UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT
March 2, 1982
YORK SHIPPING ASSOCIATION, INC., PETITIONERS
FEDERAL MARITIME COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, NATIONAL CUSTOMS BROKERS AND FORWARDERS ASSOCIATION OF AMERICA, INC., ET AL., INTERNATIONAL ASSOCIATION OF NVOCCS, AND AMERICAN IMPORTERS ASSOCIATION, INC., INTERVENORS 1982.CDC.57
Before WRIGHT, MacKINNON and WALD, Circuit Judges.
UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT
COUNCIL OF NORTH ATLANTIC SHIPPING ASSOCIATIONS and NEW
Petition for Review of an Order of the Federal Maritime commission.
Opinion for the court filed by Circuit Judge J. SKELLY WRIGHT.
Opinion concurring in part and dissenting in part filed by Circuit Judge MacKINNON.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WRIGHT
This case marks yet another chapter in the lengthy, difficult, and bitterly contested process of technological change in the maritime industry. The development of container technology-often described as the "container revolution"-created the potential for drastic reductions in the utilization of labor on the docks. For more than 20 years containerization has been one of the central issues in collective bargaining between the steamship and stevedoring companies, represented by the Council of North Atlantic Shipping Associations *fn1 and the New York Shipping Association ,2 and the maritime workers, represented by the International Longshoremen's Association .3
After protracted negotiations punctuated by strikes and labor unrest, the employers and the ILA accepted a compromise, the Rules on Containers, which seek to preserve a portion of the longshoremen's traditional work jurisdiction while permitting containerization of a substantial proportion of cargo traffic. The National Labor Relations Board is currently evaluating the legality of these rules under the federal laws governing labor-management relations.4 The Rules on Containers, however, also affect the interests of another group-the customers of the shipping lines-who are protected by the federal shipping laws from unjust, unreasonable, and discriminatory rates and practices.5 In 1978 the Federal Maritime Commission determined that the Rules on Containers violate the shipping laws.6
Petitioners CONASA and NYSA, associations of shipping employers, contend that the Rules are outside the jurisdiction of the FMC because collective bargaining agreements regarding work preservation are exempt from regulation under the shipping laws. We cannot agree. Under controlling principles adopted by the Supreme Court, the FMC has jurisdiction to determine the legality of the Rules on Containers. However, we remand to the FMC for reconsideration of its decision on the merits in light of intervening judicial decisions. I. BACKGROUND
The development of container technology has had a momentous impact on the loading and unloading of ocean-borne cargo. New pressures, perils, and opportunities have faced longshoremen, steamship lines, stevedoring companies,7 shipping customers, freight forwarders, customs brokers, and other groups. Not only have changes in the quantity and types of work on the docks profoundly affected labor-management relations; the new technology has also given rise to new patterns of shipping traffic.
A. The History of Containerization
Before the advent of container shipment, boxes, crates, packages, and other cargo were generally transported to the docks in loose, "breakbulk" form. Longshoremen checked and sorted the cargo, placed it on pallets, and loaded each pallet into the hold of a ship. When the vessel arrived at its destination port, longshoremen unloaded the hold and sorted the individual shipments for pickup or storage.8 Larger boxes, consolidating several packages or crates, were occasionally used in ocean freight but formed an insignificant proportion of cargo traffic.9
Beginning in the late 1950's in the trade between the Atlantic coast and the Gulf coast and between the Atlantic coast and Puerto Rico,10 steamship lines began to use containers-large reusable metal receptacles ranging in length from 20 to 40 feet-which could be moved to and from a ship as a single unit.11 These containers were sometimes loaded ("stuffed") with breakbulk cargo and unloaded ("stripped") at the pier by longshoremen.12 But containers could also be transported by truck or rail to inland terminals for stuffing, thereby reducing dockside congestion, labor costs, and paper work.13 Steamship companies began to supply empty containers to shippers for off-pier loading and to charge a lower rate for a fully-loaded container than for an equivalent amount of breakbulk cargo.14
Large-scale manufacturers and distributors could directly take advantage of the lower rates for containers by filling containers entirely with their own goods, either at their own facilities or at public warehouses. These containers were known in the trade as "full shippers' loads" or, if stuffed at a manufacturer's own facility by its own employees, as "manufacturer's label." In the early 1960's entrepreneurs began to offer some of the benefits of container shipping to small shippers whose cargo volume was not great enough to fill an entire container. Consolidators, also described as "non-vessel operating common carriers" (NVOCC's or NVO's),15 combined the goods of various shippers into a single container obtained from a steamship company and then delivered the container to the pier. The shipment, under a single bill of lading in the consolidator's name, was eligible for the reduced container rate. The consolidator could charge his shipping customers slightly less than the steamship package rate, thus attracting business while making a profit.16 NVO's offered shorter delivery times,17 a single bill of lading, reduced export packaging expenses, better tracing, reduced risks of loss, damage, and pilferage at dockside,18 and specialized services not provided by the steamship lines.19 Many NVO's experienced dramatic growth in traffic volume and revenues during the 1960's.20
The increasing use of containers on conventional ships and on specially fitted container ships greatly reduced the role of longshoremen in handling cargo. A full container, capable of carrying 30,000 pounds of freight, can be transported by truck or rail directly to and from the pier and can be hoisted on and off the vessel by crane, without any tallying, sorting, palletization, loading, or unloading of individual packages by longshoremen.21 Productivity per man-hour has increased markedly22; as a result the need for labor on the piers has drastically declined. In the Port of Greater New York in 1968, immediately before the onset of large-scale containerization,23 23,500 registered longshoremen worked nearly 400 million man-hours. By 1975 fewer than 14,000 registered longshoremen worked less than 25 million man-hours.24
From the outset the International Longshoremen's Association strongly resisted the loss of jobs and members resulting from adoption of containerization. In every set of collective bargaining negotiations from 1957 to the present, including sessions in 1959, 1962, 1964, 1968, 1971, and 1974, containerization was the overriding issue.25 The ILA consistently sought to preserve its traditional work jurisdiction and to share in the economic benefits of labor-saving technology; the steamship companies with equal persistence sought maximum flexibility to use containers and increase productivity.26 Under the pressure of actual and threatened work stoppages,27 the two sides reached a succession of unstable agreements that partially restricted the use of containers. In the 1959, 1962, and 1964 agreements ambiguous wording allowed "unrestricted" movement of containers but also recognized the ILA's jurisdiction over stuffing and stripping within the general port area; the ILA received a royalty payment for each container.28 Although the steamship companies continued to move some consolidated containers across the piers without ILA handling, the ILA asserted the right to stuff or strip such containers at the pier.29
A bitter and lengthy strike in 1968, lasting for 57 days in the Port of New York and more than 100 days on the Gulf coast, resulted in presidential mediation30 and eventually in a more detailed and comprehensive agreement on the utilization of containers. The basic requirements of the present-day Rules were adopted in 1969,31 but the union continued to complain about lax enforcement and unchecked container movement in violation of the collectively-bargained Rules.32 Faced by the ILA's threat to abrogate the compromise, the employers agreed in the early 1970's to more rigid provisions to enforce the Rules,33 culminating in 1973 in the "Dublin Supplement."34
B. The Rules on Containers
The Rules on Containers represent "a reasoned response to the difficult problem of technological innovation," as this court has recognized in the labor-management context.35 Qualified by detailed definitions, exceptions, and enforcement provisions, the Rules36 generally require that containers owned, leased, or used by steamship companies, if they originate within or are destined to a point within 50 miles of the center of any ILA port, must be stuffed and stripped by ILA deepsea labor on the pier, not by other employees at inland terminals. According to rough estimates by CONASA officials, the Rules permit 80 percent of container traffic to pass across the pier without rehandling by ILA labor; the remaining 20 percent remains within the work jurisdiction of the longshoremen's union.37
Within the 50-mile radius38 the Rules require that all shipments, with three major exceptions, be stuffed and stripped at the pier rather than at inland terminals.39 First, containers whose contents are owned by a single beneficial owner, including a manufacturer, and which are loaded or unloaded at the shipper's own facility by its own employees, need not be handled at the pier.40 Second, import containers need not be stripped at the pier if they are actually stored at regular rates at a bona fide public warehouse for 30 days prior to distribution.41 Third, containers of mail, household goods of persons changing residences, and personal effects of military personnel are exempt from stripping and stuffing regardless of their place of origin or destination.42 "The main remaining containerloads which the ILA now insists on stuffing and stripping at the piers," the FMC's Administrative Law Judge has written, "are containers coming to and from NVOCCs, consolidators, forwarders, deconsolidators, and other shippers and consignees who do not use their own employees to load and unload their containers, where the containers come to or go from points within 50 miles of a port."43
Over the course of more than a decade of negotiations, stiff enforcement provisions have been added to the Rules. Shippers must provide detailed documentation to enable the shipping line to determine whether the container is subject to stuffing or stripping at the pier.44 In addition, the shipping companies must not provide containers to consolidators, distributors, or any other persons operating in violation of the Rules.45 If a consolidated container arrives at the pier, it must be stripped and restuffed into a different container before it may be loaded aboard ship.46 If the violation is discovered after the container has been loaded, the steamship company must pay $1,000 in liquidated damages per container into the royalty fund.47 A joint labor-management committee interprets the Rules and determines infractions with the assistance of a team of container investigators.48
The Rules on Containers impose burdens on importers, exporters, consolidators, distributors, and others within the 50-mile zone. If containers could move freely across the pier without ILA handling, regardless of the identity of the shipper, the place of origin, or the destination, then small shippers within the 50-mile zone could take full advantage of the benefits of container shipping. In contrast, the stuffing and stripping requirements allegedly increase shipping delays and labor costs, augment the risk of loss, pilferage, and damage in transit due to improper stowage, and deprive the shippers of the special services provided by consolidators.49 NVO's and distributors previously operating within the 50-mile zone have been severely affected and in some cases have been forced to cease operations.50
On the other hand, the 50-mile rule and the enforcement provisions of the Dublin Supplement have averted further reductions of employment opportunities for ILA longshoremen51 and have reduced labor-management strife on the waterfront. Petitioners warn that if the Rules are set aside, the longshoremen may renew their demand for stripping and stuffing of all containers, not only those subject to the 50-mile rule. "Economic warfare would be the inevitable result," petitioners contend.52
C. Federal Maritime Commission Proceedings
This case involves the provisions of the Rules on Containers as incorporated by the Puerto Rico Maritime Steamship Authority into its ocean tariff-the contract of shipment it offers to shipping customers.53 PRMSA, a quasi-governmental instrumentality of the Commonwealth of Puerto Rico, was created in 1974 to take over the steamship operations of several privately owned lines operating between Puerto Rico and the eastern United States.54 Two of these lines-Sea-Land Service, Inc. and Gulf Puerto Rico Lines, Inc.-had included the Rules in their filed tariffs, along with additional provisions passing the liquidated damages and extra handling costs on to shippers in some instances. The FMC had begun an investigation of the legality of these provisions.55 After the establishment of PRMSA the FMC initiated an investigation of the PRMSA tariff and consolidated the two proceedings.56 The orders of investigation alleged possible violations of several sections of the federal shipping laws imposing obligations on common carriers: Section 14 Fourth of the Shipping Act of 1916, which prohibits unfair treatment of or unjust discrimination against any shipper with regard to cargo space accommodations57; Section 16 First of the Shipping Act of 1916, which makes it illegal to subject any person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage58; and Section 18(a) of the Shipping Act of 1916 and Section 4 of the Intercoastal Shipping Act of 1933, both of which require tariffs, rules, and regulations to be just and reasonable.59
On October 9, 1975 the Administrative Law Judge issued an Initial Decision.60 He rejected CONASA's contention that the FMC lacked jurisdiction over the Rules on Containers because of their origin in a collective bargaining agreement.61 He also ruled that the tariff provisions violated the common carrier obligations imposed on PRMSA by the shipping laws. Under the Rules, he noted, an export shipper within the 50-mile zone who loads a full container at his own facility obtains more favorable treatment than either a shipper whose full container is loaded at a public warehouse or a shipper whose goods form part of a consolidated container load. Imported containers whose destinations are within the 50-mile zone are subject to ILA stripping or 30 days' warehouse storage only if the owner does not unload the goods at his own warehouse facilities. None of these differences, the ALJ found, are justified by differences in the transportation services provided by the steamship company, which in each case simply transports a sealed container aboard its vessel.62 Apart from the discrimination among categories of shippers, the ALJ concluded that the additional delay, expense, and fines imposed upon shippers by the Rules, and the ambiguity of some of the provisions, made the Rules unjust and unreasonable to shippers.63
Upon review the Federal Maritime Commission adopted the findings and Initial Decision of the ALJ.64 Conceding that the existence of a collective bargaining agreement was a factor worthy of consideration, the Commission concluded that it did not outweigh other transportation factors and failed to justify the disparity in treatment among shippers.65 The decision was issued on June 14, 1978. CONASA and NYSA filed a timely joint petition for review of both the jurisdictional and the substantive determinations of the Commission.66 II. THE JURISDICTIONAL ISSUE
Petitioners CONASA and NYSA have addressed their briefs solely to the jurisdictional question, asserting that they have held their substantive challenge "in reserve," to be "only reached after the question of exemption has been resolved."67 They contend that the FMC completely lacks jurisdiction over the PRMSA tariff provisions in question because they are work preservation rules derived directly from a collective bargaining agreement. In their view, the Rules are "governed by the specific provisions of federal labor law"68 and should therefore be beyond the reach of any other regulatory scheme. The FMC, petitioners maintain, is simply "unequipped to deal with the sensitive and delicate collective bargaining process"69; it has "tor(n) asunder the accomplishments of more than fifteen (15) years of difficult and strike marked collective bargaining over the thorny issue of technological job displacement . . .."70
CONASA and NYSA advance two grounds for recognizing a "labor exemption" from the federal shipping laws-the Maritime Labor Agreements Act of 1980 and the non-statutory labor exemption doctrine. Neither ground provides a persuasive basis for denying the FMC's jurisdiction to determine whether tariff provisions incorporating the Rules on Containers violate the common carrier requirements of the shipping laws.
A. The National Labor Relations Act and the Rules on Containers
Petitioners emphasize that the National Labor Relations Board has jurisdiction over the Rules on Containers. They contend that the specific provisions of Sections 8(b)(4)and 8(e) of the National Labor Relations Act71 "provide the sole and exclusive test for adjudicating the validity of work preservation agreements."72 According to their brief, "Congress expressed its preference for the NLRB, as "the forum of choice,' in determining whether a labor agreement represented a legitimate work preservation program or an unlawful "hot cargo' or other secondary boycott scheme."73 We must therefore begin by examining the nature of the NLRB's jurisdiction.
Section 8(b)(4)of the National Labor Relations Act prohibits unions and their agents from engaging in "secondary" activities whose object is to force one employer to cease doing business with another. Section 8(e) outlaws those collective bargaining agreements in which the employer agrees to cease doing business with any other person. Neither section encompasses legitimate work preservation agreements with "the purpose of preserving for the contracting employees themselves work traditionally done by them."74
In unfair labor practice proceedings initiated by trucking companies and consolidators, the NLRB concluded that the Rules on Containers violated Section 8(e) and that union action to enforce them violated Section 8(b)(4).75 Defining the work in controversy as off-pier stuffing and stripping of containers-which had not traditionally been performed by longshoremen-the Board held that the Rules on Containers "did not have a lawful work-preservation object."76 In an enforcement proceeding this court held that the Board had erroneously defined the "work in controversy" because it had ignored traditional work patterns.77 The Supreme Court affirmed this court's decision, agreeing that the Board's approach to defining the work at issue was incorrect as a matter of law. The Court remanded to the Board for careful analysis of the relationship between traditional longshore work and the work assigned to ILA members by the Rules on Containers. It expressly stated that the FMC proceedings regarding the Rules "present difficult and complex problems which are not properly before us."78 On remand the Board's Administrative Law Judge issued an Initial Decision upholding the Rules in large part but invalidating them in some particulars.79 The comprehensive opinion offers a detailed analysis of the traditional patterns of freight movement and the job functions performed by longshoremen, motor carrier drivers, public warehousemen, consolidators, and others.
Even a brief discussion of the labor law proceedings demonstrates that NLRB examination of the Rules on Containers differs substantially from FMC scrutiny under the federal shipping laws. This difference reflects the two functions played by the collective bargaining provisions. The Rules govern the relationship between labor and management; incorporated into tariff provisions filed by steamship companies, they also govern the relationship between shipping customers and steamship operators. The ALJ at the NLRB noted that the NLRB and the FMC are responsible for "effectuating different Congressional policy pursuant to different legislative standards."80 The NLRB's interpretation of Sections 8(b)(4) and 8(e) does not answer the questions the FMC is required to ask-do the Rules unduly discriminate against certain shippers, and are they unjust and unreasonable?81
B. The Maritime Labor Agreements Act of 1980
Even if the issues considered by the NLRB and the FMC do not coincide, Congress has the power to exclude work preservation agreements from the jurisdiction of the latter agency. Petitioners contend that Congress exercised that power by enacting the Maritime Labor Agreements Act of 1980. We find that the language and legislative history of the statute fail to bear out petitioners' contention; the Act did not deprive the FMC of jurisdiction over this case.
The Maritime Labor Agreements Act of 1980 was the product of a legislative attempt to clarify jurisdictional boundaries in the area where labor law and shipping law intersect-the provisions of maritime collective bargaining agreements. Historically the FMC had taken the position that none of these agreements were subject to the provisions of Section 15 of the Shipping Act, which requires that a wide range of maritime agreements be filed with and approved by the Commission before they may enter into effect.82 However, beginning in 1968,83 judicial decisions had held that Section 15 covered certain collective bargaining agreements and multi-employer agreements to implement promises made in collective bargaining.84 In 1980 the House, citing the national policy of "free collective bargaining without a requirement of prior government approval,"85 adopted a bill which completely exempted collective bargaining agreements from FMC regulations.86 The House bill removed FMC jurisdiction to review maritime labor agreements, before or after implementation, or to determine their legality under the substantive provisions of the shipping laws.87 This blanket labor exemption aroused strong opposition.
At hearings held by the Senate committee, shippers, consolidators, and other witnesses objected that the bill "stripped the FMC of jurisdiction to assure equal treatment of shippers, cargo, and localities and to prevent abuses made possible by one concerted activity of carriers and others."88 In response, the Senate committee drafted a revised bill to assure "that Federal Maritime Commission jurisdiction is preserved to the extent necessary" to assure equal treatment and to prevent abuses.89 The bill was adopted by the Senate without debate,90 and passed by the House, again without debate.91
Section 5 of the Act exempts maritime labor agreements from regulation under all provisions of the Shipping Act of 1916 and the Intercoastal Shipping Act of 1933, with the proviso that there would be no exemption
for any rates, charges, regulations, or practices of a common carrier by water or other person subject to this chapter which are required to be set forth in a tariff, whether or not such rates, charges, regulations, or practices arise out of, or are otherwise related toa maritime labor agreement.92
This proviso appears to retain existing FMC jurisdiction over the Rules on Containers as applied to shipping customers through steamship company tariffs.93 Explicitly aware of the clash of interests created by the Rules,94 Congress sought to retain FMC jurisdiction to scrutinize the Rules' adverse effects upon shippers.95 Moreover, under well established shipping law doctrine, all terms and conditions relating to a carrier's acceptance and carriage of cargo must be set forth in its tariffs.96 In 1969 the FMC decided that tariff provisions derived from the Rules on Containers were required to be set forth in a carrier's tariff,97 and in 1977 a federal district court adopted a similar interpretation of the tariff filing provisions.98
We need not decide the scope of the proviso to Section 5, however, because another provision of the 1980 statute unequivocally preserves existing FMC jurisdiction over the present proceedings. Section 6 states that the changes made by the Act "shall not affect . . . formal Commission proceedings commenced prior to the date of enactment of this Act."99 Moreover, the Senate committee expressly referred to these consolidated FMC proceedings, noting that they were pending on appeal before this court.100 The 1980 legislation in its ultimate form thus has no bearing on the FMC's jurisdiction over the Rules on Containers in Dockets Nos. 73-17 and 74-40. We must turn to the non-statutory law which defined FMC jurisdiction over the products of collective bargaining agreements prior to 1980.
C. The Non-statutory Labor Exemption
Although the federal shipping laws, prior to 1980, did not expressly create any statutory exemption for collective bargaining agreements, the FMC and the courts recognized a partial non-statutory exemption in an effort to accommodate the overlapping regulatory schemes of shipping, labor, and antitrust law. If an agreement is exempt, the FMC does not exercise jurisdiction to determine whether it violates the law, but even if an agreement is not exempt it nevertheless might be lawful under the Shipping Act of 1916 and the Intercoastal Shipping Act of 1933.101
No judicial precedents address the precise issues raised in this case: whether any labor-management agreements are exempt from the substantive provisions of the shipping laws, and, if so, whether enforcement of the collectively-bargained Rules on Containers qualifies for exemption. Prior cases delineating the non-statutory labor exemption from the shipping laws have dealt with the pre-implementation filing and approval requirements of Section 15 of the Shipping Act of 1916, not with the prohibitions against unreasonably discriminatory and unjust rates and practices in Sections 14, 16, and 18.102 We need not decide whether this non-statutory exemption applies to the substantive provisions of the shipping laws, because the Rules on Containers would not qualify for such an exemption under the definition adopted by the Supreme Court. In 1978 the Court decided, in FMC v. Pacific Maritime Ass'n, that an agreement is not exempt if it directly imposes terms on persons or entities outside the agreement.103 The Commission contends that this restrictive principle applies to tariffs filed by carriers as well as to collective bargaining agreements. See note 125 infra. We conclude that, because enforcement of the Rules on Containers by inclusion in steamship company tariffs imposes terms on third parties, it raises shipping law issues which are within the FMC's statutory responsibilities. This case is therefore not beyond the scope of FMC jurisdiction.
1. Precedents recognizing the non-statutory exemption
Judicial decisions have recognized that some labor-management agreements are exempt from the requirements of Section 15 of the Shipping Act, 46 U.S.C. § 814 (1976). Section 15 requires regulated parties, including steamship carriers, to submit certain categories of agreements to the FMC for review and approval prior to implementation; FMC approval confers immunity from antitrust liability. A collective bargaining agreement may fall within several of the categories covered by Section 15: it may fix or regulate transportation rates or fares; control, regulate, prevent, or destroy competition; pool or apportion earnings, losses, or traffic; limit or regulate the volume or character of freight or passenger traffic to be carried; or provide for an exclusive, preferential, or cooperative working agreement.104 Such agreements must be filed with the FMC for review under Section 15 unless they satisfy a set of criteria modeled on the non-statutory labor exemption from the antitrust laws.105
Two rationales support the use of antitrust law principles as a model in Section 15 exemption cases. First, the labor exemption from antitrust regulation has been developed judicially over the course of four decades to reconcile the system of collective bargaining with the potentially inconsistent dictates of another statutory scheme106; hence its principles serve as a useful guide in the shipping law context.107 Second, a labor agreement which is exempt from the antitrust laws because of its indirect impact on the commercial market might not raise Section 15 issues and would not benefit from the FMC's power to grant antitrust immunity.108
In United Stevedoring Corp. v. Boston Shipping Ass'n, 16 FMC 7 (1962) (Boston Shipping), the FMC defined the criteria for a non-statutory labor exemption from the shipping laws. The case involved agreements between employers to implement the provisions of a labor-management collective bargaining agreement. Recognizing the need to "reconcile or accommodate Shipping Act policies with labor act policies,"109 the FMC derived four "guidelines" from the Supreme Court cases exempting labor agreements from antitrust regulation. First, the underlying collective bargaining must be in good faith and at arm's length.110 Second, the matter must be "intimately related or primarily and commonly associated with a bona fide labor purpose."111 Third, the result of the collective bargaining must not "impose terms on entities outside of the collective bargaining group."112 Fourth, there must be no conspiracy between labor and management.113 The FMC noted that "(t)hese criteria are by no means meant to be exclusive nor are they determinative in each and every case. . . . They are rather guidelines or "rules of thumb' for each factual situation."114 The FMC expressly adopted a case-by-case balancing test, weighing the agreement's effect on business against its impact on collective bargaining.115
Applying these standards, the Commission then found that the inter-employer agreements at issue in Boston Shipping were exempt from the shipping acts. First, the incorporation papers and by-laws creating a multi-employer collective bargaining association were exempt because they involved "purely labor matters"; "no valid regulatory purpose would be served" by requiring Section 15 review.116 Second, an agreement regarding initial allocation of labor gangs among stevedores was exempt because "in actuality (it) amounted to nothing more or less than the hiring by employers of employees." Labor considerations were "strong," while the effects upon competition in the industry were "minimal and remote."117 Third, a "first call-recall" agreement, which created procedures for assignment and reassignment of employees, satisfied all four guidelines; the FMC expressly noted that "no terms were imposed on entities outside the collective bargaining group."118
In FMC v. Pacific Maritime Ass'n, 435 U.S. 40, 98 S. Ct. 927, 55 L. Ed. 2d 96 (1978), the Supreme Court cited these guidelines with approval. The Court declined to confer a categorical Section 15 exemption on all collective bargaining agreements,119 deferring to Congress' determination to " "subject to the scrutiny of a specialized governmental agency the myriad of restrictive agreements in the maritime industry.' "120 The Court, however, accepted the FMC's guidelines for exempting some cases from pre-implementation review. Quoting the Boston Shipping decision at length,121 the Court held that the guidelines were not satisfied by the Pacific Maritime Association's collective bargaining agreement with the union. The agreement allowed employers outside the collective bargaining group to participate in the group's hiring halls and centralized fringe benefit plans only on specified terms.122 "PMA and the Union," the Court noted, "had undertaken to impose employment terms and conditions on employers outside the bargaining unit," thereby eliminating a competitive advantage previously enjoyed by nonmembers.123
*fn2. The Rules on Containers and the labor exemption
The FMC advances two grounds for denying a labor exemption for the Rules on Containers as incorporated into the PRMSA tariff. First, it contends that the non-statutory labor exemption applies only to Section 15, and not to any other provisions of the shipping laws.124 Second, it asserts that, assuming arguendo that there is a labor exemption from the substantive provisions and that it applies to tariffs as well as to agreements, the Rules on Containers do not satisfy the Boston Shipping criteria.125 We find the second contention persuasive and therefore need not reach the first issue.126
One of the four Boston Shipping guidelines127 permits a labor exemption only if "(t)he result of the collective bargaining does not impose terms on entities outside of the collective bargaining group."128 Although none of the criteria is "determinative,"129 consideration of each factor facilitates the balancing of an agreement's effect on the business market against its impact on collective bargaining.130 If an agreement "impose(s) terms" on employers or customers outside of the collective bargaining group, then its effect on shippers' interests and on competition131 is likely to be "direct and probable" rather than "remote," and it will probably implicate significant shipping law policies. Generally, therefore, such an agreement will fall within the jurisdiction of the Federal Maritime Commission.
The Rules on Containers, as incorporated into the PRMSA tariff, directly impose terms on third parties.132 As in Pacific Maritime Association, the shipping employers agreed not to deal with outsiders except upon terms and conditions specified in the collective bargaining agreement. In Pacific Maritime Association employers outside the bargaining unit were required to accept uniform contract conditions with longshoremen in order to enjoy the benefits of participation in hiring halls and fringe benefit plans. In our case consolidators and other shipping customers are required to accept the PRMSA tariff Rules on Containers in order to obtain ocean transportation services.133
Moreover, the Rules have direct and probable effects on shippers' interests and on competition in the shipping industry, both of which are subject to FMC regulation. The record fully documents the impact that enforcement of the Rules would have on importers, exporters, consolidators, distributors, and others who transport goods by sea.134 Consolidators are competitors as well as customers of the steamship lines, offering alternative arrangements for ocean transportation of smaller shipments. Those consolidating companies which previously operated within the 50-mile zone are deprived of business under the Rules, or subjected to substantial cost increases and shipping delays, in order to preserve the work opportunities of longshoremen employed at the docks by steamship operators. We take no position on whether the Rules are legal, but we are unable to conclude that the shipping interests are either indirect or insignificant in relation to collective bargaining factors.135 Therefore, the FMC has jurisdiction to consider the legality of the Rules on Containers under the shipping laws.136 III. HOLDING
We remand the record in this case to the Federal Maritime Commission for reconsideration of its decision on the merits. The Initial Decision in this case was rendered in October 1975, more than six years ago. In June 1978, more than three years ago, the FMC adopted the Initial Decision. The Commission did not examine the implications of two recent Supreme Court decisions, FMC v. Pacific Maritime Ass'n (supra) which asserts the importance of labor policy in reaching substantive shipping law decisions, 435 U.S. at 57, 63, 98 S. Ct. at 937, 940, and NLRB v. Internat'l Longshoremen's Ass'n, 447 U.S. 490, 100 S. Ct. 2305, 65 L. Ed. 2d 289 (1980), which discusses the role of collective bargaining in resolving the problems created by technological job displacement. In the interests of justice, the FMC should have the opportunity to reconsider its previous determination in light of these two decisions.
The record in this proceeding is therefore
MacKINNON, Circuit Judge (concurring in part and dissenting in part).
The majority opinion holds that the Federal Maritime Commission (FMC or Commission) has jurisdiction to determine whether shippers' tariffs that incorporate the Rules on Containers violate the common carrier requirements of the shipping laws. At 180. I concur in this part of the opinion and in so doing reject the claim of the Council of North Atlantic Shipping Associations and the New York Shipping Association (Petitioners) that the validity of the attempts at work preservation embodied in the collective bargaining agreement between Petitioners and the International Longshoremen's Association (Union) is to be determined solely under the National Labor Relations Act and specifically under sections 158(b)(4)and (e) of that Act.1 Also with respect to the Maritime Labor Agreements Act of 1980, Pub.L.No. 96-325, 94 Stat. 1021 (1980) , I concur in the interpretation that collectively bargained work preservation agreements were not thereby excluded from the jurisdiction of the Maritime Commission. At 181.
I disagree, however, with the suggestion in dictum in a footnote2 that the general rationale of the exemption for labor agreements from the filing requirements of section 15 of the Shipping Act, mandated by the MLAA, supports a non-statutory labor exemption from the substantive provisions of the shipping laws. The majority suggests that the Supreme Court "might extend the Boston Shipping (United Stevedoring Corp. v. Boston Shipping Ass'n, 16 FMC 7 (1972) ) criteria to the substantive shipping law provisions." I find no evidence for that speculation in the decisions of the Court. Moreover, the MLAA itself indicates that such an extension of the labor exemption was rejected by Congress when it considered the scope of the exemption it was granting in the MLAA and specifically rejected its extension to the substantive shipping laws in precise language as follows:
Sec. 5. Section 45 of the Shipping Act, 1916 (46 U.S.C. 842), and all references thereto, is redesignated section 46 and a new section is added as follows:
"Sec. 45. The provisions of this Act and the Intercoastal Shipping Act, 1933, shall not apply to maritime labor agreements and all provisions of such agreements except to the extent that such provisions provide for the funding of collectively bargained fringe benefit obligations on other than a uniform man-hour basis, regardless of the cargo handled or type of vessel or equipment utilized. Notwithstanding the preceding sentence, nothing in this section shall be construed as providing an exemption from the provisions of this Act or of the Intercoastal Shipping Act, 1933 for any rates, charges, regulations, or practices of a common carrier by water or other person subject to this Act which are required to be set forth in a tariff, whether or not such rates, charges, regulations, or practices arise out of, or are otherwise related, to a maritime labor agreement.".
Pub.L.No. 96-325, § 5, 94 Stat. 1022 (1980) (emphasis added).
This enactment confirms the prior interpretation of the Shipping Act. In application, it means that the FMC has jurisdiction to apply the substantive provisions of the shipping laws to tariffs that incorporate the terms of collective bargaining agreements. Thus, regardless of the source of the tariff's terms,
Whenever the Federal Maritime Commission finds that any rate, fare, charge, classification, tariff, regulation, or practice demanded, charged, collected, or observed by any carrier subject to the provisions of this chapter is unjust or unreasonable, it may determine, prescribe, and order enforced a just and reasonable maximum or minimum, or maximum and minimum rate, fare, or charge, or a just and reasonable classification tariff, regulation, or practice:
46 U.S.C. § 845a (1976).
While the statement of the majority in footnote 126 is therefore purely dictum I am concerned lest it be given more weight than its soundness warrants. The FMC should ignore such comment because it is not soundly based in the statute, legislative history or adjudicated cases.
My principal disagreement with the majority opinion, however, is with its statement of the principle it relies upon to control this case. It asserts that the Supreme Court's 1978 holding in Federal Maritime Commission v. Pacific Maritime Ass'n , 435 U.S. 40, 98 S. Ct. 927, 55 L. Ed. 2d 96 (1978), is based on the principle that "an agreement is not exempt if it directly imposes terms on persons or entities outside the agreement." At 183 (emphasis added). There are at least two serious difficulties with the application of this rule in the instant case.
First, it fails to discuss the issue-strenuously argued by the intervenors-whether one can legally equate the Rules on Containers set forth in the collective bargaining agreement between the Union and the carriers with those same Rules as incorporated into the carriers' tariffs. The failure even to consider this point is evident from the majority's statement of the test: an "agreement" is not exempt if it imposes terms "directly" on third parties. While the collective bargaining agreement may in some sense, because it includes the Rules, "impose" terms on shippers, it is not that agreement which is under scrutiny here. Rather, it is the ocean tariffs filed by the carriers.
Therefore, posing the test in terms of the "direct" effect of the "collective bargaining agreement" misstates the issue. The question presented to the Commission for consideration was either (a) the indirect effect the agreement has when its terms are included in a carrier's tariffs, or (b) the direct effect of the tariffs. The statement by the majority as to the applicable standard has one foot in each trough, and the result is bound to be hopelessly confusing if the courts or the FMC should attempt to apply it.
When one attempts to figure out how this apparently superficial flaw can be straightened out-by replacing "agreement" with "tariff," or by substituting "indirectly" for "directly"-it becomes apparent that the whole basis for the majority's statement of the controlling law is questionable. The problem is not a superficial one. It is the fundamental one of trying to use the PMA decision as authority for a premise the importance of which deserves thorough independent justification.
PMA involved the issue of whether there was a blanket exemption for collective bargaining agreements themselves from the filing requirements of section 15 of the Shipping Act. A panel of this court (Wright, McGowan, Tamm, JJ.) held that there was a blanket exemption, because to require pre-implementation approval of labor-management contracts by the FMC would frustrate national labor policy favoring the quick resolution of labor disputes. The Supreme Court reversed that decision, holding that there was no per se exemption; rather, the Commission had jurisdiction at a minimum to require prior filing and approval of agreements whose impact on competition was "neither de minimis nor routine." 435 U.S. at 56, 98 S. Ct. at 936. It is this phrase that the majority says controls here.
The rationale disapproved by the Supreme Court in reversing PMA should suggest the inappositeness of applying that rationale concerning a collective bargaining agreement to this case involving a tariff. This court's reasoning, which was based upon the need to avoid, not even the substantive law, but merely a pre-implementation procedure -was explicitly rejected. Therefore, while PMA supports the very general proposition that labor agreements are to some extent subject to FMC scrutiny, it says little if anything about the Commission's role in evaluating tariffs derived from such agreements against the substantive provisions of the Shipping Act.
There is a very substantial distinction between collective bargaining agreements (which PMA held may or may not be exempt from pre-implementation scrutiny) on the one hand, and tariffs on the other. This distinction was brought to the attention of Congress in hearings on the MLAA both by the FMC *fn3 and by the Union; *fn4 the result was the explicit distinction in section 5 of the MLAA between maritime labor agreements and matters "required to be set forth in a tariff." As intervenors rightly suggest, to ignore the distinction would be to reduce the incentive of a carrier-even one bargaining at arm's length-to bargain for labor agreements that are consistent with the Shipping Act's policies.
It must be remembered that the Shipping Act has as its primary purpose the protection of shippers, not carriers. From the standpoint of the shipper, the terms set forth in a tariff are the same regardless of whether they had their genesis in a collective bargaining agreement; the tariff is the only statement of terms imposed "directly" upon the shipper. National labor policy, while it may require that the FMC be kept out of the labor-management bargaining process, does not prohibit the FMC from applying the substantive provisions of the Shipping Act to protect shippers from being forced to bear the costs of carriers' losses at the bargaining table merely because they were incorporated in a collective bargaining agreement.
I thus cannot join the majority's statement of the controlling law. *fn5 The tariffs at issue in this case are subject to the substantive shipping laws, not because they arise out of a collective bargaining agreement that falls short of complete exemption from scrutiny, but simply because they are tariffs subject to FMC review. Although it may ultimately be demonstrated that the principles underlying PMA are applicable to cases involving the evaluation of tariffs under the substantive shipping laws, I cannot agree that PMA "controls" these cases.
Ultimately, I agree with the majority that assuming arguendo that a labor exemption is applicable here, the tariffs would still be within the FMC's jurisdiction under Boston Shipping. At 187-188. I therefore concur in upholding the FMC's exercise of its jurisdiction here.
I disagree, however, that it is either necessary or desirable that this case be remanded for further consideration. It is correct that the decision by the FMC was rendered some time ago; but one of the principal reasons for our delay was the stay the parties requested because of a pending case, NLRB v. International Longshoremen's Ass'n, 198 U.S. App. D.C. 157, 613 F.2d 890 (D.C.Cir.1979), aff'd, 447 U.S. 490, 100 S. Ct. 2305, 65 L. Ed. 2d 289 (1980). *fn6 That decision has now been released, and its failure to consider any question at issue here is grounds for not remanding the case. Indeed, both PMA (supra) and International Longshoremen's Ass'n (supra) have been decided since the FMC decision, but there is nothing in either decision that would cause the FMC to consider any questions of fact or law not previously considered and ruled upon. International Longshoremen's Association dealt solely with the work preservation issue under the labor law. Although petitioners do not concede that the Rules as incorporated into carrier tariffs violate the substantive shipping laws, they have chosen to limit their argument to the jurisdictional issue. We have no reason to believe that the Commission erred in applying the law as it stood at the time of its decision, and no reason to believe that law has since changed in any material respect. Consequently, returning the matter to the Commission for further proceedings can serve no useful purpose. I therefore dissent from the court's decision to remand the case.