Before WILBUR K. MILLER, WASHINGTON and BURGER, Circuit Judges.
UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT. 1960.CDC.97
PER CURIAM: These cases came on for hearing and were remanded to the Board for further proceedings and are now before us on the motion of petitioner in case No. 14,357 for modification of the decree of the National Labor Relations Board and for enforcement of the decree as modified, on the opposition of Shamrock Dairy, Inc., of the reply of the Board to the petitioner's motion, on the petitioner's response to the reply of the Board and on the response of Shamrock Dairy, Inc., to the Board's reply.
Having considered all the foregoing pleadings, and being of the view that the drivers ceased to be employees and became independent contractors when they signed contracts for distributorship; that the six drivers who did not sign as distributors should not be reinstated because their discharge was the result of a "reduction in force;" and that, although Shamrock Dairy, Inc., technically violated the Act in failing to give the Union an opportunity to discuss the independent distributors' plan, the court concludes that the order of the Board entered in this proceeding on August 13, 1959, should be and it is affirmed. Counsel for the Board are directed to present within ten days a proposed enforcement decree.
WASHINGTON, C.J., dissenting: This is a petition to review and modify an order of the National Labor Relations Board, reported at 119 N.L.R.B. 998 (1957). As the facts are fully set forth in that report, they need not be repeated in detail here. Briefly, Shamrock Dairy had a collective bargaining agreement with the petitioner union, which represented Shamrock's milktruck drivers. Shamrock notified the drivers that it would sell its trucks and routes to the drivers, who would then become "independent contractors." It did not bargain with the union before instituting this plan. The union filed a charge, and the General Counsel of the Board issued a complaint. After further proceedings, the Board issued an order requiring Shamrock to cease and desist from (1) refusing to bargain collectively with petitioner with respect to "adoption or continuance of a system of product distribution known as the independent distributorship plan insofar as it affects the tenure of its employees," (2) entering into any new independent distributorship contract before bargaining with petitioner, and (3) "in any like or similar manner interfering with, restraining or coercing its employees in the exercise" of their rights under Section 7 of the Taft-Hartley Act.1
Petitioner union asks that the order be modified so as to reinstate certain drivers who were discharged when they failed to agree to the so-called "independent distributorship plan," that all existing contracts with other drivers be invalidated, and that Shamrock be ordered to bargain with respect to all terms and conditions of employment, not merely tenure. In support of these requests, petitioner maintains that Shamrock violated Sections 8(a)(1), (3) and (5), and 8(d) of the Taft-Hartley Act by adopting the distributorship plan without first bargaining with the union and by discharging the drivers for refusal to sign the individual distributorship contracts. Petitioner asserts that, in failing to invalidate existing contracts, order bargaining on all issues, and reinstate the discharged drivers, the Board has not restored the status quo. The Board responds that to abrogate the existing contracts will not effectuate the policies of the Taft-Hartley Act because Shamrock adopted the independent distributorship plan in the honest belief that the question whether the drivers should have "employee" or "independent contractor" status was one for the individual drivers to determine. Thus, it says, only a technical violation of Section 8(a)(5) was involved rather than a violation of Section 8(d). In addition, the Board maintains that the employees for whom petitioner seeks reinstatement were discharged "for valid economic reasons": Sections 8 (a)(1) and (3) were not thereby violated. The Board asserts that since there was a "reasonable basis" for finding the drivers to be independent contractors rather than employees, this finding cannot be challenged.
The ultimate question is whether or not the Board's order effectuates the purposes of the Taft-Hartley Act. This depends in turn on whether or not the Board correctly ascertained the extent to which any provision of the Taft-Hartley Act had been violated and Section 8(d) in particular. Section 8(d) specifies certain bargaining prerequisites where "wages, hours, and other terms and conditions of employment" are concerned.2 In considering whether or not Shamrock Dairy's acts involved "wages, hours, and other terms and conditions of employment," the Board thought it necessary to determine whether the status of the drivers was changed from "employees" to "independent contractors."
The members of the Board were not in agreement on either the status question or the Section 8(d) question. On the status point, Chairman Leedom was of the view that "the individual contracts pertained not to terms or conditions of employment but involved the termination of the employment status . . . and substitution therefor of the status of independent contractor." Decision and Order on Remand, p. 5. From this the Chairman concluded that Section 8(d) was not violated, and that it was not necessary to invalidate the independent distributorship contracts. Chairman Leedom cited two cases supporting his position: Sloan v. Journal Publishing Co ., 213 Ore. 324, 324 P. 2d 449 (1958), and Adams Dairy Co. v. Dairy Employees Union, 363 Mo. 182, 250 S.W. 2d 481 (1952). The theory underlying these two cases is that the employer, in deciding to perform his work through independent contractors, is merely exercising his right to hire and fire,3 and is not taking action affecting wages, hours, and terms and conditions of employment. Members Fanning and Jenkins, on the other hand, concluded that employee status was not lost, pointing to those aspects of the new contracts which deal with earnings and hours.
Certainly, it is clear that the new contracts deal with economic questions going far beyond "tenure," if tenure is used to express the duration of a functional, economic relationship rather than a legal relationship. The driver-salesmen continued to perform services with respect to Shamrock products under the distributorship plan - services of a nature much the same as in the past. In fact, the essential economic function that these men performed was not different before or after institution of the distributorship system. But very great changes were made in their relations with Shamrock - changes which in my view were "with respect to wages, hours, and other terms and conditions of employment" within the meaning of Section 8(d).
Economically, the new contracts place the drivers at the mercy of Shamrock. Wholesale prices are set by Shamrock. Shamrock can unilaterally terminate any driver's milk contract, on which he must primarily depend. Collective and even individual bargaining is practically precluded because the drivers have agreed not to work for another dairy for two years. Thus, the drivers cannot use their good will as a bargaining weapon against the supplier. The Dairy can reap all good will for itself. Nor are a driver's capital assets of bargaining significance because Shamrock has a re-purchase option on each truck. Price competition on the retail level is unfeasible also because (1) the drivers sell under "recommended" prices from Shamrock - a recommendation enforcible through Shamrock's power of unilateral termination, and (2) retail prices are set in a broad market of which each individual driver forms a relatively insignificant part. Despite the fact that the drivers may carry other products and sell advertising on their vehicles, these cannot be significant factors over which the drivers exercise primary control because (1) in case of conflict with Shamrock, Shamrock may unilaterally terminate the milk contract, and (2) Shamrock may re-purchase the trucks at any time. The drivers cannot extend the geographic confines of their retail markets; thus, Shamrock can effectively control the size of the drivers' labor force. And certainly it cannot be said that an individual driver has any control over the price he pays for gasoline and insurance or over his taxes - the primary costs of the driver. Through these contracts, the drivers are economically tied to Shamrock as effectively as any man working on a wage, piece-rate, or commission basis.
How can it possibly be said, in view of these facts, that the new contracts did not change "wages, hours, and other terms and conditions of employment"? Even assuming, arguendo, that the drivers became for some purposes "independent contractors," this does not excuse the Board from recognizing the practical effects of Shamrock's unilateral acts, which in fact changed wages, hours and many other aspects of the former system. Since Shamrock made these changes without complying with Section 8(d), a violation of that section occurred.
Counsel for the Board says, on brief, that an independent contractor relationship exists because there is a reasonable basis for this conclusion in the evidence, and the Board found such a relationship, precluding a finding that Section 8(d) was violated. On remand,4 only one Board member out of four found an independent contractor status, two found that the driver-salesmen retained their employee status, and the fourth made no finding. The order was framed as if all agreed with Chairman Leedom that a change of status occurred. This split among the members of the Board does not prevent this court from deciding the issue of status. Status is not a question of fact under the Taft-Hartley Act,5 nor does counsel for the Board ...