BAKER v. GENERAL MOTORS CORP.
Legal provision: National Labor Relations, as amended
IN THE SUPREME COURT OF THE UNITED STATES
A. B. BAKER, JR., ET AL., Appellants v. GENERAL MOTORS CORPORATION AND MICHIGAN EMPLOYMENT SECURITY COMMISSION
April 2, 1986
The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:31 a.m.
JORDAN ROSSEN, ESQ., Detroit, Michigan; on behalf of the Appellants
PETER G. NASH, ESQ., Washington, D.C.; on behalf of the Appellees
LOUIS R. COHEN, ESQ., Deputy Solictor General, Department of Justice, Washington, D.C.; as amicus curiae in support of Appellees
CHIEF JUSTICE BURGER: Mr. Rossen, I think you may proceed whenever you are ready.
ORAL ARGUMENT OF JORDAN ROSSEN, ESQ. ON BEHALF OF THE APPELLANTS
MR. ROSSEN: Thank you, Mr. Chief, Justice, and may it please the Court:
Appellants are non-striking General Motors employees who were laid off due to strikes elsewhere. It is agreed that the only basis for the labor dispute disqualification in this case was because they pay emergency dues.
The issue is may a state deny unemployment compensation to these Appellants solely because they paid emergency or increased dues lawfully required as a condition of remaining union members where the dues were for the union strike fund from which strikers later receive strike benefits.
Appellant's union had a convention in October and voted to require as a condition of membership emergency dues of all UAW members in the United States and Canada. And, it is agreed and stipulated that these Appellants paid $20 to $40 each for the months of October and November, 1967 to their own local unions which then sent the increase or emergency dues to the international union's strike fund.
Appellants continued working at their own plants. Their local union settled their contract which Appellants ratified.
That year there was no national strike at General Motors Corporation. Instead, the General Motors agreement was settled in December and ratified by the union members.
In late January, three General Motors foundry locals went on strike over local issues and after those 11 to 12-day strikes ended, they received no more than $18 from the international union's strike fund.
Those foundry strikes caused part shortages and resulted in layoffs at Appellant's plant. Appellants were comparatively few members at each plant who were selected because they had low seniority and they were laid off from those plants by General Motors and they applied for unemployment compensation for that February, three months after they paid those dues. They were found eligible under state law in the sense that they had worked long enough to earn their compensation, they had enough credit weeks, they were available for work, they were seeking work, they wanted to continue working, and they were involuntarily unemployed.
The labor dispute disqualification was asserted as a reason for denying them compensation and under all aspects or all parts of the Michigan Labor Dispute statute, they were not disqualified except one. What we mean by that is they were held by all agencies and courts to not be in the same locations as the strikers, they were not participating in any foundry strikes, they were not interested in them in the sense that they could not benefit from them nor could they influence those negotiations or strikes.
They were disqualified because they had financed the labor dispute as held by the Michigan court because they had paid those increased or emergency dues the previous October.
If possible, we would like to get into our argument a little bit and then try to respond to some of the points made by General Motors.
It is pretty well agreed that Appellants would not have been disqualified from their unemployment compensation but for the facts that they chose to remain union members and paid these increased or emergency dues.
The Michigan Supreme Court correctly held that this conflicts with their Section 7 right to assist their union and it also conflicts with their right to join and remain union members if they choose to do so.
Under this Court's ordinary preemption rules, state action which conflicts with such Section 7 rights would be preempted, wouldn't stand, unless Congress affirmatively intended to allow such a conflict.
QUESTION: Mr. Rossen, did any workers refuse to pay the increased dues?
MR. ROSSEN: It is stipulated, Justice O'Connor, at page 173 of the record that all claimants paid these dues, these emergency dues in accordance with the UAW Constitution. Thus, there is no evidence that anyone refused to pay the dues.
QUESTION: What would the union do with a member who refused to pay the increased dues for the purposes of financing the strike?
MR. ROSSEN: There is no evidence that the union took any action against any of the members in terms of trying to get someone's job or anything else under Section 8(a)(3). It is our position that the dues were lawfully required dues under the union constitution and, in fact, it is stipulated and found that they were paid under the union constitution and, thus, they were required to be union members.
So, failure to pay those dues based on those stipulations would jeopardize a person's union membership if he refused or she refused to pay those dues.
QUESTION: Do you concede that the state can disqualify non-strikers who finance a strike by means of payments other than in the form of union dues?
MR. ROSSEN: Below and in this Court we have not ask that the Michigan financing disqualificational provision be stricken.
QUESTION: On its face.
MR. ROSSEN: Pardon?
QUESTION: On its face you mean.
MR. ROSSEN: On its face, that is right.
QUESTION: So you concede then that it can apply if it is payment other than union dues?
MR. ROSSEN: We concede that it can apply and be used as a disqualification when it is not based on the exercise of someone's Section 7 rights.
QUESTION: I don't think that answers the question. That really doesn't answer the question, because, in effect, it would be an exercise of a Section 7 right to finance a strike, wouldn't it?
MR. ROSSEN: Well, it may or may not, Justice Stevens. For example, there are situations where an individual might send money if there is an existing strike and that individual could do it alone, that individual may or may not be a union member, and that might be used as a basis for disqualifying someone from financing and it would not involve the exercise of Section 7 rights.
QUESTION: What if you did not -- I am still not sure of your answer to Justice O'Connor's question is why I am following up.
What if they had just sent out a special assessment for the purpose of financing the strike and then as a by-product of that strike these people were laid off temporarily. What your position be?
MR. ROSSEN: Well, our position first of all is that is not what happened here.
QUESTION: It is a different case, I understand.
MR. ROSSEN: But, I didn't want to leave any misunderstanding on that score. But, if the union did that and all the money was going to the strikers --
QUESTION: Well, it goes into a large fund and the fund in turn is used to support the --
MR. ROSSEN: I was going to say if the money was going to the strikers and the union is a mere collection agent, I am not sure if it makes a difference if it is labelled dues or not and I am not sure that would really involve assisting the union, even though the union is a collection agent, any more than if the union collects money for the United Fund and sends it to someone.
But, if the money goes into a large pot, then I think -- into the union's strike fund, even though unlike this case there is an existing strike at the time, then I think the case would be very much like General Motors versus Bowling which was decided by the Illinois Supreme Court and the Illinois Supreme Court there said that because the union was really deciding how this money was going to be paid, the union would decide when to pay it and how much and to whom, and it was not these dues -- and there they were people in the same plant paying dues, increased dues, double dues, the Illinois Supreme Court said it would not interpret financing under its statute to apply to those payments because they were dues and the union really was deciding how it ought to pay them.
Now, that is different from a situation where the payer knows that 100 percent of the money paid is going to -- even if it goes into a pot -- is going to be sent to people on the existing strike.
But, we think the Bowling situation, the example that I gave there, it is our position that that would be preempted even though it would leave our case as a much stronger case for preemption, we believe that there also would be preemption in that case and that Congress did not intend in the National Labor Relations Act or the Social Security Act to disqualify anyone for financing, let alone for paying dues.
Did that get closer?
MR. ROSSEN: In terms of the legislative history, the National Labor Relations Act does not provide any guidance as to congressional intent in this case. And, in 1935 when the Social Security Act was passed, there was no financing provision in any state labor dispute statute.
So, for that reason you cannot say, unlike in New York Telephone, for example, where there was an existing statute that Congress perhaps was aware of, you cannot say that Congress was aware of any financing provision in 1935.
Now, the State of Michigan relies on 1936 action by the Social Security Board. After the Social Security Act was passed where the Social Security Board recommended changing the disqualification of everyone in a struck establishment to only apply to situations where people participate, finance, or are directly interested in those excused within that establishment.
But, in 1940, the Social Security Board, aware of a few applications by state agencies, not courts, recommended eliminating any financing provisions in these statutes because, as the Social Security Board said, it might be used to disqualify people for solely for payment of dues.
Now, in 1943, Congress indicated its awareness of this Social Security Board action because it changed a District of Columbia statute to do as suggested in 1936 by adding participating and directly interest, but it specifically omitted the financing provision.
And, since 1935, no state court until this Michigan court has ever disqualified anyone under a financing provision for solely paying union dues.
Now, what we mean by that when we saying "for solely paying union dues," we mean in other cases where dues may have been involved, the people were also in the same establishment as the strikers, they were also held to be interested in the strike financially, and they were also held to be participating, so there is no pure dues holding in unemployment insurance history in the United States by a court until this one, and there --
This gets to be a little bit back to Justice Stevens' question. There is something else that is also flukey about this Michigan decision. The financing provisions came out of English law and they were aimed at situations where people in a factory were striking and other people, knowing of those strikes, sent money to those strikers when then caused their own layoffs.
In every other financing decision in the United States, including agencies, whether or not they involve dues, they all involve the same situation of an existing strike that people were sending money to.
We mention this because it emphasizes the unusual quality and nature of the Michigan decision which makes it, in our opinion, just as unusual as what Florida did in Nash where Florida was the only state to interpret its labor dispute disqualification in a bizarre way and yet this Court, despite the fact that that was unusual, did not allow Florida to punish that worker because she exercised statutory rights.
General Motors relies on this Court's decision in New York Telephone and says that because Congress, as indicated in New York Telephone, was apparently aware of a state statute which paid benefits to strikers after disqualification and also disqualified strikers.
Therefore, it should be assumed that Congress also intended to permit disqualifying anyone else who exercises other Section 7 rights wherever there is a strike.
But, as Your Honors know, New York Telephone rested on awareness by Congress of a specific statute which did that, and as we have shown, there was no statute in existence in 1935 that did what happened to these people.
And, the fact that Congress was aware that a state may impede the right to strike does not mean that Congress intended or should be implied to permit a state to impede all other Section 7 rights or rather all other NLRA rights, and certainly Nash is an example of that holding.
And, General Motors concedes in its brief that the state could not disqualify persons because they are union members.
So, there are situations where a state's labor dispute disqualification has been limited.
And, striking for NLRA purposes and for unemployment insurance purposes is different than other Section 7 rights, particularly the rights of free association.
Strikers leave work and things can happen to them under the NLRA that economically disadvantage them. General Motors could have replaced the foundry strikers if it had wished, permanent replace them, but General Motors could not have punished these Appellants because they chose to pay these dues even if there was a foundry strike in existence at the time and even if some of those dues reached those foundry strikers. General Motors could not have laid them off because they paid these dues, and yet General Motors is asking this Court, as it did in Michigan, to punish these claimants because they paid these dues.
QUESTION: They are withholding some state benefits, I suppose, that they would otherwise have been qualified for.
MR. ROSSEN: Yes. They were eligible in every other respect but for the fact that they were held disqualified for paying these emergency dues, so they had met all the other eligibility requirements.
QUESTION: And you say that burdens their Section 7 rights?
MR. ROSSEN: We do and Michigan did too. The Michigan Supreme Court agreed with that much and held that there was a conflict.
And, this gets us close, I think, to what this Court did yesterday in Golden State. We are not asking Michigan to pay benefits to these Appellants because they paid their union dues. We are asking Michigan to pay benefits to these Appellants because they were laid off and forced out of work.
And, yet, General Motors is asking Michigan to deny benefits to these Appellants because they paid those dues. General Motors is conditioning -- asking the state to condition denial just on their paying dues which they were required to pay to remain members.
And, this Court, every Justice of this Court in recent cases, have expressed concerned for protection Section 7 rights, particularly rights of employee self-organization which we believe would include the right to remain union members and to pay these dues.
Certainly if you leave the right to resign unfettered, it seems to me that you should leave the right to remain unfettered also if people choose to remain union members and pay these dues. We do think it burdens those rights.
QUESTION: Well, employers can walk strikers out to. That burdens their right to strike pretty much.
MR. ROSSEN: Yes. Employers are allowed to take action against strikers --
QUESTION: Without committing an unfair labor practice too.
MR. ROSSEN: That is right. And, they can replace strikers, as I indicated earlier, and state statutes allow -- State statutes regularly disqualify strikers from unemployment compensation and they would have done that --
QUESTION: So, you wouldn't think the strikers -- That the state must pay unemployment benefits to strikers.
MR. ROSSEN: No, no. We --
QUESTION: Isn't that burdening Section 7 rights?
MR. ROSSEN: Yes, it does burden Section 7 rights to deny benefits to strikers.
QUESTION: Well, why may the state do it?
MR. ROSSEN: The state may do it because as Your Honor said in New York Telephone Congress intended to permit them to do it.
QUESTION: To either grant or deny them.
MR. ROSSEN: Exactly, to strikers.
MR. ROSSEN: And, strikers have not been treated the same or synonymously with dues payers --
QUESTION: But, the strikers' claims when they are strikers -- the claim still is that their Section 7 rights are being burdened by a refusal to pay unemployment benefits, just like the claim is here that these people who finance strikes are exercising their Section 7 rights.
MR. ROSSEN: And but for Congress' awareness, as indicated in New York Telephone, that might be considered improper too.
But, strikers, even if there were no labor dispute disqualification, Justice White, strikers are different because they voluntarily leave their jobs and Congress was probably aware that -- in 1935 -- people who leave their jobs voluntarily generally don't get unemployment compensation.
Even if you had no labor dispute statute -- I mean it is the traditional unemployment insurance concept, as old as any unemployment insurance statute in history that people who leave work are disqualified from unemployment compensation.
QUESTION: How did these people lose their jobs?
MR. ROSSEN: They were the low seniority people at their plants who were laid off by General Motors when they wanted to continue working because there was a shortage of materials.
QUESTION: They weren't out of their jobs because they were on strike. They were out of their jobs for another reason.
MR. ROSSEN: Yes, that is right. They were out of their jobs -- They were involuntarily out of work, laid off by General Motors because General Motors didn't have enough parts because of those foundry strikes and General Motors chose to lay off these Appellants, comparatively few Appellants at each plant which was a humane reaction in a way, they didn't lay off everyone.
If possible we would like to reserve any further time for rebuttal.
CHIEF JUSTICE BURGER: We will resume at 1:00, counsel.
(Whereupon, at 11:54 a.m., the case in the above-entitled matter was recessed, to reconvene at 1:00 p.m., this same day.)
CHIEF JUSTICE BURGER: Mr. Nash, you may proceed whenever you are ready.
ORAL ARGUMENT OF PETER G. NASH, ESQ. ON BEHALF OF THE APPELLEES
MR. NASH: Mr. Chief Justice, and may it please the Court:
I would like to briefly run over the facts again quickly in this case to put them in perspective from General Motors' point of view.
Here a special strike fund assessment or special dues was made of UAW members, payments to be made in October and were made in October and November of 1967, increasing each member of the union's dues payments into that strike fund from $1.25 a month to from $10 to $20 a month for a total increased payments by these individuals of from $20 to $40 in this case.
These specials dues were made in anticipation of strikes in the auto industry, including anticipation of either national or local strikes at General Motors plants and funds were being contributed to a special strike fund which would pay benefits not only to strikers but also to UAW members who might ultimately be laid of as a result of those strikes who did not receive unemployment compensation benefits from the states in which they were laid off.
The benefits in this fund are paid not only to strikers but also to those who are laid off as a result if they don't get unemployment compensation benefits.
In January and February of 1968, what was anticipated, indeed, came to pass. Three General Motors foundaries went out on strike and as a result of a lack of products, parts, being made by those foundries a number of employees, including all the Plaintiffs in this case, were laid off at other GM plants because of the strike of their GM brethern in those three foundries.
They were denied -- In this case, the Plaintiffs were denied unemployment compensation benefits in the State of Michigan because they had financed a strike which had resulted in their unemployment. The financing arrangement those these special dues payments were, as found by the Michigan Supreme Court, or did, as found by the Michigan Supreme Court, have a meaningful connection with the unemployment which resulted from the strike and as a consequence they were denied unemployment compensation.
One further fact --
QUESTION: Mr. Nash, could the state treat the payment of regular union dues as financing the strike?
MR. NASH: That is not the case we have here.
QUESTION: I know that.
MR. NASH: That is a tougher case, but I think analytically and at least arguably, yes, they could. And, indeed, I think there are 37 states whose statutes do, in fact, treat the payment of regular union dues as a disqualification for unemployment compensation benefits.
There are a number of reasons for that, I think, and the reasons for that primarily, however, I believe, come from this Court's analysis of the unemployment compensation system and the National Labor Relations Act and New York Telephone.
This Court, at least as I read the decision of all of the Justices in New York Telephone, determined that Congress, when it enacted the National Labor Relations Act, intended to leave the parties in a neutral position, management and labor, each to bear the full economic consequences of a strike. Employees wouldn't be paid wages and the employer wouldn't be able to run his business and would lose money. Each side would bear the full economic consequences.
QUESTION: Well, in your view, I take it any local strike supported by a national union strike fund that leads to some lay-offs of non-strikers will justify denying the benefits to the non-strikers.
MR. NASH: Whether it justifies it or not, in terms of how the state interprets its unemployment compensation statute is one matter. The question before this Court is does the Constitution, does the National Labor Relations Act and the Social Security Act allow the states to so act.
QUESTION: Well, maybe the question is whether Congress authorized that result.
MR. NASH: Yes. I believe the answer to that question is yes, that Congress authorized that, not only in terms of the National Labor Relations Act and the balance of power struck, but more particularly --
QUESTION: What is the evidence that leads you to think that Congress intended to go so far as the circumstances I have described with regular dues?
MR. NASH: As I say, that is a tougher case than ours. But, as I see it, what Congress intended and what this Court found that Congress intended when it passed the National Labor Relations Act was that each party bore the economic consequences of that and that a state interferes with and is preempted in its actions by the National Labor Relations Act if it, in fact, shifts that economic burden or changes that economic burden in either one of two ways. Either it requires the employer to pay more, it costs the employer more to take a strike, or if what the state is doing cushions the impact of that strike upon employees.
In New York Telephone, this Court, as I read the decisions, said that absent the Social Security Act, payment of benefits to strikers, unemployment benefits, would be preempted by the National Labor Relations Act because it does both those things.
Employers contribute to an unemployment compensation fund. If that money is paid to the strikers, it not only cushions the impact of that strike on those strikers, but also costs the employer an awful lot more to take that strike.
The same is true in this particular case. If an employer is required to pay benefits -- employer to the state unemployment compensation fund -- is required to pay benefits to those laid off as a natural consequence of a strike, laid off in another plant, it costs the employer more to take that strike because it has to pay benefits to everybody that is laid off as a result of that strike.
And, particularly in this case, where the strike fund pays benefits not only to strikers, but also to those laid off as the result of a strike, unless those latter people receive unemployment compensation benefits -- If the State of Michigan paid unemployment compensation benefits to employees in this case who financed the strike, the employer would have to pay for all of that.
And, in addition, the strike fund would not diluted by that, thus giving additional economic power to all the people on strike because their strike is going to be bigger, bigger benefits could be paid over a longer period of time.
So that the payment of benefits in this case has the same effect of conflicting with policies of the National Labor Relations Act as did the payment of strike benefits or benefits to strikers in the New York Telephone case.
The Court held in this case, however, that that conflict with the National Labor Relations Act is allowed and was intended to be allowed by Congress because Congress passed the Social Security Act which granted to the states broad powers to structure their social security systems the way they wanted to structure them.
QUESTION: Were the strikes here at the foundry plants over purely local issues?
MR. NASH: I don't know that, but I am assuming that they were, yes.
QUESTION: Because the national issue had already been resolved.
MR. NASH: That is correct, although that is not necessarily true in local strikes and it was not true in later -- Or at least from GM's perspective it was not true in later strikes at local plants.
QUESTION: So, the non-striking workers we are concerned about really didn't have any interest in those local issues, I take it.
MR. NASH: That is correct in this sense. Well, they had an interest in the strike to the extent that any time their brethern are able to mount a strike they have more solidarity and they are able to improve benefits for them.
They did not have a direct interest in the strike. Indeed, had they had a direct interest, we wouldn't be here on this issue today because the Michigan statute says that employees are disqualified from unemployment compensation benefits if they are laid off as a result of a strike in which they have a direct interest. So, presumably they would have been denied benefits on that basis rather than on the basis of having financed the strike.
But, the impact on the economic -- The economic impact is the same. The balance in this case is tipped against the employer and in favor of the employees exactly the same as it was in New York Telephone.
To reiterate, this Court, however, found that even though that conflicted in New York Telephone with the National Labor Relations Act the state was allowed to engage in that kind of conflict because Congress had passed the Social Security Act giving the states broad power to structure their own unemployment compensation system the way they wanted to.
And, as a consequence of that, even though those payments in that case interfered with the strong policy of the National Labor Relations Act for a state to remain neutral, it was okay for the states to do it because Congress had given the states the right to make those calls and structure their own system.
That is the way we come at this case looking at New York Telephone. The Plaintiffs in this case come at it differently. They say that here the employer has interfered with a Section 7 right of employees to finance a strike, that is a Section 7 right, and as a consequence you have got basically a Garmon preemption case that a state can't act in such a way as to interfere with a Section 7 right.
First of all, we don't see that the inteference with a Section 7 right is equivocal at all. Indeed, in New York Telephone, as Mr. Justice White pointed out before the break, in New York Telephone the state had it denied unemployment compensation benefits, as every member of this Court said they could have, would have interfered with the Section 7 right to strike. Indeed, that right is to important that Congress went to all the trouble to pass Section 13 of the National Labor Relations Act to restate once again that that was a protected right, something it has not done with the financing of a strike.
So, the fact that it interferes with a Section 7 right should not make a difference.
And, in this particular case, the Section 7 allegedly interfered with the right to finance a strike or finance a union -- paying unemployment benefits to those people has the same economic impact, i.e., the shifting of the balance under the National Labor Relations Act and the state ought to be able to do it.
QUESTION: When members strike and a state denies unemployment compensation, there is the same burden, I suppose, on Section 7 rights.
MR. NASH: That is correct.
QUESTION: But, the reason it isn't an unfair labor practice or the reason it isn't preempted is because of the neutrality argument, I suppose.
MR. NASH: Correct. I don't know that you can really call it so much an interference with a Section 7 right, I prefer to look at it that if there is a strike --
QUESTION: What do you call it in this case? Whatever it is it is the same --
MR. NASH: You bear the economic consequences of your actions. When you strike and go out, yes, I guess one might say and probably you would say by not paying them unemployment compensation benefits, you have interfered with their right to strike, but you really haven't. What you have really done --
QUESTION: Well, you are interfering here at least with your right to contribute to the support of a union.
MR. NASH: That is correct, but that is all part and parcel of the union bearing the natural economic consequences of the strike.
In fact, when the employees go out on strike, and in this case it is a very carefully drawn issue, here employees of General Motors went out on strike and the State Supreme Court found that, in fact, the employees who were laid off and denied benefits here significantly contributed to their unemployment because they contributed to a strike fund which supported those people who went out on strike.
That also comes close to what -- or is consistent with what the Social Security Act intended when it said to the states, pass your own unemployment compensation systems.
QUESTION: Did these people lose their jobs on account of the strike?
MR. NASH: Yes.
QUESTION: There is no question about that?
MR. NASH: No question. They were laid off because the foundries were struck by their fellow UAW members in a strike which they helped to finance by paying these special dues to a strike fund and they were laid off because the parts coming out of the foundries weren't coming any more because of the strike and there wasn't enough work for them in their plants.
QUESTION: Well, I suppose if the foundry workers had struck and then the employer locked everybody out, what about the people who didn't strike but who were locked out, but who had been contributing to the union?
MR. NASH: The State of Michigan, under its unemployment compensation statute, says that if an employer locks out employees that does not disqualify them from unemployment comp.
So, in this case, they would have been paid their unemployment compensation had the employer locked them out, even though that interferes with the employer's ability to lock out.
QUESTION: But, all they did though, instead of locking out, they laid them off.
MR. NASH: They laid them off as a result of no work.
QUESTION: Of the strike. Well, because there was a strike.
MR. NASH: That is correct. But, a lock-out, I think, really is normally defined by courts, labor board, and arbitrators as an act by an employer seeking to put pressure on a union to get the union to concede to the employer's position. Here, the employer wasn't putting any pressure on anybody. He just didn't have work and laid these people off and whether the union in that plant ever conceded to his position on anything was irrelevant. The people would come back to work as soon as there was work for them. It really is not in the context of a lock-out as this Court looked at in American Ship and Brown.
QUESTION: Counsel, I assume that you join those who say these are voluntary contributions that the union members made. Voluntary. If they didn't make it they lost their union membership and their job, but that is voluntary.
MR. NASH: Well, in this particular case they would not have lost their job. There was no --
QUESTION: Would they have lost their union membership?
MR. NASH: They might have lost their union membership.
QUESTION: Well, didn't the constitution say so?
MR. NASH. The UAW's constitution?
MR. NASH: I am not an expert on the UAW's constitution, but I would assume, yes, they could have lost their membership.
QUESTION: So, you consider that voluntary?
MR. NASH: No. I don't know whether it is voluntary or not, but I don't know that that is relevant.
QUESTION: You just said a little while ago. I just wanted to know, did you need that for your argument?
MR. NASH: No, I don't need it to be voluntary and if I said that I spoke too fast. No, it doesn't have to be voluntary, the payment of these special dues.
In fact, they aren't being denied unemployment compensation benefits in this case because they paid emergency dues, because they exercised a Section 7 right. What the State of Michigan held was they are being denied unemployment compensation benefits because they contributed to their own unemployment.
QUESTION: And, the difference is?
MR. NASH: They contributed to their own unemployment. That is the key to the State of Michigan. Whether that is a Section 7 right or not is really irrelevant. And that really is the key --
QUESTION: What is that other than semantics?
MR. NASH: Well, it may be semantics in this Court. It was not semantics in the State of Michigan. The State of Michigan determined that employees shall, in fact, be paid unemployment compensation benefits unless they contribute in some way to their own unemployment. If they quit, they are fired for cause, a whole bunch of ways in which a person contributes to his or her own unemployment and, thus, is denied benefits. Had they gone out on strike, they would have contributed obviously to their own unemployment.
Financing a strike which resulted in their lay off in view of the State of Michigan, and I think correctly so in the interpretation of its statute, constitutes a contribution by the employee to his own unemployment and results in a denial of unemployment benefits.
These people then are eligible to receive benefits under the UAW strike fund and really what we are talking about here is shifting the funding of the UAW strike fund at least indirectly from the UAW and its members to the employer, General Motors in this case.
QUESTION: Would it have been an unfair labor practice for the employer to fire these people for having paid the special dues?
MR. NASH: Yes, I think so. That is a Section 7 to pay those dues and the employer could not fire them.
MR. NASH: Correct. But, it seems to me that that doesn't get us very far in determining whether or not a state program which is intended to provide benefits to people who don't contribute to their own unemployment has to provide benefits to people who, in fact, contribute.
QUESTION: And, I suppose if he had fired them for paying the dues while the unfair labor practice proceeding was going on, these people wanted unemployment benefits, they would have got them.
MR. NASH: I don't know what the answer to that case is. They probably would have because there they would have been unemployed as a result of being fired rather than as a result of a strike, so I guess --
QUESTION: On the other hand, they were contributing to the strike fund and you can't say that they didn't contribute to their own unemployment.
MR. NASH: Well, except that if you say the reason they are now unemployed is because they were fired rather than because --
QUESTION: They were fired because they contributed.
MR. NASH: I --
QUESTION: Well, anyway, it is a tough case.
MR. NASH: That is a tough case and this is not our case, yes, Your Honor.
I think in that circumstance they were fired illegally and, therefore, they probably would get the unemployment benefits and they certainly would be eligible for back pay in a National Labor Relations Board proceeding if they then made an offer to return to work.
This case, however, is -- and I would like to stress at this point -- not a question -- doesn't present the question which I think Jordan was really talking about earlier of whether the State of Michigan correctly interpreted its statute, whether it went off on some whimsy, whether or not the way the State of Michigan interpreted its statute is inconsistent with the way the State of Illinois interpreted its statute. The whole question in this case is is the State of Michigan free under the Constitution of the United States to make the interpretation it made? Does that conflict with an act of Congress and we submit it does not conflict, indeed, it is consistent with the National Labor Relations Act. It certainly is consistent with what the Social Security Act, in fact, allows the states to do and under those circumstances there is no basis for saying that this act is preempted by the National Labor Relations Act.
Congress has told the states you can do this kind of thing in structuring your own unemployment compensation system. This Court has found that in the New York Telephone case, and, as a consequence, whether Michigan was right or wrong in the way they interpreted its statute, it has the constitutional right to be either right or wrong, and that is not the issue.
The issue is that the National Labor Relations Act and the Social Security Act allow the State of Michigan to do what they did and the answer to that we submit is clearly yes.
CHIEF JUSTICE BURGER: Mr. Cohen?
ORAL ARGUMENT OF LOUIS R. COHEN, ESQ. AS AMICUS CURIAE IN SUPPORT OF APPELLEES
MR. COHEN: Mr. Chief Justice, and may it please the Court:
There is a strong national labor policy reiterated by this Court only yesterday against state interference with the collective bargaining process in a way that alters the economic balance between labor and management.
One way to view this case is that it presents the question whether a state is permitted to honor that federal policy and deny unemployment compensation to employees who the state found had paid extraordinary emergency dues that foreseeably went to support a strike that foreseeably caused their own unemployment or whether, as Appellant suggests, the state is required to pay benefits because the financing activities are protected by Section 7 because they are labelled dues.
The government, including the National Labor Relations Board, believes that Congress meant to leave the states free to deny benefits in this situation.
We think New York Telephone clearly suggests that answer. There, after considering the legislative history, the Court ruled that states were free to deny benefits to persons engaged in the quintessential Section 7 activity, striking.
There are, I think, only two distinctions between New York Telephone and this case. First, New York Telephone involved the question whether the state could pay benefits. This case involves what I think every member of the New York Telephone court would have thought was the easier question, whether the state can deny benefits.
QUESTION: Well, the payment of benefits didn't involve the interference with any protected rights I gather.
MR. COHEN: The payment did not. The denial of benefits, Justice White, would have burdened the exercise of a Section 7 right to strike and yet I think it was an assumption and Appellants have conceded here today that the state was at least at liberty to deny benefits in that situation.
QUESTION: Yes, yes. But, nevertheless, the argument against paying them was that the state shouldn't upset this balance. That is the argument.
MR. COHEN: Yes. We think that the same argument is applicable here to the payment of benefits to people who were found by the state to have been as closely allied to the actual strikers as these Appellants were.
We think, indeed, that either the legislative history nor the logic of New York Telephone suggests any distinction.
I want, first of all, to stress that Appellants are just wrong when they imply that the legislative history of the Wagner Act and the Social Security Act in 1935 distinguishes in some way between actual strikers and people who finance a strike that leads to their own unemployment. There is no such distinction.
There were, as the Court noted in New York Telephone, five state unemployment compensation statutes that predated the Wagner Act. None of those statutes had a special category for actual strikers. All of those statutes disqualified, or in the case of New York, delayed payments to a class of people consisting of everyone who was put out of work because of a strike, strikers, financiers, and innocent bystanders.
The draft statutes that were submitted to Congress while it was considering the Social Security Act contained a similarly broad disqualification and when Congress acting as the District of Columbia legislature adopted an unemployment compensation statute for the District of Columbia in 1936, it disqualified such a broad class of people.
Nor was there any distinction between strikers and financiers in the sample statute promulgated by the Social Security Board in January of 1936. The Social Security Board, the agency created by the act, disqualified persons participating in, financing or directly interested in the strike that caused their unemployment.
QUESTION: Mr. Cohen, do you think it makes any difference whether the non-striking workers have a direct interest in the issues of local strikes?
MR. COHEN: I think that Michigan was entitled to decide, as its legislature and its courts have, that non-striking workers who pay extraordinary dues that can be expected to finance other people's local strikes under circumstances where it is foreseeable that that will cause lay-offs in their own plants, Michigan is entitled to disqualify those people. That is the basis.
QUESTION: So, you would employ a foreseeability statement?
MR. COHEN: Well, I think the State of Michigan employed a foreseeability standard. I think that Congress permitted them to do that.
QUESTION: And, did Congress care whether it was foreseeable?
MR. COHEN: Well, I think that Congress should be assumed to have cared about the policy of non-state intervention in a labor dispute that is going on.
And, I think what Michigan did here was to find that these employees were sufficiently directly involved with the labor dispute that was going on, that payment of benefits to them could constitute intervention which they were entitled not to do.
QUESTION: Do you think that payment of regular dues could be financing in Congress' view?
MR. COHEN: I want to agree with Mr. Nash that that is not this case, disagree with him to the extent of saying I think probably not. I think that the rationale that the -- The purpose of Congress in the two statutes was to permit the states to decide what they wished to do in this specific -- on the specific question of providing assistance in the context of a labor dispute does not extend to a disqualification because of the payment of regular dues.
QUESTION: It is an illusive distinction somewhat though, isn't it?
MR. COHEN: Well, I think as usual there is a grey area. I think Michigan worked for 20 years to draw the line and it drew a correct one. I think there is a distinction between a decision not to finance people who are directly involved in a particular labor dispute to the extent that these were -- and a decision to deny benefits to people who are union members or have paid regular dues because it happened that some of those dues found their way into the hands of strikers. Michigan was careful not to do that.
I wanted to say a word about the question of whether this action was voluntary. I think it is clear that among other things this Court's decision in the Hodory case and all of the legislative history that I have recited that voluntariness is not a requirement of the federal statute; that is a state is not required to find that a worker is voluntarily unemployed before it may disqualify him.
I also think that voluntariness is an illusive notion in the context of what are inherently collective activities in which individuals may feel subject to varying pressures.
For example, the decision by an individual not to participate in a strike could well be a violation of union rules subjecting him to some sort of discipline, but would -- But, it is nevertheless clear, I think, that states may deny benefits to people engaged in the voluntary activity of striking.
CHIEF JUSTICE BURGER: Do you have anything further, Mr. Rossen? You have seven minutes remaining.
MR. ROSSEN: A few things, Your Honor, if I may.
ORAL ARGUMENT OF JORDAN ROSSEN, ESQ. ON BEHALF OF THE APPELLANTS -- REBUTTAL
MR. ROSSEN: Mr. Cohen may not think it is important if it is voluntary, but Justice Ryan in his opinion for the three justices of the Michigan Court said that it was necessary to find voluntariness before you disqualify people for financing.
QUESTION: Was that a construction of the Michigan law or a description of what Congress had permitted?
MR. ROSSEN: It was a construction of the Michigan law, not what Congress meant, and the reason I am making the point, Justice Rehnquist, is that in order to find voluntariness of these Appellants, Justice Ryan said they will be presumed to have done this voluntarily if they paid these dues in accordance with the union's rules and constitution.
So, I think the whole thing is tied up and it is not so much a question of whether the dues are regular or irregular, it is the question -- We say it is whether the dues were required to maintain membership, whether they were proper under Lander and Griffin --
QUESTION: But, in order to make it a proper part of the federal question that you have brought here, you have to show that Congress' tolerance of them, or whatever you want to say, would depend to some extent on their voluntariness. The fact that it may be an incorrect finding of fact under Michigan law as to voluntariness certainly wouldn't be something we would review.
MR. ROSSEN: I definitely am not rearguing Hodory, Justice Rehnquist. I am not saying that you cannot disqualify people in a labor dispute section under all circumstances.
For example, the other two counsel talked about the single establishment situation of which Congress was aware in 1935 where you disqualified everyone in the establishment or who were laid off due to a labor dispute. That might mean disqualifying people even though they were involuntarily out of work.
We agree that this could happen, but the difference is in that situation you disqualify union members and non-union members alike and you don't base the disqualification on their exercise of any Section 7 right, you just disqualify everyone in the establishment.
And, Your Honors held in Hodory whether or not that is fair that is certainly lawful. And, we don't quarrel with that decision. That does not involve Section 7 rights.
The question -- Both counsel -- The United States didn't do it in its brief, but both counsel use what we call a countervailing machinist's argument and say that GM is hampered economically somehow if you pay these non-strikers, and that therefore you should let Michigan impede their expressed Section 7 rights.
The economic effect on GM's ability to conduct the foundry strikes does not justify impeding these Section 7 rights.
When Congress provides for a Section 7 protected right, by definition Congress also tolerates some implicit economic effect on the employer or someone else. So, you can't say this amounts to the type of congressional intent that this Court found in New York Telephone where there was an expressed awareness of these things.
In effect, if you look at congressional intent, in 1935, the state statutes that were then in existence paid unemployment compensation to non-strikers at other locations who were laid off during strikes.
So, if there is any economic imbalance here, Congress was probably aware of it. I mean, traditionally unemployment compensation is paid to people who are laid off due to other situations.
And, when they say, in response to Justice Marshall's question, that somehow these claimants contributed to their unemployment, it is a little far-fetched, we think, to say that when they paid $40 in October 1967 this caused a shortage of castings at the foundries in January 1968. I mean, I don't think anyone -- Certainly there is no finding below to support that unusual theory.
Nor is there a finding below to support GM's arguments that these Claimants were allied with the foundry workers. GM's economic balance argument is based on facts that don't exist here and, as Justice O'Connor, I believe -- Her questions indicate some concern about this. If these Appellants had been in league with the foundry workers, closely allied with them or had there been a national contract that was open that could have possibly benefited them, they would have been disqualified under other Michigan statute sections anyway. You wouldn't reach these issues here and states generally take care of those concerns.
So, apart from the fact that General Motors' argument is purely speculative, if you look at it at all, Michigan takes care of these things. Michigan avoids the economic imbalance problem that was in New York Telephone by denying benefits to strikers and that is a fairly effective way of avoiding it.
QUESTION: But they can pay it.
MR. ROSSEN: They could pay strikers?
QUESTION: Couldn't they?
MR. ROSSEN: I am not sure. Your Honor held -- This Court held in New York Telephone that they could pay strikers after eight weeks. The government argued in New York Telephone that it would be such an outrage to pay strikers from the beginning, and the dissents pointed that out too, that I am not sure what this Court would do with a case involving a state that paid benefits from the first day to strikers. I really don't.
The basis of the decision in New York Telephone was that Congress was aware of that specific New York statute.
QUESTION: So, you think the policy of so-called neutrality is pretty strong?
MR. ROSSEN: Well, I don't think this case involves affecting neutrality certainly in any way that hurts General Motors regardless of what you do.
When you impede an express Section 7 right, not you personally, but when the state does, that action is preempted unless you find congressional intent to permit it. And, you don't even have to get to any questions of neutrality. Congress took care of the neutrality argument when it said in the NLRA preamble --
QUESTION: What if the state just denies payments to strikers from the very first day?
MR. ROSSEN: That would be permitted because --
QUESTION: Well, it certainly reads on Section 7 rights.
MR. ROSSEN: It does, Your Honor, and --
QUESTION: Why can they do it?
MR. ROSSEN: They can do that because you held --
QUESTION: Because of this strong policy of neutrality.
MR. ROSSEN: No, that is not why they can do it.
QUESTION: What is it?
MR. ROSSEN: They can do it because this Court held that Congress intended to permit it --
MR. ROSSEN: -- because Congress was aware in 1935 of statutes that did that expressly. The New York statute denied benefits to strikers for eight weeks. Other statutes denied benefits to strikers from the beginning and that is why --
QUESTION: Where was the evidence found in New York, both in the NLRA and the Social Security Act?
MR. ROSSEN: Well, this Court held that the NLRA didn't indicate that you could affect these rights one way or the other, but this Court looked to the Social Security Act, I believe, and the fact that the New York statute in question was on the books at the time that Congress passed the Social Security Act in 1935. That is where this Court found there was congressional intent or at least some of the Justices.
CHIEF JUSTICE BURGER: Your time has expired, counsel.
MR. ROSSEN: I did the same thing last week. I covered up the red light with my --
CHIEF JUSTICE BURGER: Thank you, gentlemen.
The case is submitted.
(Whereupon, at 1:38 p.m., the case in the above-entitled matter was submitted.)