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: 

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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 !MontanaReady Mixed Concrete Association. The administrative proceedingswere held during the year 1972. The appeal tribunal onApril 14, 1975, found that the claimants were disqualified from receiving unemployment benefits. An appeal wasmade 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 claimantswere entitled to unemployment compensationbenefits. Thereafter, the employer filed a petition for reviewof 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 judicialreview. From this decision this appeal is taken. In this case the Montana Ready Mixed ConcreteAssociation, hereinafter referred to as the employer,had an agreementwith the Joint Council of Teamsters #23and International Union of Operating Engineers, LocalNo. 400,hereinafter referred to as the employees. This agreement coveredwages, hours, and working conditions. The expiration date of this agreementwas 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 lastproposal as its final offer. At the conclusion of this meeting the employees' unions agreed to take the employer's last offer to itsmembers for a vote. Theemployer stated its members would lock up their plants onMonday, March 6, 1972,unless it received notice of acceptanceof itsproposal by noon, Sunday, March 5, 1972. The employer's offerwas thereafter rejected. On Monday,March 6,the employer closed its plants, and the employeeswho reported forwork were not allowed to work. Employmentwas withheld from them until March 16, 1972, when

a settlementwas negotiated and the plants reopened. The focal question iswhether an impasse had been reached during the 1972 negotiations between the parties which would exclude the employees from unemployment compensationbenefits. The unions deny this and insist that therehad 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 "MontanaReady Mix and Concrete ProductionsAssoc. v. The State of Montana et al." In that case, the employer claimed the Board of Labor Appeals had interferedwith 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 CompensationLaw, aswritten, is neutral and does not in any way impinge on the collective bargaining process. The issuespresented for revieware: 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 interferedwith the employer's federallyprotected right to bargain collectively and to engage in a lockout? This appeal centers around the Montana Unemployment CompensationLaw 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, establishmentor 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 notparticipating in or financing or directly interested in the labor disputewhich caused the stoppage of work; and "(2) He does not belong to a grade or class of workers of which immediatelybefore the commencement of the stoppage, thereweremembers 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 statewherein 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 forbenefits." The labor dispute disqualification is a two step procedure. First, if the commission finds that unemployment is due to a labor dispute where the claimantwas 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 CompensationAct does not define "labordispute". 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 Courtmust determine whether itwas the intent of the legislature in enacting section 87-106(d), R.C.M. 1947, that thissection apply where the employer locks out the employees. The vital question iswhether the unemploymentwas caused by a labor dispute. The word "lockout" ismeaningless unless it is applied to the circumstances of the case. The Board of Labor Appeals held that the claimantswere not unemployed because of a "labor dispute". InRoss v. Review Board of ~ndiana Employme~t Security Division, (1nd.App. 1961), 172N.E.2d 442, 448, the court, in upholding an award of unemployment compensation benefits, held: 

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## * * * The existence of differencesbetween labor and management does not ipso facto constitute a labor dispute causing a stoppage of work. 

## * * *" The courtwent on to say: 

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## * * * While labor may use the strike and managementmay 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 isunclear 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 employeeswere 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 negotiationsbetween 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 interpretationwould defeat the objective of contract negotiations in all industries. To promote the general welfare it is necessary to encourage good faith collectivebargaining at all times. If we wereto interpret every difference of opinion between employer and employee as a labor dispute,we can perceive a situationwhere 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 factbeen reached. To be sure, therewas 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 lockoutwas 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 sectionwas intended by the legislature to apply to the factual situationpresented 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 statepublic policy. As a guide to the interpretationand application of this act, the public policy of this state is declared to be as follows: Economic insecuritydue 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 itsburden 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 benefitsfor periods of unemployment, thus maintaining purchasing power and limiting the serious social consequencesof 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." (Emphasisadded.)This section declares a legislativepurpose 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 disqualificationwhere 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 negotiationsprior to the lockout, it is apparent that the employeeshad not threatened the employer with a strike or awork slowdown. The lockoutwas 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. Therewas 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 employerprior to the lockout. Where an employer lockouthas 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. Itwould be difficult for reasonableminds to reach the conclusion that the lockoutwas precipitated by the union or the employees in view of the fact that the unions' attitudewas that of negotiating any differenceswhich the employeeshad through the collectivebargaining process and the action of the employees seeking to return to work and being refused employmentby the employer. The employees involvedwere unemployed through no fault of their own. The ~istrict Courtwas 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 interfereswith federal regulation of labor relations. The employer has cited none, and we can find

no case which holds as amatter of law that the preemption doctrine is applicable to the situationhere. 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 doesnot support employer'sposition. InMcCorkle the U. S. Supreme Court declared that it was the intent of Congress tomake maintenance of government neutrality contingent on treating otherwise eligible strikersno differently from nonstrikers in the receipt of public assistance. It is important to note that this

case dealt with employeeswho were on strike. Itdid not deal with employeeswho were ready, willing, able and available forwork who had been precluded fromperforming their job by a lockout. In McCorkle-theCourt found no merit in the contention that eligibility of strikers forpublic assistance frustrates national labor policy of free collectivebargaining by altering relative economic strength of parties. Here,we find that the decision of the Board, affirmed by the DistrictCourt,does not interfere or intrude upon federal laborpolicy. The decision of the District Court is affirmed.

Justice

### We Concur:

L.

. Justice

~ng- 

### in