350 F.2d 108 (8th Cir. 1965), 17171, N. L. R. B. v. Adams Dairy, Inc.

Docket Nº:17171.
Citation:350 F.2d 108
Party Name:NATIONAL LABOR RELATIONS BOARD, Petitioner, v. ADAMS DAIRY, INC., Respondent.
Case Date:September 08, 1965
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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350 F.2d 108 (8th Cir. 1965)

NATIONAL LABOR RELATIONS BOARD, Petitioner,

v.

ADAMS DAIRY, INC., Respondent.

No. 17171.

United States Court of Appeals, Eighth Circuit.

Sept. 8, 1965

Norton J. Come, Asst. General Counsel, N.L.R.B., Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel and Laurence S. Gold, Attorney N.L.R.B., Washington, D.C., for petitioner.

J. Leonard Schermer, of Shifrin, Treiman, Agatstein & Schermer, St. Louis, Mo., Sylvan Agatstein, for Adams Dairy.

Harry H. Craig, Carroll C. Gilpin, St. Louis, Mo., for charging party as amicus curiae.

Before VOGEL, VAN OOSTERHOUT and RIDGE, Circuit Judges.

VOGEL, Circuit Judge.

On September 12, 1963, this court, on a petition from the National Labor Relations Board, denied enforcement of the Board's order in all respects save one.

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National Labor Relations Board v. Adams Dairy, Inc., 8 Cir., 1963, 322 F.2d 553. The Board petitioned the Supreme Court for certiorari and on January 18, 1965, such petition was granted. Thereafter, by per curiam order, 379 U.S. 644, 85 S.Ct. 613, 13 L.Ed.2d 550 the prior judgment of this court was vacated and the case was remanded to us 'for reconsideration in light of Fibreboard Paper Products Corp. v. Labor Board', 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233, decided by the Supreme Court subsequent to our opinion in Adams Dairy.

Upon remand, we directed that additional briefs be submitted and the case be reargued. That has been done. In our prior opinion, at page 562 of 322 F.2d, we said:

'We hold here that the decision on the part of Adams to terminate a phase of its business and distribute all of its products through independent contractors was not a required subject of collective bargaining.'

After consideration of the additional briefs filed by the parties, the oral arguments of counsel, and viewing this situation in the light of Fibreboard, as directed, we believe our original opinion to have been correct. We conclude that Adams Dairy is so factually distinguishable from Fibreboard as to take Adams Dairy outside the orbit of the Fibreboard holdings.

Fibreboard arose out of a dispute between the Fibreboard Paper Products Company and a union representing that company's maintenance employees. In September of 1958 the union and company had entered into the latest of a series of collective bargaining agreements which was to expire on July 31, 1959, upon 60 days' notice by either the union or the company. The union gave timely notice. The company delayed meeting with the union until July 27, 1959, at which time the union was informed that Fibreboard intended to 'let out' the maintenance work to an independent contractor to save on costs. By July 30th the contractor had been secured on the basis of costs of the operation plus a fixed fee of $2,250 per month. The union was told that in view of the hiring of the contractor, a new agreement negotiation session would be futile and none was had. Fibreboard was charged with violations under §§ 8(a)(1), 8(a)(3) and 8(a)(5) of the National Labor Relations Act and a violation was upheld under § 8(a)(5). 1 The facts in the Adams Dairy case are fully and adequately set out in our prior opinion. At this point it is only necessary to say that Adams Dairy was not found by this court to be in violation of §§ 8(a)(5) and (1) of the National Labor Relations Act by neglecting to bargain with the employees' certified union bargaining representative, the Independent Wholesale Dairy Products Salesmen Association, when discharging their driver-salesmen and replacing them with independent contractors.

As a preliminary matter to the further comparison of these two cases, we point out that the Supreme Court, in Fibreboard, carefully limited its decision to the facts presented in that case. At page 209 of 379 U.S., at page 402 of 85 S.Ct., Mr. Chief Justice Warren, who wrote the majority opinion, stated:

'* * * We agree with the Court of Appeals that, on the facts of this case, the 'contracting out' of the work previously performed by members of an existing bargaining unit is a subject about which the National Labor Relations Act requires employers and the representatives of their employees to bargain collectively.'

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At page 215 of 379 U.S., at page 405 of 85 S.Ct., the opinion continues:

'We are thus not expanding the scope of mandatory bargaining to hold, as we do now, that the type of 'contracting out' involved in this case-- the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment-- is a statutory subject of collective bargaining under § 8(d). Our decision need not and does not encompass other forms of 'contracting out' or 'subcontracting' which arise daily in our complex economy.'

In footnote No. 8 on page 215 of 379 U.S., on page 405 of 85 S.Ct., the court states:

'As the Solicitor General points out, the terms 'contracting out' and 'subcontracting' have no precise meaning. They are used to describe a variety of business arrangements altogether different from that involved in this case. For a discussion of the various types of 'contracting out' or 'subcontracting' arrangements, see Brief for Respondent, pp. 13-17; Brief for Electronic Industries Association as amicus curiae, pp. 5-10.'

In a separately concurring opinion, joined in by Mr. Justice Douglas and Mr. Justice Harlan, Mr. Justice Stewart pointed out at page 218 of 379 U.S., at page 407 of 85 S.Ct.:

'* * * The question posed is whether the particular decision sought to be made unilaterally by the employer in this case is a subject of mandatory collective bargaining within the statutory phrase 'terms and conditions of employment'. That is all the Court decides. The Court most assuredly does not decide that every managerial decision which necessarily terminates an individual's employment is subject to the duty to bargain. Nor does the Court decide that subcontracting decisions are as a general matter subject to that duty. The Court holds no more than that this employer's decision to subcontract this work, involving 'the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment' is subject to the duty to bargain collectively. Within the narrow limitations implicit in the specific facts of this case, I agree with the Court's decision.'

Thus the Supreme Court has not held that all forms of contracting out are subject to collective bargaining. For reasons set out below, we believe that the situation in Adams Dairy is so factually distinguishable from that in Fibreboard as to take Adams Dairy outside of the scope of the collective bargaining requirements.

Turning now to the cases themselves, we note, first, that the decision to contract out the maintenance work in Fibreboard did not change the basic operation of the company involved. The maintenance work was let out under a terminable contract on a cost-plus basis. The contractor performed the same work previously performed by company employees on company premises with company machines and equipment. The contractor was under the direct control of the company. The company directly enjoyed the benefits of the contractor's work. As stated by the Supreme Court in Fibreboard, at page 213 of 379 U.S., at page 405 of 85 S.Ct.:

'The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company's decision to contract out the maintenance work did not alter the Company's basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment.

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Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business.'

The separately concurring opinion states at page 219 of 379 U.S., at page 407 of 85 S.Ct.:

'* * * Maintenance work continued to be performed within the plant, with the work ultimately supervised by the company's officials and 'functioning as an integral part' of the company. Fluor was paid the cost of operations plus $2,250 monthly. The savings in costs anticipated from the arrangement derived largely from the elimination of fringe benefits, adjustments in work scheduling, enforcement of stricter work quotas, and close supervision of the new personnel. Under the cost-plus arrangement, Fibreboard remained responsible for whatever maintenance costs were actually incurred. * * *'

In Adams Dairy, on the other hand, a basic operational change did take place when the dairy decided to completely change its existing distribution system by selling its products to independent contractors. After the decision was made by the dairy to sell its products dockside to independent distributors, all of the trucks used previously by driversalesmen were sold to independent distributors. Adams Dairy did not finance the sale, nor in any way arrange for such financing. The routes driven by the independent distributors, though covering a similar territory, did not correspond to the previous routes of the driver-salesmen. The independent distributors took title to the products at dockside and Adams, thereafter, legally had no concern with what was done with the...

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