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International Organization of Masters v. Trinidad Corp.

decided: October 14, 1986.

INTERNATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS, PLAINTIFF-APPELLEE,
v.
TRINIDAD CORPORATION, DEFENDANT-APPELLANT



Appeal from an order of the United States District Court for the Southern District of New York (Knapp, J.) granting petition to confirm arbitrator's award of damages to appellee for appellant's breach of collective bargaining agreement. Reversed and remanded, with direction to stay action pending resolution of unfair labor practice complaint issued against appellee by the National Labor Relations Board.

Author: Miner

Before: PRATT and MINER, Circuit Judges, RE, Chief Judge, U.S. Court of International Trade, sitting by designation.

MINER, Circuit Judge:

Trinidad Corporation ("Trinidad") appeals from an order of the United States District Court for the Southern District of New York (Knapp, J.) enforcing an arbitrator's award of damages to the International Organization of Masters, Mates & Pilots ("MM&P) for Trinidad's failure to apply the provisions of its collective bargaining agreement with MM&P to its affiliate, Crest Corporation ("Crest"), as required by section V.I of that agreement. Trinidad contends that enforcement of the arbitrator's contractual award would violate sections 8(b)(1)(A), 8(b)(1)(B) and 8(B)(2) of the National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 158(b)(1)(A), 158(b)(1)(B), 158(b)(2) (1982). For the reasons set forth below, we reverse the district court's order and remand the matter for further proceedings, including a stay of the action pending resolution of the unfair labor practice charges related to this action filed against MM&P before the National Labor Relations Board ("NLRB").

I. BACKGROUND

Trinidad is a Delaware corporation that owns and operates United States flag ocean-going vessels. MM&P is a labor organization that for many years has represented the licensed deck officers employed on Trinidad vessels. The last collective bargaining agreement between the parties became effective in June of 1981 and expired in June of 1984. Section V.I of that agreement provided that its terms covered all licensed deck officers employed on vessels "owned, operated or bareboat chartered . . . by [Trinidad] or any of its subsidiaries or affiliates." Joint App. at 25 (emphasis supplied).

Several months prior to the effective date of the last collective bargaining agreement, Trinidad was acquired by Apex Shipping, Inc., a subsidiary of Apex Holding Company, which in turn is a subsidiary of Apex Oil Company. In September of 1982, the Apex conglomerate formed two new wholly-owned subsidiaries, Clayton Tankers, Inc. ("Clayton") and Crest. Clayton was formed for the purpose of acquiring and owning U.S. flag ocean-going vessels and Crest was formed for the purpose of operating those vessels. As such, Crest became the employer of all officers and crew members working on the vessels acquired by Clayton.

Despite the provision in the collective bargaining agreement between Trinidad and MM&P, Crest did not employ any MM&P deck officers on Clayton vessels, but rather entered into a new collective bargaining agreement with the Crest Tanker Officers' Association ("CTOA"). The new agreement provided that CTOA would be the exclusive bargaining agent for Crest's licensed deck officers. On February 8, 1984, pursuant to a contractual arbitration clause in its collective bargaining agreement with Trinidad, MM&P filed a grievance against Trinidad alleging that it had breached its collective bargaining agreement with MM&P by failing to apply its provisions to the licensed deck officers of Trinidad's affiliate, Crest.

An arbitration hearing was held in which Trinidad and MM&P but not Crest, were represented. On August 10, 1984, the arbitrator issued his award, finding that Crest was an affiliate of Trinidad within the meaning of section V.I of the collective bargaining agreement and, consequently, that Trinidad's failure to apply that agreement to Crest constituted a violation of the terms of the agreement. The arbitrator thus awarded damages to MM&P in the following manner:

2. Trinidad Corporation shall forthwith pay to MM&P, for the benefit of its members who have lost work on ships owned or operated by Crest and Clayton as a result of the above violation, a sum equal to the wages a full complement of licensed deck officers would have earned had they been employed on such vessels from the time those vessels were acquired or operated by Crest and Clayton until the expiration of Trinidad's collective bargaining contract with MM&P.

3. Trinidad Corporation shall pay to the appropriate MM&P Benefit Plan amounts equal to the contributions which would have been paid under the Agreement under the circumstances set forth in Item 2.

Joint App. at 94.

Within days following the arbitrator's decision, MM&P petitioned the district court under section 9 of the United States Arbitration Act, 9 U.S.C. § 9 (1982), to confirm the award. Trinidad cross-petitioned to vacate the award, alleging that enforcement of the award would be contrary to public policy as it would require Crest to violate federal labor law. In this regard, several days prior to filing its petition, Trinidad also filed unfair labor practice charges with the NLRB against MM&P. Trinidad alleged that MM&P's attempt to apply the provisions of its collective bargaining agreement to Crest violated sections 8(b)(1)(A) and 8(b)(2) of the NLRA, which prohibit an employer or labor organization from interfering with the statutory rights of employees and from discriminating against such employees on the basis of their union affiliation. 29 U.S.C. §§ 158(b)(1)(A), 158(b)(2). In addition, Trinidad asserted that MM&P's conduct impinged upon the rights of Crest, the employer, to select the grievance handling supervisors, i.e., licensed deck officers, of its choice, in violation of section 8(b)(1)(B) of the NLRA. In sum, Trinidad contended, and still contends, that, regardless of the terms of the collective bargaining agreement, application of that agreement to Crest would violate the NLRA unless Crest and Trinidad could be considered a single employer or Trinidad considered the "alter ego) of Crest. See Carpenters' Local Union No. 1478 v. Stevens, 743 F.2d 1271, 1277 (9th Cir. 1984), cert. denied, 471 U.S. 1015, 105 S. Ct. 2018, 85 L. Ed. 2d 300 (1985). Accordingly, Trinidad asserted that any damages award against it for its failure to apply the agreement to Crest necessarily would be inconsistent with federal labor law.

The district court initially held the action in abeyance pending resolution of the unfair labor practice charges before the NLRA. On October 22, 1985, the Regional Director of the NLRB for Region 5 informed the parties that the NLRB would not issue an unfair labor practice complaint against MM&P. In his letter to Trinidad, the Regional Director noted that "MM&P's sole conduct was a resort to grievance-arbitration and to court in a good-faith effort to enforce its contract, and in furtherance of at least a colorable claim that Trinidad violated the 'subsidiaries and affiliates' clause of the then existing labor contract." Joint App. at 264. To this end, the Director found that "MM&P's resort to grievance-arbitration and to court, for the purpose of collecting monetary damages to recompense a past breach of contract, does not constitute 'restraint or coercion' within the meaning of Section 8(b)(1)(A)." Id. As to the section 8(b)(2) claim, the Director noted that, although a likely result of such an award would be the termination of all non-MM&P officers on Crest ...


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