No. 13727 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1977 

MONTANA READY MIXED CONCRETE 

ASSOCIATION, a corporation, 

Plaintiff and Appellant, 

BOARD OF LABOR APPEALS, et al., 

Defendants and Respondents. 

Appeal from: District Court of the First Judicial District, 

Honorable Gordon R. Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

Burton and Waite, Great Falls, Montana 

Leslie S. Waite I11 argued, Great Falls, Montana 

For Respondents: 

Moody Brickett argued, Helena, Montana 

Hilley and Loring, Great Falls, Montana 

Emilie S. Loring argued, Great Falls, Montana 

McKittrick and Duffy, Great Falls, Montana 

D. Patrick McKittrick argued, Great Falls, Montana 

Submitted: December 2, 1977 

Decided: DEC 2 $ 1gn 

Filed : 6Ec q:ij4 

a". 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

This case concerns the administrative proceeding and decision of the Board of Labor Appeals and certain claimants represented 

by the Joint Council of Teamsters #23 and Local Union No. 400, and 

their employers who are members of the !Montana Ready Mixed Concrete 

Association. The administrative proceedings were held during the 

year 1972. The appeal tribunal on April 14, 1975, found that the 

claimants were disqualified from receiving unemployment benefits. 

An appeal was made to the Board of Labor Appeals, and after hearing 

the matter, the Board on September 22, 1975, reversed the decision 

of the appeal tribunal and found that the claimants were entitled 

to unemployment compensation benefits. Thereafter, the employer 

filed a petition for review of the Board's decision in the District 

Court of the 1st Judicial District, Lewis and Clark County. On 

January 31, 1977, the District Court issued its opinion sustaining 

the decision of the Board and denying the employer's petition for 

judicial review. From this decision this appeal is taken. 

In this case the Montana Ready Mixed Concrete Association, 

hereinafter referred to as the employer, had an agreement with the 

Joint Council of Teamsters #23 and International Union of Operating 

Engineers, Local No. 400, hereinafter referred to as the employees. 

This agreement covered wages, hours, and working conditions. The 

expiration date of this agreement was February 29, 1972. 

Prior to the expiration of the agreement, the employees, 

through their unions, opened the agreement for renegotiation. On 

March 1, 1972, negotiations were resumed. In the afternoon the 

employer notified the employees that their last proposal was not 

acceptable and resubmitted its last proposal as its final offer. 

At the conclusion of this meeting the employees' unions agreed to 

take the employer's last offer to its members for a vote. The 
employer stated its members would lock up their plants on Monday, 

March 6, 1972, unless it received notice of acceptance of its proposal by noon, Sunday, March 5, 1972. The employer's offer was 

thereafter rejected. On Monday, March 6, the employer closed its 

plants, and the employees who reported for work were not allowed to 

work. Employment was withheld from them until March 16, 1972, when 

a settlement was negotiated and the plants reopened. The focal 

question is whether an impasse had been reached during the 1972 

negotiations between the parties which would exclude the employees 

from unemployment compensation benefits. The unions deny this and 

insist that there had been only three negotiating sessions, that 

there had been movement by both sides, and that there was no evidence that continued negotiations, as requested by the unions, 

would have been unsuccessful. 

The employer filed another suit in Federal Court entitled 

"Montana Ready Mix and Concrete Productions Assoc. v. The State 

of Montana et al." In that case, the employer claimed the Board 

of Labor Appeals had interfered with the employer's collective 

bargaining rights and sought to enjoin the Board from enforcing 

its decision. U. S. District Judge Russell E. Smith granted judgment to the State of Montana, holding that the Montana Unemployment 

Compensation Law, as written, is neutral and does not in any way 

impinge on the collective bargaining process. 

The issues presented for review are: 

1. Whether the Board and District Court erred in interpreting the Montana Unemployment Disqualification Law? 

2. Whether the Board's decision improperly intruded upon 

and interfered with the employer's federally protected right to 

bargain collectively and to engage in a lockout? 

This appeal centers around the Montana Unemployment Compensation Law Section, which is section 87-106, R.C.M. 1947. Subsection 

(d) provided as follows in 1972: 
"87-106. Disqualification for benefits. An individual shall be disqualified for benefits-- 

"(d) For any week with respect to which the commission 

finds that his total unemployment is due to a stoppage 

of work which exists because of a labor dispute at the 

factory, establishment or other premises at which he 

is or was last employed, provided that this subsection 

shall not apply if it is shown to the satisfaction of 

the commission that-- 

"(1) He is not participating in or financing or directly 

interested in the labor dispute which caused the stoppage of work; and 

"(2) He does not belong to a grade or class of workers 

of which immediately before the commencement of the 

stoppage, there were members employed at the premises 

at which the stoppage occurs, any of whom are participating in or financing or directly interested in 

the dispute; 

"Provided, that if in any case separate branches of 

work which are commonly conductecl as separate businesses 

in separate premises are conducted in separate departments of the same premises, each such department shall, 

for the purpose of this subsection, be deemed to be a 

separate factory, establishment, or other premises; 

provided, further, that if the commission, upon investigation, shall find that such labor dispute is caused 

by the failure or refusal of any employer to conform 

to the provisions of any law of the state wherein the 

labor dispute occurs or of the United States pertaining 

to collective bargaining, hours, wages or other conditions of work, such labor dispute shall not render the 

workers ineligible for benefits." 

The labor dispute disqualification is a two step procedure. 

First, if the commission finds that unemployment is due to a labor 

dispute where the claimant was last employed, the claimant is disqualified. Secondly, the disqualification is removed if the commission finds that the employee is not participating or directly 

interested and he does not belong to the grade or class of workers 

who are participating. The Montana Unemployment Compensation Act 

does not define "labor dispute". The employer insists that the 

employees were "locked out" and that a "lockout" is automatically 

a labor dispute. The language of the statute lends no help. Therefore, this Court must determine whether it was the intent of the 

legislature in enacting section 87-106(d), R.C.M. 1947, that this 
section apply where the employer locks out the employees. 

The vital question is whether the unemployment was caused 

by a labor dispute. The word "lockout" is meaningless unless it 

is applied to the circumstances of the case. The Board of Labor 

Appeals held that the claimants were not unemployed because of a 

"labor dispute". In Ross v. Review Board of ~ndiana Employme~t 

Security Division, (1nd.App. 1961), 172 N.E.2d 442, 448, the court, 

in upholding an award of unemployment compensation benefits, held: 

" * * * The existence of differences between 

labor and management does not ipso facto constitute a labor dispute causing a stoppage of 

work. * * *" 

The court went on to say: 

" * * * While labor may use the strike and 

management may use the lockout, neither can use 

the Employment Act as a weapon, that is, in the 

case of management as a weapon to disqualify 

workers from unemployment benefits, and in the 

case of labor in using the strike and at the same 

time hoping to avoid disqualification for unemployment benefits." 

In the instant case the record is unclear as to the state of the 

negotiations at the time of the lockout. The record shows that 

negotiations between the employer and the bargaining agents of the 

employees were in progress all the time prior to the closing of 

the plants. After attempts to consummate a new contract, the 

employer decided a labor dispute existed and closed the plants, 

thus arriving at a lockout status. 

We conclude that good faith negotiations between representatives of management and labor, where the facts show that the bargaining is in a fluid state and no impasse has occurred, gives 

neither party the right to declare a labor dispute. To hold otherwise would be to defeat the purpose of the law. Such an interpretation would defeat the objective of contract negotiations in all 

industries. To promote the general welfare it is necessary to 

encourage good faith collective bargaining at all times. If we were 
to interpret every difference of opinion between employer and 

employee as a labor dispute, we can perceive a situation where no 

one could receive unemployment benefits and labor-management relations would be in chaos. 

However, in this case it is disputed whether or not bargaining was in a fluid state or whether an impasse had in fact been 

reached. To be sure, there was argument and wrangling between the 

negotiators over the terms of the proposed new contract. The true 

reason for the lockout at the employer's businesses is not clear 

from the record. However, it does not seem that the lockout was 

used to improve the bargaining power of the employer and therefore, 

we will give the employer the benefit of the doubt and hold that in 

this case the lockout arose from a labor dispute. 

Since this Court finds that the lockout arose from a "labor 

dispute", it becomes necessary to determine whether the disqualification section was intended by the legislature to apply to the 

factual situation presented by this case. Section 87-102, R.C.M. 

1947, sets out clearly the public policy behind the unemployment 

compensation act. This section states: 

"Declaration of state public policy. As a 

guide to the interpretation and application of this 

act, the public policy of this state is declared 

to be as follows: Economic insecurity due to 

unemployment is a serious menace to the health, 

morals, and welfare of the people of this state. 

Involuntary unemployment is therefore a subject of 

general interest and concern which requires appropriate action by the legislature to prevent its 

spread and to lighten its burden which now so often 

falls with crushing force upon the unemployed worker 

and his family. The achievement of social security 

requires protection against this greatest hazard 

of our economic life. This can be provided by 

encouraging employers to provide more stable employment and by the systematic accumulation of funds 

during periods of employment to provide benefits 

for periods of unemployment, thus maintaining purchasing power and limiting the serious social consequences of poor relief assistance. The legislature, 

therefore, declares that in its considered judgment 

the public good, and the general welfare of the 

citizens of this state require the enactment of this 

measure under the police powers of the state for the 

compulsory setting aside of unemployment reserves to 

be used for the benefit of persons unemployed through 

no fault of their own." (Emphasis added.) 
This section declares a legislative purpose of providing 

for payment of benefits to persons unemployed through no fault of 

their own. In this case, the employer contends the employees participated in the labor dispute through their representative unions 

and that they were interested in the outcome of the lockout and 

therefore section 87-106(d) mandates their disqualification. Both 

subsections (1) and (2) provide for the disqualification where the 

employee is directly interested in the labor dispute. The respondents 

contend that they were not participants in the lockout, they were 

victims of it. In reviewing the negotiations prior to the lockout, 

it is apparent that the employees had not threatened the employer 

with a strike or a work slowdown. The lockout was not brought on 

by the action of the employees except for the fact that they voted 

to reject the employer's last offer. It appears as though no demands 

had been made except for those ordinarily incident to any negotiating 

procedure. There was no testimony that a strike vote had ever been 

taken or was even contemplated by the employees. The employees' 

representative unions were willing to continue negotiations and 

so informed the employer prior to the lockout. 

Where an employer lockout has resulted in disqualification 

from benefits there have been additional facts, not present in 

this case, showing voluntary action on the part of the employees 

precipitating the employer's action. It would be difficult for 

reasonable minds to reach the conclusion that the lockout was precipitated by the union or the employees in view of the fact that 

the unions' attitude was that of negotiating any differences which 

the employees had through the collective bargaining process and 

the action of the employees seeking to return to work and being 

refused employment by the employer. The employees involved were 

unemployed through no fault of their own. The ~istrict Court was 

correct in sustaining the administrative decision of the ~oard of 

Labor Appeals granting them unemployment compensation. 
Employer further contends that the disqualification 

statute, although neutral on its face, was improperly applied in 

this case and therefore interfered with the employer's federally 

protected right to bargain collectively and to engage in a lockout. 

The many cases cited by the employer involving federal preemption 

and conflict with state law do not deal with this problem, but 

rather with state action which interferes with federal regulation 

of labor relations. The employer has cited none, and we can find 

no case which holds as a matter of law that the preemption doctrine 

is applicable to the situation here. 

The case of Super Tire Engineering Co. v. McCorkle, 416 

U.S. 115, 94 S.Ct. 1694, 40 L ed 2d 1 (1974) is distinguishable 

on the facts and does not support employer's position. In McCorkle 

the U. S. Supreme Court declared that it was the intent of Congress 

to make maintenance of government neutrality contingent on treating 

otherwise eligible strikers no differently from nonstrikers in the 

receipt of public assistance. It is important to note that this 

case dealt with employees who were on strike. It did not deal with 

employees who were ready, willing, able and available for work who 

had been precluded from performing their job by a lockout. In 

McCorkle-the Court found no merit in the contention that eligibility 

of strikers for public assistance frustrates national labor policy 

of free collective bargaining by altering relative economic strength 

of parties. 

Here, we find that the decision of the Board, affirmed by 

the District Court, does not interfere or intrude upon federal 

labor policy. The decision of the District Court is affirmed. 

Justice 
We Concur: 

L. . 

Justice 

~ng- in