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FMC V. PACIFIC MARITIME ASSN., 435 U. S. 40 - Volume 435 - 1978 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 435 > FMC V. PACIFIC MARITIME ASSN., 435 U. S. 40 (1978) > Full Text
Section 15 of the Shipping Act, 1916, 39 Stat. 733, as amended, 46 U.S.C. § 814, [Footnote 1] requires the filing with the
or person. [Footnote 2] Among those agreements that must be filed are those "controlling, regulating, preventing, or destroying competition." The Commission is empowered to "disapprove, cancel, or modify" any such agreement that it finds to be
This case arose when eight municipal corporations, owners and operators of Pacific coast port facilities and not members of the PMA, [Footnote 5] filed a petition with the Commission asserting that a 1972 agreement between PMA and the Union was subject to filing and approval under § 15 and was violative of §§ 15, 16, and 17 of the Shipping Act [Footnote 6] because it was unjust,
discriminatory, and contrary to the public interest. Prior to this time, the nonmember ports had negotiated separate agreements with the Union which contained terms and conditions that in some respects differed from those contained in the collective bargaining contracts between PMA and the Union. Fringe benefit provisions varied, depending on the result of individual negotiations. [Footnote 7] In some respects, the ports enjoyed more flexible work rules than did PMA; the ports, for example, were often permitted to use "steady crews," whereas, under the PMA contract, rotation of workers among employers was the general rule. [Footnote 8] The existence of separate agreements between the Union and the public ports also enabled the Union to exert negotiating pressure on PMA by striking PMA while continuing to work for the individual ports. The ports, nevertheless, were permitted by virtue of separate agreements with PMA to secure their workforce through the PMA-Union hiring halls [Footnote 9] and to make the particular fringe benefit payments
called for by their individual contracts by contributing to the fringe benefit funds maintained by PMA. [Footnote 10]
177 U.S.App.D.C. 248, 25251, 543 F.2d 395, 397-398 (1976) (footnotes omitted). [Footnote 12]
In its subsequent report and order, Pacific Maritime Assn. -- Cooperative Working Arrangements, 18 F.M.C.196 (1975), the Commission first rejected the suggestion that, because the case called for accommodating the Shipping Act and the labor statutes, as well as determining whether the parties had exceeded the scope of legitimate bargaining, the Commission should not itself decide the issue, but should defer to the courts or to the National Labor Relations Board. [Footnote 13] The Commission
also rejected the argument, as it had rejected similar arguments in New York Shipping Assn. -- NYSA-ILA Man-Hour/Tonnage Method of Assessment, 16 F.M.C. 381 (1973), aff'd, 495 F.2d 1215 (CA2), cert. denied, 419 U.S. 964 (1974), that § 15's filing requirement was not triggered because some members of PMA were neither carriers nor "other persons subject to the act" or because PMA's contract was with a labor union, which also was neither a carrier nor "other person." [Footnote 14] The Commission went on to find that the purpose of the nonmember participation agreement was to place nonmembers on the same competitive basis as members of the PMA. and that its effect was to control or affect competition between members and nonmembers. The Commission concluded that the agreement was thus subject to filing and approval or disapproval under § 15, unless, because it was part of a collective bargaining contract, it fell within that category of contracts that the national labor policy placed beyond the reach of the Shipping Act. The Commission had recognized this so-called "labor exemption" in United Stevedoring Corp. v. Boston Shipping Assn., 16 F.M.C. 7 (1972), and it proceeded
to adjudicate the status of the instant agreement under the criteria announced in that case. [Footnote 15]
It is appropriate, therefore, that the Court has recognized the broad reach of § 15 and resisted improvident attempts to narrow it. In Volkswagenwerk v. FMC, 390 U. S. 261 (1968), a collective bargaining agreement between PMA and the Union included a provision requiring PMA to create a sizable fund to be used to mitigate the impact of technological unemployment upon employees. PMA reserved the right to
determine how the fund was to be raised, and thereafter it settled upon a particular method by which its members would contribute to the fund. The issue then arose whether this latter agreement was within the Commission's jurisdiction under § 15. The Commission held that, although the assessment formula arrived at was within the literal language of the section, it was exempt from filing, since § 15 should be applied only to those agreements that affect competition among the carriers in their dealings with the shipping and traveling public. [Footnote 16] The Court of Appeals affirmed, but we reversed, rejecting the Commission's "extremely narrow view of a statute that uses expansive language." 390 U.S. at 390 U. S. 273. In response to the Commission's expressed desire to read § 15 narrowly in order to minimize the antitrust exemption, we noted that "antitrust exemption results not when an agreement is submitted for filing, but only when the agreement is actually approved . . . ," 390 U.S. at 390 U. S. 273, and that, "in deciding whether to approve an agreement, the Commission is required under § 15 to consider antitrust implications." Id. at 390 U. S. 273-274. Hence,
Because Volkswagenwerk dealt only with the agreed-upon assessment formula, the Court noted that no question had been raised about the validity of the underlying collective bargaining contract. The opinion does not, therefore, determine one way or the other whether collective bargaining contracts are ever within the reach of § 15; but the Court did
emphasize the breadth of the statutory language and the determination of Congress, reflected in § 15, to "subject to the scrutiny of a specialized governmental agency the myriad of restrictive agreements in the maritime industry." 390 U.S. at 390 U. S. 276. At the very least, the opinion counsels against implying broad exemptions for agreements, collective bargaining contracts or otherwise, whose impact on competition is "neither de minimis nor routine." Id. at 390 U. S. 277.
The principal objection to Commission jurisdiction over any bargaining agreement was that, under § 15, agreements subject to filing cannot be implemented prior to approval or after disapproval. This alone was enough to exempt collective bargaining contracts from filing under § 15, for, as the Court of Appeals understood the collective bargaining system mandated by the National Labor Relations Act, one of its essential elements is for the parties to be legally free "to implement promptly the compromise agreements worked out in eleventh-hour bargaining sessions. . . ." 177 U.S.App.D.C. at 25, 543 F.2d at 406. Subjecting negotiated labor agreements to filing and approval "would make nearly impossible the maintenance or prompt restoration of industrial peace." Ibid.
1358, 46 U.S.C. § 833a, in appropriate circumstances, to exempt from § 15 filing requirements "any class of agreements between persons subject to this chapter or any specified activity of such persons . . . ," [Footnote 17] the Commission, by adjudication, has determined that it will recognize a "labor exemption" from the filing requirements of § 15 for collective bargaining contracts falling within the boundaries of the exemption defined by its announced criteria. [Footnote 18] In doing so, the Commission has been guided by its understanding of our cases, and those of other courts, that recognize and define an exemption from the antitrust laws for certain contracts between management and labor. It appears to be the intention of the Commission to exercise jurisdiction over only those collective bargaining contracts that, in its view, would not be exempt from examination under antitrust laws, and that should be reviewed under Shipping Act standards. We therefore doubt that the Commission's decision will have a broad impact on labor-management relations. At least it has not been demonstrated at this juncture that the collective bargaining concerns cited by the Court of Appeals are sufficient to require complete exemption for labor agreements and the consequent partial emasculation of the statutory scheme for administrative review of anticompetitive agreements.
Second, the Commission, in any event, claims the authority, which it has exercised, see New York Shipping Assn. -- NYSA-ILA Man-Hour/Tonnage Method of Assessment, 16 F.M.C. 381 (1973), aff'd, 495 F.2d 1215 (CA2), cert. denied, 419 U.S. 964 (1974), to issue conditional approval of filed agreements pending final decision as to their legality; and it is not clear why this mechanism is not amply responsive to the fears of undue delay or why its adequacy should now be debated, since the parties could have, but did not, request early, conditional approval. The Court of Appeals did not deny that the Commission could permit implementation of filed agreements prior to a final decision, but it thought the mechanism only a partial alleviation of the problem, since the parties still would face the "specter" of a later administrative invalidation of perhaps a crucial part of a collective bargaining contract. But it is not immediately obvious why provisions of a collective bargaining contract that appear obviously illegal to the Commission should be immediately implemented pending final decision. Furthermore, if a collective bargaining contract having serious anticompetitive aspects is not subject to filing under § 15, as the Court of Appeals would have it, the parties would, in any event, face the uncertainty of possible invalidation and of treble damages after long and difficult litigation in an antitrust court. At least under § 15, it would be possible that an anticompetitive collective bargaining contract that would not survive scrutiny under the antitrust laws could be approved by the Commission, if it served important regulatory goals, and hence would be insulated from antitrust attack. Indeed, a critical aspect of the regulatory plan devised by Congress is the requirement of administrative judgment with respect to all of the specified contracts required to be filed. It was therefore error for the Court of Appeals to hold that the legality of collective bargaining contracts, challenged as anticompetitive and nonexempt, must be judicially determined under the antitrust laws without interposition of the administrative
Although the Court of Appeals did not otherwise challenge the content or application of the Commission's guidelines for resolving issues as to its jurisdiction over collective bargaining agreements, the respondents urge that the Commission has misread the relevant cases. In particular, they fault the Commission's findings with respect to the competitive impact of the nonmember participation agreement and the failure to find that the terms under challenge constituted serious antitrust violations. These submissions are unsound. It is plain from our cases that an antitrust case need not be tried and a violation found before a determination can be made that a collective bargaining agreement is not within the labor exemption, just as it is clear that denying the exemption does not mean that there is an antitrust violation. [Footnote 19] Insofar as the asserted exemption for collective bargaining contracts is concerned,
Here, both the Commission and the Court of Appeals understood the nonmember participation agreement to require nonmembers to participate in all fringe benefit plans agreed upon between the PMA and the Union, to observe PMA-determined labor policies in the event of a work stoppage, and to observe the same work rules with respect to the hiring hall workforce. The result, the Commission found, would be higher costs for nonmembers and the elimination of what the PMA considered to be "a competitive disadvantage" to its members. [Footnote 20] Accordingly, the Commission was warranted in finding that "the purpose of the supplemental agreement
[was] . . . to place nonmembers on the same competitive' basis as members of the PMA."
The Court today holds that collective bargaining agreements in the maritime industry are subject to the filing and prior approval requirements of § 15 of the Shipping Act, 1916 (Act), 46 U.S.C. § 814. Neither statutory language nor legislative history offers specific support for this result. For well over a half a century, the agency responsible for enforcing the Act did not consider § 15 previews of maritime labor contract to be within its mission, [Footnote 2/1] even though collective
bargaining is hardly a recent development in the major ports of the Nation. [Footnote 2/2] No intervening legislation explains the Court's willingness to recognize this belated assertion of jurisdiction. [Footnote 2/3]
This decision would be debatable but unexceptional were it not for the presence of a competing statute. The task confronting the Court is one of reconciling the broad language of § 15 with the distinct policy of federal labor law embodied in the Labor Management Relations Act, 1947, 29 U.S. . § 141 et seq. It seems to me that today's ruling undercuts federal labor policy, imposing undue burdens on collective bargaining, without advancing significantly any Shipping Act objective. I therefore dissent.
In subjecting collective bargaining agreements to prior clearance by the Commission under § 15, the Court goes well beyond the limits established in Volkswagenwerk. There, an earlier agreement between respondent Pacific Maritime Association (PMA) and respondent International Longshoremen's and Warehousemen's Union (Union) provided for the introduction of labor-saving devices and the elimination of certain work practices. The agreement required the creation of a "Mechanization and Modernization Fund" (Mech Fund) of $29 million to be used to mitigate the impact of technological unemployment upon employees. It reserved to the PMA alone the right to determine how to raise the fund from its members. The question before the Court was whether § 15 applied to a subsequent agreement among members of the PMA setting forth various formulas for collecting the Mech Fund. The Court held that the employers' "side agreement" would have a substantial impact on stevedoring and terminal charges, and required the prior approval of the Commission. Following the suggestion of the United States, [Footnote 2/4] the Court
390 U.S. at 390 U. S. 278 (emphasis supplied).
The italicized language makes clear that the Volkswagenwerk Court perceived a distinction, material to Commission authority under § 15, between a collective bargaining agreement and implementing agreements among carriers, stevedoring contractors, and marine terminal operators.
In this case, I would follow what seems to have been the lead of the Court in Volkswagenwerk. A proper accommodation of the conflicting signals of the Shipping Act and federal labor policy requires that bona fide collective bargaining agreements, arrived through arm's-length negotiations, [Footnote 2/5] do not fall within § 15. As in other collective bargaining contexts, labor and management in the maritime industry would be free to reach agreement without prior Government approval or control over the substantive terms of the bargain, while the agreement itself or its implementation would be subject to scrutiny under the antitrust laws and the specific prohibitions of §§ 16 [Footnote 2/6] and 17 [Footnote 2/7] of the Act.
agreements" will not "be subject to the requirements of § 15," ante at 435 U. S. 57. [Footnote 2/9] Few agreements negotiated between a union and a multiemployer bargaining association for the purpose of governing working relations at a major port are likely to be so "routine" that the parties safely may assume that they enjoy an exemption from § 15. A degree of uncertainty and delay, then, would seem an inevitable byproduct of § 15 jurisdiction over maritime labor relations.
Similarly, the possibility that the Commission may find that a particular agreement qualifies for a "labor exemption" does not offer a realistic palliative for the probable impact of the Court's decision on free collective bargaining. The Court suggests that the Commission may apply its special understanding of the requirements of anticompetitive policy, [Footnote 2/10] but there is no well developed corpus of maritime labor-antitrust decisions to guide the formulation of labor agreements in the industry. The Commission has identified four nonexclusive, nondeterminative criteria to inform its "labor exemption"
rulings. [Footnote 2/11] The brief history of the Commission' entry into the maritime labor field, however, see n. 1, supra, offers little basis for hope that it assertion of § 15 jurisdiction will not impair the collective bargaining process. In the final analysis, the substantial penalties provided by the Act [Footnote 2/12] for "guessing wrong" make it unlikely that the disruption and uncertainty inherent in this prior restraint scheme will be allayed significantly by the rulings of a federal agency inexpert in labor and labor-antitrust matters. [Footnote 2/13]
legislative history [Footnote 2/14] of § 1 requires that it be made applicable to collective bargaining agreements. Neither contains any reference to labor agreements. Although § 15 reaches a broad spectrum of arrangements, its terms apply only to agreements among "common carriers by water" or "other persons subject to this chapter." [Footnote 2/15] Unions are not persons subject to the Act. One would have thought that, if Congress had wished to include collective bargaining agreements within the scope of § 15, it would have done so specifically or, at least,
it would have provided or jurisdiction over the indispensable party to such an agreement -- the labor union. [Footnote 2/16]
The terms of § 15 must be construed in light of the considerations that led to federal regulation of the maritime industry [Footnote 2/17] and encouraged Congress to empower the Commission to immunize restrictive agreements among shippers and others subject to the Act from all antitrust scrutiny. [Footnote 2/18] The Court's ruling abstracts this power of approval from the particular context that prompted Congress to accord certain agreements an immunity premised on Shipping Act policies which did not necessarily reflect antitrust principles. [Footnote 2/19] In
Volkswagenwerk, the Court recognized § 15 jurisdiction over an agreement among members of respondent Association, to which a grant of immunity, after Commission study and approval, would have been understandable. That agreement presented only Shipping Act considerations. As the Government pointed out in that case, the assessment formula was "not a part of [the labor] contract, involve[d] no question of labor relations, and [was] not subject to the jurisdiction of the Labor Board." See n. 4, supra. I find it difficult to believe, however, that Congress, in 1916, intended to empower the Commission to approve, and thereby immunize from the reach of the antitrust laws, the varied terms of collective bargaining agreements.
Plenary review by the Commission of all maritime labor agreements that now will have to be filed in their entirety may be avoided only by retroactive, piecemeal grants of a "labor exemption." [Footnote 2/20] The better course would be to recognize that