Federal Maritime Commission v. Pacific Maritime Assn – Oral Argument – December 07, 1977

Media for Federal Maritime Commission v. Pacific Maritime Assn

Audio Transcription for Opinion Announcement – March 01, 1978 in Federal Maritime Commission v. Pacific Maritime Assn

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Warren E. Burger:

We will hear arguments first this morning in number 76-938 Federal Maritime Commission and others against the Pacific Maritime Association.

Mr. Friedman you may proceed whenever you are ready.

Daniel M. Friedman:

Mr. Chief Justice, may it please the Court.

Section Fifteen of Shipping Act requires persons covered by the Act to file with the Federal Maritime Commission, a category, seven different categories of agreements.

One of which is every agreement controlling regulating preventing or destroying competition.

Now the commission is instructed by the statute to disapprove agreements that fail to meet certain statutory criteria and to approve all others.

It is illegal either to carry out either an agreement of that the commission has not approved subject to the Act or one that has been disapproved, and any agreement approved by the commission, thereby obtains antitrust immunity.

There are two questions in this case which is here on a writ of Certiorari to the Court of Appeals for the District of Columbia Circuit.

The first one is whether Section Fifteen covers any provision of collective-bargaining agreements, and the second is if that question is answered affirmatively whether the Federal Maritime Commission in this case, properly denied to the particular provisions here involved a labor exemption and exemption that the commission has recognized as appropriate under section 15 for collective-bargaining in certain circumstances.

The respondent, the Pacific Maritime Association is an employers association comprised of most of the employees in the west coast Maritime Industry, steam ship companies terminal operators and stevedores.

The respondent International Longshoremen’s and Warehousemen’s Union is the collective-bargaining represented of the employees in that industry and bargaining on the Pacific West Coast generally take place on an areawide basis.

There are however a small number of employers operating on the west coast who are not members of Pacific Maritime Industry including a number of ports on the pacific west coast, that operate their own terminal facilities.

Since 1935, PMA and its predecessors in the Union have operated under a collective-bargaining agreement that provided detail arrangements governing the operation of the waterfront on the west cost.

The most important aspects of this is that together they have organized in control a joint registered workforce, a force which is registered and which is dispatched under Union hiring halls that are jointly administrated to particular employers on a job basis, the men are rotated, you do not have a particular crew working full time for a particular employer.

The men are rotated from job to job as the jobs come up.

The PMA has a very elaborate system of central record keeping and payroll records, everyone is paid centrally even though they work for one employer for two days and another employer for three days of the week, and in addition there is a very extensive jointly operated fringe-benefit program under which they have a guaranteed annual wage, pension plans, welfare plans, vacations plans and so on and all members of PMA are required to contribute to the fund that sustains these fringe-benefits.

Now prior to 1972 which was when the agreement involved in this case was negotiated.

Employers who are not members of PMA could obtain men from registered workforce, Union members by negotiating directly with the local Unions involved in their particular areas and this happened frequently separate contracts were negotiated between many of the ports involved in this case and the local Union.

And in addition the individual ports were able to negotiate for the fringe-benefits provided under the master contract by a participation agreement that they negotiated with PMA and the Union.

And under this arrangement, the Union permitted some of the nonmembers employers to use what they called steady gangs or steady men that is men who worked full time for one employer rather being rotated from individual to individual.

PMA was of the view of that the nonmembers use of the registered work force has it functioned put its members the PMA members under what they described as an obvious competitive disadvantage as against the nonmembers.

And a major reason, PMA’s President indicated, page 90 of the record was that under this arrangement if PMA members will close down as result of a labor dispute, the members of the ports who are not members could continue to operate because they were not bound by the arrangements, they were not members of PMA and as result of this cargo and business was diverted from the members of PMA during these periods of labor disturbance to the nonmembers, which they thought was gave the nonmembers, an unfair competitive advantage.

They also believed that the use of the steady men gave them an advantage and finally they thought that it gave the nonmembers an advantage that they were not required to pay their full share of the fringe-benefits, in the same way the PMA members were, and after extensive bargaining in 1972, PMA and the union agreed upon something called the Nonmember Participation Agreement.

An arrangement that was made a part of the collective-bargaining agreement, and the provisions provides that nonmembers must agree to be bound by the terms of the nonmembers participation agreement as a condition to using the registered work force.

Now, we set forth in our brief, a number of provisions at pages 10 and 11 of a brief a number provisions of this nonmember participation agreement, that had an impact upon the nonmembers but there are two of them that I would like to stress at this argument because those are the ones we think that probably have the greatest impact in terms of competition.

The first thing was that the nonmembers must use the registered workforce upon the same terms as the members which included drawing them off course from the hiring halls which they had been doing in the past and a limited use of them in the case there were Union works stoppages against PMA to the same extent that members of PMA were limited and the non-member participation agreement stated the essence of the this requirement was the acceptance by nonmembers participants of the principle that a work stoppage ILWU against PMA members is a work stoppage against nonmember participants.

In other words, if there was a work stoppage against PMA the nonmembers of PMA nevertheless would be bound not to use the work force at the time PMA members were barred from it.

The second thing is that the nonmembers who wished to use the registered workforce had to participate in the fringe-benefit plan on the same terms and conditions as PMA members, that is they had to same payments to the fringe-benefit program that PMA members would make.

After the union and PMA agreed upon this nonmember participation agreement, they endeavored to get the nonmember ports to sign the agreement and they pointed out to the nonmember ports that unless they sign this agreement they would not be able to use the registered workforce and that is set forth at pages 65 and 77 of the appendix.

Mr. Friedman, you referred to nonmember ports and that my understanding is that the PMA consist of steam ship companies, terminal operators, stevedores and so forth, when you say nonmember ports are there entire ports which have none of those – who are members of the PMA?

Daniel M. Friedman:

There are some ports as I understand it where no one is a member, there there are other ports where the port operated facilities are not but there are other facilities in the port that are operated by PMA.

PMA, by the way will accept anyone to membership who agrees to its terms but I use this as kind shorthand it is really all nonmembers of PMA who engage in any of these activities but this particular case basically involves the ports.

An are they primarily publicly operated ports?

Daniel M. Friedman:

Primarily yes.

It mean there public bodies operating.

Daniel M. Friedman:

Yes there all public bodies and the public bodies are required under the state Statute to do certain things and do not do certain things.

The response of the ports to the adoption of this nonmembers participation agreement and the endeavors by the Union and PMA to get them to join it and sign up, was two things.

First, they filed a complaint with the Federal Maritime Commission and secondly they file three antitrust cases.

Two of those are still pending, the third has been dismissed.

The complain with the commission alleged that this nonmembers participation agreements –.

Was the dismissal on merits?

Daniel M. Friedman:

No this was dismissed by the plaintiff.

The records indicates they decided to dismiss its employees.

And I might add that the antitrust complaint that was dismissed challenge only one narrow aspect of this particular nonmember participation agreements.

Something dealing with what they call stuffing and unstuffing of the containers at the waterfront and that has dropped out of the case because the National Labor Relations Board has held of that was illegal “hot cargo” clause so that is no longer in the case.

They alleged that the nonmember participation agreement was an agreement that had to be filed under Section Fifteen and that was an illegal agreement under both Section Fifteen and also several other sections of the act and they urged the board to take jurisdictions of the case and to disapprove the agreements, I am sorry the commission on the Board.

The commission severed for preliminary determination, two question in the case one whether Section Fifteen covered this agreement and second if it did whether it was entitled to a labor exemption.

Lengthy affidavits were filed in the case and the basic point the ports made was that the registered work force contains the skilled people necessary to operate these facilities and without the skilled people they could not effectively operate their facilities.

On the other hand the ports pointed out that if they intended to use nonunion labor if they could get it to do this work the union undoubtedly would throw picket lines around and close down the ports.

If on the other hand they singed up under this agreement, it would do two things according to the ports, one it would increase their expenses for variety of reasons and secondly it would turn over control of their labor relations which under their statute they are obliged to handle to third persons because they were bound by doing this — they would bind themselves to all of the requirements of PMA.

The commission held that it has jurisdiction under Section Fifteen over this agreement and that the agreement was not entitled to a labor exemption.

Now, the commission applied the standards it had developed in the case called Boston shipping to determine the existence of a labor exemption.

Is there any Statutory labor exemption in the Federal Maritime Act?

Daniel M. Friedman:

No, there is not Mr. Justice but the commission’s theory is that since an antitrust exemption results when they approve an agreement under Section 15 and since competitive considerations are a important factor in the commission’s administration of Section 15, it is appropriate to imply under statute a labor exemption (Inaudible) for that this Court has developed under the antitrust laws and that is the basic theory upon which the commission operates.

Mr. Friedman, am I right the commission has not yet either approved or disapproved the agreement.

Daniel M. Friedman:

That is incorrect, the all the commission has done is make the threshold determinations that the agreement has to be filed and that is entitled to labor exemption– and indeed after it makes those determinations, it issued another order setting the issues on the merits for hearing a determination.

The commission said that this was an agreement which controlled or affected competition between members and the nonmembers and therefore was covered by Section Fifteen and accordingly was applied to the filed unless a labor exemption existed.

It found there was no labor exemption for two reasons under two of the criteria it had developed under Boston shipping.

First it said, this provision did not relate to a mandatory condition of mandatory subject of bargaining, because it was directed not of the labor conditions of the members of PMA but to the labor conditions of third persons, that is the nonmembers of the ports.

In addition the second related issue is since it attempted to impose terms and conditions on people outside of the membership of PMA was in attempting to impose those conditions beyond the bargaining unit.

Daniel M. Friedman:

It concluded that this nonmember participation agreement had a potentially severe and adverse effect upon competition but only a minimal effect on the collective-bargaining process, that is cited on page 70 A of the appendix to the petition.

Mr. Friedman, when the commission asked whether the agreement is entitled to a labor exemption, even though it must be filed under section Fifteen, if they say that it does, is that just the equivalent of approving it.

Daniel M. Friedman:

No that is not, that means —

It does mean that the commission will not proceed it to deal with antitrust considerations in the matter because they think that under our cases or under the Court’s cases whatever effect on competition is covered by the “labor exemption”.

Daniel M. Friedman:

That is correct-this would not — this ruling of the commission granting a “labor exemption” would not be an approval under under Section Fifteen.

But it also keeps them from disapproving it.

Daniel M. Friedman:

Yes Yes.

Keeps them from disapproving it, although that otherwise they might disprove it on the grounds if it effect on competition.

Daniel M. Friedman:

That is correct.

But of course in considering whether there is a “labor exemption” They do carefully consider the impact on competition.

Oh I understand – I understand that.

Daniel M. Friedman:

But, this is the end of the case as far as the commission..

But if they say that the agreement is not entitled to a “labor exemption” then they are going to decide whether they would approve it or not.

Daniel M. Friedman:

That is correct.

And I take it from what you have answered to Mr. Justice Stevens, just saying that the agreement is not entitled to “labor exemption” is not equivalent of disapproving it.

Daniel M. Friedman:

No no no.

So they could still approve it and thereby insulated from antitrust.

Daniel M. Friedman:

Yes they could.

If we prevail in this case so the commission will go ahead it could approved or could disapprove.

And say that this is essential for the running of this Steamship Business.

Daniel M. Friedman:

Yeah, the only issues, I repeat is the threshold issue.

And if its- if there is a finding contrary to this case that there is a “labor exemption” then what follows, the commission —

Daniel M. Friedman:

That is the end of the proceeding.

Say as you do not need to file it.

Daniel M. Friedman:

Well they filed it, in effect they would I presume they would in effect return it.

That is.

But they do not approve it.

Daniel M. Friedman:

They do not approve it.

You must say then, because the “labor exemption” is applicable here and this is not agreement that need to be filed.

Daniel M. Friedman:

I would say that is the effect.

Daniel M. Friedman:

That would be the effect in the effect of it.

Well, what is their order.

In finding a “labor exemption” then what does the commission do?

Daniel M. Friedman:

I could not tell you.

I hope to get the answer.

But in any event they do not report to approve it and the agreement that is still open to attack in the Courts as a violation..

Daniel M. Friedman:

Oh yes yes they have not- there is no approve..

Its not approved but it certainly has been disapproved.

Daniel M. Friedman:

It has not been approved or disapproved.

Because there is a “labor exemption” you do not need to file this for approval, is that it?

Daniel M. Friedman:

In a fact that would you have to preliminarily file it in order, I suppose for them to know whether it has a — but at the- the end result of giving it a “labor exemption” is that it did not have to be filed at all –.

But it effectively takes the anti-trust issue out the Administrative process.

Daniel M. Friedman:

Oh yes, its over because.

And puts it back potentially in the Court so you must assume –.

Daniel M. Friedman:

In the anti-trust Court and I assume the anti-trust Court would not be bound of course by the commissions to.

Well, they do not purport to decide..

John Paul Stevens:

Mr. Friedman, is it not when you talk of “labor exemption” in this context, you are talking about the exemption from the requirements of the “Shipping Act” rather than the anit-trust.

What that means if there is an “labor exemption” and you are using the term, it means that the agreement need not have been filed pursuant to Section Fifteen.

Daniel M. Friedman:

That is what- if that t

If they had so ruled.

Daniel M. Friedman:

But all I am suggesting is sometimes you may have to —

It may have been un-filed sure but —

Daniel M. Friedman:

— to determine whether you had to file.

Indeed, sometimes people will file an agreement requesting a ruling but it does not have to be filed to be sure that they are not subject to the Shipping Act.

John Paul Stevens:

But in determining whether or not there is a so called “labor exemption” the commission draws not on “Shipping Act” cases but on the decisions of the Federal Courts including this Court.

Daniel M. Friedman:

It draws upon those decisions but it brings to their — its expertise on the Shipping Industry and balancing and weighing the competing impact on the one hand on collective bargaining and laboring too or the other hand on competition.

Well, it draws on Allan Bradley and those cases.

Daniel M. Friedman:

In weighing the competing —

Which exonerated sudden activities of labor unions from the antitrust laws.

That is the body of law upon which the commission evidently draws.

Daniel M. Friedman:

Oh yes yes its says in fact it states that the exemption is drawn from those decisions and its four criteria that it developed in Boston Shipping was stated to be its view of a distillation of the teachings of this Court and the anti-trust immunity cases and indeed in this sort, it thought that this particular agreement was very similar and it is ultimate in fact, its ultimate contours to the agreement this Court held was not entitled to a “labor exemption” in the Pennington case because it said in both cases its a contract under which attempts are made impose terms and conditions outside of the bargaining and of course in Pennington there was an attempt to drive the people out of business which is not here but it seems and we fully agree that the basic rationale of those decisions, the decisions of this Court is that labor and management cannot get together, in an attempt to impose terms and conditions outside the bargaining unit, employers outside the bargaining.

They cannot because of the antitrust laws, they are subject to the antitrust laws, is that what you mean?

Daniel M. Friedman:

Yes.

And the reason the commission draws on our labor cases or the Court labor cases is because it is charged with considering antitrust considerations in approving agreements that have to be filed and there is in turn a pro tem or exemption from the antitrust laws for certain types of labor agreement.

Daniel M. Friedman:

That is correct.

But it does not draw on our labor cases, it draws on antitrust..

Daniel M. Friedman:

Except to an extent to the extent for example where it has to consider whether something is a mandatory subject of bargaining and if this Court has interpreted that provision under “National Labor Relation Act”, to be drawn on those cases, basically what I would say is it draws upon the antitrust cases in determining the scope of the “labor exemption” but then it implicates Shipping Act considerations when it decides whether or not the particular agreement is entitled to the “labor exemption”

Are you or is it necessary for you to defend the correctness and wisdom and accuracy of the Boards or the Commission so called distillation in these case.

Daniel M. Friedman:

Well, I think it probably is because our opponents challenged and the opponents say that the commission has improperly defined “labor exemption”.

John Paul Stevens:

Well, do you think it is little oversimplified if —

Daniel M. Friedman:

Well, I do not think so Mr. Justice because that presents the general contours, the general cause, I think that real criticism with us, perhaps is more in the application of that test to the facts of this case than in the test itself.

I do not think there is any quarrel between us that the Commission properly can drew upon this Court’s decisions defining the scope of the antitrust “labor exemption” in determining the scope of the “labor exemption” under —

John Paul Stevens:

In any event, in this case, the commission — there was no so called “labor exemption” and right here wrongly that is what is found.

Your brothers on the other side, their first position is that no collective bargaining agreement is subject to section Fifteen requirement of filing.

Whether or not there is a “labor exemption” within the Boards criteria is really irrelevant to that basic argument.

Daniel M. Friedman:

That is right, you only reach the question of the “labor exemption” if you agree that the Board has jurisdiction over these some agreements.

And let me address my self to that question because the Court of Appeals said that labor — the collective bargaining agreements are exempt as a class from the requirements of section Fifteen.

Now section in the Shipping Act Congress provided are almost unique regulatory scheme.

Agreements that would be illegal in any other industry under the antitrust Laws may be permissible in the Shipping Act provided that the government regulatory agency has examined these agreements, has evaluated them under the standards an has determined its overall and the public interest taking hand over all competing and conflicting considerations to approve them.

John Paul Stevens:

There is a similar regulation variation in the CIB or something.

Daniel M. Friedman:

But that I think is tends to be narrow in the sense that I think, there are certain types of agreements but I think the difference is that the pervasive character of concerted agreements and operations in the Shipping Industry, I mean the statute was passed as the court knows against the background of the Alexander Report under the Shipping conference system and we are not for this Legislation or conference agreement which have even fixes its prices.

John Paul Stevens:

Would be clearly, grossly violated the antitrust laws.

Daniel M. Friedman:

Now, one of the provisions which the Court applies, which the statute provides is that agreements controlling regulating, preventing or destroying competition have to be filed with the commission.

There is no question that some provisions in collective bargaining agreements would have that effect.

In this case the parties agreed to required things to be done by the nonmember ports that would have that impact upon the ports.

We think that there is nothing in the language or the Legislative history of the whole scheme of the Shipping Act to indicate that Congress intended a blanket exemption of all collective bargaining agreements from the Shipping Act.

And what we think is that congress intend the commission in the first instance to take a look at anti- competitive agreements even though they may have been the result of competitive bargaining and that national labor policy is to be implicated not by saying that the Commission has no Jurisdiction over any of these agreements but through the application of the “labor exemption” that the Commission has determined.

The “labor exemption” itself in this case that was properly projected by the Commission because as the Commission stated and this is the page 63A of the appendix.

The agreement was specifically designed to compel nonmember entities to join PMA under the threat of exclusion from the ILWU workforce.

As such it clearly imposes terms and conditions upon persons outside of the bargaining group and this court Pennington recognized so that there is nothing in National labor policy indicating that the union and the employers in one bargaining are the free to bargain about the wages, hours and working conditions of other bargaining units or to attempt to settle these matters for the entire industry and that we think is precisely what this agreement was designed to do, PMA was putting in to Collective Bargaining Agreement with the agreement or the concurrence of the union, provisions designed to eliminate what PMA viewed as unfair competition by its competitive factors in the industry by the nonmember ports and we do not think that the “labor exemption” can be invoked to justify that kind of an agreement.

Daniel M. Friedman:

I would like to reserve the balance of my time.

Warren E. Burger:

Very well, Mr. Friedman.

Mr. Fisher

R. Frederic Fisher:

Mr Chief Justice, may it please the court.

I would first like to address myself through the couple of the questions asked by members of the Court.

I would like clarify a couple of matters if I do so.

Mr Justice Rehnquist asked whether PMA had any members who were ports.

Mr Justice Rehnquist request to Mr. Friedman, I am responding to PMA has no members who are public ports at the present time.

There is an application pending by one court to join but public port authorities generally do not employ stevedores, the non-member ports here are an exception, they do not perform stevedoring themselves and therefore they do no employ Longshoreman.

So in the normal course a public port is a land lord as in the case of the port of San Fransisco or the port of Los Angles and you do not find them having need to have labor relations with the ILWU and you therefore do not find them becoming members of PMA or otherwise dealing with the ILWU.

Mr. Justice White asked the question whether it might be the equivalent of approving the agreement, if in the event that the Commission determined that “labor exemption” applies.

I would say that is clearly not the case.

The “labor exemptions” goes to the commission’s jurisdiction over the agreements to act one way or the other.

A determination — in fact one of the problems with having the commission in this particular Act is that the determination that an agreement is “labor exempt does not bind any body for the future, certainly anyone who is not a party to this proceeding is free to turn around and file antitrust complaint after the facts.

So a determination by the Maritime commission that you have a “labor exemption” does not really get you any where in terms of security if you will wish to use that term for the future.

Mr Fisher, what happens as a consequence of a Commission determination that the agreement is within the subject or within the — is exempt because of the labor exemptions does it simple send the agreement back and say because of this finding it was not necessary to file this agreement —

R. Frederic Fisher:

That is right it is a Jurisdictional determination and as the matter of fact, in industry groups such as ourselves did not file our agreement with the commission to ask them what they thought of it.

As a practical matter that is the last thing in the world you would want to do if you felt that the commission had no business medaling with it.

In this case the nonmember ports brought the agreement to the attention of the commission.

We ultimately filed the document because it had to be looked at under the circumstances in this case.

And normally you would sit it out and wait for someone to complain about it, and you would not go in and file the thing asking for a determination unless you felt that was such a marginal case that you had to do that to protect yourself.

But normally you would feel that if your agreement was a collective bargaining agreement and not subject to the commission’s power to modify, the substance of, to approve, disapprove, regulate after the fact, second guess you, you would vigorously resist that.

You will say we will not file it.

R. Frederic Fisher:

You would not file it in the normal course.

You take your chances.

And the commission finding that the an agreement is within the labor exemption leads to a commission holding at least implicit if not explicit, this agreement need not have been filed.

R. Frederic Fisher:

Need not have been filed in the first place.

That is correct even it has been physically filed, that is absolutely correct.

Do you argue then that the Labor Board has exclusive jurisdiction?

R. Frederic Fisher:

Oh no, no I think this Court has made that pretty clear, Jewel Tea, Connell, make pretty clear that the Labor Boards.

What you said sounded as though you were implying that only Labor Board would have jurisdiction.

R. Frederic Fisher:

Well, I think depend upon, no I did not mean to imply that if I did.

I think it would depend on the nature of the question, I mean, for example the Solicitor General referred to the dispute over the container freight stuffing agreement, as the court may be aware this is a monumental subject of labor strife on both coasts.

The issue whether Teamsters or Longshoremen stuff of dock containers it has been a subject of very critical recent concerns involved in a tangential where it was involved in this case.

That could very well have been a matter under the commissions criteria that could have gotten the Maritime Commission into the act.

In that case the non member ports and more particularly cordage companies or other off docks stuffers chose to deal with the matter through a combination of the antitrust Courts by filing a complaint and through NLRB.

It happened that that particular dispute Mr. Chief Justice was resolved by the NLRB.

They said it was Hot Cargo clause and knocked it out.

One of the problems we have here is potentially, if we have the Maritime Commission in this Act, we have the NLRB which proved itself capable of handling the container freight station stuffing disputes, we have the antitrust courts who have to resolve Pennington Jewel Tea type challenges and now we would also have the maritime commission apparently under some kind of Shipping Act standards and that is very very messy and undesirable way, I submit to you to go about handling this dispute.

But basically in any one of those forms the way something starts out is by plaintiff having standing coming in and challenging and the decision that forum has to make and if its appealed, the courts on appeal have to make is whether the Federal Maritime Commission or the NLRB or the courts had jurisdiction and I suppose just the fact that more than one of them might have had jurisdiction to adjudicate a particular complaint, it is not inconsistent with the statutory scheme.

R. Frederic Fisher:

Well, I would submit to you that it is inconsistent with the statutory scheme and one of the reasons as a practical matter where I think it is inconsistent is that, in the case of Section 15 unlike the other statutes, you referred to Mr. Justice Rehnquist you have a pre implementation approval requirement and I said to the Chief Justice that in the normal course, if you wish to resist Maritime Commission jurisdiction you would want to take the position, it was not subject and you are not handing it over for filing and some kind of an approval but as a practical matter what if you have one that is fairly close to all fours.

Let us say with one where the maritime commission asserted jurisdiction, as it did for example in the Boston case.

Now, there as a collective bargaining group labor and management you are in the position of having negotiated agreement at the eleventh hour perhaps with the strike pending and you are subject to a statute there where if the commission has at least asserting jurisdiction, you are facing possible penalties of a $1000 a day per member for failing to fail the thing even apart from whether it is approvable.

This is not quite what you have asked but in my opinion that is very seriously inconsistent with the policies, labor policies I think it is inconsistent with the way that antitrust courts get in to this particular act.

Are you saying that we must construe these various acts so that if one form has jurisdiction the other does not?

R. Frederic Fisher:

Oh no, what I am saying is that as between the NLRB and the courts, there may be shared jurisdiction that is to say, if it comes up if the issue comes up in a Pennington context with an antitrust complaint, Jewel Tea, Connel, make clear that the anti trust court is to resolve that labor questions inherent in resolving the labor exception dispute.

Why cannot you say equally consistently that FMC and the courts have shared jurisdiction if it is basically a maritime question the FMC should resolve it.

R. Frederic Fisher:

Well I suppose yo can if this court says so that what we have live with somehow, but I do not think it makes any sense.

If it does not make any sense, we should not say it.

R. Frederic Fisher:

That is precisely my point.

I do not think that

It does makes does not makes sense to have three cooks stirring this particular pot and it is a difficult, difficult pot.

But you say, two cooks can stir it.

R. Frederic Fisher:

If I had my brothers and I were arguing the Allen Bradley or perhaps a better case, the Pennington case.

I might have very well argued otherwise.

It is too late to argue that.

I think there are obvious difficulties with

But there is one thing the Court did make clear and I find it very hard to argue with and Pennington and Connell and Allen Bradley.

That is, that when you get to the point of a collision between two national policies, by the way, this is frequently talked about as an antitrust exemption or it is a labor exemption from the antitrust laws.

That is a short hand phrase if I may so submit for describing a larger jurisprudential process which involves the weighing of two statutory policies, national policies of equal weight.

R. Frederic Fisher:

We call it a labor exemption, I have used the term in my briefs too.

It is not an exemption, it is a jurisprudential process of weighing, conflicting statutory policies, and I cannot quarrel with this Court’s decisions.

I think they are right.

When you say that when that happens the proper form to do that is a Court.

The worst form of all is for an agency that has no jurisdiction over either the labor or the antitrust questions which is what the FMC’s claim is.

Why do you say it has no jurisdiction over antitrust questions?

R. Frederic Fisher:

Its jurisdiction under the Shipping Act.

Let us face reality, the job in the maritime commission and the reason for the Shipping Act is to grant antitrust exemptions for steamship rate making conferences which are otherwise per se violation of the antitrust laws and its stock and trade is to review agreements that are on their face, per se violations, no antitrust issues presented there as an —

So, that is the jurisdiction then with respect to anti trusted issues.

R. Frederic Fisher:

Well —

You cannot say it does not because it exempts —

R. Frederic Fisher:

Alright, in the sense, that is correct.

In a sense —

I cannot say anything that is a clear piece of jurisdiction.

R. Frederic Fisher:

In this, Well, in the sense that the Maritime commission grants an exemption, it has to take note of the fact of the antitrust violation in the first place.

What I am saying is its simplistic kind of an antitrust jurisdiction, the commission does not administer the antitrust laws.

It ministers the Shipping Act which is an exception from the antitrust laws.

I would think that you would be delighted if it took this agreement and exempted it.

R. Frederic Fisher:

Yes.

One would suppose that.

It must come as something of a surprise to the Court to hear the industry group, trying to explain to the Court why we do not have this —

Why we do not want to be exempted?

R. Frederic Fisher:

Why we do not have this and enforce this.

Byron R. White:

You are afraid, you are afraid that the commission may not do it in a simplistic way.

R. Frederic Fisher:

I guess, what I am afraid of is that the commission will do it in a simplistic way.

Let me just back up a second, Mr. Justice White.

The problem here, I do not think is what agreements the commission will or will not approve in the larger sense.

No I —

R. Frederic Fisher:

The problem is who makes the determination of whether a labor exemption applies or not.

I will put it in your words, whether, who should decide, whether or not this agreement violates antitrust laws.

R. Frederic Fisher:

Exactly.

Let me, give you some reality.

We have a two hundred page collective bargaining agreement with the union industry wide.

Let us not fool ourselves, every section of this agreement affects competition in some fashion or another.

You do not have industry wide bargaining without having effects on competition.

Yeah, but we have been through this.

R. Frederic Fisher:

That is right, all I am saying is that if the commission is going to have jurisdiction over agreements which affect competition or which have some affect on outsiders, then we are talking about having the commission, the agency which is least qualified to understand the labor implications of this agreement.

Passing on the labor exemption question and I just do not think that it is right or it makes any sense.

No one is hurt by every other industry in this country.

Mr. Fisher, supposing that trouble Damage Act has been filed against the industry on a Pennington theory, in a federal Court, would it not have been an entirely proper defense for you to assert it as a matter of primary jurisdiction.

The matter should have first been presented to the Maritime commission.

Would that not have been a classic defense?

R. Frederic Fisher:

Oh one might have.

But I have been an —

Or if it were clear antitrust questions.

Say, I know — you do not think (Inaudible) applies but say the agreement had said, we will not deal with companies that do not agree to the rates fixed by the conference or something like that.

You would clear in a right in a collective bargaining agreement, would not that clearly be a case that you would — if you were sued in from the antitrust court, you would say that were federal maritime commission first.

R. Frederic Fisher:

I would say that would be a last desperation kind of defense.

Last desperation, it is almost routine in this industry it is ?

R. Frederic Fisher:

Not at all Your Honor.

If under the Carnation case, Carnation against Westbound Conference.

This Court ruled that when an agreement has not received the approval of the Maritime Commission, a trouble damage action can be pursued in the antitrust Court.

It is not a matter of the commission’s primary jurisdiction.

And it was a common sense kind of a ruling and so if the attack you are talking about has been mounted against a collective bargain agreement that has not been submitted voluntarily to the commission and receive the approval antitrust exemption rubber stamp, then there is nothing to the submit to the commission Carnation tell us it is subject to the jurisdiction of the Federal Courts under the antitrust laws.

It is too late.

Now, if the agreement has been submitted to the Maritime Commission and given an approval stamp that is the end of the line.

But the other side of that coin is, let us assume the egregious agreement kind of agreement, let us assume that PMA had agreed with union to do some kind of Pennington Act where we agreed with union let us put somebody out of business and he is the trouble maker, he talking all our business, let us put him out of business, let get rid of it.

Right point in the collective bargaining agreement.

Let us assume, further we filed it with the Maritime Commission which gotten the approval, stamped the antitrust exemption Stamp.

Now what happens –perhaps on the interim basis as the government suggests, we do.

R. Frederic Fisher:

I must say I that might be very nice for some people in some instances, but it is a pretty hard thing for the fellow that is driven to the wall.

He has denied his antitrust remedy.

I do not think as matter of policy that is what Congress intended in Section 15.

Rate agreements —

It is so puzzling, as you seem to be most interested in vindicating the rights of those who want to disagree with you.

R. Frederic Fisher:

I am not interested in vindicating their rights what I am saying is as matter of policy I do not think agreements, labor agreements of this kind are the kind of thing that Congress wanted or that the industry really wants.

To be within the antitrust exception, Congress did not advert to labor agreements when they created the antitrust exemption, they created it for Steamship Rate Conferences not labor agreements.

Well you use terms in a very simple way.

But agreements are complex things and if they have anti competitive consequences, you gave an example yourself, you say if you drove these ports out of business there would be clearly antitrust problem.

But if you just double their costs there is no antitrust problem–

R. Frederic Fisher:

oh! no not all.

I am not sure that why it is quite that right.

R. Frederic Fisher:

There may very well be an antitrust problem what I am saying

You would rather take your risks and have the jury decided then the Maritime —

R. Frederic Fisher:

I would rather take my risks having the Federal Court whether there is labor exemption or not.

Your suggestion is that the Maritime Commission may not really know what it is doing in this area but you assume that some 500 Federal judges are really experts in how the antitrust laws and the labor laws ought to be meshed in maritime industry, that is a pretty good mouthful, itself.

R. Frederic Fisher:

Well I must tell you that there – we do not live in the choice between two perfect world and we do not live in the choice between heaven and hell but making relative decision

Byron R. White:

It is just a choice between two evils.

R. Frederic Fisher:

Is it not really a judicial function and let us consider one other Mr. Justice White your point reminds me of some thing that and I think is important here.

The commission’s argument to this Court is, that if it is the proper agency or forum so as to speak to decide the labor exemption question the consequence they say of that is that the Court of Appeal can only review the commission’s determination for abusive discretion.

And since the labor exemption question is obviously a judgmental policy kind of point what they are really telling you is that the commission decision on this subject should not really be reviewable.

It is something close to saying that the commissions decision are not properly reviewable except for abusive discretion whatever that is in the Court of Appeal.

Well in the Allen Bradley case this Court in reviewing the District Court’s decision said it is up to us make this decision we must decide it here.

Your submission is that there is no, no part of any imaginable collective bargaining agreement that should ever have to filed with the commission.

R. Frederic Fisher:

That is absolutely right and the reason, the reason that is the case is that you do not want Federal Maritime Commission which is not a judicial agency.

It is Shipping Act agency deciding questions like whether the bargaining is in good faith, whether it is a mandatory subject of bargaining etcetera etcetera, as the Court inevitably have to do in every one of these labor antitrust cases.

As subsidiary questions to the ultimate resolution, it is the wrong forum.

Mr. Fisher, is it conceivable that there might be a collective bargaining agreement which involved the violation of antitrust laws, just a patent violation, the Pennington type case, which would nevertheless be in the interest of industry – in public interest for Shipping Act reason, is that conceivable and therefore there should be an exemption.

R. Frederic Fisher:

I think it is conceivable, but I guess what I have to say is to that it is probably unlikely and the main point is that Congress did not considered that, that was the kind of agreement that should be able to get an antitrust exemption.

Well, it surely did, any violation, the antitrust law can get the exempted under Section 16 and the Section 15.

R. Frederic Fisher:

Well it– any antitrust violation that is subject to Section 15.

Sure, if it fits any of these definitions, regulation, preventing or destroying competition and the like which is almost another way of describing an agreement and restraining the –.

R. Frederic Fisher:

Well I guess what I come down towards saying this.

The standards of Section 15 taken loosely can apply to almost any industry wide collective bargaining provision that there is, in the Maritime Industry that is subjected to the Act.

If you are going– you just simply have make a decision as to who is going to decide these questions and if the commission is going to decide it, it might be nice for us to say, might be nice for us that we have a nice place to go to get an exemption that would be handy at times I suppose, but the fact of the matter is the practical consequences is you got the Maritime Commission on the backyard of your labor relations, second guessing you they do not know anything about labor, they do not anything about labor questions, and the disadvantage so vastly out weighs the what is supposed to be the safe heaven from the antitrust laws granted by a Section15 approval, that we have made our choice the other way.

Warren E. Burger:

Very Well, Mr. Fisher.

Mr. Leonard.

Norman Leonard:

Mr. Chief Justice and may it please the Court.

I should like focus on the questions which have been raised in the preceding arguments from the point of the Labor Organization involved representing the as I do ILWU.

It was my principal concern in coming here from the West Coast to assure the Court of the legitimacy of the Union’s interest in this non member participation clause.

Perhaps if have read the the reply brief, the solicitor filed before I left for San Francisco, I might have saved myself a trip.

Because on page six of this brief and addressing the question of whether the union has that interest in the integrity in work of attorneys and registered work force and in the fringe-benefits of the agreement covers, the solicitor says there is no question.

I am quoting him now that the Union has such an interest, indeed he goes on to say that the Union unilaterally could demand from non members of PMA whose employee represents the same terms as that undertook to require under this very agreement.

It seems to me point number one, with that concession by the solicitor, it is clear that what we have here is a labor contract with the legitimate trade Union interest which bears on the question of whether or not there should be a labor exemption.

The solicitor however goes on to argue that because as he asserts and he has asserted in his own argument to this Court.

The agreement allegedly imposes conditions on employees of members outside the bargaining units, it therefore falls within the decisions of this Court in Connell and Pennington.

The problem however is, that this case on its facts is different from Kernel and Pennington, what we are talking about here, is a work force of employees who are all in one bargaining unit and who sometimes work for PMA and who very rarely and occasionally work for the non members.

The union represents all of the — it is not as though, the United Automobile Workers in the Ford Motor Company negotiated a contract to impose conditions on priceless workers, for example, we have a single solitary work force on the West Coast who sometimes work for PMA–

Byron R. White:

Well they are not in the same unit though I mean if you went to the Labor Board and to be certified, who would not be certified– the units certified would not include these non members.

Daniel M. Friedman:

Mr. Justice White, that is precisely the question, and precisely the reason why this is not a matter for Federal Maritime Commission jurisdiction.

I do not know what the labor board would do in a case like this and I do not know that the labor board has ever decided such a case, where you have single unit of employees, a single unit of employees represented by the same —

Byron R. White:

Well we have the United States here, this Mr Solicitor General represents the United States, I suppose and the Department of Justice is responsible for administering antitrust laws, represents other agencies of the United States and I take it that United State’s submission is that the antitrust issue — they are preferably willing to have the antitrust issue and the labor issue decided in the first instance by the Maritime Commission.

Daniel M. Friedman:

Well, I understand that, that is the position in United States.

It was not the position in the Court of Appeals and it is not our position.

Byron R. White:

I understand that is not.

Daniel M. Friedman:

The question that you raised I submit Mr Justice White raises a very subtle significant and important question of labor relations, precisely what would the National Labor Relations Board do when confronted with the situation where there is a single employee bargaining unit interchangeable employees and if you will, two separate of employer bargaining units.

Now however that question is resolved on this issue.

When the Solicitor General says it should be resolved about Pennington and Connell and I will point out in a moment, why we think it should not be resolved that way.

But however it is resolved.

It is our submission that it should be resolved by the agency that has the expertise to make that subtle decision in labor relations and not by the Federal Maritime Commission.

William H. Rehnquist:

Well does not the CAB do much that same thing, with respect to airline that the Federal Maritime Commissioner is here claiming a right to do with respect to shippers?

Daniel M. Friedman:

I do not have enough familiarity Mr Justice Rehnquist with what the CAB does in labor relations to answer your question.

My familiarity is essentially with the National Labor Relations Board and since the beginning of this case — so I am just unable to answer that question.

How would this kind of issue come before the labor board?

I can see that can arise in a Federal Court and antitrust trouble damage action but how does a labor board get involved in the kind of question as whether this collective-bargaining agreement violates the antitrust laws or anti-competitive or something like that.

Daniel M. Friedman:

The labor board does not get involved in the antitrust question per se, what it does get involved in is the question of the appropriateness of the bargaining unit.

In this situation, as Mr Fisher pointed out in the container stuffing situation, the complaining parties, the ports filed charges with the National Labor Relations Board to have the issue of legality of that container stuffing agreement determined by the expertise of the —

Could the ports here who filed the charge with the Labor Board claiming that they were somehow hurt by this collective- bargaining agreement.

Daniel M. Friedman:

Yes of course they could have.

Under what procedure I do not quite understand it.

Daniel M. Friedman:

It would be unfair labor practice for the union and the employer to enter in to a contract to compel the employers or the union to seize doing business with the ports.

I think it is 8(b)(1) or 8 (b)(2).

But agreement itself would be an 8E agreement.

Daniel M. Friedman:

Yes it might be an 8E agreement as it was charged to be in the container cases.

There is no question that in resolving these preliminary questions that whether or not there should be a labor exemption in the illustration I have given shows the subtle, the kind of labor relations decisions has to be made.

The Maritime Commission is undertaking to do the job that Congress has said should be done by the Labor Board.

To support the contention that there is a unique situation in the west coast which does not apply on to which Pennington and Connell do not apply is the solicitor’s concession on pages six and seven of this replied brief, extremely important from the union’s point of view.

In view of the existing institutions on the west coast and they are unique and special institutions.

It has been indicated in the brief established for the employment of longshoremen.

Some agreement, solicitor can some agreement on the access of non members to the joint PMA programs, the joint PMA, ILWU programs and facilities is necessary.

In order this is a jointly controlled work force.

The union can not say to the non members you can have the work force.

It has got to have PMA’s consent because it is a joint work force.

It is not a union controlled work force, and the solicitor recognizes it therefore some agreement is necessary.

Again, he argues that this agreement is entitled to labor exemption because it is outside the bargaining unit for the reasons I have indicated, we have the very unique situation with respect to what is a bargaining unit here and that is a question that the labor board meets rather than the Federal Maritime Commission need to determine.

So it is our submission that where the employees involved are common to both sets of employers, you do not have Pennington situation, you do not have a Connell situation where the union represents all of the employees and in Pennington, they did not and in Connell was pointed out in Mr. Justice Powell’s opinion, the union not only did not represent the employees, in that case it was not even seeking to represent.

Here it represents the employees of both sets of employers where you have got a situation like this, you have got to special kind of a unique labor situation and the Commission was just, the Federal Maritime Commission was, with respect not even unsophisticated to say what the Labor Board might have done or would have done under these circumstances and in attempting to apply this Court and the Labor Board’s criteria and its so called distillation of this Court’s decisions.

For them, the union was faced as the solicitor concedes in these very negotiations with the proposition that PMA had the right to insist on equality of treatment, on the Most Favored Nation’s Clause and if the union had given the non-members anything better than it gave PMA, PMA would have said give to us too and the union would have been whipsawed between two sets of employers.

I see my time is up.

Warren E. Burger:

No, you finish your sentence.

Daniel M. Friedman:

The union and the association negotiated in the best interest in solving very difficult labor problem.

I believe they are entitled to labor exemption for the reason stated in our briefs, we think that Maritime Commission did not have jurisdiction.

I do not have time to expand upon that but I will —

But if you prevail, I take it the antitrust cases if there are some pending or just go forward and or some others will be filed and you will have this antitrust issue decided in them, in the courts and very likely in no part of the issue will get before the Labor Board.

Daniel M. Friedman:

If the courts do not choose to file, (Inaudible) judges and the question there is, what is the proper form for the preservation of these issues that Court’s or the Federal Maritime Commission.

Thank You.

Warren E. Burger:

You have about two minutes left Mr. Friedman.

Daniel M. Friedman:

First just a preliminary matter in response to Mr. Justice Stewart’s question as to what actually happens if the board grants a labor exemption, I understand if that takes place the Commission would enter a declaratory order to affect that the agreement need not be filed and then dismiss the proceeding.

Let me get to what seems to me is as the argument has developed kind of the really the guts of this case, which is whether this is the sort of an agreement that is not properly before the Maritime Commission at all.

The suggestion that Mr. Leonard has made is somehow this is a matter to be decided by the National Labor Relations Board.

Well Mr. Justice White in your concurring opinion, your opinion in Jewel Tea, you pointed out that the Labor Board is not really equipped to handle these things, there is no way you can get a decision out of the Labor Board, all you can do is file a charge and if the General Counsel decides not to issue a complaint on the charge, that is the end of it.

But more significantly than that, this Court has recognized on not a few occasions more, most recently in the Burlington case, that situations may arise where and cases present issues involving different agencies, in the Burlington case there were problems under the Labor Act and there were problems under the Interstate Commerce Act and this Court said the Interstate Commerce Commission properly considered the problems under its Statute and if something were filed with the Labor Board, the Labor Board would construe it.

Now the claim is, an argument here with respect to the bargaining unit, well the bargaining unit that was originally certified by the Labor Board, of course, was the employers on the west coast who are members of the predecessor associations.

If somebody thinks that this bargaining unit should now be broadened to include the non-members, they can file something before the Labor Board but it seems to us that the Commission was properly and fully justified in accepting the case as it existed that is, as of now what you have is a bargaining unit consisting of these employees, some of them work for PMA members, most of them do, some of — case you do not and the PMA members and when you attempt to impose when the union and the employers get together and attempt to impose conditions on people who are not members, those are people outside the bargaining unit and we just do not think –.

But we understand that but also say that whatever antitrust issue there is here should be first decided by the Maritime Commission, I guess.

Daniel M. Friedman:

That is the.

Even though the antitrust division maybe wholly foreclosed.

Daniel M. Friedman:

That we think is the scheme Congress has provided under this Statute that not only is there antitrust exemption but this Court recognized in the Seatrain case that in interrupting the Statute whether an agreement is in the public interest, the Commission is required to consider the antitrust implications of that agreement.

Mr. Friedman, just one question before you sit down.

Mr. Fischer I think, stressed the pre implementation approval requirement and the Statute as I recall as an exception for rate agreements which may receive interim approval.

Is there a Statutory authority for interim approval of an agreement of this kind?

Daniel M. Friedman:

Well, there is no explicit Statutory authority but we have described in our brief and in our reply brief and also cited in Burlington maybe the Commission on occasion has granted this so called conditional or interim approval to provisions that are included in collective bargaining agreements, they have done this on a couple of a occasion.

What is the status?

I just want to know about the agreement in question here about the provisional agreements in question here?

Daniel M. Friedman:

That has not been implemented.

The parties have kept it in abance pending the outcome of this decision as is true with the administrative proceedings before the Commission.

Warren E. Burger:

Very well Mr. Friedman.

Thank you gentlemen.

The case is submitted.