Central Foam Corp. v. Barrett ( 1978 )

HARRIS, Justice.

This appeal under the administrative procedure act concerns unemployment benefits (chapter 96, The Code) claimed by employees who left work because of a strike. The Iowa department of job services (the department) ruled on various claims following which Central Foam Corporation (the employer) petitioned for judicial review pursuant to §§ 96.6(8) and 17A.19, The Code. The trial court modified the administrative decision by disqualifying ten claimants. (The department had disqualified claimants for misconduct for a limited period only, after which their benefits were ordered paid.) The trial court in general affirmed the administrative ruling as to the remaining 41 claimants. The department and employer¹ both appealed. We reverse on the department’s appeal, affirm on the employer’s appeal, and reinstate the department’s administrative decision.

On March 16, 1976 the employer and 52 claimants *, pursuant to collective bargaining, had á labor contract which contained a no strike — no lockout clause. The contract required arbitration of all grievances. On that day certain of the employer’s workers refused to return following lunch break and established a picket line which was honored by the other employees. The following day the employees again refused to return to work and at noon the company informed them that those not returning to work that afternoon would be considered terminated by reason of gross insubordination. The employees however continued their strike and refused to return to their jobs. On March 23 the employer terminated all employees by written notice.

The employees applied for unemployment compensation under chapter 96, The Code. Their claims were processed through appeal and resulted in disqualifications from March 16 through March 20 for participating in a labor dispute. § 96.5(4), The Code. See Galvin v. Iowa Beef Processors, Inc., 261 N.W.2d 701, 703 (Iowa 1978). Some claimant employees were penalized four weeks for misconduct pursuant to § 96.5(2), The Code. Except for such penalties the department ordered compensation paid.

The employer thereafter appealed the decision to district court pursuant to § 96.6(8), The Code. The trial court found ten of the claimants were disqualified as voluntary “quits”, thus disqualifying them from benefits. The department has appealed from that ruling. The trial court on the other hand found the remaining 41 were qualified for benefits and the employer has appealed from that portion of the trial court ruling.

The department believes the federal government’s preemption of labor disputes in the national labor relations act precludes any state consideration of the merits or legality of labor disputes. It is argued the act of the employer in “terminating” claimant’s employment concludes the question, and preemption prevents any state speculation as to whether claimants or the employer acted properly in the dispute.

The employer argues none of the claimants are entitled to unemployment compensation because all claimants voluntarily quit. The employer stands on the employment contract with its no strike-no lockout clause and provision for arbitration.

Under these conflicting views the parties point to the definition of voluntary “quits”, as contained in § 370^4.34(3), The Iowa Administrative Code which provides:

“The relationship between employer and employee continues during the period of the labor dispute unless severed by the employer or employee.

“a. If the relationship is severed by the employer, section 96.5(2) concerning discharge for misconduct shall govern.

“b. If the relationship is severed by the employee, section 96.5(1) concerning voluntary leaving shall govern.”

Significantly, except as it may inhere in the awards given or denied, there has never been a specific factual finding either that the claimants voluntarily quit or that their employment was terminated by the employer. The employer complains of this failure. We must determine whether it can be found as a matter of law under the foregoing facts the conduct of the claimants amounted to a voluntary quit or that the conduct of the employer amounted to a termination. Otherwise these proceedings would necessarily be remanded for a finding of fact on the question. Normally such a question would be a factual one for the administrative agency. Our review ordinarily would be limited to determining whether the agency action is “ * * * unsupported by substantial evidence in the record made before the agency when that record is viewed as a whole; * * *.” § 17A.19(8)(f); City of Davenport v. Public Relations Board, 264 N.W.2d 307 (Iowa 1978), and authorities.

I. The trial court did not agree completely with either the department or the employees. As to 41 employees the trial court found they had been terminated by the employer and were entitled to benefits. As to the ten claimants named in the department’s appeal the trial court allowed compensation on the basis of the national labor relations act. 29 U.S.C. 158(d) (breach of the employment contract was an unfair labor practice). The department complains vigorously against the trial court’s reliance on the national labor relations act because of the preemption doctrine. This complaint is the department’s first assignment of error.

Unquestionably the field of labor disputes has, with few exceptions, been preempted by the federal government. Hollander v. Peck, 261 N.W.2d 507, 509 (Iowa 1978); Walles v. Intern. Bro. of Electric Wkrs., 252 N.W.2d 701, 708 (Iowa 1977); Langrehr v. United Bro. of Carpenters, Etc., 236 N.W.2d 339, 342 (Iowa 1975).

Nevertheless we do not entirely subscribe to any suggestion that state courts must act in studied ignorance of the national labor relations act. It is one thing to defer, as we do, to the expertise of the national labor relations board in those matters in which their recognized expertise has led to federal preemption of labor disputes. It is another thing to apply unrelated state statutes, taking into account the fact that a labor dispute exists or in recognition of why it exists in order to sort out unemployment benefits.

A number of states have interpreted their unemployment compensation statutes so as to classify it as a termination by the employer and not as a quit by the worker when employment is severed under the circumstances presented in the instant case. Special Products Company of Tenn. v. Jennings, 209 Tenn. 316, 353 S.W.2d 561 (1962); Jackson v. Review Board of Indiana Employ. Sec. Div., 215 N.E.2d 355 (Ind.1966); Ruberoid Co. v. California Unemployment Ins. App. Bd., 59 Cal.2d 73, 27 Cal.Rptr. 878, 378 P.2d 102 (1963); T. R. Miller Mill Company, Inc. v. Johns, 261 Ala. 615, 75 So.2d 675 (1954); cf. Sprague & Henwood, Inc. v. Unemployment Comp. B. of R., 207 Pa.Super. 112, 215 A.2d 269 (1965); Robert S. Abbott Pub. Co. v. Annunzio, 414 Ill. 559, 112 N.E.2d 101 (1953).

Such a view can be criticized on the basis of the argument the employer advances in its appeal: the claimants agreed not to strike and agreed to submit disputes for arbitration. Their violation of that provision, vital to the employer, took their employment outside the contract of employment and amounted to a “quit.” In answer to the employer’s argument the claimants believe the bargained contract itself was unfair and that the union did not really represent their interests. This argument leads at least toward the morass of labor disputes pre-empted by the federal government.

There is a certain logic to both positions and the question is not free from doubt. On balance however we believe the department’s basic view is the one to which we must 'subscribe. Ultimately it appears there was nothing in the act of the claimants when they went on strike which automatically terminated the employment. They did not propose their strike as an end to the employment but for other right or wrong purposes. Indeed it is well settled a strike itself does not automatically terminate the relationship. Dallas Fuel Co. v. Horne, et al, 230 Iowa 1148, 300 N.W. 303 (1941). See Annot. 63 A.L.R.3d 88, 120. The termination occurred when the claimants were replaced for refusing to come back to work. Ruberoid, supra. The employer of course believes the replacement of the striking workers was fully justified. But we cannot, on this record, find the replacement was justified unless we do so on the same basis as did the trial court: by interpreting and applying the national labor relations act. To do so would, as the department contends, launch us into the labor field, a venture not demanded by chapter 96.

We do not suggest the employer should be left without legal rights when its contract is violated. Neither do we condone contract violations. Of course an employer may under federal law file complaint of the union’s conduct to the-national labor relations board. Our consideration is limited to chapter 96 benefits.

We conclude the employment of all claimants was terminated by the employer and that no claimant voluntarily quit within the definition of § 96.5(1), The Code.

Reversed on the appeal of the department, affirmed on the appeal of the employer, and remanded for entry of a decree in conformance herewith.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED WITH INSTRUCTIONS.

All Justices concur except UHLEN-HOPP, J., who concurs specially.

1 . One claimant left employment before March 16, 1976 and is not involved in this appeal.