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Herald Co. v. National Labor Relations Board

decided: June 11, 1971.

THE HERALD COMPANY, ET AL., PETITIONERS
v.
NATIONAL LABOR RELATIONS BOARD, RESPONDENT. BUILDING SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 200, AFL-CIO, ET AL., INTERVENORS. BUILDING SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 200, AFL-CIO, ET AL., PETITIONERS V. NATIONAL LABOR RELATIONS BOARD, RESPONDENT. THE HERALD COMPANY, ET AL., INTERVENORS



Lumbard, Anderson and Feinberg, Circuit Judges.

Author: Lumbard

LUMBARD, C. J.:

The Herald Company, which publishes and distributes three newspapers in Syracuse, New York, petitions this court to review an order of the National Labor Relations Board, issued on March 3, 1970, pursuant to section 10 (c) of the Act, and the Board cross applies for enforcement. Shortly after the Board filed its petition for enforcement, The Building Service Employees, International Union, Local 200, AFL-CIO and the Syracuse Mailers Union No. 73 intervened. These unions joined together in filing a petition to review the Board's order in a separate action on the theory that the Board failed to grant them certain relief, and the Company intervened in that case. These two cases have been consolidated and were heard together. We deny the petition to review and grant enforcement of the Board's order.

Following a lengthy hearing the Board's Regional Director for its Third Region on July 19, 1967 issued a decision and directed an election for all of the distributors of the Herald Company's newspapers. He defined the appropriate bargaining unit in which to conduct the election as follows:

All city, motor route, street sales, country and suburban distributors employed by the central New York area, but excluding all other employees, office clerical employees, guards, professional employees and supervisors as defined in the Act.

The Regional Director also found that the distributors were "employees" under section 2(3); 29 U.S.C. § 152(3) of the Act. Arguing that the distributors are independent contractors rather than employees, the Company moved to have the Board reopen the representation hearing. That motion was denied on November 15, 1967 and a subsequent motion for reconsideration was denied on December 4, 1967.

On January 4, 1968 the Regional Director conducted an election in the bargaining unit which he had found appropriate. The Union won that election by a vote of 63 to 31 and, on January 23, 1968, overruling the Company's objections to the election, the Director certified Local 200 as the distributors' collective bargaining representative.

An unfair labor practice proceeding ensued as a result of a complaint by the Union and on March 3, 1970 in a decision reported at 181 NLRB No. 62 the Board found that the Company violated §§ 8(a)(1) and (5) of the Act by refusing to recognize and bargain with Local 200, which had been certified as the exclusive collective bargaining representative of the distributors, by refusing to bargain with the Mailers and by unilaterally changing conditions of employment after Local 200 had been certified. The Board also found that the Company violated §§ 8(a)(1) and (3) of the Act by other discriminatory actions taken against the distributors with the intention of discouraging union membership and activities. The Board issued a bargaining order, as well as a traditional cease and desist order. It also ordered reinstatement of distributors discriminatorily terminated and that they be made whole for compensation which had been withheld from them by the Company.

The principal question at issue is whether the Board's finding that the distributors were employees, and not independent contractors, under section 2(3); 29 U.S.C. § 152(3), is supported by substantial evidence. Subsidiary to this are the claims of discriminatory discharge. We find substantial evidence in the record in support of the Board's findings that the distributors are employees and that twelve of them were discriminatorily discharged because of union activity. Accordingly we grant enforcement of the Board's orders.

Since NLRB v. United Insurance Company, 390 U.S. 254, 19 L. Ed. 2d 1083, 88 S. Ct. 988 (1968) it has been settled that general agency principles are to be applied in distinguishing between "employees" under section 2(3) and "any individual having the status of an independent contractor." The Supreme Court held that the NLRB's determination that debit agents of an insurance company were "employees" under the common law of agency should have been enforced by the Seventh Circuit. In News Syndicate Company, Inc., 164 NLRB 422, 423 (1967) the Board articulated the agency test as follows:

"In determining the status of persons alleged to be independent contractors, the Board has consistently held that the Act required application of the 'right to control' test. Where the one 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, while, on the other hand, where control is reserved only as to the result sought, the result is that of an independent contractor. The resolution of this question depends on the facts of each case, and no one factor is determinative."

Thus we turn to the factual background of the relationship between the "distributors" and the Herald Company in order to assess "the total factual context . . . in light of the pertinent common-law agency principles." NLRB v. United Insurance Co., supra, 390 U.S. at 258.

The Herald Company prints, sells and distributes The Herald Journal, a daily evening newspaper and the Herald American, a Sunday paper. Through an operating division, it also publishes a daily morning paper, The Post Standard. To distribute these papers in Syracuse and the surrounding area, the Company engages over 100 distributors. Since 1947 each distributor has received a franchise contract from the Company, and in arguing that the distributors are no longer employees, the Company places great emphasis on the terms of these contracts which explicitly state that the distributor occupies at all times the position of an independent contractor and controls "all ways and means relating to the proper performance and completion of the contract."

Both the Company and the Board point to a myriad of facts to support their opposing positions regarding the status of the distributors. The Company relies principally on the following facts: The franchise contracts, as redrafted in 1965, give the distributors the right to distribute the newspapers within an exclusive territory. They state that personal performance of the distributors' contractual obligation is not required; as a result, they are free to hire substitutes and to select delivery boys to work on routes which they establish. Distributors have considerable latitude in planning their own work schedules. They decide whether or not to extend credit to their customers and bear the risk of non-payment. They provide motor vehicles and other ...


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