Unemployment Insurance: the Washington Supreme Court and the Labor Dispute Disqualification

• Publication year: 1978
• Citation: Vol. 1 No. 03

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 1, No.1FALL 1977

Unemployment Insurance: The Washington Supreme Court and the Labor Dispute Disqualification

Steven soha

Reacting to the mass unemployment of the 1930's, all states established unemployment insurance programs to assist eligible workers through periods of temporary unemployment.(fn1) Although providing relief for a broad spectrum of industrial unemployment, state unemployment insurance statutes typically contain various disqualifications rendering otherwise insured workers ineligible for benefits.(fn2) This comment discusses a disqualification common to all state statutes(fn3) disqualifying from benefits workers unemployed because of a labor dispute, and focuses upon the Washington Supreme Court's interpretation of the labor dispute disqualification in the Washington Unemployment Compensation Act.(fn4) After discussing the court's approach to the disqualification in the context of Washington case law, the comment examines various policy considerations underlying the labor dispute disqualification and contrasts the Washington court's interpretation with the interpretation other state courts have accorded similar labor dispute disqualification statutes. Finally, the comment concludes that the Washington court's singularly narrow interpretation of the labor dispute disqualification results from a basic misunderstanding of the disqualification's function in unemployment insurance legislation.

The labor dispute disqualification in the Washington Act typifies most state statutes:

Labor dispute disqualification. An individual shall be disqualified for benefits for any week with respect to which the commissioner finds that his unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment, or other premises at which he is or was last employed: Provided, That this section shall not apply if it is shown to the satisfaction of the commissioner that

(1) he is not participating in or financing or directly interested in the dispute which caused the stoppage of work; and

(2) he does not belong to a grade or class of workers of which, immediately before the commencement of the stoppage, there were members employed at the premises at which the stoppage occurs, any of whom are participating in or financing or directly interested in the dispute: Provided, That if in any case separate branches of work which are commonly conducted as separate businesses in separate premises are conducted in separate departments of the same premises, each such department shall, for the purposes of this subdivision, be deemed to be a separate factory, establishment, or other premises.(fn5)

Thus, the provision initially establishes a blanket disqualification for labor dispute unemployment, but subsequently recognizes a number of exceptions to disqualification. On a practical level, the exceptions define the scope of the disqualification, because claimants remain eligible for benefits upon proof that neither they, nor a grade or class of workers to which they belong, are financing, participating, or directly interested in the dispute

State courts generally have had little difficulty defining and applying the concepts of "financing"(fn6) and "participation"(fn7) in the labor dispute disqualification. The courts are not unanimous, however, regarding the application of "direct interest" and "grade or class" to labor dispute unemployment. Nevertheless, the majority of courts do agree that participation, direct interest, and grade or class membership constitute distinct disqualifications under the statutes.(fn8) Only the Washington Supreme Court rejects this consensus, consistently refusing to recognize a distinction between the disqualifications for participation and direct interest.(fn9) Moreover, in a recent decision, the court has equated the requisites for grade or class membership with actual participation in the creation of the dispute.(fn10)

Employees of Pacific Maritime Association v. Huttn (fn11) provides the most recent and striking examnie of the Washington court's interpretation of "direct interest" and "grade or class" in the context of the labor dispute disqualification. The unemployment insurance benefit claimants were longshoremen and foremen employed by the Pacific Maritime Association (PMA). Although both lengshoremen and foremen bargained with the PMA under the auspices of the International Longshoremen's and Ware-housemen's Union (ILWU), each negotiated a separate contract with the PMA. The ILWU-PMA agreement recognized three classes of longshoremen: class A workers, who were fully registered ILWU members and had first priority for available work; class B workers, who were "limited-registered" under the ILWU-PMA agreement, non-ILWU members, and had a secondary preference for available work; and casual workers, who were also non-ILWU members and had no work priority. When their contract with the PMA expired, a majority of the class A workers authorized a strike. Class B workers did not have a voice in the actual strike, vote, but could vote equally with class A workers on whether to accept the company's final settlement offer.(fn12) In this respect, the class B workers directly controlled the duration and final settlement of the dispute, a fact of which the court took little cognizance.(fn13) The foremen also took no part in the strike vote. They traditionally negotiated their contract only after a final settlement of the longshoremen's agreement, incorporating by reference various pension and welfare benefits contained in the former agreement. They too would benefit directly from any management concessions on these aspects of the longshoremen's contract. Accordingly, the primary issue before the court was the eligibility of the foremen and class B workers for unemployment benefits: whether class B workers were directly interested in the dispute, or belonged to a grade or class of workers any of whom were participating or directly interested in the dispute.

Although acknowledging that the claimants had a "lucrative interest"(fn14) in the outcome of the dispute, the court held that foremen and class B workers were not directly interested in the dispute for purposes of disqualification. The court reached this conclusion by equating direct interest with actual participation in the creation of the dispute: "[C]laimants to be ineligible . . . must first have some direct input into the creation or maintenance of the dispute."(fn15) Solely because the claimants could not participate in the strike vote they were not "directly interested" in the dispute. At the very least, the court's interpretation of direct interest in terms of participation is analytically questionable, because such an interpretation strips direct interest of any independent significance for purposes of disqualification and renders it mere surplusage. The interpretation also contravenes elementary canons of statutory construction dictating that courts accord each word in a statute a different meaning, if possible, so as to render none superfluous.(fn16) Thus, the court's interpretation is untenable in view of the express statutory language mandating disqualification for participation or direct interest,(fn17) which further indicates the independent efficacy of each provision.

Hutt accorded little weight to the economic aspects of the claimants' interest in the dispute. It acknowledged that the claimants' "wages, fringe benefits, and working conditions were determined by the results of the negotiations between the striking class A workers and the PMA," (fn18) that class B workers, and substantially the same contract benefits as class A workers, and that the terms of the foremen's contract derived in part from the longshoremen's agreement. The court observed, however, that these contingencies would have occurred "even if there were no strike."(fn19) Such an observation ignores the crucial facts before the court: that a strike did occur and that this strike precipitated the claimants' unemployment. A logical approach to the determination of "direct interest" must begin with an analysis of the dispute itself and only then proceed to a consideration of the claimants' interest in the dispute. The court's analytical approach, which begins by hypothesizing the nonexistence of the very subject in question, actually precludes any valid consideration of the claimants' relationship to the dispute.

After determining that foremen and class B workers were not directly interested in the dispute, the court considered and rejected the contention that the claimants were members of a grade or class of workers participating or directly interested in the dispute. To reach this conclusion the court delineated grade or class membership in terms identical to those employed in resolving the question of direct interest: participation in the initial strike vote. Foremen and class B workers were contractually ineligible to participate in the strike vote, and for this reason alone constituted an independent grade or class of workers. This rationale effectively reduces the grade or class disqualification to a determination of the actual labor dispute participants and relieves it of any significance beyond the independent disqualification for participation in the dispute. In this respect, the same criticisms directed at the court's interpretation of direct interest apply to...