NLRB v. Transmarine Navigation Corporation

• Decision Date: 21 June 1967
• Docket Number: No. 20964.,20964.
• Citation: 380 F.2d 933
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. TRANSMARINE NAVIGATION CORPORATION and its subsidiary, International Terminals, Inc., Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

380 F.2d 933 (1967)

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. TRANSMARINE NAVIGATION CORPORATION and its subsidiary, International Terminals, Inc., Respondent.

No. 20964.

United States Court of Appeals Ninth Circuit.

June 21, 1967.

Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Glen M. Bendixsen, Marsha E. Swiss, Attys., N.L.R.B., Washington, D. C., Ralph P. Kennedy, Director, N.L.R.B., Los Angeles, Cal., for petitioner.

L. Robert Wood, Francis J. MacLaughlin, Lillick, Geary, McHose & Roethke, Los Angeles, Cal., Sokol, Fishman & George, Beverly Hills, Cal., for respondent.

Before BARNES and ELY, Circuit Judges, and PECKHAM, District Judge.

PECKHAM, District Judge:

The National Labor Relations Board (hereinafter "Board") has petitioned this Court for enforcement of its order issued against Respondent on May 28, 1965, following proceedings under Section 10 (c) of the National Labor Relations Act (hereinafter "Act") as amended (61 Stat. 136, 73 Stat. 519, 29 U.S.C. § 151 et seq.). The Board's decision and order are reported at 152 N.L.R.B. 998. This Court has jurisdiction over the proceedings under section 10(e) of the Act, 29 U.S.C. § 160(e), since the alleged unfair labor practices occurred at Los Angeles, California, within this judicial circuit.

Respondent Transmarine Navigation Corporation and its wholly owned subsidiary, International Terminals, Inc., (hereinafter "Company"), operated as a freight agent, ship broker, steamship agent, and terminal operator at Wilmington in the Los Angeles Harbor. In February, 1960, the American Federation of Guards, Local #1 (hereinafter "Union") was certified by the Board as the collective bargaining representative of the guard unit whose members were employed by the Company to protect cargo on the ships and in the warehouses on the dock. Since that time a collective bargaining agreement has governed relations between the Company and the Union. The most recent agreement was executed in 1962 and, with an expiration date of June 30, 1965, was still in effect at the time of the events described herein.

It appears from the testimony of the Company's vice president that during the summer of 1963, the Japanese Government ordered a consolidation of Japanese shipping companies into fewer, larger companies. This order affected the Company's principal customer, a Japanese shipowner. The consolidation created the need for larger shipyard facilities to service the new lines. In August, the Company entered into discussions with two other terminal operators about forming a joint venture to provide expanded facilities in the Long Beach Harbor. The joint venturers expected that a larger facility would attract one or more of the new merged shipping lines.

On September 5, 1963, the Company executed a joint venture agreement with Jones Stevedoring Company and California Maritime Services. Under this agreement, the Company was to terminate its operations in Los Angeles and relocate in Long Beach as a minority partner in a joint venture, to be known as Sierra Terminals. The Company and California Maritime Services were each to have a forty percent interest in Sierra Terminals, and Jones Stevedoring was to have the remaining twenty percent. At the time of the execution of the agreement, the Long Beach terminal facilities were occupied by a company known as Twin Harbors, which had a contract arrangement with Newton Security Patrol to supply guards for the facility. When the September 5 agreement was executed, the Company did not know what the need for guards would be when the joint venture — Sierra Terminals — would begin operations.

On September 15, the vice president of the Company told Ernest McClintock, a guard, that the Company was thinking of closing its terminal in Los Angeles and of merging with companies in Long Beach. McClintock was asked to keep this confidential. About a week or ten days later, McClintock was told to advise the guards they would be terminated on or about November 1, 1963. On this occasion McClintock was told that the Sierra Terminals joint venture was going to use Newton Security Patrol at Long Beach for guard services. On or about October 15, the vice president told McClintock that he would talk to Newton and see what could be done with respect to the employment of the guards employed by the Company. Subsequently, McClintock was offered a job with Sierra Terminals; the other three guards employed on a permanent basis at that time were told that they would be called in when needed. This followed talks with Newton by both the vice president of the company and McClintock, at the vice president's suggestion. McClintock and the other guards declined Newton's offer of employment because at that time they were earning substantially higher wages than were offered by Newton. Two and possibly four of the guards then sought from the Company letters of recommendation, which the vice president testified he wrote.

In September 1963, McClintock had told Walker, the secretary-treasurer of the Union, that there were rumors that the terminal was going to be closed. Also, the record reflects that at this time there was some publicity in the local newspapers and trade journals with relation to the movement of the Company to Long Beach. However, the Trial Examiner found that there was no publicity concerning the termination of the guards at this time. In the latter part of October McClintock saw Walker of the Union and told him that the guards were going to be terminated.

On October 24, 1963, the Company, in a bulletin addressed to all employees and labeled as a report of company activities, advised the employees that they would be terminated as employees of the Company and would be offered employment by Sierra Terminals. The bulletin stated that this change would take place on November 1, 1963. Copies of these bulletins were not distributed to the guards because it was not customary for the guards to receive memoranda of this type, according to the testimony of the vice president of the Company.

On October 28, 1963, the vice president wrote a letter to Walker informing the Union that on October 31, the Company would cease business. The letter recited that the collective bargaining agreement would no longer be operative, as "this event the closing will terminate the employment of the guards who are members of your organization." The Trial Examiner found that this letter was the first direct communication from the Company to the Union about terminating the operations of the Company, and that there is no basis for a finding that the business manager of the Union was aware of the Company's decision to terminate the guards prior to the late October conversation with McClintock. The Trial Examiner concluded that after receipt of this letter, Walker, the Union representative, regarded a request to bargain as a futile gesture concerning the decision of the Company with respect to moving its facilities and the termination of the guards. He did seek to have the Company offer equivalent employment to the displaced guards but without success.

The Union filed the original charge in this action on February 7, 1964. The gravamen of the charge was that the Company had violated its bargaining obligation with the Union and on June 12, 1964, the Board issued a complaint on that ground. On June 24, 1964, the Union's attorney wrote the Company suggesting a settlement. The Company, on June 25, replied that it was "* * * now and always have been willing to bargain about any matters in dispute."

In his discussion and concluding findings, the Trial Examiner found that "the central fact establishing the Company's failure to comply with the mandate of the Act is that it executed a contract obligating it to leave its place of business and become a minority party to a joint venture without consultation with the Union." Accordingly, he found as a conclusion of law that "by entering into an agreement with Jones Stevedoring and California Maritime on September 5, 1963, which affected the employment of the employees in the unit described * * * without consultation or bargaining with the Union, Respondent has committed unfair labor practices violative of Section 8(a) (5) and 8(a) (1) of the Act." The Trial Examiner recommended that the Company, in addition to posting the usual notice, make the guards whole for any loss of earnings which they suffered from the time of their discharges to June 25, 1964, the date on which the Company indicated to the Union that it would be "willing to bargain about any matters in dispute." He noted that the General Counsel had specifically disclaimed seeking a remedy restoring the status quo ante or giving employment to the displaced guards. Hence, the Trial Examiner did not consider the question of reemployment or reinstatement. He stated that under the circumstances of this case it would appear to be an "exercise in futility" to recommend that the Company and Union bargain concerning the shutting down of the terminal or the employment of the guards.

In affirming, the Board adopted the findings, conclusions and recommendations of the Trial Examiner with one addition which is not material here.

The Company then filed a motion for reconsideration, stating that since it "went out of business at the time these guards were discharged", an unfair labor practice finding and remedial order were barred under the holding in Textile Workers of America v. Darlington Manufacturing Co., 380 U.S. 263, 85 S.Ct. 994, 13 L.Ed.2d 827 (1965). Darlington issued two months before the Board's decision. Stating that the motion for reconsideration contained nothing not previously considered by the Board, the Board denied the Motion.

The principal issue on this petition for enforcement is whether the Company's decision, based solely upon greatly changed economic conditions, to terminate its business and reinvest its...