RUBEROID COMPANY v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD

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District Court of Appeal, Second District, Division 3, California.

The RUBEROID COMPANY, Respondent, v. CALIFORNIA UNEMPLOYMENT INSURANCE APPEALS BOARD et al., Appellants.*

Civ. 25411.

Decided: May 17, 1962

Stanley Mosk, Atty. Gen., and Herschel T. Elkins, Deputy Atty. Gen., for appellants. Paul, Hastings, Janofsky & Walker and Dennis H. Vaughn, Los Angeles, for respondent.

This is an appeal from a judgment in favor of the petitioner, The Ruberoid Company, in a proceeding in mandamus to compel the respondents named in the petition to vacate and set aside decisions granting unemployment compensation benefits to certain claimants and to remove charges against the petitioner's unemployment reserve account or that of its predecessor. Such respondents in the court below were California Unemployment Insurance Appeals Board, Ernest B. Webb, as chairman and a member of the California Unemployment Insurance Appeals Board, Arnold L. Morse and Wm. A. Newsom, as members of the California Unemployment Insurance Appeals Board, Irving Perluss, as Director of Employment of the Department of Employment of the State of California, and Martin J. Yellin, as a referee of the Department of Employment of the State of California. Although they are appellants herein, reference will be made to them as the respondents in this opinion in keeping with their designation in the trial court.

The question presented is whether the court below was correct in its application of the provisions of section 1262 of the Unemployment Insurance Code to the facts of this case. That setion is: ‘An individual is not eligible for unemployment compensation benefits, and no such benefit shall be payable to him, if he left his work because of a trade dispute. Such individual shall remain ineligible for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he was employed.’

Petitioner's predecessor, The Mastic Tile Corporation of America, was engaged in the manufacture of resilient flooring tiles at a plant in Long Beach until about September 30, 1959, when the petitioner acquired its assets. The reserve account of Mastic was transferred and assigned to the petitioner as the ‘successor employer’ by the Department of Employment. Thereafter the petitioner continued to maintain and operate the plant. The International Chemical Workers Union, Local Union No. 1, AFL-CIO, was certified in 1949 as the bargaining representative for the production and maintenance employees of Mastic at the Long Beach plant. For about nine years a collective bargaining agreement was in effect between Mastic and Local Union No. 1. On September 1, 1958, the agreement of September 1, 1957, expired under its terms.

About August 6, 1958, Mastic and the union commenced negotiations for a new agreement establishing wages, hours and working conditions. Such an agreement not having been reached, all of the 281 production and maintenance employees (except one, not involved in this appeal, who was ill) went out on strike at approximately 12:01 a. m. on September 21, 1958. About 265 of these employees were members of the union. Picket lines were immediately established. After the strike commenced, further negotiations were conducted between the employer and the union until October 8, 1958.

On or about October 2, 1958, Mastic sent to each of the striking employees a letter advising the addressee that Mastic had decided to resume operations in its plant and that all striking employees who did not return to work on or before October 7, 1958, would be permanently replaced.1 In response to that letter about 40 of the striking employees returned to work. Commencing on or about October 7, 1958, Mastic began to replace those who had not resumed work. To each of such employees who failed to return to work, Mastic sent a letter dated October 17, 1958, in which it was stated that such striking employees had been permanently replaced.2 After October 17, 1958, the strike and the picketing in a peaceful manner continued until March 28, 1959. Pursuant to a representation petition filed by Mastic on November 3, 1958, with the National Labor Relations Board, an election was held on March 13, 1959. On or about March 23, 1959, the board certified that Local Union No. 1 was not the exclusive bargaining representative of the production and maintenance employees of Mastic.

The trial court found in part as follows: ‘* * * after commencement of the strike on September 21, 1958, * * * each of the claimants herein was permanently replaced by Mastic when new employees were hired; that despite the resumption of operations by Mastic * * * the trade dispute herein continued in active progress at all times from September 21, 1958 to March 28, 1959, and that a number of the claimants herein engaged in picketing of Mastic's said plant subsequent to October 17, 1958.’

With respect to the employees who made claims for unemployment insurance benefits, the trial court made the following findings: ‘That not until on or about December 11, 1958, did any of said claimants return to Mastic to apply for re-employment; that from on or about December 11, 1958, to on or about March 28, 1959, approximately 15 of said claimants returned to Mastic to apply for re-employment3 and approximately 7 thereof were re-employed by Mastic;4 that subsequent to March 28, 1959, the date on which the picketing ceased, approximately 24 of said claimants returned to Mastic to apply for re-employment and a large number thereof were re-employed; that approximately 43 of said claimants have never returned to Mastic to apply for re-employment; that claimants knew that certain of their fellow claimants had returned to work for Mastic subsequent to October 17, 1958 and prior to March 28, 1959.’

Further findings of fact, which were not limited to claimants but were as to the strikers generally, were as follows: ‘* * * 77 strikers applied for employment with Mastic after October 17, 1958; that approximately 34 thereof were hired; that of these 34, approximately 20–25 thereof applied for re-employment and were re-employed prior to the termination of the picketing on March 28, 1959; that strikers who applied for re-employment and were re-employed after October 17, 1958 were re-employed as new employees.’

There is no substantial dispute as to the facts heretofore stated. The problem presented on this appeal arises from the determination of the trial court as to the cause of unemployment after October 17, 1958, and prior to any application by a particular claimant to Mastic for reemployment. Such determination finds expression in the findings of fact as follows: ‘[T]hat the claimants herein [except certain persons whose claims are not involved on this appeal] * * * continued to be unemployed after October 17, 1958 to March 28, 1959, solely by reason of the fact that the trade dispute between Mastic and said claimants continued in active progress during said period, and said claimants refused, in accordance with their Union principles, to cross the picket line maintained by claimants and their fellow striking employees and offer to return to work for Mastic; that the claimants who returned to Mastic to apply for re-employment sometime between October 17, 1958 and March 28, 1959, continued to be unemployed prior to the dates on which said claimants returned solely by reason of the fact that the trade dispute between Mastic and said claimants continued in active progress and said claimants refused, in accordance with their Union principles, to cross the picket line maintained by claimants and their fellow striking employees, and offer to return to work for Mastic. * * * [T]hat neither said letter of October 17, 1958 nor the fact that they had been permanently replaced caused said claimants to remain out of work after October 17, 1958 or had anything to do with their determination to remain away from their jobs after October 17, 1958; that claimants herein would not have returned to work during the continuance of the trade dispute even if they had not been permanently replaced by new employees and even if they had not received said letter of October 17, 1958; that there was no other fact which caused said claimants to change their original purpose and intent to remain away from their jobs during the continuance of the trade dispute.’

Conclusions of law of the court were that the evidence supported the determination of the respondent board that the trade dispute was the direct and proximate cause of the unemployment of each claimant during the period of September 21, 1958, to October 17, 1958, but that the evidence did not support the board's determination that the permanent replacement of the claimants who are involved on this appeal was the direct and proximate cause of their unemployment after October 17, 1958.

Under the judgment, the respondents were ordered to vacate and set aside the challenged decisions and to remove from their books and records all charges made to or against the reserve account of the petitioner or that of Mastic with respect to any benefits paid to the claimants who are involved on this appeal, except for periods of unemployment subsequent to unsuccessful applications for reemployment made between October 17, 1958, and March 28, 1959.

The controversy was submitted in the superior court on the records of the administrative proceedings relating to the various claims. As this court said in California Portland Cement Co. v. Cal. Unemp. Ins. Appeals Board, 178 Cal.App.2d 263, at page 269, 3 Cal.Rptr. 37, at page 40: ‘An employer whose reserve account is charged with any payment made to a claimant has a direct pecuniary interest therein and may seek judicial review of the action of the appeals board. Chrysler Corp. v. California Employment Stabilization Comm., 116 Cal.App.2d 8, 14, 253 P.2d 68. The appeals board is a statutory agency with state-wide jurisdiction; it does not have constitutional authority to make final determinations of fact. Any person deprived of a property right by the board is entitled to a limited trial de novo in the superior court. Thomas v. California Employment Stabilization Comm., 39 Cal.2d 501, 503–504, 247 P.2d 561. In reviewing a decision of the trial court, the reviewing court, on facts such as these, determines only whether the decision is supported by the record. Ashdown v. State of California [Dept. of Emp.], 135 Cal.App.2d 291, 299, 287 P.2d 176.’

The position of the appellants is that ‘from October 18, 1958, the employees could not have returned to their jobs; that the employment relationship had been completely severed and that from October 18, 1958, the employees [did not continue to be] * * * out of work by reason of the fact that the trade dispute was still in active progress.’ They urge that after October 18, 1958, the claimants ‘were out of work because they had been permanently replaced.’ Thus, while they concede that the ‘significant facts' before the trial court were not in dispute, their attack is with respect to the legal import of those facts in the application of the provisions of section 1262 of the Unemployment Insurance Code.

In resolving the problem thus presented resort must be had to the volitional theory as it is accepted and applied in this state. (Bodinson Mfg. Co. v. California E. Com., 17 Cal.2d 321, 327–328, 109 P.2d 935; Chrysler Corp. v. California Emp. etc. Com., 116 Cal.App.2d 8, 15–16, 253 P.2d 68.) The obvious legislative intent was that ‘persons who are involuntarily and innocently out of work as the result of a labor dispute should not suffer by loss of unemployment benefits.’ (McKinley v. California Emp. etc. Com., 34 Cal.2d 239, 242–243, 209 P.2d 602, 605.) Guidance with respect to the present case is found in the reasoning of Thomas v. California Emp. Stab. Com., 39 Cal.2d 501, 247 P.2d 561. In that case the logging employees went on strike and set up a picket line around the company's sawmill on January 14, 1946. The claimants, who were plant or mill employees, refused to go through the picket line. On January 18, 1946, the company closed the plant and gave those employees notices of ‘employment termination.’ The appeals board determined that the claimants were out of work because of a trade dispute and therefore were disqualified from receiving unemployment benefits. In the subsequent proceeding in mandamus the trial court, in the exercise of its independent judgment with respect to the record before the board, found that the claimants had been discharged and concluded, in substance, that this removed their disqualification. Upon the appeal from the judgment of the trial court, after stating that the evidence was sufficient to support the court's finding that the claimants were discharged as of January 18, the Supreme Court said (39 Cal.2d, at pp. 505–506, 247 P.2d at p. 563):

‘A more difficult question is presented as to whether there is any substantial evidence which supports the determination of the trial court that the discharge of claimants by the company was the direct and proximate cause of each claimant being unemployed after January 18, 1946. There appears to be no conflict in the evidence with respect to the events which transpired insofar as this phase of the case is concerned. Claimants refused to pass the picket line which the logging employees established around the company's sawmill, and, as we have seen, it is undisputed that this refusal operated to disqualify claimants from receiving benefits for the period of their unemployment prior to January 18. The picket line, as well as the trade dispute between the logging employees and the company, continued after that date and during the entire period for which claimants seek benefits. Four of the six claimants who testified in the administrative proceeding admitted that they participated in the picket line after they were discharged.

‘There is no evidence in the record indicating that the termination notices caused claimants to remain out of work after January 18 or had anything to do with their determination to remain away from their jobs. None of the claimants who appeared as witnesses testified that he would have returned to work if he had not been discharged or that he would have been willing to cross the picket line. To the contrary, claimants did not respond to two notices given by the company to all employees on or about January 21 and February 18 requesting that they return to work immediately or as soon as strike conditions cease to exist.

‘Under the circumstances presented by the record in this case the only reasonable conclusion is that claimants remained out of work after January 18 as well as before that date because they were unwilling to cross the picket line which was maintained by the logging employees in their trade dispute with the company. Accordingly, claimants were disqualified under section 56 of the act [the substance of which is now found in section 1262 of the Unemployment Insurance Code] from receiving unemployment insurance benefits.’

The appellants assert that the Thomas case cannot govern the disposition of the present case. They state that, In the Thomas case, after the plant was closed, the employer sent notices to all employees requesting them to return immediately or as soon as the strike should end, thus keeping open their jobs, whereas in the present case the employer fully replaced the striking employees, thus making certain that they would not regain their jobs when the strike ended. But since the strikers did not respond to such notices in the Thomas case, the significance of such evidence was that it gave support to the determination that the strikers would not have returned to work even if there had been no notices of discharge and that, therefore, the proximate cause of each claimant's continuing unemployment was not the discharge but, rather, his refusal to cross the picket line.

Since the claimants in the present case had voluntarily left work because of a trade dispute, they were not eligible for unemployment compensation benefits for the period of time prior to their receipt of the letter of October 17. The significance of what thereafter transpired was in its bearing upon the question of whether the initial cause of the claimants' unemployment was still governing their conduct or whether the fact of their replacement by others as workers had intervened as the proximate cause of their being out of work. On that issue, it is to be noted that no claimant testified that he would have crossed the picket line to return to work if the employer had not replaced him.5 A number of those who had been on strike did cross the picket line after October 17 to apply for reemployment and some of them, after various periods of time, were reemployed.6 The significance of an application for reemployment, when it was made by an employee theretofore on strike, was that it showed, just as other actions on his part might have done, that he no longer chose to continue to be out of work ‘by reason of the fact that the trade dispute [was] * * * still in active progress in the establishment in which he was employed.’ (Unemployment Insurance Code, § 1262.) In the light of the record the trial court was justified in reaching the conclusion that the reason the respective claimants did not apply for reemployment at all, or delayed in so doing, was because they would not cross the picket line which was being maintained by their fellow strikers. The trade dispute was still in existence and they chose to continue to adhere to their cause, just as they had voluntarily done in response to the letter of October 2 with the knowledge that such replacement might seriously diminish their chances of ultimate reemployment.

In view of the evidence which was before the trial court, the following language of Bodinson Mfg. Co. v. California E. Com., supra, 17 Cal.2d 321, found at pages 327–328, 109 P.2d 935, at page 940, is appropos: ‘It is true that under the proper construction of the statute an employee who is prevented from working through no act of his own is entitled to compensation as, for example, where he is barred by force from the premises where he has been working. But that is not the situation here. If the picket line was maintained within the limits permitted by law, as this one presumably was, no physical compulsion was exerted to prevent corespondents from working. They were unemployed solely because, in accordance with their union principles, they did not choose to work in a plant where certain of their fellow employees were on strike. Their own consciences and faith in their union principles dictated their action. This choice is one which members of organized labor are frequently called upon to make, and in the eyes of the law this kind of choice has never been deemed involuntary. * * * In brief, disqualification under the act depends upon the fact of voluntary action, and not the motives which led to it. The legislature did not seek to interfere with union principles or practices. The act merely sets up certain conditions as a prerequisite to the right to receive compensation, and declares that in certain situations the worker shall be ineligible to receive compensation.’

The judgment is affirmed.

FOOTNOTES

1.  The letter was as follows:‘To All Mastic Tile Corp. Employees: ‘At the present time, there is no indication when the strike called by the International Chemical Workers Union, Local No. 1, at the Company's Long Beach plant, will end. The Company has, therefore, decided to resume operations as soon as possible. ‘If you return to work on or before October 7, 1958, you will find a job available for you. Unless you report available for work by October 7, 1958, however, you will be permanently replaced.’

2.  The letter was in the following form:‘Dear Mr. _____: ‘We advised you, by letter dated October 2, 1958, that unless you reported available for work by October 7, 1958 you would be permanently replaced. ‘This letter is to advise you that you now have been permanently replaced. ‘Enclosed is check number _____ dated October ___, 1958, in the sum of $_____ for pro rata vacation pay covering the period to September 21, 1958, the day on which you went out on strike against this company.’

3.  In addition, one other employee, Jimmy H. Donley, whose claim was included in Court 2 of the petition, applied for re-employment on February 27, 1959. He was not rehired.

4.  As to each of those not reemployed by Mastic upon such application, no question is involved on this appeal as to their eligibility for benefits during their period of unemployment following their unsuccessful application for work. The petitioner conceded that such eligibility existed.

5.  Claimant Welch testified as follows: ‘Q. Isn't it a fact that you did not make application for re-employment with Mastic Tile because you would not cross this picket line? A. Yes.’

6.  An instance of evidence with respect to that subject is found in the following testimony of claimant Welch: ‘Q. You have heard Mr. Kennedy testify that a number of striking employees returned to work subsequent to that letter of October 17? A. Yes. Q. And they crossed the line to return to work? A. Yes. Q. Did you know some of your fellow strikers were making application to return to work? A. Yes, I heard. Q. Did you know some of those persons who made application were rehired? A. Yes, I heard some of them. Q. Yet you never made any attempt to cross the line and apply for a job? A. No.’

FORD, Justice.