N.L.R.B. v. Tri-State Transport Corp.

• Decision Date: 21 May 1981
• Docket Number: TRI-STATE,No. 80-1270,80-1270
• Citation: 649 F.2d 993
• Parties: 107 L.R.R.M. (BNA) 2678, 91 Lab.Cas. P 12,765 NATIONAL LABOR RELATIONS BOARD, Petitioner, v.TRANSPORT CORPORATION, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 993

649 F.2d 993

107 L.R.R.M. (BNA) 2678, 91 Lab.Cas. P 12,765

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. TRI-STATE TRANSPORT CORPORATION, Respondent.

No. 80-1270.

United States Court of Appeals Fourth Circuit.

Argued Nov. 12, 1980.

Decided May 21, 1981.

Jolane A. Findley, N.L.R.B., Washington, D. C. (William A. Lubbers, Gen. Counsel, John E. Higgins, Deputy Gen. Counsel, Robert E. Allen, Acting Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, John D. Burgoyne, Asst. Gen. Counsel, Washington, D. C., on brief), for petitioner.

Maxwell A. Howell, Washington, D. C., for respondent.

Before HAYNSWORTH, Chief Judge, INGRAHAM, Senior Circuit Judge, ^* and MURNAGHAN, Circuit Judge.

INGRAHAM, Circuit Judge.

Pursuant to section 10(e) of the National Labor Relations Act (the Act), 29 U.S.C. § 160(e) (1976), the National Labor Relations Board (the Board) seeks enforcement of its order issued on September 28, 1979, against Tri-State Transport Corporation (Tri-State) of Wheeling, West Virginia. After formal hearing, the Administrative Law Judge (ALJ) concluded that Henry Cunningham was an employee of Tri-State within the meaning of section 2(3) of the Act, 29 U.S.C. § 152(3) (1976). The ALJ further concluded that Tri-State discharged Cunningham for participating in a strike by other drivers against the company, in violation of section 8(a)(1) of the Act, 29 U.S.C. § 158(a)(1) (1976). The Board adopted the findings and conclusions of the ALJ and ordered Tri-State to offer Cunningham reinstatement and make him whole for any lost earnings.

Tri-State raises two principal arguments on appeal. The first argument is that since counsel for the company was detained at the last moment by other legal proceedings and the company's defense was inadequately presented by its non-lawyer president Mrs. Jean Witsberger, and for other reasons, the company did not receive a fair hearing before the ALJ. The second argument is that since Cunningham was not an employee of Tri-State within the meaning of section 2(3) of the Act, the cessation of his business affiliation with Tri-State was not a violation of section 8(a)(1). Because we hold that Tri-State's position with respect to the second argument is correct, we do not reach the issues raised by the company in its first argument.

I.

The dispositive issue in this case is the legal status of Cunningham's relationship to Tri-State. This is the only issue on which the ALJ took testimony at the hearing. Based on the testimony given and the exhibits admitted, the ALJ found that Cunningham was an employee of Tri-State. On this application for enforcement, our standard of review is to determine whether there is substantial evidence on the record as a whole to support that finding. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

Section 2(3) provides, in relevant part, that the term "employee" shall not include "any individual having the status of independent contractor." In enacting this provision, Congress did not define the status of independent contractor but intended instead that in each specific case the question whether an individual were an employee or an independent contractor was to be determined by the application of general agency principles. See NLRB v. United Insurance Co., 390 U.S. 254, 256, 88 S.Ct. 988, 989, 19 L.Ed.2d 1083 (1968); NLRB v. A. S. Abell Co., 327 F.2d 1, 4 (4th Cir. 1964). Thus, the Board's decision in this case involved not only factual findings by the ALJ but also the application of common law principles to those facts. Accordingly, the decision, although not one in which the Board had to apply its special expertise, should be upheld if the Board chose between two fairly conflicting views. NLRB v. United Insurance Co., 390 U.S. at 260, 88 S.Ct. at 991.

In distinguishing employees from independent contractors,

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. What is important is that the total factual context is assessed in light of the pertinent common law agency principles.

Id. at 258, 88 S.Ct. at 990. Those common law principles may be referred to as the right-to-control test.

In this case, there is the further consideration that Tri-State is a trucking firm engaged in the interstate carriage of pipe, authorized to operate under a certificate of public convenience and necessity issued by the Interstate Commerce Commission (ICC). Tri-State also must comply with numerous regulations of the Department of Transportation (DOT). The common law test of right-to-control has proven especially difficult to apply in cases involving owner-operators and non-owner drivers of trucks leased to carriers governed by these ICC and DOT regulations. See Local 814, International Brotherhood of Teamsters v. NLRB, 512 F.2d 564, 568 (D.C.Cir.1975) (Bazelon, J., dissenting).

Under the applicable regulations, carriers are required to demand certain information from and to impose certain rules on all drivers, regardless of the particular contractual arrangements between the carrier and those drivers. ¹ The number and nature of the government controls create an appearance of employee status. This is true even in situations where the contractual arrangements expressly disclaim any such relationship ² and the actual practice of the parties belies any such inference. As a result, the Board and the courts have struggled to develop an appropriate rule for weighing the government regulations in the assessment of the overall factual context. The following standard can be discerned from the cases: A contractor is an employee only if there was "a layer of carrier regulation put upon the contractor beyond what was required by government regulation, impairing the contractor's independence." Local 814, International Brotherhood of Teamsters (Santini Bros., Inc.), 208 N.L.R.B. 184, 197 n.18 (1974), remanded for clarification, 512 F.2d 564 (D.C.Cir.1975), clarified and upheld, 223 N.L.R.B. 752 (1976).

II.

We now turn to the record to examine the factual incidents of the relationship between Tri-State and Cunningham. At this point it is necessary to introduce one more principal actor of the dramatis personae, Joseph Coss. Coss owned two truck-tractors and two flatbed trailers of the type required in Tri-State's hauling business. Cunningham had driven for Coss before. Witsberger, president of Tri-State, was looking for access to more capacity than she had at the time. Witsberger learned from another about Coss and Cunningham. She called Cunningham and the drama began to unfold.

Coss was hospitalized at the time. Cunningham, armed with a power of attorney from Coss, went to Tri-State along with Coss' wife, Violet. A lease agreement covering one tractor-trailer rig was prepared by Tri-State's general manager and executed by Violet Coss for her husband, as lessor, and Jean Witsberger, president of Tri-State, as lessee. The lease provided for various divisions of responsibility between Coss and Tri-State, many of which provisions obligated Tri-State as the result of federal and state regulations. Apart from those, lessor Coss assumed responsibility for the following items: furnishing all licenses necessary for the intended operation of his truck and trailer; payment of all fines and penalties incurred as a result of any unlawful operation of the rig; and responsibility for all maintenance costs. Tri-State undertook to insure against damage to the public and to cargo, but Coss had to insure against damage to the equipment itself. Coss was to receive seventy-five percent of the gross revenue, out of which he was to pay the driver's wages and the costs of operating the equipment. ³

The individual who was the general manager of Tri-State during the relevant period testified that he understood Cunningham to be a driver in the employ of the owner-broker of the equipment, Coss. Witsberger testified that Violet Coss represented her husband and Cunningham as being in "sort of a partnership." Violet Coss testified that her husband and Cunningham were not in fact partners. Cunningham testified that he considered himself to be an employee of Tri-State. Witsberger, proceeding pro se, did not cross-examine Cunningham concerning any representations made at that first meeting. There were no other witnesses called who were present at that meeting.

Witsberger testified without contradiction that if Cunningham were unable to drive the Coss tractor-trailer rig, she would have to contact Coss for his permission to put some other driver on that rig. Mrs. Witsberger further testified that in order to dispatch Cunningham, unless he called in, she had to contact Joseph or Violet Coss and have one of them instruct Cunningham to check with the company. Mrs. Coss verified this routing of information was employed on several occasions.

At the outset, Cunningham supplied certain information that was recorded by Tri-State's general manager on a form entitled "Application for Employment." The application form was introduced into evidence by counsel for the General Counsel. The form was only partially completed. Another application form was submitted on behalf of the General Counsel, covering a person conceded by Tri-State to be an employee, to show that Cunningham filled out the same form as the "other" employees. The information solicited from Cunningham was no more than that required by federal regulations, ⁴ and it is not surprising that a company whose general manager worked only part-time did not have special pre-printed forms for non-employee drivers. More significant to us is that the classification of the conceded employee was "Road driver," whereas the classification of Cunningham was "Road driver for Broker J. Coss." Even more significant, perhaps, is the inscription that Cunningham on July 27, 1978, was ...