Merchants Home Delivery Service, Inc.

National Labor Relations Board - Board Decisions

Jun 17, 1977

230 N.L.R.B. 290 (N.L.R.B. 1977)

DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Merchants Home Delivery Service, Incorporated ll
and Teamsters Local Union No. 688, affiliated with
International Brotherhood of Teamsters, Chauff-
eurs, Warehousemen and Helpers of America.
Case 14-CA-9066
June 17, 1977
DECISION AND ORDER
BY CHAIRMAN FANNING AND MEMBERS
JENKINS AND MURPHY
On December 14, 1976, Administrative Law Judge
Marion C. Ladwig issued the attached Decision in
this proceeding. Thereafter, Respondent filed excep-
tions and a supporting brief and the General Counsel
filed an answering brief.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
authority in this proceeding to a three-member panel.
The Board has considered the record and the
attached Decision in light of the exceptions and
briefs and has decided to affirm the rulings, findings,
and conclusions of the Administrative Law Judge
and to adopt his recommended Order.
ORDER
Pursuant to Section 10(c) of the National Labor
Relations Act, as amended, the National Labor
Relations Board adopts as its Order the recommend-
ed Order of the Administrative Law Judge, and
hereby orders that the Respondent, Merchants
Home Delivery Service, Incorporated, St. Louis,
Missouri, its officers, agents, successors, and assigns,
shall take the action set forth in the said recommend-
ed Order.
II See Am-Del-Co, et al., 234 NLRB No. 156.]
DECISION
STATEMENT OF THE CASE
MARION C. LADWIG, Administrative Law Judge: This
case was heard at St. Louis, Missouri, on July 20-21, 1976.1
The charge was filed by the Union on February 5 and the
complaint was issued on June 22.
The Company provides a nonunion, owner-operator
home deliver service for retail merchants. In January it
replaced another firm, utilizing most of the same drivers,
helpers, and trucks, but refused to recognize the Union
which had previously represented the drivers and helpers.
The primary issues are (a) whether the Company's owner-
operators are employees or independent contractors, and,
if employees, (b) whether the Company unlawfully refused
to bargain with the Union as their representative, in
violation of Section 8(aX)(5) and (1) of the National Labor
Relations Act, as amended.
Upon the entire record, including my observation of the
demeanor of the witnesses, and after due consideration of
the briefs filed by the General Counsel and the Company, I
make the following:
FINDINGS OF FACT
I. JURISDICTION
The Company, a California corporation, is engaged in
the transportation and delivery of furniture, appliances,
and related products in St. Louis, Missouri, and in other
States, including Illinois and California, where it annually
derives gross revenues in excess of $50,000 from J. C.
Penney Company which annually has gross revenues in
excess of $500,000 and sells merchandise valued in excess
of $50,000 directly to customers in other States. The
Company admits, and I find, that it is an employer engaged
in commerce within the meaning of Section 2(2), (6), and
(7) of the Act, and that the Union is a labor organization
within the meaning of Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. Background
On June 18, 1975, the Company submitted to J. C.
Penney Company a proposal to make Penney's home
deliveries in the St. Louis area, promising better service at
lower cost, and "No unions"-by using owner-operators.
On July 21, Penney rejected the proposal, stating that its
"present delivery agent" (Compton Service Company),
which was handling its warehousing and which had been
making its deliveries for the past 10 years, had submitted a
bid which was "competitive with yours."
Meanwhile, as found by the Board in Am-Del-Co, Inc.
and Compton Service Company, Jointly, 225 NLRB 698
(1976), Penney representatives on June 20, 1975, informed
Compton Service (which employed union drivers and
helpers to make Penney's deliveries from the Compton
warehouse) that Penney was considering some bids from
"owner-operator contractors," and was also seriously
considering using owner-operators itself to make its own
deliveries. Penney requested that an owner-operator bid be
submitted, and advised that a 25- to 30-percent decrease in
the delivery charges would be necessary to be competitive.
On July 8, Am-Del-Co (found to be the alter ego of
Compton Service) submitted such an owner-operator bid,
which Penney accepted on July 18. Thereafter Billy J.
Hunt, president of both Compton Service and Am-Del-Co,
informed the union-represented drivers and helpers that "if
they wanted to form a partnership or corporation, Am-Del-
Co would sign a contract with them to perform delivery
services for the Penney account." With the help of a private
attorney, Terry Peebles, some of the driver-helper teams
did form a "partnership" or "corporation." They then
signed owner-operator contracts with Am-Del-Co and
All dates are in 1976 unless otherwise stated.
230 NLRB No. 53
290
MERCHANTS HOME DELIVERY SERVICE
began on September 2 making deliveries of Penney goods
from the Compton warehouse-using the same trucks, but
under lease to Am-Del-Co.
Am-Del-Co continued to make Penney's deliveries until
January, when Penney canceled the contract-following
the hearing in December of the above-mentioned case, in
which it was alleged that the drivers and helpers remained
employees, represented by the Union. (Later, on July 20,
the Board issued its Decision and Order, finding that the
attempt by Compton Service and Am-Del-Co "to convert
· . . employees to independent contractor status was part
of [an] attempt to eliminate the Union" and violated the
Act.)
On January 6, Penney contacted the Company and
began negotiating an owner-operator "Delivery Service
Agreement" (replacing Am-Del-Co). Penney then referred
the Company to Attorney Peebles, who was in contact with
Am-Del-Co owner-operators. On January 10, the Compa-
ny met with nine Am-Del-Co drivers and helpers who had
been delivering Penney's goods, explained the Company's
method of operation, and passed out application forms.
About January 12, despite their complaints about lower
compensation, the nine Am-Del-Co deliverymen signed the
Company's "Independent Truckman's Agreement"-one
of them signing individually and the others signing as two-
man "partnerships"-and agreed to operate a total of five
trucks to make Penney's home deliveries from the Comp-
ton warehouse, beginning January 14. On January 16 two
other persons who had made some Am-Del-Co deliveries
(but not for Penney) signed as "partners" to operate the
shuttle truck between the warehouse and the Penney stores.
The five "partnerships" (three of them operating as
corporations) also signed the Company's "Lease and
Service Agreement."
About January 21, the Union (which had represented
Compton Service's employee drivers and helpers for about
9 years and which was contending in the above-mentioned
NLRB case that the Am-Del-Co owner-operators re-
mained employees in the Compton Service driver-helper
bargaining unit) learned that the Company had taken over
Penney's deliveries, reportedly using the same deliverymen
and trucks. The Union immediately sent the Company a
bargaining request, which the Company refused.
In the delivery service agreement which Penney and the
Company signed on January 7, Penney agreed to indemni-
fy the Company for any "liability or other action . . .
wherein that is alleged by any Party that. . . Amdelco or
. . . their successors . . . has violated . . . the National
Labor Relations Act." (Emphasis supplied.)
B. Status of Owner-Operators
I. Company control
The General Counsel contends that despite the manner
in which the owner-operators are compensated (60 percent
of the gross revenue from J. C. Penney Company, instead
of wages), the Company maintains daily control over them.
On the other hand, the Company contends that these
owner-operator "contractors are entrepreneurs whose
financial success or failure depends on their ability to keep
the costs below revenues," and "exercise virtually complete
control over the way they perform their services under their
contracts."
Under its January 7 "Delivery Service Agreement" with
Penney, the Company assumes full responsibility for the
manner in which the owner-operators perform the delivery
service. The Company (referred to as "Contractor" or
"Merchants" in the service agreement and its annexes)
"guarantees prompt and efficient service by its agents and
employees to the reasonable satisfaction of Penney" (p. 1).
The Company "will route all deliveries according to the
most practical schedule, and prepare delivery manifests in
delivery sequence, with all necessary delivery instructions
as provided by Penney's," and make the schedules and
routing "to provide a reasonably uniform number of
deliveries each delivery day" (Annex A, par. II11). "All
merchandise will be inspected, properly protected (blanket
wrapped, etc.) and loaded by Merchants" (par. 12). The
Company "will exercise all possible care in loading,
delivering and setting up merchandise to avoid loss or
damage and will assume responsibility for all merchandise
loaded" (par. 14). "Transfer of responsibility between
Penney's and Merchants will be signed by proper individu-
als" (annex C, par. 4). The Company must make "every
effort" to complete all deliveries (annex A, par. 4), and to
schedule "time deliveries" as "close to the desired time as
possible" (par. 6). The normal appliance delivery (to be
made according to Penney's rules) includes setting in place,
leveling, connecting, and making operation check (par. 9c).
"Trucks will be kept clean and in good mechanical
condition" (par. 15), and "Every effort will be made to
satisfy" Penney's customers (par. 17). Thus, instead of
contracting directly with the owner-operators (as it consid-
ered doing the previous summer in its efforts to cut delivery
costs), Penney was willing to pay delivery charges which
included a 40-percent gross for the Company, in return for
the Company (instead of Penney) assuming the responsibil-
ity of ensuring the owner-operators' performance of the
deliveries in a satisfactory manner.
To fulfill this responsibility, the Company has assigned
Account Manager Mark Firehammer to handle the Penney
account. He (or sometimes Regional Manager Ronald
O'Blenes) dispatches the home deliverymen from the
Compton warehouse by daily dividing the deliveries into
routes "to provide a reasonably uniform number of
deliveries each delivery day" and assigning the routes.
(After receiving the manifests for the following day's
delivery, the owner-operators themselves decide the order
of deliveries.) The account manager makes sure that a
sufficient number of deliverymen are on hand to make the
deliveries, "gives the orders," and oversees the loading of
the trucks. He assigns special deliveries. He decides when
an additional truck is necessary and assigns the extra route
to one of the owner-operators. (Account Manager Fire-
hammer did not testify. Regional Manager O'Blenes, who
appeared on the stand to be less than candid in describing
the status of the owner-operators, testified that his or
Firehammer's "primary job at that warehouse is to try and
expedite the loading of the truck, to help the contractors
[owner-operators], to help get their merchandise," and to
have damaged merchandise touched up.) Although these
former Am-Del-Co home deliverymen were experienced in
291
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
making Penney deliveries, the account manager is present
during all the loading to assure that the trucks are clean
and in good mechanical condition and to assure fulfillment
of the other requirements of the Penney service agreement,
including inspecting, signing for, carefully handling and
loading, and properly wrapping the merchandise. The
Company "makes sure" that the I.C.C. and state truck
safety requirements are met. The owner-operators have
about a 30-minute leeway-before and after the ware-
house's 8 a.m. opening time-to begin loading their trucks,
but they are required to make deliveries on the day
scheduled, unless other arrangements are made. (The
shuttle truck is loaded about 7:45 or 8 a.m.) If an owner-
operator does not report to work and does not make other
arrangements for his deliveries, and another owner-opera-
tor's truck is not available, the manager "would probably
have to go to Ryder or Hertz Rent-A-Truck" and, if
necessary, make the deliveries himself. (On one occasion,
the owner-operators discussed the icy road conditions with
Regional Manager O'Blenes, who agreed that they could
make the deliveries the next day, Saturday, and so notified
Penney.) After the owner-operators leave the warehouse,
they are accountable to the Company for the manner in
which they make the deliveries; i.e., for exercising "all
possible care" in delivering and setting up the merchandise,
abiding by Penney's rules, making deliveries "promptly"
and the time deliveries as scheduled, and making every
effort to please Penney's customers.
The "Independent Truckman's Agreement," which each
owner-operator is required to sign, provides the means by
which the Company may enforce its daily control over the
manner in which the owner-operators perform the work.
For any service which the Company considers "substan-
dard," the agreement provides (par. 13) that the Company
may give the owner-operator a "written notice," and
"Three such written actions during the existence of this
agreement shall constitute a material breach of this
agreement." (As argued by the General Counsel, this letter
warning system is identical to a written reprimand.) The
agreement also provides that the Company may terminate
the agreement "at any time" for any "breach of the terms
thereof." In practice, as revealed by Company President
Robert Hayes, the warning letter may give a "reasonable
length of time" or "a specified amount of time" for a
situation to be corrected, and if not timely corrected or if
there is such an offense as drunken driving, theft, or
misrepresentation on the application form, the Company
may cancel the agreement. In addition, the lease agreement
provides for termination by either party on 30 days' notice.
The "Lease and Service Agreement," which the owner-
operators are also required to sign, gives the Company full
control over the operation of the truck. The agreement
provides (par. 4c) that the lessee (the Company) "shall have
sole, absolute, and exclusive use, charge, control, and
responsibility over the operation and use of the motor
vehicle equipment herein leased without hindrance, advice
or interference from or by the said Lessor" (the owner-
operator). The agreement also provides (par. 8) that the
owner-operator shall not utilize the truck "except in the
services of Lessee"-contrary to Manager O'Blenes' claim
(which I discredit) that the Company has no objection to
the owner-operators using the trucks (which bear its name)
for other purposes. The owner-operator (par. 4d) must
operate the vehicle himself, unless he obtains a substitute
driver who is "fully qualified . . . and acceptable to the
Lessee." (Emphasis supplied.) Thus the Company retains
full control over who will operate the truck.
It is obvious that the Company was not willing to turn
over the responsibility of the home deliveries to the owner-
operators without retaining the right to control the manner
in which they did the work. The Company contracted for
sole and exclusive control and responsibility over the
operation of the trucks, and retained control over who
would be permitted to drive them. It did not grant any
proprietary right in any of the delivery routes or assign
separate geographic areas where the owner-operators
would be responsible for the deliveries. Instead, the
Company retained the right to parcel out the deliveries
each day, and gave the owner-operators no right to
determine how many deliveries to make or where to make
them. The Company did not rely on the owner-operators
themselves to appear each day at the warehouse-with a
washed, well-maintained truck-to make the deliveries; or
to inspect, sign for, carefully handle and load, and properly
wrap the merchandise; or to take special deliveries and
arrange for delivering extra loads-without a company
manager being present at the warehouse to assign, oversee,
and direct the work. The Company retained the right to
decide itself what owner-operator conduct-both at the
warehouse under its direction and away from the ware-
house on the delivery routes-was "substandard," meriting
warnings and contract termination.
Furthermore, in realistically analyzing the situation, I
find it clear that Penney would not be paying delivery
charges which included a 40-percent gross to the Company
if the owner-operators themselves could be held responsi-
ble for the deliveries without supervision, and if the
Company's primary role was merely to sign up the owner-
operators, handle the clerical work, and terminate any
owner-operator who did not perform the deliveries satisfac-
torily. I find that Penney was in effect paying the Company
that high percentage of the delivery charges in return for
the Company assuming the complete responsibility for the
deliveries, and providing sufficient supervision over the
owner-operators to assure a prompt, efficient, and satisfac-
tory delivery service.
It is in this context that I weigh the effect of the so-called
control provision in the first paragraph of the truckman's
agreement which the owner-operators signed. It states that
the contractor (owner-operator) "will direct the operation
of his equipment in all respects and will determine the
method, means and manner of performance." It then states
that this includes "points of service of equipment"
(referring to truck maintenance), and "choice of any lawful
routes . . . rest stops and timing of customer deliveries"
(referring to the owner-operator's determining the order of
deliveries, after the Company decides how many deliveries
and what route will be assigned to the owner-operator that
day). I find that this conclusionary language is not
controlling. The Board has often held that the actual
relationship which has been created, despite such conclu-
sionary language as this method-means-and-manner provi-
292
MERCHANTS HOME DELIVERY SERVICE
sion, is what is controlling. (The purpose of this and the
remaining "independent contractor" provision in the first
paragraph of the agreement is discussed later.)
Accordingly, I find that the evidence shows that the
Company both retained and exercised the right of control
over the manner and means of performing the delivery
service as well as the end result.
Having so found, I now consider the total factual context
of the case in determining whether the owner-operators are
employees or independent contractors under the pertinent
common law agency principles. N.LR.B. v. United Insur-
ance Company, 390 U.S. 254, 256 (1968).
2. Other factors
Although the Company contends that the owner-opera-
tors "are entrepreneurs whose financial success or failure
depends on their ability to keep the costs below revenues,"
their income is almost entirely dependent on the number of
stops which the Company assigns them to make, and the
costs of operating their own trucks are in substantial
measure dependent upon the distance the Company
assigns them to drive. Their rate of compensation is lower
than they previously received, and they are assigned more
home deliveries, over longer distances. They do not have
regular routes, nor a particular geographical area to cover.
There is no commodity which they sell at a profit. They are
simply drivers and helpers, generally doing the delivery
work themselves. They are compensated at the company-
determined rate of 60 percent of the per-stop charges which
Penney pays for the home deliveries. (Owner-operators
Michael Kombol and Bradley Fritz are paid a flat rate,
plus mileage, for operating the shuttle truck between the
warehouse and the Penney stores.) The owner-operators
are not on the Company's payroll, and the only deduction
from their compensation is the cost of the fleet, public
liability, and property insurance which the Company takes
out on the trucks. (The Company itself pays for insurance
on the merchandise which is being delivered.) The owner-
operators pay for all cost of operating their trucks, and they
are liable for merchandise loss or damage resulting from
their fault.
Three of the owner-operator, driver-helper teams who
signed the truckman's agreements as "partners" (Donald
Flowers and Sylvester Kleinschmidt, John Holleran and
Lester Gruenewald, James Potts and LeRoy Glazebrook)
had each formed a corporation which holds the title to the
trucks they lease to the Company for its exclusive use. Two
"partnerships" (Kombol and Fritz who drive the shuttle
truck, and Harry Drozd and Ronald Hale) purchased
trucks in their individual names. The remaining owner-
operator (Lloyd Reid) was unable otherwise to finance one
of the former Compton trucks, so the Holleran-Gruene-
wald team purchased one for him, to be paid out at $25 a
working day. In February, several weeks after they became
owner-operators, Holleran and Gruenewald purchased a
third truck. (A copy of its title was attached to their
previously signed lease agreement.) This older (1969) truck
is used by the Company as an extra truck, with either
Holleran or Gruenewald doing the driving. (Inasmuch as
this is an extra truck, the Company has permitted
Gruenewald to drive it for Am-Del-Co on several occa-
sions, while Holleran was driving the newer truck for
Penney deliveries.) The Company did not help finance the
purchase of any of the trucks, except for an owner-operator
using his $500 advance for that purpose. (The truckman's
agreemnent provides that the owner-operator agrees to post
a $500 cash performance bond. Instead, the Company
advanced to the owner-operators the amount of S500, which
was taken out of their compensation at $150 a month.) The
Kombol-Fritz partnership has additional business interests,
operating a warehouse and hauling service, but one or both
of the partners are present daily to operate the shuttle
truck.
Under the truckman's agreement, the owner-operator
hires, directs, and compensates any helper he may have to
assist him in making the deliveries. This helper is not an
employee of the Company, and there is no requirement
that the Company give its approval for his hiring. Several
of the owner-operators have little occasion to hire a helper,
inasmuch as the Company signed up both the driver and
the helper as owner-operator partners. However, Reid, who
signed as an individual owner-operator, employs a helper;
owner-operators Holleran and Gruenewald employ helpers
when both owner-operators are driving (putting in service
both the new and the old trucks); and owner-operators
Kombol and Fritz need a helper when only one of them is
manning the shuttle truck.
3. Concluding findings
The Company contends that it employs only clerical and
management people and denies the General Counsel's
contention that these owner-operators are its employees. It
contends that they are independent contractors and that, in
its dealings with them, there is only "an arm's-length
transaction between businessmen."
It is true that the owner-operators are not on the
company payroll; their sole income is 60 percent of the
delivery charges; they own or finance the delivery
equipment and pay the operating and maintenance
expenses; and each day after the Company decides how
many home deliveries they are to make and in what areas,
the owner-operators decide the order of deliveries. How-
ever, as found above, the Company retained the right to
control the manner in which the owner-operators do the
work. The Company, in effect, is paid a gross of 40 percent
of the revenue to assume complete responsibility for
Penney's deliveries and to provide sufficient supervision
over the owner-operators to assure a prompt, efficient, and
satisfactory delivery service. The owner-operators must
provide the daily delivery service or be replaced. They
must make the deliveries on the day scheduled. They are
not permitted to reject assigned deliveries, or to use the
leased trucks for any other purpose (except for one old
extra truck). They are lower paid deliverymen, who are
assigned more stops to make and longer distances to travel.
Contrary to the Company's contention that they are
"entrepreneurs whose financial success or failure depends
on their ability to keep the costs below revenues," their
income is limited by the number of stops the Company
assigns them each day. They have no regular routes (except
for the one shuttle run). Thus, there is no way through
ability, resourcefulness, or entrepreneurial skill that they
293
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
can increase their income-other than limiting their truck
expense or, if they use a helper, to reduce his compensa-
tion. The helper, when used, is not a company employee,
but is hired and paid on the owner-operator's own behalf,
without the participation or approval of the Company. In
such situations, where the owner-operator is otherwise
found to be an employee, his hiring of a helper on his own
behalf does not change that status (and the helpers are
excluded from the bargaining unit). For example, in The
Beacon Journal Publishing Company, 188 NLRB 218, 220
(1971), the Board held:
Thus we are not persuaded by and do not regard as
controlling the facts that the routemen provide their
own equipment, that the Employer does not place
motor routemen on its payroll, or grant them employee
fringe benefits, or make the usual payroll deductions
for them, that the motor routemen within certain
limitations set their own working hours, or arrange for
substitutes to work in their absence, or for that matter
that the motor routemen hire, fire, and set the rates to
pay for their helpers. [Citing San Antonio Light Division,
167 NLRB 689 (1967).]
Accord: Mister Softee of Indiana, Inc. and Curb Service of
Indianapolis, Inc., 162 NLRB 354, 356 (1966); Pepsi-Cola
Bottling Company of Michigan, Grand Rapids Division, 156
NLRB 80, 83 (1965).
In deciding the status of the owner-operators, I take into
consideration not only the above-discussed control provi-
sion in the first paragraph of the truckman's agreement
(providing that the owner-operator "will determine the
method, means and manner of performance"), but also
such conclusionary language in the same paragraph as
"The parties intend to create by this agreement the
relationship of an independent contractor and not an
employer-employee relationship." After weighing all the
facts of the case, including the Company's advertising of its
services with a guarantee of "No unions," I find that the
method-means-and-manner and "independent contractor"
provisions in the company-drafted truckman's agreement
are not controlling. I find instead that their purpose relates
to the Company's "No unions" guarantee, not to determin-
ing the day-to-day control over the delivery service.
On the other hand, the question is not whether this
owner-operator arrangement is being used to undercut the
deliverymen's union conditions or to eliminate the Union.
(There is no allegation here, as in the above cited Am-Del-
Co case, 225 NLRB 698, of an illegal attempt by firms
acting as alter egos to convert employees to independent
contractor status as part of an attempt to eliminate the
Union.) Nor is there a question of whether the provisions
in the truckman's agreement are one-sided, or whether the
agreement was imposed on the Am-Del-Co deliverymen on
a "take it or leave it basis," as argued by the General
Counsel. As held in Ace Doran Hauling & Rigging Co., 214
NLRB 798, 800 (1974), it is not the Board's proper role to
decide the "equities" of the respective positions. The
question merely involves the application of the common
law agency tests to determine whether the actual relation-
ship between the Company and the owner-operators is one
of employer-employee or independent contractors.
After weighing the total factual context of the case,
including particularly the Company's right of control over
the manner and means by which the work is done, and the
meager opportunity for the owner-operators to increase
their income through ability, resourcefulness, or entrepre-
neurial skill, I find that the owner-operators are employees
within the meaning of the Act.
C. Refiusal to Bargain
1. Successor
J. C. Penney Company was the principal customer of
Compton Service until September 2, 1975, when Compton
Service's alter ego, Am-Del-Co, began making Penney's
home deliveries. From that date through January 13,
Penney was Am-Del-Co's principal customer. On January
14, the Company began making Penney's home deliveries,
employing nine owner-operators (Drozd, Flowers, Glaze-
brook, Gruenewald, Hale, Holleran, Kleinschmidt, Potts,
and Reid). All nine of them had been in the Union's driver-
helper bargaining unit at Compton Service (where, under
successive agreements, the Union had represented that unit
for about 9 years) and/or had worked for Am-Del-Co,
where they performed the same unit work. (On January 16,
the Company employed owner-operators Fritz and Kom-
bol to operate the shuttle truck. They had previously done
some driving for Am-Del-Co.)
The Company contends in its brief that it is not a
successor to Compton Service or Am-Del-Co because the
work is not "in all respects the same" and the operations
are not "identical." It is true that the Company's nine
home deliverymen work only for Penney, whereas both
Compton Service and Am-Del-Co made some home
deliveries for other firms. However, it is undisputed (as
testified by General Counsel witness William Keaton and
company witness Gruenewald) that previously, about 95
percent of the deliveries had been for Penney. Moreover,
the Company hauls the same merchandise from the same
warehouse, in the same manner, using virtually the same
equipment. (The dispatcher has been replaced with an
"account manager," who assigns the deliveries and over-
sees the work, as previously discussed.)
In agreement with the General Counsel, I find that there
has been no substantial change in the employing industry
and that the Company became the successor of Compton
Service and its alter ego, Am-Del-Co, on January 14.
N.LR.B. v. The William J. Burns International Detective
Agency, Inc., 406 U.S. 272 (1972); Boston-Needham Indus-
trial Cleaning Co., Inc., 216 NLRB 26, 27 (1975), enfd. 526
F.2d 74 (C.A. 1, 1975).
2. Majority status
There is no dispute that the Union represented a
majority of the furniture and appliance truckdrivers and
helpers during the years in which they were covered by
collective-bargaining agreements between the Union and
Compton Service.
In the summer of 1975, after the drivers and helpers were
required to sign lease agreements with Am-Del-Co (Comp-
ton Service's alter ego) in order to continue hauling for
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MERCHANTS HOME DELIVERY SERVICE
Penney, the Union met with Am-Del-Co owner-operators.
As Union Business Representative Ron McDermott
credibly testified, the Union explained to them that it did
not desire to represent owner-operators as such, but that it
considered the Am-Del-Co owner-operators still to be
employees, whom the Union would represent if they so
desired. By unanimous vote, these owner-operators ex-
pressed their interest in having the Union continue to
represent them. The Union endeavored to do so, but
Penney canceled the Am-Del-Co delivery service contract
before the Board found, in the above-mentioned Am-Del-
Co case, 225 NLRB 698 (1976), that Compton Service and
Am-Del-Co violated the Act by attempting to convert
employees to independent contractor status as part of an
attempt to eliminate the Union.
On January 21 (a week after the Company became the
successor of Compton Service and Am-Del-Co, as found
above), the Union requested recognition. As admitted in
the Company's answer, the Union claimed to represent a
majority of the Company "employees delivering furniture
of the J. C. Penney Company." The Company did not deny
the Union's majority status but on January 28, as admitted
in its answer, declined the request, stating that the claim
and request were in error "because the company has no
employees delivering furniture for the J. C. Penney
Company."
In its brief, the Company contends that "the General
Counsel failed to prove that a majority of the individuals
now performing the Penney's hauling" have designated the
Union as their representative. However, as the General
Counsel points out, there is a presumption of majority
status where the predecessor's employees were covered by
a union agreement and there is a successorship situation
such as we have here. Barrington Plaza and Tragniew, Inc.,
185 NLRB 962, 963 (1970), enforcement denied on other
grounds 470 F.2d 669 (C.A. 9, 1972). The 11 owner-
operators who were employed by the Company on January
21 (when the Union made the bargaining request) were
performing the same bargaining unit work which was
covered by the collective-bargaining agreement between
Compton Service and the Union, and which was performed
by deliverymen working for Compton Service and/or its
alter ego, Am-Del-Co. In the absence of any company
claim that its refusal to bargain was based on a good-faith
doubt of the Union's majority status, "it was encumbent
upon the Respondent to go forward with the evidence to
establish actual loss of status, if it wished to rebut the
presumption." Terrell Machine Company, 173 NLRB 1480,
1481 (1969), enfd. 427 F.2d 1088 (C.A. 4, 1970), cert.
denied 398 U.S. 929 (1970). The Company failed to do so.
In fact, 4 of the II owner-operators (Drozd, Hale,
Holleran, and Reid) were dues-paying active union
members, and four others (Flowers, Glazebrook, Gruene-
wald, and Kleinschmidt) were inactive members on
honorary status. (These latter four had been members in
good standing before they paid 50 cents for withdrawal
cards, entitling them to become active members again by
resuming the payment of dues. Although ordinarily such
2 In the event no exceptions are filed as provided by Sec. 102.46 of the
Rules and Regulations of the National Labor Relations Board, the findings,
conclusions, and recommended Order herein shall, as provided in Sec.
withdrawal cards are given to members leaving the trade or
craft, the Union permitted these owner-operators to remain
on inactive status while the independent contractor issue is
being litigated.) The other three owner-operators had not
joined the Union. However, none of these three (or any of
the other eight, for that matter) has indicated that he did
not desire union representation in the event the Union
prevailed in its contention that they were in fact employees,
not independent contractors. As often held, "There is no
necessary correlation between membership and the num-
ber of union supporters since no one could know how
many employees who favor union bargaining do not
become or remain members thereof." Terrell Machine Co.,
supra at 1481.
Accordingly, I find that the Company, as the successor
of Compton Service and Am-Del-Co, unlawfully refused
on January 28 to recognize and bargain with the Union
which represented a majority of its employees in an
appropriate unit of all owner-operators delivering furniture
and appliances for J. C. Penney Company in St. Louis,
Missouri, excluding all other employees and supervisors as
defined in the Act, thereby violating Section 8 (aX5) and (1)
of the Act.
CONCLUSIONS OF LAW
1. The Company's owner-operators delivering furniture
and appliances for J. C. Penney Company in St. Louis,
Missouri, are employees within the meaning of the Act.
2. By refusing on and since January 28, 1976, to
recognize and bargain with the Union as the majority
representative of its employees in an appropriate unit of all
owner-operators delivering furniture and appliance for J.
C. Penney Company in St. Louis, Missouri, the Company
engaged in unfair labor practices affecting commerce
within the meaning of Sections 8(aX5) and (1) and 2(6) and
(7) of the Act.
REMEDY
Having found that the Respondent has engaged in
certain unfair labor practices, I find it necessary to order
the Respondent to cease and desist therefrom and to take
certain affirmative action designed to effectuate the
policies of the Act. In the absence of an office or other
company facility where the bargaining unit employees
report for duty, I find it necessary that the Respondent
mail the attached notice to the employees.
Upon the foregoing findings of fact and conclusions of
law, upon the entire record, and pursuant to Section 10(c)
of the Act, I hereby issue the following recommended:
ORDER 2
The Respondent, Merchants Home Delivery Service,
Incorporated, St. Louis, Missouri, its officers, agents,
successors, and assigns, shall:
1. Cease and desist from:
102.48 of the Rules and Regulations, be adopted by the Board and become
its findings, conclusions, and Order, and all objections thereto shall be
deemed waived for all purposes.
295
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
(a) Unlawfully refusing to bargain with Teamsters Local
Union No. 688, affiliated with International Brotherhood
of Teamsters, Chauffeurs, Warehousemen and Helpers of
America, as the exclusive representative of its employees in
the following appropriate unit:
All of the Employer's owner-operators delivering
furniture and appliances for J. C. Penney Company in
St. Louis, Missouri, excluding all other employees and
supervisors as defined in the Act.
(b) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of their
rights under Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act:
(a) Upon request, bargain in good faith with the Union
as the exclusive representative of the employees in the
above-described appropriate unit and embody in a signed
agreement any understanding reached.
(b) Mail a copy of the attached notice marked "Appen-
dix,"3 after being duly signed by Respondent's authorized
representative, to each employee in the appropriate unit in
St. Louis, Missouri, immediately upon receipt of the copies
from the Regional Director for Region 14.
3 In the event this Order is enforced by a Judgment of the United States
Court of Appeals, the words in the notice reading "Posted by Order of the
National Labor Relations Board" shall read "Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an order of the
National Labor Relations Board."
(c) Notify the Regional Director, in writing, within 20
days from the date of this Order, what steps the Respon-
dent has taken to comply herewith.
APPENDIX
NOTICE To EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
WE WILL bargain upon request with Teamsters Local
688 and put in writing and sign any bargaining
agreement we reach covering these employees:
All owner-operators delivering furniture and appliances
for J. C. Penney Company in St. Louis, Missouri,
excluding all other employees and supervisors as
defined in the Act.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce employees in the exercise of
their rights under Section 7 of the Act.
MERCHANTS HOME
DELIVERY SERVICE,
INCORPORATED
296