Boston Shipping Ass'n, Inc. v. Federal Maritime Com'n

Decision Date04 May 1983
Docket NumberNo. 82-1617,82-1617
Parties, 97 Lab.Cas. P 10,098 The BOSTON SHIPPING ASSOCIATION, INC., Petitioner, v. FEDERAL MARITIME COMMISSION and United States of America, Respondents. New York Shipping Association, Inc., et al., Intervenors.
CourtU.S. Court of Appeals — First Circuit

Allan van Gestel, with whom Robert P. Wasson, Jr., and Goodwin, Procter & Hoar, Boston, Mass., were on brief, for petitioner.

Gordon M. Shaw, Atty., Federal Maritime Com'n, with whom William F. Baxter, Asst. Atty. Gen., C. Jonathan Benner, Gen. Counsel, Federal Maritime Com'n, Robert D. Bourgoin, Deputy Gen. Counsel, Federal Maritime Com'n, Bryant L. VanBrakle, Atty., Federal Maritime Com'n, Robert B. Nicholson, and Robert J. Wiggers, Attys., Antitrust Div., U.S. Dept. of Justice, Washington, D.C., were on brief, for Federal Maritime Com'n.

Donato Caruso, with whom C. Peter Lambos, and Lambos, Flynn, Nyland & Giardino, New York City, were on brief, for intervenor New York Shipping Ass'n.

Ernest L. Mathews, Jr., with whom Thomas W. Gleason, New York City, was on brief, for intervenor Intern. Longshoremen's Ass'n, AFL-CIO.

Francis A. Scanlan, and Deasey, Scanlan & Bender, Ltd., Philadelphia, Pa., were on brief, for intervenor Council of North Atlantic Shipping Associations.

Before CAMPBELL and BOWNES, Circuit Judges, and PETTINE, * Senior District Judge.

BOWNES, Circuit Judge.

The Boston Shipping Association (BSA) seeks reversal or remand of a Federal Maritime Commission (FMC) order adopting an administrative law judge's (ALJ) decision that Rule 10 of the Rules on Containers does not violate various provisions of the shipping laws. Rule 10, a product of collective bargaining between the International Longshoremen's Association (ILA) and various shipping employer groups, governs the collection of royalties imposed on containerized cargo. It provides that royalties are to be paid at the port of first handling. The gravamen of BSA's complaint is that the operation of Rule 10 with respect to Boston-bound cargo first delivered to the Port of New York and then transshipped by feeder barge to the Port of Boston results in unfair discrimination against the latter port. We affirm the FMC's order because it is supported by substantial evidence and is not contrary to law.

I. Facts and Proceedings Below

This case marks another skirmish in the series of lawsuits which has accompanied the process of technological advance in the shipping industry. The history of this process is well-documented 1 and we need only summarize it briefly. Prior to the advent of containerization in the late 1950's trucks delivered loose--break-bulk--cargo to the piers and longshoremen then transferred this cargo piece by piece onto ships. Containerization involves the use of metal cargo containers as large as forty feet long, eight feet high, and eight feet wide. It allows many tons of cargo to be handled as a single unit rather than piece by piece. This reduces the time required to load or unload ships and cuts losses from pilferage and breakage. Containers also facilitate rapid transportation to and from the pier because they fit readily onto truck chassis.

Ever since containerization was introduced the protection of longshoremen from concomitant job displacement has been the most troublesome issue in collective bargaining negotiations between shipping industry employers and the ILA. This bargaining has yielded a series of compromises permitting employers to use all types and sizes of containers and to transport full shipper load containers 2 without longshoremen handling the contents. In return employers have agreed to collect container royalties to compensate longshoremen for the effects of containerization. In 1960 the so-called "Stein Award" established the "First Container Royalty" at $1.00 per ton. Eleven years later employers and the union agreed to the "Second Container Royalty" for the same amount. The 1977 Master Contract doubled the First Container Royalty to $2.00 per ton. Under the labor agreements both dollars of the First Container Royalty are distributed in cash to longshoremen and the Second Container Royalty is applied to defray the costs of longshoremen's fringe benefits.

BSA, the complaining party in the dispute before us, is a multiemployer bargaining association which represents management in all longshore collective bargaining affecting the Port of Boston. Its members--twenty-five commercial firms which include contracting stevedores and deep water carriers plus the Massachusetts Port Authority--own or operate virtually all of the facilities in the port that are used regularly in foreign and intercoastal trade. BSA is the unilateral administrator of the Container Royalty Program for the port. Steamship carriers, their agents, or stevedores transfer to BSA all container royalties that are paid in the Port of Boston. BSA transfers collections of the first dollar of the First Container Royalty and the Second Container Royalty to the BSA-ILA Pension Fund and pays collections of the second dollar of the First Container Royalty as cash benefits to longshore employees selected by the ILA locals in Boston. 3

This case commenced when BSA filed with the FMC complaints against the New York Shipping Association (NYSA) 4 under the Maritime Labor Agreements Act of 1980, Sec. 4, 46 U.S.C. Sec. 814 (1976 & Supp. IV 1980), and the Shipping Act of 1916, Sec. 22 46 U.S.C. Sec. 821 (Supp. IV 1980). 5 BSA objected to Rule 10 of the Rules on Containers included in the 1977 and 1980 Master Contracts negotiated with the ILA. 6 Rule 10, the "first port rule," provided that container royalty payments shall be payable only once in the continental United States, at the port where the container is first handled by ILA longshoremen. 7 BSA's objection was that the rule did not require the forwarding of royalties collected at the first port to the port of ultimate destination; thus royalties imposed on cargo first handled at the Port of New York but ultimately headed for Boston were retained in New York and paid to that port's longshoremen.

The parties agreed to forego oral testimony and instead placed in the evidentiary record an agreed stipulation of facts and various other documents. The ALJ reported his factual findings and ultimate conclusions in an exhaustive memorandum. He noted that it had been the routine custom from the 1960's to impose royalties only once and at the first port; this rule was formalized in the 1971-1974 Master Contract with the ILA and has remained in all subsequent contracts. BSA has continuously applied the rule and never objected to it in the 1971, 1974, or 1977 Master Contract negotiations. During these years BSA was represented in labor negotiations by the Council of North Atlantic Shipping Associations, Inc. (CONASA). NYSA was a member of CONASA until 1977, when it withdrew because it had been unable to convert other CONASA members to its view on certain bargaining issues. CONASA and NYSA each participated in negotiations with the ILA leading to the 1977 and 1980 Master Contracts. BSA's objections to the first port rule surfaced during the 1980 negotiations. A BSA proposal to change the rule was voted on and rejected by CONASA members and the rule remained in the 1980 Master Contract.

BSA's dissatisfaction with the rule stemmed from the expansion of feeder services for the transshipment of containers from the Port of New York to the Port of Boston. Such services have existed since the early 1970's and a barge feeder service has operated between the two ports since 1976. The ALJ found that to an increasing extent NYSA carrier members that used to ship containerized cargo directly to Boston have altered their methods of operation by first delivering the containers to New York and then transshipping them by barge or other vessel to Boston. Under Rule 10 the royalties on this cargo are paid and retained in New York, the port in which the cargo is first handled by ILA longshoremen. The ALJ found that from October 1, 1980 to June 30, 1981, $326,633.43 of container royalties on cargo transshipped to Boston were paid in the Port of New York and that from May 1, 1979 to September 30, 1980, such royalties totalled $638,565.57. In its complaint BSA alleged that Rule 10 violated various shipping laws because it unfairly discriminated against the Port of Boston. It requested the FMC to modify Rule 10 so that the port of destination rather than the first port would be the port of royalty collection and sought reparations for container royalties that had been "diverted" to New York.

The ALJ denied the requested relief, holding that "the alleged injury is both factually and legally insufficient to establish any violation of the shipping laws." He found no support in the record for BSA's charge that NYSA had dominated other employer negotiating representatives and controlled negotiations with the ILA. He pointed to evidence that employer representatives were free to disagree with NYSA and often did, including the incident in 1977 when NYSA withdrew from CONASA because other members would not accede to some of its positions. The ALJ also found no support for BSA's contention that Rule 10 necessitated the continued assessment of an additional charge--the "Boston Dollar" 8--on cargo handled at the Port of Boston in order to maintain the actuarial soundness of fringe benefit funds, and thus hurt the port's competitive position. He noted that the Boston Dollar was initiated in 1971 before the expansion of feeder services. Moreover, BSA presented no evidence to show that present revenues were inadequate to maintain the fringe benefit funds, that the container royalties paid to New York would meet any shortage and thus enable BSA to discontinue the Boston Dollar charge, that the Boston Dollar charge was a significant competitive factor, or that cargo was being diverted away from...

To continue reading

Request your trial
2 cases
  • New York Shipping Ass'n, Inc. v. Federal Maritime Com'n, AFL-CI
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • 9 August 1988
    ...laws administered by the FMC is to protect the shipping industry's customers, not members of the industry." Boston Shipping Ass'n v. FMC, 706 F.2d 1231, 1238 (1st Cir.1983). Of the protections afforded shippers under these laws, the prohibition against tariffs that unreasonably discriminate......
  • Delaney v. U.S. Dept. of Labor
    • United States
    • U.S. Court of Appeals — First Circuit
    • 6 November 1995
    ...does not prevent an administrative agency's finding from being supported by substantial evidence." Boston Shipping Ass'n, Inc. v. Federal Maritime Comm'n, 706 F.2d 1231, 1236 (1st Cir.1983) (quoting Consolo, 383 U.S. at ...

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT