International Brotherhood of Teamsters

INTERNATIONAL BROTHERHOOD OF TEAMSTERS 155 defined in the Act, guards, and all other employees, constitute an appropriate unit for the purposes of collective bargaining within the meaning of Section 9 (b) of the Act. 5. In accordance with the usual practice in seasonal operations of this kind, the Board will direct that the election be held at or about the approximate seasonal peak, on a date to be determined by the Regional Director, among the employees in the appropriate unit who are employed during the payroll period immediately preceding the date of the issuance of the notice of election by the Regional Director. [Text of Direction of Election omitted from publication.] International Brotherhood of Teamsters, Chauffeurs, Ware- housemen and Helpers of America , Local No. 249; and Inter- national Brotherhood of Teamsters, Chauffeurs, Warehouse- men and Helpers of America, Local 2501 and Polar Water Company. Case No. 6-CC-143. March 20, 1.958 DECISION AND ORDER On October 14, 1957, Trial Examiner Ralph Winkler issued his Intermediate Report in the above-entitled proceeding, finding that the Respondents had not engaged in the unfair labor practices alleged in the complaint and recommending that the complaint be dismissed in its entirety, as set forth in the copy of the Intermediate Report attached hereto. Thereafter, the General Counsel, the Charging Party, and the Respondents filed exceptions to the Intermediate Report and supporting briefs. Pursuant to the provisions of Section 3 (b) of the National Labor Relations Act, the Board has delegated its powers in connection with this case to a three-member panel [Chairman Leedom and Members Rodgers and Jenkins]. The Board has reviewed the rulings of the Trial Examiner made. at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. The Board has considered the Intermediate Report, the exceptions and brief, and the entire record in this case' and hereby adopts the findings, conclusions, and 1 The Board having been notified by the AFL-CIO that it deems the Teamsters ' certifi- cate of affiliation revoked by convention action, the identification of this union is hereby amended. 2 The Charging Party requested ( 1) the reopening of the record to adduce additional evidence before the Trial Examiner on the status of the distributors and (2 ) oral argu- ment before the Board . As for reopening the record , we shall deny the motion as it appears that the proffered evidence was available at the time of the bearing and no rea- son is given why it was not produced . In any event , as the record , exceptions , and brief, in our opinion , adequately present the issues and positions of the parties , we shall deny this request as well as the request for oral argument. 120 NLRB No. 25. 156 DECISIONS OF NATIONAL LABOR RELATIONS BOARD recommendations of the Trial Examiner with the following modification. The issue in this case is whether the Respondent Locals, which had a dispute with Dad's Root Beer Bottling Company, herein called Dad, over Dad's use of certain nonunion distributors, violated Sec- tion 8 (b) (4) (A) of the Act by picketing the plant premises shared by Dad and Polar Water Company, herein called Polar, and inducing the employees of both Companies to strike in protest against Dad's failure to agree to membership in Respondent Local 249 for the dis- tributors in question. In determining that the Respondents' conduct did not constitute secondary action of the type proscribed by Section 8 (b) (4) (A), the Trial Examiner correctly found on the basis of Dad's right of control over the distributors that they were employees of Dad rather than independent contractors,3 and also properly found that Dad and Polar were so closely integrated as to be one Employer.' Accordingly, as the distributors were employees of Dad, which along with Polar constituted one Employer, we agree with the Trial Examiner's conclusion that Polar was not a neutral or disinterested company in the dispute between Respondents and Dad. The Respondents' conduct was therefore permissive primary action not within the proscription of Section 8 (b) (4) (A) of the Act.' We shall therefore dismiss the complaint. In view of our dismissal of the complaint for the foregoing reasons, we find it unnecessary to consider or adopt the Trial Examiner's alternative finding that Sec- tion 8 (b) (4) (A) remains inapplicable to the instant proceeding even if the distributors are deemed to be independent contractors. Finally, we, like the Trial Examiner, find it unnecessary to reach the hot-cargo issue raised by the Respondents. [The Board dismissed the complaint.] 3 The General Counsel and the Charging Party contend that the distributors' agree- ments were substantially modified by oral waivers and thus clearly indicated the inde- pendent contractor status of the distributors. The record shows that most of these modifications which pertained to the exclusive sale of Dad's products and the price to be charged therefor, the turning in of delivery tickets, the painting of trucks, and the wearing of uniforms, applied to a minority of the distributors and were, in any event, of insufficient importance to alter Dad's basic arrangement with the distributors as described in the Intermediate Report Moreover, as the Trial Examiner points out, Dad clearly retained control over the distributors by its authority to enforce at any time all provi- sions in Dad's written agreements with the distributors. See Provident Life and Accident Insurance Company, 118 NLRB 412; National Van Lines, 117 NLRB 1213. 4 See Brown & Root Carsbe, Inc , 119 NLRB 815 ; N. L. R. B. v. A. K. Allen Co., Inc., et al., 252 F. 2d 37 (C. A. 2), enforcing 117 NLRB 568. In addition, we note that despite indications to the contrary appearing in its brief to the Board, the General Counsel, in the ancillary Section 10 (1) proceeding involving the factual situation herein asserted that Polar and Dad constituted a single employer. See, in this connection, the General Counsel's Petition for Injunction in Shote v. General Teamsters, et al., 25 L R. R. M 2590 (D. C., W. Pa.). 6 See The Pure Oil Company, 84 NLRB, 315, 318-319. INTERNATIONAL BROTHERHOOD OF TEAMSTERS 157 INTERMEDIATE REPORT AND RECOMMENDED ORDER STATEMENT OF THE CASE Upon charges filed by Polar Water Company, herein called Polar, the General Counsel for the National Labor Relations Board, by the Regional Director for the Sixth Region (Pittsburgh, Pennsylvania), issued a complaint on June 18, 1957, against Local Union No. 249 and Local Union No. 250, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, herein called Local 249 and Local 250, respectively, alleging that Respondents have engaged in conduct violating Section 8 (b) (4) (A) and Section 2 (6) and (7) of the Act. Copies of the complaint and charges were served upon the Respondents; Respondents filed a joint answer denying the commission of the unfair labor practices alleged. Pursuant to notice, a hearing was held in Pittsburgh, Pennsylvania, on July 8 and 9, 1957, before the duly designated Trial Examiner. All parties were represented at the hearing and were afforded full opportunity to be heard, to examine and cross- examine witnesses, and to introduce evidence bearing on the issues. The parties were given opportunity to present oral argument at the close of the hearing and to submit briefs. Motions by Respondents to dismiss the complaint are disposed of in accordance with the following findings of fact and conclusions of law. Upon the entire record in the case,' and upon observation of the demeanor of witnesses, I make the following: FINDINGS OF FACT 1. BUSINESS OF THE COMPANIES Polar Water Company, herein called Polar, is a Pennsylvania corporation having its principal office and place of business at Pittsburgh, Pennsylvania, where it is engaged in the business of bottling, selling, and distributing distilled and natural spring water. Dad's Root Beer Bottling Company, herein called Dad, is a Penn- sylvania corporation having its principal office and place of business at Pittsburgh, Pennsylvania, where it is engaged in the business of bottling, selling, and distributing root beer. In 1956, Polar sold products valued in excess of $100,000 to various firms in Pennsylvania each of which annually ships goods or furnishes services valued in excess of $50,000 directly outside Pennsylvania. The parties have stipulated for purposes of this proceeding only, and I find, that Polar and Dad are engaged in commerce within the meaning of the Act. II. THE LABOR ORGANIZATIONS INVOLVED Locals 249 and 250, Respondents herein, are labor organizations within the meaning of the Act. III. THE UNFAIR LABOR PRACTICES The General Counsel contends that Respondent Locals violated Section 8 (b) (4) (A) of the Act by inducing employees of Polar and Dad to strike in order to force Dad to cease doing business with Dad's distributors, which distributors the General Counsel' asserts to be independent contractors. Respondents claim that Polar and Dad are a single employer and that Dad's distributors are employees and not independent contractors; Respondents further deny that they have engaged in unfair labor practices even if the distributors be deemed independent contractors. On the assumption that the distributors are independent contractors, the parties have stipulated that said distributors, either singly or collectively, are not engaged in commerce within the meaning of the Act. Relationship of Dad and Polar Polar was organized and incorporated in 1905, Dad in 1943. William H. Merker is president of Polar and Dad, and the other officers and directors of these concerns are also identical. Both companies are commonly owned and managed and they occupy the same plant and office premises in Pittsburgh, Pennsylvania, at 939 West North Avenue. Their production premises consist of one large undivided room containing equipment for bottling and storing root beer for Dad and distilled water for Polar. Although each company nominally has its own bottling employees, the same personnel bottles both products, and the companies allocate the labor costs i After the close of the bearing, all parties entered into a stipulation which is hereby received and made part of the record hereof as General Counsel 's Exhibit No. 13. 158 DECISIONS OF NATIONAL LABOR RELATIONS BOARD of these employees between them as a bookkeeping transaction. On Polar's, but not on Dad's, payroll is a classification of employees called shippers and loaders; these same employees perform identical functions for both Dad and Polar, and in doing so they work out of a single shipping office and use the same loading platform. In addition to loading trucks, the shipping and loading employees answer the Shipping office phone and answer inquiries from either the office or customers, prepare and check loading sheets, check all loads leaving the plant and prepare the billing charges for all merchandise taken from the plant. The loaders and shippers, while performing these described tasks for both Dad and Polar, are under the supervision of Ralph Conte who is carried on Polar's payroll as general manager. The labor costs of the loaders and shippers are also distributed between Polar and Dad on a pro rata basis, a bookkeeping transaction. In addition to the described integration of the so-called inside personnel (bottling and loading and shipping employees), Polar and Dad use identical office personnel and facilities, including office space, switchboard, and the like. I conclude that Polar and Dad are one and the same employer for the purposes of Section 8 (b) (4) (A). See United Brotherhood of Carpenters and Joiners of America, AFL-CIO, etc., (J. G. Roy and Sons Company), 118 NLRB 286. Dad's and Polar's Distribution Polar and Dad sell their respective products only in Pennsylvania. Polar's product is distributed by employees on its payroll called route-salesmen. Dad, on the other hand, distributes its product under distributorship arrangements with specifically described territories being assigned to the respective distributors. Dad has used the distributorship arrangement exclusively since the early 1940's except for an area referred to as the Allegheny or Rose territory. The Allegheny or Rose territory embraces Pittsburgh (located in Allegheny County) and other, but not certain outlying,2 portions of Allegheny County. Until May 1954 the Allegheny or Rose territory was serviced by route-salesmen on Dad's payroll. On or about May 1, 1954, Dad purportedly entered into a distributorship arrangement with John E. Rose for the Allegheny territory and Rose retained the same route-salesmen theretofore employed by Dad in that territory. Rose surrendered this distributorship on or about, April 12, 1957, and discharged his route-salesmen. Upon the termination of Rose's distributorship, Dad subdivided the Rose territory into 4 new territories in con- templation of establishing 4 new distributorships. Dad has since entered into distributorship arrangements for 3 of the 4 new territories ; as of the hearing date herein, Dad had not yet selected a fourth distributor for the remaining portion of the former Rose territory Two of the new distributorships are in operation; until the third and fourth new distributorships are similarly in effect, Dad has temporarily expanded the assigned territories of contiguous distributors in order to service the area of the mentioned third and fourth territories. John E. Rose, mentioned above, has been Dad's sales manager since 1951, including the period during which he also was a distributor for the Allegheny territory. Rose's duties as sales manager are primarily to promote the sale of pad's Root Beer and he is responsible in such capacity for engaging the various distributors and seeing to it that the respective territories are properly serviced; he also assists the distributors in handling their accounts "in regards to new business or a restatement of accounts or things of that nature." During the entire period of his sales managership, Rose has received a salary plus a bonus on Dad's total sales, and his duties have been substantially the same at all times, including the period during which he was also a distributor. While he was a distributor, Rose's records of sales and deliveries and records of money collected or owing him as a distributor were kept by Dad; Rose paid no rent to Dad or otherwise shared in Dad's office expenses. Rose wrote to accounts in the Allegheny territory during the period of his distributorship on Dad's stationery and in his capacity as sales manager When Rose became distributor in the Allegheny territory, he took over the same route-salesmen who had been servicing this territory for Dad and who, as employees of Dad, had been under Rose's supervision as sales manager. Rose engaged two additional drivers during his distributorship. Rose also used the same trucking equipment theretofore used by Dad in the Allegheny territory, which Dad had leased from a truck rental company. -Rose paid the rental fees during his distribu- torship, the rental fees including such operating expenses as maintenance costs, licenses, and insurance. 2 These certain outlying portions of Allegheny County have always been within the other territories and are not considered part of the territory called Rose oi',Allegheny territory in dispute here: - ' I - . INTERNATIONAL BROTHERHOOD OF TEAMSTERS . 159 Dad does not "make a report or make any deductions" as to the individual distributors for "social security or workmen's compensation, unemployment insur- ance, taxes or . income withholding taxes" and it also does not carry hospital- ization or life insurance for the distributors which it does carry for its admitted employees. • During his distributorship, Rose himself made the foregoing reports and payments on the drivers in his territory and he also carried hospitalization for them. It is recalled that only 2 of the 4 new distributorships are presently operating in the former Rose territory. Both distributors purchased trucks from Dad, which Dad had in turn purchased from the rental company; these were trucks which Dad had been renting before 1954 and which Rose subsequently rented during his distributorship. Rose testified that Dad resold those trucks at a "good buy" for the distributors. Dad has approximately 14 distributors, with each of whom it has executed a distributorship agreement. Rather than summarize these agreements at this point, a copy thereof is set forth in Appendix A attached hereto. Rose, as sales manager, executes distributorship agreements for Dad and he testified that he has orally waived certain requirements under the agreements. The contract, as set forth, states that no changes therein are binding unless written and executed by both parties; and Rose also testified in effect that despite any alleged oral waivers or modifications, Dad nevertheless has retained complete authority to enforce all such provisions in the agreement .3 Some of the distributors, 'according to Rose, occasionally "carry" a helper with them; Dad does not, according to Rose, have any control over such occasional hiring 4 Rose also testified that the distributors are responsible "in most cases" for damage or loss of merchandise, "except where if breakage is reported, we assume that it was broken during the process of loading the trucks and we replace 'such merchandise, or if in the case of a dealer returning merchandise he claims was delivered to him broken, if the crown is intact, we also replace that. Otherwise, the loss is sustained by the distributor. Loss from stealage [sic] or possibly in extremely cold weather when merchandise freezes, the distributor is liable for any damage of that sort"; the distributor, also according to Rose, "sustains any collec- tion losses that might be incurred." 5 The distributors primarily deal on a cash basis with the trade except in the case of major chain stores which insist on billing; in these cases, Dad itself bills the customers and accordingly credits the distributor's account with Dad. The distributors are not paid a salary; their earnings are "the difference between what they pay for Dad's at the platform and what they sell it for to the trade." - . Labor. Relations Situation- Respondent Local 250 represents, as it has for many years, the inside employees of Dad and Polar. and other local beverage concerns in the area. As mentioned earlier, these inside employees include bottlers, loaders, and shippers. Also for many years Respondent Local 249 has been representing the route- salesmen of Polar and other local beverage concerns. Until May 1954, when Sales Manager Rose became Dad's distributor in the Allegheny territory, Local 249 also represented Dad's route-salesmen employed in that territory. These same route-salesmen con- tinued to work in the- Allegheny territory during Rose's distributorship , as men- tioned above, and Local 249 continued to represent the Rose drivers under contract with Rose during such distributorship. Local 249 and Local 250 respectively engage in joint industry bargaining with concerns under contract with them. Local 249's industry contracts are identical, as are Local 250's, and the contracts of both Local 249 and Local 250 are substan- tially alike as well. Negotiations for the beverage concerns engaged in such industry bargaining are handled by a labor relations consultant, William C. Blesch; Blesch meets with union representatives in the presence of officers of the respective com- panies represented by him and such officers exercise ratifying authority for their respective concerns. Merker is such officer for Polar, and Dad. Both unions execute individual agreements with each employer party to the joint industry bargaining. For reasons not appearing here, Local 250 has always executed separate, 3 See National Van Lines, 117 NLRB 1213, and Provident Life and Accident Insurance Company, 118 NLRB 412, to the effect that the existence of a right to control is determi- native, not the exercise of such right. 4 This factor does not necessarily establish an independent contractorship. See Orange Ci ush of P R., Inc., 118 NLRB 217 ; National Van Lines, supra. 1,The,record does, not show that any actual losses or damages have been sustained by distributors. See Southern Shellfish Co, Inc, 95 NLRB 957, 963. See, also, National Van Lines, supra 160 DECISIONS OF NATIONAL LABOR RELATIONS BOARD albeit identical, contracts with Polar and Dad, and Local 249's practice until 1954 was apparently the same. Local 250's current contracts with Polar and Dad and the other beverage concerns run from May 1, 1956, until April 30, 1958, with provisions for reopening on wages and vacation. President Merker had executed these 1956 contracts for Dad and Polar; Secretary-Treasurer James Lebarty had signed for Local 250. Local 250 gave reopening notice to the concerns under contract with it on February 8, 1957, including such separate notices to Polar and Dad. Local 249's individual industry contracts, currently in effect, also run from May 1, 1956, until April 30, 1958, with reopening for wages and vacations. Local 249 gave such notice on February 25, 1957. Merker had signed the 1956 contract for Polar; Vice President Melvin Humphreys was one of several union officials signing for Local 249. Rose presumably signed a similar contract for the route-salesmen in the Allegheny territory.6 The Dispute The current industry contract between Polar and Local 249, and presumably the contract signed by Rose during his distributorship provides, in part, as follows: 7 Section 7. Distributors: (a) All beverages or products that are delivered in Allegheny County from this plant must be delivered by men who are in the employ of the plant and are members of Local No. 249.8 This clause is not intended to prevent the sale and delivery of the Employer's products to distributors in Allegheny County employing members of Local Union No. 249. The Employer agrees that when hiring additional trucks, to hire only the trucks of such companies as employ members of the Union. (b) Distributors are not to work on Saturdays unless Driver-Salesmen are also working. (c) All Employers now operating their own equipment shall not displace their own equipment with distributors. On February 25, 1957, as mentioned above, Local 249 served notice to reopen the wage provisions of its 1956 contract in accordance with the reopening provisions of such contract. Meanwhile on April 1, 1957, Vice President Humphreys of Local 249 sent a letter to "Mr. Merker, Dad's Root Beer Bottling Company," advising Merker as follows: I have been informed by Mr. Rose that he is going to give up the distributing of Dad's Root Beer some time in April. Please inform me immediately who is going to take over this operation so I can obtain a contract to cover the members of Local No. 249. On April 5, 1957, Merker sent the following response to Humphreys: With reference to your letter, we, too, were disappointed when we learned from John Rose that he was giving up the distribution of Dad's Root Beer. I have put in a lot of time, effort and, money trying to make this particular part of our business show some little profit, but as you already know this has never been realized. At this particular moment I honestly don't know of anyone whom I could interest in taking over a losing proposition. It can very well be that we will have to get along without this business. About that time, as already stated, the Rose territory was divided into four new territories and the route-salesmen (members of Local 249) were discharged. Dad did not offer any of the four new distributorships to any of the discharged route- salesmen. It is recalled that 2 of the 4 new distributorships are in operation and that Dad has temporarily enlarged the territories of contiguous distributors in order to cover the remaining portion of the Allegheny territory. On April 16 and 26, 1957, Local 249 had joint collective-bargaining sessions with Polar and other local bottling concerns under contract with Local 249 pursuant to Local 249's reopening notice mentioned above. The parties having failed to agree on new substantive provisions at these meetings and as the terminal date for amending the contract was approaching, the parties agreed on April 26 to make retroactive 8 This contract was not introduced in evidence 7 An identical provision has been in Local 249's contracts since 1945. 8 The contract also contains a separate union-security provision requiring union mem- bership as a condition of employment 30 days following the beginning of each employee's employment. INTERNATIONAL BROTHERHOOD OF TEAMSTERS 161 to May 1 any new terms to be later agreed upon ; and they also agreed to meet soon again. Meanwhile, however, the beverage companies became preoccupied in lobbying against a State tax on soft drinks and Blesch, in behalf of the companies represented by him, called Humphreys' office and left word that further negotiations would be delayed on this account. On May 8, 1957, Humphreys phoned Polar's general manager, Ralph Conte; Humphreys advised Conte that he had "discovered that Dad's distributors were making deliveries to accounts in the [Rose] territory formerly serviced by Local 249 members." Conte replied that he had "nothing to do with Dad's Root Beer organiza- tion" and suggested that Humphreys consult with Dad's Sales Manager Rose. Humphreys stated that "we're not going to put up with this nonsense" and he told Conte to inform Merker that "Polar Water is going to be on strike in the morning." Local 249 struck Polar the next day, May 9, and picketed the plant premises. At a meeting that same day Humphreys advised Merker and Blesch that the men would not work without a contract. When Blesch then reminded Humphreys of the retroactivity arrangement and of the fact that Blesch had left word at Humphreys' office concerning the reason for delaying negotiations, Humphreys stated that "you've got to find time to meet on these things," to which Blesch replied that "unfortunately the bottlers are too busy." (Humphreys had not made any effort to contact Blesch as to resuming negotiations between April 26 and May 9). Humphreys then said that "you might just as well know that Dad's Root Beer people are not going to make any deliveries in Allegheny County with non-union distributors, and the Polar Water people are not going to work until a union man is appointed." Blesch thereupon asked , "what can be done about it now [ that Rose had given up the distributorship];" Humphreys replied, "get a union distributor." Local 249's complaint, as Merker knew at the time, concerned the distribution of Dad's root beer in the Rose territory. Local 249 picketed the plant and Polar drivers remained on strike from May 9 until on or about June 3. Polar's and Dad's inside workers (covered by Local 250's contracts ) also were on strike on May 10, 1957; they returned to work on May 15 after meeting together and ratifying wage and vacation amendments as to which their contracts had been reopened. On May 17, however, the loading employees refused to load Dad's distributors and all the inside employees of Polar and Dad struck again when Local 249 pickets appeared at the loading platform. Secretary-Treasurer Lebarty of Local 250 testified that, during his May 15 discussions with Merker as to the wage and vacation amendments and their ratification by the affected employees of Polar and Dad, Merker agreed not to request the loaders to service Dad's distributors until Merker's dispute with Local 249 was settled; Merker testified on the other hand that such understanding was only for a 2-day period. Whatever the fact on this evidentiary matter, there is no question but that the second walkout or strike by the inside workers on May 17 was at Local 250's behest following the continuance of Local 249's picket line and pursuant to arrangement between Humphrey of Local 249 and Lebarty of Local 250. Neither Local 249 nor Local 250 struck or attempted to strike the other beverage concerns who, with Dad and Polar, were parties to identical industry contracts and which contracts were in the same reopened status described above. The evidence clearly establishes, by way of summary, that Local 249 and Local 250 induced employees of Polar and Dad to cease working. It is also clear that at least one, if not the sole, reason for Local 249's conduct was in protest against the new arrangements for servicing the so -called Rose territory. And I also find that Local 250 acted in concert with Local 249 in such connection. Contentions and Conclusions Section 8 (b) (4). (A) provides in relevant part as follows: It shall be an unfair labor practice for a labor organization or its agents- (4) to engage in, or to induce or encourage the employees of any employer to engage in, a strike or a concerted refusal in the course of their employment to use, manufacture , process, transport, or otherwise handle or work on any goods, . or to perform any services where an object thereof is: (A) forcing or requiring any employer . . . to cease doing business with any other person; . . . Whether or not Respondent Locals have a dispute with the distributors , the General Counsel contends that Polar and Dad are neutral parties with whom Respondents have no primary dispute and he also asserts that the distributors are independent contractors and therefore "person [s]" with whom Dad is doing business . Accord- 483142-59-vol. 120-12 -162 DECISIONS OF NATIONAL LABOR RELATIONS BOARD .ingly, contends the General Counsel, the Respondents have violated Section 8 (a) ,(4) (A) in inducing a strike of Polar's and Dad's employees for the purpose of causing Dad to cease doing business with the distributors. Respondents contend on the other hand that the distributors are employees and not independent contractors within the meaning of Section 2 (3) of the Act; Respondents therefore assert as a ,threshold argument that the instant action must fall for such reason. The distributors' agreement, fully set forth in Appendix A, shows among other -things that Dad assigned "exclusive" sales territories to its respective distributors ,except as to "special contracts, concessions, and chain store business" and with the right of Dad to resolve any territorial disputes between the distributors; that the distributor will devote his "full time and exclusive activity" in promoting Dad's product and will not handle or service products other than Dad; 9 that the distributor -"will follow all rules, regulations and business practices" prescribed by Dad; Dad .will set the puce the distributor pays Dad for merchandise and that Dad will also set the resale prices "which the distributor must observe and follow at all times"; that the distributor will maintain a schedule of route trips as Dad "shall ,require from time to time"; that the distributor will paint and maintain his truck to -Dad's "satisfaction" and that all sales personnel must wear uniforms "approved" -by Dad; 10 that the distributor shall, maintain insurance on his trucks for public ,liability and property damage "in amounts satisfactory" to Dad; that Dad may ,redefine the assigned territory, either by "subtraction" or "addition," and may otherwise reclaim any part or the entirety of such assigned territory as Dad "shall judge best to make possible the proper servicing of all territory"; that the distributor -will place and maintain all advertising material supplied by Dad and the distributor will himself advertise Dad's product "to the extent deemed advisable" by Dad; that -the distributor cannot sell to any person whom Dad "may consider" to be a sub- distributor; that the distributor shall regularly turn in all delivery tickets and, at Dad's ,request, shall. at any time appear and give Dad all other records and information; that the contract continues at will, with either party having the right of termination at any time; that the distributor will not, as an employee, agent, owner, or in any -other capacity, engage in ,a competitive business for 1 year after termination of the -distributorship arrangement; that Dad will have an option to purchase the distributor's -truck upon termination of the distributorship; 11 that Dad may withhold his consent to transfer of the distributorship by the distributor within 5 years, and as to such -transfers after 5 years Dad may disapprove of such sale if Dad considers the price -"unreasonable" and Dad may require such changes in the distributorship contract as Dad considers appropriate , and all transfers to be valid must have the written consent of Dad; and that the contract "is subject to any existing or future collective bargaining or similar agreement with any representative agency or group concerning any or ,all matters affecting any part of [Dad's] business , and is likewise subject to the -settlement of any disputes and grievances by arbitration or otherwise as between [Dad] and any such agency or group." It appears upon examination of the distributor agreements that the distributors are commission salesmen without any substantial stake or tenure in the enterprise. Dad's right of control, which is the test in these cases (see N. L. R. B. v. NuCar .Carriers, Inc., 189 F. 2d 756, 759 (C. A. 3), cert. denied 342 U. S. 919), extends -to practically every phase of the distributor's operations, in addition to which can 'Dad unilaterally modify and even withdraw all the so-called exclusive territories at -any time and, indeed, terminate the distributorship at will. Dad even has an option to purchase the trucks purportedly owned by the distributor; and the distributor's -so-called right of sale or transfer is really an illusory one, for it is subject to Dad's ,consent and to Dad's unlimited right to modify and even terminate the transferee's ,distributorship agreement. An employee does not become otherwise merely by reciting in an instrument with his employer that he is not an employee and/or by -having the employer treat him as otherwise for tax purposes. I conclude, under applicable authority, that the distributors are employees within the meaning of Section 2 (3) of the Act. See Orange Crush of P. R. Inc., 118 NLRB 217; Provi- dent Life and Accident Insurance Company, 118 NLRB 412; National Van Lines, 117 NLRB 121-3. I accordingly also find that Rose was not an independent contractor during the period of his distributorship and I find that his purported route-salesmen were ,employees of Dad. In view of Rose's functions and authority as sales manager "The contract of one of the distributors, Pochron, permits Pochron to handle other specifically named products. i" Pochron's contract does not contain these requirements. '= Pochron's contract does not contain this provision.' INTERNATIONAL BROTHERHOOD OF TEAMSTERS 163 in relation to distributors and also in view of the manner of operating his distribu- torship, as described above, I also conclude that his was not an independent con- tractorship, even were I to find that the other distributors are independent contractors. Further Contentions Having found that the distributors are employees and not independent contractors, I accordingly conclude that no cause of action has been stated within Section 8 (b) (4) (A) of the Act. Having found that Rose and his purported employees were employees of Dad in any event, I also sustain a further contention of Respond- ents and recommend dismissal of the complaint thereupon even assuming the other distributors to be independent contractors. It is recalled in this connection that section 7 of Local 249's contracts with Polar and Rose (as agent for Dad,in view of the aforementioned finding as to Rose's employee status as a distributor) provide that: All beverages or products that are delivered in Allegheny County from this plant must be delivered by men who are in the employ of the plant and are members of Local No. 249. This clause is not intended to prevent the sale and delivery of the Employer's products to distributors in Allegheny County employing members of Local Union No. 249. I am unaware of any prohibition in the Act against an employer agreeing not to contract out certain work performed by his employees; and the first sentence of Section 7 is, I find, a lawful provision. (Indeed, the Board frequently adverts to the presence or absence of work assignment provisions in collective-bargaining agreements as a basis for decisions under Section 10 (k) of the Act.) Where an employer, in violation of such undertaking, does withdraw such mentioned work from employees and contracts out the mentioned functions and then discharges his employees who formerly performed these tasks, it would hardly seem that such employer may be considered an innocent, unconcerned party to a dispute arising of such situation.12 Section 7 of the contract therefore affords a complete defense on the basis of Respondent's second mentioned contention unless there is something in the second sentence of Section 7 which requires otherwise. This second sentence, to avoid any ambiguity, states that "This clause is not intended to prevent the sale and delivery of the employer's products to distributors in Allegheny County employing members of Local Union No. 249." The mentioned second sentence, according to the brief of the General Counsel, "is illegal on its face and is in effect a preferential hiring agreement since Polar [or Dad or Polar-Dad], by its terms, could only hire as employees to deliver mer- chandise, persons who are already members of Local 249." First, it must be pointed out, the General Counsel made no claim at the hearing, in fact he specifically dis- claimed any contention at the hearing, that such clause was unlawful; and it is on such basis that the case must be decided. This consideration of record aside, how- ever, it would nevertheless appear that the validity of the clause is relevant here only on the assumption that the distributors are independent contractors; if they are employees of Dad and not independent contractors there can be no violation of 8 (b) (4) (A) for reasons already stated. 13 But if the distributors are assumed to be independent contractors, it is recalled that they are not engaged in commerce; on such assumption the preferential hiring provision would therefore be valid as far as this Act is concerned. But apart from questions as to the inherent validity, or invalidity of Section 7 of the contract, the General Counsel also asserts in effect that subcontract provisions provide no defense to strike action against neutral employers in disputes involving such contracts, and in this connection the General Counsel cites two cases one of which is Elliott v. Local 47, International Brotherhood of Teamsters etc. (Texas Industries, Inc.), 112 NLRB 923, enforced 234 F. 2d 296 (C. A. 5). Finding that the Union involved in that case picketed a general contractor in order to raise the wage level of truckdrivers employed by subcontractors on the job, the Board there- upon stated: "As the dispute was therefore not over terms of employment of "Even absent a contract, it would seem that employees and their union have a pumary labor dispute with an employer who contracts out work of some employees whom he then fires. Cf. the Texas Industries case, infra. 13'See also, The Great Atlantic & Pacific Tea Company, 116 NLRB 943, 945-946, hold- ing that an employer does not violate the. Act in causing a second employer to discrim- inate against employees of the second employer unless the first employer occupies the status of an employer or joint-employer of the employees discriminated against. 164 DECISIONS OF NATIONAL LABOR RELATIONS BOARD employees of [the general contractor] nor over the protection of . jobs of such employees against subcontracting, we find that there was no primary dispute between the Union and the general contractors.. ." (112 NLRB at 924). The dispute in the instant case arose directly out of such subcontracting of jobs mentioned by the Board in this excerpt from the Texas Industries case. The contract contention just discussed was predicated on the finding that Rose was not an independent contractor, even assuming other distributors were, and that any contracts made by Rose with Local 249 were made by him in behalf of Dad. Assuming, however, that Rose was an independent contractor and that Dad was not a joint employer with Rose respecting Rose's employees, I still would find no violation here. This involves a consideration of the separate corporate identities of Polar and Dad and the scope or meaning of Section 7 of the contract signed by Polar and Local 249. More specifically the question is whether Section 7 of the contract applies to the Dad operation despite the history of separate contracts for both Dad and Polar. The evidence recounted above establishes the common control and operational integration of both concerns. Indeed, were an appropriate bargaining unit to be determined by the Board for these concerns, it is inconceivable that separate units would be established for each of these concerns. Whatever the explanation for the separate contracts of these concerns, I consider both concerns to be one and the same employer for all purposes in this proceeding, as I have already found; and I therefore also consider Section 7 of the contract with Polar as fully applying to the Dad phase of the operation as well. I use the word "phase" ad- visedly, for I consider both nominal corporations as one employer engaging in one beverage business. Respondent Local 250 makes one last contention based upon a so-called hot-cargo clause in its contracts with Polar-Dad. The General Counsel properly asserts that Board decisions on this point 14 rule out such defense; but such defense is unnecessary of discussion in view of all the foregoing. Upon all the foregoing, I conclude that Respondent Locals 249 and 250 have not violated Section 8 (b) (4) (A) of the Act, and I shall accordingly recommend that the complaint be dismissed in its entirety. [Recommendations omitted from publication.] 14 See Local 1016, United Brotherhood of Carpenters d Joiners of America, AFL-CIO (Becher Lumber Co., Inc ), 117 NLRB 1739. APPENDIX A DISTRIBUTOR'S AGREEMENT The parties hereto do hereby evidence, agree and bind themselves as follows: FIRST: The DAD'S ROOT BEER BOTTLING COMPANY, hereinafter referred to as the "bottler", is a corporation engaged in the carbonated beverage business with its offices and plant at 939 W. North Avenue, Pittsburgh, Pennsylvania, and ------------------------------ is an individual located at ------------------ ----------------------------------------------------------------------- and said latter party does under the terms hereof hereby become the distributor of only the bottler's carbonated beverage known as "Dad's Old Fashioned Root Beer" (which is distinguished from and under this contract does not include any other drink, or any concentrate or syrup, or any other product at all), and the distributor is hereby authorized to use the name "Dad's Root Beer Distributing Company" or "Dad's Root Beer Distributors" for such period of time only as the distributor is a distributor of Dad's Old Fashioned Root Beer in the territory allotted to the distributor for the sale and distribution of Dad's Old Fashioned Root Beer, and only for such period of time as the bottler is a bottler of Dad's Old Fashioned Root Beer in said territory. It is understood and agreed that the distributor shall cease and discontinue to use the word "Dad's" in the distributor's name upon the distributor ceasing to sell and distribute Dad's Old Fashioned Root Beer in said territory, or in the event the bottler ceases to be a bottler of Dad's Old Fashioned Root Beer in said territory. Nothing herein contained shall be considered as an authorization to the distributor to incorporate under a name containing the word "Dad's" or to use the word "Dad's" as part of the distributor's corporate name, the use of the word "Dad's" in the Distributor's corporate name being herein specifically forbidden, in the event the distributor is a corporation. INTERNATIONAL BROTHERHOOD OF TEAMSTERS 165 SECOND: The bottler hereby assigns to the distributor the exclusive territory con- sisting of the ---------------------------------------------------------- ----------------------------------------------------------------------- more fully described in "Exhibit A" attached hereto and made a part of this agree- ment, and during the continuance of this relationship, except for other provisions to the contrary at "Third" next below, the bottler will not itself distribute the car- bonated beverage in the above territory nor will it during that time engage with any other person for such distribution therein. The distributor shall not distribute in or in any way directly or indirectly participate in the distribution of said car- bonated beverage in any other territory without the prior written consent of the bottler. In the event of any dispute between the above named distributor and any other distributor of this bottler as to their respective territorial boundaries, the same shall be settled finally by the decision of the bottler. THmD: The exception indicated at "Second" above applies to special contracts, concessions, and chain-store business . Such business is always subject to peculiar circumstances and to changes. All such business shall at all times be handled by the bottler in such a manner and on such terms and conditions as it shall determine to be equitable to the distributor and to itself. The parties also recognize that under some circumstances substantial parts or even all of such special lines of business may have to be withdrawn from the distributor. Said exception applies also to sales by the bottler to the existing special distributors already in the territory and listed on a schedule, "Exhibit B," attached hereto and made a part hereof (and if no list is attached there are none of these exceptions). FouRTH: The distributor will pursue his best efforts in promoting an ever increasing distribution of the carbonated beverage in the territory assigned to him as a full time and exclusive activity, and he accordingly will not at the same time handle the sale, distribution, production, or servicing of any product or products not manufactured by this bottler. FIFTH: The distributor is one of a number of distributors who cover other terri- tories for this bottler. At any and all times now and/or in the future when the government or the sugar industry is directly or indirectly rationing sugar and/or upon any other control by the government and/or upon any full or partial shut down any or all of which shall substantially affect the bottler's production, the distributor agrees to accept such quantities of its carbonated beverage as the bottler shall fix as equitable. SIXTH: At all times the distributor will pay the rates established by the bottler for all distributors from the same plant and in the same class and will pay in cash at the time of delivery. SEVENTH: The distributor will follow all rules, regulations and business practices as announced by the bottler for the direction of the distributor and other like distributors in the operation of their businesses. EIGHTH: The bottler will set the prices the distributor will pay for the bottler's carbonated beverage, and, to establish uniformity and also in order to discourage the evils of price cutting the bottler will set the re-sale prices which the distributor must observe and follow at all times. NINTH: The distributor shall always have and operate enough trucks to maintain a schedule of route trips of at least the same frequency as competition in other soft drinks at any given time maintains for the City of Pittsburgh, Pa., or as the bottler shall require from time to time. TENTH: His trucks shall be painted by the distributor in the manner directed by the bottler, and the distributor shall maintain them in appearance to the bottler's satisfaction. ELEVENTH: The trucks shall be covered by insurance for public liability and property damage in amounts satisfactory to the bottler, for the protection of the distributor and the bottler, and shall be paid for by the distributor. The distributor acknowledges generally that he is no agent of the bottler and that as to it these insurance requirements are purely cautionary for the protection of the bottler whom the distributor shall supply with a certificate from the insurer evidencing proper coverage. TWELFTH: Whenever the distributor neglects, fails or refuses to have and operate the number of trucks required above, and whenever he neglects, fails, or refuses to add trucks for the purposes of expansion as may be required by the bottler, then, in any such case, the bottler may reclaim such territory as it may judge to be inadequately serviced or neglected by the distributor and such territory shall then be withdrawn and excluded from all the provisions of this agreement. This para- 166 DECISIONS OF NATIONAL LABOR RELATIONS BOARD graph shall be so applied that in any case where it shall appear to the satisfaction of the bottler that the distributor is not adequately servicing his territory or any particular part thereof, the bottler shall be free to generally redefine the territory by subtraction and possibly by addition and the bottler may reclaim such part or all of the territory as it shall judge best to make possible the proper servicing of all territory. THIRTEENTH : All persons operating and making deliveries from trucks shall wear uniforms approved by the bottler and the uniforms must be kept reasonably presentable in appearance, these requirements being without cost to the bottler. FOURTEENTH : The distributor shall appropriately place and maintain all adver- tising material supplied to him by the bottler. FIFTEENTH : Consistent with the terms of this agreement the bottler will cooperate with the distributor in the development of his territory and, to the extent deemed advisable by the bottler, it will itself also advertise its carbonated beverage in the territory. SIXTEENTH: The distributor cannot sell to any person whom the bottler may consider to be a sub -distributor. SEVENTEENTH : If any Law, or any Court decision makes the bottler presently, retroactively, or in the future liable for any tax, charge , contribution, public liability, or other payment based on any feature or event of the distributor 's business. hereunder, then, he, the distributor, will save harmless and reimburse the bottler for any such sum or sums as it may be so required to pay on such account. EIGHTEENTH : The distributor shall regularly turn in all delivery tickets to the bottler and shall furnish any other information required by the bottler in connection with the servicing of customers in the distributor's territory, and at any time required by the bottler, the distributor shall appear and shall make available to the bottler at its request any and all of his other records and information that the bottler may need in any suit or in any other matter. NINETEENTH : Either party shall have the right to terminate this agreement for cause at any time, otherwise it shall continue in effect at the will of both parties. TWENTIETH : In the event the bottler terminates this agreement for cause , or if this agreement is assigned to some other party as provided below, or in the event of the abandonment or cancellation of this agreement by the distributor , the distributor shall not sell, distribute or in any way handle, directly or indirectly , as agent, servant, employee, owner, trustee , or in any other capacity, any product deemed by the bottler ' to be in competition with any product or products of the bottler, and he shall not do so any place in any territory serviced under this agreement for the period of one year from the date the distributor ceases business under this contract, and the distributor acknowledges that any violation of this restrictive covenant will result in immediate, substantial, and irreparable damage to the bottler and that it shall be entitled immediately to a preliminary and permanent injunction and the distributor agrees that if he contests or litigates this provision and if the restraint is suspended for any time during such litigation that the aforesaid one year period shall in such case begin to run from the date of the conclusion of such litigation resulting in any right in the bottler to any restraint against the distributor. TWENTY-FIRST : On any termination of this contract at any time and for any cause the bottler shall have the option of purchasing the distributor's truck or trucks, or his interest in it or them at such price as the parties may agree upon, or, failing agree- ment, at such price as shall be fixed by the appraisal of any appraiser selected by them, or, failing that, as shall be fixed by the appraisal of a committee of appraisers, one selected by each of the parties and the third selected by the other two appraisers. The expense of the appraisal to be shared equally. If the distributor for any reason abandons this contract or if for his failure of proper performance the bottler declares the contract terminated for cause , then in any such case within one year from the date hereof the bottler shall retain or obtain $500.00 of the distributor's money from the above settlement for his truck or trucks as liquidated damages and without effect upon any other terms hereof. TWENTY-SECOND: To be binding any changes in this contract must be written and signed by both parties. TWENTY-THIRD : As to the distributor, this agreement is made with him personally on judgment and faith in his personal abilities . It is accordingly not made for the benefit of his heirs, successors , and assigns, except as is provided for below, and the agreement shall be subject to termination at any time at the option of the bottler while the distributor for any reason does not personally , actively and regularly devote his full time, free from any interference or control by any third person, court, INTERNATIONAL BROTHERHOOD OF TEAMSTERS 167 or other agency, to distributing the bottlers carbonated beverage, and, as to this right in the bottler, there shall be no defense of latches to any action taken by the bottler for any breach or default hereunder at any time. The provisions of this paragraph however, are subject to the following modifications: (a) As a matter of policy the bottler desires a stable and long term relation- ship with the distributor and is opposed to any speculative dealings in the distributorship by the distributor, the distributor here acknowledging that the territory assigned to him represents a substantial capital investment by the bottler to have made it currently productive of regular and substantial business in the bottler's carbonated beverage. (b) The bottler accordingly shall be free to withhold its consent without cause to any transfer of the distributorship by the distributor within five years from the date hereof, and any such change made by the distributor in any form' or manner whatsoever without the consent of the bottler shall constitute a cancellation and abandonment of the contract by the distributor. (c) After five years from the date hereof the distributor may transfer the distributorship provided that the bottler may then require the following: 1. In connection with any such transfer the bottler may require such- changes in the distributorship contract as in its judgment may at the time be appropriate to its changed business policies or conditions. (2) The bottler may require that a sum equal to ten percent of the sale price be set aside with it, to be used by it, as it shall decide for advertising and sales promotion of its carbonated beverage in the new distributor's territory. 3. The bottler shall be free to exercise its private and independent judg- ment as to the general ability and acceptability of the proposed new distributor for such business and on such grounds may disapprove of the transfer to such party. 4. The bottler shall be free to disapprove of any sale at a price which in its judgment is unreasonable. (d) To be valid and binding the consent of the bottler to any matter provided for herein must be given in writing. TWENTY-FOURTH: It is a condition of this contract that it is made subject to any existing or future collective bargaining or similar agreement with any representa- tive agency or group concerning any or all matters affecting any part of the bottler's business, and is likewise subject to the settlement of any disputes and grievances by arbitration or otherwise as between the bottler and any such agency or group. TWENTY-FIFTH: The distributor is bound by notice that the bottler operates under franchises and the distributor will cooperate and submit to all matters required of or invoked upon the bottler by its franchisor insofar as any such matters may affect the distributor and his territory. TWENTY-SIXTH: This agreement constitutes the only agreement between the parties and replaces, supersedes and cancels any and all previous agreements, practices, or understandings that they may have had before regarding distribution of the bottler's carbonated beverage. TWENTY-SEVENTH: Gender and number as used in this contract shall be applied appropriately to the facts and circumstances as they actually exist. TWENTY-EIGHTH: Because the parties shall be working together for their mutual benefit and because judgment and circumstances may alter cases it is agreed that whenever the bottler elects to treat a particular default, breach or violation here- under as terminating this agreement for cause it, the bottler, shall not be prejudiced because it may have waived or ignored any other defaults, breaches or violations. TWENTY-NINTH: This contract is an entirety and in the event that any part of it is declared illegal or unenforceable the bottler shall have the option of declaring the contract thereby terminated or of continuing the balance of the contract in force. The parties agree to be legally bound by the terms hereof. Pittsburgh, Pa. ----------------------------------- 195 __. Witness: DAD'S ROOT BEER BOTTLING COMPANY, ---------------------------- By ------------------------------------- (President) Witness : DISTRIBUTOR :