                                  NO. 83-470

               IN THE SUPREME COURT OF THE STATE OF ?lOMTANA
                                      1984



FEDERAL AVIATION ADMINISTRATION,
                         Petitioner and Respondent,


THE MONTANA STATE DEPARTMENT OF LABOR
and INDUSTRY: and 24 members of the
Professional Air Traffic Controllers'
Organization,
                         Respondents and Appellants.




APPEAL FROM:    District Court of the First Judicial District,
                In and for the County of Lewis & Clark,
                The Honorable Henry Loble, Judge presiding.

COUNSEL OF RECORD:
         For Appellants :

                Norman H. Grosfield argued for PATCO, Utick, Grosfield
                & Uda, Helena, Montana
                R. Scott Currey, Dept. of Labor & Industry, Helena,
                Montana

         For Respondent:
                Allen R McKenzie, Asst. U.S. Attorney introduces Karl
                       .
                B. Lewis who argued for FAA, Butte, Montana



                                  Submitted:    June 12, 1984
                                    Decided:    August 15, 1984


          405 ; : ;Ya4
Filed:




                                  Clerk
1    Justice L.C.      Gulbrandson delivered the Opinion of the
Court.

        This   case    comes    on    appeal     from   an   3rder   of   the
District Court of the First Judicial District, Lewis and
Clark County, reversing a. decision of the Board of Labor
Appeals    which      had    granted      twenty-four    members     of   the
Professional Air Traffic Controllers' Organization (PATCO)
unemployment benefits.         We affirm.
        The terms of         the PATCO members'          employment were
governed by a nation-wide collective bargaining agreement
between PATCO and the Federal Aviation Administration (FAA).
After the collective bargaining agreement expired in I'larch,
1981, negotiations concerning a new contract ensued between
PATCO   and    the    FAA,    and    on   June   22,          a   tentative
agreement was negotiated.             However, PATCO members did not

ratify the agreement and bargaining for a new labor contract
began again.      When an agreement could not be reached, PATCO
members withheld       their services from employment beginning
August 3, 1981.
        A11 members of PATCO, at the time they were hired by
the FAA, had signed affidavits that generally provided as
follows:      That the member had not participated in any strike
against the government of the United States or any agency
thereof, and would not so participate while an employee of
the government of the United States or any agency thereof.
        Various members of PATCO were warned that they should
not strike or withhold their services, and a restraining
order was issued against PATCO personnel in Washington D.C.
In addition, the President of the United States ordered, in
a televised statement, that the PATCO members should return
to work within forty-eight hours or they would be subject to
discharge.     On August 3, 1981, the chief air traffic control
operators at Billings, Great Falls and Helena called the
PATCO members         and    requested       they    report for        work   as
scheduled.     On August 4, 1981, the Regional Office of the
FAA    in   Denver,    Colorado,      sent    each    Montana      employee    a
telegram and directed          them    to    return to work.             Shortly
thereafter, all members of PATCO who withheld their services
were terminated from employment with the FAA.
        Subsequent to their           termination from employment,
twenty-four      Montana       members       of     PATCO       sought     state
unemployment benefits.         On December 2, 1981, certain appeals
referees      sustained        the     determinations            of      various
administrative deputies who had found the PATCO members were
disqualified      to    receive       benefits        under      the     Montana
Unemployment     Insurance      Act    (the Act)         because      they were
discharged     for misconduct          connected         with    their    work.
Specifically, the appeals referees found that each PATCO
member was discharged by the FAA for violating 5 U.S.C.A.
section 7311 (1980) and 18 U.S.C.A.               section 1918 (1970) and
concluded that the PATCO members                  were   disqualified       from
unemployment    compensation         under    section     39-51-2303, MCA,
(discharge due to misconduct).                    Thereafter, the PATCO
members appealed       the    referees' decision to the Board of
Labor Appeals (the Board).
        On February 3, 1982, the Board reversed the decision
of    the   appeals    referees      and    granted      the    PATCO members
unemployment benefits.          Relying on Continental Oil Co. v.
Board of Labor Appeals (1978), 178 Mont. 143, 582 P.2d 1236,
the Board found that since the PATCO members' strike was
part    of   an     overall      labor   dispute     they   left    their    jobs
because      of    a    labor dispute and       were    not discharged for
misconduct.            The Board    stated that "[tlhe          fact that the

strike was in violation of Federal law does not terminate
the strike itself from the flow of the other events in this
dispute much as a              'wildcat' strike in the private sector
would    violate        a    'no strike'    labor      agreement     and    civil

injunctive relief to the employer."                    The Board concluded
that    section         39-51-2305,      MCA,    (disqualification when

unemployment due to stoppage of work), rather than section
39-51-2303, MCA,             (discharge due     to   misconduct), was         the
proper statutory provision under which to consider the issue
of the PATCO members' eligibility for unemployment benefits.
        On March 19, 1983, the FAA appealed the decision of
the Board to the District Court.                On September 8, 1983, the

District Court reversed the decision of the Board and found
that    the PATCO members           were   disqualified      from     receiving
unemployment compensation because they had been discharged
for misconduct.             Noting the PATCO strike was in violation of
federal      law, the District Court                 rejected      the Board's
interpretation and application of Continental Oil, supra,
since that case did not involve an illegal strike.
        From the District Court's decision reversing the
Board, the Department of Labor and Industry and the PATCO
members appeal to this Court.
        The two statutory provisions pertinent to this appeal
are as follows:
                  "................................ n f o r
                   39-51-2303. Disqualificatio
                  discharge due to misconduct.    An indi-
                  vidual shall be disqualified for benefits
                  if he has been discharged:
                  "(1) for misconduct connected with                his
              work or affecting his employment until 2n
              individual has performed services, other
              than    self-employment,     for    which
              remuneration is received equal to or in
              excess of eight times his weekly benefit
              amount subsequent to the week in which
              the act causing the disqualification
              occurred.
              "(2) for gross misconduct connected with
              his work or cornmitted on the employer's
              premises,    as   determined     by    the
              department, for a period of 12 months.


              "39-51-2305. D i s q u a l i f i c a t i o n w h e n
               .................................
              unemployment due to stoppage of work.
              -------------
              ( 1 ) Effective   April        1 , 1977, an
              individual shall b e disqualified for
              benefits for any week with respect to
              which the department finds that his total
              unemployment is due to a stoppage of work
              which exists because of a labor dispute
              at the factory, establishment, or other
              premises at which he is or was last
              employed,       "...
         The definition of misconduct generally accepted                   in
most jurisdictions and adopted by this Court in Gaunce v.
Board of Labor Appeals (1974), 164 Mont. 445, 448, 524 P.2d
1108, 1110, was set forth in Boynton Cab Co. v.                      Neubeck
(1941), 237 Wis. 249, 296 N.W. 636.            In Boynton Cab Co., the
court held that the term "misconduct" referred to conduct
evincing     such     a    willful    or   wanton    disregard       for   an
employer's interest as is found in the deliberate violation
or disregard of standards of behavior which the employer has
the right to expect of his employees or in negligence of
such     a   degree       or   recurrence    as     to   manifest     equal
culpability, wrongful intent, or evil design.
         Appellants rely on Claim of Heitzenrater (1966), 19
N.Y.2d    1, 224 N.E.2d        72, in arguing that the PATCO members'
strike did not constitute misconduct as defined in Boynton
Cab Co. and Gaunce.            In Claim of Heitzenrater, the New York
court held that employees who participated in a strike in
violation of the no-strike clause of a private contractual
agreement were not guilty of misconduct and were therefore
entitled to receive compensation under the striker-benefit
provisions of the statute.             The New York court initially
noted     that    the    mere     existence    of    a   strike    or   other
industrial controversy does not necessarily preclude a
finding of misconduct.            However, the court stated that in
disputes arising out of private contractual agreements, a
finding of misconduct would                 require the resolution of
factual issues as we11 as complicated questions of labor
law, and     that       such matters    "are best        left to agencies
especially qualified to deal with them, namely the Federal
and State Labor Boards and labor arbitrators," rather than
the individuals administering the unemployment compensation
laws.     Claim of Neitzenrater, supra, 19 N.Y.2d                 at 7, 224
N.E.2d    at 75-76.
         However, the New York court subsequently held that in
situations where the Legislature has specifically prohibited
strikes or other concerted activity, an employee's violation
of that proscription constitutes misconduct as a matter of
law.     Rodriguez v. Presbyterian Hospital (1973), 32 N.Y.2d
577, 582, 300 N.E.2d            418, 420.     In Rodriguez, a hospital
employee participated in a strike that had been expressly
declared unlawful by statute because of the need to protect
the public from the disruption of essential services in the
area of health and hospital administration.                  The Rodriguez
court     noted     that    the    traditional       reluctance      of   the
Legislature       to     intervene     in    the    realm   of    employment
relations was overridden in this case by a compelling need
to ensure the public safety in the critical area of health
care.       Given      this   important    legislative purpose,          the
Rodriguez court held that violation of the statutory mandate
prohibiting strikes amounted to "legislatively defined"
misconduct.        Rodriguez, supra, 32 N.Y.2d          at 582, 300 N.E.2d
at   419.         Unlike   violations     of    a   private       collective
bargaining agreement, the legislation prohibiting                    strikes
involved no         complex   issues of        labor    law because "the
Legislature itself resolved all such issues by explicitly
proscribing and expressly stamping as unlawful strikes and
work stoppages by       . . . public    employees      ..."       Rodriguez,
supra, 32 N.Y.2d       at 582, 300 N.E.2d        at 420.     The Rodriguez
court concluded that the actions of an employee in violating
the statutory prohibition against striking fell squarely
within      the     misconduct   provisions            of   the   New   York
unemployment compensation statutory scheme.                       Rodriguez,
supra, 32 N.Y.2d      at 582-583, 300 N.E.2d        at 420.
        In the case at bar, this Court must consider the same
issue as was presented in Rodriguez, specifically, whether
participation in an unlawful strike constitutes misconduct
as a matter of law.        The facts reveal that a strike occurred
whicli is unlawful according to the provisions of 5 U.S.C.A.
section 7311 (1980) and 18 U.S.C.A.            section 1918 (1970).
        In Ranone v. Board of Review (1984), No. 82-368-M.P.,
116 LRRM 2134, 2136-37, the Rhode Island court considered
whether PATCO members, discharged from federal employment
for engaging in the same illegal strike of August 3, 1981,
were ineligible for unemployment compensation.                     The Rhode
Island court stated:
              "We find persuasive the reasoning of the
              Rodriquez court in holding that the
                misconduct provision disqualifies an
                employee    from    benefits   when   the
                unemployment resulted because of an
                unlawful strike.    Here, the federal air
                traffic controllers acted in violation of
                the congressional mandate that expressly
                prohibits strikes by federal employees.
                5 U.S.C.A. section 7311. That statutory
                prohibition and the criminal sanctions
                provided pursuant thereto evince an
                unequivocal congressional intent to
                prevent the disruption of public services
                in order to 'ensure that the machinery of
                the Federal Government continues to
                function    at    a 11   times    without
                interference.'     United Federation of
                Postal Clerks v. Blount, 325 F.Supp. 879,
                884, 76 LRRM 2932 (D.D.C. 1971)."
     We agree with the Rhode Island court's application of
Rodriguez       and   hold     that     the   misconduct      provision     of
Montana's Unemployment Insurance Act applies to the PATCO
strike and       disqualifies       the PATCO members         from benefits
because the unemployment resulted from an unlawful strike.
The PATCO members engaged in conduct which was, at least, in
deliberate disregard of the employer's interests and of the
standards of behavior the employer had the right to expect
of its employees.       Gaunce, supra, 164 Mont. at 448.
      We    therefore        hold   that      the   actions   of    the   PATCO
members    in    engaging     in    a   prohibited     strike      constituted
misconduct under Montana law and the District Court did not
err in holding that the PATCO members were disqualified for
unemployment benefits under section 39-51-2303
                                                              gCA*
      Affirmed.
W e concur:




Chief J u s t i c e




             -_
             _-
             I.
Justices
Mr. Justice John C. Sheehy, dissenting:

      Let us first be clear about what this case involves.
This decision does not mean the discharged air controllers
will not receive unemployment benefits.                  They have already
received them, and we all recognize the impossibility of
recovering the benefits from the individual air controllers.
      What the majority has done is agree that the already
hard-pressed state unemployment insurance fund will reimburse
the FAA for the cost of the benefits.                   Thus will the FAA
escape fiscal responsibility for the ills which the federal
government brought down on all of us by                    its refusal to
correct the intolerable working conditions to which it had
subjected      and   does    now    subject      the   controllers   at   our
airports.       We   ought     to   put    the    responsibility     for the
payment, not on the employers of this state, but on the feds
who   indeed    were   more     interested       in breaking    labor than
protecting our air safety.
      In the six years I have served the Court, I have been
accorded    the      opportunity      to      write     some   far-reaching
decisions, and to disagree with others equally far-reaching.
In most of them, however, I saw where the Court could pride
itself as a fair arbiter in deciding between the individual
and the sometimes overwelming use of power by officials,
better termed by Hamlet as "the insolence of office."                  Today
I   am not proud.           My Court has called workers guilty of
misconduct for obeying the call of their national union to
strike.     My stomach turns at this.              Helpless in the power
struggle, the air controllers chose to support each other in
their cry for better working conditions.                  Misconduct?     We
should rather admire the courage it took to give up their
jobs and benefits rather then bend their necks to their
would-be masters.
       I do not exaggerate the abusive working conditions that
led the controllers to their choice.                    In the Wall Street
Journal of July 5, 1984, on page 10, there is quoted in part
a letter to the FAA's administrator from the chairman of Pan
American Airlines which states:
       "The air traffic controller problem has gone from
       bad--to worse--to horrible--to intolerable.  [Pan
       Am is] now experiencing more frequent and more
       substantial delays in clear, optimum conditions
       than we were incurring during severe conditions a
       few months ago."
       In the Billings Gazette, Tuesday, July 10, 1984, page
7B, one finds the Associated Press story concerning the
increase in the number of flight delays in and out of major
airports which causes scheduling and arrival troubles for the
airlines.          The     airlines      blame    the      Federal-    Aviation
.Administration for the over-burdened                air     traffic    control
system.      The    FAA,    which     cannot now blame          the new 2j.r
controllers it brought into position, blames the airlines.
Here is a paragraph, three years after the strike, to dampen
your soaring spirit:
       "The government's air traffic control system is
       still recovering from the strike three years ago
       when 11,400 controllers were fired.   The FAA is
       1,000 controllers short of what it considers full
       strength, and many of the current controllers are
       inexperienced."
       We ought to place misconduct where it properly should
lie,    on   the    administration        that    brought     this     alarming
condition    about.         We   ought    to     recognize    that     the   air
controllers had the right in 1981 to the same principle that
we applaud in the Declaration of Independence, that "when a
long train of abuses and usurpations, pursuing invaria.b,-y
                                                          the
same object, evinces a design to reduce them under a.bsolute
despotism, it is their right, it is their duty, to throw off
such government and to provide new guards for their future
security."
    We should not succumb, as most of government has, to
government by Gallup Poll.
    The statute on misconduct, section 39-51-2303, MCA, wa.s
never intended by the legislature to apply to unemployment
caused by labor dispute.       Misconduct in the sense of that
statute refers to individual fraud, theft, vandalism, and
other acts which bring about a firing because of those acts
against the employer.     The only statute we have applicable to
a labor dispute is section 39-51-2305(l), MCA.       In City of
Bill-ings v. State Board of Labor Appeals (Mont. 1983), 663
P.2d 1167, 1174, 40 St.Rep. 648, 655, we said concerning the
labor disputes statute:
    "In examining the statute, note that the inclusion
    of the phrase 'stoppage of work' by the legislature
    is not intended to be a synonym for 'strike' or
    'lockout.'    If the legislature meant that a
    striking or     locked  out   employee would     be
    disqualified for benefits, it had to only eliminate
    the phrase 'stoppage of work' so as to make the
    section read that the individual is disqualified
    for benefits if his total unemployment is 'because
    of a labor dispute at the factory.'        When the
    legislature inserted the words 'due to a stoppage
    of work,' it meant that the factor to be considered
    in connection with disqualification meant more than
    that the individual claimant was on strike, or
    locked out in a labor dispute.     There may be a
    labor dispute and yet no stoppage of work.
    Montana has aligned itself with the majority of
    courts holding on the question that the phrase
    'stoppage of work, ' refers to the employer's
    operations rather than to the individual employee's
    work (citing authority.) This so called 'American
    rule' allows strikers to collect benefits so long
    as   their   activities have    not   substantially
    curtailed the productive operations of their
    employer. (Citing authority. "
    City     of   Billings, supra, and other cases (Continental
Oil Company v. Board of Labor Appeals (1978), 178 Mont. 143,
582 P.2d 1236; Decker Coal v. Employment Security Division of
                               923
Montana (Mont. 1983), 667 P.2d BHL,                      - St.Rep.        )   ,   have
indicated our interpretation of the unemployment compensation
benefits statutes as to leave the matter of labor disputes to
the legislature and to the parties, and to determine the
rights of workers to unemployment insurance benefits solely
upon the provisions of section 39-51-2305(l)                        when a labor
dispute is involved.               The majority without discussion has
departed from that position.
     I would        affirm       the Board of Labor Appeals that no
stoppage of work had occurred and that the air controllers
were entitled to the benefits which they received.                                The
effect would be to tell the FAA that it and not Montana
employers must hear the burden of its intransigence.


                                                              e3 k
                                                                Justice




Mr. Justice Frank B. Morrison, Jr.:
     I concur in the dissent of Mr. Justice Sheehy.




I join   i n t h e d i s s e n t of M r .   J u s t i c e Sheehy.
