Seven-Up Bottling Co., of Boston, Inc. v. N.L.R.B., SEVEN-UP

• Decision Date: 29 November 1974
• Docket Number: SEVEN-UP,No. 74-1200
• Citation: 506 F.2d 596
• Parties: 87 L.R.R.M. (BNA) 2929, 75 Lab.Cas. P 10,483 BOTTLING COMPANY, OF BOSTON, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — First Circuit

Page 596

506 F.2d 596

87 L.R.R.M. (BNA) 2929, 75 Lab.Cas. P 10,483

SEVEN-UP BOTTLING COMPANY, OF BOSTON, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 74-1200.

United States Court of Appeals, First Circuit.

Argued Oct. 8, 1974.

Decided Nov. 29, 1974.

George H. Foley, Boston, Mass., with whom Hale & Dorr, Boston, Mass., was on brief, for petitioner.

William H. DuRoss, III, Atty., Washington, D.C., with whom Peter G. Nash, Gen. Counsel, Irving M. Herman, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, and Elliott Moore, Deputy Associate Gen. Counsel, Washington, D.C., were on brief, for respondent.

Before ALDRICH, McENTEE and CAMPBELL, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

The Seven-Up Bottling Company of Boston Petitions this court to review an order of the National Labor Relations Board, and the Board cross applies for enforcement of its order directing the company to cease certain unfair labor practices and to bargain with the New England Joint Board, Retail, Wholesale & Department Store Union, AFL-CIO. The union had filed a representation petition with the Board on October 15, 1973, requesting certification as the bargaining representative of a unit consisting of the company's distributors. After a hearing the Board's regional director rejected the company's contention that the distributors were 'independent contractors' rather than 'employees' under section 2(3) of the National Labor Relations Act, 29 U.S.C. 152(3), and directed an election for a unit including the distributors and driver-salesmen. The company's request for review was denied by the Board, and the union won the Board-ordered election by a vote of 27 to 3. Pursuing the accepted method for challenging before this court the Board's determination that the distributors are employees, the company refused to bargain with the union. In the ensuing unfair labor practice proceeding, the Board found the company in violation of sections 8(a)(1) and (5) of the Act.

It is settled that the Board and courts are to apply general principles of agency law in distinguishing employees from independent contractors. NLRB v. United Ins. Co., 390 U.S. 254, 256, 88 S.Ct. 988, 19 L.Ed.2d 1083 (1968). In 1947 Congress passed an amendment to the Act specifically excluding independent contractors from the definition of 'employee' so that determinations on this question would be based on ordinary tests of the common law rather than on the Board's view of policy considerations embodied in the Act. H.R.Rep. No. 245, 80th Cong., 1st Sess., 18 (1947); H.R.Conf.Rep. No. 510, 80th Cong., 1st Sess., 32-33 (1947); 93 Cong.Rec. 6441-42 (June 5, 1947). At common law courts often have had difficulty deciding whether an individual is an employee or independent contractor in cases where a principal would be liable for acts of negligence in the performance of duties only if the acts were committed by an agent who is a servant. The right to control the manner of physical performance of the services-- as opposed to control over the results sought-- is generally determinative of employee status, although a number of matters of fact must be considered in making that determination. See Restatement of Agency (Second) 220(1) & (2) (1957), and official comments thereon. In cases of employment of a driver with vehicles, the existence of the right to control has traditionally been the decisive question. See generally W. Seavey, Agency 84, at 142-43 (1964), and cases cited therein. The Board has consistently applied a similar agency test. ¹ See, e.g., News Syndicate Co., 164 N.L.R.B. 422 (1967); Pure Seal Dairy Co., 135 N.L.R.B. 76, 79 (1962); Squirt-Nesbitt Bottling Corp., 130 N.L.R.B. 24 (1961).

In order to determine whether the Board has correctly applied the test here, we shall first consider the facts in the record bearing upon the relationship between the distributors and the company. The company had franchises to produce and sell several varieties of fountain syrup and beverages within an area covering eastern Massachusetts. Prior to 1970 all deliveries of products to retail accounts were made by driver-salesmen on the company payroll and in company trucks. In May, 1970, the company offered these employees an opportunity to become distributors under an oral arrangement which could be terminated at will by the company or distributor. Under the arrangement a distributor is assigned an exclusive territory, or route, by the company. The company may alter, and has altered, the size of a route. A distributor may lose an account on his route if the customer will not buy from him.

The distributors are charged for products loaded on their trucks at the company's plant, and their profits derive from the difference between the price received from customers and the price paid to the company and other expenses. The company pays no salary, unemployment insurance, Social Security, or Workmen's Compensation insurance, and takes no tak deductions, on behalf of the distributors. The annual earnings of distributors range from $27,000 to $13,000, while driver-salesmen employed by the company and trained to become distributors receive about $7000 in wages and $2000 in benefits annually. On cash accounts the distributors are responsible for their own collections; but when the customer is a large independent or chain store with a central billing office, the company bills the customer directly through a charge account and assumes credit risks, and the distributor receives a credit towards his purchases. The company maintains a list of suggested prices to charge retailers, but the distributors need not follow the list price although in practice they almost always do. The company states the wholesale price and a suggested retail price on its standard sales receipts which are given by distributors to customers.

At the time of the regional director's decision, twenty-one of the distributors had purchased their trucks directly or indirectly from the company, and the other three used trucks leased from the company. About half the purchases were financed through a bank of which the company president is an officer. The bank has an agreement from the company to buy the truck of any distributor who defaults on payments. The distributors pay all expenses for operation, maintenance, and garaging of their trucks, which are registered and insured in the distributors' names. The company at its own expense paints the trucks in the same color and style, and the trucks bear emblems of Seven-Up or of the company's other brands of beverage. The distributors hire and pay for helpers when necessary, but in practice the distributors use only one truck. The distributors may not sell products in competition with those of the company. The company, in cooperation with the franchising parents, pays for advertising carried on the trucks and for other promotional material. The company does not require the wearing of uniforms, but suggests it. The distributors do buy and usually wear uniforms, which include an insignia provided by the company.

Three company sales counsellors assist the distributors in promotions and displays, and company merchandisers visit customers' stores and occasionally accompany the distributors in their trucks. New...