The H. E. Koontz Creamery, Inc.

National Labor Relations Board - Board Decisions

Feb 24, 1953

102 N.L.R.B. 1619 (N.L.R.B. 1953)

THE H. E. KOONTZ CREAMERY, INC. 1619
that, by making the speeches in question on the day of the election,
the Employer had the opportunity of addressing the employees at a
point of time closer to the election, the Board's policy does not hinge
on who has "the last word" as a basis for setting aside an election, but
rather on whether the timing of the speeches was such as deliberately
to preclude a presentation of the union's views.3 In the context of
the facts of this case, including the fact that the Petitioner addressed
the employees at the plant on the day before the election, we hold
that the Employer's conduct did not constitute interference with a
free election.4
Accordingly, we find that objection 5 raises no material or sub-
stantial issues with respect to the results of the election, and we hereby
overrule it. Because we have overruled this objection, and because
the tally of ballots shows that the Petitioner lost the election, we
shall issue a certification of results of election to this effect.
Certification of Results of Election
IT Is IIEREBY CERTIFIED that a majority of the valid ballots has not
been cast for Citrus and Allied Workers, Local 234, Winter Haven,
Florida, International Union of United Brewery , Flour, Cereal, Soft
Drink and Distillery Workers of America , CIO, and that the said
labor organization is not the exclusive representative of the employees
of the Employer , in the unit heretofore found appropriate , within
the meaning of Section 9 (a) of the National Labor Relations Act.
MEMBERS HOUSTON and MURDOCK took no part in the consideration
of the above Supplemental Decision and Certification of Results of
Election.
See The Hills Brothers Company , 100 NLRB 964.
The Muter Company, 101 NLRB 287 , and Metropolitan Auto Parts , Incorporated,
99 NLRB 401 , relied on by the Regional Director , are distinguishable on the facts
from the instant case, because in each of those cases , unlike the instant case , the union
aaas not accorded any opportunity to address the employees.
THE H . E. KooNTZ CREAMERY , INC. and MILK & ICE CREAM DRIVERS
& DAIRY EMPLOYEES , LOCAL UNION #937, AFL, PETITIONER. Case
No. 5-RC-117.9. February 24, 1953
Decision and Direction of Election
Upon a petition duly filed under Section 9 (c) of the National La-
bor Relations Act, a hearing was held before Sidney Smith, hearing
officer. The hearing officer's rulings made at the hearing are free
from prejudicial error and are hereby affirmed.
Upon the entire record in this case, the Board finds :
102 NLRB No. 160.
1620 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
1. The Employer 1 is engaged in commerce within the meaning of
the Act.
2. The labor organization involved claims to represent certain em-
ployees of the Employer.
3. A question affecting commerce exists concerning the representa-
tion of employees of the Employer within the meaning of Section 9
(c) (1) and Section 2 (6) and (7) of the Act.
4. The Employer is a corporation engaged in the business of proc-
essing and selling dairy products with plants at Westminster and
Baltimore, Maryland.
The Petitioner seeks a unit of production and maintenance em-
ployees at the Westminster and Baltimore operations, including
wholesale drivers, and retail drivers (hereinafter referred to as "re-
tail distributors" ),2 but excluding the retail storeman, laboratory
man, outside salesman, field men, and the field supervisor. The Em-
ployer disagrees with the proposed inclusion of the retail distributors,
and the exclusion of the retail storeman, laboratory man, outside
salesmen, field men, and the field supervisor.
Retail distributors: The Employer asserts that the retail distribu-
tors are independent contractors, and therefore persons to whom the
Act does not apply. The Petitioner contends that they are em-
ployees within the meaning of the Acts
Prior to March 1950 all the Employer's deliverymen were admit-
tedly employees. At that time they were under the Employer 's super-
vision as to the schedule and manner in which they serviced their
routes, were not liable for credit extended within the limits estab-
lished by the Employer, made no payment for the equipment they
used, were guaranteed a minimum salary, and received as base pay
approximately one-seventh of their weekly earnings.
On a Sunday in March 1950, after a few days' notice, the delivery-
men met with some of the Employer's officers and were told that the
method of distribution was to be changed. They were confronted
with the choice of either accepting the new system or losing their
positions. The existing employment contracts were abrogated and
printed agreements between the "Dairy" and each deliveryman,
termed a "Franchisee Contractor Distributor," were consummated.
' The Employer's name appears as amended at the hearing.
' In outlying areas , beyond the wholesale routes, deliverymen serve both retail and
wholesale customers Because of the Board 's finding in this matter , it is unnecessary to
differentiate between these deliverymen and those who serve only retail customers. Re-
tail distributors who deliver milk outside of Baltimore County have bobtailer permits,
State licenses not needed by deliverymen who are employees of a State licensed processor.
It does not appear that the State insisted upon proof that these individuals were inde-
pendent contractors when the Employer took such licenses out for them.
8 Section 2 (3) of the Act provides that "The term 'employee ' . . . shall not include . . .
any Individual having the status of an independent contractor. . . .
THE H. E. KOONTZ CREAMERY, INC. 1621
After this change, at which time all the drivers signed franchise
agreements, the Employer unilaterally divided wholesale and retail
routes into wholesale or retail routes and some of the franchisee con-
tractor distributors became wholesale distributors. All agree that
the latter are employees.
At the same time the parties entered into an elaborate rental agree-
ment intended to satisfy the provision of the franchise contract which
requires each retail distributor to furnish a truck of the "style, size,
specifications, and appearance as specified by the Dairy. . . ." Not
one retail distributor has ever received a copy of either of these agree-
ments, although some of the drivers have requested them more than
once; and not one of them has ever supplied his own truck.'
Although the agreements state that the retail distributors are not
employees of the Employer, provisions of the agreements limit their
independence. The franchise contract requires that the retail dis-
tributor "exclusively purchase from the Dairy and exclusively sell the
products of the Dairy and products sold by the Dairy," that he "sell
no other Dairy products except those of the Dairy in the said terri-
tory," and that he "pay to the Dairy for products sold to him the
prevailing prices for its products as posted by the Dairy from time
to time, and to resell to his customers at the prices posted by the Dairy
from time to time, said prices to be the same for all Franchisee Con-
tractor Distributors who have an Agreement with the Dairy similar to
this Agreement." To this end the Employer posts prices at the plant,
and supplies price lists for distribution to consumers. These price
lists bear the Employer's name and are devoid of any indication that
anyone else may be responsible for the prices of the products. And,
although some retail distributors deviate from posted retail prices
which the Employer urges are merely suggested prices, and although
some retail distributors sell products other than the Employer's and,
in one case, a commodity in competition with one of the Employer's,
the Employer retains the right under the agreement, despite a prior
waiver, to insist upon compliance with its terms.
The rental agreement gives the retail distributor the right to use
the truck only certain hours each day, prohibits him from assigning
any rights under the agreement, forbids the making of repairs with-
out Employer approval, and prohibits the carrying of passengers. In
addition, the Employer maintains, provides the licenses for, and
garages the trucks, and bears "all other expenses." On the other
hand, the rental fee is based on the merchandise ordered and, if
operating costs increase more than 10 percent above the costs at the
time of the agreement, the increase is to be borne by the retail dis-
4 The Employer testified that he has encouraged retail distributors to supply their own
trucks.
250983-vol. 102-53-103
1622 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
tributor. The trucks are painted in the Employer's color scheme and
bear its name. At times the trucks of the wholesale and retail drivers
are interchanged.
Except for a diminution in the degree of supervision over the man-
ner in which the retail distributor serves his route, his daily activities
do not differ from his prefranchise routine. From the time he picks
up his order, to the turning in of his collections to the cashier at the
day's end, he acts as he did prior to the change in distribution method.
On Friday he receives the money due hint along with a slip labeled
"Employee's Statement of Earnings and Deductions." The calcula-
tion of his rental fee , the cost of the products ordered, the amount of
deductions, and finally the sum to which he is entitled, is all done by
the Employer's accounting department. A former retail distributor
referred to the money received on Fridays as "my salary."
The retail distributor, although not engaged in a "skilled occupa-
tion," is trained by the Employer through its foremen before lie takes
over a route, and is an employee at that time. When he acquires a
route he purchases the accounts receivable outstanding and signs a
note covering them. He also furnishes a bond. (Bonds already
furnished were continued in the case of those persons in the Em-
ployer's service in March 1950.) The accounts purchased from the
Employer are guaranteed, although credit thereafter extended by re-
tail distributors is given at their own risk.
Upon becoming a deliveryman the drivers are given a printed list
of "Rules and Instructions" which relate to such matters as uniforms,
personal conduct, and credit extension.,' The Employer owns the
route books and checks them with respect to credit transactions as it
formerly did. It continues to use the NOT OVER stamp where it
disapproves of the further extension of credit and tells the retail
distributors to "try to get the balance down" as was its practice before
the distribution change.
In addition to the risk of credit defaults the retail distributor as-
sumes liability for the products once they are delivered to him. All
loss due to fire, theft, spoilage, and other causes is now borne by the
retail distributor as owner of the products. Therefore, their earnings
are the difference between their selling prices and bonuses (they re-
ceive bonuses similar to those given the wholesale drivers) as against
the cost of the products they purchase plus truck rental expense and
merchandise and credit losses.
5 For example , the rules relating to the extension of credit are "7. Customers limited
to two week credit unless authorized by office." and "19. No account will be transferred
when balance exceeds NOT OVER stamp. Salesman will be held responsible for exceeding
the credit allowed ." The list distributed now is identical with that given to the Employer's
deliverymen before the change in distribution method
The Employer argues that the rules and instructions are intended as suggestions and
points to the fact that some of them are disregarded by the i etail distributors.
THE H. E. KOONTZ CREAMERY, INC. 1623
Upon the termination of a retail distributorship, whether by mutual
agreement or unilateral action, the accounts receivable owing to the
distributor are assigned by him to the Employer, and the sum over
and above the money due the Employer from the retail distributor for
purchases made on credit is paid to the distributor after it is col-
lected by the Employer. The relationship may be terminated with-
out cause, but a 10-day notice must be given and payment made as de-
scribed above.
The Employer assigns one of his outside salesmen to residential
neighborhoods to promote the sale of milk at retail by the retail dis-
tributors. About 50 percent of the retail distributors wear the Em-
ployer's uniform which they purchase from it at half the cost and
which they maintain themselves. They sell milk bottled in the Em-
ployer's bottles and bearing its label, bill on the same employer bills
as before the change, and each signs bills and receipts as "Salesman."
The customers were never apprised of any change in the status of the
deliverymen by the Employer. Indeed, the Employer accepts all
complaint calls, those complaints which pertain to the product and
its bottling being handled by the Employer. Complaints relating to
service are referred to the retail distributor, but even on these com-
plaints the Employer will dispatch a supervisor "to save him (the
customer) for the distributor" if the complaints continue, and it will
deliver its products by special messenger where the customer reports
failure of delivery and the retail distributor cannot be contacted.
If a territory is reduced, which can only be done by mutual consent,
the retail distributor is paid a sum on the basis of the sales lost. Pay-
ment of a lesser sum is made to wholesale drivers, but their routes may
be reduced without their consent. Retail distributors may be absent
from their routes whenever they choose, subject only to the deduction
of $6 from their income for that day. The Employer usually sub-
stitutes one of the foremen to serve the route. The wholesale drivers
have the same arrangement, but can be discharged if the Employer
believes they are absent too often.
In determining the status of these individuals, we have previously
held that the Act requires the application of the "right of control"
test. Where the person for whom the services are performed retains
the right to control the manner and means by which the result is to be
accomplished, the relationship is one of employment. Where control
is reserved only as to the result sought, the legal effect is that of an
independent contractor relationship. The resolution of this question
depends on the facts of each case and no one factor is determinative.a
6 Golden State Agency, Inc., State Farm Mutual Automobile Insurance Company, State
Farm Fore and Casualty Company and State Farm Life Insurance Company, 101 NLRB
1775, and cases cited therein.
1624 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
We are satisfied on the basis of the entire record that the retail dis-
tributors are employees of the Employer. We are mindful that these
individuals have gained a measure of independence and responsibility
from the change in the method of distribution. This is evidenced by
the manner in which their income is determined, including the attend-
ant risk of losses through credit extended and merchandise damaged,
spoiled, or unsold. It is also apparent from the facts that they have a
proprietary interest in their routes, that they may determine the man-
ner in which they service the routes and that the formal papers show
an intent to create an independent-contractor relationship. However,
these factors are more than counterbalanced by the following: The
agreement which creates the relationship restricts the drivers to the
distribution of the Employer's products exclusively and grants the
Employer control over cost and selling prices. Employer approval is
required before any of the rights of these drivers on their routes can
be assigned or sold. The Employer supplies and maintains the equip-
ment and there has been no change in the drivers' daily routine or in
the records they keep. The drivers do not as a rule hire others to help
in their work. They do not retain their collections and pay the Em-
ployer what they owe it, but, as they did before the changeover, deposit
all their collections with the Employer and accept a check as "earn-
ings." The latter arrangement does not comport with the usual man-
ner of handling affairs by an independent businessman. In this
connection, one driver testified that some money was taken out of his
"salary" and that he turned in his "resignation" when he left.
In sum, through checks on the route books, which remain the prop-
erty of the Employer, the list of rules and instructions and the above-
mentioned limitations on the retail drivers in the agreement creating
the relationship and in the rental agreement, the Employer clearly
exercises a substantial measure of control over the means as well as the
results of their work. Furthermore, Employer policies such as train-
ing of retail distributors, providing foremen as substitutes, and the
payment of bonuses are practices which are normally associated with
an employment relationship.
Under all these circumstances, we find that the retail distributors are
,employees within the meaning of the Act .7
The Employer urged that the retail distributors be excluded from
the unit if found to be employees because of the difference in interests
between them and the remainder of the employees. Although there
are differences, the retail distributors share many common interests
with the wholesale drivers, employees whom the Employer would
7 Royal Crown Bottling Company of Puerto Rico , 102 NLRB 309; Oklahoma Trailer
Convoy, Inc., 99 NLRB 1019; Puerto Rico Dairy, Inc, 99 NLRB 1013; Nataonal Gas
Company, 99 NLRB 273; Nelson-Ricks Creamery Company, 89 NLRB 204; Nu-Car Carriers,
Inc., 88 NLRB 75, enforcement granted , 189 F. 2d 756 (C. A. 3), cert. den. 342 U. S. 919.
THE H. E. KOONTZ CREAMERY, INC. 1625
include in the unit. They have the same working hours and working
conditions, perform the same tasks, drive the same trucks, turn in
their collections to the same person, fill out their orders similarly, for-
feit the same amount when they are absent for a day, have the same
type of bond with the Employer, receive similar bonuses, are both
compensated when their routes are reduced, and both are relieved by
the same foremen and supervisors. Because the work they do is essen-
tially the same as that done by the wholesale delivery drivers, the
Board includes the retail distributors in the unit.
Outside salesmen: The Employer would include the outside sales-
men while the Petitioner would exclude them. The outside salesmen
are paid a salary, in an amount between that paid those admitted
employees known as foremen and supervisors.8 They share the same
room as the foremen and supervisors when doing paperwork (which
occupies about one-half hour of their time each day), and receive vaca-
tion benefits similar to those received by the supervisors. Most of
their day is spent outside the plant with customers or prospects, but in
emergencies they are required to drive trucks and make deliveries.
Some of them were former driver-salesmen. Since the conditions and
status of these outside salesmen are similar to those of the driver-
salesmen and the foremen and supervisors, all categories which are
included in the unit, the Board likewise includes the outside salesmen.
Field men and field supervisor: The Employer would include the
field men and the field supervisor in the appropriate unit, while the
Petitioner would exclude them. The field men inspect the farms
from which the Employer purchases milk in order to check on their
compliance with Health Department regulations. These men for-
merly worked in the Westminster plant and now spend about 25 per-
cent of their time there while writing their inspection records. The
field supervisor performs the same work as the field men but, in addi-
tion, he assigns the territories, occasionally checks on their work, has
authority to "straighten them out," and to recommend their discharge.
His salary is from 15 to 20 percent greater than that paid the field
men. We shall include the field men in the unit because of their com-
munity of interest with other employees in the unit, but exclude the
field supervisor because he is a supervisor within the meaning of the
Act.
Laboratory man: The Employer would include the laboratory man
who works at the Westminster plant, while the Petitioner would ex-
clude him. The laboratory mail does some routine, standard examina-
tions of milk for bacteria count and butterfat content, and checks
byproducts to determine the total solid weight in the product. He
8 The parties agreed, and the record shows, that the foremen and supervisors , except for
the field supervisor , are not supervisors as defined in the Act.
1626 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
learned his duties and techniques while on the job, does not need col-
lege training, is supervised by the plant manager, and receives about
the same salary as a foreman. He prepares records of the tests he
has conducted for the Baltimore City Health Department and for the
State. We shall include the laboratory man in the unit.
Retail store salesman: The retail store salesman sells dairy products
to customers who come to the store, takes telephone orders, and occa-
sionally provides merchandise to drivers for resale. He receives the
same vacation period as the foremen and other plant employees, and
deals with others in the plant only when he orders merchandise to
stock his store. On his days off he is replaced by a man in the plant
who handles the "check in" of all the drivers. He is responsible to
the sales manager and utilizes the same washroom and lunchroom
facilities as the others in the plant. Because the similarity of his
work to that of other salesmen in the unit, we find that his interests
are more closely related to the interests of the other employees in the
unit than to those of the office clerical workers and we shall include
him in the unit.
The following employees of the Employer constitute a unit appro-
priate for the purposes of collective bargaining within the meaning of
Section 9 (b) of the Act:
All the production and maintenance employees of the Employer at
its Baltimore and Westminster plants, including the retail distribu-
tors, outside salesmen, field men, laboratory man, retail store salesman,
foremen, and supervisors,9 but excluding executives, guards, watch-
men, office clerical workers, professional employees, and the field
supervisor, and other supervisors as defined in the Act.
[Text of Direction of Election omitted from publication in this
volume.]
a See footnote 8, supra.
UNION MANUFACTURING COMPANY and AMERICAN FEDERATION OF
HOSIERY WORKERS, AFL, PETITIONER. Case No. 5-RC-1103. Feb-
ruary 04,1953
Second Supplemental Decision and Direction
On December 12, 1952, the Board issued a Supplemental Decision
and Order in the above-entitled proceeding," directing that testimony
be excluded at any hearing on challenged ballots in this proceeding
as to alleged "debarment" activity on the part of strikers not dis-
1 101 NLRB No. 181.
102 NLRB No. 176.