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CONSOLIDATED EXPRESS v. NEW YORK SHIPPING ASSN.

December 19, 1977

CONSOLIDATED EXPRESS, INC., Plaintiff,
v.
NEW YORK SHIPPING ASSOCIATION, INC.; SEA-LAND SERVICE, INC.; bSEATRAIN LINES, INC.; INTERNATIONAL LONG-SHOREMEN'S ASSOCIATION, AFL-CIO; INTERNATIONAL TERMINAL OPERATING CO., INC.; JOHN M. McGRATH CORP.; PITTSTON STEVEDORING CORP.; UNITED TERMINALS CORP.; and UNIVERSAL MARITIME SERVICES CORP., Defendants. TWIN EXPRESS, INC., Plaintiff, v. NEW YORK SHIPPING ASSOCIATION, INC.; SEA-LAND SERVICE, INC.; INTERNATIONAL LONGSHOREMEN'S ASSOCIATION, AFL-CIO; INTERNATIONAL TERMINAL OPERATING CO., INC.; JOHN W. McGRATH CORP.; PITTSTON STEVEDORING CORP.; UNITED TERMINALS CORP.; and UNIVERSAL MARITIME SERVICES CORP., Defendants



The opinion of the court was delivered by: STERN

 For the reasons set forth in this Court's opinion filed this date,

 It is, on this 19 day of December, 1977,

 ORDERED that plaintiffs' motion for partial summary judgment be, and it hereby is, denied.

 HERBERT J. STERN United States District Judge

 STERN, District Judge

 I. INTRODUCTION

 In this lawsuit, plaintiff Consolidated Express (hereinafter Conex) seeks to recover money damages for injuries it claims to have suffered by reason of the implementation of the infamous 1969 Rules on Containers, a collectively-bargained response to the perceived threat to waterfront labor posed by technological change in the shipping industry. *fn1"

 Since World War II, the introduction of increasingly large containers has enabled the shipping industry gradually to replace piece-by-piece loading and unloading work performed by the longshoremen on the piers with block handling of cargo. By use of mammoth containers, shipments of diverse firms can be consolidated into one container which can be "stuffed" far from the waterfront. The containers are then sent to the piers where they are loaded onto waiting ships. This innovation has increased productivity, but has produced decline in demand for the services of the members of the defendant International Longshoremen's Association (ILA).

 In 1958, the ILA protested the use of containers and commenced a strike against defendant New York Shipping Association (NYSA). In the contract adopted in 1959, the union conceded that "any employer shall have the right to use any and all types of containers without restriction." *fn2"

 In the following decade, fully containerized ships were introduced and the use of containers increased dramatically. The loss of work opportunities occasioned by these developments led the ILA to negotiate the "Rules on Containers" in 1969. By these agreements, the NYSA guaranteed that all cargo lots which had been of less than a container size but which had been consolidated with other lots into one container would be stripped when the container arrived on the docks by longshoremen on the dock, if the cargo had originated from or was to be shipped to a point within 50 miles of the dock. The Rules provided for a penalty against the carrier in the amount of $250 per container for any container which went through dockside without being stripped and stuffed in accordance with the Rules. *fn3" In 1970, the penalty was increased to $ 1,000 per violation. Disputes continued and, in 1973, CONASA (an organization of shipping associations, including NYSA, with authority to negotiate) and the ILA met and entered into the "Dublin Supplement" which provides, in part, as follows:

 
Enforcement of Rules on Containers.
 
* * * *
 
1. (a) All outbound (export) consolidated or LTL container loads (Rule 1 containers) shall be stripped from the container at pier by deepsea ILA labor and cargo shall be stuffed into a different container for loading aboard ship.
 
1. (b) All inbound (import) consolidated or LTL cargo (Rule 1 containers) for distribution shall be stripped from the container and the cargo placed on the pier where it will be delivered and picked up by each consignee.
 
2. No carrier or direct employer shall supply its containers to any facilities operated in violation of the Rules on Containers including but not limited to a consolidator who stuffs containers of outbound cargo or a distributor who strips containers of inbound cargo and including a forwarder who is either a consolidator or a distributor. No carrier or direct employer shall operate a facility in violation of the Rules on Containers which specifically require that all containers be stuffed or stripped at a waterfront facility (pier or dock) where vessels normally dock.
 
A list shall be maintained of consolidation and distribution stations which are operated in violation of the Rules for the information of all carriers and direct employers. Any container consolidated at or distributed from such facilities shall be deemed a violation and subject to the rules on stuffing and stripping.

 Consolidated Express, a Puerto Rican corporation, is a nonvessel owning common carrier engaged in the business of containerizing less than container load (LCL) or less than trailer load (LTL) cargo for shipment between Puerto Rico and its inland facilities located within 50 miles of the Port of New York. In the trade, plaintiff is known as a "consolidator," that is, it is in the business of handling LCL or LTL goods for customers wishing to ship such goods. Consolidators "unitize" or consolidate the crates of several customers into large containers provided by the shipping companies. The consolidators pack their customers' crates into containers, and then truck them to pierside facilities where they are loaded onto ships.

 On June 1, 1973, Conex filed charges with the National Labor Relations Board alleging that the ILA had violated § 8(b)(4)(ii)(B) of the National Labor Relations Act, which forbids union activity which forces any employer "to cease doing business" *fn4" with any other employer, and that the ILA and NYSA had violated § 8(e) *fn5" which prohibits agreements requiring such a cessation. Complaints issued and the General Counsel, pursuant to § 10(1) sought preliminary injunctive relief against the union and the shipping association.

 The complaint came before Judge Lacey who granted the petition for a preliminary injunction. Balicer v. ILA, 364 F. Supp. 205 (D.N.J. 1973). Testimony of nine witnesses before Judge Lacey consumed seven days and 1,200 pages of transcript. *fn6" Noting the limited role of the Court in a 10(1) proceeding, Judge Lacey held that the NLRB's legal theory -- that the challenged activities were impermissible work reacquisition -- was substantial, and that the issuance of a temporary injunction was "just and proper." The Court of Appeals for the Third Circuit affirmed. Balicer v. ILA, 491 F.2d 748 (3rd Cir. 1973) (mem.)

 The case was then submitted to an Administrative Law Judge on the basis of a stipulated record consisting of the record of the injunction proceeding before Judge Lacey, including extensive documentary evidence, and supplementary affidavits. The Administrative Law Judge determined that the ILA boycott of Conex and the contractual agreement between the union and the shipping association were addressed to the labor-management relations of the NYSA employer-members vis-a-vis their own employees. He held that the activities were therefore protected "primary conduct."

 The NLRB reversed. Consolidated Express, Inc., 221 NLRB No. 144 (1975). The Board found the agreement to be improper under § 8(e) because its objective was to force the NYSA to cease doing business with the consolidators. The NLRB rejected the argument that the contract constituted a valid effort by the ILA to preserve for its members a type of work which they had historically performed. It reasoned that the "work in controversy" was that work performed by the consolidators at their off-pier facilities, not the traditional cargo handling done at dockside by longshoremen. The agreement thus could not be viewed as work preservation lawful under the Supreme Court decision in National Woodwork Manufacturers Ass'n v. NLRB, 386 U.S. 612, 18 L. Ed. 2d 357, 87 S. Ct. 1250 (1967). Moreover, reasoned the Board, even assuming that the ILA once had a valid claim to the strip and stuff work, that claim had been abandoned in the 1959 ILA-NYSA agreement. Finally, the Board considered the "economic personality of the industry" and noted that the absence of a clear distinction between strip and stuff work and the work related to preparing containers for shipment could lead to a future ILA claim to all such work with "enormous impact on the shipping industry". The Board further ruled that the union's actions in enforcing the agreement were unfair labor practices under § 8(b)(4)(ii)(B).

 The Court of Appeals for the Second Circuit found that the Board's order was supported by substantial evidence and sustained it. ILA v. NLRB, 537 F.2d 706 (2nd Cir. 1976), cert. denied, 429 U.S. 1041, 97 S. Ct. 740, 50 L. Ed. 2d 753 (1977). Judge Wyzanski, writing for the Court, premised enforcement of the order on the Board's finding that there was no valid work preservation agreement. *fn7" It is against this backdrop that plaintiff's motion for summary judgment must be evaluated.

 Plaintiff has moved for partial summary judgment on the issue of defendants' liability under Counts I and III of the complaint. Count I charges all defendants with a group boycott or concerted refusal to deal, alleged to be per se violations of §§ 1 and 3 of the Sherman Act, 15 U.S.C. §§ 1 and 3. Count III seeks damages against defendant ILA under § 303(b) of the Labor Management Relations Act, 29 U.S.C. § 187(b) for its violation of § 303(a) of that Act, 29 U.S.C. § 187(a).

 In brief, plaintiff argues that the 1975 determination by the National Labor Relations Board that the Rules on Containers and the enforcement thereof constituted unfair labor practices be given collateral estoppel effect and that the Board's determination is dispositive of all issues raised in this lawsuit. All defendants oppose the application of collateral estoppel in the context of this lawsuit and assert a number of affirmative defenses. Plaintiff insists that each and every defense is insufficient as a matter of law.

 II. COUNT III - UNFAIR LABOR PRACTICE CLAIM

 Under Count III, plaintiff seeks damages from the ILA under § 303(b) of the Labor Management Relations Act, 29 U.S.C. § 187(b) for its violations of § 303(a) of that Act, 29 U.S.C. § 187 (a). Section 303 provides:

 
(a) It shall be unlawful, for the purpose of this section only, . . . for any labor organization to engage in any activity or conduct defined as an unfair labor practice in section 158(b)(4) of this title [§ 8(b)(4) of the NLRA].
 
(b) Whoever shall be injured in his business or property by reason of any violation of subsection (a) . . . may sue therefor in any district court of the United States . . . and shall recover the damages by him sustained and the cost of the suit.

 Section 8(b)(4)(B), 29 U.S.C. § 158(b)(4)(ii)(B), provides, in pertinent part:

 
(b) It shall be an unfair labor practice for a labor organization or its agents --
 
. . . .
 
(4) . . . (ii) to threaten, coerce, or restrain any person engaged in commerce . . . where . . . an object thereof is --
 
(B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other person, . . . Provided That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing . . .

 Conex maintains that the union's commission of an unfair labor practice within the meaning of § 8(b)(4) was established in the NLRB proceedings and that the ILA is collaterally estopped from relitigating the facts underlying the Board's determination or the legal conclusions which it reached. The ILA argues that collateral estoppel does not apply under the circumstances present in this case. It also argues that plaintiff's own illegal activities preclude recovery. It contends that Conex's claims are barred by the statute of limitations. And it raises a number of equitable defenses.

 A. COLLATERAL ESTOPPEL.

 The parties agree that United States v. Utah Construction & Mining Co., 384 U.S. 394, 86 S. Ct. 1545, 16 L. Ed. 2d 642 (1966) establishes the criteria for application of the doctrine of collateral estoppel to an administrative determination. "When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose." Id., at 422.

 Section 303(a) of the Labor Management Relations Act requires a determination of whether the ILA committed an unfair labor practice within the meaning of § 8(b)(4) of the NLRA. International Longshoremen's Union v. Juneau Spruce Corp., 342 U.S. 237, 96 L. Ed. 275, 72 S. Ct. 235 (1952). The NLRB ruled that the ILA had committed such a forbidden practice. ILA argues, however, that that conclusion should not be binding here. I disagree.

 The major thrust of the union's argument is that it did not receive a full and fair hearing before the Board because it was afforded no discovery rights in the Board's proceedings. Acceptance of this theory would, in effect, mean that collateral estoppel could never be applied to an administrative determination; discovery under the federal rules is never available on the administrative level. Moreover, in the context of this litigation, the ILA's claim is particularly unpersuasive. At the lengthy hearing before Judge Lacey, the ILA was represented by counsel and had a full opportunity to call, examine, and cross-examine witnesses and to introduce documentary evidence. As augmented by affidavits, and by agreement of the parties, this was the record upon which the Board made its determination. Appeal of the Board's decision was prosecuted vigorously. Under these circumstances, I must conclude that the ILA had a full and fair opportunity to litigate its claims.

 Its contention that "newly discovered evidence" compels a different resolution of the substantive issue is unpersuasive. Even if a different conclusion could be reached if the ILA were permitted a second chance, the policies underlying the doctrine of collateral estoppel -- finality to litigation, prevention of needless litigation, avoidance of unnecessary expenditures of time and money, undesirability of inconsistent adjudications -- outweigh the considerations raised by the union. As the Supreme Court has stated:

 
After a party has had his day in court, with opportunity to present his evidence and his view of the law, a collateral attack upon the decision there rendered merely retries the issue previously determined. There is no reason to expect that the second decision will be more satisfactory than the first.

 Stoll v. Gottlieb, 305 U.S. 165, 172, 83 L. Ed. 104, 59 S. Ct. 134 (1938). *fn8"

 The Board's determination that the union had committed an unfair labor practice will therefore be given collateral estoppel effect for purposes of the plaintiff's Section 303 claim. *fn9" See International Wire v. Local 38, IBEW, 475 F.2d 1078 (6th Cir.), cert. denied, 414 U.S. 867, 94 S. Ct. 63, 38 L. Ed. 2d 86 (1973); Texaco Inc. v. Operative Plasterers & Cement Masons International Union, 472 F.2d 594 (5th Cir.), cert. denied, 414 U.S. 1091, 38 L. Ed. 2d 548, 94 S. Ct. 721 (1973); Paramount Transport Systems v. Teamsters Local 150, 436 F.2d 1064 (9th Cir. 1971); Painters District Council No. 38 v. Edgewood Contracting Co., 416 F.2d 1081 (5th Cir. 1969); Eazor Express, ...


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