Opinion ID: 526976
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 2 The only real dispute between the parties is appellants' status as employers under the MPPAA, and the facts necessary to its resolution are largely agreed upon. To put this issue in proper perspective, it is necessary to examine briefly the unique history of the longshore industry in the Port of New York. 3 Appellants' vessels called at the Port's marine terminals that are owned and operated by stevedoring companies engaged in the business of loading and unloading ships. A registered pool of longshore employees is available to work the vessels of any carrier; the longshoremen constitute a floating work force whose employers change frequently and whose seniority and eligibility for fringe benefits are determined on the basis of their work throughout the Port, not by attachment to any particular company. Carriers provide the work and their ships the workplace. The longshoremen's union negotiates collective bargaining agreements with the stevedoring companies and the carriers that establish the terms and conditions of the longshoremen's employment in the Port. 4 In litigation concerning whether the Rules on Containers and the work preservation provisions in the longshore contract constituted unlawful secondary activity under Secs. 8(b)(4)(B) and 8(e) of the National Labor Relations Act, the carriers were recognized to be longshore employers. See NLRB v. Int'l Longshoremen's Ass'n, 447 U.S. 490, 496 n. 10, 100 S.Ct. 2305, 2309 n. 10, 65 L.Ed.2d 289 (1980); id. at 499 n. 13, 100 S.Ct. at 2311 n. 13; id. at 512, 100 S.Ct. at 2317 (1980); see also NLRB v. Int'l Longshoremen's Ass'n, 473 U.S. 61, 74 n. 12, 105 S.Ct. 3045, 3053 n. 12, 87 L.Ed.2d 47 (1985). In the Port of New York, the National Labor Relations Board (NLRB) has certified the New York Shipping Association, Inc. (NYSA) as a bargaining unit. Although NYSA's membership consists of carriers, stevedoring companies, carrier agents, and other maritime concerns, the NYSA has historically been under the control of its carrier members. 5 The obligation for funding the costs of the longshoremen's fringe benefits has been imposed by contract upon the carriers, not on the stevedoring companies. The bitter collective bargaining conflict between the carriers and the International Longshoremen's Association (ILA) sparked by the introduction of containerized methods of cargo handling was finally resolved in 1968 after a lengthy strike and the intervention of a presidential mediator. The labor accord reached required the union to relinquish its demands for limits on containerization in exchange for, among other things, the establishment of a program of enhanced fringe benefits to compensate longshoremen for the effects of the job displacement caused by containerization. 6 Thus, the advent of containerization and the execution of the 1968 labor contract brought about significant new developments in the carriers' status in the Port of New York. From 1968 to the present the carriers not only continued to negotiate the terms and conditions of longshore employment and the level of longshore employee benefits, but also directly undertook the obligation to pay--and did in fact pay--the contributions necessary to fund these benefits. The key feature of the assessment system in effect in the Port of New York for the past two decades is that the obligation for longshore fringe benefit assessments is placed directly upon the vessel carriers based on the tons of cargo loaded and unloaded by longshoremen from their vessels. 7 Korea and Delta engaged in steamship carrier operations at the Port from 1967 to 1985 and 1978 to 1983 respectively, undertaking a variety of operations which included the loading and unloading of their general cargo and container vessels. Neither company directly employed its own labor force to service its ships, and neither operated its own marine terminal facility. When appellants' ships entered the Port, they called at terminals operated by the stevedoring companies where their vessels loaded and discharged their cargo with the aid of longshoremen directly employed by the stevedoring companies.
8 Operations at the Port are carried out under two collective bargaining agreements--(1) the so-called master contract, encompassing operations at major ports on the Atlantic and Gulf coasts of the United States, and (2) a local New York labor accord known as the General Cargo Agreement (GCA). The master contract governs the general terms of employment that apply uniformly in eastern ports where the ILA functions. Both agreements were negotiated by the ILA as the representative of the rank and file longshoremen and by the New York Shipping Association and its counterpart organizations in other eastern ports as the representatives of the carriers, the stevedores, and other employers of longshoremen. 9 The master contract sets uniform terms applicable to ports in which the ILA functions and covers such items as wages, hours, pension and welfare contributions, containerization agreements, and the payment of job security program assessments as a means of offsetting shortfalls in contributions to, inter alia, longshoremen pension funds. As members of the NYSA, Korea and Delta were parties to the master contract and, in some instances, were also direct signatories. The General Cargo Agreement, also a product of bargaining between the ILA and the NYSA, governs the local terms and conditions of employment in the Port of New York such as pension benefits, seniority, hiring, safety, and holidays. As is the case with the master contracts, plaintiffs are parties to the GCA not only by reason of their membership in the NYSA, but also as direct signatories. 10 As previously noted, in signing the master contract and the GCA the carriers obligated themselves to pay job security program assessments in order to aid in the funding of shortfalls in certain longshore pension, welfare, and trust funds. In addition to these job security program assessments provided for by the master contract, the GCA imposed other cargo assessments in the Port of New York which from 1974 to 1985 were based solely on tonnage and were paid by the carriers to the NYSA. The NYSA, in turn, paid most of those monies to the NYSA-ILA Fringe Benefits Escrow Fund. It transferred directly to the Fund that portion of the assessment monies to be used for pension plan contributions it had collected from its members. The GCA fixed a guaranteed minimum level of total annual contributions that was designed to ensure the availability of adequate funding for future retirement benefits. In relevant part, the GCA provided 11 This agreement shall be executed by the ILA for and on behalf of itself and its affiliated Locals and by New York Shipping Association, Inc. for and on behalf of its employer-members and by each contacting stevedore and vessel carrier who directly or indirectly utilizes the services of any employees covered by this agreement and who by such execution binds itself and its successors to each and every term and condition of the agreement, including, without limitation, the contribution of its proportionate share of the hourly, tonnage and other supplemental and fringe benefit contributions provided herein. If any carrier does not subscribe to this and the accompanying JSP Agreements, the ILA shall have the right not to work on the loading and discharging of its ships or any work ancillary thereto. 12 General Cargo Agreement, October 1, 1980 to September 30, 1983, at 73-74. 13 In addition, the GCA provided that each carrier would be subject to an assessment calculated according to a predetermined formula based on the tonnage of cargo loaded or discharged by the carrier in the Port. The agreement set forth the procedures for collection and payment of tonnage assessments: 14 Such tonnage assessment shall be collected by the direct employer from each of the carriers and shall be paid to the NYSA for immediate transmittal to the NYSA-ILA Fringe Benefits Escrow Fund ... as collected by said direct employers. Pension payment shall be made by the NYSA directly to the NYSA-ILA Pension Trust Fund. Amounts billed to carriers and not collected by the direct employers shall be reported to the NYSA-ILA Fringe Benefits Escrow fund promptly at the end of each billing period. 15 Id. at 118-19. Thus, though the NYSA made the contributions to the Fund, it received the funds directly from the carriers that had obligated themselves contractually to make the payments. The agreement places the obligation for funding the longshoremen's fringe benefits squarely upon the carriers' shoulders. Moreover, the Fund is administered pursuant to an Agreement and Declaration of Trust and Plan which defines employer as any entity obligated under agreements such as the GCA to pay tonnage assessments. 16 Throughout the period when Korea and Delta were actively engaged in business in the Port of New York, they were signatories to and active negotiators of the various labor contracts with the ILA. Until their cessation of operations, appellants regularly complied with their assessment obligations under the GCA. Thus, for the five-year period prior to their withdrawal, they paid assessments of $12.5 million and $10 million, respectively, of which approximately $3.5 million and $3 million constituted pension contributions to the Fund. After the two carriers discontinued operations at the Port of New York, the Fund sought to assess withdrawal liability in accordance with the applicable provisions of the MPPAA. Appellants resisted, arguing that the stevedoring companies were the direct employers of the longshoremen, and that it was those companies that would be responsible for withdrawal liability if and when they ceased serving the New York market. PRIOR PROCEEDINGS 17 The three district court judges who ruled on the matter concluded that Korea and Delta were employers subject to withdrawal liability under the MPPAA and therefore granted summary judgment in favor of the Fund. Agreeing with the carriers' contentions that they were not the common law employers of the longshoremen, the district court in each case nonetheless found that the issue of employer status under the MPPAA was not governed by the common law definition. Absent an express definition of employer in the MPPAA itself, and without clear guidance from the legislative history, the district judges believed that the determination of how to construe the term employer was derived from assessing the purposes of the legislation. See NLRB v. Hearst Publications, Inc., 322 U.S. 111, 124, 64 S.Ct. 851, 857, 88 L.Ed. 1170 (1944). 18 Judges Weinfeld and Leisure accordingly adopted a definition of employer that focused on the obligation to contribute to the pension plan and that imposed withdrawal liability upon the party contractually obligated to make those contributions. They observed that the definition of employer set forth in Title I of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1002(5) (1982 & Supp. V 1987), was not directly applicable to the MPPAA. But the district judges nevertheless drew upon ERISA's definition in holding that the carriers that were contractually obligated to contribute to a plan in the indirect interests of the direct employer (here, the stevedores) could not escape withdrawal liability without threatening the very effectiveness of the Act. Korea Shipping, 663 F.Supp. at 770 (quoted in Delta S.S., 688 F.Supp. at 1566). 19 In reaching its determinations, the district court correctly observed that to apply a common law definition of employer to the MPPAA would encourage employers to insulate themselves contractually from liability by entering into agreements under which contributions to the pension plans would be made by entities that were not the direct employers of the plan's beneficiaries. Under such a scenario, the contributing indirect employer could terminate its relationship with the direct employer and thereafter withdraw from the plan without incurring withdrawal liability because, pursuant to the definition of employer urged by appellants, the Act would not be applicable to the contributing indirect employer. At the same time, the direct noncontributing employer would also be absolved of withdrawal liability because it would not be deemed to have withdraw[n] from a multiemployer plan, 29 U.S.C. Sec. 1381(a), in accordance with the meaning given the term withdrawal under the MPPAA. See 29 U.S.C. Sec. 1383(a) (defining withdrawal as (1) permanently ceas[ing] to have an obligation to contribute under the plan, or (2) permanently ceas[ing] all covered operations under the plan). We turn now to analysis of these issues.