Eastern Shipping Corp.

National Labor Relations Board - Board Decisions

Aug 10, 1961

132 N.L.R.B. 930 (N.L.R.B. 1961)

930 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In view of the foregoing considerations, we would make -provision
for including the truckdrivers in the production and maintenance unit
should they not vote for separate representation."
le Independent Linen Supply Company of Mississippi , supra, where the Board in a situa-
tion identical to ,that not before it did - provide, as we contend it should , for including the
drivers in a production and maintenance unit if they did not vote for separate representa-
tion. We would reverse cases such as George H. Braun, d/b/a Alamo-Braun Beef Conn-
pany, et al ., supra, cited by the majority in support of their position.
Eastern Shipping Corporation ; McCormick Shipping Corpora-
tion and Seafarers International Union of North America,
Atlantic & Gulf District , AFL-CIO, Petitioner . Case No. 12-
RC-415. August 10, 1961
DECISION AND DIRECTION OF ELECTION
Upon a petition duly filed under Section 9 (c) of the National
Labor Relations Act, a hearing was held before Herbert N. Watterson,
hearing officer. The hearing officer's rulings made at the hearing are
free from prejudicial error and are hereby affirmed.
Upon the entire record i in this case, the Board finds :
1. Jurisdiction: The Petitioner seeks to represent a unit of unli-
censed personnel on the SS Yarmouth. Eastern and McCormick con-
tend that the Board is without jurisdiction to proceed in this case be-
cause the Yarmouth is a Panamanian vessel, owned and operated by
McCormick, a Panamanian corporation, and manned by a crew com-
prised primarily of nonresident aliens. However, as we concluded in
the West India and Peninsular d Occidental cases, the mere presence
of such foreign attributes as those just mentioned does not necessarily
require a finding that the Act does not cover the maritime operation
involved or that the Board should not assert jurisdiction a Rather,
the question of jurisdiction is to be decided by determining whether
"On May 18, 1960, the Board issued a notice of hearing consolidating the present case
with West India Fruit and Steamship Company, Inc, 130 NLRB 343, and Peninsular &
Occidental Steamship Company and Green Trading Company, 132 NLRB 10, for purposes
of oral argument on certain jurisdictional and public policy issues common to the three
cases. The hearing was held on May 31 , 1960, and all parties in the consolidated cases
were represented by counsel and participated in the argument . See, West India Fruit,
etc, supra, footnote 5. All requests for reargument or additional argument have been
duly denied . See, West India Fruit, etc ., supra, footnotes 5 and 6. Further, as set forth
in our decision in West India Fruit and Steamship Company, Inc., supra, footnote 4, the
Attorney General of the United States was permitted to intervene in this case and in
West India and Peninsular & Occidental, and, in his brief , filed November 18, 1960,
presented on behalf of the Department of State and Department of Defense certain con-
siderations of international law and national defense policy bearing upon the jurisdictional
issues common to the three cases.
2 AS noted in footnote 10 of the West India decision, in deciding certain jurisdictional
issues present not only in that case but in the instant proceeding , full consideration was
given not only to the arguments and positions of the parties in West India but also to
those of the parties in this proceeding.
132 NLRB No. 72.
EASTERN SHIPPING CORP.; McCORMICK SHIPPING CORP. 931'
or not substantial contacts .exist between the maritime operation and
important United States interests, a determination that can only be
made upon the facts of the particular case.
The vessel: The Yarmouth is owned by McCormick, a Panamanian
corporation, and is registered under the laws of Panama. Though_
carrying some cargo, it is operated primarily as a passenger cruise
ship between Miami, Florida, and various foreign ports in the Carib-
bean, taking aboard most of its passengers in Miami and returning-
them there at the end of their voyage, during which short stops are
made at foreign ports.3 At the time of the hearing, the Yarmouth
had never been in Panamanian waters, although it was, stated in the
record that the vessel might in the future include a Panamanian port
in its itinerary. During 1958 the gross earnings of the Yarmouth were
approximately $700,000. Of this amount some $60,000 was derived
from the carrying of cargo and, of that amount, about $50,000 was.
for the transportation of cargo from United States to foreign ports,
and the remainder was for cargo carried from foreign to domestic
ports. Of the roughly $650,000 earned from the Yarmouth's passen-
ger services in 1958, approximately 95 percent came from the fares of
American citizens taken on cruises such as that outlined above. The
ship is drydocked in the United States and provisioned primarily in
this country. During 1958 purchases of approximately, $200,000 were
made for the Yarmouth and 95 percent of these expenditures were
made in the United States. The crew of the vessel is composed pri-
marily of nonresident aliens, not necessarily citizens of Panama, and
is hired at various foreign locations and at Miami.
McCormick Shipping Corporation: As noted, the Yarmouth is.
owned by McCormick, a Panamanian corporation, with 95 percent of
its stock held by persons who are neither citizens nor residents of the
United States. One of McCormick's three officers-its president-and
two of its five directors, are American citizens. The corporation main-
tains an office in Panama and at several other foreign locations. It
also has an office in Eastern's offices at Pier 3, Miami,, Florida. The
general manager of McCormick is Frank Fraser, a British subject
domiciled in the Dominican Republic, who is also vice president and
treasurer of the company and owns 50 percent of its stock. As general
manager, Fraser conducts the daay-to-day business of the company,
which includes all matters dealing with the operations of the Yar-
mouth. He hires the vessel's master, who, though having full author-
ity with respect to the ship's crew, frequently consults with Fraser
concerning matters affecting the crew. The record shows that Fraser
spends annually over half his time in the United States but not neces-
3 At tunes the Yarmouth has sailed out of Washington, D C'., on cruises to Bermuda,
Nassau, and Havana, and 'has also sailed between Boston, Massachusetts, and Yarmouth,
Nova Scotia.
614913-62-vol. 13 2--6 0
932 . DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sarily on business concerning either the Yarmouth or McCormick.
He rarely visits the company's Panama office.
Eastern Shipping Corporation. Eastern is a domestic corporation,
wholly owned by a United States citizen. Its officers and directors are
also citizens of this Nation. It maintains its principal place of busi-
ness at Pier 3, Miami, where, as indicated above, it provides office space
and secretarial services for representatives of McCormick. In 1954
Eastern entered into a contract with McCormick as the exclusive agent
for the latter company in the United States for the Yarmouth 4
Under the agency contract Eastern is responsible for :
(1) The sale of passenger tickets and the promotion of sales.
(2) Purchase of food for the Yarmouth.
(3) Purchase of material, replacements (but not personnel), and
repairs for the ship.
(4) Handling the ship's payroll.
(5) Handling the entry and clearing of the ship and all other busi-
ness with immigration, customs, and other port authorities. Addi-
tionally, Eastern has agreed that "in its own name and for its own
account" it will "lease or otherwise arrange for dockage, warehouse
and office space in the port of Miami, Florida, sufficient to efficiently
carry out the business of the vessel and its agency as aforesaid, and
further agrees to hire and pay on its own account sufficient employees,
including a port engineer, to efficiently carry out all such business
and agency." Eastern also agreed to hire no new employees or raise
salaries without McCormick's permission. For its services to the
Yarmouth, Eastern receives 1 percent of the vessel's gross passage
money and, with minor exceptions, is compensated by McCormick for
its expenses. The $200,000 spent, as noted above, on the Yarmouth
for repairs, food, and other matters in 1958 were expenditures made
by Eastern.
It is evident from the foregoing facts that McCormick and Eastern
are with respect to the maritime venture involving the Yarmouth en-
gaged in a single integrated enterprise in which the various activities
essential to the success of the venture are divided between the two
companies. McCormick has for its part retained, inter aZia, direct
control over hiring and otherwise dealing with shipboard personnel
and, presumably as owner of the vessel, determines what voyages she
shall make. Eastern, under the agency contract, is responsible, as
,detailed above, for handling matters concerning passengers and cargo,
repairs and provisioning of the ship, and other related matters. The
success of the Yarmouth's operations clearly depends on both com-
panies properly performing their respective duties. Further, it is
evident that this integrated enterprise, through its expenditures
4 Eastern has also entered into similar arrangements with respect to other vessels either
owned or chartered bareboat by McCormick, and, insofar as appears in the record, has
no other business than acting as agent for McCormick.
EASTERN SHIPPING CORP.; McCORMICK SHIPPING CORP . 933
within the United States approximating some $200,000 annually, has
a direct and substantial impact upon the domestic commerce of this
Nation and that, similarly, through its operation of the Yarmouth,
whose 'cruises fall literally within the commerce language of Section
2(6) of the Act, is directly and to a substantial extent involved with
the foreign commerce of the United States. Moreover, those contacts
with the United States are not simply the concomitance of the inter-
national seaborne traffic of a truly foreign commercial venture 6 On
the contrary, the facts show that the McCormick-Eastern enterprise
concerning the Yarmouth is essentially a domestic, United States op-
eration, the primary purpose of which is to participate in the com-
merce of this Nation. Thus, the business of the Yarmouth is handled
mainly out of Eastern's office in Miami, Florida, where, as noted,
McCormick also maintains an office, and the matters there dealt with
range as indicated above from the advertising for passengers to those
concerning provisioning and repair of the vessel and the payroll of
the ship's crew. Also the de facto if not de jure home port of the
Yarmouth is the port of Miami, for that is where she is primarily
berthed and where her voyages both begin and end.6 Additionally,
the trade the vessel seeks is almost wholly United States trade, for
some 95 percent of her passengers and about 85 percent of her cargo
originate in the United States.
In sum, then, we have before us an essentially domestic enterprise
engaged in both the "domestic" and "foreign commerce" of this
Nation as those terms are defined in Section 2 (6) of the Act. Conse-
quently, we find that the maritime operation of the companies in-
volving the Yarmouth possesses those substantial United States con-
tacts which, under our decision in the West India 7 case, bring it
5 Cf. Lauritzen v. Larsen ( 1952 ), 345 U .S. 571, 681.
O As noted in footnote 2 above, the Yarmouth sailed out of Washington , D C., and
Boston , Massachusetts , at various times. However , it was the United States port that
was the point of departure of the cruises at those times.
7130 NLRB 343 . Our dissenting colleague suggests that we have not followed the
"guide lines" laid down in West India in concluding that the maritime operations here
involved fall within the jurisdictional coverage of the Act . We believe the discussion in
West India and that in the text above clearly reveal the error of his reasoning. He seems
to imply that West India requires that certain particular contacts-specifically those in
that case-be present to bring a given maritime operation within the coverage of the
Act. As we point out above, once the literal requirements of Section 2(6) have been
satisfied , the question is one of substantial , not particular contracts . Second, he seems
to draw some comfort for his view from the fact McCormick carries out many of its
domestic operations through a "limited " agent . However , the fact that McCormick
chooses to operate in this country through an agent having such broad powers as those
possessed by Eastern does not alone take McCormick or the Yarmouth beyond the cover-
age of the Act. 'Cf. Thomsen v. Cayser ( 1917), 243 U.S. 66, 88. Lastly , our dis-
senting colleague states in effect that here the only U S. contact , within the meaning of
West India is that fact that the Yarmouth operates "in and around United States'
waters." But to so construe West India is to misconceive it. Moreover , as the facts
above so clearly demonstrate , the relationship of the maritime operations of the Yarmouth
to U.S. Interests are far more substantial than Member Rodgers would have us believe.
It is, without question , U.S. shipping that is involved in this case.
934 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
within the jurisdictional coverage of the Act, despite the foreign
registry of the vessel and the nonresident alien status of much of its,
crew. The fact that here, unlike the situation in West India, the
shipowner and employer of the crew-McCormick-is a foreign cor-
poration does not require a ,different conclusion. It is not necessary,,
as we pointed out in West India,' that all the significant contacts be
American to warrant the application of a domestic law to a maritime
operation having foreign attributes. Neither is some particular fac-
tor, aside from "commerce of the United States," indispensable to.
the jurisdiction of the Act.9 And in Lauritzen v. Larsen 10 the Su-
preme Court, in considering the application of the Jones Act 11 to
such maritime operations, listed the allegiance ,of the shipowner as.
but one .of several important contacts to be considered. Moreover,
the National Labor Relations Act itself, makes no distinction between
domestic-or foreign corporations in-defining an employer covered by its
provisions, and this Board has, in fact, previously asserted jurisdic--
tion over a foreign corporation and its alien employees, who, like
many-of those in this case, were recruited abroad.12 In any event, as
we.have found that McCormick directly and through Eastern, its.
agent, is,engaged in an essentially domestic United States enterprise,,
having a continuing and substantial impact on the domestic and
foreign commerce of this Nation, we can perceive no reason why the
foreign incorporation and ownership of McCormick should be held'
to bar the jurisdiction of the Act over that company. Accordingly-
we find that Eastern and McCormick and their maritime operation
subject,of the petition are in, and affect, commerce within the ,mean--
ing of Section 2 (6) and (7) of the Act, and that it will effectuate the
policies,of the Act to assert jurisdiction in this proceeding.
2. The labor organization involved claims to represent certain em-
ployees of the Employer.
3. A question affecting commerce exists concerning the represen-
tation of employees of the Employer within the meaning of Section,
9(c) (1) and Section 2(6) and (7) of the Act.
4. The appropriate unit: In accord with the stipulation of the
parties we find that the following employees of the Employer, McCor-
mick Shipping Corporation, constitute a unit appropriate for the,
purpose of collective bargaining within the meaning of Section'9 (b))
of the Act: All unlicensed personnel employed aboard the SS Yar--
8130 NLRB 343
9 See, Bartholomew v. Universe Tankships , Inc., 263 F. 2d 437, 440 ( CA. 2),, cert. d9niedt
359 U.S 1000.
10 345 U S at 571
u 46 U S C. Sec. 688.
12 Italia Societa per Azloni de Navigazione, 118 NLRB 1113, 1117.
EASTERN SHIPPING CORP.; McCORMICK SHIPPING CORP. 935
mouth, excluding concessionaires, pursers, radiomen, musicians, nurses,
doctors, guards, and supervisors as defined in the Act.
[Text of Direction of Election omitted from publication.]
MEMBER RODGERS, dissenting :
For the reasons stated in my dissenting opinion in West India Fruit
,and Steamship Company, 130 NLRB 343, I do not agree with my col-
leagues that the policies of the Act will be effectuated by asserting
jurisdiction over the Employers' operations.13 Accordingly, I would
dismiss the petition in this case.14
CHAIRMAN MCCULLOCH and MEMBER BROWN took no part in the
consideration of the above Decision and Direction of Election.
18 Although not adverted to by my colleagues , the parties have stipulated that the
SS Yarmouth, the vessel as to which the instant petition relates, was built in the
United States and has operated under the American flag for the major portion of its
existence . Yarmouth was built in Philadelphia in 1927 and was owned and operated by
Eastern Steamship Lines, Inc , a domestic corporation , from 1938 to 1953 Sometime in
1953 Eastern Steamship , while retaining actual ownership , transferred the vessel' to the
Yarmouth Steamship Company, a Liberian corporation , and the latter company operated
the ship under the Liberian flag for approximately 1 year ( The evidence does, not dis-
-close the details of this transfer .) However, it was not until the early part of 1954 that
McCormick , Yarmouth 's present owner, acquired title from Eastern Steamship. At the
same time McCormick requested permission from the U S. Maritime Commission to trans-
fer registry of the vessel from Liberia to Panama . The Maritime Commission granted
that request subject to , inter alia, the following express , conditions : that McCormick
will not change the registry or ownership of Yarmouth without prior approval from the
U S. Maritime Commision and that, in time of national emergency , the vessel ' will be sold
or chartered on demand to the United States.
Thus, as was the case in West India, supra, this ship is under "effective U S. control"
by virtue of an express agreement between McCormick and the U S ' Maritime Com-
mission, and pursuant to the latter 's implementation of United States policy of encourag-
ing the transfer of such vessels to a friendly Panlibhon nation I am still of the
opinion that "it is incumbent upon the Board to accommodate itself within the overall
Federal scheme so as to advance , rather than defeat" this policy.
14 Aside from the policy considerations which I believe warrant declining jurisdiction
here , I seriously question whether my colleagues have followed the guidelines which they
themselves set forth in West India as the test for asserting jurisdiction , namely, whether
the overall maritime operations of the shipowner involved possess sufficient United States
contacts The facts disclose that McCormick is a foreign corporation ( incorporated in
Panama in 1941 ) and 95 percent of its stock is owned by foreign residents of British
and Cuban nationality ( the remaining 5 percent is owned by an American citizen residing
permanently in Panama ) Although Eastern Is a Florida corporation , by virtue of a long-
standing contractual relationship between Eastern and McCormick , Eastern is McCormick's
agent for limited purposes and, as the contract fully indicates , McCormick is, and has
always been , the real employer with full control of the employees' substantive- rights.
Further, Yarmouth, since it has come under the ownership of McCormick , has been
operated exclusively under the Panamanian flag. As for the crew, of approximately 140
crewmembers , McCormick claims that none is an American. (The Petitioner does not
appear to contest this, merely indicating that during September 1958, no Panamanian
citizens were aboard and eight of the crewmembers were American ) All of the crew-
members are hired by McCormick and, although 10 members appeared to have been hired
in Miami ( or some other U S. port), the shipping articles which each crewmember signs
are Panamanian and specifically stipulate that Panamanian law is to govern.
Thus , using my colleagues' own standard for determining jurisdiction , it is highly
doubtful that the foregoing facts demonstrate the requisite American contacts found to
be present in West India Indeed, the only points of similarity between the instant case
and West India are that in both, the vessels operate in and around United States waters;
in both the vessels are crewed by foreigners ; and in both the crews signed foreign articles
in the United States.