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08/16/83 MEAD PRODUCTS v. INDUSTRIAL COMMISSION

August 16, 1983

MEAD PRODUCTS, A DIVISION OF THE MEAD CORPORATION, APPELLANT
v.
THE INDUSTRIAL COMMISSION OF MISSOURI, ET AL., RESPONDENTS



From the Circuit Court of Buchanan County; Civil Appeal; Special Judge Lee Hull.

Before Turnage, P.j., Pritchard, Kennedy, JJ.

The opinion of the court was delivered by: Pritchard

Claimants, 563 in number, were employees at appellant's St. Joseph, Missouri, plant and members of the Graphic Arts Union, Local 529. Claimants each filed requests for unemployment compensation benefits for the period from December 17, 1979 until January 7, 1980, contending that they were laid off from work. Appellant contends that claimants' unemployment was due to a lockout resulting from a labor dispute which caused a work stoppage and, therefore, claimants are barred from receiving unemployment compensation for a work stoppage under the express provisions of Section 288.040.5(1) RSMo. 1978.

An appeals referee found, as did deputies of the Division of Employment Security, that claimants were unemployed from December 17, 1979 until January 7, 1980 because of a stoppage of work which existed because of a labor dispute, and the claims were denied. The Industrial Commission reversed the Appeals Tribunal and found that claimants were entitled to employment security benefits during the weeks claimed. The circuit court affirmed the Commission.

It was stipulated before the Appeals Tribunal: Appellant and the Union had entered into a collective bargaining agreement with an effective date of November 1, 1976, and a termination date of October 31, 1979; prior to the expiration date, the Union notified appellant of its desire to negotiate new terms and conditions; the contract expired without settlement of the contract negotiations, which commenced on October 1, 1979; thereafter, employees continued working without a contract and negotiations continued; and on November 8, 1979, appellant made its "final offer" to the Union Bargaining Committee, which was rejected. Thereafter, certain notices were sent by appellant to employees and the Union, and its Senior Executive spoke to its members at a meeting, which matters are hereinafter mentioned. From December 17,1979, to January 7, 1980, appellant's employees who were members of other Unions continued working without interruption.

Quite apparently shouldering their laboring oar, claimants presented this evidence, which is included in the transcript of the record considered by the Industrial Commission: Larry L. Huston testified that he had been employed by appellant for 15 years, and was the Union's business representative for 6 years. The plant was first unionized in 1941, and since that time there has been only one strike, which occurred in 1974. After the expiration of the contract, claimants continued to work without a contract, and during negotiations for a new contract, the union team never refused to meet with the company management personnel team, and never directly threatened any type of strike action. On November 19, 1979, appellant posted a notice that there would be work for only three days a week because of production problems caused by uncertainty of contract negotiations, economic conditions, high inventory levels and customer requirements.

On December 16, 1979, Huston was present for the normal starting time of the third shift, at about 10:15 or 10:30 p.m., at the employees' entrance. The door was locked and upon Huston's knock, Paul Montegna, appellant's then production manager, talked to him. Huston told him his people were ready to come to work and report in. Montegna answered that there was no work available and that "your people are laid off -- or something similar to that." Huston told the people to go home. He was at the plant the next morning at the starting time of that shift, and told him that his people were ready and willing to report for work, and Montegna repeated that there was no work available, and "your people are laid off." Huston testified that the slack season at the plant, as a general rule, is from September to February or March - it varies. Around the Christmas holidays, it was traditional for the employees of his bargaining unit to request vacations. Ray Allen was present with Huston when Montegna told him that there was no work available, that they were laid off, on both December 16th and 17th. Allen was present alone at the 3:00-3:30 shift on the latter date, and told Montegna they were ready to go to work. "Q And what did Paul say at -- well, what was his response at the time, at 3:30? A Paul threw me a curve. I thought we had it down pat because this was the third time around and the reply wasn't the same, it was, you're -- are locked out. So, took me for a second and I said, wait a minute Paul, I said, 'locked out' or 'laid off', what is it? And he said, locked out or laid off, it's the same difference, it's the same difference, there's no difference he said, there's no work available."

Paul Montegna testified that on the three occasions when claimants reported for work he told Huston twice that there was no work available for their union and that they were laid off. He used the term "lockout" once the next morning (December 17th) to Huston, and told Allen that afternoon that they were "locked out, there's no work available." "I told them they were locked out or laid off, it didn't make any difference how I put it." The reason for the company's position at the time reflected in the statement Montegna gave to the employees - the reason they were locked out was the labor dispute, which was when the final contract offer was rejected. The meanings of the terms "lockout" and "laid off" were the same to Montegna, and he was so told by their attorney. As to the seasonal nature of the work, Montegna testified that under normal conditions, it would start building up around the middle of December, "and it's just gradual build up until we eventually get up in February, we're almost at full employment and we peak out around July." This differed from the testimony of Huston that the slack season is, as a general rule, from September to February or March. "It varies."

George Carolus was appellant's operations manager at the times here in question, and was head of its bargaining committee. The Union rejected appellant's final offer of a new contract of November 8, 1979, by a vote of a large majority of its members on November 17, 1979. Appellant's decision was to institute a three-day work week, followed by a decision to have a short lockout. [The posted notice to Union members, dated November 19, 1979, recited: "Because of production problems caused by uncertainty of contract negotiations, economic conditions, our high inventory levels, and customer requirements, we will need to start working only three days per week until further notice, * * *."] A newspaper article reporting the failure of contract negotiations and a complaint filed with the NLRB, was a factor in appellant's decisions. It was its understanding that in a lockout situation employees would not draw unemployment compensation.

As to the seasonal nature of appellant's work in December 1979, Carolus had this to say: There was then sufficient work for all claimants to remain employed; they were all employed prior to the three-day work week cutback. There was no difference in the economic conditions of the company during that few work week period. Orders were not any less, and demands on the system were just as great; and there was no reduction in availability of supplies and raw material. The only reason for making a decision to cease operations was lack of progress in contract negotiations. A part of the plant operations was transferred to other locations, and a part was just left undone. As to the seasonal nature of the work, Carolus testified that a build-up is started about the middle of December primarily to supply other divisions. The build-up continues and peaks out in July. At the highest peak, there are over 1,000 employees, and the lowest ebb is at inventory time in September, at which time there are about 400 to 500 people, who are retained until the build-up is started again. Due to the lockout, other plants were asked to assume as much production from St. Joseph as possible, but were not able to assume all of it. Consequently, appellant lost between five and seven hundred thousand dollars during the lockout.

An official of appellant (apparently its president, Bill White) spoke to union members on December 10, 1979, the talk being preserved on tape. It was noted that Fred (Stoll), a member of Mead's management, was responsible for negotiating a new contract, and any future contract would be at the union's bargaining table with Fred's team. "The next question is this: Where are the negotiations at the moment? Unfortunately we are at an impasse. I am aware there have been thirteen negotiating sessions, and that we have dealt in good faith trying hard to reach an agreement. However, the point was reached at which there was no more progress. Fred, in his efforts to be honest and straightforward with you, attempted in his letter of November 9 to outline the very serious business problems which are beginning to accumulate. He said we could not go on indefinitely, living under a cloud of uncertainty, not knowing what might happen next. He emphasized that we must make plans for the future - plans to protect your long range future by doing what was necessary to protect the business. Fred made it clear to you, just as was made clear to your bargaining committee, that the company has given you its best offer. Everything Fred said in that letter of November 9 is still true but the pressure of our business now is considerably greater. We must make arrangements right away to protect our business over the weeks and months ahead. We are reluctant to do some of the things which the situation demands. But if we are to maintain our position in the marketplace we must act. * * * So here are our plans: First, we are making arrangements to divert 20 percent or more of our anticipated 1980 production to other Mead plants and outside sources. We will begin diverting orders immediately. Second, since there is no agreement on a new contract, manufacturing operations under the jurisdiction of Local 529 will be curtailed from December 17 to January 7, and there will be no work available for employees represented by Local 529. Third, should a new contract be ratified by noon, Sunday, December 16, 1979, operations will resume on a normal full schedule beginning Monday, December 17, 1979. Fourth, if a contract is ratified between December 17 and January 7, 1980, a normal full manufacturing schedule would be resumed providing work is available. The longer we go without a contract the more difficult it will be to bring work back into the plant. Finally, without a labor agreement by January 7, 1980, we will propose a three day work week on an indefinite basis. * * *."

A notice was issued to union employees: "You are being laid off effective December 17 until January 7 due to labor dispute between the company and G.A.I.U. Local 529. Foreman ." [No date is on the exhibit of this notice.]

On cross-examination, Carolus acknowledged that he never told the union officials or the employees that the three-week hiatus in manufacturing or plant operations was specifically a lockout prior to December 16th or 17th.

Upon appeal to the Industrial Commission a remand was ordered to take additional evidence as to: "whether and to what extent the unemployment of the claimants during any weeks claimed throughout the period involved in this matter was related to seasonal fluctuations in the business of the employer." The appeals referee held the further hearing on January 15, 1981, at which this evidence was adduced: George Carolus testified that Mead Products is a division of Mead Corporation and "is a manufacturer of school supplies or paper converters of school supplies, that is, tablets, pads, note pads and etc." Mead Products services from the smallest paper job, paper wholesalers on to directly service discount stores, and department stores. Fifty-five percent of production goes to other (Mead) divisions. As to the seasonal nature of production, Carolus testified: "Well, by nature of the business school supplies, our business has to run in a cycle coinciding with school opening. Our normal -- our normal bill period begins following our annual physical inventory which is normally late in September. We start building production at that time and we'll continue building in an increasing matter (sic) right after the first of the year, we normally would peak out in a production cycle in -- during the months of June and July. At that time most of the shipments are going out to ...


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