300 F.2d 222 (2nd Cir. 1962), 233, Empresa Hondurena de Vapores, S. A. v. McLeod

Docket Nº:233, 27314.
Citation:300 F.2d 222
Party Name:EMPRESA HONDURENA DE VAPORES, S.A., Plaintiff-Appellant, v. Ivan C. McLEOD, Regional Director for the Second Region of the National Labor Relations Board, Defendant-Appellee, National Maritime Union of America, AFL-CIO, Intervenor-Appellee.
Case Date:January 12, 1962
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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300 F.2d 222 (2nd Cir. 1962)



Ivan C. McLEOD, Regional Director for the Second Region of the National Labor Relations Board, Defendant-Appellee, National Maritime Union of America, AFL-CIO, Intervenor-Appellee.

No. 233, 27314.

United States Court of Appeals, Second Circuit.

January 12, 1962

Argued Dec. 20, 1961.

National Labor Relations Board did not have power to order representation election on registered vessels of Honduran corporation which employed crews under Honduran articles and whose vessels regularly visited Honduras and employed Honduran citizens on the crews and which had a labor contract with Honduran union and was regulated by Honduran law concerning labor matters, although corporation was a wholly owned subsidiary of United States corporation and vessels were engaged in the foreign commerce of the United States. Treaty between the United States and Honduras, Dec. 7, 1927, arts. 10, 22, 45 Stat. 2618; National Labor Relations Act, §§ 2(6, 7), 7, 8, 9(c), 10(l ) as amended 29 U.S.C.A. §§ 152(6, 7), 157, 158, 159(c), 160(l ).

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Orison S. Marden, New York City (White & Case), New York City, (Chester Bordeau and William D. Conwell, New York City, of counsel), for plaintiff-appellant.

Allan I Mendelsohn, Washington, D.C. (Stuart Rothman, General Counsel, Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel, National Labor Relations Board, Washington, D.C., and Samuel M. Kaynard, Regional Attorney, New York City), for defendant-appellee.

Herman E. Cooper, New York City, for intervenor-appellee.

Alfred A. Giardino, New York City, for United Fruit Co.

Before LUMBARD, Chief Judge, and FRIENDLY and MARSHALL, Circuit judges.

FRIENDLY, Circuit Judge.

The complaint of Empresa Hondurena de Vapores, S.A., hereafter Empresa, against the Regional Director of the National Labor Relations Board, filed in the District Court for the Southern District of New York on December 12, 1961, made allegations which we summarize as follows:

(1) Empresa is a Honduran corporation, organized in 1941, with its principal office and place of business in Puerto Cortes, Honduras. It operates thirteen seagoing vessels, ten of which it owns and three of which are owned by Balboa

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Shipping Company, Inc., a Panamanian corporation, which, like plaintiff, is a wholly owned subsidiary of United Fruit Company, a New Jersey corporation. All the vessels are registered under the laws of Honduras and fly the Honduran flag.

(2) The vessels are manned by unlicensed seamen, some 335 in number, all but one of whom are citizens of Honduras (the one being a British subject), employed in Honduras under Shipping Articles executed there. The vessels, all of which are time-chartered to United Fruit, ply between ports in Central and South America, the United States, Canada and Europe; all of them call regularly at Honduran ports for trade and renewal of Ship's Articles. Since 1941 the seamen have been represented by Sociedad Nacional de Marineros de Honduras, a Honduran labor union recognized by the Republic of Honduras, hereafter Marineros, as their collective bargaining agent. A collective bargaining agreement between Empresa and Marineros was made in 1957, to remain effective until April 15, 1959, and thereafter to be automatically renewed for successive two year terms in the absence of contrary notice; it now stands renewed until February 15, 1963. Honduras 'has a long established and comprehensive system of laws and regulations governing all aspects of the ownership and operation of vessels registered in Honduras and the employment of personnel thereon'; under that law plaintiff is required to recognize Marineros as the exclusive bargaining agent of its unlicensed seamen, and labor grievances are handled by representatives of plaintiff and Marineros subject to the Ministry of Labor and the Labor Courts of Honduras.

(3) On November 15, 1961, the NLRB rendered a Decision and Direction of Election, 134 NLRB No. 25, which, as later modified, instructed the defendant Regional Director to conduct an election among plaintiff's seamen to determine whether they desired to be represented for collective bargaining purposes by National Maritime Union, AFL-CIO, by Sindicato Maritimo Nacional de Honduras ('Sindimar'), or by neither. 1 The Honduran Labor Code prohibits the exercise of functions by a union 'so long as it does not have recognition of its juridic personality' or if its personnel is not at least 90% Honduran; National Maritime Union fails on both counts. Defendant has informed plaintiff that the election is to take place, beginning December 17, 1961, on board vessels arriving in United States ports between December 17, 1961 and January 31, 1962, and by mailing ballots to employees on vessels not so scheduled.

Alleging that the Board's direction violated Article 10 of the Treaty of Friendship, Commerce and Consular Rights between the United States and Honduras dated December 7, 1927, 45 Stat. 2618, 2 as well as the Constitution of the United States and principles of international law, plaintiff sought temporary and permanent injunctive relief. By order to show cause signed December 12, 1961, on an affidavit of counsel incorporating the allegations of the complaint, the motion for a temporary injunction was brought on for hearing before Judge Palmieri on December 14. The Regional Director moved to dismiss. He asserted that the District Court lacked jurisdiction over a direction for an election, that the request for relief was premature, that the members of the NLRB were indispensable parties defendant, and that in any event the Board's action was proper.

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Relevant to the last contention are certain additional facts stated in the Board's opinion and not challenged before us: United Fruit Company is predominantly United States owned. The bulk of its trade is between Central and South American countries which grow bananas and other tropical produce, and the United States. Empresa's officers are elected by its directors who are elected by United Fruit, and Empresa has always time-chartered all its vessels, almost entirely to United Fruit. However, Empresa 'appears to function as a distinct corporate entity,' and 'There is nothing in the record to suggest that Empresa does not in fact carry out * * * typical responsibilities of the owner of a vessel under a time charter,' including 'hiring the officers and crews and handling all matters concerning terms and conditions of employment including payment of wages and discipline of the personnel.' 3 On the other hand, United Fruit determines the routing of Empresa's ships, communicating its desires and complaints to the captain or to some other officer of Empresa. The vessels regularly call at United States ports, carrying United Fruit cargo on inbound and outbound voyages and also general cargo on the latter; some of the ships also carry passengers. Empresa's vessels are used by United Fruit in the same manner as other chartered or owned vessels registered under United States law.

It should be observed also that the Attorney General, acting at the request of the Departments of State and Defense, was permitted to appear as amicus curiae before the Board in this and related cases. Although the Attorney General's brief to the Board stated that it was not its 'purpose * * * to support or oppose the position of the steamship companies or the position of the unions' (p. 2), it advanced (pp. 15-20) a list of proposed 'principles to be applied in determining whether a vessel and its crew shall be deemed foreign and thus beyond the scope of the Act,' and 'submitted * * * that the flag, as a ready, recognizable, and accepted standard must be preferred pragmatically to any other and that in accordance with that standard, the indirect financial interest of American citizens in a foreign registered ship may not deprive a vessel of its status as a national of the country whose flag is flown.'

Despite the time pressure created by plaintiff's failure to bring this action until almost the eve of the scheduled election, Judge Palmieri prepared a thoughtful opinion, filed on December 16. Holding that the District Court had jurisdiction of the subject matter since, as he believed, plaintiff had made a colorable allegation of denial of constitutional rights, see Fay v. Douds, 172 F.2d 720, 723 (2 Cir. 1949), he nevertheless denied the injunction since he was not convinced of the probability of plaintiff's success or by its claims of irreparable damage from the election. He therefore deemed it unnecessary to decide at that time whether the members of the Board were indispensable parties.

Although a motion for a stay pending appeal was initially denied, the appeal itself was argued on December 20. Meanwhile the election had been stayed as the result of a temporary restraining order issued by the District Court for the District of Columbia in an action by Marineros against the members of the Board. The argument having convinced us that the case presented serious issues involving the relations of the United States with a foreign government and that no irreparable damage would be caused by a brief delay of the election, we then issued a stay pending determination of the appeal. We have reached a conclusion different from that of the District Judge.

Two other circumstances must be mentioned before we proceed further: Under date of December 15, 1961, the Department of State, through its Legal

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Adviser, forwarded to Judge Palmieri, without comment, a note dated November 29, 1961, from the Ambassador of Honduras, protesting against the board's decision, which was claimed to violate Articles 10 and...

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