625 F.2d 379 (2nd Cir. 1980), 641, Jensen v. Farrell Lines, Inc.

Docket Nº:641, 817, Dockets 79-7716, 79-7717.
Citation:625 F.2d 379
Party Name:William JENSEN, Edwin Kremer, John Gardella, William Kuyl, Dominick Bisbano, Lindsay Hoyt, Francis S. Haggerty, Richard Trippe, Anthony Lore and Gary D. Lueck, Appellees, v. FARRELL LINES, INC., and International Organization of Masters, Mates and Pilots, AFL-CIO, Appellants, and Brotherhood of Marine Officers, District 1, MEBA, AFL-CIO, and Americ
Case Date:May 12, 1980
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 379

625 F.2d 379 (2nd Cir. 1980)

William JENSEN, Edwin Kremer, John Gardella, William Kuyl,

Dominick Bisbano, Lindsay Hoyt, Francis S.

Haggerty, Richard Trippe, Anthony Lore

and Gary D. Lueck, Appellees,


FARRELL LINES, INC., and International Organization of

Masters, Mates and Pilots, AFL-CIO, Appellants,


Brotherhood of Marine Officers, District 1, MEBA, AFL-CIO,

and American Federation of Labor and Congress of

Industrial Organizations, Defendants.

Nos. 641, 817, Dockets 79-7716, 79-7717.

United States Court of Appeals, Second Circuit

May 12, 1980

Argued Jan. 21, 1980.

Page 380

Alexander Gigante, Proskauer, Rose, Goetz & Mendelsohn, New York City, for appellant Farrell Lines, Inc.

Seymour M. Waldman, New York City (Waldman & Waldman, Burton M. Epstein, New York City, of counsel), for appellant International Organization of Masters, Mates and Pilots, AFL-CIO.

Murray A. Gordon, Gordon & Shechtman, P. C., New York City, for appellees.

Before OAKES, VAN GRAAFEILAND and NEWMAN, Circuit Judges.

OAKES, Circuit Judge:

This appeal, by an employer and a union, is from a decision of the United States District Court for the Southern District of New York, Robert W. Sweet, Judge, holding that, once an employer agrees to bargain collectively with supervisors who have no statutory right to organize, they have a freedom of association First Amendment right to a determination that the union representing them is favored by a majority of its members. Jensen v. Farrell Lines, Inc., 477 F.Supp. 335 (S.D.N.Y.1979). We are not persuaded that there was state action here, nor are we persuaded that, even if there were, the plaintiff-appellee supervisors had any such First Amendment right. We therefore reverse.


Plaintiff-appellees are ten licensed deck officers and engineers who are supervisory employees in the maritime shipping industry. They were all employed for a substantial period of time aboard certain vessels formerly owned and operated by American Export Lines, Inc. (AEL). They were also members of the Brotherhood of Marine Officers, District One, National Marine Engineers Beneficial Association, AFL-CIO (BMO), a defendant below but not a party here.

Defendant-appellant employer is Farrell Lines, Inc. (Farrell), a United States flag shipping line operating merchant cargo and bulk carriage vessels, which acquired AEL's twenty-five owned or operated ships in a sale pursuant to a reorganization plan resulting from proceedings under Chapter XI of the Bankruptcy Act, 11 U.S.C. §§ 701-799 (1976). Defendant-appellant union is the International Organization of Masters, Mates and Pilots, AFL-CIO (MMP).

Appellees are only ten out of approximately 180 former AEL supervisors who were members of and exclusively represented by BMO. Farrell owned or operated fourteen of its own ships immediately prior to its acquisition of AEL's vessels; as such, it was a party to a multi-employer collective bargaining agreement with MMP. The agreement provided that all licensed deck officers employed by Farrell must be members of MMP.

Upon Farrell's integration of the AEL ships into its own operations, Farrell signed an agreement with BMO on March 28, 1978, continuing the AEL-BMO collective bargaining agreement. Later, Farrell negotiated

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with BMO a wage increase for the employees covered under the old AEL-BMO contract. Shortly after the bankruptcy purchase, however, MMP asserted that it, not BMO, was entitled to represent all licensed deck officers employed by Farrell, and through its parent union (the International Longshoremen's Association) initiated proceedings before the AFL-CIO under Article XX of the AFL-CIO Constitution. BMO, through its parent union, counterclaimed, asserting BMO's representation rights. The AFL-CIO arbitrator found that the Farrell purchase constituted an "accretion" of the AEL fleet to the Farrell fleet and that, primarily because the MMP contract provided for accretions, whereas the BMO contract did not, the MMP contract was to be given effect. This decision was affirmed in an appeal to the AFL-CIO Executive Council.

Farrell then informed the former AEL supervisors that, as a condition of continued employment with Farrell, they would have to leave BMO and join MMP, Farrell also discontinued its pension, health, and vacation pay contributions to BMO under the old AEL contract and began to make all contributions to the MMP plan.

MMP on its part offered the former AEL supervisors, including appellees, membership in MMP on terms that, among other things, granted them the highest available seniority status of three grades accorded employees under the MMP contract, for jobs aboard all former AEL ships. Many of the former AEL supervisors, but not appellees, accepted MMP's offer.

On March 12, 1979, appellees received notice of the Farrell decision abrogating the BMO collective bargaining agreement, when their former AEL ship, the C/V Staghound, the first ship to return to the United States following the decision, docked in Baltimore, Maryland. After reaching New York several days later, appellees were informed of the effect of the AFL-CIO Article XX decision and the requirement that they join MMP to continue employment with Farrell. Upon refusing to sign MMP membership cards and leave the vessel, appellees were removed from the Staghound by the New York City police, and this action followed.


In the proceedings below, appellees made three basic claims, the first two of which were rejected by the district court and are not in contention here. 1 The third claim, here on appeal, is that Farrell's enforcement of the Article XX decision is a violation of appellees' First Amendment right to freedom of association, because it forces them to join a union that has not been freely selected by them or by a majority of Farrell's deck officers as a condition of their continued employment. After evidentiary hearings on an application for preliminary relief, the court below, properly exercising its discretion under Fed.R.Civ.P. 65(a)(2), ordered that the trial of the action on the merits be advanced and consolidated with the preliminary injunction hearing. The court found, 477 F.Supp. at 346, correctly, that subject matter jurisdiction over the constitutional claim existed under 28 U.S.C. § 1331. Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946); Evans v. American Federation of Television and Radio

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Artists, 354 F.Supp. 823, 837 (S.D.N.Y.1973), rev'd on other grounds sub nom. Buckley v. American Federation of Television and Radio Artists, 496 F.2d 305 (2d Cir.), cert. denied, 419 U.S. 1093, 95 S.Ct. 688, 42 L.Ed.2d 687 (1974). The court below also held, 477 F.Supp. at 347-48, that appellees had standing to bring their constitutional claim, despite appellant's argument below that MMP benefits may have equaled or exceeded those of BMO and despite appellees' opportunity to join MMP. The court found that appellees had shown a definite injury and personal stake in the outcome, occasioned by their loss of employment, and that they had lost a valuable right of being represented by a majority-selected union. The court posited a further independent basis for standing in that there were significant differences between the operation of the two collective bargaining agreements relating to vacation benefits, seniority, selection of billets, and overtime payments, among other things. Id. at 348. The opinion noted that the third claim in effect challenged the maritime industry's practice of engaging in pre-hire collective bargaining contracts, i. e., a contract between a shipowner and a union requiring supervisory employees to join that union before any ships are built or supervisors are hired. Id. at 350.

Before reaching the merits of the constitutional claim, the district court found that the requisite state action existed, whether in terms of "interdependence," "symbiosis," or "nexus." Id. at 350-53; see Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 357-58, 95 S.Ct. 449, 453, 456-457, 42 L.Ed.2d 477 (1974); Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 725, 81 S.Ct. 856, 860, 861, 6 L.Ed.2d 45 (1961). See also Graseck v. Mauceri, 582 F.2d 203, 209-10 (2d Cir. 1978), cert. denied, 439 U.S. 1129, 99 S.Ct. 1048, 59 L.Ed.2d 91 (1979). The court relied on several elements: (1) the fact that, in the maritime industry, there is a government operating subsidy to the employer resulting from the differential between wages paid union members and wages paid employees performing similar functions in foreign fleets; (2) evidence indicating that Farrell received a cumulative sum exceeding $56 million in subsidies for operating costs, principally costs under collective bargaining contracts; (3) proof that Farrell not only received construction-differential subsidies for the construction of its ships from the United States government, but also received guarantees of its bonds and notes issued to provide financing. 2

Furthermore, the court noted that routes for which subsidies are received must be approved by the Government and that the United States regulates extensively the manning and wage scales of officers and seamen serving aboard Farrell ships. Federal law provides for Maritime Administration review of the fleetowner's collective bargaining costs before it may receive the so-called operating-differential subsidy. 46 U.S.C. § 1173(b). Finally, the legislative history of the Merchant Marine Act of 1970 establishes that a primary purpose of the subsidies is to ensure a national maritime industry as an element in our national security. See (1970) U.S.Code Cong. & Admin.News, p. 4188. In short, the court concluded that the "merchant marine carries out a specific...

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