Dan Dee West Virginia Corp.

National Labor Relations Board - Board Decisions

Jan 5, 1970

180 N.L.R.B. 534 (N.L.R.B. 1970)

534 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Dan Dee West Virginia Corporation and
International Brotherhood of Teamsters,
Chauffeurs, Warehousemen and Helpers of
America, General Teamsters, Chauffeurs,
Warehousemen and Helpers Local Union 697.
Case 6-CA-4527
January 5, 1970
DECISION AND ORDER
BY MEMBERS FANNING, BROWN, AND JENKINS
National Labor Relations Act, as amended, herein called
the Act. Respondent filed an answer denying the
commission of any unfair labor practices, and a hearing
was held before me in Wheeling, West Virginia, on June
24, 1969, at which all parties were represented
Subsequent to the hearing, General Counsel and
Respondent filed briefs which have been carefully
considered.
Upon the entire record in the case and from my
observation of the witnesses, I make the following.
FINDINGS OF FACT
I JURISDICTION OF THE BOARD
On September 10, 1969, Trial Examiner George
J. Bott issued his Decision in the above-entitled
proceeding, finding that Respondent had engaged in
and was engaging in certain unfair labor practices
and recommending that it cease and desist
therefrom and take certain affirmative action, as set
forth in the attached Trial Examiner's Decision.
Thereafter, the Respondent filed exceptions to the
Decision, and the General Counsel filed limited
exceptions and a brief in support of the Trial
Examiner's Decision.
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 case to a
three-member panel.
The Board has reviewed the rulings made by the
Trial Examiner at the hearing and finds that no
prejudicial error was committed. The rulings are
hereby affirmed. The Board has considered the
Decision, the exceptions, brief, and the entire record
in this case, and hereby adopts the findings,
conclusions, and recommendations of the Trial
Examiner.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board hereby adopts as its Order the
Recommended Order of the Trial Examiner, and
orders that Respondent, Dan Dee West Virginia
Corporation, Wheeling, West Virginia, its officers,
agents, successors, and assigns, shall take the action
set forth in the Trial Examiner's Recommended
Order.
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
GEORGE J. BOTT, Trial Examiner: Upon a charge of
unfair labor practices filed by the Union on March 6,
1969, against Dan Dee West Virginia Corporation, herein
called Respondent or Company, the General Counsel of
the National Labor Relations Board issued a complaint
and notice of hearing dated May 29, 1969, in which he
alleged that Respondent had engaged in unfair labor
practices in violation of Section 8(a)(1) and (5) of the
180 NLRB No. 80
Respondent, a West Virginia corporation, with its
principal office in Charleston, West Virginia, is engaged in
the nonretail sale of snack food products During the
12-month period immediately preceding the issuance of
the complaint, Respondent received goods and materials
which were valued in excess of $50,000 and were shipped
directly from points outside the State of West Virginia to
its distribution centers in the State of West Virginia.
Respondent concedes and I find that it is an employer
engaged in commerce within the meaning of Section 2(6)
and (7) of the Act.
11. THE LABOR ORGANIZATION INVOLVED
The Union is a labor organization within the meaning
of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
A. Statement of the Issues
Broadly stated, the questions are whether Respondent
successfully converted the status of its Wheeling
driver-salesmen to that of independent contractors and
refused to bargain with the Union in the circumstances,
regardless of whether the persons involved are employees
or independent contractors.
B. Basic Findings
1. Background
Respondent distributes its products through the use of
10 distribution centers located in West Virginia. Only the
Wheeling distribution facility is involved in this case. Prior
to March 31, 1969, Respondent used six driver-salesmen
and an extra driver to deliver its products to retail outlets
in the Wheeling area. After March 31, Respondent, as
described below, changed its method of distribution to
what it calls "independent distributors," but it retained
the same six individual drivers to deliver its products. The
spare driver was also retained along with the
warehousemen.
The Union has represented the Wheeling drivers since
1960 when it won a Board election and was certified as
their exclusive representative on August 5, 1960.
Sometime after certification, Respondent also recognized
the Union as the bargaining agent for its warehousemen,
and for years the Union has had collective bargaining
contracts covering the drivers and the warehousemen
employed at Respondent's Wheeling distribution center.
None of the other distribution centers are organized.
DAN DEE WEST VIRGINIA CORP.
2. Respondent decides to change its method of
distribution
At a special meeting of Respondent 's board of directors
held on December 13, 1968 , Lopatt , Respondent's
personnel director , recommended that since "the sales
method using distributors had been successful in its initial
tests , the company ( should ) make this method their
permanent way of doing business ." The directors after
discussion then voted to "use distributors to sell the
company products."
3. The Union is advised of Respondent ' s decision
regarding the method of distribution
The labor agreement covering the drivers and the
warehouseman was due to expire on February 28, 1969,
and, in accord with its terms , Pyle, president of the
Union , wrote Lopatt on December 16, 1968 , and notified
him that the Union wanted to modify the contract and
would soon submit proposals to that end . On January 11,
1969, Pyle met with the drivers and warehouseman and
discussed possible changes in the contract . Following this
meeting, Pyle, on January 24, submitted written proposals
for modification to the Company . On February 6,
Respondent acknowledged Pyle's communication and
advised that Respondent would set a date for the first
meeting with the Union.
The parties met on February 24, 1969 . Lopatt kept
minutes of the meeting . The meeting was brief and the
minutes succinctly state what happened as follows:
WHEELING UNION MEETING - February 24,
1969
Present for Union : Jim Pyle , Bob Sadler, and John
Hartigan (arrived late)
Present for Company : Dan Lopatt , Jim Recknagel
and Charles Pike.
As the meeting opened , Dan Lopatt discussed the
negotiations of the previous contract and noted that the
union had promised the company:
1. If the company signed up for the pension program,
the men would be given credit for all their previous
years of service with the company ( Babe Lowe was
the specific example).
2. Inasmuch as everyone else in the Wheeling snack
food market was an independent distributor, the
union management would go out and obtain new
business for the company on the strength of the union
contract.
Lopatt pointed out that as far as it could be verified,
no new business had materialized. He then read the
following prepared statement:
The Board of Directors has decided to discontinue the
present method of distribution at the end of the
present contract . We are getting out of the retail
business and turning it over to anyone who wants it.
My orders are to run an ad in the newspaper for
distributors who can financially handle the deal. We
are here to negotiate the termination of the salesmen
but I have been allowed to give preference to any of
our present employees to become distributors if they
are financially stable . Since they will be making more
money we will encourage them to stay in the union.
We are interested in making certain that Babe Lowe
gets a pension and we are willing to sign a contract to
535
get this accomplished.
Bob Sadler , the steward , asked if Babe would be
kept if the jobbers had individual bins and Lopatt
replied : " Bob, outside of what I have just said , I can't
say anything else until we settle the present problem."
Lopatt then asked how many years credit Lowe had
on his pension . The union negotiators could not give an
immediate answer . Lopatt stated his willingness to
negotiate and Hartigan replied : "We represent more
than one person " Lopatt countered that the position of
the Company 's Board of Directors had been stated and
he is here to carry it out.
Hartigan asked : "Are you refusing to negotiate"
Lopatt replied : "We are here to negotiate under the
conditions I have set forth."
Hartigan said : "We are not prepared to negotiate for
Babe Lowe and exclude the other employees ." After
this statement , Hartigan began to put his note paper in
his briefcase.
Lopatt watched Hartigan putting his note paper
away and said : " If that is your position , I'll return to
my Board and tell them what you decided. We will
notify you if we decide something different."
At this point the meeting adjourned , with Jim Pyle
uttering some remarks about shining up the weapons.
4. Respondent meets with the employees to the
exclusion of the Union
Lopatt 's announcement at the February 24 meeting was
the first word the Union or the employees had about
Respondent's decision to >rhange its method of distributing
its products . On the next day, the employees voted to
strike when Pyle told them what had happened at the
negotiation session , but this action was held in abeyance
however , and the instant unfair labor practices filed with
the Board.
On March 11 , at a meeting of employees , but with no
union representative present, General Manager Recknagel
read a proposed distributor 's contract and told the men
that they would no longer be driver - salesmen but
"independent distributors ." Recknagel also advised the
employees that they would be preferred by the Company
over outsiders who might apply for distributorships.
Respondent had another meeting with the Wheeling
drivers on March 14. Recknagel said the men had certain
questions about the proposed change in their status and
wanted to meet with Lopatt . At the March 14 meeting,
which was again attended by all drivers, but no
representative of the Union , Lopatt explained the
provisions of the distributorship agreement. The men
asked questions about the size of the routes, commissions
and credits , which Lopatt answered . Some of the men had
doubts about their ability to run their own businesses,
financially or otherwise , but Lopatt assured them that the
Company had confidence in their stability and would
assist them financially in any case. Details of the
monetary provisions of the distributorship involving the
distributor 's return were explained and it was noted that
part of the commissions would be withheld by the
Company weekly to pay for the delivery trucks that the
men would have to purchase from the Company.
At the March 14 meeting , Lopatt also made it clear
that the Company intended to sell the routes to
independent distributors but that Respondent would give
the present drivers preference over outsiders . It appeared,
however, that while Lopatt was talking with the men,
Recknagel and Supervisor Hamilton were interviewing
536 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
applicants, and the drivers were advised of this.
5. Respondent concludes negotiations with the
driver-salesmen
Because it appeared at the end of the March 14
meeting that the drivers wanted more time to consider the
proposed arrangement, Recknagel promised to meet with
them again in a week or so at which time he would have
the contracts ready. On March 29 Recknagel gathered the
men together as promised, and each employee, except
Hanson, who wanted more time to think about it,
indicated willingness to sign the sales agreements.
Recknagel told them that they must first resign as
employees, and he dictated a form resignation to one of
the employees. The men then executed identical
resignations and sales agreement.' In addition to the sales
agreement, the drivers also signed a West Virginia Deed
of Trust, which is a type of security agreement covering
Respondent's advances of money and merchandise as well
as the purchase price of the truck.
Not long before Respondent and the driver-salesmen
entered into distributorship agreements, the Union learned
that individual negotiations to that end were going on On
March 17, Pyle, president of the Union, met with all the
drivers at the Union's offices in Wheeling. All drivers
present signed a document stating that they had met with
company representatives who had advised them that
Respondent intended to sell its trucks After reciting the
general terms of the arrangement which the Company had
offered them, the statement noted that the men had
studied the Company's offer and thereby rejected it.
Therefore, the statement concluded, "We request the
Union to further our negotiations."
On March 18, 1969, Lopatt wrote the Union and
advised it that "the company is ready, willing and able to
negotiate the discontinuance of company operations
relative to its method of sales." The writer said that
Respondent would "continue to have a warehouse and a
warehouseman," and added that it desired "to finalize a
contract with (the Union) for all . . . employees."
6. Additional negotiation sessions
The parties held negotiation meetings on March 28 and
June 12, 1969, but were unable to resolve the dispute over
the drivers. Lopatt's March 18 letter to Pyle might
indicate that Respondent was willing to negotiate the
question of whether or not to change its method of
distribution, but a reading of the minutes of the March 28
meeting in the light of Lopatt's and Pyle's testimony
makes it clear that Respondent had made a final and
irrevocable decision regarding the drivers and no longer
considered them employees. Respondent appeared willing
to negotiate a full contract for the warehouseman and
anyone else in a similar classification, and to negotiate
matters Such as severance pay for drivers, but nothing that
would concede an employee status for them. The minutes
state, for example, that Pyle insisted that he "was not
accepting the discontinuance of the sales operations," but
Lopatt replied that the Company had a right to decide
how to run the business and "the decision of the board of
directors was to sell the sales routes." There was a
relatively long discussion of provisions covering a
'Hanson also became party to a sales agreement not long after, when
Recknagel told him he would appreciate it if he did, because Respondent
was running into some "problems" with the Union
warehouseman, but Pyle continued to maintain that he
reserved the right to "negotiate for the sales drivers " The
Union asked how many employees had signed
distributorship contracts, but Lopatt did not give the
information. Pyle observed that he thought the
Respondent had violated the law in respect to the
discontinuance of the sales routes and its refusal to
bargain with the Union for the drivers.
Although there is also an indication in the minutes of
the June 12 meeting that Respondent was ready to
negotiate the "termination of the salesmen's routes," a
reading of the minutes, taken with Lopatt's explanation,
again shows that Respondent did not consider the drivers
to be employees and was willing, insofar as they were
concerned, to negotiate only with respect to the effects of
the change on them. At the meeting, for example, Lopatt,
when asked by a union representative what he was there
for, referred the speaker to the written statement which
Lopatt had read in the first session regarding the action of
the board of directors which "had decided to discontinue
the present method of distribution at the end of the
present contract." Pyle again insisted that he was
attempting to negotiate for the drivers as employees, and
Lopatt's replies clearly show that the drivers' status had
been predetermined and that Respondent would talk only
about the effects on the driver-salesmen of the institution
of independent distributorships. As indicated above, this is
evident from Lopatt's testimony. He said that he wanted
to negotiate a contract for all "employees," but he
admitted that the former drivers who were now
"distributors" were not employees in his view. He also
candidly conceded that he was willing to bargain about
effects, and by effects he meant "something like severance
pay, health and welfare, other benefits," but not "about
their status as an employee or an independent contractor."
7. Soliciting employees to withdraw from the Union
Robert Sadler, union steward, was asked on June 11 or
12 by Recknagel and Hamilton to sign a statement which
read, "I, Robert Sadler, do hereby agree to have nothing
more to do with the Union." Sadler refused, and he saw
the document in Hamilton's office later
C. Analysis, Additional Findings, and Conclusions
1. Independent contractors or employees
In determining the status of persons alleged to be
independent contractors, the Board has frequently held
that the Act requires application of the "right to control"
test. Under this test, the relationship is one of
employment where the person for whom the services are
performed retains the right to control not only the ends to
be achieved but also the manner and means to be used in
accomplishing the result. If, on the other hand, control is
reserved only as to the result sought, the relationship is
that of independent contractor. Resolution of the question
depends largely upon the peculiar facts of each case. No
single factor is controlling and the totality of the
circumstances must be considered.' More recent cases of
the Board have emphasized that the test must be applied
in the light of the economic realities present in each
situation.'
'Pure Seal Dairy Company, 135 NLRB 76, 79, Cement Transport, Inc.
162 NLRB 1261, 1265.
'Mister Softee of Indiana, Inc, 162 NLRB 354, A Paladin, , Inc. 168
DAN DEE WEST VIRGINIA CORP.
Since, not unexpectedly, some of the factors present in
this case indicate an independent contractor status, others
point to an employee status, but most are mixed and need
interpretation in the light of the principles, the record
must be reviewed in some detail.
All of Respondent's driver-salesmen executed two
documents in the transaction wherein they become
distributors, one a "West Virginia Deed of Trust" and the
other a "Sales Agreement." Under the deed of trust, each
driver agreed to purchase the truck he had been driving as
an employee and Respondent retained a security interest
in it until the price was paid. The buyer put up no cash
for the truck and did not negotiate its price. Respondent
fixed the price, and the buyer agreed that Respondent
could deduct 3 percent of each weeks' volume of sales as
part payment for the truck and for $900 worth of
merchandise advanced to each driver. Under the security
agreement the purchaser of the truck agreed to keep the
vehicle insured and pay all taxes assessed against any
personal property covered by the instrument . It also
provides, among other things, that in case of default in
payment, or if the driver fails to purchase merchandise
from Respondent, the entire balance of the debt becomes
immediately due and bears interest at 6 percent.'
By the terms of the sales agreement the distributors are
given the exclusive right to sell Respondent's products in
territories described in the agreement and which are the
same territories or routes that the distributors serviced as
driver-salesman. Respondent determined the boundaries of
each person's route, and in case any territory overlapped
another, Respondent reserved the right to make a final
decision in the matter.
Respondent establishes the price the distributors pay for
its product less a 20 percent discount. This price and
discount was not negotiated with Respondent, but
apparently was in accord with the policy that Respondent
had established in its other distributorships. The
distributor does not on his own discount merchandise to
the retailer, and he is obligated to absorb one-halt' of any
discount the Respondent might authorize.' The
distributors' weekly compensation is the difference
between the amount the retailers pay him for the products
less the amount of money Respondent deducts for the cost
of the merchandise advanced the distributor and the
amount of any money in repayment of loans. The
distributors deposit all collections in Respondent's bank
account and Respondent weekly makes a distribution to
the distributors after performing the bookkeeping
functions which include not only the basic computation of
sales minus advances, but also various types of credits for
returned merchandise.
Under the sales agreement the distributor agrees that
he will not sell any products of any other company similar
to those of Respondent. Although the agreement forbids
the sale of competitive products, distributors continue to
sell a small amount of snack merchandise purchased from
other companies as they did in the past. The amount of
these noncompetitive products is an insignificant part of
their total sales, however. It also appears that this
merchandise is delivered to all of them at Respondent's
warehouse where they garage their trucks at a rental fee
NLRB No. 132 ; Carnation Company , 172 NLRB No. 215, Deaton Truck
Lines, Inc., 143 NLRB 1372, 1377.
'The notes were non-interest bearing . An example of one of the deeds of
trust in evidence shows the face value of the debt of the buyer as $2,200
'The price which Respondent discounts to the distributor effectively fixes
the price that distributors must charge retailers.
537
of $5 per month.
The sales agreement provides that upon its termination
by the buyer or seller the distributor will not compete with
the seller in his territory for 2 years.
As we have seen, the distributor provides his own truck
which he purchased on credit from the Respondent and
under the sales agreement he is required to have marked
on the side of each truck his "name, address and his
ownership." The record shows that Respondent suggested
that each distributor create a proprietorship name and
paid to have this name painted on each distributors' truck.
Respondent's telephone number is also on the trucks,
which are uniformly painted with Respondent's color and
bear Respondent's name and decals advertising
Respondent's products. Distributors are required to carry
appropriate liability insurance and they must provide their
own gasoline and oil and maintenance. Repairs, too, are
their own responsibility. It appears, however, that
Respondent saw to it that the trucks were in good
condition before the purchase and it also advanced each
man $200 for payment of insurance premiums.
Respondent also advanced each distributor $300 so that he
could pay his first quarter Federal tax. Respondent also
supplies, without cost, all tools necessary for selling
products, like display racks and miscellaneous
promotional material.
Respondent does not deduct withholding or social
security taxes from the payments it makes the
distributors, but it does provide free medical insurance
under a Blue Cross group plan. The contract requires the
buyer to operate his sales truck on the basis of a 6-day
week and service each retailer at least once a week. While
nothing is said about hours, and each man can set his
own, they all operate pretty much as they did in the past
as far as reporting for work is concerned.
In addition to other bookkeeping and record keeping
services which Respondent supplies to the distributors, the
distributors are required by contract to keep up-to-date
route cards. Respondent supplies these route cards and the
distributor keeps the information current and furnishes a
copy to the Respondent. The agreement also guarantees
the distributor Respondent's expert help by providing that
Respondent's sales organization will promote sales in the
distributors' territory, without expense to the distributor,
by "advice and recommendation in the manner of
servicing a route in accordance to the rules of the Seller in
its own sales organization" and by sending "into the
territory when so deemed necessary by the Seller, its own
sales supervisors to work with the Buyer and his salesmen
through instruction and advice to help promote sales."
Respondent assigns its supervisors to ride with the drivers
for the just stated purpose.6 In addition, Respondent
assigns a spare driver or an extra truck when distributors
are on vacation or need extra assistance because of loads
larger than they can handle. The distributors pay
Respondent for this service, but the profits from the route
go to the distributors, not the extra driver or the
Company.
In the sales agreement the seller agrees to furnish
merchandise, but, subject to certain restrictions on the
seller, the seller reserves the right to determine the
amount of sales to be made in any territory. On the other
hand, should sales fall below what Respondent considers is
right, the buyer must put into effect "recommendations
made by the seller to increase sales." If the distributor
'Distributors also attend sales meetings at company expense as they did
before they became distributors.
538 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
fails to follow the seller's recommendation, which, for
example, may include placing additional trucks in the
territory, the seller may cancel the agreement.
Respondent retains the right to approve or reject any
individual hired by the distributor, and it also restrains
any sale, assignment or transfer of the territory allocated
to the distributor by the agreement.
In addition to being able to terminate the exclusive
sales provision of the agreement and take over the route
for the reason stated above, Respondent has broad powers
under the contract to terminate it immediately upon
written notice "if the Buyer fails to do any of the things
as required by or provided in" the agreement.
In my view, and I so find, despite some indicia of an
independent contractor status, such as the drivers
supplying a truck and bearing most of the cost of its
operation, Respondent actually controls not only the end
to be achieved but the manner and means of achieving it,
and, realistically, the distributors are so utterly dependent
economically on Respondent and their activities so
inextricably interwoven with and controlled by
Respondent's policy determinations that the relationship
involved can only be described as that of
employer-employee, differing only in insignificant ways
from that which existed before the documents which
purported to make the men independent entrepreneurs
were signed.
Manner and means of operation and financial and
economic dependence are necessarily interrelated and not
easily separated. It is the combination of factors which is
important, of course, in deciding who has the right to
control, but an attempt at separation will be made here.
With respect to manner and means, the following appear:
Each driver involved drove a truck and serviced a
certain number of customers on an assigned route prior to
March 26, 1969. He still drives the same truck and
services the same customers, and he cannot enlarge his
territory, although he can acquire new customers and
report their names and purchases to Respondent.
Respondent, by contract, controls where he works as
tightly as it did before, and the commission he makes
controls how long and how hard he works as much or
more than Respondent ever did. Moreover, the sales
agreement requires that the drivers operate on a 6-day
calendar week, serve each retailer at least once a week
and file reports with Respondent. It is not surprising in
the light of these combined controls that distributors work
pretty much the same schedules that they did in the past.
The Respondent also has substantial control over the
techniques and methods of operations. Prior to the new
arrangement, Respondent trained drivers in the work, and
of course it had the right to discharge them if they were
incompetent. Today, distributors still are trained and
instructed by means of sales meetings and by the use of
sales supervisors on their routes. The purpose of these
supervisory controls are the promotion of sales, but the
sales agreement provides that sales volume is the
"essence" of the contract, that both parties will act to
increase sales volume , that Respondent will use its sales
organization to help promote sales in the particular
territory involved, and that if sales fall below a certain
standard and the distributor fails to follow
recommendations of Respondent to increase sales,
Respondent may take a number of actions , including
cancelling the agreement or making sales in the territory
itself . Respondent by this combination of practices and
provisions, it seems to me, can effectively and
substantially control the distributors.'
Respondent maintains a spare truck and a spare driver
to assist the distributors when they have extra large loads
or promotional material, or in case of breakdowns or
vacations.
Whether the employer or the workman supplies the
tools necessary for doing the work is a common law
criterium frequently invoked in this area.' The distributors
supply the truck, but Respondent supplies promotional
material, display racks and other devices necessary for
display.
The distributors have a proprietorship name painted on
the door of the truck, but Respondent suggested this
technique and paid the artist to paint the name. In
addition, as seen above , the truck looks the same
otherwise and also contains Respondent's telephone
number.
The sales agreement gives Respondent the right to
approve or reject any individual hired by a distributor.
The financial and economic factors involved in the
relationship have been alluded to in the statement of facts.
They, in combination with other factors, are significant in
applying the "right to control" test, for they indicate that
the supposed independent business man invested little of
his own capital in the enterprise and has little to say about
how the important decisions effecting the adventure's
profits will be made.
First of all, Respondent sold the truck on a conditional
sale or mortgage basis and the drivers invested no money.
Respondent charges no interest on the loan andoalso,
advanced $900 worth of merchandise and sums of money,
to pay for insurance and taxes.
Financially, Respondent put the drivers in business,
and, financially, it keeps them there. It controls the use of
their current income and extends credit to their customers.
All credit payments are made directly to Respondent who
bills the customer, and any cash collected by the
distributors must be deposited in Respondent's bank
account. Failure to deposit or account for collections is
cause to cancel the sales agreement . At the end of the
week, if the distributors report and account for all their
collections, Respondent makes the computations and pays
each driver a sum of money.
Unlike the independent business man , the distributors
have little control over the very things they are supposed
to generate (sales and profits), for Respondent can control
their volume and set their prices. These matters are all
regulated by the contract. In addition to setting prices
without distributor consent , Respondent may discount
merchandise and the distributor must absorb half of the
discount to the retailer.
The distributors sell an insignificant amount of
products not distributed by Respondent, but they are
prohibited by the contract from selling competitive
products. In effect, therefore, all their time must be
devoted to promoting Respondent's products.'
The distributors, unlike independent business men,
neither own nor accrue any significant alienable
proprietary interests in the business . The Respondent
allots the territory and is the final arbiter about any
dispute over its size and area. The agreement provides
that it cannot be sold, assigned or transferred. If the
'Allen Milk Company, 158 NLRB 285, 300-301; Frito-Lay, Inc, 167
NLRB No. I l
'This is an unreliable factor even if it is only one indicator , for who
supplies the tools which persons who are admittedly workmen use varies
from industry to industry.
'Western Nebraska Transport Service Division of Consolidated
Freighiways . 144 NLRB 301, 304-305.
DAN DEE WEST VIRGINIA CORP.
agreement is terminated for any reason, the distributor is
restricted from selling any similar products in the territory
for a period of 2 years. Renewal of the agreement at its
expiration depends on mutual agreement.
Finally, Respondent has reserved broad authority to
unilaterally terminate the agreement "if the Buyer fails to
do any of the things as required by or provided in this
Agreement, or fails to honestly and faithfully perform and
discharge his obligations as herein provided " by
giving written notice of an intention to do so. In the light
of the distributors' undertakings to follow Respondent's
"advice and recommendations" in the sales area, these
controls point to an employer-employee relationship
terminable almost at will.-
2. The refusal to bargain
a. Majority and appropriate unit
On the basis of the whole record , including the history
of collective bargaining and the stipulation of the parties,
I find that:
All driver-salesmen and warehousemen of the Employer
at its Wheeling distribution center , excluding all other
salesmen , office clerical employees , professional
employees , guards and supervisors as defined in the
Act,
constitute an appropriate unit for the purposes of
collective bargaining within the meaning of Section 9(b) of
the Act.
The Union was certified by the Board as the majority
representative of the employees in 1960 and its last
contract with Respondent expired on February 28, 1969.
All contracts contained union shop and checkoff
provisions . After expiration of a certification year,
majority status of a union is presumed , but an employer
may rebut such presumption which objective facts showing
that he has a reasonable basis for believing that the Union
has lost its majority. There were no facts offered here to
show that the Union had lost its majority or that
Respondent could rationally believe that it had. As a
matter of fact , the record shows, as found above , that, on
February 25, six of the unit employees met with the
Union and voted to strike over Respondent ' s alleged
refusal to bargain , and on March 17, 1969, all unit
employees clearly reaffirmed their support for the Union
by signing a document requesting the Union to continue
to press Respondent for bargaining . I find and conclude
that the Union is and has been for many years the
exclusive bargaining representative for all employees in
the above unit for the purposes of collective bargaining
under the Act."
b. Respondent 's refusal to bargain with respect to its
decision to change to a distributorship method
Regardless of Respondent 's economic justification for
instituting a distributorship method , it was nevertheless
bound to bargain with the Union both about the decision
and the effects of such decision ." As set out more
extensively in the above statement of facts , Respondent's
board of directors decided on December 13, 1968, to use
"Carnation Company , supra; The Maxwell Company , 164 NLRB No.
97.
"Celanese Corporation of America , 95 NLRB 664; Kimbrough Trucking
Co., 160 NLRB 954, 957-958.
539
distributors to sell the Company's products, and although
the parties engaged in correspondence thereafter
supposedly arranging for collective bargaining for a new
agreement , it was only at the first meeting on February
24, 1969, that Respondent disclosed its decision to the
Union. Although Respondent argues that it was the Union
which refused to bargain with the Respondent at that and
subsequent meetings , it is crystal clear that management's
decision about distributorships had already been made and
was irrevocable. As pointed out earlier, the very minute of
the meetings show that where Respondent said it was
present to "negotiate the termination of salesmen" it
meant that it would discuss matters such as severance pay
and other matters which become relevant when a person's
status changes from employee-to exemployee. The minutes
show that Respondent's aim in the negotiations sessions
was toward a contract for the warehouseman only and
provisions covering the termination of the drivers. Pyle
insisted on negotiating for all persons as employees, and
Lopatt refused. If there were any lingering question about
Respondent 's position on the status of the drivers, it was
dispelled by Lopatt's testimony to the effect that the
method of doing business had been decided by
Respondent, that he would negotiate regarding the effects
of the change on the drivers, and that he would bargain
for all employees but drivers were no longer employees. It
may be true that the Union avoided bargaining about the
effects of the change, but bargaining on that subject was
premature until the matter of the change was resolved or
an impasse reached on it. Respondent's obligation was not
just to notify the Union that it was going to convert to a
different method of distribution, but to bargain with
respect to the very adoption of the plan. This Respondent
did not do, and it thereby violated Section 8(a)(5) of the
Act."
C. Bypassing the Union and signing individual
contracts with the employees
Since I have found that the drivers remained employees
and the Union was their representative, Respondent
violated the Act by meeting with the employees without
their representative present on March 11, 14 and'20, 1969,
for the purpose of dealing directly with said employees
about their terms and conditions of employment and
entering into individual contracts with them. The private
negotiators leading to agreements and changes in the
conditions of employment were in derogation of the status
of the majority representative and a violation of Section
8(a)(5) of the Act." It is unnecessary to consider what
may have been the case if Respondent had bargained to
an impasse with the Union about its decision to use the
distributorship method in its business and subsequently
met with the employees with the Union's knowledge and
consent, because Respondent failed to bargain at all about
its decision to change its method of operating and
negotiated with the employees without the Union's
knowledge.' I
"Fibreboard Paper Products Corp v. N.L R B., 379 U.S. 203; Town
and Country Manufacturing Company, Inc, 136 NLRB 1022, enfd. on
other grounds 316 F.2d 846 (C A. 5), Tonkin Corp., of California, d/b/a
Seven Up Bottling Co., of Sacramento , 165 NLRB No. 61; Servette, Inc.,
133 NLRB 132; Squirt-Nesbitt Bottling Corp ., 130 NLRB 24, 34.
"Fibreboard Paper Products Corp v. N L.R B., Servette . Inc., supra;
Squirt-Nesbitt Bottling Corp . supra.
"Medo Photo Corporation v. N L.R. B , 321 U S. 678, 684; May
Department Stores v . N.L.R B., 326 U.S. 376, N.L R B. v Katz U.S 736;
Carnation Company, 172 NLRB No. 215.
"Even if, contrary to what I have found , the status of the drivers was
540 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
d. Unilaterally changing working conditions
After the individual contracts were signed, the
employees, on or about March 31, 1969, began to function
as distributors and this made a substantial change in their
method of compensation and in their other benefits
provided under the expired collective bargaining contract.
These unilateral changes were also violations of Section
8(a)(5) of the Act, as alleged in the complaint.16
e. Respondent's continued refusal to bargain with the
Union
Although the Union and the Company met on March
28 and June 12, 1969, after the new method of sales had
been installed, Respondent, as I have found in greater
detail above, took the position that its decision to operate
in a distributorship fashion was irrevocable, although it
was willing to bargain about the effects of this decision on
the drivers. Respondent, although willing to negotiate an
agreement covering the warehouseman as an employee,
clearly took the position that since the drivers were no
longer employees, it need not bargain with the Union
about them as such. Because the drivers remained
employees represented by the Union, as I have found,
Respondent's continued refusal to bargain with the Union
over their terms and conditions of employment violated
Section 8(a)(5) of the Act."
f. Independent violations of Section 8(a)(1) of the Act
The complaint, as amended at the hearing, alleged that
Respondent urged employees to state in writing that they
no longer desired to be represented by the Union.
Employee Sadler, who was also the Union job steward,
testified without contradiction that, on or about June I I
or 12, 1969, Supervisor Recknagel, who was active in
arranging the meetings with the men where the sales
agreements were discussed and executed, and Supervisor
Hamilton, asked him to sign a document already prepared
which contained a declaration that the undersigned agreed
to have nothing more to do with the Union. Subsequently,
Sadler saw this document in Hamilton's mail bin.
Recknagel admitted participating in this incident, and
Hamilton did not testify. By soliciting Sadler to withdraw
from the Union, particularly in the context of this case,
Respondent violated Section 8(a)(1) of the Act.18
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES
UPON COMMERCE
The activities of Respondent set forth in section III,
above, which have been found to constitute unfair labor
practices, occurring in connection with the operations of
Respondent described in section 1, above, have a close,
intimate, and substantial relation to trade, traffic, and
changed from that of employees to independent contractors , Respondent
would have violated the Act by refusing to bargain with the Union about
its decision to eliminate unit jobs and contract the work out. Town &
Country Manufacturing Company, Inc. supra: Tonkin Corporation of
California, d/b/a Seven Up Bottling Company of Sacramento, supra
IN L R. B. v. Katz. supra
"Allen Milk Company. 158 NLRB 285.
"There is no evidence in the record to support the allegation , which was
also added at the hearing , that Personnel Director Lopatt urged employees
to disavow and to persuade other employees to disavow support for the
Union.
commerce among the several States and tend to lead to
labor disputes burdening and obstructing commerce and
the free flow of commerce.
V. THE REMEDY
Having found that Respondent has engaged in certain
unfair labor practices, it will be recommended that
Respondent cease and desist therefrom and take certain
affirmative action designed to effectuate the policies of the
Act.
Since it has been found that Respondent refused to
bargain with the Union as the exclusive representative of
the employees in the appropriate unit described herein, but
has, to the contrary, bargained individually with the
employees and entered into individual contracts with
them, it will be recommended that Respondent cease and
desist therefrom and that it cease giving effect to the
individual contracts with its driver-salesmen. It will be
recommended that Respondent offer the driver-salesmen
with whom it has made individual contracts immediate
and full reinstatement to their former or substantially
equivalent positions, without prejudice to their seniority or
other rights and privileges, and make each of them whole
for any loss of pay he may have suffered by reason of
employment under individual contracts.
Upon the basis of the foregoing findings of fact and
upon the entire record in the case, I make the following
CONCLUSIONS OF LAW
1. The Respondent is engaged in commerce within the
meaning of Section 2(6) and (7) of the Act.
2. The Union is a labor organization within the
meaning of Section 2(5) of the Act.
3 All driver-salesmen and warehousemen of the
Respondent at its Wheeling distribution center, excluding
all other salesmen, office clerical employees, professional
employees, guards and supervisors as defined in the Act,
constitute a unit appropriate for the purpose of collective
bargaining within the meaning of the Act.
4. At all times since May 15, 1963, and continuing to
date, the Union has been the exclusive representative for
the purpose of collective bargaining of all the employees
in the aforesaid unit within the meaning of Section 9(a) of
the Act.
5. By refusing to bargain with the Union, as found
above, on February 24, 1969, and thereafter, Respondent
engaged in and is engaging in unfair labor practices within
the meaning of Section 8(a)(5) and (I) of the Act.
6. By soliciting its employees, to withdraw from the
Union, Respondent violated Section 8(a)(1) of the Act.
7. The aforesaid unfair labor practices are unfair labor
practices within the meaning of Section 2(6) and (7) of the
Act.
RECOMMENDED ORDER
Upon the basis of the above findings of fact and
conclusions of law, and upon the entire record in the case,
it is recommended that Respondent, its officers, agents,
successors, and assigns, shall:
1. Cease and desist from.
(a) Refusing to bargain with the Union as the exclusive
representative of its employees in the appropriate unit
found herein.
(b) Continuing or giving effect to any individual
independent distributorship contracts executed with any of
DAN DEE WEST VIRGINIA CORP.
its driver-salesmen in the unit.
(c) Dealing individually with its driver-salesmen in
derogation of their bargaining representative, encouraging
or soliciting them to revoke their bargaining
representative's authority to represent them for the
purpose of collective bargaining, or, in any like or related
manner, interfering with, restraining, or coercing its
employees in the exercise of the right of self-organization,
to form labor organizations, to bargain collectively
through representatives of their own choosing, and to
engage in other concerted activities for the purpose of
collective bargaining or other mutual aid or protection, or
to refrain from any and all such activitites, except as
authorized in Section 8(a)(3) of the Act.
2. Take the following affirmative action which will
effectuate the policies of the Act.
(a) Bargain collectively with the Union, upon request,
as the exclusive representative of the employees in the
appropriate unit found herein with respect to wages, hours
and other conditions of employment, and if an
understanding is reached embody such understanding in a
signed agreement.
(b) Notify individually, and by the posting of notices
attached hereto, all driver-salesmen with whom
Respondent has made individual contracts that it will no
longer offer, solicit, enter into, continue, or enforce such
contracts, but without prejudice to the assertion by the
driver-salesmen affected of any legal rights they may have
acquired under such contracts.
(c) Offer to all unit employees with whom Respondent
has made individual contracts immediate and full
reinstatement to their former or substantially equivalent
positions, without prejudice to their seniority or other
rights and privileges, and make each of them whole for
any loss of pay he may have suffered at 6 percent per
annum in the manner set forth in Isis Plumbing &
Heating Co., 138 NLRB 716.
(d) Preserve and, upon request, make available to the
Board or its agents, for examination and copying, all
payroll records, social security payment records,
timecards, personnel records and reports, and all other
records necessary or useful in determining compliance
with this Order, and the computation of the amount of
backpay due pursuant thereto.
(e) Post at its Wheeling, West Virginia, distribution
center copies of the attached notice marked "Appendix.""
Copies of said notice on forms provided by the Regional
Director for Region 6 shall, after being duly signed by the
Respondent, be posted immediately upon receipt thereof
in conspicuous places and be maintained by it for a period
of 60 consecutive days, including all places where notices
to employees are customarily posted. Reasonable steps
shall be taken by Respondent to insure that such notices
are not altered, defaced, or covered by any other material.
(f) Notify the said Regional Director, in writing, within
20 days from the receipt of this Trial Examiner's Decision
what steps Respondent has taken to comply herewith.l0
"In the event that this Recommended Order is adopted by the Board the
words "a Decision and Order" shall be substituted for the words "the
Recommended Order of a Trial Examiner" in the notice . In the further
event that the Board ' s Order be enforced by a decree of the United States
Court of Appeals , the words "pursuant to a Decree of the United States
Court of Appeals, Enforcing an Order " shall be substituted for the words
"Pursuant to a Decision and Order "
541
"In the event that this Recommended Order be adopted by the Board,
this provision shall be modified to read "Notify said Regional Director in
writing , within 10 days from the date of this Order, what steps the
Respondent has taken to comply herewith."
APPENDIX
NOTICE TO ALL EMPLOYEES
Pursuant to the Recommended Order of a Trial
Examiner of the National Labor Relations Board and in
order to effectuate the policies of the National Labor
Relations Act, as amended, we hereby notify our
employees that:
WE WILL bargain collectively, upon request with
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America, General
Teamsters, Chauffeurs, Warehousemen and Helpers
Local Union 697, as the exclusive representative of our
driver-salesmen and warehousemen regarding wages,
hours, and working conditions, including a
distributorship plan and if an understanding is reached,
embody such understanding in a signed agreement.
WE WILL no longer enter into, continue, or enforce
any individual contracts with our driver-salesmen.
WE WILL offer to all driver-salesmen with whom we
have individual contracts immediate and full
reinstatement to their former or substantially equivalent
positions as driver-salesmen, without prejudice to their
seniority or other rights and privileges, and make each
whole for any loss of pay suffered by reason of
employment under individual contracts
WE WILL NOT deal individually with driver-salesmen
concerning their terms and conditions of employment
but WE WILL deal with the Union instead
WE WILL NOT try to get our driver-salesmen to
withdraw from the Union.
WE WILL NOT in any like or related manner interfere
with, restrain , or coerce you in the exercise of your
right to self-organization, to bargain collectively
through representatives of your own choosing, and to
engage in any other concerted activities for the purpose
of collective bargaining or other mutual aid or
protection, or to refrain from any or all such activities,
except to the extent that such rights might be affected
by an agreement requiring membership in a labor
organization as a condition of employment as
authorized in Section 8(a)(3) of the National Labor
Relations Act.
DAN DEE WEST VIRGINIA
CORPORATION
(Employer)
Dated By
(Representative ) (Title)
This notice must remain posted for 60 consecutive days
from the date of posting and must not be altered, defaced,
or covered by any other material.
If employees have any question concerning this notice
or compliance with its provisions, they may communicate
directly with the Board's Regional Office, 1536 Federal
Building , 1000 Liberty Avenue, Pittsburgh, Pennsylvania
15222, Telephone 412-644-2969.