McKinney Avenue Realty Co.

McKINNEY AVENUE REALTY COMPANY 547 Our colleagues seem to view a retail store as bearing the hallmark of local enterprise. Perhaps that was so in a bygone day; but except in rural areas the specialty, department, or food store or service estab- lishment coining within the 1950 standards scarcely can be likened to the small corner grocery.12 If the emphasis is on the individual store, how is it that if more than one are owned by the same concern in one State, we shall henceforth regulate the labor relations of one of those units no matter how small it is, so long as the aggregate purchases or out-of-State sales of all stores in the State meet the test established for the single store? And if a multistate chain is involved, no matter how many outlets it has, why will we decline to take jurisdiction over the whole if it has less than $10,000,000 gross sales annually, but none- theless assert jurisdiction over any segment that meets the single store test? The incongruities lurking in this formula are legion. If we are right in reading the majority's opinion as placing prime emphasis on the individual store, then why do they abandon that end of the telescope for the other once the magic figure of $10,000,000 in gross sales is reached in the case of a chain? The litmus paper they use must have strange properties indeed for it to change hue immediately when the $10,000,000 figure touches it. We think the questions we have raised are not idle; many more exist that need to be answered. Because we regard the result and the method by which it was reached to be completely out of harmony with the congressional purpose, the realities of industrial relations, and a responsible and judicious discharge of the duties committed to us, we dissent from the decision not to assert jurisdiction over this Employer. 12 The so called "general store," as classified by the Census Bureau, is virtually now extinct The forces responsible for this and the development of present day retail stores include a continuing increase in the number and variety of goods which are made avail- able to the consumer through new production operations and improvements in market- ing services and techniques The concentration of manufacturing and processing opera- tions in various pacts of the country has been matched by advances in interstate trans- portation through inipioved and expedited rail, air, and truck facilities The result has been an astounding growth in the mass marketing of perishable and staple goods which freely pass across States lines from producer to consumer. The local retail outlet has thus become an integral part of a nationwide marketing operation. See, e g , Marketing in the American Economy by Valle, Grether, and Cox, The Ronald Press Co, New York, 1952, passs n MCKINNEY AVENUE REALTY COMPANY (CITY NATIONAL BANK) and STATIONARY ENGINEERS LOCAL UNION No. 707, INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL, PETITIONER. Case No. 39-RC-755. October 26,1954 Decision and Order Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before John F. Burst, hearing of- 110 NLRB No. 69. 548 DECISIONS OF NATIONAL LABOR RELATIONS BOARD ficer. The hearing officer's rulings made at the hearing are free front prejudicial error and are hereby affirmed. Upon the entire record in this case, the Board finds : 1 The Petitioner seeks a unit of seven stationary engineers who are employed at the City National Bank Building in Houston, Texas. The Employer moved to dismiss the petition on the ground that it is not engaged in interstate commerce or, if it is, that it will not effectuate the purposes of the Act to assert jurisdiction. The Employer is a Texas corporation, solely engaged in maintain- ing and operating the City National Bank Building, a 24-story office building located in Houston, Texas. This building, wherein space is offered to the general public, contains 282,584 square feet of rentable space. During 1953, the Employer procured maintenance supplies and services in the amount of approximately $94,000, of which all but $802.07 was obtained locally from firms in Houston, Texas. The building is occupied by 126 tenants who pay rent in excess of $1,000,000 per year. Among the tenants is the owner of the building, The City National Bank of Houston, which occupies more space (12.36 percent) than any other individual tenant. Other tenants in- clude nationally known oil companies, insurance companies, and such enterprises as Monsanto Chemical Company, Baroid Sales Division of National Lead Company, Alcoa Mining Company Division of Alumi- num Company of America, and Atlas Pipe, Inc. More than one-half of the building's rentable space is occupied by tenants who by their own admission in the record or by stipulation of the parties are en- gaged in interstate commerce, or by tenants over whom the Board has asserted jurisdiction. It has been the consistent position of the Board that it better ef- fectuates the purposes of the Act and promotes the prompt handling of major cases, not to exercise its jurisdiction to the fullest extent possible under the authority delegated to it by Congress, but to limit that exercise to enterprises whose operations have, or at which labor disputes would have a pronounced impact upon the flow of interstate commerce. In furtherance of that policy, the Board in October 1950 adopted certain standards to govern its assertion of jurisdiction. Those standards resulted from 7a study of the Board's experience up to that time. Pursuant to these standards, the Board determined to assert juris- diction over office buildings which had as tenants, paying $50,000 or more rent per annum, enterprises which were themselves engaged in interstate commerce.' 'On May 12, 1954, the Petitioner submitted a request for permission to withdraw its petition. In view of our disposition of this case , we deem it unnecessary to pass upon this request. 2 Cormam, Inc., 94 NLRB 1150. McKINNEY AVENUE REALTY COMPANY 549 Early this year the Board undertook to study and reappraise the 1950 jurisdictional standards in the light of the Board's experience since their adoption and also in the light of changing economic con- ditions. Based upon that study and reappraisal, it is our opinion that the jurisdictional standard enunciated in Cormax, Inc. should be revised so that the Board's long-established policy of limiting the exercise of its jurisdiction to enterprises whose operations have, or at which labor disputes would have, a pronounced impact upon the flow of interstate commerce can be better attained.' We have determined that in future cases the Board will assert juris- ,diction over an office building operation only when the employer which owns or leases and which operates the office building is itself other- wise engaged in interstate commerce and also utilizes the building primarily to house its own offices 4 As the office building involved in this case is not owned and op- erated primarily for the use of its own offices by an employer itself engaged in interstate commerce, we find that it would not effectuate the policies of the Act to exercise jurisdiction here. We shall there- fore dismiss the petition. [The Board dismissed the petition.] MEMBER MURDOCK, dissenting : I dissent first from the refusal to grant the Petitioner's request to withdraw its petition. The denial of such a request is contrary to all precedent and practice of which I am aware. The fact that the Em- ployer opposes the request, preferring that the Board grant its motion to dismiss the petition on jurisdictional grounds, does not seem to me sufficient reason to depart from our practice of permitting withdrawals of petitions. I likewise disagree with the conclusion of the majority that it no longer effectuates the policies of the Act to assert jurisdiction over this or any other office building unless "the employer which owns or leases and which operates the office building is itself otherwise engaged in interstate commerce and also utilizes the building primarily to house its own offices." I find no basis in law or proper policy consid- erations for such a stringent restriction upon our jurisdiction and there is ample reason for the Board to continue to assert its authority in this area of commerce. The instant case is one of a number of "lead" decisions announcing but not, unfortunately, explicating to any degree the large number of restrictive changes in the Board's jurisdiction noted in the press re- leases of July 1 and 15. In my dissenting opinion in Breeding Trans- 8 See, also, the majority decision in Breeding Transfer Co., 110 NLRB 493. 4 To the extent that Cormax, Inc. and cases relying thereon are inconsistent with our decision herein, those cases are overruled. 550 DECISIONS OF NATIONAL LABOR RELATIONS BOARD fer Company, 110 NLRB 493, I set forth in detail my basic objec- tions to these new jurisdictional restrictions and standards as conflict- ing with the Act and the Board's legal responsibilities thereunder; involving the exercise of legislative power to reallocate authority be- tween the Federal and State Governments, and without justification based on any compelling budgetary or other administrative necessities. The same objections voiced to the program as a whole, bear equally forcefully against my acceptance of the withdrawal of jurisdiction specifically dealt with herein. I shall restrict myself, in this opinion, to a discussion of the particular factors applying to the position of office buildings in the jurisdiction of the Board. So far as I can glean from the record, including the title of the case, the realty "company" operating the building involved herein is really nothing more or less than a division of the City National Bank, having no other business than the operation of the 24-story building owned by the bank. The bank occupies 12.36 percent of the space, which would approximate 3 floors. The remainder houses over 100 tenants paying in excess of a million dollars a year rental. More than one-half the building is occupied by tenants who are admittedly engaged in interstate commerce. These tenants include major oil companies who occupy almost one-third of the space, major insurance companies and other large industrial and commercial firms with vast interstate connections and operations. That a national bank itself "affects" interstate commerce seems beyond question. My colleagues seemingly do not contest the obvious fact that the Employer, even when viewed as an independent operator of an office building rather than as a bank, is clearly within the legal scope of the Board's jurisdiction and that such jurisdiction has been asserted by this Agency for a number of years on the very finding that it would effectuate the purposes of the Act.5 They now reject such jurisdiction and reverse those prior findings on the ground that em- ployers operating such office buildings do not have operations in which labor disputes would have a pronounced impact upon commerce. This conclusion is ostensibly based upon a study and reappraisal of the 1950 standards "in the light of" the administrative experience of this Board in the past 4 years and of "changing economic conditions." I shall accordingly analyze these contentions and conclusions, assum- ing for the moment as the majority seems to, that we are dealing with an employer not itself engaged in interstate commerce as is a national bank. Despite the reference of the majority to the administrative expe- rience of the past 4 years as a basis for their decision, I can find no evidence therein supporting such a conclusion. During my 7 years G See Cormax, Inc., d3b/a Southland Building and Annex, 94 NLRB 1150 , and cases cited therein See also, Butler Bros. v. N L. R B, 134 F. 2d 981 (C. A. 7). McKINNEY AVENUE REALTY COMPANY 551 of membership on the Board, the Board has frequently examined the question of jurisdiction over office buildings. In 1951, it was con- cluded, upon the basis of exhaustive search of our own decisions and those of the courts, that jurisdiction over office building operations of this type was essential to effectuate the policies of the Act.r To my knowledge, that conclusion has not been shaken by any experience of this Agency since 1950; indeed, as recently as June 1954, the Board expressed the belief to the Supreme Court that assertion of jurisdiction over a comparable office building would effectuate the purposes and policies of the Act.' In that instance the Board informed the court that its administrative experience had led to the conclusion that : Manifestly, a cessation of the services furnished by petitioner [the owner-operator of an office building] to its tenants by reason of industrial strife attributable to unfair labor practices would necessarily tend to have a substantially adverse impact upon the interstate activities of those tenants. In view of the absence of any specific rationale in the majority decision, I can only assume that the majority views this Employer as being a "truly local" enterprise such as they found the employer in Breeding Transfer to be. As I pointed out in my dissenting opinion in the Breeding Transfer case, our task would indeed be simple if all that was required to ascertain the impact upon commerce of a dispute in a given enterprise was the application of a magic word such as "local." But even if there was, as there is not, a commonly accepted definition of that term as applied to business activity, it still would not solve our jurisdictional problems. The statute does not restrict our operations to those employers engaged directly in interstate commerce. On the contrary, the Act directs that the Board protect the national economy from labor disputes "affecting commerce" and defines the latter phrase as meaning "in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing com- merce." 8 For a fuller discussion of the wide scope of jurisdiction thus conferred, I again refer to my dissenting opinion in Breeding Transfer. It is sufficient here, to note with the Supreme Court, that : 9 Congress has explicitly regulated not merely transactions or goods in interstate commerce but activities which in isolation might be deemed to be merely local but in the interfacings of business across state lines adversely affect such, commerce. [Emphasis supplied.] 6 See Cormax, Inc, d/b/a Southland Building and Annex, supra ' See Brief for the National Labor Relations Board in opposition to a petition for certiorari, October Term, 1953, United States Supreme Court , in The Dixie Terminal Co v. N. L.R.B,210F 2d538 (C.A.6). 8 Section 2 (7) of the Labor Management Relations Act, 1947. 9 Polish National Alliance of the United States of North America v N. L R B., 322 U. S 643 at 647. 552 DECISIONS OF NATIONAL LABOR RELATIONS BOARD It is also possible, although the majority opinion is silent on this as on all else, that my colleagues view the operation of an office building such as this to be a mere real estate venture with no real relationship to the broader activity of the tenants. If that, indeed, is the thinking of the majority, it is clear that they are in error. If we are to approach our task as administrators of this Act with any vigor at all, it is obvious that we cannot separate the interstate activity of the tenants from the situs of that activity, i. e., the office building with which we are con- cerned. Unless, of course, the majority considers that enterprises en- gage in interstate commerce only where physical articles are being pro- duced and not in offices which handle the administrative and financial matters related to the production and sale of goods in interstate com- merce. But, if tenants such as the Standard Oil Company, Phillips Petroleum Company, the Aluminum Company of America, Monsanto Chemical Company, Metropolitan Life Insurance Company, and, in- deed, this bank itself, are not to be considered as carrying on activities which "affect commerce" in this very building, then this Board, indeed, will not only have rolled back its own jurisdiction, but will have turned its back on years of judicial authorities. But to view this Employer's operations as no different in kind from any other real estate business involving purely residential or entirely local commercial activities is patently myopic. The unit petitioned for here is of stationary engineers who maintain boilers, engines, ma- chinery, pumps, generators, air-conditioning equipment, etc. How long does the majority think tenants in a 24-story skyscraper could carry on their activities without heat, light, water, elevator service, etc., in the event of a labor dispute involving a cessation of such services? The Employer herein plainly performs an essential service to firms ad- mittedly engaged in interstate commerce, no less so than if it supplied, heated, and maintained a plant making goods for shipment in inter- state commerce. The fact that the tenants of the Employer are en- gaged in clerical rather than production operations at this location does not alter the fact such activities are just as integral a part of the inter- state commerce operations of these tenants as those performed by the rest of their employees. Again, the courts have put the matter best. Thus, the Seventh Circuit Court has observed as to similar services in another office building : "o The employees involved in the instant controversy are referred to as maintenance employees and consist of elevator operators, watch- men and janitors employed in building B. They all perform a service directly connected with and for the benefit not only of petitioner [the office building owner-operator] but of the nu- merous tenants of building B by hauling freight and passengers to la Butler Bros . v. N. L. R. B., supra, at 983. McKINNEY AVENUE REALTY COMPANY 553 and from the offices and warehouses of those occupying the build- ing. Watchmen guard the building and the offices of the nu- merous tenants, and janitors clean and maintain the common stair- ways, lobbies and lavatories, and frequently operate the elevators as relief operators. It is at once apparent, so we think, that the services of such employees are so closely associated, if not directly connected, with the flow of interstate commerce as to be entitled to the protection of the Act. [Emphasis supplied.] It is clear, therefore, that the majority of the Board, in denying jurisdiction here, have failed properly to apply the statutory test as to whether labor disputes in the enterprise would affect commerce. The fallacy of the majority's approach is aptly illustrated by the exception which my colleagues have created in their new rule. This exception allows the assertion of jurisdiction where the office building is operated primarily for the use of its own offices by an employer itself engaged in interstate commerce. Thus the Board will hence- forth take jurisdiction over the office building of a relatively small employer who meets one of the minimum requirements for the asser- tion of jurisdiction, while refusing to assert jurisdiction over the Em- pire State Building or other buildings housing tenants doing millions of dollars of business in interstate commerce, merely because the for- mer, but not the latter, is operated for the use of its own offices by the owner or lessor of the building. The incongruity of the situation is immediately apparent. It is basic in an approach which attaches su- preme importance to the superficial "localness" of activity and refuses to observe the effect of that activity on commerce. For certainly, if the majority recognizes that the strike of building employees of an employer operating its own office building affects commerce, it must follow that a strike by the same personnel of a building housing many occupants engaged in interstate commerce would have a like or greater effect. As the Tenth Circuit Court has observed:- It is reasonably foreseeable that a stoppage of the elevators and the maintenance of the building, with picket lines in front, would have a substantially adverse effect upon the conduct of the busi- ness, including the interstate activities. This adverse effect would be present without regard to whether the building is devoted to occupancy by the owner or by other employers engaged in interstate commerce. Moreover, the incongruity is further apparent in the requirement that the office building operated by an employer engaged in interstate commerce must be "primarily" for its own use. I suppose the majority means by "primarily" that the em- ployer must occupy at least 51 percent of the space itself, leasing less than 50 percent to general tenants. (However, the intended meaning ss N. L. R. B. v. Tri-State Casualty Insurance Company, 188 F. 2d 50. 554 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of the term "primarily" is only one of the many areas of uncertainty in the meaning of the new standards.) That would mean that if a bank built a 6-story building, occupying 3 (plus a tiny fraction) floors it- self, the Board would take jurisdiction because of the impact of a cessa- tion of building services on the bank's own commerce. But if the bank added 1 more floor leased to a general tenant-or 17 more floors, all leased to tenants engaged in interstate commerce, the Board would re- fuse to assert jurisdiction under its rule. How does the increase in the number of floors and tenants whose commerce would be affected by a cessation of building services, negate the effect of the cessation on the bank's own commerce so as to justify the Board in their ignoring the effect on the bank's own commerce and refusing to take jurisdiction which it would have taken absent the additional floors and tenants? How does greater effect on interstate commerce lead to less assertion of jurisdiction? Accordingly, I must strongly dissent from the re- fusal to assert jurisdiction in this case or over office buildings hous- ing and servicing tenants engaged in interstate commerce, and from the promulgation of a standard governing this area which is intrinsically illogical. MEMBER PETERSON, dissenting : I am in substantial agreement with Member Murdock in dissenting both from the refusal to permit withdrawal of the petition and from the policy declaration to confine our assertion of jurisdiction over office buildings to those structures where the particular "employer which owns or leases and which operates the office building is itself otherwise engaged in interstate commerce and also utilizes the build- ing primarily to house its own offices." I have endeavored to explicate my basic approach to the difficult problem of determining where to draw the jurisdictional line, in the exercise of a power which to me is plainly within our discretion, in my separate opinion in the Breeding Transfer case, 110 NLRB 493. That underlying philosophy will not, therefore, be repeated here. Suffice it for me to say that in applying the criteria there set out, I cannot bring myself to join my colleagues in the majority in declining to assert jurisdiction here. I therefore dissent. HIGHWAY SERVICES , INC. AND CONTINENTAL PACIFIC LINES and TEAMSTERS , AUTO TRUCK DRIVERS AND HELPERS, LOCAL No. 57, AFL, PETITIONER . Case. No. 36-RC-1016. October W, 1954 Decision and Order Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Robert J. Wiener, hearing 110 NLRB No. 66.