Thursday, December 13, 2012

Farriers Defined: 1965 Federal Appeals Court Decision

Unusual Case Brings Farriery into the Federal Court for a Little Clarification...Maybe


Bowie, Maryland - 1965: 
353 F2d 593 Taylor v. Local No. 7 International Union of Journeymen Horseshoers

I have added the actual court case numbers in case you are studying for the bar, live life anally-retentive, or like most instances, you assume I'm engaged in ribald fiction again.  It can be found at:  Fran Jurga's Hoofblog also referred to this case in a Sep. 29, 2012 column, (History: 1960's Racetrack Horseshoer's Union Court Case May Have...) []  The principals in this case are not important, but the case did end up in Federal Appeals Court, 4th District in 1965 following an appeal by the plaintiffs on a lower court decision.  There were actually two cases involved (same principals), and the Appeals Court consolidated both cases for disposition.  More than anything, these cases were about semantics and the definition of what constitutes the business relationship between farriers, trainers and owners.  However, it entered the court system under the guise of a 'labor dispute' between racetrack shoers (platers), and owner/trainers operating on both sides of the border.  Three of the plaintiffs were Canadian citizens, but raced in both countries.  Now, this part you're going to absolutely love:  the whole thing really centered on some owners that didn't want to pay $16 to plate a runner, or concurrently, being denied access to their own guy.  Few things ever change, eh?

[image: ozfolksonaday,]
[images: property of]
A little background is in order:  The International Union of Journeymen Horseshoers (IUJH); today, simply the UJH, was formed in 1873 primarily to represent farriers employed by large livery companies.  Labor unions were on the rise, the Industrial Revolution looming on the horizon and immigration approaching its somewhat uncomfortable peak.  All forms of commerce, private transportation and agriculture moved by horse.  And organized Teamsters were one of the most powerful labor organizations from Chicago to New York.  The Teamsters and the IUJH shared a common heritage and purpose. Teamsters would refuse to drive any horse that did not bear the IUJH logo on its shoe.  And farriers could only acquire this stamp after passing the IUJH exam.  Mutual interest was more deeply ingrained here than mere professional courtesy.  This was about money, livelihoods, status and...put bluntly, what was seen as a foreign invasion.  Unions and shops were locked in a fierce contest over cheap foreign labor and the pursuit of profits.  Sound familiar?  Unions were not about to have their power undermined from the outside or the inside.

However, time and industrialization of the world moved on and while the Teamsters thrived with the invention of the truck, farriery declined steadily -- virtually bottoming out in 1960.  But it wasn't the end of the UJH, now more national than international for the organization found a niche in North American racing.  Why?  The 'rules of racing.'  Racing commissions throughout N. America demanded (and were sanctioned accordingly), to 'qualify' all participants engaged in the sport.  This the result of racing operating as a gambling venue.  The betting public had to be assured of the sport's integrity and the UJH was the only organization with the history and structure to fill racing's regulatory needs.

4th Circuit Court
        Okay, back to the 4th Circuit Court.  For all intents and purposes, it appeared that a group of Canadian owners and some American converts decided that they didn't want to pay $16 to plate a runner -- or have no control over who did the work.  Evidently, the IUJH didn't have the controlling power it coveted on Canadian racing.  Further, it had become common for off-track shoers to work on Canadian tracks.  As such, prices were set by market forces and fluctuated wildly.  Like today, the quality of work also varied extensively.  However, on US racetracks, the price was set by the union -- membership in the union tightly controlled and re-enforced by those very 'rules of racing,'  contained therein:  access.  Meaning that the commission, a quasi-government, regulating body could and would enforce the dictate.  Hell, they had to.  Racetrack farriers had the power and right to shut the place down.  Not only by refusing to work, but by the supportive actions of the more powerful Teamsters Union.  In other words, no Bourbon for the Turf Club or much of anything else.
What set off this dispute, at Bowie Race Track in Maryland, was wrapped around the lack of union compliance in Canada.  The Bowie platers wanted a signed agreement from these Canadian owners to "use only IUJH members at Canadian tracks," or the farriers would refuse to work on their horses on the US side.  It was principle on one hand, but a Union rule on the other.  In some ways, the farriers were in a happy trap, because the price was set by the local chapter (themselves), and the shoers were subject to disciplinary action or expulsion from the Union for non-compliance.  Out of the Union meant you were booted off the track -- livelihood lost, as racing was the only consistent game going. 

Bowie Race Track -- 1900's

The owners decided to sue in District Court, claiming among other things that farriers 'were employees' on one hand and violating the Sherman Anti-Trust Act on the other.  The lower court ruled that the plaintiffs were indeed employees of the owners/trainers, but naturally threw out the anti-trust argument.  This merely led to an impasse.  The farriers were hoping for a ruling (under Norris-LaGuardia), that it was merely a labor dispute between independent contractors in a third-party arrangement.  But since the lower court ruled them to be employees, nobody was satisfied.  So back to court -- this time to the Federal Appeals Court in Richmond, Virginia. This suit was again brought by the owners who were dead set on getting a ruling under the Sherman Act -- the purpose being to break the IUJH by saying that the Union was, in effect:  price fixing.  On the other hand, IUJH members wanted their definition as 'employees' stricken down and their status as 'independent contractors' affirmed by a federal court. This had huge ramifications for both the present, and ultimately the future status as it defined farriers once and for all, including by the US Federal Tax Code.  Precedent setting you might say.
The Test: 
Singer Manufacturing v Rahn, 1889      
"The relation of Master and Servant exists whenever the employer retains the right to direct the manner in which the business shall be done as well as the result to be accomplished."
"However, complete control over the result to be accomplished is not enough to make an independent contractor an employee."
Splitting hairs?  Perhaps, but the Court had more to say:
"An employer has a right to exercise such control over an independent contractor as is necessary to secure the performance of the contract according to its terms, in order to accomplish the results contemplated by the parties in making the contract, without thereby creating such contractor an employee."
Numerous other cases supported the conclusion that some "reservation of control to supervise the manner in which the work is done...or to inspect the work during its performance...does not destroy the independent contractor relationship."  [Cited: Conasauga River Lumber v. Wade.]  "No one fact is controlling the 'totality of the circumstances must be considered.'"  Such as:
Points established in Appeals Court ruling: 
25.  Farriers provide own tools.
26.  Farriers are highly skilled.
27.  Farriers are paid by the job.
28.  Farriers control hours worked.
29.  Farriers regard themselves as independent contractors.  This established by their printed billboards, employment of apprentices, references in their constitution (IUJH) to trainers as 'customers, unilateral price-fixing and uni-lateral establishment of work rules. hours of work and bill collection methods.'
Points 30-33 merely added frosting to the cake.  30 noted that trainers make no deductions for Social Security, income taxes and carry no workmen's compensation insurance on farriers. They (trainers), consider farriers 'specialists.'  Similar to veterinarians.
Point 31:  Farriers decide whether to demand cash or extend credit.  Union rules on bill collection require that no farrier perform services for any trainer who owes money to another farrier. This was deemed legal by the court and is enforced to this day.  Well, most of the time.
Point 32:  "Farriers often receive retainers from trainers to guarantee first call on the farrier's services.  The payment of 'retainer' for this purpose is clearly indicative of an independent contractor, not an employee..."  Ha!  See where this came from?  All judges are first attorneys. How could they rule otherwise without damaging their own status.
Point 33:  The custom of the 'community' supports the conclusion.  Analogous to: plumbers, painters, roofers, electricians, etc..
{Should also be noted here that Point 24 in the ruling clarified farriers as being 'in the business of service, not retailing.' This was based on the notion that farriers bought their own shoes and made no direct profit on their resale.  Might want to remember this ruling if your state auditor decides that your business needs to charge sales tax.}
Farriers themselves testified during these proceedings:
Q:  "How does the trainer retain the right to direct you with respect to how much to cut or the type of shoe to put on?"
A:  "Yes. You have occasions that you might shoe a horse one day and you might not do it just right, and the trainer will tell you, maybe you took too much off or maybe you didn't take enough off, how about adjusting the foot or something to make it -- try to make it the same or whatever he wants."
Q: "And after you get him standing, what do you do then?"
A:  "Pull the shoe off, trim the foot?"
Q:  "Now, do you receive instructions as to to pull the shoe off?"
A:  "No."
Q:  "Well, now you indicated that those kind of instructions [ed: concerning lowering or raising heel, etc.] are given to you by the trainer at the time he decides to use your services.  At the beginning, he tells you those kinds of things. I like the toe short or I like it high or low or whatever."
"Now, do you tell me he repeats that instruction to you every time you come into there and shoe his horse?"
A:  "Well, if you go back and he happens to see a horse that is not shod to his liking, he'll tell you, I think you have missed this horse, maybe do something else to him, or change him."
The long and short of it was that the Appeals Court threw out the lower court's ruling, which in part was based on an Ontario (Canada) court ruling sought and affirmed by the same plaintiffs. The Appeals Court chose not to consider the Ontario ruling. Since they made a determination that farriers were indeed 'independent contractors' and NOT employees, a labor dispute did NOT by legal definition exist.  They also dismissed violations under the Sherman Anti-Trust Act as NOT applicable to the constitution of a labor union, further to the rules and regulations of a state regulatory body, i.e., the Racing Commission.
Who decides?
The ruling did settle, once and for all (short of the Supreme Court), just who or what a farrier is by legal standard, establishing the parameters of a business relationship that normally functions on little more than goodwill and good work. However, it did usher in later litigation, (in and out of the courts), over the relationship between UJH and the various state racing commissions.  In some cases, the commissions themselves were accused of being accomplices on a 'restraint of trade' basis -- arguing that the Union was using the 'rules of racing' (which vary in all 38 racing states, not to mention Canada), to maintain a 'closed shop' working environment.  On a purely theoretical level, most were.  But in these cases, the commissions were targeted in the claims, rather than the Union itself.  The outcome of these various actions have yet to be completely resolved, indeed may never be while the racing industry continues to operate, regulate and enforce on a state by state system.  Yeah, we never quite finished our Civil War. 
As for Bowie Race Track?  It stumbled along for another two decades, finally succumbing in 1985 to the fierce competition in the northeast brought about by the emergence of both OTB* and IOTB,** perhaps another case of one state waging financial war on another for the heart of the same bettor.
So...farriers should all give a shout-out to the 4th Circuit, Court of Appeals. At the very least, they know what you are. 
*Off-Track Betting.
**Interstate Off-Track Betting.