire to continue to work under the

terms of the existing agreement, . . .” until a new agree-

ment was reached or new termination notice sent. Un-

der the ruling in Sweet, the writer would on this set of

< A67

facts hold that claimant employees’ loss of time from work

for which they seek unemployment benefits was not due

to a bona fide labor dispute within the meaning of sec.

108.04 (10), Stats. Where the claimant employees had

clearly indicated their willingness to continue work under

the existing agreement, the writer would further. hold

that the labor dispute was not “in active progress” within

the meaning of sec. 108.04 (10), Stats. The employer here

notified the claimant employees: “The entire mill wil] be

shut down effective no later than the end of the last shift

on September 3, 1971, and until further notice.” Whether

this notice and shutdown is considered, as it was in con-

curring opinion, as a permanent closing down of opera-

tions, or, as it has been here, as a temporary lockout, it

does not under the facts here constitute what the statute

requires for disqualification from benefits of employees

who have lost time from work due to a lockout precipi-

tated by a bona fide labor dispute that was in active prog-

ress.

CONNOR T. HANSEN, J. (dissenting from denial of

motion for rehearing). The Kansas City Star Co., Flam-

beau Paper Co. Division, respondent, has filed a motion

for rehearing. For the reasons hereinafter set forth, Mr.

Justice BEILFUSS, Mr. Justice HANLEY, and the writer

would grant the motion for a rehearing.

The majority opinion correctly holds that “bona fide

labor dispute,” as the term is used in sec. 108.04(10),

Stats., means a controversy regarding the terms of em-

ployment which in fact exists and is not merely pre-

textual or feigned on the Part of an employer in an at-

tempt to avoid his obligations under the Unemployment

Compensation Act. However, the facts of this case clearly

Support the trial court’s conclusion that these employees

Jost their employment as a result of a bona fide labor dis-

pute.

Baar iet sees nents Seite seni saceerandnod ballon ce aime ice acu. SKoROR decane ne Lianne viata tga ead ata NA ae lk RT Ok eRe. ota Nee ak eaaentead bee hWaD wneieas coe

A68

Section 1(b) of the collective bargaining agreement

provides:

“(b) If either party shall desire to change any

provision of this agreement, it shall give written no-

tice of such desire to the other party at least sixty

(60) days in advance of any anniversary date.”

Both unions gave the requisite notice to the employer

by letters on May 10 and May 12, 1971, that certain con-

tract provisions should be renegotiated. Bargaining ses-

sions were conducted on June 11, 1971, and intermittently

thereafter for approximately six weeks. The unions

sought increased wages and changes in fringe benefits such

as pensions, vacations and group insurance. The em-

ployer sought changes in certain work rules, wage differ-

entials and contract language.

The parties were unable to agree and a “bona fide

labor dispute’’ between the parties existed.

An impasse was reached between the parties on July

23rd. On July 27th, the union notified the employer that

the members had agreed to strike by a vote of 291 to 19.

Pursuant to section 2 of the collective bargaining agree-

ment, ard on August 5th, both unions tendered termina-

tion notices, effective in thirty days in accordance with

their contracts. At the same time the unions advised tie

employer that they would be willing to meet to resolve

differences any tirne during the thirty day period.

Because of the nature of the chemicals and machinery

used by the employer in its operations, a sudden walkout

by employees during full production would have caused

extensive damage io facilities and materials. Therefore,

the employer immediately began to wind down its opera-

1. See: sections 103.62, 111.02, 111.70 (1)(i), and 111.81

(8), Stats., for definitions of a labor dispute.

“2 em

A69

tions. Customers ani material suppliers were notified and,

naturally, a dravtic decline in new orders for paper goods

was soon evident.

On August 15th, the President of the United States

asked for a 90-day wage and price freeze and four days

later, on August 19th, the employer received the follow-

ing letter from the unions:

“In light of President Nixon’s ninety day freeze

on wages and prices, this letter will serve as a with-

drawal of that termination notice and of our desire to

continue to work under the terms of the existing

agreement, unless, or until, a new termination is sent

or full agreement reached on a new contract.” (Em-

phasis supplied. )

Somehow the commission and the majority opinion of

this court interpret this withdrawal of termination notice

as the end of the labor dispute. The fact is, it was not. A

“bona fide labor dispute” existed before the termination

notice was served and continued to exist after the pur-

ported withdrawal and continued unti] a new collective

bargaining agreement was finally entered into between

the parties in December, 1971,

All that the August 5th letter from the unions pur-

ported to accomplish was to withdraw the strike notice

for the ninety day wage freeze and until] the unions sent

a new thirty day termination notice in the event an agree-

r..nt was not reached on a new contract.

The employer refused to accept this attempted with-

drawal of termination notice by the unions because the

collective bargaining agreements did not provide for such

a withdrawal of the termination notice, and because it had

already begun to wind down its operations and if full op-

rations were resumed the unions could, at some impropi-

ee ee SS Cae eee ne er Wren

A70

tious moment, issue a new notice of termination. Also,

without what were believed to be adequate assurances

that the employees would continue on the job, the em-

ployer could not serve its customers as a reliable source

of supply. The commission, in support of its conclusion

that the employees did not lose their employment because

of a bona fide labor dispute, found that “. . . the good

faith efforts by the unions to continue the contracts re-

quired the employer to accept the withdrawal notice even

though the contract is silent as to the unions’ right to

withdraw the termination notices,” notwithstanding other

facts. This finding of fact by the commission, alone, is

evidence of a labor dispute. Also, the commission held

that “. . . the employer's actions in continuing to ‘wind

down’ its business operations .. . were not required, nec-

essary or warranted business decisions, . . .” and the at-

tendant loss of work by these employees was “. . . solely

because of economic worries over the preservation of its

relations with its suppliers, and its customers (and that)

this was a business judgment and did not constitute a

‘bona fide labor dispute’ as contemplated by section 108.04

(10).”

Undeniably, the decision to continue to wind down

operations was a business judgment as, indeed, is every

decision that an employer or a union makes with respect

to its respective operations during a period such as this.

However, an employer has the right, when confronted with

a labor controversy, to evaluate his position in view of

union demands and act in accordance with his best judg-

ment without being penalized by enforcement of the pro-

visions of the Unemployment Compensation Act. If, in

fact, the actions of the employer or a union constitute en

unfair labor practice, sanctions exist in a different forum.

The commission is not empowered to weigh the merits of

the various positions taken by the parties in a labor con-

ie eee

A71

troversy such as this. To do so violates the spirit and in-

tent of sec, 108.04 (10), Stats. The purpose of this sec-

tion “. . . is to preserve the status quo during the course

of the labor dispute so that at its cessation the parties

thereto stand in the same relation to each other as at its

beginning in so far as payments of benefits under the act

are concerned.” Marathon Electric Mfg. Corp. y. Indus-

trial Comm, (1955), 269 Wis. 394, 408, 69 N.W.2d 573. 70

N.W.2d 576. The commission itself recognized in Mara-

thon, supra, p. 405, that the “‘[pJresent law takes a

“hands off” approach. It stays neutral. It does not re-

quire that the administrative agency determine the merits

of the labor dispute. . . .’” The commission’s ruling in

this case violated this rnandate of “neutrality” and, in ef-

fect, required the employer to contribute financial support

to this labor dispute. If such a change is to be made in

the law, it is the duty and concern of the legislature,

The two-member Majority cf the commission relied

on Barrett v. Wasson Coal Co. ( 1949), 404 Ill. 11, 87 N.E.2d

769, as authority to support their conclusion. In Barrett,

supra, p. 771, the operations of a coal mine ceased because

the owner was losing money on it and the court held that

the employees w«:e not laid off because of a labor dispute,

explaining as follows:

“. .. There was not dispute conceriing hours or

terms of employment about which the paities were

trying to agree. The trouble was the uncertainty of

prices and conditions under the prevailing economic

setup [government regulations] which caused the

company to fear the future and to retire behind closed

doors rather than to continue operation and take the

chance of failure.”

This paper plant was not closed because it was fail-

ing to generate a sufficient economic return or because of

an uncertain market for its products.

- oO RO BE oe ed CAMA OL LOLOL ELLE

SNS ee Se eee

Law

~ lk

sO ad aaa er eon a Deb We Bt Le A

Ai2

A bona fide labor dispute in fact existed in this case

both before and after the purported withdrawal of the

termination notice. The dispute was not pretextual or

feigned on the part of the employer.

We conclude as a matter of law that there was a bona

fide labor dispute and would grant the motion for rehear-

ing.

PERTINENT PROVISIONS OF WISCONSIN’S

UNEMPLOYMENT RESERVES AND

COMPENSATION ACT

108.02 DEFINITIONS. As used in this chapter:

(1) Benefits. “Benefits” means the money allowance

payable to an employe as compensation for his wage losses

due to unemployment as provided in this chapter.

* * *

(3) Employe. (a) “Employe”’ means any individual

who is or has been performing services for an emnploying

unit, in an employment, whether or not he is paid di-

rectly by such employing unit; except as provided in par.

(b). If a contractor performing services for an employing

unit is an employe under this subsection and not an em-

ployer subject to the contribution provisions of this chap-

ter, a person employed by the contractor in fulfilment of

his contract with the employing unit shall be considered

the employe of the employing unit.

(b) Paragraph (a) shall not apply to an individual

performing services for an employing unit if the employ-

ing unit satisfies the department as to both the following

conditions:

1, That such individual has been and will con-

tinue to be free from the employing unit's control or

"eee

A73

direction over the performance of his services both

under his contract and in fact; and

2. That such services have been performed in an

independently established trade, business or profes-

sion in which the individual is customarily engaged.

employing unit's liability under the contribution provisions

of this chapter, and shall likewise be used in determining

the status of claimants under the benefit provisions of this

chapter,

(d) Any individual who is, under tnis subsection, an

“employe” of a given empioying unit shall be deemed “em-

ployed” by that employing unit for the purposes of this

chapter.

(4) Employer. (a) “Employer”, except where the

term by its context may apply to any unit employing one

or more individuals, means any person, partnership, asso-

ciation, corporation, whether domestic or foreign (or legal

representative or trustee in bankruptcy or receiver or trus-

tee of a person, partnership, association or corporation, or

legal representative of a deceased person), including this

State and any city of the ist class (but excluding any

other political subdivision) and eny fraternal benefit so-

ciety as defined in s. 208.01, who is subject to this chapter

under the statutes of 1969, or who has had einployment in

Wisconsin and becomes subject to this chapter under this

subsection,

(b) Any other employer shal! become an “emplover”

subject hereto as of the beginning of 1972 or any later cal-

endar year if it:

1. Is a nonprofit organization; and

2. Employed as many as 4 individuals in employment

for some portion of a day (whether or not at the same

AT4

moment of time) on at least 20 days, each day being in a

different calendar week (whether or not such weeks were

consecutive), ending either in that year or in the preced-

ing calendar year.

subject hereto as of the beginning of 1972 or any later cal-

endar year if he:

1. Paid wages for employment which totaled $1,500

or more during any calendar quarter in either that year

or the preceding calendar year; or

2. Employed at least one individual in some employ-

ment in each of 20 or more calendar weeks ending in that

year or in each of 20 or more calendar weeks ending in the

preceding calendar year, whether or not the same indi-

vidual was in employment in each such weex.

(d) Any other employer who is subject to the fed-

eral unemployment tax act for any calendar year, or who,

as a condition for approval of this chapter for full tax

credit against the tax imposed by the federal un

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