Servette, Inc.

National Labor Relations Board - Board Decisions

Sep 14, 1961

133 N.L.R.B. 132 (N.L.R.B. 1961)

132 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tives of their own choosing , and to engage in other concerted activities for the pur-
pose of collective bargaining or other mutual aid or protection , or to refrain from
any or all such activities , except to the extent that such right may be affected by an
agreement requiring membership in a labor organization as a condition of employ-
ment as authorized in Section 8(a)(3) of the Act, as modified by the Labor-
Management Reporting and Disclosure Act of 1959.
Upon the basis of the foregoing findings of fact , and upon the entire record in
the case, I make the following:
CONCLUSIONS OF LAW
1. Local 177, International Brotherhood of Electrical Workers, AFL-CIO, is a
labor organization within the meaning of Section 2(5) of the Act, existing in whole
or part for the purpose of dealing with employers concerning grievances , labor dis-
putes, wages , rates of pay , hours of employment , or conditions of work.
2. By interrogating , threatening with discharge , and imposing upon its employees
as a condition of employment that they refrain from forming, joining , or assisting a
labor organization ,, bargaining collectively through representatives of their own
choosing , and engaging in other concerted activities for the purpose of collective
bargaining or other mutual aid or protection , the Respondent has and is interfering
with, restraining , and coercing its employees in the exercise of the rights guaranteed
in Section 7 of the Act, and thereby has engaged in and is engaging in unfair labor
practices within the meaning of Section 8(a) (1) of the Act.
3. By discriminating in regard to the hire and tenure of employment of Floyd
R Price, Robert L. Barkheimer , Eldridge Lee McCormick, Clint W. Parvin, and
Jessie F. Withrow, employees, to discourage membership in a labor organization,
the Respondent has engaged in and is engaging in unfair labor practices within the
meaning of Section 8(a)(3) of the Act, as modified by the Labor-Management Re-
porting and Disclosure Act of 1959.
4. The aforesaid unfair labor practices are unfair labor practices affecting com-
merce within the meaning of Section 2(6) and (7) of the Act.
[Recommendations omitted from publication.]
Servette, Inc. and Wholesale Delivery Drivers & Salesmen Union,
Local No. 848, International Brotherhood of Teamsters , Chauf-
feurs, Warehousemen & Helpers of America, Ind. Case No.
21-CA-3869. September 14, 1961
DECISION AND ORDER
On October 4, 1960, Trial Examiner David F. Doyle issued his
Intermediate Report in the above-entitled proceeding, finding that the
Respondent had not engaged in the unfair labor practices alleged in
the complaint and recommending that the complaint be dismissed in
its entirety, as set forth in the Intermediate Report attached hereto.
Thereafter, the General Counsel filed exceptions to the Intermediate
Report together with a supporting brief, and' the Respondent also filed
a brief.
The Board has reviewed the rulings made by the Trial Examiner at
the hearing and finds that no prejudicial error was committed. The
rulings are hereby affirmed. The Board has considered the Inter-
mediate Report, the exceptions and briefs, and the entire record in the
case, and, as it finds merit in some of the General Counsel's excep-
133 NLRB No. 20.
SERVETTE, INC. 133
tions, adopts the findings, conclusions, and recommendations of the
Trial Examiner, only to the extent consistent herewith.
The Respondent is engaged in the wholesale distribution of toys
and novelties in and aroundLos Angeles, California. In addition to
a plant in Los Angeles, it has branch operations in Santa Ana, San
Bernardino, and San Diego, California. All the employees involved
herein work out of the Los Angeles plant.
On January 13, 1959, the Respondent voluntarily recognized the
Union as the representative of the drivers at its Los Angeles operation,
and executed a contract with it effective until January 3, 1960, and
containing a 60-day automatic renewal clause. On October 26, 1959,
the Union sent the Respondent a notice of contract termination, and,
on November 18, 1959, submitted to the Respondent detailed pro-
posals for a new contract.
Ellis, the Respondent's president, according to his own testimony,
had notified the drivers sometime in October that "we were going on
franchise after the first of the year." On November 19, 1959, the Re-
spondent hired Harry Dictor with the understanding that, after the
first of the year, the Respondent would adopt a franchise plan and he
would be one of the franchise operators.' Also in November, Ellis met
Finley, a business agent of the Union, on the Respondent's parking lot,
and again stated that Respondent would adopt a franchise plan after
the first of the year, to which Finley made no reply.
On December 3, 1959, Ellis met with Finley and another union busi-
ness agent, Williams. They asked Ellis to negotiate a new agreement.
Ellis refused on the ground that the Union had not served timely
notice of intention to terminate the old agreement,2 and that it had,
therefore, been automatically renewed. He then stated that he was
going to adopt a franchise plan, which would make the drivers inde-
pendent contractors, and that he would negotiate only for those driv-
ers who rejected this plan. Ellis also told the union representatives
that, while details of the new plan had not yet been worked out, the
drivers could expect to earn a minimum of $135 a week, an increase of
$40 a week over the existing minimum, to which Finley and Williams
replied that this would be a good thing for the men. When Ellis
further stated that he planned to hold a dinner-meeting of drivers and
their wives at which the new a'r'rangement would be explained, the
union agents voiced no objection. Williams, in fact, said the Respond-
ent had a right to make such a change, if it wished, and offered to ob-
tain for Ellis copies of franchise agreements used by other companies.
1 Dictor was terminated when he and the Respondent failed to reach agreement regard-
ing the route to be assigned to him. The complaint alleges that Dictor was discriminatorily
discharged in violation of Section 8(a) (3) and ( 1) of the Act . The General Counsel ex-
cepted to the Trial Examiner 's recommended dismissal of this allegation As we agree
with the Trial Examiner that Dictor was terminated because he refused to accept the
route assigned to him by the Respondent , we shall adopt this recommendation.
s Ellis was mistaken as the Union had given timely notice.
134 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
At this conference, Ellis handed the union representatives a letter
addressed to the Union, dated December 2, 1959, to the effect that the
Respondent considered the contract automatically renewed because of
the Union's failure to serve a 60-day termination notice, and that it was
willing to negotiate for a new contract only upon the signed under-
standing that, if no agreeent were reached, the old contract would be
renewed for another year. Finley and Williams refused to sign this
letter, declaring that the Union had sent a timely notice of termination,
and that they would check with Bowers, the Union's secretary-
treasurer, about it.
On the following day, December 4, Bowers telephoned Ellis and
told him that a timely notice of termination had been sent to the Re-
spondent. Ellis, after checking his files and finding that this was so,
told Bowers that he was willing to negotiate for the drivers who con-
tinued as employees, but not for those who accepted the franchise be-
cause they would become independent businessmen. Bowers replied,
as Ellis testified, that Bowers "would not negotiate for independent
contractors; he would negotiate only for all the men on an employee
status." 9
During the latter part of December, Ellis and Williams agreed on
a date for the dinner-meeting which would not conflict with a sched-
uled union meeting. At the dinner-meeting, held on Friday evening,
January 8, 1960, 5 days after expiration of the contract, Ellis ex-
plained the franchise plan, distributed copies of a franchise contract,
and announced that he wanted the drivers to give him an answer on
Monday morning. He also stated that if the drivers wanted to join
a union after accepting the franchise, the logical one would be the
Retail Clerks because it represented employees at the stores they would
service.
On Monday morning, one of the Respondent's supervisors, on Ellis'
instructions, interrogated the drivers about the franchise : four ac-
cepted, four refused, and three remained undecided.
On January 12, at a union meeting attended by 10 of the Respond-
ent's 14 drivers, Bowers and other union officials urged rejection of
the franchise plan, termed it a "yellow dog" contract, and said the
Union would not represent those who accepted it. The drivers voted
unanimously that Union "be authorized to continue negotiations with
Servette, Inc., as employees." The following day, Bowers telephoned
Ellis and told him the results of this meeting. Thereupon Ellis called
a meeting of the drivers, and told them he was willing to add, to the
franchise agreements, guarantees of a minimum of $100 a week during
the first year and of payment by the Respondent of certain expenses.
8 The complaint alleges that the Respondent ". . . since on or about January 8,
1960 . . (refused) . . . to bargain with the Union about the change to a franchise
system." While the events occurring before that date are not charged as violations of
the Act, they are set forth as relevant background evidence.
SERVETTE, INC. 135
He circulated a document indicating acceptance of the franchise,
which seven men signed. Ellis also told the drivers to feel free to
come to his office individually to discuss any questions they might
have.
On January 15, 1960, the Respondent called another meeting of
drivers and presented a document he had prepared for their signature,
which revoked "any authority which may previously have been given
.. . to any person or organization to represent me . . . concerning
my relationship with Servette, Inc." No drivers signed it that 'day
because the drivers were waiting for the new guarantees to be included
in the franchise contract; but, on January 21, when the new contract
had been drawn up, 7 drivers signed it and the revocation. The fran-
chise operation began on January 25, 1960.
In the meantime. on January 16 or 17, Bowers and Ellis had a
telephone conversation in which Ellis again stated that lie would
negotiate only for drivers who did not accept the franchise, and
Bowers again maintained that he would not negotiate "except for
everybody." The Union and the Respondent held two conferences on
January 27. At the first, in Ellis' office, Ellis declared that a ma-
jority of the drivers had signified that they did not want to belong
to the Union, that he, therefore, did not know whether he could negoti-
ate, but that he was willing to negotiate for those who had not accepted
the franchise. Bowers stated that "he would negotiate for everybody
or nobody." At the second conference, before the Central Labor
Council, Ellis reiterated his willingness to negotiate for the drivers
who rejected the franchise, and Bowers repeated that "he would only
negotiate for the entire organization or none." Bowers also threatened
a strike unless negotiations began in a few days. When no bargaining
session was arranged, a strike was called on February 1, and was still
going on at the time of the hearing, May 24, 1960.
I. THE REFUSAL TO BARGAIN
A. The appropriate unit
The Respondent contends that it had no obligation to bargain with
the Union because the contract covered only the Los Angeles drivers,
making the unit inappropriate for failure to include drivers at the
three branch operations. The Trial Examiner, who found that the
Respondent's conduct did not constitute an unlawful refusal to bar-
gain, did not discuss the unit issue. We find no merit in the Respond-
ent's unit contentions, which it raised for the first time at the hearing.
The record shows that all the drivers at the three branch operations
had been operating under a franchise arrangement, at the time of the
hearing, for from 8 months to 5 years, under terms and conditions
differing considerably from those as Los Angeles. The drivers in
the branch operations, who cover different geographical areas from
136 DECISIONS OF NATIONAL LABOR • RELATIONS BOARD
those of the drivers here involved; own their own trucks, garage them
in their own communities, and purchase merchandise from the Re-
spondent for resale to customers on their routes. The Los Angeles
drivers, before the change to a franchise operation, did not own the
trucks they drove, left them overnight in the Respondent's garage,
and were compensated on a salary-plus-commission basis. Because of
these differences in their employment interests, and in view of the
bargaining history, we find that the Los' Angeles drivers constitute an
appropriate unit.
B. Representation of a majority in the appropriate unit
The Respondent contends that the Union did not represent a major-
ity of drivers in an appropriate unit. The Trial Examiner made no
finding on this matter. We presume, in the absence of evidence
to the contrary, that the Respondent's recognition of the Union was
lawful, and, therefore, that the Union was the majority representative
when recognized and during the term of the contract.' We note that
the Respondent's letter of December 2, 1959, concerning automatic re-
newal of the contract, made no mention of lack of majority. More-
over, as the Trial Examiner found, the contract unit contained 14
drivers. At the hearing, the Union presented authorization cards of
eight drivers dated on or before November 3, 1959, and three dated
November 30, 1959. At a union meeting on January 12, 1960, all 10
drivers present voted to authorize the Union to continue negotiations
with the Respondent on their behalf. We find, therefore, that, at all
relevant times, the Union was the majority representative of the Los
Angeles drivers in an appropriate unit.
C. Refusal to bargain
The Trial Examiner found that there was no unlawful failure or
refusal to bargain by the Respondent on the following grounds :
1. He found that the Union had waived its right to bargain about
the franchise plan by acquiescence in the Respondent's decision. He
relied for this finding upon (a) the business agent's failure to reply
when Ellis mentioned the franchise plan on the parking lot; (b) the
statement of the two business agents that the new plan would be "a
good thing for the men" when Ellis said, at the December 3 confer-
ence, that their earnings would be increased; and (c) the Union's
failure to object when told that the Respondent was going to hold a
dinner-meeting at which to explain the franchise plan. We do not
agree with this finding. While the Board has long recognized that a
union can waive its right to bargain over certain matters, such waiver
* Yale Upholstering Company, Inc , 127 NLRB 440; Shamrock Dairy, Inc , et al., 124
NLRB 494; 119 NLRB 998.
SERVETTE, INC. 137
must be clear and unequivocal, and is not lightly to be inferred .5 In
the present case, there were announcements by the Respondent about
,the plan, but no negotiations. The remark made on the parking lot
was too casual to be significant. Nor do we find acquiescence in the
fact that the two business agents indicated approval of the plan at the
December 3 conference as they also noted that the matter would be
submitted to Bowers, who was in charge of the Union's negotiations
and had signed the original contract, and Bowers promptly, the day
after the conference, expressed disapproval of the plan.6 We find,
therefore, that the Union did not clearly and unequivocally indicate
a waiver of its right to bargain about the franchise plan.
2. We likewise do not agree with the Trial Examiner that the
Union adopted such an adamant attitude that it precluded any possi-
bility of bargaining over the plan. In support of this finding, the
Trial Examiner relied on (a) the Union's refusal to accept the plan,
(b) its requests that the Respondent negotiate a new agreement for
all the drivers in the unit, (c) its rejection of Ellis' demand that the
Union represent a unit only of drivers who refused the franchise, and
(d) Bowers' remarks to the drivers that the franchise was a "yellow
dog" contract and the Union would issue withdrawal cards to those
who signed it.
The first three factors, however, show only that the Union took a
consistent bargaining position that it represented all the employees in
the unit, which, under the circumstances, it had a right to do. As a
matter of fact, this conduct, together with the Union's timely service
on the Respondent of a notice of contract termination and of written
proposals for a new agreement, show that the Union was seeking to
bargain for a new contract in general, even though the record does not
show a specific demand by the Union to negotiate over the franchise
plan. Finally, the statements by Bowers to the drivers, made away
from the plant and not in the Respondent's presence, are unrelated
to the dealings between the Respondent and the Union. We find,
therefore, that the Union's position was not adamant, nor such as to
preclude bargaining about the franchise plan?
3. Nor can the requirement to bargain be made to turn on whether
the franchise agreement was intended to, or did, change the status of
GBeacon Piece Dyeing and Finishing Co ., Inc, 121 NLRB 953, 956. See also The
Press Company , Incorporated, 121 NLRB 976; Gulf Atlantic Warehouse Co, 129 NLRB 42
6 See Borg-Warner Controls , Borg-Warner Corporation , 128 NLRB 1035, 1051, where
the Board rejected the contention that a union waived its right to bargain over a change
in holidays because one member of a five-man negotiating committee told the employer he
thought it was a good idea
4 The Trial Examiner relies on Times Publishing Company, et at , 72 NLRB 676, which
is clearly distinguishable . In that case, issued before the Act was amended in 1947 to
make it an unfair labor practice for a union to refuse to bargain, the Board stated that
a union's refusal to bargain in good faith may remove the possibility of negotiation
and thus preclude the existence of a situation in which the employer' s own good faith can
be tested ." The Union in the instant case was not refusing, but was seeking , to bargain.
138 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the drivers to independent contractors .8 It is undisputed that the Re-
spondent has consistently refused to negotiate with the Union as the
representative of the drivers who signed franchise contracts on the
ground that they thereby became independent contractors, and the
Trial Examiner found that the franchise contract did create an inde-
pendent contractor relationship. However, as we find hereinafter,
the status of the drivers was at all times that of employees. As the
Board has frequently held, whether the drivers were converted by the
franchise contract from employees to independent contractors depends
on the control which was retained over their operations. Thus, if the
Respondent reserved control only as to the result sought, the relation-
ship became that of independent contractor, but if it retained control
over the manner and means by which the drivers were to accomplish
this result, the employment relationship continued.9 To determine
that question, it is necessary to examine the franchise contract, which
provides that the driver purchases his route and pays 41/2 times its
weekly net for it, owns his truck, furnishes his display racks, and
determines his hours of work; when merchandise remains unsold, the
driver suffers the loss; a decision to hire a helper is solely that of the
driver, as are the helper's compensation and hours of work; and the
Respondent pays no social security taxes for these drivers, nor deducts
income taxes from the payment due them.
On the other hand, the franchise contract also provides that the
Respondent draws up the routes, assigning them to the various driv-
ers but retaining the right to terminate the contract or to cut the
size of a route at any time by paying the driver a nominall sum; sets
the prices at which merchandise is sold to the driver and at which
he can resell it; guarantees the driver a net profit of $100 a week
during the first year of the franchise; retains the right to approve
the body style and condition of the trucks and of any repair in excess
of $50; furnishes sales books and forms; paints and letters the driv-
ers' trucks; pays for wholesale delivery licenses for the drivers; and
obtains authorization from chain stores for display by the drivers of
new items in these stores. The contract also requires the driver to
file daily sales reports with the Respondent. While it is the driver's
responsibility to provide a substitute at his own expense when he is
sick or on vacation, the Respondent may replace that substitute. The
driver may carry only the Respondent's merchandise and sell only
to retail stores. In case of a shortage of goods, the Respondent
allocates its merchandise among the drivers as it sees fit. The driver
must obtain the Respondent's approval before discontinuing any
product or customer, and he cannot assign the franchise without the
Respondent's consent.
8 Shamrock Dairy, Inc, et al , supra.
O Lindsay Newspapers , Inc., 130 NLRB 680; Morris Steinberg and Julian Leslie Stein-
berg, a Louisiana Partnership, d/b/a Steinberg & Company, 78 NLRB 211, 220.
SERVETTE, INC. 139
We are convinced, from all the evidence, that the Respondent has
reserved to itself the right to control the manner and means by which
the drivers are to perform their work, and has left little room for
the driver to make decisions which will govern his profit and loss.io
Accordingly, we find that the franchise contract failed to convert the
drivers from employees to independent contractors.
From all the foregoing we conclude that the Respondent was under
a continuing duty to bargain with the Union for all the drivers in
the unit, including those who signed the franchise contracts as well
as those who refused.ll The Respondent admittedly did not do so.
4. Finally, we do not agree with the Trial Examiner's finding that
the Respondent did not fail or refuse to bargain in violation of the
Act because (a) it had economic justification for adopting a franchise
operation, or (b) it waited until the contract expired before putting
the change into effect. As to (a), the Union, as the established bar-
gaining representative, was entitled to notice and an opportunity to
bargain over the Respondent's proposed change in working condi-
tions, even if such change was motivated by economic necessity.12
And as to (b), the expiration of the contract did not eliminate the
Respondent's duty to bargain with the contractual representative of
the appropriate unit,13 especially as the Union retained its majority
beyond the expiration date of the contract.
It is clear that the Respondent's decision to change its method of
operation was made before notification thereof to the Union. An
employer does not meet its bargaining obligation by announcing to
the bargaining representative of its employees a final decision to
change working conditions. 14 Reasonable notice of the change and
an opportunity to bargain are also required .15 Accordingly, we find,
under all the circumstances of this case, that the Respondent violated
Section 8(a) (5) and (1) of the Act. -
10 Smith's Van & Transport Company, Inc , and Smith's Transfer and Storage Company,
Inc, 126 NLRB 1059; see also Lindsay Newspapers , Inc., supra ; Squirt-Nesbitt Bottling
Corp. , 130 NLRB 24; Buffalo Courier -Empress, Inc , 129 NLRB 932.
"Although the General Counsel excepted to the Trial Examiner 's recommended dis-
missal of the allegation that the Respondent refused to bargain for those drivers who
did not accept the franchise , there is evidence that the Respondent at all times offered to
bargain for those drivers We shall, therefore , dismiss this allegation of the complaint
13 Smith's Van & Transport Company, Inc ., and Smith's Transfer and Storage Company,
Inc, supra ; Shamrock Dairy, Inc, et at, 124 NLRB 494 ; 119 NLRB 998
18 Yale Upholstering Company , Inc., 127 NLRB 440
14 Cascade Employers Association , Inc., 126 NLRB 1014, 1028 ; Langlade Veneer Prod-
ucts Corporation , 118 NLRB 985, 988.
15 The Board has held that an employer is obligated to bargain with its employees ' repre-
sentative concerning a change from an employment to an independent contractor relation-
ship Shamrock Dairy, Inc, et al. , 124 NLRB 494 ; Squirt-Nesbitt Bottling Corp , 130
NLRB 24; Smith's Van & Transport Company, Inc , and Smith's Transfer and Storage
Company, Inc, supra In NLRB . v. Brown-Dunkin Company, Inc , 287 F . 2d 17, 20
(C A. 10), the court stated that " . . reasonable notice and a chance to bargain must be
afforded before an employer enters into a contract affecting the hire or tenure of its
Union workers ' employment."
140 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
II. INTERFERENCE, RESTRAINT , AND COERCION
The complaint alleges that the Respondent interfered with, re-
strained, and coerced its employees in violation of Section 8(a) (1) of
the Act. The Trial Examiner found the acts involved to be "mere
components of the whole controversy . . . merged in the broader issue
of the case," namely, the allegation of refusal to bargain. Having
recommended dismissal of this allegation, he likewise recommended
dismissal of the 8 (a) (1) allegations. We have found, however, that
the Respondent did unlawfully refuse to bargain with the Union.
Moreover, the Respondent's conduct here in issue, includes circulating
among the drivers a revocation of the Union's authority, soliciting
their signatures thereto and obtaining signatures of seven drivers, as
well as carrying on direct discussions with small groups of drivers in
an effort to persuade them to sign the franchise contract. We find
that the Respondent, by such conduct, sought to undermine the au-
thority of the designated bargaining representative, and thereby
interfered with, restrained, and coerced its employees in violation of
Section 8 (a) (1) of the Act.
The complaint charges that the Respondent further violated Sec-
tion 8 (a) (1) by Ellis' statement at the dinner-meeting that the logical
union for the drivers to join would be the Retail Clerks because it
represented employees of the stores which the drivers would service.
This statement was made in answer to a question from the floor. In
view of the Respondent's consistent position that it would not have to
negotiate with any union concerning the drivers who accepted the
franchise plan, we find that this was a noncoercive reply to a question
by the drivers, and not an attempt to switch their allegiance from one
union to another. Accordingly, as we find this statement protected
by Section 8(c) of the Act, we adopt the Trial Examiner's recom-
mended dismissal of this allegation.
III. REMEDY
We have found that the Respondent unilaterally adopted a fran-
chise plan for its drivers, that the franchise plan did not convert the
drivers from employees to independent contractors, and that the Re-
spondent failed and refused to bargain with the Union, the contractual
representative of its drivers, in violation of Section 8 (a) (5) and (1)
of the Act. We shall, therefore, order the Respondent, upon request,
to bargain collectively with the Union as the representative of its
employees in the unit found appropriate regarding wages, hours, and
working conditions, including a franchise plan. We shall also re-
quire that it abrogate the individual franchise contracts, and offer
those drivers who signed them immediate and full reinstatement to
their former or substantially equivalent positions, and make them
whole for any losses of pay which they may have suffered by reason
SERVETTE, INC. 141
of the Respondent's unilateral modification of their terms and con-
ditions of employment.16
We have also found that the Respondent, by circulating among the
drivers a revocation of the Union's authority and soliciting their
signatures thereto, and by its discussions with small groups of drivers
in an effort to persuade them to sign the individual franchise con-
tracts, interfered with, restrained, and coerced its employees in vio-
lation of Section 8 (a) (1) of the Act. We shall, therefore, order the
Respondent to cease and desist from such conduct.
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, Servette, Inc.,
Los Angeles, California, and its officers, agents, successors, and assigns,
shall :
1. Cease and desist from :
(a) Failing or refusing to bargain collectively with Wholesale
Delivery Drivers & Salesmen Union, Local No. 848, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers
of America, Ind., as the exclusive representative of all drivers em-
ployed by the Respondent at its Los Angeles, California, operation,
excluding all office clerical employees, guards, and supervisors as de-
fined in the Act, regarding wages, hours, and working conditions,
including^a franchise plan.
(b) Continuing or giving effect to any individual franchise con-
tracts executed with any of its drivers in the Los Angeles unit.
(c) Dealing individually with its drivers in derogation of their
bargaining representative, encouraging or soliciting them to revoke
their bargaining representative's authority to represent them for
purposes of collective bargaining, or, in any like or related manner,
interfering with, restraining, or coercing its employees in the exer-
cise of the right to self-organization, to form labor organizations,
to bargain collectively through representatives of their own choos-
ing, and to engage in any other concerted activities for the purpose
of collective bargaining or other mutual aid or protection, or to re-
frain from any and all such activities, except as authorized in Section
8 (a) (3) of the Act, as amended.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Bargain, upon request, with Wholesale Delivery Drivers &
Salesmen Union, Local No. 848, International Brotherhood of
16 Smith's Van & Transport Company, Inc ., and Smith 's Transfer and Storage Company,
Inc., supra . Cf. Squirt-Nesbitt Bottling Corp ., supra, where the idea of individual con-
tracts originated with the employees.
142 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Teamsters, Chauffeurs, Warehousemen and Helpers of America, Ind.,
as the exclusive representative of its drivers in the unit found appro-
priate regarding wages, hours, and working conditions, including a
franchise plan.
(b) Notify individually, and by the posting of the notice attached
hereto, all drivers with whom the Respondent has made individual
contracts that it will no longer offer, solicit, enter into, continue, or
enforce such contracts, but without prejudice to the assertion by the
drivers affected of any legal rights they may have acquired under such
contracts.
(c) Offer to all drivers with whom the Respondent has made in-
dividual contracts immediate and full reinstatement to their former
or substantially equivalent positions as drivers, without prejudice to
their seniority or other rights and privileges, and make each of them
whole for any loss of pay he may have suffered by reason of employ-
ment under individual contracts. In computing the amount of back-
pay to which the employees are entitled, the period from the date of
the Intermediate Report, October 4, 1960, to the date of the Order
herein, September 14, 1961, shall be excluded.
(d) Post at its place of business in Los Angeles, California, copies
of the notice attached hereto marked "Appendix." 17 Copies of said
notice, to be furnished by the Regional Director for the Twenty-first
Region, shall, after being duly signed by the Respondent's authorized
representative, be posted by the Respondent immediately upon receipt
thereof, and be maintained by it for 60 consecutive days thereafter, in
conspicuous places, including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by the Respond-
ent to insure that said notices are not altered, defaced, or covered by
any other material.
(e) Notify the Regional Director for the Twenty-first Region, in
writing, within 10 days from the date of this Order, what steps it has
taken to comply herewith.
The allegations of the complaint that the Respondent has violated
Section 8(a) (3) of the Act, and that it has violated Section 8(a) (1)
and (5) of the Act otherwise than as found above, are hereby
dismissed.
MEMBER RODGERS, dissenting :
The Trial Examiner's disposition of the case is both sound and
reasonable. I would therefore affirm the Intermediate Report.
MEMBER BROWN took no part in the consideration of the above
Decision and Order.
17 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals , Enforcing an Order."
SERVETTE, INC.
APPENDIX
NOTICE TO ALL EMPLOYEES
143
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, we hereby notify our employees that :
WE WILL bargain collectively, upon request, with Wholesale
Delivery Drivers & Salesmen Union, Local No. 848, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Help-
ers of America, Ind., as the exclusive representative of our drivers
regarding wages, hours, and working conditions, including a
franchise plan.
WE WILL no longer enter into, continue, or enforce any indi-
vidual contracts with our drivers.
WE WILL offer to all drivers with whom we have individual
contracts immediate and full reinstatement to their former or
substantially equivalent positions as drivers, without prejudice
to their seniority or other rights and privileges, and make each
whole for any loss of pay suffered by reason of employment under
individual contracts.
WE WILL NOT deal individually with drivers concerning their
terms and conditions of employment in derogation of their bar-
gaining representative.
WE WILL NOT encourage or solicit drivers to revoke the authority
of Wholesale Delivery Drivers & Salesmen Union, Local No. 848,
International Brotherhood of Teamsters, Chauffeurs, Warehouse-
men and Helpers of America, Ind., or any other labor organiza-
tion, to represent them for purposes of collective bargaining.
WE WILL NOT, in any like or related manner, interfere, with,
restrain, or coerce our employees in the exercise of the rights
guaranteed by Section 7 of the Act.
All our employees are free to become, remain, or refrain from be-
coming or remaining members of the above-named Union, or any other
labor organization, except to the extent that such right may be af-
fected by an agreement requiring membership in a labor organization
as a condition of employment, as authorized in Section 8(a) (3) of
the Act.
SERVETTE, INC.,
Employer.
Dated---------------- By-------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
144 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
INTERMEDIATE REPORT AND RECOMMENDED ORDER
STATEMENT OF THE CASE
This proceeding, with all parties represented, was tried before the duly designated
Trial 'Examiner in Los Angeles, California, on May 24 through 26, 1960 on complaint
of the General Counsel and answer of Servette, Inc., herein called the Company.
The issues litigated were whether or not the Company had violated Section 8(a)( I),
(3), and (5) of the Act by certain conduct more particularly described hereinafter.
Upon the entire record, and from my observation of the witnesses, I hereby make
the following:
FINDINGS AND CONCLUSIONS
1. THE BUSINESS OF THE COMPANY
The Company is a California corporation which is engaged in Los Angeles,
California, and in neighboring cities, in the wholesale distribution of specialty mer-
chandise. During the year 1959 in the course and conduct of its operations, the
Company purchased goods valued in excess of $50,000, which were shipped directly
to its Los Angeles place of business from points outside the State of California. It
is undisputed and I find that the Company is engaged in commerce within the mean-
ing of Section 2(6) and (7) of the Act and that the assertion of jurisdiction is
warranted.
H. THE LABOR ORGANIZATION INVOLVED
Wholesale Delivery Drivers & Salesmen Union , Local No. 848, International
Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Ind.,
herein called the Union, is and -at all times material hereto has been a labor organ-
ization within the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
The Issues
This controversy finds its source in the desire of the Company to change the
method by which it distributes its specialty merchandise in the Los Angeles area.
Prior to January 28, 1960, the Company had distributed its merchandise by means of
a staff of 14 employees called dnver-salesmen, who were represented by the Union.
In late 1959, management of the Company made plans to change their method of
distribution, to one in which the same driver-salesmen became independent contrac-
tors or franchisees of the Company. The change was to be effective upon expiration
of the current labor contract between the Union and the Company. The General
Counsel charges that in the course of the Company's efforts to initiate this change the
Company failed to bargain with the Union by: (1) negotiating directly wit1i its
driver-salesmen; (2) refusing to bargain with the Union about the change to a fran-
chise system; (3) refusing to recognize the Union as the representative of the driver-
salesmen who accepted franchises from the Company; (4) refusing to recognize the
Union as the representative of its employees, who did not accept franchise agreements
from the Company; (5) refusing to bargain with the Union for all of the employees
in the unit of driver- salesmen; (6) negotiating individual contracts with its individual
employees; and (7) entering into individual contracts with its employees.
The General Counsel also charges that Cecil R. Ellis, president of the Company,
violated Section 8(a)-(1) of the Act by: (1) requesting employees to resign from
the Union in connection with its individual dealings with said employees; (2) stating
to employees that they should join the Retail Clerks Union; and (3) by dealing
directly with employees with respect to a franchise agreement.
The General Counsel further charges that the Company discharged Harry B. Dictor
because he would not accept a franchise, thereby violating Section 8(a)'(3) of the Act.
The Company denies the commission of any unfair labor practices, and defends
its conduct in initiating the change in its method of operations on four broad grounds.
These are: (1) The change in operations was proposed in good faith and for eco-
nomic reasons, and not as a subterfuge to evade dealing with the Union. (2) The
Company was within its rights in initiating the change at the time the current con-
tract with the Union expired by its terms. (3) The Company notified the Union
on several occasions of its intention to propose the franchise arrangement to the men
and the Union made no objection until after some men had accepted franchises.
(4) The Union by its conduct implicitly denied that the men and the Company had
the right to change the method of operation by agreement, and in denying that right,
implicitly refused to bargain on any change in operations.
As to Dictor, the Company claims that he quit.
SERVETTE, INC. 145
The Testimony
There is little dispute about the basic facts constituting this proceeding, for the
General Counsel bases his case almost entirely on the testimony of Cecil R. Ellis,
president of the Company, whom he examined as an adverse witness under Rule 43B.
Ellis was interrogated at length by leading questions and in one instance confronted
with a statement he had given the General Counsel at a time prior to the hearing.
In all of his testimony Ellis appeared to be a forthright, careful, and exact witness.
He related the substance of conversations that he held with representatives of the
Union, Finley, Williams, and Bowers. When Finley took the stand as a witness he
did not correct or disagree with Ellis' testimony on any material point.
For these reasons, I credit the testimony of Ellis fully.
Furthermore, as will appear from the sequence of events hereafter related, Bowers,
secretary-treasurer of the Union, viewed the efforts of the Company to change its
method of operating in a far different light than Business Agents Finley and Williams,
and he soon became the spokesman and the prime mover on the Union's side of the
controversy. Much of the testimony of Ellis and other witnesses relates to what
Bowers said and did at various points of the controversy. Yet Bowers did not testify
at the hearing, nor was his failure to testify explained. In that posture of the testi-
mony, I accept the credible testimony of Ellis and others in regard to Bowers' conduct,
for the testimony credible in itself, stands undenied. Therefore, the sequence of
events which is hereafter set forth is substantially undisputed, except as to minor
points. It should also be noted that Business Agent Williams did not testify.
Background of the Controversy
It is undisputed that prior to the Company's action designed to initiate distribution
of its merchandise by franchisees, rather than by driver- salesmen employees, that
the Company employed a staff of 14 driver-salesmen and 5 supervisors to perform
this work.' It is likewise undisputed that the Union represented the driver- salesmen
in the unit of employees and that the relationship of the parties was governed by a
collective-bargaining agreement executed by the Company and the Union, which by
its terms was to extend from December 1, 1958, to January 3, 1960, inclusive. This
agreement, in conventional terms, provided that the contract would be automatically
renewed from year to year unless either party thereto gave written notice to the other
of its desire to modify or terminate the same at least 60 days prior to January 3, 1960.
It is undisputed that the contract was observed by the parties during its term .2
However, the Company also conducted operations in the San Bernardino, Santa
Ana, and San Diego regions . In the latter named places, the Company did not
employ driver-salesmen but used a system by which it granted a franchise to certain
individuals who thereafter acted as independent retailers of the Company's products.
The management of the Company found that the independent contractor method of
doing business worked to the benefit of the Company, so as the contract with the
Union in the los Angeles area approached the end of its term, the Company took
steps to change its method of operation to that employed in the other cities.
It is also undisputed that on October 26, 1959, the Company received timely notice
by letter from the Union, of the Union' s intention to terminate the contract on its
expiration date . However, this letter stated that the Union was "desirous of meet-
ing . . . for the purpose of negotiating a new agreement to become effective as of
January 4, 1960."
It is also undisputed that on November 18, 1958, the Union by letter furnished
to the Company a list of modifications of the expiring contract which it proposed
be incorporated in the new contract .3
The Company's Reasons for the Proposed Change in Method of Operations
Ellis, president of the Company, testified without contradiction that the opera-
tions of the Company in the Los Angeles area for a substantial period in 1958 and
'The unit of driver-salesmen as of this week beginning January 10, 1900. Is found to
be composed of employees Jacobson, Robb, Grossi, Thomas, Rosenberg, Dictor Cramer,
Johnson, Turett, Mortenson, Lauk, Traphagen, Noble, Long-14 employees. The super-
visors referred to are Ellis president ; Liebeman, vice president; and Supervisors Gaudio,
Berry, and Logan. The testimony establishes that the latter three men were and are
supervisors
9 This contract is General Counsel's Exhibit No. 2 in evidence.
S This letter is General Counsel's Exhibit No. 4 in evidence.
624067-62-vol. 133-11
146 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
1959 had resulted in a loss to the Company . These losses became so bad in 1959
that on two occasions in that year the Company tried to sell the business , but could
find no buyers . Meanwhile the operations of the Company in San Bernardino,
Santa Ana, and San Diego, using the independent retailer method of operation, were
profitable and growing . The net result of overall operations was that the profits in
the outlying areas, in effect offset to some extent losses in the Los Angeles area.
For that reason, and that reason only, the Company sought to install ,the independent
retailer method of distribution in the Los Angeles area.
The Operation of the Independent Retailer System
The franchise contract which some of the men ultimately signed was introduced
in evidence?
This document, according to Ellis, embodies in writing the exact arrangement by
which operations are conducted in the franchised area. In the interest of brevity
the terms of this contract are not set forth here, but it may be described as a docu-
ment whereby Servette sells to the buyer, the right to resell Servette merchandise, in
a specified geographical territory, and the buyer agrees to use his best efforts to
promote the sales of Servette products in the franchised territory. In addition to
this document, Ellis testified at some length as to how the franchisee by the use of
initiative could increase sales , and his income, and by prudent management of equip-
ment, etc., promote beneficial results for himself and the Company.
Upon all the evidence on this point, I find that the franchise agreement between
the Company and the men creates a bona fide wholesaler-retailer relationship to
deal in Servette products. This finding is based on Harrison v. Greyvan Lines, Inc.,
combined with U.S. v. Silk, in decision, and reported under that name at 331
U.S. 704.
The Dispute
First Notice to the Union
It is undisputed that in late October or early November 1959, Cecil R.. Ellis, presi-
dent of the Company, and Jerry Finley, business agent of the Union, met at the plant
of the Company. On this occasion, Ellis told Finley that the Company expected to
inaugurate a franchise system after the first of the year. According to Ellis, Finley
made no comment.
The Meeting of December 3
On December 3, 1959, Ellis and Liebeman, vice president of the Company, met
with Business Agents Finley and Williams of the Union. At this meeting Williams
and Finley said they wanted to sit down and talk about the new contract. Ellis told
the union representatives that he couldn't do that, because the Company was con-
sidering a franchise setup which the Union knew about, and, secondly, the Union had
not given timely notice of its intention to modify the old agreement. The union
representatives assured Ellis that he was mistaken on the second point and events
later established to the satisfaction of Ellis that he had indeed received a letter noti-
fying him of the Union's desire to terminate the existing contract. However, in, the
discussion on December 3, Ellis told the union officials that the final details of the
franchise arrangement had not been worked out by the Company, but that the men
would each earn a minimum of $135 a week , and be independent businessmen.
Both Williams and Finley agreed that this was a very good thing for the men and
said, "Well, I guess that lets us out of the picture, but somehow we got to figure out
how we can remain in the picture." The union officials said they'knew of similar
contracts, and would try to locate some, and supply them to Ellis. Ellis told the
union representatives that the Company intended to hold a dinner-meeting of em-
ployees and their wives and explain the entire operation of the. franchises to the
guests. The union agents said they thought that was a good idea; and made no
objection.
A day or two after the December 3 meeting, John Bowers, secretary-treasurer of;
the Union, phoned Ellis and called his attention to the fact that the Union had
mailed Ellis a timely notice of its desire to terminate the current contract. Upon
checking, Ellis ascertained that Bowers was correct on this point. Then Bowers
asked if Ellis was prepared to "negotiate a new agreement." Ellis told Bowers of
the Company's intention to set up a franchise system, but Ellis assured Bowers that
the Company would at all times negotiate with the Union for any of the employees
who chose to remain with the Company as driver-salesmen and who did not accept
a franchise. Ellis also told Bowers that he had suggested to the men that those,of
* This document is General Counsel's Exhibit No. 8-A.
SERVETTE, INC. 147
their number who accepted franchises should remain in the Union as independent
contractors . At this point Bowers told Ellis that he would not negotiate for inde-
pendent contractors ; and he would only negotiate for all the men on an employee
basis. He said that he would negotiate for all the men in the unit or for no one at
all. Ellis said that he was willing to negotiate for any men who preferred to remain
in employee status but that he would not negotiate for those who became franchisees
and independent contractors . As far as the latter was concerned , it was up to them
to determine whether they wished to belong to the Union or not . Bowers, however,
remained adamant , and insisted that he would represent all the driver-salesmen or
none.
On December 16, 1959, Ellis again met with Business Agents Finley and Williams
and discussed the situation but Ellis said that he had no clear recollection of this
meeting. Business Agent Finley in his testimony said that at his meeting the union
agents talked about the 5 percent increase in commissions , which the Union sought
in the new contract and that Ellis talked about the change to a franchise basis. This
brief talk ended with the union representatives saying, "We have always dealt
amicably with you in the past and we don't see why we can't do so in the future."
A few days after this meeting Ellis called Williams and inquired if he had found
any franchise agreements , which he had mentioned previously . Williams replied in
the negative . Ellis also told Williams that the Company proposed having the dinner-
meeting of employees on a certain date. Williams replied that the particular date,
was the date of a union meeting. Ellis agreed to take another date, and later phoned
Williams to say that the new date for the dinner-meeting was January 8, 1960.
Williams said that date was satisfactory.
The Dinner Meeting of January 8, 1960
On January 8, 1960, the Company held a dinner for all the driver-salesmen in Los
Angeles, and the franchisees at San Bernardino , Santa Ana, and San Diego, at the
Carolina Pines restaurant in Los Angeles. The wives of the driver-salesmen and the
franchisees were also invited . After dinner , Ellis, as president of the Company,
addressed the assembled guests He had prepared copies of the proposed franchise
agreement . Copies were handed out to all individuals present together with pencils
and notepaper . Ellis then read the contract aloud paragraph by paragraph , stopping
at appropriate intervals to answer any questions pertaining to that particular para-
graph. After the reading and discussion of the franchise agreement , Ellis asked
those driver-salesmen who wished to become franchisees to notify the Company on
the following Monday morning of their desires . He assured the assembled guests
that each of the driver-salesmen was free to decide whether he would accept a
franchise and be an independent businessman or continue to remain with the Com-
pany as an employee in the status of driver -salesman . He explained to all of them
that he estimated that the franchisees would make more money than they would
as employees , but he assured his listeners that any of the driver -salesmen who pre-
ferred to remain as employees would be continued as such , and that under no
circumstances would anyone be discharged.
At this meeting a question from the floor brought up the matter of union affiliation.
A speaker from the floor pointed out that recently one of the driver -salesmen 'had
been stopped from putting merchandise on the shelves of the Market Basket at
Los Angeles , by a business agent of the Retail Clerks Union . Ellis told them that it
was entirely up to them - whether they belonged to a union or which union they joined,
that those men who would be on franchise were independent businessmen and that
would be one of the decisions that each would have to make. In, the course of the
general discussion which took place , Ellis said that if they were going to join a
union the logical one would seem to be Local 770 of the Retail Clerks because that
was the union with whom the franchisees and driver -salesmen had contact in the
stores On the following Monday morning , Ellis requested Supervisor Logan to
contact each of the driver -salesmen to ascertain which of them desired to accept a
franchise and which desired to remain as driver-salesmen . Logan reported to
Ellis that 4 men wanted to accept the franchise , 3 or 4 men were undecided, and 3
desired to remain as driver -salesmen. -
The Union Meeting of January 12
On this date the Union took steps to counter the proposition 'offered the driver-
salesmen by the Company . For that purpose a meeting of the driver -salesmen was
called at the union hall . Various persons furnished accounts of what transpired at
this meeting . Jerry Finley , business agent of the Union , testified that he attended
this meeting. Present for the Union with Finley were Bowers , secretary -treasurer,
148 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
a man by the name of Griffin, and Business Agent Williams. Among the driver-
salesmen present were Jacobson, Robb, Grossi, Thomas, Rosenberg, Dictor, Cramer,
Johnson, Truett, and Martinson-a total of 10 drivers. According to Finley, the
driver-salesmen related what had taken place at the dinner meeting at the Carolina
Pines and then the union officials and the men discussed the pros and cons of the
franchise agreement. Griffin stated to the men that he was familiar with the oper-
ations of such contracts and related disadvantageous things that had happened to
him under such an arrangement. A general discussion was then held and the men
finally voted by a secret ballot on whether they would allow the Union to represent
them in getting another collective-bargaining agreement. The vote was 10 to 0 in
favor of the Union.
Several employees amplified this description of the union meeting. Russell
Johnson testified that at the meeting Bowers termed the franchise contract a
"Yellow-dog contract." Bowers also said that he had seen contracts similar to it
and the arrangement had not worked, and that he would do everything he could to
stop its initiation. Bowers also told the men that the Union absolutely refused to
represent any man who went on a franchise. Bowers said that he could not draw
up an individual contract for those men. In the course of his testimony Harry
Truett said that prior to the meeting of January 12, Bowers told him that the Union
could not represent individuals who signed franchise contracts with the Company,
that the only way the Union could represent the men was if it represented the
entire group. Jerry Jacobson testified also that Bowers, at the meeting, said that he
couldn't represent the men except on a group basis; that it would be impossible to
police individual contracts. Harry Cramer testified that in the course of the meeting,
Bowers told the men that it would be impossible and too much paper work and
trouble for the Union to represent the men on individual contracts, so he would
issue a withdrawal card to any man who accepted a franchise from the Company.
The Company Meeting on January 13
On the morning after the meeting at the union hall, Bowers, secretary-treasurer
of the Union, called Ellis and told him that the driver-salesmen had voted 10 to 0
to continue as driver-salesmen and to be represented by the Union in negotiations.
Ellis said that he could not understand how that could be, since a number of the
drivers had indicated to him that they wanted to accept a franchise from the Com-
pany. He told Bowers that he would call a meeting of the drivers and see what
they really wanted. After this phone call, Ellis directed that a notice be posted on
the bulletin board stating that all driver-salesmen should attend a meeting in his
office that afternoon. At the designated time the driver-salesmen gathered in
Ellis' office. It is apparent from all the testimony that some of the men were con-
cerned with the amount of money they would make under the franchise arrange-
ment, particularly in the early stages. Aware of the risks which they incurred as
franchisees, some of them had suggested to the Company that the Company give
them some minimum guarantee per week to assure them of an income while they
initiated the new arrangements. At the meeting on this afternoon, Ellis told the
men that in addition to the previous contract offered to them, the Company was
willing to accept their suggestion, and the Company would write into the con-
tract a guarantee of $100 a week, plus expenses, plus reimbursement for the dis-
plays which the men erected. When this concession was made, several of the men
who were undecided agreed to accept a franchise.
The Company introduced into evidence an exhibit which purported to show the
agreement to accept a franchise by the various employees. This agreement reads
as follows: 5
We, the undersigned, hereby signify our intention of purchasing a route
franchise from Servette, Inc. as an independent distributor.
Name
Ed Lauk----------------------------------------January 11, 1960
Lee H. Traphagen--------------------------------January 11, 1960
Hart Noble--------------------------------------January 11, 1960
R. M. Johnson-----------------------------------January 14, 1960
H. H. Cramer------------------------------------January 14, 1960
Donald E. Long----------------------------------January 14, 1960
James T. Mortenson------------------------------January 15, 1960
5 Respondent 's Exhibit No . 2 in evidence.
SERVETTE, INC. 149
At this meeting the men also discussed the fact that Bowers had told them and
told Ellis that the Union would not represent any man who accepted a franchise
from the Company.
A day or two after the meeting of January 13, Bowers called Ellis and asked him
"if he would negotiate ." Ellis said , "I will negotiate for all the men who are em-
ployees, those who signified they did not want to go on franchise." Bowers said,
"No, I won't negotiate except for everybody."
On January 21, 1960, Ellis called a meeting of men who had accepted franchises.
He told them that in view of the Union's position as to them he wanted some clari-
fication as to how they stood with the Union. After some discussion, he presented
to each man a copy of the document hereafter set forth. Each of the seven men
signed his copy. The document reads as follows:
JANUARY 15, 1960.
I, the undersigned, revoke any authority which may -previously have been
given, orally or in writing to any person or organization to represent me, indi-
vidually or otherwise, concerning my relationship with Servette, Inc.
I am an independent businessman and do not desire to be an employee of
any employer.
Signature
The Meeting Before the Joint Council
During the late afternoon of January 26, Ellis received a telegram from the Joint
Council of the Los Angeles Federation of Labor which summoned him to a meeting
of the Council on the morning of January 27. In the course of this meeting, Ellis
told the Council that the Company would negotiate with the Union for those men,
who had not accepted franchises , but that the Company did not know whether it could
legally negotiate for those men who had accepted franchises, particularly in view
of their revocations Also, in the course of this meeting Ellis said that in his opinion
the Union no longer represented a majority of the men.
In the course of the discussion, Bowers refused point blank to negotiate for those
individuals who remained driver-salesmen. He told the Council that he would ne-
gotiate for everybody or nobody. Bowers then told Ellis that he would give Ellis
until the following Sunday to advise him that he would negotiate for the entire or-
ganization or else the Union would begin picketing Servette's place of business and
as Bowers put it, "pull all stops." Ellis did not change his position and when the
time of Bowers' ultimatum ran out on February 1, the Union placed pickets at the
entrance to Servette's place of business Those driver-salesmen who had not ac-
cepted a franchise from the Company immediately went on strike.
The Union Threatens the Franchisees
Harry H. Cramer testified that at the union meeting of January 12, Bowers told
the men that it would be impossible and too much paper work and too much trouble
for the Union to carry the men on individual contracts, that Bowers would issue a
withdrawal card to any man taking a franchise.
When Ellis offered the men a guarantee of $100 per week, plus expenses and dis-
plays, they voluntarily accepted a franchise, and executed a revocation of authority
to the Union.
On approximately January 28, Cramer, Johnson, and Mortenson went to the office
of the Union. Johnson testified that they went then because they couldn't see any
sense in paying dues to a union which refused to represent them.
When they reached the office the men asked the girl in charge for a withdrawal
card for each. She typed up the cards, and took them into Bowers' office for his
signature. Bowers came out of his office and told the men, "I'm sorry, Gentlemen.
I'm not issuing withdrawal cards. Furthermore, I'll have you suspended from the
Union and have you blackballed from any other local where you can get a job
through the Union." 6
The Alleged Discharge of Dictor
It is undisputed that Harry Dictor was hired on November 19, 1959, by the Com-
pany and that his services with the Company came to an end on January 15, 1960.
In explaining Dictor's separation from Servette, Ellis testified that Dieter was hired
on the understanding that he would accept a franchise when the new system was
initiated At the time Dictor was hired there was no route available for him, but
6 Transcript, page 336 See also testimony of Johnson
150 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
it was understood between Dictor and Ellis that after the first of the year, when
the franchise system went into effect, that a route would be made available for Dictor
on a franchise basis, by dividing one of the larger routes. In the meantime Dictor
was assigned Work in building displays and making special deliveries. It is undis-
puted that Dictor attended the dinner-meeting at Carolina Pines on January 8, was in-
volved in the various conversations regarding the franchise system, and attended the
union meeting on January 12. The discussions of Ellis with Dictor concerning the
franchise arrangement was the same as it was with all the other men. However,
when asked his decision, Dictor said that he thought the franchise was "too con-
fining." In the discussion that followed Dictor said that he would like the franchise
at Santa Barbara. At that date, the Company was considering but had not decided
to put a franchise in Santa Barbara. Furthermore, the Santa Barbara territory
would be a large one, and require some capital on the part of the franchise. Ellis
then told Dictor that he was given to understand when he joined Servette that he
would be offered a franchise, and that if he thought the franchise system was too
confining he should have made his mind up on that point at the time of his hire.
Ellis then told Dictor that if he didn't want a franchise, there was no route as a
driver-salesman open at the time, and that Dictor's services were no longer required.
He agreed to give Dictor a week's pay in lieu of a week's notice.
However, overnight, Ellis thought over Dictor's request for the Santa Barbara
franchise, so on the next morning he phoned Dictor. He reached Dictor's wife
and asked for Harry. Dictor came to the phone and Ellis told Dictor that he would
be interested in discussing the Santa Barbara franchise in greater detail and asked
Dictor and his wife to come to the Company's office. Dictor said that he would
have to check with his wife to see if she could accompany him. When he returned
to the phone he said they were having trouble arranging for a sitter for the children,
so they couldn't come to the office at that time. Ellis then said, "How about Tues-
day morning at 10 a.m.?" Dictor replied, "That would be fine." Dictor also said,
"Can I pick up my final check on Monday?" Ellis said that the check would be
ready. On Monday morning Dictor came to the office and got his check. Ellis told
him, "Harry, the appointment still stands for tomorrow morning." Dictor replied,
"Why sure." Ellis testified that that was the last he saw of Dictor until he testified
at the hearing
In his testimony Dictor said that he was hired at a time when no route was open,
but he understood that he would be given a route, when one of the larger routes
was broken up. He said, that although the prospect of franchise operations was
mentioned from time to time by supervisors, he did not understand that he was hired
for the purpose of franchise operations only.
As to his conversation with Ellis on January 15, he said that when he told Ellis
he did not want a franchise, but would consider one in Santa Barbara, Ellis told
him that his services were no longer required, and agreed to give him a week's pay
in lieu of notice.
Dictor admitted that Ellis called him, and invited him and his wife to the office
to confer on the subject of the Santa Barbara franchise. He also admitted that he
did not keep this appointment. Instead he told another driver-salesman, to tell the
office girl, to tell Ellis, that he was canceling the appointment. Dictor did not
know why Ellis did not receive this message.
Concluding Findings
Upon all the credible evidence I find that the General Counsel has failed to estab-
lish by a preponderance of the evidence that the Company violated Section 8(a)(5)
of the Act, in any respect.
The undisputed evidence establishes that the Company for a period of time had
incurred substantial losses in its Los Angeles operations, using the driver-salesman
system of distribution, while at the same time it was operating at a profit in other
cities, using the wholesaler-retailer system of distribution. Economic survival dic-
tated that the Company give thought to the initiation of the wholesaler-retailer system
in the Los Angeles area. After trying to sell the business without success, the Com-
pany decided to change the system of operations at Los Angeles, and picked the time
for the change to coincide with the expiration of the current contract between the
Company and the Union. That was the permissible and appropriate time for the
initiation of such a change. In this respect, this case is far different from previous
cases before the Board, in which changes in operational methods were initiated in
mid term of a current contract.
Furthermore, before the plans of the Company had been fully formulated, the
Company notified the Union of what it had in mind. At first, Union Representatives
Finley and Williams expressed tacit approval of the plan by stating no objections to
SERVETTE, INC. 151
it, and by saying that it appeared to be a good thing for the men. The representa-
tives also approved of the dinner meeting at the Carolina Pines Restaurant, and
participated in the-selection of a date for the meeting, which would not conflict with
the union meeting.
This attitude of the Union in the early stages of the controversy I deem significant.
It shows that the Company's frank and open disclosure of its contemplated plans
convinced even the union representatives that the change in the method of operation
was not motivated by any factor except economic considerations. Also, apparently
Finley and Williams saw in the plan no problem which consultation of the parties
could not solve.
However, that attitude.of the Union was quickly changed with the appearance of
Bowers on the scene. In his first conversation with Ellis, a day or two after Decem-
ber 3, Bowers placed himself in unalterable opposition to any change in the system
of operations, and said that he would negotiate for all the men, or nobody, pre
sumably, on the basis of the old contract and the Union's proposed modifications.
Then Bowers launched a full-scale attack on the Company's proposed plan. In
the union meeting of January 12 Bowers made his attitude clear to the men, and
to anyone concerned with this proceeding. He told the men that the Company's
franchise proposal was a "yellow-dog" contract; that he was going to stop it; that
he would have nothing to do with individual contracts; and that he would issue
a withdrawal card to any man who entertained the Company's proposals.
With the whole power of the Union, thus arrayed against the "yellow dog"
proposal of the Company, the men yielded to Bowers' request for authorization to
negotiate a new contract, on the basis of the former system of operations. Implicit
in Bowers' words to Ellis and to the men was a denial of the Company's right to
propose any change in its system of operations, even when the change was proposed
to the Union, in good faith and for economic reasons. Also implicit in Bowers'
speech to the men was a denial that they had any right to change their status from
employees to independent businessmen. On neither point is Bowers supported
by the Act.
However, on the day after the union meeting Bowers lost the struggle for the
minds of the men, for the Company agreed to give the men a guarantee of $100
per week, and self-interest induced a large portion of the men to accept franchises.
The union meeting also gives an insight into the reason for the Union's summary
rejection of the franchise idea. Bowers said he could not draw up individual con-
tracts for the men, that the Company's proposal would involve too much paper work
and too much trouble; and that the policing of the franchise agreements would also
be too much trouble.
From all of the above it is clear that Bowers considered it easier to issue an
ultimatum to the Company and the men rejecting the Company's proposals and to
enforce his ultimatum with the Union's economic strength, than to bargain with the
Company on the subject of the franchise arrangements, in the hope of arriving at
a new contract which would permit the Company to continue its operations. It is
the General Counsel's contention here that the Company refused to bargain upon
the subject of its franchise arrangement, yet oddly enough, from the advent of
Bowers upon the scene to the present time, there is not a scintilla of evidence in
the record that Bowers either directly or indirectly requested or sought bargaining
on that subject. The long and short of the matter is, and I find, that Bowers was
unalterably opposed to any change in the operations of the Company, and refused
to even consider negotiating on the subject. From first to last, Bowers was adamant;
the Union would refuse to bargain except on the basis of all the men, on the basis
of its old contract and its new proposals. When the Union made clear its position,
that the Union refused to even discuss the subject of franchises, the Company was
at liberty to institute the change in its operations unilaterally; it had no other
alternative.
It is also patent that Bowers' ultimatum to the Company prevented any bargain-
ing on a contract for the men who did not wish to accept a franchise. In the first
conversation he had with Ellis, Bowers said he would bargain for all or nobody,
on the basis of the old contract. Thus, Bowers conditioned bargaining for those
men, upon the Company's withdrawal of its franchise proposals. When the Com-
pany did not withdraw the proposals, bargaining for the entire group of men became
imnossible.
The instant case is similar on many points to that case decided by the General
Counsel, in an Administrative Decision of the General Counsel. Case No SR-146,
made public September 10, 1959. There, a union filed 8(a) (1) and (5) charges
alleging that a company had refused to bargain. There (as here) the company
informed the union that it contemplated a change in its method of operation. There
(as here) the union did not protest this decision , nor did it request bargaining
152 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
concerning the matter at that time . The change was made (as it was here). Subse-
quently, in that case (as well as this one), the union requested the company to
bargain for those drivers who had signed the lease agreements there (the franchise
agreements here). Also there, the company continued to bargain with the union
for its other employees, just as the Company has offered to do here. There, the
Regional Director refused to issue a complaint and the General Counsel sustained
that action . The General Counsel said that under such circumstances the company
was under no statutory obligation to bargain with the union , and that in the absence
of any evidence that the sale of the trucking operation was discriminatorily motivated,
further proceedings were unwarranted.
In this case , if anyone is guilty of thwarting the purposes of the Act, it is the
Union and Bowers, for it is Bowers who has said that his Union will not represent
the individual franchisees. The Company, in my view, did everything in its power
in informing the Union, and in offering to consult with the Union, but the Union
flatly stated that it would not negotiate any contract for a franchise arrangement.
In view of these circumstances, I find that the Company discharged its obligations
to bargain under the Act.7
Also, in Shamrock Dairy, Inc., et al., 124 NLRB 494, the Board considered the
question of whether the union had waived any bargaining rights it might have had
with respect to the institution of the so-called independent distributorship plan.
Here, the facts from which the inference of waiver may be drawn are much stronger
than in the Shamrock Dairy case. Here, the union representatives agreed that both
the institution of the franchise arrangement was a "good idea" and that the dinner-
meeting for the purpose of explaining the francise agreement was also a "good idea,"
and they did not object to either. Further, in the union meeting Bowers refused
to represent those men who might want a franchise arrangement. Upon all the
evidence, I find that the Union waived its right to bargain on the subject of the
institution of the franchise arrangements.
Upon the credible testimony of Ellis, I find that Dictor was hired on the under-
standing that he would be offered and would accept one of the franchises, when that
plan was initiated by the Company. However, on approximately January 15, 1960,
when the Company offered him a franchise route he refused it, and thereupon was
told by Ellis that the Company no longer required his services. But, it is admitted
by Dictor, that on the next day Ellis called him saying that he wanted to talk to
Dictor and his wife on the subject of the Santa Barbara franchise, which Dictor
had requested. An appointment was made for the purpose of discussing this subject,
but Dictor did not keep the appointment. I find that it was Dictor, and not the Com-
pany, who brought his employment to an end.
The complaint alleges that certain specific acts of the Company constitute viola,
tions of Section 8(a)(1) of the Act. In my judgment, these specific acts are mere
components of the whole controversy, and are merged in the broader issue of the
case, namely the alleged violation of Section 8(a)(5) by the Company. Since I have
found that the course of conduct of the Company does not constitute a violation of
Section 8(a)(5) it follows, and I find, that in the context of circumstances here
established by the evidence, the said specific acts of the Company are not in violation
of Section 8 (a) (1) of the Act.
For all the above reasons, I find that the General Counsel has failed to prove by
a preponderance of the evidence that the Company committed any of the unfair labor
practices alleged in the complaint. It is recommended that the same be dismissed
in its entirety.
7 Times Publishing Company, et al., 72 NLRB 676.
Greene Construction Company, and Tecon Corporation, a joint
venture 1 and District 50, United Mine Workers of America,
Petitioner . Case No. 5-IBC-3408. September 14, 1961
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National Labor
Relations Act, a hearing was held before Louis Aronin, hearing officer.
1 The name of the Employer appears as amended at the hearing.
133 NLRB No. 11.