Waterfront Com'n of New York Harbor v. Mercedes-Benz of North America, Inc.

• Decision Date: 04 June 1985
• Docket Number: MERCEDES-BENZ
• Citation: 493 A.2d 504,99 N.J. 402
• Parties: , 117 Lab.Cas. P 56,510 WATERFRONT COMMISSION OF NEW YORK HARBOR, on Behalf of itself and of the State of New Jersey, Plaintiff-Appellant, v.OF NORTH AMERICA, INC., Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 402

99 N.J. 402

493 A.2d 504, 117 Lab.Cas. P 56,510

WATERFRONT COMMISSION OF NEW YORK HARBOR, on Behalf of itself and of the State of New Jersey, Plaintiff-Appellant, v. MERCEDES-BENZ OF NORTH AMERICA, INC., Defendant-Respondent.

Supreme Court of New Jersey.

Argued Feb. 20, 1985.

Decided June 4, 1985.

David B. Greenfield, Asst. Counsel, East Brunswick, for plaintiff-appellant (Gerald P. Lally, Gen. Counsel, New York City, attorney).

Jeffrey C. Poll, Montvale, for defendant-respondent (Allan G. Freund, Montvale, attorney).

The opinion of the Court was delivered by

STEIN, J.

This case concerns the jurisdiction of the Waterfront Commission of New York Harbor (Waterfront Commission or Commission) over certain workers employed by defendant, Mercedes-Benz of North America, Inc. (Mercedes-Benz or Mercedes), at its automobile-preparation facility in Port Newark. The Chancery Division ruled that these employees were not longshoremen or hiring agents subject to registration or licensing under the Waterfront Commission Act, N.J.S.A. 32:23-1 to -225, ¹ and the Appellate Division affirmed. We granted certification on the petition of the Waterfront Commission. 97 N.J. 702, 483 A.2d 210 (1984).

I

The Waterfront Commission brought this action to enjoin Mercedes-Benz from violating the Waterfront Commission Compact (the Act), an interstate agreement entered into by the States of New Jersey and New York with the consent of Congress. L.1953, chs. 202 and 203; 1953 N.Y.Laws 2417 and 2443, chs. 882 and 883; Act of August 12, 1953, Pub.L. No. 252, c. 407, 67 Stat. 541. Plaintiff alleges that certain employees at Mercedes' former vehicle preparation facility in Port Newark ² were either not registered as longshoremen, in violation of N.J.S.A. 32:23-27, or not licensed as hiring agents, in violation of N.J.S.A. 32:23-12. The Commission sought to recover from Mercedes payroll assessments ³ with interest and penalties pursuant to N.J.S.A. 32:23-58 and -74(8), as well as statutory civil penalties for violating the Compact pursuant to N.J.S.A. 32:23-89.

From 1968 until September, 1983 Mercedes leased Building 250 in Port Newark from the Port Authority of New York and New Jersey. Mercedes used this facility for vehicle storage and preparation work on the luxury automobiles it imported by ocean carrier from West Germany. The work performed at Building 250 included removal of the cosmoline coating that protected the vehicles during shipment, inspection for body damage, checks of fluid levels, monitoring the numerous mechanical and electrical systems, and verification that the vehicles met both company and governmental standards. Any deficiencies were remedied by Mercedes employees before delivery of the vehicles to dealers. The Commission did not assert jurisdiction as to other work performed at this facility, such as repair of "company" cars and cars under warranty, and modification of automobiles purchased in West Germany for use in the United States.

The Mercedes employees who performed this work were hired on a permanent basis and were members of a warehouse local of the International Longshoremen's Association. Many of these employees were highly trained and their jobs required the use of specialized tools, testing devices, and equipment. The Commission produced evidence that it had required the registration of the employees of a number of independent firms that provided similar automobile preparation services for cars imported by other automobile companies. ⁴

The Commission contended that those Mercedes employees who removed the protective coating from the vehicles, inspected for and repaired damage sustained during ocean shipment, or who were involved in the storage of the vehicles were "longshoremen" within the meaning of the Act, N.J.S.A. 32:23-85(6), and that the persons who hired them were "hiring agents" as defined in N.J.S.A. 32:23-85(9). ⁵ The Commission's claim that these employees were subject to registration, licensing, and payroll assessments hinges on the interpretation of the statutory term "longshoreman." N.J.S.A. 32:23-85(6) defines "longshoreman" as follows:

(6) "Longshoreman" shall also include a natural person, other than a hiring agent, who is employed for work at a pier or other waterfront terminal

(a) either by a carrier of freight by water or by a stevedore physically to perform labor or services incidental to the movement of waterborne freight on vessels berthed at piers, on piers or at other waterfront terminals, including, but not limited to, cargo repairmen, coopers, general maintenance men, mechanical and miscellaneous workers, horse and cattle fitters, grain ceilers and marine carpenters, or

(b) by any person physically to move waterborne freight to or from a barge, lighter or railroad car for transfer to or from a vessel of a carrier of freight by water which is, shall be, or shall have been berthed at the same pier or other waterfront terminal, or

(c) by any person to perform labor or services involving, or incidental to, the movement of freight at a waterfront terminal as defined in subdivision (10) of this section. [Emphasis added.]

The Chancery Division focused on the prefatory language of paragraph (6) and on subparagraph (c), the subparagraph upon which the Commission's claim was based. The court observed that in order to satisfy the statutory definition of longshoreman, the Mercedes employees had to work at a pier or other waterfront terminal and their work had to involve or be incidental to the movement of freight. The court reasoned that the status of the designated Mercedes employees as longshoremen depended upon the meaning to be given to the statutory term "freight." Not only does the statute require that the work performed be incidental to the movement of freight, but the requisite location of the work, the "other waterfront terminal," is partly defined in terms of its use as an area for work incidental to or involving the movement of freight. ⁶

The Act defines freight tautologically: " 'freight' means freight which has been or will be, carried by or consigned for carriage by a carrier of freight by water * * *." N.J.S.A. 32:23-85(10). Conceding that the Mercedes vehicles "ha[d] been carried by a carrier of freight by water," the trial court concluded that the vehicles were "freight" only when they were being "handled by people as part of a transportation service rendered for pay to [Mercedes]" but that they ceased to be freight when they came into Mercedes' possession at Building 250. Accordingly, the trial court found none of the Mercedes employees to be longshoremen or hiring agents within the meaning of the Act. This decision was affirmed by the Appellate Division.

II

A thorough understanding of the statutory terms crucial to the resolution of this case is afforded by reference to the history of the Waterfront Commission Act and its amendments. The original Act was passed in 1953 by the States of New Jersey and New York as an interstate compact with congressional consent. L.1953, chs. 202 and 203 (codified at N.J.S.A. 32:23-1 et seq.); 1953 N.Y.Laws 2417 and 2443, chs. 882 and 883, N.Y.Unconsol.Laws § 9801 et seq. (McKinney 1974, Supp.1984-85); Act of August 12, 1953, Pub.L. No. 252, c. 407, 67 Stat. 541. This Court has previously emphasized that the primary purpose of this bistate legislation was the elimination of corruption on the waterfront in the Port of New York Harbor. In Hazelton v. Murray, 21 N.J. 115, 120, 121 A.2d 1 (1956), we noted the existence of a serious threat to the supremacy and economic well-being of New York Harbor:

This threat lay in the fact that criminals, racketeers and hoodlums had acquired a stranglehold upon port activities through their control of key positions in a large number of the 64 locals of the International Longshoremen's Association (eleven of the locals were New Jersey locals), which numbered in its membership not alone the longshoremen but as well the pier superintendents and hiring agents who employed and supervised their work * * *.

The public hearings on the New York Crime Commission's Fourth Report, conducted by Governor Dewey on June 8 and 9, 1953, developed in fact, as one witness phrased it, that " * * * it is certain and evident that the ILA in this harbor is a racket union * * *. [T]he basic problem on the waterfront is not crime, but how to get a decent labor-management set-up, free of the control of racketeers. The basic problem is not law enforcement, but how to make the waterfront law-enforceable by stripping the racketeers of their false union coloration." Public Hearings Record, p. 119. The Fourth Report recounts "the exploitation and betrayal of the rank and file dock worker by his ILA officials and representatives," p. 19; "It was established that at least 30 per cent of the officials of the ILA longshoremen locals have police records. Waterfront criminals know that the control of the local is a prerequisite to conducting racket operations on the piers. Through their power as union officials, they place their confederates in key positions on the docks, shake down steamship and stevedoring companies by threats of work stoppages, operate the lucrative public loading business, and carry on such activities as pilferage, loansharking and gambling." (pp. 23-24) [Id. at 120-21, 121 A.2d 1.]

See also In re Application of Waterfront Comm'n, 32 N.J. 323, 331, 160 A.2d 832 (1960) (The purpose of the Act was to eliminate evil conditions, primarily the domination of the I.L.A. by criminal elements, on the waterfront in the Port of New York Harbor.); N.J.S.A. 32:23-2 to -4 (Findings and Declarations of the Act).

In accordance with its statutory mandate to eliminate the pervasive involvement of criminals in waterfront activity, the Waterfront Commission established by the Act proceeded to regulate employment practices in the Port of New York. See, e.g., N.J.S.A. 32:23-7 and -10(6) to (14). The Act replaced...