Court Opinion

ID: 3499343
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:06:36.91467+00
Date Added: 2024-06-11T14:15:53.649417
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 440 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 441 
The Chrysler Corporation manufactures automobiles and to that end maintains and *Page 442 
operates, in the Detroit area, nine essential, coordinated plants, known as the Dodge main plant, Dodge truck plant, Dodge forge plant, DeSoto, Dodge Amplex, Highland Park, Chrysler-Jefferson, Chrysler-Kercheval, and Plymouth. A labor dispute, actively in progress in the main plant, stopped work and occasioned unemployment of employees of the Chrysler Corporation in all of the plants. About 50,000 of the employees so affected made claims for unemployment compensation under Act No. 1, Pub. Acts 1936 (Ex. Sess.), as amended by Act No. 347, Pub. Acts 1937, and Act No. 324, Pub. Acts 1939, known as the Michigan unemployment compensation act.*
Briefly stated, that act provides for a segregated fund created, in large part, by assessment upon employers of workmen and to be administered by a State commission with mapped procedure.
Section 29, subd. (d), of the act provides the following disqualification for benefits:
"For any week with respect to which his total or partial unemployment is due to a labor dispute which is actively in progress 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."
The commission denied the claims for unemployment benefits. The claimants thereupon, as provided *Page 443 
in the act, had the matter sent to a referee appointed by the commission to take testimony and make report.
A consolidated hearing on typical test claims was conducted before the referee and testimony, occupying over 2,000 pages of the printed record, was taken. The referee found:
"The one stubborn and undisputed aspect of this case, however, is that, during the calendar week ending October 14, 1939, and thereafter, a labor dispute was actively in progress at the Dodge main plant; that this labor dispute caused a stoppage of work 'in 22 of the 28 production departments;' that the subject matter of the labor dispute was with respect to the wages, hours and general conditions of employment of all the hourly workers of that plant; that the condition of employment of all these hourly workers, whether in productive or nonproductive departments, are closely related; * * * and that, as a result of it, they were all as a matter of fact and law 'directly interested' in said strike within the meaning of section 29, subd. (d) (2), of the act and are, therefore, disqualified for the period of its duration.
"The same reasons led the workers of the Dodge truck plant to bring to a standstill production there, when they established a picket line around the plant November 1, 1939, and continued it to the termination of the strike on November 30, 1939.
"Hence, the appellants (and all other hourly workers — excepting a group of maintenance workers to be designated below) are disqualified for the calendar week ending November 4, 1939, and up to and including November 29, 1939.
"And the same is true of the appellants (and other hourly workers — excepting maintenance workers of the class to be designated below) of the Dodge forge plant who established a picket line November 8, 1939, are disqualified for the week ending *Page 444 
November 11, 1939, and up to and including November 29, 1939.
"The appellants and the workers of the other plants do not come within the labor dispute provisions of the act for the reasons already stated."
This last holding was based upon a conclusion of law that the term "establishment" covered only the units in which a labor dispute was actively in progress, regardless of the stoppage effect upon other units so synchronized thereunder as to be unable to function alone.
An appeal was taken to the appeal board. Upon review the appeal board found that the claimants worked at the various units within the Detroit area and that:
"All of these plants are within 11 miles distance of the Dodge main plant, which in many respects is the key plant of the entire organization. This particular plant supplies various parts or assemblies to all of the other plants and it is frequently referred to as the feeder or the principal supplier plant for the other manufacturing units of the corporation. Most of the corporation's manufacturing operations are functionally integrated and highly synchronized with the production of the Dodge main plant. During periods of normal production there are over 57,000 hourly-rated employees working in the corporation's plants in the Detroit area and of this number approximately 23,000 are employed in the Dodge main plant.
"The main offices of the corporation are, however, located at the Highland Park plant and it is from these offices that the general operations of the corporation are controlled. The central accounting, engineering, export, mailing, production, purchasing, routing and service departments of the corporation are all located in or immediately adjacent to the *Page 445 
general offices in Highland Park. Each plant has, however, individual plant managers and engineers who supervise the operations of their respective plants. * * *
"Shortly after production began on the 1940 models, labor difficulties were experienced between the corporation and many of its employees. * * * Perhaps at this point it is sufficient to state that the production standards set by the employer were not met by the workers and that the alleged slow-downs occurred mainly in the Dodge main plant. The corporation contended that the slow-downs increased until they affected approximately 50 per cent. of the scheduled production and that they gradually spread from a few departments until approximately 25 of the 28 departments of this plant were affected. In many instances operations were skipped by the employees and it soon became impossible to carry on a synchronized method of manufacturing. Labor difficulties were also experienced in a few of the other plants.
"Several conferences were held between representatives of the corporation and the union regarding these production problems but the situation gradually grew worse. Warnings were issued by the management that unless the employees discontinued their tactics disciplinary action would be taken. On October 6, 1939, the corporation discharged 57 employees for alleged participation in the slow-downs. Within the next few days 60 additional employees had been discharged and 7 had been laid off for periods of two weeks because of refusals to comply with instructions issued by the management. These 124 employees worked in 19 different departments in the Dodge main plant.
"Because of a shortage of parts and the production difficulties which were occurring among the various plants, operations gradually decreased in all of the corporation's plants in the Detroit area. On October 18, 1939, picket lines were established *Page 446 
at the Dodge main plant and at the transportation department located in the old Dodge truck plant. A picket line was established at the present Dodge truck plant on October 31, 1939, and still another picket line was established on November 6, 1939, at the Dodge forge plant. On November 25, 1939, an official strike was declared by the UAW-CIO at the Dodge main plant."
The national labor relations board directed that elections should be held among all the production and maintenance employees of the company, excluding foremen, assistant foremen, time keepers, plant production employees, office employees, confidential salaried employees, and salaried engineers. These elections, by secret ballot, were conducted on or about September 27, 1939, and resulted in an overwhelming majority of the eligible employees from the various Chrysler Corporation plants in the Detroit area, voting in favor of the UAW-CIO. This union was subsequently certified by the national labor relations board as the exclusive representative of all such employees for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, and other conditions of employment.
The appeal board made the following applicable observation:
"We have always believed that it was the duty of the Michigan unemployment compensation commission, the referees, and the appeal board to remain absolutely neutral in all controversies concerning the eligibility or the disqualification of claimants. All interested parties who are involved in a claim for unemployment compensation, or in an appeal from any determination issued on such a claim, must be dealt with on an impartial basis. The unemployment *Page 447 
compensation fund should never be used to finance claimants who are directly involved in a labor dispute, nor should it ever be denied to claimants who are legally entitled to receive benefits. This fund is in many respects a public trust fund and all who have custody [of] or control over it are in reality trustees who must at all times administer the fund in strict compliance with the provisions of the law. None of the money accumulated in this fund should ever be disbursed for the purpose of financing a labor dispute nor should it be illegally withheld for the purpose of enabling an employer to break a strike. The State of Michigan, in so far as this act is concerned, must remain neutral in all industrial controversies."
The appeal board also found that a labor dispute was actively in progress in the Dodge main plant from October 6, 1939, to November 29, 1939. The appeal board affirmed the holding of the referee relative to the term "establishment."
The holding of the board was reviewed by certiorari in the circuit court for the county of Ingham, and that court held that "plaintiff's different plants must be regarded as separate establishments insofar as the application of section 29, subd. (d) is concerned."
The court also found:
"The referee and the appeal board have found that labor disputes were actively in progress in at least three plants but that such was not the case as to the others. In view of the conclusion reached as to the meaning of the word 'establishment' such finding must be treated as one of fact. So considered it cannot be regarded as against the great weight of the evidence. It is not sufficient that employees in plants other than those in which strikes occurred had an interest therein. Rather such employees are *Page 448 
entitled to unemployment compensation under the act of the legislature as it is worded unless the stoppage of work was due to a labor dispute actively in progress in the plant of their own employment."
Under provisions of the act the Chrysler Corporation reviews by appeal, and a cross-appeal was also taken by certain claimants.
The main question is whether, under the legislative employment of the term "establishment" in section 29, subd. (d), of the act, the units constituting the work production system set up by the corporation should be held separate "establishments" or, as a whole, an "establishment." An"establishment," under the simplest definition and commonsense understanding, is merely something established. The purpose and use of the creation, if to accomplish an end in which all units are participants in bringing it about, constitutes the units, so synchronized and employed by the Chrysler Corporation in accomplishment of a common end, an "establishment" within the meaning of the term as employed in the act.
December 3, 1940, the supreme court of Wisconsin, in the case of Spielman v. Industrial Commission, 236 Wis. 240
(295 N.W. 1), considered the meaning of the term "establishment" in the unemployment compensation act of that State. The provision in the Wisconsin act reads:
"An employee who has * * * lost his employment with an employer because of a strike or other bona fide labor dispute shall not be eligible for benefits from such * * * employer's account for any week in which such strike or other bona fide labor dispute is in active progress in the establishment in which he is or was employed." Wisconsin Stat. 1939, § 108.04 (5) (a). *Page 449 
The import of that provision is the same as in the Michigan act. The Nash-Kelvinator Corporation manufactures automobiles, having plants at Milwaukee and Kenosha. Car bodies are manufactured at the Milwaukee plant and parts, other than bodies, at the Kenosha plant. The production in each plant was highly synchronized and the work of the two plants coordinated. The plants are about 40 miles apart, and the bodies taken from one plant to the other by trucks operated by employees of the corporation. Spielman was employed in the Milwaukee plant. Employees of the Kenosha plant, on account of a labor dispute, went on strike and that resulted in shutting down both plants.
The court held "that although the two plants were 40 miles apart, they were just as much a single establishment for the manufacture of automobiles as they would have been had they been in two buildings adjacent to each other."
The court affirmed the holding of the commission in denying compensation on the ground that the Milwaukee and Kenosha plants constituted an "establishment" within the meaning of the statute, because "of their 'physical proximity, functional integrality, and general unity.' "
It is stated in the brief for claimants:
"There can be no real controversy on the record in this case as to the immediate and proximate cause of the stoppage of work at the Dodge main plant.
"Prior to October 6th there was no stoppage of work at the Dodge main plant. Whether there was or was not a slow-down in one or more departments, it is conceded that no stoppage of work resulted.
"However, it is agreed by all witnesses that the demoralization of production resulting in a stoppage of work occurred immediately after the men were discharged on October 6th." *Page 450 
The claim that there was a lock-out by the plaintiff is without support, and so found by the referee.
In behalf of claimants it is contended:
"The sole cause of the unemployment of the Chrysler workers was the discharge of men at the Dodge main plant and the refusal of the company to rehire them. * * *
"The union took the position at the very outset of the trouble at the Dodge main plant on October 6th that it desired to have the men employed at the plant while contract negotiations were pending."
This tied the labor dispute, actively in progress, with the contract then wanted by the union and all subsequent events stopping work. Such labor dispute, actively in progress, and the stoppage of work in the Dodge main plant, that being the key to operation of all units, resulted, whether so intended or not, in closing operations in all units and in throwing plaintiffs and thousands of others out of employment.
The company found a shortage of output and, believing it occasioned by concerted action of the workmen, discharged a number. The UAW-CIO, bargaining agent for employees, took the matter up and advised the discharged workmen to go back and attempt to work. They were prevented. Then a membership meeting of the Dodge local voted to give the international union authority to call a strike in the Dodge main plant. A picket line was formed and, November 25, 1939, the UAW-CIO called a strike. A new contract was also a bone of contention and finally, December 1, 1939, differences were adjusted and operations were resumed at the Dodge main plant and at the other plants as soon as essential parts, manufactured at the Dodge main plant, were available. *Page 451 
We hold that the Dodge main plant and the mentioned synchronized units constitute one "establishment" within the meaning of that term as employed in the act, and claimants are disqualified from unemployment compensation by reason of the fact that their claims are based upon unemployment during a period in which a labor dispute, in which they were directly involved, was in active progress, and caused stoppage of operations in the establishment where they were employed.
Claimants invoke section 29, subd. (d) (2), of the act, and contend:
"That whether the plants of the Chrysler Corporation are treated as a single establishment or as separate establishments, all of the claimants in this case, including those employed at the Dodge main plant, are entitled to receive their benefits, since none 'participated in' or 'financed' or was 'directly interested' in the labor dispute which caused the stoppage of work."
The circuit judge said on this point, with reference to three plants, and which we think applicable to the establishment, the following:
"It must be borne in mind that claimants were all represented by their exclusive bargaining agency, duly selected as such at the election held under the auspices of the national labor relations board. Whether we regard the employees as acting through their agent, or treat them as third party beneficiaries, as counsel in their brief suggest, the practical result is the same. The third party beneficiary may not accept the benefits of a contract made in his behalf and reject the burdens. There is no escape from the conclusion that all employees in the plants in which strikes were called were 'directly involved' and were also 'directly interested.' The rule is too well settled to be questioned that a *Page 452 
labor dispute that affects the wages, hours of work, and general conditions of employment, causes all employees concerned to be directly interested. This is not a contingent, remote, or speculative interest, but rather must be regarded as directly within the meaning of the statute.
"It further appears that prior to the amendment made at the session of 1939, the appeal board had given to the expressions under consideration the meaning adopted by the referee. It is contended, in consequence, that the amendment at the last session was made in the light of such executive interpretation, which must be presumed to have been known to the legislature, and that the reenactment of the language so construed carries with it the sanction of legislative approval of such conclusion. That this is the general rule seems to be well settled. Commerce-Guardian Trust  Savings Bank v. State,228 Mich. 316; People v. Railway Co., 228 Mich. 596; Brewster v.Gage, 280 U.S. 327 (50 Sup. Ct. 115, 74 L.Ed. 457)."
The labor dispute involved new contract provisions in which claimants were directly interested, and the stoppage of work and the calling of a strike in the main plant were well calculated to bring about a new contract of employment of direct interest to all claimants. There is no merit in the point.
Pending judicial determination of the rights of claimants, the circuit court stayed payments out of the fund and denied claimants' motion to vacate the order.
Claimants invoked that part of section 34 of the act, reading:
"Provided, That if the final decision of a referee affirms the initial or an amended determination, or the appeal board affirms the final decision of a referee, allowing benefits, such benefits shall be paid regardless of any appeal which may thereafter be *Page 453 
taken, but if such decision is finally reversed, no employer's experience record shall be charged with benefits so paid."
This, if held applicable in the instance at bar, would render administrative action superior to recognized judicial power in the premises and constitute the provisions relative to appeal and court procedure a nullity. If construed, as applicable in this instance, it would render due process of law, expressly recognized and provided for in the act, nugatory and a senseless gesture. The circuit judge held the provision inapplicable, and we join in such holding without spending time in an endeavor to note its place, if any, under other circumstances.
Claimants question the right of the Chrysler Corporation to appear and contest their right to awards. This requires but short answer. As a contributor to the fund, having an interest in its proper disbursement, it was the right of the corporation, if not its duty, to see that the purpose and full integrity of the fund was preserved.
In Pittsburgh Plate Glass Co. v. National Labor RelationsBoard, 313 U.S. 146 (61 Sup. Ct. 908, 85 L.Ed. 1251), decided April 28, 1941, it was held that, under election, the CIO, having a majority of all employees in five of the six plants of the flat glass division, located in five different States, was the sole bargaining agent for employees in all six on the ground that the entire division is a single bargaining unit, thus negativing the claim that the Crystal City union, which claimed a majority at that plant in Missouri, should be separated from the rest of the division for the purpose of fixing the bargaining unit.
In the case at bar, under the election ordered by the national labor relations board, the UAW-CIO *Page 454 
became the sole bargaining agent for every plant division of the Chrysler Corporation and, as such, its activities in the labor dispute directly involved claimants and their interests.
Judgment will be entered in this court in accordance with this opinion but, the question being new in this jurisdiction and of public moment, neither party will recover costs.
SHARPE, C.J., and CHANDLER, NORTH, and BUTZEL, JJ., concurred with WIEST, J.
* Comp. Laws Supp. 1940, § 8485-41 et seq., Stat. Ann. 1940 Cum. Supp. § 17.501 et seq. — REPORTER.