Fort Knox Construction Co.

140 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Fort Knox Construction Company and International Brother- hood of Firemen and Oilers, Local #320, Petitioner. Case No. 9-RC-P348. April 13,1955 DECISION AND ORDER Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Alvin Schwartz, hearing officer. The hearing officer's rulings made at the hearing are free from prejudicial error and are hereby affirmed. Upon the entire record in this case, the Board finds : The Employer, a Florida corporation, is engaged in the operation of housing projects for military personnel at Fort Knox and Fort Campbell, Kentucky. The projects at both locations are owned by eight separate corporations, not including the Employer. The Em- ployer functions solely on behalf of the eight owning corporations in managing these housing facilities and is paid for such services a fee of 3 percent of gross rental receipts. The Employer is authorized by the Commonwealth of Kentucky to do business within that State. The same 4 individuals are the officers and stockholders of the 8 owning corporations and of the Employer, all of which are closed corporations. Common offices for the nine corporations are main- tained in Miami, Florida, where all books and records of the Em- ployer are kept. The Employer directs the operations of the housing projects from the Miami office, but has resident managers who are hired by a representative of the Employer from the Miami office. The resident managers exercise supervisory authority over the re- -spective employees at each location. Wage increases for the employ- ees are approved by the Employer at Miami, and certain purchases for operation of the projects are made from, or approved at, the Miami ,office. The four stockholders-officers of the Employer at Miami draw salaries, not stock dividends, from the corporation. The projects involved were privately constructed and financed by the eight owning corporations, under the authority of the Wherry Act.' Pursuant to this Federal statute, the eight owning corporations received a certificate of need from the Army, upon the basis of which they obtained leases from the Federal Government for land on the military reservations at Fort Knox and Fort Campbell, and then obtained a commitment from the Federal Housing Authority to insure the mortgage loans, thereby enabling the corporations to enter into contracts for construction. Rentals are made only to military personnel and civilians having the approval of the appropriate mili- tary authorities. Construction was completed in March 1954 by the owning corporations on the last group of housing units; no further construction is contemplated. At Fort Knox the project contains 1 63 Stat 170 112 NLRB No. 13. FORT KNOX CONSTRUCTION COMPANY 141 1,700 housing units, in 4 groups, for which annual rentals amount to $1,400,000. At Fort Campbell the project contains 1,200 housing units, in 4 groups, from which annual rentals amount to $1,000,000. The Employer's annual management fee from operating both projects therefore approximates $72,000. No rental collections are kept by the Employer; it deposits all collections in Kentucky banks for the eight owning corporations. The employees of the Employer are paid from management fees. The owning corporations pay the Fed- eral Government monthly ground rent of $1 per acre, or a total of $2,844 annually for acreage at both locations. For the operation of both projects, the annual purchases of supplies and services are made at an approximate cost of $70,000, all but $6,000 within the Common- wealth of Kentucky. In addition, the Army is paid about $15,000 annually for fire and police protection, and water and sewage. We find it unnecessary to decide whether the management corpora- tion named herein as Employer together with the eight owning cor- porations constitute a single Employer under the Act. For even if this fact were assumed, arguendo, we would not assert jurisdiction here, as the record fails to show the necessary facts as to the entire housing enterprise to satisfy any of the Board's jurisdictional stand- ards. As the facts show, the Employer from a situs in Florida oper- ates the housing projects as an enterprise permanently fixed in Kentucky. All construction has long been completed ; no further con- struction of any housing units is contemplated. The sole remaining functions in connection with the housing projects are necessarily con- fined to such of a purely minor and local character, e. g., rent collec- tions, cleaning, painting, pest control, and general maintenance. Because, as it is clear, the Employer's overall establishment is main- tained in substantial respects both in Florida and in Kentucky, and the Fort Knox project is an integral part of the enterprise, the Em- ployer properly falls within the Board's standard covering a multi- state enterprise. For the Fort Knox project, immediately in ques- tion, the Employer's management fee is about $42,000, and for Fort Campbell, about $30,000. These sums can in no way be construed to meet the Board's requirement for a multistate enterprise of $250,000 direct outflow? Nor, as the Board has already held in Western Area Housing Co., 107 NLRB 1263, involving a military housing project of the same character as here, does such an operation have a substantial effect on the national defense. We therefore need not consider whether the Employer singly, or jointly with the eight owning cor- porations, operates on the basis of any contractual arrangement with the Government.' Accordingly, we shall dismiss the petition. [The Board dismissed the petition.] 9 Jonesboro Grain Drying Cooperative, 110 NLRB 481. 2 Cf. Maytag Aircraft Corp., 110 NLRB 594. 142 DECISIONS OF NATIONAL LABOR RELATIONS BOARD MEMBER MuRDOCK, dissenting : I believe and would find, contrary to my colleagues, that the Em- ployer comes within the existing standards of the Board for asserting jurisdiction. Relating the facts in the present case to the standards, as I read and understand them, I arrive at the conclusion that the enterprise here involved satisfies, alternatively, two standards, dis- cussed below, for the assumption of jurisdiction by the Board. 1. In Jonesboro Grain Drying Cooperative, 110 NLRB 481, the "direct outflow standard" for asserting jurisdiction was expressed in the following terms : An enterprise which produces or handles goods and ships such goods out of State, or performs services outside the State in which the enterprise is located, valued [annually] at $50,000 or more. [Emphasis supplied.] The Employer named herein is a Florida corporation which func- tions on behalf of eight owning corporations 4 in managing certain mili- tary housing projects in Kentucky. From its offices and headquarters in Florida, the Employer hires the resident managers of the projects, approves wage increases for the employees in Kentucky, makes or approves certain purchases for the operation of the projects, pays the salaries of its officers and personnel, and generally directs the Ken- tucky operations. For these management services the Employer re- ceives an annual fee of about $72,000. In my judgment, the Em- ployer, as a Florida corporation performing services in Kentucky, plainly qualifies, within the literal language and meaning of the Jones- boro case, as an enterprise which "performs services outside the State" in which it is located valued in excess of $50,000 annually.' No mean- ingful explanation is offered in the majority opinion of why jurisdic- tion over the Employer should not be asserted on the basis of this standard. To say that it does not meet another one of the standards- the multistate standard-does not justify the dismissal when it does meet the direct outflow standard. 2. In Maytag Aircraft Corp., 110 NLRB 594, the Board announced the present national defense standard, stating that jurisdiction would be exercised over an enterprise "engaged in providing goods or services directly related to national defense pursuant to Government contracts, including subcontracts, in the amount of $100,000 or more a year." I believe the application of this standard is a separate and additional ground for the assertion of jurisdiction herein. In applying this standard it becomes necessary to decide the nature of the true Employer in this case, a determination my colleagues in majority deem it unnecessary to make. The housing projects in Ken- 4 Whether the management corporation and the owning corporations together constitute a single employer under the Act is considered in a later portion of the opinion. 6 See , e. g, Columbia-Southern Chemical Corporation, 110 NLRB 206. TORT KNOX CONSTRUCTION COMPANY 143 tucky are nominally owned by eight corporations, not including the managing corporation named herein as the Employer. However, it appears that the same 4 individuals are the sole officers and stockhold- ers in the 8 owning companies and the management company, all of which are closed corporations. These nine corporations maintain com- mon offices in Miami, Florida, where their books and records are kept, and where the essential executive and policy decisions are made for the operation of the enterprise. In these circumstances, considering the close affinity and functional relationship between the owning corporations and the management corporation, there can be little ques- tion that the nine corporations constitute a single Employer under the Act. I would so find.' The single Employer receives approximately $2,400,000 per year in rentals from the operation of the Fort Knox and Fort Campbell proj- ects. This is the value of the services rendered by the Employer-far in excess of the $100,000 minimum of the standard. That the provision of housing for military personnel at an important military installa- tion is a service "directly related to the national defense" is readily ap- parent from my dissenting opinion in Western Area Housing Com- pany, 107 NLRB 1263. I there pointed out in detail that such housing can be constructed and financed by F. H. A. under the Wherry or Mili- tary Housing Insurance Act' only where the Secretary of Defense, or his designee, certifies that the project is "necessary to provide adequate housing for such personnel . . . ;" and that such projects are not only built with Federal credit but continue under Federal supervision. For example, accommodations in the instant case can be rented only to military personnel having the approval of the Army. In that dissect I likewise quoted at length from the legislative history of the Military Housing Insurance Act which clearly established the judgment of the Armed Services, adopted by the Congress, that such projects bear a very important and vital relationship to "the efficiency of the armed services" and hence to the national defense. I refer to that opinion for an extensive quotation from the Senate and House Reports on the legislation documenting such conclusion. 8 I note that my colleagues of the majority reiterate the contrary pronouncement they made in the Western Area Housing case, that such military housing does not have "any substantial effect on the national defense." Inasmuch as Western Area Housing was decided under the former standard prior to the adoption of the differently worded current national defense standard, as laid down in the 11[aytag case, I do not consider the former decision as controlling. 8 E g, Venus The Engineer tray Company, 110 NLRB 336, Sanx.tary Mattress Company, 109 NLRB 1010 ; Marvel Roofing Products, Incorporated, 108 NLRB 292. ' 12 U S C. A., Sec 1748, et seq. 8 S. Rept No 410, May 20, 1949 , FI. Rept No. 854, June 20, 1949, on S 1184, 81st Cong., 7 st Sess. 144 DECISIONS OF NATIONAL LABOR RELATIONS BOARD I particularly find it difficult to understand my colleagues' reiterated conclusion that such housing has no substantial effect on the national defense in view of the liberality with which they have applied the new Maytag standard in other areas. Thus in Hospital Hato Tejas, 111 NLRB 155, they applied the Maytag standard to assert jurisdiction over a private, for-profit hospital in Puerto Rico, finding that because it treated veterans under a contract with the Veterans Administration, its operations were "directly related to the national defense." s The Board having held (and I agree) that the treatment of veterans of past wars should be considered an activity "directly related to the na- tional defense," I would think that a fortiori the provision of necessary housing to active military personnel at important military installa- tions would be deemed "directly related to the national defense." In any event, I believe that the Armed Services and the Congress have clearly established their judgment that such activity is so related to the national defense and I propose to respect that judgment. Accordingly, I would assert jurisdiction herein on either or both the direct outflow standard or the national defense standard. MEMBER LEEDODI took no part in the consideration of the above De- cision and Order. ° I found it unnecessary to consider that question as I concurred in the assertion of jurisdiction in accordance with the rule of plenary jurisdiction in the Territories. Frank H. Smith , Claude L. Smith, Frank B. Smith, Howard P. Smith, Morris M. Smith, and Billy J. Smith, d/b/a Frank Smith & Sons and Amalgamated Meat Cutters & Butcher Workmen of North America, AFL, Petitioner. Case No. 16-RC-1506. April 13, 1955 SUPPLEMENTAL DECISION AND CERTIFICATION OF REPRESENTATIVES Pursuant to a Decision and Direction of Election 1 an election by secret ballot was conducted on February 11, 1955, under the direction and supervision of the Regional Director for the Sixteenth Region, among the employees in the unit found appropriate in the above- mentioned Decision. Thereafter, a tally of ballots was furnished the parties showing that, out of 81 voters casting valid ballots, 45 voted for the Petitioner, 35 voted against the Petitioner, and 1 cast a challenged ballot. On February 17, 1955, the Employer filed objections to the election. In accordance with the Board's Rules and Regulations, the Regional Director conducted an investigation of the Employer's objections and., 3 111 NLRB 241. 112 NLRB No. 29.