COURT OF APPEALS
GUERNSEY COUNTY, OHIO
FIFTH APPELLATE DISTRICT
RODNEY ANDERSON, ET AL. :
Plaintiffs-Appellees, :
-vs- :
SHIELD ALLOY CORP., ET AL., :
Defendants-Appellants. :
JUDGES:
Hon. John F. Boggins, P.J.
Hon. William B. Hoffman, J.
Hon. Julie A. Edwards, J.
Case Nos. 05CA12 and 05CA13
CHARACTER OF PROCEEDING: Appeal from the Guernsey County Court of
Common Pleas, Civil Case No. 04 CV 268
JUDGMENT: Reversed
DATE OF JUDGMENT ENTRY: MARCH 24, 2006
APPEARANCES:
For Plaintiffs-Appellees: For Defendants-Appellants:
For Shield Alloy Corp.:
TIMOTHY F. COGAN DAVID A. CAMPBELL
1413 Eoff Street 2100 One Cleveland Center
Wheeling, WV 26003-3582 1375 East Ninth Street
Cleveland, Ohio 44114
For Ohio Department of Job
And Family Services:
PATRIA V. HOSKINS
Assistant Attorney General
30 E. Broad Street, 26th Floor
Columbus, Ohio 43215-3400
Guernsey County, Case Nos. 05CA12 and 05CA13 2
Boggins, P.J.
{¶1} Appellees-appellants Shield Alloy Corporation, et al. appeal the March 11,
2005, Opinion entered by the Guernsey County Court of Common Pleas, which
reversed and remanded the decision of the Unemployment Compensation Review
Commission finding appellants-appellees Rodney W. Anderson, et al. were not entitled
to unemployment compensation benefits.
STATEMENT OF THE FACTS AND CASE
{¶2} The facts of this case are largely undisputed. Shield Alloy entered into a
collective bargaining agreement (“CBA”) with the United Steel Workers of America,
Local Union No. 4836-02 (“Union”) of which appellees herein are members. The CBA
went into effect on June 11, 1998, and expired on June 6, 2003. Beginning on April 4,
2003, through June 13, 2003, the parties conducted fifteen bargaining sessions in an
attempt to reach a new agreement. In early June, 2003, the Union offered to continue
working under the expiring CBA indefinitely. The parties mutually agreed to an
extension of the CBA through June 14, 2003. The Union made a concessionary offer
for a new agreement on or about June 6, 2003. Shield Alloy countered with an offer for
a new agreement which included further concessions than those the Union had offered.
The Union’s offer included a three percent wage decrease compared to the expiring
CBA while Shield Alloy’s countered with a twelve to thirteen percent wage decrease.
{¶3} By a substantial majority, the members of the Union voted to reject Shield
Alloy’s “final offer” on June 13, 2003. Shield Alloy interpreted the contract rejection by
the Union as an impasse in negotiations, and on June 15, 2003, implemented its “final
offer”. The Union worked under the “final offer” from June 15, 2003, through
December 8, 2003. During this time, the Union filed a charge with the National Labor
Relations Board (“NLRB”), alleging the parties had not reached an impasse in
negotiations. The NLRB dismissed the charges against Shield Alloy on November 26,
2003. After the NLRB’s dismissal, the parties agreed to a December 8, 2003
negotiation session. The parties did not engage in any negotiation sessions between
June 13, 2003, and December 8, 2003. The Union advised Shield Alloy if the parties
did not revert back to the expired CBA with a retroactive payment in the difference
between the implemented “final offer” and the expired CBA, a work stoppage would be
recommended to the members. Shield Alloy would not agree to the terms. The
members of the Union, by a substantial majority, voted to reject Shield Alloy’s “final
offer”, and commence a work stoppage on December 8, 2003.
{¶4} Thereafter, appellees applied for unemployment compensation benefits
with the Ohio Bureau of Employment Services. The Unemployment Compensation
Review Commission (“Review Commission”) found appellees had become unemployed
due to a labor dispute other than a lockout; therefore, were not entitled to
unemployment compensation benefits. Appellees appealed to the Guernsey County
Court of Common Pleas, which reversed the decision of the Review Commission,
finding the unemployment of the Union members was due to a lockout, and, the
members were entitled to unemployment compensation benefits. The trial court
memorialized its decision via Opinion filed March 11, 2005.
{¶5} It is from this decision Shield Alloy appeals, raising the following
assignments of error:
ASSIGNMENTS OF ERROR OF SHIELD ALLOY CORPORATION
{¶6} “I. THE TRIAL COURT’S OPINION OF MARCH 11, 2005 FAILED TO
APPLY THE APPROPRIATE STANDARD OF REVIEW UNDER REVISED CODE
SECTION 4141.28(O) BECAUSE THE TRIAL COURT IMPROPERLY SUBSTITUTED
ITS JUDGMENT FOR THE BOARD OF REVIEW’S JUDGMENT AND REVERSED THE
BOARD OF REVIEW’S DECISION BASED SIMPLY ON A DIFFERENT
INTERPRETATION OF THE EVIDENCE.
{¶7} “II. THE TRIAL COURT’S OPINION OF MARCH 11, 2005 FAILED TO
APPLY THE APPROPRIATE STANDARD OF REVIEW UNDER REVISED CODE
SECTION 4141.28(O) BECAUSE THE TRIAL COURT IMPROPERLY MADE A
FACTUAL DETERMINATION THAT IS WITHIN THE SOLE JURISDICTION OF THE
BOARD OF REVIEW.”
ASSIGNMENTS OF ERROR OF OHIO DEPARTMENT OF
JOB AND FAMILY SERVICES
{¶8} The Ohio Department of Job and Family Services (“ODJFS”) also appeals
the same Opinion, raising as error:
{¶9} “THE COMMON PLEAS COURT ERRED IN FINDING THAT THE
DECISION OF THE OHIO UNEMPLOYMENT COMPENSATION REVIEW
COMMISSION WAS UNLAWFUL, UNREASONABLE AND AGAINST THE MAINFEST
WEIGHT OF THE EVIDENCE, WHEN THE EVIDENCE SUPPORTS THE
CONCLUSION THAT THE CLAIMANTS BECAME UNEMPLOYED DUE TO A LACK
OF WORK.”
Shield Alloys I, II and ODJFS I
{¶10} Because both of Shield Alloy’s assignments of error and ODJFS’s
assignment of error require identical analysis, we shall address said assignments of
error together. In its first assignment of error, Shield Alloy maintains the trial court failed
to apply the appropriate standard of review as it improperly substituted its judgment for
that of the Review Commission. In its second assignment of error, Shield Alloy submits
the trial court improperly made a factual determination which was within the sole
jurisdiction of the Review Commission. In its sole assignment of error, ODJFS asserts
the trial court erred in finding the decision of the Board of Review was unlawful,
unreasonable, and against the manifest weight of the evidence.
{¶11} R.C. 4141.28(O)(1) states any interested party may appeal from a
decision of the Review Commission to the court of common pleas, and the court of
common pleas may reverse or modify such decision only if it finds the decision was
unlawful, unreasonable or against the manifest weight of the evidence. (Emphasis
added.) The same standard applies to this Court's review. Tzangas, Plakas &
Mannos v. Ohio Bur. of Emp. Serv., 73 Ohio St.3d 694, 696, 1995-Ohio-206. “In so
reviewing, however, the Review Commission's role as fact finder remains intact, and the
fact that reasonable minds may reach different conclusions is not a basis for reversing
the Review Commission's decision.” Id. at 697. (Emphasis added.) An appellate court
may not make factual findings or assess the credibility of witnesses and may determine
only whether the evidence supports the Review Commission's decision. Id. at 696-697.
{¶12} R.C. 4141.29(D)(1)(a) provides no individual is entitled to unemployment
compensation benefits for any week during which their unemployment is due to a labor
dispute other than a lockout. Therefore, the sole issue to be decided by this court is
whether the appellees' unemployment was due to a lockout or a labor dispute other than
a lockout. As such, in order to determine whether the plaintiffs are entitled to benefits,
we must determine whether the labor dispute was or was not a lockout within the
meaning of the Ohio unemployment compensation law.
{¶13} In Zanesville Rapid Transit, Inc. v. Bailey (1958), 168 Ohio St. 351, the
Ohio Supreme Court defined a "lockout" as a "cessation of the furnishing of work to
employees or a withholding of work from them in an effort to get for the employer more
desirable terms." Id. at 354. A lockout is not confined to an actual physical plant
closing; employees may be subjected to a constructive lockout as well. Id. A
constructive lockout occurs when "the conditions of further employment announced by
the employer are such that the employees could not reasonably be expected to accept
them and the terms manifest a purpose on the part of the employer to coerce his
employees into accepting them or some other terms." Id. at 355.
{¶14} In Zanesville, supra, the Supreme Court focused on whether the employer
imposed unreasonable conditions on its employees which left the employees no
alternative but to cease working. However, in Bays v. Shenango Co. (1990), 53 Ohio
St.3d 132, the Court adopted the "status quo" test to determine whether a labor dispute
is considered a strike or a lockout. Quoting Erie Forge & Steel Corp. v. Unemploy.
Comp. Bd. of Review (1960), 400 Pa. 440, 443- 445, 163 A.2d 91, the Ohio Supreme
Court stated:
{¶15} " * * * The sole test under * * * the Unemployment Compensation Law * * *
of whether the work stoppage is the responsibility of the employer or the employees is
reduced to the following: Have the employees offered to continue working for a
reasonable time under the pre-existing terms and conditions of employment so as to
avert a work stoppage pending the final settlement of the contract negotiations; and has
the employer agreed to permit work to continue for a reasonable time under the preexisting
terms and conditions of employment pending further negotiations? If the
employer refuses to so extend the expiring contract and maintain the status quo, then
the resulting work stoppage constitutes a 'lockout' and the disqualification of
unemployment compensation benefits in the case of a 'stoppage of work because of a
labor dispute' does not apply." Id. at 134-135. (Emphasis in original).
{¶16} The "status quo" test, therefore, requires a determination of "which side,
union or management, first refused to continue operations under the status quo after the
contract had technically expired, but while negotiations were continuing." Id. at 135,
quoting Philco Corp v. Unemp. Comp. Bd. of Review (1968), 430 Pa. 101, 103, 242
A.2d 454, 455 (Emphasis added).
{¶17} Some courts of appeal have determined the Bays, supra, "status quo" test
applies only where negotiations between the parties are ongoing at the time the
employer implements its final offer, while the Zanesville, supra, test applies to determine
whether a work stoppage is due to a lockout in instances where negotiations have
ceased. See: Aliff v. Unemployment Comp. Review Com’n, (March 13, 2003),
Cuyahoga App. No. 80767, 2003-Ohio-1155; Johnson v. Ohio Bur. of Emp. Serv.
(1993), 82 Ohio App.3d. 293. If the relationship between the parties has broken down to
the point where meaningful negotiations have ceased, then under Bays, supra, the
employer does not deviate from the status quo when it implements its final offer.
Johnson, supra at 298.
{¶18} In Albaugh v. Unemployment Compensation Review Comm'n (May 11,
2001), Guernsey App. No. 00CA024, unreported, this Court determined Bays, supra,
and Zanesville, supra, must be interpreted together:
{¶19} “Although the Bays court cited Zanesville, it did not overrule it, nor did it
explain when to apply Bays and when to apply Zanesville. We must review both cases
to determine how they can be construed together. At the outset, we find they both
present a reasonableness standard. Bays deals with situations where the status quo
has been changed, and directs us to determine whether the party who changed the
status quo acted reasonably. If the party who changed the status quo is the employer,
the Bays test is employed to review the employer's actions. If the court finds the
employer acted reasonably in offering its best and final offer, then the analysis shifts to
an examination of whether the employees' response to the offer was reasonable, which
is the Zanesville analysis. In other words, the Supreme Court has provided us with a
framework which will analyze both parties' actions in turn. It is only logical to place the
burden of proof on the actor in each instance, to show its actions were reasonable. The
first step must be to determine which party altered the status quo * * * Pursuant to Bays,
the parties may change the status quo only after allowing it to exist for a ‘reasonable
time’.” Id.
{¶20} The Hearing Officer and Review Commission found that Shield Alloy’s
imposition of its “final offer” was reasonable based upon a compelling reason and that it
was not done to coerce the Union into accepting the offer. Implicitly, the administrative
decision also found that the Union’s decision to strike was unreasonable.
{¶21} There was no factual dispute that Shield Alloy had been sustaining a loss
ever since mid-1998. The Union agreed that concessions were necessary. Moreover,
when the company first imposed the “final offer”, the Union did not strike. Instead, the
Union members continued to work. As of December 8, 2003, the facts indicated that
the Union did not just request that it continue working under the expired CBA during
negotiations but coupled this with a retroactive pay condition or it would strike, thereby
changing the status quo existing at that time. Then Union chose to strike.
{¶22} This resulted in a labor dispute rather than a lockout, making
unemployment benefits inapplicable.
{¶23} We find that the decision at the administrative level was supported by the
record and was not unlawful or unreasonable.
By: Boggins, P.J.
Edwards, J. concurs separately
Hoffman, J. dissents.
___________________________________
___________________________________
___________________________________
JUDGES
Guernsey County, Case Nos. 05CA12 and 05CA13 10
Hoffman, J., dissenting
{¶24} I respectfully dissent from the majority opinion. I agree with the trial court
Shield Alloy’s actions resulted in a “lock out”, and appellees were entitled to
unemployment compensation. My reasons follow.
{¶25} “The reasonableness of any business decision depends on the special
facts and circumstances of the case.” Albaugh v. Unemployment Compensation
Review Comm’n (May 11, 2001), Guernsey App. No. 00CA024, unreported. On
December 8, 2003, after the NLRB announced its decision, the parties met, but could
not reach an agreement. The Union sought reinstatement of the expired CBA with
retroactive pay, however, Shield Alloy rejected such. The Union had been working
under Shield Alloy’s final offer since June 14, 2003. As a result, the Union commenced
the strike. I find Shield Alloy changed the status quo by refusing to allow the Union to
continue working under the terms of the expired CBA beyond June 14, 2003, and such
was unreasonable. The Union had no alternative other than a work stoppage.
{¶26} Shield Alloy argues it has not earned a profit since mid-1998, and
increasing financial difficulties left it no other option. During negotiations, these financial
difficulties were communicated to the Union. The Union recognized the need for
concessions, and offered concessions to Shield Alloy, including a three percent wage
decrease. Shield Alloy demanded concessions amounting to a twelve to thirteen
percent overall decrease, which included a wage decrease, an increase in the
employee contribution for health coverage premiums, a decrease in the health
coverage, and reduction in overtime pay. Shield Alloy would not move past its twelve
percent concessionary demand. Although the company was having financial difficulties,
countervailing evidence was presented to the Hearing Officer. For example, the
company increased its net working capital from 2001, to 2002. Shield Alloy had also
engaged in substantial capital expenditures, which effectively increased its loss.
{¶27} I agree with the trial court and find the decision of the Review Commission
was unlawful, unreasonable and against the manifest weight of the evidence.
Accordingly, I would overrule Shield Alloy’s and ODJFS’s assignments of error, and
affirm the judgment of the Guernsey County Court of Common Pleas.
________________________________
JUDGE WILLIAM B. HOFFMAN
Guernsey County, Case Nos. 05CA12 and 05CA13 12
EDWARDS, J., CONCURRING OPINION
{¶28} I agree with Judge Boggins as to the disposition of this case, but I
disagree with a portion of his analysis. The “status quo” is defined in terms of the preexisting
terms and conditions of employment set by the Collective Bargaining
Agreement. M. Conley Co. v. Anderson (March 8, 2006), 108 Ohio St.3d 252, 2006-
Ohio-792, Para. 16. I disagree that a new status quo was created when the Union
continued to work under the company’s final offer. I also disagree that the Union, by
agreeing to work under the expired Collective Bargaining Agreement (retroactive to the
date the CBA expired) or strike, was changing the status quo.
{¶29} I agree with Judge Boggins as to the remaining portion of his analysis. I
find that Shield Alloy broke the status quo when it implemented its final offer. But,
based upon the losses suffered by Shield Alloy and the Union acknowledgement that
concessions were necessary, I find that the administrative decision, which found the
imposition of Shield Alloy’s final offer was reasonable based upon a compelling reason
and not done to coerce the Union into accepting the offer, was not unlawful,
unreasonable or against the manifest weight of the evidence. Accordingly, I agree with
Judge Boggins as to the decision to reverse the judgment of the Guernsey County
Court of Common Pleas.
_____________________________
Judge Julie A. Edwards
JAE/mc/mec