McCulloch v. Sociedad Nacional de Marineros de Honduras – Oral Argument – December 12, 1962 (Part 1)

Media for McCulloch v. Sociedad Nacional de Marineros de Honduras

Audio Transcription for Oral Argument – December 12, 1962 (Part 2) in McCulloch v. Sociedad Nacional de Marineros de Honduras
Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Earl Warren:

— and 107.

Mr. Manoli, you may continue your argument.

Dominick L. Manoli:

May it please the Court.

It appears yesterday that the basic issue which lies at the heart of this case is whether and to what extent, the jurisdictional reach of the Labor Act extends to foreign-flag vessels which are engaged in the commerce of this nation and of also have other substantial contacts with this country.

It is the Board’s position that the Act extends to foreign-flag vessels which are engaged in the commerce of this nation where the maritime operation is either primarily based and directed out of this country or is essentially an adjunct by the American corporation engaged in the seaborne commerce of this country so that unbalanced — so that unbalanced, the shipping may reasonably be deemed to be a shipping of this nation rather than that of a foreign nation which only the exigencies of international trade bring to these shores.

Analysis of this proposition, I take it, must start with the statute.

In sketching the jurisdictional reach of the Labor Act, Congress painted it with an extremely broad brush.

The declared policy of the statute is to safeguard the foreign and domestic commerce of this nation from activity, the intent or necessary effect to which is to burden or obstruct that commerce.

The — to this end — to this end, Congress empowered the Board to prevent unfair labor practices and to resolve representation disputes which would burden or obstruct the free flow of this nation’s commerce both foreign and domestic.

The touchstone, the touchstone of the Act’s jurisdiction is the effect of the particular activity upon the foreign and domestic commerce of this country and not the source.

And as this Court said long ago, Congress in — the Act reflects the congressional policy in the exercise of Congress’ plenary constitutional authority over commerce to eliminate — to eliminate industrial strife without regard to the source.

Now, there can be and indeed there is no question of the power of Congress to reach these foreign-flag vessels that are engaged in the commerce of this nation.

Indeed, this Court once said that the power of Congress, the condition access to our ports by foreign-flag vessels that complies with what Congress deems to be good American policy cannot be questioned nor can there be any question as to a literal reach of the statute that literally the statute encompasses these flag vessels.

Potter Stewart:

But literary the —

Dominick L. Manoli:

Of course —

Potter Stewart:

Literary, the statute would go much further than you are now contending.

Dominick L. Manoli:

That’s right.

Potter Stewart:

Isn’t it?

Dominick L. Manoli:

Of course, we are aware that the literal language of the statute does not end our inquiry and we’re also aware that a part from the language of the statute which is quite broad of course, that apart from the language of the statute, Congress gave no specific indication either in the statute or in its legislative history or in the legislative history whether and to what extent the Act should apply to foreign-flag vessels which are engaged in the commerce of this nation.

And perhaps as the court below said, it would be a bit unrealistic to a trade to Congress, a subjective intent to reach his flag — this flag of convenience vessels that are engaged in the commerce to this nation because as I said yesterday, the development of these — this fleet, this type of shipping has come about largely since the enactment of the Wagner Act.

But these considerations, I submit, as this Court indicated in the Vermilya-Brown case are not conclusive, nor decisive.

What is important is the policy of the statute and that policy is crystal clear and it is the function of the Board as well as the Court to determine what Congress, given that policy, given that far broad policy would have done with a situation which now confronts this Court.

As I said yesterday, the concern of Congress was with the disruptive effects of industrial strife upon the foreign and domestic commerce of this country.

And the purpose of the statute comp — is comprehensibly to eliminate this industrial strife.

Now, it can hardly be thought that Congress would have had less concern with industrial strife affecting foreign-flag vessels which are engaged in the shipping of this country or in the commerce of this country and which may reasonably be deemed to be essentially the shipping of this nation that Congress would have had less concern with the disruptive industrial strife affecting those ships than it had with the American-flag vessels where the plain fact is of course that industrial strife affecting one or the other will impede the free flow of commerce of this nation.

Indeed, perhaps industrial strife affecting foreign-flag vessels that are engaged in the commerce of this nation may impede it even more than industrial strife affecting American flag ships in view of the important role that these flag ships as I indicated yesterday are playing in the commerce of this nation.

Now, the problem of determining the reach of domestic legislation which like the Labor Act has broad jurisdictional coverage is not a noble one.

Congress has not infrequently enacted legislation which has had broad general coverage without at the same time specifically indicating to what extent such legislation should apply to activity which has foreign aspects, activity which may have extraterritorial aspects, or activity on board foreign-flag vessels.

Where that is the case, where that is the case, the statute is — issue of statutory interpretation must not be determined in a mechanical fashion either on the basis of the literal universality of the language or on the basis of outmoded concepts that a ship is floating piece of the flag nations territory or by slavish submission to the flag in — to the flag.

On the contrary, we think that the proper test is that the scope of the statute must be determined in the light of the policies of that statute upon the American and foreign interest present, the substantiality of one as against the other and a weighing of these interests with due regard to considerations of international comity.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Dominick L. Manoli:

This, as we understand it, is the teaching of this Court’s decision in the Lauritzen case.

Now, in the Lauritzen case and that case involved the Jones Act which provides that any seamen may bring suit in a federal court — Federal District Court to recover for injuries suffered in the course of his employment.

In that case, the problem was whether a foreign seaman who had been injured on board a foreign boat in foreign waters could take advantage of the Jones Act.

Now, this Court held that he could not.But the approach which this Court took to the question of statutory coverage of the Jones Act which again had this literal universal language, the approach which the Court had took this question of statutory construction we think has relevance here.

The Court there said, the Court there said that the flag is of cardinal importance but domestic interest, domestic policies and the substantiality of American contacts may tell — in a given case, may took the balance against the flag.

Now, the Board in determining the reach of our statute with respect to these ships has taken its cue from the Lauritzen case.

Does the Lauritzen case involve (Inaudible)

Dominick L. Manoli:

That’s true, Your Honor.

That the materials involved (Inaudible)

Dominick L. Manoli:

That’s true, Your Honor and the significance of that may be that at least theoretically, there more — be more danger of conflict between us and some foreign nations than there would be in a Lauritzen type of case.

And I shall subsequently come to argue the point, that point as to the extent of this conflict between us and other nations.

William J. Brennan, Jr.:

Are you going to take any issue of the Court of Appeals’ contrary conclusion to the Board that this employee — that this Empresa and United Fruit were joint employers?

Dominick L. Manoli:

It is our position that they are joint employers.

William J. Brennan, Jr.:

And of course if that’s the fact then none of these arguments are relevant, is it?

Dominick L. Manoli:

Sir?

William J. Brennan, Jr.:

If that should be the fact, then we don’t reach the questions that you’re talking about, do we?

Dominick L. Manoli:

Well, you still have of course the fact that these seamen are employed on board with foreign flag.

William J. Brennan, Jr.:

Well, I know but if —

Dominick L. Manoli:

And —

William J. Brennan, Jr.:

— if they’re also employees of United Fruit, and do we have all these concerns?

Dominick L. Manoli:

Well, I expect that the other side will say yes and I — now —

Potter Stewart:

Well, it could be employees of United Fruit who were down on Honduras and never left Honduras and there would be — you wouldn’t assert it.

Dominick L. Manoli:

We would not assert jurisdiction over those who would stay in Honduras.

That is true.

Potter Stewart:

So — so that —

Dominick L. Manoli:

The problem here is —

Potter Stewart:

— that employment relationship does not avoid the — what you’re —

Dominick L. Manoli:

It does not —

Potter Stewart:

— urging now.

Dominick L. Manoli:

–avoid that problem.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Potter Stewart:

— does it?

Dominick L. Manoli:

Now, we think that it’s an import — it’s one of the factors that the Board took into account and we don’t believe that even if this Court could conclude that United Fruit is not a joint employer that it doesn’t necessarily mean that the Board does not have jurisdiction over this case.

Byron R. White:

But Mr. Manoli —

Dominick L. Manoli:

Now —

Byron R. White:

— what is the — what do you include in the foreign commerce of the United States?

Dominick L. Manoli:

What?

Byron R. White:

What do you include in the foreign commerce of the United States?

Is it the commerce carried on by residents here or by its corporation —

Dominick L. Manoli:

The —

Byron R. White:

— incorporated here?

Dominick L. Manoli:

The statute itself of course Your Honor defines the term commerce to mean trade, traffic, commerce etcetera among the several states, between the District of Columbia or any territory of the United States and any state or other territory or between any foreign country and any state territory to the District of Columbia.

So it covers any trade between this country, this country and a foreign country.

Byron R. White:

Between — you mean between a citizen of this country (Voice Overlap) —

Dominick L. Manoli:

Not necessarily a citizen, no.

No.

You may have an alien for example.

An alien who is engaged in business here and engaged in the foreign commerce of this county and the act certainly would come to that.

Byron R. White:

You’re talking here about the goods or merchandise that are actually physically moved from —

Dominick L. Manoli:

The transportation —

Byron R. White:

— or to the United States?

Dominick L. Manoli:

The transportation of goods, supplies between this country and other countries.

Now, in — as I’ve said, in determining the reach of the statute, the Board has taken its cue from the approach which this Court took in the Lauritzen case and the Board acknowledges, the Board acknowledges that the flag determines the nationality of the ship.

But as against that factor, it has taken into account the following factors.

One, whether the nationality of the bene — one, the nationality of the beneficial owner of the ship.

Two, whether the operations of the ship are directed primarily from the United States, the regularity and frequency of its visit to United States ports and the nature of cargo and passengers carried, where the shipper’s provision repaired and finally, whether the ship carries the trade of its flag country and if so, whether such trade is merely a concomitance of — or incidents of operations of an American-based enterprise.

If — in finding the evaluation of these factors, the Board concludes that the shipping is closely linked to the economy of this country that on balance, the contacts which this shipping has with this country make it essentially the shipping of this nation.

Then the Board says the Act applies.

If, on the other hand, upon an evaluation of these factors, the Board concludes that the contacts with this country are relatively insubstantial and that the shipping is essentially that of a foreign country which only the exigencies of international trade bring to this shore — bring to our shores then the Act does not apply.

Now, the Board’s test brings within the coverage of the statute, those vessels which are closely linked to our economy and excludes those which are not.

Now, we submit — we submit that the reading of the statute which the Board has made and the accommodation which it has made is a proper one for it brings within the statute — for it brings within the statute and a — vessels which are closely linked to the economy of this nation despite their foreign flag and foreign registry and it extends to them what Congress deemed to be good American policy, namely, the elimination of industrial strife in an area that is of vital and direct interest of this country.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Dominick L. Manoli:

That is to say, it’s foreign commerce.

At the same time, at the same time this test does not intrude upon foreign interest, foreign interest for it does not extend the Act to shipping which is essentially that of a foreign nation.

Now, I think logically at this point, I arrive at the Benz decision of this Court.

Before you get to Benz.

Dominick L. Manoli:

Yes, sir.

May I ask you, is there anything in the history of the Labor Act that shows that Congress adverted to this problem?

Dominick L. Manoli:

No sir, there is none.

Nothing at all.

Dominick L. Manoli:

Nothing at all, however, one of the reports, and this report was cited in the Benz case, refer to the application of the Act to the American workingmen, American workingmen.

Now, I suggest Your Honor that that was merely in reference to American workingmen was a perfectly natural illustrative kind of a thing, not to intend it to be exclusive but merely the thing that would come quite natural to an American political representative to speak in terms of an American workingman.

The statute itself, the statute itself in its definition of commerce and its definition of employer and employees draws no distinction on the basis of citizenship.

Now, coming to Benz, coming to Benz, we have acknowledged in our briefs that there are some language in Benz that militates quite strongly against the Board’s position here because there is some language there that seems to indicate that the Labor Act was not intended to apply to foreign activity or activity onboard foreign-flag vessels.

However, we haven’t — we don’t read, we don’t read their decision to stand for so broad of proposition.

Of course, this Court knows best what he’s intended to say, how far it intended to go in that case.

But it is important to remember the facts in that particular case.

The courts in saying that the Labor Act did not apply in that case, stress the fact that the ship that was involved in there was only transiently and temporarily in a United States port and that the only contact, the only contact which that flag had was that a labor dispute erupted, erupted while that ship was temporarily in an American port.

William O. Douglas:

That was a suit against the union wasn’t it —

Dominick L. Manoli:

Yes.

William O. Douglas:

— for damages?

Dominick L. Manoli:

That’s right.

William O. Douglas:

In a state court?

Dominick L. Manoli:

In a state court and it was removed to a federal court.

That’s correct.

Now —

Tom C. Clark:

Of course all the boats are here temporarily, aren’t they, even your vessels?

Dominick L. Manoli:

I don’t think that that term was used in that sense, in that case, at least that’s my reading of it Your Honor.

You wrote it.

But I think what the Court meant to say by those two adverbs, at least as we read it —

Tom C. Clark:

I don’t understand that your boat stayed here permanently either.

Dominick L. Manoli:

No.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Dominick L. Manoli:

These boats are engaged in a shuttle service.

These particular boats are engaged in a shuttle service between the United States — United States and these Latin and Central American countries.

But the boat in the Benz case was really — it was truly temporary in this — in the port of this nation because after this labor dispute erupted, it wasn’t until — apparently by the time the case got to this Court.

This boat never came back to this country.

Tom C. Clark:

But this distinction seems to be the stock ownership that you alleged.

Dominick L. Manoli:

The stock ownership is an important factor which —

Tom C. Clark:

That wasn’t —

Dominick L. Manoli:

— the Board takes into account.

Tom C. Clark:

That wasn’t present in Benz.

Dominick L. Manoli:

No, it was not, it was not.

American ownership is not necessarily decisive of Board jurisdiction but it is a factor which the Board takes into account.

William O. Douglas:

It was the dissent by the —

Dominick L. Manoli:

A dissent written by Your Honor.

William O. Douglas:

If that majority thing in Benz stands and allows a suit from the state court but then it was against the union for engaging in activities, it would otherwise be protected by the — your act.

How could the Board win this case?

Dominick L. Manoli:

Well, in these cases here, if that — if that decision of course to go as far as some of its literal language goes, we cannot win in this case.

That’s true.

But we think — we think that that decision must be read in the light of the particular facts which were in that case that you had a boat which contacts with this country were of only of — shall I say a femoral very — highly fortuitous, whereas here, in the cases which the Board has had before, in the case which the Board had before it, the context with this nation are much more substantial than they were in that case.

Potter Stewart:

Benz, the ship was owned by Panamanian Corporation and flying — and registered in Liberia apparently.

Dominick L. Manoli:

Which ship, sir?

Potter Stewart:

In the Benz case.

Dominick L. Manoli:

In the Benz, yes.

William O. Douglas:

That’s much more a suspect in a situation, isn’t it?

Dominick L. Manoli:

Yes.

William O. Douglas:

Is that a much more suspect situation than anyone we have here?

Dominick L. Manoli:

Well, we do have cases — this is not one of them but the Board has had cases in which there is foreign-flag registry but there is no contact, no contact whatsoever with the flag nation.

Now, in this case, you do have contacts with the flag nation and engage to some extent of course in the commerce of the flag nation itself.

Now, in at least three cases that the Board has had, and at least three cases that the Board has had that has been American ownership, foreign-flag registry and absolutely no contacts, absolutely no contacts with the flag nation.

Now, as I say, our reading of Benz is that it does not cover a situation where the vessels have substantial contacts with its nation and we are strengthened in that reading, we are strengthened in that reading of Benz by this Court’s subsequent decision in the Marine Cooks case where again the Court in referring to Benz, stress the highly fortuitous context of the vessel in Benz where the — with this nation.

Potter Stewart:

We (Inaudible) with the Norris-LaGuardia Act.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Dominick L. Manoli:

That’s right.

But in connection with that, this Court had occasion to speak of the Benz case.

The Benz case as I say it again stressed the highly fortuitous nature of the ships contacts, the Benz ship contacts with this nation.

Now, the argument is made — the argument is made that labor relations on Board vessels have to do with the internal order of the vessel.

And that it is the general recognized practice among the nations that the internal order of the vessel should be governed by the flag nation and the law of the flag nation and that in the light of this practice, we should not attribute to Congress in the absence of an expressed statement for the contrary.

We should not attribute to the Congress a purpose — a purpose to extend the statute to regulate matters which the argument goes, deal with the internal or to the vessel.

We believe that this argument misconceives the internal order doctrine.

That doctrine which of course is an ancient one, has to do with the exercise and control of — exercise and control and authority over ship, over the vessel, over the passengers, over the crew and disciplinary matters.

The classic statement of the doctrine made in the Wildenhus case by Chief Justice Waite is that the doctrine pertains to — is that all matters of discipline and all things done onboard which affected only the vessel or those belonging to her and did not involve the peace or dignity of the country or the trend carried apart should be left to the authorities of the flag nation.

Now, we believe that labor relations extend beyond any internal order of the vessel.

They affect the commerce of the coastal state or the territorial state where the ship happens to be.

And in the classic phrase, we think that labor disputes involving vessels affect the tranquility, the peace and dignity of the coastal state and that therefore it is not covered — that these matters are not covered by the internal order doctrine.

Now, of confirmation of this understanding of the internal order doctrine is furnished I think by the treaty of peace that exist between this country and Honduras which contains this provision and I may say that this provision is typical of many of the treaties that this country has with other treaties of friendship that this country has with other countries.

The relevant article of that treaty provides — this is at page 44 of our brief, that a counselor officer shall have exclusive jurisdiction over controversies arising out of the internal order of private vessels of this county and shall alone exercise jurisdiction in cases wherever arising between officers and crews pertaining to the enforcement of discipline onboard provided the vessel and that person charged with wrongdoing shall have entered as part of his consular district.

Such an officer shall also have jurisdiction over issues concerning the adjustment of wages and the execution of contracts relating thereto, provided the local laws so permit.

This treaty itself seems to recognize the matters having to do with wages, the execution of labor contracts — of labor contracts that this is not a matter that is governed by the internal order doctrine.

Now, I go on to another argument that is made against the Board’s position.

It is urged that for the Board — for the Board to extend the jurisdict — its jurisdiction to this foreign-flag vessels to read the statute as covering some of these foreign-flag vessels will necessarily invite international discord, perhaps retaliation and that in the light of these considerations, we should not attribute to Congress a purpose to extend the Act for these foreign flag vessels, absent the specific declaration by Congress to that effect.

Now, this argument of course is a familiar one in this area.

It was made to this Court very forcefully by these three departments of the executive branch in the Vermilya-Brown case that if the Fair Labor Standards Act were extended to a base which is contrary at least in Bermuda that it would provoke all kinds of horrible things.

The Court was not exactly overwhelmed by the argument.

And I suspect that the reason the Court was not exactly overwhelmed by the argument because in large measure the argument is a speculative one.

In assessing this argument, I think we must be mindful of the fact, as I said yesterday, that the great majority of these flag of convenience vessels have no contacts with the flag nation.

And the few that do — the few that do as in this case only do so in connection with the American beneficial owners operations.

Now, in the great majority of cases certainly, in the great majority of cases where the flag — where the flag — where the boats never touches the flag nation shores, the — any notion of international discord or retaliation or repercussions are perhaps more theoretical than real but to the extent that there is and I shall address myself to your question Mr. Justice Harlan to the question — to the extent that there may be some international discord on happiness over the Board — over the extension of the Labor Act of these foreign-flag vessels, we think that there is no solid basis, no solid basis for attributing to Congress an intent to prefer foreign interest at the expense of American policy and American interest.

Indeed, quite the contrary, if the peaceful procedures of this statute are not available for the resolution of these industrial disputes affecting these foreign-flag vessels, the result would be of course that the parties will deal after their economic weapons with a consequent disruption of American commerce.

Now, we think that in these circumstances, in these circumstances, there is no compelling reason, no compelling reason for attributing the purpose of Congress to sacrifice American policy, what Congress deem to be good American policy to sacrifice American interest in deference to the conflicting demands of a foreign country.

I shall reserve the rest of my time.

Earl Warren:

You may.

Dominick L. Manoli:

Oh, before I sit down, yes, I have something.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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William J. Brennan, Jr.:

This of course involves the injunction against conduct in election.

Dominick L. Manoli:

Yes, sir.

William J. Brennan, Jr.:

I take it if the election went on, the problem at least where this case could be mooted if the vote were no union, couldn’t it?

Dominick L. Manoli:

Well, I — it wouldn’t be mooted because the basic underlying question will still remain there —

William J. Brennan, Jr.:

Well, that’s what

Dominick L. Manoli:

— as to whether or not —

William J. Brennan, Jr.:

— puzzles me.

Apparently, you’re very anxious to have us decide the basic underlying question.

Dominick L. Manoli:

I am — we are — we are, Your Honor, and —

William J. Brennan, Jr.:

But you’re not taking any position with regard to the — whether it’s a jurisdictional or it may be the injunction against an election.

Isn’t that premature in — even in Leedom and Kyne terms?

Dominick L. Manoli:

Well, of course we have — we — in the Second Circuit case which was brought by the company, by Empresa.

We had opposed the jurisdiction of the District Court there saying that under Myers versus Bethlehem, the employer had a proper way — had a method under our own statute of litigating this issue without going into a District Court.

Namely, there would have been an election if the election had resulted in the certification of a particular union, he could be impart or refused to bargain unfair labor practice charges and complaints would have issued and would have gone up the ladder through the Board.

This argument was rejected by the Second Circuit and while we have some very great doubts, very great doubts about the correctness of that ruling, we have not raised that issue here.

We have not raised that issue here because we felt that the — in this case, the important issue, the more significant issue for the time being was the question of Board jurisdiction over the —

William J. Brennan, Jr.:

Over the fact that you haven’t raised it?

Dominick L. Manoli:

Sir?

William J. Brennan, Jr.:

The fact that you have not raised it at present or was that for (Inaudible)

Dominick L. Manoli:

It raises a — it may raise a law probably but the Union has raised it.

The Union has raised it.

The N.M.U. —

William J. Brennan, Jr.:

Well, I thought you told us yesterday the Union’s contract were undoubtedly here?

Dominick L. Manoli:

No, no this is the N.M.U., the National Maritime Union which is a party for the case and which is —

William J. Brennan, Jr.:

But Marineros or whatever that name is these contracts went out in February.

Dominick L. Manoli:

Its contract had expired when the Board’s decision but I understand that it’s been renewed, it’s been renewed.

Now, with the few minutes that I have left, I do want to say a word about this particular case.

I dealt — I’ve devoted most of my time to what I think is the initial threshold question whether or not flag is dispositive of this issue or whether it is not.

Now, I want to say a word about the case that we have before us here.

If the Board is correct, if the Board is correct in concluding that the flag is not decisive of the applicability of the Act that the Board is correct in saying that the applicability of the Act is to be determined upon what I shall call a contacts test.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Dominick L. Manoli:

Then we believe that the accommodation which the Board has made in this case is a reasonable one as entitled to acceptance.

I will not restate the facts, I will not restate the facts but the record here shows that the Empresa, United Fruit and Maritime operations are a single, integrated operation which is primarily based in and directed from this country and owned by American enterprise engaged in the commerce of this nation.

Empresa is nothing more I suggest, it’s nothing more than a department than a department of United Fruit and its sole purpose is to further the shipping operations, the shipping operations of United Fruit in the commerce of this nation.

Now —

(Inaudible)

Dominick L. Manoli:

No, they didn’t — they didn’t say that — they didn’t say that but Empresa —

(Inaudible)

Dominick L. Manoli:

They did not pierce a corporate veil but as I said yesterday — as I said yesterday Your Honor, Empresa does not carry passengers or cargo on its own account.

Its sole function is to own and operate these ships that are beneficially owned by United Fruit and its income is derived with possibly few exceptions and they are just possible exceptions as the record says.

Its income is derived from time charged with these vessels which are time chartered almost exclusively, almost exclusively to United Fruit.

So in a very real sense, looking to the economic realities of the situation that Empresa’s and to say in a very real sense, a department of United Fruit and functioning in order to carry on the business of United Fruit.

On these circumstances, we think the Board could properly say that this shipping here, despite the context with Honduras, despite the flag that this shipping here is essentially the shipping of this country but it is not shipping which has a truly foreign character.

And that therefore the Act should apply to these ships.

Hugo L. Black:

Have you had any cases — does the Board have any cases where an individual does the same thing?

Dominick L. Manoli:

I think they’ve all have been corporations of one kind or another that have owned these ships.

We have listed these cases Your Honor in our brief —

Hugo L. Black:

In line with your argument, what would be the difference if an individual owning — own the United Fruit in the individuals name but put his boats under foreign flag.

Dominick L. Manoli:

I would — the answer would be the same, the answer would be the same whether it’s an individual that’s carrying on the operation or whether it’s a corporate enterprise.

In either case, the essential question for the Board is, is this true to the shipping of this country by virtue of the substantial contacts with this nation on the basis of the factors that are outlined?

Or is it truly a foreign shipping venture which only the exigencies of international trade bring to this nation’s chores.

Before I sit down, Mr. Justice Black yesterday asked me for some figures having to do with the number of ships that may have been constructed in American shipyards for American interest which were transferred to foreign flags.

We made a hasty search for some figures Mr. Justice Black yesterday.

And in 1961, the administrator of the Maritime Administration testifying before the Merchant Marine and Fishery Subcommittee of the United States Senate, stated that between 1950 and 1960, 39 ships, each have of 12,500 gross tons were constructed in U.S. shipyards for companies controlled by U.S. citizens and registered under foreign flags.

Hugo L. Black:

What country is that?

Dominick L. Manoli:

Sir?

Hugo L. Black:

You said it was built in foreign —

Dominick L. Manoli:

No, no, constructed in U.S. shipyards for companies controlled by U.S. citizens and registered under foreign flags.

The number was 39.

And this covers the tenure period 1950 to 1960.

I think also Your Honor asked me a question to whether or not —

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Hugo L. Black:

I’m asking you whether they were built impart with the subsidies from the Treasury.

Dominick L. Manoli:

I was — Your Honor also asked that question.

Apparently, subsidies are not available to ships that are constructed in this country for registration under foreign flags.

Hugo L. Black:

Is that by law?

Dominick L. Manoli:

Yes, yes sir.

Hugo L. Black:

Do you have the citation to that?

Dominick L. Manoli:

The citation of this hearing?

Hugo L. Black:

To the law.

Dominick L. Manoli:

Offhand, I don’t.

Byron R. White:

Mr. Manoli, just so I have it clear.

When you’re — in applying the contacts test under the Board is an American ownership or effective American ownership and all these an essential ingredient?

Dominick L. Manoli:

No sir.

Byron R. White:

Has it been up to date?

Dominick L. Manoli:

In the Eastern case, there was not American ownership in that case.

+We have cited that case in our brief.

On the other hand, American ownership does not necessarily mean that the Board will assert jurisdiction and this was made clear by the Board’s decision in the Dalzell case which we have appended to our brief.

In that case, the boat was owned by American interest but its contacts would — that this country is shipping were so highly of fortuitous character that the Board concluded despite the American ownership, the shipping was not that of this country and therefore it did not assert jurisdiction over that particular enterprise.

Byron R. White:

So when — so in some cases, you would assert jurisdiction although you could not say that an American company was a joint employer.

Dominick L. Manoli:

Yes sir, that was true in the Eastern case.

Hugo L. Black:

Did the law to which you referred apply also to subsidies to the ship building company as well as to the shipowner?

Dominick L. Manoli:

I don’t know the answer to that question, Your Honor.

Earl Warren:

Mr. Cooper.

Herman E. Cooper:

May the Court please.

I appear on behalf of the National Maritime Union which is the intervenor in this proceeding and which in fact initiated the conduct by the Board which in turn has been suppressed by injunction by the courts.

In fact, we started this in November 1959 when having procured a majority of the cards of Honduran seamen in the Maine, aboard some 17 Empresa vessels.

We filed a petition for an election with the Board and what appeared to have become a vain hope that we would promptly have an election and ultimately emerge as the certified bodily representative for the seamen.

Two years later, November 15th, 1961, the Board ordered for this election.

In the meantime, some four ships had dropped from the fleet and the status of our Union with respect to the seamen today is a relatively uncertain one, however, if an election is ultimately ordered, we intend of course to proceed actively in it.

Now, in selecting the Board as the vehicle for this operation of becoming the bargaining representative for the Empresa seaman, we attempted to utilize the orderly processes available to us instead of proceeding by economic pressure to accomplish the same result.

Necessarily what I have to say will be a factual footnote to the arguments of counsel for the Board.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Herman E. Cooper:

I think that with all great respect, he has covered the important case law, the statutes but the one aspect of this case which requires amplification of the real underlying facts.

In this instance, the primacy of the facts, I submit, would deal directly with the key determination by this Court.

And these facts assumed in decreased importance because they were not available to any of the courts below by the curious situation that the Board record was not before the courts either in New York or Washington.

It was not before the Court of Appeals.

It is before this Court by stipulation or by certification of the parties and therefore references which I will make to that record will necessarily be references primarily directed to the record before the Board.

Now, the Board did not act in haste.

The Board had two years from the day we filed our petition to come to the conclusion which it did.

The hearing commenced shortly after the filing of our petition and it took two years, let me underscore this, before the Board and the Commission came to the conclusion that it had jurisdiction of this case and that it should order an election.

By the same token, it took the Courts just about a week or two at the most to decide that the election should not be held.

The absence of this Board record before the courts below may have led to the critical error which we feel is inherent in their decisions and that is the rejection of the Board’s finding that these ships operate as the face of the United States enterprise under and I quote “the continuous direct control” and either direct or ultimate ownership of United Fruit.

Now, the — these facts assume even greater importance because if Empresa stands as an independent entity which is the framework in which our adversaries view it necessarily and therefore United Fruit is not the employee or even the joint employer.

It provides the whole framework of argument for claiming that sovereignty of Honduras floats this corporate entity and therefore makes it immune from the operations of the Board.

All of this is predicated on a Honduran corporation, on a Honduran flag, on the main Honduran crew and the fact that they carry Honduran products.

And we submit that while these facts are important, while these facts may bear on the ultimate issue that they’re overcome by the real issue.

And the real issue is defined in the record before the Board that that captures the realities of the case and discloses the true relationship between Empresa and United Fruit and United States commerce.

Now, what is significant here is that United Fruit is not a stranger for the National Maritime Union.

Back in February 1938, we were certified, 1938 as the exclusive collective bargaining representative for all seamen, unlicensed seamen aboard United Fruit vessels.

It took us some eight months and wasn’t until October of that same year before we achieved the contract with United Fruit.

And we are and have been since that time, the exclusive collective bargaining representative for the unlicensed seamen aboard, the American-flag vessels of United Fruit.

There are some 20 of them today and it covers some 800 seamen.

And we will demonstrate from the Board record that there is a single fleet operating here which is combined as part of Empresa ships and American ships under the direct United Fruit control.

And that while they may be dual flags, there is a single centralized control and that this whole operation is by virtue of the decision not of Empresa, not of Honduras but of United Fruit.

And United Fruit itself has created the situation because by perhaps no strange coincidence, only three years after we got our first contract, they suddenly created the Honduran corporation known as Empresa and that Honduran corporation is the one that we’re dealing with now.

They own all the stock in Empresa.

They dominate Empresa completely.

They named the Boards of Directors who in turn select the officers.

The Empresa itself is a mere shadow of United Fruit.

United Fruit itself as its well-known is a colossus which travels in four continents.

It operates through some 50 or 60 varied subsidiaries of which Empresa is one.

Its main business is the growing, the transporting and the marketing of probable produce enacting as a shipper of cargo.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Herman E. Cooper:

The bulk of its trade is between Central and South America and the United States and it ships its own good and also solicits general cargo from others.

But the produce which it carries is either carried in ships which it owns directly or which at time charters from others.

And this is where its relationship operatively with Empresa comes in.

Because United Fruit not being exclusively a holding company but being actively an operating company, also runs these 50 or 60 subsidiaries through this American central agency which in turn exercises close control and supervision over the acts of all of its subordinates including Empresa.

And Empresa has no independent existence.

It’s completely subordinate to the United Fruit and it could exercise no choice which is inconsistent with the decisions and will and wish of United Fruit.

It’s —

Potter Stewart:

Does Empresa do anything else but own and operate ships?

Herman E. Cooper:

No, as a matter of fact, the use or the way to operate may be a misconduct.

Potter Stewart:

Well, does it do anything else but —

Herman E. Cooper:

It does nothing.

Potter Stewart:

— engage in the shipping business.

Herman E. Cooper:

That’s all it does.

It has this at present 12 ships or 13 ships.

It time charters them to its — as a captive corporation of United Fruit.

United Fruit decides what to do with it.

They sail side-by-side.

They dock side-by-side, they’re utilized as part of an integrated system of one company and that is United Fruit, American-owned.

Now even in the — in the annual stockholders report filed by United Fruit, it refers to these Empresa vessels as its own, built to its own specifications.

United Fruit in filing the specifications and financial data required by 801 of the Merchant Marine Act, Shipping Act, files detailed financial reports again as to its vessels and includes within those characterizations, the Empresa fleet.

The entire capital of Empresa has been provided and continues to be provided by United Fruit.

Vessels are transferred to Empresa by United Fruit.

Empresa has no other relationship with anyone else except with the United Fruit.

And let me underscore this fact that by controlling where Empresa operates and how it operates.

In effect, United Fruit selected Honduras and thereby itself assume whatever burden might attach to having business in an area in which — from which may emerge dual claims of two sovereignties.

And certainly, United Fruit, just as it created the situation, could terminate it tomorrow because the exercise of this kind of dominance constructively and actively over the Empresa fleet.

Now, Marc Hetu is the vice president and let me say at this point that the officers of United Fruit testified to the Board, it’s so fully and fairly and their testimony is primarily the testimony in which the Board has to rely.

The documents were provided by United Fruit and their testimony came from their officers.

They knew the fact.

And Marc have testified that all that Empresa has ever done to corporate life is to be the nominal owner of certain vessels which has then chartered the United Fruit, lies the flag of Honduras and mans the ships period, receives the income from it.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Tom C. Clark:

What do you mean by nominal owner?

Herman E. Cooper:

Well, it’s the nominal owner because an actual owner must necessarily be considered to be as the Board found, either directly or indirectly.

The beneficial ownership is the United Fruit.

United Fruit provides the funds.

United Fruit can withdraw the fund.

United Fruit has the position by its control of Empresa to determine the size of the fleet of Empresa, where it will go and whether it will continue.

Empresa never procured cargo for its own vessels, never had anything to do with the loading or discharging of cargo.

And as one of their witnesses I think it was Mr. Sisto (ph) testified.

Empresa is owned glock, stock, and barrel by United Fruit.

Now there is no intangible evidence in this record of any independent existence or a shadow of claim to such independence which would entitle Empresa to come before this Court and say that we are a separate entity.

We are entitled to this thing of immunity because we happened to fly the Honduran flag.

Byron R. White:

(Inaudible)

Herman E. Cooper:

Well, of course, I think if we were to view the realities and their proper context is —

Byron R. White:

(Inaudible)

Herman E. Cooper:

No, they’re the owner.

The tax advantage —

Byron R. White:

(Inaudible)

Herman E. Cooper:

Well, only because they own all the stock of Empresa.

Byron R. White:

For insurance?

Herman E. Cooper:

For insurance, they get all of the virtues and advantages of the Honduran registry but none of the responsibility for actual direct ownership.

But they exercise the control it’s so dominating that for all the purposes certainly under the Act, they should either be regarded as the employer or — sir?

Byron R. White:

(Inaudible)

Herman E. Cooper:

Right, exactly.

Byron R. White:

(Inaudible)

Herman E. Cooper:

Those really follow the corporate law.

(Inaudible)

Herman E. Cooper:

Of course.

We are naturally confined to the narrow limits of what constitutes an employer under the Act.

Now, this is significant above all other as to the real nature of this relationship between the smeared reflection known as Empresa and United Fruit.

Hugo L. Black:

(Voice Overlap) on what you’re asking now.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Hugo L. Black:

Suppose the judgment were obtained against these companies.

It was filed by the Union that there would be no argument to show that United Fruit really ought to pay it.

Herman E. Cooper:

I think that would be a very sound argument because in the commercial side of the case where the real beneficial ownership and stock control whether United Fruit with the kind of dominance which is here demonstrated, it might be under commercial law that such a credible proceeding against United Fruit.

Unfortunately, that is not our problem.

This is not a company likely to be involved with creditors of that carrier.

Now, this to me is the most significant and I submit it invites the attention of the Court.

Empresa, unlike any independent shipping company or corporation, does not hold out its vessels in the world charter markets is available.

Every one of its vessels is limited to being time chartered to United Fruit.

It has no arm’s length relationship.

It has no competitive position.

It can’t bargain about what the time rates shall be.

It is limited entirely to serving the purposes and objective and the advantages of United Fruit.

And the income of Empresa comes only from the source.

Now, as the Court well know, time chartering nearly means that you lease a vessel with the crew and supply.

United Fruit has the choice because of its dominant position to bareboat these chartes.

Bareboat — bareboat chartered these vessels from Empresa which in effect would mean that United Fruit would then be the active open operator of these vessels.

But United Fruit makes the decision not to bareboat them because this would immediately put these vessels under the contract which United Fruit now has with the National Maritime Union.

And therefore, United Fruit has consistently made this choice to avoid contracting relations with the N.M.U. on this vessel that it will only time charter, trusting in this way to avoid the consequences of a bareboat charter and such relationship.

Whether that’s impossible or United Fruit under Honduran law to simply have their vessels apply the Honduran (Inaudible)

Herman E. Cooper:

And to bareboat them to the — to United Fruit, though.

And so they have the vessels operating in Honduras?

Herman E. Cooper:

Yes, I think the United Fruit that has property in Honduras, there’s no restriction.

There are some restrictions under Honduran law with respect to the unions which may represent its employees and the nature of the labor relations which it should prevail.

But there’s no restrictive legislation that I know of and I may be an error which prohibits United Fruit from owning these vessels actually before 1941, Your Honor.

They did operate vessels of American flag registry in Honduras as they do now.

And not under Honduras flag?

Herman E. Cooper:

Under Honduran flag.

My impression and I’m not in the position to respond accurately.

My impression is that they could, that United Fruit could own the vessels under the Honduran registry.

Now, with respect to the operation of the control, the operative control of what happens to these vessels once they’re time chartered to United Fruit.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Herman E. Cooper:

Ostensibly, the master is the one and responsible for the internal order and control of the operations of that vessel but the master himself is subject to the direction of United Fruit, perhaps not directly.

But as one of the witnesses testified on behalf of United Fruit, it would be surprising if Empresa did not fulfill a request coming from United Fruit and it would certainly be surprising if United Fruit would supposedly demonstrate dominance of Empresa, could not impose its will directly or directly on the master of the vessel.

Because the master takes his reports and orders from the United Fruit Marine Department which is based in the United States and which is the overall agency which in turn passes upon and determines the operations of its entire fleet.

It’s this United Fruit Marine Department and this is the test as to what is the unit here, solicits general cargo business, schedules run, fixes destination, departure and arrival times.

All in the same trade routes with the use of the same docks and terminal facilities for both United States and Honduran-flag vessel.

The cargo and the passenger rates are set by this United Fruit Marine Division, the same for all vessels both United States and Honduras.

And the United Fruit uses these Honduran vessels interchangeably with its United States flag vessels for the same cargo and the same ports and the decision as to which vessel shall be utilize by this marine department does not depend on the flag but on the availability, the size, and the speed of the vessel.

The supplies which go into these ships both Honduran as well as United States flag are principally brought in the United States from another subsidiary of United Fruit, Maritrop Trading Corporation.

The food is purchased in the same source whether it’s the United States ship or a Honduran-flag vessel.

They’re both dry-docked and repaired usually in the United States as United Fruit decides.

And as this whole question of do we really have an independent entity is sharply revealed by this following circumstance that United Fruit in this constant testimony of United Fruit, witnesses makes all decisions as to capital improvements or the acquiring of old or new United Fruit ships or Empresa ships.

All funds are advanced by United Fruit to acquire new ships.

United Fruit decides the capital expenditures and substantial operational changes for Empresa.

It decides the size of the Empresa fleet whether it should expand, whether it should be eliminated in its own interest.

It transfers the ships to other United Fruit subsidiaries or to other companies without any indication that Empresa itself exercises any choice in this matter.

Now, I’m certain it’s going to be argued by our adversaries that this is a characteristically time charter relationship that exist between Empresa and United Fruit.

But I defy them to demonstrate another time charter relationship which gives to the charter this absolute control over life and death and existence and the dominance which is revealed by the record as existing between United Fruit ostensibly a hiree from — a hirer from Empresa of its vessel.

During World War II when the U.S. War Shipping Administration as the requisition vessels.

It requisitioned these Empresa vessels for our war service as controlled by United Fruit.

In fact it made the demand on United Fruit and not on Empresa.

And even the contract which you — some reference has been made to ostensibly in existence between Sociedad, the Honduran Union and Empresa.

But Article XII provides that wages to these Honduran seamen shall be paid in U.S. currency, its schedule of wages is all scaled to the American dollar and it provides the defending payments that are being made in equivalence, it’s an equivalence in lempiras or in the currency prevailing in the place of payment but the base calculation is the American dollar.

All other benefits in the same contract, so-called contract, are similarly geared for the dollar and not to the local currency, the lempiras.

And in the same contract under Article XVIII, it provides that a vessel’s requisition or under — or not even requisition or under war conditions that the seaman get the identical bonus as to death or disability compensation as seaman employed in the U.S. Merchant Marine.

However, the identification is not casual.

This is not the normal relationship which you can anticipate between a so-called independent foreign entity and an American corporation.

This is if anything a captive corporation, subordinate to and subject completely to the dominance of United Fruit.

And this catalogue of facts, I submit, effectively destroys the image of Empresa as an independent entity and supports the Board’s conclusion of full integration and operation in which Empresa and United Fruit are under the most generous construction joint employers.

And that this Honduran corporation is nothing but a tool and instrumentality of United Fruit subject to its absolute control.

Left with only one function and that is to serve the purposes of United Fruit which in this case seeks to hide behind its own subsidiary corporation in Honduras.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Hugo L. Black:

Is this name for example with directly pay on these Honduran-flag vessel sailing under the American flag.

Herman E. Cooper:

No, if there were, we’d have no complaint, Your Honor.

Hugo L. Black:

Well —

Herman E. Cooper:

Let me give you the — the pay to a Honduran seaman working side-by-side, ship by ship is approximately 25% of that paid to American seaman notwithstanding the fact that the same cargo rates, the same passenger rates prevail on whether the ship is a Honduran ship or an American ship.

Now, from these facts, the facts in the record before the Board which were considered by the Board for almost two years, they properly concluded and I cannot improve on the language of the summary made by the Board.

Empresa’s maritime operations are a part of a single integrated maritime operation under the continuous direct control and either direct or ultimate ownership of United Fruit and are an essential part of seagoing enterprise located in and directed from the United States and engage in the commerce of this nation.

And the Board further observed, that and I quote, “the relationship between United Fruit and Empresa is one in which the affairs of the subsidiary are designed essentially to further the shipping operations that are apparent and not one in which Empresa is considered an independent undertaking whose success or failure is gauged by its role in the open market.

Empresa vessels are utilized by United Fruit as an integral and necessary part of its fleet of vessels and not chartered as an alternative to acquiring vessels elsewhere or only to meet particular contingencies that may arise.

In short, the Board found that they are joint employers of the affected crew members.

And certainly, as such joint employers, the effect of that relationship submits and subjects this company to the jurisdiction of the Board and entitles us to what we have been seeking for two years, and namely an opportunity to demonstrate that a majority of the crew members of Honduran nationality or otherwise desire to be represented by the National Maritime Union.

Now, let us examine, if I may, advert to its impractical consequences that flow from this controversy.

Assume that the Board’s jurisdiction is upheld.

Assume if you will and as we hope that an election ultimately comes here while we’re all still around and that in this election, the National Maritime Union emerges as the choice of the majority of the seamen.

What happens then and this is a practical problem with which we are very much concerned.

Now, we then engage under the law in collective bargaining with Empresa and with United Fruit or both.

They’re not required by law to reach agreement with us.

All they required by law to do is to bargain with us in good faith.

They’re not obliged to reach any specific understanding as to any particular condition of the agreement.

All they’re obliged to do is to demonstrate that they’re sitting with us and that — within the limits where the legal or otherwise are contractual.

They’re trying to reach some understanding.

What are we really interested in here?

As the Union of American Seamen, were primarily concerned with seeing that their wage rates in some measure not entirely equal because this is unlikely but approximate more than 25% of the scales which we now receive and which their scales act constantly as a depressing impact and threat to our own existence in this economy, so that the practical consequences are that we will reach some agreement on wages.

We already have dealt with their parent organization since 1938.

We don’t have to negotiate with United Fruit.

And once United Fruit comes from behind as the side of Empresa, we’re not concerned that we’ll reach agreement with them and that this agreement will be as every agreement is and the accommodation by all parties to the realities of the economic situation.

Hugo L. Black:

How are the wage rates fixed now?

Herman E. Cooper:

The wage rates of the Empresa seamen?

They are fixed ostensibly by agreement between the Sociedad which claims to be its — the collective bargaining representative and Empresa in Honduras.

Hugo L. Black:

They’re regulated under Honduran —

Herman E. Cooper:

No, there is no —

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Hugo L. Black:

— the whole Honduras?

Herman E. Cooper:

No, this is a private law of private contract entirely just as —

Hugo L. Black:

No, no legal regulation.

Herman E. Cooper:

No legal regulation as to wages.

Hugo L. Black:

No legal compulsion for —

Herman E. Cooper:

None at all.

Hugo L. Black:

— bargaining agreements.

Herman E. Cooper:

Now, the plaintiff’s arguments of the intrusion into Honduran sovereignty, I submit are really political arguments and not just the ship.

They belonged, may I say, in the halls of Congress rather than here although I appreciate that this Court necessarily is concerned with the impact of its decisions on our political life.

But whatever retaliation is threatened, it cannot be real or substantial, we’re always in friction with other countries.

Tom C. Clark:

It seems to me when you say what you’ve said, you (Inaudible).

Herman E. Cooper:

Well, I say it not to strengthen my position but because this is what I consider —

Tom C. Clark:

You have to recognize it.

Herman E. Cooper:

Yes, I do.

We do recognize this reality and this is what I hope to deal with now.

It is a reality but the extent of the reality is one which necessarily diminishes the possibility of impact.

Now, Congress itself had been motivated or continued to be motivated by this vague anxieties of retaliation.

We wouldn’t have many other laws which rough against the sensibilities or the sense of sovereignty which other countries feel.

Hugo L. Black:

Has the Union or the Government attempt to get Congress to clarify the scope of the Labor Board’s jurisdiction in this field?

Herman E. Cooper:

No, we haven’t because we’re satisfied now with the language in the Act.

And the in — the interesting question might well be addressed to our friends here.

Hugo L. Black:

It hasn’t yet accepted.

Herman E. Cooper:

Not yet.

Hugo L. Black:

How long is this fight been going on?

Herman E. Cooper:

Well, this specific fight had been going on —

Hugo L. Black:

I don’t mean the specific one.

I mean all of these questions.

Herman E. Cooper:

I think it has — it clearly became amplified following the First World War or the Second World War when we have a rush of escape Panlibhon shippers to attach to themselves the advantages of foreign tax advantages as well as the low wage rates, lower insurance rates, less require — less stringent requirements on safety measures and what have you, all of which attached to the Panlibhon fleets.

Hugo L. Black:

There had been no effort at all and nobody has presented to Congress or anything about it?

Herman E. Cooper:

Well, there had been hearings.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Hugo L. Black:

(Voice Overlap) often?

Herman E. Cooper:

There had been hearings at the press — at the cabinet level, a consideration of this problem.

There had been certainly a great number of hearings in Congress.

In fact, in 19 — when the 14 (c) of the Labor Act was passed, it was passed by Congress with full knowledge of what this problem was and the Congress themselves made no change in the Act.

It merely reaffirmed the jurisdictional limits which have until then been exercised by the Board.

Hugo L. Black:

There’s no change in whatever it was.

Herman E. Cooper:

Exactly.

Hugo L. Black:

It hasn’t been decided.

Herman E. Cooper:

We all submit of course to the decision of the courts.

Hugo L. Black:

Now, that’s what I mean.

Herman E. Cooper:

Yes, of course.

Hugo L. Black:

If the Congress didn’t leave any particular thing in effect on these so far as its knowledge.

Herman E. Cooper:

No, it did not.

Hugo L. Black:

Except just the language of the law.

Herman E. Cooper:

Exactly, and I —

Hugo L. Black:

There’s no step one way or the other.

Herman E. Cooper:

Nothing — nothing has happened in Congress legislatively on this issue.

William J. Brennan, Jr.:

Have there been any efforts to get the legislation and that guaranteed ship owners (Inaudible)

Herman E. Cooper:

Yes, there —

William J. Brennan, Jr.:

— to the foreign flag?

Herman E. Cooper:

There have been such efforts.

They’re reflected not only in some legislation but also in the activities of the maritime administration.

If I may continue, the question of retaliation which I submit is not very real.

We have very recently, Mexico protested because we wouldn’t permit — the coast guard wouldn’t permit one of its crew ships to sail.

There’s been international opposition to the Maritime Commission’s implementation of the Bonner Act which seeks to regulate rate making.

And you have Prime Minister MacMillan’s threat the efforts of the Maritime Commission to regulate affairs of foreign shippers.

The — this kind of friction, we submit, insofar as Honduras is concerned, is within the control of United Fruit because United Fruit could decide tomorrow that there should no longer be a single vessel under Empresa and that decision would be rapidly implemented and become a fact.

United Fruit could decide tomorrow than set up time chartering, it would bareboat charter and this whole issue would disappear so far as Empresa is concerned.

And United Fruit is the one rather than the Honduran government, rather than Empresa which in fact makes the decision as to the real relationship between these vessels and their ownership.

Now, let’s examine what happens if Board jurisdiction is rejected.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Herman E. Cooper:

I think this is a necessary subject of concern.

It will leave the union no other recourse but self help which we would approach most reluctantly.

This in effect would mean economic pressures in effect that it would neither picketing permitted to us in the Marine Cooks.

It would mean that in — of other cases, we would be thrust before a variety of coastal state courts and then we’d have to fight out the issue after each time a vessel was stopped, the port would be disturbed that a strike might spread in all of its complexities as these industrial disputes have a habit of doing and at the same time there could be no real resolution of the underlying question and that is the activity of the Board as an instrumentality of avoiding this kind of industrial strike on the waterfront.

And this is not the kind of in terrorem argument which I submit is characteristic of some of the amicus curiae briefs of foreign countries.

This is a concrete and foreseeable consequence if we are denied access to the orderly processes of the Labor Board.

And I may ask with all due respect, how would a rejection of Board jurisdiction contribute to fulfilling congressional purpose of avoiding through the machinery set up by the Act, the domestic industrial strife and the rest, the burdening and obstructing of the free flow of commerce, the encouraging of collective bargaining.

The Court of Appeals below recognize that American unions like the National Maritime Union have a vital interest in labor conditions on Empresa vessels and that a labor dispute between our union or any union and these vessels would disrupt the flow of commerce to and from this nation no less than if we are engaged in such an issue with an American ship.

There’s been some reference made to congressional intent and we submit that it clearly upholds Board jurisdiction.

And in this relationship, I would like to make reference to one point not raised by my friend of the Board.

And that has to do with the antitrust statutes which have been hollowed by case law as representing authority for Congress to exercise extraterritorial jurisdiction and appropriate situation.

We were very troubled by a question which was asked as to legislative history, did Congress intend that it would extend the arm of the board into a situation of this character.

We could find no specific legislative history because this statute is a statute of general inclusion and specific exclusion.

And the other statute which bears the closest relationship to it is the Sherman Act in 1890.

And what we did then was to take the Sherman Act, the language of the Sherman Act, defining commerce.

And we discovered in this comparison that the frameworks of the Labor Act must have gone to the Sherman Act for the definition of commerce.

Because if you follow the description of commerce in the Labor Act and the one contained in the Sherman Act in 1890, you find that the language is almost identical in specific particulars so that when the reference is made to any foreign nation or any foreign country that the inference may fairly be drawn that the congressional intent when it framed the Sherman Act in 1890 and obtained extraterritorial jurisdiction through it or gave it and by the same token, the utilization of the same if not identical language in the Labor Act, accomplished the same purpose.

And I submit that under U.S.C. 8 Title XV and if I may take a moment to read the language so that the impression of it is left clear.

The language is contained in the Sherman Act by its commerce as follows: This commerce is used therein means trade or commerce among the several states and with foreign nations or between the District of Columbia, or any territory of the United States and any state territory or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any state or territory of the United States or the District of Columbia or any foreign nation or within the District of Columbia or any territory or any insular possession or other place under the jurisdiction of the United States.

It makes it very specific when you compare this language with the language utilized in the Commerce Clause of the Labor Act that Congress might well have intended and I dare not to say must have but may well have intended that the same reach granted in the antitrust statutes were to be utilized and the statute of general inclusion and specific exclusion because under the Labor Act when they wanted to cut something out, they cut it out.

When they wanted to cut out agricultural workers, they cut it out specifically.

When they wanted to cut out domestics, they cut them out specifically.

But when they were talking about the reach of the area of jurisdiction, they left it in terms of foreign commerce precisely as the language itself is conveyed by the language in the Sherman Act itself.

I would like to conclude on one note, if I may.

We — I argued the Afran case which this Court referred to with the approval in Marine Cooks before, Judge Bryan from the Southern District of New York.

And we had the same problem there.

We had this question, does the Liberian treaty superimposed its contents over the activities of American citizens in American commerce.

And this engaged Judge Bryan’s attention to a great degree because it had to do with not the extra territorial impact of United States law on Liberia but the extraterritorial impact of Liberian law through a treaty on the United States.

And he concluded after viewing the authorities and listening to the argument that the treaty relied on in that case as the treaty relied on in this case does not confer upon the plaintiffs in that case or in this case or upon their vessels, any greater rights than those of American corporations or vessel.

It goes no further than to place them on a parody with American corporations and vessels in the respects enumerated in the treaty.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Herman E. Cooper:

I submit that all references that may have been made to the impact of the Honduran Treaty of Friendship with this country fall into the same category.

It is a fact that while we owe respect and comity to the decisions, to the laws of other countries they owe us respect too.

We are entitled to the same comity which they expect of us.

And when we are talking as we are here about American commerce by an American corporation behind the façade of Honduran corporation, are we not justified and expected that American law will be upheld notwithstanding this vague and we call it threats of reprisal which are intended to defeat the congressional purpose.

Earl Warren:

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

The United States has filed the brief amicus and obtained — believed to participate in the oral argument in this case because the executive branch is convinced, not only that the decision of the National Labor Relations Board asserting jurisdiction over these vessels is wrong as a matter of law.

But more important that because we are convinced after careful study that if upheld, the decision of the Board will disturb our international relations and prejudice of the national defense.

The Government urges, therefore, that the decision below in each case should be affirmed.

In the beginning, I think it may be helpful to draw certain distinctions.

Much of the argument thus far has dealt with all foreign-flag vessels and it’s been a considerable effort to speak of the Panlibhon fleet as if these were all vessels which have the same characteristic in relation to this country.

This is not true at all.

One important distinction is between apparently all Honduran vessels and a large number of Liberian and Panamanian vessels.

The 13 vessels involved in this case, whatever may be our jurisdiction over them plainly do have a very substantial connection with Honduras, on the other hand, and there are only 13 but — 13 Honduran vessels beneficially owned by American interest so that apparently there is no case of the use of the Honduran flag simply as a flag of convenience using the term in the sense of a flag on a vessel which does not carry the trade of the flag nation or have other substantial contacts with it.

I found it convenient in my analysis of the problem to divide the universe of foreign-flag vessels which are engaged in the commerce of the United States and necessarily also with the commerce of some foreign nation into four categories which are not perfect but which I think are helpful.

But first, I would list those foreign flag vessels whose beneficial ownership is foreign and which are substantially engaged in carrying the trade of the foreign state.

The most obvious example is of course the Queen Mary and the other Cunard Liners or the claims of BOAC.

Everyone would agree that this first category of foreign-flag vessels is outside the jurisdiction of the National Labor Relations Board even though it is plainly engaged in the foreign commerce of the United States.

Potter Stewart:

So it would arguably be within the literal provision.

But essential —

Archibald Cox:

It is clearly within the literal —

Potter Stewart:

Literal.

Archibald Cox:

— provision of the statute and clearly demonstrates I think that Congress did not undertake to show where the Board’s jurisdiction was to break off in this respect.

In the second category, I would put those foreign flag vessels whose ultimate beneficial ownership is in U.S. interest but which are substantially engaged in carrying the trade of the flag nation.

This would be the case if the Cunard stock was held by citizens or other domiciliaries of the United States.

It is the present case because all 13 of these vessels are engaged in carrying the trade of Honduras.

They serve the Honduran academy, indeed I suspect that they are more important to interest located in Honduras and to the Honduran economy than they are to the economy of the United States.

Furthermore, let me point out that in the case of a foreign-flag vessel which carries the trade of the nation whose flag it flies but there may often be as and then dangerously would be a substantial additional contact with that nation but the present case is again an illustration.

The crew of these vessels is a Honduran crew, indeed it required to be Honduran by a Honduran law and it’s covered by a Honduran collective bargaining contract.

The employees are represented by Honduran Union.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

The crew signed in Honduran — Honduras under Honduran article and it will go back to Honduras normally at the end of each voyage then they’re released.

The vessels are managed by Honduran corporation whether one pierce of the corporate friction or not, the fact is that they are managed by an office in Honduras, by the people in Honduras who have a substantial amount of discretion particularly in relation to the matter that we’re now concerned with, labor management relations.

The third and fourth categories have to do in my judgment with vessels who’s beneficial — with vessels which are not substantially engaged in carrying the trade of the flag nation.

And I distinguish between the third and fourth according to the ownership.

In the third category, in other words, I would put those foreign-flag vessels whose ultimate beneficial ownership is thorough but which are not engaged in carrying the trade of the flag nation.

The Incres case which is to be argued following these N.L.R.B. cases is a good example of this category.

The vessels fly the Liberian flag and apparently except for that in the text and regulatory consequences have no other contact with Liberia.

On the other hand, they’re Italian owned, Italian managed.

The crew and home base are all Italian.

The only connection with the United States is that the enterprise is commerce between the United States and West Indian ports.

In the fourth category, I would put those foreign-flag vessels whose ultimate beneficial ownership is in U.S. interest which are operated essentially as part of the U.S. enterprise and which are not engaged in carrying the trade of the flag basically or perhaps the best examples are the ore boats carrying bentonite from South America but not from Panama or Liberia under whose flag they register.

Many tankers fall in this category and some iron ore boats, other boat carrier to that carrier.

This fourth group should be carefully distinguished, of course, from the present case where the vessels are carrying the trade of the flag nation.

In this fourth category, we must earnestly submit, is not presently before the Court.

The United States takes no position in this case because the issue is not before the Court and whether the National Labor Relations Board has statutory jurisdiction over foreign-flag vessels which are owned and operated as part of the United States enterprise and which are not engaged to a substantial extent in carrying the trade of the flag nation.

Potter Stewart:

You would not only take no position but as I understand it, Mr. Solicitor General, you urged the Court to take no position of the fact, —

Archibald Cox:

We do.

Potter Stewart:

— do you not?

Archibald Cox:

We think that this is a case where it is very important to adhere to the normal legal principle that the Court doesn’t decide more than what’s before it.

Potter Stewart:

Well now —

Archibald Cox:

Because this is — yes.

Potter Stewart:

Go ahead, I didn’t (Voice Overlap).

Archibald Cox:

I will simply going to say that this is a problem on which there are diverse, complicated and delicate national interests and we have concluded that it would be in the national interest not to deal with that at the present time.

It may arise.

Why it will rise?

No one can tell.

William J. Brennan, Jr.:

(Inaudible)400 vessels in this whole category?

Archibald Cox:

There are today — there are today 411 vessels in the whole Panlibhon category.

13 of those today and when I say today, I mean as of September, are Honduran and apparently are all the United Fruit or Empresa vessel.

Earl Warren:

How many did you say?

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

13 —

Earl Warren:

13.

Archibald Cox:

— are Honduran the other are Panamanian or Liberian.

I may say too that since the question was raised that as of September of the 411, 186 was sold by the Maritime Commission under bond that they would come back to the United States in the event of an emergency.

225 of them and these are the newer, larger and from the standpoint much more important that were constructed abroad.

None of them were constructed with the aid of a subsidy from the Federal Government.

Tom C. Clark:

Either to the —

Archibald Cox:

Now that statement —

Tom C. Clark:

Either to the ship or the ship builder?

Archibald Cox:

No, sir.

Now that — that requires — that statement alone is a little bit or maybe a little bit misleading.

The 186 that were sold by the Maritime Commission were built during World War II and were later sold by the Commission.

Many of the vessels built during World War II were of course built with federal fund but this was later sold under a formula set forth by Congress in the statute.

But the present subsidy arrangement do not and cannot apply in any respect to vessels that are not to be registered under the U.S. flag and which — and they must be kept under the U.S. flag for substantially their useful life.

Tom C. Clark:

But can you make any suggestion, Mr. Solicitor General.

How many of these vessels present the problem which you say we don’t have to decide in this case?

Archibald Cox:

All but — well, I was about to say all the 13.

I think that’s probably a little too broad a statement.

The — I suspect that much the largest part of them —

Tom C. Clark:

Because I understand Mr. Manoli, he wants to go much further than you’re suggesting you want it to be.

Archibald Cox:

That’s quite true.

We — and the difference I think essentially is this that Mr. Manoli argues that the flag a vessel applies is never controlling and that the Board should examine all the contacts between the vessel and the United States in order to determine whether she is engaged in the commerce of the United States.

Our position is that the flag is controlling under the ancient precepts of international law in every case where the registry of the flag is supported by some substantial connection with the flag nation so that it’s not a pure friction.

In other words, in cases where the vessel is carrying the trade of the flag nation and that there is no need to determine what the rule would be in a case where the flag is in a sense only a form and the connection where the United States is otherwise predominant and I just don’t think you may take —

William J. Brennan, Jr.:

I gather —

Archibald Cox:

— the next step.

William J. Brennan, Jr.:

— if your position is sustained as to Empresa that probably will take care of most of the concerns of the nations that have filed amicus briefs.

Archibald Cox:

It would — it would take care of a very considerable number of them.

It would not take care, I take it, of the Liberian or Panamanian concern.

How far it would go to ease the concern of the United Kingdom or Canada, I have straight to say that the state department advices me that the foreign relations problems would be reduced if our position were sustained here regardless of what might happen in the category of cases I would say you should not decide.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

Now, if that’s —

William J. Brennan, Jr.:

Now, if you — excuse me.

Archibald Cox:

Excuse me.

I just want to make this one —

William J. Brennan, Jr.:

Go ahead.

Surely.

Archibald Cox:

— the defense problem curiously is far more concerned with the question that I say is not here because it is the big boat carriers —

William J. Brennan, Jr.:

Underlying ones under agreement in the event of emergency to come back.

Archibald Cox:

This — no.

The big boat carriers are at present time, so far as the Department of Defense is concerned, in this situation.

The owners, the present owners have assured the Defense Department that they would be made available.

There is no attached bond as to what will happen to the ship that that is the present arrangement.

The Panamanian and Liberian governments are also willing that they should be made available.

If they were to pass into the registry of any other country certainly in the West European registry, that would not be true and if they were to pass as a result of economic forces, out of the control of American — United States Corporation of course that holding would be gone.

And since a very large pond of the essential defense planning is based on the availability of these vessels.

Anything which disturbed their present condition would be of very great concern from the standpoint of the national defense.

Now, of course this is an argument which not only support our position here but if pressed to its extreme, it would require us to say what we do not now say and that is that the flag principle should be applied 100%.

And when I say we reserve judgment, I mean exactly that, I cannot say what our position would be if that other case were here because there are diverse problems, the problems of maritime labor relation, there are problems of jobs, there are arguments back and forth.

The argument of the U.S. jurisdiction is obviously at its strongest note in this case.

And it was this difficulty which led us upon reflection to think that this was truly a situation where the old rule about case by case decision was wise not only as a judicial matter but wise from the standpoint of the national interest.

William J. Brennan, Jr.:

Well, but I gather that certainly defense and the Labor Board are completely at odds.

Archibald Cox:

Defense and the Labor Boards are completely at odds, if that is — yes, I — there is no — I hesitate to go by in the position of the United States in this so far as the executive branch is concerned but the defense argument would certainly be completely at odds with the Labor Board.

Hugo L. Black:

May I ask you one question?

It seems to me that your argument would be based on the assumption so that we don’t have to consider the corporate business at all if you would say consider the same thing, an individual owned the United Fruit and have this relationship with Honduras.

Archibald Cox:

That is true, and yes, and I’ve been thinking about that.

I do not want to go quite so far as to say that it should be treated as utterly irrelevant in the case but I would be making the same argument I am sure, regardless of the problem of corporate ownership.

So that when I say U.S beneficially owned, I am in effect disregarding the corporate ownership.

William J. Brennan, Jr.:

May I ask you this question.

Do you agree with Mr. Manoli too that there’s no occasion for us to reach the question of jurisdiction of the lower court to issue an injunction against an election order?

Archibald Cox:

We have not concerned ourselves with that and I will say just a word or two about it because Mr. Manoli’s time was short but really, we have to take in the position on that because that isn’t our major concern in this case.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

The Court has before it here you would recall, Mr. Justice Brennan, two cases.

One coming from the District of Columbia which was a suit by the Honduran Union to enjoin this election and the other was the suit by the employer in New York to enjoin the election.

Now, as I understand the Board’s view, I’m not quite sure I have it right, it takes the position that an employer may not bring an action to enjoin the holding of an election.

But the Union may because the Union has probably no other way than not so good equity of protecting its interest.

One can workout as a professor complicated whether they might strike and thereby raise the issue but for all practical purposes they have not.

And therefore, the Board would concede, as I understand it, that the action in the District of Columbia was a case within the cognizance of equity even though it would argue the action in New York was not

Now, both these cases were pending at the same time and they therefore seem to the Board and to me in consultation to the Board that it was not desirable to bring the employer issue before the Court at the same time as the underlying substantive question so that the Court would be free to publicize.

William J. Brennan, Jr.:

Do you think the Boards position involved in the extension of Leedom and Kyne?

Archibald Cox:

I might — I myself have expressed in writing the view that Leedom and Kyne should not be extended in dealing with the elections.

That’s reprinted in the clerk and based in the books on administrative law.

It has seemed to me that the concern of Congress was not interfering with the elections.

But the —

William J. Brennan, Jr.:

But that is —

Archibald Cox:

— the difference in the concern at the certification stage.

William J. Brennan, Jr.:

So this —

Archibald Cox:

But I must say that I stepped out of character I’m afraid here.

William J. Brennan, Jr.:

Well, no.

But this does, apart from that.

I’m familiar with your views.

But apart from that, this certainly does involve an extension of the principle of Leedom and Kyne.

Archibald Cox:

Well that —

William J. Brennan, Jr.:

Has there ever before been — has the Board ever before exceeded to an injunction against the conduct of election?

Archibald Cox:

You mean — I think it has — I think it has allowed unions to bring two things, yes.

And of course, it should be said I think here that if one is ever to allow interference with the conduct of an election.

William J. Brennan, Jr.:

This is the system.

Archibald Cox:

That this — assuming that the Board is wrong on the merits is the kind of situation where it could be a problem because the mere taking of jurisdiction to deal with it —

William J. Brennan, Jr.:

Well, I don’t mean to take so much of your time.

I believe I’m sure not disagreeing with the Board’s position on that.

Archibald Cox:

No sir, no.

I’m stepping back into character, taking no position with respect to it.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

Now, coming to the merits, one must begin, as Mr. Manoli began, with the words of the statute itself.But in this case, the words of the statute give no guidance whatsoever to the extent of National Labor Relations Board jurisdictions over foreign-flag vessels.

Section 2 (6) of the Act define commerce to include trade, traffic, commerce, transportation or communication between any foreign country and any state or territory.

Sections 9 and 10 give the Board jurisdiction over any question of representation or unfair labor practice affecting commerce.

There is no greater help in the definitions of employer and employee since except for certain specific exclusions or inclusions, I simply say employer includes any employer, the employee includes any employee.

A literal application of the definition to what Mr. Justice Stewart suggested, gives the Board jurisdiction to hold election among the crew of the Queen Mary or of the BOAC Overseas Airlines.

Potter Stewart:

But I guess that would be covered by the Railway Labor Act, wouldn’t it?

Archibald Cox:

The airliner would.

William J. Brennan, Jr.:

Yes.

Archibald Cox:

You’re quite right.

Assuming that the definitions aren’t different and there is a matter of exclusion.

Obviously, this was not intended.

And we must take it, I think, that Congress in the original Wagner Act left a literal universality of the language to be confined by recognition of the settled principles of international maritime law.

I should say too that no additional light has grown on the problem by the amendments that came at later stages of the Act.

The Board cites Section 14 (c) (1) which was enacted in 1959 as part of the Labor Management Reporting and Disclosure Act.

It provides that the Board shall not decline to assert jurisdiction over any labor dispute over which it would assert jurisdiction under the standards prevailing on August 1, 1959.

We think this provision is utterly irrelevant really for three reasons.

In the first place, Section 14 (c) (1) was directed to an administrative practice of declining to exercise and acknowledge statutory jurisdiction on the ground that the matter was too small to be of concern to the National Labor Relations Board.

It was not concerned and Congress at that time did not review what was the statutory jurisdiction of the National Labor Relations Board.

Second, Section 14 (c) (1) speaks of the standards prevailing on August 1, 1959.

Those were published, announced standards.

It doesn’t refer, I think, to each or every decision that the Board might have handed down sometime in the past.

And finally, one can review the legislative history of the 1959 amendments through every word and he will not find a single word that addresses itself with this problem.

In the absence of any contrary guidance from the Congress, we submit that the case is governed by the settled principle that the federal statute will be construed to recognize the need for comity and reciprocity in relation to international maritime commerce and to avoid conflict with international use.

That rule is old.

It goes back at least to the words of Mr. Chief Justice Marshall in The Charming Betsy where he said that “An act of Congress ought never to be construed to violate the law of nations if any other possible construction remains.”

The rule is laid down in a number of cases including Lauritzen and Larsen.

Most pertinent here no doubt is the Benz case in 353 U.S.

There, an effort was made to bring under the National Labor Relations Act, a labor dispute affecting a foreign vessel, foreign registered and foreign owned vessel in a port of the United States engaged of course in the commerce of the United States because she was beginning to load grain to be transported to one of the West Coast ports to a foreign nation.

In the Benz case, the Court rejected this effort to extend the National Labor Relations Act saying, for us to run interference in such a delicate field of international relation, there must be presently affirmative intention of Congress clearly expressed.

It alone has the facilities necessary to make fairly such an important policy decision where the possibilities of international discord are so evident and retaliative action so certain.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

We therefore conclude that such an appeal should be directed to commerce — to Congress rather than to the Court.

It’s unusually important, indeed, I think it is essential that to adhere to this principle in applying a law regulating the choice of a collective bargaining representative and the relations between employer and crew.

But the collective bargaining relationship is a unit.

It’s an integral thing and only one nation that can successfully regulate it.

In this respect, the current problem differs remarkably from the situation with respect to personal interest.

There’s inconvenience as the Court recognized in the Romero case in having the law applicable to compensation for personal injuries or vary with the port in which the injury occurs or the forum in which the suit is brought.

But once the case is decided, that’s the end of the matter.

It’s a transient thing and it does not therefore affect as here an ongoing relationship.

Now, the situation with respect to collective bargaining, the choice of representatives is quite difficult.

You can’t have one bargaining representative in Honduras, another in Singapore, another in London and another in New York.

A collective bargaining agreement is designed to be a continuing thing to govern the relationships of the parties and exclusively to govern them for a year or two years whatever it may be

.You can’t bring men under one contract in New York and another in Honduras.

Decisions about the bargaining unit have a continuing effect.

Once the decision is made by one jurisdiction, the organizational problems within that company will never be quite the same as if the decision had not been made.

This Court recognized this problem of representation proceeding in its earliest cases dealing with the problem of federal occupation of the field.

The Bethlehem Steel — the Bethlehem case and the La Crosse Telephone case, both decided in the Court, clearly recognize that it would be intolerable to have both the states and the Federal Government handle questions of representation affecting the same company.

Now, the situation would be far more intolerable as between the United States and the foreign nation because the likelihood of divergence in the applicable laws is much, much greater.

For example, in the present case, the N.M.U. could not be certified to represent — under Honduran law, under Honduran law, it may not represent the crew of this vessel.

On the other hand, Sociedad cannot lawfully appear on the Honduran law at least before the National Labor Relations Board.

That’s the reason I take it that it didn’t take part in those proceedings.

The provisions with respect to the bargaining unit and duties in collective bargaining are bound to be altogether different.

For example, under Honduran law as I read it, there is no right to exclusive recognition, whereas of course our law gives the majority the right to exclusive recognition or if there is any such right, it is quite different under Honduran law and its goal.

Again, you’ll find that under Honduran law that the regulation and limitations on the right to strike are very different from the regulation and limitations of the right to strike in the National Labor Relations Act that conversely the guarantees of the right are considerably different.

As it’s implicit in what I have said, there is a very considerable body of Honduran law regulating on the relations between employer and crew on these vessels.

Some of it is direct regulation, other parts of it deal with the rights and duties of the employer and any labor union chosen by the Honduran employees.

Those laws are collected in the lieu brief amicus filed by the Republic of Honduras.

This brings me to what I conceive to be the basic fallacy in the approach of the National Labor Relations Board.

It takes an egocentric, one might almost say a chauvinistic point of view, and repeatedly asked whether the vessels are engaged in the commerce of the United States.

Of course, they’re engaged in the commerce of the United States, but a vessel trading between the United States and a foreign nation is necessarily engaged in the commerce of the foreign nation as well as the commerce of the United States and so are the vessels in this case engaged in the commerce of the flagged country to a regular and substantial degree and they’re obviously important to that country.

Similarly, the N.L.R.B. approach, wholly fails to resolve the problem of dual regulation.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

The Board acknowledges the likelihood of some conflict between the duties that it would impose and the duties imposed by Honduran law but it shrugs them off in the briefs saying, “This is a burden which the shipowner must bear as a consequence of doing business in a manner which subjects into the laws of due sovereignty.

Well, I doubt that that is very much comfort to the shipowner caught between conflicting laws but I’m sure that it is an utterly inadequate approach as a matter of international relation.

A friendly foreign commerce is to be carried on overseas, one must look at these problems from a detached point of view being mindful that the problems of interest of the foreign state as well as the problems and interest of the United States.

It is essential then, we think, and to the circumstances of this case and indeed in dealing with labor management relations generally to have a single internationally accepted standard for determining which of two or more nations with an interest in the labor management relations for the vessel shall have jurisdiction and which others shall stand aside.

The traditional and almost universally accepted maritime principle is that the law of the flag nation will be allowed to govern the internal affairs of the vessel such as labor management relations and the relationships between the vessel or the master and her crew.

That’s the principle unrecognized in international law, in the decisions of this Court, in the treaties of the United States and in the consular regulations issued by the state department, the references are voluminous in the briefs and I don’t stop to do more than what’s referred to.

Potter Stewart:

This argument as well as the other arguments that you both have an urging would — if adopted, would lead to a decision of your fourth category of ships, wouldn’t it, in that case?

Archibald Cox:

I think the —

Potter Stewart:

If a — would then if you will, a mechanistic application of the law of the flag doctrine, the so-called —

Archibald Cox:

Well —

Potter Stewart:

— it has been referred to as an outmoded doctrine on the other side would —

Archibald Cox:

I —

Potter Stewart:

— would decide your fourth category, wouldn’t it?

Archibald Cox:

It would if one went to full extent of saying that it must be — completely wouldn’t and mechanistic.

I think that I can perhaps best to put it this way that what I’m saying is that there are very powerful reasons such as I have indicated and others that I will try to outline, they’re there in my brief for holding that the flag is determined.

But as this withdrew so many legal problems, there are interests which don’t logically deny those but which are entitled to be taken into account.

Now, if you have a situation where there are other interest over here that clash with the logic of that argument, where there is a real overwhelming United States interest and where the flag is in truth nothing but a picture or parts of certain text logically.

And then the matter of disregarding it may be very different, there may be reasons in that limited field.

It may have consequences in international relation but the problem may be quite different in doing it on the broad scale that the Board proposes.

So while in the sense by argument, the thrust of it goes part ways.

It seems to me that it doesn’t require in any sense taking this additional step.

It might require it or it might not and —

(Inaudible)

Archibald Cox:

Well certainly Judge Friendly did.

Whether Judge Holtzoff was going 100% or not, I suppose you can’t tell because in the case that he have before him, there were these —

Potter Stewart:

Who are these defendants?

Archibald Cox:

— the fact had a basis.

Let me put it that way.

It was validly founded in the fact that the vessel was carrying the commerce of the flag nation and indeed in this case, it had another foundation too.

Potter Stewart:

Of course, you can say it’s a fiction by calling it a fiction.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Potter Stewart:

You can call anything, anything and Mr. Cooper says that in this case, it’s a fictional situation.

Archibald Cox:

Well, of course most of Mr. Cooper’s argument was that the corporate separation between Empresa and United Fruit is fiction.

Potter Stewart:

Yes, and the —

Archibald Cox:

And —

Potter Stewart:

— United Fruit —

Archibald Cox:

— my answer as Mr. Justice Black pointed out is that even if it’s true, it doesn’t make any difference that as long as there is a foundation in the carrying of the trade of Honduras, it — then there is sufficient basis for the flag and the flag without looking further should be regarded as conclusive.

I don’t think — I suppose he will in rebuttal but I don’t think Mr. Cooper really said that there was no attachment between these vessels of Honduras.

I don’t see how it could.

Potter Stewart:

What I understood him to say was — were — these were United Fruit vessels.

Archibald Cox:

But even if they are an American company may, as Your Honor pointed out earlier, may do business overseas.

Potter Stewart:

Could United Fruit vessels register under the Honduran flag?

Archibald Cox:

After much passing of note —

Potter Stewart:

Yes.

Archibald Cox:

— we all concluded that we didn’t know but we all think —

Potter Stewart:

That makes United Fruit —

Archibald Cox:

— yes.

Potter Stewart:

It’s neither questions but I didn’t know.

Archibald Cox:

I’m sorry, that’s quite fairly none of counsel’s specific, the tarried answer is yes because there are some vessels which are owned by Panamanian corporation registered in Honduras whether that’s in a state or not.

There are not involved in this case but there are in existence, one or two as cited.

The assertion — may I say just one word further about the internal order doctrine.

It seems to us that labor management relations are part of the internal order governed under the traditional view by the law of the flag.

This Court has held that seamen’s wages are normally governed by the law of the flag.

In Wildenhus’ case, the famous passage is quoted over and over again, the Court referred to the generally accepted rule that the flag nation alone should govern the internal discipline of the ship and the general regulation of the rights and duties of the officers and crew toward the vessel or among themselves.

Now, of course if one thinks where should the underlying distinction be drawn, it would seem to put quite clearly the labor management relations on the side of things which are predominantly of the concern of the vessel.

They don’t arise out of the vessels relations with the literal state or with the people of its port, they remain constant including their problems remain constant as she’s on the high seas or regardless of the port she’s in.

And also, things have their interaction as they do today and particularly through the intervention perhaps of their port union, others may be affected but still the core of this is something that concerns the vessel or owners and crew and goes with the vessels or owner or crew regardless of the relationship to the flag nation.

Hugo L. Black:

May I ask you one other question?

Archibald Cox:

Yes sir.

Hugo L. Black:

Maybe you would want to say but there’s no question is there — of the power of Congress to regulate in this way if they get attempted to do so.

Archibald Cox:

I assume not.

Audio Transcription for Oral Argument – December 11, 1962 in McCulloch v. Sociedad Nacional de Marineros de Honduras

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Archibald Cox:

I assume the Congress has the power that — yes.

It’s scarcely necessary for me to mention the concern which the foreign state has exhibited with these decisions of the National Labor Relations Board.

What I would like to make a point is that their concern has not been confined to filing briefs in this Court, that it has been expressed in normal diplomatic interchange over a number of years and that the officials of the United States responsible for our foreign relation hold the opinion that insistence upon the application of the National Labor Relations Act to these vessels would have deeply disturbing consequences in international relation.

Earl Warren:

We’ll recess now.