National Labor Relations Board v. Bill Daniels, Inc.

• Decision Date: 17 March 1953
• Docket Number: No. 11536,11582.,11536
• Citation: 202 F.2d 579
• Parties: NATIONAL LABOR RELATIONS BOARD v. BILL DANIELS, Inc. et al. NATIONAL LABOR RELATIONS BOARD v. GILBERT MOTOR SALES, Inc.
• Court: U.S. Court of Appeals — Sixth Circuit

202 F.2d 579 (1953)

NATIONAL LABOR RELATIONS BOARD v. BILL DANIELS, Inc. et al.

NATIONAL LABOR RELATIONS BOARD v. GILBERT MOTOR SALES, Inc.

Nos. 11536, 11582.

United States Court of Appeals, Sixth Circuit.

January 20, 1953.

Rehearing Denied March 17, 1953.

COPYRIGHT MATERIAL OMITTED

John E. Jay, Washington, D. C. (George J. Bott, David P. Findling, A. Norman Somers and Frederick U. Reel, Washington, D. C., on the brief), for petitioner.

Frank E. Kenney, Detroit, Mich., for respondents.

Before SIMONS, Chief Judge, and ALLEN and McALLISTER, Circuit Judges.

ALLEN, Circuit Judge.

The question presented in these cases arising out of petitions for enforcement of orders of the National Labor Relations Board is whether a Michigan automobile dealer who operates independently under a sales contract with the Ford Motor Company (hereinafter called Ford) and sells entirely within the state of Michigan, or 99% within that state, parts, accessories and motor cars purchased from Ford within the state of Michigan, is engaged in commerce among the several states within the meaning of the National Labor Relations Act as amended, 29 U.S.C.Supp. IV, § 141 et seq., 29 U.S.C.A. § 141 et seq. It is agreed that Ford is engaged in interstate commerce and that the parts and accessories in question are manufactured outside the state. The motor cars are assembled within the state of Michigan from parts manufactured outside the state.

Respondent Gilbert Motor Sales, Inc. (hereinafter called Gilbert) and respondent Walker Motors, Inc. sell no cars, parts or accessories outside Michigan. All three respondents make their purchases of vehicles, parts and accessories entirely within the state. Respondent Daniels, Inc. shipped 1% of its sales in interstate commerce during the period involved. This is the only material variation in the facts and the two petitions for enforcement involve in general identical propositions of law.

The facts are stipulated and may be summarized as follows:

The respondents are retail dealers in Ford motor vehicles and they also sell parts and perform service operations. Ford operates manufacturing plants in Michigan, Ohio and New York and assembly plants within fourteen states. More than one-half of the parts and accessories sold by Ford to its service dealers come from plants outside Michigan. In 1948 Ford manufactured more than a million vehicles. The cars here involved are assembled by Ford in Michigan at Ford's Dearborn plant and the parts and accessories involved are delivered to respondents from the Dearborn plant, where they have been held upon arrival from outside the state. With the exception of a few sales to the United States Government and sales of company used cars, Ford does not sell vehicles at retail, but operates through some seven thousand independent dealers. All parts purchased from Ford outside the state are finished parts sold by independent manufacturers not affiliates of Ford.

Ford and the retail dealers operate under a written agreement which the National Labor Relations Board in its brief denominates "a franchise." However, the contract lacks the indispensable element of franchise for it is not conferred by any sovereignty or state. Bank of Augusta v. Earle, 13 Pet. 519, 585, 10 L.Ed. 274; California v. Central Pacific Rd. Co., 127 U.S. 1, 40, 8 S.Ct. 1073, 32 L.Ed. 150. Even though such contracts are sometimes loosely referred to as franchises, the sales contract is an agreement between two private entities arising out of the "general right to engage in a lawful business, part of the liberty of the citizen". Mr. Justice Brandeis in Frost v. Corporation Commission, 278 U.S. 515, 534, 49 S.Ct. 235, 242, 73 L. Ed. 483. The contract deals with and makes provision for situations which call for adjustment between a wholesale manufacturer and a retail dealer.

The sales agreement expressly provides that the dealer is to operate independently. It reads as follows:

"Dealer Not To Act As Agent

"(7) Dealer further agrees not to make any representation or warranty concerning Company products on behalf of Company, but to refer purchasers to `Manufacturer\'s Warranty\' printed on back of Retail Buyer\'s Order form supplied by Company and not in any manner to attempt to assume or create obligations on behalf of Company or in any manner attempt to act as agent of Company."

* * * * * *

"Limitation Of Company\'s Liability

"(12) * * * It is distinctly understood that this agreement contemplates that Dealer will acquire Dealer\'s own plant and facilities in accordance with Dealer\'s own discretion and will purchase Company products as Dealer\'s own and resell them to customers selected by Dealer, all in conformity with the requirements and limitations herein specified but otherwise in Dealer\'s own discretion. Nothing herein contained shall impose any liability on Company for any expenditures made or incurred by Dealer in preparation for performance or in performance of this agreement."

Certain restrictions are agreed to which presumably are mutually beneficial. The right to approve the location of the dealer's business is given to Ford. The dealer agrees not to represent non-genuine Ford parts as genuine and representatives of Ford may investigate complaints that this agreement has been violated. The dealer agrees not to sell at less than the minimum price suggested, but is not forbidden to sell above that price. While Ford representatives regularly call at the dealer's place of business to give advice and counsel upon mutual problems, Ford has no general control over the operation. The service department, for instance, is in no way supervised.

Ford makes a charge to all dealers for each car purchased. This money is invoiced as a part of the purchase money for each car, belongs to Ford, and is used by Ford for promotional advertising. Also, under dealer authorization, Ford lists an additional amount on the invoice of each car. Ford acts as collector of this amount and sends it to the Dealer's Advertising Fund. A committee of dealers administers this money locally for advertising in the Detroit metropolitan area.

Each of the three respondents has been involved in representation proceedings as a result of which the Board ordered elections and certified the union as bargaining representative. Each respondent refused to bargain with the union, contending that it was not engaged in interstate commerce. The present complaint proceedings were then instituted charging respondents with unfair labor practices in refusing to bargain with the union. The Board ruled that the respondents were engaged in interstate commerce, found that they had violated the statute in refusing to bargain collectively, and issued the usual cease and desist orders which are the subject of these enforcement proceedings.

Respondent Gilbert contends that the Board erred in entertaining a second petition for certification of representation within the twelve month period following the election of July 21, 1949, which had been directed by the Board in a previous representation proceeding. It urges that this action of the Board violates "the spirit if not the letter" of the statute, which provides in § 159(c) (3) that "No election shall be directed in any bargaining unit or any subdivision within which, in the preceding twelve-month period, a valid election shall have been held."

The purpose of this section clearly is to relieve the employer of additional representation proceedings for one year after the Board has directed and held a valid election. That this section would be entirely robbed of its intended force if the Board should allow representation proceedings to be instituted within the second or third month after an election is self-evident; but the wording of the section is plain. It prohibits, not the filing of a representation petition, but the direction of an election within the twelve month period. Here the second election was directed August 4, 1950, the preceding election having been held July 21, 1949. We conclude that this contention has no merit.

Respondent Gilbert attacks the receipt in evidence of the transcript of representation proceedings involving respondent and other Ford dealers in a previous case, 7-RC-143. Section 9(d) of the National Labor Relations Act as amended provides:

"Whenever an order of the Board made pursuant to section 10(c) is based in whole or in part upon facts certified following an investigation pursuant to subsection (c) of this section, and there is a petition for the enforcement or review of such order, such certification and the record of such investigation shall be included in the transcript of the entire record required to be filed under section 10(e) or 10(f), and thereupon the decree of the court enforcing, modifying, or setting aside in whole or in part the order of the Board shall be made and entered upon the pleadings, testimony, and proceedings set forth in such transcript."

It is clear that this section does not provide for the admission of transcripts of other proceedings in the transcript of record for judicial review. In fact, it prohibits the receipt of the transcript here, for the order of the Board of which enforcement is sought is not based, either in whole or in part, upon facts certified growing out of representation proceeding 7-RC-143. This record does not show what if any facts were certified from that proceeding. Moreover, local 415 instituted No. 7-RC-143, while Local 408 instituted 7-RC-960. The parties involved in the second representation proceedings were different from those involved in the first and the issues were not necessarily identical. It was error to admit the transcript.

The contention of Daniels and Walker as to the admission of certain evidence in the unfair labor charge against them has less merit. They contend that the Board erred in allowing the introduction of additional evidence in the complaint proceedings after the issue as to the...