Squirt-Nesbitt Bottling Corp.

National Labor Relations Board - Board Decisions

Feb 7, 1961

130 N.L.R.B. 24 (N.L.R.B. 1961)

24 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
showing of interest. Accordingly, we instruct the Regional Director
not to proceed with the election herein directed until he shall have
first determined that the Petitioner has made an adequate showing of
interest among the employees in the appropriate unit who are eligible
to vote in the election 3
[Text of Direction of Election omitted from publication.]
8 Foremost Dairies, Inc., 118 NLRB 1424 , 1428, footnote 7.
Squirt-Nesbitt Bottling Corp. and Bakery Sales Drivers Union,
Local No. 344. Case No. 13-CA-339$. February 7, 1961
DECISION AND ORDER
On June 14, 1960, Trial Examiner John P. von Rohr issued his In-
termediate Report in the above-entitled proceeding, finding that the
Respondent had engaged in and was engaging in certain unfair labor
practices and recommending that it cease and desist therefrom and
take certain affirmative action, as set forth in the copy of the Inter-
mediate Report attached hereto. Thereafter, the General Counsel and
Respondent filed exceptions to the Intermediate Report and briefs in
support thereof, and Respondent filed a reply brief.
Pursuant to the provisions of Section 3(b) of the National Labor
Relations Act, the Board has delegated its power in connection with
this case to a three-member panel [Chairman Leedom and Members
Rodgers and Jenkins].
The Board has considered the Intermediate Report, the exceptions
and briefs, and the entire record in the case, and hereby adopts the
findings,' conclusions, and recommendations of the Trial Examiner,
with the exceptions and modifications noted below.
We agree with the Trial Examiner that the individual distributor-
ship contracts entered into by the Respondent with its driver-salesmen
did not alter the employee status of these drivers or convert them into
independent contractors. We also find that Respondent violated Sec-
tion 8 (a) (5) and (1) of the Act, as, concluded by the Trial Examiner,
by refusing to bargain with the Union, the certified bargaining repre-
sentative of its driver-salesmen, as to those driver-salesmen who signed
distributorship contracts and by entering into individual contracts
with such employees.2
1 Elmer Johnson , secretary-treasurer of the Union, was not present at the meeting be-
tween Respondent and union representatives held an August 12,.1959, as the Intermediate
Report finds.
2In view of our disposition herein, we find it unnecessary to pass upon whether, as
found by the Trial Examiner , Respondent also violated the Act by cooperating with and
encouraging the employees to accept the distributorship plan or would even have violated
the Act had the individual contract effectively changed the status of the driver -salesmen
to that of independent contractor.
130 NLRB No. 9.
SQUIRT-NESBITT BOTTLING CORP.
THE REMEDY
25
We have found that Respondent acted in derogation of its duty to
bargain with the certified representative of its employees in violation
of Section 8 (a) (5) and (1) of the Act. To remedy this violation, we
shall enjoin the commission of the unfair labor practices found
through the usual cease-and-desist provisions in our Order, and we
shall order that Respondent bargain with the Union as the exclusive
representative of the employees in the unit for which it was certified,
including the employees who have signed individual distributorship
contracts, and that it take certain other affirmative action designed to
effectuate the policies of the Act.
We are not adopting the Trial Examiner's recommendation that
each driver-salesman who signed individual distributorship contracts
with Respondent "be made whole for loss of pay, if any, suffered by
reason of said driver-salesmen employment under individual con-
tracts." The employees involved were not unlawfully coerced into
signing the contracts, nor was their acceptance of the contracts in any
sense involuntary. Indeed, the idea of individual distributorship con-
tracts originated with employees, employees urged Respondent to
create a distributorship system, employee meetings with Respondent
on the subject were held at the urging of employees, and individual
contracts were signed only by the driver-salesmen who desired them.
Of course, Respondent violated the Act by thus dealing with the em-
ployees themselves, to the exclusion of the Union. But we believe that
our Order requiring Respondent to bargain with the Union and abro-
gating the individual contracts will adequately remedy Respondent's
unfair labor practice. To also reimburse the employees for such loss
of pay as they may have suffered as a result of the distributorship
arrangement instituted at their urging, as the Trial Examiner recom-
mended, would, in the circumstances of this case, unjustly enrich them
and be inequitable to Respondent; the policies of the Act could not
thereby be effectuated.3
ORDER
Upon the entire record in this case, and pursuant to Section 10(c)
of the National Labor Relations Act, as amended, the National Labor
Relations Board hereby orders that the Respondent, Squirt-Nesbitt
Bottling Corp., Milwaukee, Wisconsin, its officers, agents, successors,
and assigns, shall :
1. Cease and desist from :
(a) Refusing to bargain collectively with Bakery Sales Drivers
Union, Local No. 344, as the exclusive representative of all driver-
salesmen, excluding' office employees, professional employees, guards,
3 Cf. Shamrock Dairy, Inc., et at., 124 NLRB 494.
26 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
supervisors, and all other employees as defined in the Act, with respect
to rates of pay, wages, hours of employment, and other terms and
conditions of employment.
(b) Continuing or giving effect to any individual distributorship
contract.
(c) Dealing individually with employees in derogation of their bar-
gaining representative in respect to any matter properly the subject of
collective bargaining.
(d) In any like or similar manner interfering with, restraining, or
coercing its employees in the exercise of the right to bargain collec-
tively through representatives of their own choosing.
2. Take the following affirmative action which the Board finds will
effectuate the policies of the Act :
(a) Upon request, bargain collectively with Bakery Sales Drivers
Union, Local No. 344, as the exclusive representative of the employees
in the appropriate unit and embody any understanding reached in a
signed contract.
(b) Notify individually, and by the posting of the notice attached
hereto, all driver-salesmen with whom Respondent has made indi-
vidual contracts that it will no longer offer, solicit, enter into, con-
tinue, or enforce such contracts, but without prejudice to the assertion
by the driver-salesmen affected of any legal rights they may have ac-
quired under such contracts.
(c) Offer to all driver-salesmen with whom Respondent has made
individual contracts immediate and full reinstatement to their former
or substantially equivalent positions as driver-salesmen, without prej-
udice to seniority or other rights and privileges.
(d) Post at its place of business in Milwaukee, Wisconsin, copies
of the notice attached hereto marked "Appendix." 4 Copies of such
notice, to be furnished by the Regional Director for the Thirteenth
Region, shall, after being duly signed by the Respondent's authorized
representative, be posted by the Respondent immediately upon receipt
thereof, and be maintained by it for 60 consecutive days thereafter,
in conspicuous places, including all places where notices to employees
are customarily posted. Reasonable steps shall be taken by the Re-
spondent to insure that said notices are not altered, defaced, or
covered by any other material.
(e) Notify the Regional Director for the Thirteenth Region, in
writing, within 10 days from the date of this Order, what steps the
Respondent has taken to comply herewith.
4 In the event that this Order is enforced by a decree of a United States Court of
Appeals, there shall be substituted for the words "Pursuant to a Decision and Order" the
words "Pursuant to a Decree of the United States Court of Appeals, Enforcing an Order 11
SQUIRT-NESBITT BOTTLING CORP.
APPENDIX
NOTICE TO ALL EMPLOYEES
27
Pursuant to a Decision and Order of the National Labor Relations
Board, and in order to effectuate the policies of the National Labor
Relations Act, as amended, we hereby notify our employees that :
WE WILL NOT refuse to bargain collectively with Bakery Sales
Drivers Union, Local No. 344, as the exclusive bargaining repre-
sentative of the employees in the appropriate unit.
The appropriate bargaining unit is:
All driver-salesmen of Respondent, Milwaukee, Wisconsin,
excluding office employees, professional employees, guards,
all other employees, and supervisors as defined in the Act.
WE WILL NOT, in any like or related manner, interfere with, re-
strain, or coerce employees in the exercise of the rights guaranteed
by Section 7 of the Act.
WE WILL bargain collectively, upon request, with Bakery Sales
Drivers Union, Local No. 344, as the exclusive bargaining repre-
sentative of the employees in the appropriate unit, and, if an
understanding is reached, embody such understanding in a signed
agreement.
WE WILL offer to all driver-salesmen with whom we have indi-
vidual contracts immediate and full reinstatement to their former
or substantially equivalent positions as driver-salesmen, without
prejudice to seniority or other rights and privileges.
All our employees are free to become, remain, or refrain from be-
coming or remaining members of the above-named Union, or any
other labor organization, except to the extent that such right may be
affected by an agreement requiring membership in a labor organiza-
tion as a condition of employment, as authorized in Section 8(a) (3)
of the Act, as modified by the Labor-Management Reporting and Dis-
closure Act of 1959.
SQUIRT-NESBITT BOTTLING 'CORP.,
F, mployer.
Dated---------------- By-------------------------------------
(Representative ) ( Title)
This notice must remain posted for 60 days from the date hereof,
and must not be altered, defaced, or covered by any other material.
INTERMEDIATE REPORT
STATEMENT OF THE CASE
Upon a charge duly filed, the General Counsel of the National Labor Relations
Board , for the Regional Director of the Thirteenth Region (Chicago, Illinois ), issued
28 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
a complaint against Squirt -Nesbitt Bottling Corp., herein called the Respondent,
alleging that the Respondent had engaged in certain unfair labor practices within
.the meaning of Section 8(a)(1) and (5) of the National Labor Relations Act, as
.amended. In substance, it is alleged that on or about July 17, 1959, the Respondent,
in derogation of the rights of the Charging Union as the designated bargaining
-representative of the employees, bargained with its employees individually and
.entered into individual contracts with them , thereby refusing to bargain collectively
in good faith with the Union.
Respondent filed an answer in which it admitted the jurisdictional allegations of
the complaint, but denied the commission of any unfair labor practices.
Pursuant to notice, a hearing was held at Milwaukee, Wisconsin, on March 21
and 22, 1960, before the duly designated Trial Examiner. All parties were repre-
sented by counsel and were afforded opportunity to adduce evidence, to examine
and cross-examine witnesses , to present oral argument , and to file briefs . Subse-
quent to the close of the hearing, briefs have been received from the Respondent
and the General Counsel, both of which have been carefully considered. Upon the
entire record, and from my observation of the witnesses, I hereby make the following:
FINDINGS OF FACT AND CONCLUSIONS
1. THE BUSINESS OF RESPONDENT
The Respondent is a Wisconsin corporation with its office and place of business
located in Milwaukee, Wisconsin, where it is engaged in the manufacture, sale, and
distribution of carbonated beverages. During the calendar year 1958, Respondent
purchased and received raw materials valued in excess of $100,000 from suppliers
located outside the State of Wisconsin. The Respondent admits, and I find, that it
is engaged in commerce within the meaning of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Bakery Sales Drivers Union, Local No. 344, hereinafter referred to as the Union,
is a labor organization within the meaning of Section 2(5) of the Act.
III. THE UNFAIR LABOR PRACTICES
A. The bargaining negotiations
On July 13, 1959, following a consent election, the Union was certified as the
exclusive collective-bargaining representative for a unit consisting of all Respondent's
driver-salesmen, excluding office employees, professional employees, guards, super-
visors, and all other employees as defined by the Act.' Various bargaining meet-
ings followed and are discussed below. To avoid repetition, and unless otherwise
noted, the representatives for the Union were August J. Bopp and Elmer Johnson,
business representative and secretary-treasurer, respectively. Principal representa-
tives for the Company were Mrs. Lily W. Graves, president, and Donald Hansen,
sales manager.
The first meeting, which was held on July 17, 1959,2 was brief. The Union pro-
posed that the Company sign an agreement identical to that of an area agreement
which the Union had with other franchised bottlers in the Milwaukee area and sub-
mitted a copy of such agreement to the Company. As spokesman and principal
negotiator for the Respondent, Mrs. Graves agreed that she would examine the
contract before the next meeting. During this meeting Mrs. Graves did not men-
tion the fact, which is unrefuted, that on July 14 one John Conrardy, a driver-
salesman, had approached her and stated that he and another employee, Dick Eich-
miller , were interested in the prospect of becoming distributors .3
Within a few days after the July 17 meeting, two of Respondent's driver- salesmen,'
Eichmiller and Robert Blackhall, approached Sales Manager Hansen and told him
that they were interested in discussing the possibility of obtaining distributorships.
Hansen reported the matter to Mrs. Graves.
I Case No. 13-RAT-480 (not published in NLRB volumes). The Union won the election
by a vote of 10 to 9
2 All dates herein refer to the year 1959 unless otherwise indicated.
8 Mrs Graves testified that at this time she told Conrardy that she did not think it was
a good idea for two men to go into business together She also told these employees that
she did not know if she could legally discuss this subject inasmuch as the Company was
bargaining with the Union.
SQUIRT-NESBITT BOTTLING CORP. 29
The second meeting between the Respondent and the Union was held on July 30.
At this meeting Mrs. Graves stated that several of the men had asked for informa-
tion regarding distributorships, The matter was discussed briefly, Mrs. Graves stat-
ing that she did not know what effect distributorships would have upon a contract
and union representatives dismissing the subject by stating that they were unac-
quainted with operations of that nature. Mrs. Graves thereupon submitted a con-
tract in counterproposal to the one which the Union had offered and the parties
proceeded to discuss it provision by provision? Differences arose and the meeting
ended with each party agreeing to give further consideration to the proposals at
hand.
On July 31 (a Friday) Mrs. Graves was approached by John Conrardy and
Robert Blackball who requested that she meet with some of the drivers, themselves
included, who were desirous of obtaining specific information relative to the subject
of distributorships. Pursuant to this request, Mrs. Graves agreed to meet with the
men on the following day-Saturday, August 1. In preparation for the meeting
Mrs. Graves that evening made long-distance telephone calls to three bottlers located
in other States who operated under a distributorship setup. From them she obtained
certain information concerning the operations and arrangements of the distributor-
ship plan.
A meeting was held on August 1, as scheduled, with six driver-salesmen in attend-
ance. Blackball submitted a list of questions which he had prepared. Mrs. Graves,
in turn, explained to the men in great detail the inherent involvements of distributor-
ships, as she had ascertained them to be, including the various obligations and
responsibilities which would result to each of the parties. As she was not able
to answer all of the questions which were raised, the meeting ended with Mrs.
Graves' assurance to the men that she would endeavor to obtain further information.
On the following Monday, August 3, Graves prepared a two-page typewritten
memorandum in which she listed in detail the various aspects of the distributorship
plan as she had discussed it with the six employees on the preceding Monday. She
gave copies of the memorandum to two of the driver-salesmen for circulation among
the employees who had not attended the August 1 meeting. The memorandum
concluded with the following statement.
We hope to give you something more specific on this within the next week or
so after we have studied some other distributorships and have been able to
analyze our own situation. But remember, this has to be worked out so that
each of you makes money for we can't exist unless you do.
Also on Monday, August 3, according to the credited testimony of Mrs. Graves,
she called Bopp and told him about the meeting which she held with six driver-
salesmen the previous Saturday. Bopp replied that he was meeting with the men
that same evening and that he would learn more about it at that time.
Fourteen employees were present at the union meeting held on the evening of
August 3. The union representatives , including Bopp , were told about the meeting
between the six driver-salesmen and Mrs. Graves on August 1 and one of the
employees furnished Bopp with a copy of the memorandum which Graves had
prepared subsequent to that meeting . The Union 's position upon receiving this
information from the men , as expressed in the credited testimony of Bopp, was that
.,we told them they would have to make up their minds if they were going to be
distributors or driver-salesmen." Thereupon, pursuant to a motion of employee Eddie
Schultz, the employees voted 13 to 0, with 1 abstention , to remain as driver-
salesmen 5 At this meeting the employees also voted to authorize a strike in the
event a contract was not executed by August 17.
Hansen testified that on the following day, August 4, some of the employees told
him what had transpired at the unon meeting on the evening before and that they
had decided to "put over" the idea of distributorship until April. This information
4 Bopp testified that Respondent did not submit its counterproposal until the third bar-
gaining meeting on August 5, as he recalled it Upon consideration and examination of
all the testimony, I am persuaded that Mrs. Graves' recollection as to the chronology of
events is the more accurate and most reliable. Accordingly , where there are differences as
to the subjects discussed at the various meetings , I have accepted the account of Mrs
Graves. In any event, there is no material dispute or difference between Bopp and Graves
as to the substance of the discussions at the various meetings.
5 Conrardy and Blackball testified that at this meeting the employees voted to "shelve
the idea" until the following April In any event it is clear that at this meeting the
employees voted to abandon the idea of distributorships at this time.
30 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
concerning the stand of the employees at the August 3 union meeting was imparted
by Hansen to Mrs. Graves.
Notwithstanding the formal resolution of the preceding evening to drop the dis-
tributorship proposition (which decision was made known to the Respondent),
three of the employees at the end of the day (on August 4) approached Hansen
again and stated that they still wanted distributorships.6 The result of this was
that another meeting was held between Hansen and the driver-salesmen when the
employees reported to work the next morning, August 5. Although Hansen testified
that this meeting was a spontaneous affair, it is evident that he did not come entirely
unprepared. Suffice it to note that at this meeting Hansen used a blackboard on
which he demonstrated in some detail the earnings which the employees could
make under a distributorship system?
On August 5 the third bargaining meeting was held between the Union and the
Respondent. Bopp began by advising Respondent's representatives that a union
meeting had been held on August 5, that the employees had voted to reject the
proposition of distributorships, and they had voted to authorize a strike if a collective-
bargaining agreement was not reached by August 17. Mrs. Graves thereupon told
Bopp about the employees' meeting with Hansen on August 4, stating that in view
thereof it was apparent to her that the employees had changed their minds and
that they still wanted distributorships. Upon being so apprized the Union took the
position that if distributorships were what the men wanted, it was the bargaining
agent and it would negotiate the contract.e Mrs. Graves, however, took the position
that the Union had no "jurisdiction" to bargain for the driver-salesmen if they were
to become "independent businessmen," i.e., distributors. These positions having
been stated, the parties continued to bargain over the terms of the contract with no
final agreement being reached.
In the meantime, which was after Mrs. Graves had received additional information
concerning distributorship from other bottlers, Mrs. Graves consulted with her
attorneys with regard to a possible distributorship contract which would be suitable
to the Respondent. It was on Monday, August 10, according to Mrs. Graves, that
she decided a distributorship program would be economically feasible for the
Respondent Company. On the following day, August 11, she held a meeting with
the employees and at that time read to them a distributorship contract which had
been drafted by her attorneys. Five of Respondent's driver-salesmen signed copies
of the contract before this meeting ended.
The next bargaining meeting was held on the following day, August 12, and at
its outset Bopp was notified of the action taken by the five employees in signing
the distributorship agreements . According to the credited testimony of Bopp,
Mrs. Graves stated also that most of the others had indicated their intention to sign.
At this meeting Mrs. Graves took the position, which was consistent with the posi-
tion she had taken before, that Respondent could not bargain with respect to the
employees who had signed or who were about to sign distributorship agreements
except to the extent that Respondent would bargain concerning the "tenure of em-
ployment" of those employees. She explained to Bopp that, "tenure would cover sev-
erance pay for the time going back to July 20, which had been set as retroactivity
date." Although Mrs. Graves indicated that Respondent would continue to bargain
for those employees who would not become distributors, it was evident by this time
that very few, if any, employees would remain in this category.
A total of 14 of the Respondent's approximate 20 driver-salesmen signed dis-
tributorship agreements by August 14.
By letter dated August 18, 1959, Mrs. Graves notified the Union that Respondent
was prepared to accept the Union's proposed collective-bargaining agreement with
certain exceptions, including a modification of the Union's wage proposal, which
were set forth in the letter. This communication concluded with the following
statement:
As you are aware, certain of our driver-salesmen presently covered by this
agreement have entered into contracts with us as independent contractors.
Upon commencement of their duties as such independent contractors, they will
no longer be employees and this contract and agreement will no longer cover
8 These employees included those who originally were in favor of the idea , I e , Igna zitto,
Conrardy, Eichmiller , and Blackball
7 Hansen testified that by this time Respondent had received "additional information"
concerning distributorships and also that on August 4 Respondent received in the mail a
form of distributor contract from another bottler.
8 Testimony of Mrs Graves.
SQUIRT-NESBITT BOTTLING CORP. 31
them. Also, should other driver-salesmen in the future enter into similar con-
tracts with us, they too will be relieved from coverage under our contract with
you.
No further communications or meetings were held between the parties. The
Union filed the unfair labor practice charge herein on August 21, 1959.
B. Status of the drivers under the distributorship agreements
For reasons which will become apparent hereinafter, it is incumbent that a deter-
mination be made as to whether the distributorship agreements converted the driver-
salesmen into independent contractors or whether under those agreements the
driver-salesmen continued to retain their status as employees.
It is now well established that in determining the status of persons alleged to be
independent contractors, the Act requires the application of the "right-of-control"
test.9 Where the person for whom the services are performed retains the right to
control the manner and means by which the result is to be accomplished, the rela-
tionship is one of employment; on the other hand, where control is reserved only
as to the result sought, the relationship is that of independent contractor. The
Board and the courts have long recognized that the resolution of this question often
is a difficult one and depends on the facts of each case with no one factor as
determinative.
It is true, as the Respondent points out in its well-documented brief, that a number
of factors are present in the distributorship arrangement which are essentially char-
acteristic of an independent contractor relationship. The factors pointing in this
direction will be considered first.la In most instances these factors represent changes
in the employment relationship which were not present before the driver-salesmen
entered into the distributorship agreements.ii Thus, under the distributorship agree-
ments (which are for a 2-year period) the driver-salesmen now are required to pay
their own taxes and to make their own social security contributions, if any. They
no longer enjoy paid vacations, a company pension plan, or a company health and
accident plan. Uniforms are no longer furnished by the Company but the men are
required to furnish their own. The driver-salesmen formerly were required to work
a 5-day week starting at 7 a.m. and ending at 4 p in. There is no set workweek as
to days or hours under the distributorship agreements. Formerly the routes to
which the drivers were assigned were under the exclusive control of the Respondent.
Under the distributorship agreements the drivers are granted certain exclusive
rights to particular routes and territories of their own. In the past the drivers were
required to service their routes by making stops in the order and method prescribed
by the Respondent. They now have authority to determine their own method and
frequency of serving their customers. Whereas the Respondent previously leased the
trucks from Hertz and provided them for the use of the driver-salesmen, the latter
are now required to furnish their own trucks and pay for their own insurance i2
The distributorship agreements permit the drivers to warehouse their own trucks
and goods; in the past the drivers were required to return the trucks to the Respond-
ent's premises. Under the old arrangement helpers were furnished and paid by the
Respondent. This practice was abolished under the distributorship agreements and
the driver-salesmen now must pay for the services of any additional help which they
may need.
Under the former arrangement the driver-salesmen were paid a salary by the
Respondent, plus commission on a per case basis. They received their pay each
week by check. The salary method was discontinued under the distributorships and
the men are paid by commissions only. They now purchase the Respondent's prod-
9 Golden Age Dayton Corporation, 124 NLRB 916, Bob, Inc, 116 NLRB 1931 ; Okla-
homa Trailer Convoy, Inc, 99 NLRB 1019
11 Unless otherwise noted, there is no conflict in the evidence with respect to the factors,
both pros and cons, involving the employment relationship about which we are here
concerned
11 For the convenience of all concerned, the Respondent and the distributors agreed to
certain temporary arrangements which were to remain in effect until about April 1 1960.
These included the once a week assignment of a city route to out-of-town distributors
during the winter months and the prorating of truck rental expenses among the drivers.
In view of their temporary nature, I do not regard these arrangements as dispositive or
controlling of the issue here under 'consideration
12 Actually the men drive the same trucks, the leases having been reassigned by Hertz
from the Respondent to the drivers.
32 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
ucts at a price determined by the Respondent . The distributorship agreements do
not set or restrict the prices at which the men resell the products to the retailers.
The earnings of the men are thus based upon the difference of what they pay for
the beverages and what they receive from sales.
The foregoing represent the factors reflected in the evidence which tend to point
toward in independent contractor relationship. We turn now to the factors dis-
closed in the record which tend to indicate an employee relationship. The latter
factors for the most part pertain to requirements and restrictions which are reflected
in the provisions of the distributorship agreements and may be set forth and sum-
marized as follows: (1) The distributor is limited to purchasing all nonalcoholic
soft drinks for resale in his territory from the Respondent; (2) the distributor is
required to cooperate in and actively support and work on all sales, advertising, and
promotional campaigns suggested by the Respondent; further, he is required to
follow the Respondent's suggestions with respect to the placing and displaying of
advertising materials; (3) all trucks used by the distributor must be painted and
inscribed in accordance with the Respondent's requirements; the trucks must be
kept in a clean and neat condition and maintained in good repair; if the trucks are
warehoused, the warehouse areas must be kept clean, sanitary, and in good repair;
distributors are required to give representatives of the Respondent access to trucks
and warehouse areas for purposes of inspection; (4) distributors and their helpers
are required to wear "standard" uniforms when selling and distributing Respond-
ent's products; (5) distributors are required to maintain full and complete sales
records, route books, and books of account in a form approved by the Respondent
and they are required to provide the Respondent at least once a week with duplicate
copies of daily sales records; (6) the Respondent retains the right to solicit orders
in the distributors' territories; (7) the Respondent retains the right to sell and service
a territory and to retain any profit derived thereby in the event the distributor for
any reason is unable to sell or service such territory, (8) the distributors are required
to attend periodic "co-operative" meetings called by the Respondent; and (9) the
distributors are required to carry public liability and property damage insurance
in the amounts prescribed by the Respondent.
In addition to the foregoing requirements and conditions which are embodied in
the contracts, uncontroverted testimony indicates that Respondent maintains exclu-
sive control over charge accounts and credit arrangements with the distributors'
customers. Thus, in the event a customer of the distributor desires credit or a
charge account, the customer is furnished with an application which must be sub-
mitted to and approved by the Respondent before any credit can be given.
The evidence establishes also that on occasion Respondent's sales supervisors
accompany the distributors on their routes. In this regard it is signnficant that
the memorandum which Mrs. Graves prepared as a summary of what she told the
employers at the August 1 meeting (which memorandum was also circulated among
the employees who did not attend that meeting) contains the following statement:
"Our present supervisors will then be `advisors'-like any franchise, we will have to
he there to help see that the job is done right." [Emphasis supplied ] While there
is no equivalent provision, as such, in the distributorship agreements , there is evi-
dence that this policy was effectuated after the driver-salesmen became distributors.
Thus, Robert Blackhall, a witness for the Respondent and the only driver-salesman
then employed to testify on the subject, testified that since he became a distributor
Harold Ellis, his former supervisor, accompanied him "once or twice" on his
routes 13 Concerning those occasions, Blackball testified, "He just rides around and
observes, he writes a report and he turns the report into the Company and from
there on I will find out if there is anything wrong with my route, that they will sug-
gest ways for me to change it." Further that "he examines ways I am not performing
the contract correctly . . . how I can get . more sales through additional mer-
chandising by putting our products at a different spot or by hanging what we call
advertising helps . or give me a hint where I can locate a vendor that he knows
about, some people that want it that I don't know about." Also, according to Black-
hall, Ellis examines the condition and cleanliness of his stock and where it is located in
the customer's premises. Although there is no doubt but that the supervisors ac-
company the distributors far less frequently than they did prior to the distributorship
system, I find that a practice and understanding exists between the Respondent and
the distributor which entitles the supervisors to accompany the distributor on such
is Blackball testified that before becoming a distributor Ellis would accompany him as
often as once or twice a week.
SQUIRT-NESBITT BOTTLING CORP. 33
occasions as the Respondent may see fit and for the purposes testified to by Black-
hall. This was made clear by Mrs. Graves to the driver-salesmen at the outset of
the distributorship system and the practice shows that it has been carried into effect 14
Moreover, the evidence is clear that Respondent's supervisors (also known as sales
counselors under the distributorship system) attend and participate in the meetings
which the distributors are by contract required to attend.
It is significant, too, that the driver-salesmen who initially became distributors
were experienced employees. During their tenure of employment they had become
fam.liar with Respondent's operations and well knew what was expected of them
by way of handling Respondent's products. In this regard, Hansen testified that
new employees are hired as "trainees " The new employees are hired on proba-
tion with the understanding that they will become distributors only after they undergo
a training course and show that they will measure up to Respondent's required
qualifications. The training course is conducted by Hansen and other of Respond-
ent's supervisors. It is clear that by utilization of a system whereby Respondent
hires only trainees and requires them to undergo a thorough training program con-
ducted by its supervisors, Respondent is thus assured that the prospective distribu-
tors are thoroughly indoctrinated with the detailed methods of Respondent's dis-
tributorship operations.
C. Conclusions concerning the status of the drivers under
the distributorship system
After careful consideration and analysis of the cases and of all the factors here
involved, it is my conclusion, and I find, that the driver-salesmen retained their status
as employees under the distributorship agreements. There is no need to burden this
report with further analysis of the various factors involved or with a comparison of
the numerous Board and court cases on the subject. The pertinent factors pointing
in both directions have all been itemized in the foregoing section. In the opinion of
the Trial Examiner the positive factors pointing to an employee relationship, including
the various requirements and restrictions which are imposed upon the distributor,
all of which have been discussed above, indicate substantial control by the Respond-
ent over the distributors' method of operations. Such control over the distributors'
method of operations is characteristic of an employee relationship. Conversely, I
find that the evidence as a whole establishes that the distributors do not possess the
freedom of action as to the manner and means of accomplishing their work which is
an essential characteristic of independent contractors.15
D. The refusal to bargain; analysis and conclusions
Both the General Counsel and the Respondent have cited the Shamrock Dairy
case 16 in support of their respective positions. The Respondent argues that by
offering to bargain with the Union with respect to the "tenure of employment" of
the driver-salesmen for the period of their employment prior to the execution of the
distributorship agreements, Respondent thereby fulfilled any and all of its obligations
to bargain under the Shamrock case. The fact of the matter is, and contrary to the
Respondent's contention, the Respondent did not bargain on this subject within the
14 Richard Sparks, a distributor who left the Company on January 7, 19G0, testified that
Ellis (also his former supervisor) accompanied him on his route on an occasion after he
became a distributor.
15 The following additional observations might be noted The Respondent's products
(Squirt, Hires Root Beer, and Double Cola) are of the type generally sold to the public
at standard prices. The prices at which Respondent sells those products to the distributors
are determined by the Respondent. The routes and territories of the distributors already
had been established. Accordingly, the "risk" element, a factor indicative of an inde-
pendent contractor relationship, appears negligible here.
Moreover, although the contract does not require the distributors to work any set hours
or days, the evidence indicates that the men continue to report at the plant early in the
morning to pick up their products . That the freedom which the distributors enjoy with
respect to any working schedule is more apparent than real is further demonstrated by
the fact that the distributorship agreement permits the Respondent to take over or re-
assign any territory where the distributor falls to afford such service as provided for in
the contract.
16 Shamrock Dairy, Inc, et al., 124 NLRB 494.
597254-61-vol. 130-4
34 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
meaning of the Shamrock case. In the latter case, which involved a situation where
the employer had unilaterally instituted a contractor-operator plan, the Board clearly
held that the employer's obligation to bargain with the Union included the obligation
to bargain with respect to the very adoption of the plan-this in addition to matters
relating to tenure of employment, a matter which would arise only if, in fact, the
plan was adopted.
It is clear that here the Respondent unilaterally adopted and put into effect the dis-
tributorship system without negotiating with the bargaining representative about it. It
is not enough, as Respondent also seems to urge, that the Union was notified in
advance of Respondent's plans to inaugurate the system and that Respondent's bar-
gaining obligations were thereby satisfied. Mere notification of contemplated
unilateral action clearly does not satisfy the processes of collective bargaining con-
templated by the Act. Nor can any claim be made that the Union abandoned the em-
ployees or that it in any way waived its rights to bargain over the adoption of the
distributorship system. As heretofore related, the Union Representative Bopp
initially took the position that the Union would bargain over the distributorship
system and he adhered to this position through the last bargaining meeting. Not
in the least inconsistent was the Union's action in filing an unfair labor practice
charge within a few days after the distributorship was made an accomplished fact.
On the basis of the foregoing, and under the Shamrock case, I find that the Re-
spondent violated Section 8(a)(5) and (1) of the Act by engaging in individual bar-
gaining with its employees and by entering into individual contracts with its em-
ployees at a time when the Union was the certified bargaining representative of the
employees.
The case does not rest at this point, however, for in the opinion of the Trial Ex-
aminer the extent of the violation here exceeded that found by the Board in the
Shamrock case and in the Smith's Van & Transport case 17 In each of the latter
cases the Board found that the unilateral actions of the employers in entering into
contract agreements were economically motivated, i e , the motivating factor was non-
discriminatory.18 But beyond this, it appears that the employers in each of the cited
cases initiated and sponsored the action in kind by reason of business considerations,
viz. more profits, greater efficiency, and the like In the instant case there is no evi-
dence whatsoever that the Respondent adopted the distributorship system for business
reasons For what the record shows, the Respondent has profited no more or no less
under the distributorship arrangement than it had under the driver-salesmen system.
Furthermore, the original suggestion to adopt the distributorship system came from
the employees; it was not initiated or sponsored by the employer. In view of the
foregoing, and for the additional reasons noted hereinafter, I am of the opinion that
the facts in the instant case are more analogous to that in Medo Photo Supply Corp.19
In the Medo case the employer recognized the union as the bargaining representative
of its employees. At the employees' request and upon their statement that they
would abandon the union if their wages were increased, the employer negotiated with
them without the intervention of the union, granted the requested increase in wages,
and thereafter refused to recognize or bargain with the union. The Supreme Court
there rejected the notion that the employer was relieved from its bargaining obliga-
tions because the employees asked that they be disregarded, holding that "the statute
was enacted in the public interest for the protection of the employees' right to col-
lective bargaining and it may not be ignored by the employer, even though the em-
ployees consent." In finding a violation of Section 8(a)(l) and (5), the Court
found that the obligation to bargain with the union being exclusive, it exacted the
"negative duty to treat with no other "
The facts show that here the employees came to the Respondent and expressed
an interest in distributorships It is true that, unlike the Medo case, they did not
come out and specifically announce that they would abandon the Union if the
distributorships were granted to them Nevertheless, it is obvious that Respondent,
if not immediately. soon became cognizant of the fact that it no longer would have
to deal with the Union once the men were in fact established as independent con-
tractors As heretofore noted, once approached with the suggestion, Respondent
went to no little effort and expense to ascertain whether the distributorship system
could feasibly be integrated into Respondent's operations. Thereafter it not only
19 Smith's Van d Transport Company. Inc, of at, 126 NLRB 1059 Thts case was also
cited by the General Counsel in support of his contentions
19 See also Brown Track and Trailer Manufacturinq Company, Inc, et at, 106 NLRB 999.
19 Medo Photo Supply Corporation v N L R B, 321 U S 678.
SQUIRT-NESBITT BOTTLING CORP. 35
cooperated with the employees, but the evidence establishes that Respondent in
fact encouraged the employees to accept what it by then proposed in the way of a
distributorship arrangement. Thus, it will be recalled that at the August 3 union
meeting the employees had voted to authorize a strike and that Respondent was
advised of this action on August 4. Nevertheless, at a meeting with the employees
on August 5, the Respondent offered further inducement to the employees by ex-
plaining to them in great detail the possibilities of what they might earn under the
distributorship system.
In view of the foregoing, and upon the record as a whole, I find that the Respond-
ent further violated Section 8(a) (1) and (5) by its conduct in cooperating with and
encouraging the employees to accept the distributorship plans. The foreseeable
results of such action was bound to undermine the Union as the employees' bar-
gaining representative. Medo Photo Corp , supra. This is particularly true where,
as here, the action occurred prior to the expiration of the 1-year certification period.
Ray Brooks v. N.L.R.B., 348 U.S, 96.
Finally, I find that even if the individual contracts changed the status of the
drivers to that of independent contractors, Respondent nonetheless violated Section
8(a)(5) and (1) of the Act. The refusal to bargain here occurred prior to the
actual execution of the distributorship contracts. As held by the Board in Smith's
Van & Transport Company, et al., supra, the Union was entitled to bargain over the
adoption of the contract system.20
IV. THE EFFECT OF THE UNFAIR LABOR PRACTICES UPON COMMERCE
The Respondent's activities set forth in section III, above, occurring in connection
with the Respondent's operations described in section I, above, have a close, inti-
mate, and substantial relation to trade, traffic, and commerce among the several
States, and tend to lead to labor disputes burdening and obstructing commerce and
the free flow of commerce.
V. THE REMEDY
Having found that Respondent has engaged in certain unfair labor practices, I
shall recommend that it cease and desist therefrom and take certain affirmative
action designed to effectuate the policies of the Act.
Having found that Respondent has refused to bargain collectively with the Union
and has, on the contrary, engaged in individual bargaining with its employees in
derogation of the Union's representative status, it will be recommended that the
Respondent cease and desist therefrom and that it cease giving effect to the indi-
vidual contracts with its driver-salesmen . In order to restore the status quo, it also
will be recommended that the driver- salesmen with whom the Respondent has made
individual contracts be offered full reinstatement to their former or substantially
equivalent positions as driver-salesmen, without prejudice to seniority or other
rights and privileges, and that each be made whole for loss of pay, if any, suffered
by reason of the said driver-salesmen employment under individual contracts.
CONCLUSIONS OF LAW
1. Bakery Sales Drivers Union, Local No. 344, is a labor organization within the
meaning of Section 2(5) of the Act.
2. All driver-salesmen, including office employees, professional employees, guards,
supervisors, and all other employees as defined in the act, constitute a unit appro-
priate for purposes of collective bargaining within the meaning of Section 9(b) of
the Act.
3. At all times material since July 13, 1959, the Union has been the exclusive
bargaining representative in the aforesaid unit within the meaning of Section 9(a)
of the Act.
4. By failing to bargain collectively with the Union as the exclusive bargaining
representative of the employees in the appropriate unit, by bargaining individually
with the employees, and by entering into individual contracts with the driver-
salesmen, the Respondent has engaged in and is engaging in unfair labor practices
within the meaning of Section 8(a) (1) and Section 8(a)(5) of the Act.
5. The aforesaid unfair labor practices are unfair labor practices affecting com-
merce within the meaning of Section 2(6) and (7) of the Act.
[Recommendations omitted from publication.]
20 See the Board's remedial order in the Smith's Van case, supra.