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October 1, 1956


Appeals, Nos. 4, 5, 6, 7, 8, 10, 11 and 12, May T., 1957, from decree of Court of Common Pleas of Dauphin County, 1956, No. 2192 Equity Docket, No. 136 Commonwealth Docket, 1956, in case of Pennsylvania State Chamber of Commerce et al. v. John R. Torquato, Secretary of the Department of Labor and Industry et al. Decree affirmed; reargument refused October 19, 1956.


Charles E. Kenworthey, with him Charles Denby, J. Tomlinson Fort, James H. Hardie, Nicholas Unkovic, John G. Wayman and Reed, Smith, Shaw & McClay, for plaintiffs.

Leon Ehrlich, Deputy Attorney General, with him Herbert B. Cohen, Attorney General, Morley W. Baker, Special Deputy Attorney General, and Richard H. Wagner, Associate Counsel, for Secretary of Department of Labor and Industry et al., defendants.

M. H. Golstein, with him Goldstein & Barkan, for intervening defendant.

Sidney G. Handler, with him Arthur J. Goldberg, Elliot Bredhoff, Morris P. Glushien, Wilbur Daniels, and Douglass, Handler & Rosenberg, for intervening defendants.

David Cohen, for intervening defendants.

Benjamin C. Sigal, with him M. H. Goldstein and Bert Diamond, for intervening defendants.

Before Stern, C.j., Jones, Bell, Chidsey, Musmanno and Arnold, JJ.

Author: Bell

[ 386 Pa. Page 308]


Plaintiffs filed a complaint in equity seeking an injunction to restrain defendants from paying any money out of the Unemployment Compensation Fund until a decision on the claims of employes of Westinghouse Electric Corporation for unemployment compensation is made by the Superior Court; and also praying for further equitable relief. The lower Court issued a special injunction prohibiting payments out of the Fund until a decision on the merits could be made by the Superior Court, but refusing all the other equitable relief sought by the employer-complainants. From this special injunctive decree each side has appealed to this Court.

[ 386 Pa. Page 309]

While the arguments covered a wide range, the basic issues involved are narrow: Has Equity jurisdiction, and if so, did the facts and the applicable principles of law warrant and justify the special injunctive decree made by the lower Court, or should the decree be reversed as the employes contend, or greatly broadened as the employers contend?

We adopt the following excerpts from the able comprehensive opinion of Judge NEELY speaking for the lower Court:

"This action in equity was instituted on the complaint of Westinghouse Electric Corporation and seventy-one other plaintiffs as employers and taxpayers subject to the Unemployment Compensation Law (Act of December 5, 1936, P.L. 2897, as amended, 43 P.S. 751, et seq.) and contributors to the Unemployment Compensation Fund. The defendants are the Secretary of the Department of Labor and Industry, the Executive Director of the Bureau of Employment Security within that Department, and members of the Unemployment Compensation Board of Review. In addition to these officials who are charged with the duty of administering the Unemployment Compensation Law, there is also joined as a defendant the State Treasurer who is custodian of the Unemployment Compensation Fund. Many employers intervened as parties plaintiff by agreement of all parties. Also, a number of employees intervened as defendants, as did also labor organizations and persons affiliated therewith.

"The complaint was filed on March 29, 1956, and on or about that date the plaintiffs advised the Court that, as shown by their bill, they seek injunctive relief preliminary until hearing of the bill in its merits, and seek also other forms of temporary equitable relief. Upon examining the averments of the bill, the

[ 386 Pa. Page 310]

Court, counsel for plaintiffs and defendants being present, determined that a hearing on the application for preliminary injunction was required and set the date accordingly. The matter came on for hearing before the Court en banc on April 12, 1956 .... The plaintiffs were represented by their counsel. The defendants were represented by the Attorney General through his Deputies. There were numerous intervening plaintiffs and defendants who were also represented at the hearing by counsel. At this hearing testimony was taken and the matter is now before us on the question as to what extent, if any, the plaintiffs are entitled to special equitable relief at this stage of the proceeding.

"The nature of this proceeding can best be understood by considering the averments of the complaint. It is averred in substance that work stoppage occurred at the plants of the Westinghouse Electric Corporation in this Commonwealth due to a labor dispute; that after the stoppage had continued for a number of weeks a telegram was dispatched by the Governor to the Unions representing the employees as bargaining agents in the dispute, and to Westinghouse, wherein the Governor stated that a nationwide strike was in progress and proposed that the Unions and the Company 'submit their dispute to final and binding arbitration,' and that while the arbitration was in progress the employees should return to work. This telegram, according to the bill, was dispatched on December 19, 1955, and on the same day the Company notified the Governor of its refusal to accept the proposal. It appears in plaintiffs' pleadings that at least one of the two Unions acting in behalf of the employees did accept the proposal. The Department of Labor and Industry, then, according to the averments of the bill, acting through its Secretary and Executive Director

[ 386 Pa. Page 311]

    of the Bureau of Employment Security, issued a ruling dated February 17, 1956 to the effect that the work stoppage which had been a strike became a lockout on December 19, 1955, due to the acceptance of the Governor's proposal by the employees and the rejection thereof by the Company.*fn*

"There is attached to the complaint a copy of the Department's so-called 'Lockout Ruling,' wherein it is set forth that under the provisions of the Unemployment Compensation Law, § 402(d), 43 P.S. 802(d), employees on strike are disqualified from unemployment compensation; but that this disqualification does not apply where there is a lockout. It is alleged in the complaint that this so-called 'Lockout Ruling' of February 17, 1956 is invalid, and that claims for unemployment compensation in great numbers are now being illegally and unlawfully processed in the Department. It is specifically averred that determinations in a number of claims have been made by the Department, and there is attached to the complaint a copy of one such determination. It is averred that identical determinations have been made by the Department in 27 claims.

"It is averred that Westinghouse filed appeals with the Unemployment Compensation Board of Review from allowance of compensation in these 27 claims, but that if the decisions are affirmed by a Referee, and the Board on appeal affirms the Referee or fails to act within a period of thirty days of the action of the Referee, unemployment compensation will be immediately payable under the provisions of § 501(e) of the Act, 43 P.S. 821(e), notwithstanding any further appeal to the Superior Court. The complaint alleges that the Governor's proposal, followed by the Department's

[ 386 Pa. Page 312]

    ruling, was coercive, in that it was sought to coerce a Pennsylvania employer to submit to compulsory arbitration in a labor dispute; that the Department's ruling, if not set aside will result in an arbitrary and unlawful payment from the Fund in an aggregate amount of $9,500,000, and the unlawful depletion of the Fund thereby.

"The plaintiff's prayer for relief is (1) that we mandatorily direct the defendants, John R. Torquato, Secretary of the Department of Labor and Industry, and A. Allen Sulcowe, Executive Director of the Bureau of Employment Security, to rescind and reverse the Department's ruling concerning the lockout; (2) that we enjoin these two defendants, their successors, agents and representatives from accepting, processing and approving any claim for unemployment compensation based upon that ruling; (3) that we enjoin the defendants, William J. Burchinal and Frank McLaughlin, members of the Board, their successors, agents and employees from processing, hearing or approving any claim for unemployment compensation; (4) that we enjoin the defendant, Weldon B. Heyburn, State Treasurer, from making or permitting the payment of any claim for unemployment compensation based upon the Department's ruling; (5) that we declare the Governor's proposal and the Department's ruling to be unconstitutional and void; (6) that we declare § 501(e) of the Unemployment Compensation Law to be unconstitutional and void, to the extent that it requires the payment of unemployment compensation to be made to employees of Westinghouse before a decision of the Board and of the Superior Court; (7) that we grant such further equitable relief as may be required.

"To the complaint preliminary objections have been filed in the nature of (a) petition raising questions of

[ 386 Pa. Page 313]

    jurisdiction, (b) demurrer, and (c) motion to strike off. Since the plaintiffs seek special equitable relief, we will discuss briefly the essential facts adduced at the hearing on April 12. Many of the facts are not in dispute.

"At this hearing a number of allegations in the complaint were read into the record as facts upon which this Court could determine the plaintiffs' right to special relief. We have discussed some of the allegations in the complaint, and to the extent that the references hereinabove made are to factual matters we adopt them as facts in the case.

"Admittedly, there was a work stoppage at the plants of Westinghouse. The Governor sent the telegram referred to in the complaint and the Department issued its ruling of February 17, 1956. In that ruling the Department pointed out that employees as a matter of law are disqualified from unemployment compensation where they are on strike, but that this disqualification does not apply where there is a lockout. The Department then made its ruling in the following terms: 'RULING' 'Commencing as of December 27, 1955, the unemployment resulting from this dispute was not subject ot disqualification under the provisions of Section 402(d) of the Unemployment Compensation Law.'

"The effect of this ruling was to hold that as of December 27, 1955 what had theretofore been a strike became a lockout because of the company's rejection of the terms specified by the ...

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