author: V. J. Brennan, J. Bashara, P.J. R. M. Maher, J.

text:
    DOERR v UNIVERSAL ENGINEERING DIVISION, HOUDAILLE INDUSTRIES, INC
    Docket No. 78-389.
    Submitted February 8, 1979, at Lansing.
    Decided June 5, 1979.
    Leave to appeal applied for.
    Plaintiffs, Carl Doerr and others, were employees of Universal Engineering Division, Houdaille Industries, Inc., in 1971. Plaintiffs were represented for collective bargaining purposes by the United Auto Workers Union. The UAW and the employer were bound by a collective bargaining agreement which had an expiration date of June 1, 1971.
    On April 1, 1971, the employer gave notice of its intent to terminate the agreement at its expiration. A series of meetings between the UAW representatives and representatives of the company were held. During negotiations the union expressed a desire to continue working under the terms of the agreement beyond the date of expiration. The union, however, gave some indication that such continuation of work should be contingent on making any new agreement retroactive to the expiration date of the old contract.
    On May 31, 1971, when an agreement had not been reached, the company carried out its earlier announced plan to lock out the employees. Two weeks later negotiations were resumed. The lockout was terminated on August 23, 1971. A new contract was signed and ratified on January 13, 1972. By its terms it was effective December 27, 1971.

      References for Points in Headnotes
    [1, 3, 10, 11, 13-15] 76 Am Jur 2d, Unemployment Compensation §§79, 81.
    Unemployment compensation: application of labor dispute disqualification for benefits to locked out employee. 62 ALR3d 437. General principles pertaining to statutory disqualification for unemployment compensation benefits because of strike or labor dispute. 63 ALR3d 88.
    [2.14] 76 Am Jur 2d, Unemployment Compensation § 78.
    [3.15] 76 Am Jur 2d, Unemployment Compensation § 77.

       76 Am Jur 2d, Unemployment Compensation §§ 93, 94.

       16 Am Jur 2d, Constitutional Law §§ 531, 532.
    13 Am Jur 2d, Statutes § 41.

       16 Am Jur 2d, Constitutional Law §§ 494, 498.

       16 Am Jur 2d, Constitutional Law § 172.

       76 Am Jur 2d, Unemployment Compensation § 5.

       76 Am Jur 2d, Unemployment Compensation § 11.

       76 Am Jur 2d, Unemployment Compensation § 6.

      During the lockout, the employees applied for unemployment compensation benefits. The multi-claimant benefit section of the Employment Security Commission determined that the unemployment was due to a "labor dispute in active progress” and that the employees did not qualify to receive benefits. This finding was affirmed by a hearing referee at an evidentiary hearing and by the Employment Security Appeal Board. The employees appealed to the Genesee Circuit Court, which upheld the Board’s determination that the unemployment was due to a "labor dispute in active progress”, but found that the applicable section of the Employment Security Act was unconstitutional in that it deprived the employees of equal protection under the law. The circuit court, Philip C. Elliott, J., on rehearing, reversed itself on the constitutional question and ruled that the employees were not entitled to benefits. The plaintiffs appeal alleging 1) that the finding that plaintiffs were unemployed due to a labor dispute in active progress is not supported by the evidence, 2) that the statutory provision under which the plaintiffs were disqualified from receiving benefits violates the equal protection clause of both the United States and Michigan Constitutions, and 3) that the Federal labor laws under the National Labor Relations Act preempt the rights of a state to disqualify employees affected by a labor dispute from receiving unemployment compensation benefits. Held:

    1. The record indicates that the lockout was prompted almost entirely by economic factors. The Board’s determination that the unemployment of the plaintiffs was due to a "labor dispute in active progress” was not supported by competent, material and substantial evidence. The union continually expressed its willingness to work without a contract and the assertion that the new contract should be made retroactive to the expiration date of the old contract was not a demand conditioning the union’s offer to work without a contract. In reality the lockout was a disguised layoff and was not the result of a labor dispute. The plaintiffs are entitled to benefits.
    2. That portion of the Employment Security Act which disqualifies from receiving benefits one who is unemployed due to a labor dispute in active progress is not violative of the equal protection clause of the Michigan Constitution or of the Federal Constitution. There is a rational basis for the classification made by the disqualification provision.
    3. Federal labor law under the National Labor Relations Act has not preempted the legislative scheme found in the disqualification provision of the Employment Security Act.
    Reversed in part and affirmed in part.
    R. M. Maher, J., concurred. He agrees that the unemployment was not due to the labor dispute and that the employees are not disqualified from receiving unemployment benefits.
    Bashara, P. J., dissents in part. He would hold that there was sufficient evidence presented to support the Appeal Board’s decision that the efficient cause of the plaintiffs’ unemployment was a labor dispute in active progress and that the plaintiffs were not qualified to receive unemployment compensation benefits. He agrees that there is no equal protection violation and that the National Labor Relations Act has not preempted the state from legislating in this area.
    He would affirm the trial court.
    Opinion of Brennan, J.
    1. Unemployment Compensation — Employment Security Commission — Appeal Board — Findings of Fact — Labor Dispute — Benefits — Lockout.
    A finding of the Employment Security Appeal Board that certain locked-out employees were unemployed as a result of a labor dispute in active progress and that, therefore, the employees were not entitled to unemployment compensation benefits was not supported by competent, material and substantial evidence where a review of the record indicates that the lockout was prompted almost entirely by economic factors and was really a disguised layoff.
    Dissent by Bashara, P. J.
    2. Unemployment Compensation — Labor Dispute — Words and Phrases — Statutes.

      A "labor dispute” for purposes of the Employment Security Act is a controversy between an employer and its employees regarding such matters as hours, wages and conditions of employment.

    3. Unemployment Compensation — Lockout — Labor Dispute — Cause-In-Fact Test.

      A ”cause-in-fact” test is to be applied to determine whether claimants for unemployment compensation, who have been locked out by their employer, are unemployed due to a labor dispute in active progress or for some other reason; the application of this test is to ask whether claimants would have been unemployed despite the labor dispute.

      4. Unemployment Compensation — Appeal Board — Findings of Fact — Evidentiary Support — Constitutional Law — Statutes.

      Findings of the Unemployment Compensation Appeal Board must be left undisturbed as long as they are supported by competent, material and substantial evidence on the whole record (Const 1963, art 6, §28; MCL 421.38[1]; MSA 17.540[1]).

    5. Constitutional Law — Statutes — Equal Protection — Rational Relation to Legitimate State Interest.
    The test of the constitutionality of a statute, in face of an equal protection challenge, where the statute does not involve any discernible fundamental interest or affect with particularity any protected class, is whether the statute has a rational relation to a legitimate state interest.
    6. Constitutional Law — Equal Protection — Rational Basis Test.
    An equal protection inquiry under the rational basis standard employs a relatively relaxed standard reflecting an awareness that the drawing of lines that create distinctions is peculiarly a legislative task and an unavoidable one and that perfection in making the necessary classifications is neither possible nor necessary.
    7. Constitutional Law — Equal Protection — State Constitution — Federal Constitution.
    The equal protection clause of the Michigan Constitution affords the same rights as the equal protection clause in the Federal Constitution.
    8. Constitutional Law — Statutes — Equal Protection.
    The burden is on a party who challenges, on equal protection grounds, legislation dealing with property rights, not fundamental rights, to show that the classification is arbitrary and does not bear a rational relation to the object of the legislation.
    9. Employment Compensation — Involuntary Unemployment — Labor Disputes — Neutrality of State — Equal Protection — Statutes.
    Two purposes behind the Employment Security Act are (1) to provide interim unemployment benefits for those who suddenly find themselves unemployed through no fault of their own and (2) to insure that the state remains neutral in labor disputes; a provision in the act which excludes from the coverage of the act those who are unemployed due to a labor dispute in active progress has a rational basis and is not violative of equal protection (MCL 421.2, 421.29[8]; MSA 17.502, 17.531[8]).
    10. Unemployment Compensation — Statutes — Preemption — Labor Disputes — Disqualification From Benefits — Federal Law.
    Federal labor law under the National Labor Relations Act has not preempted the rights of states to disqualify employees affected by a labor dispute from receiving unemployment compensation benefits.
    Opinion by Maher, J.
    11. Unemployment Compensation — Employment Security Act — Disqualification From Benefits — Labor Dispute — Statutes.

      A provision in the Michigan Employment Security Act which disqualiñes from beneñts those who are unemployed as a result of a labor dispute in active progress was not intended to disqualify from beneñts, regardless of circumstances, those who are unemployed as a result of unilateral action taken by their employer (MCL 421.29[8]; MSA 17.531[8]).

    12. Unemployment Compensation — Michigan Employment Security Act — Intent — Construction — Statutes.

      The Michigan Employment Security Act is intended to provide relief from the hardships caused by involuntary unemployment; the act, being remedial, must be construed liberally to achieve its purpose, and conversely, the disqualiñcation provisions are to be read narrowly (MCL 421.1 et seq.; MSA 17.501 et seq.).

    13. Unemployment Security — Court of Appeals — Employment Security Act — Appeal and Error.

      It is the responsibility of the Court of Appeals, when reviewing cases arising out of labor-management disputes and which involve the Michigan Employment Security Act, to assure that the purpose of the Employment Security Act is fulñlled without compromising the neutrality of the State of Michigan toward labor-management controversies; just as unemployment compensation beneñts may not be used to support employees during a strike, so too, denial of beneñts may not be used to strengthen the position of an employer who has locked out employees who are willing to work (MCL 421.1 et seq.; MSA 17.501 et seq.).

      14. Unemployment Compensation — Employment Security Act — Employer’s Exemption — Labor Dispute.

      An employer who seeks exemption from payment of unemployment beneñts under the Employment Security Act on the ground that the claimants’ unemployment was caused by a labor dispute in active progress bears the burden of proving that he is entitled to that exemption; the mere fact that negotiations for a labor contract are underway does not automatically bring a lockout within the labor dispute exception (MCL 421.29[8]; MSA 17.531[8]).

    15. Unemployment Compensation — Employment Security Act — Disqualification — Labor Dispute — Lockout — Statutes.

      The provision of the Employment Security Act which disqualiñes an employee from receiving unemployment compensation beneñts if the unemployment is due to "a labor dispute in active progress” includes only unemployment resulting from labor disputes in which the employee himself actively engages by refusing to work; the act was not intended to enforce a lockout by an employer by denying unemployment compensation beneñts to employees who are available for work, but who are denied work by their employer (MCL 421.29[8]; MSA 17.531[8]).

      Marston, Sachs, Nunn, Kates, Kadushin & O’Hare, P.C. (by Charles Looman), and John A. Fillion and Jordan Rossen, for plaintiffs.

      Dykema, Gossett, Spencer, Goodnow & Trigg (by James D. Tracy, Cameron H. Piggott and Baylee Reid), for defendant Universal Engineering.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Felix E. League, Assistant Attorney General, for defendant Michigan Employment Security Commission.
    Amici Curiae:

      Beaumont, Smith & Harris (by Dwight H. Vincent and J. Walker Henry), for Michigan Manufacturers Association, and others.

      Before: Bashara, P.J., and V. J. Brennan and R. M. Maher, JJ.
   V. J. Brennan, J.

The facts giving rise to the present controversy are set forth in the dissenting opinion of Judge Bashara. The question to be resolved is whether the unemployment of the plaintiffs at bar was the result of a labor dispute in active progress.

As Judge Bashara points out, the pertinent inquiry concerns the "efficient cause” of the unemployment. Accordingly, if the primary or controlling reason for the lockout is adverse economic conditions, then the resultant unemployment is not "due” to a labor dispute. As stated by Judge Bashara this is a question of fact. However, upon my review, the record sufficiently indicates that the lockout was prompted almost entirely by economic factors. Thus the Board’s decision is not supported by "competent, material and substantial evidence”.

The collective bargaining agreement in effect prior to the lockout provided it was to remain in force:

"until June 1, 1971 and thereafter for successive periods of sixty (60) days unless either party shall, on or before the 60th day prior to expiration, serve written notice on the parties of the desire to terminate.”

On April 1, 1971, the employer served notice to terminate and proposed a meeting to "discuss the terms and conditions for the new agreement”. At the first of some 20 meetings the union made clear its willingness to continue work under the terms of the prior contract. Throughout the negotiations, the employer painted a rather bleak economic picture of the industry with decreasing sales, increasing competition from abroad and a declining profit level. This was emphasized repeatedly as was the fact that the employer had fallen to a loss position.

The union restated its willingness to work without a new contract with the "understanding” that any new agreement be retroactive. The union again made it clear that it had no intention to strike. Judge Bashara interprets the retroactivity aspect of the new agreement as a demand conditioning the union’s offer to work without a contract. The record is unsupportive of this interpretation, and the union’s communication is more readily interpreted as a mere optimistic assertion as to the retroactivity of any new contract. The fact that the new agreement as entered into was not retroactive is equally indicative of the nóndemand nature of the retroactivity.

In any event the factual determination as to the cause of the unemployment involves a balancing of the various factors mentioned above. The union’s mere assertion of retroactivity, which occurred only once and was never mentioned by the employer as precipitating the lockout, is clearly outweighed by the fact that the employer, during an economic slowdown, terminated the contract and repeatedly emphasized the general adverse economic position of the industry. Upon due consideration of the above, I conclude that the lockout was really a disguised layoff and not the result of a labor dispute. The plaintiffs are therefore entitled to MESC benefits.

I concur in Judge Bashara’s opinion relating to constitutionality and the rights of the states to enact their own unemployment compensation acts.

I will reverse.

Bashara, P.J.

(dissenting). This is an appeal from the Genesee Circuit Court affirming a Michigan Employment Security Appeal Board’s determination denying unemployment benefits to plaintiffs and upholding the constitutionality of the legislative provision under which the denial was authorized.

Plaintiffs are employees of defendant company. They were represented for collective bargaining purposes by the United Auto Workers Union. The UAW and Universal Engineering Division, Houdaille Industries, Inc., had been bound by a collective bargaining agreement which expired by its terms on June 1, 1971.

On April 1, 1971, the company gave notice of its intent to terminate the agreement as of May 31, 1971. A series of some 23 meetings were held by representatives of both sides concerning wages, seniority, length of the new contract and flexibility of the work force.

During the negotiations, the UAW expressed a desire to continue working under the existing agreement, even beyond the date of expiration. However, it indicated that such continuation of work was contingent on making any new agreement retroactive to the June 1st expiration date.

On May 26, 1971, the company sent a letter to the union announcing that unless their final proposals were accepted, it planned to close the plant. The union responded with counter proposals on May 28 and May 30.

On May 31, 1971, the company indeed locked out its employees. Two weeks later, negotiations were resumed. The lockout was terminated on August 23, 1971. The employees returned to work without a contract. The new contract was signed and ratified on January 13, 1972. By its terms, it was effective December 27, 1971.

The employees applied to the Michigan Employment Security Commission for unemployment benefits during the period of the lockout. The multiclaimant benefit section of the MESC determined that their unemployment was due to a "labor dispute in active progress”, and disqualified them from receiving benefits by virtue of MCL 421.29(8); MSA 17.531(8). This finding was confirmed by a hearing referee at an evidentiary hearing, and by the Appeal Board.

The Genesee Circuit Court upheld the Appeal Board’s determination that the claimants’ unemployment was due to "a labor dispute in active progress”, but found that § 29(8), the applicable section of the Employment Security Act, was unconstitutional in that it deprived claimants of equal protection under the law. On motion for rehearing, the court reversed itself under the authority of Ohio Bureau of Employment Services v Hodory, 431 US 471; 97 S Ct 1898; 52 L Ed 2d 513 (1977).

I

Plaintiffs first contend that the finding of the Appeal Board that plaintiffs were unemployed due to a labor dispute in active progress is not supported by the evidence. The relevant portion of the applicable statute, MCL 421.29(8); MSA 17.531(8), is as follows:

"An individual shall be disqualified for benefits for any week with respect to which his total or partial unemployment is due to a labor dispute in active progress, or to shutdown or start-up operations caused by that labor dispute, in the establishment in which he is or was last employed, or to a labor dispute, other than a lockout, in active progress, or to shutdown or start-up operations caused by that labor dispute, in any other establishment within the United States which is functionally integrated with the establishment and is operated by the same employing unit.”

Any attempt to answer the question of whether, under the facts of this case, a labor dispute was in active progress must begin with a definition of the term "labor dispute”. The term has been clearly defined by our Supreme Court as "a controversy between employer and employees regarding hours, wages, conditions of employment”. General Motors Corp v Employment Security Comm, 378 Mich 110, 117; 142 NW2d 686 (1966), citing Lillard v Employment Security Comm, 364 Mich 401, 420; 110 NW2d 910 (1961). Cf., MCL 421.29(8)(b); MSA 17.531(8)(b), MCL 423.2(b); MSA 17.454(2)(b).

We next consider the meaning of the words "due to”. Plaintiffs argue that the standard must be one of absolute causation. In other words, the disqualification would occur only if the sole reason for plaintiffs’ unemployment was due to a labor dispute.

Rather, I would opt for the theory espoused by the MESC as the "efficient cause” or "cause-in-fact” concept. The application of this test is to ask whether plaintiffs would have been unemployed despite the labor dispute. If so, then the unemployment was not "caused by” or "due to” the labor dispute. On the other hand, if the unemployment would have occurred because of the labor dispute, in spite of any other reason including economics, the causality necessary to prove disqualification has been established.

In point of fact, all of the cases relied on by plaintiffs in support of the "absolute cause” theory are actually cases standing for the "cause-in-fact” proposition. See Scott v Budd Co, 380 Mich 29; 155 NW2d 161 (1968), Abbott v Unemployment Com pensation Comm, 323 Mich 32; 34 NW2d 542 (1948), Dann v Employment Security Comm, 38 Mich App 608; 196 NW2d 785 (1972).

Finally, it should be noted that no labor dispute is ever decided in a vacuum. Practical considerations such as economics guide both management and labor in determining whether a strike or lockout should be effectuated, and how long it should be in effect.

Having defined the terms, we are thus led to a resolution of the question. The issue is one of fact. Bedwell v Employment Security Comm, 367 Mich 415; 116 NW2d 920 (1962), Baker v General Motors Corp, 74 Mich App 237; 254 NW2d 45 (1977).

By constitution, statute and case law, findings of the Appeal Board must be left undisturbed as long as they are supported by competent, material and substantial evidence on the whole record. Const 1963, art 6, §28; MCL 421.38(1); MSA 17.540(1), King v Calumet & Hecla Corp, 43 Mich App 319; 204 NW2d 286 (1972).

A review of the record reveals the existence of substantial evidence in support of the findings of the Appeal Board. From April 1, 1971, until the May 31, 1971, termination date, the parties met more than 20 times in an attempt to resolve differences so that a new agreement could be reached. Various proposals and counter-proposals were offered. When the company advised the union that it would cease operations on May 31, 1971, the union countered that its members would continue to work under the old agreement as long as any future agreement would be retroactive to June 1, 1971.

The labor dispute still existed when the employees returned to work on August 23, 1971, and throughout the time the company and union reestablished and continued negotiations. In fact, a subsequent agreement was not accepted and approved by both parties until January 13, 1972.

I must conclude that there is competent, material and substantial evidence to support the Appeal Board’s decision to disqualify the plaintiffs under the statute.

II

Having determined plaintiffs’ disqualification under the Michigan statute, I now address the issue raised concerning its constitutionality. Plaintiffs contend the statute violates the equal protection clause of both the United States and Michigan Constitutions.

The United States Supreme Court has clearly spoken to the issue. In Ohio Bureau of Employment Services v Hodory, supra, the Court reviewed the constitutionality of an Ohio unemployment statute which disqualified an employee who was furloughed as a result of a strike at another plant owned by the claimant’s employer. In upholding the statute as not violative of equal protection, the Court said that,

"The statute does not involve any discernible fundamental interest or affect with particularity any protected class. * * * the test of constitutionality, therefore, is whether the statute has a rational relation to a legitimate state interest. Brief for Appellee 29. See New Orleans v Dukes, 427 US 297 [96 S Ct 2513; 49 L Ed 2d 511] (1976). Our statement last Term in Massachusetts Bd of Retirement v Murgia, 427 US 307 [96 S Ct 2562; 49 L Ed 2d 520] (1976), explains the analysis:
" 'We turn then to examine this state classification under the rational-basis standard. This inquiry employs a relatively relaxed standard reflecting the Court’s awareness that the drawing of lines that create distinctions is peculiarly a legislative task and an unavoidable one. Perfection in making the necessary classifications is neither possible nor necessary. Dandridge v Williams, [397 US 471] 485 [90 S Ct 1153; 25 L Ed 2d 491 (1970)]. Such action by a legislature is presumed to be valid.’ Id., at 314 [96 S Ct 2562; 49 L Ed 2d 520].” 431 US at 489.

The Court, quoting extensively from Dandridge, supra, summarized its holding as follows:

" 'If the classification has some "reasonable basis”, it does not offend the Constitution simply because the classification "is not made with mathematical nicety or because in practice it results in some inequality.” Lindsley v Natural Carbonic Gas Co, 220 US 61, 78 [31 S Ct 337; 55 L Ed 369 (1911)].’ Dandridge v Williams, 397 US at 485. The rationality of this treatment is, of course, independent of any 'innocence’ of the workers collecting compensation.” 431 US at 491.

In Michigan, our Supreme Court has repeatedly said that the equal protection clause of the Michigan Constitution affords "the same rights as the Federal equal protection clause”, Fox v Employment Security Comm, 379 Mich 579, 588; 153 NW2d 644 (1967). See also Moore v Spangler, 401 Mich 360; 258 NW2d 34 (1977), Wolodzko v Wayne Circuit Judge, 382 Mich 528; 170 NW2d 9 (1969). I must conclude that the Michigan Supreme Court would also apply the Hodory test of minimal scrutiny using "any rational basis” as its standard of review.

Plaintiffs contend that the plurality opinion in Manistee Bank & Trust Co v McGowan, 394 Mich 655; 232 NW2d 636 (1975), dictates that the "substantial relation to the object” test is applicable. However, the criteria necessary for application of the test in Manistee Bank, (1) that there be an exception to a common-law or general rule and (2) that the exception is no longer experimental, do not appear to be present in the instant matter.

It should be noted that subsequent decisions have limited the "substantial relation” test to the unique circumstances of each case. See e.g., McAvoy v H B Sherman Co, 401 Mich 419; 258 NW2d 414 (1977), Cruz v Chevrolet Grey Iron, Division of General Motors Corp, 398 Mich 117; 247 NW2d 764 (1976).

In McAvoy, the Supreme Court held:

"In the case at bar, it becomes immediately apparent that the thrust of the legislation challenged is primarily social and economic. The legislation involved deals with property rights, not fundamental rights. Therefore, the burden is on the appellants to show the classification is arbitrary and does not bear a rational relation to the object of the legislation.” 401 Mich at 453-454.

Our inquiry must lead us, then, to determine if there is any rational basis for which the classification encompassed by § 29(8) was created.

First, the purpose of the Michigan Employment Security Act, as articulated in § 2, MCL 421.2; MSA 17.502, is to provide interim unemployment benefits for those who suddenly find themselves unemployed through no fault of their own. I M Dach Underwear Co v Employment Security Comm, 347 Mich 465; 80 NW2d 193 (1956). It seems reasonable to conclude that the Legislature did not think those employees involved in a labor dispute would fit the purpose of the act. There exists, therefore, a rational basis for the legislative action whether one agrees or disagrees with the proposition.

The second purpose of the act, and specifically § 29(8), is to insure that the state remains neutral in labor disputes. Thus if either a strike or a lockout exists at a particular plant, the state will not investigate to determine who is right or wrong in the dispute. MESC will determine only if a labor dispute does in fact exist and whether a claimant’s unemployment was due to the labor dispute. The policy of neutrality by the state has long been recognized as a worthwhile objective by the Supreme Court. See Noblit v The Marmon Group, 386 Mich 652; 194 NW2d 324 (1972), Lilard, supra, and Buzza v Unemployment Compensation Comm, 330 Mich 223; 47 NW2d 11 (1951).

I would hold that the statutory provision meets not only the "rational basis” test, but that it also bears a substantial relation to the purpose of the law. It is not violative of the plaintiffs’ right to equal protection regardless of which standard of review is employed.

Ill

Plaintiffs also contend that the Federal labor law under the National Labor Relations Act preempts the rights of states to disqualify employees affected by a labor dispute from receiving unemployment compensation benefits.

As plaintiffs argue, the United States Supreme Court specifically reserved the question in Hodory, supra. However, the Court in this case did uphold similar statutory schemes involving the Social Security Act and the Federal Unemployment Tax Act.

The United States Supreme Court, in a recent plurality opinion, upheld a New York unemployment compensation statute against a Federal preemption challenge. New York Telephone Co v New York State Dep’t of Labor, — US —; 99 S Ct 1328; 59 L Ed 2d 553 (1979). This decision is equally applicable to the claims of the plaintiffs in the instant case. Therefore, it must be concluded that Federal law has not preempted the legislative scheme found in § 29(8) of the Employment Security Act.

I would affirm the judgment of the trial court. No costs, a public question being involved.

R. M. Maher, J.

(concurring). I agree with Judge Brennan that reversal is required. I do not believe that the labor dispute exception of the Michigan Employment Security Act was intended, regardless of circumstances, to disqualify from benefits those who are unemployed as a result of unilateral action taken by their employer.

The controversy in the case before us was initiated when the employer gave the union notice of its intent to terminate the collective bargaining agreement as of midnight, May 31, 1971. The parties subsequently entered negotiations in an attempt to reach a new agreement. On May 26, 1971, the employer sent the union its "final offer” with a letter in which it indicated its intention to close the plant at midnight on May 31, 1971, because of the lack of agreement. The letter concluded:

"In consideration of the withdrawal of any and all Union demands at Universal Engineering regarding a Houdaille Council, including the demand for a Houdaille Council step in the Grievance Procedure, Universal Engineering will continue to operate the Frankenmuth plant through June 4 to facilitate the current negotiations and to permit the Union to hold necessary meetings to vote on the Company final proposal. Operations of the plant after June 4 is subject to settlement of the current labor dispute.
"The Company stands ready to continue negotiations at any time.” (Emphasis added.)

The union responded with counter-proposals, and stated:

"This proposal is made on the basis of the Company withdrawing all the demands listed in the first paragraph of the Company’s proposal made May 26, 1971. Also, settlement of all other non-economic issues as presented by the Union. Plus, we are willing to bargain past May 31 until an agreement is reached. We have no intention of striking the plant with the understanding any agreement will be retroactive to June 1, 1971. We want to make it clear we have no intention of striking the plant at this time.” (Emphasis added.)

Although both parties indicated a willingness to continue bargaining, the employer was willing to bargain only until June 4, while the union was willing to bargain until an agreement was reached. Although the union mentioned retroactivity of any agreement in connection with its willingness to continue working, it then repeated that it had no intention of striking without any mention of conditions which must be met. The employer, on the other hand, stated unequivocally its intention to close the plant unless agreement was reached by June 4. The facts that the employees subsequently returned to work without a contract and that the new collective bargaining agreement, when concluded, was not retroactive support the conclusion that the employees’ willingness to work was not contingent upon the new contract being retroactive.

There is considerable evidence in the record indicating that the employer was experiencing a business decline which resulted in at least one layoff and might have been expected to have caused more layoffs had there been no lockout. On the other hand, the union had not threatened to strike, no strike vote had been taken, and no picketing took place during the lockout. Looking at the record as a whole, I think it is clear that this "labor dispute” was initiated entirely by the employer and that the "lockout” was a unilateral action by the employer which was precipitated not by the actions of the union or the employees, but by the economic status of the employer’s business. Under these circumstances, I am of the opinion that the labor dispute exception should not be applied to deny the employees benefits.

The basic principles which must be kept in mind in evaluating unemployment benefits claims which arguably come under the labor dispute exception were recently summarized in Baker v General Motors Corp, 74 Mich App 237, 247; 254 NW2d 45 (1977), lv gtd 402 Mich 828 (1977):

"The Michigan Employment Security Act is intended to provide relief from the hardship caused by involuntary unemployment. As the purpose of the act is remedial, it is to be liberally construed. MCL 421.2; MSA 17.502, Noblit v The Marmon Group, 386 Mich 652; 194 NW2d 324 (1972), Salenius v Employment Security Comm, 33 Mich App 228; 189 NW2d 764 (1971). Conversely, the disqualification provisions of § 29 are to be read narrowly. Salenius v Employment Security Comm, supra. Nevertheless,
" 'All interested parties who are involved in a claim for unemployment compensation * * * must be dealt with on an impartial basis. The unemployment compensation fund should never be used to finance claimants who are directly involved in a labor dispute, nor should it ever be denied to claimants who are legally entitled to receive benefits. * * * None of the money accumulated in this fund should ever be disbursed for the purpose of financing a labor dispute nor should it be illegally withheld for the purpose of enabling an employer to break a strike. The State of Michigan, in so far as this act is concerned, must remain neutral in all industrial controversies.’ Lawrence Baking Co v Unemployment Compensation Comm, 308 Mich 198, 213; 13 NW2d 260, 265; 154 ALR 660, 669 (1944), cert den 323 US 738; 65 S Ct 43; 89 L Ed 591 (1944).”

The responsibility of this Court is to assure that the purpose of the Employment Security Act is fulfilled without compromising the neutrality of the State of Michigan toward labor-management controversies. Just as unemployment compensation benefits may not be used to support employees during a strike, so too denial of benefits may not be used to strengthen the position of an employer who has locked out employees who are willing to work. Where the record reveals that the contract was terminated at the option of the employer, an absolute deadline for settlement was imposed unilaterally by the employer and a lockout was instituted without any provocation by the employees, who continued willing to work and to negotiate, I am convinced that the labor dispute exception does not apply.

Just as economic factors invariably play a part in determining tactics of both labor and management during any labor dispute, there is in times of economic instability almost always "a controversy between employer and employees regarding hours, wages, conditions of employment”. General Motors Corp v Employment Security Comm, at 117, quoted in Judge Bashara’s opinion. To permit the employer to escalate that controversy, unilaterally and at will, to the point of a lockout, and then to permit him to use the labor dispute exception to deny his employees unemployment compensation benefits, is to subvert both the aim of the act and the policy of neutrality in labor disputes. Although the courts have historically been reluctant to inquire into the merits of a labor dispute, Lawrence Baking Co v Unemployment Compensation Comm, supra, I believe that we are not precluded from inquiring into the question whether the labor dispute in fact precipitated the layoff.

The burden rests on the employer to prove that the labor dispute exception applies, Salenius v Employment Security Comm, 33 Mich App 228; 189 NW2d 764 (1971). While I agree that lockouts might be a legitimate weapon in a bona fide labor dispute, where negotiations are continuing, no strike is imminent, the employees are willing to continue work without a new contract, and no other action has been taken against the employer by the union, by any group of employees or by anyone with whom the employees share a community of interest, the employer has simply not carried his burden of establishing that the labor dispute caused the lockout. See Scott v Budd Co, 380 Mich 29; 155 NW2d 161 (1968). The mere fact that negotiations are underway does not automatically bring a lockout within the labor dispute exception. See Salenius, supra, Smith v Employment Security Comm, 89 Mich App 212; 280 NW2d 489 (1979).

The Attorney General in his brief points out that the statutory section in question expressly provides that a lockout in another establishment of the same employer which is functionally integrated with the establishment in which the claimant is employed does not disqualify the claimant from benefits, but that no express lockout exception is made for labor disputes in the establishment in which the claimant is employed. From this, the Attorney General argues that any lockout in the same establishment in which a claimant is employed per se disqualifies him from benefits, whatever the genesis of the lockout. I do not agree that the express exception for lockouts in other establishments compels the conclusion that the Legislature intended that any lockout in the establishment in which the claimant is employed would disqualify him for benefits, without regard to the genesis of the lockout. I am of the opinion that the Legislature simply intended that no claimant would be disqualified because of a lockout at a plant other than that at which he is employed whatever the circumstances of that lockout. As to lockouts in the establishment in which the claimant is employed, I agree that in a labor dispute where, for example, the employees are no longer willing to bargain, or where ultimatums are delivered or concessions demanded as a condition of continuing work, or a strike or a slowdown is threatened, and a lockout results, employees are disqualified from receiving unemployment compensation benefits under MCL 421.29(8); MSA 17.531(8). Cf., Salenius, supra, and Michigan Tool Co v Employment Security Comm, 346 Mich 673; 78 NW2d 571 (1956). Where an employer locks out employees who are willing to work and to continue peaceful negotiations, however, I agree with the view expressed in Smith v MESC, supra, that the employees are not disqualified from benefits.

I therefore concur in Judge Brennan’s opinion for reversal.

       I recognized that another panel of this Court has reached what appears to be an opposite result in Smith v Employment Security Comm, 89 Mich App 212; 280 NW2d 489 (1979). The facts recited in Smith appear to be distinguishable from those in the case at bar. I further note that National Gypsum Co v Administrator, Louisiana Dep’t of Employment Security, 313 So 2d 230 (La, 1975), relied on by the Smith Court, is a minority holding among American jurisdictions.

       The contract provided that although the agreement expired on June 1, 1971, it would continue in effect for successive 60-day periods until either party gave notice of its intent to terminate the agreement not less than 60 days after the date of the notice.


source: Caselaw Access Project

author: V. J. Brennan, J.

license: Public Domain

text:
    VISCONTI v DETROIT AUTOMOBILE INTER-INSURANCE EXCHANGE
    Docket No. 78-872.
    Decided June 5, 1979.
    Plaintiff, Lawrence M. Visconti, was injured when he slipped while stepping from his car. Detroit Automobile Inter-Insurance Exchange (DAIIE) was plaintiff’s no-fault insurer and Robert Moody was a DAIIE claims adjuster. DAIIE denied plaintiff’s claim for benefits and plaintiff sued it and Mr. Moody. The district court found liability but, when plaintiff requested a judgment including personal protection benefits for the services of his wife, who quit her job to care for him, held that plaintiff was not entitled to such benefits. Plaintiff appealed to the Macomb Circuit Court, which affirmed, Walter P. Cynar, J. Plaintiff appeals by leave granted. Held:

    Plaintiff may recover the personal protection benefits.
    Reversed and remanded with instructions.
    Insurance — Automobiles — No-Fault Insurance — Personal Protection Benefits.
    A person injured in an automobile accident may recover from his no-fault insurer for care provided by his spouse who quit her job to provide such care (MCL 500.3107; MSA 24.13107).
    References for Points in Headnote
    44 Am Jur 2d, Insurance § 1689.
    New Topic Service, No Fault Insurance § 30.

      Robert C. Vandenbroucke, for plaintiff.
    Before: Bashara, P.J., and V. J. Brennan and R. M. Maher, JJ.
   V. J. Brennan, J.

On February 4, 1976, plaintiff, Lawrence M. Visconti, was injured while stepping from his automobile, slipping and falling upon hard-packed ice and snow. At the time of the accident, defendant Detroit Automobile Inter-Insurance Exchange (hereafter referred to as DAIIE) was the no-fault automobile insurance carrier on plaintiff’s motor vehicle and defendant Robert Moody was a claims adjuster for DAIIE. On May 11, 1976, after DAIIE had denied plaintiff’s claim for no-fault benefits from this accident, plaintiff filed a complaint against defendants, seeking benefits pursuant to his policy and the applicable statute, MCL 500.3101 et seq.; MSA 24.13101 et seq.

On July 12, 1976, a nonjury trial was held in the 39th Judicial District Court before Judge William B. Ward. At the conclusion of the trial, Judge Ward determined that plaintiff’s injuries occurred under circumstances creating liability on the part of defendant DAIIE for payment of no-fault benefits.

On July 20, 1976, plaintiff filed a motion for entry of judgment, asserting therein that one of the items of liability was payment for the necessary services and care that plaintiff’s wife rendered to her husband during the 132 days (February 5, 1976, through June 15, 1976) that plaintiff’s left leg was in a cast. Plaintiff claimed that, immediately after his accident, his wife quit her job to care for him. Plaintiff therefore sought recovery from the DAIIE for the value of his wife’s services for 132 days at a rate of $20 per day, which he claims under MCL 500.3107; MSA 24.13107. Defendant DAIIE disclaimed such liability, and a hearing on plaintiff’s motion was held on August 2, 1976, before Judge Ward. There it was determined that plaintiff was not entitled to any benefits for the care and services rendered by his wife to him during the period of his incapacity because the statute did not contemplate reimbursement for this type of service provided by a wife.

From this decision plaintiff appealed to the Ma-comb County Circuit Court. In a December 1, 1977, opinion, Macomb County Circuit Judge Walter P. Cynar affirmed the decision of the district judge. Judge Cynar reasoned that because the statute spoke of "allowable expenses” for "reasonable charges” incurred by the insured, the insured’s wife could not be reimbursed for her services. Leave to appeal from the circuit court decision was granted on June 8, 1978.

We are faced with one issue on appeal: whether, pursuant to MCL 500.3107; MSA 24.13107, plaintiff may recover benefits as compensation for his wife’s service and care rendered during his incapacity. The automobile no-fault insurance provisions at issue provide in part:

"Personal protection insurance benefits are payable for the following:
"(a) Allowable expenses consisting of all reasonable charges incurred for reasonable necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation. * * *
"(b) Work loss consisting of loss of income from work an injured person would have performed during the first 3 years after the date of the accident if he had not been injured and expenses not exceeding $20.00 per day, reasonably incurred in obtaining ordinary and necessary services in lieu of those that, if he had not been injured, an injured person would have performed during the first 3 years after the date of the accident, not for income but for the benefit of himself or of his dependent.”

These provisions are similar to the worker’s disability compensation statute, MCL 418.315; MSA 17.237(315), which provides in part:

"The employer shall furnish, or cause to be furnished, to an employee who receives a personal injury arising out of and in the course of his employment, reasonable medical, surgical and hospital services and medicines, or other attendance or treatment recognized by the laws of this state as legal, when they are needed.”

On its face this worker’s compensation provision does not cover reimbursement for the value of care provided by a spouse during the convalesence of the injured insured. However, in Dunaj v Harry Becker Co, 52 Mich App 354; 217 NW2d 397 (1974), an employee sought compensation benefits for the services rendered by his wife during his disability. In that case the defendant objected to the claim, asserting essentially the same argument which the defendant here argued below, namely that such services rendered by a wife do not constitute an expense by the husband. This Court rejected that noncoverage argument and held that such services by a wife were compensable:

"There can be little question that had these services been rendered by someone other than claimant’s spouse they would have been compensable under the statute. Defendant argues however that because these services were nothing more than those which a loving wife would render to her husband, they were not 'owing’, since claimant’s wife could not maintain an action against her husband to recover for these services. There is ample Michigan authority for the proposition that a husband is entitled to the services and society of his wife, and that, to the extent that such services are what a husband has a right to expect of his wife, a wife cannot maintain an action against her husband to enforce payment for those services. Those cases are not, however, dispositive of the question at hand. Given the remedial nature of the Workmen’s Compensation Act, a narrow application of such authority is inappropriate. While the appellate courts of this state have not spoken to this question in a published opinion, the general rule prevailing in other jurisdictions is well stated in 2 Larson’s Workmen’s Compensation Law, §61.13, pp 88.253-88.254.
" 'The commonest controversy is the question whether practical nursing services performed by the claimant’s own wife may be made the subject of a claim for nursing expenses. The earlier cases denied the allowance, on the ground that the wife did no more than she was bound to do as an affectionate spouse. Later cases, however, have permitted the charge, on the reasoning that the employer, by statute, has the affirmative duty of furnishing this kind of nursing service. If he has not done so, and if the wife then takes over these duties in addition to her regular household work and does exactly what a hired nurse would have had to do, the charge is proper.’ (Footnotes omitted.)
"While it is clear that the Legislature by its 1963 amendment intended to eliminate the possibility of a windfall by a claimant with respect to services for which he could not be held liable, we do not believe that the Legislature intended that employer and its insurer should receive a windfall by reason of the fact that claimant’s wife has performed services which should have been provided by said employer. We therefore hold that medical services provided by a claimant’s wife are compensable to the same extent as they would be if the services had been rendered by someone other than the wife.” (Footnotes omitted.) 52 Mich App 354, 357-359.

This approach was supported by the Michigan Supreme Court in Kushay v Sexton Dairy Co, 394 Mich 69; 228 NW2d 205 (1975), where the Court interpreted the statute as embracing services provided by a spouse:

"Ordinary household tasks are not within the statutory intendment. House cleaning, preparation of meals and washing and mending of clothes, services required for the maintenance of persons who are not disabled, are beyond the scope of the obligation imposed on the employer. Serving meals in bed and bathing, dressing, and escorting a disabled person are not ordinary household tasks. That a 'conscientious’ spouse may in fact perform these services does not diminish the employer’s duty to compensate him or her as the person who discharges the employer’s duty to provide them.” 394 Mich 69, 74.

Both worker’s disability compensation and automobile insurance are no-fault systems. It is reasonable to interpret these systems in a like manner when these statutory provisions. appear to be affecting similar policies. In accordance with the above reasoning, we hold that the services performed in the case at bar are compensable under the no-fault act.

The lower court is reversed. The case is remanded for entry of an order awarding plaintiff $20 per day for 132 days plus interest.

Costs to be paid by defendant DAIIE.

Submitted February 7, 1979, at Lansing.

      Submitted February 7, 1979, at Lansing.


author: D. E. Holbrook, Jr., J.

text:
    PRIDEMORE v WILLIAMS WARDELL v HENRY
    Docket Nos. 78-1249, 78-2705.
    Submitted November 8, 1978, at Lansing.
    Decided June 5, 1979.
    Leave to appeal applied for.
    Gale L. Pridemore filed a paternity complaint against Larry M. Williams. Lapeer Circuit Court, Martin E. Clements, J., ordered defendant Williams to answer plaintiff’s interrogatories but indicated that such answers could not be admissible in evidence except for impeachment purposes. Defendant Williams appeals by leave granted the denial of his motion to strike the interrogatories. Rhonda Wardell filed a paternity complaint against Joe Henry. Eaton Circuit Court, Richard Robinson, J., refused to order plaintiff to answer interrogatories submitted by Joe Henry because of the court’s recognition that the defendant in a paternity action could not be required to testify and the court’s unwillingness to permit discovery by only one party. Defendant appeals by leave granted the denial of his motion to compel answers. The two cases were consolidated for hearing. Held:

    1. Provisions of The Paternity Act prevail over General Court Rules in a conflict situation. The Paternity Act states that an alleged father shall not be compelled to testify. This provision is in direct conflict with a court rule which requires a defendant to testify by answers to written interrogatories. The court rules concerning the service and answer of interrogatories are inapplicable to putative fathers in paternity actions. This construction of the General Court Rules requires a reversal in
      Pridemore and remand to the trial court for entry of an order striking plaintiff’s interrogatories.

      References for Points in Headnotes

       10 Am Jur 2d, Bastards §§ 75, 130.
    Right to jury trial in bastardy proceedings. 94 ALR2d 1128.

       10 Am Jur 2d, Bastards §§ 58, 59.
    Conflict of laws as to legitimacy or legitimation or as to rights of illegitimates, as affecting descent and distribution of decedents’ estate. 87 ALR2d 1274.

       10 Am Jur 2d, Bastards §§ 33-36, 104 et seq.

       23 Am Jur 2d, Depositions and Discovery § 307 et seq.

       10 Am Jur 2d, Bastards § 104 et seq.

      2. A court rule which provides that depositions or other discovery proceedings shall not be taken in criminal matters is not applicable in paternity actions, which are civil actions. The use of written interrogatories as a discovery technique is a valid and permissible procedure. A plaintiff mother may not have discovery in a paternity action while discovery is allowed to a putative father. The trial court erred in refusing to order Rhonda Wardell to answer Joe Henry’s interrogatories.
    3. Plaintiff Wardell’s claim that the statutory discovery procedure in a paternity action is a denial of equal protection is without merit. The provision which denies a plaintiff mother discovery, while allowing it to be utilized by a defendant, is neither a denial of equal protection nor without reasonable justification because the plaintiff mother is or should be cognizant of all operative facts concerning conception and her testimony constitutes a prima facie case while a defendant, especially if he is unjustly accused, requires certain preliminary information in order to prepare a defense.
    Reversed and remanded.
    1. Bastards — Paternity Proceedings — Civil and Criminal Nature — Primarily Civil — Statutes.
    A paternity action, under the current statute, is primarily civil in nature; although bastardy proceedings are of a mixed character, civil and criminal, they involve no indictable offense which would support a criminal conviction, a demand for extradition could not be made on such a charge and the alleged father is not to be fingerprinted, photographed, or have his name listed on any criminal record (MCL 722.711 et seq.; MSA 25.491 et seq.).

    2. Bastards —• Paternity Act — Court Rules — Statute and Court Rule Conflicts — Statute Prevails.
    The General Court Rules which are not in conflict with the provisions of The Paternity Act are applicable to paternity actions; however, where there is a conflict between the General Court Rules and The Paternity Act, The Paternity Act provisions prevail (GCR 1963,11.1, 730.1).
    3. Bastards — Paternity Proceedings — Evidence — Interrogatories — Statute and Court Rule Conflicts — Statutes — Court Rules.
    The Paternity Act provision that "both the mother and the alleged father shall be competent to testify, but the alleged father shall not be compelled to testify, and if either gives evidence he or she shall be subject to cross examination” is in direct conflict with the General Court Rules which require a party to testify by answers to written interrogatories; however, because provisions of The Paternity Act prevail over the General Court Rules in a conflict situation, the General Court Rules concerning the service and answer of interrogatories are inapplicable to putative fathers in paternity actions (MCL 722.715; MSA 25.495, GCR 1963, 309, 313.1[2], 730.1).
    4. Bastards — Paternity Proceedings — Discovery — Civil Actions — Court Rules.
    A court rule provides that depositions or other discovery proceedings shall not be taken in criminal matters; the rule, however, is inapplicable to paternity proceedings, which are civil actions (GCR 1963, 785.1[2]).
    5. Bastards — Paternity Proceedings — Discovery — Equal Protection — Evidence — Prima Facie Case.
    The Legislature’s decision to deny discovery in a paternity action to a plaintiff mother while allowing it to be utilized by a defendant putative father cannot be said to be a denial of equal protection or essentially arbitrary because, in a paternity action, the only issue is whether the defendant is the father of the child of the plaintiff; the plaintiff mother is, or at least ought to be, fully cognizant of all of the operative facts concerning the child’s conception; the defendant, on the other hand, especially if he is unjustly accused, requires certain preliminary information to prepare a defense, since the plaintiff’s testimony will constitute a prima facie case.

      Mary K. Roberts, Lapeer County Assistant Prosecuting Attorney, for plaintiff Gale L. Pridemore.

      Raymond G. Buffmyer, Eaton County Chief Assistant Prosecuting Attorney, for plaintiff Rhonda Wardell.

      Robert W. Thomas, for defendant Larry M. Williams.

      Zimmer & Deitrick (by William H. Paynter), for defendant Joe Henry.

      Before: D. F. Walsh, P.J., and T. M. Burns and D. E. Holbrook, Jr., JJ.
   D. E. Holbrook, Jr., J.

These cases were consolidated to examine the use of interrogatories in paternity actions filed pursuant to MCL 722.711 et seq.; MSA 25.491 et seq.

In Pridemore the plaintiff filed a complaint under The Paternity Act alleging that defendant was the father of her son. Defendant served interrogatories upon the plaintiff and the plaintiff served a set of interrogatories upon the defendant. Neither party filed answers to the interrogatories. The trial court granted defendant’s motion to compel plaintiff to answer interrogatories and in the same order denied the defendant’s motion to strike plaintiff’s interrogatories. Defendant appeals the denial of the motion to strike plaintiff’s interrogatories by leave granted.

In Wardell plaintiff also filed a complaint under The Paternity Act. The defendant submitted interrogatories to the plaintiff who refused to answer the interrogatories. The defendant filed a motion to compel answers to the interrogatories and the trial court held that the plaintiff need not answer the interrogatories since discovery was not equally available to both parties in paternity cases. Defendant appeals the denial of his motion by leave granted and the two cases were consolidated for oral argument and decision.

Proceedings under The Paternity Act have created a great confusion concerning the nature of the proceedings. They are generally considered to be "quasi criminal” because they combine elements of both civil and criminal cases. Justice Coleman, after analyzing the nature of paternity actions, concluded:

"In the final analysis, a paternity action under the current statute is primarily civil in nature.” Artibee v Cheboygan Circuit Judge, 397 Mich 54, 67-68; 243 NW2d 248 (1976) (Coleman, J., dissenting).

It has long been the law in Michigan that actions under The Paternity Act are not criminal actions.

"Bastardy proceedings, although of a mixed character, involve no indictable offence on which a conviction could be had in their course, and they are not criminal proceedings in the proper sense of the term. It is not pretended that any demand of extradition could be made on such a charge. Our own decisions have settled the character of such proceedings as not criminal. Cross v People, 8 Mich 113; Semon v People, 42 Mich 141 [3 NW 304 (1879)]; Sutfin v People, 43 Mich 37 [4 NW 509 (1880)]; Waite v Washington, 44 Mich 388 [6 NW 874 (1880)].” In the Matter of Frank Cannon, 47 Mich 481, 485; 11 NW 280 (1882).

The Paternity Act itself further substantiates the civil nature of the matter by requiring that "the alleged father shall not be fingerprinted, photographed or have his name listed on any criminal record”. MCL 722.714(e); MSA 25.494(e).

Holding as we do, that paternity actions are civil actions, then it necessarily follows that the General Court Rules of 1963, as amended, are applicable to paternity actions. See GCR 1963, 11.1. The Supreme Court has, however, in GCR 1963, 730.1 stated that:

"The procedure and actions under the Paternity Act shall be in accordance with rule 730, and the general court rules, which are not in conflict with the provisions of the Paternity Act.”

Thus in the case of a conflict between the General Court Rules and The Paternity Act, The Paternity Act provisions shall prevail.

In both Pridemore and Wardell interrogatories were served upon the parties pursuant to GCR 1963, 309. These interrogatories were not answered by any of the parties within the applicable time limits. Motions were then made in both cases pursuant to GCR 1963, 313.1(2) to compel answers to the interrogatories. In Pridemore the trial court ordered defendant to answer plaintiffs interrogatories but indicated that such answers could not be admissible in evidence except for impeachment purposes. In Wardell the trial court refused to order plaintiff to answer defendant’s interrogatories because of its recognition that the defendant in a paternity action could not be required to testify and its unwillingness to permit discovery by only one party. Both trial courts erred in their decisions.

The controlling statute is MCL 722.715; MSA 25.495. It states:

"Both the mother and the alleged father shall be competent to testify, but the alleged father shall not be compelled to testify, and if either gives evidence he or she shall be subject to cross examination * *

This provision of The Paternity Act is in direct conflict with GCR 1963, 309 and 313 since those rules would require the defendant to testify by answers to written interrogatories. Accordingly, we hold that GCR 1963, 730.1 requires that the General Court Rules concerning the service and answer of interrogatories are inapplicable to putative fathers in paternity actions. This construction if the General Court Rules requires a reversal in Pridemore and remand to the trial court for entry if an order striking plaintiffs interrogatories.

Our holding in Pridemore does not dispose of the ssue raised in Wardell. The statutory conflict created by MCL 722.715; MSA 25.495 concerns only the putative father and not the plaintiff mother. While the trial court’s reasoning in War-dell is not clear, it did recognize that the defendant could not be required to answer interrogatories. Incorrectly characterizing the paternity action as criminal in nature, it denied all discovery based upon GCR 1963, 785.1(2) which indicates that depositions or other discovery proceedings shall not be taken in criminal matters. As stated previously, paternity actions are civil actions and GCR 1963, 785 has no applicability.

Plaintiff in Wardell further argues that it would be a denial of equal protection to permit the defendant to utilize discovery while denying her access to the same procedures. The statute clearly places the plaintiff mother and the defendant putative father in separate classifications and grants them differing access to discovery during litigation. Discovery is a recent creation of the Legislature and the courts and is not a fundamental interest; thus the proper review is the traditional equal protection test. Under this test:

"The burden is on the person challenging the classification to show that it is without reasonable justification. It has been said that '[a] statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it’. A classification will stand unless it is shown to be 'essentially arbitrary’.” Manistee Bank & Trust Co v McGowan, 394 Mich 655, 668; 232 NW2d 636 (1975).

In a paternity action the only issue is whether the defendant is the father of the child of the plaintiff. The plaintiff mother is, or at least ought to be, fully cognizant of all of the operative facts concerning the conception of the child in question. The defendant on the other hand, especially if he is unjustly accused, requires certain preliminary information in order to prepare a defense, since the plaintiff’s testimony will constitute a prima facie case. When viewed from this perspective, the Legislature’s decision to deny discovery to the plaintiff mother while allowing it to be utilized by the defendant cannot be said to be essentially arbitrary.

In summary, we find that the use of written interrogatories as a discovery technique in paternity actions is a valid and permissible procedure. However, since a defendant in a paternity action may not be compelled to answer interrogatories pursuant to statutory conflict which overrides the General Court Rules, we prohibit the service of written interrogatories upon a defendant in a paternity action.

Reversed and remanded for proceedings consistent with this opinion.


text:
    ARMAND v TERRITORIAL CONSTRUCTION, INC
    Docket No. 78-1525.
    Submitted February 8, 1979, at Lansing.
    Decided June 5, 1979.
    Leave to appeal applied for.
    W. R. Armand, doing business as Armand Drilling and Dewatering, was a subcontractor on a construction project. The general contractor, Territorial Construction, Inc., was the principal on a labor and material payment bond issued by Sentry Insurance a Mutual Company. The bond provided that any claimant who had not been paid within 90 days after ceasing work on the project could sue on the bond. The bond also provided that no action could be commenced after 1 year from the time the principal ceased work. Armand and Territorial both ceased work on November 5, 1974. Armand was not paid, and brought an action against Territorial and Sentry on November 18, 1975, in district court, which granted summary judgment for Armand. Sentry appealed to circuit court, which reversed and remanded. The district court then granted accelerated judgment for Sentry. Armand appealed to the Oakland Circuit Court, which affirmed, Robert L. Tempin, J. Armand appeals by leave granted. Held:

    In order to effectuate the literal language of the bond’s limitation provision, a claimant must be provided one year within which suit may be filed. Because Armand was precluded by the terms of the bond from filing suit for 90 days after stopping work, the limitation period should begin to run at the end of the 90-day period. Armand’s filing was timely, and accelerated judgment for Sentry was improper.
    Reversed.
    Limitation of Actions — Bonds — Literal Language.
    A provision in a labor and material payment bond which limits the time in which a claimant may bring suit for payment on the bond is to be construed so as to effectuate the literal language of the provision; where the bond also provides that suit cannot be commenced within 90 days after cessation of work, the bond’s 1-year limitation period begins to run at the end of the 90-day period.

      References for Points in Headnote
    13 Am Jur 2d, Building and Construction Contracts § 14.
    17 Am Jur 2d, Contractors’ Bonds §§ 122,124.

      Amberg, Miller & Macpherson, P.C., for plaintiff.

      Freihofer, Oosterhouse, DeBoer, Barnhart & Cooper, P.C. (by Mark H. Verwys), for defendant Sentry Insurance a Mutual Company.
    Before: Bashara, P.J., and V. J. Brennan and R. M. Maher, JJ.
   V. J. Brennan, J.

This is an action by W. R. Armand, d/b/a Armand Drilling and Dewatering, to recover on a labor and material payment bond issued by Sentry Insurance to Territorial Construction, Inc.

Territorial Construction, Inc, was engaged by John C. Helveston as general contractor for a development project in Independence Township. Plaintiff then entered into a contract with Territorial to perform dewatering services and supply certain equipment. Some 11 days before the Armand contract was entered into, Sentry Insurance issued a labor and material payment bond naming Territorial as principal and John C. Helveston as owner/obligee.

The bond provisions applicable to this suit provide:

"2. The above named Principal and Surety hereby ointly and severally agree with the Owner that every daimant as herein defined, who has not been paid in úll before the expiration of a period of ninety (90) days liter the date on which the last of such claimant’s work >r labor was done or performed, or materials were urnished by such claimant, may sue on this bond for ise of such claimant, prosecute the suit to final judgnent for such sum or sums as may be justly due claimant, and have execution thereon. The Owner shall not be liable for the payment of any costs or expenses of any such suit.
"3. No suit or action shall be commenced hereunder by any claimant:
"(b) After the expiration of one (1) year following the date on which Principal ceased work on said Contract, it being understood, however, that if any limitation embodied in this bond is prohibited by any law controlling the construction hereof such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law.”

Plaintiff ceased its dewatering operation on November 5, 1974, and Territorial was not physically present on the job site after that date. Presumably plaintiff was not paid for its services, and a written notice of claim was given to Sentry on September 3, 1975. The claim was denied one month later and plaintiff commenced this suit in district court on November 18, 1975.

On June 8, 1976, a hearing was held before Judge Gerald E. McNally on Sentry’s motion for accelerated judgment based upon the one-year limitation of action clause contained in the bond. On September 20, 1976, Sentry’s motion was denied and plaintiff’s motion for summary judgment was granted.

On appeal to the Oakland County Circuit Court the judgment was reversed and remanded for further proceedings. On remand, after further factual determinations, Judge McNally granted Sentry’s motion for accelerated judgment. This judgment was affirmed by the circuit court, and plaintiff appeals by leave granted.

On appeal we are asked to reconcile and construe the force and effect of the above-quoted bond provisions pertaining to a claimant’s time limitation for bringing suit on the bond.

Both the district court and the circuit court devoted much attention to the applicability of The Tom Thomas Organization, Inc v Reliance Ins Co, 396 Mich 588; 242 NW2d 396 (1976), to the case at bar. Although Thomas dealt with contract provisions substantially different than those presented here, the underlying rationale employed to construe the limitation of action clause is equally applicable to the present case.

In Thomas the plaintiff brought suit to recover damages for the loss of certain films which were insured by defendant. The policy in question contained a 12-month limitation of action clause commencing from the date of loss. The loss occurred on December 14, 1971, and the suit was filed on March 16, 1973. The Court pointed out that "substantial delays” were built into the policy which allowed the insured 90 days from the discovery of loss to file proof of loss and gave the insurer 60 days from presentation and acceptance of proof of loss to pay the claim. The Court held that the contractual period of limitation was tolled from the time the insured gave notice until the insurer formally denied liability.

The Thomas Court essentially construed the limitation provision as extending to the insured the full period as set forth in the contract (exclusive of time consumed in administrative procedure). The Court, p 595, quoted from Westchester Fire Ins Co v Sperling, 421 F2d 141, 142 (CA 9, 1970), as follows:

" ' "* * * A policy of insurance which contains conditions reducing the statutory time for the commencement of any suit thereon ought, in justice and equity, to be so construed — if reasonable under its terms — as to give the full period of time mentioned in the policy, freed from the provisions of all other clauses of the policy, or from the conduct of the insurance company, limiting, or attempting to limit, the time actually given in the limitations clause. This, it appears to us, is the consistent and logical view that ought to be taken of such policies of insurance. * * * It would prevent either party from taking any undue or improper advantage of the other.” ’ ” (Emphasis added.)

In the present case paragraph 2 of the bond precludes the filing of a suit by a claimant for 90 days after the claimant last furnished work or materials. Presumably this period would be used by the claimant to procure payment from the principal or obligee. If payment is then procured, action on the bond is obviated. This 90-day period is analogous to the time consumed in Thomas wherein the insured was required to process the claim administratively before commencing an action. As such this 90-day period substantially reduced the one-year limitation of action provision set forth in paragraph 3(b) of the bond. Such a reduction violates the underlying rationale of Thomas which is to effectuate the "literal language of the limitation provision”.

Applying this rationale to the facts present warrants the finding that the claimant must be provided at least one year (the literal language of the limitation provision) wherein suit may be filed. Therefore the one-year limitation begins to run from that point in time in which the claimant may first file suit. Here the plaintiff ceased its dewatering operation and the principal ceased work on November 5, 1974. Pursuant to paragraph 2 of the bond, plaintiff could not commence suit for another 90 days. The one-year limitation began to run at the end of the 90-day period, and the filing of the suit on November 18, 1975, was well within the one-year provision.

Accordingly, the lower court improperly granted Sentry’s motion for accelerated judgment based on the limitation of action provision. That order is vacated and the cause is remanded to the district court with directions to reinstate the summary judgment in favor of plaintiif.

Reversed.

Costs to be paid by Sentry Insurance.


text:
    PEOPLE v CAGE
    Docket No. 78-1621.
    Submitted March 8, 1979, at Lansing.
    Decided June 5, 1979.
    Leave to appeal applied for.
    Derrick Cage was convicted, on his plea of guilty, in Washtenaw Circuit Court, Ross W. Campbell, J., of obtaining property having a value of over $100 under false pretenses with intent to defraud. Defendant appeals, arguing that the factual basis for his guilty plea was insufficient because of the absence of evidence of an intent to pass title and because his misrepresentation related to a future event rather than a present or past fact or circumstance. Held:

    1. Intent to pass title need not be shown to establish the crime of obtaining property under false pretenses with intent to defraud.
    2. A promise that is false ab initio is a misrepresentation of a present fact, even if the misrepresentation relates to a future event, and is thus sufficient to constitute a false pretense under the statute making criminal the obtaining of property under false pretenses with intent to defraud.
    Affirmed.
    1. False Pretenses — Title — Passage — Intent — Guilty Plea — Factual Basis — Statute.
    Evidence of an intent to pass title is not required to establish the factual basis sufficient for acceptance of a guilty plea to obtaining property under false pretenses with intent to defraud (MCL 750.218; MSA 28.4150).
    2. False Pretenses — Misrepresentation — Present Fact — Statute.
    A promise that is false ab initio is a misrepresentation of a present fact, even if the misrepresentation relates to a future event, and is thus sufficient to constitute a false pretense under the statute making criminal the obtaining of property under false pretenses with the intent to defraud (MCL 750.218; MSA 28.415).

      References for Points in Headnotes

       32 Am Jur 2d, False Pretenses §§ 33-36, 62.

       32 Am Jur 2d, False Pretenses §§ 12, 13, 61.

      Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, William F. Delhey, Prosecuting Attorney, and Neil J. Juliar, Assistant Prosecuting Attorney, for the people.

      Richard B. Ginsberg, for defendant on appeal.
    Before: M. F. Cavanagh, P.J., and Bashara and D. E. Holbrook, Jr., JJ.
   D. E. Holbrook, Jr., J.

Pursuant to a plea bargain, defendant pled guilty to obtaining property having a value of over $100 by false pretenses, MCL 750.218; MSA 28.415. Defendant appeals, raising two issues relating to the sufficiency of the factual basis for the trial court’s acceptance of his plea.

First defendant claims that there was no evidence of intent to pass title. This contention has no merit. Intent to pass title is no longer required under the statute. People v Sharpe, 22 Mich App 454; 178 NW2d 90 (1970).

Defendant also claims his misrepresentations did not relate to a present or past fact or circumstance but to future events only. The facts relevant to a determination of this issue are that the defendant, under the guise of purchasing an automobile, went to a Lincoln-Mercury dealership and, after working out a deal with the salesman, indicated that, before making a downpayment, he wished to take the vehicle to a mechanic to check it out. Relying upon defendant’s statement that he was going to buy and was just going to have it checked out and bring it back, the salesman put dealer plates on the vehicle and allowed defendant to take the car. It never was the intention of the defendant to bring the car back, nor was it his intention to have the vehicle checked out by a mechanic.

While it might appear that defendant’s misrepresentations were of a future fact, in reality what he misrepresented was his present intention, which was clearly fraudulent. While there does not appear to be any Michigan case clearly on point, we quote from a Texas court in Kinder v State, 477 SW2d 584, 586 (Tex Grim App, 1971), wherein the court stated:

"The rule is that' false promises or representations as to future happenings by which a person is induced to part with his property may form the basis of the offense of theft by false pretense so long as the proof shows that such promises are false ab initio. ”

We find the foregoing rule enunciated by the Texas court to be sound and hereby adopt it. Defendant’s contention is therefore without merit.

Affirmed.


text:
    ABBOTT v BEATTY LUMBER COMPANY
    Docket No. 78-1676.
    Submitted February 13, 1979, at Detroit.
    Decided June 5, 1979.
    Floyd A. Abbott brought an action alleging that defendant Beatty Lumber Company had wilfully violated the Fair Labor Standards Act by failing to pay overtime compensation in accordance with that act. Defendant moved for summary judgment on the basis that plaintiff failed to state a claim upon which relief could be granted, arguing that plaintiff had failed to exhaust his remedies under the collective bargaining agreement covering the terms of his employment, which also had a provision for overtime pay. The Oakland Circuit Court, John N. O’Brien, J., granted defendant’s motion for summary judgment. Plaintiff appeals. Held:

    1. The Fair Labor Standards Act creates a statutory right to recover unpaid overtime compensation that is wholly independent of any collective bargaining agreement. That statutory right is not waived by the employee because of the existence of provisions in a collective bargaining agreement concerning overtime compensation.
    2. An employee is not barred from instituting a suit to enforce the statutory right to overtime compensation by reason of the failure to seek enforcement of a corresponding contractual right under the grievance procedure provided by the later contract.
    3. Arbitration of a claim for unpaid overtime compensation conducted under the United States arbitration act operates as a stay of any judicial proceeding for unpaid overtime compensation under the Fair Labor Standards Act. The pendency of such an arbitration is in the nature of an affirmative defense. The arbitration does not bar the filing of a suit for the statutorily required payment of overtime compensation.
    4. It was error to grant summary judgment in favor of defendant on the basis that plaintiffs statutory claim for unpaid overtime compensation was barred by his failure to exhaust his contract remedies.

      References for Points in Headnotes

       48A Am Jur 2d, Labor and Labor Relations § 2233.

       48A Am Jur 2d, Labor and Labor Relations § 1932 et seq.

       48A Am Jur 2d, Labor and Labor Relations §§ 1937, 2467 et seq.

       73 Am Jur 2d, Summary Judgment § 26 et seq.

      Reversed and remanded.
    1. Labor Relations — Overtime Compensation — Statutory Rights — Waiver — Statutes.
    The Fair Labor Standards Act creates a statutory right to recover unpaid overtime compensation that is wholly independent of any collective bargaining agreement; that statutory right may not be waived by the employee by a collective bargaining agreement (29 USC 207, 216[b]).
    2. Labor Relations — Overtime Compensation — Statutory Rights — Contract Rights — Statutes.
    An employee is not barred from instituting a suit to enforce his statutory right to overtime compensation under the Fair Labor Standards Act by reason of his failure to seek enforcement of a corresponding contractual right under the grievance procedure provided by a collective bargaining agreement (29 USC 207).
    3. Labor Relations — Overtime Compensation — Arbitration — Stay op Proceedings — Pleadings — Statutes.
    Arbitration pursuant to the United States arbitration act of a claim for unpaid overtime compensation under the Fair Labor Standards Act operates as a stay of any judicial proceedings for such compensation under the Fair Labor Standards Act, but such arbitration is in the nature of an affirmative defense which must be pled and does not bar the filing of a suit under the Fair Labor Standards Act (9 USC 1 et seq.).

    4. Judgment — Summary Judgment — Statutory Cause op Action — Court Rules.
    A grant of summary judgment is improper where a plaintiff pleads a statutory cause of action and a defendant has raised no applicable legal standard which must prevail over the plaintiff’s claim (GCR 1963, 117.2[1]).

      Peres, Carr, Jacques, Batchik & Schmidt, for plaintiff.

      Beier, Howlett, McConnell, Googasian & Mc-Cann, for defendant.
    Before: Cynar, P.J., and D. E. Holbrook, Jr. and D. C. Riley, JJ.
   D. E. Holbrook, Jr., J.

On September 24, 1977, plaintiff filed an action in the Oakland County Circuit Court alleging that defendant had wilfully violated the Fair Labor Standards Act of 1938 as amended, 29 USC 201 et seq., by failing to pay overtime as required under § 7 of that act, 29 USC 207. During the time in which plaintiff was employed by defendant, his employment relationship was controlled by a collective bargaining agreement. Article XXI, § 2 of this collective bargaining agreement stated that:

"Time and one-half (1-1/2) the employee’s regular hourly rate shall be paid for all hours worked in excess of eight (8) hours in any one day, or forty (40) hours any one week, but not both. Hours paid for at overtime on any day shall not be counted towards weekly overtime. Overtime pay shall not be pyramided.”

Article VII, § 1, concerned grievances and stated:

"All disputes and disagreements involving the application or interpretation of this Agreement shall be resolved in accordance with the procedures hereinafter provided.”

The final step of the grievance procedure was binding arbitration. Article IX, § 1, stated:

"Any grievance remaining unresolved at the conclusion of the grievance procedure provided in Article VIII or any dispute or disagreement between the Local Union and the Employer, or the Association involved in the application or interpretation of this Agreement may be submitted to arbitration by either the Local Union, the Employer or the Association.”

Section 7 of this article further provided that:

"The arbitrator’s decision shall be final and binding upon the Local Union, the Employer, the Association and the employee or employees involved.”

Defendant brought a motion for summary judgment under GCR 1963, 117.2(1) contending that plaintiffs claim is cognizable under the grievance and arbitration provisions of the contract and that his failure to utilize these procedures served to bar the action as a matter of law. After receiving briefs and hearing oral arguments, the trial court granted summary judgment for defendant, and plaintiff appeals as of right.

The only issue raised in this appeal is whether an individual employee seeking to assert his statutory rights under the FLSA must exhaust his contractual grievance procedure before seeking judicial resolution. Section 7 of the FLSA, 29 USC 207, provides in pertinent part that:

"Except as otherwise provided in this section, no employer shall employ any of his employees who in any work week is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, for a work week longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.”

Enforcement of § 7 is granted to the individual employee by § 16(b) of the FLSA, 29 USC 216(b), which states in pertinent part:

"Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. * * * An action to recover the liability described in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated.”

These provisions create a statutory entitlement to recover unpaid overtime compensation that is wholly independent of the provisions of any collective bargaining agreement which purports to control the payment of wages to the employee. This statutory entitlement to overtime compensation may not be waived by the employee, even by a collective bargaining agreement, since to do so would nullify the purposes of the FLSA. Brooklyn Savings Bank v O’Neil, 324 US 697, 707; 65 S Ct 895, 902; 89 L Ed 1296, 1309 (1945), Mumbowar v Callicott, 526 F2d 1183 (CA 8, 1975), Marshall v R & M Erectors, Inc, 429 F Supp 771, 780 (D Del, 1977). This rule of nonwaiverability has only one exception. Section 16c of the FLSA, 29 USC 216(c), provides that:

"The Secretary is authorized to supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee or employees under section 206 or 207 of this title, and the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee of any right he may have under subsection (b) of this section to such unpaid minimum wages or unpaid overtime compensation and an additional equal amount is liquidated damages.”

Thus, where an employee accepts payment in full after investigation by the Wage and Hour Division of the Employment Standards Administration of the United States Department of Labor, that employee has waived his right to judicial enforcement of his claim for overtime compensation. See Sneed v Sneed’s Shipbuilding, Inc, 545 F2d 537 (CA 5, 1977). In this instance, there has been no supervised settlement by the wage and hour division, and plaintiff is not deemed to have waived his right to overtime compensation.

Having determined plaintiff has not waived his right to seek a judicial determination of his entitlement to overtime pay, we must now determine whether plaintiff’s statutory entitlement to sue to recover unpaid overtime has been terminated in any other way. An individual’s right to bring an action under the FLSA may be terminated by the occurrence of two statutorily recognized occurrences. Section 16b, 29 USC 216(b), provides that:

"The right provided by this subsection to bring an action by or on behalf of any employee, and the right of any employee to become a party plaintiff to any such action, shall terminate upon the filing of a complaint by the Secretary of Labor in an action under section 217 of this title in which (1) restraint is sought of any further delay in the payment of unpaid minimum wages, or the amount of unpaid overtime compensation, as the case may be, owing to such employee under section 206 or section 207 of this title by an employer liable therefor under the provisions of this subsection or (2) legal or equitable relief is sought as a result of alleged violations of section 215(a)(3) of this title.”

Additionally, § 16(c), 29 USC 216(c) states:

"The Secretary may bring an action in any court of competent jurisdiction to recover the amount of the unpaid minimum wages or overtime compensation and an equal amount of liquidated damages. The right provided by subsection (b) of this section to bring an action by or on behalf of any employee to recover the liability specified in the first sentence of such subsection and of any employee to become a party plaintiff to any such action shall terminate upon the filing of the complaint by the Secretary in an action under this subseption in which the recovery is sought of unpaid minimum wages or unpaid overtime compensation under sections 206 and 207 of this title or liquidated for other damages provided by this subsection owing to such employee by an employer liable under the provisions of subsection (b) of this section, unless such action is dismissed without prejudice on motion of the Secretary.”

The record indicates that neither of these two specified circumstances have occurred, forcing us to conclude the plaintiffs right to bring an action under the FLSA is not precluded by the statutory exceptions to its application.

A judicial exception has been created which terminates the right of an individual employee to sue for overtime compensation under the FLSA. In Satterwhite v United Parcel Service, Inc, 496 F2d 448 (CA 10, 1974), cert den 419 US 1079; 95 S Ct 668; 42 L Ed 2d 674 (1974), it was held that an employee’s right to sue for overtime compensation under § 7(a) and § 16(b) of the Fair Labor Standards Act was foreclosed by prior submission of his claim to final arbitration under the grievance procedure of the collective bargaining agreement. This exception has been recognized by other circuits. Union de Tronquistas de Puerto Rico, Local 901 v Flagship Hotel Corp, 554 F2d 8, 11 (CA 1, 1977), Atterburg v Anchor Motor Freight, Inc, 425 F Supp 841, 845 (D NJ, 1977). See also Suissa v American Export Lines, Inc, 507 F2d 1343, 1348 (CA 2, 1974). However, since plaintiff has not elected to settle this dispute by arbitration, this exception is inapplicable.

We are convinced none of the recognized exceptions that could limit plaintiffs ability to bring this suit under the FLSA are present. Indeed none of these exceptions were put forward by the defendant and they do not form the basis for the trial court’s grant of summary judgment. Instead, defendant argued plaintiff was precluded from bringing a suit under the FLSA because the issue could have been resolved under the contractual grievance procedure, and his failure to exhaust contractual remedies precluded his action.

Defendant’s argument that plaintiff must attempt to utilize contractual grievance procedure before instituting suit is derived from Republic Steel Corp v Maddox, 379 US 650, 652; 85 S Ct 614, 616; 13 L Ed 2d 580, 583 (1965), where the Court stated:

"As the general rule in cases to which federal law applies, federal labor policy requires that individual employees wishing to assert contract grievances must attempt use of the contract grievance procedure agreed upon by employer and union as the mode of redress.”

Defendant’s contention would undoubtedly be correct if plaintiff were suing to vindicate his right to collect overtime based upon Art XXI, § 2, of the collective bargaining agreement. However, in this instance, plaintiff is not seeking to enforce his contractual rights, but rather seeks to enforce his unwaiverable statutory right to overtime granted by 29 USC 207. Since plaintiff is asserting his statutory rights, rather than his contractual, rights, the preclusion rule of Maddox is inapplicable since its effect is limited to suits on the contract only. Plaintiff, having chosen to eschew the contract rights and assert his statutory rights, is not precluded from instituting his suit. Indeed, since the grievance procedure covers only disputes and disagreements involved in the application or interpretation of this agreement and not disputes concerning other statutory claims, it is questionable whether arbitration could provide plaintiff with a forum in which to adjudicate his FLSA claim. In view of this, in order to permit defendant’s argument to prevail, we must be willing to extend Maddox to hold that pursuit of a statutory remedy is barred because the same factual basis could have been made the basis of a grievance based upon the provisions of the collective bargaining agreement. This contention was rejected in Leone v Mobile Oil Corp, 173 US App DC 204; 523 F2d 1153 (1975), Thompson v Iowa Beef Packers, Inc, 185 NW2d 738 (Iowa, 1971), cert granted 404 US 820; 92 S Ct 70; 30 L Ed 2d 48 (1971), cert dismissed as improvidently granted 405 US 228; 92 S Ct 859; 31 L Ed 2d 165 (1972), and we are confident that the proper result was reached in both cases.

The holdings in Leone and Iowa Beef Packers are entirely consistent with prior law. In Voutrey v General Baking Co, 39 F Supp 974 (ED Pa, 1941), the Court refused to require an FLSA claim concerning overtime pay to be submitted to arbitration under the provisions of a Pennsylvania statute. Bailey v Karolyna Co, 50 F Supp 142 (SD NY, 1943), found that the arbitration clauses contained in the collective bargaining agreement had no relation to the claim asserted by the plaintiff because his claims arose under the provisions of the Fair Labor Standards Act and not under the clauses contained in the agreement. In a similar vein, City Bank Farmers Trust Co v O’Donnell, 179 Misc 770; 39 NYS2d 842 (1943), found that a claim brought under the Fair Labor Standards Act was not a dispute arising under or involving an interpretation of a collective bargaining agreement.

Subsequent to these cases, a successful method of requiring claims under FLSA to be arbitrated was discovered. The provisions of the United States arbitration act, 9 USC 1 et seq., were applied to require a stay of proceedings and a referral to arbitration based upon the collective bargaining agreement. Beckley v Teyssier, 332 F2d 495 (CA 9, 1964), Evans v Hudson Coal Co, 165 F2d 970 (CA 3, 1948), Watkins v Hudson Coal Co, 151 F2d 311 (CA 3, 1945), Donahue v Susquehanna Collieries Co, 138 F2d 3 (CA 3, 1943). Significantly, these cases did not prevent a plaintiff from filing suit under the FLSA, but rather established a principle that, if the issue was arbitrable pursuant to the terms of written contract, the proceeding could be stayed pending completion of the arbitration. This operation of the United States arbitration act does not arise sua sponte, but must be pled in the nature of an affirmative defense in order to be applicable. Since defendant has not raised the provisions of this act, its potential staying power cannot be used to defeat plaintiffs claim that he is entitled to pursue his remedy in a judicial forum.

The grant of summary judgment was made by the trial court pursuant to GCR 1963, 117.2(1) for failure to state a claim upon which relief can be granted. The grant of summary judgment under this subsection of the court rule is only appropriate when the claim is so clearly unenforceable as a matter of law that no factual development could possibly justify a right to recover. Partrich v Muscat, 84 Mich App 724, 730; 270 NW2d 506 (1978), Crowther v Ross Chemical & Manufacturing Co, 42 Mich App 426; 202 NW2d 577 (1972). We find that the grant of summary judgment was improper in this instance, since plaintiff pled a statutory cause of action and defendant has raised no applicable legal standard that must prevail over plaintiff’s claim.

Holding as we do that no applicable legal standard, either of statutory or judicial origin, precludes plaintiff’s bringing an action under the FLSA without first attempting to utilize contractual grievance procedures, does not negate the possibility that a successful counter-claim to enforce the arbitration provisions of the collective bargaining agreement could be brought upon remand. 29 USC 185, 9 USC 3. The dissenting opinion written by Justice White and signed by three other current justices of the United States Supreme Court in U S Bulk Carriers, Inc v Arguelles, 400 US 351; 91 S Ct 409; 27 L Ed 2d 456 (1971), would tend to substantiate this position. However, as such a claim is not before us, we make no comment upon the success of such a claim to force arbitration of a claim for overtime under the Fair Labor Standards Act.

Reversed and remanded for trial. Costs to abide the final result.