VOLKSWAGENWERK AKTIENGESELLSCHAFT v. FEDERAL MARITIME COMMISSION ET AL.
No. 69
Supreme Court of the United States
Argued November 13, 1967.—Decided March 6, 1968.
390 U.S. 261
Richard A. Posner argued the cause for the United States. With him on the brief were Acting Solicitor
Robert N. Katz argued the cause and filed a brief for respondent Federal Maritime Commission. Gary J. Torre argued the cause for respondents Pacific Maritime Association et al. With him on the brief for Pacific Maritime Association were Edward D. Ransom and R. Frederic Fisher. On the brief for Marine Terminals Corp. were Owen Jameson and William W. Schwarzer.
Norman Leonard filed a brief for the International Longshoremen‘s & Warehousemen‘s Union, as amicus curiae, urging affirmance.
MR. JUSTICE STEWART delivered the opinion of the Court.
The petitioner, a German manufacturer of automobiles, is one of the largest users of the ports on the West Coast of the United States, delivering through them more than 40,000 vehicles each year, the majority transported there by vessels chartered by the petitioner rather than by common carrier. This case grows out of the petitioner‘s claim that charges imposed upon the unloading of its automobiles at Pacific Coast ports are in violation of the Shipping Act, 1916, as amended.
The Pacific Maritime Association (the Association) is an employer organization of some 120 principal common carriers by water, stevedoring contractors, and marine terminal operators, representing the Pacific Coast shipping industry. The primary function of the Association is to negotiate and administer collective bargaining contracts with unions representing its members’ employees, of which the International Longshoremen‘s and Warehousemen‘s Union (ILWU) is one. In late 1960 the
A committee of the Association investigated various possible formulas for collecting the Fund from the stevedoring contractors and terminal operators—i. e., those Association members who were employers of workers represented by the ILWU. A majority of the committee recommended that the Mech Fund assessment be based solely on tonnage handled, and this recommendation was adopted by the Association membership.3 Under this
Unlike shippers by common carrier, the petitioner must arrange and pay for the unloading of its own chartered vessels upon their arrival in port. For this purpose it has since 1954 contracted with Marine Terminals Corporation and Marine Terminals Corporation of Los Angeles (Terminals), which are members of the Association, for the performance of stevedoring and related services in unloading vehicles from the petitioner‘s chartered ships in West Coast ports, at a negotiated price. Prior to the Mech Fund assessment agreement, Terminals’ charge to the petitioner for these unloading services was $10.45 per vehicle, of which about a dollar represented Terminals’ profit. When the vehicles were assessed for the Mech Fund by measurement, the assessment came to $2.35 per vehicle—representing, if passed on to the peti-
The petitioner refused to pay any additional charge resulting from the Association‘s levy, and Terminals, while continuing to unload Volkswagen automobiles for the petitioner, did not pay its resulting assessment to the Association. The Association sued Terminals in a federal court in California for its failure to pay the Mech Fund assessments; Terminals admitted all the allegations of
“1. Whether the assessments claimed from [the petitioner] are being claimed pursuant to an agreement or understanding which is required to be filed with and approved by the Federal Maritime Commission under Section 15 of the Shipping Act, 1916, as amended,
46 U. S. C. 814 (1961) , before it is lawful to take any action thereunder, which agreement has not been so filed and approved.“2. Whether the assessments claimed from [the petitioner] result in subjecting the automobile cargoes of [the petitioner] to undue or unreasonable prejudice or disadvantage in violation of Section 16 of the Shipping Act, 1916, as amended,
46 U. S. C. 815 (1961) .“3. Whether the assessments claimed from [the petitioner] constitute an unjust and unreasonable practice in violation of Section 17 of the Shipping Act, 1916, as amended,
46 U. S. C. 816 (1961) .”
The petitioner then began the present proceedings by filing a complaint with the Commission raising the above issues. The petitioner alleged that the Association was dominated by common carriers10 which had agreed upon the assessment formula in order to shift a disproportionate share of the Mech Fund assessment onto the peti-
I.
The petitioner‘s primary contention—supported by the United States, a party-respondent—is that implementation of the Association‘s formula for levying the Mech Fund assessments was unenforceable, because the agreement among Association members imposing that formula was not filed with the Commission in accord with § 15 of the Act. That section provides that there be filed with the Commission “every agreement” among persons subject to the Act
“fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing, or destroying competition;
pooling or apportioning earnings, losses, or traffic; allotting ports or restricting or otherwise regulating the number and character of sailings between ports; limiting or regulating in any way the volume or character of freight or passenger traffic to be carried; or in any manner providing for an exclusive, preferential, or cooperative working arrangement. . . .”15
Until submitted to and approved by the Commission, “it shall be unlawful to carry out in whole or in part, directly or indirectly, any such agreement . . . .”16 The Commission is directed to disapprove any agreement
“that it finds to be unjustly discriminatory or unfair as between carriers, shippers, exporters, importers,
or ports, or between exporters from the United States and their foreign competitors, or to operate to the detriment of the commerce of the United States, or to be contrary to the public interest, or to be in violation of [the Act]. . . .”17
The Commission held that, although the Mech Fund assessment formula was a “cooperative working agreement” clearly within the plain language of § 15, it nonetheless was not the kind of agreement required to be filed with the Commission under that section:
“Although the literal language of section 15 is broad enough to encompass any ‘cooperative working arrangement’ entered into by persons subject to the Act, the legislative history is clear that the statute was intended by Congress to apply only to those agreements involving practices which affect that competition which in the absence of the agreement would exist between the parties when dealing with the shipping or traveling public or their representatives.
“It is not contested that the membership of [the Association] entered into an agreement as to the manner of assessing its own membership for the collection of the ‘Mech’ fund. Such an agreement, however, does not fall within the confines of section 15 as, standing by itself, it has no impact upon
outsiders. What must be demonstrated before a section 15 agreement may be said to exist is that there was an additional agreement by the [Association] membership to pass on all or a portion of its assessments to the carriers and shippers served by the terminal operators.” 9 F. M. C., at 82–83.
The Court of Appeals affirmed. That court felt itself confined by our decision in Consolo v. FMC, 383 U. S. 607, to determining simply whether the Commission‘s ruling was supported by “substantial evidence.” With “due deference to the expertise of the Commission,” it concluded “(albeit with some hesitation) that there is substantial evidence in the record considered as a whole to support the Commission‘s decision.” 125 U. S. App. D. C., at 290, 371 F. 2d, at 755.
The issue in this case, however, relates not to the sufficiency of evidence but to the construction of a statute. The construction put on a statute by the agency charged with administering it is entitled to deference by the courts, and ordinarily that construction will be affirmed if it has a “reasonable basis in law.” NLRB v. Hearst Publications, 322 U. S. 111, 131; Unemployment Commission v. Aragon, 329 U. S. 143, 153–154. But the courts are the final authorities on issues of statutory construction, FTC v. Colgate-Palmolive Co., 380 U. S. 374, 385, and “are not obliged to stand aside and rubber-stamp their affirmance of administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute.” NLRB v. Brown, 380 U. S. 278, 291. “The deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia. . . .” American Ship Building Co. v. NLRB, 380 U. S. 300, 318. Cf. FMB v. Isbrandtsen Co., 356 U. S. 481, 499–500 (where this Court overturned the Commission‘s construction of § 14 of the Shipping Act).
The Commission thus took an extremely narrow view of a statute that uses expansive language. In support of that view, the Commission argued in this Court that a narrow construction of § 15 should be adopted in order to minimize the number of agreements that may receive antitrust exemption. However, antitrust exemption results, not when an agreement is submitted for filing, but only when the agreement is actually approved; and in deciding whether to approve an agreement, the Commission is required under § 15 to consider antitrust
The Commission itself has not heretofore limited § 15 to horizontal agreements among competitors, but has applied it to other types of agreements coming within its literal terms. See, e. g., Agreements Nos. 8225 and 8225-1, Between Greater Baton Rouge Port Commission and Cargill, Inc., 5 F. M. B. 648 (1959), aff‘d, 287 F. 2d 86, and Agreement No. T-4: Terminal Lease Agreement at Long Beach, California, 8 F. M. C. 521 (1965), applying § 15 to lease agreements.22 In the latter case, decided only four months before its decision in the case before us, the Commission said:
“Section 15 describes in unambiguous language those agreements that must be filed; it does not speak of agreements per se violative of the Sherman Act.
Since the wording of section 15 is clear, we need not refer to the legislative history; there is simply no ambiguity to resolve.” 8 F. M. C., at 531.
To limit § 15 to agreements that “affect competition,” as the Commission used that phrase in the present case, simply does not square with the structure of the statute.23
The legislative history offers no support for a different view. The genesis of the Shipping Act was the “Alexander Report” in 1914.24 FMB v. Isbrandtsen Co., 356 U. S. 481, 490. While it is true that the attention of that congressional committee was focused primarily upon the practices that had cartelized much of the maritime industry, it is clear that the concerns of its inquiry were far more broadly ranging. The report summed up the testimony before the committee:
“Nearly all the steamship line representatives . . . expressed themselves as not opposed to government supervision . . . and approval of all agreements or arrangements which steamship lines may have entered into with other steamship lines, with shippers, or with other carriers and transportation agencies. On the other hand, the shippers who appeared as witnesses . . . were in the great majority of instances favorable to a comprehensive system of government supervision . . . [and] the approval of contracts, agreements, and arrangements, and the general supervision of all conditions of water transportation which vitally affect the interests of shippers.” Alexander Report, at 418. (Emphasis added.)
“That all carriers engaged in the foreign trade of the United States, parties to any agreements, understandings, or conference arrangements hereinafter referred to, be required to file for approval . . . a copy of all written agreements (or a complete memorandum if the understanding or agreement is oral) entered into (1) with any other steamship companies, firms, or lines engaged directly or indirectly in the American trade, or (2) with American shippers, railroads or other transportation agencies.” Alexander Report, at 419–420.
Nothing in the legislative history suggests that Congress, in enacting § 15 of the Act, meant to do less than follow this recommendation of the Alexander Report and subject to the scrutiny of a specialized government agency the myriad of restrictive agreements in the maritime industry.25
This is not to say that the Commission is without power to determine, after appropriate administrative proceedings, that some types or classes of agreements coming within the literal provisions of § 15 are of such a de minimis or routine character as not to require formal filing. Since the Commission‘s decision in the present case, Congress has explicitly given it such authority:
“The Federal Maritime Commission, upon application or on its own motion, may by order or rule exempt for the future any class of agreements between persons subject to this chapter or any specified activity of such persons from any requirement of this chapter, or Intercoastal Shipping Act, 1933,
where it finds that such exemption will not substantially impair effective regulation by the Federal Maritime Commission, be unjustly discriminatory, or be detrimental to commerce.
“The Commission may attach conditions to any such exemptions and may, by order, revoke any such exemption.”26
46 U. S. C. § 833a (1964 ed., Supp. II) .
But the agreement with which we deal here—levying $29,000,000 over five years, binding all principal carriers, stevedoring contractors, and terminal operators on the Pacific Coast, and necessarily resulting in substantially increased stevedoring and terminal charges—was neither de minimis nor routine. We hold that this agreement was required to be filed under § 15 of the Act.
II.
The petitioner also attacked the Association‘s assessment of its automobiles under § 16 and § 17 of the Shipping Act. Section 16 makes it unlawful “to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage,”27 and
§ 17 forbids any “unjust or unreasonable” regulation or practice “relating to or connected with the receiving, handling, storing, or delivering of property.”28 The Commission ruled that neither of these sections had been violated, and the Court of Appeals affirmed.
If the agreement is now filed under § 15, the Commission will be called upon again to consider the effect of §§ 16 and 17, since an agreement that violates a specific provision of the Act must be disapproved.29 Accordingly, it is not inappropriate, without now passing upon the ultimate merits of the §§ 16 and 17 issues, to give brief consideration to the Commission‘s handling of those issues upon the present record.
The Commission ruled that the petitioner had failed to demonstrate any “undue or unreasonable prejudice or disadvantage” under § 16 solely because it had not shown any unequal treatment as between its automobiles and other automobiles or cargo competitive with automobiles. In so ruling, the Commission applied the “competitive relationship” doctrine which it has developed in cases concerning rates for carriage of goods by sea.30
With respect to § 17, the Commission found that the assessment upon the petitioner‘s automobiles was not
“unreasonable,” because the petitioner had received “substantial benefits” in return for the assessment, and there was no showing of a deliberate intent to impose an unfair burden upon the petitioner. This, we think, reflects far too narrow a view of
“[Sections 16 and 17] proscribe and make unlawful certain conduct, without regard to intent. The offense is committed by the mere doing of the act, and the question of intent is not involved.” Hellenic Lines Ltd.—Violation of Sections 16 (First) and 17, 7 F. M. C. 673, 675-676 (1964).
The question under
The judgment of the Court of Appeals is reversed and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
MR. JUSTICE MARSHALL took no part in the consideration or decision of this case.
MR. JUSTICE HARLAN, concurring.
Although I agree with the conclusions reached by the Court in this case, I deem it desirable to amplify the reasons, as I see them, for what is decided today. More especially, I think that further justification is needed for the Court‘s decision (1) that the “assessment agreement” falls within the Commission‘s jurisdiction under
I.
The Pacific Maritime Association is a multi-employer collective bargaining group. Its “assessment agreement” directly in question here is closely related to a collective bargaining agreement covering a subject about which employers are required to bargain, “terms and conditions of employment.”1 This underlying labor agreement was, according to apparently unanimous industry and expert opinion, a highly desirable step forward in the shipping industry.
Multi-employer collective bargaining units have long been recognized as among the unit classifications that the National Labor Relations Board may deem “appropriate.” In Labor Board v. Truck Drivers Union, 353 U. S. 87 (1957), we held that Congress intended
“that the Board should continue its established administrative practice of certifying multi-employer units, and intended to leave to the Board‘s specialized judgment the inevitable questions concerning multi-employer bargaining bound to arise in the future.” Id., at 96.
We specifically referred to longshoring as an industry with a long history of multi-employer bargaining, and we noted
“cogent evidence that in many industries the multi-employer bargaining basis was a vital factor in the effectuation of the national policy of promoting labor peace through strengthened collective bargaining.” Id., at 95.
At the same time, the very existence of multi-employer units, and the obvious need for the employers involved to agree on collective policy, must invariably have competitive effects. The signatories to a collective bargaining agreement are frequently, by the very act of signing, agreeing with their own competitors on matters such as labor costs, certain nonlabor costs, services to be provided to the public, and (indirectly) price increases.
Multi-employer collective bargaining must therefore be reconciled with the sometimes competing policies of federal laws promoting and regulating competition, viz., the antitrust laws and, in the case of maritime labor relations, the Shipping Act. This is a problem on which Congress has provided relatively little direct guidance,2 but it is one of a kind that the Court has repeatedly grappled with since Allen Bradley Co. v. Union, 325 U. S. 797 (1945). It is a problem of line-drawing.
The Court, noting that the assessment agreement levied $29,000,000, thus “necessarily resulting in substantially increased stevedoring and terminal charges,” ante, at 277, holds that the assessment agreement must be filed under
This suggested accommodation seems to me demonstrably wrong. In the first place, as the Court notes, the filing requirement of
The real difficulty in this case is not to distinguish between agreements that must be filed and agreements whose impact on competition will be evaluated after implementation, but to define the Commission‘s jurisdiction in such a way that (whether challenges arise before or after implementation) the Commission will not improperly be brought into labor matters where it does not belong. The Court‘s only suggestion is that the labor agreements involved in this case “fall in an area of concern to the National Labor Relations Board.” Ante, at 278.
More circumspect analysis than this is needed, I believe. In the first place, since the later validity and antitrust immunity of all agreements subject to
The Commission took the position that
Since maritime employers are permitted to bargain as a group, and since they are required to bargain about certain subjects, the resulting agreements must have some exemption from the filing requirements of
The assessment agreement was, of course, consequent upon the labor agreement committing PMA to raise the fund. The union side was concerned with a guarantee that the fund would be raised somehow, and the
Often, the “allocation” decision follows directly from the terms of the labor agreement. In the case of a multi-employer agreement to raise wages, for example, each employer simply bears the cost of benefiting his own employees. In the present case, had it been possible to make the levy on each employer directly proportional to, and roughly simultaneous with, the savings to that employer from modernization, two things would have followed: the “allocation” decision could be said to stem directly from the terms of the labor agreement, and the modernization program would “pay for itself” as it went along, leaving shipping customers unaffected.
The PMA, however, did not (and presumably could not) apportion costs in this manner. To the extent that, under the plan chosen, individual employers were unable to absorb the levy and debit it against future savings from modernization, the decision how much each employer was to pay necessarily affected that employer‘s customers as a class. To the extent that the plan went on to determine which of an employer‘s customers would ultimately pay which share of an employer‘s dues, the agreement also made choices among customers of an individual employer.
The Commission nevertheless held that the agreement did not “affect competition” because there was “no agreement” to pass the levy on to individual customers. Whether the error be deemed one of “fact” or one of “law” these conclusions are irreconcilable with reality. Terminal companies such as MTC compete with each other for the business of unloading Volks-
The statements of numerous officials of the participating companies to the effect that there were no “agreements” affecting Volkswagen (statements constituting in large part the “substantial evidence” on which the Commission is supposed to have relied, 125 U. S. App. D. C., at 291, 371 F. 2d, at 756), are at best quibbles about the meaning of words. The members of the Association must be taken to have agreed to the obvious consequences of the paper they all signed. That paper did not destroy price competition for Volkswagen‘s trade; nor would a specific agreement to “pass on” the addi-
Commission review of the fairness of the agreement allocating the cost burden of mechanization does not mean Commission review of a labor agreement and does not imply consequences in conflict with national labor policy. Whether to mechanize, or otherwise modernize, and what provision should be made for displaced workers, are obviously matters of union concern, and negotiations about these things should be governed by the law of collective bargaining. Resolution of such questions by a decision to create a “Mech Fund” gave rise to a subsidiary “allocation” question. The union was concerned that the question receive some answer, but had no proper interest in which of the possible cost allocation plans was adopted, so long as any such plan raised the amount promised. On the other hand, in the present case no one has suggested that Maritime Commission review of a particular method of cost allocation may properly reach the question whether the obligation necessitating the allocation should have been entered into, or that the Commission may reject an allocation plan when there are no preferable alternative routes to collection of the necessary amount. Review of the fairness and propriety of a taxing scheme is not the same thing as reviewing the fairness and propriety of the uses to which the tax money, once collected, is put. When the Court notes that only the assessment agreement must be filed and examined, it seems clear that it contemplates a Com-
II.
With respect to the
The agreement that was before the Commission was, so far as appears, quite unlike any agreement that body had considered before. It dealt neither with a charge for particularized services in the carrying, handling, or storage of goods, nor with how such services would be provided. Rather, the agreement levied a “tax” on Association members, a tax which (insofar as the modernization program did not directly “pay its own way“) would be passed on to members’ customers and ultimately to the public. The tax would be used to pay for a general benefit to the shipping industry, but the allocation of that tax bore no direct relationship to benefits received by customers.
The Court holds that it was error for the Commission to reject challenges to this agreement under
On the surface, it might appear that the argument should be the other way around: it makes some sense to speak of an “undue or unreasonable preference or advantage” to, say, watermelons over automobiles when they are “competing” for a finite amount of shipping space; it becomes much more difficult to find anything that can be called a “preference” between such products with respect to any services that are available to both in unlimited quantities.
My Brother DOUGLAS states that the Commission has consistently adhered to its insistence upon a competitive relationship between the product preferred and the product disadvantaged, except where “there are services that are not dependent upon the nature of the cargo and the various charges therefor.” Post, at 314, n. 30. Yet, if ever it was clear that “the nature of the [products]” was not the basis for a difference in rates, it is in this case.
The true solution of the matter, it seems to me, is that in each situation the problem has been to devise some workable basis for determining whether rates are fair vis-à-vis other rates. It simply would not be feasible, as the Second Circuit has noted,8 to assess the fairness of charges for shipping heavy industrial equipment by comparison with the cost of shipping bananas. The notion of a “preference” for bananas over heavy equipment is simply too elusive to be implemented. At the same time, when the service rendered is, for example, procuring insurance or arranging for cartage,
In the present case, the problem before PMA was the allocation of a pre-specified total cost among its various members and their customers. Since this was very much a case of first impression, the Commission would have done well to go back to the language of
The real difficulty in this case is to formulate a workable definition of whether the burdens have been “unfairly” allocated. Obviously, as the debates in the PMA indicate, there was no “perfect” way to apportion the costs. Any analysis of the present problem must leave room for the implementation of some uniform, practical, general rule of assessment even though it have some features that are less desirable than some alternative imperfect rule. The difficulty with the method of assessment adopted by PMA is that it was not uniform and general but made special provision for automobiles. The fact that all automobiles are treated alike should
The Commission‘s interpretation of
In fact, the tax assessed is not “equal” as between Volkswagen and other shippers who will benefit more. The charge to MTC per Volkswagen was figured on a different basis from the assessments for handling other products; the figure reached was a substantially higher percentage of existing costs and charges; and the figure was so high that the additional cost apparently could
Finding no disagreement in principle between myself and the Court, I join the Court‘s opinion upon the premises stated in this opinion.
MR. JUSTICE FORTAS, concurring in the judgment.
I agree with the judgment and with Part I of the opinion herein. I do not understand that the Court‘s opinion purports to determine the effect of
MR. JUSTICE DOUGLAS, dissenting in part.
I believe the Court has misconstrued
collective bargaining in the maritime industry. If the tariff exacted from petitioner is discriminatory or unreasonable,
The collective bargaining agreement involved in this case, with its Mechanization and Modernization Fund (Mech Fund), cannot be evaluated properly without an understanding of maritime labor relations and technological developments in the shipping industry.
The history of maritime labor relations in this country has been punctuated with lengthy major strikes and
Because the shipping industry is vitally important both to our national commerce and national defense, the Federal Government has maintained a special interest in trying to promote its growth and stability. The Shipping Act, 1916, is one example of this concern.5 With respect to maritime labor relations, however, the activities of the Federal Government were, until our entry into World War I, primarily devoted to laws protecting or disciplining seamen as individual workers. The war years saw the Government actively encouraging collective bargain-
That strike was the product of deep-seated grievances of maritime employees regarding low wages and poor working conditions.6 The situation on the Atlantic Coast was not much better. Although an agreement was reached in late 1934 for Atlantic Coast workers, labor relations remained unstable and work stoppages were rampant. On both coasts, intra-union and inter-union disagreements, coupled with employer-union hostility, made agreement highly difficult. Quickie strikes dotted the ports, and another general strike followed in 1936. On the Pacific Coast, the employers and the ILWU (which had achieved recognition after the 1934 strike) were in constant conflict through 1948, when still another general strike erupted. This period, from 1934 to 1948, has been
“The ILWU (then a part of the AFL International Longshoremen‘s Association) gained formal employer recognition as a result of the general strike of 1934, which followed years of exploitation and abuse of longshoremen by their employers. The bitterness which had characterized the industry carried over into the subsequent employer-union relationship. The employers did their best to break the union, and the union retaliated just as militantly. The years which followed were among the stormiest in U. S. labor history. Between 1934 and 1948, the West Coast had over 20 major port strikes, more than 300 days of coastwide strikes, about 1,300 local ‘job action’ strikes, and about 250 arbitration awards.”8
During the stormy 1930‘s, the Federal Government was greatly expanding its role in labor relations. The NIRA and NLRA greatly revived unionism among both seamen and longshoremen in addition to workers in other industries. Those Acts guaranteed the right of collective bargaining and offered a means for recognition of unions; the unions gained members and strength. And with stronger unions, collective bargaining became more widespread. But the explosive situation in the maritime industry was not solved by these general enactments, and Congress passed a series of laws to deal with the labor problems in that industry. First was the Merchant Marine Act, 1936, 49 Stat. 1985, creating a United States Maritime Commission to investigate conditions of seamen on ships and to determine minimum wage scales and working conditions on vessels that were receiving govern-
The Board was instructed in the 1938 Act to submit to Congress by 1940 its recommendations for establishing a permanent federal maritime labor policy ensuring stable labor relations. The Board in its 1940 report concluded that conditions in the industry were still uneasy, and recommended a permanent federal body with wide jurisdiction over questions of maritime labor—including representation10 and settlement of disputes.
In 1948 another general maritime strike rocked the Pacific Coast. Following that strike, which lasted about 100 days, there was a “period of relative calm.”13 The 1948 strike had led to a change in employer leadership, a less hostile attitude on the part of the union leadership,
shall be considered and determined by the National Labor Relations Board in accordance with the provisions of the National Labor Relations Act: Provided, however, That nothing in this title shall constitute a repeal or otherwise affect the enforcement of any of the navigation laws of the United States or any other laws relating to seamen.” 52 Stat. 965.
holding up to 40 tons of freight. They are loaded at a factory or distribution point and lifted aboard a ship and unloaded as single units. Matson Co. reported that it took about 850 man-hours to load and unload a specially designed container ship carrying 6,500 tons using mechanized equipment. The same cargo carried in conventional loose form would take 11,000 man-hours (about 13 times as much labor) to load and unload. An added attraction of this saving in time is the fact that ships get in and out of port faster, providing additional cost savings. For example, Matson‘s container ships stay in port less than a day, compared with five days for a conventional ship. Shippers estimate that it cost in 1964 about $3,000 to $5,000 for such things as depreciation, seamen‘s wages and pier charges for each day a ship stays in port. The Wall Street Journal, Nov. 20, 1964, at 8, col. 2. For a more thorough consideration of the changes in technology that promise great benefits for the shipping industry, see the comprehensive eight-volume study of the United States Department of Labor, Manpower Utilization, Job Security in the Longshore Industry (1964). See also Shils, Industrial Unrest in the Nation‘s Maritime Industry, 15 Lab. L. J. 337, 356-358 (where the author notes improvements in construction of vessels, the use of highly mechanized cargo ships, changes in engine room operation, in the Deck Department and in the Steward Department, and a new line of semi-automated vessels); O. Hagel & L. Goldblatt, Men and Machines, Joint Publication of the I. L. W. U. and P. M. A. (San Francisco, 1963).
Earnest bargaining began in 1957. PMA wanted to obtain a guarantee from the ILWU that strikes and work stoppages would not result from the introduction and use of mechanization and other labor-saving devices. In return, the union wanted its workers to share in the cost savings resulting from modernization, and desired assurances that changes in work methods would neither create unsafe working conditions nor accelerate the productivity required of individual workers. After two years of preliminary negotiations, an agreement was made in August 1959 which provided for a further study of the problems of mechanization and for the establishment by PMA of a fund of $1,500,000 for the benefit of union workers.20
Negotiations beginning in May 1960 led to a “Memorandum of Agreement on Mechanization and Moderni
Thus, the agreement satisfied the desire of employers to modernize and eliminate outmoded and restrictive work rules, and at the same time provided a measure of security for the workers whose jobs would be affected by the use of the new devices. The agreement, however, left open the question of how the employers’ contributions of $5,000,000 a year would be raised. The question of a proper method of assessment had been discussed by the union and management during the preceding negotiations; several suggestions were offered by the parties. But in return for a commitment from the PMA members obligating themselves individually and collectively to the payment of the fund, the ILWU agreed to permit PMA to establish the method of payment.
PMA then set up a Work Improvement Fund Committee to determine the best method of raising the money. That Committee considered various bases for assessing contributions—man-hours of each employer, cargo tonnage, a combination of the two, cargo tonnage moving in containers, measurement of improvements in longshore productivity. The Committee majority recommended a cargo tonnage basis; its reasons for doing so were summarized by the court below as follows:
“The Committee recommended a formula based on cargo tonnage as a ‘rough-and-ready’ way to divide the cost, admittedly lacking the refinement of the productivity measurement method but also lacking its infeasibility and avoiding the inequity of the man-hour method whereby contributions are in inverse proportion to benefits received. It considered that cargo volume though not necessarily proportional was some indicator of stevedoring activities and that administrative simplicity was a cardinal consideration.
“The Committee recognized further that there were also objectionable features of the tonnage formula but considered these to be less weighty than the objections inhering in the other formulae. It recommended that the formula be reviewed to prevent the continuation of any hardship or inequity that might develop.”22
In recommending the tonnage formula, the Committee noted that the same system was used for assessing a part of PMA dues. It had also been the practice of PMA to use a tonnage formula for assessments allocating other types of labor costs, such as joint maintenance of dispatch halls and the payment of arbitrators’ salaries.23 In fact, it appears that the ILWU had itself proposed a tonnage formula during the negotiations and asked that it be incorporated into the collective bargaining agreement; but PMA resisted this approach, apparently wishing to keep its options open and fearing that incorporation in the agreement might tend to commit the PMA to a fixed formula that would also be included in a future agreement. The tonnage formula recommended by the Committee was subsequently adopted by the PMA membership.
It was specifically provided in the agreement that each employer would abide by the formula adopted by the
PMA treated the financing of the fund as an integral part of the collective bargaining process. The Committee established by PMA to recommend a funding formula was appointed by the negotiating committee which worked on the collective bargaining agreement;25 and the PMA membership ratified both the collective bargaining agreement and the funding formula at the same time.
It is not, I submit, possible, as a practical matter, to separate the Mech Fund provision in the collective bargaining agreement from the subsequent decision of
ceased after it was agreed that the method of collection was to be reserved to PMA.” In the printed record before the Court, however, I find no reference in Mr. St. Sure‘s testimony to a lack of interest on the part of the union concerning the method of collection of the fund. The Hearing Examiner does not indicate the testimony on which his interpretation of Mr. St. Sure‘s presentation is based; and, at the least, that part of his testimony quoted would appear to raise a strong doubt whether it could be said that the interest of the union ceased. In any event, it is clear from Mr. St. Sure‘s testimony that the method of collection was a prime topic of negotiations between the parties, and that the employers’ decision on the matter was intimately tied with the collective bargaining agreement.
The Mech Fund is a labor expense. Increased labor costs normally are passed on at least in part by increased prices. When the Auto Workers were recently negotiating with General Motors for a guaranteed annual wage, what would have been the consequence if nothing could have been decided until a federal agency had determined whether the impact on prices or on the economy was proper? I can imagine a regime of total controls where such prior approval would be required. But we have no such regime at present; and I can see no possible justification for a judicially created one in the explosive maritime field. To meet the costs increased by any collective bargaining agreement, a company might have to raise its prices and pass at least part of the added cost on to the consumer. But this happens all the time in the maritime industry, as well as in other industries, and does not constitute rate fixing of the type at which the Shipping Act is aimed. There is nothing in the legislative history of the Shipping Act which suggests that § 15 gives the FMC the power or license to oversee labor negotiations. But that is the effect of what the Court does today when it decides that the employers’ agreement here must be submitted to that body for approval.
My Brother HARLAN suggests that the assessment agreement can be distinguished from the collective bargaining agreement because “[t]he union was concerned
The Solicitor General would have us atomize the collective bargaining agreement and treat the schedule of charges that create the fund as a mere “side agreement.” But without the so-called “side agreement” there would have been no collective bargaining agreement. And it must be remembered that § 15, if applicable, requires that an agreement be filed “immediately with the Commission.” What would have to be filed is the entire agreement, not merely the proviso to which petitioner now objects. The Commission then must give notice and a hearing and “disapprove, cancel or modify” the agreement. Which persons would be entitled to participate in the hearing presents an initial problem.27 Thereafter, what provisions would become the target in the hearing
This is what my Brother HARLAN overlooks when he suggests that advance approval of “labor-related agreements” might be more desirable from the standpoint of facilitating collective bargaining than leaving open the question whether the agreement, or parts of it, would be subject to the antitrust laws. Presumably, he means that legal uncertainty concerning the possible vulnerability of certain provisions of an agreement to attack under the antitrust laws might stall negotiations or lead some association members to decline to cooperate in carrying out the agreement, fearing a treble-damage action. To be sure, the parties to a collective bargaining pact must frame their agreement to fit within the standards of the antitrust laws or any other governing statutes. But without a requirement of advance approval of the terms of the agreement, they remain free to bargain speedily. Frustration of the collective bargaining process comes not so much from the possibility that one or more provisions in a collective bargaining pact might be found illegal at some future date under the antitrust laws, or other statutes such as §§ 16 and 17 of the Shipping Act, but rather from the undue and possibly lengthy freezing or stultification of solutions to troublesome labor problems while an intimate part of the proposed agreement is sent to the FMC for approval.
With all respect, the Court‘s approach in requiring the funding plan to be submitted to the FMC for approval under § 15 of the Shipping Act will frustrate legitimate and speedy collective bargaining in the maritime indus-
The Court may well mean, as my Brother HARLAN suggests, that the “obligation to collect the Mech Fund,” contained in the collective bargaining agreement, is not to be examined by the Commission on remand, but rather the question is to be limited to the “propriety of the choice of the route to that objective.” But that misses the mark. My point is that the latter question is as much a part of the bargaining process as the former. Commission control over either question runs substantial risk of frustrating agreement by the parties on both issues, not to mention other matters in the collective bargaining pact. For example, if an allocation formula satisfactory to PMA members and to the Commission could not be devised, the fund might never be established, requiring perhaps other changes in the agreement, such as higher wages or continuance of some or all of the restrictive work rules.
If the present practice is an abuse, there is an existing remedy. This agreement between employers could of
ever, there are different charges levied depending upon the nature of the cargo involved. Petitioner conceded before the Hearing Examiner that “[w]e do not claim that the measurement formula ‘regardless of how manifested’ subjects Volkswagen automobiles to ‘prejudice or disadvantage’ as compared to other automobiles, and we admit that there is no other cargo classification in competition with automobiles.” The competitive relationship rule has been applied consistently by the Commission in appropriate circumstances. The same rule has also been used by the ICC. Since I cannot say in the circumstances of this case that the requirement of a competitive relationship is unreasonable or inconsistent with the provisions of the Shipping Act, I would defer to the Commission‘s expertise. Consolo v. FMC, 383 U. S. 607.
With respect to § 17, the Commission expressly noted that (1) the measurement basis for assessing automobiles resulted in an assessment almost 10 times greater than a weight basis ($2.35 per vehicle as against approximately $0.25); (2) that although other cargo was assessed as manifested, vehicles were always assessed on a measurement basis; and (3) while automobile cargo would probably receive only general benefits from the mechanization plan (such as freedom from strikes and slowdowns), such cargo, unlike some other cargo, was unlikely to benefit from technological improvements in loading and unloading. Yet, the Commission held that the difference in treatment was not unreasonable because although automobile cargo may not have benefited as much as other cargo, it did receive “substantial benefits” from the mechanization agreement. As the Court holds, however, such a standard, which focuses on only the benefits received, represents too narrow a view of § 17. What petitioner is contesting essentially is PMA‘s decision to adopt as the revenue ton for automobiles not a weight ton (2,000 pounds) but a measurement ton expressed in volumetric terms (40 cubic feet/ton). Since the average Volkswagen weighs only 1,800 pounds, but measures about 8.7 tons on a volume basis, it is being assessed $2.35 compared with the $0.25 it would otherwise have to pay on the basis of a weight-ton measurement. It is argued that this exaction is grossly disproportionate in light of the limited benefits which petitioner could expect to receive from the mechanization agreement as compared with those which other shippers could antici-
pate. To focus an inquiry solely on the benefits received may obscure the disparity between the charges ultimately falling upon petitioner and those exacted from other shippers. The Commission should compare the benefits received with the charges imposed on petitioner‘s cargo and with those levied upon other cargo, which receives substantially similar benefits, before the question of reasonableness can be resolved. This determination is for the Commission to make in the first instance.
Notes
“fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing, or destroying competition; pooling or apportioning earnings, losses, or traffic; allotting ports or restricting or otherwise regulating the number and character of sailings between ports; limiting or regulating in any way the volume or character of freight or passenger traffic to be carried; or in any manner providing for an exclusive, preferential, or cooperative working arrangement.”
The Commission is instructed in
Any agreement which is not approved, or which is disapproved, by the Commission is declared by
“It shall be unlawful for any . . . person subject to this chapter, either alone or in conjunction with any other person, directly or indirectly . . . to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever . . . .”
“Every . . . person subject to this chapter shall establish, observe, and enforce just and reasonable regulations and practices relating to or connected with the receiving, handling, storing, or delivering of property. Whenever the Board finds that any such regulation or practice is unjust or unreasonable it may determine, prescribe, and
“The provisions of this title shall not in any manner affect or be construed to limit the provisions of the National Labor Relations Act, nor shall any of the unfair labor practices listed therein be considered a dispute for the purposes of this title. Questions concerning the representation of employees of a maritime employer . . .”
“The longshore industry is technologically among the most backward. An industrial engineer from any one of the mass production industries would be horrified to find sacks of coffee on the San Francisco docks being handled just as they have been handled since sailing ship days. No one of the many separate corporate links in the transportation chain has sufficient interest in greater efficiency to force the changes in coffee handling methods, for example, which, to be effective, must start in Brazil and be carried right through to Hills Brothers or Folgers in San Francisco.” Fairley, The ILWU-PMA Mechanization and Modernization Agreement, 12 Lab. L. J. 664, 665 (1961).
The first big change in technology along the docks, notes Mr. Fairley, was the use of lift trucks, propelled by wartime demands for greater efficiency during World War II. Since that time, new methods of bulk handling of cargo have been developed, and unit loads have been increasingly used (such as those made by gluing items together or strapping them together or containerizing them). Id., at 666. One of the most efficient operations of containerization has been used by the Matson Navigation Co. In August 1964 that company cut its rates by nearly 10%, citing cost reductions made possible by a ship improvement and “containerization” plan. The plan relates to container cargo, where the containers are boxes
“It [the method of payment of the fund] was a definite part of the negotiations in that the union took a position with regard to the method of collection. PMA took a position with regard to the method of collection. There were discussions with the union during negotiation as to the problems that had been presented by the method of collection used with relation to the million dollars and a half.
“We discussed with the union the differences of opinion among our own members as to the equitable method of providing for the collection of this money.
“We ended up with an agreement by the union that, inasmuch as the employer members of the bargaining unit had committed themselves specifically to the payment of the sum, that whereas they were interested in the assurance that the sum would be collected, they would allow us to work out among ourselves the method of actual collection within the membership of PMA.”
Such action, however, did not make the union a disinterested party; rather, the union certainly had a continuing interest in the method of financing the fund. Mr. St. Sure, who was deeply involved since 1948 in negotiations with the ILWU, testified:
“There was a continuing interest and a continuing concern as to whether or not the collections under the fund were being met. Obviously they have, by joint trusteeship, joint custody of the fund, and I can assure you that they were alert as to whether or not the method of the custody, was working, because they believed this and, in fact, knew it was their money to spend in accordance with the agreement.
“After all, this was a continuing relationship that we have, by the collective bargaining agreement, and my experience would suggest to me that we couldn‘t have adopted the method which would defeat the very purpose for which we had reached a bargain without having further negotiations.”
The Hearing Examiner stated in his opinion that “Mr. St. Sure testified that the ILWU‘s interest in the method to be adopted,
“Well, this was still part of the bargaining process. We were still actually trying to conclude the bargain which we had developed and had signed a memorandum to cover. We still had the responsibility as a negotiating committee of reporting back to the board of directors, and then to the membership, and this was simply a convenient means of calling in some men that we felt were more expert in this field than the negotiators were who were operating people to make a recommendation as to a method of payment.”
“The [Commission of the Port of New Orleans] has made a charge to help defray its costs of operating facilities as measured by cargo handled in the area and the only question is whether its facilities are being used and the commission is performing a service reasonably related to its charges. The Examiner considered the evidence and found that it was.” (Emphasis added.) 6 F. M. B., at 418-419.