D. R. McKINLEY et al., Petitioners, v. CALIFORNIA EMPLOYMENT STABILIZATION COMMISSION et al., Respondents, 34 Cal. 2d 239

EDMONDS, J. Seven employers, members of the Sacramento Wholesale Bakers Association, petition for a writ of mandate directing the Insurance Appeals Board to vacate and set aside certain of its decisions granting benefits to claimants, and to compel the director of employment to strike out all charges made to the accounts of the petitioners because of such payments.

As a result of the rather unique administrative procedure which was followed, the petitioners now concede that the awards cannot be vacated; however, the charges against the employers’ accounts may be stricken from the records if the determination of the board was erroneous. The case is presented upon an agreed statement of facts, and the only question for decision is whether the board correctly determined that the petitioners’ employees are not excluded from benefits under

section 56 of the Unemployment Insurance Act [Stats. 1935, p. 1226; 3 Deering’s Gen. Laws, Act 8780d], as amended in 1945. The association, comprising all of the Sacramento “machine shop baking industry,” was organized in 1935 for the purpose of representing its members in labor relations. Prior to the formation of the association, either individually or jointly, the employers had entered into contracts with the Bakery and Confectionery Workers’ International Union of America, Local 85.

Since 1935, a master contract upon an industry-wide basis was utilized, and on behalf of the employers, executed by the executive secretary of the association. Prior to 1946, each employer indicated his concurrence by signing the master contract; since that year the employers have declined to do so, taking the position that each of them is bound by the action of the secretary of the association.

According to the agreed statement, “ [t]he members of the Association understood among themselves that they would act as a unit in collective bargaining matters, and that a strike against any one or more members would be treated by them as a strike against all. This position had been known to the union by statements, letters and prior action (p. 37, l. 25, p. 38, l. 4; p. 39), but the union at no time expressed either agreement or disagreement with this position.

The collective bargaining agreement in force during the time involved herein contained no provision on this point.” The page references are to testimony in the transcript of proceedings before the referee.

This testimony is referred to in the petitioners’ reply brief as uncontroverted and is summarized as follows: “That in the past work stoppages have occurred in the baking industry in Sacramento, and that the Union took action against less than all of the members of the Bakers Association, and that when such action was taken, the others closed. ...” This summarization is not contradicted by the union; clearly the parties agree that, when in the past the union invoked economic sanctions against less than all of the employers who were parties to the master contract, the others closed their places of business.

By the master contract made in January, 1946, uniform wages, hours and working conditions were established for the employees of all member employers. Early in 1947, less than 30 days prior to the expiration date of the contract and in accordance with its terms, the union advised the executive secretary of the association that it desired to amend the contract generally as to wages, hours and working conditions.

During the negotiations which followed, the members of the union employed in the petitioners’ plants authorized the negotiating committee, in its discretion, to call a strike against any one or more of the employers. When negotiations broke down, the union declared a strike against the Butter Cream Baking Company, one of the members of the association. Pickets were stationed at the Butter Cream plant and remained until a month later, when an agreement was reached between the union and the association for a new master contract.

On the day that the picket line was established, a representative of the employers stated to a union representative at the scene that the strike against one employer would be treated as a strike against all. The union representative replied that he had expected such a result. Thereupon, and within the following few days, the other employers closed their plants. The employees in these bakeries continued to work until the plants were closed. Throughout the entire period of the dispute and until its settlement, the union’s sole demand was for changes in the contract with the association.

At no time, either before or after the picket line was established, were demands made upon the individual employers. After the other bakeries ceased operations, the picket line included employees from bakeries other than the struck plant.

Section 56 of the Unemployment Insurance Act, as amended in 1945, provides: “An individual is not eligible for benefits for unemployment, and no such benefits shall be payable to him under any of the following conditions: (

a) If he left his work because of a trade dispute and for the period during which he continues out of work by reason of the fact that the trade dispute is still in active progress in the establishment in which he is employed.” (Stats. 1945, ch. 1178, p. 2225; 3 Peering’s Gen. Laws, 1945 Pocket Supp., Act 8780d, § 56.) The petitioners contend that the employees who have claimed and received benefits are within the exclusionary provisions of the act in that (1) the employers had “good cause” to close their plants under the rule laid down in Bunny’s Waffle Shop v. California Emp.

Com., 24 Cal.2d 735 [151 P.2d 224]; (2) the employees made the strike at Butter Cream their own and voluntarily participated in it; and

(3) section 56 must be construed liberally “to promote the purpose of the Act, i. e., to provide benefits only to those who are involuntarily unemployed through no fault of their own. ’ ’ The respondents reply that (1) according to the stipulated facts, the employees did not leave their work voluntarily; (2) the cause of the unemployment was the closing of the plants and not the trade dispute; and (3) the board’s determination as to unemployment benefits is based upon certain language in the waffle shop ease.

Provisions disqualifying from benefits an employee whose unemployment is the result of a labor dispute are to be found in the unemployment compensation statutes of all of the 48 states. In most jurisdictions, however, the Legislature has made certain exceptions to the general disqualification provision. (49 Columb.L.Bev. 550 [1949].) Lack of such express statutory exception in the California act led this court in Bodinson Mfg. Corp. v. California Emp. Com., 17 Cal.2d 321, 328 [109 P.2d 935], to state that disqualification “depends upon the fact of voluntary action” by the claimant.

That decision recognized the obvio.us legislative intent that persons who are involuntarily and innocently out of work as the result of a labor dispute should not suffer by loss of unemployment benefits. Accordingly, the right to benefits under

section 56 of the statute was said to depend upon whether the worker left his job of his own free will or was forced to do so because of the acts of others. The disagreement between the parties to the present controversy arises from the difference in their respective views as to the cause of the claimants’ unemployment. The employers contend that it was the union action of striking the Butter Cream plant which caused the shutdown; the respondents argue that the employees were willing to work in the petitioners’ plants and did so until they were locked out. In Bunny’s Waffle Shop v. California Emp.

Com., 24 Cal.2d 735 [151 P.2d 224], certain restaurant owners sought to compel their employees, through their union, to deal with a newly organized San Francisco Employers’ Council in obtaining a collective bargaining agreement. The union refused to bargain except with the individual employers as had been the custom. To compel joint negotiations, the restaurant owners made a reduction of 25 per cent in wages, and a six-day week with split shifts was established instead of the existing five-day week and straight shift. When the employees were paid at the lower rate, they left their jobs.

Subsequently the restaurants were closed down. Later, the employers sued to obtain the relief demanded in the present case and the question presented for decision was whether the employees were disqualified from receiving benefits under the Unemployment Insurance Act because they left their work. The commission contended that, in effect, the employers’ action constituted a lockout.

This position was upheld because the court determined, after reviewing the employers’ acts, that they were disassociated from any bona fide proposal in connection with the dispute, hence, “when claimants left their work, they left because of this economic weapon and not because of the trade dispute then in existence.’’ In reaching its conclusion, the court recognized that, in reality, the form of the cessation of employment is not controlling and the determinative factor is the volitional cause of the work stoppage.

In other words, although the employees left work of their own choice, that choice was not freely made but was compelled by the economic weapon which the employers used. This is the only sound and fair way to apply the subjective volitional test stated in Bodinson Mfg. Co. v. California Emp. Com., 17 Cal.2d 321 [109 P.2d 935]. Applying this rule to the issue in the present case, the stipulated facts clearly show, that the employees of the Sacramento bakeries left their work voluntarily and, therefore, should have been excluded from receiving unemployment benefits.

Continuously since 1935, the union and the association, by collective bargaining, had entered into one master contract which included all of the employers and the employees of the baking industry of Sacramento. It seems clear that under such industry-wide, single contract negotiation, economic action by either side, whether strike or lockout, would be considered by each of the parties as action against the entire group struck or locked out. However, for the purpose of furthering the demand for certain amendments to that contract, the members of the union, by group action, voted to strike.

The selection of a certain plant or plants for a shutdown by strike at a particular time was a mere matter of strategy in the conduct of the trade dispute which equally involved all of the bakeries and their employees. This, in effect, applied the anion’s economic sanctions against each employer and brought about the unemployment of all of its members. Had the association acted first by closing down one of the member plants and the union followed with a strike against all of the remaining plants, it would be equally clear that the volitional act causing unemployment was the initial shutdown.

Either the union or an individual employer, at any time, could have broken off joint negotiations and bargained with its employees on an individual basis. But that course was not taken. At no time did the union purport to be directing any action solely against the Butter Cream plant; instead, the union continued throughout to deal directly with the association for the purpose of obtaining a new master contract.

To say, therefore, that the act of striking the one plant did not shut down work in other plants of the association which were subject to the labor negotiations for the purpose of obtaining a master contract is wholly unrealistic. Industry-wide negotiations had been established by these employers and consistently carried on for over 10 years. The volitional test established in Bodinson Mfg. Co. v. California Emp. Com., 17 Cal.2d 321 [109 P.2d 935], was based upon the principle that innocent victims of a trade dispute should not suffer loss of their unemployment insurance rights.

But the unemployment of the bakery workers was caused by their own action taken with full knowledge of its consequences. In the waffle shop case, the unemployment was due to a lockout; here the lockout of the bakers was due to a strike. The lockout of the restaurant workers was attributed to the concerted action of the employers; the strike of the bakers was by the vote of all the employees concerned and was directed against all of the employers who were parties to the master contract.

The volitional test itself is based upon a just analysis of a substantial subjective element and it cannot properly be extended or perverted by insistence upon mere form. In this case the union members knew from letters and statements as well as from prior strike action that any strike during negotiations would result in stoppage of all work. When, in the face jf that information, union members authorized a strike, they placed themselves outside the class of persons who are properly protected by the subjective volitional exception to

section 56 which was stated and applied in the Bodinson case. The respondents rely heavily upon the following language of the waffle shop opinion: “A strike against a single member of an employers’ collective bargaining unit involves economic action against that employer only and subjects to disqualification under the Unemployment Insurance Act those employees only who leave their work because of the dispute.

If the other employers thereupon choose to close their establishments and lock out their employees, such employees cannot be charged with leaving their work because of a trade dispute.” (24 Cal.2d 741.) But an important fact which must be considered in this connection is that the employer group involved in the waffle shop case was newly formed and had never been a bargaining agent for the restaurants; instead, the question of whether it should be the bargaining agent was one of the major issues in the dispute.

The quoted language, therefore, is not applicable to a situation such as the present one where the evidence shows a long-standing practice of contracting between the union and a group of employers as a unit; if it may be said to have that effect it was dictum and, in either event, it is not here controlling. A peremptory writ of mandate will therefore issue, requiring the director of the Department of Employment to remove from the official records the charges against the petitioners’ accounts which are the subject of this proceeding. Spence, J., concurred.