Philadelphia Record Co.

National Labor Relations Board - Board DecisionsAug 6, 1946

69 N.L.R.B. 1232 (N.L.R.B. 1946)

In the Matter Of PHILADELPHIA RECORD COMPANY and PHILADELPHIA NEWSCARRIERS' UNION, LOCAL 504, AFFILIATED WITH INTERNATIONAL PRINTING PRESSMEN AND ASSISTANTS' UNION OF NORTH AMERICA, AMERICAN FEDERATION OF LABOR In the Matter of THE PHILADELPHIA INQUIRER DIVISION OF TRIANGLE PUBLICATIONS, INC. and PHILADELPHIA NEWSCARRIERS' UNION, LOCAL 504, AFFILIATED WITH INTERNATIONAL PRINTING PRESSMEN AND ASSISTANTS' UNION OF NORTH AMERICA, AMERICAN FEDERATION OF LABOR Cases Nos. 4-R-1436 and 4-R-1437, respectively.-Decided August 6, 1946 Mr. Geoffrey J. Cuni ff, for the Board. Fox, Rothchild, O'Brien, and Frankel, by Mr. Daniel Lowenthal, of Philadelphia, Pa., for the Record. Bell, Murdock, Payson and Dillworth, by Mr. Richardson Dillworth and Miss M. Elizabeth Hatton, of Philadelphia, Pa., for the Inquirer. Mr. Arthur W. A. Cowan, of Philadelphia, Pa., for the Union. Miss Katharine Loomis, of counsel to the Board. DECISION AND ORDER STATEMENT OF THE CASE Upon separate petitions duly filed by Philadelphia Newscarriers' Union, Local 504, affiliated with International Printing Pressmen and Assistants' Union of North America, American Federation of Labor, herein called the Union, alleging that questions affecting commerce had arisen concerning the representation of employees of Philadelphia Record Company, Philadelphia, Pennsylvania, and of The Philadel- phia Inquirer Division of Triangle Publications, Inc.,' Philadelphia, Pennsylvania, herein separately called the Record and the Inquirer and collectively called the Companies, the National Labor Relations Board consolidated the cases and provided for an appropriate hearing ' The name of this company appears as amended at the hearing. 69 N. L. R. B.,-No. 146. 1232 PHILADELPHIA RECORD COMPANY 1233 upon due notice before Earl S. Bellman, Trial Examiner. The hear- ing was held at Philadelphia, Pennsylvania, on various dates between July 17 and August 29, 1945. The Record, the Inquirer, and the Union appeared and participated. All parties were afforded full opportunity to be heard, to examine and cross-examine witnesses, and to introduce evidence bearing on the issues. At the hearing the Trial Examiner rejected the Union's offer to prove that the Companies' corner men, who were recognized as employees by the Companies after the Supreme Court's decision in the Hearst case,' are comparable to the Companies' house-to-house carriers, with whom we are here solely concerned. Inasmuch as we are of the opinion that this comparison would raise collateral issues unnecessary for a decision in this case, we shall sustain the Trial Examiner's ruling rejecting the Union's offer. All other rulings of the Trial Examiner made at the hearing are free from prejudicial error and are hereby affirmed. All parties were afforded opportunity to file briefs with the Board. Oral argument in which all parties participated was heard before the Board at Washing- ton, D. C., on May 23,1946.3 At the oral argument the Record offered in evidence two documents. Neither the Union nor the Inquirer abjected to this offer whereupon the Board accepted the documents in evidence. They have been marked as Record Exhibits Nos. 29 and 30, respectively, and the Board has duly considered them as part of the record in this proceeding. Upon the entire record in this case, the Board make the following : FINDINGS OF FACT 1. THE BUSINESS OF THE COMPANIES 1. The Philadelphia Record Company The Philadelphia Record Company is a Pennsylvania corporation which is engaged in the publication, sale, and distribution of a daily newspaper , known as the Philadelphia Record. The average daily, except Sunday, circulation of the Record is approximately 270,000 copies, of which 19 percent is sold and distributed outside the Common- wealth of Pennsylvania; the Sunday circulation amounts to about 525,000 copies, of which 24 percent is sold and distributed outside the Commonwealth. During 1944 the Record purchased from sources out- side Pennsylivania raw materials valued at more than $1,000,000. 2 In N. L. R. B. v. Hearst Publications , Inc., 322 U. S. 111, the Supreme Court affirmed the Board's holding in 39 N . L. R. B. 1256 that the corner men with whom we were there concerned were the employees of the publishers whose papers they sold. 3 Chairman Herzog was not present at the oral argument. His concurrence in this deci- sion is therefore based solely on the record made at the hearing before the Trial Examiner and on the briefs filed by the parties. 701592-47-vol. 69-79 1234 DECISIONS OF NATIONAL LABOR RELATIONS BOARD During the same period 45.3 percent of the space in the daily and Sunday editions was devoted to advertising, of which 21.7 percent was national advertising. In connection with its operations the Record uses the Associated Press Service, International News Service, New York Times Services, New York Times Foreign Service, and Chicago Sun Syndicate Service. 2. The Philadelphia Inquirer Division of Triangle Publications, Inc. The Philadelphia Inquirer Division of Triangle Publications, Inc., is a Pennsylvania corporation which is engaged in the publication, sale, and distribution of a daily newspaper, known as the Philadelphia In- quirer. The average daily, except Sunday, circulation of the Inquirer in May 1945 was 570,017 copies, of which 16 percent was sold outside the Commonwealth of Pennsylvania; the average Sunday circulation was 1,106,527 copies, of which 19.3 percent was sold outside the Com- monwealth. During 1944 the Inquirer purchased raw materials valued in excess of $1,000,000, substantially all of which came from sources outside Pennsylvania. In May 1945 national advertising constituted approximately 19 percent of the total space devoted in the paper to advertising. In connection with its operations the Inquirer subscribes to the Associated Press and the United Press. The Inquirer admits that it is engaged in commerce. The Record neither admits nor denies that it is so engaged. We find that the Com- panies are engaged in commerce within the meaning of the National Labor Relations Act. II. THE ORGANIZATION INVOLVED Philadelphia Newscarriers' Union, Local 504, affiliated with Inter- national Printing Pressmen and Assistants' Union of North America, which is in turn affiliated with the American Federation of Labor, is a labor organization admitting to membership employees of the Companies. III. THE RELATIONSHIP OF THE COMPANIES TO THE CARRIERS The house-to-house carriers whom the Union seeks to represent de- liver the papers of the Record and/or the Inquirer to the homes of sub- scribers in the Philadelphia metropolitan area. The Companies con- tend that the carriers are not employees, but rather, independent contractors, and that the Board is therefore without jurisdiction., 4 There are approximately 220 carriers involved in this proceeding, 13 of whom allegedly are employees only of the Inquirer while the remainder allegedly are employees of both Companies. PHILADELPHIA RECORD COMPANY 1235 The Philadelphia metropolitan area is divided into sales territories, or routes, for the purposes of newspaper distribution and each carrier delivers papers to persons residing along his particular route. For the most part the papers delivered are those of the Companies here involved. The carriers receive these papers at places convenient to their routes, pay a price for them fixed by the publishers, and sell them at the publishers' determined price. Carriers are not required to pay for unsold papers returned by them and the publishers pick up such papers at the delivery spots. The publishers also furnish the carriers with some equipment such as labels to be affixed to unsold papers and self-addressed envelopes and postcards bearing a guar- antee of payment of postage by the addressee. Until about a year ago both Companies supplied punch cards for the convenience of the carriers in making collections of payments for their papers. and also gave transportation allowances to carriers who delivered in sparsely populated areas. The carriers are not listed on the Companies' pay rolls and are not subject, by reason of their relationship to the Companies, to the bene- fits of Social Security, Workmen's Compensation, or Unemployment Insurance. The carriers enjoy a wide latitude for individual initia- tive in performing the work involved in operating their routes. This work consists, generally, in the delivery of papers, the keeping of subscribers' accounts, and the collection of payments for the papers. Deliveries are made in the morning because of the publication time of the papers. The method used in making deliveries varies with the carriers; some use no conveyance, while others use automobile, horse and wagon, or pushcart. Some carriers employ helpers to assist them in their work. Methods of keeping accounts and the intervals be- tween collection of payments likewise vary with the individual car- riers. Many carriers also sell out-of-town papers as well as those of the publishers, and 16 of the'NO carriers who testified at the hearing engage in other occupations concurrently with their newspaper vend- ing, 3 of the 16 engaging in the sale of various commodities other than newspapers to customers on their routes.' All such matters are de- cided by the individual carriers without consultation with the Com- panies. In addition, some carriers, in competition with the pub- lishers, sell the publishers' papers at wholesale prices to stores along their routes. The carriers follow no set sales or business techniques in obtaining and serving customers for the publishers' papers. Although, prior to 1941, each publisher employed district or street men, the principal s Carriers John E. Lampe and Ernest G. Schwarz own interests in household furnishing businesses and solicit orders for household articles from their newspaper subscribers Carrier Joseph Rogel peddles dry goods on his route. 1236 DECISIONS OF NATIONAL LABOR RELATIONS BOARD function of these individuals appears to have been to bring to the attention of the carriers complaints from customers on their routes which had been received by the publishers. No instances are given in the record of instructions by the district or street men to the carriers regarding the details of their work or of admonitions by them to the carriers to keep steadily at their work. Several of the carriers who testified at the hearing said that their customers usually made any complaints about service to them and that they adjusted such com- plaints." Such complaints as are received by the publisher are now handled by means of complaint forms which are placed on the carrier's bundle of papers at the spot where his papers are delivered. Officials of the circulation departments of both publishers have, when such complaints have not been promptly adjusted, reprimanded the car- riers and, in some instances, threatened to discontinue their papers. However, neither publisher has ever carried out such threats.' Al- though Irvin M. Orner, circulation manager of the Record, testified that in his opinion the Record has a right to order a carrier to dispose of his route if his services are unsatisfactory, in no instance has the Record given such an order, and it does not appear that either pub- lisher follows a policy of ordering carriers to dispose of their routes.8 The revenue derived by a carrier from the sale of the publishers' papers may be supplemented, at the option of the carrier, by the per- formance of additional services for the publishers. Thus, the carrier, if he chooses, may earn set commissions for collecting payments on accident insurance policies and magazines sold to old or new sub- scribers by solicitors employed by the publishers. The Companies inform the carriers of new "serves" of this character and expect the carriers to service them unless the prospective customer is a poor credit risk. The Inquirer's policy has been not to question the carrier's rejection of a magazine or insurance "serve." The Record, however, reserves the right to malt its papers, and the maga- zines and insurance policies which are sold in connection with them, available to a customer by other means if a carrier refuses such a "serve." In these cases junior salesmen are given rejected subscrip- tions 9 8 Carriers Harold Smith, Fred Wieland, and Frank Thomas Hawn testified to this effect. ' The Record discontinued Carrier Jacob Swope Newborn's papers when he failed to serve his route on the morning of May 11, 1945, the date of a proposed strike planned by the Union in protest against the Record's use of junior salesmen, boys of 11 to 15 who sell only the Record. Newborn had not been informed that the strike was not to take place. After- ward, his papers were restored. 8 The carriers are not permitted to place insertions in papers. Carrier Frank W. Muller was ordered to dispose of his route by the Inquirer in 1908 for allegedly having made such insertions. However, it does not appear that he ever made a bona fide sale of his route and he appears to have continued to deliver papers on the route after receiving the order. 9 Although a junior salesman is permitted to solicit generally on the route of a carrier who rejects a subscription, the Record continues to sell the carrier his usual number of papers. PHILADELPHIA RECORD COMPANY 1237 It is the carriers, rather than the publishers, who determine who shall operate the routes and the sales areas to be covered. This is indicated by the manner in which routes are transferred. The trans- fer of a route from an established carrier to a new carrier is effected by a sale between these parties, the publishers taking little part in the transaction. As to negotiations for transfers, the seller and purchaser draw up the contract of sale independently of the publishers. Al- though it is the usual practice for the seller and purchaser then to interview officials in the circulation department of each publisher and to arrange for a transfer of the route listing on the publishers' lists,7e neither publisher has ever refused to make a transfer if the required deposit, amounting to the price of the papers usually sold on the route during a 2-month period, is paid." It appears, too, that a transfer on the Companies' lists is advantageous to all parties concerned. It is through this transfer that the Companies know the identity of the individual who delivers their papers; that the new carrier is assured that lie will experience no difficulty in obtaining papers; and that the selling carrier is relieved of his obligation to pay the bills incurred on the route thereafter. It appears further that carriers not only have sold entire routes but have subdivided their routes and sold por- tions of them. In such cases the seller and purchaser have estab- lished the boundaries of the portion to be served and described it in their sales contract. Also, some carriers own more than one route, and the Companies have never objected to making transfers on their lists of additional routes in the name of the same carrier 12 The record also contains instances in which carriers have, by partnership, lease, or other agreement, handed over to others the operation of their routes along with either the entire profits, or a share of the profits,13 and such agreements have been entered into by the carriers without consultation 1° The carriers buy their papers on credit and are billed each month for the price of the papers supplied. Each publisher maintains a list of the carriers in its circulation depart- ment on which the carriers' names, addresses, and the numbers by which their routes are designated , are indicated . The carrier whose name appears on the list is . accordingly, held responsible by the publishers for the amount owed for papers. U William L. Anderson, president of the Union, testified that the carriers do not sign the sales contracts until the Companies ' officials have indicated their approval of transfers. Anderson has been appointed by the Union as "transfer agent" and often acts as broker in the sale of routes . In seeking purchasers for routes he has advertised them for sale in local newspapers under the heading of "Business Opportunities." U The record indicates that 26 of the approximately 220 carriers own more than one route ; one carrier owns 7 routes. 11 Carrier Ernest G . Schwarz has a written partnership agreement with his son -in-law, Charlie Myers, by which profits from the sale of papers are shared equally between two men. Myers doing most of the work on the route. Henry W. Odenheimer 's route is actually operated by one William Dowd . Odenheimer pays the Companies ' bills with money turned over to him by Dowd and Dowd retains the balance of the money collected as his profit. The route listed under the name of Leonard Freedman is operated by Ormond Wood. The arrangement between Freedman and wood is similar to that between Oden- heimer and Dowd except that Freedman has agreed to pay wood part of the purchase price when he sells the route. 1238 DECISIONS OF NATIONAL LABOR RELATIONS BOARD with the Companies and without obtaining a transfer oil the Com- panies' lists." The nature of the relationship between the carriers and the pub- lishers and the conditions surrounding the operation of the routes have been the subject of frequent discussion between the publishers and organizations representing the carriers over a period of 60 years. The record shows that the carriers in 1885 formed an organization en- titled Paper Carriers Protective and Beneficial Association,15 and that the publishers dealt with the Association for many years. In this con- nection, it appears, for example, that in 1932 an increase in the amount of commissions for collecting payments for magazines, insurance pol- icies, and other premiums then sold in connection with newspaper sub- scriptions, was obtained for the carriers by the Association. Also, in 1936 or 1937, the carriers, acting in concert through the Association, refused to furnish lists of their wholesale subscribers to the Inquirer." However, the constitution of the Association indicates that it is not a labor organization. Indeed, in 1937, it ceased to exist as a bargaining group although it continued as a beneficial association. At that time the carriers obtained a charter from the American Federation of Labor under the title of Philadelphia Newsdealers and Carriers Association, Local 21375, A. F. L. Although dealings continued for some time between this organization and the publishers, the latter have met with no carrier group since December 1942. The Union, to which most of the carriers now belong, has been active in their interests since August 27, 1943, but the publishers have refrained from dealing with it. The record also clearly shows that in any dealings between the Companies and the carriers the former have consistently main- tained that the carriers were not their employees, but independent con- tractors. And, although many carriers testified at the hearing that they considered themselves employees, the record indicates that there is some doubt as to whether the carriers have uniformly maintained this position. Ernest G. Schwarz, carrier, admitted on cross-examina- tion that he understood that the Association was one of business men, and that at one time it had been a member of the United Business Men's Association of Philadelphia, an organization comprised of small independent business men. With respect to the over-all picture as to the economic status of the carriers, the testimony given by the carriers at the hearing indicates 1. In connection with the sales of routes we note that there is an instance in the record of the sale of an abandoned route for the approximate amount of an unpaid bill by the Inquirer and also an instance of a sale made jointly by both Companies. However, it would not appear that either publisher pursues a practice of making such sales. Hereinafter called the Association. r0 Although the record indicates that the Companies have delivered papers for the car- riers without charge upon occasions when carriers have been ill and that , upon such occa- sions, the carriers have furnished the Companies with their lists of subscribers , the carriers are generally reluctant to supply the Companies with such lists. PHILADELPHIA RECORD COMPANY 1239 that the average price paid by a carrier for his route is about $4,500,17 that the average carrier is 49 years old, married, and has two children; that he delivers the Companies' papers regularly, devoting about 55 hours a week to the work involved in operating his route; that he employs one helper daily and two on Sunday to assist him; and that the average net weekly income he receives from the sale of the pub- lisliers' papers, and from collecting payments on magazines and insur- ance policies sold in connection with the papers, is between $45 and $50. As has already been indicated, some carriers supplement their incomes, without objection by the publishers, by profits from the sale of out-of- town papers and miscellaneous articles on their routes, or by their earnings from other pursuits. The facts outlined above show that the carriers possess some attri- butes of employee status and others indicative of independent con- tractor relationship, and that they consequently fall within the inter- mediate area described in the Supreme Court's opinion in the Hearst case where characteristics of both relationships are present. With respect to relationships within this area the Court said that when "the economic facts of the relation make it more nearly one of employment than of independent business enterprise with respect to the ends sought to be accomplished by [the Act], those characteristics may outweigh technical legal classifications for purposes unrelated to the statute's objectives and bring the relation within its protection." Militating in favor of the Union's position as to employee status are, in the main, the facts that the Companies set the buying and selling prices of the papers and thus fix the profit per paper on each sale made by the carriers; that the publishers furnish some of the equipment used in the operation of the routes without charge to the carriers; that, upon occasion, the publishers have arranged for the servicing of routes when the carrier has been unable to do so; and that the carriers form a stable group comprised of mature men who work regularly at selling news- papers and who, for the most part, depend on the sale of the Companies' newspapers for their livelihoods." Militating against the Union's position, however, and pointing to an independent contractor status, are the following considerations. It is the carriers who, by the purchase and sale of routes, choose their 14 As previously noted, some carriers own more than one route. 19 The Union also contends in this connection that in their dealings with the carriers for over 60 years, the publishers have applied the industrial technique of collective bargaining and have thereby given employee status to the carriers. We disagree with the Union. Although these dealings do not appear to be conclusive with regard to the relationship between the parties, we are of the opinion that they are more indicative of an independent contractor relationship than an employer-employee relationship. The Union also argues that in establishing employee status the right of the alleged employer to control rather than control itself is significant and cites Grace v. Magruder, 148 F. (2d) 679 (D. C., Ct. App.), cert. denied, 66 S. Ct. 24, as standing for that principle. We, however , find it unnecessary to dispose of this contention since there is nothing in this record to show that the publishers have a substantial right to control the carriers. 1240 DECISIONS OF NATIONAL LABOR RELATIONS BOARD sales areas. For although, as we have indicated above, the Companies make a transfer on their lists when a route is sold, in actual practice the routes are bought and sold among the carriers themselves without objection by the publishers, the publishers' approval of the transfer which is sought by the carriers being as much a safeguard of the trans- ferring carrier as of the publisher. And, after a carrier has obtained a route, the Companies have, in effect, recognized that he has a right in the route which is to be judged by entrepreneurial values. This is illustrated by the fact that neither publisher has in recent years ordered a carrier to dispose of his route, to alter its boundaries, or to subdivide it. In addition, the carriers enjoy a wide latitude in the exercise of individual initative in the manner and methods in which they operate their route or routes. They receive virtually no instruc- tions from the publishers regarding the details of their work and they are free to compete with the publishers in the wholesaling of papers, to sell out-of-town papers, and even to sell commodities other than newspapers on their routes. Although both publishers expect the carriers to provide satisfactory service to their customers and to ac- cept magazine and insurance "serves," they both continue to furnish papers to the carriers even if their wishes in these matters are disre- garded. Furthermore, it is the carriers who determine how many papers they will need in order to supply their customers and the pub- lishers appear to have uniformly supplied them with the number requested. Indeed, despite the facts that the publishers set the buying and selling prices of the papers and seek to encourage the carriers in maintaining and, if possible, improving the circulation of the papers, the earnings of the carriers, because of the freedom they exercise in the actual conduct of their routes, depend in large measure on their own desires, energy, resourcefulness, and business acumen. It is thus apparent from all these characteristics that the economic facts surrounding the relationship between the carriers and the pub- lishers make it more nearly one of independent enterprise than of employment in respect to the ends to be accomplished by the Act, and fail to bring the relationship within the Act's protection. We find, therefore, that the house-to-house carriers who deliver the papers of the Record and the Inquirer to the homes of subscribers in the Phila- delphia metropolitan area, are not "employees" within the meaning of the Act 19 19 The Union also cites in support of its position Matter of the Pulitzer Publishing Company, 62 N. L. R. B. 229 , in which we held that house-to-house carriers were employees of the publishers whose papers they sold . However , that case is distinguishable from this one on its facts. We note particularly that the publishers, in that case followed a policy of ordering carriers to dispose of their routes for unsatisfactory service and also that, in order to effect a transfer of a route, a new carrier was required to sign an agreement whereby he undertook to abide by certain rules and regulations specified by the publisher. Our attention has been called to a contract , dated November 5, 1945, which was entered into by the parties to the Pulitzer case subsequent to our decision in that case . The Com- PHILADELPHIA RECORD COMPANY 1241 Upon the basis of the foregoing findings of fact and the entire record in the case , the Board makes the following : CONCLusIONs OF LAW 1. The house-to-house carriers selling the Philadelphia Record and the Philadelphia Inquirer in the Philadelphia metropolitan area are not "employees" of Philadelphia Record Company or of the Philadel- phia Inquirer Division of Triangle Publications, Inc., both of Phila- delphia, Pennsylvania, within the meaning of Section 2 (3) of the Act. 2. No question affecting commerce has arisen concerning the rep- resentation of employees of either the Philadelphia Record Company or the Philadelphia Inquirer Division of Triangle Publications, Inc. ORDER Upon the basis of the foregoing findings of facts and conclusions of law, the National Labor Relations Board hereby orders that the petition for investigation and certification filed by the Philadelphia Newscarriers' Union, Local 504, affiliated with the International Print- ing Pressmen and Assistants' Union of North America, American Federation of Labor, be, and they hereby are, dismissed. panies urge that by this contract the employee -employer relationship found to exist by this Board was , in effect, disavowed . Assuming such a disavowal , and, assuming further, that we were presently deciding that case, we might well decide it differently.