Newspaper & Periodical Drivers, Local 921

National Labor Relations Board - Board Decisions

Nov 6, 1971

194 N.L.R.B. 37 (N.L.R.B. 1971)

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