U.S. Assurance Co.

National Labor Relations Board - Board Decisions

Mar 30, 1970

181 N.L.R.B. 863 (N.L.R.B. 1970)

U S. ASSURANCE CO. 863
U.S. Assurance Co. and Assurance Investment
Corporation and Independent Insurance Agents of
America . Case 9-CA-5119
March 30, 1970
DECISION AND ORDER REMANDING
PROCEEDING TO TRIAL EXAMINER
BY CHAIRMAN MCCULLOCH AND MEMBERS
BROWN AND JENKINS
On October 14, 1969, Trial Examiner Paul E.
Weil issued his Decision in the above-entitled
proceeding, finding that Respondent U.S. Assurance
Co. (herein called USA) and Respondent Assurance
Investment Corporation (herein called AIC) are not
engaged in commerce within the meaning of the
National Labor Relations Act, as amended, and
recommending that the complaint be dismissed in its
entirety, as set forth in the attached Trial
Examiner's Decision. Thereafter, the General
Counsel filed exceptions to the Trial Examiner's
Decision and a brief in support thereof Respondents
filed a brief in opposition to the General Counsel's
exceptions.
Pursuant to the provisions of Section 3(b) of the
National Labor Relations Act, as amended, the
National Labor Relations Board has delegated its
powers in connection with this case to a
three-member panel
The Board has considered the rulings of the Trial
Examiner made at the hearing in connection with
the jurisdictional issue and finds that no prejudicial
error was committed. These rulings are hereby
affirmed. The Board has considered the Trial
Examiner's Decision, the exceptions and briefs, and
the entire record in this case We find merit in the
exceptions and, accordingly, do not adopt the Trial
Examiner's conclusions or recommendations, but
only his findings of fact which are not inconsistent
with our Decision and Order herein.
As set forth more fully in the Trial Examiner's
Decision, USA is an Ohio corporation licensed only
in Ohio as a legal reserve life insurance company,
and is engaged in selling weekly premium or
industrial insurance, ordinary life insurance, and
student accident insurance AIC transacts no
business itself, but is a holding company possessing
74 percent of the outstanding stock of USA as its
sole asset. National Masonic Provident Association,
herein called Masonic, is an Ohio corporation
licensed to sell life and accident insurance to
members of the Masonic Fraternal Order in various
States Masonic owns all the class "B" stock of
AIC, which guarantees Masonic 40 percent of the
voting power of AIC, thus assuring it of virtual
control of the holding company and through it of
USA
The record shows the active management of the
three firms, including officers and directors, is
completely overlapping. All five directors of
Masonic sit on USA's six-member board of
directors and also serve as directors of AIC. The
president of USA is also the president of Masonic
and a director of AIC; William T. Cooper is the
executive vice president of USA and AIC, the vice
president of operations of Masonic, and a director
of all three firms; George J. Murray is vice
president and general counsel of USA, vice
president of AIC, and a director of all three firms,
Paul A. Blackstone serves as medical director of
USA and Masonic, vice president of USA and AIC,
and director of all three; Joseph C. Vaughn is the
director of underwriting for USA and Masonic and
is vice president and assistant secretary of both, as
well as assistant secretary of AIC; Paul H. Schultz,
secretary-general manager of Masonic, also serves
as secretary, general manager, and director for USA
and as secretary and director for AIC; Thomas R.
Guthrie is director and vice president of USA's
industrial department, and is USA's only director or
officer who does not have a position with either
Masonic or AIC.
It is evident from the record that Guthrie
exercises a large degree of discretion and
independent judgment in the day-to-day operations
of USA. He was apparently fully authorized to, and
did, control labor relations between USA and its
employees, most notably the debit agents. However,
Guthrie is required to make monthly reports to
USA's board of directors, which, exclusive of
himself, is composed entirely of individuals who also
serve as directors and officers of Masonic. The
record also indicates that Guthrie consulted with
Murray prior to making any decisions regarding
USA's labor policies; specifically, this occurred
prior to signing any labor agreements with debit
agent Crawford,' and prior to Crawford's discharge,
the subject of the unfair labor practice allegations of
the complaint.
Approximately 70 percent of USA's total business
concerns industrial insurance, a type of insurance
not offered by Masonic and sold only by debit
agents in the employ of USA. A substantial portion
of the balance of USA's sales is ordinary life
insurance. This type of insurance is sold both by
USA's debit agents and by general agents licensed
by USA within the State of Ohio Ordinary life
insurance is not underwritten by USA. Rather, it is
underwritten and issued for USA by Masonic,
totaling 12 percent of Masonic's ordinary life
policies However, claims on all USA policies,
including ordinary life, are handled by USA's own
claim department. In a letter to members dated
April 1968, Masonic spoke of its intention to
develop a "companion company" to Masonic. Such
a "companion company," Masonic stated, would
enable Masonic to broaden its insurance coverage to
Only one such agreement is in evidence , and it does not refer to
Petitioner
181 NLRB No 130
864 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
include individuals that would not be eligible for
protection under Masonic's standards, and to secure
additional field representatives who previously would
not represent Masonic because it operated in too
limited a field USA, through its holding company,
AIC, was to be the "companion company "
The three companies have their home offices in
the same building. Masonic leases the building and
sub-leases space to USA and AIC. AIC pays no
rental, and USA's rental is assessed each month on
a pro rata basis, determined by USA's premium
income for the preceding month. Furthermore, all
three companies share certain administrative
services, including the electronic data processing
equipment and employees used to prepare the
payroll for all home office employees and
accounting reports for Masonic and USA 2 The
various departments of each company are located on
the same floors in the home office, and while each
company normally leases its own office equipment,
there has been occasional interchange of such
equipment.
It is well settled that the Board will treat separate
corporations as one employer for jurisdictional
purposes when it appears that they are highly
integrated with respect to ownership and operations.'
The Trial Examiner found that, while the
companies herein were integrated with respect to
ownership and management, there was no
substantial showing of integration of operations,
relying on the criteria articulated in See Bee Slurry
Matic
We are persuaded that the record establishes a
substantial integration of operations amongst the
three firms While the Trial Examiner found that
Guthrie has day-to-day control over USA's labor
relations policies, the final authority in such policies
is firmly controlled by USA's board of directors,
five of whose six directors are also officers and
directors of Masonic. The three firms are both
physically and functionally integrated, with the same
individuals (except for Guthrie) operating all of
them. They share the same office building and
certain services, and Masonic has been able to
utilize USA's debit agents and general agents as an
additional sales outlet for ordinary life policies, all
of which are issued and underwritten by Masonic.
As it is undisputed that the three companies are
integrated with respect to ownership and
management, and as we find there is centralized
control of labor relations and interrelationship of
operations, we conclude that Masonic and
Respondents USA and AIC constitute a single,
'These shared services also include the office boy, the switchboard
operator , the stock boy, and the cashier for mail payments
'international Union of Operating Engineers , Local 428, AFL-CIO (See
Bee Slurry Matic , Inc ). 169 NLRB No 30, illustrates factors the Board
considers relevant in determining whether a sufficient degree of integration
of operations exists See also Twenty-First Annual Report, pp 14-15, and
cases cited therein
'Supra , at slip op, p 4
functionally integrated firm for jurisdictional
purposes.'
Respondents conceded that Masonic is engaged in
interstate commerce, and the Trial Examiner found
that during the 12 months preceding the hearing,
Masonic's gross sales exceeded $500,000, of which
in excess of $50,000 was received from the sale of
insurance to customers located outside the State of
Ohio. We find, therefore, that Respondents are
engaged in commerce within the meaning of the Act
and that it will effectuate the purposes of the Act to
assert jurisdiction herein Accordingly, we shall
remand this case to the Trial Examiner for the
submission of a Supplemental Trial Examiner's
Decision on the merits of the case.
ORDER REMANDING CASE TO TRIAL
EXAMINER
It is hereby ordered that the above-entitled
proceeding be, and it hereby is, remanded to Trial
Examiner Paul E. Weil for the preparation and
issuance of a Supplemental Trial Examiner's
Decision, setting forth findings of fact, conclusions
of law, and recommendations with respect to the
unfair labor practices alleged in the complaint issued
in this proceeding by the Regional Director for
Region 9 on June 20, 1969. Copies of such
Supplemental Trial Examiner's Decision shall be
served upon all parties, after which the provisions of
Sections 102.46 and 102 114 of the Board's Rules
and Regulations shall be applicable.
'in view of these factors, it is immaterial whether the companies are held
out to the public as a single integrated enterprise Cf Trade Winds Motor
Hotel and Restaurant , 140 NLRB 567
TRIAL EXAMINER'S DECISION
STATEMENT OF THE CASE
PAUL E. WEIL, Trial Examiner: On a charge filed by
Independent Insurance Agents of America, herein called
the Union, on April 3, 1969, and subsequently amended
April 10, 1969, alleging that U S Assurance Co and
Assurance Investment Corporation, hereinafter referred to
as USA and Investment, had engaged in unfair labor
practices, the General Counsel of the National Labor
Relations Board on behalf of the Board by the Regional
Director for Region 9 issued a complaint on June 20,
1969, alleging that Respondents by the discharge of
Frederick B Crawford had violated Section 8(a)(3) and
(1) of the Act. By its duly filed answer Respondent denied
that it was engaged in commerce within the meaning of
the Act and denied that it had committed any unfair labor
practices.
I heard the matter on August 12, 1969, at Cincinnati,
Ohio. All parties were present and had an opportunity to
call witnesses, examine and cross-examine witnesses, and
adduce relevant evidence Briefs were filed by the General
Counsel and Respondent
Upon the entire record, including my observation of the
witnesses and after due consideration of the briefs filed by
the parties, I make the following
U.S. ASSURANCE CO 865
FINDINGS OF FACT
I JURISDICTION
USA is an Ohio corporation licensed only in Ohio as a
legal reserve life insurance company Seventy percent of
its total business consists of weekly premium insurance
sold by debit agents working out of the offices of USA
The remaining thirty percent is ordinary life insurance and
student accident insurance, both of which are sold
primarily by general agents licensed by USA. Debit
agents are also encouraged to sell ordinary life policies.
However, due to the nature of the clientele whom they
serve, only a small portion of the Company's business is
involved in such policies The alleged discrimmatee herein,
Frederick B Crawford, is a debit agent operating from
the Cincinnati Office of USA in which six debit agents are
employed under the supervision of a district office
manager who reports to Thomas R. Guthrie, vice
president of the industrial department of the U.S
Assurance Company '
Seventy-four percent of the outstanding stock of USA
is owned by Investment
Investment is a holding company apparently holding
nothing but the 74 percent interest in USA. It transacts
no business itself Investment, in its turn, is controlled by
the National Masonic Provident Association, herein called
National Masonic, under an arrangement in which
National Masonic owns all of the class "B" stock of
Investment, which, under the laws of Investment,
guarantees it 40 percent of the voting power of the
corporation. This of course gives National Masonic virtual
control of Investment, and through it of USA
National Masonic is an Ohio corporation licensed to
sell life and accident insurance to members of the
Masonic Fraternal Order in various States of the Union
During the 12 months preceding the hearing, National
Masonic's gross sales exceeded $500,000, of which in
excess of $50,000 was received from the sale of insurance
to customers located outside the State of Ohio.
The General Counsel contends that National Masonic,
Investment and USA constitute a single integrated
business enterprise and that as such, inasmuch as National
Masonic's business warrants the assertion of jurisdiction,
that such jurisdiction should be extended to USA USA
on the other hand contends that it has no impact
whatsoever on interstate commerce and accordingly
jurisdiction should not be asserted
Discussion
As I have recited above, the ownership of the three
companies is largely overlapping The management insofar
as officers and directors are concerned is completely
overlapping Thus, the president of USA is the president
of National Masonic The executive vice president of
USA is the executive vice president of Investment and the
vice president of operations of National Masonic. All five
directors of National Masonic are directors of USA.
Seven of the eight directors of Investment are directors of
USA. The only officer of USA who does not seem to be
associated with either Investment or National Masonic is
Thomas R Guthrie, who, in addition to being vice
president of the industrial department, is a director of
USA.
The Board will treat separate corporations as one
employer for jurisdictional purposes only when it appears
that they are highly integrated with respect to ownership
and operations. Although no one of the following factors
is controlling, the Board considers them relevant in
reaching such determination: (1) interrelationship of
operations, (2) centralized control of labor relations, (3)
common management, (4) common ownership or financial
control, and (5) representation to the public as a single
integrated enterprise I The General Counsel here relies
upon the almost complete integration of the three firms in
management and financial control. In addition, he points
out that all three companies are located in the same
building and they share the services of the office boy, the
switchboard operator, the stock boy, the electronic data
processing unit of four people, and the cashier for mail
payments.
USA and Masonic have separate underwriting and
accounting departments and the issue department of
Masonic issues all ordinary policies including USA
business which is about 12 percent of the total. Claims for
the two insurance firms are handled separately.
There is no showing that the two firms are represented
to the public as a single integrated enterprise, or indeed
that the public has any way of knowing that the two are
connected The record contains copies of the documents
by which the operations of USA's district offices are
performed, including insurance applications, lapse notices,
payment receipt books, receipts, form letters, and claims
notices, none of which on their face make any reference to
any company other than USA
There is no evidence that there is any integration in
operations between the two companies other than in the
general administration of them in the home office in
Mansfield, Ohio As I stated above, 70 percent of USA's
business is in the field of industrial insurance under the
sole supervision of Guthrie who has no position with
either of the other corporations All industrial insurance is
sold by debit agents employed by USA under Guthrie's
supervision. The debit agents also sell ordinary life
policies on occasion The remainder of the ordinary life
policies and the student accident insurance are sold
primarily by general agents in the State of Ohio There is
no evidence that these are the same general agents who
handle all of the sales of policies for Masonic The debit
agents sell no policies for Masonic
With regard to control of labor relations, the record
contains no indication that with the exception of the
administrative employees in the home office, the
relationships between USA and its employees, notably its
debit agents, are controlled by anyone but Thomas R
Guthrie. The General Counsel points to the fact that
Guthrie consulted with George J. Murray before
discharging Crawford. Murray is vice president, general
counsel and a director of U.S. Assurance and also vice
president and director of Investment and director of
National Masonic I believe that this is too slender a
thread upon which to hang a finding that Guthrie thereby
shares control of his labor relations with anyone
The evidence does not convince me that the three
companies are so integrated that the assertion of
'Weekly premium insurance is known in the trade as industrial
insurance
'international Union of Operating Engineers , Local 428, AFL-CIO (See
Bee Slurry Matic, Inc ). 169 NLRB No 30
866 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Jurisdiction by the Board over USA based upon the RECOMMENDED ORDER
commerce data of National Masonic is warranted.
Accordingly, I shall recommend dismissal of the Upon the basis of the foregoing it is recommended that
complaint. the complaint be dismissed in its entirety