# Petitioners Brief — National Labor Relations Board v. Natural Gas Utility District > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0291%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Petitioners Brief - **Published:** January 1, 1971 - **Citation:** 402 U.S. 600 ## 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 10 17 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 13 10 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, 11 14-15 13, 18 19, 21 6 21-30 IV 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 4 9 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 v. 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) 2 190 197), 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 3 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). 4 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. 5 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 a ° - ng 3 4 % : ‘e g } 5 A 4 3 % eA i a Feces Te Spicer ee hh eS Lets ek ELAR NS KN ab iteed y 6 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 7 “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 I 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 eee Az. le et ee et ek ek? ee ee + PPE. ty OS 26 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 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. 27 —_— a a / % 2 : Fi 4 a | 7 o7 2 Povsiiaiarn... eh net * 28 (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 2 29 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 30 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0291%3A4. Public record. Not legal advice.