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International Longshoremen's Association v. Seatrain Lines Inc.

January 27, 1964


Author: Hays

Before CLARK,*fn* SMITH and HAYS, Circuit Judges.

HAYS, C. J.:

The International Longshoremen's Association appeals from the dismissal of its complaint seeking a declaratory judgment that it may lawfully receive certain moneys from the defendants under an agreement between the ILA and the defendants. The ILA is a labor organization which represents the employees of the defendants within the meaning of Section 302 of the Labor-Management Relations Act, 29 U.S.C. § 186, 61 Stat. 157 (1948), as amended, 73 Stat. 537 (1959), 29 U.S.C. § 186 (Supp. IV, 1959-62).*fn1 The employers resist payment to the ILA on the ground that performance of the agreement would violate Section 302 which, with certain exceptions, prohibits payments by an employer to a labor organization that represents any of its employees. On the ILA's motion for summary judgment, the district court determined ex motu suo that the dispute was only a friendly difference of opinion concerning the interpretation of Section 302, that it would be improvident to adjudicate the scope of this penal statute in a suit to which the government was not a party, and that the controversy was therefore nonjusticiable. We hold that a justiciable controversy is presented and we resolve that controversy in favor of the defendants.

The facts are not in dispute. During the course of collective bargaining negotiations in 1959, the ILA objected to the employers' use of pre-loaded cargo containers, a form of automation, in the Port of New York. The use of containers reduced the employment of ILA members and thereby adversely affected that portion of the ILA's income that is derived from a dues check-off based on the hours worked by each employee. After extensive discussions the employers agreed to pay 28 cents per gross ton of "containerized" freight handled through the Port of New York into a fund to be administered by trustees appointed by the ILA and the employers. The ILA, however, demanded that part of the fund be paid to it as compensation for its loss of revenue. This demand was rejected by the employers on the ground that such a payment would violate Section 302. In an effort to avoid labor strife over the issue the parties stipulated that 10% of the moneys paid to the trustees would be put in escrow pending a determination by a federal court or the United States Attorney General of the legality of payment to the ILA. The parties agreed that if payment was declared illegal, they would renegotiate the disposition of the escrow fund. The Attorney General refused to render an opinion, and the union instituted this suit for a declaratory judgment.

I. A claim for declaratory relief must present a dispute that is "definite and concrete, touching the legal relations of parties having adverse legal interests." Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41 (1937). We think the present controversy satisfies that standard. The parties have a bona fide controversy concerning the application of Section 302 to a particular, definite agreement. They stand in a legal relationship in which their legal interests are adverse. Resolution of the controversy will determine the ILA's legal right to secure the 10% payment which it claims. "Such a dispute is manifestly susceptible of judicial determination. It calls, not for an advisory opinion upon a hypothetical basis, but for an adjudication of present right upon established facts." Aetna Life Ins. Co. v. Haworth, supra at 242. The fact that the dispute is a "friendly" one in the sense that the parties have agreed to submit it to the courts for resolution is, of course, not a valid objection to rendering a declaratory judgment.

Nor can it be improper to adjudicate the scope of Section 302 in a suit between private parties since the Section itself provides for just such adjudication. While it is true that violation of the Section subjects the violator to penal sanctions, the Section is also enforceable by a civil action at the instance of private persons.Under Section 302(e) an action may be brought to enjoin the performance of an agreement that violates Section 302. Actions under this provision have been brought by union members, Carroll v. Associated Musicians of Greater New York, 284 F.2d 91 (2d Cir. 1960); Local No. 2, Operative Plasterers and Cement Masons Int'l Ass'n v. Paramount Plastering, Inc., 310 F.2d 179 (9th Cir. 1962), cert. denied, 372 U.S. 944 (1963), and by employers, Employing Plasterers' Ass'n v. Journeymen Plasterers' Protective & Benevolent Soc'y, 279 F.2d 92, 97-99 (7th Cir. 1960); Sheet Metal Contractors Ass'n v. Sheet Metal Workers Int'l Ass'n, 248 F.2d 307 (9th Cir. 1957), cert. denied, 355 U.S. 924 (1958).

In these cases the courts have not hesitated to define the area of proper application of Section 302, though, of course, the United States was not a party.

Declaratory judgments adjudicating the scope of Section 302 were granted in Local 2, Operative Plasterers & Cement Masons Int'l Ass'n v. Paramount Plastering, Inc., supra and Mechanical Contractors Ass'n v. Local 420, 265 F.2d 607 (3d Cir. 1959).

II. Section 302(a) of the Labor Management Relations Act prohibits the payment by an employer of "any money or other thing of value" to a labor union that represents its employees who are employed in an industry affecting commerce. Section 302 (b) prohibits the receipt of such a payment by a labor union. The defendants are employers in an industry affecting commerce. The ILA is a labor organization representing their employees. The agreement the ILA seeks to enforce is for the payment of a sum of money by the employers to the ILA. On its face, then, the agreement violates the statute.

The ILA, however, contends that the legislative history of the statute shows that it interdicts only payments obtained by bribery or extortion, and that in any event the agreement is excluded from the operation of the statute by Section 302(c)(2), which exempts:

"the payment or delivery of any money or other thing of value in satisfaction of a judgment of any court or a decision or award of an arbitrator or impartial chairman or in compromise, adjustment, settlement, or release of any claim, complaint, grievance, or dispute in the absence of fraud or duress."

The ILA's first contention cannot be sustained. The prohibitory sweep of the statute encompasses more than conscious wrong-doing.

"That the section does include situations that do not involve conscious wrongdoing is apparent from the fact that the exceptions are all devoid of that element.Strictly speaking, it may be an impertinence to discuss this question at all and not to treat the passage in the Supreme Court's opinion, 350 U.S. 299 as authoritative which declared that 'as the statute reads, it appears to be a criminal provision, malum prohibitum, which outlaws all payments, with stated exceptions, between employer and representative.'" United States v. Ryan, 232 F.2d 481, 483 (2d Cir. 1956).

Nor can the agreement be considered a settlement of a claim within the meaning of the exception established by Section 302(c) (2). Obviously, if the ILA's argument were accepted the proscriptive effect of the statute would be nullified, since every payment by an employer to a union could be characterized as a settlement of a claim or demand made by the union. We need not now attempt to define in detail the area in which Section 302(c)(2) affords immunity. For the present case it is sufficient that we hold that whenever some other provision of Section 302(c) provides a more particularized exception, the transaction must satisfy the requirements of that other exception to be exempt. Thus, contributions to union welfare funds which have been made pursuant to a collective bargaining agreement or an arbitration award, and might therefore be thought to fall within the exceptions of Section 302(c)(2), are to be scrutinized under the standards set out in Section 302 (c)(5), which provides a particularized exception for payments to certain trust funds. See, e.g., Local 2, Operative Plasterers & Cement Masons Int'l Ass'n v. ...

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