Peninsular & Occidental Steamship Co.

National Labor Relations Board - Board Decisions

May 23, 1958

120 N.L.R.B. 1097 (N.L.R.B. 1958)

PENINSULAR & OCCIDENTAL STEAMSHIP CO. 1097
Peninsular & Occidental Steamship Co.; ' and Green Trading
Company and Seafarers International Union of North America,
Atlantic & Gulf Districts , AFL-CIO, Petitioner. Case No.
12-RC-241. May 23, 1958
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 B. Mintz,
hearing officer. The hearing officer's rulings made at the hearing are
free from prejudicial error and are hereby affirmed.
Upon the entire record in this case, the Board finds :
1. The Petitioner seeks a unit of unlicensed personnel on the SS.
Florida and the SS. Southern Cross. The Employers contend that
the employees in the requested unit are aliens employed by a foreign
corporation to man vessels registered under a foreign flag, and that
the Board (a) has no legal jurisdiction under the Act to proceed in
this matter, and (b) in any event, should not assert jurisdiction here
for policy reasons.
Prior to August 1955, the SS. Florida and SS. Southern Cross 2
were owned and operated by P. & 0., a Connecticut corporation, and
sailed under the American flag. The Florida plied between Miami
and Havana, Cuba; the Southern Cross between Tampa, Key West,
and Havana. Both ships carried tourists as well as cargo. Opera-
tions of the two ships became increasingly unprofitable, reaching a
half million dollar loss in 1954. The reasons for the loss were, ac-
cording to the Employers, the decline in tourist trade and the compe-
tition of foreign flag ships. Having failed to obtain a Federal subsidy,
P. & O. was faced with the necessity of cutting operating expenses and
especially crew wages. The Petitioner, who at the time represented
the unlicensed personnel on the two ships, refused to agree to a wage
cut. As long as the ships were under American registry, the law
required that 75 percent of the crew be composed of American citizens.
P. & O. therefore, decided to transfer the ships to foreign registry in
order, as it conceded at the hearing, to be able to hire foreign crews
whose wages in at least some classifications were about half that being
paid the American seamen. The United States Maritime Commis-
sion, upon P. & O.'s application, authorized transfer of the ships.
In August 1955, P. & O. organized two Liberian corporations-the
White Steamship Co. (hereinafter called White) and the Blue Steam-
ship Co. (hereinafter called Blue)-each wholly owned by P. & O.
Thereafter, on September 3, P. & O. for nominal consideration trans-
ferred the two ships to White and Blue, which corporations registered
Hereinafter called P. & 0
2 Prior to the transfer of registry In 1955, the Southern. Cross was named SS. Cuba.
120 NLRB No. 147.
1098 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
the ships under the laws of Liberia. During this same period, P. & O.
had its attorneys organize a third Liberian corporation , the Green
Trading Co. The attorneys and some of their employees, acting on
behalf of P. & 0., became the officers, directors, and stockholders of
Green Trading.
On August 18, 1955, the Green Trading Company chartered bare-
boat the Florida and Southern Cross from Blue and White and on the
same day entered into a time subcharter with P. & O. for operation
of the ships. Under the bareboat charter Green Trading assiimed
full responsibility for the maintenance and operation of the ships,
agreeing to pay as rental a certain sum each month and to assume
certain other obligations such as insuring the vessels and dry docking
them when required for certain repairs and inspections.
Under the terms of the time subcharters, P. & O. was given
authority to determine the trading limits of the two vessels. It
assumed responsibility for maintaining and operating the ships at its
own expense , including such matters as repairing and victualing. It
was expressly provided in the subcharters that P. & 0., and not Green
Trading, would have "exclusive possession, control and command of
the ships." It was further specified that P. & O. could make such
alterations and additions to the equipment and gear of the ships as
it deemed desirable. However, under the terms of the subcharter,
Green Trading agreed to man the ships with a full complement of
officers and crew and to pay the wages, including payroll taxes, and
other employee benefits, but it was provided that P. & O. would reim-
burse Green Trading for all such expenses. Furthermore, though
Green Trading had the obligation to man the ships, P. & O. had the
right to dismiss any master, officer, or crew member who proved ineffi-
cient, negligent, drunk and disorderly, or insubordinate. P. & O.
further assumed all responsibilities with respect to insuring the ships.
Lastly, P. & O. agreed to pay monthly to Green Trading in United
States currency certain sums for hire of the vessels, which corre-
sponded exactly to the amounts which Green Trading had agreed to
pay Blue and White for charter of the vessels.
The ships were changed to Liberian registry in September 1955.
The American crew of the Florida was then discharged and in a day
or so a new , predominantly alien crew was hired. The Southern
Cross was in dry dock at the time of transfer of registry and, thus,
had no crew. Upon being placed back in commission, a predomi-
nantly alien crew was hired. At the time of the hearing herein the
unlicensed crew of 113 on the Florida was composed of 3.5 percent
Americans, 14.2 percent resident aliens, and 82.3 percent nonresident
aliens. The corresponding breakdown for the Southern Cross was,
out of a crew of 76, 10.6 percent Americans, 9.2 percent resident aliens,
and 80.2 percent nonresident aliens. These unlicensed personnel were
PENINSULAR & OCCIDENTAL STEAMSHIP CO . 1099
recruited in a number of areas. However, 86 percent of those in the
Southern Cross's crew signed ship's articles in the United States,
while only some 33 percent of the Florida's crew signed on in the
United States. Although Green Trading is required under the time
subcharter to hire the crew members, Green Trading actually operates
through a Captain Lord, its operating manager, who is also P. & O.'s
marine superintendent and is on P. & O.'s payroll only. Moreover,
the wage scales for the vessels, when established, were submitted to
P. & O.'s vice president and general manager for, his approval. He
also had been consulted before any changes were made in the scale.
Furthermore, P. & O. pays medical bills for crew members injured
aboard ship and handles immigration matters concerning the alien
members of the crew.
While on board ship, the crew is under the supervision of the ship's
master and other officers. Under the shipping articles signed by each
crewman the "crew agrees to conduct themselves in an orderly, faith-
ful and sober manner, in fulfillment of their duties : obedient to the
order, regulation, and instructions of the captain . . . and of the of-
ficers...." The masters of both ships were hired by P. & O. and the
other officers are hired by Captain Lord and Captain Owen, both on
P. & O.'s payroll, and both representing P. & O.'s vice president in
hiring these officers. It might also be noted here that these officers are
predominantly American citizens and carry for the most part Ameri-
can licenses.
There has been no change in the operations of the vessels since trans-
fer of registry. They operate regularly out of Miami, Florida, and
both their passengers and cargo originate for the most part at that
port. The Southern Cross takes on fuel in Venezuela, but otherwise
the ships are principally provisioned at Miami. Both ships are in-
spected by the United States Coast Guard and Federal health officers
at Miami and are subject to no other inspections. Neither has ever
been in Liberian waters.
Under the terms of the bareboat charter, Blue and White have no
control over the vessels and their crews, but pay a tonnage tax on the
vessels to the Liberian government. That tax appears to be the only
real obligation of any of the corporations here involved to Liberia.
None of the, companies maintain an office in Liberia. There is some
evidence that Green has or has had an office in Cuba for hiring crew
members. However, it has a business office in Miami at the offices of
P. & O.'s attorney. Its operating manager is located on pier 2, Miami,
which is P. & O.'s address and which carries P. & O.'s name only. The
comptroller for P. & 0., apart from being a director of both Blue and
White, handles Federal tax matters for Green Trading as well as for
RA O. and the two steamship companies.
1100 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
In contesting the Board's jurisdiction, the Employers rely upon
the facts that Green Trading, which they contend is the sole employer
of the employees involved, is a foreign corporation and that the em-
ployees are predominantly aliens. In support of their position the
Employers argue that the Act does not apply to a foreign ship and
its foreign crew. However, under the circumstances of this case we
find no merit in the position of the Employers.
The Employer: As stated above, P. & 0. and Green Trading con-
tend that the latter corporation is the Employer of the employees in
the requested unit. We believe, however, that the evidence clearly
demonstrates that Green Trading is essentially merely an instru-
mentality of P. & 0. Green Trading has not since its incorporation
engaged in any business undertakings on its own account. The Em-
ployers concede that the ships were transferred to foreign registry in
order that they might be manned with foreign crews. Green Trading
was organized to aid in effectuating this purpose and its transactions
with respect to the chartering and subehartering of the ships had the
obvious aim of returning the ships to the operational control of P. & 0.
From none of these transactions did Green Trading gain any economic
advantage. As noted above, the income it received from subcharter-
ing the vessels to P. & 0. was identical to that which it pays out to the
steamship companies for chartering the vessels. Furthermore, under
the subcharters it receives for its services in manning the ships only
the "out-of-pocket expenses" which it incurs. There is no evidence in
the record that Green Trading engages in any business activities other
than those described above.
Also, the record admits of no doubt that Green Trading is wholly
under the control of P. & 0. This fact is demonstrated by the evi-
dence showing that : (1) the officers, directors, and stockholders of
Green Trading are representatives of P. & 0. acting in their capacity
as such representatives; (2) Captain Lord, Green Trading's opera-
tions manager, is an employee of P. & 0.; and (3) Green Trading's
services to P. & 0. under the subcharters are rendered at cost. It is,
thus, clear that Green Trading was organized, and is utilized solely
for the furtherance of P. & O.'s business and that those in nominal
control of Green Trading actually do not operate independently of
P. & 0. Under such circumstances the form of corporate organiza-
tion must give way to the realities of the situation.' Accordingly, we
find that Green Trading is a mere instrumentality of P. & 0.4 and that
P. & 0. is in fact the Employer of the employees in the requested unit.
See, United States v. Reading Co., 253 U. S. 26, 62-63; McCann Erickson Corp ., et al,
107 NLRB 1492, 1494.
d See, United States v. Readtng Co., 253 U. S. 26, 62-63; Chicago, M. h St. P. Ry. v.
Minn. Civic Assn., 247 U. S. 490, 501; Darling Stores Corporation v. Young Realty Co.,
121 F. 2d 112, 116 (C. A. 8) ; Centmont Corporation v. Marsh, 68 F. 2d 460 (C. A. 1) ;
Trustees System Co. of Pennsylvania v. Payne, 65 F. 2d 103, 107 (C. A. 3).
PENINSULAR & OCCIDENTAL STEAMSHIP CO. 1101
The ships: We also find that the Florida and Southern Cross may
not properly be considered for jurisdictional purposes as foreign ves-
sels. To be sure, they are nominally owned by Liberian corporations 5
which pay a tonnage tax upon the ships to the government of Liberia
and are registered under the laws of that nation. However, the ships
have never been in Liberian waters and are under the complete opera-
tional control of a domestic corporation. It is, moreover, abundantly
clear that the ships are engaged primarily in the commerce of the
United States. Their home port is Miami, Florida. They are dry-
docked at Jacksonville and are inspected by agencies of the United
States Government. They are in the most part provisioned in Miami
and derive most of their passenger trade and the bulk of their freight
at that port. In fact, P. & O.'s control over, and operations of, the
ships is in all material respects the same as it was prior to their transfer
to foreign registry.
The employees : In view of the foregoing, we find that the em-
ployees in the requested unit are employees of a domestic corporation
and man vessels owned by such corporation through its instrumentali-
ties, and engaged principally in the commerce of the United States.
Further, the majority of the employees have signed their shipping
articles in this country and are paid off while their ships are in Ameri-
can ports. Under such circumstances we find that the mere fact that
a majority of the employees are nonresident aliens does not take the
case outside the coverage of the Act.'
In view of the foregoing, we find that we have under the Act juris-
diction of the subject matter of this case.7 Accordingly, the Em-
ployers' motion to dismiss on this ground is denied.
5 However, we also find that Blue Steamship Company and White Steamship Company
are like Green Trading mere instrumentalities of P. & 0. They are wholly owned by
P. & 0., have common offices with officers of P. & 0. and insofar as the record indicates
were organized and managed for the sole purpose of facilitating P. & O.'s plan to transfer
the ships to foreign registry without, however , surrendering control or beneficial owner-
ship of the vessels.
e See for example Brown Company , 109 NLRB 173; Italia Societa Per Azioni Di
Navigazione, 118 NLRB 1113; Southwestern Co, 102 NLRB 1492, 1493.
4 The Employers in support of their contention that the Board is without jurisdiction to
proceed in this matter rely upon Benz v. Compania Naviera Hidalgo S. A , 353 U. S. 138,
in which the Supreme Court stated that the Act did not cover disputes between nationals
of other countries operating ships under foreign laws That case is clearly distinguished
on its facts . It involved a ship of Liberian registry owned by a Panamanian corporation.
The crew was composed entirely of foreign nationals who had agreed to serve on a
voyage originating in Bremen , Germany, for a period of 2 years or until the ship re-
turned to a European port. They sailed under British articles which incorporated condi-
tions prescribed by the British Maritime Board, including wages and hours of employment
The ship did not operate regularly out of any American port, but rather was only
temporarily in such a port for repairs and to load a cargo of wheat at the time the dispute
involved in that case arose The situation in the Benz case is, thus , clearly different from
that in the present proceeding Here the Employer as we have found above, is a domestic
corporation , not a foreign national and the crews include a number of American citizen's
and resident aliens. Moreover , the crews do not sign shipping articles containing condi-
1102 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
The Employers also contend that, assuming that the Board has
legal jurisdiction, it should decline to assert its jurisdiction here
because the instant case involves foreign employers and foreign
workmen who are not in competition with American workmen, and
that the operations of the Employers, therefore, have "no real effect
on interstate commerce and even less effect upon American working-
men." However, we have already found that the actual employer
here is P. & 0., a domestic corporation. Moreover, we find that the
Employers' operations have a direct and substantial effect upon the
foreign commerce of the United States and upon American workmen.
It is clear from the circumstances recited above that the present com-
plement of the Florida and Southern Cross not only consists at least
in part of American citizens and residents but is also in direct compe-
tition with American seamen for employment opportunities aboard
the vessels, and that the organization of the vessels' crews with a view
to improving their working conditions is, therefore, a matter of
concern to American seamen. Accordingly, we find no merit in the
Employers' position that we should not assert jurisdiction in this
proceeding,' and its motion to dismiss on this ground is denied.
2. The labor organization involved claims to represent certain
employees of the Employer.
3. A question affecting commerce exists concerning the representa-
tion of employees of the Employer within the meaning of Section 9
(c) (1) and Section 2 (6) and (7) of the Act.
4. In accord with the agreement of the parties, we find that the
following employees of the Employer constitute a unit appropriate
for the purposes of collective bargaining within the meaning of
Section 9 (b) of the Act: All unlicensed personnel employed aboard
the SS. Florida and SS. Southern Cross, excluding licensed personnel,
pursers, and radio operators, and supervisors as defined in the Act.
[Text of Direction of Election omitted from publication.]
MEMBER RODGERS took no part in the consideration of the above
Decision and Direction of Election.
tious of employment prescribed by a foreign government, but rather sign old type American
articles . As for the ships, their home port is, for all practical purposes , at Miami , Florida.
Further. though they are registered under foreign laws, they clearly do not operate under
foreign laws , the crews, as noted , signing American shipping articles and the only in-
spections of these ships being performed by agencies of the United States Government.
Consequently, it is our opinion that neither the Court' s holding nor language in the Benz
case does cover or was intended to cover a factual situation such as we have here and
which is so markedly different from that before the Court in that case
8 The Employers do not contend that they do not meet the Board 's jurisdictional
standards . Furthermore , the record shows that such standards are met here , as P. & O.
does a business annually in excess of $2 million . Rollo Transit Corporation, et al.,
110 NLRB 1623.