Crest Tankers, Inc. v. National Maritime Union of America

• Decision Date: 13 August 1986
• Docket Number: No. 85-1575,85-1575
• Parties: 122 L.R.R.M. (BNA) 3237, 105 Lab.Cas. P 11,996 CREST TANKERS, INC., and Clayton Tankers, Inc., Appellees, v. NATIONAL MARITIME UNION OF AMERICA, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 234

796 F.2d 234

122 L.R.R.M. (BNA) 3237, 105 Lab.Cas. P 11,996

CREST TANKERS, INC., and Clayton Tankers, Inc., Appellees, v. NATIONAL MARITIME UNION OF AMERICA, Appellant.

No. 85-1575.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 15, 1986.

Decided July 15, 1986.

Rehearing and Rehearing En Banc

Denied Aug. 13, 1986.

Sidney H. Kalban, New York City, for appellant.

Thomas M. Hanna, St. Louis, Mo., for appellees.

Before HEANEY, ARNOLD and WOLLMAN, Circuit Judges.

ARNOLD, Circuit Judge.

Crest Tankers, Inc., and Clayton Tankers, Inc., filed this suit for injunctive and declaratory relief on June 21, 1983, against the National Maritime Union of America (NMU). The action came in response to the union's attempt to compel these employers to arbitrate under a labor contract between the NMU and Trinidad Corporation, which has the same ultimate ownership as plaintiffs. The District Court found that Crest and Clayton, with Trinidad, should not be treated as one under the single-employer doctrine, and enjoined NMU's arbitration efforts on the ground that plaintiffs were not parties to the labor agreement. Crest Tankers, Inc. v. NMU, 605 F.Supp. 1270 (E.D.Mo.1985). While the union does not appeal the single-employer ruling, NMU does challenge the District Court's determination that a second labor-law doctrine, that of alter ego employers, was inapplicable in this situation as a matter of law. NMU also argues that the District Court erroneously refused to apply the doctrine of collateral estoppel to a New York trial court decision finding Trinidad and the plaintiffs to be alter egos and a single employer. Although we decline to apply collateral estoppel in these circumstances, we reverse on the ground that the District Court misconstrued the principle of alter ego employers and remand for factual consideration of this case under that doctrine.

I.

Details of the relationships among Crest, Clayton, Trinidad, and their parent companies are set out in depth in the District Court's well-written opinion. 605 F.Supp. at 1271-1276. Trinidad is a wholly-owned subsidiary of Apex Shipping, which in turn is a wholly-owned subsidiary of Apex Holding, itself a wholly-owned subsidiary of Apex Oil Co. Both Crest and Clayton are also wholly-owned subsidiaries of Apex Holding. All the companies have essentially the same corporate management. Apex Shipping purchased Trinidad in 1981; Crest and Clayton were organized in 1982. Trinidad and Crest both own and operate United States flag vessels, although Trinidad also operates vessels of the Military Sealift Command of the United States Navy; Clayton is a paper corporation which owns U.S. flag vessels operated by Crest.

Trinidad and NMU had a collective-bargaining agreement effective from 1981 through June 1984, which provided that the company:

recognizes the Union as the sole collective bargaining agent for the Unlicensed Personnel employed by the Company on board all U.S. Flag oceangoing vessels ... which are owned or operated ... by the Company or any of its subsidiaries or affiliates (whether so at present or at any time during the life of this Agreement).... ¹

When Crest began its operations, it purchased two vessels from Getty Oil Co.; the ships were operated almost entirely by unlicensed personnel laid off by Getty who had been represented by the Getty Tankermen's Association. The new Crest employees then formed the Crest Tankerman's Association (CTA), which the company recognized as bargaining representative. Shortly thereafter, when Crest purchased two vessels from Gulf Oil Co., it did not hire the former Gulf employees, who were represented by the NMU. Crest also purchased from Grand Bassa Tankers, Inc., two vessels which had been operated under contract by Trinidad. Trinidad had the right of first refusal on the vessels, but was told not to buy them by the same Apex official who directed their purchase by Crest. Former Trinidad crew members were not offered work by Crest. By the time of trial in November 1983, most if not all of the charter shipping once done for Apex by Trinidad was being done by Crest. Just prior to the formations of Crest and Clayton, Trinidad operated five vessels on charter to Apex Oil; as of the trial, none of those was operating, while Crest was operating five such vessels for Apex, including one of the Grand Bassa tankers formerly operated by Trinidad.

NMU notified Apex officials in November 1982 of its position that the vessels obtained for Crest fell under the NMU-Trinidad agreement. In March 1983, the union filed with the NLRB and later withdrew discrimination charges against Clayton. NMU then demanded arbitration under the contract; the arbitration was scheduled, and Crest and Clayton filed this suit, alleging that as non-signatories of the contract, they were not bound by it. The union moved to dismiss the action, on the ground that issues of representation and appropriate bargaining unit are within the jurisdiction of the NLRB. The District Court denied the motion, held that it had jurisdiction under Sec. 301(a) of the Labor-Management Relations Act, 29 U.S.C. Sec. 185(a), and stated that the only issue at trial would be whether the three Apex subsidiaries constituted a single employer. The District Court ruled in plaintiffs' favor and this appeal followed.

II.

In general, only a party to a collective bargaining agreement is bound by its terms; however, in some instances, an employer which has not signed a labor contract may be so closely tied to a signatory employer as to bind them both to the agreement. Two theories for demonstrating this "high degree of consanguinity," Carpenters Local Union No. 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489, 511 (5th Cir.1982), cert. denied, 464 U.S. 932, 104 S.Ct. 335, 78 L.Ed.2d 305 (1983), are relevant here. The first is the single-employer doctrine, discussed by the District Court, in which the basic inquiry is whether the commonality of the employers' operations, management, labor relations, and ownership or financial control, Radio & Television Broadcast Technicians Local Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85 S.Ct. 876, 877, 13 L.Ed.2d 789 (1965), is sufficient to indicate that they should be treated as one whole. In this case, although the District Court twice said evidence would support either holding, 605 F.Supp. at 1277, 1278, it found that the companies were not a single employer, despite their common ownership, because the interrelation among their operations was not great; the daily managements were unconnected even though the corporate management was identical; and labor relations were conducted separately, although the same Apex official had the authority to deal with labor at both.

The second theory of employer consanguinity relevant here is the alter ego doctrine. The union does not challenge the court's decision on the single-employer issue, but it does argue that the District Court erred in refusing also to consider the circumstances of this dispute against the standards of the alter ego doctrine. The District Court cited in particular our decision in Iowa Express Distribution, Inc. v. NLRB, 739 F.2d 1305 (8th Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 595, 83 L.Ed.2d 704 (1984), for the proposition that the alter ego doctrine deals only with whether one employer has succeeded to the labor obligations of another now-defunct employer. "The alter ego doctrine has no applicability to the case at bar, because Trinidad is not a discontinued employer." 605 F.Supp. at 1277. However, an examination of the doctrine shows, as NMU contends, that this labor-law principle is not so restrictive.

As this Court said in Iowa Express, 739 F.2d at 1310, the factors used to decide whether one employer is another's alter ego--ownership, management, business purpose, operations, customers and equipment--are similar to those used in single-employer analysis. But "the Board's decisions have made it clear that the doctrines are conceptually distinct," Pratt-Farnsworth, 690 F.2d at 508 n. 7. The first distinction is related to the proposition that the District Court found dispositive: While affirmative findings on either theory produce the same result--that for labor-law purposes, only one employer exists--the alter ego doctrine generally applies to situations where one employer has in some way succeeded another, often through a change in corporate structure. The second distinction is motivational: A critical part of the inquiry into alter ego status, absent in single-employer analysis, is whether the employers acted out of anti-union sentiment or to avoid a labor contract. Iowa Express, 739 F.2d at 1311. " '[T]he focus of the alter ego doctrine, unlike that of the single employer doctrine, is on the existence of a disguised continuance of a former business entity or an attempt to avoid the obligations of a collective bargaining agreement, such as through a sham transfer of assets,' " Iowa Express, 739 F.2d at 1310, quoting Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 24 (1st Cir.), cert. denied, 464 U.S. 892, 104 S.Ct. 237, 78 L.Ed.2d 228 (1983). See also Note, Bargaining Obligations After Corporate Transformations, 54 NYU L.Rev. 624, 638-39 (1979). ²

Critical to the District Court's refusal to apply the alter ego doctrine was this Court's description of that issue in Iowa Express as " 'whether one business entity should be held to the labor obligations of another business entity that has discontinued operations.' " 605 F.Supp. at 1277 (emphasis added), quoting Iowa Express, 739 F.2d at 1310. Iowa Express did deal with a discontinued business and the successor company alleged to be its alter ego, and many other alter ego cases also involve such situations. But its description of the doctrine was not a comprehensive or exhaustive statement of all the circumstances in which it could be appropriately applied. Neither the courts nor the National Labor...