OHIO BUREAU OF EMPLOYMENT SERVICES v. HODORY

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Argument of Richard A. Szilagyi

Chief Justice Warren E. Burger: We will hear arguments first this morning in 75-1707, Ohio Bureau of Employment Services v. Hodory.

Mr. Szilagyi, you may proceed whenever you are ready.

Mr. Richard A. Szilagyi: Mr. Chief Justice and May it please the Court.

This case involves the constitutionality of Section 4141.29(D)(1)(a) of the Ohio revised code.

This Section disqualifies individuals from receiving unemployment benefits, if there is an unemployment that was due to a labor dispute other than a lockout at any factory, establishment or other premises located in this or any other State that is wholly owned or operated by the employer in which the employee is or was last employed.

This is commonly referred to in the unemployment field as the Functional Integrated Plant Theory whereas you have multiple plants, one employer, and all of the plants operate as a single unit that produces one-single product or end-products.

Plaintiff-appellee represent approximately 1250 steel workers who became unemployed as a result of a strike at the wholly owned and operated coal mines of the steel companies which cut-off the supply of coal that the steel companies needed to continue production in Ohio.

Plaintiff’s denied benefits by the administrator because of disqualification in our law.

There is an appeal pending before the Board of Review in the Ohio Bureau of Employment Services with appellees and their class and this was pending the outcome of this case.

During the pendency of appeal before the board, the appellees filed an action in the Federal District Court, Northern District, and Eastern Division in Cleveland as a class action under 42 U.S.C. 1983 for a declaratory judgment seeking as unconstitutionality of the statute and also for injunctive relief in the way of past benefits.

Chief Justice Warren E. Burger: Was the administrative proceeding pending at that time, the case was first brought in the District Court?

Mr. Richard A. Szilagyi: Yes Mr. Chief Justice, it was, yes.

Appellees alleged that the Ohio Statute was unconstitutional on its face and as applied because it violated the Supremacy Clause dealing conflict with 42 U.S.C. Sections 503(a)(1) and 303(a)(1) of the Social Security Act.

Additionally, they alleged, that it was a violation of Due Process and Equal Protection Clauses of the Fourteenth Amendment.

Appellees did not name either US Steel or Republic Steel in the District Court as the party defendants as required under the Ohio statutes as an interested party, since their funds are drawn against because payments of unemployment benefits.

The defendants in the Court below argued that the case was not a proper case for a three-judge District Court and an action for injunction damages.

During the oral argument, the appellees changed it from money damages and said that it was benefits.

Plaintiff-appellee has failed to exhaust their remedy at law.

We argued that the plaintiff and his co-worker had a pending appeal before the Board of Review and the Court should not hear.

Plaintiff-appellee has failed to meet the requirements of Federal Rules of Civil Procedure 23(b)(3).

The class was a definite class that plaintiffs would furnish names, no notice was given.

The unemployment compensation laws in Ohio are solely the State’s concern and have not been preempted by the Federal Government and we argue that US District Court should abstain from the hearing of the case, for two reasons.

Comity and that they are already were in the state administrative process and could go up through the process to the State Courts, to the Federal Courts in the normally judicial manner.

The District Court convened a three-judge panel to determine the constitutionality of the statute.

The memorandum opinion, however, the three-judge court which was found in the jurisdiction statement arise on page 48 held that injunctive relief was proper under 28 U.S.C. 2283 in our injunction statute.

They said that abstention was not proper in the instant case since plaintiff had stated a good cause under 42 U.S.C. 1983.

The Ohio Courts had previously ruled on the validity of the statutes, therefore, the frugal for the plaintiffs to go through the process again.

The Court found in the prerequisites to certification that the prerequisites of certification had been banned under 23(a) and (b), despite as I said no fact and notice was given.

And they said that the operative effect of 4141.29(D)(1) was disqualifies benefits to plaintiffs who violate the Equal Protection and Due Process Clause as guaranteed under the Fourteenth Amendment and 42 U.S.C. 1983.

We generally argued at oral argument that granting benefits to workers laid off due to a strike in a parent company subsidiary plant would in effect be subsidizing the union members of the steel workers.

Granting of benefits would place the employer in an unfair disadvantage in negotiations with the unions.

That the financial burden of supporting the striking members is shifted from the Unions Treasury to the State of Ohio, it is conceivable that no concerted effort by the mine workers to negotiate a fair settlement would be pursued until the employer reached the financial crisis.

The difference between the mine workers of say a 100 and maybe 5,000 or 6,000 steel workers, you can see the impact upon the employer’s fund.

The State has a legitimate purpose in protecting the physical integrity of its compensation fund.

Strikes involving large Corporations such as US Steel, the auto workers, the Rubber Companies, and other corporate giants involved many hundreds and thousands of employees which would sometimes last many weeks further depleting our funds.

Unknown Speaker: Mr. Szilagyi, is it clear that the statute in this case does prevent any unemployment benefits to be paid to the respondents?

Mr. Richard A. Szilagyi: Mr. Justice, the statute, when this case was brought up, did disqualify benefits if it was a wholly owned and operated subsidiary that went on strike which caused the main plant to strike.

In this instant case, there were about 2,000 employees involved in Reno, Ohio, Cleveland, Youngstown, Warren I believe.

The Board of Review in half of the cases found that the employees in the Larine Plant, for instance, were qualified for benefits because under some tests that they had for as far as supplying fuel, they had a 50/50 test, but they said, “Unless the main plant was receiving or depending on the subsidiary for more than 50% of the coal.

It was not due to a strike or labor dispute, but it was caused because of lack of fuel, and therefore, a lack of work.

Therefore, the Cleveland and Reno people did get benefits, which is on appeal by the steel company of course.

Unknown Speaker: But then, the claim of these people is also on appeal, by then?

Mr. Richard A. Szilagyi: That is correct, in an administrative process.

Unknown Speaker: So, it is not clear so far that it has not been finally determined by the State of Ohio and the Administrative appeal process that these people are deprived of their unemployment benefits, is that correct?

Mr. Richard A. Szilagyi: The final determination has not been made.

Unknown Speaker: And their claim in that appeal is what, that the…?

Mr. Richard A. Szilagyi: That is that they are entitled to it and say “We are involuntary unemployed,” which is counter to the statute.

Unknown Speaker: Well, yes, but do they say they are entitled to it even under the statute?

Mr. Richard A. Szilagyi: Well, they say that the statute is unconstitutional.

Unknown Speaker: Making the same claim on that state proceeding as they are, as they prevailed in this Federal Court proceeding?

Mr. Richard A. Szilagyi: Mr. Justice, I think that they would have to reserve that till they got to the Common Pleas Court.

I do not think the administrative agency or the bureau is bound by the Supreme Court decisions and Court of Appeal decisions in Ohio which held the statute constitutional, and therefore, the issue of constitutionality would not get into it until they got to next level, Common Pleas Court, Court of Appeals, and possibly into the Federal Judicial.

Unknown Speaker: But in the administrative proceedings, it was my understanding that they are claiming that even assuming the constitutionality of the statute, they are entitled to benefits under the statute because their employer could have gotten its coal somewhere else.

Mr. Richard A. Szilagyi: This is an issue and that was brought up by the amicus AFL-CIO that I believe it was not the appellee’s contention.

Unknown Speaker: I see.

Unknown Speaker: Do you agree with the new policy Mr. Szilagyi?

Mr. Richard A. Szilagyi: Well, of course we would hopefully.

Unknown Speaker: Which is set to work?

Mr. Richard A. Szilagyi: I settle for a reverse to vacate the judgment and let the State Court proceedings go on.

Unknown Speaker: Oh, would you agree to their remand, you would not agree to that.

Mr. Richard A. Szilagyi: Mr. Justice, I do not think the remand would be very good because the District Court would still have to wait for the administrative hearing, it is not a de novo trial.

The administrative process would still have to go through the Board of Review and then they could appeal to the State Courts and depending on the evidence in the case, they could not rule that they could be entitled to benefits, I do not know.

Each case was on a fact-by-fact basis.

Unknown Speaker: But this statute has not been amended, is it not?

Mr. Richard A. Szilagyi: It has been amended, but we have two other cases, Your Honor, that are pending.

There is the Lordstown, General Motors with several thousand people, we have which is the actual case that is in Court of Appeals in Ohio and we also have one in Youngstown in a hospital case which is relatively minor, 200 or 300 employees.

Unknown Speaker: Is there any decision in this case on the statutory ground or on the conflict ground with the federal statute?

Mr. Richard A. Szilagyi: There has not been any in this particular, in this instant case in the Board of Review or the lower level administrative proceedings, but we have had a case in 1963.

Unknown Speaker: What is this, where did this case come from?

Mr. Richard A. Szilagyi: This one comes from directly to the District Court which convened the Three-Judge Court for the constitutional.

Unknown Speaker: Was the conflict with the federal statute alleged?

Mr. Richard A. Szilagyi: I guess they had a -- they said it was in conflict with Section 503 and 50…

Unknown Speaker: Did the three-judge court decide that?

Mr. Richard A. Szilagyi: Well, they did not say it was in conflict with the federal statute because Judge Celebrezze requested to the appellees, in fact it is in my brief, where he specifically questioned the appellees and said, “Is there any Federal Law that you can tell me that is in conflict with this and the appellee said no, they do not have any.

Unknown Speaker: Had there any complaint made about it?

Was that part of the case when it started in the District Court?

Mr. Richard A. Szilagyi: Well, when they first started the case, they said it was the Supremacy Clause.

Unknown Speaker: Supremacy?

Mr. Richard A. Szilagyi: Preemption document.

The Due Process, Equal Protection.

Unknown Speaker: So that was in the complaint?

Mr. Richard A. Szilagyi: That was in the complaint, yes sir.

Unknown Speaker: But did they abandon that Supremacy Clause argument?

Mr. Richard A. Szilagyi: No, Your Honor, they have not abandoned it since…

Unknown Speaker: Well, was it decided or not?

Mr. Richard A. Szilagyi: I do not think the District Court spoke to the Supremacy.

They just…

Unknown Speaker: Was it not supposed to before it reached the Equal Protection or Due Process clause?

Mr. Richard A. Szilagyi: Well, I understood that they are from the Lower Court; they just said there was a constitutional conflict on Equal Protection and Due Process.

Unknown Speaker: Well I understand that, but how about a conflict with the federal statute, they did not decide it?

Mr. Richard A. Szilagyi: They did not decide that as far as I know.

Unknown Speaker: Do you object to that or not?

Are you complaining about that?

Mr. Richard A. Szilagyi: I am complaining, yes, its part of our brief.

If there is not any federal statute and unless you have a federal right or constitutional right, fundamental right, a 1983 action is inappropriate, improper.

Unknown Speaker: Well, you can raise the issue of the conflict to the federal statute in the 1983 Act?

Mr. Richard A. Szilagyi: But there has to exist a fundamental right or statutory right which there is not in this case.

Unknown Speaker: You say that there is just no federal statute that is relevant to it?

Mr. Richard A. Szilagyi: The whole Social Security Act since 1935 under Stewart, the landmark cases at this Court decided was Charles E. Stewart v. Davis and the Carmichael v. Southern Colin Coke.

Both of those cases held that this was a State Federal plan.

There was no coercion on the States to accept the plan, they were free to take it or reject it and still can, that the only, there were minimum requirements that is the money.

The employer has got a tax break of up to 90% if the State had an unemployment plan and it is still today that way.

The minimum requirement was that the secretary of labor has to approve our plan yearly.

The funds can be only used for unemployment.

That we have to maintain a fiscal soundness in our plan because if we do not, we are not only loose the capital improvement money, but we have to increase either the tax on the employer by way of increasing his weight or we have to raise the base or we have to use a combination of all three and it has to be done in three years.

As you notice this probably, the Court has judicial knowledge that more than 31 States that are already bankrupt.

Since I wrote this brief, there were only eight, but there are approximate 31 now and more and this energy crisis has even caused more of a problem because Ohio’s funds are going to run out probably or were going to, if the weather had not turned by March 15.

Unknown Speaker: Has Ohio amended his law now?

Mr. Richard A. Szilagyi: Yes, it has amended its law, but there is still a disqualification.

In Ohio’s law which was amended.

Unknown Speaker: In 1975.

Mr. Richard A. Szilagyi: 1977, January.

Unknown Speaker: 1977, was there one in 1975 too?

Mr. Richard A. Szilagyi: Oh, wait let us see, 1975.

Unknown Speaker: 1975.

Mr. Richard A. Szilagyi: Yes, which was about three months, but did not go in affect when this case was…?

Unknown Speaker: But how did they -- did they eliminated the disqualification?

Mr. Richard A. Szilagyi: They eliminated a part of the disqualification, but there is still a disqualification.

The elimination was as in this case, the language of the statute said that, “No individual shall be disqualified”, well this is the language that with the particular interest in this case.

“Or other premises located in this or any other State and owned or operated by the employer by which he was or his last employee.”

Although, that language was taken out so that the location of out of state or away from the premises would now be paid benefits.

Unknown Speaker: So that the employees involved in this case would not have been disqualified?

Mr. Richard A. Szilagyi: Well, that is the point that has not been litigated in the State and I will tell you why Mr. Justice.

The statute, the part that was amended, the rest of it was still the same and it still has a disqualification.

It says that no individual shall be disqualified from benefits unless his employer is a wholly own subsidiary of the employer engaged in the dispute.

So they take it out and it is still in, in another place in a different context.

So there is still possibly disqualification for involuntary unemployed due to a labor dispute which has not been litigated yet.

Chief Justice Warren E. Burger: Now, in the proceeding that is pending, the administrative proceeding that is still pending, what law or which statute will be applied?

Unknown Speaker: The one that I just read, 2141.

Chief Justice Warren E. Burger: The amended?

Unknown Speaker: Not the amended, the previous to the amendment.

The one that disqualifies that says that there are other premises located in this or any other State and owned or operated by the employer, the functional integrated theory.

The coal mine was in West Virginia that went on strike.

The Cleveland plants were closed down.

That is the statute that the court decided and it is before this Court.

Unknown Speaker: The same statute that was before the three-judge District Court in Arizona.

Mr. Richard A. Szilagyi: That is correct, Your Honor.

Unknown Speaker: That is on appeal here is the one that is involved in the state administrative proceedings that are pending?

Mr. Richard A. Szilagyi: That is correct, yes.

Unknown Speaker: Could the administrative tribunal apply the new statute?

What is the bar?

Mr. Richard A. Szilagyi: There is no retroactivity application to the statute, they could not.

The central issue that we have here today at least as far as appellant’s feelings are, that it is more than a question of just adjudicating their rights under our labor dispute statute.

We think that is a central issue as the right of the State to formulate its own unemployment programs as it has been since 1935 when the Social Security Act was first.

Unknown Speaker: The law does require that there will be annual approval?

Mr. Richard A. Szilagyi: That is correct.

Unknown Speaker: By the, is it still the secretary of labor.

Mr. Richard A. Szilagyi: Yes.

Unknown Speaker: And Ohio’s plan has the annual approval.

Mr. Richard A. Szilagyi: That is correct.

Unknown Speaker: Including the years here involved, the period here involved.

Mr. Richard A. Szilagyi: It is part of our jurisdiction statement as an exhibit, which was signed by the secretary to the labor.

Appellant’s content has no federal right to unemployment compensation and the appellee’s have not demonstrated such a right exists.

Appellees have argued that the Ohio labor dispute disqualification as appeared in 1974, 1975 deprived them of Due Process.

In order to have a constitutionally secured or protected right, you would have to have a federal statute or at least the fundamental right before you reach the Due Process argument.

There is not any in this case.

In Paul v. Davis and Kelly v. Johnson last year decided by this Court, the Court recognized that Due Process does not extend to every pursuit in inequality suffered by the hands of the State, but rather applies only where there is involved an underlying federal or constitutional right.

The Due Process arguments made by appellee can be deemed viable if they can point out some law that would contravene the Ohio State Law.

Section 503 (a) of the Social Security Act, the first section requires approval by the Secretary of Labor.

The second section speaks about when do that this Court had when they faced Java, nothing to do with unemployment benefit eligibility.

Section 303 states that payments will be made to the state upon approval by the secretary of labor of our plan.

There is no where that we have been able to find or as far as we are concerned, the appellees have been able to find that applies to eligibility for benefits.

There are many disqualifications in the unemployment field.

You are disqualified, in some States for benefits if you have to go to a jury.

You are disqualified if you are ill.

You are disqualified if you are pregnant within the timeframe with limitations.

You are disqualified if you have to leave your job to follow your husband or wife to another State.

So there are many types of disqualification.

You have to first qualify for twenty-six weeks eligibility of working in most States.

You have a one week disqualification.

You have got strike disqualifications, labor dispute disqualifications.

Some cases that held that lack of transportation, you are disqualified.

It is not up to the employer to furnish it.

So there are all kinds of disqualifications.

Unknown Speaker: And in every State has a cut-off time.

You are qualified only for a certain number of weeks.

Mr. Richard A. Szilagyi: That is correct Your Honor, there is 26 weeks in most cases, but the time for qualification varies, the monetary amount varies, the earned amount to qualify varies, there are 50 States with 50 different variables.

Unknown Speaker: But every single State has a...

Mr. Richard A. Szilagyi: Cut-off date.

Unknown Speaker: Duration.

Mr. Richard A. Szilagyi: That is correct, except.

Unknown Speaker: The limitation.

Mr. Richard A. Szilagyi: Well, the Federal Government came in under the emergency with high employment a couple of years ago and they appropriated the money from apparently general revenue to admit the extended benefits.

It was not state unemployment fund.

Unknown Speaker: For any determinate period?

Mr. Richard A. Szilagyi: It came up to 65 weeks, but that is cut-off now because of the on-off indicator that they have.

If it reaches a certain percent in the State in high economic unemployment areas, it goes back on.

Ohio so far has not been..

Unknown Speaker: But even that, there is a terminal point of 65 weeks is it not?

Mr. Richard A. Szilagyi: Yes, but that is an unusual case.

Unknown Speaker: I know.

Mr. Richard A. Szilagyi: 26 weeks is the normal.

Under the Tenth Amendment, our argument is that since the Social Security Act does not decide what benefits are to be paid is left to the State.

That any law that would tell us what to do, that would be a reserve to the States under their reserved power, police power and general welfare would be a violation of the Tenth Amendment.

The coverage; there have been two amendments to the Social Security Act.

The 1970 Amendments increased the coverage, but nothing was said about benefits.

It was just that State and political subdivision employees would be covered.

Certain types of agricultural workers are now not excluded unless they are actually on the farm, but the adjacent peripheral type work is covered.

In 1976, they also expanded the coverage, but that neither the 1970 nor the 1976 amendments had anything to do with this case.

It is coverage.

Most of it is covered by Federal Tax, the State gets credit for it with exception to the government employees.

We question whether that is constitutional under this Court’s recent ruling in National League of Cities of those accessory, since the State employees in the political subdivisions are exempt from Fudo.

So therefore, the State gets no credit for that and I would expect that this Court might be faced with that challenge one of these days.

Unknown Speaker: Could you tell me if the federal officials have specifically addressed themselves to whether or not the Ohio type of disqualification is contrary to the federal statute or the federal regulation?

Mr. Richard A. Szilagyi: Yes, Your Honor.

We have got about three areas in that.

A recent case that this Court heard, in which they denied cert, was Kimbell.

In the Kimbell case, I believe this Court asked the Solicitor General to file a position paper, a law memorandum paper and that was 75-1452, Kimbell v. Doing Business as Foodway First Incorporated.

Unknown Speaker: The 75-1452?

Mr. Richard A. Szilagyi: Yes, versus Employment Security Commission of State in New Mexico.

Unknown Speaker: Yes.

Mr. Richard A. Szilagyi: The issue in that case involved the labor dispute, but it is not the same as ours, but I am pointing it out because the Solicitor General says, “It is always been and it is still is a right of a State to determine, who is eligible, to what extent benefits to be paid and what disqualifications you are going to have”.

Unknown Speaker: But is that as close you can come to finding something addressed to this specific disqualification?

Mr. Richard A. Szilagyi: The Labor Department Attorneys said that they have always felt that there is no position paper on it, they have never written one.

Unknown Speaker: They have never issued a regulation or.

Mr. Richard A. Szilagyi: Never written any regulation on it because it is all the States have just automatically.

Unknown Speaker: But they are only, were there not, how many States were there with your disqualification, only two, are they not?

Mr. Richard A. Szilagyi: Well, there is North Carolina (Voice Overlap) and ourselves, but there are various variations of that.

Unknown Speaker: Well I understand, yes.

Mr. Richard A. Szilagyi: There are all kinds of variations.

Unknown Speaker: But not at other plants?

Mr. Richard A. Szilagyi: Well, there are some States that do not even speak about—they just say you are just qualified if you are involved in a labor dispute.

Unknown Speaker: Yes.

Mr. Richard A. Szilagyi: They do not even go in to fault, no fault or where it is located or we will stop it, your worker or anything, it just absolutely denied under a labor dispute.

Unknown Speaker: Does your plan -- did you say your plan had to receive federal approval?

Mr. Richard A. Szilagyi: Every year.

Unknown Speaker: Every year, and it has?

Mr. Richard A. Szilagyi: It is an annual approval, it has been…

Unknown Speaker: And when did you amend your plan to put in this disqualification, 1960s?

Mr. Richard A. Szilagyi: 1974.

I beg your pardon, I was confused, on which again you were talking about, in 1963.

Unknown Speaker: 1963.

Mr. Richard A. Szilagyi: Right after the Abney v. Ford Case, what happened?

We are always disqualified for this reason and the Ohio Court spoke, the Court of Appeals and the Supreme Court have always did held their statute constitutional, but it did not have the words in at any other location with a wholly owned subsidiary, owned or operated by the parent company.

Somebody challenged the statute, Abney challenged the statute in 1963 and they got into the word construction of what does “Establishment” mean.

Previous to that day, establishment covered multi-plants.

The Michigan Case in Chrysler that was just decided previous to that held that they would go to a strict construction on their word establishment and they also had the same problem because Ford had multi-integrated plants to produce an automobile and the Michigan Supreme Court held that the establishment was not broad enough to cover another plant.

Unknown Speaker: So Ohio then amended its laws?

Mr. Richard A. Szilagyi: We immediately amended the laws.

So the legislator whose original purpose was to disqualify these people when it was turned around and said, “Now they can get benefits,” they immediately went in and changed the law.

It has been approved since 1963 by the Federal Government.

Unknown Speaker: Your law has been approved every year since 1963.

Mr. Richard A. Szilagyi: That is correct, Your Honor, it sure has.

The only insight that we can get as far as at least what members of Congress feel about this, I have a Section in my brief, which is on Page 17, not the reply brief, but the main brief, and I think it starts, well 17 talks about “Mr. Secretary, you have talks about the exhaustion of benefits,” but on Page 19, Mr. Weather for Dunlop, who was asked the question regarding involvement with states, deferred to Mr. Weather for it and he said that, “We have got to provide a great amount of influence over it by program letters, leadership guidance to make sure that the State does develop a program that is sound.”

That is about the only involvement they get.

They give us advise of our fund is running low.

My time is up.

Chief Justice Warren E. Burger: Very well, I overlooked.

Mr. Richard A. Szilagyi: Thank you.

Chief Justice Warren E. Burger: I overlooked announcing that Mr. Justice Rehnquist who was unavoidably absent due to illness, reserves the right to participate in all of these cases on the basis of the entire record and the tape-recording and the oral arguments.

Mr. Lordeon.

Argument of T. Patrick Lordeon

Mr. T. Patrick Lordeon: Good morning Mr. Chief Justice Burger.

Good morning Mr. Justices, Mr. Szilagyi, Co-Counsels and all citizens.

Briefly stated, we think this Ohio statute negates the whole purpose of the Federal Unemployment Compensation Act filed in 1936 at a time when I was just toddling around and most of you gentleman understand better and I now ask you to try to recall back what was it like back in the 30s and remember why that statute and US member of the jury can do that, you do not have to forget your common sense as we say to jurors.

And, with all due deference and respect, this case Mr. Szilagyi is talking about and the State has talked about, administrative procedure, administrative expertise comes through in the presentation.

I would also point out to this Court that the members of the lower three-judge court, particularly the Honorable Judge Celebrezze.

I was an Assistant Attorney General for the State of Ohio, Bureau of Employment Services before his elevation to HEW where he became the Secretary of HEW in the Kennedy administration and he was in the position to be knowledgeable of these statutes to be administrating from the whole United States not just Ohio.

He was the man who decided this case.

We have judicial expertise here.

Judge Thomas Lambros was a common Pleas Judge before he was elevated to the bench and decided many unemployment compensation cases and that appears in the record.

And the Court knows this through its administration, those judges and those Courts these are matters that you can take judicial notice of it if you like.

Briefly, I would like to point out that there are few what we would call politely inaccuracies in the statements of facts.

The State asserts that the Ohio statute as passed in 1936 is essentially the same as the Ohio Amendment which we are attacking in 1961 and it lived until 1975, a period of 14 years.

It is not essentially the same.

Prior to 1961, had Mr. Hodory and his group applied, they would have received benefits.

In 1963, there was only one other State in Ohio that excluded under this circumstances and that was North Carolina which passed this severe exclusion in 1961.

Up to that point, all of the States would allow benefits at this point.

Furthermore, the State relies upon a case in support of a proposition of law that Michigan statutes or somewhat like Ohio statutes characterizes that as the law of Michigan.

Well, we point out as we do at Page 57 of the brief, Chrysler v. Smith 297 Michigan, Page 438 was expressly overruled in Park v. Appealed Board of Michigan, 355 Michigan 103, and that appeal appears in our brief and that case is not good law for anything.

Unknown Speaker: Would these employees get compensation today in Ohio?

Mr. T. Patrick Lordeon: Well, the Attorney General says no, but most expressly by the statute, they would.

Unknown Speaker: Well then, let us assume they would, what is at issue in this case, compensation for a past period?

Mr. T. Patrick Lordeon: Yes, this compensation is for a past period of time which they were denied benefits.

Mr. Hodory and his group applied in November 1974, and the case is still in the administrative proceedings till today.

It has not got to the first level step here and Mr. Hodory went to the counter and he received the denial.

Unknown Speaker: Well, is the administrative proceeding being deferred pending resolution of this case?

Mr. T. Patrick Lordeon: It began to be deferred by the State after the three-judge court issued their decision in…

Unknown Speaker: And maybe you would have had a decision by now, if you have not brought the three-judge court case?

Mr. T. Patrick Lordeon: There was nothing to preclude Ohio from going ahead with this case, Your Honor, we have been in Federal Court and other State Courts, and in State Courts, and they have gone ahead and decided.

Processed the case right through the administrative procedure without holding it in abeyance.

I do not believe Ohio is holding it in abeyance.

Ohio is not complying with “when do.”

They are not processing claims and moving them along and the Department of Labor reports as they over see Ohio show this, Ohio is way far behind, not only is the statute unconstitutional, but they are so slow.

Unknown Speaker: You do not disagree, do you that the Ohio plan has received annual approval since 1963?

Mr. T. Patrick Lordeon: No, but we find that this case is not like the Turner Case and which involved the pregnancy disqualification, the Turner Case had received annual approval as well.

Unknown Speaker: Had the Federal Official addressed themselves to this particular exclusion or not?

Mr. T. Patrick Lordeon: Yes, some of the Federal Officials have, particularly Congress.

Congress has stated and as we pointed out in the brief that in various Senate and Congress Committees on the purpose of the statute have pointed out that no person should be denied unemployment compensation benefits where he is involuntary unemployed in a strike in which he participated in at his plant is going on.

Unknown Speaker: This case was decided on statutory grounds.

Mr. T. Patrick Lordeon: Well, we raised the statutory grounds, Your Honor and we argued them below and we asked the Court to address themselves and they did not feel that -- they went on Due Process and Equal Protection.

Unknown Speaker: Well are they before us?

Mr. T. Patrick Lordeon: Well, certainly.

In light of Matt v. Ohio if the court wanted them here, we believe they could be here because I believe in -- if remember map correctly, there were issues presented to this Court back in 1958 by counsel and the Court decided that on grounds other than where argued before the Court.

Unknown Speaker: Well, are you familiar with the normal rule that the Courts address themselves to statutory ground for its…

Mr. T. Patrick Lordeon: Yes, we are Your Honor that is why we plead them in the lower court.

Unknown Speaker: And that you do not get to the constitutional when it would be pass up to statutory, and this Court passed up statutory and went to the constitution.

Mr. T. Patrick Lordeon: The lower court felt that the federal unemployment statue enacted in 1936 and as amended did not completely pre-empt some state modification, but they felt that the modifications made here by Ohio were not too severe under Due Process and Equal Protection.

But we urged Java at this Court, we…

Unknown Speaker: Are you going to argue the constitutional point here, the one that the Court decided?

Mr. T. Patrick Lordeon: Yes we are and...

Unknown Speaker: Before you moved that, in answer to my Brother White you said yes the Federal Officials have spoken, particularly the Congress has spoken and you said that is in your brief.

What part of your brief, where in your brief?

Mr. T. Patrick Lordeon: Well, at page 30 of the brief Your Honor.

We talk about the history and provisions of the labor dispute qualifications.

Unknown Speaker: What is the language of the Federal Statute upon which you rely?

As you pointed out in your complaint, you allege that this was impermissible under the Federal Statutory Law and what provision of Federal Statutory law do you rely upon?

Mr. T. Patrick Lordeon: In Title XXVI of the United States Code, Section 3304 I believe, that the Secretary of Labor is only to fund and process those state’s programs that are proper to ensure full payment of benefits.

Also, we rely on the 42 U.S.C. Sections 501, which is 303 of the Act and that…

Unknown Speaker: That is on page 10 of your brief.

Mr. T. Patrick Lordeon: Particular statute refers to “when do” that the secretary should only approve those programs under which will it ensure the full payment of benefits to those eligible, “when do”.

Unknown Speaker: That was, what was relied upon in the Java Case?

Mr. T. Patrick Lordeon: Yes, and the other Section is 26 U.S.C. 3304(a)(10).

Unknown Speaker: That uses the word proper.

Mr. T. Patrick Lordeon: Proper, right, and we are saying this is not proper.

Unknown Speaker: Although the Secretary of Labor has found that it is.

Mr. T. Patrick Lordeon: Right and he also found that in the Turner Case.

What we are saying is the Java Case, as we told the lower court and as we argued, did not primarily or specifically deal with procedure versus substantive.

This Court was not talking about the standards to get locked-in on this category as Mr. Marshall points out in Margia v. Massachusetts, where we have a two tier approach for our Equal Protection classifications.

We feel that this court was speaking out for the purpose, the fundamental purpose of the Unemployment Act when Mr. Chief Justice Burger said that those involuntarily unemployed.

Mr. Chief Justice Burger in delivering the opinion of the Court in Java clearly indicated that the purpose of Congress in enacting the Unemployment Compensation Program was to provide a substitute for wages lost during a period of unemployment not to fault of the employee, 402 U.S 130.

In this case, we are saying that the Ohio disqualification bears no relationship to any legitimate state purpose, it has no rationale behind it.

Therefore, it must fail and it must fail on constitutional grounds, and it must fail because it is in conflict with the fundamental purpose of the congressional statute as passed by Congress in Title XXVI.

Unknown Speaker: Mr. Lordeon, in your constitutional argument on which you rely on the Equal Protection Clause, what are the classifications that you say that statue makes that are improper.

Mr. T. Patrick Lordeon: Well, number one Your Honor, the statute starts out in Ohio.

What we are talking about is on the page 26 in the Appendix ORC 414129, Eligibility and Qualification for Benefits.

It says each eligible individual shall receive benefits as compensation for loss of remuneration due to involuntary total or partial unemployment.

Well, that is recognition of the fundamental purpose of Congress.

Fault appears no less than eleven times in the Ohio Statute.

We talk about fault in indeed, involuntariness and we equate that with fault in the Federal Statute.

It appears in the Congressional purpose.

It appears in the contestants of traditions of the peoples of the United States, in Anglo-Saxon countries and the statute was adopted from the English Statute of 1911.

Unknown Speaker: Well, is your classification then between those involuntary unemployed and those not involuntary unemployed?

Is that what you are saying?

Mr. T. Patrick Lordeon: Yes, that would be the broad class.

Unknown Speaker: What do you do about a case involving only one plant in which say the people who do run the heating the broiler plant or something like that go on strike and every one else has to stay home.

Could the state deny unemployment compensation to people working in the same plant where the strike occurred, but who have no control over their inability at work?

Mr. T. Patrick Lordeon: Your Honor we treat that in our brief and briefly stated we are not dealing with that, but to be answering your question, quite properly and politely; we would indicate that no benefits for strikers.

We are in agreement with that, we feel striking is involuntary...

Unknown Speaker: Involuntary does not relate to strike.

My question relates to other employees in one plant where a small number of employees are able closedown the entire plant.

Mr. T. Patrick Lordeon: Well, there are states that have that disqualification and they have an escape clause.

Unknown Speaker: My question is do you contend that disqualification as unconstitutional?

Mr. T. Patrick Lordeon: Yes, we would, and we do so, on our brief.

We feel there ought to be an Escape Clause and it does not take much…

Unknown Speaker: But you really do not rely on the fact that the Gold Mines are on the other state?

Mr. T. Patrick Lordeon: Certainly not.

Unknown Speaker: The mere fact that it is involuntary.

Mr. T. Patrick Lordeon: Certainly, not.

We feel that fundamentally, the people were participating in the strike, if they are supporting it in some fashion, this could be easily discovered by the state.

The state has alternative means of doing this when the people come up to the counter after they are allowed to cross the line which says, “Thou shalt not step across,” this could be gotten into at the preliminary stage.

As a matter of fact, 20 years ago I worked at US Steel as a foreman there and when we terminated people and they still do it today, people are given a little card, they handed in their materials, they handed in their equipment and they were checked out.

The reason for their discharge was put on a multi-copied tear apart.

They gave their reason, right there why they were being discharged and most of the time it was terminated for lack of work, reduction of force.

So there is no burden on the state and if an employee takes it to the state offices and they rely on that and it is a business record and so it is really not an evidentially problem as the state puts forth.

Unknown Speaker: Except, going back to what you told to my Brother Stevens was your basic equal protection claim, i.e that the distinction between voluntary unemployed and involuntary unemployed.

Every state statute is shown full of provisions that deny to involuntarily unemployed people unemployment compensation.

For example, everybody after his 26 weeks runs out or whatever the number of weeks is, who remains involuntary unemployed no longer gets unemployment benefits.

Just to take one example, everybody, there is a waiting period in every states, is there not?

Mr. T. Patrick Lordeon: Certainly.

Unknown Speaker: And during that period, he is involuntarily unemployed and does not get benefits.

All of the exempt employees, the agricultural workers, the domestic workers and all those people are involuntarily unemployed and they do not get benefits.

So, that distinction just does not, unless you say that all of those provisions and I have only mentioned a few illustrative examples, all of those provisions are unconstitutional.

Mr. T. Patrick Lordeon: Well, the farm workers and the other people that you mentioned, they are not in the eligible class.

The steel workers are.

Unknown Speaker: These people.

Mr. T. Patrick Lordeon: Yes, they are in the class.

Unknown Speaker: And by that statute, these people are not either?

Mr. T. Patrick Lordeon: Mr. Hodory, worked for an employer who was a steel manufacturer and did not receive -- US Steel, he would have been paid.

Unknown Speaker: We can accept that decision, but how about the waiting period or how about the period after the 26 weeks, those are all matters of state law.

Mr. T. Patrick Lordeon: They are not eligible at that time, Your Honor.

Unknown Speaker: Neither are these people as a matter of state law that is the point.

Mr. T. Patrick Lordeon: Well, going in to it, Mr. Hodory is eligible to apply for benefits, he is eligible to go see...

Unknown Speaker: Anybody is eligible to apply; I am eligible to go down there to apply.

I hope I would be turn down very promptly.

Mr. T. Patrick Lordeon: Well, there maybe a rationale basis for one week waiting period, that may not be long enough.

The employer may issue a call back.

There maybe rationale basis for this, I have no problem with that.

But to exclude people who are involuntary unemployed through no fault of their own, once they are in the class where the employer has done something, this statute goes to what the employer has done.

This employer is United States Steel, which the court knows is vertically integrated from the Mesabi Range, from over in Europe to mines in West Virginia and to Kentucky, which we are talking about.

This employer was involved in a labor dispute.

Mr. Hodory and his groups were not involved, they are innocent by standers, they are in another union, some are probably were not even in the union yet, working at the plant.

They are the UMW.

They are not involved, it is miles away and they are being excluded for something not that they have not done, not as their fault, something their employer’s fault, something that their employer has done, their employer has called the shot.

He is the one that has laid them off.

It is a new twist in the law, it is the Respondeat inferior.

Respond for something your employer has done rather than Respondeat superior.

Unknown Speaker: In every case by definition, it is the employer who has terminated the employment, is it not?

Mr. T. Patrick Lordeon: No, no sir, no Your Honor.

An employee can walk away, he can terminate the employment.

Unknown Speaker: But he does not get it if he is...

Unknown Speaker: On strike.

Mr. T. Patrick Lordeon: What if he just walks out the door and says I will see you.

He does not get it either.

Unknown Speaker: No.

Mr. T. Patrick Lordeon: So he can call the shot.

Unknown Speaker: Yeah, but then he is not eligible, is he?

Mr. T. Patrick Lordeon: No sir.

Unknown Speaker: So eligibility in almost every case at least, depends upon the employer’s action in terminating the employment.

Mr. T. Patrick Lordeon: Yes sir and this statute…

Unknown Speaker: So that surely is not a constitutional distinction.

You are pointing out that in this case, it was the employer who terminated the employment.

My question is that not true in every case?

Mr. T. Patrick Lordeon: No, I would not answer that, but this statute was tailored in Ohio and the only state like it was North Carolina.

If this Court rules in favor of Ohio in this case, you necessarily overrule 51 other jurisdictions, the other states and the district of Columbian and Puerto Rico.

They have to be all wrong.

Unknown Speaker: Whether this is constitutionally tolerable?

Mr. T. Patrick Lordeon: Yes.

Unknown Speaker: It is not whether the other states have violated the constitution by not having this same law.

The question in this case is, does this statute constitutionally tolerable?

Mr. T. Patrick Lordeon: We understand and our…

Unknown Speaker: But you just submitted that if we have decided against you in this case, we would invalidate the laws of 49 other states that is certainly not true, you do not mean that, do you?

Mr. T. Patrick Lordeon: By implication I certainly and the Ohio’s new statute would be overruled.

It would be granting benefits.

Unknown Speaker: I just cannot let you say that.

What you are saying Mr. Lordeon, is that those statutes would not be constitutionally required.

But if we hold this statute is permissible, it does no affect whatsoever on those statutes.

The legislature can still have the statute they now have.

Mr. T. Patrick Lordeon: Oh yes it would, because basically this Ohio Amendment is anti-labor legislation.

It cannot be interpreted as any other way.

It is a tax break for employers.

Unknown Speaker: Well, are you suggesting that anything that we hold the constitution permits will be adopted because Ohio is basically anti-labor and all its policies are anti-labor, is that what you are saying?

Mr. T. Patrick Lordeon: I am not using the word anti-labor advisedly, it is just a short hand expression, yes, and you can see it in this case.

You will notice in this case that the Chamber of Commerce has filed brief opposing appellees.

US Steels filed brief opposing appellees.

Republic Steel as filed a brief opposing appellees and they talked about the effect.

Unknown Speaker: Well, you are not suggesting they make the policy for the state of Ohio, are you?

Mr. T. Patrick Lordeon: I think the Court is aware that these people are working on this question right now, in this and a lot of other cases.

Unknown Speaker: And the AFL-CIO filed a brief and did not agree with you either.

Mr. T. Patrick Lordeon: No, because I think the question underlying the surface here is -- the question is whether or not benefit should be paid to strikers and that case is the Dawson Howard Case, which is awaiting petition for cert in this Court right now and that is not our case.

We are not dealing with strikers and there is a lobbying going on in the country in various legislatures and in this case there is lobbying and the issue that comes in here by way of the back door is really brought in by the employers in the Chambers of Commerce and the AFL-CIO, because what they are talking about is the payment of unemployment benefits to strikers by state unemployment compensation funds.

In New York where the Dawson Howard Case, which is awaiting some activity by this court, involves a situation where the New York statute allows benefits to strikers who are directly participating in the strike at the site after a seven-week waiting period.

And the CIO is pushing for Dawson Howard all over the United States without fault and the Chamber of Commerce and the Steel Companies who are saying, we do not want to have to pay benefits for people who are striking us directly, because number one, it violates neutrality.

We do not want to have to pay the benefits to people who are striking against us, and they are directly involved in that, and they are saying that these would be subsidizing a labor dispute.

As far as Mr. Hodory and his group is concern that is not the case for this Court.

Unknown Speaker: Have you finished your Equal and Protection argument because I have not called it yet.

Mr. T. Patrick Lordeon: I am sorry.

Unknown Speaker: Your Equal Protection argument, which is what the Court decided?

Have you finished discussing that because I do not understand your position?

Mr. T. Patrick Lordeon: Well, in this particular case we have a group of employees who are denied benefits under the statute that sets up a class of individuals who are deemed to be disqualified from receiving benefits where there participation in a strike has not been shown?

There is no real substantial state purpose for the passage of the statute, and it does not present any legitimate interest of the state, it furthers no substantial interest of the state.

The arguments put forward in favor of this are one that it destroys the physical integrity of the state.

If you allowed this people to collect benefits, it would overwhelm the states unemployment compensation fund.

As it stands now, that there are 237 million.

In this case we are talking, according to the state, maybe 770,000.

That is not going to deplete the fund and Ohio by its own amendment of the statute has recognized this.

So Ohio legislature is not worrying about depleting the fund.

Number two; we talk about neutrality, that somehow this would upset the employer-employee bargaining process whereby, if benefits are paid to these steel workers in Ohio that somehow this will affect the outcome of the mine workers strike in West Virginia and Tennessee and as the District Court shows, there is no evidence in the record to this.

It has not been shown and we do not think that it can be shown.

The employer could care less at this point.

Unknown Speaker: Your point is this narrow class is different from all the others who get unemployment, is that your inequality?

Mr. T. Patrick Lordeon: We are saying, yes and there are no reason to discriminate against them because they are alike all the other people.

They are involuntarily unemployed through no fault of their own and if they are involuntarily unemployed, that is arbitrary in capricious, and if it is arbitrary in capricious, it is unconstitutional and they ought to have the benefits.

Unknown Speaker: What about all of the others that they do not allow to collect unemployment, you are not talking about those.

You are talking about those who do collect.

Mr. T. Patrick Lordeon: We are talking about those who do collect, right and we are talking about the fault, the group that the Unemployment Compensation Act was passed in 1936.

It was passed at the time when there were programs set-up under Social Security Act, and this Act must be looked at as a total.

There was something in there for people who could no longer work, the old people.

There were something in a Social Security as we know it today and it had been amended quite a bit, there was something in there for those involuntarily unemployed and we have welfare programs and they are all something different.

Unemployment is regarded as receiving something as dignity and as Justice Rehnquist has pointed out to us that unemployment is an earned right.

It is not based on need.

It is based on an earned right of the employee and the purpose of giving this money is so that he could maintain his dignity and go out and look for a job and to provide for a substitute for wages while he is looking for a job.

We agree with Justice Rehnquist, it is an earned right and we think anytime, anyone is denied unemployment benefits when they are involuntarily unemployed, in this case, that is an invidious discrimination.

It subverts the whole purpose of the Act.

It is just tax relief for employers.

Thank you.

Chief Justice Warren E. Burger: Thank you gentlemen.

The case is submitted.