Court Opinion

ID: 9571429
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:31:46.679968+00
Date Added: 2024-06-11T12:30:26.503608
License: Public Domain

Smith, J.
The principal issue in this case is similar to the principal issue decided in the so-called “Ford-Canton” case: Park v. Employment Security Commission, 355 Mich 103. Claimants are Michigan-based employees of Northwest Airlines who were laid off from work as a result of a strike by flight engineers who were domiciled in Minneapolis and Seattle, but who were attached to aircraft which flew from place to place throughout the airline system. Federal aviation regulations required such engineers to be on hoard aircraft during flight. When the flight engineers went on a systemwide strike January 9, 1961, the flight operations of Northwest in Michigan and elsewhere were closed down and certain ground personnel, including claimants herein, were laid off by management.* Generally stated, the question has to do with whether or not the labor dispute which resulted in claimants’ unemployment was “in the establishment” where they were employed.
The parties agreed to a “statement of proceedings and facts” in the Ingham circuit court, which court *123had initial appeal jurisdiction from the employment security appeal board. Such statement having been concurred in again by the parties in this Court, and it being a fair summation of the case, is adopted here:
“Claimants are individuals who were employed by Northwest Airlines, Incorporated, at the Detroit Metropolitan Airport and at the Northwest Airlines office in the city of Detroit.
“On the 9th day of January, 1961, the claimants were advised by Northwest Airlines, Inc., that due to a strike of flight engineers that they would bé laid off until further notice.
“The claimants filed claims for unemployment benefits under the Michigan employment security act. The commission filed a redetermination on September 8, 1961, holding that the unemployment of the claimants was due to a stoppage of work in the establishment in which they were last employed and held that the claimants were disqualified from receipt of benefits for the same period of their un7 employment under the labor dispute provision, section 29(1) (b)(4) of the Michigan employment security act.
“The claimants filed appeals from the redetermination to a referee who, on August 27,1962, issued a decision holding that the claimants were not entitled to benefits.
“The claimants appealed this decision to the appeal board of the Michigan employment security commission and on January 4,1963, the appeal board reversed the decision of the referee and held that the claimants were eligible for benefits.
“Northwest Airlines, Inc., filed an appeal to the circuit court for the county of Ingham. On April 29, 1964, the Honorable Sam Street Hughes filed a written opinion holding that the claimants were ineligible for benefits as a matter of law; a copy of the opinion being attached hereto as exhibit A.
*124“On May 28, 1964, judgment was entered by the Honorable Sam Street Hughes reversing the decision of the appeal board.
“The issue in this case is whether, under section 29(l)(b) of the Michigan employment security act, the unemployment of the claimants was due to a stoppage of work existing because of a labor dispute in -the establishment in which they were last employed.
“Northwest Airlines, Incorporated, is a common carrier by air in interstate and foreign commerce, operating foreign and scheduled air service under authority of the civil aeronautics board.
“Northwest domestic service connects the Pacific northwest cities of Seattle, Tacoma, Portland, with New York, and Washington via Detroit, Chicago, Minneapolis, St. Paul and Spokane. The trunk portion of the system consisted of the mainline between New York and Seattle with segments off the main trunk to Washington, to points in Florida, and to Winnipeg, the Orient, Alaska, and Hawaii.
“The company operations involved centralized dispatching of planes and a centralized electronic reservation system, high line telephone, teletype and meteorology service.
“Prior to January 9, 1961, regularly flying in and out of the Detroit Metropolitan Airport, the flight engineers were performing services. These services were subject to the direction and control of the captain, both when the planes were en route and when they were landing and take-off, including assisting the pilot in phases of the landing and take-off such as monitoring certain instruments pertaining to the performance of the engine of the aircraft aboard the aircraft, and just prior to take-off making what was known as a walk around check at the airport prior to its departure. Flight engineers were subject to the direction and control of the company’s operations manager in Detroit while such flight engineers laid over between flights at that location.
*125“On January 9, 1961, in the course of a labor dispute, the flight engineers unqualifiedly refused to fly any of the company’s aircraft to or from any point in the company’s entire route system in the continental United States, including the Detroit terminal. This resulted in the complete cessation of operations in Michigan by Northwest Airlines because of the fact that flight engineers who refused to fly were all licensed by the federal aeronautics administration, and such licensed personnel were required by regulation to operate Northwest aircraft. Northwest did not have other replacement personnel available to fly the flights scheduled into and out of Michigan, and, therefore, the flights were grounded as a result of the strike. As a consequence, Northwest employees were given a temporarily no work notice.
“The issues involved in the labor dispute solely concerned the status of the company’s flight engineers. Northwest, on January 9, 1961, had 82 employees on its Michigan payroll, none of whom were flight engineers. None of the flight engineers were based or domiciled in Michigan. The domicile of the flight engineers was either at Minneapolis, Minnesota, or Seattle, Washington. No aircraft was stored in Michigan.
“The company had an operations manager in Detroit who might and did recruit employees. Prospective employees might be interviewed in Minneapolis or locally by an interviewer from Minneapolis, or by a local interviewer, but their ultimate employment was subject to approval by the director of employment at Minneapolis.
“The local manager could not discharge a worker for an infraction of rules until a hearing was held with a final decision being made normally with the manager’s recommendation to the company. In the case such as theft, the manager could directly discharge the employee.
“The payroll department for the entire system was located in Minneapolis. All time cards were *126checked by the local manager and forwarded to Minneapolis for compiling and for payment. All payroll checks were drawn on the First National Bank of Minneapolis; these being forwarded to the various points of the company’s system around the country.
“For the purpose of union representation the entire system was treated as a single bargaining unit. Thus the flight engineers were represented by the International Association of Machinists. The district lodge of that union at Minneapolis represented all employee members wherever they might be located in the system and negotiated systemwide rather than local agreements with the company. There were no local labor-management agreements and local employees in Michigan were covered by systemwide agreements which provided systemwide seniority. Employees, regardless of location, have systemwide seniority and are promoted, demoted, or laid off based on systemwide seniority.
“The claimants are variously represented for collective bargaining purposes by International Association of Machinists, Brotherhood of Railway & Steamship Clerks and by the Communications Workers of America. The constitution of the Grand Lodge of the International Association of Machinists provides for a strike fund from which the striking flight engineers drew benefits. The International Association of Machinists’ constitution further provides that 50‡ per month is assessed against each member for the support of his local or district lodge, and is specifically earmarked for inclusion in the strike fund.
“Claimants who are members of the International Association of Machinists did not pay union dues during the period of their lay off. They did not receive strike benefits.
“There was no picketing by anyone at the place of employment of the claimants, the Detroit Metropolitan Airport.
*127“Northwest Airlines pays unemployment taxes on behalf of the claimants to the State of Michigan. Northwest pays unemployment taxes on behalf of its flight engineers to the State of Minnesota.”
The appeal board said, “We do not believe that these flight engineers became employed at the facilities at Detroit Metropolitan airport within the meaning of the act any more than they are attached to any ‘establishment’ in a State over which they fly without landing, simply because of services performed in flight.” Later, the appeal board stated in its opinion that “We therefore conclude that, as a matter of law, the claimants in the instant appeal were employed at a separate ‘establishment’ than that in which the stoppage of work, due to a labor dispute by flight engineers, existed.”
In reversing the decision of the appeal board, the Ingham circuit court held “that the decision of the appeal board is erroneous, as a matter of law.”
Both appellants and appellees agree that the principal issue is whether or not the labor dispute which caused the unemployment of the claimants occurred in the establishment in which the claimants were employed.
Decision in this case turns on the application of principles enunciated in Park v. Employment Security Commission, supra, as that case interpreted statutory language, particularly what constitutes a labor dispute “in the establishment.” Said statutory provisions are the same as they were in the Park Case; however, since the Park Case (1959), and since the 1961 dispute giving rise to the present action, the statute in question has been amended by PA 1963, No 226. Obviously, the amendments do not apply in this suit and, therefore, will not be discussed.
*128The pertinent section of the statute up for review is as follows:
“Sec. 29. (1) An individual shall be disqualified for benefits: * * *
“(b) For any week with respect to which his total or partial unemployment is due to a stoppage of work existing because of a labor dispute in the establishment in which he is or was last employed * * * .” CLS 1956, § 421.29 (Stat Ann 1960 Eev § 17.531).
Although the statute contains no definition of what constitutes “in the establishment,” that expression was fully explored and defined in Park v. Employment Security Commission, supra.
In Park, where a strike in Ford’s Canton, Ohio, plant resulted in the layoff of Ford employees in three Michigan plants in the Detroit area, this Court held erroneous, as a matter of law, a finding that (p 130) “all of the units of the Ford Motor Company, both in Michigan and Ohio, constituted 1 establishment within the meaning of that word as contained in the Michigan act.” This Court held that the term “establishment”, as used in the provision of the employment security act relative to disqualification for unemployment benefits “because of a labor dispute in the establishment in which he is or was last employed”, has reference to a distinct physical place of business. The Court specifically rejected the company’s suggestion that “establishment” is synonymous with “employing unit”, a term which is defined in the act and which, from the discussion in Park, clearly carries a broader application than the term “establishment.” (p 117)
The Court also rejected (p 125) “functional integrality, general unity, and physical proximity * * * as an absolute test.” It adopted language which left no doubt that although these are some *129of the factors to be considered in determining when a factory, plant or nnit is a separate establishment, other facts (p 127) “must be taken into consideration in determining whether the nnit under consideration is in fact a separate establishment from the standpoint of employment.” (Emphasis supplied.) Park, supra, quoting with full approval Nordling v. Ford Motor Company, (1950), 231 Minn 68 (42 NW2d 576, 28 ALR2d 272).
The Park Case thus defined “establishment” in terms of a distinct physical place of business, necessarily localized in character. In so deciding, Parle placed substantial reliance upon Nordling v. Ford Motor Company, supra, which posed a similar problem. Nordling held that a determination of whether a unit of employment is a separate “establishment” within the meaning of the disqualifying provisions of their employment security law must be based upon all the facts relating to the relationship of the employee to the unit of employment, rather than on a determination of whether an entire enterprise or industry is highly integrated as to operating units or unified for the purpose of efficient management or production. See number 5 of the syllabus by the court in Nordling. This analysis is a sound and helpful approach to the problem of applying the facts, which in the instant case are not in dispute, to the statutory principle involved in this lawsuit.
We recognize first that the test of functional integrality, general unity and proximity, which has so often been used and debated in connection with “establishment” cases (see cases discussed in Parle), grew out of problems in industries vastly different from the airline industry. Nearly all such cases involved manufacturing industries, especially automotive, with different sets of operating character*130istics. In manufacturing, the employees are stationary in fixed plant locations, and the products, in various stages of production, move from plant to plant in a highly synchronized manner. The airline industry is, of course, greatly different in organization and purpose. It transports persons and cargoes from place to place and in providing such service employs two distinct kinds of personnel: flight personnel and ground personnel. The ground personnel are located at fixed terminals and offices, while the flight personnel perform their essential functions in connection with the actual flight of aircraft, although some flight personnel perform functions on the ground at various terminal points.
We come down to the question, then, in this ease that where, as here, part of the flight personnel (flight engineers) are involved in a labor dispute with management and certain ground personnel are laid off by management as a result, said ground personnel having no dispute with management, is the labor dispute of the flight engineers “in the establishment” of the ground personnel claimants employed at the Detroit Metropolitan Airport and the Detroit ticket office of Northwest?
Following our interpretation in Parle of what constitutes an “establishment”, that is, a distinct physical place of business local in character, and approaching the fact tests of Parle and Nordling from the stipulated record, we conclude that the labor dispute of the flight engineers did not occur in the establishment of claimants, hence they are not disqualified from unemployment benefits. The analysis of the appeal board is consonant with the broad criteria laid down in the Nordling Case and adopted in Parle, and is therefore relevant at this point:
“The transcript of testimony discloses that, when the aircraft arrived at Detroit metropolitan airport, *131the flight engineers usually walked around the plane in order to examine it in some respect and, also, perhaps employed their skills in some manner while the plane was being serviced and while passengers were either deplaning or emplaning. However, the primary service of tlie flight engineers appears to he rendered while the aircraft is in flight. For these services, the flight engineers are subject to the flight captain aboard the ship. Can it be said that these flight engineers were employed at the Michigan facility? Here again, the nature of the transportation industry is such that those who employ their skill do so from place to place and it is urged that they are employed at each point along the route. We believe that such type of service is employment at each point along the route in a very literal sense. The question before us, however, is whether or not we have such employment under the terms of our employment security act. We do not believe that these flight engineers became employed at the facilities at Detroit Metropolitan Airport within the meaning of the act any more than they are attached to any ‘establishment’ in a State over which they fly without landing, simply because of services performed in flight. It is to be noted that the flight engineers are not considered in the Michigan employment count for Northwest Airlines Incorporated’s taxes under the act, and no report is made to Michigan of their wages. It follows that these flight engineers could not file claims for unemployment benefits under our act and it appears, from the record, that a number of the flight engineers filed for unemployment benefits in Minnesota. We therefore do not believe that there is any sound basis in the record to consider these flight engineers as having had a labor dispute at a Michigan ‘establishment.’ ” (Emphasis supplied.)
■ To this analysis, we would add the following from the stipulated record. The flight engineers on strike were neither based nor domiciled in Michigan, they *132were domiciliarles of either Minneapolis, Minnesota, or Seattle, Washington. None of the aircraft to which they were attached was stored in Michigan. The services performed by the flight engineers were under the direction and control of the captain of the aircraft; although, in the event of a layover in Detroit, the flight engineers would come under control of the Detroit operations manager while in Detroit. The operations manager is, as his title implies, in charge of the Detroit operation, including the ground personnel therein.
The referee, in his opinion, sought to distinguish this case from the Park Case by showing that in the Park Case there were “localized employment conditions” whereas in this case “the employer’s [Northwest] airline system is highly integrated with all units along its route, not only for the purposes of management and operation, but for employment purposes as well.” He then goes on to explain his point by repeating that Northwest employees are hired under systemwide collective bargaining agreements and that, although employees may be hired by local units, the central control is maintained by management at company headquarters in St. Paul. The same point is substantially repeated in the opinion of the circuit judge in his review. We think the emphasis was misdirected and, therefore, led to the error in decision.
The Park Case directs us to look first to the ordinary definition of the word “establishment.” In this connection, the controlling opinion in Park instructively comments as follows: (p 116)
“Judges and lawyers can frequently do astonishing things with words. No layman would venture to suggest the single word ‘establishment’, * * * could in normal usage be applied to both the Ford Rouge plant in Dearborn, Michigan, and the Ford forge plant in Canton, Ohio. * * *
*133“No layman without a specific motive in mind, would read the statutory provisions quoted above and come to the conclusion that the legislature had any such inclusiveness in its intended use of the word.”
This returns us to the simple definition which was adopted in Park, that an “establishment,” within the meaning of the statute, is a distinct physical place of business, local in character. But definitions alone do not suffice when we are faced with the necessity of analyzing the highly complex relationship of the local employee to his employer, a multi-faceted, international business organization. The Park Case then commands us to look not alone to functional integrality, general unity, and physical proximity as a test but to other factors as well, from the standpoint of the worker’s employment.
In view of the broad test laid down in Park, we think that the referee and the able circuit judge placed too heavy emphasis upon the systemwide collective bargaining agreements and central control of personnel. These are factors to be considered, neither more nor less meaningful than other factors present in the case such as the transitory nature of the flight engineers’ work contrasted with the local character of claimants’ work. If we were to affirm the referee and the circuit judge we would be placing undue emphasis upon the systemwide personnel and union procedures of Northwest which cannot be decisive in determining what was the character of the local workers’ employment and the character of the place in which it was performed.
The fact that there was a centralized payroll department and certain basic controls of employees from the Northwest headquarters in Minneapolis do not detract from the distinctly local character of the establishment in question. Nor do we per*134ceive that because the flight engineers performed some part of their function on the ground in Detroit the character of the Detroit operation was thereby altered so as to place the labor dispute in the local establishment.
Northwest also argues that those of the claimants who belong to the same international union (International Association of Machinists), as do the flight engineers, should also be disqualified for the reason that by the payment of union dues prior to the strike, a portion of which went into a strike fund, the claimants had “financed the labor dispute which caused the stoppage of work as contemplated in Section 29(1) (b)(2) of the Michigan employment security act:
“‘(2) That he is * * * financing * * * the labor dispute which caused the stoppage of work; * * * > >5
The brevity of the quotation in this argument makes it necessary to quote somewhat at greater length from the portion of the statute from which the quotation was taken. It read as follows:
“Sec. 29(1) An individual shall be disqualified for benefits: * * *
“(b) For any week with respect to which his total or partial unemployment is due to a stoppage of work existing because of a labor dispute in the establishment in which he is or was last employed: Provided, however, That no individual shall be disqualified under this section if he shall establish that he is not directly involved in such dispute. For the purpose of this section, no individuals shall be deemed to be directly involved in a labor dispute unless it is established: * * *
“(2) That he is participating in or financing or directly interested in the labor dispute which caused the stoppage of work; Provided, however, That *135the payment of regular union dues shall not he construed as financing a labor dispute within the meaning of this subsection.” Michigan employment security act, CLS 1956, § 421.29 (Stat Ann 1960 Rev § 17.531). (Emphasis supplied.)
In interpreting the application of the proviso (to which emphasis has been supplied), this Court has already ruled contrary to the argument made by Northwest. In Park, at page 131, we said that “the basic disqualification finding required in the first sentence of section 29(1) (b) must be legally made before the proviso relating to ‘direct involvement’ becomes effective, and before considering or applying the tests of direct involvement set forth in subsections 1, 2, 3 and 4.” This means simply that it must first be established the stoppage of work was due to a labor dispute “in the establishment” before the tests of direct involvement, set forth in subsections 1, 2, 3 and 4, can be applied. Having already decided that the labor dispute was not in the establishment, the proviso plainly does not apply.
The judgment of the Ingham circuit court is reversed as a matter of law, and upon remand the decision of the appeal board will be reinstated. Costs to appellants. .
T. M. Kavanagh, C. J., and Souris and Adams, JJ., concurred with Smith, J.

 As -will be seen from the “statement of proceedings and facts,”» some of the claimants are members of the same union, International ’ ■Association of Machinists, as the flight engineers, while other claim•ants are members of 2 other unions: Brotherhood of Railway and steamship Clerks and the Communications Workers of America.