Frito-Lay, Inc. v. NLRB

• Decision Date: 07 November 1967
• Docket Number: No. 15962.,15962.
• Citation: 385 F.2d 180
• Parties: FRITO-LAY, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

385 F.2d 180 (1967)

FRITO-LAY, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 15962.

United States Court of Appeals Seventh Circuit.

November 7, 1967.

Thomas C. Shelton, Albert C. Tate, Jr., S. Phillip Heiner, Atlanta, Ga., for petitioner. Kilpatrick, Cody, Rogers, McClatchey & Regenstein, Atlanta, Ga., of counsel.

Marcel Mallet-Prevost, Asst. Gen. Counsel, George B. Driesen, Atty., National Labor Relations Board, Washington, D. C., Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Francis Flannery, Atty., N. L. R. B., for respondent.

Before MAJOR, Senior Circuit Judge, SCHNACKENBERG and SWYGERT, Circuit Judges.

MAJOR, Senior Circuit Judge.

This case is here on petition by Frito-Lay, Inc. (the Company), a nationwide manufacturer of snack food products, to review and set aside a decision and order to bargain entered November 14, 1966, by National Labor Relations Board (the Board), in an unfair labor practice proceeding under Sec. 10(f) of the National Labor Relations Act, as amended (the Act), 61 Stat. 136, 29 U.S.C.A. Sec. 151 et seq. The Board by cross petition requests enforcement of its order. 161 N.L.R.B. No. 90. No question is raised as to our jurisdiction inasmuch as the Company transacts business and operates manufacturing plants and sales offices in Wisconsin, Illinois and Indiana.

The case had its genesis in a petition filed with the Board by International Union of District 50, United Mine Workers of America (the Union), requesting certification as the bargaining representative of certain single truck distributors of the Company's products in the Buffalo, New York, area.

The sole issue then, as now, is whether such distributors are employees within the meaning of the Act, or independent contractors. The Board's Regional Director in Buffalo, acting under the authority of Sec. 3(b) of the Act, decided the issue adversely to the Company, made findings of fact and directed an election in a unit which the Company agreed was appropriate.

The Company filed a timely request for review of the Director's decision, which the Board summarily declined by telegraphic communication which stated that the Company raised "no substantial issue warranting review." Following an election, the Union was certified by the Director as the collective bargaining representative of the distributors. The Company refused the Union's request to bargain, stating its intention to obtain a determination from the Board as to the status of its distributors.

Thereupon, the unfair labor practice complaint in the instant proceeding was issued under the authority of Sec. 10 of the Act. The Company answered the complaint, admitting the certification, but refused to bargain on the ground that the Board was without jurisdiction because the distributors were in fact independent contractors.

The General Counsel filed a motion for summary judgment, calling for application of the Board's "Rule Against Relitigation" of previously determined issues. The Company filed a response to the motion, detailing its objections to such summary procedure, and claimed its rights as an accused in an unfair labor practice proceeding to the administrative due process guaranteed by Sec. 10 of the Act and by Secs. 5, 7, 8 and 11 of the Administrative Procedures Act, as amended, 60 Stat. 237, 5 U.S.C.A. Sec. 1001 et seq.

The Board without a hearing sustained the motion for summary judgment and entered the order under attack. Neither the Board nor an independent trial examiner reviewed the evidence adduced at the representation hearing or attempted to make independent findings of fact as to the details of the relationship between the Company and the distributors, or as to any indicia of control by the Company over their method and manner of operation.

The situation is clearly portrayed by the Board's decision. Under the heading, "Findings of Fact," those not in dispute — that is, those relating to the Company's business, the labor organization involved and the unfair labor practices charged — are set forth. Relative to the issue in dispute the decision states:

"It is well settled that, in the absence of any evidence unavailable at the time of the representation proceeding or any newly discovered evidence, the Board will not reconsider in a subsequent refusal-to-bargain proceeding matters which have been disposed of in a prior, related representation case. This is equally true where the representation proceeding was processed under Section 3(b) of the Act, especially where the Board has denied a request for review of the Regional Director\'s decision. The Regional Director\'s finding in this case that the truck distributors were employees was reached after full litigation by the parties, and review was thereafter denied by the Board. * * * It is therefore clear that, under established rules, the status of the disputed employees cannot be relitigated in the instant proceeding. Accordingly, we find, on the basis of the Regional Director\'s decision, that all the single truck distributors are employees within the meaning of the Act." (Italics supplied.)

Ordinarily, in an unfair labor practice case, the Board in support of its order relies upon its own findings. In the instant case we have something different. The Board made no findings of its own but relied upon those made by the Regional Director in the representation proceeding. In its brief, under the heading, "The Board's Findings of Fact," the Board makes a lengthy and involved statement of facts, citing only the decision of the Regional Director and the evidence which was adduced at the representation hearing. In a footnote to its brief the Board states:

"Since the Board\'s order is based in part on findings made in the representation proceeding under Section 9 of the Act, the record in that proceeding is part of the record before the Court, pursuant to Section 9(d) of the Act."

The Board might have added that its order is based entirely on findings made in the representation proceeding insofar as they relate to the status of the Company's distributors.

We think the contested issues may be appropriately stated: (1) whether the Board properly found that the Company violated the Act by its admitted refusal to bargain with the certified representative of its employees, and (2) whether the Company as the party accused of an unfair labor practice has been deprived of procedural due process by reason of the Board's resort to its "Rule Against Relitigation," thereby denying the Company the right to a hearing on the substantive issue involved.

A resolution of the first issue depends upon whether the distributors were employees within the meaning of the Act as found by the Regional Director, or independent contractors as urged by the Company. If this issue is decided in favor of the Company, there will be no occasion to discuss or decide the procedural issue raised by it.

The Company is a Delaware corporation, engaged in the manufacture and sale of potato chips, corn chips and other snack foods throughout the United States. The Company's two sales districts and warehouse located in the area of Buffalo, New York, are its only facilities involved in this proceeding. In the Buffalo area the Company distributes its products and other products which it handles exclusively through the use of approximately 24 single truck distributors. This distribution method had been in effect in the Buffalo area for 33 years prior to the representation hearing, although the operation was not acquired by the present company until 1960. The Board contends, based upon a decision of its Regional Director, that these distributors are employees, and not independent contractors as urged by the Company.

It is difficult to make a statement of relevant facts fair to all parties. In addition to the decision of the Regional Director, upon which the Board stakes its entire case, the Company on brief makes an 8-page statement of the evidentiary facts. The Board on its brief does not object to any statement of fact in the Company's brief, but instead submits a "Counterstatement of the Case," which contains another 8-page summary of the same evidence. However, our task in this respect is considerably aided by the frank concessions made in the Board's argument, subsequently set forth.

The Regional Director states in his decision:

"All distributors own their own trucks; finance their trucks independently of the Employer; insure their trucks on individual policies; pay all costs for gas, oil and maintenance of their vehicles; have their personal telephone numbers on the trucks; have their own bank accounts; file individual income tax returns, and in so doing sometimes retain accountants to assist in the preparation of said returns; determine the quantity of products to be ordered and sold; determine the order of route stops; determine the number of days and the hours in a given day to be spent working; have the same mode of compensation; and may hire helpers at their own discretion. The Employer does not pay workmen\'s compensation, unemployment insurance, social security, or withhold taxes for the distributors.

"The Employer does not require a minimum insurance, although it reimburses distributors for 25% of the cost of their liability and property damage insurance. The distributors may use their trucks as they see fit; however, for the most part, their trucks are used exclusively to service their routes. The distributors\' trucks are all painted in standard colors with the exception of two new trucks, and these vehicles also contain the Employer\'s decal. The painting and lettering of the decal is provided by the Employer at no cost to the distributor. The Employer, in writing, directs distributors to keep their trucks in a good state of repair, on the premise that a truck that is not fit reflects upon the products sold, other distributors, and the business. The Employer requires the

...