National Labor Relations Board v. Phoenix Mut. L. Ins. Co., 9493.

• Citation: 167 F.2d 983
• Decision Date: 07 May 1948
• Docket Number: No. 9493.,9493.
• Parties: NATIONAL LABOR RELATIONS BOARD v. PHŒNIX MUT. LIFE INS. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

167 F.2d 983 (1948)

NATIONAL LABOR RELATIONS BOARD v. PHŒNIX MUT. LIFE INS. CO.

No. 9493.

Circuit Court of Appeals, Seventh Circuit.

May 7, 1948.

David P. Findling, Associate General Counsel, Ruth Weyand, Acting Assistant General Counsel, National Labor Relations Board, Fannie M. Boyls and Frederick D. Vincent, Jr., all of Washington, D. C., for petitioner.

Tom Leeming, Richard V. Henry, Jr., Lewis D. Spencer, and Owen Rall, all of Chicago, Ill., for respondent.

Before MAJOR and MINTON, Circuit Judges, and DUFFY, District Judge.

DUFFY, District Judge.

The National Labor Relations Board petitions this court pursuant to Section 10(e) of the National Labor Relations Act, 49 Stat. 449, Sec. 1 et seq.; 29 U.S.C.A. § 151 et seq., for enforcement of its order of June 6, 1947, based upon findings that the respondent, in discharging employees Davis and Johnson, engaged in unfair labor practices affecting commerce in violation of Section 8(1) of the act. The Board found that respondent had interfered with, restrained, and coerced its employees in their rights guaranteed under Section 7 because they had engaged in concerted activity for their mutual aid or protection. The Board ordered respondent to cease and desist from the unfair labor practice so found and to reinstate Messrs. Davis and Johnson with back pay and to post appropriate notices of compliance.

Section 8(1) of the act provides:

"It shall be an unfair labor practice for an employer —

"(1) To interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7 * * *."

Section 7 provides:

"Employees shall have the right to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in * * * concerted activities for the purpose of collective bargaining or other mutual aid or protection."

The issues to be here decided are: (1) Is the National Labor Relations Act applicable to respondent's operations? (2) Were salesmen Davis and Johnson employees of respondent or independent contractors? (3) Is the Board's finding that Davis and Johnson were discharged by respondent because they engaged in concerted activities for their mutual aid or protection supported by substantial evidence, and if so did respondent's actions amount to an unfair labor practice under the act? and (4) Was the Board's order valid and proper?

Respondent, a Connecticut corporation, is a mutual life insurance company whose business is selling and issuing life insurance policies and annuities. On the basis of total insurance in force it ranks 24th among all insurance companies in the United States. It conducts business in 33 States and in the District of Columbia. Of its two branch offices in Chicago, the one known as the Chicago-LaSalle Office is involved in this proceeding. On December 31, 1945, respondent had in force insurance amounting to the total of $814,789,831.00, and its total assets amounted to $386,044,844.00.

There can be no doubt as to the act's application to the business of respondent. Polish National Alliance v. National Labor Relations Board, 322 U.S. 643, 64 S.Ct. 1196, 88 L.Ed. 1509; Santa Cruz Fruit Packing Co. v. National Labor Relations Board, 303 U.S. 453, 464, 58 S.Ct. 656, 82 L.Ed. 954; National Labor Relations Board, v. Bradford Dyeing Association. 310 U.S. 318, 326, 60 S.Ct. 918, 84 L.Ed. 1226. A good description of the scope of respondent's business is given in the following quotation from the decision of the Supreme Court in United States v. South-Eastern Underwriters Association et al., 322 U.S. 533, 539, 540, 541, 64 S.Ct. 1162, 1166, 88 L.Ed. 1440:

"The modern insurance business * * * has become one of the largest and most important branches of commerce. * * *

"* * * Premiums collected from policyholders in every part of the United States flow into these companies for investment. As policies become payable, checks and drafts flow back to the many states where the policyholders reside. The result is a continuous and indivisible stream of intercourse among the states composed of collections of premiums, payments of policy obligations, and the countless documents and communications which are essential to negotiation and execution of policy contracts. * * *"

It is apparent that a stoppage of respondent's business at any of its sources would have a substantial effect upon the flow of interstate commerce. Associated Press v. National Labor Relations Board, 301 U.S. 103, 125-130, 57 S.Ct. 650, 81 L.Ed. 953; Polish National Alliance v. National Labor Relations Board, supra, 322 U.S. at pages 646, 647, 64 S.Ct. 1196.

The contention made that the particular acts of respondent, upon which the Board based its finding of unfair labor practice, have not been shown to have been a burden upon commerce is without merit. The Board need not prove an actual stoppage in the flow of commerce or even the immediate likelihood of such stoppage before it assumes jurisdiction over the employer. National Labor Relations Board v. Bradford Dyeing Association, supra, 310 U. S. at page 326, 60 S.Ct. 918; Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 222, 59 S.Ct. 206, 83 L.Ed. 126; National Labor Relations Board v. Fainblatt, 306 U.S. 601, 608, 307 U.S. 609, 59 S.Ct. 668, 83 L.Ed. 1014; National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 43, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352.

The Board here properly concluded:

"The activities of the respondent * * * occurring in connection with the operations of the respondent described * * * have a close, intimate, and substantial relation to trade, traffic, and commerce among the several States, and tend to lead to labor disputes burdening and obstructing commerce and the free flow of commerce."

Respondent strongly urges that its salesmen are not employees within the meaning of the act and argues that Davis and Johnson were independent contractors to whom the protection of the act may not properly be extended.

The act does not contain a precise definition of the term "employee." As amended in 1947 by the Taft-Hartley Law, Public Law No. 101, 80th Cong., 1st Sess., Chap. 120, 29 U.S.C.A. § 152(3), the act provides that the term "employee" shall not include "any individual having the status of an independent contractor." Therefore, it was incumbent upon the Board in the first instance to determine whether the insurance salesmen involved were employees or independent contractors, and this court likewise must determine that issue on the Board's petition for enforcement of its order.

A similar question was considered by this court in Williams v. United States, 7 Cir., 126 F.2d 129, 132, certiorari denied, 317 U.S. 655, 63 S.Ct. 52, 87 L.Ed. 527, where the rule was stated that each case must depend upon its own facts, and that the test most usually employed for determining the distinction between an independent contractor and an employee is found in the nature and the amount of control reserved by the person for whom the work is done. This court there pointed out that the employer-employee relationship exists when the person for whom the work is done has the right to control and direct the work, not only as to the result accomplished by the work, but also as to the details and means by which that result is accomplished, and that it is the right and not the exercise of control which is the determining element. A number of tests were pointed out, such as the right to hire and discharge persons doing the work, the method and determination of the amount of the payment to the workmen, whether the person doing the work is engaged in an independent business or enterprise, whether he stands to make a profit on the work of those working under him, the question of which party furnishes the tools or materials with which the work is done, and who has control of the premises where the work is done. In addition to the tests there mentioned, consideration must be given to other factors, such as whether the relationship is of a permanent character, the skill required in the particular occupation, and who designates the place where the work is to be performed.

In the case at bar the respondent provides headquarters for its salesmen and furnishes each of them with office space, a desk, a telephone, stenographic service, stationery, postage, filing cabinets, sales supplies, and business cards. It also pays for the indemnity bonds and license fees which the State of Illinois requires of each insurance agent. Each salesman is required to devote his full time to respondent's business and may not assign his contract, nor employ anyone to work under him. Respondent requires each salesman to produce a specified minimum of new business each year and if he fails to do so he is subject to discharge. The salesmen are engaged in soliciting life and endowment insurance within an assigned territory and usually collect the first premium. Respondent selects its agents from among those persons who make written applications for these positions, and after having a personal interview. To be selected as an insurance salesman, it is not necessary for the applicants to have previous experience at selling insurance. After an applicant is selected and after signing an agency contract, each is given an intensive training by respondent's supervisory staff. He spends the first two weeks of his employment in respondent's offices receiving instructions from the office manager and other supervisory personnel, and is taught the use of the company's various forms and records, and initiated in the sales approach. After completing this training period the salesmen are permitted to take field trips. During their first interviews they usually are accompanied by respondent's office manager or other supervisor, but as they gain experience they are subjected to less field supervision. During the first two years of their...