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NATIONAL MARITIME UNION v. COMMERCE TANKERS CORP.

March 2, 1971

National Maritime Union of America, AFL-CIO, Plaintiff,
v.
Commerce Tankers Corporation, Defendant


Frankel, D. J.


The opinion of the court was delivered by: FRANKEL

FRANKEL, D. J.

Under its collective agreement with the plaintiff, National Maritime Union of America (NMU), covering the three years ending June 15, 1972, the defendant, Commerce Tankers Corporation, promised not to transfer either of its two ships unless the purchaser agreed to assume the obligations of the union contract. Nevertheless, without informing the Union, defendant, in December 1970, contracted to sell its ship SS Barbara, but exacted no promise from its purchaser to honor the NMU agreement. Upon learning of the proposed transfer, the NMU moved promptly to demand arbitration under the collective agreement. Defendant sought and obtained delays it may now come to regret; its request for still further delay was rejected by the Union. The experienced permanent arbitrator designated by the parties in their agreement held that the proposed transfer of the ship was forbidden, and he enjoined it. Now, resisting enforcement of the award, the defendant tenders a variety of trivial objections along with a relatively substantial argument that its collectively bargained obligation is void and unenforceable because it violates the antitrust laws. The proposed transferee of the vessel, Vantage Steamship Corp., has been permitted to intervene, and it likewise argues that the disputed contract provision and the arbitral award thereunder must be nullified. The court, acceding to requests that it move speedily -- requests pressed with special urgency by the defendant and the intervenor because of their imminent contract deadlines -- has come to the conclusion that defendant's obligation is valid, subsisting and properly enforced by the award of the arbitrator. Accordingly, the Union's application for a preliminary injunction, which may well amount in practical effect to a final decision, will be granted.

 The contract provision upon which the NMU relies, Article I, Section 2, reads this way:

 
"(a) The Company agrees with respect to any vessel which is presently under or may hereafter come under this Agreement, that if during the term of this Agreement said vessel is sold or transferred in any manner to any other business entity not covered by this Agreement for operation under United States flag (but not including a vessel which the Company bareboat charters and the charter is terminated), said vessel shall be sold or transferred with the complement of employees who either are or shall be provided by the Union in accordance with the terms of this Agreement, or such number as may be agreed upon between the Union and the transferee. The term 'transfer' shall be construed to include any chartering of a vessel by the Company.
 
"(b) The Company obligates itself to obtain for the benefit of the Union a written undertaking with the Union to be executed by the business entity to which the vessel has been sold or transferred that for the full term of the Agreement all of its terms and provisions shall apply to said vessel except as hereinabove provided and that said business entity will fully comply with all of the terms and provisions of this Agreement and any amendments thereto to preserve the jobs and job rights of the Unlicensed Personnel covered by this Agreement and to protect and maintain the wages, pension rights and other economic benefits and working conditions provided such personnel under this Agreement.
 
"(c) The Company agrees that if it desires to sell bareboat charter or in any manner whatsoever transfer a vessel to another business entity, whether for United States flag or Foreign-flag registry, timely written notice to the Union must first be given prior to any such sale or transfer.
 
"(d) This Section shall be deemed of the essence of the Collective Bargaining Agreement and in the event of any violation, the no-strike provision of this Agreement shall not be applicable."

 Having no doubt about the meaning of this provision, defendant decided last October to sell its two vessels. It sold one in December and contracted later in the same month for sale to the intervenor of its remaining ship, the Barbara. Defendant said nothing to the NMU about this. It made no effort to seek relief either in the form of some concession by the Union or in a declaratory or other judicial proceeding when there was time to press at relative leisure the claim that the plain obligations of defendant to honor and preserve its NMU contract were somehow void and unenforceable. Instead, defendant proceeded in secret, and, on December 23, 1970, executed its contract for sale of the vessel and delivery on February 28, 1971, to the intervenor. *fn1" That contract contained no provision of the kind defendant was obliged to obtain requiring compliance by the purchaser with the subsisting collective bargaining agreement.

 On or about January 11, 1971, the NMU learned that there might be a sale of the Barbara. It wrote promptly to defendant, reported its information that defendant was "contemplating" such a sale, reminded defendant of the requirement for preservation of the collective agreement, and requested appropriate information and assurance.

 In a response on January 13, seemingly inaccurate if not intentionally misleading, defendant acknowledged that it had made a contract for sale of the Barbara; acknowledged, too, its contractual duty to preserve the collective agreement; and supplied the following double-talk on this key point:

 
"Commerce Tankers Corporation is a wholly-owned subsidiary of Vernitron Corporation, and the final negotiations for the sale of these vessels were made directly between Vernitron Corporation and the buyers through the brokerage firm of Blix-Mallory & Company. For your guidance, at the start of negotiations for the sale of these vessels I advised Mr. Blix of Blix-Mallory & Company that the same unions, including NMU, with which Commerce Tankers Corporation had collective bargaining agreements must continue to man the vessels after their sale, and that this was to be made a condition of the sale; and he assured me that this was fully understood and would be impressed on prospective buyers. I know that the same unions are continuing on the THALIA and have no reason to believe that it will be otherwise with the BARBARA."

 Actually, of course, defendant knew, or carefully insulated itself from learning, that it would "be otherwise with the BARBARA."

 The Union wasted no time asking defendant's purchaser and learning that its contractual rights would not be assumed or recognized after the sale. On January 25, 1971, the NMU demanded arbitration of its resulting dispute with defendant. Defendant requested and was granted a postponement to February 8. A request for a further adjournment was refused.

 On February 8, 1971, following the plain terms of the contract between the NMU and defendant, the arbitrator held illegal and enjoined the proposed sale unless the purchaser acknowledged the contract rights of the NMU. A day later, the NMU brought this suit to enforce the award. Judge Wyatt granted a temporary restraining order on February 9. Then, on further consideration triggered by the intervenor, Judge Wyatt, on February 19, concluded that the restraint should be dissolved, and he entered an order to that effect on February 22, the day before argument of the instant motion, conditioned upon posting of a bond in the amount of $278,361. *fn2" Judge Wyatt also granted the motion of Vantage to intervene, allowing this company until March 1, 1971, for the filing of its answer. In dissolving his initial temporary restraining order Judge Wyatt indicated as his grounds, first, a belief that there was a "serious question" under the antitrust laws, and, second "on balance, * * * that Commerce and Vantage would suffer from the restraining order ...


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