Appeal from a judgment of the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, denying appellants' motion for partial summary judgment, granting appellee's motion for partial summary judgment, and dismissing appellants' complaint which sought a declaratory judgment that the assessment procedure utilized by the appellee is preempted by the Employee Retirement Income Security Act.
Mansfield, Pierce and Winter, Circuit Judges.
Appellants NYSA-ILA Vacation and Holiday Fund ("Vacation Fund") and NYSA-ILA GAI Fund ("GAI Fund") (hereinafter alternatively referred to collectively as the "Funds")*fn1 appeal from a judgment, entered July 22, 1983, in the United States District Court for the Southern District of New York, Thomas P. Griesa, Judge, denying the Funds' motion for partial summary judgment, granting the motion for partial summary judgment of appellee The Waterfront Commission of New York Harbor ("Waterfront Commission" or "Commission"), and dismissing the Funds' action which sought, inter alia, a declaratory judgment that the Commission's assessment procedure is preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq.
For the reasons set forth below, we affirm.
The Waterfront Commission was established in 1953 by the Waterfront Commission Compact ("Compact"), an interstate compact between New York and New Jersey. The Compact was enacted by the legislatures of the two states,*fn2 and was approved by the United States Congress. Act of Aug. 12, 1953, Pub. L. No. 83-252, 67 Stat. 541, reprinted in 1953 U.S. Code Cong. & Ad. News 605. The Compact constitutes Part I of the Waterfront Commission Act ("Act"), which formulates a scheme for governmental supervision of employment on the waterfront in the Port of New York, and which was intended to cope with problems of long-standing on New York and New Jersey's joint waterfront in that Port. See De Veau v. Braisted, 363 U.S. 144, 4 L. Ed. 2d 1109, 80 S. Ct. 1146 (1960).
The Compact provides that the Commission's expenses, to the extent not covered by federal grants, are to be financed by statutory assessments paid to the Commission by employers*fn3 of longshore employees. N.Y. Unconsol. Laws § 9858 (McKinney 1974)("§ 9858").*fn4 The amount of the assessment is "computed upon the gross payroll payments" made to such employees. Since its inception, the Commission has taken the position that "gross payroll payments" within the meaning of § 9858 include both regular wages and fringe benefits paid to employees. Since 1953 and thereafter, vacation and holiday benefits have been a standard form of fringe benefit, and the Commission included those benefits in calculating employer assessments. Similarly, when GAI benefits began in 1966, those payments were also included by the Commission in computing assessments.
In 1971, the appellant Funds were created as a result of a collective bargaining agreement between the ILA, the union, and the NYSA, which is a membership corporation whose members consist of steamship operators, stevedores, terminal operators and other firms performing related services for the shipping industry.*fn5 In addition to the two appellant Funds, the collective bargaining agreement established a third fund -- the NYSA-ILA Fringe Benefit Escrow Fund ("Escrow Fund"). The three funds work in concert as follows: shipping and stevedoring companies deposit their respective share of fringe benefit payments into the Escrow Fund, which in turn makes payments to appellants Vacation Fund and GAI Fund as required by the needs of the latter two funds; then, the appellant Funds directly dispense fringe benefits to the longshoremen and their dependents.
From January 1, 1973 until March 31, 1975, the Commission's assessments on vacation, holiday and GAI benefits were paid, under protest, by the Vacation Fund and the GAI Fund, respectively.*fn6 Thereafter, pursuant to a resolution proposed by the Commission and adopted by NYSA in 1975, NYSA paid the assessments on these benefits under protest through 1977 when the payments were discontinued and litigation ensued.*fn7
In April, 1978, several employers of longshoremen in the Port of New York commenced an action in the Supreme Court, New York County, challenging the Commission's assessment on vacation, holiday and GAI benefits. Specifically the employers sought a judgment declaring (1) that vacation, holiday and GAI benefits are not "gross payroll payments" paid by "employer[s] . . . for work or labor performed" within the meaning of § 9858 of the Compact and, therefore, are not subject to assessment by the Commission; and (2) that the Commission's assessment on those benefit payments is unconstitutional upon the ground of federal preemption. The Commission answered the complaint, filed a counterclaim against the employers and, in addition, brought NYSA and the Funds into the state action as counterclaim defendants. In its counterclaim, the Commission sought a judgment that the benefit payments are "gross payroll payments" within the meaning of § 9858 and that the plaintiffs are employers under that section, or, alternatively, that the Funds are, or that NYSA is, an employer under § 9858.
Meanwhile, prior to the disposition of the state action by the New York Supreme Court, the Funds, on January 5, 1979, initiated the federal action which forms the basis of this appeal, alleging that assessments on the benefits paid by the Funds are preempted by ERISA. This ERISA preemption claim was not raised by any of the parties in the state action. In a four-count complaint filed in the District Court for the Southern District of New York, the Funds sought a judgment declaring that ERISA preempted the assessments, a permanent injunction against the Commission and refunds of payments previously made by the Funds to the Commission. During a pre-trial conference, the parties to the federal action agreed that it should be placed on the suspense calendar pending the outcome of the state proceedings.
In an opinion dated February 11, 1982, the New York Court of Appeals rendered a decision in the state action in favor of the Commission. American Sugar Refining Co. v. Waterfront Commission, 55 N.Y.2d 11, 432 N.E.2d 578, 447 N.Y.S.2d 685, appeal dismissed sub nom. New York Shipping Association v. Waterfront Commission, 458 U.S. 1101, 73 L. Ed. 2d 1362, 102 S. Ct. 3474 (1982). The Court of Appeals held that the vacation, holiday and GAI benefits are included in "gross payroll payments" within the meaning of § 9858 and are therefore assessable by the Commission. The court also held that the Funds, as well as the plaintiff-employers, are liable for assessment on those benefit payments. Finally, the Court of Appeals rejected plaintiffs' contention that the assessment is preempted by federal labor laws governing the collective bargaining process and by federal tax laws. The United States Supreme Court dismissed an appeal from that decision "for want of a substantial federal question."
On March 12, 1982, the federal action was removed from the suspense calendar. Thereafter, the Funds moved for summary judgment on the declaratory judgment count (Count I) of their complaint. The Commission cross-moved for summary judgment on Counts I and II of the complaint -- the declaratory judgment and permanent injunction counts. In an opinion dated July 20, 1983, the district court held that the Compact, including § 9858, is a federal law and, therefore, is not preempted by ERISA. Accordingly, Judge Griesa denied the Funds' motion ...