Crest Tankers, Inc. v. National Maritime Union

665 F. Supp. 1431, 126 L.R.R.M. (BNA) 3350, 1987 U.S. Dist. LEXIS 6956
CourtDistrict Court, E.D. Missouri
DecidedAugust 4, 1987
DocketNo. 83-1481C(1)
StatusPublished
Cited by1 cases

This text of 665 F. Supp. 1431 (Crest Tankers, Inc. v. National Maritime Union) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Crest Tankers, Inc. v. National Maritime Union, 665 F. Supp. 1431, 126 L.R.R.M. (BNA) 3350, 1987 U.S. Dist. LEXIS 6956 (E.D. Mo. 1987).

Opinion

MEMORANDUM

NANGLE, Chief Judge.

This case is now before the Court on remand from the United States Court of Appeals for the Eighth Circuit for further proceedings on the alter ego question. Crest Tankers, Inc. v. National Maritime Union of America, 796 F.2d 234 (8th Cir.1986). Pursuant to the judgment entered by the Eighth Circuit, this Court held additional hearings on the alter ego question sitting without a jury.

This Court having considered the pleadings, the testimony of the witnesses, the documents in evidence, and the stipulations of the parties, and being fully advised in the premises, hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 52.

I. FINDINGS OF FACT

A. The business operations of Trinidad have declined since its purchase by Apex Shipping.1 Trinidad no longer manages the 125,000-ton tanker for Alaska Bulk Carriers, a company in which Trinidad owned a 19% interest and in which a Sun Oil affiliate owned the remaining interest. In August, 1983, over the objection of Trinidad’s director, the Board of Directors of Alaska Bulk Carriers switched management of the vessel from Trinidad to a Sun Oil affiliate. In June, 1984, Trinidad’s Military Sealift Command contracts expired. When the contracts were again put up for bid, Trinidad did not bid on them. In addition, City Services terminated its management contracts with Trinidad due to a decreased demand for tanker shipping. The five T-2 vessels owned by Trinidad were scrapped between July, 1982, and April, 1984.

B. The T-2 tanker class was built during World War II. Originally, these vessels had a capacity of 16,000 tons. Since these vessels have been purchased by private business, many have been “jumboized” to increase their cargo capacity to between 20,000 and 31,000 tons.

Trinidad owned five T-2 vessels: the Bordeaux (previously San Antonio), Houston, Meursault (previously Ft. Worth), Pasadena, and Vouvray (previously Austin). These boats had been “jumboized”, increasing their capacity to between 26,900 tons and 27,600 tons.

At the time Apex purchased Trinidad, four of these T-2’s were under long-term charter to Shell Oil Corporation. At the time of their charter by Shell, these T-2’s had been fitted to carry 11 distinct types of cargo. These T-2’s plyed the “drugstore trade”, carrying multi-grade cargoes up and down the east and west coasts of the United States. To carry these distinct cargoes, these T-2’s required separate piping [1433]*1433and pumping for each oil grade. These modifications required greater maintenance and slowed loading and unloading of cargo.

The fifth T-2 owned by Trinidad was chartered to the Military Sealift Command until April, 1981.

C. As the T-2’s were released from charter by Shell Oil, they were placed under charter to Apex Oil, Trinidad’s parent corporation. The Pasadena charter to Shell expired on September 15, 1982, but in February of that year Shell Oil notified Trinidad that it would not renew the contract. The Meursault charter-ended when Shell Oil exercised its right to terminate the contract due to the failure of the cargo tank coatings. The Houston and Vouvray charters lapsed in January, 1982.

D. After the T-2 tankers entered service for Apex Oil, they performed little work for the corporation. At the time Crest began operations in November, 1982, the Meursault and Vouvray were not carrying cargo for Apex and had been scrapped. After leaving Shell Oil but before the beginning of Crest’s operation, the Pasadena made three voyages for Apex Oil, totaling 41 days of service. Prior to its final voyage and scrapping in August, 1983, the Pasadena spent 202 days in lay-up. At the time Crest was formed, the Houston had been laid up for 74 days. Subsequently, the Houston spent 298 days in lay-up, performed three voyages for the Military Sealift Command, totaling 104 days, and performed four voyages for Apex Oil, totaling 99 days. Thereafter, the Houston was sold for scrap in February, 1984. After leaving the Military Sealift Command and before Crest began operations, the Bordeaux performed 23 voyages totaling 391 days and was in lay-up 383 days. During this period, the Bordeaux performed 13 voyages for Apex Oil, totaling 258 days. After the formation of Crest, the Bordeaux made three grain voyages, totaling 126 days, before it was sold as scrap in April, 1984.

From the time of Trinidad’s purchase by Apex until the T-2’s were each scrapped, the five T-2’s had a potential for 4,401 days of service. The vessels spent 940 days, or 21% of their available time, under charter to Apex Oil. During this period, these vessels spent 2,406 days, or 55% of their available time, under charter to other carriers. The remaining time was spent in layup for repairs or due to lack of employment. Only the Bordeaux spent more time working for Apex than for other customers.

E. The scrapping of the T-2’s was motivated by economic considerations independent of the NMU Collective Bargaining Agreements. During the 1980’s, the drugstore trade for which four of the T-2’s were equipped was in decline. The trade shifted to vessels carrying one or two, rather than 11, grades of oil. The greater maintenance and slower loading resulting from the ships’ modifications for the drugstore trade placed these ships at an economic disadvantage.

Federal regulation also increased the cost of operating these vessels. Under 46 U.S.C. § 3705, all vessels over 20,000 tons must have segregated ballast systems. For the T-2’s to meet this requirement, a dedicated ballast system would have been installed. This system could only carry ballast water, not cargo, and therefore would have reduced the cargo capacity of these vessels by 6,000 to 7,000 tons. Alternatively, the T-2’s could have been “remeasured”, a procedure which limits the cargo to less than the 20,000-ton minimum above which the Act applies.

F. Trinidad’s scrapping of the T-2’s is consistent with the worldwide decline in small tankers. From June 30,1982, to July 1, 1985, the number of T-2 tankers decreased from 79 to 30. Worldwide, vessels under 30,000 tons decreased from 553 to 508 from January 1, 1981, to January 1, 1986. During 1981 to 1985, 50 vessels of less than 27,000 tons under the United States flag were scrapped.

G. P.A. Novelly is the President of Trinidad Corporation, Crest Tankers, Inc., Clayton Tankers, Inc., Apex Shipping, Inc., Apex Holding Company, and Apex Oil Company. As the Chief Executive Officer of Crest, Clayton, and Trinidad, Novelly has the ultimate authority to negotiate the Collective Bargaining Agreements of these companies. During the 1986 negotiations [1434]*1434between the National Maritime Union of America (NMU) and Trinidad, Novelly made suggestions and recommendations concerning Trinidad’s proposals and positions.

Novelly dislikes unions and would prefer no unionized employees. In particular, Novelly told his subordinates at Crest that he preferred it to be a non-union company.

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Related

Tankers, Inc. v. National Maritime Union
871 F.2d 1092 (Eighth Circuit, 1988)

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665 F. Supp. 1431, 126 L.R.R.M. (BNA) 3350, 1987 U.S. Dist. LEXIS 6956, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crest-tankers-inc-v-national-maritime-union-moed-1987.