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Commerce Tankers Corp. v. National Maritime Union of America

decided: April 15, 1977.


Appeal from judgment of the United States District Court for the Southern District of New York, Thomas P. Griesa, J., dismissing complaint alleging violations of federal antitrust and labor laws, and limiting recovery for wrongful injunction to amount posted for injunction bond. Affirmed in part and reversed in part.

Lumbard, Feinberg, Circuit Judges, and Coffrin, District Judge.*fn* Lumbard, Circuit Judge, concurring in part and dissenting in part.

Author: Feinberg

FEINBERG, Circuit Judge:

Over six years ago, appellant Commerce Tankers Corporation for pressing economic reasons attempted to sell its last remaining vessel to Vantage Steamship Corp., also appellant here. Appellee National Maritime Union (NMU), which represented the seamen on the vessel, objected to the sale because Commerce had not obtained a commitment from Vantage to continue the NMU as bargaining representative, in accordance with a provision of NMU's collective bargaining agreement with Commerce. This began a flurry of litigation over a period of several years among Commerce, Vantage, NMU and the National Labor Relations Board (NLRB), in combinations and permutations set forth below.

At first NMU blocked the sale, obtaining an arbitration award and an injunction in the United States District Court for the Southern District of New York. National Maritime Union v. Commerce Tankers Corp., 325 F. Supp. 360 (S.D.N.Y. 1971). That injunction, however, was reversed after the Regional Director of the NLRB, on an application under § 10(l) of the National Labor Relations Act, alleged that there was "reasonable cause to believe" that the clause invoked by the NMU violated section 8(e) of the National Labor Relations Act, see McLeod v. National Maritime Union, 457 F.2d 1127 (2d Cir. 1972), a preliminary determination later confirmed by the Board and by this court in NLRB v. National Maritime Union, 486 F.2d 907 (2d Cir. 1973), cert. denied, 416 U.S. 970, 40 L. Ed. 2d 559, 94 S. Ct. 1993 (1974). Commerce and Vantage claimed that they suffered damages of $1,550,000 and $2,230,000, respectively, due to NMU's conduct, which they alleged violated not only the National Labor Relations Act, but also the Sherman Act.*fn1 After a non-jury trial in the United States District Court for the Southern District of New York, Judge Thomas P. Griesa found that the proximate cause of any damage was the district court injunction against the sale. The judge therefore limited Commerce's recovery to the $10,000 injunction bond posted by NMU in the litigation below and denied Vantage any relief whatever, since it was not covered by the bond. 411 F. Supp. at 1225. This appeal followed. For reasons set forth below, we reverse and remand for further consideration of appellants' claim under the Sherman Act.


The background of this litigation is set forth in our two prior opinions cited above, and we will try not to repeat here anything but the essential facts. The contract clause in question, which is reproduced in the margin,*fn2 was contained in a multiemployer NMU collective bargaining agreement, to which Commerce was a party. The clause provided in substance that if Commerce sells a ship to an American flag shipper not already under contract with the NMU, the ship will be sold with a crew provided by the NMU, and Commerce will obtain from the purchaser "a written undertaking" to abide by the NMU contract. In the fall of 1970, Commerce's parent, Vernitron Corporation, decided for business reasons to go out of the shipping business. On December 23, 1970, Commerce contracted to sell the S.S. Barbara, an ocean-going tanker, to Vantage for a price of $2,750,000, with delivery scheduled for February 28, 1971. The contract did not contain any provision regarding "the complement of employees" to be furnished by the NMU; nor did Commerce obtain from Vantage the undertaking with the NMU called for by paragraph (b) of the restraint-on-transfer clause. See note 2, supra. At the time, Vantage could not properly have given such an undertaking, since it was party to a conflicting agreement with the Seafarers International Union of North America (SIU), a rival maritime union. In January 1971, Vantage chartered the ship it had contracted to purchase to the Standard Oil Company of California (SoCal) for a period of one year, commencing on March 5, 1971.

At this point, furious activity ensued. The NMU demanded of Commerce and Vantage that Vantage accept the NMU as the bargaining agent of the unlicensed seamen employed aboard the ship. The SIU threatened to strike all Vantage vessels if it ceased using the SIU hiring hall to obtain its unlicensed seamen. Vantage threatened to sue Commerce if it did not deliver the S.S. Barbara in accordance with its contract. The NMU commenced and won a labor arbitration, at which the arbitrator did not consider the legality of the restraint-on-transfer clause; the award enjoined the sale of the vessel without compliance with the clause. The next day, the NMU began an action against Commerce in the United States District Court for the Southern District of New York for confirmation of the award. A week later, Vantage intervened as a party defendant and also filed unfair labor practice charges with the NLRB against the NMU and Commerce. After some other skirmishing, Judge Frankel in early March 1971 granted a preliminary injunction against the sale unless the contested clause were observed. The arguments of Commerce and Vantage that the clause was illegal were given short shrift, National Maritime Union v. Commerce Tankers Corporation, supra, 325 F. Supp. at 364-65, and the court required NMU to post only a $10,000 bond. Both Commerce and Vantage appealed.

At about this time, Vantage's charter with SoCal was cancelled due to "union problems." Shortly thereafter, Commerce advised the NMU that all efforts to obtain a United States flag purchaser had been unsuccessful and Commerce asked the NMU to drop its objection to the transfer, offering to drop its legal attack on the clause. The NMU refused, saying that it "would not gamble that the ship might go SIU."

In late May 1971, the Regional Director of the NLRB issued a complaint against the NMU and sought a § 10(l) injunction against enforcement of the restraint-on-transfer clause. The NLRB's motion was heard along with a motion by Commerce to vacate the earlier preliminary injunction against it, in view of the intervening NLRB complaint. In July 1971, Judge Croake denied both motions, but it appears that were it not for the jurisdictional problem posed by the earlier appeal of Commerce and Vantage, the judge would have vacated the injunction obtained by the NMU.*fn3 The NLRB appealed from the order refusing a § 10(l) injunction.

By notice of motion dated July 21, 1971, Commerce moved in this court to vacate the NMU injunction against the sale of the vessel, or, in the alternative, to increase the bond to be posted by the NMU to $2,750,000. Commerce advised the panel then sitting of the NLRB complaint and of various additional financial exigencies*fn4 and argued strenuously that at least the NMU "should be obliged to post a bond to cover the full purchase price of the vessel so that Commerce . . . will not be left in a situation in which recovery against any of the other parties cannot be readily accomplished." The NMU's position was that a large bond was "singularly inappropriate . . . in view of the absence of any meaningful defense to the merits of the action [by the NMU against Commerce]." The panel denied Commerce's motion, but expedited the appeal. Thereafter, another panel reversed the rulings of the district court, vacating the NMU injunction and granting the NLRB a § 10(l) injunction. 457 F.2d 1127. Eventually, the NLRB completed the unfair labor practice proceeding and found that the NMU had violated § 8(e) of the Labor Act. The NLRB sought enforcement of its order, which we granted. 486 F.2d 907.


This background brings us to the litigation now before us. From the start, Commerce - later joined by Vantage - has claimed that the NMU's restraint-on-transfer clause was illegal and should not be enforced, and that the NMU was liable to it for damages. Commerce's damage claims were pressed in the form of counterclaims in the suit by NMU against it. Vantage brought its own action in October 1972 against the NMU and Commerce. In June 1973, pursuant to a settlement agreement between Vantage, Commerce and Vernitron, the action was discontinued against Commerce and Vernitron. After our reversal of the injunction obtained by the NMU in its action, Commerce's counterclaims against the NMU in that suit and Vantage's action against the NMU were consolidated and tried without a jury before Judge Thomas P. Griesa. The trial lasted over two weeks; 15 witnesses testified and there were over 1500 pages of transcript.

Commerce and Vantage argued that the NMU was liable for damages on a number of theories. First, the NMU violated Section 1 of the Sherman Act, 15 U.S.C. § 1, in two ways described by the district judge as follows: "(1) That the restraint on transfer clause involved a group boycott against certain potential purchasers of vessels and therefore constituted a per se violation; and (2) that the sale and transfer clause was the result of a combination or conspiracy between NMU and large shipping companies to enhance their competitive and financial position at the expense of smaller companies such as Commerce." 411 F. Supp. at 1229. Second, the NMU was liable under section 303 of the Labor Management Relations Act, 29 U.S.C. § 187, which by its terms incorporates section 8(b)(4) of the National Labor Relations Act, 29 U.S.C. § 158(b)(4), both of which are reproduced in the margin.*fn5 Third, Commerce and Vantage relied on various other alleged bases of liability: The contract ...

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