520 South Michigan Avenue Associates v. The Department of Employment Security ( 2010 )

FIRST DIVISION
September 7, 2010
No. 1-09-2095
520 SOUTH MICHIGAN AVENUE ASSOCIATES, ) Appeal from the
d/b/a The Congress Plaza Hotel and ) Circuit Court of
Convention Center, ) Cook County.
)
Plaintiff-Appellant )
)
v. ) No. 06 L 050602
)
THE DEPARTMENT OF EMPLOYMENT SECURITY, )
an Administrative Agency in the State )
of Illinois; BRENDA A. RUSSELL, )
Director of Illinois Department of )
Employment Security; LOCAL 1, UNITE )
HERE, f/n/a/ Hotel Employees and )
Restaurant Employees International )
Union; et al., ) The Honorable
) Alexander P. White,
Defendants-Appellees. ) Judge Presiding.
JUSTICE GARCIA delivered the opinion of the court.
Plaintiff 520 South Michigan Avenue Associates, doing
business as the Congress Plaza Hotel & Convention Center
(Congress Plaza), appeals from the decision of the Illinois
Department of Employment Security and its Director (collectively,
the Director) that its employees, striking since June 15, 2003,
were "not ineligible" for unemployment benefits after the week
ending July 5, 2003, a decision the circuit court confirmed.
Congress Plaza contends the claimants remained ineligible under
section 604 of the Illinois Unemployment Insurance Act (the Act),
which provides a claimant is "ineligible for benefits for any
1-09-2095
week his *** unemployment is due to a stoppage of work which
exists because of a labor dispute." 820 ILCS 405/604 (West
2008). In a supplemental decision, the Director found that the
"stoppage of work" ended July 5, 2003, because Congress Plaza had
resumed substantially normal operations. Congress Plaza
challenges this decision, contending a shortage of workers
remained, its occupancy remained low, and it had to contend with
a noisy, disruptive picket line, all of which preclude a finding
that substantially normal operations had resumed.
The Director and the claimants, members of Local 1 UNITE
HERE, the union representing the striking employees,1 contend
Congress Plaza's own admissions to the Department's written
inquiries that it had suffered no curtailment in the operations
of the hotel within two to three weeks after the start of the
strike support the Director's decision, which is subject to
1
Congress Plaza named all members of the striking
"bargaining unit" of the union as defendants, but only about
seventeen striking employees actually filed for unemployment
benefits at the time of the Director's initial decision, making
them claimants and the only union members that should have been
named as defendants in the circuit court proceedings. See 56
Ill. Adm. Code §2720.1, amended at 21 Ill. Reg. 12129, eff.
August 20, 1997 (a claimant is "a person who applies for benefits
under the Act").
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review for clear error. The Director and claimants argue that it
was Congress Plaza's burden to establish the stoppage of work was
ongoing by showing that its business continued to suffer
significantly, a burden Congress Plaza failed to carry. We agree
on all counts and affirm.
BACKGROUND
On June 15, 2003, members of Local 1 went on strike against
the Congress Plaza Hotel & Convention Center. The union members
were employed in various guest service positions such as
housekeeper, laundry attendant, cook, steward, server, bartender,
and bell attendant. The striking members represented between 130
and 185 of the approximately 220 individuals employed by Congress
Plaza. The employees established a picket line outside the hotel
that continued through at least July 15, 2004.
Shortly after the start of the strike, some of the union
members filed for unemployment benefits. On June 18, 2003,
Congress Plaza filed an eligibility protest with the Department
pursuant to section 2720.130(a) of Title 56 of the Administrative
Code (56 Ill. Adm. Code §2720.130(a), amended at 18 Ill. Reg.
16340, eff. October 24, 1994), contending the claimants were
ineligible for unemployment benefits under section 604 of the Act
because of the strike. On various dates thereafter, the
Department made numerous inquiries of the hotel regarding the
level of its business operations. Congress Plaza's director for
human resources, Mark Souder, responded in writing to the
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inquiries. Mr. Souder indicated 94 permanent employees were
working at the hotel as of July 29, 2003. Congress Plaza was
also using outside temporary workers to fill guest services
positions as needed. Sixteen union members had crossed the
picket line and returned to work at this point, and a total of
twenty-seven did so by July 13, 2004.
In August 2003, the Department submitted a written inquiry
to Mr. Souder: "Do you feel that the hotel's level of operation
is substantially normal despite the strike?" On August 12, 2003,
Mr. Souder responded, "Yes." In correspondence dated August 27,
2003, the Department asked the very same question, with a follow-
up question, "If yes, why?" Mr. Souder responded, "Yes. All
services normally provided for the guests are being provided."
To the questions, "What is the extent of curtailment in
operations? What is the percentage?" Mr. Souder responded,
"None. 0%." To the question, "How many managers are being
utilized and to what extent is [any] work being neglected?", Mr.
Souder responded, "All the managers of the Hotel. No work is
being neglected."
On September 23, 2003, and again on September 29, 2003, the
Department, through Carolyn Vanek, mailed nearly identical
correspondence to Mr. Souder to confirm its understanding of a
telephone conversation Ms. Vanek had with Mr. Souder on September
22, 2003. Ms. Vanek reiterated that Mr. Souder had "estimated
operations returned to 'substantially normal' within the *** two
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to three week period" after the strike began. In the September
29 correspondence, she informed the hotel, "To be clear, once
operations are substantially normal, Section 604 of the
Unemployment Insurance Act, which generally provides that
striking or locked-out workers are ineligible for benefits, is no
longer applicable."
Following the September 29 correspondence concerning the
continued applicability of section 604, on September 30, 2003,
Mr. Souder wrote to Cheryl Howard, manager of the Labor Dispute
Unit at the Department, asserting, "Overall, 'operations' at the
hotel have not returned to a 'substantially normal' level." He
explained his conflicting responses to the Department's written
inquiries. "[Ms. Vanek] did not define what she meant by these
terms and I responded to them in the limited context of the
questions she asked: i.e., guest service." He asserted that
Congress Plaza's business levels had suffered due to the strike
and because of the disruption caused by the picket line. He
pointed to union literature boasting its action against the hotel
had caused over $400,000 in lost revenue.
Claims Adjudicator
Following Congress Plaza's written protest that the
claimants were ineligible for unemployment benefits under section
604, the claims adjudicator ruled on January 9, 2004, that the
claimants were ineligible from June 15, 2003, through the week
ending July 5, 2003, but "not ineligible" for any week
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thereafter. The adjudicator determined that while the hotel was
not operating at precisely the same level as before the strike,
the hotel was running at substantially normal operation levels
with the use of management personnel, service workers that had
crossed the picket line, and temporary workers from four or five
different agencies. Congress Plaza appealed the adjudicator's
decision pursuant to section 800 of the Act. 820 ILCS 405/800
(West 2008). An administrative hearing was conducted pursuant to
section 801 before the Director's representative. 820 ILCS
405/801 (West 2008).
Director's Representative
At the administrative hearing beginning on July 13, 2004,
Lucinda Scharbach, an organizer for the union, testified she
spends 20 percent of her time trying to persuade potential guests
not to patronize the hotel. In one "Strike Alert" she e-mailed
an individual regarding an upcoming conference at the hotel and
"strongly recommended" the individual inform conference guests of
substandard conditions at the hotel and of the union's intentions
to stage loud demonstrations during the conference. Ms.
Scharbach participated in large demonstrations outside the hotel
on Labor Day in 2003 and on June 16, 2004. Dan Miller, a lead
union organizer, testified that since the strike began,
demonstrations were held at the hotel on seven or eight occasions
involving more than 100 individuals.
On behalf of Congress Plaza, Mark Souder testified that
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picketing workers would sometimes use bull horns or bang drums
outside the hotel. The picket line typically included about 20
striking employees, but larger rallies would occur about once per
month. Mr. Souder testified customers would occasionally
complain, and one guest sought "some sort of restitution from the
hotel" for the inconvenience caused by one of the larger rallies.
According to Mr. Souder, another guest complained to police that
a union supporter had assaulted him. Mr. Souder also testified
that a hotel doorman complained that two striking employees had
shouted racial epithets at him, which the union denied.
According to Mr. Souder, he had to devote a large amount of
time in December 2003 to assist employees that had crossed the
picket line when the union gave notice that their health
insurance benefits were set to terminate at the end of the year.
The highly publicized nature of the strike also triggered a large
number of job applicants, requiring Mr. Souder to devote
considerable time explaining that Congress Plaza was not hiring
permanent replacements, but using temporary workers. Mr. Souder
conceded that his involvement with some of these matters fell
within his job description and thus the work was not directly
attributable to the strike.
Mr. Souder testified the high turnover among the temporary
workers required him to spend time training new replacements. He
admitted, however, that the annual turnover of employees during
the years leading up to the strike was also high, between 40% and
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60%.
Mr. Souder testified that the temporary workers performed
50% to 75% of the work previously done by the striking employees.
This meant that he, other managers, nonunion "line workers," and
the returning strikers had to perform the rest. Managers were
often required to perform line work, which was generally outside
the scope of their jobs. The managers were generally required to
do the line work when the hotel was fully occupied or the
restaurant was especially busy. Mr. Souder testified that he
worked up to two hours longer per day after the strike and worked
more weekends than before. After the strike, he performed
housekeeping functions six times. He answered phones for the
housekeeping staff three or four times. He bussed tables one or
two dozen times. He observed one restaurant manager serve almost
"exclusively" as a bartender. He stated the food and beverage
manager spent time serving food or bussing tables after the
strike, but he told Ms. Vanek that this was probably true before
the strike as well. He testified that clerical workers were
performing guest service work in addition to their clerical
duties.
Nonetheless, Mr. Souder confirmed the accuracy of his
written responses to the written inquiries of the Department. As
of September 9, 2003, all "work was getting done." He noted,
however, the restaurant had to cut back some items from its menu
and it might take longer to respond to requests from guests for
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additional towels, an iron or the like. Mr. Souder testified
Congress Plaza had hosted at least 20 weddings since the start of
the strike in June through the end of 2003, but had hosted only 6
weddings in the first six months of 2004.
Mr. Souder also sought to testify about his knowledge of the
revenues of Congress Plaza, both before and after the strike.
Mr. Souder's knowledge was not first-hand, but predicated on
business records, which the hotel refused to produce. Congress
Plaza claimed disclosure of the information was prohibited by
confidentiality requirements of ongoing labor negotiations before
the National Labor Relations Board. Counsel for the claimants
argued, however, that nothing prohibited the hotel from producing
the business records. The Director's representative ruled "there
is no basis for the lack of presentation of [the hotel business]
records" and, in their absence, barred Mr. Souder's testimony
about Congress Plaza's revenue.
Shakeel Siddiqui testified he is the general manager of
Congress Plaza, to whom all other managers report. He lives at
the hotel. He testified that the three primary internet hotel
booking Web sites had issued advisories warning potential guests
of the strike at the hotel. Since the start of the strike, he
had cleaned rooms, parked cars, served in the dining room, poured
drinks in the bar, and carried guests' bags to their rooms. On
cross-examination, he admitted to having parked cars only once.
While he initially claimed to have cleaned rooms "every single
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day," he retracted that claim, stating he cleaned rooms no more
than four days per week during some months and during other
months he cleaned no rooms at all. He testified that since the
start of the strike he worked 24 hours per day. Prior to the
strike, Mr. Siddiqui would spend at least an hour per day
comparing prices with competitors and working on hotel marketing.
He was no longer able to do that after the start of the strike.
On September 1, 2005, the Director's representative issued a
report recommending that the claimants be found ineligible for
unemployment benefits from June 15, 2003, through the date of the
hearing, July 15, 2004. The representative concluded that a work
stoppage was ongoing at Congress Plaza and, contrary to the
determination by the claims adjudicator, its business operations
had not returned to substantially normal levels because Congress
Plaza had relied on "extraordinary methods and abnormal
operations, consisting of the use of management personnel,
temporary agency workers, and line workers to do work normally
done by" union employees. She found Congress Plaza had to rely
on "the use of greater man-hours to maintain the same level of
service, to the neglect of significant management duties."
Director's Decision
On May 25, 2006, the Director rejected the decision of the
Director's representative, in favor of the decision by the claims
adjudicator, finding the claimants were "not ineligible" for
benefits for any week beginning after July 5, 2003. The
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Director's written decision concluded that Congress Plaza had the
burden to show that its business had not resumed substantially
normal levels of operation and it had not met that burden.
"Evidence concerning an employer's normal operations is a matter
within the exclusive control of the employer. The employer has
the burden of proving it." Congress Plaza did not produce the
necessary evidence to support its contention. In her decision,
the Director stated, "I conclude that the employer was able to
resume substantially normal operations by July 5, 2003, by
farming out much of the claimants' work to temporary service
agencies."
On September 7, 2007, in the administrative review
proceedings, the circuit court remanded the case to the Director
with instructions to supplement her decision with specific
findings of fact.
On June 4, 2008, the new Director issued a "Supplemental
Decision." The Director affirmed the earlier decision. He found
Mr. Souder worked no more than 1 additional hour during the
strike relative to before, and Mr. Siddiqui's testimony that he
worked 24 hours per day was beyond belief. He found both
witnesses "evasive." The Director found "farming out work"
through the use of temporary employees did not necessarily
preclude a conclusion that the hotel had resumed substantially
normal operations. The Director also noted Congress Plaza's
refusal to document the extent of its use of temporary workers or
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the extent to which its business revenues suffered.
On July 13, 2009, the circuit court issued a lengthy
decision confirming the Director's decision. The court observed
"there may be some leeway given to Mr. Souder's non-attorney
status in answering" the Department's written inquiries regarding
whether guest services had returned to normal operations
following the start of the strike in June 2003. Nonetheless, it
found "it is difficult to understand how, 'no work is being
neglected' can somehow imply in any sense that [the hotel] had
not returned to substantially normal operations."
This timely appeal followed.
ANALYSIS
We begin with the stated purpose of the Illinois
Unemployment Insurance Act: "The general purpose of the Act is to
provide compensation for those persons who are involuntarily
unemployed." Bridgestone/Firestone, Inc. v. Doherty, 305 Ill.
App. 3d 141, 147, 711 N.E.2d 799 (1999). The Act is to be
"liberally construed" in the interest of eliminating "[p]overty,
distress, and suffering." Huggins v. Board of Review, Department
of Labor, 10 Ill. App. 3d 140, 143, 294 N.E.2d 32 (1973); 820
ILCS 405/100 (West 2008). The general purpose behind the Act is
tempered by section 604 of the Act, which provides that a
claimant is ineligible for benefits if his or her unemployment is
"due to a stoppage of work which exists because of a labor
dispute" at the claimant's employer. 820 ILCS 405/604. Section
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604 "evinces the legislative determination that the State is to
remain neutral in labor disputes and collective bargaining,
rendering assistance to neither the employer nor labor." Local
7-641, Oil, Chemical & Atomic Workers International v. Department
of Labor, 96 Ill. 2d 94, 98, 449 N.E.2d 134 (1983).
In 1953, our supreme court recognized that whether a
"stoppage of work" arising from a labor dispute continues for
purposes of ineligibility for unemployment benefits turns on
whether " 'production or operation' " of the business has been
diminished as a result of the labor dispute. Robert S. Abbott
Publishing Co. v. Annunzio, 414 Ill. 559, 569-70, 112 N.E.2d 101(1953), quoting the Nebraska Supreme Court in Magner v. Kinney,
141 Neb. 122, 130-31, 2 N.W.2d 689, 693 (1942). In Abbott
Publishing Co., two distinct groups of claimants from the same
employer were involved. The supreme court affirmed the
Director's decision that for the "composing room employees" the
"stoppage of work" ceased on the day the employer employed "the
same number of workers *** normally employed prior to the time of
the strike." Abbott Publishing Co., 414 Ill. at 563, 571. For
the "mailing room employees," the stoppage of work ceased on the
very day they joined the strike, because "they were fully
replaced on the same day." Abbott Publishing Co., 414 Ill. at
571.
The central issue in this appeal is the Director's decision
that the "stoppage of work" at the Congress Plaza, caused by the
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strike on June 15, 2003, had ceased by July 5, 2003. The
"stoppage of work" test, to determine eligibility for
unemployment benefits of employees that lost their work due to a
labor dispute has been refined to require a finding that the
employer has "return[ed] to substantially normal [business
operations]." Travis v. Grabiec, 52 Ill. 2d 175, 182, 287 N.E.2d
468 (1972). If Congress Plaza had resumed substantially normal
business operations after July 5, 2003, it is immaterial that a
labor dispute continued to exist. The Director's finding that
the union members were "not ineligible" for unemployment benefits
would be a matter of rendering assistance to prevent "poverty,
distress, and suffering" (Huggins, 10 Ill. App. 3d at 143), and
not of "rendering assistance to *** labor" (Local 7-641, Oil,
Chemical & Atomic Workers International, 96 Ill. 2d at 98).
Standard of Review
"The Unemployment Insurance Act provides that judicial
review of the Director's decision must accord with the
Administrative Review Law." International Union of Operating
Engineers, Local 148 v. Illinois Department of Employment
Security, 215 Ill. 2d 37, 61, 828 N.E.2d 1104 (2005), citing 735
ILCS 5/3-101, et seq. (West 1994). "Under the Administrative
Review Law (735 ILCS 5/3-101 et seq. (West 2000)), we review the
final decision of the administrative agency and not the decision
of the circuit court." Blessing/White, Inc. v. Zehnder, 329 Ill.
App. 3d 714, 726, 768 N.E.2d 332 (2002). In reviewing an
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administrative decision, " '[t]he applicable standard of review
depends upon whether the question presented is one of fact, one
of law, or a mixed question of fact and law.' " Cinkus v.
Village of Stickney Municipal Officers Electoral Board, 228 Ill.
2d 200, 210, 228 N.E.2d 200 (2008), quoting American Federation
of State, County & Municipal Employees, Council 31 v. Illinois
State Labor Relations Board, 216 Ill. 2d 569, 577, 839 N.E.2d 479(2005).
The sides dispute the nature of the essential question
presented in this case. Congress Plaza contends the Director's
finding that business operations at the hotel had returned to a
substantially normal level is a factual determination subject to
review against the manifest weight of the evidence; whereas, the
finding that the work stoppage ended by July 5, 2003, presents a
question of law to be reviewed de novo, citing as authority the
supreme court's decision in Local 148, 215 Ill. 2d 37.
The Director responds that the two questions Congress Plaza
contends are presented by this case are not separate, but a
single mixed question of law and fact. "It is *** improper, as
some of the cases have done and as the Hotel attempts to do in
its brief, to split apart 'mixed questions.' " The Director
asserts his ultimate decision finding that the stoppage of work
had ceased, as a mixed question, is reviewed under the clearly
erroneous standard, citing Cinkus, City of Belvidere v. Illinois
State Labor Relations Board, 181 Ill. 2d 191, 205, 692 N.E.2d 29515
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(1998), and AFM Messenger Service, Inc. v. Department of
Employment Security, 198 Ill. 2d 380, 392, 763 N.E.2d 272 (2001).
The claimants agree that a single mixed question of fact and law
is presented by this case.
No deference is owed to an agency on a question of law, such
as "an agency's interpretation of the meaning of the language of
a statute," a question we review de novo. Cinkus, 228 Ill. 2d at
210 ("an agency's decision on a question of law is not binding on
a reviewing court").
"An administrative agency's findings and conclusions on
questions of fact are deemed prima facie true and correct."
Cinkus, 228 Ill. 2d at 210. We disturb them only if "such
findings of fact are against the manifest weight of the
evidence." Cinkus, 228 Ill. 2d at 210.
In City of Belvidere, the supreme court "held for the first
time that an examination of the legal effect of a given state of
facts involves a mixed question of fact and law with a standard
of review of 'clearly erroneous.' " Cinkus, 228 Ill. 2d at 211,
quoting City of Belvidere, 181 Ill. 2d at 205. In other words, a
mixed question of law and fact arises from an agency's decision
that " ' "the [undisputed] rule of law as applied to the
established facts is or is not violated." ' " Cinkus, 228 Ill.
2d at 211, quoting American Federation of State, County &
Municipal Employees, Council 31 v. Illinois State Labor Relations
Board, 216 Ill. 2d 569, 577, 839 N.E.2d 479 (2005), quoting
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Pullman-Standard v. Swint, 456 U.S. 273, 289 n.19, 72 L. Ed. 2d
66, 80 n.19, 102 S. Ct. 1781, 1790 n.19 (1982).
The phrases "given state of facts" used by the supreme court
in Cinkus, 228 Ill. 2d at 211, and "given set of facts" used in
City of Belvidere, 181 Ill. 2d at 205, refer to findings of fact
as determined by the administrative agency, which must stand
unless "the opposite conclusion is clearly evident." City of
Belvidere, 181 Ill. 2d at 204. Consistent with the deference
owed to an agency's decision making, a mixed question is reviewed
for clear error. Cinkus, 228 Ill. 2d at 211, citing City of
Belvidere, 181 Ill. 2d at 205. "[A]n administrative agency's
decision is deemed 'clearly erroneous' when the reviewing court
is left with the ' "definite and firm conviction that a mistake
has been committed." ' [Citation.]" Cinkus, 228 Ill. 2d at 211.
We reject Congress Plaza's suggestion that there is a
difference, beyond mere semantics, between a "given state of
facts" as the court stated in Cinkus and "undisputed facts" as
the court stated in Local 148, such that the Director's decision
here, that work stoppage ended by July 5, 2003, is subject to de
novo review as the supreme court applied in Local 148. In its
main brief, Congress Plaza states it "does not agree that the
'facts' relied upon by the second director are a 'given state of
facts.' " We take from this that the Director's findings of fact
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cannot constitute "undisputed facts" under Local 148.2 Thus,
even if we were to agree that the standard of review holding in
Local 148 has not been called into question by Cinkus, which we
do not, the hotel's own contention makes Local 148 inapposite
where its application of de novo review was based on "undisputed
facts." See Cinkus, 228 Ill. 2d at 211, ("We acknowledge that
the distinction between [the] three different standards of review
has not always been apparent in our case law)", citing Local 148,
215 Ill. 2d at 62. We also question whether there is a
distinction of any significance between a finding by the Director
that "work stoppage" has ceased and a finding that substantially
normal business operations have resumed in the context of this
case, where neither side disputes that a "labor dispute" existed.
In this sense, a " 'stoppage of work' ends when the employer's
business operations return to a substantially normal condition."
Be-Mac Transport Co. v. Grabiec, 20 Ill. App. 3d 345, 351, 314
N.E.2d 242 (1974), quoting Travis, 52 Ill. 2d at 182. A finding
that work stoppage has ceased flows from a finding that normal
business operations have resumed. The two are inextricably
linked. See Bridgestone, 305 Ill. App. 3d at 147 ("Whether
[employer] resumed substantially normal operations so that the
2
Both sides make clear that the findings of fact as
determined by the Director based on the administrative
proceedings below remain highly disputed.
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'stoppage of work' ended is not purely a question of law").
We agree with the Director and the claimants that the
ultimate decision that normal business operations had resumed,
making the claimants "not ineligible" for unemployment benefits
under section 604, is subject to clearly erroneous review. The
findings and conclusions on questions of fact are subject to
review based on the manifest weight of the evidence standard.
Cinkus, 228 Ill. 2d at 210.
Findings of Fact
The circuit court remanded the initial decision by the
Director, directing that findings of fact in support of the
decision be set forth. The new Director, following his re-
examination of the record, issued a supplemental decision in
which he made explicit findings of fact and conclusions of law.
The Director expressly found the two witnesses for Congress
Plaza to be "evasive." The Director found Mr. Siddiqui's claim
that he worked 24 hours a day during the strike to be
unbelievable on its face. The Director found Mr. Souder's
credibility to be "undermined by his frequent written and oral
statements given to the Department before the hearing that the
hotel had resumed substantially normal operations by July 5,
2003." The Director found Mr. Souder "vacillated" in his
testimony regarding the percentage of work performed by
management personnel that had previously been performed by the
striking workers. The Director discounted the figures given by
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Mr. Stouder because, in testifying by memory, "he frequently
referred to information contained in hotel reports," which
Congress Plaza refused to submit. The Director considered Mr.
Souder's testimony regarding the percentage of work done by
management personnel to be "uncorroborated opinion."
The Director ruled that Congress Plaza's use of large
numbers of temporary workers did not preclude a finding that the
hotel had resumed substantially normal operations. The hotel's
reliance on the testimony of two of its managers alone was
insufficient to demonstrate that its business continued to suffer
significantly. The absence of any documentary evidence to
support Congress Plaza's claim, in particular where Mr. Souder
referenced reports detailing information the hotel failed to
produce, undermined the trustworthiness of the manager's
testimony. Ultimately, the Director concluded that Congress
Plaza had not met its "burden of proving that it had not resumed
substantially normal operations."
In the supplemental decision, the Director listed six
reasons he did not agree with his representative's decision that
Congress Plaza had not returned to substantially normal
operations. Some of the reasons, summarized above, constituted
findings of facts, others conclusions of law.
In challenging the Director's supplemental decision,
Congress Plaza argues that each of the reasons given by the
Director "for reversing the hearing officer's determination as
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set forth in the Supplemental Decision" is contrary to the
manifest weight of the evidence. Congress Plaza explains that,
unlike the representative, the Director "was not even present to
hear and observe testimony." The hotel urges that greater
deference is owed to the decision by the Director's
representative, as the individual that was "present at the
hearing and heard and observed the witnesses, [who] found as fact
that the hotel's Director of Human Resources, Mr. Souder,
testified 'credibly.' "
Congress Plaza's overarching contention is that between the
opposing decisions, the conclusion of the Director's
representative that the hotel's ability "to maintain the same
level of service" within two to three weeks after the start of
the strike was due to an " 'abnormal means of operation' " is
entitled to greater consideration by this court. To support this
contention, Congress Plaza offers rebuttal arguments in its main
brief to each of the reasons given by the Director for
overturning the decision of the representative. In Gregory v.
Bernardi, 125 Ill. App. 3d 376, 465 N.E.2d 1052 (1984), a very
similar argument, that the decision of the administrative officer
that hears live testimony should be given greater consideration
on administrative review than the board that issues the final
decision, was made and rejected.
The Gregory plaintiff argued "that the Board's decision is
against the manifest weight of the evidence and that the ***
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decision [of the referee who heard the witnesses and found in
favor of the claimant] is supported by substantial evidence."
Gregory, 125 Ill. App. 3d at 381. In rejecting this contention,
the Gregory court explained:
"In an unemployment compensation case, the
court's function is limited to ascertaining
whether the findings of the Board are
supported by the manifest weight of the
evidence; the court may neither substitute
its own judgment nor overturn the Board's
findings unless they are without substantial
support in the record. [Citations.] Thus,
whether the referee's decision is supported
by substantial evidence is not relevant to
this court's determination." Gregory, 125
Ill. App. 3d at 381.
Though the procedures for review of eligibility under
section 604 are distinct from the procedures for ascertaining
whether an individual claimant is eligible for unemployment
benefits, the Board's position and the referee's position in
Gregory are analogous to the Director and his representative in
this case. 820 ILCS 405/800, 801 (West 2008). Both the referee
and the Director's representative hear live testimony, while it
is the Board's decision and the Director's decision that is
subject to review under Administrative Review Law. See 735 ILCS
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5/3-101 et seq. (West 2006); 820 ILCS 405/1100 (West 2006).
Congress Plaza's contention that deference is owed to the
credibility determinations and the findings and conclusions of
fact reached by the Director's representative in her decision is
indistinguishable from the argument rejected in Gregory. See
Starkey v. Civil Service Comm'n, 97 Ill. 2d 91, 100-01, 454
N.E.2d 265 (1983) ("there is no requirement *** that [the officer
with the ultimate decision-making authority] rehear the evidence
in order to reject [the hearing] officer's findings and
recommendations").
We note the Director was under no legal obligation to
support his decision to reverse the representative by giving
explicit reasons for his disagreement, as opposed to issuing a
decision based on his independent assessment of the record
evidence. "[W]here an administrative agency and not the hearing
examiner is responsible for the decision, the agency need not
reverse only when the examiner's findings are 'clearly
erroneous'; rather, the agency must make its own decision based
on the evidence in the record." Gregory, 125 Ill. App. 3d at
381. Because it is the Director's decision that we review, we
see no reason to explicitly address Congress Plaza's rebuttal
arguments that the reasons given by the Director to reverse his
representative's decision are contrary to the findings made by
the Director's representative; the reasons for the Director's
disagreement with his representative are "not relevant to this
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court's determination." Gregory, 125 Ill. App. 3d at 381.
While we agree with Congress Plaza's position that the
representative's report is part of the record (citing Gregory,
125 Ill. App. 3d at 380-81), we limit our consideration of the
representative's report to ascertaining whether the Director's
findings of fact are supported by the record. We decline the
hotel's implicit invitation to compare the findings issued by the
Director to the findings of the Director's representative and
decide which is more in line with the record. It falls to the
administrative agency to make "an independent assessment of the
evidence in the record, rather than merely determining the
supportability of the [hearing officer's] findings." Gregory,
125 Ill. App. 3d at 379. As confirmed by the circuit court's
ruling below, it is only the Director's (supplemental) decision
that we consider on administrative review. See Local 148, 215
Ill. 2d at 61.
To be clear, we give no deference to the representative's
assessment of Mr. Souder's testimony as "credible." It fell to
the Director, as the "ultimate finder of fact," to make his own
assessment of the evidence on record, including assessing the
credibility of the witnesses. Gregory, 125 Ill. App. 3d at 379.
We reject any suggestion by Congress Plaza that the Director was
bound to weigh the evidence in favor of the hotel, as his
representative did. The assessment of demeanor and candor of a
witness is particularly within the province of a finder of fact.
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We find no basis to overturn the Director's negative assessment
of the testimony offered by Mr. Souder and Mr. Siddiqui, the only
witnesses presented by Congress Plaza, based on a contrary
finding by the representative. Gregory, 125 Ill. App. 3d at 380-
81; Starkey, 97 Ill. 2d at 100.
We will not substitute our judgment for that of the
Director, nor is there any authority for substituting the
judgment of the representative for the Director's. City of
Belvidere, 181 Ill. 2d at 204 ("In examining an administrative
agency's factual findings, a reviewing court does not weigh the
evidence or substitute its judgment for that of an administrative
agency").
We also expressly reject Congress Plaza's suggestion that
explicit findings of fact can be shown to be against the manifest
weight of the evidence by pointing to evidence in the record and
the testimony of a hotel's witness's as given "without rebuttal,"
even if such evidence might be favorably seen as contrary to
explicit findings:
"For example, the Director of Human
Resources, Mark Souder, testified without
rebuttal that since the strike, he regularly
attends frequent meetings with hotel
officials discussing strike related issues
where prior to the strike, no such meetings
took place."
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That the director for human resources was required to spend time
on matters he would not otherwise have had to address in the
absence of the labor dispute does not mean that the Director was
obliged to find facts consistent with the hotel's claims that the
strike occupied an inordinate amount of the manager's time. As
Congress Plaza itself acknowledges, the testimony at the
administrative hearing was highly contested; the resolution of
contested testimony falls within the exclusive province of the
ultimate finder of fact, which, in this case, is the Director.
An agency's findings of fact are "deemed prima facie true
and correct." Cinkus, 228 Ill. 2d at 210. It falls to the party
challenging an agency's findings of fact to demonstrate that they
are against the manifest weight of the evidence. Gregory, 125
Ill. App. 3d at 381. If, on review, the issue "is merely one of
conflicting testimony and credibility of a witness, the agency's
determination should be sustained. [Citation.]" Gregory, 125
Ill. App. 3d at 383. We will not overturn an agency's findings
of fact unless it is shown that "the opposite conclusion is
clearly evident." City of Belvidere, 181 Ill. 2d at 204. That
showing has not been made here. See Gregory, 125 Ill. App. 3d at
381 (Board's decision, reversing referee's decision in favor of
claimant, upheld even though "two of its findings of fact have no
basis in the record of the proceedings before the referee," thus
violating the due process rights of the claimant as to those two
findings).
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Conclusion of Law
In the supplemental decision, the Director addressed the
burden of establishing the continued applicability of section 604
at the administrative hearing: "Evidence concerning an employer's
normal operations is a matter within the exclusive control of the
employer. The employer has the burden of proving it." Whether
the burden of proof fell on Congress Plaza raises an issue of law
subject to de novo review. Czajka v. Department of Employment
Security, 387 Ill. App. 3d 168, 173, 901 N.E.2d 436 (2008). Each
party filed a supplemental brief on the issue of the nature of
the burden of each party prior to oral argument, as we requested.
There is support for the position taken by the Director and
the union that the employer carries a burden of proof under
section 604: "Therefore, in the process of attempting to bring
otherwise eligible claimants within the affirmative defense
created by this specific exception [section 604] in the statute,
the burden of proof should logically rest upon the employer."
Be-Mac Transport Co., 20 Ill. App. 3d at 354.3 Nonetheless, the
supreme court has stated, in another context, that the burden of
proof regarding the inapplicability of section 604 rests with the
3
The court relied on its label of section 604 as an
"affirmative defense" to conclude that the burden of proof rests
on the employer, without providing any authority for imposing the
label. Be-Mac Transport Co., 20 Ill. App. 3d at 354.
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claimant. "To be eligible for unemployment insurance benefits
under the relieving proviso of section 604, an employee must
prove both that he is not directly interested in the labor
dispute and that he is not of the same grade or class as
employees who are participating in, financing or who hold a
direct interest in the labor dispute." (Emphasis added.) Local
148, 215 Ill. 2d at 70; see also Shell Oil Co. v. Cummins, 7 Ill.
2d 329, 334, 131 N.E.2d 64 (1955) ("To relieve the employee of
this ineligibility [imposed by the predecessor to section 604],
it is incumbent upon him to prove, not one, but both of [the
exceptions regarding lack of involvement in the labor dispute]").
In line with our supreme court's decisions, we believe the
better approach to assessing the nature of the burden on the
employer regarding the continued applicability of section 604 is
that taken by the Fourth District in Bridgestone, which addresses
the burden question in the context of a prima facie case. "In
essence, *** [once] a prima facie case of eligibility for
claimants [was established,] *** the burden of going forward
shifted to Bridgestone ***." Bridgestone, 305 Ill. App. 3d at
150. Be-Mac Transport Co. can also be read as involving a prima
facie case of eligibility when it addresses "the process of
attempting to bring otherwise eligible claimants within the
affirmative defense created" by section 604. (Emphasis added.)
Be-Mac Transport Co., 20 Ill. App. 3d at 354. This was made
clear by the court's ultimate conclusion. "[E]ven assuming that
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the burden of proof rested upon claimants, we would be obliged to
approve the ultimate finding of eligibility by the Director which
rested necessarily upon the basic premise that unemployment
during the disputed period existed because of unavailability of
work." Be-Mac Transport Co., 20 Ill. App. 3d at 355.
In an administrative hearing under section 604, no shifting
of the burden of proof occurs; the burden of proof remains on the
claimants in accordance with the position taken by Congress Plaza
before us. Local 148, 215 Ill. 2d at 70; Shell Oil Co., 7 Ill.
2d at 334.
In the instant case, once the claims adjudicator determined
that Congress Plaza had resumed substantially normal business
operations after July 5, 2003, the burden of going forward
shifted to Congress Plaza to rebut the prima facie case that the
claimants were "not ineligible" for unemployment benefits.
Bridgestone, 305 Ill. App. 3d at 150. Congress Plaza recognized
the logic of this and agreed to assume the burden of producing
evidence at the administrative hearing it requested before the
Director's representative as set out in the supplemental record
filed after oral argument was heard in this case. 820 ILCS
405/804 (West 2008) ("the conduct of hearings and appeals shall
be in accordance with regulations prescribed by the Director for
determining the rights of the parties"); 56 Ill. Adm. Code
S2725.250(b) (West 2008) ("At the hearing the petitioning
employer must produce testimony, argument or other evidence to
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establish that the *** determination and assessment is
incorrect").4
As we noted, Congress Plaza does not challenge before us the
Director's ruling as to its burden at the administrative hearing.
We find it unnecessary to answer whether there is a practical
difference in the instant case between failing to carry its
burden of proof and failing to carry its burden of going forward.
See Schiff v. Friberg, 331 Ill. App. 3d 643, 658, 771 N.E.2d 517(2002) (once a prima facie case is made out, it falls to the
finder of fact to assess the "credibility of the witnesses and
*** [resolve the] conflicting evidence"). Ultimately, we do not
read the Director's decision as turning on his reference to the
term "burden of proof" as opposed to the burden of going forward.
We follow the prima facie case analysis employed by the Fourth
District in Bridgestone. Bridgestone, 305 Ill. App. 3d at 150.
We agree with the Director that, in the context of this
case, the burden to establish that substantially normal
operations had resumed to overcome the claimant's prima facie
case rested with Congress Plaza.
4
The supplemental record reveals that at the administrative
hearing before the Director's representative, Congress Plaza
acknowledged its burden "to go forward;" the Director's
representative described it as a burden of proof: the employer
must "prove that the determination is incorrect."
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Stoppage of Work
We now review the Director's ultimate decision that Congress
Plaza had resumed substantially normal business operations by
July 5, 2003, which we determined above involves a mixed question
of law and fact, subject to review under the clearly erroneous
standard. The issue can be restated as whether Congress Plaza
overcame the prima facie case that the claimants were "not
ineligible" under section 604. In this regard we begin with the
negative inference the Director drew based on the lack of
business records to corroborate the testimony of the witnesses on
behalf of Congress Plaza. See Bridgestone, 305 Ill. App. 3d at
148-49 ("The employer's refusal to provide information to the
Department with respect to the question of return to
substantially normal operations is an appropriate factor to
consider in determining the merits of the controversy").
Following an independent assessment of the record evidence,
the Director noted:
"Witnesses for the hotel as well as the
hotel's attorney admitted that the hotel
issued reports concerning the number of
temporary workers hired during the strike,
the hotel's occupancy rates before and during
the strike, and the hours worked by
management personnel during the strike."
The Director ruled that when Congress Plaza failed to produce the
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reports or any other evidence documenting the alleged curtailment
of business operations, the hotel failed to carry its burden. "I
conclude that the hotel failed to show that it had not resumed
substantially normal operations by July 5, 2003 because it did
not sufficiently document the extent of its reliance on temporary
help agencies and the extent of management personnel performing
bargaining unit work during the strike." See Bridgestone, 305
Ill. App. 3d at 146 ("Bridgestone offered no evidence *** that
production levels *** were substantially below what was needed").
Thus, we review the Director's decision that the work
stoppage ceased as of July 5, 2003, against the backdrop that,
according to the Director, Congress Plaza failed to come forward
with sufficient evidence to establish the continued ineligibility
of the claimants under section 604. We review the Director's
decision, which presents a mixed question of fact and law, that
Congress Plaza failed to demonstrate a "stoppage of work"
continued past July 5, 2003, for clear error. Cinkus, 228 Ill.
2d at 211.
The only remaining challenge to the Director's decision made
by Congress Plaza that we have yet to address is that "there is
nothing in this record but speculation to conclude that transient
workers who were repeatedly replaced were sufficiently up to
speed in their work to return the hotel to normal conditions."
Congress Plaza does not contest that an employer "farming out
[its] work" does not preclude a finding that substantially normal
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operations had resumed at the business. Union Starch & Refining
Co. v. Department of Labor, 8 Ill. App. 3d 406, 411, 289 N.E.2d
692 (1972). Nor does Congress Plaza contend that the use of
temporary workers constituted extraordinary methods to preclude a
finding that substantially normal business operations had
resumed.5 See Bridgestone, 305 Ill. App. 3d at 148 ("To conclude
that substantially normal operations had returned would mean that
the employer did not need the striking employees"), citing
Travis, 52 Ill. 2d at 182.
Congress Plaza's contention is that the facts do not warrant
the factual conclusion that the temporary workers hired by the
hotel, within three weeks after the start of the strike, "had
supposedly learned all aspects of the jobs to efficiently replace
long term striking employees." Congress Plaza argues that there
is no evidence in the record "the Director may point to" of a
5
Had Congress Plaza permanently replaced all of the
striking workers, there is little doubt that the stoppage of work
would have ceased. See Abbott Publishing Co., 414 Ill. at 571(the stoppage of work caused by the strike ceased when the
employer permanently hired the same number of workers normally
employed prior to the strike). Congress Plaza fails to inform
why the use of temporary workers standing alone, in numbers it
decides upon, should preclude a finding by the Director that
substantially normal business operations had resumed.
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change in circumstances from the first couple weeks after the
strike, when the hotel was undoubtedly experiencing a "stoppage
of work," to support his conclusion that the work stoppage had
ceased by July 5, 2003.
While Congress Plaza's contention regarding the absence of
any evidence showing a change of circumstances from June 15,
2003, the start of the strike, to July 5, 2003, is well taken,
there are admissions in the record by Congress Plaza, which
support the conclusion drawn by the Director that by July 5,
2003, Congress Plaza had resumed substantially normal levels of
operation. "[T]his court will not substitute its judgment for
that of the agency merely because other reasonable inferences
could have been drawn from the evidence." Bridgestone, 305 Ill.
App. 3d at 147, citing Golab v. Department of Employment
Security, 281 Ill. App. 3d 108, 114, 666 N.E.2d 347 (1996).
While it is true that no specific documentary evidence
exists to demonstrate a change in circumstances within three
weeks after the strike, the record contains Mr. Souder's written
responses to the Department's early inquiries regarding the level
of Congress Plaza's business operations immediately after the
strike. In written responses to the Department, Mr. Souder
indicated that the hotel was using temporary workers to fill
guest services positions as needed and 94 permanent employees
were working at the hotel as of July 29, 2003. In his response
to the August 2003 inquiry by the Department, "Do you feel that
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the hotel's level of operation is substantially normal despite
the strike?", Mr. Souder responded, "Yes." In correspondence
dated August 27, 2003, the Department asked the very same
question, with the follow-up question, "If yes, why?" Mr. Souder
responded, "Yes. All services normally provided for the guests
are being provided." To the questions, "What is the extent of
curtailment in operations? What is the percentage?" Mr. Souder
responded, "None. 0%." To the question, "How many managers are
being utilized and to what extent is [any] work being
neglected?", Mr. Souder responded, "All the managers of the
Hotel. No work is being neglected."
That Congress Plaza later sought to limit the Department's
reliance on these admissions is understandable, though we find
that Mr. Souder's status as a nonattorney fails to undercut the
reasonable import of his admissions; in any event, we cannot say
that a fair reading of Mr. Souder's written admissions that there
was no curtailment in Congress Plaza's operations, that no work
was being neglected, and that all guest services were being
provided, are at odds with the Director's decision.
We decline to engage in any reweighing of Mr. Souder's
testimony to reconcile his early admissions with his later
complaint that he misunderstood the intent of the questions when
it was explained to him the information would be used in
assessing whether the ineligibility under section 604 would
continue. See Shell Oil Co., 7 Ill. 2d at 339 (Director's
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finding will not be disturbed on review when evidentiary support
exists for the decision). The Director properly gave the
admissions their "natural probative effect." Bridgestone, 305
Ill. App. 3d at 149 (newspaper articles, which referenced
statements made by Bridgestone's officials that the employer was
"resuming full production" and its "plant was running at full
speed," supported Director's decision that Bridgestone had
resumed substantially normal business operations). We reject any
suggestion by Congress Plaza that the weight the Director gave to
the admissions is at odds with the record evidence. See Slowik
v. Schrack, 77 Ill. App. 3d 42, 45-46, 395 N.E.2d 753 (1979)
("credibility and weight of the evidence are normally matters
left to the finder of fact").
The parties agree that under rule of law applicable to this
case, "stoppage of work" ceases when the employer's business
operations have returned to substantially normal levels. The
Director's conclusion that the "stoppage of work" had ceased
beginning the week after July 5, 2003, "necessarily presupposes a
finding that there was not sufficient evidence to invoke the
statutory exception [based on a work stoppage due to a labor
dispute.]" Be-Mac Transport Co., 20 Ill. App. 3d at 354.
The burden of going forward to overcome the prima facie case
that the claimants were "not ineligible" for unemployment
benefits rested upon, and was assumed by, Congress Plaza. The
findings of fact by the Director amply support his decision that
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the claimants were "not ineligible" under section 604. On the
mixed question of fact and law, based on the record before us, we
cannot say the Director's decision finding Congress Plaza had
resumed substantially normal business operations for weeks ending
after July 5, 2003, is clearly erroneous.
CONCLUSION
Based on the administrative record, we are not left with a
definite and firm conviction that the Director made a mistake in
finding the claimants "not ineligible" to receive unemployment
compensation for weeks beginning after July 5, 2003, under
section 604 of the Act, based on his finding that Congress Plaza
had resumed substantially normal business operations by that
date, the ongoing labor dispute notwithstanding.
We affirm the judgment of the circuit court confirming the
decision of the Director.
Affirmed.
HALL, P.J., and LAMPKIN, J., concur.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
______________________________________________________________________________
520 SOUTH MICHIGAN AVENUE ASSOCIATES, d/b/a the Congress Plaza Hotel
and Convention Center,
Plaintiff-Appellant,
v.
ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY, an administrative
agency in the State of Illinois, Brenda A. Russell, DIRECTOR OF ILLINOIS
DEPARTMENT OF EMPLOYMENT SECURITY, LOCAL 1, UNITE HERE, f/n/a/
Hotel Employees and Restaurant Employees International Union, et al.
Defendants-Appellees.
_______________________________________________________________
No. 1-09-2095
Appellate Court of Illinois
First District, First Division
Filed: September 7, 2010
_________________________________________________________________
JUSTICE GARCIA delivered the opinion of the court.
HALL, P.J., and LAMPKIN, J., concur.
_________________________________________________________________
Appeal from the Circuit Court of Cook County
Honorable Alexander P. White, Judge Presiding
_________________________________________________________________
For PLAINTIFF-APPELLANT For DEFENDANTS-APPELLEES
Bradley Wartman, Esq. N. Elizabeth Reynolds
Peter Andjelkovich, Esq. Angie M. Cowan
Peter Andjelkovich & Associates Allison, Slutsky & Kennedy, P.C.
39 S. LaSalle, Suite 200 230 W. Monroe Street, Suite 2600
Chicago, Illinois 60602 Chicago, Illinois 60602
Carl J. Elitz, Assistant Attorney General
Lisa Madigan, Attorney General,
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State of Illinois
100 W. Randolph Street, 12th Floor
Chicago, Illinois 60601
39