Merchants Home Delivery Service, Inc.

DECISIONS OF NATIONAL LABOR RELATIONS BOARD Merchants Home Delivery Service, Incorporated ll and Teamsters Local Union No. 688, affiliated with International Brotherhood of Teamsters, Chauff- eurs, Warehousemen and Helpers of America. Case 14-CA-9066 June 17, 1977 DECISION AND ORDER BY CHAIRMAN FANNING AND MEMBERS JENKINS AND MURPHY On December 14, 1976, Administrative Law Judge Marion C. Ladwig issued the attached Decision in this proceeding. Thereafter, Respondent filed excep- tions and a supporting brief and the General Counsel filed an answering brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record and the attached Decision in light of the exceptions and briefs and has decided to affirm the rulings, findings, and conclusions of the Administrative Law Judge and to adopt his recommended Order. 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 Administrative Law Judge, and hereby orders that the Respondent, Merchants Home Delivery Service, Incorporated, St. Louis, Missouri, its officers, agents, successors, and assigns, shall take the action set forth in the said recommend- ed Order. II See Am-Del-Co, et al., 234 NLRB No. 156.] DECISION STATEMENT OF THE CASE MARION C. LADWIG, Administrative Law Judge: This case was heard at St. Louis, Missouri, on July 20-21, 1976.1 The charge was filed by the Union on February 5 and the complaint was issued on June 22. The Company provides a nonunion, owner-operator home deliver service for retail merchants. In January it replaced another firm, utilizing most of the same drivers, helpers, and trucks, but refused to recognize the Union which had previously represented the drivers and helpers. The primary issues are (a) whether the Company's owner- operators are employees or independent contractors, and, if employees, (b) whether the Company unlawfully refused to bargain with the Union as their representative, in violation of Section 8(aX)(5) and (1) of the National Labor Relations Act, as amended. Upon the entire record, including my observation of the demeanor of the witnesses, and after due consideration of the briefs filed by the General Counsel and the Company, I make the following: FINDINGS OF FACT I. JURISDICTION The Company, a California corporation, is engaged in the transportation and delivery of furniture, appliances, and related products in St. Louis, Missouri, and in other States, including Illinois and California, where it annually derives gross revenues in excess of $50,000 from J. C. Penney Company which annually has gross revenues in excess of $500,000 and sells merchandise valued in excess of $50,000 directly to customers in other States. The Company admits, and I find, that it is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act, and that the Union is a labor organization within the meaning of Section 2(5) of the Act. II. ALLEGED UNFAIR LABOR PRACTICES A. Background On June 18, 1975, the Company submitted to J. C. Penney Company a proposal to make Penney's home deliveries in the St. Louis area, promising better service at lower cost, and "No unions"-by using owner-operators. On July 21, Penney rejected the proposal, stating that its "present delivery agent" (Compton Service Company), which was handling its warehousing and which had been making its deliveries for the past 10 years, had submitted a bid which was "competitive with yours." Meanwhile, as found by the Board in Am-Del-Co, Inc. and Compton Service Company, Jointly, 225 NLRB 698 (1976), Penney representatives on June 20, 1975, informed Compton Service (which employed union drivers and helpers to make Penney's deliveries from the Compton warehouse) that Penney was considering some bids from "owner-operator contractors," and was also seriously considering using owner-operators itself to make its own deliveries. Penney requested that an owner-operator bid be submitted, and advised that a 25- to 30-percent decrease in the delivery charges would be necessary to be competitive. On July 8, Am-Del-Co (found to be the alter ego of Compton Service) submitted such an owner-operator bid, which Penney accepted on July 18. Thereafter Billy J. Hunt, president of both Compton Service and Am-Del-Co, informed the union-represented drivers and helpers that "if they wanted to form a partnership or corporation, Am-Del- Co would sign a contract with them to perform delivery services for the Penney account." With the help of a private attorney, Terry Peebles, some of the driver-helper teams did form a "partnership" or "corporation." They then signed owner-operator contracts with Am-Del-Co and All dates are in 1976 unless otherwise stated. 230 NLRB No. 53 290 MERCHANTS HOME DELIVERY SERVICE began on September 2 making deliveries of Penney goods from the Compton warehouse-using the same trucks, but under lease to Am-Del-Co. Am-Del-Co continued to make Penney's deliveries until January, when Penney canceled the contract-following the hearing in December of the above-mentioned case, in which it was alleged that the drivers and helpers remained employees, represented by the Union. (Later, on July 20, the Board issued its Decision and Order, finding that the attempt by Compton Service and Am-Del-Co "to convert · . . employees to independent contractor status was part of [an] attempt to eliminate the Union" and violated the Act.) On January 6, Penney contacted the Company and began negotiating an owner-operator "Delivery Service Agreement" (replacing Am-Del-Co). Penney then referred the Company to Attorney Peebles, who was in contact with Am-Del-Co owner-operators. On January 10, the Compa- ny met with nine Am-Del-Co drivers and helpers who had been delivering Penney's goods, explained the Company's method of operation, and passed out application forms. About January 12, despite their complaints about lower compensation, the nine Am-Del-Co deliverymen signed the Company's "Independent Truckman's Agreement"-one of them signing individually and the others signing as two- man "partnerships"-and agreed to operate a total of five trucks to make Penney's home deliveries from the Comp- ton warehouse, beginning January 14. On January 16 two other persons who had made some Am-Del-Co deliveries (but not for Penney) signed as "partners" to operate the shuttle truck between the warehouse and the Penney stores. The five "partnerships" (three of them operating as corporations) also signed the Company's "Lease and Service Agreement." About January 21, the Union (which had represented Compton Service's employee drivers and helpers for about 9 years and which was contending in the above-mentioned NLRB case that the Am-Del-Co owner-operators re- mained employees in the Compton Service driver-helper bargaining unit) learned that the Company had taken over Penney's deliveries, reportedly using the same deliverymen and trucks. The Union immediately sent the Company a bargaining request, which the Company refused. In the delivery service agreement which Penney and the Company signed on January 7, Penney agreed to indemni- fy the Company for any "liability or other action . . . wherein that is alleged by any Party that. . . Amdelco or . . . their successors . . . has violated . . . the National Labor Relations Act." (Emphasis supplied.) B. Status of Owner-Operators I. Company control The General Counsel contends that despite the manner in which the owner-operators are compensated (60 percent of the gross revenue from J. C. Penney Company, instead of wages), the Company maintains daily control over them. On the other hand, the Company contends that these owner-operator "contractors are entrepreneurs whose financial success or failure depends on their ability to keep the costs below revenues," and "exercise virtually complete control over the way they perform their services under their contracts." Under its January 7 "Delivery Service Agreement" with Penney, the Company assumes full responsibility for the manner in which the owner-operators perform the delivery service. The Company (referred to as "Contractor" or "Merchants" in the service agreement and its annexes) "guarantees prompt and efficient service by its agents and employees to the reasonable satisfaction of Penney" (p. 1). The Company "will route all deliveries according to the most practical schedule, and prepare delivery manifests in delivery sequence, with all necessary delivery instructions as provided by Penney's," and make the schedules and routing "to provide a reasonably uniform number of deliveries each delivery day" (Annex A, par. II11). "All merchandise will be inspected, properly protected (blanket wrapped, etc.) and loaded by Merchants" (par. 12). The Company "will exercise all possible care in loading, delivering and setting up merchandise to avoid loss or damage and will assume responsibility for all merchandise loaded" (par. 14). "Transfer of responsibility between Penney's and Merchants will be signed by proper individu- als" (annex C, par. 4). The Company must make "every effort" to complete all deliveries (annex A, par. 4), and to schedule "time deliveries" as "close to the desired time as possible" (par. 6). The normal appliance delivery (to be made according to Penney's rules) includes setting in place, leveling, connecting, and making operation check (par. 9c). "Trucks will be kept clean and in good mechanical condition" (par. 15), and "Every effort will be made to satisfy" Penney's customers (par. 17). Thus, instead of contracting directly with the owner-operators (as it consid- ered doing the previous summer in its efforts to cut delivery costs), Penney was willing to pay delivery charges which included a 40-percent gross for the Company, in return for the Company (instead of Penney) assuming the responsibil- ity of ensuring the owner-operators' performance of the deliveries in a satisfactory manner. To fulfill this responsibility, the Company has assigned Account Manager Mark Firehammer to handle the Penney account. He (or sometimes Regional Manager Ronald O'Blenes) dispatches the home deliverymen from the Compton warehouse by daily dividing the deliveries into routes "to provide a reasonably uniform number of deliveries each delivery day" and assigning the routes. (After receiving the manifests for the following day's delivery, the owner-operators themselves decide the order of deliveries.) The account manager makes sure that a sufficient number of deliverymen are on hand to make the deliveries, "gives the orders," and oversees the loading of the trucks. He assigns special deliveries. He decides when an additional truck is necessary and assigns the extra route to one of the owner-operators. (Account Manager Fire- hammer did not testify. Regional Manager O'Blenes, who appeared on the stand to be less than candid in describing the status of the owner-operators, testified that his or Firehammer's "primary job at that warehouse is to try and expedite the loading of the truck, to help the contractors [owner-operators], to help get their merchandise," and to have damaged merchandise touched up.) Although these former Am-Del-Co home deliverymen were experienced in 291 DECISIONS OF NATIONAL LABOR RELATIONS BOARD making Penney deliveries, the account manager is present during all the loading to assure that the trucks are clean and in good mechanical condition and to assure fulfillment of the other requirements of the Penney service agreement, including inspecting, signing for, carefully handling and loading, and properly wrapping the merchandise. The Company "makes sure" that the I.C.C. and state truck safety requirements are met. The owner-operators have about a 30-minute leeway-before and after the ware- house's 8 a.m. opening time-to begin loading their trucks, but they are required to make deliveries on the day scheduled, unless other arrangements are made. (The shuttle truck is loaded about 7:45 or 8 a.m.) If an owner- operator does not report to work and does not make other arrangements for his deliveries, and another owner-opera- tor's truck is not available, the manager "would probably have to go to Ryder or Hertz Rent-A-Truck" and, if necessary, make the deliveries himself. (On one occasion, the owner-operators discussed the icy road conditions with Regional Manager O'Blenes, who agreed that they could make the deliveries the next day, Saturday, and so notified Penney.) After the owner-operators leave the warehouse, they are accountable to the Company for the manner in which they make the deliveries; i.e., for exercising "all possible care" in delivering and setting up the merchandise, abiding by Penney's rules, making deliveries "promptly" and the time deliveries as scheduled, and making every effort to please Penney's customers. The "Independent Truckman's Agreement," which each owner-operator is required to sign, provides the means by which the Company may enforce its daily control over the manner in which the owner-operators perform the work. For any service which the Company considers "substan- dard," the agreement provides (par. 13) that the Company may give the owner-operator a "written notice," and "Three such written actions during the existence of this agreement shall constitute a material breach of this agreement." (As argued by the General Counsel, this letter warning system is identical to a written reprimand.) The agreement also provides that the Company may terminate the agreement "at any time" for any "breach of the terms thereof." In practice, as revealed by Company President Robert Hayes, the warning letter may give a "reasonable length of time" or "a specified amount of time" for a situation to be corrected, and if not timely corrected or if there is such an offense as drunken driving, theft, or misrepresentation on the application form, the Company may cancel the agreement. In addition, the lease agreement provides for termination by either party on 30 days' notice. The "Lease and Service Agreement," which the owner- operators are also required to sign, gives the Company full control over the operation of the truck. The agreement provides (par. 4c) that the lessee (the Company) "shall have sole, absolute, and exclusive use, charge, control, and responsibility over the operation and use of the motor vehicle equipment herein leased without hindrance, advice or interference from or by the said Lessor" (the owner- operator). The agreement also provides (par. 8) that the owner-operator shall not utilize the truck "except in the services of Lessee"-contrary to Manager O'Blenes' claim (which I discredit) that the Company has no objection to the owner-operators using the trucks (which bear its name) for other purposes. The owner-operator (par. 4d) must operate the vehicle himself, unless he obtains a substitute driver who is "fully qualified . . . and acceptable to the Lessee." (Emphasis supplied.) Thus the Company retains full control over who will operate the truck. It is obvious that the Company was not willing to turn over the responsibility of the home deliveries to the owner- operators without retaining the right to control the manner in which they did the work. The Company contracted for sole and exclusive control and responsibility over the operation of the trucks, and retained control over who would be permitted to drive them. It did not grant any proprietary right in any of the delivery routes or assign separate geographic areas where the owner-operators would be responsible for the deliveries. Instead, the Company retained the right to parcel out the deliveries each day, and gave the owner-operators no right to determine how many deliveries to make or where to make them. The Company did not rely on the owner-operators themselves to appear each day at the warehouse-with a washed, well-maintained truck-to make the deliveries; or to inspect, sign for, carefully handle and load, and properly wrap the merchandise; or to take special deliveries and arrange for delivering extra loads-without a company manager being present at the warehouse to assign, oversee, and direct the work. The Company retained the right to decide itself what owner-operator conduct-both at the warehouse under its direction and away from the ware- house on the delivery routes-was "substandard," meriting warnings and contract termination. Furthermore, in realistically analyzing the situation, I find it clear that Penney would not be paying delivery charges which included a 40-percent gross to the Company if the owner-operators themselves could be held responsi- ble for the deliveries without supervision, and if the Company's primary role was merely to sign up the owner- operators, handle the clerical work, and terminate any owner-operator who did not perform the deliveries satisfac- torily. I find that Penney was in effect paying the Company that high percentage of the delivery charges in return for the Company assuming the complete responsibility for the deliveries, and providing sufficient supervision over the owner-operators to assure a prompt, efficient, and satisfac- tory delivery service. It is in this context that I weigh the effect of the so-called control provision in the first paragraph of the truckman's agreement which the owner-operators signed. It states that the contractor (owner-operator) "will direct the operation of his equipment in all respects and will determine the method, means and manner of performance." It then states that this includes "points of service of equipment" (referring to truck maintenance), and "choice of any lawful routes . . . rest stops and timing of customer deliveries" (referring to the owner-operator's determining the order of deliveries, after the Company decides how many deliveries and what route will be assigned to the owner-operator that day). I find that this conclusionary language is not controlling. The Board has often held that the actual relationship which has been created, despite such conclu- sionary language as this method-means-and-manner provi- 292 MERCHANTS HOME DELIVERY SERVICE sion, is what is controlling. (The purpose of this and the remaining "independent contractor" provision in the first paragraph of the agreement is discussed later.) Accordingly, I find that the evidence shows that the Company both retained and exercised the right of control over the manner and means of performing the delivery service as well as the end result. Having so found, I now consider the total factual context of the case in determining whether the owner-operators are employees or independent contractors under the pertinent common law agency principles. N.LR.B. v. United Insur- ance Company, 390 U.S. 254, 256 (1968). 2. Other factors Although the Company contends that the owner-opera- tors "are entrepreneurs whose financial success or failure depends on their ability to keep the costs below revenues," their income is almost entirely dependent on the number of stops which the Company assigns them to make, and the costs of operating their own trucks are in substantial measure dependent upon the distance the Company assigns them to drive. Their rate of compensation is lower than they previously received, and they are assigned more home deliveries, over longer distances. They do not have regular routes, nor a particular geographical area to cover. There is no commodity which they sell at a profit. They are simply drivers and helpers, generally doing the delivery work themselves. They are compensated at the company- determined rate of 60 percent of the per-stop charges which Penney pays for the home deliveries. (Owner-operators Michael Kombol and Bradley Fritz are paid a flat rate, plus mileage, for operating the shuttle truck between the warehouse and the Penney stores.) The owner-operators are not on the Company's payroll, and the only deduction from their compensation is the cost of the fleet, public liability, and property insurance which the Company takes out on the trucks. (The Company itself pays for insurance on the merchandise which is being delivered.) The owner- operators pay for all cost of operating their trucks, and they are liable for merchandise loss or damage resulting from their fault. Three of the owner-operator, driver-helper teams who signed the truckman's agreements as "partners" (Donald Flowers and Sylvester Kleinschmidt, John Holleran and Lester Gruenewald, James Potts and LeRoy Glazebrook) had each formed a corporation which holds the title to the trucks they lease to the Company for its exclusive use. Two "partnerships" (Kombol and Fritz who drive the shuttle truck, and Harry Drozd and Ronald Hale) purchased trucks in their individual names. The remaining owner- operator (Lloyd Reid) was unable otherwise to finance one of the former Compton trucks, so the Holleran-Gruene- wald team purchased one for him, to be paid out at $25 a working day. In February, several weeks after they became owner-operators, Holleran and Gruenewald purchased a third truck. (A copy of its title was attached to their previously signed lease agreement.) This older (1969) truck is used by the Company as an extra truck, with either Holleran or Gruenewald doing the driving. (Inasmuch as this is an extra truck, the Company has permitted Gruenewald to drive it for Am-Del-Co on several occa- sions, while Holleran was driving the newer truck for Penney deliveries.) The Company did not help finance the purchase of any of the trucks, except for an owner-operator using his $500 advance for that purpose. (The truckman's agreemnent provides that the owner-operator agrees to post a $500 cash performance bond. Instead, the Company advanced to the owner-operators the amount of S500, which was taken out of their compensation at $150 a month.) The Kombol-Fritz partnership has additional business interests, operating a warehouse and hauling service, but one or both of the partners are present daily to operate the shuttle truck. Under the truckman's agreement, the owner-operator hires, directs, and compensates any helper he may have to assist him in making the deliveries. This helper is not an employee of the Company, and there is no requirement that the Company give its approval for his hiring. Several of the owner-operators have little occasion to hire a helper, inasmuch as the Company signed up both the driver and the helper as owner-operator partners. However, Reid, who signed as an individual owner-operator, employs a helper; owner-operators Holleran and Gruenewald employ helpers when both owner-operators are driving (putting in service both the new and the old trucks); and owner-operators Kombol and Fritz need a helper when only one of them is manning the shuttle truck. 3. Concluding findings The Company contends that it employs only clerical and management people and denies the General Counsel's contention that these owner-operators are its employees. It contends that they are independent contractors and that, in its dealings with them, there is only "an arm's-length transaction between businessmen." It is true that the owner-operators are not on the company payroll; their sole income is 60 percent of the delivery charges; they own or finance the delivery equipment and pay the operating and maintenance expenses; and each day after the Company decides how many home deliveries they are to make and in what areas, the owner-operators decide the order of deliveries. How- ever, as found above, the Company retained the right to control the manner in which the owner-operators do the work. The Company, in effect, is paid a gross of 40 percent of the revenue to assume complete responsibility for Penney's deliveries and to provide sufficient supervision over the owner-operators to assure a prompt, efficient, and satisfactory delivery service. The owner-operators must provide the daily delivery service or be replaced. They must make the deliveries on the day scheduled. They are not permitted to reject assigned deliveries, or to use the leased trucks for any other purpose (except for one old extra truck). They are lower paid deliverymen, who are assigned more stops to make and longer distances to travel. Contrary to the Company's contention that they are "entrepreneurs whose financial success or failure depends on their ability to keep the costs below revenues," their income is limited by the number of stops the Company assigns them each day. They have no regular routes (except for the one shuttle run). Thus, there is no way through ability, resourcefulness, or entrepreneurial skill that they 293 DECISIONS OF NATIONAL LABOR RELATIONS BOARD can increase their income-other than limiting their truck expense or, if they use a helper, to reduce his compensa- tion. The helper, when used, is not a company employee, but is hired and paid on the owner-operator's own behalf, without the participation or approval of the Company. In such situations, where the owner-operator is otherwise found to be an employee, his hiring of a helper on his own behalf does not change that status (and the helpers are excluded from the bargaining unit). For example, in The Beacon Journal Publishing Company, 188 NLRB 218, 220 (1971), the Board held: Thus we are not persuaded by and do not regard as controlling the facts that the routemen provide their own equipment, that the Employer does not place motor routemen on its payroll, or grant them employee fringe benefits, or make the usual payroll deductions for them, that the motor routemen within certain limitations set their own working hours, or arrange for substitutes to work in their absence, or for that matter that the motor routemen hire, fire, and set the rates to pay for their helpers. [Citing San Antonio Light Division, 167 NLRB 689 (1967).] Accord: Mister Softee of Indiana, Inc. and Curb Service of Indianapolis, Inc., 162 NLRB 354, 356 (1966); Pepsi-Cola Bottling Company of Michigan, Grand Rapids Division, 156 NLRB 80, 83 (1965). In deciding the status of the owner-operators, I take into consideration not only the above-discussed control provi- sion in the first paragraph of the truckman's agreement (providing that the owner-operator "will determine the method, means and manner of performance"), but also such conclusionary language in the same paragraph as "The parties intend to create by this agreement the relationship of an independent contractor and not an employer-employee relationship." After weighing all the facts of the case, including the Company's advertising of its services with a guarantee of "No unions," I find that the method-means-and-manner and "independent contractor" provisions in the company-drafted truckman's agreement are not controlling. I find instead that their purpose relates to the Company's "No unions" guarantee, not to determin- ing the day-to-day control over the delivery service. On the other hand, the question is not whether this owner-operator arrangement is being used to undercut the deliverymen's union conditions or to eliminate the Union. (There is no allegation here, as in the above cited Am-Del- Co case, 225 NLRB 698, of an illegal attempt by firms acting as alter egos to convert employees to independent contractor status as part of an attempt to eliminate the Union.) Nor is there a question of whether the provisions in the truckman's agreement are one-sided, or whether the agreement was imposed on the Am-Del-Co deliverymen on a "take it or leave it basis," as argued by the General Counsel. As held in Ace Doran Hauling & Rigging Co., 214 NLRB 798, 800 (1974), it is not the Board's proper role to decide the "equities" of the respective positions. The question merely involves the application of the common law agency tests to determine whether the actual relation- ship between the Company and the owner-operators is one of employer-employee or independent contractors. After weighing the total factual context of the case, including particularly the Company's right of control over the manner and means by which the work is done, and the meager opportunity for the owner-operators to increase their income through ability, resourcefulness, or entrepre- neurial skill, I find that the owner-operators are employees within the meaning of the Act. C. Refiusal to Bargain 1. Successor J. C. Penney Company was the principal customer of Compton Service until September 2, 1975, when Compton Service's alter ego, Am-Del-Co, began making Penney's home deliveries. From that date through January 13, Penney was Am-Del-Co's principal customer. On January 14, the Company began making Penney's home deliveries, employing nine owner-operators (Drozd, Flowers, Glaze- brook, Gruenewald, Hale, Holleran, Kleinschmidt, Potts, and Reid). All nine of them had been in the Union's driver- helper bargaining unit at Compton Service (where, under successive agreements, the Union had represented that unit for about 9 years) and/or had worked for Am-Del-Co, where they performed the same unit work. (On January 16, the Company employed owner-operators Fritz and Kom- bol to operate the shuttle truck. They had previously done some driving for Am-Del-Co.) The Company contends in its brief that it is not a successor to Compton Service or Am-Del-Co because the work is not "in all respects the same" and the operations are not "identical." It is true that the Company's nine home deliverymen work only for Penney, whereas both Compton Service and Am-Del-Co made some home deliveries for other firms. However, it is undisputed (as testified by General Counsel witness William Keaton and company witness Gruenewald) that previously, about 95 percent of the deliveries had been for Penney. Moreover, the Company hauls the same merchandise from the same warehouse, in the same manner, using virtually the same equipment. (The dispatcher has been replaced with an "account manager," who assigns the deliveries and over- sees the work, as previously discussed.) In agreement with the General Counsel, I find that there has been no substantial change in the employing industry and that the Company became the successor of Compton Service and its alter ego, Am-Del-Co, on January 14. N.LR.B. v. The William J. Burns International Detective Agency, Inc., 406 U.S. 272 (1972); Boston-Needham Indus- trial Cleaning Co., Inc., 216 NLRB 26, 27 (1975), enfd. 526 F.2d 74 (C.A. 1, 1975). 2. Majority status There is no dispute that the Union represented a majority of the furniture and appliance truckdrivers and helpers during the years in which they were covered by collective-bargaining agreements between the Union and Compton Service. In the summer of 1975, after the drivers and helpers were required to sign lease agreements with Am-Del-Co (Comp- ton Service's alter ego) in order to continue hauling for 294 MERCHANTS HOME DELIVERY SERVICE Penney, the Union met with Am-Del-Co owner-operators. As Union Business Representative Ron McDermott credibly testified, the Union explained to them that it did not desire to represent owner-operators as such, but that it considered the Am-Del-Co owner-operators still to be employees, whom the Union would represent if they so desired. By unanimous vote, these owner-operators ex- pressed their interest in having the Union continue to represent them. The Union endeavored to do so, but Penney canceled the Am-Del-Co delivery service contract before the Board found, in the above-mentioned Am-Del- Co case, 225 NLRB 698 (1976), that Compton Service and Am-Del-Co violated the Act by attempting to convert employees to independent contractor status as part of an attempt to eliminate the Union. On January 21 (a week after the Company became the successor of Compton Service and Am-Del-Co, as found above), the Union requested recognition. As admitted in the Company's answer, the Union claimed to represent a majority of the Company "employees delivering furniture of the J. C. Penney Company." The Company did not deny the Union's majority status but on January 28, as admitted in its answer, declined the request, stating that the claim and request were in error "because the company has no employees delivering furniture for the J. C. Penney Company." In its brief, the Company contends that "the General Counsel failed to prove that a majority of the individuals now performing the Penney's hauling" have designated the Union as their representative. However, as the General Counsel points out, there is a presumption of majority status where the predecessor's employees were covered by a union agreement and there is a successorship situation such as we have here. Barrington Plaza and Tragniew, Inc., 185 NLRB 962, 963 (1970), enforcement denied on other grounds 470 F.2d 669 (C.A. 9, 1972). The 11 owner- operators who were employed by the Company on January 21 (when the Union made the bargaining request) were performing the same bargaining unit work which was covered by the collective-bargaining agreement between Compton Service and the Union, and which was performed by deliverymen working for Compton Service and/or its alter ego, Am-Del-Co. In the absence of any company claim that its refusal to bargain was based on a good-faith doubt of the Union's majority status, "it was encumbent upon the Respondent to go forward with the evidence to establish actual loss of status, if it wished to rebut the presumption." Terrell Machine Company, 173 NLRB 1480, 1481 (1969), enfd. 427 F.2d 1088 (C.A. 4, 1970), cert. denied 398 U.S. 929 (1970). The Company failed to do so. In fact, 4 of the II owner-operators (Drozd, Hale, Holleran, and Reid) were dues-paying active union members, and four others (Flowers, Glazebrook, Gruene- wald, and Kleinschmidt) were inactive members on honorary status. (These latter four had been members in good standing before they paid 50 cents for withdrawal cards, entitling them to become active members again by resuming the payment of dues. Although ordinarily such 2 In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec. withdrawal cards are given to members leaving the trade or craft, the Union permitted these owner-operators to remain on inactive status while the independent contractor issue is being litigated.) The other three owner-operators had not joined the Union. However, none of these three (or any of the other eight, for that matter) has indicated that he did not desire union representation in the event the Union prevailed in its contention that they were in fact employees, not independent contractors. As often held, "There is no necessary correlation between membership and the num- ber of union supporters since no one could know how many employees who favor union bargaining do not become or remain members thereof." Terrell Machine Co., supra at 1481. Accordingly, I find that the Company, as the successor of Compton Service and Am-Del-Co, unlawfully refused on January 28 to recognize and bargain with the Union which represented a majority of its employees in an appropriate unit of all owner-operators delivering furniture and appliances for J. C. Penney Company in St. Louis, Missouri, excluding all other employees and supervisors as defined in the Act, thereby violating Section 8(aX5) and (1) of the Act. CONCLUSIONS OF LAW 1. The Company's owner-operators delivering furniture and appliances for J. C. Penney Company in St. Louis, Missouri, are employees within the meaning of the Act. 2. By refusing on and since January 28, 1976, to recognize and bargain with the Union as the majority representative of its employees in an appropriate unit of all owner-operators delivering furniture and appliance for J. C. Penney Company in St. Louis, Missouri, the Company engaged in unfair labor practices affecting commerce within the meaning of Sections 8(aX5) and (1) and 2(6) and (7) of the Act. REMEDY Having found that the Respondent has engaged in certain unfair labor practices, I find it necessary to order the Respondent to cease and desist therefrom and to take certain affirmative action designed to effectuate the policies of the Act. In the absence of an office or other company facility where the bargaining unit employees report for duty, I find it necessary that the Respondent mail the attached notice to the employees. Upon the foregoing findings of fact and conclusions of law, upon the entire record, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: ORDER 2 The Respondent, Merchants Home Delivery Service, Incorporated, St. Louis, Missouri, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. 295 DECISIONS OF NATIONAL LABOR RELATIONS BOARD (a) Unlawfully refusing to bargain with Teamsters Local Union No. 688, affiliated with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, as the exclusive representative of its employees in the following appropriate unit: All of the Employer's owner-operators delivering furniture and appliances for J. C. Penney Company in St. Louis, Missouri, excluding all other employees and supervisors as defined in the Act. (b) In any like or related manner interfering with, restraining, or coercing employees in the exercise of their rights under Section 7 of the Act. 2. Take the following affirmative action necessary to effectuate the policies of the Act: (a) Upon request, bargain in good faith with the Union as the exclusive representative of the employees in the above-described appropriate unit and embody in a signed agreement any understanding reached. (b) Mail a copy of the attached notice marked "Appen- dix,"3 after being duly signed by Respondent's authorized representative, to each employee in the appropriate unit in St. Louis, Missouri, immediately upon receipt of the copies from the Regional Director for Region 14. 3 In the event this Order is enforced by a Judgment of the United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an order of the National Labor Relations Board." (c) Notify the Regional Director, in writing, within 20 days from the date of this Order, what steps the Respon- dent has taken to comply herewith. APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government WE WILL bargain upon request with Teamsters Local 688 and put in writing and sign any bargaining agreement we reach covering these employees: All owner-operators delivering furniture and appliances for J. C. Penney Company in St. Louis, Missouri, excluding all other employees and supervisors as defined in the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce employees in the exercise of their rights under Section 7 of the Act. MERCHANTS HOME DELIVERY SERVICE, INCORPORATED 296