STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)


JEFFREY T  VOGT et al., Employes

ILLINGWORTH CORP, Employer

UNEMPLOYMENT COMPENSATION DECISION
Hearing No. 96606892MWG


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on the applicable law, records and evidence in this case, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employes worked as sheet metal workers for the employer, a corporation engaged in the business of sheet metal fabrication, installation, and maintenance. The employes all worked at the employer's facility located in Milwaukee. The employes are represented for the purposes of collective bargaining by Local 18 of the Sheet Metal Workers' International Association. The employer is a member of the Sheet Metal and Air Conditioning Contractors' Association of Milwaukee (SMACCA) or the "Association."

The Association is composed of a number of contracting firms. It provides educational programs, technical programs, and various other information for contractor members. It also bargains collectively on its members' behalf. The Association is covered by bylaws and exists as a corporation in Wisconsin. The Association obtains authorization to bargain on behalf of member contractors by virtue of the bylaws and "AUTHORIZATION TO BARGAIN" agreements. Under that agreement, a contractor agrees to be bound by any and all actions taken by the Association concerning or arising out of negotiations with the employes' union, Local No. 18. The contractor further agrees to abide by all decisions of the Association with regard to concerted action on the part of the members of the Association in dealing with the union.

During the time period at issue, a labor agreement existed between the Association and the employes' Local 18. The Association is the employer's agent for purposes of collective bargaining and has the right to act on the employer's behalf in all aspects of dealing with the employes' union. The 1993-1996 collective bargaining agreement between the parties expired on Friday, June 7, 1996, and the employes' union went on strike against another Association contractor, Construction Supply and Erection, Inc. The employes' union did not go on strike against the employer.

On June 11, 1996 (week 24), the Association sent a letter to its members indicating that a selective strike was underway. The letter directed the members to inform union employes that they were locked out. Members were directed to tell employes that members were not going to allow bargaining unit employes to work until further notice and that the employes were not being laid off nor terminated. Members were directed to have union employes return tools and equipment belonging to the company and to not let locked out employes continue to operate a company-owned vehicle. The Association indicated it would notify the union that employes had been locked out. Nonunion employes were allowed to continue to do their regular jobs during the lockout. The employer locked out all its union employes. There were Association members that did not lock out union workers despite the Association's directive to do so.

On June 14, 1996, the Association sent a letter to members indicating that a tentative agreement had been reached on June 14 and the strike and lockout would be called off Monday morning, June 17, 1996 (week 25). The strike at Construction Supply and Erection, Inc. and the lockout continued until June 17, 1996, when the parties reached tentative agreement on a new labor contract and the union employes returned to work.

The union has labor agreements with approximately 124 contractors in the Milwaukee area. Of those contractors, approximately 50 or 60 are either Association members or have assigned their bargaining rights to the Association. The remaining are so-called "independents."

Certain workers called "addendum workers" are a low paid classification of union workers. Construction Supply and Erection is the largest employer of the union's addendum workers in the Milwaukee area. The employer does not employ any addendum workers. An issue in the negotiations concerned the compensation for addendum workers. It was because of Construction Supply and Erection's large number of addendum workers that it was selected as a target of a work stoppage. Addendum workers work on material that is not heating, ventilating and air conditioning, or HVAC. The addendum workers do steel erection or steel fabrication. They do not do HVAC work. The addendum workers are in a different classification and work at a lesser pay. The addendum workers are, however, covered by the same labor agreement, as an addendum to that agreement, and are all Local Union 18 members.

The employer and Construction Supply and Erection, the entity that was struck by the employes' union, have separate ownership. They also have separate management. They operate out of separate facilities. They do both employ labor from Local 18 and some employes may pass back and forth. Construction Supply and Erection is involved in a specialized area of the industry, specifically, steel fabrication and siding and decking. The employer does not engage in that field and, if it did, it would be minimal involvement. Construction Supply and Erection and the employer are operated as totally separate businesses.

The union did not, in any manner, suggest to any representative of the Association that there would be more than one of the contractors to suffer a strike during the stalled negotiations. The union also did not give anyone from the Association any assurance that Construction Supply and Erection would be the only contractor to be struck.

The issue to be decided is whether the employes left or lost their employment because of a strike or other bona fide labor dispute, other than a lockout, in active progress in the establishment in which they were employed, during week 24 of 1996.

Wis. Stat. 108.04 (10) provides:

LABOR DISPUTE. (a) An employe who has left or partially or totally lost his or her work with an employing unit because of a strike or other bona fide labor dispute, other than a lockout, is not eligible to receive benefits based on wages paid for employment prior to commencement of the dispute for any week in which the dispute is in active progress in the establishment in which the employe is or was employed, except as provided in par. (b).

(b) An employe who did not establish a benefit year prior to commencement of a strike or other bona fide labor dispute, other than a lockout, may establish a benefit year after commencement of the dispute if the employe qualifies to establish a benefit year under s. 108.06 (2)(a), but the wages paid to the employe for employment prior to commencement of the dispute shall be excluded from the employe's base period wages under sub. (4)(a) and ss. 108.05 (1) and 108.06 (1) for any week in which the dispute is in active progress in the establishment in which the employe is or was employed.

(c) For purposes of this subsection, if the active progress of a strike or other bona fide labor dispute ends on a Sunday, it is not in "active progress" in the calendar week beginning on that Sunday as to any employe who did not normally work on Sundays in the establishment in which the labor dispute occurs.

(d) In this subsection, "lockout" means the barring of one or more employes from their employment in an establishment by an employer as a part of a labor dispute, which is not directly subsequent to a strike or other job action of a labor union or group of employes of the employer, or which continues or occurs after the termination of a strike or other job action of a labor union or group of employes of the employer.

The labor dispute provision is based on three policies: 1) to compensate individuals unemployed through no fault of their own; 2) to maintain state neutrality in labor disputes; and 3) to protect employers from financing a strike against themselves. (1)

In order to deny benefits under Wis. Stat. 108.04 (10)(a) the employer must demonstrate that (1) there was a bona fide labor dispute, (2) other than a lockout, (3) in active progress, (4) at the establishment where the employes seeking benefits worked, (5) that covered the period of unemployment. If the labor dispute is a "lockout" under Wis. Stat. 108.04 (10)(d) benefits are allowed. (2)

There is no contention that there was not in fact a bona fide labor dispute in this case. That is, there was a genuine controversy between the employes and their union, and the employer and the Association. The controversy involved contractual matters, specifically, the treatment of the union's addendum workers. Likewise, the labor dispute was clearly in active progress during the week the employes were unemployed.

The initial issue is whether the employer's action in barring the employes from working for it was a lockout as defined in Wis. Stat. 108.04 (10)(d). The commission finds that it was not. Wis. Stat. 108.04 (10)(d), requires that the lockout not be directly subsequent to a strike by the employe's labor union. The first overt job action in this case was the selective strike by the employe's union local against a member of the Association. This job action involved all members of the union and of the Association, since its purpose was to exert pressure on all Association members to accede to the union's bargaining position. Subsequent action by the nonstruck Association members, including the employer, to bar their employes from work was a direct reaction to the selective strike and, under the definition set forth in the unemployment compensation statute, does not constitute a lockout.

The next issue is whether there was a labor dispute in active progress in the establishment in which the employes are employed.

The employes argue that there was no labor dispute in the establishment in which they worked, but rather, the labor dispute was at Construction Supply and Erection, Inc. The employes further argue that Construction Supply and Erection, Inc. and the employer are totally separate businesses and, under the three- factor test adopted by the Wisconsin Supreme Court, the two businesses are not one "establishment."

In Spielmann v. Industrial Comm., 236 Wis. 240 (1951), the Court addressed the establishment issue. The employer in Spielmann manufactured Nash automobiles. It owned plants in Milwaukee, Racine, and Kenosha. One employe worked in the Milwaukee plant and two employes worked in the Kenosha plant. The employes of the Kenosha plant went on strike on October 2, 1939, which caused the employer to shut down the Kenosha and Milwaukee plants that same day. The commission found that the Kenosha and Milwaukee plants were a single "establishment." In doing so the commission relied on the concepts of functional integrality, general unity, and physical proximity of the two plants. (3)   The Wisconsin Supreme Court agreed. In doing so the court rejected the contention that the word "establishment" referred only to a definite place.

The employes in the Kenosha plant lost their employment on September 26, 1938, prior to the strike in Kenosha. However, the commission found that there was a labor dispute in the Racine plant at that time. (4) The commission found the Racine and Kenosha plants to constitute a "single establishment" again based on their "physical proximity, functional integrality and general unity." (5) The court again agreed.

The question of what constituted an "establishment" arose again in Schaeffer v. Industrial Comm., 11 Wis. 2d 358 (1960). In Schaeffer, the employer was a corporation engaged primarily in the manufacture of paper and paper products with its principal office in Wisconsin Rapids. The employer operated paper mills at Wisconsin Rapids, Biron, Whiting, and Stevens Point. Its paper mills principally used groundwood pulp and chemical pulp. The employer had purchased, some years ago, a chemical-pulp-producing plant in Appleton. Most of the employer's chemical pulp was produced at its Wisconsin Rapids plant with a smaller portion supplied by the Appleton plant. The pulp from Appleton was transported about 80 miles by truck or rail to the other plants. Groundwood pulp was produced at Wisconsin Rapids, Biron, and Whiting. Although the Appleton plant operated at 100 percent capacity, the employer never needed all the product produced at that plant. Instead, it sold up to 22 percent of the chemical pulp produced at Appleton to other paper companies. If the Appleton plant closed down, the operations at Wisconsin Rapids, Biron, and Whiting would be seriously hampered and Stevens Point would have to be closed down. Each plant had its own plant manager who was directly responsible to the director of manufacture whose office was at Wisconsin Rapids. Some technical, engineering, maintenance, and repair service was supplied to the Appleton plant from the Wisconsin Rapids headquarters.

Production workers of the Appleton plant belonged to a different union than the papermaking workers at the Wisconsin Rapids, Biron, Whiting, and Stevens Point plants. On September 19, 1957, the workers of the latter plants went on strike forcing the papermaking operations of the company to close. The workers at the Appleton plant did not support or engage in the strike. Although the employer had the workers and raw materials needed to operate the Appleton plant, it closed down for the majority of the strike. The employer did not have the facilities to store the chemical pulp produced at the Appleton plant and the pulp did not lend itself to storage. In order to operate the Appleton plant during the strike, it would have been necessary to sell the pulp it normally used to other paper companies. This it was unwilling to do because the other companies demanded long-term contracts. Further, the employer did not wish to use up its own timber reserves in order to supply competitors with pulp.

The employe, a worker in the Appleton plant, applied for benefits. The commission found, based on the analysis employed in Spielmann, that he was ineligible based on a labor strike in active progress in the establishment in which he was employed. The court disagreed finding that the case did not have the highly synchronized integration of production as was present in Spielmann. The court reasoned that while the pulp produced at the Appleton plant was necessary and essential for the operation of some or all of the employer's papermaking plants, the pulp was equally usable by other paper manufacturers who used chemical pulp.

In A. J. Sweet Inc., v. Industrial Comm., 16 Wis. 2d 98 (1962), the court dealt with the issue of whether the labor dispute in that case was "bona fide." In Sweet, five employers (and one business not involved in the case) for a number of years had collective-bargaining agreements with a Teamsters union local covering truck drivers and warehousemen. (6)   Prior to 1956 the six employers had bargained as an association with the union. However, in 1956 the employers negotiated with the union on an individual basis, resulting in six separate but materially similar three-year contracts expiring May 1, 1959. Pursuant to the contracts, the union notified each employer that it desired to negotiate changes in the contracts. Negotiations began between the employers and the union. An impasse was reached and on May 12, the union served notice of intent to strike. The employers hired an attorney to represent them in negotiations. In the meantime, the employers formed themselves into an informal association and agreed among themselves that if the union struck any one employer the others would lock out their employes in the bargaining units represented by the union. On June 1, the union struck one of the employers. During that week the other employers locked out those of their employes represented by the union. Ultimately an agreement was reached, pickets were removed from the struck employer's place of business and the locked-out workers were recalled.

The locked-out workers in Sweet filed for benefits. The commission found that the lockouts violated the existing collective-bargaining agreements and, therefore, the employes' loss of employment was not due to a bona fide labor dispute. The court first found that based on the statutory language, and twenty-three years of commission decisions, that a "bona fide labor dispute" encompassed a lockout. The majority of the court's decision involved whether there was a bona fide labor dispute. The court examined the contracts at issue, determined that the lockouts did not breach the bargaining agreements, and concluded that the labor dispute was therefore bona fide. The court reversed the circuit court's decision, which had affirmed the commission decision, and remanded the matter to the circuit court with instructions to set aside the decision of the commission.

In Kenneth F. Sullivan Co. v. Industrial Comm., 25 Wis. 2d 84 (1964), the court was faced with the question of whether employes who became unemployed due to a material shortage occasioned by a strike against another employer were disqualified for benefits under Wis. Stat. 108.04 (10). The employer in Sullivan was a general contractor engaged in three construction projects. The employers workers were members of a particular trade union. None of the employes belonged to the Teamsters union. Cement was necessary at each job site and the employer purchased the cement from two ready-mix suppliers. Drivers who delivered the cement belonged to the Teamsters. On April 11, 1962, the Teamsters struck the ready-mix suppliers which resulted in a lack of concrete, which in turn required the employer to lay off a number of workers. During the strike the employer could have obtained concrete from nonunion suppliers but refrained from doing so for fear that it would be picketed. Some contractors did obtain outside concrete without being picketed. Each of the unions to which the employes belonged was affiliated with the Madison Building & Construction Trades Council. The Teamsters local had at one time belonged to the council but was not a member prior to or during the strike. After the strike ended the Teamsters were invited to join the council and were admitted on July 1.

The initial issue addressed by the court in Sullivan was whether there was a strike or labor dispute within the meaning of the statute. The employer argued that the definition of labor dispute, adopted by the court in Spielmann, did not require an employer-employe relationship. The court rejected such argument noting that no cases subsequent to Spielmann alluded to such definition and noting that the statute containing the labor dispute definition was later amended eliminating the language relied on by the employer. (7)     The court reasoned, based on the purpose of the provision - that the employer not finance a strike against itself - that the employe or the employer must be directly involved in the dispute. The court found that the employes were not in controversy with anyone. The court concluded that the employes were laid off because of a lack of materials on the construction sites and that such temporary suspension did not disqualify the employes under the Wis. Stat. 108.04 (10).

The court in Sullivan also rejected the employer's argument that because the council, of which the employes' unions were members, supported the strike, the Teamsters' strike became the dispute of each individual union. The court noted that the Teamsters local was not a member of the Council, nor invited to join the Council, until after the strike had ended. The court further stated:

"Under circumstances such as those in the instant case, it would be manifestly unfair to hold respondents accountable for another union's strike of a wholly different employer when the respondents had absolutely no connection with the strike. To disqualify an employee there must be more of a thread than is present here which connects the employer (in the case of a lockout) and the employee (in the case of a strike) with the controversy.

Because neither Sullivan nor the respondents were parties to a labor dispute within the meaning of sec. 108.04 (10), Stats., it is not necessary to consider whether or not the construction sites were `establishments' as contemplated by the provisions of that section."

* * *

6 (8) See A. J. Sweet, Inc., v. Industrial Comm., supra, footnote 4, where employers who belonged to an association locked out their employees when a member was struck. The association was enough to bring all the employers into the dispute, therefore disqualifying the employees from receiving benefits."

Sullivan at 90. (9)

In Liberty Trucking Co. v. ILHR Dept., 57 Wis. 2d 331 (1973), the court addressed the question of whether the trucking companies' workers employed in Wisconsin terminals were eligible for unemployment compensation as a result of their unemployment during a strike-lockout occurring at the employers' Chicago terminal. The single issue was whether the trucking system, including the terminal, constituted the "establishment" in which the employes were employed.

The three trucking companies involved in Liberty Trucking were multiterminal common carriers with their principal terminals in Chicago and other terminals in Wisconsin. One trucking company operated intrastate and the predominant proportion of its business conducted at the Wisconsin terminal was directly related to the transportation of freight in and out of the Chicago terminals. The trucking company appellants, and other trucking companies, were members of Trucking Employers, Inc. (TEI) and had given it authority to negotiate basic national labor contracts with the International Brotherhood of Teamsters (IBT), which negotiated on behalf of the trucking industry employes who were members of various local unions affiliated with IBT. The appellants were also members of the Central Motors Freight Association (CMFA) which carried on negotiations in Illinois with various local unions for local agreements to supplement the national contract.

In January of 1970, TEI and IBT began negotiations to replace the contract which was to expire on March 31. A national contract was reached on April 2 or 3, but its ratification was delayed by the locals pending various negotiations. At this time, intermittent strikes occurred in Chicago, but the employes of the appellants did not strike in Wisconsin. On April 10, the appellants with other trucking companies locked out all their employes in Chicago because of the local selective strikes at various terminals in Chicago by a Local Union 705. The lockout lasted until July 6, when a local Chicago agreement was reached.

During the lockout, no freight moved in or out of the Chicago terminals to the Wisconsin terminals. None of the appellants' Wisconsin terminals was the object of the strike or of picketing. Operations at all the Wisconsin terminals continued; but as a result of the Chicago lockout, a substantial number of employes at the Wisconsin terminals became unemployed because freight shipments could not go to and from the Chicago terminals.

The commission found the Wisconsin employes who lost their employment because of the labor dispute at the Chicago terminals were eligible for benefits because, although there was a strike or lockout which caused their unemployment, the Chicago terminals were not the "establishment" or a part thereof in which the employes were employed. The circuit court affirmed as did the Wisconsin Supreme Court. The court found, by looking at the effect of the strike at each employer's Chicago terminal on its Wisconsin terminals, that functional integrality was lacking. The court noted that there was dependence in that between 75 and 90 percent of a particular appellant's business involved freight to and from the Chicago terminals and during the lockout business decreased from 10 to 25 percent of normal. However, while the aforementioned facts showed dependence, the court found that they did not reach any degree of synchronization of services. The court went on to find:

"In considering the factor of general unity, all the terminals were owned and operated by the respective employers and were therefore a part of the permanent commercial organization and there was a unity of management of the terminals. In respect to unity of employment, the employees at the employers' terminals in Chicago were represented by Chicago Local Union 705 and 710 of IBT. But in Wisconsin, Chippewa had an agreement with Local 662 of IBT covering its single Wisconsin terminal at Eau Claire. Liberty had local agreements covering its three Wisconsin terminals. Neuendorf had agreements with various Wisconsin locals at its six Wisconsin terminals and in respect to its employees at the Wisconsin terminals, seniority, vacations, and working rules were governed by the local agreements. Obviously, the employees were not one unit although they all belonged to some union."

Liberty Trucking at 339-340.

Finally, as to physical proximity the court noted that the distance between the Wisconsin employers' terminals and the Chicago terminals varied from 88 to 330 miles. The court considered that, in looking at physical proximity, more important than the fact that the distances were greater than existed in, for example, Spielmann and Schaeffer, was that "the distances tend to break down the concept of a tangible oneness although from the employers' standpoint the distances are prescribed and mark only the beginning and end of its service." Liberty Trucking at 340.

The Wisconsin Supreme Court again revisited the establishment question in Abendroth v. ILHR Dept., 69 Wis. 2d 754 (1975). Abendroth involved employes of Northwest Airlines laid off because of a pilots' strike against the airline. Northwest had its general offices in Minnesota from which its operations were centrally directed and controlled, including staffing, flight schedules, determining the budget for each station, and paying employes. Hiring and firing by local stations was subject to approval by the general office. The company served 39 cities in the US and Canada. All pilots were based in Minneapolis or Seattle. Union agreements were system wide with no local bargaining agreement with any local union. The agreements provided for a system wide seniority system, allowing more senior workers in one station to displace less senior workers in the same classification. All workers were subject to the general employment rules set forth by the general office.

At the time of the strike, Northwest operated two stations in Wisconsin, one in Madison and the other in Milwaukee. Both stations were closed as a result of the pilots' strike. There were no pickets at either station, although the pilots picketed stations in Seattle and Minneapolis. The strike ultimately grounded all aircraft. None of the benefit claimants were members of the Air Line Pilots Association. Some were members of other unions, e.g. machinists, but some were not members of any union. The other unions were not involved in nor did they assist the strike. In examining the establishment question the court again returned to the three-factor test of functional integrality, physical proximity, and general unity. The court concluded that the balancing of the three led to the conclusion that the claimants were eligible for benefits. In particular, court found no unity of employment noting that none of the employes seeking benefits were members of the striking union and the duties performed by the benefit claimants were of a nature different from that performed by the pilots.

In De Leeuw v. ILHR Dept. 71 Wis. 2d 446 (1975), the court addressed the issue of whether masons working for a general construction firm, who lost their employment because of a lockout of other employes of the employer, were eligible for benefits. The employer was based in Racine but had construction projects in a four-county area including Milwaukee. The employer was a member of the Allied Construction Employer Association, the bargaining agent for construction company employers in the four- county area. On July 18, 1968, after a new contract with the laborers had reached an impasse and a strike seemed imminent, the association locked out the laborers in the four-county area. The effect of the lockout was to put masons out of work since they could not work without laborers to mix mortar, carry block, and construct scaffolding. The claimants were masons based in Milwaukee but who would work other areas depending on where there services were needed. Each claimant completed all available mason work on the last project to which he was assigned and each such assignment was in Racine. Racine was not one of the four counties covered by the association or affected by the lockout.

The court first addressed the standards of causation for the unemployment of the five claimants. The court adopted a "but for" test in determining whether the lockout caused the unemployment of the claimants:

"Under this test an employee is disqualified under sec. 108.04 (10), Stats., only in those cases in which he would be working but for the existence of a bona fide labor dispute. This test is more consistent with the main statutory purpose of providing income support to unemployed workers than a "substantial factor" test would be, and yet it does not defeat the purpose of seeing to it that the employer does not finance a labor dispute in which he is a principal."

De Leeuw at 450. (Footnotes omitted.) (10)

Applying the above test, the court concluded that the claimants would have been working but for the existence of the lockout. The only factor which prevented the masons from getting additional work was the lockout by the association. The court rejected the contention that but for the low demand for masons in the Racine area, they would have been working in Racine. The court noted that the nature of employment in the construction industry involves a succession of temporary projects, with workers finishing one job and moving on to another project where work is available. The court further noted that each worker was a Milwaukee-area mason and each was in Racine temporarily and would have naturally looked to Milwaukee for work when work in Racine was completed.

The court also noted that the legislature had not seen fit to change Wis. Stat. 108.04 (10), indicating approval of the administrative agency's interpretation of the statute that an employe is not eligible for benefits if he/she has lost employment due to a bona fide labor dispute involving other employes of the same employer. The court concluded by stating:

"Given the present wording of sec. 108.04 (10), Stats., however, these applicants were correctly denied unemployment compensation. First, there was no challenge made on appeal to the bona fides of the lockout. Second, there is no question but that these employees lost their employment because of their dependence upon the locked-out employees rather than because of economic reasons or because of a strategic decision by the employer to shut down all production."

De Leeuw at 453. (Footnotes omitted.)

The dissent in De Leeuw argued that the loss of work initially was caused by the fact that work had been completed at each work site. The dissent further argued that, even if work was lost due to the lockout, the majority failed to address whether the loss occurred "in the establishment" in which the claimants were employed. The dissent went on to apply the three- factor test and concluded that the strike did not occur in the establishment in which the claimants were employed.

In Schaeffer, Spielmann, and Abendroth, cases involving a single employer with multiple facilities, the court applied the three-factor test. Likewise, the three-factor test was applied in Liberty Trucking to different employers attempting to be one establishment by virtue of being in the same industry.

In Spielmann, there was one employer and a strike in one plant causing the employer to shut down another facility resulting in lost employment in the nonstruck facility. The claimant was not a member of the same local union as employes in the struck plant (but apparently belonged to the same national union). The situs of the strike was in a different facility which required a determination as to whether there was a labor dispute in active progress in the "establishment" in which the claimants worked. The court found one establishment when applying the three-factor test.

In Schaeffer, there was one employer and a strike in one plant causing the loss of work in another plant. The claimant was not a member of the same union that struck in the other facility. The situs of the strike was in a different plant which required a determination as to whether there was a labor dispute in active progress in the "establishment" in which the claimant worked. The court found that the labor dispute was not in the establishment in which the claimant worked when applying the three-factor test.

In A. J. Sweet, there were five employers negotiating separate but similar contracts with a union local. During negotiations the employers formed an informal association. A selective strike by union workers occurred against one member of the employer's informal association. In response, the other employers locked out employes in the bargaining units represented by the union. The claimants were the locked out workers. The situs of the strike was at a different employer than the locked out workers, but there was a lock out in the facility in which the claimants worked. The court denied finding the labor dispute bona fide but did not address the establishment issue.

In Sullivan, there was one employer and a strike against the employer's material supplier. The claimants were not members of the union that struck. The court did not reach the establishment issue because there was no labor dispute in which the employer, or the claimants (or the claimants' union) were directly involved. Therefore, the court found that the labor dispute provision did not apply to the claimants. The court specifically stated that because there was no direct involvement there was no need to address the establishment issue. The court also cited A. J. Sweet for the proposition that a defensive lockout by members of an employer association can bring all the employers into the dispute.

In Liberty Trucking, there were three employers and a strike by the Chicago local union at each employer's Chicago terminal. The employers were members of an association which bargained with the national union and members of an association which bargained with the Illinois local unions. The strikes took place in Chicago and responsive lockouts occurred in Chicago. The claimants were members of the same national union as the employes who were striking and being locked out, but belonged to different local unions. No lockout, strike, or picketing occurred in Wisconsin. The court applied the three-factor test to each employer's Wisconsin terminals and the same employer's Chicago terminal and determined that the labor dispute was not in active progress in the establishment in which the claimants of the respective employers worked. In particular the court in examining unity of employment noted that the workers were members of different locals than those involved in the strikes and lockouts.

In Abendroth there was one employer with multiple facilities. The claimants were not members of the union that struck. The strikes took place in different facilities than the unemployed workers worked. The court found that the labor dispute was not in the establishment in which the claimant worked when applying the three-factor test.

In De Leeuw, there was one employer with construction projects in its principal place of business, Racine, and a four-county area which included Milwaukee. The employer was a member of an association of construction employers, the bargaining agent for the employer in the four-county area. The employer locked out laborers in the four-county area, which did not include Racine, because a strike by laborers, not masons, seemed imminent. The claimants were masons based in Milwaukee who could not work in the four-county area because of the lockout. The court first found that the claimants would have been working but for the lockout, satisfying the standard of causation for the claimants' unemployment. The court noted that the legislature had not seen fit to change the labor dispute statute to allow benefits to workers who lose employment due to a bona fide labor dispute involving other employes of the same employer. The locations of the lockouts were the construction projects in the four-county area, the same locations the court found the mason claimants would be working but for the lockouts. The majority did not address the establishment issue. The dissent argued that the court should have done so.

The court has applied the three-factor test only where the location of the strike/lockout was not in the same location/plant/facility as the unemployed workers were employed. Sullivan did not apply the three-factor test because a threshold requirement had not been met - neither the employe nor the employer were directly involved in the labor dispute. Where the strike/lockout was in the same location/plant/facility, and the employes and employer were directly involved in the labor dispute, it was not necessary to engage in such analysis because clearly it was in the establishment in which the claimants worked and the labor action - the lockout, was instituted against the claimants.

In the present case the employes and the employer, through their union and the employer's membership in the Association were directly involved in the labor dispute occurring at Construction Supply and Erection, Inc. That same involvement resulted in the employer engaging in a labor action, a lockout, against the employes, members of the same local union that was striking another association member. It was not a lockout as set forth in Wis. Stat. 108.04 (10)(d), because it was a defensive lockout, i.e. a lockout directly subsequent to a strike by the employes' labor union. It was a labor dispute in the establishment in which the employes worked as it was a lockout of the employes themselves. Therefore, the three-factor test is not applicable.

The commission therefore finds that in week 24 of 1996, the employes left or partially or totally lost employment because of a strike or other bona fide labor dispute, other than a lockout, in active progress in the establishment in which the employes are or were employed, within the meaning of Wis. Stat. 108.04 (10)(a).

The commission further finds that the employes were paid benefits for week 24 of 1996, as set forth in the attached appendix, for which they were not eligible within the meaning of Wis. Stat. 108.03 (1), and to which they were not entitled.

The final issue to be decided is whether recovery of overpaid benefits must be waived.

Wisconsin Statute 108.22 (8)(c), provides that the department shall waive the recovery of overpaid benefits if the overpayment was the result of departmental error, and the overpayment did not result from the fault of the employe. Under Wis. Stat. 108.02 (10e)(a) and (b), department error is defined as an error made by the department in computing or paying benefits which results from a mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, or from misinformation provided to a claimant by the department, on which the claimant relied.

The overpayments in this case result from the commission's reversal of the appeal tribunal decision. Such reversal was not due to department error as defined in Wis. Stat. 108.02 (10e)(a) and (b). Rather, the commission has reached a different legal conclusion when applying the law to the facts.

The commission further finds that waiver of benefit recovery is not required under Wis. Stat. 108.22 (8)(c), because although the overpayment did not result from the fault of the employes as provided in Wis. Stat. 108.04 (13)(f), the overpayment was not the result of a department error. See Wis. Stat. 108.22 (8)(c)2.

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employes are ineligible for benefits in week 24 of 1996, based on wages paid for employment prior to the commencement of the dispute while such strike or other bona fide labor dispute, was in active progress. The employes are required to repay the sums overpaid, as reflected in the attached appendix, as recovery of those benefits is not waived.

Dated and mailed August 20, 1997
vogtjef.urr : 132 : 1  LD 502 LD 510  LD 550

/s/ Pamela I. Anderson, Chairman

/s/ David B. Falstad, Commissioner

MEMORANDUM OPINION

The commission did not consult with the administrative law judge regarding witness credibility and demeanor. The commission's reversal is not based on witness credibility or demeanor but on reaching a different legal conclusion when applying the law to the facts.

NOTE: Repayment instructions will be mailed after this decision becomes final. The department will withhold benefits due for future weeks of unemployment in order to offset overpayment of U.C. and other special benefit programs that are due to this state, another state or to the federal government.

Contact the Unemployment Compensation Division, Collections Unit, P. O. Box 7888, Madison, WI 53707, to establish an agreement to repay the overpayment.

cc: ATTORNEY MATTHEW R ROBBINS
PREVIANT GOLDBERG UELMEN GRATZ BUCHANAN & BARRY SC

ATTORNEY JERE W WIEDENMAN
MILLER & BRUEGGEMAN SC 111 E KILBOURN AVE

(APPENDIX OMITTED IN HTML COPY)


Appealed to Circuit Court. Reversed June 30, 1998. [Circuit Court Decision Summary ].  Circuit Court decision appealed and certified to the Supreme Court by the Court of Appeals.  Circuit Court decision affirmed by the Supreme Court, June 27, 2000. [Supreme Court Decision]

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Footnotes:

(1)( Back ) See Jenks v. ILHR Dept., 107 Wis. 2d 714, 725 (1982).

(2)( Back ) Prior to a law change by 1983 Act 468, the term "labor dispute" included lockouts.

(3)( Back ) The same employer owned both plants. Although the Milwaukee plant was devoted exclusively to the manufacture of car bodies, and the Kenosha plant exclusively to the manufacture of part and assembly, ninety-eight percent of the cars were built against specific orders requiring synchronization of production in each plant. The plants were forty miles apart. Bodies were transferred from the Milwaukee plant to the Kenosha plant by trucks owned by the employer and driven by its employes. The employer had a general works manager in charge of the operation of the two plants.

(4)( Back ) The employer closed the Racine plant due to business conditions and intended to do all the assembling of cars in the Kenosha plant. The employes instituted a blockade which prevented the employer from moving parts in the Racine plant to the Kenosha plant. This caused the closing of the Kenosha plant.

(5)( Back ) The plants were ten miles apart. Both were assembly plants. The plants were interdependent - each producing many of the parts needed by, but not produced by, the other.

(6)( Back ) The employers, all based in LaCrosse, were described as a wholesale produce business; a distributor of candies, tobacco, school supplies, and sundries; a wholesale dealer in paper and paper supplies; a wholesaler of groceries; a wholesale dealer in fruit and produce; and a wholesale distributor of liquor, cigarettes, candy, and sundries.

(7)( Back ) The statute referred to defined labor dispute as "...any...controversy arising out of the respective interests of the employer and employee, regardless of whether or not the disputants stand in the proximate relation of employer and employee." The bold typed clause was the portion taken out in the amendment.

(8)( Back ) Footnote 4 in A. J. Sweet refers to an appeal tribunal decision finding no bona fide labor dispute where association of employers locked out union members even though labor contract was still in effect and union had notified association of the employes' willingness to work under the existing contract while negotiating a new contract.

(9)( Back ) The commission believes that the enactment of Wis. Stat. 108.04 (10)(d), would have changed the outcome in De Leeuw, as the lockout there was not in response to, nor directly subsequent to, a strike by the claimant masons or the masons' union.