East Newark Realty Corp.

National Labor Relations Board - Board DecisionsFeb 17, 1956

115 N.L.R.B. 483 (N.L.R.B. 1956)

EAST NEWARK REALTY CORPORATION - 483 East ' Newark Realty Corporation and Local 617, International Brotherhood of Teamsters , Chauffeurs, Warehousemen and Helpers of America , AFL-CIO, Petitioner . Case No. 2-RC-7520. February 1 7,1956 DECISION AND ORDER Upon a petition duly filed under Section 9 (c) of the National Labor Relations Act, as amended, a hearing was held before Milton Pravitz, hearing officer. The hearing officer's rulings made at the hearing are free from prejudicial error and are hereby affirmed. Upon the entire record in this case, the Board finds : The Employer is a New Jersey corporation with its offices in East Newark where it is engaged in the business of owning and leasing industrial floor space and selling water, steam, and electricity to its tenants. During the past year, the Employer purchased fuels in the amount of $100,000, approximately 15 percent of which was shipped directly to the Employer from points outside the State of New Jersey. During the same period, the Employer's gross revenues exceeded $1,000,000. Of this amount, $725,000 was derived from industrial rentals; the balance from the sale of water, steam, or electricity to tenants. The parties stipulated that the Employer is engaged in com- merce within the meaning of the Act and apparently agree that the Board should exercise its jurisdiction in this case. However, such a stipulation cannot foreclose inquiry by the Board to determine whether the assertion of jurisdiction in a given case would be contrary to the Board's jurisdictional policy.' In McKinney Avenue Realty Company (City National Bank),' the Board undertook to study and reappraise its jurisdictional standard with respect to office building operations in light of changing economic conditions and the experience gained since the promulgation of this standard in 1950. Based upon that study and reappraisal, the Board concluded that the then existing criterion for the assumption of juris- diction over office building enterprises should be revised in order to better attain the Board's long-established policy of limiting the exer- cise of its jurisdiction to enterprises whose operations have, or at which labor disputes would have, a pronounced impact upon the flow in interstate commerce. Accordingly, the Board announced in the McKinney case that henceforth it would assert jurisdiction over an office building operation only when the employer which owns or leases and which operates the office building is itself otherwise engaged in interstate commerce and also utilizes the building primarily to house its own offices. See, e g, later-Comity Raa-al Elect) to Cooperative Corpo ) atio )L, 106 NLRB 1316. s 110 NLRB 547. 115 NLRB No. 75. 484 DECISIONS OF NATIONAL LABOR RELATIONS BOARD The instant case presents the question as to whether the jurisdic- tional standard enunciated in the McKinney case should be applied to^ industrial building enterprises. We conclude that it should. In our opinion, the considerations underlying the McKinney decision are equally true of industrial building enterprises such as are involved here where the Employer is also engaged in the essentially local opera- tion of furnishing no more than space for the use of others. Even assuming that the portion of this Company's business, relat- ing to the sale of water, steam, and electricity to commercial con- sumers, could be disentangled from the single integrated operation, it falls short of the Board's established jurisdictional standards appli- cable to such type of business. Under the rule of the Greenwich Gas case, set up in 1954, companies which produce and distribute such utilities must gross $3,000,000 annually to meet the present jurisdic- tional requirements.' No doubt some such companies, although smaller, count commercial consumers among their customers. The Board has held that the Greenwich Gas standard would apply to them also. If the Greenwich Gas standard applies, the standards enunci- ated in Jonesboro Grain Drying Cooperative' do not. Equally inapposite to the issue before us is the Supreme Court de- cision in Kirschbaum v. Walling,' upon which our dissenting colleagues rest. There the Court decided that services such as those performed by the employees here involved are "necessary to the production of goods for commerce." This Board has never held, nor do we now determine, otherwise. - Of course, the statutory test for legal juris- diction under the Act which we administer is different. This dis- tinction apart, there can be no question but that this Employer's operations affect commerce within the meaning of the Act. This fact, however, is not determinative of the issue presented in this case, which is whether the Employer's business has sufficient im- pact "upon interstate commerce so as to warrant our discretionary exercise of jurisdiction. As always in the past, these two questions are separate and distinct. Notwithstanding the fact of legal jurisdiction under the statute, the Board has long deemed less than $500,000 direct flow of goods into a State insufficient interstate commerce to invoke its processes, but a much lesser direct outflow of products enough.' In Haleston Drug Stores v. N. L. R. B., after the establishment of such standards in 1950, the Ninth Circuit Court upheld the Board's legal authority to exercise its discretion.' As to the present rules on jurisdiction, including the McKinney Realty-case here applied, the 8 The Greenwich Gas Company and Fuels, Inc., 110 NLRB 564. * 110 NLRB 481. 6 316 U. S. 517, in which the Court found that the particular operations fell within the legal jurisdiction of the Fair Labor Standards Act. O Federal Dairy Company, 91 NLRB 638 ; Stanislaus Implement and Hardware Com- pany, 91 NLRB 618; and Jonesboro Grain Drying Cooperative, sups a. 7 187 F. 2d 418, cert denied 342 U. S 815. EAST NEWARK REALTY CORPORATION 485 latest court decision in point is Optical Workers Union Local 204.8.59, 'et al. (Rogers Bros. Wholesale) v. N. L. R. B., in which the Fifth Circuit Court said : We hold . . . that the Board has authority to adopt and reverse policy, either in the form of an individual decision or as rule- making for the future , in any manner reasonably calculated to carry out its statutory duties. . . . Therefore , finding, as we do, that the standards adopted by the Board are reasonable, we can discern no valid distinction between a decision made under these criteria and one made under the former unannounced policy.8 In light of these court authorities , the contrary view of our dissent- ing colleagues appears as but another opinion as to where the juris- dictional line should be drawn. When dealing with matters of degree, reasonable men may differ widely as to the place where the line should fall. Accordingly, we shall dismiss the petition. [The Board dismissed the petition.] MEMBERS MURDOCK and PETERSON, dissenting : We dissent from the dismissal of the petition in this case in which none of the parties contests the Board's jurisdiction. In dismissing the petition a majority of the Board as presently con- stituted necessarily approves and reaffirms the McKinney Avenue Realty Company case, supra, in which an earlier majority of the Board announced the highly -restrictive standard for office buildings under the 1954 jurisdictional plan. But in addition, the present majority de- cides that the office building standard shall also be utilized for en- terprises leasing industrial property, rather than the general Jones- boro standards under which such enterprises would otherwise fall. We dissented in the McKinney Avenue case from the adoption of a standard for office buildings so restrictive as to excise a substantial portion'of such enterprises from the Board's jurisdiction. We enumer- ated the fallacies and inconsistencies in that standard, including the failure to give effect to the frequently expressed judicial conclusion that the provision of office space and necessary incidental building services for enterprises engaged in commerce does exert a 'substantial impact on commerce. We also noted the incongruity in a standard which necessarily results in less assertion of jurisdiction when there is greater effect on commerce. Obviously when the Board is consider- ing extending a standard from one industry to another, it is timely and necessary to reexamine the merits of the original standard. We there- fore again direct attention to the deficiencies of the office building standard as detailed in our dissents in the McKinney case. Supple- F 227 F. 2d 687. 486 - DECISIONS OF NATIONAL LABOR RELATIONS BOARD menting that opinion we note the graphic illustration of the absurdity of the office building standard provided by the facts in New York Stock Exchange, 58 NLRB 911. In that case the Board asserted juris- diction in 1944 over the New York Stock Exchange, and its three sub- sidiary corporations, Stock Clearing Corporation, New York Stock Exchange Building Corporation, and New York Quotation Company, as a single employer. With respect to the activities of the Building Corporation the decision stated that it owns or leases and operates a city block of real estate bounded by Wall Street, Broad Street, Exchange Place, and New Street in the City of New York. The Exchange, Stock Clearing, the Build- ing Company, and the Quotation Company occupy approximately 37 percent of the space in said buildings. Approximately 36 per- cent is occupied by other tenants, including the Western Union Telegraph Company and the Brooklyn Trust Company who to- gether occupy approximately 11 percent of the total available space in said buildings. The above-described property may well be the single most valuable square block of real estate in the world and is,utilized by enterprises which listed securities for the purpose of facilitating the sale and pur- chase of said securities, having a market value of $149,000,000,000 during the year 1944. Yet a petition for an election of representatives among the employees who maintain and service the buildings at that location presumably would have to be dismissed on jurisdictional ,grounds under the McKinney standard because the employer, though otherwise enga2•ed in interstate commerce, does not operate the office buildings primarily to house its own offices. Can it be seriously con- tended that a labor dispute among the building service employees of such an employer would not have a pronounced impact on interstate commerce, as the majority which now reaffirms the office building standard would have us believe? If the standard is not even de- sirable in the office building area for which it was framed, obviously it should not be extended into the industrial property field. We shall also discuss in some detail additional considerations which show the error in applying it to industrial properties such as that operated by the Employer herein. As stated in the majority opinion the Employer is engaged in New Jersey in the business of owning and leasing industrial floor space and selling water, steam, and electricity to tenants who are engaged in interstate commerce. The maintenance and service employees it em- ploys to carry on its business and furnish custodial and maintenance service to its tenants include operating 'engineers, maintenance en- gineers, firemen, oilers, machinists, electricians, plumbers, pipefitters, carpenters, painters, elevator operators, watchmen, etc. It is apparent that this operation is the same as or essentially indistinguishable from EAST NEWARK REALTY CORPORATION 487 the typical so-called "loft" building which was involved in Kirschbaum v. Walling, 316 U. S. 517, where the employer leased space and pro- vided,similar services to tenants engaged in manufacturing clothing. The basic fallacy in the majority's extension of the McKinney officer building standard to industrial properties of this type is the under- lying and implicit premise that the furnishing of leased premises with power, light, and maintenance services is not necessary to the produc- interstate commerce by lessee manufacturers.tion of goods for' (Only where the lessor coincidentally is himself otherwise engaged in commerce and occupies a building primarily for his own use (pre- sumably a majority of the space) will the extended McKinney stand- ard permit jurisdiction to be asserted over a building whose tenants .produce goods for commerce.) The majority's basic premise, how- ever, had already been demolished by the Supreme Court in Kirsch- baum v. Walling, 316 U. S. 517, before its adoption. - In the Kirschbaum case, as already noted, the employer was simi-. larly engaged in renting space and furnishing services to tenants who, manufactured clothing for interstate commerce. The Court described the work of the lessor's employees in these words : These employees perform the customary 'duties of persons charged with the effective maintenance of a loft building. The engineer and fireman produce heat, hot water and steam necessary to the, manufacturing operations. They keep elevators, radiators, and fire sprinkler systems in repair. The electrician maintains the system which furnishes the tenants with light and power. The elevators operators run both the freight elevators which start and finish the interstate journeys of goods going from and coming to. the tenants, and the passenger elevators which carry employees, customers, salesmen and visitors. The watchmen protect the buildings from fire and theft. The carpenters repair the halls and stairways and other parts of the buildings commonly used by the tenants. The porters keep the buildings clean and habitable- [p. 517] The legal issue in the Kirschbaum case was whether the work of such employees was "necessary to the production of goods for commerce"' by the tenants of the building premises, in which event they would be covered by the Fair Labor Standards Act. The Supreme Court answered that issue plainly and emphatically : Without light and heat and power the tenants could not engage as they do, in the production of goods for interstate commerce. The maintenance of a safe, habitable building is indispensable to^ that activity. [p. 524] In our judgment, the work of the employees in these cases had such a close and immediate tie with, the process of production for 488 DECISIONS OF NATIONAL LABOR RELATIONS BOARD commerce, and was therefore so much an essential part of it, that the employees are to be regarded as engaged in an occupation "necessary to the production of goods for commerce." [Emphasis supplied.] [pp. 525-526] The majority opinion makes a feeble attempt to distinguish the Kirschbaum case. It notes that the standard for legal jurisdiction under our Act ("affecting commerce"), is different from that under the Fair Labor Standards Act ("necessary to the production of goods for commerce") . Of course that is true, but it has long been judicially recognized that the test under our Act is less restrictive than under that law. We agree with the majority that the issue here is not the existence of legal jurisdiction, which they concede, but "whether the Employer's business has sufficient impact upon interstate commerce so as to warrant our discretionary exercise of jurisdiction." We say that the views expressed by the Supreme Court in the Kirschbaum •case on the question of the nature of the impact on commerce of the kind of activities here involved (without regard to the different tests for legal jurisdiction under the two statutes) are directly pertinent to the issue in the instant case and diametrically opposite to the views expressed by the majority herein. As noted above, the Supreme Court states that the activities performed by the kind of employer here involved are so "indispensable" and have such a "close and imme- diate tie with the process of production for commerce" that they are "an essential part of it [commerce]." Yet our majority colleagues characterize these activities as an "essentially local operation" as the basis for their conclusion that they do not have "sufficient impact" on commerce to warrant the discretionary assertion of jurisdiction. Plainly an activity cannot be both "an essential part of commerce" and "essentially local." If the Supreme' Court's conclusion is right, then the majority's conclusion is wrong. They cannot both stand." The majority also cite the Haleston Drug and the Optical Workers Union court decisions in support of their decision. Inasmuch as the former simply upheld the Board's authority for budgetary or other proper reasons to assert jurisdiction, it simply begs the question here, which is the propriety and reasonableness of the declination of juris- diction in the area of industrial properties. The Optical Workers 0 The only other basis stated for the decision to apply office building standards to indus- trial properties is the majority's statement that "considerations underlying the McKinney decision aie equally true of industiial building enterprises." But as pointed out in the dissent in the McKinney case, the majority decision therein failed to explicate or provide any rationale for the conclusion that office buildings do not have a pronounced impact on interstate commerce except wheie the owner is otherwise engaged in interstate commerce and utilizes the building primarily to house his own offices Like many of the lead cases announcing the 1954 jurisdictional standards, the majority decision was no more than adnunistiative fiat. It is thus meaningless for the majority now to say that they are applying the office building standard to industrial properties because the " considerations" undeilying - 1fcKu sney are equally tine here, when those considerations still remain unstated. EAST NEWARK REALTY CORPORATION 489 case actually involved only 1 of the 1954 standards , that which elimi- nated the past practice of combining the percentages of inflow and outflow and asserting jurisdiction if the total equalled 100 percent: Accordingly , the issue of the , reasonableness of the office building standard even as applied to office buildings was not litigated or de- cided. Moreover , even if that opinion could be construed as contain- ing dicta supporting the reasonableness of the office building standard for office buildings, it obviously could not be dispositive of the instant case which presents the very different issue of the propriety of the use of the office building standard for industrial properties. Once it is conceded , as the majority does , that the Employer, by furnishing industrial space, together with incidental custodial and maintenance services , is engaged in furnishing services "necessary to the production of goods for commerce" to interstate manufacturers, it must necessarily be conceded that its operations are governed by the Board's indirect outflow standard which was specifically designed for gauging the impact exerted on commerce by enterprises which fur- nish services directly to enterprises engaged in shipping goods di- rectly in interstate commerce. Moreover , even if we disregard the amount of rentals the Employer receives for the industrial space it leases to interstate manufacturers, it is clear that the indirect outflow standard as set forth in Jonesboro Grain Drying Cooperative 10 and Whippany Motor Co., Inc." is met from its sale of water, steam, and electricity to its tenants . The Em- ployer received for these services the past year $317,000, of which at least $100 ,000 was received from manufacturers who annually ship in excess of $50,000 worth of goods outside the State of New Jersey. Nothing in those decisions indicates that enterprises of the kind here involved are excluded from the scope of that standard . Indeed, the Board has just recently held that the indirect outflow standard is ap- plicable to enterprises which furnish window cleaning services to man- ufacturers engaged in shipping goods directly in interstate commerce. See City Window Cleaning Company, et al., 114 NLRB 906. Certainly it cannot seriously be contended that an employer , who furnishes the actual building , together with custodial and maintenance services, to say nothing of water, steam, and electricity , without which the man- ufacturer tenants would be unable to produce a single product for shipment in interstate commerce, must be judged by a more restrictive standard than that applied to window cleaners . Yet the majority has created one more jurisdictional anomaly under which an em- ployer who provides $100,000 worth of window cleaning to concerns shipping $50,000 out of State is deemed to have such a pronounced impact on interstate commerce that we assert jurisdiction , while an employer who provides $100,000 worth of fuel and power to the same 10 110 ,NLRB 481 11114NLRB 231 490 _ DECISIONS OF NATIONAL LABOR RELATIONS BOARD concerns is not deemed to have a sufficient impact on commerce to warrant the assertion of jurisdiction. Ironically, because this Employer not only furnishes water, steam, and electricity, but additionally, the very premises on which its cus- tomers carry on their business, the majority hold that the test of jurisdiction must be measured solely by a new restrictive standard for lessors of property (not here met because the buildings are not primarily utilized for the Employer's own operations). In other words, the net result of the majority opinion is that the greater impact on commerce from additionally furnishing space along with water, steam, and electricity, is somehow translated into an effect on com- merce insufficient to warrant the assertion of jurisdiction, where the requisite effect would exist absent the additional service. How can greater impact on commerce logically lead to less assertion of jurisdiction? The majority seeks to avoid the fact that the sale of water, steam, and electricity alone is sufficient to meet the Jonesboro standard for jurisdiction by the specious claim that the Greenwich Gas $3,000,000 gross receipts test would govern the sale of these services. They fail to reveal that the Greenwich Gas standard governs only "local public utility and transit systems." [Emphasis supplied.] If they are op- erating under the misconception that this Employer's fuel and power services make it a "public utility," the authorities are readily available to dispel such a misconception. Indeed, the supreme court of the State in which the Employer is located has held that merely because a lessor furnishes tenants with utilities, he does not thereby become a "public utility," even though he'utilizes mains laid partly in the public streets.'a The New Jersey court gave this test : The true criterion by which to judge of the character of the use of any plant or system alleged to be a public utility is whether or not the public may enjoy it by right or by permission only. [Emphasis supplied.] The result is the same where a manufacturer supplies to neighbors; surplus heat, light, and power left over after supplying its tenants.'3 To'constitute a "public utility," the devotion to the public use must be ,of such character "that the product and service is available to the pub- lic generally and indiscriminately"; 14 and the public must have the legal right to demand that the service be conducted so long as it is continued with reasonable efficiency, under reasonable charges." 15 The term "public utility . . . implies a public use carrying with it the duty to serve the public and treat all persons alike, and it pre- 12 Junction Water Co v Riddle, 155, Atl. 887, 108 N J. 523. 13 Cawker v. Meyer, 133 N. W. 157, 147 Wis 320; Jonas v. Swetland, 167 N. E. 45, 119 Ohio St. 12. 14 State ex rel Bricker v. Industrial Gas Co., 16 N. E. 218, 221, 58 Ohio App. 101. - 15 Richardson v. Railroad Commission of California, 218 Pac. 418, 420. - BOSTON QUILTING CORP. AND NAT'L WADDING CO., INC. 491 eludes the idea of service which is private in its nature and is not to be obtained by the public." 16 [Emphasis supplied.] It is thus clear that the nature of the Employer's service is private rather than public and that accordingly, the Jonesboro standards rather than the Greenwich Gas standard are applicable. If the Jones- boro standards are reasonable as the majority asserts, how can it be a reasonable action to refuse to apply them? The Supreme Court has already exploded the basic premise on which the majority decision rests-that the business of furnishing space, water, light, and power to manufacturers engaged in producing goods for interstate commerce does not have the pronounced effect on commerce which would justify the assertion of jurisdiction. We have also shown that the sale of water, steam, and electricity alone warrants the assertion of jurisdiction under the Jonesboro standard and the majority's effort to rebut that fact by the claim that the Employer must meet the public utility standard has no legal foundation. We have also noted the absence of any rationale or reasoning to support the majority's fiat that the office building standard is appropriate for industrial properties and that the latter do not have sufficient impact on interstate commerce to warrant the Board in continuing to exer- cise its discretion to assert jurisdiction over them. Inasmuch as this decision goes beyond the 1954 standards in restricting even further the Board's jurisdiction, it is pertinent to point out that there is no administrative necessity for the Board to go further and to curtail or deny the use of its facilities in this important area. Our experience under the more restrictive 1954 standards and with the caseload which those standards yield demonstrates that the Board's existing personnel and machinery could easily handle more cases than the 1954 standards produce. Employers, employees, and unions who have urged the 'Board to make its processes available to them are being needlessly denied, the benefits of the Act, as are the parties to this case. We thus find it paradoxical for the Board at this time to announce a new juris- dictional standard in this area which further restricts the coverage of the Act. What is clearly indicated at this time is not new restric- tions on jurisdiction, but further liberalization. Is Springfield Gas & Electric Co, v. City of Springfield, 126 N E. 739 , 745, 292 M. 236 Boston Quilting Corporation and National Wadding Co ., Inc. and Industrial Trades Union of America, Petitioner . Case, No. .i-RC-4122. February 17, 1956 DECISION AND ORDER Upon a petition filed under Section 9 (c) of the National Labor Relations Act, a hearing was held before Herbert N. Watterson, hear- 115 NLRB No. 78.