Navios Corp. v. National Maritime Union of America

402 Pa. 325

• Court: Supreme Court of Pennsylvania
• Decided: December 15, 1960
• Docket: Appeals, 147, 148, 155 and 156
• Status: Published

Opinions

Opinion by

Mr. Chief Justice Jones,

These appeals arise out of suits instituted by the plaintiffs seeking to enjoin the defendant unions and certain of their officers from picketing or in any other manner interfering with the unloading and servicing, at the Port of Philadelphia, of a ship flying a Liberian “flag of convenience.”

The matter first came before the court below on the plaintiffs’ motions for a preliminary injunction. After a full hearing, the learned chancellor refused a preliminary injunction and contemporaneously entered decrees nisi dismissing the complaints, to which exceptions were subsequently filed and still remain undisposed of. Accordingly, final decrees have not been entered. The present appeals were promptly taken by the plaintiffs, pursuant to Section 15 of the Labor Anti-Injunction Act of June 2, 1937, P. L. 1198, 43 PS §206o, from the court’s refusal of a preliminary injunction; and upon application of counsel, we forthwith advanced the appeals for argument, as contemplated by the Act.

The fundamental basis for the chancellor’s action in denying the plaintiffs injunctive relief is that exclusive jurisdiction of the subject matter of the dispute is vested in the National Labor Relations Board. Whether that is so, under the facts of the case, is the legal problem to which we shall now address ourselves.

The plaintiffs, Universe Tankships, Inc., and Navios Corporation, are respectively the owner and time charterer of a bulk cargo vessel, the S.S. Ore Monarch, which transports iron ore from Puerto Ordaz, Venezuela, to the Fairless Works of the United States Steel Corporation at Morrisville, Pennsylvania. Because of the limited depth of the Delaware River, above Philadelphia, which the vessel necessarily must ply in order to reach Morrisville, she unloads a portion of her cargo at Philadelphia to lessen her draft before attempting to proceed upstream for delivery of the balance of the cargo at Morrisville. The S.S. Ore Monarch arrived at Philadelphia on October 21, 1960, laden with a cargo of iron ore from Puerto Ordaz for the United States Steel Corporation at Morrisville and was berthed at Pier 122 South on the Delaware River at Philadelphia for the partial unloading operation above mentioned.

All of the S.S. Ore Monarch’s crew of forty-eight men are, with three exceptions, aliens and all, except for the captain and chief engineer, are members of the Global Seamen’s Union, an unincorporated association registered in the Cayman Islands, British West Indies, with which organization Universe Tankships, Inc., the owner of the vessel, has an existing labor agreement.

On October 26, 1960, Universe Tankships, Inc., and Navios Corporation filed complaints in the Court of Common Pleas of Philadelphia County against the National Maritime Union of America, the Seafarers’ International Union of North America, the International Maritime Workers’ Union, the International Longshoremen’s Association, Local 1291, and certain officers of these unions for a temporary and, thereafter, a permanent injunction restraining the defendants from causing the S.S. Ore Monarch to be picketed or in any way interfering with the operation, management, internal economy and affairs of the S.S. Ore Monarch or any vessel owned or chartered by the plaintiffs; or in any manner inducing others to refuse to service such vessels. The plaintiffs also demanded damages.

The complaints alleged, inter alia, that, at or about the time that the S.S. Ore Monarch berthed at Pier 122 South, the defendants caused two persons to picket in front of the entrance to the pier carrying signs bearing the legend, “American Maritime Unions Protest Unfair Labor Practices Of ‘Ore Monarch’ ”, and also caused a small boat carrying pickets with similar signs to cruise in the vicinity of the S.S. Ore Monarch, the picketing activity having continued up to the institution of the suits; that the defendants caused the pickets to prevent, or attempt to prevent, deliveries of supplies and victuals to the S.S. Ore Monarch by threats of force and intimidation to drivers of trucks undertaking to make such deliveries; that at approximately 8 p.m. on October 21, 1960, while the S.S. Ore Monarch was discharging her cargo, two agents of the International Longshoremen’s Association, Local 1291, boarded the S.S. Ore Monarch and ordered members of Local 1291, then working at the hatches of the ship, to cease working, the orders being promptly obeyed; that the unloading operations have not been resumed since that time; that the purpose of the above mentioned and similar actions of the defendants is to procure the breach of the labor agreement existing between Universe Tankships, Inc., and Global Seamen’s Union, and to coerce Universe Tankships, Inc., to compel or require the members of its ship’s crew to join the International Maritime Workers’ Union; that the aforesaid actions of the defendants have prevented and are preventing the unloading, bunkering and victual-ling of the S.S. Ore Monarch, thereby causing the plaintiffs to suffer irreparable injury.

In the course of the hearings, the court granted Global Seamen’s Union leave to intervene as a party plaintiff; and on November 4, 1960, the intervenor filed its separate complaint alleging substantially the same facts as the complaints filed by Universe Tankships, Inc., and Navios Corporation. Global’s complaint asked, in addition, that the defendants be enjoined from inducing members of Global Seamen’s Union from disavowing their relationship therewith and from compelling the employers of the S.S. Ore Monarch’s crew to breach their contract with Global Seamen’s Union and from entering into a contract with Universe Tankships, Inc., while the latter’s contract with Global Seamen’s Union endured. Otherwise, Global’s complaint sought the same injunctive relief as was prayed for by Universe Tankships, Inc. Global did not, however, demand damages.

The facts adduced at the hearings in the court below further disclosed that the S.S. Ore Monarch was built in 1956 at Kure City, Japan, and was registered in New York on January 9, 1957, as a Liberian vessel, which, however, has never been to Liberia. Nor has the ship ever been, registered by any other country or flown any other flag than that of Liberia.

Universe Tankships, Inc., is a Liberian corporation, wholly owned by Oceanic Tankships, S. A., a Panamanian corporation, which, in turn, is wholly owned by D. K. Ludwig and W. W. Wagner, both of whom are American citizens.

Navios Corporation is a Liberian corportion, wholly owned by Navigen Corporation, a Liberian corporation also, which, in turn, is wholly owned by the United States Steel Corporation, and is registered in the Bahama Islands with its home office in Nassau.

The Cayman Islands are a British possession located approximately 250 miles south of Cuba in the British West Indies. Their population is between six and seven thousand inhabitants.

Global Seamen’s Union was registered in the Cayman Islands on June 1, 1959, under the provisions of Trade Union Law 3 of 1952. Apparently it is the only union that has ever been registered in the Cayman Islands. The registration took place when a man who said that he was the Secretary-Treasurer of the Global Seamen’s Union submitted a list of officers of the Union and the signatures of 15 or 20 men whom he said were its members. No official investigation of the union was made prior to its being admitted to registration in the Cayman Islands, whose registrar of trade unions testified that company domination does not disqualify a union from registering in the Cayman Islands. There is no record of any activity on the part of the union prior to its registration.

The S.S. Ore Monarch’s articles of agreement with the members of its crew require all such as are eligible to join the Global Seamen’s Union within thirty days after signing the articles.

On January 5, 1960, the Secretary of Universe Tankships, Inc., sent to the captain of the S.S. Ore Monarch a letter cautioning the members of the crew not to join any American unions and to abide by the contract between Global Seamen’s Union and Universe Tankships, Inc. The captain was instructed to read the letter aloud to his unlicensed men at his first opportunity outside the territorial waters of the United States and, that, he did.

The time charter between Universe Tankships, Inc. and Navios Corporation is for a term of seven years, calculated from the time of the vessel’s delivery at Puerto Ordaz, Venezuela, after having been released from the builder’s yard in Japan. The charter provides that all differences or disputes with respect to performance and construction of the charter “shall be determined at the port of New York in accordance with the laws of the United States.” Another clause of the charter provides that “All bills of lading, receipts or other shipping documents issued hereunder shall contain an appropriate Clause Paramount substantially in the following form: ‘This bill of lading or contract of carriage shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States ....’” Payments due under the charter are to be made in United States currency and the ship is to be redelivered, unless otherwise mutually agreed, “at the last port of discharge which shall be on the U. S. Atlantic or Gulf Coast.”

No evidence was introduced that the picketing was otherwise than peaceful or that it was accompanied by any violence whatsoever. The chancellor’s finding to such effect, amply supported as it is by the record, must be taken on these appeals as an established fact.

If, as the court below held, this case involves a labor dispute within the jurisdiction of the National Labor Relations Board, then the picketing and other activities of the defendants are either protected by Section 7 of the National Labor Relations Act of July 5, 1935, c. 372, 49 Stat. 449, as amended, 29 U.S.C.A. §157, or constitute an unfair labor practice under the standards of Section 8(b) of the same statute.

In San Diego Building Trades Council v. Garmon, 359 U. S. 236, 245 (1959), the United States Supreme Court declared that, “When an activity is arguably subject to §7 or §8 of the [National Labor Relations] Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted.”

It seems abundantly plain that, on the rationale to be deduced from Supreme Court decisions in cognate relation, the activity of the defendants in the instant case is, at least, arguably subject to Sections 7 or 8 of the National Labor Relations Act, and that accordingly requires us to “defer to the exclusive competence of the National Labor Relations Board” over the subject matter.

The appellants argue, however, that the picketing and other activities of the defendants involve an interference with the internal economy of a foreign ship and its foreign workers within the restrictive scope of the decision in Bens v. Companía Naviera Hidalgo, S. A., 353 U. S. 138 (1957). We think the two cases are clearly distinguishable on their material facts.

In the Bens case a Liberian ship berthed at Portland, Oregon, for repairs, the loading of a cargo of wheat and the completion of an insurance survey. The crew was composed entirely of nationals of countries other than the United States, principally Germany and Great Britain. The crew members had agreed to serve on a voyage originating at Bremen, Germany, for a period of two years, or until the vessel returned to a European port. They had signed on under a British form of articles of agreement which was opened at Bremen. The members of the crew went on strike, while at Portland, demanding that their term of service be reduced, their wages increased, and more favorable conditions of employment established. To voice their grievances, they picketed the vessel. Six days later they designated the Sailor’s Union of the Pacific, an American union, as their collective bargaining representative. The striking crew, or others acting for them, continued the picketing for almost a month. The day after the crew withdrew its picket line, the Sailors’ Union of the Pacific began picketing the ship. It was enjoined by the United States District Court after the shipowner filed suit for an injunction and damages. Subsequently, two other American unions picketed the ship and, in turn, were enjoined by the court.

At the trial of the Bern case, the District Court found, as stated in the opinion for the Supreme Court at page 141, “that the purpose of the picketing Vas to compel the [shipowner] to re-employ’ the striking members of the crew for a shorter term and at more favorable wage rates and conditions than those agreed upon in the articles.” In holding that the National Labor Belations Board did not have jurisdiction of this dispute, the Supreme Court said (page 142) : “It should be noted at the outset that the dispute from which these actions sprang arose on a foreign vessel. It was between a foreign employer and a foreign crew operating under an agreement made abroad under the laws of another nation. The only American connection was that the controversy erupted while the ship was transiently in a United States port and American labor unions participated in its picketing.” (Emphasis supplied. )

The facts of the instant case, as we have herein-before recited them, reveal many and vital American connections involved in the controversy and not merely that it “erupted while the ship was transiently in a United States port and American labor unions participated in its picketing.” The case of Marine Cooks & Stewards, AFL v. Panama Steamship Co., Ltd., 362 U. S. 365 (1960), presents a factual situation much more analogous to the present than does the Benz case.

In the Marine Cooks case, supra, the owner, the time charterer and the master of a Liberian registered vessel brought suit in a United States District Court against Marine Cooks & Stewards, AFL, inter alia, asking that the union and its members be enjoined from picketing the ship in American waters and from threatening to picket shore consignees of the ship’s cargo should they accept delivery thereof. The Supreme Court stated the facts as follows (pp. 367-68) : “The S.S. Nikolos is owned by a Liberian corporation, was time-chartered for this trip by another Liberian corporation, and all members of its crew were aliens working under employment contracts made outside this country. There was no labor dispute between the ship’s employees and the ship. The Nikolos picked up a cargo of salt in Mexico and carried it to the harbor of the port of Tacoma, Washington, for delivery to an American consignee there. After the ship entered the Tacoma harbor it was met by the [American] union’s boat which began to circle around the Nikolos displaying signs marked ‘Picket Boat.’ Later an additional sign was put on the boat reading: ‘AFL-CIO seamen protest loss of their livelihood to foreign flagships with substandard wages or substandard conditions.’ The union threatened to extend its picketing to the consignee of the salt should an attempt be made to berth and unload that cargo. Although the picketing was peaceful and there was no fraud, the result was that the ship could not deliver its cargo.”

The District Court issued a temporary injunction, which was affirmed by the United States Court of Appeals for the Ninth Circuit, in reliance almost entirely upon Benz v. Compania Naviera Hidalgo, supra. The Supreme Court reversed and held that the Norris-LaGuardia Act¹ deprived the District Court of jurisdiction to issue the injunction under the circumstances shown, saying (page 370) : “It is difficult to see how this controversy could be thought to spring from anything except one 'concerning terms or conditions of employment/ and hence a labor dispute within the meaning of the Norris-LaGuardia Act. The protest stated by the pickets concerned 'substandard wages or substandard conditions.’ The controversy does involve, as the Act requires, 'persons who are engaged in the same industry, trade, craft, or occupation.’ And it is immaterial under the Act that the unions and the ship and the consignees did not 'stand in the proximate relation of employer and employee.’ This case clearly does grow out of a labor dispute within the meaning of the Norris-LaGuardia Act.” (Footnotes omitted.)

The National Labor Relations Act defines “labor dispute” as follows: “The term 'labor dispute’ includes any controversy concerning terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee.”²

The definition of labor dispute in the National Labor Relations Act is identical with the definition of labor dispute in the Norris-LaGuardia Act,³ except that the latter Act does not include the word “tenure” and uses the conjunctive phrase, “whether or not”, instead of the more simple “whether.” It follows, therefore, that if the facts of a case constitute a labor dispute within the meaning of the Norris-LaGuardia Act, they also constitute a labor dispute within the meaning of the National Labor Relations Act. Because the facts in the instant case are in all material respects similar to the facts in Marine Cooks & Stewards, AFL v. Panama Steamship Co., Ltd., supra, it necessarily follows that this case involves a labor dispute within the meaning of the National Labor Relations Act.

In the Marine Cooks & Stewards case, the Supreme Court distinguished the Bens case as follows in footnote 12 at page 371: “Unlike the situation in the Bens case, in which American unions to which the foreign seamen did not belong picketed the foreign ship in sympathy with the strike of the foreign seamen aboard, the union members here were not interested in the internal economy of the ship, but rather were interested in preserving job opportunities for themselves in this country. They were picketing on their own behalf, not on behalf of the foreign employees as in Bens. Though the employer here was foreign, the dispute was domestic.” (Emphasis supplied.)

On similar facts in the instant case, then, we have a labor dispute within the meaning of the National Labor Relations Act which is domestic. It is all the more domestic in view of the many American connections revealed by the evidence taken in the court below. Because the present case involves a domestic labor dispute which affects commerce between a foreign country and a State, the complained of activity of the defendants is arguably subject to Sections 7 or 8 of the National Labor Relations Act. The National Labor Relations Board, therefore, has exclusive primary jurisdiction of the dispute.

This conclusion is confirmed by the fact that in Peninsular & Occidental S. S. Co., 42 LRRM 1113 (1958), decided subsequent to the Benz case, the National Labor Relations Board took jurisdiction of a representation proceeding involving two ships registered in Liberia, owned by one Liberian corporation, and time chartered by another Liberian corporation. The Liberian corporation which owned the ships was wholly owned by an American corporation. The Board said, in its ruling, that “. . . the Florida and Southern Cross may not properly be considered for jurisdictional purposes as foreign vessels. To be sure, they are nominally owned by Liberian corporations which pay a tonnage tax upon the ships to the government of Liberia and are registered under the laws of that nation. However, the ships have never been in Liberian waters and are under the complete operational control of a domestic corporation.” Neither should it make any difference whether a foreign registered ship is under the control of a domestic corporation or of individual United States citizens, as in the present case.

In Eastern Shipping Corp., 44 LRRM 1571 (1959), which involved a foreign owned ship registered in Panama, with a foreign crew, and with its home port in Panama, the National Labor Relations Board reversed the regional director’s dismissal of a representation petition filed by the Seafarers International Union AFL-CIO. The regional director had relied upon the Benz case.

In Bartholomew v. Universe Tankships, Inc., 263 F. 2d 437 ( 2nd Cir., 1959), the United States Court of Appeals for the Second Circuit, in a Jones Act case where the injured seaman was a citizen of the British West Indies, affirmed a judgment against, significantly, the same shipowner as is involved in the instant case. The federal court did not hesitate to look behind the foreign flag which the shipowner raised in an attempt to shield itself from liability, saying that, “Although appellant contends otherwise, the practice in this type of case of looking through the facade of foreign registration and incorporation to the American ownership behind it is now well established. Gerradin v. United Fruit Co., 2 Cir., 1932, 60 F. 2d 927, certiorari denied 287 U. S. 642, 53 S. Ct. 92, 77 L. Ed. 556; Carroll v. United States, 2 Cir., 1943, 133 F. 2d 690; Zielinski v. Empresa Hondurena de Vapores, D.C.S.D.N.Y. 1953, 113 F. Supp. 93; Torgersen v. Hutton, 2nd Dept. 1934, 243 App. Div. 31, 276 N.Y.S. 348, affirmed, 1935, 267 N.Y. 535, 196 N.E. 566, certiorari denied, 1935, 296 U. S. 602, 56 S. Ct. 118, 80 L. Ed. 426. This is essential unless the purposes of the Jones Act are to be frustrated by American shipowners intent upon evading their obligations under the law by the simple expedient of incorporating in a foreign country and registering their vessels under a foreign flag. See Lauritzen, 345 U. S. at page 587, 73 S. Ct. at page 930. In the case now before us appellant has taken the trouble to insert an additional nominal foreign corporation between the flag and the true beneficial ownership of the vessel. But we have little difficulty in brushing all this aside when considering the applicability vel non of the Jones Act. Complicating the mechanics of evasive schemes cannot serve to make them more effective. What we now do is not to disregard the corporate entity to impose liability on the stockholders, but rather to consider a foreign corporation as if it were an American corporation pursuant to the liberal policies of a regulatory act. See Zielinski v. Empresa Hondurena de Vapores, supra, 113 F. Supp. at page 95.” (Footnote omitted.)

The appellants point out that it is the policy of the United States Government to recognize a vessel’s foreign “flag of convenience.” Since, however, this policy does not deter the federal courts from looking behind such flags in cases involving federal regulatory statutes like the Jones Act, for instance, it may reasonably be inferred that neither should it deter the National Labor Eelations Board from looking behind such flags in cases involving the National Labor Eelations Act. The above cited rulings of the National Labor Eelations Board accord with this conclusion.

In our opinion, exclusive primary jurisdiction of the dispute involved in these appeals is in the National Labor Eelations Board.

The orders of the court below, denying the plaintiffs’ respective motions for preliminary injunctions in the several suits, are affirmed and the complaints dismissed at the appellants’ costs.

Mr. Justice Benjamin E. Jones dissents.

1 Act of March 23, 1932, c. 90, 47 Stat. 70, 29 Ü.S.C.A., §101 et seq.

2 Act of July 5, 1935, c. 372, Section 2(9), 49 Stat. 449, as amended, 29 U.S.C.A., §152(9).

3 Section 13(c), 29 U.S.C.A., §113 (e).