Opinion ID: 339800
Heading Depth: 2
Heading Rank: 3

Heading: Labor/Shipping

Text: 29 We turn now to a series of cases in which the Federal Maritime Commission has attempted to apply the vagaries of labor/antitrust principles to agreements affecting labor relations within the shipping industry. 30 Prior to 1968, the FMC had resisted the concept that it had jurisdiction under section 15 over agreements affecting employer-employee relationships. The Supreme Court, however, in 1968 overruled the FMC and this court as to the applicability of the Shipping Act's pre-implementation procedures to an agreement among PMA members which formulated assessments for the establishment of a $29,000,000 fund that had already been negotiated with the ILWU. Volkswagenwerk Aktiengesellschaft v. FMC, 390 U.S. 261, 88 S.Ct. 929, 19 L.Ed.2d 1090 (1968). Despite warning by Justice Douglas that this employer agreement, although outside employer-employee negotiation processes, was intimately related to labor relations, id. at 296-313, 88 S.Ct. 929, the majority relied on the broad language of section 15 regarding any cooperating working arrangement to determine that the FMC had jurisdiction under section 15 to approve, disapprove or modify the agreement, and that the fee assessment also might violate sections 16 and 17. Of particular concern was the disproportionate cost of automobile shipping, a cost passed on to the manufacturer despite the minimal benefit received. Id. at 281-82, 88 S.Ct. 929. 31 The second step leading to the present controversy involved an attempt by the FMC to assert jurisdiction over a labor allocation agreement among members of the multi-employer unit and an employee assignment provision worked out later among employers and then embodied in the collective bargaining agreement. United Stevedoring Corp. v. Boston Shipping Association, 15 F.M.C. 33 (1971) (hereinafter Boston I ). On appeal the First Circuit expressed its astonishment at the Commission's action and remanded, noting the difference between attaching a separate, section 15, agreement, in which the union had little interest, to a collective bargaining agreement, and making a multi-employer agreement with a union, eyeball to eyeball, but which, by the very fact that it is multi-employer, has some effect on employer competition. Boston Shipping Association v. FMC, Civil No. 72-1004 (1st Cir., filed May 31, 1972). The Commission upon remand examined the labor/antitrust cases and held that the same labor exemption applied to section 15 agreements. United Stevedoring Corp. v. Boston Shipping Association, 16 F.M.C. 7 (1972) (hereinafter Boston II ). Although organic agreements of pure collective bargaining would never require filing, a line would be drawn where purely labor matters cease and shipping matters begin. Id. at 14. The Commission articulated a four-prong test, 24 no element of which would be controlling, and found that both agreements before it were entitled to the exemption. 32 The following year the Commission again faced the interplay of labor agreements and shipping concerns. New York Shipping Association, 16 F.M.C. 381 (1973). At issue was an assessment formula for funding the fringe benefit program. Both the union and the multi-employer bargaining unit had negotiated the formula since prior assessment methods worked out by the employers had proven unable to assure fund security. Although the FMC claimed jurisdiction over the assessment formula, it granted interim approval so as not to jeopardize relations between the NYSA and the ILA. Id. at 396. This decision was affirmed by the Second Circuit as merely an extension of the Volkswagenwerk holding. New York Shipping Association v. FMC, 495 F.2d 1215 (2d Cir.), cert. denied, 419 U.S. 964, 95 S.Ct. 224, 42 L.Ed.2d 178 (1974). 33 These cases have continued to cut ever finer the distinction between organic collective bargaining agreements and shipping cooperative arrangements. In the case before us, the FMC was compelled once again to draw the difficult line which reconciles Shipping Act policies with labor policies. Boston II, supra, 16 F.M.C. at 10. Although we sympathize with the Commission's herculean task of following the rather imprecise guidelines of Volkswagen, id. at 11, while avoiding intrusion into the already strife-ridden maritime labor world, id. at 10, we do not believe that asserting jurisdiction under section 15 over the collective bargaining agreement before us is within the mandate of Volkswagenwerk or the structure of the Shipping Act.III. RESOLUTION OF THE ISSUE 34 As the three lines of cases summarized above illustrate, application of the Shipping Act to collective bargaining agreements affecting employers outside the bargaining unit requires reconciliation of conflicting policies. We must, whenever possible, draw the line between shipping, labor and antitrust concerns in such a way that each statutory scheme remains effective. 25 In this case we believe that the jurisdictional boundary drawn by the FMC impinges unnecessarily upon collective bargaining processes. The FMC, recognizing the need for this balancing, has attempted to distill the essence of the judicially-developed antitrust exemption for labor and apply it to the Commission's jurisdictional bases in sections 15, 16 and 17. Were the procedures of section 15 the same as those of the antitrust laws we would agree that the transplanted exemption might well serve the aim of statutory reconciliation. The unique structure of the Shipping Act, however, makes this an unsatisfactory solution in several ways. 35 Unlike the antitrust laws, section 15 prescribes a procedure whereby agreements subject to the Act must be filed with the Commission before implementation. The legislative scheme is a sound one for assuring that agreements among carriers which fix rates, pool earnings, allocate ports, or limit traffic 26 must be approved or modified by the agency with an expertise in shipping matters. As the legislatively established regulator of maritime concerns, the Commission needs authority to postpone the effective date of such agreements pending full examination of their impact on the entire industry. The Federal Maritime Commission, however, is not in any way the congressional choice of regulator for labor relations within the shipping industry. In contrast, as pointed out by Justice Douglas in Volkswagenwerk, the Maritime Labor Board created in 1938 was allowed to expire, and Congress has consistently refused to provide a specialized federal maritime labor agency. 390 U.S. at 299-301, 88 S.Ct. 929 (Douglas, J., dissenting). Subjecting negotiated labor agreements to filing and approval (or disapproval or modification) would place collective bargaining units in the shipping industry under more stringent federal regulation than other transportation industries and thus at a competitive disadvantage. 36 One obvious disadvantage to maritime labor of the FMC ruling is that the ruling would make nearly impossible the maintenance or prompt restoration of industrial peace. The history of Pacific Coast longshoremen bargaining is a story of great unrest. Continual quickie strikes during the 1930's and coast-wide shutdowns lasting several months in the 1940's were destructive to labor and management alike. See C. Larrowe, Shape Up and Hiring Hall ch. 4, 83-138 (1955). The nature of collective bargaining as it exists in this country today requires the ability of both sides to implement promptly the compromise agreements worked out in eleventh-hour bargaining sessions or, as in this case, in hard-fought negotiations following a strike and mediation. The facts of this case are illustrative of the problem: a labor agreement negotiated in 1972 and refined in 1973 has yet to be put into effect more than four years later. The problem is not one of dilatory agency action 27 or judicial backlog, but of procedures unsuited to collective bargaining. Labor peace, a national objective, cannot be furthered when the bargaining parties realize that their compromise solutions may be rejected in toto or, even worse, in a piecemeal fashion by a federal regulatory agency whose primary concern is to foster trade competition. 37 Frustration of the collective bargaining process comes not so much from the possibility that one or more provisions in a collective bargaining pact might be found illegal at some future date under the antitrust laws, or other statutes such as §§ 16 and 17 of the Shipping Act, but rather from the undue and possibly lengthy freezing or stultification of solutions to troublesome labor problems . . . . 38 Volkswagenwerk, supra, 390 U.S. at 312, 88 S.Ct. at 956 (Douglas, J., dissenting). 39 In New York Shipping Association, supra, the FMC attempted to offset this disadvantage by granting a temporary approval of the assessment formula found to be within section 15 jurisdiction: 40 Labor peace is crucial to the well-being of our maritime industry, and we will take an action which disturbs the peace only when there are no other reasonable alternatives. Here, however, the course is clear, we will grant the assessment formula an interim approval . . . and we will condition our approval upon any adjustments which may be found necessary as a result of the proceeding which we have this day instituted (to determine if the agreement violates sections 16 and 17). 41 16 F.M.C. at 396. While such temporary approvals appear to alleviate partially the problem of delayed implementation, they would not solve the problem entirely. The power of the Commission to grant interim approval is currently being litigated. Marine Cooks & Stewards Union v. FMC, No. 75-2012 (D.C. Cir.). Even if this power is affirmed by the court, interim approval does not remove the possibility of later unilateral modification by the Commission and the resultant specter of a final agreement in which the delicate balance struck by the competing interests of labor and management is upset by partial invalidation of the collective bargaining terms. 28 42 Section 15 jurisdiction also differs from antitrust procedures as to the penalties imposed. Bargaining agreements found to be outside the antitrust exemption face treble damages, no small deterrent to parties which stray too near the nebulous border between the legitimate bargaining and Sherman Act violations. Nevertheless, the penalty reflects the actual damages suffered, though multiplied in the reflection. In contrast, Shipping Act penalties may fall numerous times upon bargaining contracts. Under section 15 failure to file a covered agreement may result in a $1,000 per day fine. In addition, a civil penalty of $5,000 per day may be assessed for each violation of the provision against discriminatory practices, 46 U.S.C. § 815 (Supp. 1974), or discriminatory rates, 46 U.S.C. §§ 815, 831(a) (Supp. 1974). With FMC lightning threatening to strike twice in the same agreement, carrier employers 29 would no doubt err in favor of filing all agreements with potential anticompetitive results, thus further disrupting the course of negotiations. This is particularly true since the FMC, in recognizing the complexities of the labor/antitrust exemption, has stated that its four criteria are merely rules of thumb, that failure to meet any one of them might result in denial of the exemption, and that the determination will be made on a caseby-case ad hoc basis. See. e.g., Boston II, supra, 16 F.M.C. at 12; New York Shipping Association, supra, 16 F.M.C. at 390; Pacific Maritime Association, Doc. No. 72-48 (FMC Jan. 30, 1975), J.A. at 522. 43 Such burdens should not be imposed lightly by either the Commission or the courts, particularly since congressional direction in the statute does not clearly require this result. The Supreme Court's decision in Volkswagenwerk construed section 15's definition of agreements broadly, stressing that the Alexander Report 30 intended government scrutiny of the myriad of restrictive agreements. 390 U.S. at 276, 88 S.Ct. 929. That agreement, however, was one among employers : common carriers, stevedoring contractors and marine terminal operators. 31 The Court rejected the argument that filing of this separate employer contract would unjustifiably impinge upon labor concerns. The union had a substantial interest in setting the amount of the mechanization fund established by collective bargaining, but had agreed to leave to the association the method for assessing members their share of the cost. The Court cautioned, however, that 44 (i)t is to be emphasized that the only agreement involved in this case is the one among members of the Association allocating the impact of the Mech Fund levy. We are not concerned here with the agreement creating the Association or with the collective bargaining agreement between the Association and the ILWU. No claim has been made in this case that either of those agreements was subject to the filing requirements of § 15. Those agreements, reflecting the national labor policy of free collective bargaining by representatives of the parties' own unfettered choice, fall in an area of concern to the National Labor Relations Board, and nothing we have said in this opinion is to be understood as questioning their continuing validity. 45 390 U.S. at 278, 88 S.Ct. at 938 (emphasis added). To expand the holding in Volkswagenwerk to cover an agreement negotiated between union and management is to ignore the caveat of the Court and the legislative history of the Act. Although the Shipping Act did not pre-date collective bargaining in the maritime industry, 32 no mention of labor agreements appears in the discussion of problem agreements to be regulated by the federal agency. Instead, the Alexander Report stresses the need for supervision of all agreements or arrangements which steamship lines may have entered into with other steamship lines, with shippers, or with other carriers and trans portation agencies. Alexander Report, supra at 418 (emphasis added). 46 We are, of course, aware that our holding in this case creates a barrier between the FMC jurisdiction over labor-related agreements, as in Volkswagenwerk, and labor-management negotiated agreements. Justice Harlan, who foresaw the problem in his concurring opinion in Volkswagenwerk, felt that a labor agreement could raise both labor and shipping concerns. 390 U.S. at 291 n.7, 88 S.Ct. 929. He also recognized, however, that reconciling multi-employer collective bargaining and regulation of shipping competition is a problem of line-drawing. Judicial line-drawing is always a difficult task, and in areas of converging statutory schemes the differences between cases on either side of the line may be muted by the similarities. An argument can be made, undoubtedly, that a separation is arbitrary which permits the FMC to oversee employer agreements intended to fulfill a collective bargaining obligation but denies this approval procedure for the bargaining agreement itself. While we might prefer a rule that more adequately protects labor negotiations from the very real, if more distant, interference permitted in Volkswagenwerk, we see no valid purpose in extending that rule to encourage immediate disruption of negotiations. Exempting collective bargaining agreements as a class from section 15 is the best method to reconcile these conflicting labor and shipping objectives. 47 Even if we were to adopt the balancing test suggested by Justice Harlan, the agreement at issue would be exempt from filing. The agreement challenged in Volkswagenwerk assessed fees to employers on the basis of tonnage handled, tonnage being determined by weight or measurement depending upon the manifesting custom for each type of cargo. Almost all the employers passed these costs on to their customers, thus causing the assessment to fall disproportionately on shippers who transported automobiles by nonmember charter and common carriers. In this way, the agreement produced discriminatory tariffs a primary concern of the Act for the shipping of automobiles. 33 48 In contrast, Supplemental Memorandum of Understanding No. 4 is challenged not because it will compel discriminatory rates, but because it will allegedly force nonmembers into accepting the same wage, fringe benefit and work stoppage terms as those negotiated by the multi-employer unit. Although the parties vigorously dispute the proper interpretation of the terms of Supplemental Memorandum No. 4 and the subsequent Revised Agreement, 34 as well as the intent 35 of the parties to the agreement, the nonmembers' argument boils down to an accusation that they are being forced against their wills into a multi-employer unit. FMC has thus accepted jurisdiction to determine shipping implications of an agreement which perhaps imposes an improper bargaining unit. We do not believe that the Shipping Act pre-implementation approval provision was intended to cover problems so clearly within the realm of National Labor Relations Board expertise. The NLRB practice of certifying multi-employer bargaining units has been approved by the Supreme Court in general 36 and for the maritime industry in particular. 37 Similarly, there can be no question that the NLRB has more experience in interpreting contested bargaining terms than the FMC. At worst the case presents Pennington considerations. See text at notes 20-21 supra. These labor issues do not, of course, automatically assure NLRB exclusivity. A divided Supreme Court has ruled against primary jurisdiction in the NLRB for anticompetitive agreements. See Connell Construction, supra,421 U.S. at 633-34, 95 S.Ct. 1830; Jewel Tea, supra, 381 U.S. at 685-88, 85 S.Ct. 1596. While the Court recognized the expertise of the NLRB on matters such as determining whether certain negotiating topics were mandatory, it believed that the ultimate question of whether antitrust policies overrode collective bargaining objectives was properly one for the judicial process. In noting the strong labor considerations involved in the case before us we are not advocating exclusive jurisdiction for the NLRB; rather we are removing from the FMC the primary jurisdiction inherent in the pre-approval system of the Shipping Act for labor agreements concerned with uniform fringe benefits and work stoppage policies. We agree with the Supreme Court that courts, and not labor or shipping agencies, are best suited to balancing the conflicting interests of the acts which these agencies must enforce. In the case sub judice, antitrust cases raising identical claims are the proper forums for resolution of the issue. See note 11 supra. 49 In rejecting section 15 jurisdiction over these agreements, we do not insulate them from the antitrust laws or from FMC scrutiny. As the Court has frequently observed, (T)here are limits to what a union or an employer may offer or extract in the name of wages, and because they must bargain does not mean that the agreement reached may disregard other laws. Pennington, supra, 381 U.S. at 665, 85 S.Ct. at 1591. 50 Despite the inappropriateness of section 15 procedures for collective bargaining agreements, shipping concerns are clearly evident in the possibility that the actual implementation of the agreement will result in discriminatory practices or rates against the complaining ports. The concept of section 15 jurisdictional prerequisites different from those of sections 16 and 17 is not novel. The Act itself provides for FMC consideration of individually-imposed discriminatory rates and practices as well as approval of inter-carrier agreements. Although the FMC must assure facial compliance with sections 16 and 17 before approving submitted agreements under its mandate to disapprove agreements in violation of this chapter, it has continuing jurisdiction over approved agreements 38 to ensure that implementing practices do not violate the prohibitions against discriminatory rates and practices. 46 U.S.C. § 814 (1970). See also Port of Boston Marine Terminal Association v. Rederiaktiebolaget Transatlantic, 400 U.S. 62, 65, 91 S.Ct. 203, 27 L.Ed.2d 203 (1970); Memorandum of Law of Hearing Counsel, Doc. No. 72-48 (FMC, Dec. 15, 1972), J.A. at 74. 39 Justice Douglas, dissenting in Volkswagenwerk, recognized potential FMC jurisdiction under sections 16 and 17 for practices growing out of an agreement that might be exempt from filing under section 15. 390 U.S. at 314, 88 S.Ct. 929. Although Justice Harlan's separate concurrence rejects this suggestion, id. at 285-86, 88 S.Ct. 929, his opinion, and that of the majority, acknowledges the difference between labor agreements and labor-related agreements and that the difficult line-drawing involved in these cases depends upon the type of agreement involved. 51 Because the FMC order before us is a finding of jurisdiction under section 15 only, we need not determine at this time whether the Boston II four-prong test accurately reflects the labor/antitrust exemption carved out by the Supreme Court. We would caution the Commission, however, that parsing the Court decisions in this highly complex area may over-simplify the balancing process required and create a legal conundrum in which the total exemption is still greater than the sum of its parts. 52 In resolving the narrow issue before us, we have not ignored the antitrust/shipping overlap that our decision will create. Labor agreements not subject to section 15 approval may not obtain the benefit of the antitrust exemption provided in that section. See generally Carnation Co. v. Pacific Westbound Conference, supra. See also Volkswagenwerk, supra, 390 U.S. at 274 n.20, 88 S.Ct. 929, 936 (Any agreement subject to § 15 filing that is not both filed and approved is not only illegal under § 15 but also subject to attack under the antitrust laws.) These agreements could thus be in violation both of sections 16 and 17 and of the antitrust laws, even though shipping considerations might outweigh the general applicability of Sherman Act principles. The Cunard-Carnation line of cases reveals a judicial willingness to defer to the expertise of the FMC within the limited antitrust exemption created. We are confident that, when the issue is presented squarely, the established principles of reconciling competing statutes will guide the courts in carrying out the objectives of both. Whether this is best accomplished through the doctrine of primary-jurisdiction, 40 through creation of a nonstatutory exemption for shipping as was done for labor, 41 or through allowing injured parties the choice of remedies 42 is not required by the posture of the case before us.