Arrow Rock Materials

National Labor Relations Board - Board Decisions

May 29, 1987

284 N.L.R.B. 1 (N.L.R.B. 1987)

ARROW ROCK MATERIALS 1
Frank Robert Walker, Jr. d/b/a Arrow Rock Mate-
rials and International Union of Operating En-
gineers, Local Union No. 12, AFL-CIO, Peti-
tioner. Case 31-RC-6098
29 May 1987
ORDER DENYING REVIEW
BY CHAIRMAN DOTSON AND MEMBERS
JOHANSEN, BABSON, STEPHENS, AND
CRACRAFT
On 6 February 1987 the Regional Director
issued a Decision and Direction of Election in the
above-entitled proceeding in which he found, inter
alia, that the Employer satisfied the Board's juris-
dictional standards based on indirect outflow.
Thereafter, in accordance with Section 102.67 of
the Board's Rules and Regulations, the Employer
filed a timely request for review of the Regional
Director's decision. The election was conducted as
scheduled on 6 March 1987 and the ballots were
impounded.
We have carefully considered the arguments of
the parties and, for the reasons set forth below, we
deny the Employer's request for review of the Re-
gional Director's decision.
The relevant facts are undisputed. The Employer
is engaged in the operation of a sand and gravel
quarry in Palmdale, California. Since it commenced
operations in January 1985, all its sales have been
to customers located within the State of California.
During the last calendar year, the Employer sold
materials valued in excess of $50,000 to Jaqua
Block, Inc. (Jaqua), a California corporation.
During this same time period, Jaqua purchased a
block machine valued in excess of $50,000—which
the parties stipulated was a nonrecurring capital ex-
pense—directly from a supplier located outside the
State of California. In addition, during the period
from November 1985 to November 1986, Jaqua
purchased spare parts (noncapital expenditures)
valued at approximately $10,000 directly from
sources located outside the State of California.
Based on the foregoing facts, the Regional Di-
rector concluded that Jaqua satisfies the Board's ju-
risdictional standards based on direct inflow, citing
East Side Sanitation Service, 230 NLRB 632 (1977),
and SnoWshoe Co., 212 NLRB 535 (1974), and,
therefore, that jurisdiction properly may be assert-
ed over the Employer based on an indirect outflow
standard Siemons Mailing Service, 122 NLRB 81,
85 (1958). We agree with the Regional Director.
It is well established that in determining whether
an employer meets the Board's jurisdictional stand-
ards, "Rifle Board's practice. . . is to include non-
recurring capital expenses if such expenses are not
the only items of inflow." East Side, 230 NLRB
632. See also Snowshoe Co., supra; Cemetery Service
Corp., 149 NLRB 604 (1964). In the instant case,
Jaqua's $10,000 of noncapital expenditures (which
is twice the amount of the employer's noncapital
expenditures in East Side), combined with its non-
recurring capital expenditure of over $50,000, is
sufficient to satisfy the Board's direct inflow stand-
ard. Thus, as the parties stipulated that the Em-
ployer sold materials valued in excess of $50,000 to
Jaqua, which we find to meet one of the Board's
direct jurisdictional standards, the Regional Direc-
tor properly asserted jurisdiction over the Employ-
er on the basis of the indirect outflow standard.
Siemons Mailing Service.
The dissent views the assertion of jurisdiction in
this case as "an extension of the Board's jurisdic-
tion beyond previously recognized limits." We do
not agree with that analysis. As shown above, in
East Side the Board included the employer's nonre-
curring capital expenditures in determining the
amount of inflow. In the same manner, Jaqua's
nonrecurring expenditures have been applied
toward the calculation of whether it meets one of
the Board's jurisdictional standards other than indi-
rect inflow or indirect outflow; clearly, under East
Side, Snowshoe, and Cemetery Service Corp., Jaqua
meets the Board's jurisdictional standards based on
the amount of its direct inflow. Therefore, given
the Employer's sales to Jaqua, it simply follows
that the Employer meets the Board's indirect out-
flow standard for assertion of jurisdiction.
Our finding that Jaqua meets the Board's juris-
dictional standard for nonretail enterprises on the
basis of direct inflow results from a straightforward
application of Board precedent that has been in ex-
istence for almost 23 years and that has withstood
court challenge. 1 Once it is found that Jaqua meets
the direct inflow standard, a routine application of
the jurisdictional tests set forth in Siemons Mailing
Service leads to the conclusion that the Employer
meets the indirect outflow standard based on its
sales to Jaqua. This conclusion is not an expansion
of the Board's jurisdiction. Rather, it is merely the
result of the application of established jurisdictional
principles to the facts of this case.
Accordingly, as we believe that the Regional Di-
rector properly applied the longstanding precedent
and policies of the Board, we deny the Employer's
request for review.
See NLRB v. East Side Sanitation Service, 653 F,2d 235 (6th Or
1980), enfg. 234 NLRB 1099 (1978)
284 NLRB No. 1
2 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
CHAIRMAN DOTSON, dissenting.
Contrary to my colleagues, I would grant the
Employer's request for review and reverse the Re-
gional Director's Decision and Direction of Elec-
tion asserting jurisdiction over the Employer.
The Employer operates a sand and gravel quarry
in California. All its sales have been within the
State of California to customers located within a_
75-mile radius of the quarry. During the last calen-
dar year, the Employer sold materials valued in
excess of $50,000 to Jaqua Block, Inc., a California
corporation. During the last calendar year, Jaqua
Block purchased a block machine valued in excess
of $50,000 directly from a supplier located outside
the State of California. The purchase of the block
machine constituted a nonrecurring capital expense.
Jaqua Block also purchased spare parts valued at
$10,000 directly from outside the State of Califor-
nia.
The Regional Director concluded that Jaqua
Block satisfied the Board's jurisdictional standard
based on direct inflow, and that the Board could,
therefore, assert jurisdiction over the Employer on
an indirect outflow standard. In finding that Jaqua
Block met the direct inflow standard, the Regional
Director relied on East Side Sanitation Service l and
Snowshoe Co., 2 in which the Board held that it
would count nonrecurring capital expenses in ap-
plying the Board's nonretail inflow test if such ex-
penses were not the only items of inflow.
Unlike the majority, I would not assert jurisdic-
tion over the Employer inasmuch as I would find
that Jaqua Block did not satisfy the Board's nonre-
tail inflow standard. A one-time capital expenditure
does not furnish a reliable indicator of an enter-
prise's effect on interstate commerce. Further, the
Board has traditionally not asserted jurisdiction
over an employer's business solely on the basis of
nonrecurring capital expenses. 3 The Board has
stated that the out-of-state origin of an employer's
capital equipment does not, despite the value of
such equipment, transform an essentially local op-
eration into an interstate enterprise. 4 I see no
reason for the Board to make an exception in cases
where there were other items that were purchased
from outside the State that could be added to the
nonrecurring capital expenses to meet the Board's
jurisdictional standards. Indeed, the application of
East Side Sanitation Service results in the Board as-
serting jurisdiction over operations that are essen-
tially local in nature. I would not include, even if
230 NLRB 632 (1977), 234 NLRB 1099 (1978) (supp ), enfd. 653 F 2d
235 (6th Cir. 1980)
2 212 NLRB 535 (1974).
'Magic Mountain, Inc , 123 NLRB 1170 (1959), E. T Gresham Co, 85
NLRB 891 (1949), Richter Transfer Co., 80 NLRB 1246 (1948)
4 E. T. Gresham, id. at 892 fn. 2.
there are other items of inflow, nonrecurring cap-
ital expenses in determining whether the Board's
nonretail inflow standard has been met. Conse-
quently, I would overrule East Side Sanitation Serv-
ice and Snowshoe Co. Inasmuch as I would not
count Jaqua Block's purchase of the block machine
toward meeting the Board's jurisdictional standard,
I would find that it does not meet the nonretail
inflow test, and not assert jurisdiction over it. I
therefore would be unable to assert jurisdiction
over this Employer under the indirect outflow
standard.
In any event, the majority's use of Jaqua Block's
nonrecurring capital expenditure to assert jurisdic-
tion over this Employer is an extension of the
Board's jurisdiction beyond previously recognized
limits. The Board has never applied East Side Sani-
tation Service to an employer's customer in order to
meet the indirect outflow test. The majority's use
of Jaqua Block's nonrecurring capital expense to
assert jurisdiction over Jaqua Block so that it may
in turn assert jurisdiction over this Employer
makes for an anomaly. It is difficult to conceive of
many businesses whose operations are more local
than a sand and gravel quarry all of whose sales
are made within a 75-mile radius. I do not believe
that it effectuates the policies of the Act to assert
jurisdiction in these circumstances.
The extreme measures and subtle analyses used
here to take jurisdiction over a local enterprise are
uncalled for, even as policy. They ignore inflation's
impact on the Board's jurisdictional standards. For
example, the standard for retail stores (set in 1959)
is an annual sales volume of $500,000. The infla-
tion-adjusted amount in 1983 dollars was at least
$1,600,000, using the consumer price index as a
guide. Using the "GNP Deflator" series as a guide,
the equivalent amount was $1,400,000. Therefore,
applying the $500,000 standard in 1983 was the
equivalent of applying a standard of circa $170,000
in 1959. 5 The Board is thus arguably asserting ju-
risdiction over businesses that would have been
considered local operations in 1959. There is little
call for such unplanned expansion of its jurisdic-
tion. That jurisdiction might technically be plena-
ry6 but the Board has, since 1950, employed dollar
volume standards to combine optimal use of limited
appropriations with maximum protection to com-
merce. There have been multiple increases in the
5 See p. 13 of my 2 November 1983 testimony before the Subcommit-
tee on Manpower and Housing of the House Committee on Government
Operations. The $170,000 figure is an approximation arrived at by using
both the "GNP Deflator" and consumer price index standards. Although
inflation has slowed markedly in recent years (1981-1987), our jurisdic-
tional standards are still afflicted by the high inflation rates of the 1970s
6 See, e g, NLRB v. Fainblatt, 306 U S 601 (1939)
ARROW ROCK MATERIALS

3
gross national product in the past 28 years. This
fact, together with historically high inflation rates,
has resulted in the Board's use of scarce resources
on smaller and smaller bits of a far bigger econo-
my. At best, this state of affairs must result, as it
has here, in expending our resources on situations
whose effect on commerce is almost wholly specu-
lative. We only compound the problem by the me-
chanical application of rules that have become in-
commensurable with their subject matter and pur-
pose.
For the reasons set forth above, I would not
assert jurisdiction over the Employer and, conse-
quently, would dismiss the complaint.