Pepsi-Cola Bottling Co. of Michigan

National Labor Relations Board - Board Decisions

Dec 16, 1965

156 N.L.R.B. 80 (N.L.R.B. 1965)

8O DECISIONS OF NATIONAL LABOR RELATIONS BOARD
meree standards , it does not fall within the intendment of the Board's
Advisory Opinion rules .3 For these reasons, we shall dismiss the peti-
tion for Advisory Opinion herein.
[The Board dismissed petition for an Advisory Opinion.]
8 Upper Lakes Shipping, Ltd., supra; Interlak e Steamship Company and Pickand8
Mather & Co., 138 NLRB 576; Broward County Po? t Authority, 144 NLRB 1539
Pepsi- Cola Bottling Company of Michigan, Grand Rapids Divi-
sion 1 and International Union of United Brewery, Flour,
Cereal , Soft Drink and Distillery Workers of America, AFL-
CIO, Petitioner . Case No. 7-RC-69!8. December 16, 1965
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, as amended, a, hearing was held before Hearing Officer
l Tilton Fischer of the National Labor Relations Board. The Hearing
Officer's rulings made at the hearing are free from prejudicial error
and are hereby affirmed. The Employer and the Petitioner filed briefs
which have been considered by the Board in making its decision in this
case.
Pursuant to the provisions of Section 3(b) of the Act, the Board
has delegated its powers in connection with this case to a, three-member
panel [Chairman McCulloch and Members Brown and Zagoria].
Upon the entire record in this case, the Board finds:
1. The Employer is engaged in commerce within the meaning of the
Act and it will effectuate the purposes of the Act to assert jurisdiction
herein.
2. The labor organization involved claims to represent certain
employees of the Employer.
3. A question affecting commerce exists concerning the represen-
tation of certain employees of the Employer within the meaning of
Section 9(c) (1) and Section 2(6) and (7) of the Act.
4. The Petitioner seeks a unit of single truck distributors who are
engaged in the sale and distribution of the Employer's products.
The Employer contends that these distributors are independent
contractors.1
The Employer in Marcll 1965 acquired the assets of its distributor in
Grand Rapids, Michigan, the Michigan Beverage Company, herein
called Michigan, and entered into individual "Distributor's Agree-
' The name of the Employer appears as amended at the hearing.
8 An alternative contention of the Employer that these distributors are supervisors
was withdrawn by the Employer.
156 NLRB No. 9.
PEPSI-COLA BOTTLING COMPANY OF MICHIGAN 81
ments" with seven of Michigan's former driver-salesmen. Pursuant to
this agreement, each driver, described therein as "an individual prin-
cipal," derives his income from the "profits" received as the result of
the sale of the Employer's products. Each of the drivers purchased his
truck from the Employer-the same truck in some instances that he
had driven previously for Michigan-with no down payment and a
security interest remaining in the Employer. The trucks were to be
paid for by the return to the Employer of 5 cents on every case of
merchandise purchased by the drivers for resale, which covered with-
out interest not only payments for the truck but also the insurance,
license, and tax for the truck as well as uniforms, the first load of
merchandise, and receipt books. The drivers were no longer covered
by workmen's compensation or other company insurance, and no social
security or income tax was withheld by the Employer. By the terms
of the contract, the drivers had to pay for their own gas, oil, mainte-
nance, repairs, and insurance, although the minimum limits of insur-
ance were set by the Employer and purchased through it. The
distributors receive no vacation or sick leave benefits.
Although each driver was. granted the right to be the exclusive
distributor for the Employer in his area, the Employer reserved the
right to sell and distribute in each distributor's territory, and unilater-
ally to control the size of the territory. There is evidence that the
territories allocated by the Employer were established with reference
to a 40,000-case guideline, and that the routes would be unilaterally
adjusted up or down according to the demands of the Employer. The
Employer eventually reduced the routes of all four of the distributors
who appeared as witnesses. In addition, there is evidence that the
Employer, upon a complaint from a dissatisfied customer, could trans-
fer the acount to a different distributor without compensation to the
original distributor.
The distributors were obligated by the contract to "diligently pro-
mote the sale and the distribution of such products to every retail
outlet therein [the territory], . . . make every endeavor to sell new
accounts," and engage in advertising and promotion techniques "with
the objective of achieving display dominance over competing prod-
ucts." Each distributor was also required to solicit locations for vend-
ing machines and to provide service and minor repairs to such installa-
tions in his territory, although this did not usually result in any income
to the distributor. The contract did not prohibit distributors from
selling any other products, but the Employer did expressly proscribe
the sale of products competitive with those of the Employer; there is
testimony that the distributors were told to "push" the Company's
products; and the record shows that their day-to-day duties and their
obligations under the contract made it impractical for them to try to
sell any other products.
82 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The contract also required the distributors to maintain records in a
form approved by the Employer subject to its inspection and right
to make copies thereof, to adhere to certain practices with respect to
the trademark and franchise requirements, and to comply with the
instructions from the Employer to minimize loss or waste.
A distributor cannot transfer or otherwise convey his distributor-
ship. While either party has the right to terminate the contract upon
a 90-day written notice, the Employer has in addition the right to
terminate if the distributor should fail to comply with any of the terms
of the contract or "becomes involved in financial difficulties of any
nature." The contract calls for the distributor to maintain warehouse
space, but in practice the Employer provides such space without
change; most of the distributors leave their empty trucks at the ware-
house at night, to be loaded by the warehouse employees. Also at the
warehouse is a designated place for each distributor to keep his route
book, which is the only list of customers within the territory and which
specifies the dates upon which customers are to be called. The
Employer provides these route books and, when routes are altered, it
provides new route books.
The distributors are free to determine 'their hours of work, are
free to refuse to service customers, are not trained or supervised while
on the route, may deviate from the established routes and from the
suggested list prepared by the Employer, may use their trucks for
personal purposes, and are free to hire helpers.
Although the freedom of the distributors to make such determina-
tions indicates some degree of independence, the evidence as a whole
establishes that the Employer maintains close control over their opera-
tions. The Employer sent its representatives to accompany the dis-
tributors on their initial days on the route even when it was the same
route they had covered for the predecessor company, and thereafter,
without request or consent from the distributors, supervisory person-
nel on occasion were sent to accompany them on their routes. The
Employer provided the distributors with a "suggested" price list for
products to be sold to the retailers and expected the list to be furnished
by the distributors to the retailers. Moreover, the evidence clearly
shows a close adherence to the price list "suggested" by the Employer
while the Employer, in contract, at times sold its products at a dis-
count directly to customers within the distributors' territories. In
addition, the evidence reveals attempts of the Employer to supervise
the distributors with respect to their clothing and work habits. Thus,
although there are no formal requirements that the distributors wear
uniforms, call the plant while out on the route, or attend the weekly
sales meetings, the Employer has sought compliance with such
practices.
PEPSI-COLA BOTTLING COMPANY OF MICHIGAN 83
The Board has frequently held that, in determining the status of
persons alleged to be independent contractors, the Act requires applica-
tion 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 an independent
contractor. The resolution of this question depends on the facts of
each case, and no one factor is determinative.
On the basis of the foregoing and the entire record, we are satisfied
that the distributors are not independent contractors. We are aware
that the evidence discloses several factors which are usually considered
to indicate an independent contractor status, but the presence of these
factors does not alone establish such status. Thus, we are not per-
suaded and do not regard as controlling the fact that a written agree-
ment defines the relationship as one of "independent principal"; that
the distributors provide their own equipment; that the Employer does
not make the usual payroll deductions for the distributors; or that the
distributors may on occasion hire helpers.3 The potential ownership
of the trucks by the distributors does not negate the Employer's con-
trol of the manner and means by which the result they seek is to be
accomplished .4 Aside from the question as to the ownership of the
truck, which is subject to the lien of the Employer until the purchase
price is paid in full, the evidence shows that the Employer effectively
controls the operations of the distributors. The routes are controlled
by the Employer in terms of location, size, and sales practices, and the
distributors are in practice effectively limited to sales of the Employ-
er's products.
Furthermore, the fact that the dstributors may work for "profit"
rather than wages does not in and of itself establish that they possess
the opportunity to make decisions resulting in profit or loss which
resemble those decisions made by independent businessmen.5 There
is evidence that the allocated territory, established with reference to
a 40,000-case guideline and unilaterally adjusted by the Employer in
accordance with that guideline, confines and limits the distributor's
potential range of income. Moreover, the Employer may go into the
distributor's territory and sell directly to his customers or transfer his
accounts to another distributor. The distributor retains no proprie-
tary rights in the territory which he can sell. The Employer deter-
8 Eureka Newspaper8 , Inc., 154 NLRB 1181.
4 Samuel H. Burton, et al., d/b/a Burton Beverage Company, 116 NLRB 634.
5 See The Seven-Up Bottling Company of Detroit, Inc ., 120 NLRB 1032, 1034.
217-919-66-vol. 156-7
84 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
mines the prices at which products will be sold to the distributor and,
by its practice of providing for distribution to the retailers the "sug-
gested" price list at which the products should be purchased from the
distributors, effectively circumscribes resale prices.
In view of the facts that the distributors have minimal control of
the manner and means by which their work is to be accomplished and
meager opportunity to make decisions which would affect their profit
and loss and upon the entire record, we find that they are employees
within the meaning of the Act. Accordingly, we find that a unit of the
following employees is appropriate for the purposes of collective bar-
gaining within the meaning of Section 9 (b) of the Act :
All single truck distributors employed by the Employer at Grand
Rapids, Michigan, excluding warehousemen, semitruck drivers, office
clerical employees, salesmen, guards, and supervisors as defined in
the Act.
[Text of Direction of Election omitted from publication.]
John C. Stalfort & Sons, Inc. and Printing Specialties and Paper
Products Union of the International Printing Pressmen and
Assistants' Union of North America , AFL-CIO, Petitioner.
Case No. 5-IBC-5208. December 16, 1965
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, as amended, a hearing was held before Hearing Officer
Hubert E. Lott of the National Labor Relations Board.' The Hearing
Officer's rulings made at the hearing are free from prejudicial error
and are hereby affirmed.
Pursuant to the provisions of Section 3 (b) of the Act, the Board
has delegated its powers in connection with this case to a three-member
panel [Chairman McCulloch and Members Brown and Zagoria].
Upon the entire record 2 in this case, the Board finds :
1. The Employer is engaged in commerce within the meaning of the
Act and it will effectuate the purposes of the Act to assert jurisdiction
herein.
' The Employer 's name appears herein as amended at the hearing.
2 The Hearing Officer granted the Employer ' s motion to incorporate into the record in
the instant case, insofar as relevant and material hereto, the record in Case . No. 5-RC-
2018, a prior representation proceeding involving one of the.two issues presented here,
but not the same Union.
156 NLRB No. 7.