NO. 83-470 INTHE SUPREME COURTOF THE STATEOF ?lOMTANA 1984

FEDERAL AVIATION ADMINISTRATION, Petitioner and Respondent,

THEMONTANA STATEDEPARTMENTOF LABOR and INDUSTRY: and 24members of the ProfessionalAir Traffic Controllers' Organization, Respondents and Appellants.

APPEAL FROM: DistrictCourt of the First Judicial District, Inand for the County of Lewis & Clark, TheHonorable Henry Loble, Judgepresiding.

COUNSELOF RECORD: For Appellants: Norman H. Grosfield argued for PATCO,Utick,Grosfield & Uda,Helena,Montana R. Scott Currey,Dept. ofLabor & Industry, Helena, Montana For Respondent: Allen R. McKenzie,Asst. U.S. Attorney introduces Karl B. Lewiswho argued forFAA,Butte,Montana

Submitted: June 12,1984 Decided: August 15, 1984

405 ; :

## ;Ya4 Filed:

Clerk1 Justice L.C. Gulbrandson delivered the Opinion of the Court.

This case comes on appeal from an 3rder of the District Court of the First Judicial District, Lewis and Clark County, reversing a. decision of the Board of Labor Appeals which had granted twenty-four members of the Professional Air Traffic Controllers' Organization (PATCO) unemploymentbenefits. We affirm. The terms of the PATCO members' employment were governed by a nation-wide collective bargaining agreement between PATCOand the Federal Aviation Administration (FAA). After the collective bargaining agreement expired in I'larch, 1981,negotiations concerning a new contract ensued between PATCO and the FAA, and on June 22, a tentative agreement was negotiated. However, PATCO members did not ratify the agreement and bargaining for a new labor contract began again. When an agreement could not be reached, PATCO members withheld their services from employment beginning August 3, 1981. A11 members of PATCO, at the time they were hired by the FAA, had signed affidavits that generally provided as follows: That themember had not participated in any strike against the government of the United States or any agency thereof, and would not so participate while an employee of the government of theUnited States or any agency thereof. Various members of PATCO were warned that they should not strike or withhold their services, and a restraining order was issued against PATCO personnel in Washington D.C. In addition, the President of the United States ordered, in

a televised statement, that the PATCO members should returnto work within forty-eight hours or they would be subject to discharge. On August 3,1981, the chief air traffic control operators at Billings, Great Falls and Helena called the PATCO members and requested they report for work as scheduled. On August 4, 1981, the Regional Office of the FAA in Denver, Colorado, sent each Montana employee a telegram and directed them to return to work. Shortly thereafter, allmembers of PATCOwho withheld their services

were terminated from employmentwith the FAA. Subsequent to their termination from employment, twenty-four Montana members of PATCO sought state unemploymentbenefits. OnDecember 2,1981,certain appeals referees sustained the determinations of various administrative deputies whohad found thePATCOmembers were disqualified to receive benefits under the Montana Unemployment Insurance Act (the Act) because they were discharged for misconduct connected with their work. Specifically, the appeals referees found that each PATCO member was discharged by the FAA for violating 5 U.S.C.A. section 7311 (1980)and 18U.S.C.A. section 1918 (1970)and concluded that the PATCO members were disqualified from unemployment compensation under section 39-51-2303, MCA, (discharge due to misconduct). Thereafter, the PATCO members appealed the referees' decision to the Board of LaborAppeals (theBoard). On February 3, 1982, the Board reversed the decision of the appeals referees and granted the PATCO members unemployment benefits. Relying on Continental Oil Co. v. Board of Labor Appeals (1978),178Mont. 143,582P.2d 1236, the Board found that since the PATCO members' strike waspart of an overall labor dispute they left their jobs because of a labor dispute and were not discharged for misconduct. The Board stated that "[tlhe fact that the strike was in violation of Federal law does not terminate the strike itself from the flow of the other events in this dispute much as a 'wildcat' strike in the private sector would violate a 'no strike' labor agreement and civil injunctive relief to the employer." The Board concluded that section 39-51-2305, MCA, (disqualification when unemployment due to stoppage of work), rather than section 39-51-2303, MCA, (discharge due to misconduct), was the proper statutory provision under which to consider the issue of the PATCOmembers' eligibility for unemploymentbenefits. On March 19, 1983, the FAA appealed the decision of the Board to the District Court. On September 8,1983, the District Court reversed the decision of the Board and found that the PATCO members were disqualified from receiving unemployment compensation because they had been discharged for misconduct. Noting the PATCO strike was inviolation of federal law, the District Court rejected the Board's interpretation and application of Continental Oil, supra, since that casedid not involvean illegal strike. From the District Court's decision reversing the Board, the Department of Labor and Industry and the PATCO members appeal to thisCourt. The two statutory provisions pertinent to this appeal

are as follows: "39-51-2303. Disqualification for



### ................................ dischargedue to misconduct. An individual shallbe disqualified for benefits if he has been discharged: "(1) for misconduct connected with hiswork or affecting his employment until 2n individual has performed services, other than self-employment, for which remuneration is received equal to or in excess of eight times his weekly benefit amount subsequent to the week in which the act causing the disqualification occurred. "(2) for gross misconduct connected with his work or cornmitted on the employer's premises, as determined by the department, for aperiod of 12months.

"39-51-2305. Disqualification when



### ................................. unemployment due to stoppage of work. 

### ------------- (1) Effective April 1, 1977, an individual shall be disqualified for benefits for any week with respect to which thedepartment finds thathis total unemployment isdue to a stoppage ofwork which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed,

# ..." The definition of misconduct generally accepted in most jurisdictions and adopted by this Court in Gaunce v. Board of LaborAppeals (1974),164Mont. 445, 448, 524 P.2d 1108, 1110, was set forth in Boynton Cab Co. v. Neubeck (1941),237Wis. 249,296N.W. 636. InBoynton CabCo., the court held that the term "misconduct" referred to conduct evincing such a willful or wanton disregard for an employer's interest as is found in the deliberate violation

or disregard of standardsofbehavior which the employer has the right to expect of his employees or in negligence of such a degree or recurrence as to manifest equal culpability, wrongful intent,or evil design. Appellants rely on Claim of Heitzenrater (1966), 19 N.Y.2d 1, 224N.E.2d 72, in arguing that the PATCOmembers' strike did not constitute misconduct as defined in Boynton Cab Co. and Gaunce. In Claim of Heitzenrater, the New Yorkcourt held that employees who participated in a strike in violation of the no-strike clause of a private contractual agreement were not guilty of misconduct and were therefore entitled to receive compensation under the striker-benefit provisions of the statute. The New York court initially noted that the mere existence of a strike or other industrial controversy does not necessarily preclude a finding of misconduct. However, the court stated that in disputes arising out of private contractual agreements, a finding of misconduct would require the resolution of factual issues as we11 as complicated questions of labor law, and that such matters "are best left to agencies especially qualified to deal with them, namely the Federal and State Labor Boards and labor arbitrators," rather than the individuals administering the unemployment compensation laws. Claim of Neitzenrater, supra, 19 N.Y.2d at 7, 224 N.E.2d at 75-76. However, the New York court subsequently held that in situationswhere the Legislature has specifically prohibited strikes or other concerted activity, an employee's violation of that proscription constitutes misconduct as a matter of law. Rodriguez v. Presbyterian Hospital (1973), 32 N.Y.2d 577, 582, 300 N.E.2d 418, 420. In Rodriguez, a hospital employee participated in a strike that had been expressly declared unlawful by statute because of the need to protect the public from the disruption of essential services in the

area of health and hospital administration. The Rodriguez court noted that the traditional reluctance of the Legislature to intervene in the realm of employment relations was overridden in this case by a compelling needto ensure the public safety in the critical area of health

care. Given this important legislative purpose, the Rodriguez courtheld thatviolation of the statutory mandate prohibiting strikes amounted to "legislatively defined" misconduct. Rodriguez, supra, 32N.Y.2d at 582, 300 N.E.2d at 419. Unlike violations of a private collective bargaining agreement, the legislation prohibiting strikes involved no complex issues of labor law because "the Legislature itself resolved all such issues by explicitly proscribing and expressly stamping as unlawful strikes and work stoppagesby

# .

# . .public employees

# .. ." Rodriguez, supra, 32 N.Y.2d at 582, 300N.E.2d at 420. The Rodriguez court concluded that the actions of an employee in violating the statutory prohibition against striking fell squarely within the misconduct provisions of the New York unemployment compensation statutory scheme. Rodriguez, supra, 32N.Y.2d at 582-583, 300N.E.2d at 420. In the case at bar, this Courtmust consider the same issue as was presented in Rodriguez, specifically, whether participation in an unlawful strike constitutes misconduct

as amatter of law. The factsreveal that a strike occurred whicli is unlawful according to the provisions of 5 U.S.C.A. section 7311 (1980)and 18U.S.C.A. section 1918 (1970). In Ranone 

### v. Board of Review (1984),No. 82-368-M.P., 116 LRRM 2134, 2136-37, the Rhode Island court considered whether PATCO members, discharged from federal employment for engaging in the same illegal strike of August 3, 1981, were ineligible for unemployment compensation. The Rhode Island court stated: "We find persuasive the reasoning of the Rodriquez court in holding that themisconduct provision disqualifies an employee from benefits when the unemployment resulted because of an unlawful strike. Here, the federal air traffic controllersacted in violation of the congressional mandate that expressly prohibits strikes by federal employees. 5 U.S.C.A. section 7311. That statutory prohibition and the criminal sanctions provided pursuant thereto evince an unequivocal congressional intent to prevent thedisruption of public services in order to 'ensurethat themachinery of the Federal Government continues to function at a11 times without interference.' United Federation of Postal Clerksv. Blount, 325F.Supp. 879, 884,76 LRRM 2932 (D.D.C. 1971)." We agree with the Rhode Island court's application of Rodriguez and hold that the misconduct provision of Montana's Unemployment Insurance Act applies to the PATCO strike and disqualifies the PATCO members from benefits because the unemployment resulted from an unlawful strike. The PATCOmembers engaged in conduct which was,at least, in deliberate disregard of the employer's interests and of the standards of behavior the employer had the right to expect of its employees. Gaunce, supra,164Mont. at 448. We therefore hold that the actions of the PATCO members in engaging in a prohibited strike constituted misconduct under Montana law and the District Court did not

err in holding that the PATCO members were disqualified for unemployment benefits under section 39-51-2303

# gCA* Affirmed.Weconcur:

Chief Justice

-I_._- JusticesMr. Justice John C. Sheehy,dissenting:

Let us first be clear about what this case involves. This decision does not mean the discharged air controllers will not receive unemployment benefits. They have already received them, and we all recognize the impossibility of recovering thebenefits from the individual air controllers. What the majority has done is agree that the already hard-pressed stateunemployment insurance fund will reimburse the FAA for the cost of the benefits. Thus will the FAA escape fiscal responsibility for the ills which the federal government brought down on all of us by its refusal to correct the intolerable working conditions to which it had subjected and does now subject the controllers at our airports. 

### We ought to put the responsibility for the payment, not on the employersof this state,but on the feds who indeed were more interested in breaking labor than protectingour air safety. In the six years I have served the Court, I have been accorded the opportunity to write some far-reaching decisions, and to disagree with others equally far-reaching. In most of them, however, I sawwhere the Court could pride itself as a fair arbiter in deciding between the individual and the sometimes overwelming use of power by officials, better termed by Hamlet as "theinsolence of office." Today I am not proud. My Court has called workers guilty of misconduct for obeying the call of their national union to strike. My stomach turns at this. Helpless in the power struggle,the air controllers chose to supporteach other in their cry for better working conditions. Misconduct? We should rather admire the courage it took to give up theirjobs and benefits rather then bend their necks to their would-bemasters. Ido not exaggerate the abusive working conditions that led the controllers to their choice. In the Wall Street Journal of July 5, 1984,onpage 10,there is quoted inpart

a letter to the FAA's administrator from the chairman of Pan AmericanAirlineswhich states: "The air traffic controllerproblem has gone from bad--to worse--to horrible--to intolerable. [Pan 

### Am is] now experiencing more frequent and more substantial delays in clear, optimum conditions than we were incurring during severe conditions a fewmonths ago." In the Billings Gazette, Tuesday, July 10, 1984,page 7B, one finds the Associated Press story concerning the increase in the number of flight delays in and out ofmajor airports which causes schedulingand arrival troubles for the airlines. The airlines blame the Federal- Aviation .Administration for the over-burdened air traffic control system. The FAA, which cannot now blame the new 2j.r controllers it brought into position, blames the airlines. Here is a paragraph, three years after the strike,to dampen your soaring spirit: "The government's air traffic control system is still recovering from the strike three years ago when 11,400 controllers were fired. The FAA is 1,000 controllers short of what it considers full strength, and many of the current controllers are inexperienced." We ought to place misconduct where it properly should lie, on the administration that brought this alarming condition about. We ought to recognize that the air controllershad the right in 1981 to the sameprinciple that

we applaud in the Declaration of Independence, that "when a long train of abuses and usurpations,pursuing invaria.b,-y the

same object, evinces a design to reduce them under a.bsolutedespotism, it is their right, it is their duty, to throw off such government and to provide new guards for their future security." We should not succumb, as most of government has, to governmentby GallupPoll. The statute onmisconduct, section 39-51-2303,MCA,wa.s
never intended by the legislature to apply to unemployment caused by labor dispute. Misconduct in the sense of that statute refers to individual fraud, theft, vandalism, and other acts which bring about a firing because of those acts against the employer. The only statutewehave applicableto

a labor dispute is section 39-51-2305(l), MCA. In City of Bill-ings

### v. State Board of Labor Appeals (Mont. 1983), 663 P.2d 1167, 1174,40 St.Rep. 648, 655,we said concerning the labordisputes statute: "Inexamining the statute, note that the inclusion of thephrase 'stoppage ofwork' by the legislature is not intended to be a synonym for 'strike' or 'lockout.' If the legislature meant that a striking or locked out employee would be disqualified forbenefits, it had toonly eliminate the phrase 'stoppage of work' so as to make the section read that the individual is disqualified for benefits if his total unemployment is 'because of a labor dispute at the factory.' When the legislature inserted the words 'due to a stoppage ofwork,' itmeant that the factorto be considered in connection with disqualificationmeantmore than that the individual claimant was on strike, or locked out in a labor dispute. There may be a labordisputeandyetno stoppage ofwork. Montana has aligned itself with the majority of courts holding on the question that the phrase

'stoppage of work,

### ' refers to the employer's operations rather than to the individual employee's work (citingauthority.) This so called 'American rule' allows strikers to collect benefits so long as their activities have not substantially curtailed the productive operations of their employer. (Citingauthority. 

### " City 

## of Billings, supra, and other cases (Continental 

### Oil Company v. Board of Labor Appeals (1978)

## , 178Mont. 143,582P.2d 1236;Decker Coalv. EmploymentSecurityDivisionof 

### 923 Montana (Mont. 1983), 667 P.2d BHL, 

## -St.Rep. )

## ,have indicatedour interpretation of theunemployment compensation benefits statutesas to leave the matter of labordisputes to the legislature and to the parties, and to determine the rights of workers to unemployment insurance benefits solely upon the provisions of section 39-51-2305(l) when a labor dispute is involved. The majority without discussion has departed fromthatposition. I would affirm the Board of Labor Appeals that no stoppage of work had occurred and that the air controllers were entitled to the benefits which they received. The effect would be to tell the FAA that it and not Montana employers must hear the burden of its intransigence. 

# e3k

Justice

Mr. Justice FrankB. Morrison,Jr.: Iconcur in the dissent ofMr. JusticeSheehy.

I join inthe dissent of Mr. Justice Sheehy.