Newspaper & Periodical Drivers, Local 921

NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 37 Newspaper & Periodical Drivers' & Helpers Union Local 921, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America and San Francisco Newspaper Printing Co., Inc., and Douglas Brown, Walter De Long, Phillip T. Walker, Marvin W. Weissensee, Kenneth C. Wollman, John Roy Conway, Leroy Lester Hol- brook, Darrell E. Baker, and Willis P. Kolb, Cases 20-CE-68, 20-CE-69, 20-CE-70, 20-CE-7 1, 20-CE-72,20-CE-73,20-CE-74,20-CE-76, and 20-CE-77 November 6, 1971 DECISION AND ORDER BY MEMBERS FANNING, JENKINS, AND KENNEDY On April 27, 1971, Trial Examiner Herman Coren- man issued his Decision in the above-entitled pro- ceeding, finding that the Respondents had not engaged in unfair labor practices as alleged in the complaint and recommending that the complaint be dismissed in its entirety, as set forth in the attached Trial Examiner's Decision. Thereafter beefs and exceptions were filed.' Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its powers in connection with this proceeding to a three- member panel.` 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 Trial 'Examiner's Decision, the exceptions and briefs, and the entire record in this proceeding, and hereby adopts the findings, conclusions, and recommenda- tions of the Trial Examiner'2 ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the Recommend- ed Order of the Trial Examiner and hereby orders that the complaint herein be, and it hereby is, dismissed. MEMBER KENNEDY, dissenting: The complaint alleged that the Respondent Compa- i The Charging Parties' request for oral argument is hereby denied, as the record, the exceptions, and the beefs adequately present the issues and the positions of the parties, 2 Our dissenting colleague sets forth only those factors supporting an "independent contractor" finding. We, however, agree with the Trial Examiner, as fully detailed by him, that on balance the factors supporting an "employee" finding outweigh those supporting an "independent contractor" finding 3 N L R.B. v. Ututed Insurance Co, 390 U.S. 254. ny and the Respondent Union violated Section 8(e) of the Act by entering into an agreement requiring the Company to cease doing business with certain newspaper dealers. The Trial Examiner found that the dealers were employees rather than independent contractors and, therefore, that Section 8(e) was not applicable. Accordingly, he recommended dismissing the complaint. My colleagues have adopted the Trial Examiner's findings and recommendation. I disagree. I would find that the dealers are independent contractors and remand the case to the Trial Examin- er for a determination on the merits. There is no dispute that in determining whether the dealers are employees or independent contractors we are to apply commonlaw agency tests.3 As stated by the Board:4 [W ]hen persons are alleged to be independ- ent contractors, the determination requires the application of the "right of control" test. Where the person for whom the services are performed retains the right to control the manner and means by which the result is to be accomplished, the relationship is one of employment. On the other hand, where control is reserved only as to the result sought, the relationship is that of an independent contractor. The resolution of this determination depends on the facts of each case, and no one factor is dispositive. The standard is more easily stated than applied.s Moreover, the "right of control" standard must not be mechanically applied.6 "It is the total situation, including the risk undertaken, the control exercised, the opportunity for profit from sound management" that determines whether an employee or independent contractor relationship exists.? And the Board has emphasized: 8 In this connection, one of the factors considered by the Board in deciding whether an individual is an independent contractor or an employee is his opportunity to make decisions which will affect his profits and loss. With these standards in mind, I shall recapitulate the evidence which in my opinion establishes that the dealers are independent contractors. The written agreement between the Company and the newsdeal- ers specifically provides: 3. Covenant Against Control. That, notwithstand- ing anything to the contrary in this Agreement, it 4 A Paladins, Inc, 168 NLRB 952 5 Compare N.LR.B v. A. S. Abell Co., 327 F.2d I (C.A. 4) (holding newspaper distributors were independent contractors), with Rerald Co. v. N L R B, 444 F 2d 430 (C.A. 2) and News Journal Co v. N L RB., 444 F.2d 254 (C.A. 3) (holding newspaper distributors were employees). 6 A Paladins, Inc., supra. r US. v. Silk, 331 U.S. 704, 719. 8 A. Paladins, Inc., supra. 194 NLRB No. 4 38 DECISIONS OF NATIONAL LABOR RELATIONS BOARD will not exercise any direction or control or right thereof over the manner, methods or means Dealer shall employ to perform this Agreement. The agreement also specifically defines the dealer's relationship to the Company as that of independent contractor. Except for the requirement that the morning newspaper must be delivered by 6:30 a.m. and the Sunday paper by 7:30 a.m., the manner and method of delivering the newspapers is entirely within the discretion of the dealer. Thus, as found by the Trial Examiner: The method and manner of the hire of helpers [to deliver the newspaper], the number thereof and the payment to the helpers is entirely within the discretion of the Dealer, without consultation with or instructions from the Company and without notifying the Company concerning the identity of the people employed by the Dealer. The Dealers are not required to deliver papers themselves, although most do, and they are free to determine their own hours of work consistent with their responsibilities. The dealers have a reasonable discretion in deter- mining to whom they will not deliver newspapers. The Company will not require the dealer to serve delin- quent nonpaying customers, residences, or places which are inaccessible to vehicles, or on impassable streets, and the dealer's judgment in this regard is ordinarily respected by the Company. One of the Company's circulation department supervisors, Carl Lischeske, meets with each of the dealers in his territory once a week for about 20 or 30 minutes. According to the Trial Examiner, these meetings were "devoted in the main to nonbusiness matters, such as sports, hobbies, investments, etc. ... Another area supervisor, George Theobold, meets with his dealers far less often than does Lischeske. On a number of occasions the Company has notified dissatisfied customers that it was unable to be of assistance to them in a dispute with a dealer because of the fact that the dealer was an independent contractor. The Company does not carry on its payroll any dealers or persons employed by the dealers in selling and distributing the newspapers, nor does it withhold or pay social security taxes, income tax, unemploy- ment insurance, or any other payroll tax for or on behalf of the dealers or the persons employed by the latter. The dealers and their helpers do not receive any fringe benefits provided by the Company for its employees and they are not covered by the collective- bargaining contract between the Company and the Union. The dealer purchases his newspapers from the Company for- a price unilaterally fixed by the latter. But he may sell the newspaper at any price he chooses, although in most cases he adheres to the resale price suggested by the Company. This right to determine resale price is in fact exercised by some of the dealers. (See footnote 2 of the Trial Examiner's Decision.) The dealer orders the number of papers he believes he can sell and must pay for all papers received. He may not return unsold papers for credit, unless the Company unilaterally increases the order. The dealer has full discretion in billing customers to whom he sells and distributes papers. If a customer defaults in payment, the dealer bears the loss. The dealer has sole discretion in determining how to collect overdue bills, whether to utilize collection agencies or sue in small claims court. The dealer is responsible for any losses or expenses incurred in his business and for any losses, damages, or injuries to persons or property caused by the dealer or his helpers. He bears all losses resulting from theft of newspapers or vandalism to the newsracks and other equipment used by the dealer in the operation of his business. The dealer rents or leases a shed at his own expense where he receives the newspapers and prepares them for distribution. He also invests in newspaper racks, tying machines, wooden benches, etc., and a motor vehicle. He purchases at his own expense rubber bands, wax paper, string, and office equipment for billing. The dealer's investment in equipment, exclu- sive of an automobile in which to make deliveries and office equipment, is about $750. Dealers work no prescribed number of hours; some devote more time than others to their work. Some dealers take fairly long vacations of 1 or 2 months, others take no vacation; this is a discretionary matter with the individual dealer. The sole requirement as far as the Company is concerned is that the dealer notify the Company of the person taking his place during his absence. Some of the dealers also engage in other occupations, a fact well known to the Company. It appears to me that in making his overall assessment of the relationship between the dealer and the Company, the Trial Examiner failed to give proper weight to the numerous entrepreneural aspects of that relationship. For example, he failed properly to appreciate the significance of the fact that dealers are not required to sell newspapers at the Company's suggested retail prices. This is a most unusual relinquishment of control for this industry and is strongly indicative of an independent contractor relationship. The other aspects of the relationship which I have described above also show that the Company exercises a light hand over its dealers and that the latter have broad discretion in pursuing their distribution function. That the dealers are in fact NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 small business men whose income is essentially profit rather than wages is brought home most vividly, in my opinion, in the 6-month profit and loss statement of Dealer Leroy Holbrook included in the Trial Examin- er's Decision. According to this statement, Hol- brook's gross receipts for the 6 months ending June 1970 amounted to $50,249. During the same period his cost of purchases amounted to $31,787, leaving him with a gross profit of $18,462. His operating expenses for such items as delivery, taxes, office expense, postage, office rent, telephone, auto and truck expense, refunds, repairs to racks, supplies, etc., amounted to $11,293. Thus his net profit before depreciation was $7,169. In my opinion the foregoing establishes that the dealer's relationship to the Company is that of independent contractor rather than that of employee.9 I would so find. 9 Cf. US. v. Silk, 331 U.S. 704; Carnation Co. v. NL.R.B., 429 F.2d 1130 (C.A 9); Meyer Dairy, Inc v. N.LR.B, 429 F.2d 697 (C.A. 10). The cases of Herald Co. v. N.L.R B, supra, and News-Journal Co. v. N L.R.B., supra, in which the courts upheld the Board's findings that the newspaper deliverers there involved were employees and not independent contractors are readily distinguishable from the present case. In both these cases, the newspaper publishers exercised considerably more operational control over the deliverers than is true in this case. TRIAL EXAMINER'S DECISION STATEMENT OF THE CASE HERMAN CORENMAN, Trial Examiner: This proceeding under Section 10(b) of the National Labor Relations Act, as amended, was heard at San Francisco, California, begin- ning on November 18, 1970, and on various dates thereafter in November and December and was concluded on December 18, 1970. The consolidated complaint, as issued on August 19, 1970, and as amended on September 24, 1970, was based on charges filed by the individuals named in the aforesaid- caption as follows: charges in Cases 20-CE-68 through 20-CE-72 were filed on March 27, 1970; charges in Cases 20-CE-73 and 20-CE-74 were filed on June 4, 1970; and charges in Cases 20-CE-76 and 20-CE-77 were filed on August 24, 1970. Such charges were duly served on each of the Respondents. The consolidated complaint, as amended, alleges in substance that Newspa- per & Periodical Drivers' & Helpers Union Local 921, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, hereinafter called the Union, and San Francisco Newspaper Printing Co., Inc., hereinafter called the Company, violated Section 8(e) of the National Labor Relations Act, as amended, herein called the Act, by entering into, reaffirming, maintaining, and giving effect to an agreement requiring the Company to cease doing business with the Charging Individuals and other similarly situated newspaper dealers. Upon the entire record in the case and from my observation of the witnesses, I make the following: FINDINGS OF FACT I. THE BUSINESS OF THE COMPANY 39 The pleadings establish, and I find, that the Company is a Nevada corporation with its principal office and place of business in San Francisco, California, engaged in the business of newspaper printing in connection with which it performs the mechanical, circulation, advertising, account- ing, credit, and collection functions for the San Francisco Examiner division of the Hearst Corporation, publishers of the San Francisco Examiner newspaper , and the Chronicle Publishing Company, publishers of the San Francisco Chronicle newspaper. During the past year, the Company in the course and conduct of its business operations received gross revenues in excess of $200,000. During the past year, the Company in the course and conduct of its business operations purchased and received paper and printing supplies valued in excess of $50,000 which were shipped to it directly from suppliers outside the State of California. During the past year, the San Francisco Examiner and the San Francisco Chronicle have each held membership in and/or subscribed to interstate news services, have each published nationally syndicated features , and have each advertised nationally sold products. On the basis of these admitted facts, I find that the Company is engaged in commerce within the meaning of Section 2(6) and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The pleadings establish, and I find, that the Union is a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES A. Background The Union and the Company and/or its predecessors have had continuing collective-bargaining relations since 1937. The Company which began operations September 15, 1965, is owned equally by the Hearst Corporation and the Chronicle Publishing Company who continue to attend to the editorial functions of these two metropolitan daily newspapers. The Sunday newspaper is published j ointly by the coowners of the Company, and it is called the San Francisco Sunday Examiner and Chronicle. The Charging Individuals in this proceeding are newspa- per dealers, hereinafter called Dealers, who have distribut- ed and continue to distribute the Chronicle and the Examiner pursuant to separate uniform written agreements with the Company, known as "Dealer Purchase and Sale Agreement." Each Dealer distributes the newspapers exclusively in a prescribed area or territory. Douglas Brown distributes the Chronicle in the "Corte Madera" territory in Marin County; Walter De Long, the Chronicle in the "East San Rafael" territory in Marin County; Phillip Walker, the Chronicle in the "South San Rafael" territory in Marin County; Marvin W. Weissensee, the Chronicle in the "Kentfield" territory in Marin County, prior to his 40 DECISIONS OF NATIONAL LABOR RELATIONS BOARD termination on September 1, 1970; Kenneth C. Wollman, the Chronicle in the "San Anselmo" territory in Marin County; John Roy Conway, the Chronicle in the territory known as "Central San Jose" and the Examiner in the territory known as the "San Jose Streets" in Santa Clara County; LeRoy Lester Holbrook, the Chronicle in the territory known as "West San Jose" in Santa Clara County from 1967 to July 1, 1970, when his dealership was terminated by the Company pursuant to its collective- bargaining agreement with the Union which is under attack in this case as violative of Section 8(e) of the Act; Darrell E. Baker, distributor of the Chronicle in the "Fairfax" territory in Marin County; and Willis P. Kolk, distributor of the Chronicle in the "San Rafael" territory in Marin County. The Company and the Union entered into a renewal collective-bargaining agreement on April 25, 1967, effective by its terms from October 16, 1966, to and including December 15, 1968, which covered the wages, hours, and working conditions of employees of the Company engaged in the sale and distribution of its product within a specified geographic area. On March 22, 1968, the Union and the amended in the Supplemental Agreement. The supplemen- tal agreement includes, inter alia, the following provisions: Section 1. (a) This Agreement, except as hereinafter otherwise provided, applies to all employees employed within the cities of San Francisco, South San Francisco, San Bruno, Millbrae, Burlingame, San Mateo, Foster City, Oakland, Berkeley, Alameda, Albany, El Cerrito, San Leandro, Belmont, San Carlos, Pacifica, Castro Valley, San Lorenzo, Redwood City, Atherton, Menlo Park, and Hayward-including road-men operating within a radius of fifty (50) miles of San Francisco-whose work is to promote the sale of, distribution of and the collection for the Employers' product through the medium of carrier boys, news boys, news vendors and news stands, including those full time employees performing dispatching. Provided, nothing herein contained shall be construed to interfere with part time dispatchers as now employed. Company entered into a "Supplemental Agreement," (b) It is agreed that Section 1 (a) be subject to effective by its terms from February 25, 1968, to and modification in accordance with the following terms:- including February 28, 1971, which incorporates the terms (1) The Union's jurisdiction shall be extended to of the aforesaid agreement of April 25, 1967, except as include: Morning Newspaper Effective Date East Menlo Park East Palo Alto 4-1-68 Palo Alto 7-1-68 South Palo Alto 10-1-68 Mountain View W. Mountain View Moffett Field Barron Park Los Altos 1-1-69 4-1-69 No. Sunnyvale 7-1-69 Sunnyvale 9-1-69 Santa Clara 1-1-70 Cupertino 3-1-70 W. San Jose 7-1-70 Campbell 10-1-70 Monte Vista 1-1-71 Afternoon Newspaper Sunnyvale Santa Clara W. San Jose Santa'Clara Streets Morning Newspaper Central San Jose Corte Madera Almaden Kentfield NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 Effective Date Afternoon Newspaper 3-1-71 Central San Jose 7-1-71 San Jose Streets East San Jose* Foothills* San Anselmo (*llrilpitas and E. San Jose hills excluded) Fairfax San Rafael East San Rafael South San Rafael 9-1-71 1-1-72 4-1-72 7-1-72 (2) The dealer in any one or all of the above designated cities whose contract is terminated in accordance with the above terms shall, at the Employer's option, be permitted to continue in the same territory as an employee working under Union jurisdiction and so long as he remains continuously employed in the same territory shall not be subject to replacement in accordance with the seniority provisions of Section 26 but in all other respects shall be subject to the terms of this Agreement. The collective-bargaining agreement between the Union and the Company was subsequently modified in 1969 to change the dealership termination dates of certain dealer- ships, for assumption of union jurisdiction, namely the Chronicle Monte Vista dealership, the Examiner Monte Vista and Central San Jose dealership and the Examiner West San Jose dealership. It is clear that the Respondents have reaffirmed and given effect to the termination provisions of section 1(b) of their March 22, 1968, supplemental agreement, as modified. Thus, on March 1, 1970, Wray Chain, a Dealer distributing the -Chronicle in the Monte Vista territory of Santa Clara County, was terminated pursuant to section 1(b) of the collective-bargaining supplement, as modified for assump- tion of the Union's jurisdiction, and Holbrook was terminated as a Chronicle Dealer in West San Jose July 4, 1970, for inclusion in the Union's jurisdiction pursuant to the aforesaid supplement. Holbrook was retained by the Company as a district manager under the collective- bargaining agreement which required him to joist the Union after 30 days. Further implementation of the dealerships' terminations under section 1(b) of the collective-bargaining 41 supplement was discontinued pursuant to a temporary injunction under section 10(1) of the Act. It is clear from the record that the March 22, 1968, supplemental agreement extending the Union's jurisdiction to the dealerships therein designated on future effective dates is a continuation of past successive agreements over the years in which the Company and/or its joint owners have gradually extended recognition to the Union over Dealers outside the metropolitan cities of Oakland and San Francisco and into the suburbs north, south, and east of the two metropolitan cities. It is established without dispute that it has been the practice, when the dealership was terminated to absorb the Dealer into the collective- bargaining unit where he was assigned the employee classification of "District Manager" or "Wholesaler" performing duties and undertaking similar responsibilities that he had practiced as a dealer in home delivery and street sales. All parties agreed that for the purposes of this case the terminated Dealer who subsequently was covered by the collective -bargaining agreement thereby became an employee under the Union's jurisdiction and was com- pelled to become a member of the Union pursuant to the union-security clause in the collective-bargaining agree- ment. B. The Issues The issues are: Whether section 1(b) of the March 22, 1968, supplement to the collective-bargaining agreement and its reaffirmance and implementation violates Section 8(e) of the Act. The resolution of this issue is contingent upon the determination of two preliminary issues, namely, (1) whether the news dealers are employees or independent contractors. The parties agree that if the Dealers are 42 DECISIONS OF NATIONAL LABOR RELATIONS BOARD employees, there can be no Section 8(e) violation. See, e.g., Minnesota Milk Company v. N.L.R.B., 314 F.2d 761, 764 (C.A. 8, 1963). However, if the Dealers are found to be independent contractors, the question is posed (2) whether section 1(b) of the March 22, 1968, supplemental agreement has a primary work preservation objective so as to insulate it from a Section 8(e) violation. C. Employee vs. Independent Contractor Status The Company provides a uniform printed agreement for signature by the Dealers called a "Dealer Purchase and Sale Agreement." All Dealers who distribute the Chronicle and Examiner sign such an agreement and it purports to govern their relations. The current "Dealer Purchase and Sale Agreement" has been in effect since April 12, 1969, and differs in some respects from the previous agreement.' Relevant provisions of the agreement are in part as follows: 1. Printing Company agrees: 1. Sales of Newspapers. To sell to Dealer on each day of publication copies of the Chronicle and Sunday Examiner & Chronicle at the Wholesale Rate. 2. Statements of Account. To furnish Dealer with a statement of account for each Billing Period, including (but not limited to) the amount due Printing Company for copies of the Chronicle and the Sunday Examiner & Chronicle sold to Dealer. 3. Covenant Against Control. That, notwithstanding anything to the contrary in this Agreement, it will not exercise any direction or control or right thereof over the manner, methods or means Dealer shall employ to perform this Agreement. 4. Assistance. Upon request, to give Dealer advice and the benefit of its knowledge regarding subscrip- tions, service matters, deliveries or collections. 6. Customers List. To the extent available, and to the extent not already furnished, to furnish or cause to be furnished for the use of Dealer a list of names and addresses of Customers in Dealer's Territory. II. Dealer agrees: 1. Purchase of Newspapers. To purchase at the Wholesale Rate and accept delivery from Printing Company on each day of publication sufficient copies of the Chronicle and the Sunday Examiner & Chronicle to adequately serve and supply all Customers in Dealer's Territory. 2. Sale and Deliveries. To sell and deliver copies of the Chronicle and the Sunday Examiner & Chronicle to all Customers in Dealer's Territory and to make all sales and deliveries promptly and timely after copies are sold and delivered to Dealer. 3. Payments. To pay Printing Company within 15 days following the end of each Billing Period for all copies of the Chronicle and the Sunday Examiner & Chronicle delivered to the Dealer during such Billing Period, at the Wholesale Rate, in lawful money of the r For example, the previous dealer agreement, effective February 1, 1967, required the Dealer to sell newspapers to subscribers at a fixed retail rate, determined by the Company and to sell to authorized sales outlet customers at not to exceed the retail rate fixed by the Company. The United States of America, at its address hereafter stated. 4. Guaranty of Performance. As a guaranty for Dealer's faithful performance of this Agreement: (a) Cash Deposit-(Details not here set forth), (b) surety Bond and Deposit-(Details not here set forth). 5. Records. To keep up to date such records as are used by Dealer in Dealer's business and/or furnished or caused to be furnished to Dealer by Printing Company; and upon demand at any time, and from time to time, to supply to Printing Company from such records any information which Printing Company may request, including (but not limited to) a complete list of names and addresses of all Customers served by Dealer. 6. Promotion of Circulation. To make an earnest, conscientious and continuing effort to promote and increase the circulation of the Chronicle and the Sunday Examiner & Chronicle within Dealer's Territo- ry- 7. Substitute. To furnish a temporary substitute acceptable to Printing Company at Dealer's expense whenever such a substitute is necessary to perform Dealer's obligation under this Agreement. 9. Other Territories. Not to sell or deliver copies of the Chronicle or Sunday Examiner & Chronicle except within Dealer's Territory. 12. Duties Upon Termination. Upon termination of this Agreement: (c) Final Settlement of Accounts-To pay to Printing Company within fifteen (15) days thereafter all amounts, then or thereafter due and payable from Dealer to Printing Company, according to the terms of this agreement, including (but not limited to) the purchase price, at Wholesale Rate, for all copies of the Chronicle and the sums of money collected in advance by Dealer from Customers served by Dealer. III. Both Parties agree that: 1. Allowances, etc. Dealer shall not be entitled to 'receive any compensation, allowances or other payment from Printing Company. 2. Independent -Contractor Relationship. Dealer is engaged in an independent business and is an independent operator, contractor, merchant and/or distributor and not an employee of Printing Company; Dealer personally hires and pays all persons assisting Dealer in the sale and distribution of the Chronicle and the Sunday Examiner & Chronicle and in the collection of money from Customers; and Dealer has sole and exclusive control over all of Dealer's agents and employees. Without being construed as limiting or derogating Dealer's status as anvindependent contrac- tor, Dealer shall maintain adequate workmen's com- pensation insurance and furnish Printing Company with satisfactory evidence of such insurance; with reference to motor vehicles used in the performance of Dealer's obligations hereunder, and all premises used elimination of these restrictive resale provisions from the April 12, 1969, agreement appears to have, resulted from precautionary measures taken by the Company not to violate legal principles announced in Albrecht v. The Herald Co., 390 U.S. 145 (1968). NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 by him in such performance, he shall maintain bodily injury liability insurance with limits not less than 100/200,000 and property damage liability insurance with limits of not less than` 5,000. Such liability policy(ies) shall designate Printing Company as a co- assured and shall provide for not less than ten (10) days prior written notice to Printing Company before any cancellation of said policy(ies) become effective. Dealer shall furnish Printing Company with certificate(s) showing that such liability insurance is currently in effect with an insurer authorized to transact business in California. 3. Dealer's Liabilities. Printing Company shall not, in any event, be liable for the following and Dealer shall be solely liable therefor: (a) Any losses or expenses incurred in Dealer's business; (b) any losses, damages and/or injuries to the person or property of Dealer, Dealer's agents or employees, Customers served by Dealer, and other persons, caused by or in any way connected with or attributable to any act or omission of Dealer or Dealer's agents or employees. 4. Indemnity. Dealer shall, under all circumstances, indemnify and hold Printing Company harmless from liability for any and allof the aforementioned expenses, losses, damages and/or injuries and for any and all losses, damages, expenses, and/or liabilities caused by Dealer's breach of or failure to properly perform any promise or condition herein contained. 5. Substitute for Dealer. If Dealer shall be unable at any time and for any reason to fulfill Dealer's obligations under this Agreement Printing Company, without terminating this Agreement or releasing Dealer from any of Dealer's obligations hereunder and without notice to Dealer, shall have the right' to cause such obligations to be performed by some other person at the expense of Dealer. 6. Right to Terminate. Either party may terminate this Agreement upon giving the other party, at the address hereafter stated, written notice of termination not less than thirty (30) days prior to the effective date of such termination, which date shall be specified in the notice; provided, however, that if Dealer at any time fails, refuses or becomes unable to fully perform any promise or condition hereof, Printing Company may terminate this Agreement upon written notice to Dealer, which notice shall be effective immediately. 11. Assignment of Agreement. This Agreement is not assignable nor transferable in whole or in part by Dealer, voluntarily, by operation of law or otherwise. IV. Definitions: The following terms shall have the following meanings: 3. Wholesale Rate: The wholesale rate of the Chronicle and the Sunday Examiner & Chronicle as fixed and established from time to time by the publisher thereof. 4. Territory. The territory (established and defined is The quote is from the agreement with Chronicle Dealers. The identical agreement is also made with Examiner Dealers relating to the Examiner distribution. 2 Dealer Weissensee notified his residential subscribers that effective October 1, 1969, subscription prices would be increased 25 cents per month above the suggested resale price. Dealer Walker sold the Sunday-only 43 from time to time by Printing Company) within which Dealer is authorized to sell and deliver copies of the Chronicle and Sunday Examiner & Chronicle. 5. Billing Period. The period fixed and established from time to time by Printing Company for periodic billing to Dealer which, unless otherwise fixed, shall be a calendar month.ia I find that the Company and the Dealers are substantially carrying out the terms of the Dealers' agreement, but by this finding make no conclusion on the independent contractor question of law. In connection with the performance of the agreement, I make the following further findings of fact: The Dealers are each allotted an exclusive territory in which to sell their newspapers to home subscribers and to retail outlets, such as liquor stores, drugstores, newsstands, etc., or through honor racks or coin operated racks. They are required to confine their sales to the restricted territory. The newspapers coming from San Francisco are dropped off daily by the Company's truckdrivers at designated sheds or buildings leased by the Dealer at his own expense. The Dealer purchases his newspapers from the Company for a price unilaterally fixed by the Company. Under the current contract in effect since April 12, 1969, the Dealer may sell the newspapers at any price he chooses, but in most cases he adheres to the resale price suggested by the Company? The Dealer is required by the Company to deliver the morning paper by 6:30 a.m. and the Sunday paper by 7:30 a.m. The average dealer distributes approximately 1,700 daily and 2,000 Sunday papers.- The Dealer hires on the average four to six individuals to help in the handling, folding, and distribution of the papers. Dealers customarily hire adult drivers to deliver the papers to home subscribers and other customers by motor vehicle and sometimes boys to fold the papers and carry them. The method and manner of the hire of helpers, the number thereof, and the payment to the helpers is entirely within the discretion of the Dealer, without consultation with or instructions from the Compa- ny and without notifying the Company concerning the identity of the people employed by the Dealer. The Dealers are not required to deliver papers themselves, although most do, and they are free to determine their own hours of work consistent with their responsibilities. The Company does not carry on its payroll any Dealers or persons employed by the Dealers in selling and distributing the newspapers, nor does it withhold or pay social security taxes, income tax, unemployment insurance, or any other payroll tax for or on behalf of the Dealers or the persons engaged by them in handling, selling, or distributing the newspapers; nor do the Dealers or their helpers receive any fringe benefits such as health and welfare coverage, paid vacations, overtime compensation or pension or retirement benefits from the Company; nor are they covered by the collective-bargaining agreement between the Company and the Union. paper for 25 cents per month above the suggested resale price to home subscribers. Dealer Nelson was selling the Chronicle from the racks at 15 cents per copy when the suggested retail puce was 10 cents. Dealer Conway sells the daily paper at 1/2 cent under the suggested price because of competition from the San Jose Mercury and other newspapers. 44 DECISIONS OF NATIONAL LABOR RELATIONS BOARD _ The Dealer orders the number of papers he believes he can sell, but he must pay for all papers received and may not return unsold papers for credit except in those instances where the Company unilaterally increases ("stuffs") the Dealer's "draw" because of a newsworthy event or other reason; in which case the Company will accept the return of unsold newspapers for credit; and to encourage the volume sale of Sunday papers, the Company will accept for credit return papers in excess of eight percent where it unilaterally increases the order. Duration of Agreement The "Dealer Purchase and Sale Agreement" is indefinite in duration, but either party may terminate the agreement on 30 days' written notice, and the Company reserves the right under the agreement's terms to terminate the Dealer "immediately . . . if Dealer at any time fails, refuses r becomes unable to fully perform any promise or condition set forth in the Agreement." 3 Some of the Dealers engage in other occupations, a fact well known to the Company. For example, Walker for a time operated a small coffeeshop and vending machine business; Weissensee engaged in the real estate business; Brown was a stamp and coin collector; Kolb a minister of a Jehovah's Witnesses Church; Holbrook an assistant manager of a trailer park; and some Dealers sold competing newspapers. Thus, Conway rents a newsstand at the Greyhound Bus Depot in San Jose where he sells competing newspapers such as the San Jose Mercury and News; and in the East San Jose territory Dealer Nelson sells the Los Angeles Times as well as the Chronicle. The Company had no objection to this outside employment as long as it did not interfere with the Dealer's responsibility to distribute the newspaper. The Dealers have a reasonable discretion in determining to whom they will not deliver' newspapers. The Company will not require the Defiler to serve delinquent nonpaying customers, or residences or places which are inaccessible to vehicles, or on impassable streets, and the Dealer's judgment in this regard is ordinarily respected by the Company. The Company in addition to its headquarters office in San Francisco, which houses, among other departments, its circulation department, also maintains circulation depart- ment branch offices in Corte Madera for its Marin County operations and in Mountain View for its Santa Clara- County lower peninsula and East Bay operations. Carl Lischeske is the circulation area supervisor in the Corte Madera office and George Theobald the circulation area supervisor in the Mountain View office. These two supervisors are in turn under the direction of Louis Dubour; the suburban circulation, manager, with offices at San Francisco, who in turn is responsible to Mr. Hobson, the circulation director, who also headquarters in San Francisco. Prior to July 1, 1970, the Marin County Dealers together with the Company maintained an answering service at the Corte Madera office in Marin County. The 3 The Company has in the past terminated Dealers for cause, namely delinquency in payment of the monthly bill and failure to get up in the morning to see that the papers are delivered. 4 For example, he would meet Dealer Walker in Walker's coffee shop Dealers each paid $35 a month toward the partial cost of operating the answering service, the Company paying the balance which represented approximately three-fourths of the cost. The Dealer was required to telephone the Company's answering service twice (8 and 10 o'clock) in the morning and once in the afternoon to receive messages or complaints. The exact times of these calls were logged by a clerk at the answering service and placed on a master list. Additionally, many complaints are made by customers to the Company's home office in San Francisco by phone or letter. Lischeske usually meets each Dealer once a week at an agreed-on spot convenient to the Dealer.4 These meetings would last about 20 to 30 minutes and would be devoted in the main to nonbusiness matters, such as sports, hobbies, investments, etc., and the balance of the time devoted to dealership problems, such as placement of new racks, whether racks are sufficiently supplied with newspapers, and sales promotion tactics, and with customers' aggravat- ed complaints in which Lischeske confirmed that they had already been attended to by the Dealer who in most cases had received written notice of the complaint several days before the matter was broached by Lischeske. It appeared that in most cases the Dealer's judgment as to the disposition of the complaint was satisfactory to Lischeske. Mr. George Theobald, the area supervisor in San Mateo, Santa Clara, and Alameda Counties, presently responsible for 27 dealerships, met with his Dealers far less often than Lischeske met with his Dealers, and Theobald had no fixed schedule of meetings with his Dealers. Both Lischeske and Theobald would also contact the Dealers by phone. The Dealer's Investment The Marin County Dealer's investment in his dealership consists of a number of newspaper racks, tying machines, wooden benches on which to stuff and fold the papers, rubber bands, wax paper, string, office equipment for billing, and a motor vehicle. The Company offers to sell news rack equipment and other essential supplies at or below its cost, but the Dealer is free to buy elsewhere. Wax paper to wrap the paper in rainy weather is sold to the Dealer at 33 percent below the Company's cost. The fair value of the Dealer's equipment on an average is approximately $750 exclusive of the motor vehicle used by the Dealer to make deliveries, as well as office equipment such as typewriter and addressograph equipment used by some Dealers .5 Preparation of Paper for Delivery Preparatory to delivery, the paper is folded and tied and in rainy weather placed in wax bags to insure a dry paper to the home subscriber. Failures in preparation of the paper for delivery result in many customer complaints to San Francisco and the answering service. over a cup of coffee. 5 Dealer Conway who handles San Jose Street sales of the Chronicle and the Examiner testified he had 179 coin operated racks valued at $5,600. NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 45 Profit Method of Computing Dealer Income The Dealer's gross profit from his dealership is the difference between the cost of the newspapers to him and the price he sells them to his customers who comprise essentially home subscribers, newsstands and customers who purchase from coin racks. The net profit is derived by deducting the Dealer's costs of operation from his gross profit in the same manner as any self-employed business- man would compute his net profit. Surety Bond The Company bills the Dealer each month for the papers sold to the Dealer in the previous month. The Dealer is required to make payment in full by the fifteenth of the month and if he does not make payment by the twentieth the matter is turned over to the Surety Company and the Dealer is subject to termination for cause. Customarily, the Company requires that the Dealer post a surety bond in an amount equal to the dollar volume of newspapers purchased in a 2-month period and as collateral for the surety bond the Dealer is also required to have on deposit with the Company a cash bond equal to approximately 25 percent of the surety bonds The Company advances the premium on the surety bond and bills the Dealer semiannually for the amount of the premium. In the monthly bill submitted to the Dealer the Company also includes the bill for supplies and equipment sold by the Company to the Dealer, such as news racks, wax, etc. Hours of Work The Dealer works no prescribed number of hours, and some Dealers devote more time than others to their work. Representative of a Dealer's workday in Marin County is that described by Dealer Douglas Brown, although other Dealers testified they worked longer hours than Brown. Brown testified he rises at 2 o'clock in the morning and arrives at his newspaper shack at 2:30 a.m., where a truckdriver of the Company will drop off his morning papers. Brown checks his newspaper racks to ascertain if any of them have been broken into; he removes the previous day's papers from the news racks and is back at his shack when the truck arrives from San Francisco with his newspapers. Brown sees to it that his drivers are on the job, that they receive the correct number of newspapers and that his drivers get their instructions on "starts" and "stops." Brown then ties up what papers he must himself throw, loads his car, and goes out and throws them. If Brown has any driver trouble or a driver oversleeps, in that case, according to Brown, "It is up to me to either throw his route or get him on the job." After Brown "throws his route," he returns to his shack, picks up the "finals" or 6 The Company pays the Dealer interest at 4-1/2 percent for the amount of the cash bond. 9 Prior to August 1, 1970, Brown and other Marin County Dealers called the Corte Madera answering service for their messages and complaints 8 The aforesaid activity in opposition to company control appears to have had its inception in the antitrust litigation between the Company and a dealer named Wyman after the decision of the United States Supreme Court in Albrecht v The Herald Co., 390 U.S. 145 (1968), an antitrust case "street copy" which he distributes to his newspaper racks and stores. Brown usually has some free time between 6:30 and 8 a.m. to take a nap. At 8 o'clock he picks up his messages from his code-a-phone and picks them up again at 10 a.m., and he then takes care of any messages or complaints which have come in over the code-a-phone.7 Brown, like most of the Dealers, considers his drivers, all of whom drive their own vehicles, as independent contractors. His drivers furnish and maintain their own car insurance and they are paid on a piece-rate basis by Brown according to the number of customers they throw. This payment is made by Brown and not by the Company. Brown testified that his workday in connection with newspaper delivery usually ends at 10 a.m. on weekdays and 11 a.m. on Sundays. Additionally, he must also attend to his office work, billing, collections, and sales promotion. The Rebellion of the Marin County Dealers Prior to August 1, 1970, the Dealers in Marin County participated in the answering service conducted by the Company at its suburban office at Corte Madera in Marin County. Each Dealer was charged $35 per month by the Company toward .the cost of the answering service and the Company contributed the balance of the cost. In the latter part of July 1970, many of the Marin County Dealers served notice on the Company that they were dropping out of the answering service effective August 1, 1970, to install their own individual answering service. The reasons given at the hearing in this case for this action by some of the Dealers was a desire to have 24-hour-per-day service rather than the 12-hour-per-day answering service at the Corte Madera office; others ascribed a desire to have their messages confidential; while others testified that the Corte Madera answering service was not satisfactory and misdirected messages. The company management although obviously unhappy voiced no clear objection to the Dealers' intentions to withdraw from the Corte Madera answering service. There is also credible evidence in the record that the Dealers, who had formed an association of newspaper dealers, were manifesting a purpose to achieve greater independence from company control by their withdrawal from the answering service.8 Effective August 1, 1970, these Marin County Dealers did in fact withdraw from the Company's answering service. Some installed code-a-phones in their homes or their sheds while others merely used their regular telephone. Thereafter, these Dealers refused to turn over their messages or complaints to Lischeske or to discuss business with Lischeske, as had been the custom, the Dealers taking the position that as independent contractors they were not subject in any manner to the control of the Company. Reacting to this conduct by the Dealers, Mr. Kenneth R. Hobson, the Company's circulation director, on July 31, 1970, addressed holding that a newspaper publisher may not fix the resale price of its newspaper by an independent newsdealer. Mr John Arteseros, who was temporarily taking over Supervisor Lischeske's duties while he was on vacation leave, testified credibly that Dealer Douglas Brown told hun on July 21, 1970, that the Dealers were all going to pull out from the answering service, giving as the reason - "Well, we are paying an attorney, and we have got to do what he says-you are exercising too much control over us." 46 DECISIONS OF NATIONAL LABOR RELATIONS BOARD identical letters to these Dealers in which, among other things, he advised the Dealers that the Company required "that it have full, complete and current access to all information concerning complaints by subscribers, all new service starts, and all stops in service, whether permanent, indefinite or temporary." Hobson's letter further notified the Dealers that it was the obligation of each Dealer to furnish to the supervisor on a daily basis all such information. Hobson further recited in the letter that the Company required information as to the number of unsold Sunday newspapers and it further expected that each Dealer would meet with a supervisor at least once each week for the purpose of discussing those various matters incidental to the distribution of the Chronicle and the Sunday Examiner and Chronicle as was customary in the past. Hobson further notified the Dealers that "any dealer who fails to observe the foregoing requirements or who shall depart in significant fashion from the established practices shall be subject to termination." The Mann County Dealers persisted in refusing to meet with Supervisor Lischeske or to turn over their messages and complaints coming through their individual telephones or code-a-phones and persisted in refusing to permit the count of their Sunday returns or to meet with Lischeske to discuss business as had been their custom. Consequently, Mr. Louis F. Dubour, suburban circulation manager, under date of August 26, 1970, directed the following letter to each of the Dealers: "Pursuant to Article 3, paragraph 6, please be advised our contract with you is terminated effective October 1, 1970."9 After receiving theAugust 26, 1970, termination notices, the Dealers were notified by the supervisors that the notice of termination would be rescinded if they would meet the requirements set forth in Mr. Hobson's letter of July 31, 1970. The Dealers subsequently having manifested a good-faith desire to comply with Hobson's July 31 letter, Hobson, under date of September 22, 1970, notified each of them in writing that the termination notice scheduled to be effective October 1, 1970, had been revoked, Hobson notifying them he was "satisfied that you are complying with the requirements of the Company." Hobson further cautioned the Dealers in his September 22 letter that their continuing relationship with the Company was dependent on their continuing compliance with well-established company practices and procedures mentioned in earlier letters. In the latter part of August 1970, Lischeske was given access to the Dealers' messages over their private phones or code-a-phones; they resumed their weekly meetings with him to discuss company matters as had been, the previous practice; and they accounted for the Sunday returns. The Lack of a Proprietary Interest in the Territory Although the dealers purchase and own the equipment which they use in newspaper distribution such as their motor vehicles, benches, newspaper racks, wax paper, and miscellaneous supplies, as well as their office equipment such as typewriter desks, files, addressograph, code-a- phone, etc., they have no ownership in the territory, no goodwill or customer list, and a new dealer pays nothing for the customers. Moreover, the agreement is not assignable by the dealer. The old dealer, under the overall supervision of the Company's supervisor, turns over to the new dealer his customer lists. The new dealer is selected by the Company's managerial representative and it has been the practice of the new dealer to purchase from the old dealer the equipment consisting of news racks, tables, benches, and supplies, customarily valued at approximately $750 by direct negotiation. Temporary Absences Some dealers take fairly long vacations of 1 or 2 months, whereas others take no vacation, and it has been a matter within the discretion of the dealer to absent himself temporarily without permission from the Company, the dealer merely being required to notify the office of the responsible person taking his place during his temporary absence. Records The ,Company does not keep a record of the Dealers' subscribers or customers but the Dealer is required to keep such a list for the Company's information on request. The Company does not seek to know the identity of the persons who are engaged by the Dealer to assist him in delivering his papers either to home subscribers or to news vendors such as drugstores, liquor stores, etc. The Company's Corte Madera office under the supervision of Suburban Supervi- sor Lischeske keeps a daily log of the times that each Dealer phones in to that office to ascertain messages and complaints, and a daily log is kept of the starts and stops and of the number of complaints each day and each month for each Dealer, and a "derby" sheet is prepared by Supervisor Lischeske showing the comparative rank of each Dealer in volume of complaints per month. Lischeske will, in his meetings with the individual Dealers, relate to them how they rank on the derby sheet. Lischeske makes notations on his copy of the aggravated complaints the manner of their disposition after discussing them with the Dealer. Promotion The Dealer is required under the terms of the contract to make an earnest, conscientious, and continuing effort to promote and increase the circulation of the newspaper within the Dealer's territory. Assisting the Dealer in his promotional activities, the Company provides free sample newspapers or post cards at no cost to the Dealer to be distributed by the Dealer at his own cost, if any, to nonsubscribers. Other means utilized by the Company to promote new customers is through a telephone solicitor maintained at the Company's expense who solicits new customers, and occasionally boy crews are used by the Company at its expense to personally solicit home subscribers. In this promotional campaign the Company respects the Dealers' wishes and accordingly will not solicit 9 This referred to the "Dealer Purchase and Sale Agreement" provision providing in part that "Either party may terminate this Agreement upon giving the other party written notice of termination not less than thirty (30) days prior to the effective date of such termination." NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 new customers in areas vetoed by the Dealer because of high risk credit and will leave it to the Dealers' discretion to reject new subscribers who are poor credit risks. The Company further assists in promotion by giving premiums such as electric clocks to new subscribers and pays the Dealer a $1.50 bonus on new customers procured by the Dealer through the sample newspapers or post cards. The Company also conducts new subscriber contests among the Dealers and awards to the winners $100 prizes, trips to Las Vegas, etc. New Subscribers The Company's suburban office at Corte Maders follows up on new subscribers to verify if the newspaper has started delivery and if the customer is satisfied, and in cases of aggravated complaints coming in either to the answering service or to the San Francisco office, either the supervisor or one of the clerks under his supervision in the office will phone the customer to confirm whether the subscriber's complaint has been satisfactorily adjusted by the Dealer. Risk of Loss The Company does not reimburse the Dealer for any losses sustained by him through the inability to collect from the customer whether that customer is a home subscriber or a retailer and it is entirely in the discretion of the Dealer what means he uses to collect the bill, and on nonpaying customers collection is sought by the Dealer through collection agencies or through suit in the small claims court. Additionally, the Company assumes no liability for theft or damage to the news racks or other equipment owned and used by the Dealer in the operation of his business, and the Company does not intrude into the financial relationship between the Dealer and his helpers. Independent Contractor Provisions of Agreement The Dealer Purchase and Sale Agreement expressly provides that the Company'will not exercise any direction or control or right thereof over the manner, methods, or means the Dealer shall employ to perform the agreement and the agreement also stipulates that the Dealer is engaged in an independent business and is an independent operator, contractor, merchant, and distributor, and not an employee of the Company. The evidence shows that on a number of occasions the Company has notified dissatisfied customers that it is unable to be of assistance to them in a dispute with a dealer because of the fact that he is an independent contractor. Thus, in response to a letter from Chronicle subscriber Zazzi, the Company's circulation director in a letter dated March 18 , 1970, told here in part: Mr. Weissensee, like all our dealers, is an independent contractor and not an employee of this company so control over his method of operation is somewhat limited. If at this time you still have not received the refund mentioned in your letter, our suggestion would be for you to go to the small claims court as you have indicated. In a letter to a customer named Richard M . Pastarino dated March 4, 1969, the Company's suburban circulation manager said: 47 The delivery of the Chronicle in your area is handled by a contracted independent dealer, a Mr. Charles Nelson. As such, there is only a limited amount of control we can exercise over his operation .... Presently Mr. Nelson is threatening small claims action. I cannot interfere with this threat because of our contractor relationship. I hope this action will be avoided by your payment of the bill. At that time we can ask Mr. Nelson to resume service, and also mail you a premium. In a letter responding to correspondence from Mr. Jack A. Feller, Jr., dated October 24, 1969, the Company's suburban circulation manager replied: The distributions and the collections of the San Francisco Chronicle in your area is handled by an independent dealer. Our control over a dealer is quite limited. The Company through the testimony of management representatives Dubour and Hobson asserts that in a few cases this type of a letter is employed in the expectation that the Dealer is in a better position than they are to resolve the customer's grievance. Aggravated Complaints The Company has a system of recording all messages and complaints that come into the central office at San Francisco or the suburban offices at Corte Madera or Mountain View. All complaints which persist more than 1 day are arbitrarily classified as aggravated complaints. These are written up either at the central office in San Francisco, or the suburban office as the case may be, copies thereof are delivered to the Dealer involved in the complaint, and copies go to the supervisors, either Lischeske in Marin County or Theobald in Santa Clara County. At his weekly meetings with the individual Dealers in Marin County, Lischeske would take up each individual complaint to ascertain how it has been or will be resolved and to offer suggestions on its resolution. Typical of the aggravated complaints taken up by the suburban supervisor with the Dealers are such matters as: wet papers, late delivery, no delivery, delivery in improper place, improper start of delivery, disturbances by drivers, billing or collection problems, failure to make newspaper inserts, newspaper routes, racks empty. At these weekly meetings, the supervisor discusses methods of increasing the newspa- per draw and promotional techniques such a free newspaper samples, post card enclosures in newspapers and other methods of obtaining new subscriptions. Lischeske by his testimony concedes that he has regarded the newspaper dealers as independent contractors and has dealt with them on that basis, namely in making suggestions, counseling, and advising them rather than giving them orders. As I have stated heretofore, Lischeske's dealings with the individual dealers have been on a weekly basis and Theobald's dealings have been less frequent with the dealers under his supervision in Santa Clara County. Illustrative of the number of aggravated complaints registered in one month in Marin County is June 1970, in which month the Corte Madera answering service received 270 aggravated complaints regarding the Southern Marin County Dealers involved in this case. It has been the 48 DECISIONS OF NATIONAL LABOR RELATIONS BOARD practice of the supervisor or his clerks in the answering service to contact the complaining subscriber to verify that the complaint has been attended to by the Dealer. The supervisor notes on the face of the aggravated complaint memorandum the disposition of the complaint after discussion with the Dealer. Company Subsidies to Dealers During the 53-day strike in January and February 1968, the Company made loans up to $400 to the Dealers upon request. With the termination of the strike, the Company granted subsidies to the Dealers averaging approximately $1,200 to $1,400 to each Dealer on condition that the Dealer maintain his daily draw of newspapers at a stipulated level in comparison with his daily draw before the strike. The subsidy was paid in equal installments to the Dealer for 3 consecutive months. The Company also assists certain Dealers to supplement their income in various ways. For example, Dealer Conway in San Jose is charged 1-3/4 cents less for the Examiner than the Chronicle because of the difficult competition the Examiner has with the San Jose newspapers and a further subsidy was granted to Conway of a car allowance of $400 per month. Additional- ly, Dealer Baker is given "controlled" accounts where the Company's truck delivers the papers for Baker without cost to Baker. Billing The dealer takes full responsibility for billing the customers to whom he sells and distributes papers. Customarily, the home delivery subscribers are billed bimonthly, 1 month in arrears and 1 month in advance. Some dealers use different methods than others, as the billing is within the dealer's own discretion. The customer usually pays by check through the mail, and in some cases the dealer authorizes a drugstore or some other retail location to receive payment from the subscribers. The dealer usually collects weekly from the retail distributors and gives them credit for any unsold papers. However, the dealer himself is not credited for unsold papers except in situations where the Company has "stuffed" the dealer's draw, in which case the dealer, upon request, will receive credit for unsold papers as well as for the Sunday returns in excess of eight percent. Insurance The dealers are required to carry certain minimum limits of liability insurance on their motor vehicles naming the Company as the co-insured, and the dealer requires his helpers also to carry the minimum limits on their motor vehicles. The dealer also carries workmen's compensation insurance on his helpers, and at least one of the dealers treats his helpers as his employees rather than independent contractors making the usual payroll deductions for social security, etc. Dealers' Business Premises The dealer usually maintains his office at his residence and in many cases his wife or members of the family assist him in keeping of office records such as customer account cards, billings, and collections. The dealer rents or leases a shed or other premises at his own expense where he receives the newspapers and prepares them for distribution. The rent for the shed usually approximates $25 a month. Dealers' Losses and Liabilities Dealers are responsible for any losses or expenses incurred in their' business and for any losses, damages, or injuries to persons or property caused by the Dealer or his helpers. Thus, in some cases the Dealer has been responsible to reimburse home subscribers for the acciden- tal breakage of a window. The dealer also absorbs all losses resulting from theft of newspapers or vandalism to their newspaper vending machines. Dealers' Monetary Return As has been stated heretofore, prior to the April 12, 1969, Dealer Purchase and Sale Agreement, the Company fixed both the wholesale rate to the Dealer as well as the resale price to the customer from the Dealer, but the April 12, 1969, agreement no longer fixed the resale price from the Dealer to his customer. Notwithstanding the freedom granted to the Dealers to fix their own resale price, the Company's suggested resale price in almost all cases has been adhered to by the Dealers. Illustrative of the dollar volume of business transacted by the Dealers and the method of computing gross and net profit is the profit and loss statement of Dealer Leroy Holbrook for the first 6 months of 1970 whose dealership was terminated July 1, 1970, pursuant to Section 1(b) of the supplemental agreement entered into March 22, 1968. This profit and loss statement prepared by Holbrook is as follows: NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 LEROY HOLBROOK 13 La Palmoa Campbell, California 49 PROFIT & LOSS STATEMENT JANUARY 1970 THRU JUNE 1970 GROSS RECEIPTS $50,249.94 PURCHASES 31, 787.40 GROSS PROFIT----- -------$18,462.54 OPERATING EXPENSES: CONTRACT DELIVERY TAXES & LICENSES OFFICE EXPENSE & POSTAGE OFFICE RENT- TRASH TELEPHONE AUTO & TRUCK EXPENSE REFUNDS REPAIRS-RACKS PHONE DIRECTORY SUPPLIES REPAIRS (CUSTOMER'S WINDOW) INSURANCE $8,881.20 194.00 410.53 360.00 17.50 50.00 644.69 433.16 102.47 10.50 75.05 10.27 103.70 TOTAL OPERATING EXPENSES -----------------------------$11,293.07 NET PROFIT BEFORE DEPRECIATION RESERVE Training The Company does not regularly provide training for newspaper Dealers or their helpers , and representatives of the Company do not accompany the newspaper Dealers and their helpers when they are delivering papers and making collections but, so far as the evidence shows, new Dealers engaged have had previous experience usually as an adult driver for another Dealer and have not required training, Changes in Dealership Territory Although the Company has no plans in the foreseeable future to split the Dealer territories in Marin County, because, as testified to by Lischeske, "my dealerships are all comparatively small," and "I would have to have a tremendous amount of building in Marin County for these dealerships to get to the size where they could be split," the $ 7,169.47 record shows without dispute, according to the testimony of Suburban Circulation Manager Dubour, that dealership territories have in the past been combined or split by the Company to accomplish the Company's plan of operation. Analysis and Conclusionary Findings Section 2(3) of the National Labor Relations Act, as amended, provides that the term " `employee' . . . shall not include . . . any individual having the status of an independent contractor ....°' In N.L.R.B. v. United Insurance Co., 390 U.S. 254 (1968) in affirming the Board's conclusion that certain debit insurance agents were employees, the Supreme Court held that the commonlaw agency test should be applied in distinguishing an employee from an independent contrac- tor. The Board has frequently held that in determining the status of persons alleged to be independent contractors, the 50 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Act requires the application of the "right-of-control test." Where the person for whom the services are performed retains the right to control the manner and means by which the result is to be accomplished, the relationship is one of employment; while on the other hand where control is reserved only as to the result sought, the relationship is that of independent contractor. The resolution of this question depends on the facts of each case, and no one factor is determinative. While the rule is easier to state than to apply, I am satisfied on the entire record and upon overwhelming Board authority that the Dealers are employees of the Company.10 While the Dealers possess numerous attributes indicative of independent contractor status, namely, that they are not carried on the Company's payroll, they buy and sell their newspapers, hire and pay their own help, bear the risk of loss from nonpaying customers, do not work a fixed schedule or number of hours, do not work for wages, but compute their earnings as the difference between their dollar volume sales and the cost to them of the papers and other expenses incurred in the operation of the dealership, have an investment in newspaper distribution equipment and office equipment and supplies, as well as an automobile; they are not credited for unsold papers except where the draw is "stuffed" or for Sunday returns in excess of eight percent; they are expressly designated independent contractors in the Company prepared dealership agree- ment; they have not been restricted as to the resale price to the customer since April 12, 1969. These factors, however, are not uncommon in employment relationships in the newspaper industry and are not decisive in the instant case when viewed in the light of factors evidencing the Company's control over the manner and means by which the result is to be accomplished. The result to be accomplished is, of course, the circulation and sale of the Company's newspapers. In accomplishing this result, the Dealer is not truly the equivalent of the independent businessman whose earnings are controlled by self-determined policies, personal invest- ment and expenditure, and market conditions. The Dealer must purchase his newspapers at a wholesale price established by the Company, which the record shows the Company at times reduces to individual dealers as a method of subsidizing them on low-paying routes as well as outright subsidies described heretofore; and although since the April 12, 1969, agreement the resale price of the newspaper to the customer is not fixed, the record shows that in the main the Dealers adhere to the Company's suggested resale price. The Dealer's risk of loss and capacity to draw upon personal initiative to increase his earnings are minimized to a significant extent by the Company's practices and policies of preventing competi- tion between Dealers by defining the territories in which they are limited to sell and by exercising the practice, in the Company's discretion, to split or combine dealership 10 Beacon Journal Publishing Co., 188 NLRB No. 23 (1971), 76 LRRM 1228; N.LR.B v Brush-Moore Newspapers, Inc, 413 F.2d 809 (C.A. 6, 1969), enfg. 161 NLRB 1620 (1966); San Antonio Light Division, The Hearst Corporation, 174 NLRB No. 97 (1969), 70 LRRM 1252; San Antonio Light Division, The Hearst Corporation, 167 NLRB 689 (1967), El Mundo, Inc, 167 NLRB 760 (1967), The Sacramento Union, Inc., 160 NLRB 1515 (1966), News Syndicate Co., Inc, 164 NLRB 422 (1967), Eureka territories. Moreover, the Dealer has no proprietary interest in his territory or the customers. He is prohibited from assigning his dealership, and if he relinquishes his dealership, he does so without compensation except for such physical equipment the new Dealer selected by the Company is willing to purchase at a negotiated price. The Dealer has no discretion in the matter but is required by the Company to post surety and cash bonds to insure his performance of financial obligations to the Company. He is required to carry liability insurance naming the Company as co-insured, and he is required to carry workmen's compensation insurance on his helpers. The Dealer has no discretion in the matter but is required to keep up to date the records essential to the dealership, such as customer lists, book accounts, customer messages and complaints, and from time to time to supply any of such information to the Company upon request. As a means of exercising control over the Dealers' contractual duty to promote and increase the newspapers' circulation, the Company's supervisors enlist the cooperation of the Dealer in the promotion campaigns described earlier in this decision to which the Company substantially contributes. Additionally, to insure good service and satisfied custom- ers, the Company, through written communication from customers, the answering service, the documentation of complaints and messages, and the periodic meetings, as well as phone contacts between individual dealers and supervisors to ascertain and assure that the Dealer has attended to the customer message or complaint, thereby exercises important control over the manner and means of performance by the Dealer, and is an important device to monitor the Dealers' conduct of his dealership. The Company's control over the manner and means of the Dealer's performance is further manifested by the requirement that the morning Chronicle be distributed no later than 6:30 a.m. and the Sunday paper no later than 7:30 a.m., and by the further company requirement that the Dealer call in to the Company's suburban office at 8 and 10 a.m., and again before the office is closed, for further customer messages and complaints. Additionally, -the Dealer is required to fold the papers andplace them in wax bags in rainy weather. Over and above the manner and means of control above set forth is the ultimate power of the Company to terminate the Dealer on 30 days' notice, or immediately for cause. The Company's control over the manner and means of the Dealer's job performance was emphatically demonstrat- ed during the rebellion of the Dealers in Marin County in the summer of 1970 when they refused to turn over their code-a-phone messages and complaints to Supervisor Lischeske or to meet and discuss such complaints, messages, or any business matters with him. On this occasion, the Company clearly manifested its real control over the manner and means of the Dealers' job perform- Newspapers, Inc., 154 NLRB 1181 (1965); The Vindicator Printing Company, 146 NLRB 871 (1964); N.LR.B. v. Lindsay Newspapers, Inc., 315 F.2d 709 (C.A. 5, 1963), enfg 130 NLRB 680 (1961); Buffalo Courier-Express, Inc., 129 NLRB 932 (1960); San Antonio Light Division, Hearst Consolidated Publications, Inc, 130 NLRB 619 (1961); and A. S Abell Company, 137 NLRB 238 (1962), enforcement denied, 327 F.2d 1 (C.A. 4, 1964). NEWSPAPER & PERIODICAL DRIVERS, LOCAL 921 ante by serving them with written notice of their termination. When the Dealers capitulated to this action and resumed their past practices spelled out in Circulation Director Hobson's July 31, 1970, letter, the termination action was rescinded. It is immaterial whether this control is exercised by means of suggestions and requests , rather than direct orders, and is directed towards "cooperative assistance" in the fulfillment of the dealer agreement. Buffalo Courier- Express, Inc., 129 NLRB 932, 936 (1960); Frito-Lay, Inc., 167 NLRB 73, 75 (1967); The Vindicator Printing Co., 146 NLRB 871, 877, fri. 9 (1964). Although the company prepared dealer agreement stipulates in express language that the ' Dealer is an independent contractor and not an employee of the Company and the Company covenants that it will not exercise any direction or control over the manner, method, or means the Dealer shall employ to perform the agreement, this language is not decisive in resolving the "independent contractor" versus "employee" issue in Board proceedings. See, for example, Eureka Newspapers, Inc., 154 NLRB 1181, 1184 (1965); The Sacramento Union, 160 NLRB 1515, 1517 (1966); News Syndicate Co., Inc., 164 NLRB 422, 424 (1967); The News Journal Co., 180 NLRB No. 137 (1970); Frito-Lay, Inc., 167 NLRB 73, 74 (1967); The Vindicator Printing Company, 146 NLRB 871, 875 (1964). As I have found that the Dealers are "employees" within the meaning of Section 2(3) of the Act, I conclude that a violation of Section 8(e) cannot be established, and the Section 8(e) violation alleged in the complaint must fall. The conduct between an employer and his employees does not fall within the ambit of Section 8(e) of the Act. Minnesota Milk Company, 133 NLRB 1314 (1961), enfd. 314 F.2d 761, 764 (C.A. 8 1963), where the Court said at page 764: We adopt the Board's finding that Hillyer was an employee of the petitioner and not an independent 51 contractor. In view of the well recognized rule that Section 8(e) of the Act does not control relationships between an employer and his employees, we hold that the union's action in requiring the petitioner to terminate the relationship, which existed between it and Hillyer prior to June 9th when he began working under the labor agreement, was not violative of Section 8(e). Upon the basis of the foregoing findings of fact and the entire record, I hereby make the following: CONCLUSIONS OF LAW 1. The Respondent, San Francisco Newspaper Printing Co., Inc., is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Respondent, Newspaper & Periodical Drivers' & Helpers Union Local 921, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, is a labor organization within the meaning of Section 2(5) of the Act. 3. The Dealers whom the Company and the Union, in their March 22, 1968, supplemental collective-bargaining agreement, have agreed to terminate on certain specified dates as alleged in the complaint are employees and not independent contractors within the meaning of Section 2(3) of the Act. 4. The March 22, 1968, supplemental collective-bar- gaining agreement referred to above is not an agreement .,to cease doing business with any other person" within the meaning of Section 8(e) of the Act. RECOMMENDED ORDER Upon the basis of the foregoing findings of, fact, conclusions of law, and the entire record in this proceeding, it is recommended that the Board issue an order dismissing the complaint in its entirety.