National Labor Relations Board v. Tri-State Transport Corporation

649 F.2d 993, 107 L.R.R.M. (BNA) 2678, 1981 U.S. App. LEXIS 13031

• Court: Court of Appeals for the Fourth Circuit
• Decided: May 21, 1981
• Docket: 80-1270
• Status: Published

Opinions

INGRAHAM, Circuit Judge.

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

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

I.

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

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

In distinguishing employees from independent contractors,

there is no shorthand formula or magic phrase that can be applied to find the answer, but all of the incidents of the relationship must be assessed and weighed with no one factor being decisive. What is important is that the total factual context is assessed in light of the pertinent common law agency principles.

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

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

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

II.

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

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

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

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

At the outset, Cunningham supplied certain information that was recorded by TriState’s general manager on a form entitled “Application for Employment.” The application form was introduced into evidence by counsel for the General Counsel. The form was only partially completed. Another application form was submitted on behalf of the General Counsel, covering a person conceded by Tri-State to be an employee, to show that Cunningham filled out the same form as the “other” employees. The information solicited from Cunningham was no more than that required by federal regulations,⁴ and it is not surprising that a company whose general manager worked only part-time did not have special pre-printed forms for non-employee drivers. More significant to us is that the classification of the conceded employee was “Road driver,” whereas the classification of Cunningham was “Road driver for Broker — J. Coss.” Even more significant, perhaps, is the inscription that Cunningham on July 27,1978, was “Discharged by Broker — J. Coss,” and on September 18, 1978, was “reinstated by Broker — J. Coss.”

After Cunningham began driving, the first four checks for the lessor’s seventy-five percent of the rig’s weekly gross were made payable to Cunningham. Witsberger testified without contradiction that this arrangement was at the instruction of Coss, who did not want another source of his income jeopardized by extra earnings during the month he was hospitalized. Thereafter, having consulted his attorney regarding the matter, Coss instructed Witsberger to make the checks payable directly to him. Witsberger never made tax, social security, or other payroll deductions from the Coss Cunningham earnings, as she did for certain other drivers who she considered to be employees of Tri-State.

On one occasion, Witsberger attempted to dispatch Cunningham on a trip to James-burg, New Jersey. Cunningham refused to make the trip. On direct examination by counsel for the General Counsel, he testified that his reason for refusing the run was that “we couldn’t make any money on that run because we had to cross the mountains and fuel was so high and we had to pay for our own turnpike fees.” He further testified that Witsberger stated that she would call Coss and that “if [Cunningham] didn’t want to make the run to just park the truck.”

Subsequent to the lease covering the tractor-trailer rig that was to be driven by Cunningham, Coss entered into another lease agreement with Tri-State. The second lease covered a different tractor-trailer rig that Coss personally drove. Under this lease, Coss received only sixty-two percent of the gross revenue earned by the rig. Although Coss was contractually obligated to carry the physical damage insurance on the rig, he testified that he did not have it insured and was therefore “very careful with it.” At one point when he was ill, Coss had another person drive that rig. On the third trip, the person had an accident that damaged the cargo on the flatbed trailer but that did not damage the rig itself. The driver was promptly terminated. Although Coss characterized the termination decision as having been made by Witsberger with his consent, it is instructive to note that Witsberger told Coss about the accident and then he, not Witsberger, went to the driver and demanded the keys to the truck.

On November 9, 1978, Witsberger sent a letter to Coss advising him that she was terminating the leases on his two tractor-trailer rigs. The following weekend, Coss contacted Cunningham. According to Cunningham, “[Coss] said that I was laid off because she fired his truck.”

III.

The ALJ acknowledged in his opinion that “much, if not all of this so-called control is dictated by Interstate Commerce Commission rules and regulations and does not necessarily create an employer-employee relationship.” He went on to conclude, however, that on balance the record facts supported “a finding that although Cunningham might have been (without any specific record showing) some sort of profit sharer or agent for Coss, he was also an employee of [Tri-State].” We reach the opposite conclusion. We find that there is not substantial evidence in the record to support the finding that Cunningham was an employee of Tri-State. Instead, the record substantially supports the conclusion that Cunningham was either an employee of or a profit sharer with Joseph Coss.⁵ The factors relied upon by the ALJ are for the most part expressions or consequences of the rules and regulations of the ICC and the DOT. Once those controls are stripped away, what little control remains is simply not sufficient to support the conclusion that Tri-State was an employer of Henry Cunningham qua employee. See, e. g., NLRB v. A. Duie Pyle, Inc., 606 F.2d 379 (3rd Cir. 1979); Local 814, International Brotherhood of Teamsters (Santini Bros., Inc.,), 208 N.L.R.B. 184 (1974), remanded for clarification, 512 F.2d 564 (D.C.Cir.1975), clarified and upheld, 223 N.L.R.B. 752 (1976). Accordingly, the application for enforcement of the Board’s order must be denied.

ENFORCEMENT DENIED.

1 . For an appreciation of the extent of some of those regulations, see Parts 391, 392, 394, 395, 1043, and 1057 of 49 C.F.R. (1979).

2 . For example, the leases involved in this case were preprinted forms. In certain places, where choices were to be made, the parties were to signify their intent by striking out the unwanted language, thusly: “Lessor/fcessee agrees to accept .,.. ” On each lease, the following sentence was entirely stricken: “The Lessee shall be responsible for the driver or drivers of subject vehicles and said driver(s) shall be employees of the Lessee.”

3 . Cunningham’s arrangement with Coss appears to have been that he would receive twenty-five percent of whatever amount Coss received from Tri-State.

4 . In fact, although the printed form seems to comport with the requirements of 49 C.F.R. § 391.21, responses were not recorded for many of the questions.

5 . We note that at the hearing the ALJ adverted to “a lead case on this called Greyhound,” noting that perhaps Cunningham was an employee of both Coss and Tri-State for purposes of the right-to-control test. We further note that the ALJ did not base any part of his written opinion on any case involving a party named Greyhound. The ALJ expressly stated that Cunningham’s relationship to Coss “is not clarified in the record.” Given our conclusion that Cunningham is not an employee of TriState, we need not question the propriety of the ALJ’s failure to clarify the nature of his relationship to Coss.