Petitioners Brief — National Labor Relations Board v. Natural Gas Utility District

Supreme Court brief1971

Ask Donna

What actually matters in this document.

Text

INDEX

A. The Board’s findings of fact -------------

B. The Decisions of the Board and the Court

I. Federal, Rather Than State, Law Governs

the Determination Whether an Entity

Is a “Political Subdivision” of a State

within the Meaning of Section 2(2) of

the National Labor Relations Act, and

Therefore Not an “Employer” Subject

Bee AO oo. Socks ciaedidendecces

II. The Board Correctly Concluded That the

District Is an Employer within the

CITATIONS

Amalgamated Bus Employees v. Wisconsin

Employment Relations Board, 340 U.S. 383-

Chandler Investment Co. v. Whitehaven Utility

District, 44 Tenn. App. 1, 311 5.W. 2d 603 _ -

(1)

417-301-—71-—--1

City of Alcoa v. Int'l Bhd. of Elec. Workers, 203

Pap

Tenn. 12, 308, S. W. 2d 476__.-..._._____ 13

City of Paris v. Federal Power Commission, 399

Fy UPN i inetd eed ccasecgn. 18

Cornell University, 183 NLRB No. 41, 74

oe ctea ELE ETAT 16

Division 1287, Motor Coach Employees vy.

Missouri, 374 U.S. 74________ 8, 10, 12-13, 15, 1s

Fayetteville-Lincoln Electric System, 183 NLRB

BGs Ae, 4a te ANE... 12

First Suburban Water Utility District y.

McCanless, 177 Tenn. 128, 146 S.W. 2d

WS ar eat nveddncumbunec cee ook 5, 4

Keeble v. City of Alcoa, 204 Tenn. 286, 319

Res MP ka ee en 13

Lewiston Orchards Irrigation District, 186

NLRB No. 121, 75 LRRM 1430..._____ 12

Lewiston Orchards Irrigation District v. Gilmore,

SS Sie, 277,207: 28 7. 14

Local No. 207, Int'l Assoc. of Bridge Workers

Union v. Perko, 373 U.S. 701___.....____ 10

Local 266, Electrical Workers vy. Salt River

Project Agricultural Improvement District,

78 Ariz. 30, 275 P. 2d 393___..._..... | 15

Madison Suburban Utility District of Davidson

County v. Carson, 191 Tenn. 300, 232 S.W.

DR siericansedatancge ees: F

Marine Engineers Beneficial Assoc. v. I nterlake

Steamship Co., 370 U.S. 173___.......____ 10

Mobile Steamship Assoc., 8 NLRB 1297______ ll

Morgan v. Commissioner, 309 U.S. 78..._____ ll

National Labor Relations Board v. E. C. Atkins

O06, BUS Wc 10, 13, 19

National Labor Relations Board v. Hearst

Publications, 322 U.S. 111________ 7-8, 10-11, 19

Ill

National Labor Relations Board v. Howard

Johnson Co., 317 F. 2d 1, certiorari denied,

375 U.S. 920---------------------------

National Labor Relations Board v. Jones &

Laughlin Steel Corp., 331 U.S. 416--------

National Labor Relations Board v. Randolph

Electric Membership Corp., 343 F. 2d 60----

Page

11,

14, 15, 17, 19

National Labor Relations Board v. United

Insurance Co., 390 U.S. 254-----.----- 10, 18-19

New Bedford etc. Steamship Authority, 127

5) aisles aaa abee aii ater: 11-12, 19

New Jersey Turnpike Authority, 33 LRRM

ee i teen oemieswepere ao

Office Employees Int'l Union v. National Labor

Relations Board, 353 U.S. 313------------

Oxnard Harbor District, 34 NLRB 1285- - - - --

United States v. Mine Workers, 330 U.S. 258 -

Walker River Irrigation District, In re 44 Nev.

321, 195 P. 327_------------------------

Weakley County Municipal Elec. Syst. v. Vick,

43 Tenn. App. 524, 309 S.W. 2d 792- - ----

Statutes:

National Labor Relations Act, as amended

(61 Stat. 136, 73 Stat. 519, et sey.)

Section 2(2)-.------------ 2, 3, 6, 7, 8, 9,

Section 8(a)(1) - ----------------------

Section 8(a)(5) - ----------------------

Section 9(c)...-----------------------

Tennessee Utility District Act of 1937, as

amended, Tennessee Code, Title 6, Chap.

26, Secs. 6-2601, et seq- -------------- 2, 3,

14-15

13, 18

19, 21

21-30

Miscellaneous:

Leg. Hist. of the National Labor Relations

Act, 1935 (G.P.O., 1949) 1117, 2653______

Leg. Hist. of the Labor Management Rela-

tions Act, 1947 (G.P.O., 1948) 1535______

McQuillin, Municipal Corporations, Secs. 2.26-

2.29 (Callaghan & Co., 3rd ed., 1949)_______

Rhyne, Labor Unions and Municipal Employee

Law (National Institute Municipal Law

Officers, 1946), 4836-437_....._.._._...____

Vogel, What About the Rights of the Public

Employee? 1 Lab. L.J. 604, 612-615 (1950). 9-19

ings SEE pe gery

7) ae Oe

Jn the Supreme Court of the Bnited States

OctoBER TERM, 1970

No. 785

National Lasor RELATIONS BoarD, PETITIONER

THe Natura, Gas Utmity District or

Hawkins County, TENNESSEE

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD

OPINIONS BELOW

The opinion of the court of appeals (R. 149-155)

is reported at 427 F. 2d 312. The Board’s decision and

direction of election in the representation proceeding

(R. 61-66) are reported at 167 NLRB 691. Its de-

cision and order in the ensuing unfair labor practice

case (R. 138-145) are reported at 170 NLRB No. 156.

JURISDICTION

The judgment of the court of appeals was entered

on March 17, 1970, and the Board’s timely petition

for rehearing en banc was denied on June 5, 1970 (R.

(1)

190 197), On Atrust 29, 1970, Mr. Pustice Stewary

asetencod the tines For ting a Petition TOP WA WHL of

cortionar ta, and meluding, Qetober 1, L970 CR. 1s).

and the petition was fled on that dates: it was ranted

on danuary TE, L9TE CR. 198). The jurisdietion of ty

Court rests on US ULSWCL 5400).

ATATUTER INVOLVED

The relevant provisions of the National baber Re-

lations Net, as amended (GE Stat, EG, 7 Stat. My,

ef seq), and of the Tonnessee Code (Sees, 6 2001, &

seq), ave set forth inthe Appendix, dafra, pp. 2b oo,

QUESTIONS PRESENTED

1, Whether federal rather than state law governs

the detormination, under Section 202) of the Nations’

Labor Relations Net, whether an entity ereated under

stifle law ts a“ politieal subdivision’ of the state ang

therefor not an “emplover™ subjeet to the Aet,

“. Whether the Board properly concluded that the

respondent: public utility district is not a- polities!

subdivision of the State of Tennessee, and whether,

under the correct standard of judicial review, the eour

ef appeals should have upheld that determination,

STATEMENT

1. THE BOARD'S FINDINGS OF FACT

On April 24, 1967, Loeal No. 102, United Associa:

ton ot Journeymen and Apprentices of the Phimbing

and Pipe Fitting Industry of the United States ang

Canada, tiled a petition with the Board, pursuant te

Seetion 9c) of the National Labor Relations Act

weking to represent the pipefitters employed by the

Natural Gas Utility District of Mawking County, Ten

nessee, ‘The District moved to dismiss the petition on

the ground that it was a political subdivision of the

State of Tennessee and thus not an employer within the

meaning of Seetion 202) of the Act (Kh. 61; 6-7). The

Board rejected this contention and directed that an

election be held (CR. 62.66). The Union won the elee

tion and was certified as the employees” representative

(R. 69-70). Upon the Distriet’s subsequent refusal to

recognize and bargain with the Union on the ground

that it was not an employer under the Act, the Union

filed an unfair labor practice charge which initiated

the present case (R. 72 74). The facts with respect to

the District’s status as an employer under the Act

are as follows:

The District sells and distributes natural gas, with

out profit, to residential homes, commercial businesses,

and industrial firms in Hawkins County, Tennessee

(R. 62; 11). Tt was incorporated in December 1957,

under the Tennessee Utility Distriet Law of 1937

(App., infra, pp. 21-30).' Pursuant to that law, a

group of local real property holders in’ Hawkins

County filed a petition with the County Court setting

forth a statement of the need for the service to be

supplied, an estimate of the cost, and the names of

three Jocal residents proposed as commissioners of the

District. (I. 64, n. 7; 56-58). Following a hearing, the

Chairman of the County Court of Hawkins County

‘There are about 270 similar utility districts in the state

(R. 192).

approved creation of the District and granted the

petition (R. 60-61). As required by the state statute

(App., infra, p. 23), the County Judge appointed a:

commissioners of the newly created District the three

people nominated in the petition (R. 64, n. 8; 61).

The powers of the District are vested in and ex.

ercised by the three-member board of commissioners,

who are not subject to state or county regulation (R.

12-14; App., infra, pp. 23-25). The commissioner

adopt necessary rules or regulations, and set the fees

charged for the District’s services (R. 13: App., tufra,

pp. 27-28). They also control the labor relations poliey

of the District. The manager of the District, who is mn.

der the supervision of the board of commissioners, hires

and fires its employees and sets their wages (R. 13-14).

Neither the state nor the county has any control over the

District’s employees, and they are not considered

state or county employees (R. 14, 155), whose Inher

conduct might be specially restricted as a matter of

publie policy.

No public money was utilized in organizing the

District; it was financed through the private sale o/

bonds of nearly two million dollars (R. 130, 117-118),

With the proceeds, the District constructed a natural

gas distribution ‘system (R. 130), which, under the

statute, became subject to a lien in favor of the bend-

*The Tennessee statute provides that, in counties having a

population of 482,000 or more, commissioners of utility districts

shall be elected by the qualified voters in the District (App.

infra, pp. 25-26). This provision is inapplicable to Hawkins

County.

holders until the bond debt was paid. (App., infra,

pp. 28-29). Principal and interest on the bonds are pay-

able solely from the revenues of the District (App.,

infra, pp. 29-30). Rates charged by the District must be

sufficient to pay its expenses, plus the bond debt as

it comes due (App., infra, p. 30).

The statute under which the District was organized

provides that a utility district is a ‘ ‘municipality’

or public corperation,’’ and exempts it from ‘‘state,

county and municipal taxation’ (App., infra, pp.

3, 30). The Supreme Court of Tennessee has up-

held this tax exemption on the ground that utility

districts are ‘‘arms or instrumentalities’’ of the

state (R. 62-63). The statute further gives the Dis-

trict the power of eminent domain (App., infra, pp.

24-95), and empowers the board of commissioners

to inquire into any matter relating to the affairs of

the District and to issue subpoenas and administer

oaths for this purpose (App., infra, p. 27). The Dis-

triet, however, has no power to levy or collect taxes

and its charges for services are not construed to be

taxes (R. 62, n. 2; App., tnfra, p. 23).

BR THE DECISIONS OF THE BOARD AND THE COURT OF

APPEALS

In its initial decision in the representation proceed-

ing (R. 61-66), the Board rejected the District’s con-

tention that it was a political subdivision of the State

First Suburban Water Utility District v. McCanless, 177%

Tenn, 128, 146 S.W. 2d 948, 950; this opinion did not concern

itself in any respect with labor relations questions.

417-:301—71

‘e

}

A 4

i a

Feces Te

Spicer ee

hh eS Lets ek ELAR NS KN ab iteed

of Tennessee within the meaning of Section 2(2) of

the National Labor Relations Act and thus not sub

ject to the Act. The Board noted that the Tennessee

statute specifically states that a utility district is q

‘‘municipality’’\or ‘‘public corporation’’ and that the

Supreme Court of Tennessee had concluded that such

districts are “arms or instrumentalities”’ of the state:

but it held that such characterizations are not controlling

in interpreting the National Labor Relations Act.

Noting that the scope of the National Labor Relations

Act is to be determined by federal standards and not

by the varying declarations and classifications of state

law (R. 63, n. 4), the Board examined the relevant

factors and concluded that the District was ‘an es-

sentially private venture, with insufficient identity

with or relationship to the State of Tennessee to sup-

port the conclusion that it is an exempt governmental

employer under the Act’’ (R. 63).

In the subsequent unfair labor practice proceeding,

the Board relied on its earlier determination that the

District was an ‘‘employer”’ covered by the Act (R.

140-141). Accordingly, the Board held that the Dis-

trict’s refusal to bargain with the Union selected by

its employees violated Section 8(a) (5) and (1) of the

Act (R. 143). The Board ordered the District to cease

and desist from the unfair labor practices found, to

bargain with the Union upon request, and to post ap-

propriate notices (R. 144-145).

A divided court of appeals declined to enforce the

Board’s order (R. 149-155), ruling that state law was

controlling on the issue whether the District is a

“political subdivision” within the meaning of Section

9(2) of the Act. The court stated (R. 153-154) :

In our opinion, the state has a right to create

its own political subdivisions, and when its cre-

ations have been held by the state’s highest

court to constitute political subdivisions that

ought to be binding on federal administrative

agencies.

* * * — *

* * * Tn our judgment, the present case in-

volves more of a question of municipal law

than a labor problem, and the decision of the

Supreme Court of Tennessee was of controlling

importance on the question whether the Dis-

trict was a political subdivision of the state. In

our opinion, it was binding on the Board. {Em-

phasis in the original.]

SUMMARY OF ARGUMENT

The court below erred in holding that a decision of

the Supreme Court of Tennessee finding utility dis-

tricts properly exempt from taxation under state law

was controlling for purposes of determining whether

such a district is a “political subdivision” of the

state within the meaning of the exemption in Section

9(2) of the National Labor Relations <Act. Nothing

in the Act’s history or purposes indicates it “is to he

administered in accordance with whatever different

state standard the respective states may see fit to adopt

for the disposition of unrelated, local problems.”’ Na-

tional Labor Relations Board v. Hearst Publications,

BILD a CORE spall

eR ebad

SERA NCAR PIS aie Roach inna

322 U.S. 111, 123. Rather, the exemption is properly

interpreted with a view toward the manner in which

employment relations are carried on. To give cop.

trolling weight in the administration of federal labor

law to mere characterization regarding what con.

stitutes a ‘“‘political subdivision” would produce a

haphazard result, with no unifying policy or purpose,

As this Court implicitly recognized in Division 1287,

Motor Coach Employees v. Missouri, 374 U.S. 14,

the uniform administration that Congress sought un-

der the National Labor Relations Act can be attained

only by having federal rather than state law determine

the extent of the Section 2(2) exemption.

Applying a uniform national standard, the Board

reasonably determined that the District was not

exempt from the Act as a political subdivision of the

state under Section 2(2). The District is no more a

direct creation of the State than privately-owned pub-

lie service companies, which also require some form

of governmental approval before they begin opera-

tions. It is completely autonomous in the conduct of

its day-to-day affairs; the state has no power to re-

move or otherwise discipline the private individuals

who control the District’s operations and labor rela-

tions policies. The operations and services of the Dis-

trict “do not differ significantly from those of enter-

prises in private industry including utilities whose

elployees are entitled to the benefits of the Act”

(R. 64). And its labor relations are entirely its own;

its employees are not state or county employees under

local law. Weighing these factors in the context of

all the other relevant considerations, the Board justi-

fiably concluded that the District was not a “political

subdivision” of the state. Whether or not the court

below would have reached the same conclusion on its

own de novo evaluation of the facts, it should have

accepted the Board’s considered judgment on this

matter.

ARGUMENT

I. FEDERAL, RATHER THAN STATE, LAW GOVERNS THE

DETERMINATION WHETHER AN ENTITY 1S A ‘*POLITICAL

SUBDIVISION’’ OF A STATE WITHIN THE MEANING OF

SECTION 2(2) OF THE NATIONAL LABOR RELATIONS ACT,

AND THEREFORE NOT AN ‘SEMPLOYER” SUBJECT TO THAT

ACT

Section 2(2) of the National Labor Relations Act

provides that the term ‘employer’ shall not include

“the United States or * * * any State or political

subdivision thereof’? (App., infra, p. 21). The term

“political subdivision” is not defined m the Act and

the legislative history is silent as to the meaning Con-

gress intended to give it. As with other coverage

‘However, the evident purpose of the governmental exenip-

tion as a whole was to avoid interference with the labor-man-

agement relations of federal, state, and municipal governments

and their employees, since the latter traditionally lacked the

right to strike against the government. See Leg. Hist. of the

National Labor Relations Act, 1935 (G.P.O., 1949) 1117, 2653;

leg. Hist. of the Labor Management Relations Act, 1°47

(G.P.O., 1948) 1535. See also Rhyne, Labor Unions and

Municipal Employee Law (National Institute Municipal Law

Officers, 1946) 436-437; Vogel, What About the Rights of the

questions under the Act,’ it is reasonable to conelude

that Congress intended that the determination whether

an entity is a “political subdivision” of a state for

purposes of the National Labor Relations Act be mad

under federal law, formulated by the Board subject

to review by the courts of appeals and this Court,

rather than under state law.

As this Court pointed out long ago, National Laby;

Relations Board v. Hearst Publications, 322 U.S. 111,

123:

Both the terms and the purposes of the statute,

as well as the legislative history, show that Con-

gress has in mind no * * * patehwork plan for

securing freedom of employees’ organization

and of collective bargaining. The [National

Labor Relations] Act is federal legislation, ad-

Public Employce? 1 Lab. L. J. 604, 612-615 (1950). The re

lationship between the exemption and anti-strike provisions of

state law is implicit in the decisions of this Court. striking

down state efforts to extend such provisions to other groups of

employees, Division 1287, Motor Coach Employees v. Missouri.

374 U.S. 74: Amalgamated Bus Employees vy. Wisconsin En-

ployment Relations Board, 340 U.S. 383.

*See Local No. 207, Int'l Assoc. of Bridae Workers Unionv.

Perko, 373 U.S. 701 (whether an individual is a “supervisor”

under Section 2(11)); Marine Engineers Beneficial Assoc. v.

Interlake Steamship Co., 370 U.S. 173 (whether an entity isa

“labor organization” under Section 2(5)); National Labor Rela-

tions Board vy. United Insurance Co., 390 U.S. 254 (whether

an individual is an “independent contractor” under Section

2(3)), National Labor Relations Board v. E. C. Atkins & Co.. 3)

U.S. 398, and National Labor Relations Board vy. Jones «

Laughlin Steel Corp., 331 U.S. 416 (whether “militarization” or

“deputization” of plant guards employed by a private employer

removes them from the status of “employees” under Section

2(3)).

ministered by a national agency, intended to

solve a national problem on a national scale.

* * * Nothing in the statute’s background, his-

tory, terms or purposes indicates its scope is to

be limited by * * * varying local conceptions,

either statutory or judicial, or that it is to be

administered in accordance with whatever dif-

ferent state standard the respective states may

see fit to adopt for the disposition of unrelated,

loeal problems. * * *

This objective would be substantially impaired if state

characterization was to control the determination

whether an entity is a political subdivision of a state

for purpose of exemption from the National Labor

Relations Act. Cf. Morgan v. Commissioner, 309 U.S. 78,

80-81.

In administering the Act on a national basis, the

Board has limited the exemption for political sub-

divisions to entities that are either (1) created

directly by the state, so as to constitute departments

or administrative arms of the government, or (2)

administered by individuals who are responsible to

public officials or to the general electorate. National

Labor Relations Board vy. Randolph Electric Member-

ship Corp., 343 F. 2d 60, 63-64, n. 7 (C.A. 4).° This

®See Mobile Steamship Assoc.. 8 NURB 1297, 1305, 1318

(state docks commission created by specific legislation of the

State of Alabama): Oxnard Harbor District, 34 NURB 1285,

1289-1290 (harbor district organized by district residents under

general enabling legislation of the State of California, but

governed by a board of commissioners elected by qualified

voters of district): New Jersey Turnpike Authority, 33 LRRM

1528 (turnpike authority specifically created by the legislature

and governed by members appointed by the governor, with the

advice and consent of the senate); Vew Bedford etc, Steamship

test provides a veasonable and uniform standard for

differentiating between essentially private employ.

ment relations and those controlled by the state or it,

components to such an extent that they are properly

exempted from statutory coverage.

What that extent might be was also suggested by the

decision of this Court in Division 1287, Motor Conc)

Employees v. Missouri, 374 U.S. 74, 81, in considering

a claim that a state’s seizure of a public utility had

operated to make the state an “employer” within the

meaning of the exclusion. Applying a standard implie-

itly federal, the Court held that

the State’s involvement fell far short of creat.

ing a state-owned and operated utility whos

labor relations are by definition excluded from

the coverage of the National Labor Relations

Act. The employees of the company did wot

become employees of Missouri. Missouri did not

pay their wages and did not direct or supervise

their duties. No property of the company was

actually conveyed, transferred, or otherwise

turned over to the State. Missouri did not par-

ticipate in any way in the actual manag ‘nent

Authority, 127 NLRB 1322 (steamship authority created by

Massachusetts statute, consisting of members appointed and

removed by the governor with the advice and consent of the

executive council) ; Fayetteville-Lincoln Electric System, 183

NLRB No. 19, 74 LRRM 1278: (utility system created by

specific legislation and governed by board appointed by mayor,

with the approval of city aldermen). Cf. Lewiston Orchards

Irrigation District, 186 NLRB No. 121, 75 LRRM 1430 (irriga-

tion district created by petition of landowners and governed

by directors elected by landowners for their benefit, rather

than by all qualified voters in a general election).

wtb

of the company, and there was no change of

any kind in the conduct of the company’s

business * * * *

Compare, also, Uv ied States v. United Mine Workers,

330 U.S. 258, 284-203, where a contrary set of facts

led to the conclusion that miners in coal mines seized

under the War Labor Disputes Act were federal em-

ployees. Where the state does not directly control the

terms and conditions of employment, as it does not

here, this Court has not found a state employment

relationship permitting denial of the right to orga-

nize and to strike.’ Division 1287, supra; see also Na-

tional Labor Relations Board v. E. C. Atkins & Co., 331

U.S. 398; National Labor Relations Board v. Howard

Johnson Co., 317 F. 24.1 (C.A. 3), certiorari denied, 375

US. 920.

Although a state has a vital interest in defining its

political subdivisions and a special competence to do

so, the considerations that may prompt a state to

label an entity a political subdivision are varied and

have no necessary relation to the purposes for which

an exemption from the National Labor Relations Act

is afforded. Thus, an entity created and operated by

‘In the Tennessee cases imposing restraints on freedom of em-

ployee organization and collective bargaining, it was specifically

found that the employees in question were county or municipal

employees. Weakley County Municipal Elec. Sys, v. Vick, 43

Tenn. App. 524, 309 S.W. 2d 792, 796; City of Alcoa v. Interna-

tional Bhd. of Electrical Workers, 203 Tenn. 12, 308 S.W. 2d 476;

Keeble v. City of Alcoa, 204 Tenn. 286, 319 S.W. 2d 249. In the

Weakley County case, supra, the court noted that employees of

utility districts under the state legislation here were not city or

county employees in that sense. 309 S.W. 2d at 805.

417-301—71——3

}

es 6d Se Mi th nd, ee RR

private individuals who are free from state contro

in fixing terms and conditions of employment may

nonetheless be denominated a “political subdivision”

for particular state purposes that have nothing to do

with its “relation to the state and [its] actual meth.

ods of operation.” * National Labor Relations Boari

v. Randolph Electric, supra, 343 F.2d at 64. Another

state, or the same state for other purposes, may deter.

mine that a similar entity, equally uncontrolled, is not

a ‘‘political subdivision”—again, for reasons unre.

lated to the factors that are significant under the

National Labor Relations Act.’ What must be con-

* For example, in upholding the exemption of utility districts

from taxation under state law as “municipalities” or “arms of

the State,” the Tennessee Supreme Court, in the decision relied

on by the court below (R. 150), stated: “It is elementary that

the Legislature may call such bodies what it pleases, and may

give and take away as it chooses their powers and privileges.”

First Suburban Water Utility District y. McCanless, 177 Tenn.

128, 146 S.W. 948, 950. Similarly, in Madison Suburban Utility

District of Davidson County v. Carson, 191 Tenn. 300, 232 SW.

2d 277, 279, the Tennessee Supreme Court upheld the exemption

of utility districts from state use and sales taxes, even though

it recognized that :

“The appellant [utility district] does not have the power to

levy taxes nor is it listed as a municipality under the Federal

census and its population is never separately tabulated. The

people residing within the district do not have the right of

self-government. The district performs no governmental fune-

tion except carrying on the business as a water and sewage

company with all those powers necessarily connected therewith.”

*See MeQuillin, Municipal Corporations, Sees, 2.26-2.29 (Cal-

laghan & Co., 3rd ed., 1949), for the varying approaches that

may be taken under state law with respect to “municipal” or

“quasi-public” corporations. See also Lewiston Orchards Irri-

gation District v. Gilmore, 53 Ida, 377, 23 P. 2d 720, 722; In

trolling is the manner in which the entity’s labor rela-

tions are carried on. To give conclusive weight in the

administration of federal labor law to state law char-

acterizations would at the least invite a patchwork

of policies, with no coherent sense or purpose, and

might encourage measures such as this Court found

preempted in Amalgamated Bus Employees and Divi-

sion 1287, supra, n. 4.

Accordingly, while a state’s characterization of a

utility district or other entity as a political subdivision

is a factor to be considered in determining whether it

falls under the ‘‘political subdivision” exclusion of the

National Labor Relations Act, that characterization

cannot be conclusive. As the Fourth Cireuit correctly

concluded in National Labor Relations Board v.

Randolph Electric, supra, 343 F. 2d at 63, the uni-

formity which Congress meant to secure in the ad-

ministration of the National Labor Relations Act can

be attained only by having federal, rather than state,

law control determination of that question.” The court

below thus erred in holding that the “decision of the

Supreme Court of Tennessee was of controlling im-

ve Walker River Irrigation District, 44 Nev. 321, 195 P.

327, 331-332. Cf. Local 266, Electrical Workers v. Salt River

Project Agricultural Improvement District, 78 Ariz. 30, 275 P.

2d 393.

In urging that federal rather than state law determines

whether utility districts are a political subdivision of the state

under the National Labor Relations Act, we of course raise no

question as to the propriety of such characterization for state

law purposes. Nor do we here take any position on whether

these districts are or are not political subdivisions under other

federa} legislation.

Betti fate

portance on the question whether the District was a

political subdivision of the state”, and was binding

on the Board” (R. 154).

II, THE BOARD CORRECTLY CONCLUDED THAT THE DISTRICT

IS AN EMPLOYER WITHIN THE MEANING OF THE ACT

As shown above, pp. 3-5, the District was created,

pursuant to general enabling legislation, upon a

petition of local property owners which was approved

by a County Judge. As the statute required, the

County Judge appointed as commissioners of the Dis.

trict the three private persons nominated in the pe-

tition." Thus, as the Board concluded, ‘‘the District

is no more a direct creation of the State than such

privately-owned public service companies as rail-

roads, and motor carriers, which also require some

form of governmental approval, such as a certificate

of convenience and necessity’? (R. 64, n. 7). Nor is

“The County Judge may name a commissioner to the board

only if a vacancy occurs and the two remaining commissioners

are unable to agree on a third (App., infra, p. 25).

* The court below viewed this reasoning as “fallacious” be-

cause such public service companies “are operated for profit of

their owners, whereas the District is owned and operated by

the state, and not for the profit of private individuals” (R.

151). In fact, however, the utility system operated by the Dis-

trict is not state property, but is owned by the District. itself,

subject to a statutory lien in favor of the private bondholders.

and such other encumbrances as the board of commissioners

may see fit to make (App., infra, pp. 24, 27, 28-29). The fact that

the District is not operated for profit (R. 62) does not exempt

it from the Act. Office Employees International Union v. Na-

tional Labor Relations Board, 353 U.S. 313, 318-319; Cornell

University, 183 NLRB No. 41, 74 LRRM 1269 (June 12, 1970).

Nor is there merit to the lower court’s suggestion that the

utility district here is significantly different from the electric

it “administered by S‘ate-appointed or elected offi-

cials” (R. 64).

Moreover, the Board found, the District “is com-

pletely autonomous in the conduct of its day-to-day

affairs, With the State exercising no supervisory role

with respect thereto, or reserving any power to remove

or otherwise discipline those responsible for the [ Dis-

trict’s] operations’’ (R. 64). The record fully supports

this finding. As the dissenting judge below pointed

out (R. 155):

The District’s manager testified unequivocally

that it is governed hy the board of commis-

sioners which adopts rules and regulations

necessary to its operation; that the board sets

all service rates; that the manager, and ulti-

mately the board, hires and fires employees

and determines wages; that neither the employ-

ees nor the District is controlled in any way by

the county or state government.

The Board could reasonably conclude that these

factors, plus the further fact that the District’s

membership cooperative involved in Randolph Electric. supra,

because the District was formed for the benefit of the inhabit-

ants of the community while ‘the cooperative was formed for

the exclusive benefit of its members (R. 151). Beth entities

were formed by private individuals for the benefit of them-

selves and their communities. Membership in the Randolph

cooperative was available, without arbitrary or unreasonable

limitations, to all applicants. 343 F. 2d at 63. Conversely, wader

Tennessee law, the inhabitants of a utility district have no alb-

solute right to demand an extension of the service to their

location. See Chandler Investment Co. v. Whitehaven Utility

District, 44 Tenn. App. 1, 311 S.W. 2d 603, 611.

“operations and services do not differ significantly

from those of enterprises in private industry jp.

cluding utilities whose employees are entitled to th

benefits of the Act”’ (R. 64), outweighed such counter.

vailing factors as the pronouncements of the State on

* the District’s status as a “municipality” or ‘instr.

4 mentality” of the State, and its grant of power of

: eminent domain to the District.’ See ¢ "ity of Paris y.

Federal Power Commission, 399 F. 2d 983, 986 (CA.

D.C.). Of particular importance is the fact that Dis.

trict employees share neither the benefits nor the bur-

dens of direct state or municipal employment. Divi.

5 ston 1287, supra; Weakley ( ‘ounty, supra,

In sum, the Board was warranted in holding the

the District has an “insufficient identity with or re.

lationship to the State of Tennessee to support the

conclusion that it is an exempt governmental employer

under the Act” (R. 63), Whether or not the cout

below would have reached the same conclusion on a de

novo evaluation of the facts—and Division 1287, supra,

suggests that it should have—there was ample sup

port on review for the Board's considered judgment

on this issue. See National Labor Relations Boar’

"With respect to the District's power of eminent domain, the

Board stated: “[Wle think it significant. that legislatures have

frequently delegated such power to nonexempt privately-owned

and operated service corporations. Indeed, the Tennessee Legis.

lature itself has delegated such authority to private corpora.

tions.” (R. 64-65, and authorities there cited at nn. 9 and 10.)

"'The Board also considered the other factors urged by the

Distriet in support of its claimed exemption—e.g.. the power

of the commissioners to inquire into the District's affairs and to

y. United Insurance Co., 390 U.S. 254, 260; National

Labor Relations Board vy. Hearst Publications, 322

U.S. 111, 180-131; National Labor Relations Board

vy. E.C. Atkins & Co., 331 U.S. 398, 403-404, 412-415. The

court of appeals therefore, should have upheld the

Board’s determination that the District is an employer

under the Act.

subpoema witnesses and administer oaths for that purpose, the

requirement that the District publish its annual statement in a

newspaper of general circulation, and the District's asserted

special status under federal tax daws (R. 151). The Board's

decision reflects its judgment that these factors, too, were out-

weighed by those supporting coverage. Nor was the Board's de-

cision here inconsistent with its prior holdings. The language in

the Vew Bedford decision, supra, 127 NLRB at 1324-1525, that

state law is controlling on the scope of the Section 2(2) exemption,

was noit necessary to the result reached there, and was 1 jected by

the Board in subsequent decisions such as /aiwdolph Electric. and

the piresent case. See National Labor Relations Board v.

Randolph Electric, supra, 343 F, 2d at 63, n. 6.

Simiilarly, the decision that the utility district of Weakley,

Carrolll and Benton Counties, Tennessee was within the Section

2(2) exemption, Case No. 26-RC-2972 (R. 110-112), was made

by the: Board’s Regional Director and was never reviewed by

the Board itself. The decision here, which was made by the

Board itself. postdates that decision (R. 140. n. 3).

| Se Oe

‘

CONCLUSION

The judgment of the court of appeals should be

reversed, and the case should be remanded to that

court with directions to enforce the Board’s order,

Respectfull;' submitted.

Erwin N. Griswotp,

Solicitor General.

Perer L. Strauss,

Assistant to the Solicitor General.

ARNOLD ORDMAN,

General Counsel,

Dominick L. MANOLI,

Associate General Counsel,

Norton J. CoME,

Assistant General Counsel,

MaRIon GRIFFIN,

Attorney,

National Labor Relations Board.

Fepruary 1971.

APPENDIX

The relevant provisions of the National Labor Re-

lations Act, as amended (61 Stat. 136, 73 Stat. 519, 29

U.S.C. 151, et seq.), are as follows:

Section 2. When used in this Act—

(2) The term “employer”’ includes any per-

son acting as an agent of an employer, directly

or indirectly, but shall not include the United

States or any wholly owned Government cor-

poration, or any Federal Reserve Bank, or

any State or political subdivision thereof * * *.

* * * * *

Section 8(a). It shall be an unfair labor’ prac-

tice for an employer—

* * * * *

(5) to refuse to bargain collectively with the

representatives of his employees, subject to the

provisions of Section 9(a).

The relevant provisions of the Tennessee Utility

District Act of 1937, as amended (Tennessee Code,

Title 6, Chapter 26, Sees. 6-2601, et seq.), are as

follows:

6-2602. Petition for creation —A petition for

the incorporation of a utility district may be

submitted to the county judge or chairman of

the county court of any county in which the

proposed district is situated, said petition to be

signed by not less than twenty-five (25) owners

of real property, who shall also reside within

the boundaries of the proposed district. Said

petition shall include (a) a statement of the

necessity for the service or services to be sup-

plied by the proposed district; (b) the proposed

corporate name and boundaries of the district;

(ce) an estimate of the cost of the acquisition

(21)

or construction of the facilities of the distri«

(which estimate shal] not, however, serve a

a_ limitation upon the financing of improve.

ments, or extensions of the facilities), and (4)

the nomination of three (3) residents of the

district for appointment as commissioners of

the district. e petition shall be signed jy

person by the petitioners with the addresses of

their residences and sha!l be accompanied by

Sworn statement of the person or persons cir.

culating the petition, who shall state under oath

that he or they witnessed the signature of each

petitioner, that each signature is the signature

of the person it purports to be, and that to the

best of his or their knowledge each petitioner

was, at the time of signing, an owner of real

property within and a resident of the Proposed

district.

* * 7 7 .

6-2604. Hearing and order of approval—

Upon receipt of such petition it shall be the

duty of the county judge or chairman of the

county court to fix a time and place for a pub-

lie hearing upon the convenience and necessity

of the incorporation of the district. The date

of such hearing shall be not more than thirty

(30) days after the receipt of the petition

and its date, place and purpose shall be an-

nounced by the county judge or chairman of

the county court in a notice published not more

than fifteen (15) days nor less than seven (7)

days prior to the date of the hearing in a news-

paper of general circulation in the proposed

district, or if there be no sueh newspaper, then

by posting such notice in five (5) conspicuous

public places within the boundaries of the pro-

posed district. Tf at said public hearing the

county judge or chairman of the county court

finds (a) that the publie cons enience and neces-

sity requires the creation of the district, and

(b) that the creation of the district is eeonomi-

cally sound and desirable, he shall enter an

order of the court so finding, approving the

entered on record. * * *

+ a * * +

6-2607. District as munici palit y—Powcrs.—

From and after the date of the making and

filing of such order of incorporation, the dis-

trict so incorporated shall be a “municipality”

or publie corporation in perpetuity under its

corporate name and the same shall in that

name be a body politic and corporate with

power of perpetual succession, but without any

power to levy or collect taxes. Charges for

services authorized herein, shall not be con-

strued as taxes. The powers of each district

shall be vested in and exercised by a majority

of the members of the board of commissioners

of the district. So long as the district continues

to furnish any of the services which it is herein

authorized to furnish, it shall be the sole public

corporation empowered to furnish such services

in the district and no other person, firm or cor-

poration shall furnish or attempt to furnish

any of the said services in the area embraced

by the district, unless and until it shall have

been established that the public convenience

and necessity requires other or additional

services; * * *

* ¥ * * *

6-2610. Powers in carrying out purposes.—

Any district created pursuant to this chapter

shall have the power;

(a) To sue and be sued.

(b) To have a seal. ;

lease or exercise of the power of eminent do-

main or other mode of acquisition, hold and

dispose of real and personal property of every

kind within or without the district, whether or

not subject to mortgage or any other liens,

(d) To make and enter into contracts, cop-

veyances, mortgages, deeds of trust, bonds or

leases,

(e) To ineur debts, to borrow money, to issue

negotiable bonds and to provide for the rights

of holders thereof.

(f) To fix, maintain, collect and revise rates

and charges for any service.

(g) To pledge all or any part of its revenues,

(h) To make such covenants in connection

with the issuance of bonds, or to secure the pay-

ment of bonds, that a private business corpora-

tion can make under the general laws of the

state, notwithstanding that such covenants mar

operate as limitations on the exercise of any

power granted by this chapter.

(i) To use any right-of-way, easement or

other similar property right necessary or con-

venient in connection with the acquisition im-

provement, operation or maintenance of a

utility, held by the state or any political sub-

division thereof, provided that the governing

body of such political subdivision shall consent

to such use. : .

. 62611. Eminent domain.—Any district shall

have power to condemn either the fee or such

right, title interest, or easement in the property

as the board may deem necessary for any of the

purposes mentioned in this chapter, and such

property or interest in such property may be so

acquired whether or not the same is owned or

held for public use by corporations, associations

or persons having the power of eminent domain,

or otherwise held or used for public purposes:

provided, however, such prior public use will

not be interfered with by this use. * * *

oe * * *

6-2613. Exemption from state regulation.—

Neither the raifroad and public utilities com-

mission nor any other hoard or commission of

like character hereafter created shall have ju-

risdiction over the district in the management

and control of any system, including the regu-

lation of its rates, fees, tolls or charges.

6-2614. Terms of commissioners—Vacan-

cies.—The terms of office of the members of the

board of commissioners first appointed shall be

two (2), three (3) and four (4) years respec-

tively from date of appointment and thereafter

the term of office of the members shall be four

(4) years. Members shall hold office until their

successors are elected and qualify. Any vacancy

shall be filled and new commissioners shall be

elected or old commissioners shall be reelected

upon the expiration of any term of office by

vote of the other commissioners then in office.

In the event the two (2) commissioners cannot

agree upon a new commissioner to fill any

vacancy, they shall certify that fact to the

county judge or chairman of the county court

within thirty (30) days of the date upon which

such vacancy occurs, and, thereupon, within

ten (10) days the county judge or chairman of

the county court shall appoint a third commis-

sioner to fill such vacancy. Provided, however,

that in counties having a population of 482,000

or more according to the federal census of 1950

or any subsequent federal census the three (3)

commissioners shall be appointed for terms to

run until the first of the month following the

next regular general county election and at the

next regular general county election one (1)

shall be elected by the qualified voters living

within the boundaries of the district for a term

PRY OPES EG! LSE EE NEI EL MNP SAI Ce PLT SF

> eee Az.

le et ee et ek ek? ee ee

+ PPE. ty OS

of two (2) years, one for a term of four (4)

years and one or a term of six (6) years, After

that, there shall be elected at the regular gen-

eral election held in the county each two (2)

years, a commissioner for a full term of six (6)

years. All qualified voters gies | in the bound.

aries of the utility district shall be eligible to

vote for such commissioners. Candidates for

office as commissioner shall qualify with the

county election commission at least forty-five

(45) days before the date of the election, pro.

vided, further, that all utility districts in exist-

ence in any such county on March 20, 1959 shal

proceed to elect their commissioners in the sane

manner as above provided for new utility

districts.

6-2615. Compensation of commissioners—

Delegation of powers — Officers — Records —

Qualifications—The members of the hoard. ex.

cept as provided in the next paragraph, shall

serve without compensation for their services,

but shall be entitled to reimbursement for all

expenses incurred in connection with the per-

formance of their duties. The board may dele-

gate to one (1) or more of its members or to its

agents and employees such powers and duties

as it may deem proper, but at its first meeting

and at the first meeting of each calendar year

thereafter it shall elect one ( 1) of its members

to serve as president, and another of its men-

bers as secretary of the commission. The secre-

tary shall keep a record of all proceedings of

the commission which shall be available for

inspection as other public records, and shall be

custodian of all official records of the district.

Only persons resident in the district shall be

eligible for election to the board.

Except as to counties having a population of

not less than 41,000 nor more than 41.600 ae-

cording to the federal decennial census of 1960

or any subsequent federal census, and except as

to any utility district containing less than five

ee ee ee ee <a >

bensesvenncms GENET AILS HE f ELEM INL O LEA IEG TT Lee TO

—

counties, the members of the board of commis-

sioners shall be entitled to receive compensa-

tion for their services in an amount not to ex-

ceed twenty-five dollars ($25.00) per day for

each day’s attendance of the meetings of said

board in the performance of their official du-

ties. The amount of compensation shall be fixed

by the board of commissioners but the same

shall not exceed the sum of twenty-five dollars

($25.00) per day. Provided, however, that no

member of a board of commissioners shall draw

compensation in excess cf three hundred dollars

($300) for such services during any one cal-

endar year.

6-2616. Powers of commissioners.—The board

of commissioners of any district shall have

power and authority ;

(1) To exercise by vote, ordinance or reso-

lution all of the general and specific powers of

the district.

(2) To make all needful rules, regulations

and by-laws for the management and the con-

duct of the affairs of the district and of the

board.

(3) To adopt a seal for the district, prescribe

the style thereof, and alter the same at pleasure.

(4) To lease, purchase, sell, convey and mort-

gage the property of the district and to execute

all instruments, contracts, mortgages, deeds or

bonds on behalf of the district in such manner

as the board shall direct.

(5) To inquire into any matter relating to

the affairs of the district, to compel by sub-

na the attendance of witnesses and the pro-

uction of hooks and papers material to any

such inquiry, to administer oaths to witnesses

and to examine such witnesses.

(6) To appoint and fix the salaries and duties

of such officers, experts, agents and employees

as it deems necessary, to hold office during the

pleasure of the board and upon such terms and

conditions as the board may require.

—_— a a

a |

Povsiiaiarn... eh net

(7) To do all things necessary or convenient

to carry out its functions.

6-2617. Publication of annual statement ~

Within ninety (90) days after the close of the

fiscal year of each district organized and Oper:

ating under the provisions of this law, the com.

missioners of the district shall publish in g

newspaper of general circulation, published jr

the county in which the district is situated, 2

statement showing (a) the financial condition

of the district at the end of the fiscal year; (b)

the earnings of the district during the fiscal]

year just ended; (c) a statement of the water

rates then being charged by the district, and

a brief statement of the method used in arrir-

ing at such rates.

* * * * *

6-2619. Purposes for which bonds author.

tzed.—Each district shall have power and is

hereby authorized from time to time to issue

its negotiable bonds in anticipation of the ¢o-

lection of revenues for the purpose of con-

structing, acquiring, reconstructing, improving,

bettering or extending any facility or system

authorized by this chapter, or any combination

thereof, and to pledge to the payment. of the

interest and principal of such bonds all or

any part of the revenues derived from the

operation of such facility, system, or eombina-

tion thereof. There may be included in the

costs for which honds are to be issued, reason-

able allowances for legal, engineering and fiscal

services, interest during construction and for

six (6) months after the estimated date of

completion of construction, and other prelimi-

nary expenses, ineluding the expenses of in-

corporation of the district.

ad * * * *

6-2623. Pemedies of bondhol’ers.—Th re

shall be and there is created a statutory lien

in the nature of a mortgage lien upon any

system or systems acquired or constructed in

accordance with this chapter, including all ex-

tensions and improvements thereto or combina-

tions thereof subsequently made, which lien

shall be in favor of the holder or holders of

any bonds issued pursuant to this chapter and

all such property shall remain subject to such

statutory lien until the payment in full of the

rincipal of and interest on said bonds. Any

Cater of said bonds or any of the coupons

representing interest thereon may either at law

or in equity, by suit, action, mandamus, or

other proceeding, in any court of competent

jurisdiction, protect and enforce such statutory

lien and compel performance of all duties re-

quired by this chapter, including the making

and collection of sufficient rates for the service

or services, the proper accounting therefor,

and the performance of any duties required by

covenants with the holders of any bonds issued

in accordance herewith.

If any default be made in the payment of the

principal of or interest on such bonds, any

court having jurisdiction of the action may

appoint a receiver to administer said district,

and said system or systems, with power to

charge and collect rates sufficient to provide for

the payment of all bonds and obligations out-

standing against said system or systems and for

the payment of operating expenses, and to ap-

ply the income and revenues thereof in con-

formity with the provisions of this chapter,

and any covenants with bondholders.

* * * * x

6-2624. Bonds payable from revenue —No

holder or holders of any bonds issued pursuant

to this chapter shall ever have the right to

compel the levy of any tax to pay said bonds

or the interest thereon. Each bond shall recite

in substance that said bond and interest thereon

is payable solely from the revenue ledged to

the payment thereof and that said nd does

not constitute a debt of the district Within the

meaning of any statutory limitation,

6-2625. Rates sufficient to pay costs and retire

bonds.—The board of commissioners of any dis.

trict issuing bonds pursuant to this chapter shall

prescribe and collect reasonable rates, fees,

tolls, or charges for the services, facilities, and

commodities of its system or systems, shall pre-

scribe penalties for the nonpayment thereof, and

shall revise such rates, fees, tolls or charges

from time to time whenever necessary to insure

that such system or systems shall be and always

remain self-supporting. The rates, fees, tolls

or charges prescribed shall be such as. will

always produce revenue at least sufficient (a)

to provide for all expenses of operation and

maintenance of the system or systems, including

reserves therefor, and (b) to pay when due all

bonds and interest thereon for the payment

of which such revenues are or shal] have been

pledged, charged or otherwise encumbered, in-

cluding reserves therefor.

6-2626. Exemption from taxation.—So long

as a district shall own any system, the property

and revenue of such system shall be exempt

from all state, county and municipal taxation.

Bonds issued pursuant to this chapter and the

income therefrom shall be exempt from all

state, county and municipal taxation, except in-

heritance, transfer and estate taxes, and it shall

be so stated on the face of said bonds.

U.S GOVERNMENT PRINTING OFFICE: 1971

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.