Carnation Co.

National Labor Relations Board - Board Decisions

Jul 26, 1971

192 N.L.R.B. 237 (N.L.R.B. 1971)

CARNATION COMPANY 237
Carnation Company and Sales Drivers and, Helpers,
'Local No. 274, International -Brotherhood of Team-
sters, Chauffeurs, Warehousemen and Helpers of
America. Case 28-CA-1460
July 26, 1971
SUPPLEMENTAL, DECISION AND
ORDER
BY MEMBERS FANNING, BROWN, AND
KENNEDY '
On September 6, 1968, the National Labor Rela-
tions Board issued a Decision and Order in the above-
entitled proceeding' in which it found that the drivers
with whom Respondent executed agreements were
still employees rather than independent contractors,
and that the Respondent thus violated Section 8(a)(5)
and (1) of the Act ^by inducingthem to` enter into
employment agreements in derogation of their bar-
gaining representative and by modifying the existing
collective-bargaining agreement without complying
with the requirements of Section 8(d). By so holding,
the Board found-it unnecessary to determine whether
Respondent fulfilled its duty to bargain over the
question of contracting out part of its distributorship
-business if in fact contractual relationships were
created. The Board also found that Respondent
further violated Section 8(a)(5) by terminating the
employment of four drivers who would not enter into
the agreements.
The Board ordered the Respondent, inter alia, to
cease giving effect to the individual distributorship
agreements, to reactivate the previous collective
agreement, to bargain, upon request, with the Union,
and to offer reinstatement , with backpay, to the four
dischargees and the other unit employees to whom'the
Respondent had offered individual contracts.
Respondent petitioned the United States Court of
Appeals for the Ninth Circuit to -review the Board's
Order. In its opinion, the court differed with the
Board, concluding that the drivers became independ-
ent contractors . The court, however, found that "these
considerations do not necessarily moot the question
of past violation by Carnation." 2 The court added:
We are of the opinion that the Board ought to
pass upon the refusal-to-bargain issue, but that if it
finds a violation it ought to fashion a remedy with
the understanding that, Carnation and its distribu-
tors now occupy a different relationship than that
occupied when the alleged violation occurred.3
With respect to the four drivers whose jobs had been
terminated, the court held that the Board's determina-
1 172 NLRB No. 215.
2 Carnation Company v. N.L.RB., 429 F.2d 1130, 1135.
5 Supra.
192 NLRB No. 46
tion of these facts should not be disturbed, but "[t]he
remedy . . . ought to be re-examined in-light of our
holding that Carnation cannot be compelled to
distribute its products through employee drivers."4
The Board petitioned' for rehearing, questioning
whether the court's opinion precluded the Board-from
ordering restoration of the status quo ante pending
bargaining negotiations should' it, find a violation of
the duty to bargain had occurred and that restoration
was an appropriate remedy. The -court' entered -a
clarifying order, stating that "the Board is not
precluded from ordering any, appropriate'remedy, - by
law, subject, of course to judicial review." 5 The court
added that "[n]o remedy, whether for the benefit of
[the Union] or for individual drivers, however, can be
sustained unless it is predicated upon a finding that
Carnation unlawfully refused to bargain." 6
On- April 22, 1971, the Board remanded this case to
a Trial Examiner for a further hearing on the issues
posed by the court remand. Subsequently, the parties
filed motions for reconsideration requesting that the
Board decide the matter without a further hearing
since the refusal-to-bargain issue was fully litigated.
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 case to a three-member
panel. -
The Board has considered the motions, the briefs,
and the entire record in this case and hereby grants
the parties' motions and makes the following' find-
ings:
The record shows that Respondent is part of a
multiemployer group that has recognized and' bar-
gained with the Union concerning its retail and
wholesale milk drivers in,Phoenix, Arizona. Con-
cerned with the financial position of its operations;
Respondent began in August 1966 to sell its delivery
routes to the drivers and enter into 'distributor
agreements with them.
The events- that led up to the distributorship
arrangements show the following: On February 19,
1966, a meeting requested by Respondent was held
between the Respondent, and the Union at Los
Angeles. Representing Respondent at this meeting
was Roland Jones, director of 'industrial relations.
Present for the Union was George Sebastian, director
of the Dairy Employees Council of the Western
Conference of Teamsters; Vernon Case, secretary-
treasurer and business , representative of Local-274;
and A. D. Ward, attorney for the Union.
Jones testified that at the meeting he told the union
representatives that the only solution to the Phoenix
4 Supra at 1136.
5 Supra at 1136.
6 Supra at 1136.
238 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
distribution problem was to change from employee-
drivers, to independent ,contractors. He added that it
would be acceptable to the Company if the,-independ-
ent contractors were Teamsters members and that the
Company would be willing ato give the Union an
assignment for their premiums on pensions and health
and, welfare benefits. The Union's response, accord-
ing to Jones, was_thatit strongly opposed changing to
distribution by; independent contractors and -also
opposed Teamsters, membership for, the jobbers.
Jones aso testified that the Union made no proposals
but, did, suggest.that a retail- committee from the
Carnation drivers be formed and that a brainstorming
session , be held to explore with the drivers whether
they had an ideas on how to improve the situation in
Phoenix. The parties-agreed -to have this meeting on
March 10 in Phoenix. Jones testified that Sebastian,
Case, and a group of drivers were to attend the March
10 meeting.7
Jones testified that on March 10, James Bryant,
general manager; Charles Graham, assistant general
manager; and he showed up at the Teamsters Joint
Council office in.Phoenix. Case met them and either
Bryant or Jones asked Case if Sebastian had arrived.
Case responded that Sebastian was not coming and
that- Sebastian,had told him that there was nothing
further to talk - about.. No employee committee was
present. At the meeting Jones restated the Company's
willingness to have the distributors remain in, the
Teamsters Union, and also the fact that the Company
would be,,more than happy to keep them under the
Teamsters pension and health and welfare plans. Case
replied thatthe jobber-route was not the answer and
the Union would certainly oppose it. Bryant corrobo-
rated ,Jones' testimony that upon- arriving at the
March i0 .meeting "the gist of what [Case] said was
that everything had been discussed between Mr.
Sebastian and Mr. Jones and there was no sense in
rehashing the subject that had been covered."
However, Bryant testified, contrary to Jones, that
they did not-,discuss the matter of owner-operators at
that time.
Union Representative Case testified that, the subject
of distributing Respondent's product by independent
contractors, was not discussed at the February 19
meeting. Case also testified that the March 10 meeting
was, set up- to resolve problems' caused by the
Company's recent switch to -a-5-day,work schedule
r Union Attorney Ward, who was present at the February 19 meeting,
brought out on cross-examination of Jones the fact that at this meeting the
parties also discussed the transaction that was then being worked out
where Kruft Dairy was going out of business and selling its vehicles to its
former `employees and that Carnation was agreeing, to sell milk under a
Kroft label from the Carnation plant to former . Kruft employees who were
driving their own vehicles.
8 General Counsel contends that Sebastian's agency was never
established for the purpose of negotiating for the Union. The record shows
that Sebastian is the director of the Dairy Employees Council of the
and not for the purpose of discussing the possibility of
going owner-operator. In fact, Case testified that it
was sometime in August that' he became aware that
Respondent was contemplating owner-operator oper-
ations.
Shortly after this meeting, the first decision was
made to sell the routes. This decision was made prior
to the commencement of -negotiations for a new
collective-bargaining agreement executed on May 25,
1966. During the course of these negotiations there
was no discussion in regard to Respondent's decision
to sell its routes. The Union attempted to obtain,
without success, a no-subcontracting clause.
Subsequent to the execution. of the collective-
bargaining agreement, Jones and Mathews met in Los
Angeles, in early June 1966, with George Sebastian,
director, of the , Dairy Employee Council of the
Western, Conference of Teamsters.8 Jones testified
that Sebastian requested they come down to his hotel
so that, they could talk about, the Phoenix situation.
According to Jones, they discussed the Phoenix
distribution question. Jones testified that Mathews
reiterated the plight, of the distribution system and
stated the Company's willingness to keep the distribu-
tors in the Teamsters Union and give an assignment
for pension-and, health and welfare, funds. Sebastian
submitted, as, an ,alternative to distribution, by
independent contractors, a copy of the Teamsters
contract with Foremost Dairies. According to Jones,
Mathews told Sebastian that -this was not a satisfacto-
ry solution because it was still an employee-employer
relationship. When there were no further proposals
from Sebastian, Mathews said that. there was no
alternative for Carnation but to go jobber. Sebastian
said that if the Company did switch the Union would
file unfair labor practice charges.
Sebastian did, not testify at this-proceeding. Case
testified that Sebastian advised him that he had met
with Jones concerning the Kruft Dairy, matter, but
made ^ no report in connection with, the Carnation
independent contractor situation.
In August .1966, Respondent General Manager
Bryant phoned Case and told him that employee
Frederick was contemplating buying his route. Case
testified that he told Bryant that he "would resist it
with everything possible that the union could muster
in order to prevent this so-called owner-operatorfrom
coming about." Bryant's version of this conversation
Western Conference of Teamsters . He acts as coordinator for all the dairy
locals in the Western Conference of Teamsters . Respondent has dealt with
Sebastian concerning problems within the dairy industry ' and particularly
within their own Company . In fact , Respondent contacted Sebastian in
arranging the February 19 meeting. Therefore we find that Sebastian had
sufficient apparent authority to bind the Union . Operating Engineers Local
Union No. 3, AFL-CIO (California Association of Employers), 923 NLRB
922; Sheet Metal Workers Union, Local No. 165, AFL-CIO (Inland Steel
Products Co.), 120 NLRB 1678.
CARNATION COMPANY
shows , that he called Case and told him that employee
Frederick had come in and was interested in becom-
ing an owner-operator . Bryant told Case he wanted to
,talk to Frederickmore about it and give consideration
to selling the wholesale route: According to Bryant,
Case said that there was nothing specific he could do
about it, but he would fight the change all the way.
Subsequently , Respondent made similar phone calls
to the Union priov to discussing the matter with other
drivers . The Union continued to respond that it would
resist the change to owner-operator.
Without the benefit of a further hearing, which the
parties oppose, .we are unable to reconcile the
conflicting testimony concerning the substance of the
discussions at the February 19 and March 10
meetings .9 There is no credibility problem , however,
with regard to the meeting held in early June at the
request of Sebastian: Indeed, the fact that the Union
requested this meeting tends to support Respondent's
position that there had been prior discussion concern-
ing the .distribution .operation . In any event, ,it is clear
from, the evidence set forth above that the June
meeting concluded-with both sides adhering to fixed
239
and firm positions. That the Union was adamant in its
rejection of Respondent's proposal is further demon-
strated by Case's statement that-he would resist any
attempt by Respondent to change the, driver-salesman
relationship. No request was made by the Union for
further bargaining. In short, the Union had decided to
respond to. Respondent's proposal with-'"litigation
rather than utilizing the bargaining process.
Under these circumstances , we- conclude that the
Union's fixed position, evidenced at the June meeting,
and Case's own statements subsequent thereto show
that the parties had reached an impasse . Accordingly,
the Respondent was free to initiate changes in its
distribution system. We shall therefore dismiss the
complaint in its entirety.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the- National Labor
Relations Board hereby orders that the complaint
herein be, and it hereby is, dismissed in its entirety.
9 Trial Examiner Spencer, who had the benefit of observing the
demeanor of•the witnesses , has since retired from the Agency.