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National Labor Relations Board v. American Dist. Tel. Co.

decided.: June 8, 1953.


Author: Mclaughlin

Before GOODRICH, McLAUGHLIN and KALODNER, Circuit Judges.

McLAUGHLIN, Circuit Judge.

The National Labor Relations Board petitions for the enforcement of its order dated July 14, 1952, to compel respondent to bargain with a union whose membership consists of guards and other employees of respondent.

The respondent, a Pennsylvania corporation, is one of a number of wholly owned subsidiaries of American District Telegraph Company, a New Jersey corporation, which in turn is controlled through majority stock ownership by Western Union Telegraph Company. Respondent, as do the other subsidiaries, supplies various forms of electric protective services by means of which the premises of its customers are safeguarded against burglary and fire. It operates in several cities of Pennsylvania, though the bargaining order deals solely with employees in the Pittsburgh area. The New York subsidiary acts as purchasing agent for the entire group and furnishes their equipment and supplies at cost. That corporation also performs important management functions for the others. In 1950 respondent paid the New Jersey holding company $95,251 for its share of those services.

Respondent has two departments, Plant and Operating. The former installs and maintains the protective equipment, the latter handles the alarm signals. Such signals are investigated by uniformed guards who wear badges and carry arms. The service is founded, among other things, upon the proposition that all alarm signals are answered immediately regardless of the circumstances. It is part of respondent's contractual obligation to its subscribers that its guards, when necessary, remain on subscribers' premises until relieved.


The Board urges that it possesses jurisdiction over respondent because of the latter's purchase of materials from outside Pennsylvania, the effect of its services upon subscribers engaged in interstate commerce and its association with the A.D.T. group.

For its complete operations respondent receives annually over $130,000 worth of material from outside of Pennsylvania. The Pittsburgh office is responsible for about $9,000 of that amount. Respondent argues that since its Pittsburgh employees are alone involved in this litigation any question regarding supply expenses should be confined to that unit. Using this theory it contends that the Pittsburgh expenses are in fact de minimis and cannot be reasonably adjudged to exert a substantial effect on interstate commerce as required by the pertinent law. NLRB v. Fainblatt, 1939, 306 U.S. 601, 607, 307 U.S. 609, 59 S. Ct. 668, 83 L. Ed. 1014; Mabee v. White Plains Publishing Co., 1946, 327 U.S. 178, 66 S. Ct. 511, 90 L. Ed. 607.

On the second point, while concededly respondent does furnish guard service in and around Pittsburgh to concerns engaged in interstate commerce, it argues that the nature of those services is remote, intermittent and non-essential and therefore that they are not substantially related to interstate commerce. With reference to respondent being one of a number of corporations comprising a multi-state business it is asserted that there is no proof to that effect.

We think that there is sufficient in each of the three reasons to justify the assumption of jurisdiction by the Board. There is nothing in the record to indicate that the Pittsburgh business was not the same kind as in the balance of respondent's territory and that it did not function as an integral part of the employer corporation. Pettsburgh supplies were merely a portion of the total received by respondent. They were not intended for, or accepted by, any independent or separate project. Respondent's whole purchase system was attuned to the complete group buying plan as managed by the New York subsidiary. Incidentally, the cost of the interstate supplies for Pittsburgh amounted to the not inconsiderable proportion of approximately 8% of respondent's out-of-state purchases. The situation revealed is quite different from that existing in the type of case exemplified by NLRB v. Shawnee Milling Co., 10 Cir., 1950, 184 F.2d 57, 59, 23 A.L.R.2d 886, where a corporation operated "* * * two businesses, wholly separate and apart - one engaged in interstate business and the other in intrastate operations * * *." As in NLRB v. Denver Building & Construction Trades Council, 341 U.S. 675, 685, 71 S. Ct. 943, 949, 95 L. Ed. 1284, "The maxim de minimis non curat lex does not require the Board to refuse to take jurisdiction of the instant case."

Admittedly respondent services a number of manufacturers and business houses engaged in interstate commerce. We cannot agree that its contact with those customers is intermittent and infrequent. On the contrary, there is a constant security supervision by respondent over the premises of its subscribers through an open, efficient alarm system which is the heart of respondent's enterprise. The alarms happily may be infrequent but the protection is continuous and paid for on that basis. The service rendered is, and has been, considered valuable enough by its subscribers to have enabled this corporation, its fellow subsidiaries and its parent New Jersey corporation, to develop appreciably even for this time and place. While the Pittsburgh operation is not of the importance to its interstate commerce subscribers that the Consolidated Edison Company was in its dispute with the National Labor Relations Board [Consolidated Edison Co. v. NLRB], 305 U.S. 197, 59 S. Ct. 206, 83 L. Ed. 126, the protection furnished is close enough to the reach of that decision to prevent us from denying the Board's jurisdiction on this ground.

The Board's theory of multi-state operation also possesses considerable justification. We have here a parent controlling corporation with its corporate subsidiaries in various states. It is stipulated between the parties that "certain specialized management functions [of those subsidiaries, including respondent] i.e. administrative, accounting, auditing, advertising, engineering, financial and legal services * * * are not performed by the subsidiaries but by the New York company for which services the New Jersey holding company is paid." We think that the close integration of ownership and operation of respondent with the entire A.D.T. group actively engaged in the identical sort of business in several states effectively removes respondent "* * * from the realm of purely local enterprise." Collins Baking Co. v. NLRB, 5 Cir. 1951, 193 F.2d 483, 485.

Appropriate Bargaining Unit

Under its present ruling the Labor Board combines both classes of respondent's employees, operators and guards, into one union. Section 9(b) of the National Labor Relations Act, 29 U.S.C.A. ยง 159(b), outlines the method to be used by the Board in determining the ...

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