Appendix — National Labor Relations Board v. United Insurance Co. of America

la

‘APPENDIX A _

Decisions of Court Below

IN_ THE UNITED STATES COURT OF APPEALS

FOR THE rs CIRCUIT

— Ten, 1966—SEPTEMBER Selenite, 1966

Nos. 15266 & 15589 ‘,

- No. 15266

* Unrrep Insurance Company or America, Petitioner

7 . See i

Nationat Lasor ‘RELATIONS Boarp, Respondent

3 a ;

Iysurance WorkKERS INTERNATIONAL Union, AFL-CIO,

_ Intervenor.

No. 15589

INSURANCE Workers INTERNATIONAL Union, AFL-CIOQ,

; Petitioner ~

Vv.

Nationa Lasor Revations Boarp, Respondent

. + and -

’ Unrrep Insurance Company or America, Intervenor.

' On Petitions to Review and on Cross-petition to Enforce

an Order of the National Labor Relations Board.

December 21, 1966

Before Knocs, Casriz and Swyczrr, Circuit Judges.

Cgstix, Circuit Judge. These cases are before the Court -

upon the petition of United Insurance Company of America

; g

7

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- (Company) to review and set aside an order of the National

Labor Relations Board issued against the Company July

28, 1965, a petition of Insurance Workers International

Union, AFL-CIO, (Union) to review the Board’s order to

the extent the order denied the Union the full relief it re--

- quested, and:upon the.cross-petition of the Board to enforce

its order. A motion of the Company: to dismiss the Union’s

petition was taken with the case on. the merits.

The Board found that the Company violated Section

8(a)(5) and (1) of the National Labor Relations Act, as

amended, by its admitted refusal to bargain with the Union,

. the certified. representative of the Company” s debit agents __

in Baltimore City and Anne Arundel County, Maryland.

The Company is engaged primarily in selling industrial

life insurance, a form of ordinary life insurance in which

the policies are written in amounts of less than $1,000 and’

‘the premiums are payable weekly, and for that purpose

maintains district offices throughout the country. Each

. district office has a manager and several assistant mati- ©

. agers, and each assistant ‘manager heads a group of four

or five debit, agents. Thesé debit agents, so-called for the

reason that ‘‘debit”’ describes the agent’s book Aisting the

policyholders from whom the agent collects premiums,

spend most of their time in the collection of premiums from

policyholders residing in a given ares. . They also solicit

applications for new insurance and for fire insurance

written by another insurer whose business is also handled

by the management and supervisors of the Company.

On June 4, 1964, the Union filed a petition with the Board

seeking certification as. the collective bargaining repre-

1 The Union’ 's petition was originally filed in the United States

Court: of Appeals for the District of Columbia Circuit. The Com-

pany thereafter filed its petition with this Court and it was trans-

ferred to the District of Columbia ‘Circuit as provided by 28

‘U.S.C.A. §2112(a). The Board cross-petitioned for enforcement

‘of its order, and the D. C. Circuit transferred the proceedings to .

this Court where they were consolidated for hearing and disposition.

3a :

sentative of the Company’s debit agents in Baltimore. City

and Anne Arundel County, Maryland.. On March 16, 1964,

the Company had entered into a reinsurance agreement with

' Quaker City Life Insurance Company, a Philadelphia,

Pennsylvania corporation, under which, among other things

not here pertinent, the Company reinsured the industrial

life insurance policies issued by Quaker in’a number of

states, including those in force in Baltimore City and —

Anne Arundel County, Maryland.. Quaker had chosen to

maintain an employer-employee relationship with its debit

agents, and its agents in Baltimore City and Anne-Arundel ~~

County were. represented by the Union. Upon the-effective

' date of the reinsurance agreement (March 16, 1964) Quaker

terminated all of its employees. Some of Quaker’s former

agents in Baltimore City and Anne Arundel County became

"agents of the Company. The policies they serviced, and the

- business they generated, were handled from the Company’s

Franklin -Street district office in Baltimore, a location

formerly utilized by Quaker. The debit agents here in-

volved wére about equally divided between that office and i

the company’s St. Paul Street district office from which.

: the Company had handled its policies in Baltimore prior

to its reinsurance of Quaker’s policies and continued to

maintain.

On July 6; 1964, the hennae and the Union whined into

a stipulation for certification upon consent election which

by its terms provided that the Company did not waive its |

contention that the debit agents in the unit were independ-

ent contractors and not employees within the meaning of

the Act, and that the failure of the Company to contest —

that issue was limited solely to the representation pro-

+ eeeding. The Union won the election and was certified on

August 14, 1964. On August 20, 1964, the Union requested

recognition. On September 1, 1964, the Company denied.

that request. It based its refusal to bargain with the Union

-on the ground that the debit agents involved are —

pendent contractors and not employees.

Fe OE SE

The Board ordered the Company to cease and desist from

its refusal to bargain, to bargain with the Union upon 4

request, and to post designated. notices. xe

The Board’s conclusion that the Company deleted Sec-

tion 8(a) (5) and (1) of the Act is predicated upon the Trial

Examiner’s findings and conclusions to the effect that the .

Company’s debit. agents in the Baltimore City and Anne ©

Arundel County area unit here involved. are employees

within the meaning of the Act, which findings and con-

_ ¢lusions the Board adopted.

The Company contends’ that the Board’s mere is not

supported by substantial evidence on the record considered

as a whole; that the findings.and conclusions adopted by

the. Board are, in material part, the product of subjective

‘conclusions drawn -from the trial examiner’s personal

observations rather than from the evidence; that material

comparative testimony, proffered by the Company, was

erroneously excluded; and that at the most’ the testimony

of the two witnesses credited. and relied upon by the.ex-

aminer can: be regarded as establishing only that the unit

-was half ‘‘employee’’ and half ‘‘independent contractor’’.

The Union’s contentions? are limited to its assertions

that the Board erred in denying its requests that there be.

included in the Board’s order a specific direction that the

Company bargain concerning the fire insurance aspects of

the debit agents’ activities and a requirement that the

Company, from the date of its refusal to bargain until the

discharge of its bargaining obligations, apply to all of the

debit agents in the unit the terms of a contract which al-

legedly had existed between Quaker and its’former debit

agents; and that the Union is entitled to challenge these

aspects of. the Board’s order as a ‘“‘person aggrieved”.

The Company’s motion to dismiss the Union’s petition in

2 Except for those contentions urged by the Union as intervenor

in No. 15266 in support of the Board’ S$ order.

"_.No--15580 “thallenged the ‘Union’ s status as an agerieved

person. The Board takes the position that while the Union

is an aggrieved person in so far as jurisdictional purposes

are concerned, and therefore this Court has jurisdiction *

of the Union’s petition for review, the contentions of the

‘Union with respect to the scope of the Board’s-order are _

wholly without merit.’

‘Two years prior to the, Union’s petition for ‘certification

in the instant matter the issue whether the Company’s debit _ ~

agents in Pennsylvania were Company employees or inde-

‘pendent contractors was before this Court in United Insur-

ance Company of America v. N.L.R. B., 7 Aes 304 F. 2d 86. o

This Court there observed:

‘In the instant case, United-has chosen to operate: its

business on the basis that its agents are independent

contractors and, of course, it had the complete legal

— so to do.”’

And pee N.L.R.B. v. Phoemix Mutual Infe Insurance

Company, 7 Cir., 167 F. 2d 983, and National Van Lines,

8 In view of our conclusion that the Board’s order is not entitled

. to enforcement the Union’s petition in No. 15589, and the Com-

pany’s motion to dismiss that petition, are moot. Accordingly, we

will not discuss the contentions of the parties with respect thereto.

- Suffice it to indicate that we agree with Board’s position that the

Union‘ was entitled to petition for review of the Board’s order inso-

- far as it denied the additional relief the Union requested but that

there is no merit to the Union’s complaints. There was no neces-

sity for a specific reference to the fire insurance activities. Bar-

gaining orders. need not specify each individual matter upon which

_an employer must bargain, particularly where, as here, the thresh- .

old question is whether there is an obligation to-bargain. Cf. San

Antonio Machine & Supply Corp. v. N.L.R.B., 5 Cir., 363 F. 2d

633, 642. And, there is no basis in the record, either factually

or legally, to support the Union’s request concerning a ap-

on * an alleged contract. ;

+ SER Ue Ee A

Inc.

out

Wii, ¥

v. NLR.B., 7 Cir.» 273 F. 2d 402; the Court ponies

(304 F. 24.89) : we

‘*. . ... that the itthisl sciudtons seutiendte exists

when the person for whom the work is done has the

right to control and direct-the work, not only as to the

result accomplished by the work, but also as to the

details and means by which that result is accomplished,

and that it is the right and not the exercise of control

- which’ is the determining ‘element: .. . the critical -

-distinction ‘between employees and independent con-

tractors under the Act is the right to, control the

manner and means by which the agent conducts his -

business. In determining whether the requisite, control

of manfer or means is ‘present, various tests have _

employed. ”

| but

* debit agent is ‘on his own’. He sets hi

‘

‘The conclusion must be based on the ‘total situation’

looking at all of the facts in the particular case.”’

= The Court held (304 F. 24 90):

hours

of work and work days and makes his own \arrange-

ments wifh policy holders respecting frequency of

premium payments. As admitted by the trial ex-

aminer, the agent pays his own travel expense, rent,

postage, ‘telephone, bond expense and salaries of as-

sistants ; he may take holidays when he desires without

notice to United. Agents may transfer policies among

themselves and are not required to do so by United.

An agent retains his own commission from collected

premiums. As to selling insurance, the agent ‘* * *

. the. debit agents: are independent jaya

is free to follow the superintendent’s suggestion or

to devise his own methods.’ i

‘

Si

. The Court rejected 1 as insignificant the factors relied upon

by the Board in support of its conclusion that the agents .

were employees, and 1 in this connection the Court observed :

‘‘Suffice it to say, we have carefully considered each

@ the items and categories mentioned, but we are con-

-vinced! they do not show, in connection. with all the

other facts and circumstances, that an employer-

employee relationship existed. .

There are many businesses, and the sale of ,insur-

ance is one of them, where the management may make

a choice as to the manner in which the business will

. be conducted. Very often, perhaps traditionally, in-.

‘surance has been sold through insurance salesmen

whose ‘tools’ are their own initiative and personality

and who work on their own time and’ af" their own -

expense. _However, some insurance companies have

established ean employer-employee relationship such

as the company in N.L.R.B. v. Phoenix Mutual Life

Insurance Company, {167 F. 2d 983] supra.’?

' With the critical test firmly established by United Insur-

ance Company of America v. N.L.R.B., 7 Cir., 304 F. 2d

86, and the decisions cited therein, and the natare of the

various factors which may properly be considered ‘i ‘in apply-

ing that test illustrated by that decision, we turn to an .

appraisal of the record before us giving full recognition to

e fact that the issue presented is to be determined on

‘the record in this particular case. National Van Lines,

Inc. v. N.L.R.B., 7 Cirs, 273 F. 2d 402, 407.

‘ Under the principles governing our review: of the factual |

findings of the trial examiner, adopted by the Board, those

findings are to be accepted if supported by substantial

evidence on the record considered as a whole. Universal

Camera Corp. v. National Labor Relations: Board, 340 U.S.

474. But this formula for judicial review of the Board’s

administrative action was recognized in Universal Camera

F in’

x

_

lid

Sa

i

(340 U. ‘8. p. 489) as affording “‘TsJome scope for judicial

- discretion’’ and approved with the express realization that

‘<Tt]here are no talismanic words that can avoid the process

of judgment’’, and the admonitions (340 U.S. 488 arid

496) that ‘‘[t]he substantiality of evidence must take into

account whatever in the record fairly detracts from its

- weight’? and that the examiner’s findings are not tg be

‘‘siven more weight than in reason and in the light of

judicial experience they deserve”’ and ‘‘are to be considered

along with the consistency and inherent probability of testi-

mony’’. And Universal’ Camera makes it clear (p. 488)

that: ; fn

- “*TA] reviewing court is not barred’ from setting aside

a Board decision when it cannot conscientiously find

that the evidence supporting that decision is substan-

tial, when viewed in the light that the record in its

entirety furnishes, including the body of evidence op-

gi he to the Board’s view.’’

And in this cotinection Eastern Greyhound Lines v.

N.L.R.B., 6 Cir., 337 F. 2d 84, reiterates the pertinent

observation made i in N.L.R.B. v. Elias Bros. Big Boy, Inc.,

327 F. 2d 421, 426, after a review of the relevant cases, ~

that: é

‘‘In a proper case [the reviewing court] may decline

to follow the action of an examiner in crediting and

discrediting ’testimony,.even though the Board has

be adopted the Examiner’s findings. 9,

Similarly, in Portable ‘Electric Tools, Inc. v. ain 7

Cir., 309 F. 2d 423, 426, this Court had occasion to state:

‘*While recognizing that the question of credibility i is

for the trial examiner, an Appeals Court is not pre-

cluded from independently determining what weight

certain —w which he = credible should be

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given when evaluating the evidence on the record as

a whole. i

~—s | ae

and that if the Court is not to be ‘“‘merely the judicial |

echo.of the Béard’s conclusion’’ a* Board determination

must be set aside when the reé¢drd clearly precludes that

determination from being justified by a fair estimate of

the worth of the testimorry of witnesses or the Board’s _

informed judgment on ‘matters within its special com-

_petence or: both. 7 = :

The trial examiner’s decision discusses testimony and

exhibits of record bearing on various factors relevant to,

and to which the examiner attached significance in, the

determination of the debit agents’ status as employees: or

‘independent contractors. These factors embrace most of »

those mentioned in our opinion in the earlier case involving.

the Company’s Pennsylvania debit agents (United Insur-

ance Company of America v. N.L.R.B., 7 Cir., 304’ F. 2d

86).. But, on the record in the instant proceeding, the:

examiner, although professing that he was not overlooking

the Company’s testimony that in order to meet or avoid

the Board’s earlier findings (set aside in United Insurance,

supra) ‘it had a vertently set about to and had made

changes, . iis revisions in the manual the Company

_ furnishes its debit agents, to more clearly réflect the inde-

’ pendent contractor. status ; and while finding that the Com-

pany does not fix the agent *s hours for debit collections

_ and other services on his debit, and that the agent is per-

mitted to retain his commission from the premiums jcol-

lected, proceeded: to find that the testimony concerhing

. certain of the Company’s requirements and practices evi-

denced such right of control as dictated a conclusion that

. the agents are employees.

‘In this. latter connection the examiner found that (1):

. ‘the agent is required to make a weekly report and settle-

ment of ‘account at his district office in the morning of a

“< Se yaa op :

‘designated day, use forms specified and furnished by the

Company, and comply with its accounting procedures ;. (2)

_ on the day he so reports there usually is a sales meeting

with the district manager which the agent is required to

attend, followed by group and individual meetings and dis- |

‘ eussions between the agents and the assistant: manager to

whom each agent is assigned; (3) the agent receives as-

sistance from and is subject. to supervision,by the assistant.

manager to whom he is assigned; (4) transfers of policy-

holders between agents are subject to: Company -approval ;

and (5) the Company pays travel expenses, provides rent,

postage, and telephone, as well as office space in its district -

office for’ the agent’ s use when he comes in to make his

weekly’ report and — and to cx up mail and

~ telephone messages.

“We find ~» support i in the veel for s some of these find-

‘ings and but tenuous support for others. Those which are

supported by substantial evidence are, in our opinion, con-

sistent with an independent contractor status.. They are

not indicative of an existence or exercise of control directed

tothe ‘‘manner and means’’ by which the result to be

produced by the agent is to be accomplished, but only of ;

‘ the application of those financial controls, accounting pro-

cedures, and business methods and practices which would

_ appear to be normal to the operation of the premium col-

lection phase of the Company’s business whether it be

carrier on through debit agents who are Eanperee or

who are independent contractors.

- There is lack of evidentiary support for the examiner’s

findings that the Company pays travel expenses and fur-

nishes rent, postage and telephone. In:this respect the

record merely discloses that where the policyholders making

up. an agent’s debit are dispersed over a large area his

_ commission: is 1%. more than the normal rate. There is —

no payment of the agent’s actual travel expenses. The

récord does not establish that the Company furnishes or

reimburses the agent for postage. It shows “only that if

lla

a policyholder mails a premium to the district office together |

with his premium receipt book the Company mails the

book back to the policyholder at its own expénse. With

respect to ‘‘rent’’, ‘telephone’? and the furnishing of

‘‘office space’? the record divulges only that: during the

three or four hours a week, the agent spends in the district

office of the Company, usually on the morning when he

makes his weekly report and. accounting, tables and chairs

are made available in the district office which the agent. may

use while preparing his report. Likewise, the agent may

occasionally use the Company. telephone while he is in the

district office or receive a telephoned message which has

been left for him.

There is testimony that where a polieyholder moves ; from

the area serviced by the debit agent or the agent secures —

a new policyholder outside of the area normally serviced |

by-him* he may arrange, subject to Company approval,:

with the agent who doe serve the area involved for a

transfer of the policyholder to the latter. There is other

testimony that transfers are freely made between agents

without first securing Company approval. In any event, it

is our opinion that this transfer of business factor is not .

of critical significance. Both from the standpoint of the

extent of the area in which an agent is to have. responsi-

bility for premium collections, and for the purpose of

~ financial accounting with the agent, Company concern with

such transfers and its need for knowledge of the same is _

readily apparent.

There is iontiondny, some of which. is net harmonious,

* concerning the ‘‘assistance’’ furnished and ‘‘supervision”’

exercised by the Company. assistant managers, each of

whom is assigned a group of four or five debit agents.

‘Thus, while it appears that the assistant manager’s associ- |

ation with the debit agent continues after the agents initial

training period, aie the assistant manager may. determine

* Each agent has a shit wide Yinenee to solicit insurance and is

not restricted by the — obtaining new business.

he > _ tec omen ee ‘ SARI EONS SON

12a

if and when he elects to accompany the agent on his rounds

in the servicing of his debit, there is also testimony that

_ the primary purpose for so doing is to assist the agent in

the conservation of business—the calling on policyholders

in connection. with lapsed policies—and aiding. the agent

‘in procuring new business on which the latter receives the

commissions. The assistant manager reviews the agent’ s

_ reports, requires him to make necessary changes if the °

_ accounting is not correct, and cautions the agent about poor

production when necessary. During periods of an agent’s

absence from his debit for a week or more because of ill-

ness, or while taking a vacation, the assistant manager, if

available, will take over for the agent. Thus, while the as- ~

sistant. manager assists the agerit and “Cgapervises”? the

agent in the latter’s relationship with and agounting to

the Company it is hardly a supervision: which entails the

control of the ‘‘manner and means’”’ as distinguished from

_. the results the agent is required to obtain: The Company

is entitled to insist that the debit be adequately serviced

and that a proper accounting of premiums collected be

made whether such servicing and collection is carried on

through employees or independent contractors. Inadequate

. ‘results or failure in monetary remittance to the Company

would in the absence of: corrective action require termina-

tion of the relationship ‘in either case.

The testimony concerning attendance of sales meetings

and with respect to discussion conferences with the assist-

ant manager on the occasions of the weekly reports to the

district office if appraised as evidencing Company insistence

- upon such attendance is, nevertheless, equivocal. The

continuity of the relationship involved and the -mutual

interest. of the parties in thé result to be obtained make

_ it imperative that the agents be kept informed with re-

. spect to changes in the insurance contracts the Company

offers and desirable that they be made aware of incentive

programs sponsored by the vey to stimulate sales

efforts.

“oe

‘The trial examiner’s appraisal of the, testimony upon

which his findings relating to the above factors were predi-

- cated was made on the basis ‘of a credibility resolution

’ that the General Counsel’s chief witness, Ronney E. Scott, —

former employeé-debit agent of Quaker and the chairman

of the Union’s local, whose display of ‘‘evident partisan-

ship’’ was recognized, ‘‘was. a.reliable witness’? and ‘‘I

credit his testimony generally’’ as contrasted to what the

examiner characterized ag ‘‘the patently unreliable aspects’ va

displayed by the Company’ S witnesses. .

And the appraisal of the testimony so made by the trial

examiner, and the résulting findings he made from the

testimony he credited, were accompanied by and made in -

the context of his observation that :

“To the extent if any that I may sly 0 on demeanor

in the hearing room, I would now report that without

exception the agents did not display or appear to-have

attributes of independence (not even when the ‘ring-

leader’ appeared to assert himself as he testified), but.

acted and appeared to be regarded as rank-and-file

employees, not of high rank either in fact or in regard.”’

and of his reasoning, set forth in a footnote, that:

'«*, .. there appears to be no good reason for exclud-

ing demeanor in the courtroom when the witness is not |

on the stand and where it is clearly. observable as in

5 The-General Counsel presented the testimony of two witnesses,

Scott and Don Ramon Jenkins, both of whom were members of the

Union and had been employee-debit agents of Quaker before be-

coming agents for the Company. Jenkin’s comparatively abbrevi-

ated testimony supported that of Scott in some particulars. The

Company presented the testimony of four of the debit agents, and

- it was stipulated that the testimony of six others, identified for — |

the record, would be of the same general tenor as that of the four

who testified. Additional Company witnesses included its vice-

president and general counsel, its agency vice-president, and the

district manager, who was s formerly a Quaker —

‘ 14a

this case;...* * * Without attempting to detail the |

basis for this necessarily subjective finding, and allow-

ing for an independent contractor’s possible concern

over renewal or termination of his contract, I can

here declare that I observed a uniform and marked

deference by. agents toward supervisors and company —

officials which, without obsequiousness but beyond the

sometimes elusive requirements of courtesy, is decently

characteristic of common attitudes between employees

and supervisors; and which.in such uniformity differs

from the normally observable attitudes ee inde-

- pendent contracting parties. ”

.A witness’ demeanor as a criterion of credibility is gen-

erally related to a witness’ manner while on-the stand or

manner of testifying: And although the off-the-stand ap-—

pearance or conduct of the witness may properly be con-

_ sidered in determining his credibility when it constitutes an -

observable physical fact, the off-the-stand demeanor here

relied upon by the examiner was not based on his observa-

_tion of a simple physical fact but was predicated upon such

subtle manifestations of human reactions as ‘‘obsequious-

ness’’ and ‘‘courtesy’’ to which the examiner applied his

own view or predilection as to what. attitudes are ‘‘char- _

acteristic’? of relationships between. employers and em-

ployees and between independent contracting parties. In.

our opinion resort to conclusions drawn from the applica-

tion of such an elusive subjective standard as the examiner

here puts forth is improper and that conclusions so drawn

do not afford an acceptable basis for a credibility appraisal

much less can they supply any independent evidentiary

content. Kovacs v. Szentes, 130 Conn. 229, 33 A. 2d 124. .

In adopting the trial examiner’s findings, conclusions,

and recommendations the Board specifically disavows re-

liance upon the demeanor ‘‘observation’’.made by the

examiner. But we do not perceive how this disavowal

. Nees, : ‘Ia

can serve to remove from -the examiner ’s findings and con-

clusions the flavor with which his demeanor observation |

tainted them. Cf. Wheeler v. N.L.R.B., D.C. Cir., 314 |

F. 2d 260, 263; N.L.R.B. v. American Federation: of Tele- .

vision and Radio Artists, 6. Cir., 285 F’. 2d°902, 908. Our

‘study of the record leaves us with a distinctive impression °

that the flavor of the demeanor observation and accompany-

ing rationalization not only pervades the examiner’s credi-

bility. resolutions, and thus taints the findings and con-

clusions resulting from the testimony so credited, but also

that independent evidentiary content and force may well

have been giveri, albeit undesignedly, to the ‘‘employee

attitude’’ the examiner,so tenuously surmised was reflected

by debit agents’ off-the-stand demeanor.

Thus, in addition to the infirmity of some of the critical

findings from the standpoint of lack of substantial evi-

deritiary support, and the insignificant or equivocal nature

-of the factors embraced in other findings, we are confronted

with a record which, when viewed in the hight consideration —

ii its entirety furnishes, is revealed to be tainted with a

flavor which precludes us from conscientiously relying upon

vit as adequately supporting the Board’s determination and

order. There is too much which detracts from the weight

of the evidence relied upon to —T" the mae and

conclusions.

| The Company’s petition to set aside the Board’s order

is granted, and, consequently, the Board’s petition for en-

forcement of its order is denied. .

| Orper Set Aspe

; : Anp ENFORCEMENT DENIED.

A true Copy: . is

Teste: aie

Clerk of the United States Court of ~

Appeals for the Seventh Circuit.

LSAT ESOL IE RS 1 LE POT

16a .

Unitep Insurance Company or AMERICA, a corporation,

Petitioner,

v. .

Nationa Lasor Retations Boarp, Respondent.

No. 13500

United States Court of Appeals

Seventh Circuit -

June 12, 1962

As Amended July 2, 1962

Before Durry, Knocu and Castie, Circuit J udges.

Durry, Circuit Judge. |

Petitioner (United) seeks to review a decision and order

of the National Labor Relations Board (Board) dated

August 10, 1961. The Board has filed a cross-petition for.

eee of that order.

- This case is here for the second time. On the first’ oc-

casion, we set. aside the Board’s order (272 F. 2d 446),

holding the Board had not afforded United procedural due

process. We remanded the case ‘‘for a full hearing and

decision based upon a consideration of all relevant evi-

dence.’’

The ‘indices and order of the Board here challenged re-

capes United to bargain collectively with Insurance Work-

ers’ International Union, AFL-CIO, (I[WIU) as the collec-

tive bargaining agent for the licensed debit agents who

serve United in the State of Pennsylvania. ‘The: principal

issue is whether these licensed debit agents are independent

: contractors or employees. of United.

_°' In 1953, Local 5, Insurance ‘Workers of America, CIO, *

filed a petition for certification with the Board. About one

month later, Insurance Agents’ International Union, AFL,

17a

filed a petition also seeking certification. These petitions

- were later voluntarily dismissed and withdrawn respec- _

_ tively. “About two and a half years later, Insurance Agents’

"International Union, AFL-CIO, petitioned for certification.

An agreement was ‘entered into by this Union and United

for a consent election with the specific understanding that

United would not waive its position that the debit agents

were independent contractors.

An election and a re-run election were held, and the In-

surance Agents’ International Union, AFL-CIO, won and

was certified. United refused to bargain, claiming that it

was under no obligation to bargain with the Union because

the debit agents ¥ not its employees but were inde-

pendent contractors.

United issues commercial and industrial life, health and

accident, and hospitalization irisurance policies. Under

Pennsylvania law, Industrial Life Insurance Policies of

less than $1000 are sold on a weekly premium basis. The

debit agents are engaged primarily in selling and collecting

premiums on industrial life insurance policies issued by

United. However, at times, they do collect premiums on ~

other types of insurance: policies issued by United. |

In our previous opinion, we observed that in’ many re-

spects a debit: agent has the attributes of an independent

contractor, and we listed some of them. We also said that

there are some aspects of the duties of debit agents which

might inditate their status is that of employees of Unitéd.

In view of our disposition of the first appeal, we did not

reach the issue of whether the licensed debit agents are

independent contractors or employees,

On February 8, 1960, the Board reopened the record and |

remanded the case to the trial examiner ‘‘for the purpose

of receiving additional evidence consistent with the Court’s

remand.’’? A hearing was scheduled.

Prior to the hearing. date, United moved-to transfer the

proceedings to the representation docket, principally on --

_ the ground that three years had elapsed since the Insurance

Agents’ International Union (IAIU) had been certified in

a close election. United claimed that the disposition of the

matter in a representative proceeding would be appropriate

to determine both the jurisdictional employee status issue

and ‘the current representative status of the certified

Union. The motion was referred to the trial examiner and

was denied:

On March 25, 1960, three days before the scheduled hear-

ing, counsel who had. represented Insurance Agents’ Inter-

national Union disclosed to United’s counsel that the cer-.

tified Union was no longer in existence. «It was finally dis-

closed that in early 1959, prior to the time this case was

first presented to. this Court, the Insurance Agents’ Inter-.

national Union had merged with the Insurance Workers of

America and a new union had been formed kriown as the ~

Insurance Workers’ International Union, AFL-CIO,

(IWIU). United then renewed its effort to have the case

transferred to the representation docket. The Board de-

- nied. United’s request for leave to appeal the examiner’s

ruling denying the motion to transfer.

In the 1957 hearing, the Board declined to receive or

consider the testimony of one Jack Borman which was.

offered by United. Counsel for United then made.an_ex-

tensive offer of proof. Borman operates a large enterprise >

_ which sells and services insurance policies for United in ~

Pennsylvania. It has acted in such capacity for a con- |

siderable period of time. It is and has been subject sub-

_ stantially to the same instructions, report requirements and

other procedures’in its relationship with United as are the

debit agents involved in this proceeding. The purpose of -

the testimony was to demonstrate that the so-called ‘‘con-

trols’’ relied upon by the Board as showing the agents to

be employees, applied equally to the Borman enterprise,

‘which no one contended made them employees of United.

_ At-the new hearing, there was no new evidence on the

_ ’ basie question of employee status.: The parties stipulated

eee +

© ht) ae - 198

that the record in the prior proceeding should be considered

a part of the record in the current Proceeding. .United

again offered the testimony of Mr. Jack Borman, but it

in the prior proceeding. The parties stipulated that if the

- , Board found the exclusion of Borman’s testimony to be

/ error, United’s offer of proof would: be accepted as the

entire testimony of Mr. Bo. Ki A a ree

reissue the order originally :

uary 14, 1959, except that the Insurance Workers’ Inter-

national Union, AFL-CIO, should be substituted fer In-

surance Agents’ International Union, AFL-CIO. On Au-

~ §ust 10, 1961, the Board adopted the*trial examiner’s find-

. Ings, conclysions and reco endations, 7 :

‘In 1947, Congress amended the N. ational Labor Relations —

Act so as to prohibit the National Labor Relations Board

from assuming jurisdiction Over independent contractors,

1 Sec. 2(3), 29 U.S.C.A. § 152(3).

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It is conceded the amendment was intended ‘by. Congress

Publications, Inc., $22 ries 111, 64 S.Ct. 851, 88 L.Ed.-.

an

In National Van Lines, Ine. v. NLRB. 7 Cir., 273 F. 2d

402, 404-405, we quoted from a previous decision of this.

Court, N. L. R. B. v. Phoenix Mutual Life Insurance Com-

pany, 7 Cir., 167 F..2d 983, at 986: ‘** *** This court there

pointed out that the employer-employee relationship exists

when the person for whom the work is done has the right to

control and direct the work, not only as to tlie result ac-

complished by the work, but also as to the details and

means by. which'that result is accomplished, and that it is

the right and not the exercise of control which is the de-

a

termining elenient. ***” . '

Thus, since 1947, the . critical distinction between em-

. ployees and independent contractors under the Act is the

right to control the manner and meatis by which the agent

conducts his business. - In determining whether the requisi-

- site control of manner or means is present, various tests

have been employed.

‘Consideration is given to such items | as the right to hire

and discharge; the method of payment; who furnishes the

tools and materials used; who designates the time and

place for the work to be done ; and the intention of the

2See N. L. RB. B. v. Steinberg, et al., 5 Cir., 182 F. 2d 850, 854-

_' 855, which. discussed the legislative purpose The House -Committee

Report reads, in part, as follows: ‘‘An ‘employee’, according to

all standard dictionaries, according to the law as the courts have

stated it, and according to the understanding of almost everyone,

with the exteption of members of the National Labor Relations

Board, means someone who works for another for hire. But in

the case of National Labor Relations Board v. Hearst Publications,

Inc., 1944, 322 U.S. 111 [64 S. Ct. 851, 88 L. Ed. 1170], the Board .

#5, expanded ‘the definition of the term ‘employee’ beyond anything it

had ever included before, and the Supreme Court relying on the

theoretical * — of the. Board, upheld the Board. * * * ”’

é

ne?

to nullify the Supreme Court ruling in N. L. R. B. v. Hearst:

2la

parties. Usually, no one of these categories is decisive.

The conclusion must be based on the “total situation’? lgok- —

ing at all of the. facts in the particular case. N ational Van

Lines v. N. L. R. B., 7 Cir., 273 F. 2d 402, 407. °

We hold ‘the debit agents are independent contrac-

tors. A debit agent is “‘on his own,”? He sets his own

hours of work and work days and makes his own arrange-

ments with policy holders respecting frequency of preni-

*+ jum’ payments.’ “As admitted by the. trial examiner, the

agent pays his own travel expense, rent, postage, telephone,

bond expense and salaries of assistants; he may take holi-

days when he desires without notice to United. Agents

may ‘transfer policies among themselves and are: not re-

quired to do so by United. An agent retains his own com-

mission from collected premiums, As to selling insurance,

the agent ‘‘* * * is free to follow the superintendent’s sug-

gestion or to devise his own methods.’’

The examiner listed certain categories’ which he said

indicate the relationship of employer and employee ex-

isted. He considered significant that each agent was as-

signed to the staff of a particular superintendent, and that

certain reports are made by the agents, ‘

at his own Tequest, and he may sell and service policies

anywhere in the staté~° |

There is nothing under this heading which shows United

has taken from the agent his freedom of choice of manner

and means. The reports mentioned by the examiner are

no more significant than would be the situation where a

manufacturer requires reports. from its manufacturers’

‘representative, ; ios

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| 22a

' Another reason listed by the examiner for his conclu-

sion is his claim that United assists ifs- agents in their.

functions; that superintendents accompany new agents on

their rounds and that sales meetings are held. :

United does offer: assistance ‘to its agents but only to

those who desire to receive same: Sales meetings are con-

ducted but attendance is entirely voluntary. Some agents

never attend such meetings. We think there is nothing

in\,such practibhes inconsistent with an bee cores con-

tractor relationship.

The examiner thought it siniiticant that United makes

“group insurance. plans available to groups of persons in-

cluding its ageiits. Here the agents pay the full cost of

the plan. Many organizations provide group insurance

plans. The American Bar Association has a group insur- .

ance plan, but itis obvious that, because there of, the rela-

_ tionship between the ABA and its members does not thereby

_ become one of employer and. employee. Aa

~ The examiner relied upon: the faet that rate manuals

were owned by United. We thifk this is.of no significance. |

Rate manuals in the insurance business are like a price

list. A salesman must know the price of what he sells.

The examiner discussed other reasons and categories.

It would unduly extend this opinion to discuss each in de- ~

tail’ Suffice it to say,.we have carefully considered each

of the items and categories mentioned, but we are con-

-vinced they do not show, in connection with all the other

facts and circumstances, that an employer-employee rela-

| _ tionship existed. a .

There are Many businesses, and the sale of j insurance is

one of them, where management may make a choice as to.

_the’manner in which the business will be conducted. Very

often, perhaps traditionally, insurance has been sold .

through insurance salesmen whose ‘‘tools’* are their own

. initiative and personality and who work on their own time

a

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=

23a

ve : are

and at their own expense. However, some insurance comi- »

panies have established an employer-employee relationship

such as the company in N. L. R. B. v. Phoenix Mutual Life

Insurance Company, supra.

- In the. instant ease, United has chosen to operate its

business on the basis that its agents are independent con-

tractors and, of course, it had the namgplote legal right SO.

to do.

Other quistions have been E ie he the petitioner and

the Board. However, as we have decided the fundamental

- and underlying question in this case, a decision on the

other points need not be reached. .

The petition for review is granted, sal the ere

for enforcement of the order is ne

e

\

x

— 24a

APPENDIX B

Statutory Provisions Involved.

National Labor Relations Act, as amended, 29: US. Co

§§ 141 et seq.: : .

Section 2. (3), 29 U.S.C. § 152(3)

Sec. 2. When used in this Act— *

. (3) The term “employee” shall saiiadis any cial,

wna shall not be limited to the. employees ‘of a particular

employer, unless the Act. explicitly states otherwise, and

shall include any individual whose work has ceased as a

consequence of, or in connection with, any current. labor

dispute or because of any unfair. labor practice, and who

has not obtained-any other regular and substantially equiva-

lent employment, but shall not include any individual em-

_ ployed as an agricultural laborer, or in the domestic service

of any family or person at his home, or any individual em-

ployed by his. parent or spouse, or any individual having |

the status of an independent contractor, or any individual

employed as a supervisor, or any individual employed by »

an employer subject to the Railway Labor Aq}; as amended —

-from time to time, or by any other person teak is not an

mpnye as herein defined.

Section 7, 29 U.S.C. § 157

Sec. 7. Employees shall have the right to self-organiza-

. tion, to form, join, or assist labor organizations, to bargain

collectively through representatives of their own choosing, -

and to engage in other concerted activities for the purpose

of collective bargaining or other mutual aid or protection,

and shall also have the right to refrain from any or all of

such activities except to the extent that such right may

be affected by an agreement requiring membership in. a _

labor organization as a condition of employment as author-—

. —; in section mre ;

25a

Section 8.(a) (1) (5), 29 U.S.C. § 158(a) (1) (5)

- Usrarr Lasor PRactTIcEes |

Sec. 8. (a) It shall be an unfair labor practice for an

employer—.

(1) to interfere with, restrain, ‘or coerce employees

in the exercise of the rights guaranteed in section 7;

(5) to refuse to setene collectively with the 1 repre-

sentatives of his employees, subject to the provisions. .

of section wie)

Section 10.(e) (f), 29 U.S.C. § 160(e) (f) -

- See. 10(e) The Board shall have power to petition any |

court of appeals of the United States, or if all the courts of ©

appeals to which application may be made are in vacation,

any district court of the United States, within any circuit

_or district, respectively, wherein the unfair labor practice

in question occurred or wherein such person resides or

transacts business, for the enforcement of such order and >

‘for appropriate temporary relief or restraining order, and

shall file in the court the record in the proceedings, as pro-

- vided in section 2112 of title 28; United States Code.. Upon

the filing of such -petition, the court shall cause notice

thereof to be served upon such person, and thereupon shall

have jurisdiction of the proceeding and of the question

determined therein, and shall have power to grant, such

temporary relief or restraining order. as it deems just and

proper, and to make and enter a decree enforcing, modify-

ing, and enforcing as so modified, or setting aside in whole

or in part the order of the Board. No objection that has |

not been urged before the Board, its member, agent, or

agency, shall be considered by the court, unless the fail-.

ure or neglect to urge such objection shall be excused be-

cause of extraordinary circumstances. The findings of the -

Board with respect to questions of fact. if supported’ by

substantial evidence on the record considered as a whole

a as

a

26a

shall be conclusive. If either party shall apply to the eee

for leave to adduce additional evidence and shall show to

the satisfaction of the court. that such additional evidence

is material and -that there were reasonable grounds for

the failure to adduce such ‘evidence in. the hearing before

- the: Board, its member, agent, or agency, the court may

order such additional evidence to be taken before the

Board, its. member, agent, or agency, and to be made a_

part of the récord. The Board may modify its findings as

to the facts, or make new findings, by reason of additional

evidence so taken and filed, and it shall file such modified

or new findings, which findings with respect to questions

of fact if supported by substantial evidence on the record

- eonsidéred as a whole shall be conclusive, and shall file its

‘ recommendations, if any, for the modification or setting

aside of its original order. Upon the filing of the record

with it the jurisdiction of the court shall be exclusive and

its judgment and decree shall be final, except that the.

‘same shall be subject to review by the appropriate United

States court of appeals if application was made to the

district court as hereinabove provided, and by the Supreme:

Court of the United-States upon writ of certiorari or cer-

_ tification as provided in section 1254 of title 28.

(f) Any person aggrieved by a final order of the Board

granting or denying in whole or in part the relief sought

_ May obtain a review of such order in any circuit court of

appeals of the United States in the circuit wherein the un-

fair labor practice in question was alleged to have been

_engaged in or wherein such person resides or transacts

’ -business, or in the United States Court of Appeals for the

District of Columbia, by filing in such court a written peti-

tion praying that the order of the Board be modified or

set aside. A copy of such petition shall be forthwith trans-

mitted by the clerk of the court to the Board, and thereupon

the aggrieved party shall file in the court the record in

the proceeding, certified by the Board,-as provided in sec-

tion 2112 of title 28, United States Code. Upon the filing

27a

+

of such petition, the court shall proceed in the same man-

ner as in the case of an application by the Board under

.. subsection (e) of this section, and shall have the same

_ jurisdiction to grant to the Board such temporary relief

or restraining order as it deems just and proper, and in

like manner to make and enter a decree enforcing, modify-’

ing, and enforcing as so modified, or setting aside in whole

or in part the order of the Board; the findings of the Board.

‘with respect to questions of fact if supported by substan-

tial evidence on the record considered as a whole shall in

like manner be conclusive.