A. Duie Pyle, Incorporated v. NATIONAL LABOR RELATIONS BOARD

• Decision Date: 15 August 1967
• Docket Number: No. 16010.,16010.
• Citation: 383 F.2d 772
• Parties: A. DUIE PYLE, INCORPORATED and A. E. F. Transportation, Incorporated, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Local 107, Local 384, Local 470, Local 312, Local 331 and Local 676 each Affiliated With the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Intervenors.
• Court: U.S. Court of Appeals — Third Circuit

383 F.2d 772 (1967)

A. DUIE PYLE, INCORPORATED and A. E. F. Transportation, Incorporated, Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent Local 107, Local 384, Local 470, Local 312, Local 331 and Local 676 each Affiliated With the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Intervenors.

No. 16010.

United States Court of Appeals Third Circuit.

Argued March 7, 1967.

Decided August 15, 1967.

Robert H. Kleeb, Morgan, Lewis & Bockius, Philadelphia, Pa. (Peter D. Walther, David A. Leff, Philadelphia, Pa., on the brief), for petitioners.

Paul Spielberg, N.L.R.B., Washington, D. C. (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Gary Green, Atty., National Labor Relations Board, on the brief), for respondent.

Edward Davis, Philadelphia, Pa. (David Previant, Milwaukee, Wis., Howard S. Simonoff, Camden, N. J., on the brief), for intervenors.

Before McLAUGHLIN, HASTIE and FREEDMAN, Circuit Judges.

OPINION OF THE COURT

FREEDMAN, Circuit Judge:

This is a petition to review a decision and order of the National Labor Relations Board that certain provisions of a collective bargaining agreement dealing with subcontracting did not violate the hot cargo proscription of the Landrum-Griffin Act, which added § 8(e) to the National Labor Relations Act.¹

Petitioners are common carriers and as members of a multiemployer bargaining association are parties to a collective bargaining agreement with local unions affiliated with the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. The agreement contains a number of provisions dealing with carrier subcontracts to individuals who own and operate truck-tractors and tractor-trailers. An owner who operates his own equipment is known as an owner-operator, and an owner who has more than one piece of equipment and employs one or more drivers is known as a fleet-owner. The subcontracting arrangements are carried out by a lease of the equipment which also includes the services of the driver. Since the subcontractees do not have the requisite permits they may transport goods in interstate commerce only while working for certificated interstate carriers such as petitioners.

The 1963 collective bargaining agreement, the one before us, contains detailed regulations of the treatment of owner-operators and fleet-owners, including the setting of minimum wages and minimum lease rentals and provision for seniority rights, insurance and the sale of equipment at its true value.² It expressly states that its object is to assure the payment of union wage scales and to prevent their circumvention through reduction of wage scales in the guise of absorption of loss from the operation of equipment.³ Another provision of the agreement, not in question here, requires that no work presently performed by or later assigned to the bargaining unit shall be subcontracted unless all regular employees are working.⁴ A related provision, also unchallenged, provides that the petitioners may not lease or hire outside equipment unless all of their available usable equipment is working, and bars the use of outside equipment while regular employees are on layoff.⁵ A final provision, which is the center of the present controversy and was newly added in 1963, requires that leased equipment must be operated in all cases by an "employee" of the carrier, who must be paid "pursuant to the terms" of the collective bargaining agreement, and that the employer shall reserve the right to control the manner, means and details by which the owner-operator performs his service, as well as the ends thereby accomplished.⁶ It is undisputed that the newly added provision would change the status of nonunionized owner-operators and fleet-owners from independent contractors to employees and thus would require them to become union members because of the union security provision of the agreement.⁷

The Board concluded that the agreement did not violate § 8(e) and that the provisions here in question, providing in detail for the terms and conditions of employment of owner-operators and requiring employee status of them, were simply designed to protect unit work and standards from erosion by unregulated subcontracts to owner-operators and fleet-owners. It also decided that the requirement that the operators of all leased equipment must be employees was not invalid simply because it had the incidental effect of requiring the subcontractees to become members of the union. Highway Truck Drivers and Helpers, Local 107, 159 N.L.R.B. No. 1 (1966). Petitioners, however, contend that the union in the guise of protecting legitimate rights of the bargaining unit has reached out to coerce the owner-operators and fleet-owners to become unionized on pain of losing their subcontracts. This they contend renders invalid under § 8(e) the provisions of the agreement, especially those requiring the subcontractees to become employees and thereby to join the union.

Section 8(e) makes it an unfair labor practice for a union and an employer to agree that the employer shall cease and refrain from handling, using, selling, transporting, or otherwise dealing in the products of another employer, "or to cease doing business with any other person." The Act declares invalid a provision made in violation of its prohibition.⁸

At the threshold of our inquiry is the question whether the agreement requires a cessation of business with the owner-operators and fleet-owners since by its terms it would permit them to retain the work if they became employees of the carrier and joined the union. The requirement that the owner-operators and fleet-owners must become employees of the carriers prohibits a carrier by implication from doing business with those who do not become its employees and thus requires it "to cease doing business" within the meaning of § 8(e). General Teamsters', Warehousemen and Helpers' Union, Local No. 890, 137 N.L.R.B. 641, 643-44 (1962).⁹ It is no answer to say that if the subcontractees become employees and join the union the carriers will not be required to cease doing business with them. While it is true that not every incidental alteration in the relationship between the parties to the subcontract would rise to the extent of constituting an agreement to cease doing business, the provisions before us are so drastic in their impact on the continued relationship of the independent subcontractees with the carriers that they fall clearly within the area regulated by § 8(e).¹⁰

The scope of the prohibition of § 8(e), however, is not to be found in the literal meaning of its broad language, but rather in its history and the circumstances out of which it arose, all of which has recently been described authoritatively by the Supreme Court in National Woodwork Manufacturers Association v. NLRB, 386 U.S. 612, 87 S.Ct. 1250, 18 L.Ed.2d 357 (1967). The Court there showed that § 8(e) was enacted to close a "loophole" in § 8(b) (4) (A), which the Court in the Sand Door case¹¹ had construed as permitting an employer to carry out voluntarily a hot cargo provision. Section 8(e) therefore made it an unfair labor practice merely to enter into such an agreement, which it declared void. The setting in which § 8(e) was adopted thus requires it to be construed in harmony with § 8(b) (4) and this carried into § 8(e) the distinction made in § 8(b) (4) between so-called "primary" and "secondary" activities. National Woodwork Manufacturers Association v. NLRB, supra; Houston Insulation Contractors Association v. NLRB, 386 U.S. 664, 87 S.Ct. 1278, 18 L.Ed.2d 389 (1967).¹² If the object of the agreement is to benefit the employees of the bargaining unit represented by the union, it is "primary" and in such event does not fall within the proscription of § 8(e), whereas if the object is the application of pressure on an outside employer in order to require him to accede to union objectives it is "secondary" and within the prohibition of § 8(e).¹³ Thus, in the National Woodwork Manufacturers case, the Supreme Court upheld as "primary" a provision that no employer would handle prefabricated doors, because it sought only to preserve work which traditionally had been performed by members of the bargaining unit on the job site.

In the present case the union has a legitimate interest in the subcontracts of the work which its members have the capacity to perform. The danger which such subcontracts have posed to the job security of bargaining unit members was recognized by the Supreme Court in the Oliver cases, Local 24, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America v. Oliver, 358 U.S. 283, 79 S.Ct. 297, 3 L.Ed.2d 312 (1959), and 362 U.S. 605, 80 S.Ct. 923, 4 L.Ed.2d 987 (1960). The Court there dealt with provisions which were virtually identical to those involved here and held that they were immune from attack under state antitrust law because of the exclusive federal jurisdiction over the subject matter of the agreement. The Court recognized that the conditions under which a carrier could lease the equipment of an owner-operator had been in dispute for many years and that the owner-operators' practice of accepting inadequate rentals for their vehicles had endangered the maintenance of the union wage scales.¹⁴ The Court considered these factors sufficient to require bargaining on the conditions of subcontracts granted by the carriers to owner-operators.¹⁵ The Board therefore was justified in concluding that the present subcontracts were a legitimate concern of the union, subject to suitable regulation in the collective bargaining agreement.

Petitioners contend, however, that the provisions requiring the subcontractees to become employees of the carriers and thus to become members of the union are utterly unnecessary for the protection of the bargaining unit and therefore have a secondary...