Document: 368 U.S. 370 82 S.Ct. 408 7 L.Ed.2d 360 UNITED STATES of America et al., Appellants,v.Henry E. DRUM al. REGULAR COMMON CARRIER CONFERENCE OF AMERICAN TRUCKING ASSOCIATIONS, INC., Appellants, v. Henry Nos. 23, 24. Argued Oct. 11 and 12, 1961. Decided Jan. 15, 1962. Robert W. Ginnane, Washington, D.C., for appellants in No. 23. Roland Rice, appellant William L. Peterson, Jr., Oklahoma City, Okl., Charles R. Iden, Akron, Ohio, the appellees both cases. Mr. Justice Brennan delivered opinion Court. 1 In an investigation initiated by it under 49 U.S.C. § 304(c), U.S.C.A. 304(c),1 Interstate Commerce Commission held that who leased their motor vehicles hired services as drivers to appellee Furniture Manufacturing Company (hereinafter 'Oklahoma') were contract carriers within 303(a)(15), 303(a)(15)2 subject permit requirements 309(a)(1), 309(a)(1).3 79 M.C.C. 403. 2 A three-judge court District Court Western Oklahoma, convened 28 2325, a proceeding commenced pursuant §§ 1336 1398, 1938,4 set aside cease-and-desist order which required lessors refrain from operations unless until they received appropriate authority therefor Commission. 193 F.Supp. 275. The was engaged private carriage defined 303(a)(17), 303(a)(17).5 We noted probable jurisdiction appeals lodged here 1253, 1253. 365 839, 81 800, 5 807. 3 Motor Carrier Act 19356 many aspects interstate carriage—including entry persons into business for-hire transportation oversight carrier rates—to administrative controls, on premise public interest maintaining stable industry so required.7 However, although aware 'Both (contract common carriers) * are continually faced with actual or potential competition truck operation *,'8 Congress took cognizance shipper's furnishing his own transportation,9 limited application licensing those provide 'transportation compensation'10 or, 1957 Amendment, 'for-hire transportation.'11 Commission, therefore, has had decide whether particular arrangement gives rise 'for-hire' is economic regulation interest, is, fact, determined carrying goods should prevail. This case recent instance Commission's developing technique decision. 4 From beginning underlying principles have been, remained, clear. primary objective scheme assure shippers generally will be provided healthy system may resort get market. goal not only surveillance licensed rates services, but also requirement whom would purchase service designed meet shippers' distinctive needs must first secure approval. See Contracts Contract Carriers, 628, 629; Keystone Transportation Co., 19 475, 490—492. statutory certificate issued before any new undertaken bespeaks congressional concern over diversions traffic harm existing upon bulk depend access market.12 Accordingly, definitions, while confirming shipper free transport without utilizing regulated instrumentality, at same time deny him use 'for compensation' purchased person Because definitions must, if serve purpose, impose practical limitations unregulated industry, interpreted manner transcends merely formal. outset correctly them importing purported hires instrumentalities another must—if he utilize carrier—assume significant measure characteristic burdens business. problem one determining—by reference clear broad remedial purpose regulatory statute committed agency administration—the applicability narrow fact situation imprecise definitional language delineates converage measure. Private simply transporters property neither nor carriers; yield up no better verbal guide reach its provisions than 'for-hire.' Compare Bates & Guild Co. Payne, 194 106, 24 595, 48 L.Ed. 894; Rochester Tel. Corp. United States, 307 125, 144—146, 59 754, 764—765, 83 1147; Gray Powell, 314 402, 412—413, 62 326, 332—333, 86 301; National Labor Relations Board Hearst Publications, 322 111, 130—131, 64 851, 860—861, 88 1170. resolution issue does seem us violate coherence body judicial precedents far developed this area, we there occasion disturb conclusion reached therefore reverse Court's judgment. It wish rid itself certain caused enter involved. Prior 1952 manufacturer low-cost furniture, maintained full fleet tractors trailers all furniture shipped. crew employed. absorbed expenses, carried risks, operation. utilized pricing eliminated charges identifiable element price furniture. Its status exempt never questioned pre-1952 arrangement. But method found incorporate burdensome disadvantages. discovered employee-drivers embezzling funds through misuse credit arrangements company established purchasing fuel minor repairs road. addition, became convinced equipment too often involved accidents, need maintenance could been avoided careful 6 effort eliminate these disadvantages, altered modus operandi. decided terminate investment long hauls and, instead, lease drivers. original agreements encountered difficulty when, 1956, Supreme Arkansas resultant constituted owner-operators applicable statutes.13 Following turn events, revised leases, entered collective agreement union representing workers setting forth terms employed current factual predicate present litigation. presently owns 26 tractors. leases long-haul connection owns. solely discerned provision transportation. renewable year, terminable either party 30 days' notice. granted sole right control tractor it; return, covenants such lawful confined Company's property. pays strictly milease basis. owner receives weekly rental payments 10 cents each mile vehicle driven, plus extra per backhaul load raw materials. guarantee minimum mileage. Operating costs—including gasoline, oil, grease, parts, registration fees—are paid owners. assumes responsibility wear tear damage tractors, collision fire theft insurance coverage—although pay liability insurance. owners assume cargoes. 8 Under covering among employees, enjoy employment privileges bargaining, seniority rights, death benefits, immunity discharge except cause, military-service protection, vacation amount based average pay. Owner-drivers discharged cause.14 Their remuneration calculated mileage basis, obliged living expenses No guaranteed.15 Drivers maintain trucks good running condition times. 9 Oklahoma's faithful reflection agreement. Certain matters, explicitly unambiguously covered written instruments, significance. Ordinarily assigned though occasional exceptions. superintendent testified owner-operators' day. repairs, conducted safety inspections.16 closely directed details loading delivery routes. instructed steps taken emergencies. administered physical examinations, supervised preparation reports social security taxes withheld income taxes, workmen's compensation. sum, possessed number hallmarks genuine Still, able spare itself—and pass owner-operators—certain large capital risk premature depreciation catastrophic loss, borne owner-operators, Company. rather stood variable costs fuel, operating condition, thirty-day cancellation privilege, together possible bargaining power en bloc, affected degree burden actually shifted. Finally, divest itself, extent, non-utilization high-priced equipment. wages when used did drive. did, however, carry nonproductive backhaul.17 12 question whether, facts, emancipated it, terms, unlicensed inconsistent scheme. resolved adversely owner-operators. Division 1, Commissioner dissenting, ordered cease desist activities thus unlawful secured necessary permits Applications invited, Division's Report observing condemned prejudice applications.18 disposition approved reconsideration.19 13 dealt out two inquiries satisfied constitute carriage: First, other 'any control, direct, dominate' Second, 'in substance, hire.'20 against respondents tests. first, 'control,' test pointed earlier decisions presumption whenever shipper, might defeated showing retained exclusive Despite evidence case, remained effect because 'There present, owner-operator drives equipment, lessor defeat supposed shipper-lessee believe exists.'21 reversed relative control,22 action challenged appeal.23 14 finding require ultimate favor.24 true recently, 'control' focus efforts delineate verbally permissible area non-licensed initial assess lessee-shipper's assumption undertook 'dominate' it.25 generated substance treated employees.26 Throughout, note various factors clearly transcend concept direction operation; always apparent vesting suffice render carriage.27 15 Latterly, begun move away embodiment manifold inquiry.28 accords explicit recognition implicit decisions: That some indicia assumed, detailed undertaken, having significantly shouldered supplemented inquiry betokens heedless departure beaten track decision curb exercise discretion.29 more inclusion between owner-drivers particulars discoverable decisions. deal totalities; instruments decision, touchstones. allowably novel integral unique judgment, counting common-places. Nor leave basis unarticulated. 16 meaning applying told following report: 17 'Here assigns continuing period company, distinct company. He provides furnished, maintained, driven thereof commerce. guarantees fixed definite cost transportation, bears profit loss hazards delays transit, breakdowns highway detours, meets including licenses trip expenses.' M.C.C., 412. 18 refused allow belief financial risks shifted extent rendered sanctioning design. think conclusions well range recognized propriety inquiring arrangements. Yet court's 'what part Company, owner-operators.' 281, rests articulated control. If intended hold test, error view objectives above. If, hand, meant substitute judgment that, record, indulged unwarranted incursion domain. Reversed. 20 DOUGLAS, BLACK joins, concurring. 21 I read my Brother HARLAN reads dissent made case. free-wheeling can ideas fiat. standard adjudicate And make findings support (Interstate Comm. J—T Transport 81, 204, 212, 216, 147), intelligible complete. States Carolina Freight Carriers Corp., 315 488—489, 722, 729, 971. me marginal commissioners judges differ.* do distorted conformity facts. 22 Hence join 23 HARLAN, WHITTAKER dissenting. Were substituting matter reserved determination, respected. Cf. I.C.C. 126—130, 233—235, 147 (dissenting opinion). cases now utterly lacking evidentiary support, uniform course decisions, contrary plan embodied 1935 later amendments, cannot reinstates order. As record what done amounts possess. 25 things indisputably clear: (1) Congress, subjecting 'private' regulation, mean otherwise regulate 'their commercial purposes' (79 Cong.Rec. 5651 (1935), remarks Senator Wheeler, Chairman Senate Committee Commerce);1 (2) leasing alone 'contract carrier,' regulation; words, rentals statute.2 plain rulings, comes play where shown.3 then like Inc., 1170, construction inexplicitly term broadly left enforcing law. strong suggestions contrary,4 saw fit Act. discretion sweep variety legitimately carriage, authorizing disobedience legislative mandate surely allowed remove carriage. 27 Until late 1952, low-priced shipped product retail purchasers throughout company-owned trailers, full-time salaried employees. Discovering misusing cards, given enable charging road, revamped way temptations.5 essence involved, service,6 shifting driver incidents preserving conduct business, keeping, every sense, employee relationship accurately summarized opinion.7 process reasoning rearrangement changed fully regulatable activity theretofore standpoint safety, best obscure. sanctions revealed laying bare agency's commonsense criteria heretofore determinations reflected carriage.8 29 holds three justified determination: substantial investments along drivers;9 road; (3) bore risk, envisages 'non-utilization equipment' unemployment. These factors, singly combination, not, view, warrant ruling. normal concomitant rental; presence change character (supra, U.S., p. 387, S.Ct., 417, 1). gas, garaging commonly assumed use.10 See, e.g., R.N.G. Commercial Auto Renters, 73 665; Scott Bros., 32 253; U-Drive-It Pennsylvania, 799. third factor, whatever weight supported actuality, circumstances depicted pure abstraction (368 pp. 394—395, 421, infra). appears recognize, arrangement, relating point Past found, face similar provisions, here. entitled during (cf. Joseph A. Bisceglia, 34 233); loaded, dispatched, routed Shields, 41 100);11 McKeown 42 792); cargo Edward Allen Carroll, 788); Centre Trucking 313);12 inspect insure compliance regulations Driver Service, 77 243); bills lading Jacobs Transfer 46 265). 31 strengthened circumstance appellees, addition supplying vehicles, factor furnished independent contractors, differs lessee mans strange indeed attribute classify who, employment, employer's transported. All standards previously tested 'employment' prove existence drivers' Columbia Terminals 662);13 deducted federal Haulage 107); logs medical certificates Watson Mfg. 51 223); bargained labor conditions 665); engage John J. Casale, 15). Broth. Local Intern. Teamsters, etc. Oliver, 358 283, 297, 303, 312, lessor-driver's 'within scope law.' Id., 293, 303. light dissenting opinion, id., 297—298, 305—306, seems concluded lessor-drivers purposes 33 total supervision exercised really risked work all, earning wage, time, room argument were, contractors. theoretical possibility exists, facts happen. per-mile testimony shows deliberately attempted distribute limits acceptable individual concerned union. Six continued owned employees vehicle, just owned. Those $50 week mile, dispatched short hauls. sent hauls, absence wage.14 sick, usually operate belonging incapacitated man least payment short, nothing warrants anything bona fide shouldered, anticipated bear, 35 am unmindful has, late, much drawing line legitimate rentals, concedes 'private carriage,' come call 'pseudo-private i.e., disguised equipment.15 Obviously schemes devised avoid regulation. suppose acting beyond pierced form enterprise purportedly providing disclosed Decisions Courts Appeals uniformly 'substance' circumstances. E.g., Lamb I.C.C., Cir., 259 F.2d 358; Isner, 92 582; Gannoe, 100 790. disagree result Court, 'substance,'16 very urged persuades reality employer 36 allegation subterfuge attributing devious motive lessee; transferred more, possibly even less, substantial17 ordinary equipment; hire disclose protected representatives overreaching employer. saved 'totality' brings aid. For however viewed, adds mere as, than, protect being cheated driver-employees. 37 carriers—and rigorous fitness suitability carriers—what thought 'gray' becomes black, truth, white gray. What, example, title whereby subleased back assuming destruction? Or guaranteed wages? Would ousted contracts carriage? 38 Indeed, goes encourage obliterate entirely congressionally drawn distinction interesting see aftermath followed blurring effected Steel 350 409, 76 461, 482. J-T supra, 107—109, 223—224 39 affirm. 204(c), Stat. 547, amended, 304(c): 'Upon complaint writing person, State board, organization, politic, initiative complaint, investigate broker failed comply chapter, thereto. after notice hearing, finds requirement, shall compel therewith. Whenever state reasonable grounds part, dismiss complaint.' 203(a)(15), 544, 303(a)(15): 'The vehicle' means engages passengers foreign commerce, compensation (other referred paragraph (14) section exception therein), (a) assignment served (b) customer.' 203(a)(14), 554, 303(a)(14), defines 'common carrier' follows: general commerce class classes compensation, regular irregular routes, express chapter title, continue considered title.' 209(a)(1), 552, 309(a)(1): 'Except 310a (exceptions pertinent), reservation force respect *.' 203(c), 71 411, 303(c), 303(c): 302(c) subsection section, (a)(14) second proviso 306(a)(1) (none exceptions scope, furtherance, transportation) person.' intervened defendant, 2322, Weather-Seal Regular Common Conference plaintiff defendant respectively, 2323, 2323. 203(a)(17), 545, 303(a) (17), 303(a)(17): included vehicle,' transports owner, lessee, bailee, sale, lease, rent, bailment, furtherance enterprise.' 543—567, 301—327, 301—327. S.Rep. 482, 74th Cong., 1st Sess. 2; H.R.Rep. 1645, 3; S.Doc. 152, 73d 2d 14—15, 22—23 (Report Federal Coordinator Regulation Agencies). 14. 1; 4; H.R.Doc. 89, Legislation). notes 2, 5, supra. 3, expression 1958 amendment so-called 'buy-sell' evasions 'pseudo' carriers. 72 568, 574, amending 303(c). 1647, 85th 23—24; 1922, 17—19. Robinson Woodard, 227 Ark. 102, 296 S.W.2d 672. While automatically driver's truck-lease agreement, obvious immediately 30-day privilege service. contrast, short-haul mile. 'shall condition' superseded, parties' practice, undertaking 'to keep said times complete rules bodies.' 406, 407; 278. materials backhaul. differential explained additional purchases occasioned heavier transported return trips. At incremental costs, represented risk. 415. Appellees assert willing type essential survival competitor. Brief Drum 3. presented passing appellees' applications; reason bypassing carrier. 167. 409—410. 411. 281—282. 17, n. 8: 'In appeal, challenge district lacked argue below gave test. assume, purposes, applied operational transportation.' direct leading H. B. Church Truck Service 191, 195: 'Essentially dominate performance remains carrier, results 'yield directing controlling service, operated employee.' 196. 223, 226; 665, 670. suggest (Brief 29), sense 'employees.' unit overwhelming majority concededly carrier-owned entitled, 8(d) Act, 61 142, 158(d), bargain impasse concerning owner-drivers. determine 'employees' since establishment wage structure employee-drivers. 294 295, 303—304. 788; 313; 100; 44 45; 107; 265; 15; 665. Pacific Diesel Rental 78 161, 172—173: asked forms; namely Is Are here, highways hire? responsibilities offered II act. To contravention our duty imposed Congress. evident (as employer) normally fall transforms which, apart assumption, different open door unfair destructive competitive practices national policy declared Congress.' courts plotting boundary over-all 'control.' Georgia System, Inc. 123 210, 212 ('(A)ppellant, reality, operates business.'); Stickle 128 155, 160, 161 (test 'substance reality'); 358, ('Simply stated (the issue) transporting question.'); C. Leasing, 283 163, 165 effect'); La Tuff 95 375; Werner, 106 497; cf. Bridge Renting Pedrick, 174 733; 167, 114 Ct.Cl. 599. Earle Babler, 180 1016; Vincze 267 577; 70 affirmed 331 784, 67 1205, 91 1815; 790; 187 625. Three disagreed (193 275) Commissioners missented. (1934); (1935); (1935). There quipment States; desirable yet Nutting Kuhn, Regulation—The Third Phase, U. Pitt.L.Rev. 477, 487 491 (1949); Note, Ky.L.J. 338 (1951). relevant footnotes opinion. 799; 253. Lease Interchange Vehicles 521, interchange inferred regulate, well, 'the procurement suggests noncarriers companies activities. Hearings 1935, 333, 345, 347—350 Short products unaffected presumably less opportunity cards show acquired bought others, what, any, consideration paid. 10¢ hauling single-axle 11¢ tandem-axle 3¢ back-haul materials, weekly, properly qualified physically accordance regulations, (4) arising (gasoline, grease parts) license plates, (5) first-class bodies, (6) fails cancel option charge owner-operator's account (7) direction, belong sublease firm corporation, (8) liable wear, accident, theft, hazard casualty, (9) responsible cargo, (10) name endorsed assured policies (11) giving party, (12) remain year date execution renewed further periods cancelled terminated covers drive Although union, apply equally non-union provides, pertinent rate 4.5 driving, 0.25 truck, back-hauls companyowned receive basic salary 75,000 miles computed driving preceding times, hours report usual contract, exception. main- tain them. supports vehicles. reveals following: authorized uses chiefly tractor. practice assign regardless leased. necessity convenience feasible so, it. supervisor oversees drivers, trips checks repaired. Detailed routing instructions therewith insured loading, last off loaded last. handed bill manifest sign receipt freight transport. Each paychecks, driver. deducts paychecks withholding share benefits maintains file logs, physicians' inspection reports. Both garaged homes respective independently agreement.' F.Supp., 277 O'Brien, Twenty-Five Years Licensing—The Versus For-Hire Problem, N.Y.U.L.Rev. 1150 (1960); Matthews, Leasing By Shippers Problem Dangling Instrumentalities, I.C.C.Prac.J. Porter, Harv.L.Rev. 896 6, 'risk' concerns personal unrealistic consider albeit flat one-fourth cent collective-bargaining Consolidated Trucking, 737; 265 (shippers' dispatching insufficient carriage). Since firms insurance, firms. bound occasionally considers burden. Roy Rittenhouse, 389. determinative. 161. reasons differentiating repects ownership already given. Supra, 5. 69 I.C.C.Ann.Rep. 99; 43; 51; 74 57—58. thorough study 'gray area'—defined 'transport lie Government bodies'—was recently submitted Foreign Bureau Economics Statistics. major 'shipper driver.' Statistics, Area Operations (1960), 27—37. down rule created presented, contrary, arises performed words regulation.' quarrel validity presumption, although, 45, 52—53. 'showing contrary' impermissible unproductive backhaul, trailer returned empty full. productive, four added payment, increased wear-and-tear duties. may, circumstances, location taken, one-way slightly rates. might, reduce permitted destination.

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