J. Howard Smith, Inc.

National Labor Relations Board - Board Decisions

Jul 6, 1951

95 N.L.R.B. 21 (N.L.R.B. 1951)

J. HOWARD SMITH, INC. 21
compensation policy along with the general employees of the
Company.
On the basis of the foregoing, particularly the facts indicating that
the killing of kosher cattle and shipping of kosher products forms a
large portion of the Company's business, that the kosher workers
perform all of their work at the Company's plant, and are indirectly
controlled through the Employer's operation of its plant, we find that
the Company and the Rabbis, who supervise and directly control the
working conditions of the kosher workers and determine their salaries,
constitute a single employer within the meaning of Section 2 (2) of
the Act.
3. A question affecting commerce exists concerning employees of
the Employer within the meaning of Section 9 (c) (1) and Section
2 (6) and (7) of the Act.
4. As the kosher workers are the only employees employed by the
Company and the Rabbis as a single employer, and in view of the
religious aspects of their work which is unlike that of the other em-
ployees in the plant, we find that they should function as a unit
separate and apart from the general production and maintenance
employees of the Company.'
We find that all schochtim and tag men employed by the Employer
at the Company's plant in Kansas City, Kansas, excluding all super-
visors as defined in the Act, constitute a unit appropriate for the
purposes of collective bargaining, within the meaning of Section 9
(b) of the Act.
[Text of Direction of Election omitted from publication in this
volume.]
* The Board has consistently found units of schochtim to be appropriate bargaining
snits . Armour & Company, 72 NLRB 717, and cases cited therein . We therefore find
no merit in the Rabbis' contention that the religious nature of their work precludes their
representation for purposes of collective bargaining.
J. HOWARD SMITH, INC. and SEAFARERS INTERNATIONAL UNION OF
NORTH AMERICA, AFL, PETITIONER . Case No. 4RC--814. July
671951
Decision and. Order
Upon a petition duly filed under Section 9 (c) of the National
Labor Relations Act, a hearing was held in September 1950 before
Fred G. Krivonos, hearing officer. Following that hearing, the Em-
ployer, hereafter called Smith, moved to reopen the hearing on the
ground that it was changing its method of fishing operations for the
1951 season. The Board remanded the case for hearing on the alleged
95 NLRB No. 9.
22 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
changes and the hearing was completed on May 2, 1951. The hearing
officer's rulings made at the hearings are free from prejudicial, error
and are hereby affirmed.
Upon the entire record in this case, the Board finds :
1. The Employer is engaged in commerce within the meaning of
the Act.
2. The labor organization involved claims to represent certain em-
ployees of the Employer.
3. The question concerning representation :
The Petitioner seeks to represent all fishermen and cooks employed
on boats chartered by captains from Atlantic Navigation Company,
hereafter called Atlantic, for the purpose of catching fish for sale to
Smith. Although not disputing the categories in the requested unit,
Smith contends that these men are not in its employ, but are inde-
pendent contractors or employees of independent contractors, and
that the unit sought is therefore inappropriate.
The main business of Smith is the sale of products derived by proc-
lessing menhaden fish for fish oil, solubles, and fish meal. At the
docks near its plant in Port Monmouth, New Jersey, it purchases
menhaden fish from *any boat which delivers them. Approximately
^80 percent of the fish delivered to these docks is caught by boats, called
"charter boats," which were formerly owned or leased by Smith, but
are now owned by Atlantic, a wholly owned subsidiary corporation of
Smith. Smith purchases the remaining 20 percent of its fish from
small boats, called "independents," which are owned by their captains.
The relationship of the charter boat captains to Atlantic and to
Smith is governed by two. agreements. Under the charter with At-
lantic, a captain takes "full and.exclusive possession, management,
navigation, control. and operation" of a fishing vessel worth from
;$150,000 to $300,000.: The boat is completely equipped by Atlantic,
which also furnishes enough fuel for normal daily operations. In
return, the captain pays Atlantic $4.40 for each thousand fish caught
and sold, a sum calculated from the detailed monthly report made by
the captain to the boat owner. The captain agrees to provide com-
petent officers and crew at his own expense. The engineer is to be
appointed by the captain and approved by Atlantic. The term of the
charter is for the fishing season, although the owner may terminate
it on 2 days' notice if the captain fails to keep any of the conditions.or
stipulations set forth in the charter. .
Sometime after a captain signs a charter agreement with Atlantic,
he signs a fish purchase agreement with Smith. By this contract, the
captain agrees to sell, and Smith agrees to buy, all menhaden fish de-
livered by the captain to Smith during the season at a certain price
per thousand fish. At the date of-the, hearing, no price had been set
J. HOWARD SMITH, INC. 23
by Smith, allegedly because of the possibility that a price ceiling might
be established by the Government for fish products.
The fish purchase agreement provides that Smith will retain part
of the purchase price until the end of the season , and that if the cap-
tain does not fish for the entire season, this amount shall be kept as
liquidated damages. According to the testimony , the purpose of this
clause is to encourage captains to continue fishing until the season
ends in October, despite the sporadic nature of the catch in September
and early October . Each fisherman , in turn, does not receive his full
share of the price for the catch unless he remains with the boat for
the full season. A lump sum payment to the captain for the fish
caught and delivered is made every 2 weeks. Should a dispute arise
between Smith and a captain , the matter is to be referred for arbitra-
tion, : after 14 days, to the American Arbitration Association.
The menhaden fishing season lasts from May until October. Al-
though the independent boats begin fishing early in May , the charter
boats do not begin to fish until after the fish have "schooled ." Towards
the end of May , Atlantic summons the captains to its headquarters
in Reedville , Virginia , where the fishing boats have been stored for
the winter. The fishermen then assemble at Reedville . At that time,
each captain mans his charter boat with a crew of approximately 24
men. Thereafter the boats sail north to the Port Monmouth docks of
the Smith Company.
It is customary for the charter boats to leave the docks about 4
o'clock each morning, fish all day, and return in the late afternoon.
The fish are counted on Smith's docks by a volumetric device; the cap-
tain does not receive his pay at the time the fish are delivered to Smith,
but is paid later on a biweekly basis.
The relation of master and servant exists whenever the employer
retains the right to direct the manner in which the business shall be
done as well as the result to be accomplished ., In accordance with the
mandate of. Congress ,2 the Board has adopted common law tests to
determine whether or not a right of control over the business lies with
the alleged employer.3 Accordingly, in deciding whether the right of
control is held by the fishing captains or by Smith , we shall apply a
variety of tests, such as who has the right to hire and discharge the
fishermen , controls the method of their payment, furnishes the tools
with which they work , and supervises the work. No one factor is
determinative ; one must look at the venture as a whole.'
1 Singer Manufacturing Company v. Rahn, 132 U. S. 518.
2 See House Conference Report No. 510, 80th Congress, 1st Sess. 1947, pp. 32-33;
souse Report No. 245, 80th Congress, 1st Sees. 1947, p. 18.
s Sinclair Refining Company, 93 NLRB 1115; San Marcos Telephone Company,
81 NLRB 314; Steinberg & Company, 78 NLRB 211.
4 The common law tests applied by the Board were discussed in Steinberg and Company,
supra. See also N. L. R. B. v. Phoenix Mutual Life Insurance Company, 167 F. 2d 983,
cert. den ., 335 U. S. 845 ; Cosmopolitan Company v. McAllister, 337 U. S. 783 at 795.
24 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Petitioner urges the Board to take a realistic view of the eco-
nomic relationship between Smith and the captains. Such a view, it
contends, would show that the captains are dependent upon Smith for
their livelihood. It insists, first of all, that Atlantic's control over the
fishing operations must be imputed to Smith. All the directors and
officers of Atlantic are officers and directors of Smith, and, with one
exception, members of the same family. A transfer of the ownership
of boats to Atlantic was made by Smith with the purpose, according
to the Petitioner, of evading the obligations of an employer. It is
undenied that there is frequent consultation between the officers of the
two' corporations.
Considering Atlantic and Smith as one employer, the Petitioner
maintains that the captains, having only their skill as a commodity
for sale, are in poor position to bargain with either corporation. It
points to the undisputed existence of a "gentlemen's agreement" by
which all the charter boat captains agree to sell to Smith all the fish
that their boats catch. This agreement, it is contended, prevents a
captain from selling to other fish processing companies, and a captain
realizes that he must sell only to Smith or he will not be given a boat
for the next season. Without the promise of a boat, a captain is, of
course, unable to recruit a crew. This dependence on Smith, the Peti-.
tioner maintains, is inconsistent with the status of an independent
contractor.
The Petitioner points to other factors showing the control of the
fishing operations by Smith or its subsidiary. Thus, Atlantic decides
when the season for the charter boats will begin and end; Smith fur-
nishes free of charge the services of an airplane which radios the loca-
tion of schools of fish to the charter boats. In past years, Smith has
handled all the clerical work for the captains, obtained licenses for
the boats, paid the fishermen directly, and withheld the required taxes
from their pay. Although the captains have been .told that Smith
would no longer perform these services in 1951, as of the date of the
reopened hearing-a month before the opening of the season-no
arrangements had been made by the captains to obtain the licenses or
handle any of the accounts.
The distinction between control over the result contracted for and
control over the method of obtaining that result is often a difficult one
to make. Anyone who has a contractual relationship for the full-time
services of another person has a certain amount of control over that
person's mode of operations. In this case a strict application of the
common law tests of control leads us to the conclusion that the cap-
tains are independent contractors and' the fishermen their employees.
We note, in particular, that the relationship of the captains to Smith
and its subsidiary, Atlantic, is to be governed in 1951 by two written
agreements which give to the captains all the rights and privileges
J. HOWARD SMITH, INC. 25
of independent contractors.' Under these agreements , a captain has
complete control of the management and navigation of. his charter
boat. Subject to the necessity of delivering the fish daily, he may fish
at the hours he chooses and in the area he considers most productive.
He is under no obligation to follow the suggestion of the Smith Com-
pany airplane in regard to the best location for fishing.° Furthermore.,
under the two agreements, a charter boat captain is obligated to pay
a fixed price per thousand fish to Atlantic and he receives a fixed price
from Smith for all the menhaden fish caught during the season. Con-
sequently, like other independent contractors, his profit or loss is at-
tributable in part to the way in which he combines efficiency and
economy in the management of his ship.
The existence of the relationship of independent contractor in the
present instance is likewise confirmed by other circumstances commonly
associated with this relationship. Thus, the services of an independ-
ent contractor, unlike those of an employee which may generally be
terminated at the will of the employer, may not be ended without
breach of the agreement.7 Similarly, the agreements with Atlantic
and Smith may not be ended during the season except upon breach
of the conditions of those agreements. Neither Atlantic nor Smith
may terminate the employment of any of the fishermen. Moreover,
the independence of the captains is indicated by the fact that each
captain is required to obtain his boat license in his own name; that he
is charged with supplying the boat with food; that he is responsible
for the payment of the accounts carried for the boat at grocers in Port
Monmouth; and that he is responsible for the manning of his boat.8
There is no doubt that the fishermen are under the supervision of
the captains rather than Smith. They are hired and discharged by
the captains.9 Their work is supervised and they may be disciplined
by the captains. Finally, the captains set the wages of the fishermen.
It is admitted that the wage scale for fishermen is standard on all the
charter boats and, furthermore, that it is dependent upon the price
paid by Smith for menhaden fish, but this in no way indicates that
5 On the date of the reopened hearing , because no price had been set for menhaden fish,
no captain had signed the fish purchase agreement with Smith , although those signing
the charter agreements had promised to do so . If the fish purchase agreement eventually
signed is substantially different from the one submitted in evidence , or if the method
of operation should depart from that provided in the written agreements, reexamination
of the relationship between the fishermen , captains , and Smith may be in order.
G Lack of control by the purchasing company over the freedom of the fishermen to go
where they please and to fish in any manner and for any length of time they wish was
one of the factors relied upon by the Board in Alaska Salmon Industry, 81 NLRB 1335,
where fishermen were held to be independent contractors . In that case , over 15 percent
of the small fishing boats was owned directly by the fish processing companies.
7 New England Telephone and Telegraph Company, 90 NLRB 1139.
8 In recruiting a crew for the first time , a captain may travel as much as several thousand
mites during the winter months in order to have a sufficient number of fishermen assemble
at his boat at Reedville at the start of the season.
9See Birmingham v. Bartels , 332 U . S. 127 ; The Fuller Automobile Company, 88
NLRB 1452.
26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Smith has the power to change the wages that the fishermen receive.
The standard wage scale is the result of an agreement or understand-
ing among the charter boat captains in order to prevent competition
in recruiting crews. The power to hire, fire, set the wages, and super-
vise the fishermen in this case is of primary importance in showing
that the fishermen are the employees of the captains."
The method of payment of wages has been one of the tests consid-
ered by the Board and the courts to determine whether an alleged
independent contractor has the right of control over those working
under him 11 In the instant case, it appears that in 1951 the captains,
rather than Smith, have the obligation to withhold the required taxes
from the fisherman's salaries, and retain part of those salaries as a
bonus to be paid at the end of the year. Although Smith handled
all accounts for the captains in 1950, the captains understand that in
1951 they are solely responsible for keeping the records that accom-
pany the operation of a boat and the payment of its crew. These
responsibilities of the captains are indicative of an independent con-
tractor status. Of course, if the changes in this regard, as in others
promised for the 1951 season, are not effected, reexamination of our
decision herein will be warranted.
Applying the common law tests to the factors discussed above, we
find that the captains are independent contractors and the fishermen
their employees.12 This decision is in accord with the Board's deci-
sion in Alaska Salmon Industry, Inc., supra, and with court decisions
in related fields of law 13 We find, accordingly, that no question af-
fecting commerce exists concerning the representation of employees
of the Employer, within the meaning of Section 9 (c) (1) and Sec-
tion 2 (6) and (7) of the Act, and we shall therefore dismiss the
petition.
Order
Upon the basis of the entire record in this case, the National Labor
Relations Board hereby orders that the petition filed in the instant
matter be, and it hereby is, dismissed.
MEMBERS HOUSTON and STYLES took no part in the consideration of
the above Decision and Order.
10 See, for instance , Fairchild Cafeteria, 87 NLRB 667 , where a contractor who hired,
fired, and set the wages of his employees was held to be independent despite the fact that
his prices and profits were limited by the contracting principal.
11 J. F, Alexander Lumber Company, 78 NLRB 1097; Flint Oil Company, 88 NLRB 634.
12 Cf. N. L. R. B. v. Steinberg, 182 F. 2d 850.
13 In antitrust cases, the courts have held that fishermen who owned or leased fishing
boats under somewhat similar arrangements were independent contractors . Columbia
River Packers Ass'n v. Hinton , 315 U. S. 143; Local 36 of International Fishermen and
Allied Workers of America v. United States, 177 F. 2d 320, cert. den. 339 U. S. 947.
See also , a case arising under the Jones Act, Cosmopolitan Company v . McAllister, 337
U. S. 783, supra.