Case Name: Donald M. BROBSTON et al., Appellants, v. EMPLOYMENT SECURITY COMMISSION of Arizona, and Kennecott Copper Corporation, Ray Mines Division, Ray and Hayden, Arizona, Appellees
Court: Arizona Supreme Court
Jurisdiction: Arizona
Decision Date: 1963-09-19
Citations: 94 Ariz. 371
Docket Number: No. 7628
Parties: Donald M. BROBSTON et al., Appellants, v. EMPLOYMENT SECURITY COMMISSION of Arizona, and Kennecott Copper Corporation, Ray Mines Division, Ray and Hayden, Arizona, Appellees.
Judges: BERNSTEIN, C. J., UDALL, V. C.- J., and LOCKWOOD, J., concur.
Reporter: Arizona Reports
Volume: 94
Pages: 371–380

Head Matter:
385 P.2d 239
Donald M. BROBSTON et al., Appellants, v. EMPLOYMENT SECURITY COMMISSION of Arizona, and Kennecott Copper Corporation, Ray Mines Division, Ray and Hayden, Arizona, Appellees.
No. 7628.
Supreme Court of Arizona. En Bane.
Sept. 19, 1963.
Champe Raftery, Phoenix, and Frederick S. Smith, Superior, for appellants.
Robert W. Pickrell, Atty. Gen., Richard J. Daniels, Asst. Atty. Gen., for appellee Employment Security Commission.
Fennemore, Craig, Allen & McClennen, Phoenix, for appellee Kennecott Copper Corp.

Opinion:
STRUCKMEYER, Justice.
Appellants are members of either Crawford Lodge #942, Brotherhood of Locomotive Firemen and Enginemen, or Local #314, International Brotherhood of Electrical Workers, at Ray, Arizona. In this consolidated appeal they seek to review two judgments of the superior court affirming decisions of the Unemployment Commission of Arizona denying unemployment compensation.
The record discloses that appellee, Kennecott Copper Corporation, owns and operates establishments for the mining and reduction of copper ores in Arizona and various other states of the United States. Prior to June 30, 1959, appellee, through its Ray Mines Division, had entered into collective bargaining agreements with Local #314 and Lodge #942. On June 30, the agreements expired as did agreements with certain other unions, notably the International Union of Mine, Mill and Smelter Workers and the United Steelworkers of America. Although the collective bargaining agreements had expired, operations at the mine and smelter continued while representatives of appellee company and the two latter unions conducted meetings in Salt Lake City, Utah, in an effort to negotiate new agreements. Local #314 and Lodge #942 undertook to negotiate locally at Ray concerning what is described as conditions of employment as distinguished from matters affecting health and welfare. Prior to June 30, an understanding was reached affecting only conditions of employment.
Appellant Brobston, General Chairman of Local # 314, by letter of April 28, 1959, wrote to appellee:
"Negotiations now being held at Salt Lake City, Utah shall become part of our agreement for 1959, concerning Health and Welfare, Group Insurance, and Accident and Sickness Policies."
The evidence is susceptible of the conclusion that Lodge #942 would also have acquiesced in such health and welfare benefits as might be worked out by the company and the International Union of Mine, Mill and Smelter Workers and the United Steelworkers in the negotiations at Salt Lake City. It is uncontradicted that the company's policy on health and welfare was to treat all employees alike. Cary E. Brace, President and Business Manager of Lodge #942, testified at a hearing before the Unemployment Security Commission on November 12, 1959:
"Q Did you infer, either in writing or in direct statements to anybody in the company that you would be willing to accept the health and welfare program that was agreed upon up in Salt Lake?
"A No, I did not, because that had been a practice. It has always been brought to us and we accepted it without any disagreement."
Other evidence justifies the conclusion that both local unions retained individually the right to reject the company's uniform application of conditions of health and welfare. Nevertheless, it is clear in light of the company's policy, that the decision arrived at in Salt Lake City would control the ultimate agreement.
On August 10, 1959, when no agreement had been reached in Salt Lake City, the Mine, Mill and Smelter Workers and United Steel workers commenced a strike to enforce their demands. The record does not disclose the reasons for the failure to reach an agreement — that is whether health and welfare were areas of disagreement — , but no agreement at that time had been reached on health and welfare. The company's operations at Ray, Arizona, were shut down and employees of non-striking unions in production were thrown out of work.
By Statute A.R.S. § 23-777, subd. A:
"An individual shall be disqualified for benefits for any week with respect to which the commission finds that his total or partial unemployment is due to a labor dispute, strike or lockout which exists at the factory, establishment or other premises at which he is or was last employed. This provision shall not apply if it is shown to the satisfaction of the commission that the individual is not participating in, financing or directly interested in the labor dispute, strike or lockout or that he does not belong to a grade or class of workers of which, immediately before the commencement of the labor dispute, strike or lockout, there were members employed at the premises at which the labor dispute, strike or lockout occurs, any of whom are participating in or financing or directly interested in the dispute, strike or lockout."
The Statute is designed to preserve the neutrality between an employer and his cm ployees by withdrawing, irrespective of individual-needs, benefits under the circumstances enumerated. Palpably, the intent of the legislature is that the state'shall stand aside in order that a labor dispute may not be financed through unemployment compensation. Appellees' position is that appellants were disqualified from benefits as being "directly interested" in the strike at the. company's establishment in Ray. It is urged that the controlling factor is whether the appellants' agreement could be affected, favorably or adversely, as a result of the strike called by other employees.
Supporting the appellees' position is the overwhelming weight of the decisions. For example, in Martineau v. Director of Division of Unemployment Security, 329 Mass. 44, 106 N.E.2d 420, where a foreman not a member of the striking union possibly stood to gain by the strike, the cause was reversed for determination of the issue of whether he would have. The Massachusetts Supreme Court said:
" ' It is plain that the claimant's unemployment occurred in consequence of a labor dispute which brought about a stoppage of work. The claimant was not a member of the union which initiated the strike and he refrained from-any'activity in support of it, and the contrary is not contended. His position is, therefore, that he should not be deprived of benefits for a loss precipitated-entirely by the efforts of others. That there is force in this argument cannot be denied. The statute, however, does not confine disqualification to those employees who participate in or finance the labor dispute. In addition, it withholds benefits from employees who are 'directly interested in the labor dispute'. Although the authorities are not uniform, the prevailing view is that a person is 'directly interested' in a dispute when his wages, hours, or conditions of work will be affected favorably or adversely by the outcome. It is of no consequence that the person is not a member of the union conducting the strike or that he may not be in sympathy with its purposes. " 329 Mass. 49, 106 N.E.2d 424. (Emphasis supplied).
Conversely, in Outboard, Marine & Mfg. Co. v. Gordon, 403 Ill. 523, 87 N.E.2d 610, where a factory workers' union was on strike but no profits from the strike could accrue to the office workers' union and the office workers did not seek to share in any of the benefits which might accrue to the factory workers, it was held that the office workers were not directly interested in the labor dispute. The Illinois Supreme Court said:
"Appellant contends that its office employees were directly interested in the labor dispute and thus barred from eligibility .for benefits. It must be conceded by the employer that no profit .or increase in pay would accrue to office workers by any result that could come from the strike. They did not seek to share in any of the benefits that might accrue to the other employees, if the latter should obtain some by strike action. While the office workers' union was to pay part of their dues to the other union, there was no reciprocal payment of any kind provided for. The office employees had concluded their bargain with the management and had nothing further to gain. They were asking for nothing. No one had asked them to share in the labor dispute and they had not sought or volunteered to do so. We therefore are forced to conclude from our examination of the record that there is no substantial evidence that the claimants were directly interested in the labor dispute." 403 Ill. 537, 87 N.E.2d 617.
The following cases construing statutes similar to ours constitute the almost unanimous weight of authority: Burak v. American Smelting & Refining Co., 134 Colo. 255, 302 P.2d 182; Lanyon v. Adm. of Unemployment Comp., 139 Conn. 20, 89 A.2d 558; Huiet v. Boyd, 64 Ga.App. 564, 13 S.E.2d 863; Kemiel v. Review Board, Indiana Employment Security Division, 117 Ind.App. 357, 72 N.E.2d 238; Local No. 658, Boot & Shoe Workers v. Brown Shoe Co., 403 Ill. 484, 87 N.E.2d 625; Martineau v. Director of Unemployment Security, 329 Mass. 44, 106 N.E.2d 420, supra; Nobes v. Michigan Unemployment Compensation Commission, 313 Mich. 472, 21 N.W.2d 820; Borchmanson v. Carpenter, 166 Neb. 322, 89 N.W.2d 123; Lepper v. Unemployment Compensation Board, 188 Pa.Super. 158, 146 A.2d 337; Henzel v. Cameron, 228 Or. 452, 365 P.2d 498.
Appellants rely on two decisions. In the New Jersey case of Kieckhefer Container Co. v. Unemployment Compensation Commission of New Jersey, 125 N.J.L. 52, 13 A.2d 646, the words "directly interested" were construed as confining disqualification to those who were "participating" in the dispute. The construction adopted there was approved and ostensibly followed by the Supreme Court of Washington in the case of Wicklund v. Commissioners of Unemployment, 18 Wash.2d 206, 138 P.2d 876, 148 A.L.R. 1298.
The force of both decisions has been greatly limited by later decisions. In Wasyluk v. Mack Mfg. Corporation, 4 N.J.Super. 559, 68 A.2d 264, the New Jersey court, in first noting that the statutes relating to unemployment compensation in most of the states including New Jersey were adopted from the English Statute, 10-11 George V, Ch. 30, [1920] as amended 14-15 George V. Ch. 30, said:
" •* Our attention has not been called to the opinion of any of the high British courts construing the English. . statute, but the Court of Referees and the'British Umpire, the highest administrative agencies, have ruled that an individual is directly interested in the trade dispute when his wages, hours, or conditions of work will be affected favorably or adversely by the outcome, "The appellant relies heavily upon the cases of Kieckhefer Container Co. v. Unemployment Compensation Commission of New Jersey, its Board of Review and John Bowen, 125 N.J.L, 52, 13 A.2d 646, and Kieckhefer Container Co. v. Unemployment Compensation Commission of New Jersey, its Board of Review and Frederick R. Aurich, 125 N.J.L. 55, 13 A.2d 648. We think, however, these cases are readily distinguishable on the facts from the case at bar and are not controlling. Neither Bowen nor Aurich were members of any labor union. Bowen at best was a utility man and Aurich an odd jobs man. It may fairly be said that each was in a class by himself. The former Supreme Court found that neither participated in or contributed to the union or were directly interested in the dispute which caused the stoppage of work." 4 N.J. Super. 562, 563, 68 A.2d 265.
The distinction was adhered to in the later case of Gerber v. Board of Review, 36 N.J. Super. 322, 115 A.2d 575, affirmed 20 N.J. 561, 120 A.2d 436.
The Wicklund case was similarly limited in the subsequent Washington decision, Appeals by Employees of Poison Lumber and Shingle Mills, 19 Wash.2d 467, 143 P.2d 316, where after a lengthy consideration of Wicklund, judgments of the trial court allowing benefits to the claimants were reversed.
We note in passing that by equating "directly interested" with "participating" the phrase "directly interested" is rendered meaningless and thus inoperative, idle and nugatory.
This is not a situation where appellants agreed to accept the existing conditions pertaining to health and welfare unless the company later offered better conditions as a result of the negotiations in Salt Lake City. To the contrary, appellants' agreement with the company was dependent upon the outcome of the negotiations there being conducted. Appellants were directly interested in the strike at appellees' establishment in Ray because their contracts relating to conditions of health and welfare were dependent upon and could be affected favorably or adversely by the outcome of the negotiations at Salt Lake City.
Judgments affirmed.
BERNSTEIN, C. J., UDALL, V. C.- J., and LOCKWOOD, J., concur.