Fedex Home Delivery v. N.L.R.B., 07-1391.

Citation563 F.3d 492
Decision Date21 April 2009
Docket NumberNo. 07-1436.,No. 07-1391.,07-1391.,07-1436.
PartiesFEDEX HOME DELIVERY, a Separate Operating Division of FedEx Ground Package System, Incorporated, Petitioner v. NATIONAL LABOR RELATIONS BOARD, Respondent, International Brotherhood of Teamsters, Local No. 25, Intervenor.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Kellie J. Isbell, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Ronald E. Meisburg, General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and Robert J. Englehart, Supervisory Attorney. Julie B. Broido, Supervisory Attorney, entered an appearance.

Renee J. Bushey argued the cause for intervenor International Brotherhood of Teamsters, Local No. 25. With her on the brief were Michael A. Feinberg and Jonathan M. Conti.

Daniel J. Popeo and Richard A. Samp were on the brief for amici curiae Washington Legal Foundation, et al. in support of respondent.

Before: GARLAND and BROWN, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge BROWN.

Opinion dissenting in part filed by Circuit Judge GARLAND.

BROWN, Circuit Judge:

FedEx Ground Package System, Inc. ("FedEx"), a company that provides small package delivery throughout the country, seeks review of the determination of the National Labor Relations Board ("Board") that FedEx committed an unfair labor practice by refusing to bargain with the union certified as the collective bargaining representative of its Wilmington, Massachusetts drivers. The Board cross-applies for enforcement of its order. Because the drivers are independent contractors and not employees, we grant FedEx's petition, vacate the order, and deny the cross-application for enforcement

I.

In 1998, FedEx acquired Roadway Package Systems and changed its name to FedEx Ground Package System, Inc. The company has two operating divisions: the Ground Division and the Home Delivery Division or FedEx Home. The Ground Division delivers packages of up to 150 pounds, principally to and from business customers. FedEx Home delivers packages of up to 75 pounds, mostly to residential customers. The Wilmington terminals are part of FedEx Home, a network that operates 300 stand-alone terminals throughout the United States and shares space in an additional 200 Ground Division facilities. FedEx Home has independent contractor agreements with about 4,000 contractors nationwide with responsibility for over 5,000 routes.

In July 2006, the International Brotherhood of Teamsters, Local Union 25, filed two petitions with the NLRB seeking representation elections at the Jewel Drive and Ballardvale Street terminals in Wilmington, neither of which boasts many contractors. The Union won the elections, prevailing by a vote of 14 to 6 at Jewel Drive and 10 to 2 at Ballardvale Street, and was certified as the collective bargaining representative at both. FedEx refused to bargain with the Union. The company did not contest the vote count; instead, FedEx disputed the preliminary finding that its single-route drivers are "employees" within the meaning of Section 2(3) of the National Labor Relations Act, 29 U.S.C. § 152(3).

The Board rejected FedEx's Request for Review of the Regional Director's Decision and Direction of Election on November 8, 2006. In dissent, Chairman Battista disagreed with "the refusal to permit [FedEx] to introduce system-wide evidence concerning the number of route sales and the amount of profit," as the information would be relevant to the determination of the drivers' "entrepreneurial interest in their position." FedEx Home Delivery and Local 25, N.L.R.B. Case Nos. 1-RC-22034, 22035, (Nov. 8, 2006) (Battista, C., dissenting). After the election, the Board found FedEx violated Sections 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and (5), by refusing to bargain. Finding FedEx's objection that its contractors are not employees had been raised and rejected in the representation proceedings, the Board issued its order on September 28, 2007. FedEx filed a timely petition for review and the Board filed its cross-application for enforcement. The Union intervened in support of the Board's cross-application.

II.

To determine whether a worker should be classified as an employee or an independent contractor, the Board and this court apply the common-law agency test, a requirement that reflects clear congressional will. See NLRB v. United Ins. Co., 390 U.S. 254, 256, 88 S.Ct. 988, 19 L.Ed.2d 1083 (1968); see also St. Joseph News Press, 345 N.L.R.B. 474, 478 (2005) ("Supreme Court precedent `teaches us not only that the common law of agency is the standard to measure employee status but also that we have no authority to change it.'") (quoting Dial-A-Mattress Operating Corp., 326 N.L.R.B. 884, 894 (1998)). While this seems simple enough, the Restatement's non-exhaustive ten-factor test is not especially amenable to any sort of bright-line rule,1 a long-recognized rub.2 Thus, "there is no shorthand formula or magic phrase that can be applied to find the answer, but all of the incidents of the relationship must be assessed and weighed with no one factor being decisive," United Ins. Co., 390 U.S. at 258, 88 S.Ct. 988, always bearing in mind the "legal distinction between `employees' ... and `independent contractors' ... is permeated at the fringes by conclusions drawn from the factual setting of the particular industrial dispute." North Am. Van Lines, Inc. v. NLRB, 869 F.2d 596, 599 (D.C.Cir.1989) ("NAVL").

This potential uncertainty is particularly problematic because the line between worker and independent contractor is jurisdictional—the Board has no authority whatsoever over independent contractors. See id. at 598. Consequently, it is "one of this court's principal functions" to "ensur[e] that the Board exercises power only within the channels intended by Congress," especially as determining status from undisputed facts "involves no special administrative expertise that a court does not possess." Id. We thus do not grant great or even "normal[]" deference to the Board's status determinations; instead, we will only uphold the Board if at least "it can be said to have `made a choice between two fairly conflicting views.'" C.C. Eastern, Inc. v. NLRB, 60 F.3d 855, 858 (D.C.Cir.1995) (quoting NAVL, 869 F.2d at 599).

For a time, when applying this common law test, we spoke in terms of an employer's right to exercise control, making the extent of actual supervision of the means and manner of the worker's performance a key consideration in the totality of the circumstances assessment. Though all the common law factors were considered, the meta-question, as it were, focused on the sorts of controls employers could use without transforming a contractor into an employee. E.g., NAVL, 869 F.2d at 599 ("In applying traditional agency law principles, the NLRB and the courts have adopted a right-to-control test. The test requires an evaluation of all the circumstances, but the extent of the actual supervision exercised ... is the most important element."). For example, "efforts to monitor, evaluate, and improve" a worker's performance were deemed compatible with independent contractor status. Id. Nor would "restrictions" resulting from "government regulation" mandate a contrary conclusion. Id. "[E]vidence of unequal bargaining power" also did not establish "control." Id.

Gradually, however, a verbal formulation emerged that sought to identify the essential quantum of independence that separates a contractor from an employee, a process reflected in cases like C.C. Eastern and NAVL where we used words like control but struggled to articulate exactly what we meant by them. "Control," for instance, did not mean all kinds of controls, but only certain kinds. See, e.g., C.C. Eastern, 60 F.3d at 858 (quoting NAVL, 869 F.2d at 599). Even though we were sufficiently confident in our judgment that we reversed the Board, long portions of both opinions were dedicated to explaining why some controls were more equal than others. See id. at 858-61; NAVL, 869 F.2d at 599-604. In other words, "control" was close to what we were trying to capture, but it wasn't a perfect concurrence. It was as if the sheet music just didn't quite match the tune.

In any event, the process that seems implicit in those cases became explicit—indeed, as explicit as words can be—in Corporate Express Delivery Systems v. NLRB, 292 F.3d 777 (D.C.Cir. 2002). In that case, both this court and the Board, while retaining all of the common law factors, "shift[ed the] emphasis" away from the unwieldy control inquiry in favor of a more accurate proxy: whether the "putative independent contractors have `significant entrepreneurial opportunity for gain or loss.'" Id. at 780 (quoting Corp. Express Delivery Sys., 332 N.L.R.B. No. 144, at 6 (Dec. 19, 2000)). This subtle refinement was done at the Board's urging in light of a comment to the Restatement that explains a "`full-time cook is regarded as a servant,'"—and not "an independent contractor""`although it is understood that the employer will exercise no control over the cooking.'" Id. (quoting RESTATEMENT (SECOND) OF AGENCY § 220(1) cmt. d). Thus, while all the considerations at common law remain in play, an important animating principle by which to evaluate those factors in cases where some factors cut one way and some the other is whether the position presents the opportunities and risks inherent in...

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