602 F.2d 494 (3rd Cir. 1979), 78-1529, Consolidated Exp., Inc. v. New York Shipping Ass'n, Inc.

Docket Nº:78-1529, 78-1530.
Citation:602 F.2d 494
Party Name:1979-1 Trade Cases 62,589 CONSOLIDATED EXPRESS, INC., Appellant, v. NEW YORK SHIPPING ASSOCIATION, INC., Sea-Land Services, Inc., Seatrain Lines Inc., International Longshoremen's Association, AFL-CIO, International Terminal Operating Co., Inc., John M. McGrath Corp., Pittston Stevedoring Corp., United Terminals Corp., Universal Maritime Services C
Case Date:April 16, 1979
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 494

602 F.2d 494 (3rd Cir. 1979)

1979-1 Trade Cases 62,589

CONSOLIDATED EXPRESS, INC., Appellant,

v.

NEW YORK SHIPPING ASSOCIATION, INC., Sea-Land Services,

Inc., Seatrain Lines Inc., International Longshoremen's

Association, AFL-CIO, International Terminal Operating Co.,

Inc., John M. McGrath Corp., Pittston Stevedoring Corp.,

United Terminals Corp., Universal Maritime Services Corp.

TWIN EXPRESS, INC., Appellant,

v.

NEW YORK SHIPPING ASSOCIATION, INC., Sea-Land Service, Inc.,

International Longshoremen's Association, AFL-CIO,

International Terminal Operating Co., Inc., John M. McGrath

Corp., Pittston Stevedoring Corp., United Terminals Corp.,

Universal Maritime Services Corp.

Nos. 78-1529, 78-1530.

United States Court of Appeals, Third Circuit

April 16, 1979

        Argued Nov. 14, 1978.

        As Amended May 18, 1979.

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        Richard A. Whiting (argued), Mark F. Horning, Ellen M. McNamara, Steptoe & Johnson, Washington, D. C., John A. Ridley, Crummy, Del Deo, Dolan & Purcell, Newark, N. J., for appellants.

        Ernest L. Mathews, Jr. (argued), Gleason, Laitman & Mathews, New York City, for International Longshoremen's Association, AFL-CIO.

        C. P. Lambos, Donato Caruso (argued), Lorenz, Finn, Giardino & Lambos, New York City, Michael S. Waters, Carpenter, Bennett & Morrissey, Newark, N. J., for appellees New York Shipping Association, Inc., International Terminal Operating Co., Inc., John M. McGrath Corp., Pittston Stevedoring Corp. and Universal Maritime Service Corp.

        James W. B. Benkard (argued), Paul H. Karlsson, Mary M. Hoag, Davis, Polk & Wardwell, New York City, Jeffrey Reiner, Meyner, Landis & Verdon, Newark, N. J., for appellee Sea-Land Service, Inc.

        Before SEITZ, Chief Judge, and GIBBONS and WEIS, Circuit Judges.

       OPINION

        GIBBONS, Circuit Judge:

        We here review an order denying plaintiffs' motion for partial summary judgment on issues of liability in a suit pleading causes of action under § 303 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 187, and § 4 of the Clayton Act, 15 U.S.C. § 15. The order is before us on an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The district court, 452 F.Supp. 1024, identified four controlling questions of law which in its view were worthy of interlocutory review, and a panel of this court granted leave to appeal. Before this court the parties have addressed those questions as well as other considerations which are urged in support of and in opposition to the district court's ruling. We reverse the court's order denying summary judgment on the § 303(b) claim. Because we conclude that material issues of fact may remain regarding the availability of the non-statutory labor exemption to the antitrust laws we affirm the denial of summary judgment on the antitrust claim.

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       I. THE FACTS

  1. The Parties and their Businesses

            The plaintiffs are Consolidated Express, Inc. (Conex) and Twin Express, Inc. (Twin). They are non-vessel owning common carriers engaged in the business of consolidating less than container load (LCL) or less than trailer load (LTL) cargo for shipment between Puerto Rico and the Port of New York (the Port). At their off-pier facilities, they pack the shipments of several customers into large containers which are then trucked to pierside facilities and loaded on board ship. The defendant New York Shipping Association (NYSA) is an association of employers who engage in various businesses related to the passage of freight through the Port. On behalf of its members NYSA conducts collective bargaining negotiations and enters into collective bargaining agreements with various labor organizations, including the defendant International Longshoremen's Association, AFL-CIO (ILA), a labor organization representing longshoremen in the Port. Defendants International Terminal Operating Co., Inc., John M. McGrath Corp., Pittston Stevedoring Corp., United Terminals Corp., and Universal Maritime Services Corp. (the stevedores) are members of NYSA and employers of ILA longshoremen. They provide stevedoring services to vessels in the Port. Defendants Sea-Land Service, Inc. and Seatrain Lines, Inc. (the vessel owners) are operators of vessels engaged in common carriage by water between the Port and Puerto Rico. Their vessels are designed for the accommodation of large containers. As a part of their business they furnish shippers with containers and trailers for use on board their ships, as well as terminal facilities. They also provide stevedoring services for cargo shipped on their vessels, and thus, like the stevedores, employ ILA longshoremen.

  2. Pre-litigation History

            Until shortly after World War II most dry cargo was crated by the shipper, delivered to the pier by rail or truck, and loaded into a vessel piece-by-piece by longshoremen. That method of cargo handling has now generally been replaced by the use of vessels specially designed to accommodate mammoth containers. The cargo of large volume shippers may fill one or more containers. That of lower volume shippers is consolidated with the cargo of others in a single container. Many of these containers, when removed from the vessel, serve as semi-trailers, and virtually all are readily shipped by truck. Thus they can be loaded or unloaded ("stuffed" or "stripped" in longshoreman parlance) at sites remote from the pier. This innovation has increased productivity in the movement of cargo by water, but has produced a decline in the demand for longshoreman labor.

            When in 1958 ILA struck the members of NYSA, a central issue was the growing use of containers on the docks. The strike was not, however, successful in prohibiting their use, and in the ILA-NYSA contract adopted in 1959 ILA conceded that "any employer shall have the right to use any and all types of containers without restrictions." In the next decade fully containerized ships were introduced, and dockside work opportunities for ILA members declined still further. These developments led ILA to negotiate with NYSA, as a part of its 1969 collective bargaining agreement, the Rules on Containers (Rules). The Rules dealt specifically with the consolidation of LCL and LTL cargo. NYSA agreed that all consolidated LCL and LTL cargo lots originating from or to be shipped to a point within fifty miles of the dock would be stripped by longshoremen at dockside. Outbound cargo was to be restuffed into a container, while inbound cargo was to be left on the pier for pickup by the consignees. The Rules provided for a penalty against the employer of $250 for every such container which passed through the dockside without being stripped and stuffed. In 1970 the penalty was increased to $1000 per violation.

            Shortly after the 1969 Rules became effective Intercontinental Container Transportation Corp. (ICTC), a consolidator with a business similar to that of Conex and Twin, brought an action in the Southern

    Page 499

    District of New York seeking injunctive relief and damages from NYSA and ILA on the ground that the Rules violated the Sherman Act. At the same time ICTC filed unfair labor practice charges before the NLRB. In the antitrust action, then District Judge Mansfield granted a preliminary injunction prohibiting the defendants from refusing to handle containers stuffed or stripped by the plaintiff. On appeal from that interlocutory order the Second Circuit reversed, holding that there was little likelihood of ultimate success on the merits, because the collective bargaining agreement of which the Rules were a part probably fell within the labor exemption to the antitrust laws. Intercontinental Container Transp. Corp. v. New York Shipping Ass'n, 426 F.2d 884 (2d Cir. 1970) (ICTC). In ICTC's unfair labor practice case, the Regional Director refused to issue a complaint on the ground that the Rules on Containers were a valid work preservation agreement, and the General Counsel denied the appeal. Joint App. 303a-305a.

            The Rules on Containers were carried forward in the 1971-1974 collective bargaining agreement negotiated between ILA and the Council of North Atlantic Shipping Associations (CONASA), an employer bargaining unit composed of NYSA and employer associations in five other North Atlantic ports. But for reasons that are in dispute, the Rules were not consistently enforced. Conex and Twin were therefore able to continue in the business of consolidating LCL and LTL lots, using containers furnished by the vessel owners. Access to such containers was essential to the business of the consolidators, since the vessel owners' ships could carry only specially designed containers, and since prior to October, 1974, Sea-Land and Seatrain were two of only three container carriers operating between the Port and Puerto Rico. 1

            The failure to enforce the Rules led to attempts to improve their effectiveness. On January 25-29, 1973, representatives of CONASA, acting for the employers it represented, met with representatives of ILA in Dublin, Ireland. There those parties negotiated and executed Interpretive Bulletin No. 1, generally known as the Dublin Supplement. The Dublin Supplement established new mechanisms for the enforcement of the Rules against consolidators. It provided that off-pier consolidators operating within fifty miles of the Port were to be considered as operating in violation of the Rules. Consolidators could not avoid application of the Rules by relocating their facilities beyond the fifty mile limit, because the agreement contained a so-called "evasion" or "runaway shop" provision. The Supplement also provided for the establishment and circulation to all carriers and stevedores of a list of such violators, and vessel owners were to be fined...

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