MCCULLOCH v. SOCIEDAD NACIONAL
Legal provision: National Labor Relations, as amended
Argument of Dominick L. Manoli
Chief Justice Earl Warren: Number 91, Ivan C. McLeod, Regional Director of the Second Region of the NLRB, Petitioner, versus Empresa Hondurena de Vapores, Number 93, National Maritime Union of America, AFL-CIO, Petitioner, versus Empresa Hondurena de Vapores and Number 107, Frank W. McCulloch, Chairman, and Philip Ray Rodgers et al., Members NLRB, Petitioners, versus Sociedad Nacional de Marineros de Honduras.
Mr. Dominick L. Manoli: May it please the Court.
Numbers 91, 93, and 107 are companion cases and they are here on writs of certiorari to the Second Circuit and the District of Columbia Circuit.
These three cases arise out of a single proceeding before the National Labor Relations Board, in which the Board directed an election among the unlicensed seamen onboard a fleet of vessels flying the Honduran flag.
In general, this litigation deals with the applicability of the National Labor Relations Act to foreign-flag vessels which are engaged in the commerce of this nation and also have other substantial contacts with this nation.
More specifically, the immediate controversy before the Court is whether the jurisdictional reach of the Labor Act extends to a fleet of vessels which fly the Honduran flag, employ Honduran seamen, primarily Honduran Seamen, and have other contacts of the flag nation but which are beneficially owned and operated under the control of an American corporation are engaged in commerce between this nation and foreign nations including the flag nation and carry almost exclusively the products and supplies of the American corporation.
Now, the facts which give rise, the basic facts which give rise to this controversy are essentially not in dispute and I shall summarize them briefly as I can.
In 1959, the National Maritime Union of America petitioned the Board to certify it as the bargain representative of the unlicensed seamen onboard a fleet of vessels flying the Honduran flag and owner controlled, owner controlled by Empresa, a Honduran corporation.
The N. M. U.'s petition -- the Empresa is a wholly owned subsidiary of United Fruit and the N. M. U.'s petition before the Board named the -- named United Fruit as the employer of the seamen in question.
For some years, these seamen had been represented by Honduran Union, which I shall call Marineros.
And although Marineros was invited to participate in the proceedings before the Board, it declined to do so.
However, another Honduran Union, the Sindicato, did participate in the Board proceedings.
United Fruit, as is well-known, is an American Corporation with its principal place of business in Boston.
Virtually all of its stock is owned by American citizens and it is engaged in the production of tropical produce, marketing of that produce, and the transportation thereof.
This annual imports into this country exceed $1 million.
United Fruit carries on its operations through approximately 50-60 subsidiaries.
The subsidiaries handle the day-to-day operations of the enterprise while United Fruit looks to long-ranged development and policies including the purchase, the improvement, and the scrapping or sale of the vessels that are used in the enterprise.
Empresa is one of these subsidiaries.
It was organized in 1941 by United under the laws of Honduras.
United supplied all of the capital, presently owns all of the stock, names its directors who in turn, elect the officers of Empresa.
Empresa, as I say, is organized under the laws of Honduras and its business -- it is engaged solely in the operation of the enterprise's vessels, in owning and operating the enterprise's vessels which are registered under the laws of Honduras.
It does not carry cargo or passengers on its own account.
Virtually all of its income is derived from time charters and it -- with a possible occasional exception, it charters -- it time charters its vessels to the parent corporation and the vessels which are involved in this litigation were so charged.
Now, Empresa supplies fully equipped, fully manned, and fully provisioned ships.
It hires the crews in Honduras.
The crews are primarily Honduran citizens and they sign Honduran contracts or ship articles, I guess is the word.
And, as I say, for some years -- for some years, these crews have been represented by the Honduran Union, the respondent in No. 107.
United Fruit controls the movements of these ships which are time charters from Empresa and they are used primarily to carry the products -- carry the products of United Fruits' Latin America and Central America operations.
They stop at various ports in Central and South America, including those of Honduras, and on their -- they call regularly.
They call regularly at United States ports.
They are used interchangeably.
They are used interchangeably by United Fruit which ships with either United Fruit owns directly or which it time charters from other wholly owned American subsidiaries.
The ships carry the same cargo.
They call at the same ports and the selection of a ship -- the selection of a ship for any particular trip is determined on the base of size, speed, and availability without regard to the flag or the ownership of the vessel.
These, in essence, are the facts which were before the Board and on these facts --
Justice Potter Stewart: These ships have a regular run or --
Mr. Dominick L. Manoli: Apparently not.
They're used interchangeably and, as I say, the facts indicate that they stop at Honduras, other Central and South American countries and they are used interchangeably with other boats that are owned by United -- by the parent corporation.
Justice Potter Stewart: And invariably, do they come to United States ports on every voyage?
Mr. Dominick L. Manoli: The record is that they regularly call at United States ports.
I don't think the record goes beyond that.
Justice Hugo L. Black: (Inaudible)
Mr. Dominick L. Manoli: Sir?
Justice Hugo L. Black: (Inaudible)
Mr. Dominick L. Manoli: I don't think there are any figures in the record that -- at least I'm not aware of any that are in the record to show --
Justice Hugo L. Black: (Inaudible)
Mr. Dominick L. Manoli: Again, I don't -- I think the record is silent on this.
Justice William J. Brennan: And Mr. Manoli, is there anything else about what Empresa does in Honduras besides the -- I gather you told us, they dock the ship there, man it there, anything else that Empresa does in Honduras itself?
Mr. Dominick L. Manoli: The Empresa has negotiated with this Union, with this Honduran Union in the -- in Honduras.
Justice William J. Brennan: Do they have a headquarters or something in Honduras?
Mr. Dominick L. Manoli: That is where its place of business is, yes.
I think it also has had from time -- sometime in the past, if not presently, Empresa has had an office in this country.
Now, the ships as I say, are provisioned by Empresa and the supplies are purchased either by Empresa directly or they're purchased through another subsidiary of United Fruit.
And, the repairs and the dry-docking of the vessels are, perhaps not always but frequently, done in the United States.
Justice William J. Brennan: Some of it is done in Honduras?
Mr. Dominick L. Manoli: Again --
Justice William J. Brennan: In the record?
Mr. Dominick L. Manoli: Again, I don't know.
Justice William J. Brennan: The record doesn't show?
But I gather, in any event, there are enough contacts with Honduras to distinguish this particular case from other cases where --
Mr. Dominick L. Manoli: Yes.
Justice William J. Brennan: -- there's nothing but a Flag of Convenience and no --
Mr. Dominick L. Manoli: That's quite right.
Justice William J. Brennan: -- connection whatever with the flag country.
Mr. Dominick L. Manoli: We -- the Board has cases in which there are no contacts with the flag nation other than the registration.
Justice William J. Brennan: Well, in the Board --
Mr. Dominick L. Manoli: But, this one here --
Justice William J. Brennan: -- who might that -- would that make a difference?
Mr. Dominick L. Manoli: Sir?
Justice William J. Brennan: In the Board's view, would that make a difference?
Mr. Dominick L. Manoli: It is an important consideration to be taken into account that it has no contacts with the flag nation and I shall come later on as to the test which the Board applies.
Unknown Speaker: (Inaudible)
Mr. Dominick L. Manoli: Yes, Honduras has labor law which requires that a Honduran Union be recognized by that country, that its membership consist with 90% Honduran nationals.
On the facts which I have outlined briefly, the Board found that the United Fruit and Empresa were joint employers of the seamen here in question, that Empresa's operations were part of a single integrated operation which is owned and directed by an American-owned, an American-based enterprise engaged in the commerce of this nation.
The Board concluded -- the Board concluded that the Act applied to Empresa's maritime operations to these vessels despite their foreign registry and that it would effectuate the policies of the statute to assert jurisdiction over these vessels.
Accordingly -- accordingly, the Board directed the -- an election among these seamen --
Justice Potter Stewart: I don't quite understand, assert jurisdiction over these vessels?
The Board --
Mr. Dominick L. Manoli: Assert jurisdiction for the purpose of holding a representational action among the seamen onboard these vessels.
Justice Potter Stewart: Yeah.
Mr. Dominick L. Manoli: And the Board's order directed an election to determine whether they wished to be represented by the N. M. U., the National Maritime Union of America, or by Sindicato, the Honduran Union which had intervened in the Board proceedings, or by no union.
Justice Potter Stewart: Then, this is on a vessel-by-vessel?
Mr. Dominick L. Manoli: It was -- the unit that was sought by the N. M. U. was a fleet-wide unit, fleet-wide unit and the mechanics of the election were to be that -- either they were -- the Board would mail -- would mail ballots to the seamen onboard these vessels which would not be on a certain port on a certain day, and those ships and crews which were in a port on the date indicated by the Board for the election, the election would be held at the portside or, if permission were granted, I suppose, onboard the vessel itself.
Now, the Board's order directing this election precipitated two lawsuits, one by Empresa, in the Southern District of New York, and the other one by the Marineros, a Hungarian Union in the Southern -- in the District of Columbia.
Each sought to enjoin the Board from holding the election, asserting that the Board had exceeded its statutory powers in asserting jurisdiction over these vessels for this purpose.
The upshot of this litigation was that both Courts, both the Court of Appeals -- Court of Appeals the for the Second Circuit and the District of Columbia Court, held that the Board had exceeded its statutory jurisdiction in asserting that -- in asserting its authority over its -- in seeking to assert authority over these vessels and both Courts enjoined the Board from proceeding with the election.
Now, the rationale of the two decisions is somewhat different and I should like to state the difference briefly.
The District of Columbia Court held that the Act did not apply to a vessel which, as in this case, flew a foreign-flag and which had foreign crews who had been engaged under contracts pursuant to foreign laws.
The District of Columbia Court here apparently gave decisive weight, decisive and dispositive weight to the fact that these boats here were registered here under the laws of a foreign nation and through the flag of that nation.
Now, the Second Circuit, on the other hand, took the position that, while acknowledging -- while acknowledging that the flag was of cardinal importance, nevertheless, it agreed with the Board that the weight to be given to the flag would depend upon an evaluation in the context of the policies of this statute upon an evaluation of the interacting American and foreign interest, the substantiality of the American contacts as compared to the substantiality of the foreign contacts, and the weighing of these competing considerations.
On that premise -- on that premise, the Court of Appeals for the Second Circuit held that the contacts with Honduras were sufficiently substantial to outweigh the American contacts and that therefore, the Board does not have jurisdiction over these particular vessels.
Justice William J. Brennan: Mr. Manoli, this is the representation proceeding.
Mr. Dominick L. Manoli: Yes, sir.
Justice William J. Brennan: Did Marineros have a collective bargaining agreement covering these --
Mr. Dominick L. Manoli: There was -- there was at the time that the Board conducted or had these representation proceedings before it, a collective bargaining agreement with Empresa, that agreement expired at about the time that the Board issued its decision of this election.
Justice William J. Brennan: There's no problem with the contract part?
Mr. Dominick L. Manoli: Not for the Board.
Justice William J. Brennan: I don't suppose you could -- the Board would've considered it anyway.
Mr. Dominick L. Manoli: That's right.
Not -- there was no problem of that kind for the Board.
Now, as I have said, the immediate problem here is whether the Board has jurisdiction for the purpose of holding these representation elections over these particular vessels.
But, the issue which lies at the heart of this case, namely whether and to what extent the Labor Board has jurisdiction over foreign-flag vessels which are engaged in the commerce of this nation, that issue transcends -- transcends this particular case and I venture to think -- I venture to think that the decision of this Court would have radiations that would extend beyond this particular case.
And I believe that neither analysis nor decision should be unmindful of the larger context.Recent years -- recent years have seen the development of the so -- the particular development, I might say, the impressive development of the so-called Flag of Convenience or flag of necessity vessels or fleets.
In general, the term, as I understand it, I'm talking about where I've read it somewhere -- in general, the term is used to describe the flag of a nation which permits the registration of foreign-owned and foreign-controlled vessels under its laws under conditions which are deemed either opportune or necessary by the parties that seek to register their vessels under the laws of that particular country.
In common usage, however, the term is generally used gen -- normally used to refer to the flags of Panama, Liberia, and Honduras, the so-called Panlibhon Countries.
Justice Potter Stewart: There's a registration involved, are you going to get to that?
Mr. Dominick L. Manoli: I'm afraid that's a little beyond my depth, Mr. Justice.
The -- I don't know what the mechanics are.
What the mechanics are of registration.
Someone that's more familiar with the --
Justice Potter Stewart: You don't know why -- what there is about the registration laws or regulations of these three specific nations that seem to have attracted -- to them so much, is that it?
Mr. Dominick L. Manoli: Well, we do know what it -- what it is to that -- I know what it is that has attracted these particular vessels to the laws of -- just what the mechanics of the registration are, that is what I'm ignorant of.
But what it's attracted -- what has caused shipping interests, to register their vessels under the laws of these countries is --that this is particularly true, particularly true of American shipping interests, that they matter -- that they avoid tax -- certain types of taxation of which they would be subject if they were registered under the laws of this country and if they flew the flag of this country.
Also, because they employ foreign seamen, their -- the weight scales, the weight scales are much lower than those that are paid to American seamen onboard American flag vessels, and those are the two part -- two significant attractions for registration in these particular countries.
Justice Potter Stewart: Well, I --
Justice Byron R. White: What was the other one (Inaudible)
Mr. Dominick L. Manoli: Savings and taxation.
Savings and taxations.
Justice Potter Stewart: Suppose -- so far as the second aspect goes, there are a good many other countries which have this lower, lower level of wages.
Mr. Dominick L. Manoli: Yes.
Justice Potter Stewart: I mean, all through that -- a matter all over --
Mr. Dominick L. Manoli: So that -- it has been said that the chief attraction is the savings and taxation, savings and taxation.
Now, the size and growth of these Flag of Convenience vessels at the magnitude of their operations in international trade, and particular in the trade of this country, are truly of impressive proportions.
We have some figures that in 1960 -- 1960, nearly 2000 vessels of over 20 million deadweight tons were registered under laws of Panama -- of the Panlibhon countries.
And of that number, more than 400, more than 400 were American-owned or American-controlled.
And again in that year, again in that year, these Panlibhon vessels, these accounted carrier, they carried nearly 40% of the seaborne commerce of this nation and in that year, 24% of that commerce was carried by Panlibhon vessels which were American-owned and controlled.
Justice John M. Harlan: (Inaudible)
Mr. Dominick L. Manoli: Some were built here in this country and were transferred from this country to those nations.
Some have been built elsewhere.
And they've never been -- some of them may have never been registered under the laws of this country.
They were built elsewhere and registered under laws of these three nations.
Unknown Speaker: (Inaudible)
Mr. Dominick L. Manoli: I don't have it in mind, Your Honor.
I don't have it in mind.
Justice Potter Stewart: Suppose -- now, you're talking now about the American investment in the -- and shipping which sails under the flag of these three nations.
I suppose the American investment in other -- in those countries in other ways, would be quite a higher percentage, wouldn't it?
We all know that the Firestone Company is --
Mr. Dominick L. Manoli: Well, United Fruit, I dare say --
Justice Potter Stewart: In Liberia, the United Fruit.
In Honduras, it's --
Mr. Dominick L. Manoli: -- has a very high investment in Honduras.
And that's true.
Justice Potter Stewart: And the various American investments in Panama.
Mr. Dominick L. Manoli: Yes.
Justice Potter Stewart: And --
Mr. Dominick L. Manoli: I'm --
Justice Potter Stewart: Is there any comparison made between investments in non-shipping in those com -- countries as compared to shipping investments here?
Mr. Dominick L. Manoli: Well, I don't have that comparison, Your Honor, but this is the fact, however.
Justice Potter Stewart: And these are high figures, but I just wondered -- that you've given us.
Mr. Dominick L. Manoli: Yes.
Justice Potter Stewart: But, I wondered how they compare with the investments generally by Americans in those three countries.
Mr. Dominick L. Manoli: I don't have any figures to that purpose.
Now, the great majority of these vessels and particularly the American vessels, particularly the American vessels, they have no contact with the flag nation other than the fact that they've been registered there.
Unknown Speaker: (Inaudible)
Mr. Dominick L. Manoli: The basic issue which we see in this case, a threshold issue in this case, is whether or not the Board has any business in this area, whether flag is decisive.
Justice William J. Brennan: Well, I'm just wondering if --
Mr. Dominick L. Manoli: The flag is --
Justice William J. Brennan: -- it might well be that -- you might not on the facts of these cases, that it doesn't follow that -- it could be the same result in one of these instances where --as I understand it, they merely fly the flag and never (Inaudible)
Mr. Dominick L. Manoli: The -- in this case, Your Honor, the Court can either assume for the purpose of deciding this case that flag is not controlling and dispose of the case under the basis of whether the contacts are outweighed -- or the Honduran contacts outweigh the American contacts.
If the court should disagree with the court below that the Honduran contacts outweigh the American contacts, then it has to face the basic question of whether flag is decisive or not.
And it is -- as I say, it is only if this Court agrees with the court below that the contacts with Honduras outweigh those of this country, that it need not reach the $64 question of whether a flag is decisive or not.
Now, we think that the court -- we think that the court should address itself to that problem because the issue is in this case.
It's properly presented here and there's much litigation with respect to this matter here.
In fact, presently, there is pending in the Fifth Circuit, a case of this kind.
There is one pending in the Court of Appeals.
In both cases, there are no contacts with the flag nation.
The states have had problems with respect to this thing here as to whether or not the area is preempted by the federal legislation or whether they are not.
And finally, I suggest, Your Honor, I suggest that this is not the kind of an issue that should be deferred because I don't think the future is going to bring any further insights into this problem than the court will have today -- we'll have today.
And for all these reasons -- for all these reasons, we suggest that the Court deal with the basic question to determine whether or not the Board, as I say, has any business at all in this area and, if so, to what extent.
Now, it is the -- I just want to round up the economic picture a little bit.
I've already indicated -- I've already indicated that a great majority of the American-flag -- of these American vessels that are owned by American interest and that fly -- the Panlibhon flags have no contacts with those nations.
And the few that do, as in this case, have only contacts with the flag nation in connection with the American-based enterprises' operations.
And an interesting facet -- an interesting facet of this Flag of Convenience development is that today, Liberia, which I take it is not an oil producing country, has the largest and most modern tanker fleet in the world.
And, to round out the economic pictures I said a moment ago, one of the inducements for this kind of an operation is that these shipping interests can hire foreign seamen.
In fact, they almost always hire foreign seamen, had wages lower than those which prevail on American boats.
And as a result -- and as a result, the American Unions have become quite concerned of course because the tremendous drop -- tremendous drop in the employment of American seamen.And this concern has triggered off the organizational efforts which found their culmination in this type of case.
Justice Potter Stewart: You say this is a tremendous -- a competitively recent development, that is -- it's a tremendous development.
Mr. Dominick L. Manoli: Yes.
Justice Potter Stewart: It is recent.
Mr. Dominick L. Manoli: Yes.
Justice Potter Stewart: Since World War II or even more recently?
Mr. Dominick L. Manoli: Largely since World War II, yes.
The last --
Justice Potter Stewart: This is not unheard of before.
Mr. Dominick L. Manoli: Oh, no, no, not at all, quite the contrary.
This has happened before.
In fact, one of the books which has been cited -- one of the studies that's been cited here, some of this may go back as far back as the 16th Century.
Justice Potter Stewart: Yes.
Mr. Dominick L. Manoli: But this enormous development, Your Honor, this enormous development has taken place since the World War II.
Justice John M. Harlan: This development (Inaudible) in fact, one way or the other, on the tax aspect of a --
Mr. Dominick L. Manoli: Well, presumably, if they were -- if these vessels were forced -- as they claim that they might be by assertion of Board jurisdiction, they were forced to transfer the registration to some other country, perhaps they would have tax problems there which they presently do not have under the laws of Liberia, Honduras, and Panama.
Unknown Speaker: (Inaudible)
Mr. Dominick L. Manoli: I'm sure we can get those figures, Your Honor.
We'll supply them.
I do not have them in mind, but we will make every effort to supply those figures.
Now, there's one minute remaining and I'm about to reach the legal analysis of this case.
Unknown Speaker: I believe (Inaudible)
Mr. Dominick L. Manoli: Alright, sir.
Argument of Dominick L. Manoli
Chief Justice Earl Warren: -- and 107.
Mr. Manoli, you may continue your argument.
Mr. Dominick L. Manoli: May it please the Court.
It appears yesterday that the basic issue which lies at the heart of this case is whether and to what extent, the jurisdictional reach of the Labor Act extends to foreign-flag vessels which are engaged in the commerce of this nation and of also have other substantial contacts with this country.
It is the Board's position that the Act extends to foreign-flag vessels which are engaged in the commerce of this nation where the maritime operation is either primarily based and directed out of this country or is essentially an adjunct by the American corporation engaged in the seaborne commerce of this country so that unbalanced -- so that unbalanced, the shipping may reasonably be deemed to be a shipping of this nation rather than that of a foreign nation which only the exigencies of international trade bring to these shores.
Analysis of this proposition, I take it, must start with the statute.
In sketching the jurisdictional reach of the Labor Act, Congress painted it with an extremely broad brush.
The declared policy of the statute is to safeguard the foreign and domestic commerce of this nation from activity, the intent or necessary effect to which is to burden or obstruct that commerce.
The -- to this end -- to this end, Congress empowered the Board to prevent unfair labor practices and to resolve representation disputes which would burden or obstruct the free flow of this nation's commerce both foreign and domestic.
The touchstone, the touchstone of the Act's jurisdiction is the effect of the particular activity upon the foreign and domestic commerce of this country and not the source.
And as this Court said long ago, Congress in -- the Act reflects the congressional policy in the exercise of Congress' plenary constitutional authority over commerce to eliminate -- to eliminate industrial strife without regard to the source.
Now, there can be and indeed there is no question of the power of Congress to reach these foreign-flag vessels that are engaged in the commerce of this nation.
Indeed, this Court once said that the power of Congress, the condition access to our ports by foreign-flag vessels that complies with what Congress deems to be good American policy cannot be questioned nor can there be any question as to a literal reach of the statute that literally the statute encompasses these flag vessels.
Justice Potter Stewart: But literary the --
Mr. Dominick L. Manoli: Of course --
Justice Potter Stewart: Literary, the statute would go much further than you are now contending.
Mr. Dominick L. Manoli: That's right.
Justice Potter Stewart: Isn't it?
Mr. Dominick L. Manoli: Of course, we are aware that the literal language of the statute does not end our inquiry and we're also aware that a part from the language of the statute which is quite broad of course, that apart from the language of the statute, Congress gave no specific indication either in the statute or in its legislative history or in the legislative history whether and to what extent the Act should apply to foreign-flag vessels which are engaged in the commerce of this nation.
And perhaps as the court below said, it would be a bit unrealistic to a trade to Congress, a subjective intent to reach his flag -- this flag of convenience vessels that are engaged in the commerce to this nation because as I said yesterday, the development of these -- this fleet, this type of shipping has come about largely since the enactment of the Wagner Act.
But these considerations, I submit, as this Court indicated in the Vermilya-Brown case are not conclusive, nor decisive.
What is important is the policy of the statute and that policy is crystal clear and it is the function of the Board as well as the Court to determine what Congress, given that policy, given that far broad policy would have done with a situation which now confronts this Court.
As I said yesterday, the concern of Congress was with the disruptive effects of industrial strife upon the foreign and domestic commerce of this country.
And the purpose of the statute comp -- is comprehensibly to eliminate this industrial strife.
Now, it can hardly be thought that Congress would have had less concern with industrial strife affecting foreign-flag vessels which are engaged in the shipping of this country or in the commerce of this country and which may reasonably be deemed to be essentially the shipping of this nation that Congress would have had less concern with the disruptive industrial strife affecting those ships than it had with the American-flag vessels where the plain fact is of course that industrial strife affecting one or the other will impede the free flow of commerce of this nation.
Indeed, perhaps industrial strife affecting foreign-flag vessels that are engaged in the commerce of this nation may impede it even more than industrial strife affecting American flag ships in view of the important role that these flag ships as I indicated yesterday are playing in the commerce of this nation.
Now, the problem of determining the reach of domestic legislation which like the Labor Act has broad jurisdictional coverage is not a noble one.
Congress has not infrequently enacted legislation which has had broad general coverage without at the same time specifically indicating to what extent such legislation should apply to activity which has foreign aspects, activity which may have extraterritorial aspects, or activity on board foreign-flag vessels.
Where that is the case, where that is the case, the statute is -- issue of statutory interpretation must not be determined in a mechanical fashion either on the basis of the literal universality of the language or on the basis of outmoded concepts that a ship is floating piece of the flag nations territory or by slavish submission to the flag in -- to the flag.
On the contrary, we think that the proper test is that the scope of the statute must be determined in the light of the policies of that statute upon the American and foreign interest present, the substantiality of one as against the other and a weighing of these interests with due regard to considerations of international comity.
This, as we understand it, is the teaching of this Court's decision in the Lauritzen case.
Now, in the Lauritzen case and that case involved the Jones Act which provides that any seamen may bring suit in a federal court -- Federal District Court to recover for injuries suffered in the course of his employment.
In that case, the problem was whether a foreign seaman who had been injured on board a foreign boat in foreign waters could take advantage of the Jones Act.
Now, this Court held that he could not.But the approach which this Court took to the question of statutory coverage of the Jones Act which again had this literal universal language, the approach which the Court had took this question of statutory construction we think has relevance here.
The Court there said, the Court there said that the flag is of cardinal importance but domestic interest, domestic policies and the substantiality of American contacts may tell -- in a given case, may took the balance against the flag.
Now, the Board in determining the reach of our statute with respect to these ships has taken its cue from the Lauritzen case.
Justice John M. Harlan: Does the Lauritzen case involve (Inaudible)
Mr. Dominick L. Manoli: That's true, Your Honor.
Justice John M. Harlan: That the materials involved (Inaudible)
Mr. Dominick L. Manoli: That's true, Your Honor and the significance of that may be that at least theoretically, there more -- be more danger of conflict between us and some foreign nations than there would be in a Lauritzen type of case.
And I shall subsequently come to argue the point, that point as to the extent of this conflict between us and other nations.
Justice William J. Brennan: Are you going to take any issue of the Court of Appeals' contrary conclusion to the Board that this employee -- that this Empresa and United Fruit were joint employers?
Mr. Dominick L. Manoli: It is our position that they are joint employers.
Justice William J. Brennan: And of course if that's the fact then none of these arguments are relevant, is it?
Mr. Dominick L. Manoli: Sir?
Justice William J. Brennan: If that should be the fact, then we don't reach the questions that you're talking about, do we?
Mr. Dominick L. Manoli: Well, you still have of course the fact that these seamen are employed on board with foreign flag.
Justice William J. Brennan: Well, I know but if --
Mr. Dominick L. Manoli: And --
Justice William J. Brennan: -- if they're also employees of United Fruit, and do we have all these concerns?
Mr. Dominick L. Manoli: Well, I expect that the other side will say yes and I -- now --
Justice Potter Stewart: Well, it could be employees of United Fruit who were down on Honduras and never left Honduras and there would be -- you wouldn't assert it.
Mr. Dominick L. Manoli: We would not assert jurisdiction over those who would stay in Honduras.
That is true.
Justice Potter Stewart: So -- so that --
Mr. Dominick L. Manoli: The problem here is --
Justice Potter Stewart: -- that employment relationship does not avoid the -- what you're --
Mr. Dominick L. Manoli: It does not --
Justice Potter Stewart: -- urging now.
Mr. Dominick L. Manoli: --avoid that problem.
Justice Potter Stewart: -- does it?
Mr. Dominick L. Manoli: Now, we think that it's an import -- it's one of the factors that the Board took into account and we don't believe that even if this Court could conclude that United Fruit is not a joint employer that it doesn't necessarily mean that the Board does not have jurisdiction over this case.
Justice Byron R. White: But Mr. Manoli --
Mr. Dominick L. Manoli: Now --
Justice Byron R. White: -- what is the -- what do you include in the foreign commerce of the United States?
Mr. Dominick L. Manoli: What?
Justice Byron R. White: What do you include in the foreign commerce of the United States?
Is it the commerce carried on by residents here or by its corporation --
Mr. Dominick L. Manoli: The --
Justice Byron R. White: -- incorporated here?
Mr. Dominick L. Manoli: The statute itself of course Your Honor defines the term commerce to mean trade, traffic, commerce etcetera among the several states, between the District of Columbia or any territory of the United States and any state or other territory or between any foreign country and any state territory to the District of Columbia.
So it covers any trade between this country, this country and a foreign country.
Justice Byron R. White: Between -- you mean between a citizen of this country (Voice Overlap) --
Mr. Dominick L. Manoli: Not necessarily a citizen, no.
You may have an alien for example.
An alien who is engaged in business here and engaged in the foreign commerce of this county and the act certainly would come to that.
Justice Byron R. White: You're talking here about the goods or merchandise that are actually physically moved from --
Mr. Dominick L. Manoli: The transportation --
Justice Byron R. White: -- or to the United States?
Mr. Dominick L. Manoli: The transportation of goods, supplies between this country and other countries.
Now, in -- as I've said, in determining the reach of the statute, the Board has taken its cue from the approach which this Court took in the Lauritzen case and the Board acknowledges, the Board acknowledges that the flag determines the nationality of the ship.
But as against that factor, it has taken into account the following factors.
One, whether the nationality of the bene -- one, the nationality of the beneficial owner of the ship.
Two, whether the operations of the ship are directed primarily from the United States, the regularity and frequency of its visit to United States ports and the nature of cargo and passengers carried, where the shipper's provision repaired and finally, whether the ship carries the trade of its flag country and if so, whether such trade is merely a concomitance of -- or incidents of operations of an American-based enterprise.
If -- in finding the evaluation of these factors, the Board concludes that the shipping is closely linked to the economy of this country that on balance, the contacts which this shipping has with this country make it essentially the shipping of this nation.
Then the Board says the Act applies.
If, on the other hand, upon an evaluation of these factors, the Board concludes that the contacts with this country are relatively insubstantial and that the shipping is essentially that of a foreign country which only the exigencies of international trade bring to this shore -- bring to our shores then the Act does not apply.
Now, the Board's test brings within the coverage of the statute, those vessels which are closely linked to our economy and excludes those which are not.
Now, we submit -- we submit that the reading of the statute which the Board has made and the accommodation which it has made is a proper one for it brings within the statute -- for it brings within the statute and a -- vessels which are closely linked to the economy of this nation despite their foreign flag and foreign registry and it extends to them what Congress deemed to be good American policy, namely, the elimination of industrial strife in an area that is of vital and direct interest of this country.
That is to say, it's foreign commerce.
At the same time, at the same time this test does not intrude upon foreign interest, foreign interest for it does not extend the Act to shipping which is essentially that of a foreign nation.
Now, I think logically at this point, I arrive at the Benz decision of this Court.
Justice John M. Harlan: Before you get to Benz.
Mr. Dominick L. Manoli: Yes, sir.
Justice John M. Harlan: May I ask you, is there anything in the history of the Labor Act that shows that Congress adverted to this problem?
Mr. Dominick L. Manoli: No sir, there is none.
Justice John M. Harlan: Nothing at all.
Mr. Dominick L. Manoli: Nothing at all, however, one of the reports, and this report was cited in the Benz case, refer to the application of the Act to the American workingmen, American workingmen.
Now, I suggest Your Honor that that was merely in reference to American workingmen was a perfectly natural illustrative kind of a thing, not to intend it to be exclusive but merely the thing that would come quite natural to an American political representative to speak in terms of an American workingman.
The statute itself, the statute itself in its definition of commerce and its definition of employer and employees draws no distinction on the basis of citizenship.
Now, coming to Benz, coming to Benz, we have acknowledged in our briefs that there are some language in Benz that militates quite strongly against the Board's position here because there is some language there that seems to indicate that the Labor Act was not intended to apply to foreign activity or activity onboard foreign-flag vessels.
However, we haven't -- we don't read, we don't read their decision to stand for so broad of proposition.
Of course, this Court knows best what he's intended to say, how far it intended to go in that case.
But it is important to remember the facts in that particular case.
The courts in saying that the Labor Act did not apply in that case, stress the fact that the ship that was involved in there was only transiently and temporarily in a United States port and that the only contact, the only contact which that flag had was that a labor dispute erupted, erupted while that ship was temporarily in an American port.
Justice William O. Douglas: That was a suit against the union wasn't it --
Mr. Dominick L. Manoli: Yes.
Justice William O. Douglas: -- for damages?
Mr. Dominick L. Manoli: That's right.
Justice William O. Douglas: In a state court?
Mr. Dominick L. Manoli: In a state court and it was removed to a federal court.
Justice Tom C. Clark: Of course all the boats are here temporarily, aren't they, even your vessels?
Mr. Dominick L. Manoli: I don't think that that term was used in that sense, in that case, at least that's my reading of it Your Honor.
You wrote it.
But I think what the Court meant to say by those two adverbs, at least as we read it --
Justice Tom C. Clark: I don't understand that your boat stayed here permanently either.
Mr. Dominick L. Manoli: No.
These boats are engaged in a shuttle service.
These particular boats are engaged in a shuttle service between the United States -- United States and these Latin and Central American countries.
But the boat in the Benz case was really -- it was truly temporary in this -- in the port of this nation because after this labor dispute erupted, it wasn't until -- apparently by the time the case got to this Court.
This boat never came back to this country.
Justice Tom C. Clark: But this distinction seems to be the stock ownership that you alleged.
Mr. Dominick L. Manoli: The stock ownership is an important factor which --
Justice Tom C. Clark: That wasn't --
Mr. Dominick L. Manoli: -- the Board takes into account.
Justice Tom C. Clark: That wasn't present in Benz.
Mr. Dominick L. Manoli: No, it was not, it was not.
American ownership is not necessarily decisive of Board jurisdiction but it is a factor which the Board takes into account.
Justice William O. Douglas: It was the dissent by the --
Mr. Dominick L. Manoli: A dissent written by Your Honor.
Justice William O. Douglas: If that majority thing in Benz stands and allows a suit from the state court but then it was against the union for engaging in activities, it would otherwise be protected by the -- your act.
How could the Board win this case?
Mr. Dominick L. Manoli: Well, in these cases here, if that -- if that decision of course to go as far as some of its literal language goes, we cannot win in this case.
But we think -- we think that that decision must be read in the light of the particular facts which were in that case that you had a boat which contacts with this country were of only of -- shall I say a femoral very -- highly fortuitous, whereas here, in the cases which the Board has had before, in the case which the Board had before it, the context with this nation are much more substantial than they were in that case.
Justice Potter Stewart: Benz, the ship was owned by Panamanian Corporation and flying -- and registered in Liberia apparently.
Mr. Dominick L. Manoli: Which ship, sir?
Justice Potter Stewart: In the Benz case.
Mr. Dominick L. Manoli: In the Benz, yes.
Justice William O. Douglas: That's much more a suspect in a situation, isn't it?
Mr. Dominick L. Manoli: Yes.
Justice William O. Douglas: Is that a much more suspect situation than anyone we have here?
Mr. Dominick L. Manoli: Well, we do have cases -- this is not one of them but the Board has had cases in which there is foreign-flag registry but there is no contact, no contact whatsoever with the flag nation.
Now, in this case, you do have contacts with the flag nation and engage to some extent of course in the commerce of the flag nation itself.
Now, in at least three cases that the Board has had, and at least three cases that the Board has had that has been American ownership, foreign-flag registry and absolutely no contacts, absolutely no contacts with the flag nation.
Now, as I say, our reading of Benz is that it does not cover a situation where the vessels have substantial contacts with its nation and we are strengthened in that reading, we are strengthened in that reading of Benz by this Court's subsequent decision in the Marine Cooks case where again the Court in referring to Benz, stress the highly fortuitous context of the vessel in Benz where the -- with this nation.
Justice Potter Stewart: We (Inaudible) with the Norris-LaGuardia Act.
Mr. Dominick L. Manoli: That's right.
But in connection with that, this Court had occasion to speak of the Benz case.
The Benz case as I say it again stressed the highly fortuitous nature of the ships contacts, the Benz ship contacts with this nation.
Now, the argument is made -- the argument is made that labor relations on Board vessels have to do with the internal order of the vessel.
And that it is the general recognized practice among the nations that the internal order of the vessel should be governed by the flag nation and the law of the flag nation and that in the light of this practice, we should not attribute to Congress in the absence of an expressed statement for the contrary.
We should not attribute to the Congress a purpose -- a purpose to extend the statute to regulate matters which the argument goes, deal with the internal or to the vessel.
We believe that this argument misconceives the internal order doctrine.
That doctrine which of course is an ancient one, has to do with the exercise and control of -- exercise and control and authority over ship, over the vessel, over the passengers, over the crew and disciplinary matters.
The classic statement of the doctrine made in the Wildenhus case by Chief Justice Waite is that the doctrine pertains to -- is that all matters of discipline and all things done onboard which affected only the vessel or those belonging to her and did not involve the peace or dignity of the country or the trend carried apart should be left to the authorities of the flag nation.
Now, we believe that labor relations extend beyond any internal order of the vessel.
They affect the commerce of the coastal state or the territorial state where the ship happens to be.
And in the classic phrase, we think that labor disputes involving vessels affect the tranquility, the peace and dignity of the coastal state and that therefore it is not covered -- that these matters are not covered by the internal order doctrine.
Now, of confirmation of this understanding of the internal order doctrine is furnished I think by the treaty of peace that exist between this country and Honduras which contains this provision and I may say that this provision is typical of many of the treaties that this country has with other treaties of friendship that this country has with other countries.
The relevant article of that treaty provides -- this is at page 44 of our brief, that a counselor officer shall have exclusive jurisdiction over controversies arising out of the internal order of private vessels of this county and shall alone exercise jurisdiction in cases wherever arising between officers and crews pertaining to the enforcement of discipline onboard provided the vessel and that person charged with wrongdoing shall have entered as part of his consular district.
Such an officer shall also have jurisdiction over issues concerning the adjustment of wages and the execution of contracts relating thereto, provided the local laws so permit.
This treaty itself seems to recognize the matters having to do with wages, the execution of labor contracts -- of labor contracts that this is not a matter that is governed by the internal order doctrine.
Now, I go on to another argument that is made against the Board's position.
It is urged that for the Board -- for the Board to extend the jurisdict -- its jurisdiction to this foreign-flag vessels to read the statute as covering some of these foreign-flag vessels will necessarily invite international discord, perhaps retaliation and that in the light of these considerations, we should not attribute to Congress a purpose to extend the Act for these foreign flag vessels, absent the specific declaration by Congress to that effect.
Now, this argument of course is a familiar one in this area.
It was made to this Court very forcefully by these three departments of the executive branch in the Vermilya-Brown case that if the Fair Labor Standards Act were extended to a base which is contrary at least in Bermuda that it would provoke all kinds of horrible things.
The Court was not exactly overwhelmed by the argument.
And I suspect that the reason the Court was not exactly overwhelmed by the argument because in large measure the argument is a speculative one.
In assessing this argument, I think we must be mindful of the fact, as I said yesterday, that the great majority of these flag of convenience vessels have no contacts with the flag nation.
And the few that do -- the few that do as in this case only do so in connection with the American beneficial owners operations.
Now, in the great majority of cases certainly, in the great majority of cases where the flag -- where the flag -- where the boats never touches the flag nation shores, the -- any notion of international discord or retaliation or repercussions are perhaps more theoretical than real but to the extent that there is and I shall address myself to your question Mr. Justice Harlan to the question -- to the extent that there may be some international discord on happiness over the Board -- over the extension of the Labor Act of these foreign-flag vessels, we think that there is no solid basis, no solid basis for attributing to Congress an intent to prefer foreign interest at the expense of American policy and American interest.
Indeed, quite the contrary, if the peaceful procedures of this statute are not available for the resolution of these industrial disputes affecting these foreign-flag vessels, the result would be of course that the parties will deal after their economic weapons with a consequent disruption of American commerce.
Now, we think that in these circumstances, in these circumstances, there is no compelling reason, no compelling reason for attributing the purpose of Congress to sacrifice American policy, what Congress deem to be good American policy to sacrifice American interest in deference to the conflicting demands of a foreign country.
I shall reserve the rest of my time.
Chief Justice Earl Warren: You may.
Mr. Dominick L. Manoli: Oh, before I sit down, yes, I have something.
Justice William J. Brennan: This of course involves the injunction against conduct in election.
Mr. Dominick L. Manoli: Yes, sir.
Justice William J. Brennan: I take it if the election went on, the problem at least where this case could be mooted if the vote were no union, couldn't it?
Mr. Dominick L. Manoli: Well, I -- it wouldn't be mooted because the basic underlying question will still remain there --
Justice William J. Brennan: Well, that's what
Mr. Dominick L. Manoli: -- as to whether or not --
Justice William J. Brennan: -- puzzles me.
Apparently, you're very anxious to have us decide the basic underlying question.
Mr. Dominick L. Manoli: I am -- we are -- we are, Your Honor, and --
Justice William J. Brennan: But you're not taking any position with regard to the -- whether it's a jurisdictional or it may be the injunction against an election.
Isn't that premature in -- even in Leedom and Kyne terms?
Mr. Dominick L. Manoli: Well, of course we have -- we -- in the Second Circuit case which was brought by the company, by Empresa.
We had opposed the jurisdiction of the District Court there saying that under Myers versus Bethlehem, the employer had a proper way -- had a method under our own statute of litigating this issue without going into a District Court.
Namely, there would have been an election if the election had resulted in the certification of a particular union, he could be impart or refused to bargain unfair labor practice charges and complaints would have issued and would have gone up the ladder through the Board.
This argument was rejected by the Second Circuit and while we have some very great doubts, very great doubts about the correctness of that ruling, we have not raised that issue here.
We have not raised that issue here because we felt that the -- in this case, the important issue, the more significant issue for the time being was the question of Board jurisdiction over the --
Justice William J. Brennan: Over the fact that you haven't raised it?
Mr. Dominick L. Manoli: Sir?
Justice William J. Brennan: The fact that you have not raised it at present or was that for (Inaudible)
Mr. Dominick L. Manoli: It raises a -- it may raise a law probably but the Union has raised it.
The Union has raised it.
The N.M.U. --
Justice William J. Brennan: Well, I thought you told us yesterday the Union's contract were undoubtedly here?
Mr. Dominick L. Manoli: No, no this is the N.M.U., the National Maritime Union which is a party for the case and which is --
Justice William J. Brennan: But Marineros or whatever that name is these contracts went out in February.
Mr. Dominick L. Manoli: Its contract had expired when the Board's decision but I understand that it's been renewed, it's been renewed.
Now, with the few minutes that I have left, I do want to say a word about this particular case.
I dealt -- I've devoted most of my time to what I think is the initial threshold question whether or not flag is dispositive of this issue or whether it is not.
Now, I want to say a word about the case that we have before us here.
If the Board is correct, if the Board is correct in concluding that the flag is not decisive of the applicability of the Act that the Board is correct in saying that the applicability of the Act is to be determined upon what I shall call a contacts test.
Then we believe that the accommodation which the Board has made in this case is a reasonable one as entitled to acceptance.
I will not restate the facts, I will not restate the facts but the record here shows that the Empresa, United Fruit and Maritime operations are a single, integrated operation which is primarily based in and directed from this country and owned by American enterprise engaged in the commerce of this nation.
Empresa is nothing more I suggest, it's nothing more than a department than a department of United Fruit and its sole purpose is to further the shipping operations, the shipping operations of United Fruit in the commerce of this nation.
Justice John M. Harlan: (Inaudible)
Mr. Dominick L. Manoli: No, they didn't -- they didn't say that -- they didn't say that but Empresa --
Justice John M. Harlan: (Inaudible)
Mr. Dominick L. Manoli: They did not pierce a corporate veil but as I said yesterday -- as I said yesterday Your Honor, Empresa does not carry passengers or cargo on its own account.
Its sole function is to own and operate these ships that are beneficially owned by United Fruit and its income is derived with possibly few exceptions and they are just possible exceptions as the record says.
Its income is derived from time charged with these vessels which are time chartered almost exclusively, almost exclusively to United Fruit.
So in a very real sense, looking to the economic realities of the situation that Empresa's and to say in a very real sense, a department of United Fruit and functioning in order to carry on the business of United Fruit.
On these circumstances, we think the Board could properly say that this shipping here, despite the context with Honduras, despite the flag that this shipping here is essentially the shipping of this country but it is not shipping which has a truly foreign character.
And that therefore the Act should apply to these ships.
Justice Hugo L. Black: Have you had any cases -- does the Board have any cases where an individual does the same thing?
Mr. Dominick L. Manoli: I think they've all have been corporations of one kind or another that have owned these ships.
We have listed these cases Your Honor in our brief --
Justice Hugo L. Black: In line with your argument, what would be the difference if an individual owning -- own the United Fruit in the individuals name but put his boats under foreign flag.
Mr. Dominick L. Manoli: I would -- the answer would be the same, the answer would be the same whether it's an individual that's carrying on the operation or whether it's a corporate enterprise.
In either case, the essential question for the Board is, is this true to the shipping of this country by virtue of the substantial contacts with this nation on the basis of the factors that are outlined?
Or is it truly a foreign shipping venture which only the exigencies of international trade bring to this nation's chores.
Before I sit down, Mr. Justice Black yesterday asked me for some figures having to do with the number of ships that may have been constructed in American shipyards for American interest which were transferred to foreign flags.
We made a hasty search for some figures Mr. Justice Black yesterday.
And in 1961, the administrator of the Maritime Administration testifying before the Merchant Marine and Fishery Subcommittee of the United States Senate, stated that between 1950 and 1960, 39 ships, each have of 12,500 gross tons were constructed in U.S. shipyards for companies controlled by U.S. citizens and registered under foreign flags.
Justice Hugo L. Black: What country is that?
Mr. Dominick L. Manoli: Sir?
Justice Hugo L. Black: You said it was built in foreign --
Mr. Dominick L. Manoli: No, no, constructed in U.S. shipyards for companies controlled by U.S. citizens and registered under foreign flags.
The number was 39.
And this covers the tenure period 1950 to 1960.
I think also Your Honor asked me a question to whether or not --
Justice Hugo L. Black: I'm asking you whether they were built impart with the subsidies from the Treasury.
Mr. Dominick L. Manoli: I was -- Your Honor also asked that question.
Apparently, subsidies are not available to ships that are constructed in this country for registration under foreign flags.
Justice Hugo L. Black: Is that by law?
Mr. Dominick L. Manoli: Yes, yes sir.
Justice Hugo L. Black: Do you have the citation to that?
Mr. Dominick L. Manoli: The citation of this hearing?
Justice Hugo L. Black: To the law.
Mr. Dominick L. Manoli: Offhand, I don't.
Justice Byron R. White: Mr. Manoli, just so I have it clear.
When you're -- in applying the contacts test under the Board is an American ownership or effective American ownership and all these an essential ingredient?
Mr. Dominick L. Manoli: No sir.
Justice Byron R. White: Has it been up to date?
Mr. Dominick L. Manoli: In the Eastern case, there was not American ownership in that case.
+We have cited that case in our brief.
On the other hand, American ownership does not necessarily mean that the Board will assert jurisdiction and this was made clear by the Board's decision in the Dalzell case which we have appended to our brief.
In that case, the boat was owned by American interest but its contacts would -- that this country is shipping were so highly of fortuitous character that the Board concluded despite the American ownership, the shipping was not that of this country and therefore it did not assert jurisdiction over that particular enterprise.
Justice Byron R. White: So when -- so in some cases, you would assert jurisdiction although you could not say that an American company was a joint employer.
Mr. Dominick L. Manoli: Yes sir, that was true in the Eastern case.
Justice Hugo L. Black: Did the law to which you referred apply also to subsidies to the ship building company as well as to the shipowner?
Mr. Dominick L. Manoli: I don't know the answer to that question, Your Honor.
Chief Justice Earl Warren: Mr. Cooper.
Argument of Herman E. Cooper
Mr. Herman E. Cooper: May the Court please.
I appear on behalf of the National Maritime Union which is the intervenor in this proceeding and which in fact initiated the conduct by the Board which in turn has been suppressed by injunction by the courts.
In fact, we started this in November 1959 when having procured a majority of the cards of Honduran seamen in the Maine, aboard some 17 Empresa vessels.
We filed a petition for an election with the Board and what appeared to have become a vain hope that we would promptly have an election and ultimately emerge as the certified bodily representative for the seamen.
Two years later, November 15th, 1961, the Board ordered for this election.
In the meantime, some four ships had dropped from the fleet and the status of our Union with respect to the seamen today is a relatively uncertain one, however, if an election is ultimately ordered, we intend of course to proceed actively in it.
Now, in selecting the Board as the vehicle for this operation of becoming the bargaining representative for the Empresa seaman, we attempted to utilize the orderly processes available to us instead of proceeding by economic pressure to accomplish the same result.
Necessarily what I have to say will be a factual footnote to the arguments of counsel for the Board.
I think that with all great respect, he has covered the important case law, the statutes but the one aspect of this case which requires amplification of the real underlying facts.
In this instance, the primacy of the facts, I submit, would deal directly with the key determination by this Court.
And these facts assumed in decreased importance because they were not available to any of the courts below by the curious situation that the Board record was not before the courts either in New York or Washington.
It was not before the Court of Appeals.
It is before this Court by stipulation or by certification of the parties and therefore references which I will make to that record will necessarily be references primarily directed to the record before the Board.
Now, the Board did not act in haste.
The Board had two years from the day we filed our petition to come to the conclusion which it did.
The hearing commenced shortly after the filing of our petition and it took two years, let me underscore this, before the Board and the Commission came to the conclusion that it had jurisdiction of this case and that it should order an election.
By the same token, it took the Courts just about a week or two at the most to decide that the election should not be held.
The absence of this Board record before the courts below may have led to the critical error which we feel is inherent in their decisions and that is the rejection of the Board's finding that these ships operate as the face of the United States enterprise under and I quote “the continuous direct control” and either direct or ultimate ownership of United Fruit.
Now, the -- these facts assume even greater importance because if Empresa stands as an independent entity which is the framework in which our adversaries view it necessarily and therefore United Fruit is not the employee or even the joint employer.
It provides the whole framework of argument for claiming that sovereignty of Honduras floats this corporate entity and therefore makes it immune from the operations of the Board.
All of this is predicated on a Honduran corporation, on a Honduran flag, on the main Honduran crew and the fact that they carry Honduran products.
And we submit that while these facts are important, while these facts may bear on the ultimate issue that they're overcome by the real issue.
And the real issue is defined in the record before the Board that that captures the realities of the case and discloses the true relationship between Empresa and United Fruit and United States commerce.
Now, what is significant here is that United Fruit is not a stranger for the National Maritime Union.
Back in February 1938, we were certified, 1938 as the exclusive collective bargaining representative for all seamen, unlicensed seamen aboard United Fruit vessels.
It took us some eight months and wasn't until October of that same year before we achieved the contract with United Fruit.
And we are and have been since that time, the exclusive collective bargaining representative for the unlicensed seamen aboard, the American-flag vessels of United Fruit.
There are some 20 of them today and it covers some 800 seamen.
And we will demonstrate from the Board record that there is a single fleet operating here which is combined as part of Empresa ships and American ships under the direct United Fruit control.
And that while they may be dual flags, there is a single centralized control and that this whole operation is by virtue of the decision not of Empresa, not of Honduras but of United Fruit.
And United Fruit itself has created the situation because by perhaps no strange coincidence, only three years after we got our first contract, they suddenly created the Honduran corporation known as Empresa and that Honduran corporation is the one that we're dealing with now.
They own all the stock in Empresa.
They dominate Empresa completely.
They named the Boards of Directors who in turn select the officers.
The Empresa itself is a mere shadow of United Fruit.
United Fruit itself as its well-known is a colossus which travels in four continents.
It operates through some 50 or 60 varied subsidiaries of which Empresa is one.
Its main business is the growing, the transporting and the marketing of probable produce enacting as a shipper of cargo.
The bulk of its trade is between Central and South America and the United States and it ships its own good and also solicits general cargo from others.
But the produce which it carries is either carried in ships which it owns directly or which at time charters from others.
And this is where its relationship operatively with Empresa comes in.
Because United Fruit not being exclusively a holding company but being actively an operating company, also runs these 50 or 60 subsidiaries through this American central agency which in turn exercises close control and supervision over the acts of all of its subordinates including Empresa.
And Empresa has no independent existence.
It's completely subordinate to the United Fruit and it could exercise no choice which is inconsistent with the decisions and will and wish of United Fruit.
Justice Potter Stewart: Does Empresa do anything else but own and operate ships?
Mr. Herman E. Cooper: No, as a matter of fact, the use or the way to operate may be a misconduct.
Justice Potter Stewart: Well, does it do anything else but --
Mr. Herman E. Cooper: It does nothing.
Justice Potter Stewart: -- engage in the shipping business.
Mr. Herman E. Cooper: That's all it does.
It has this at present 12 ships or 13 ships.
It time charters them to its -- as a captive corporation of United Fruit.
United Fruit decides what to do with it.
They sail side-by-side.
They dock side-by-side, they're utilized as part of an integrated system of one company and that is United Fruit, American-owned.
Now even in the -- in the annual stockholders report filed by United Fruit, it refers to these Empresa vessels as its own, built to its own specifications.
United Fruit in filing the specifications and financial data required by 801 of the Merchant Marine Act, Shipping Act, files detailed financial reports again as to its vessels and includes within those characterizations, the Empresa fleet.
The entire capital of Empresa has been provided and continues to be provided by United Fruit.
Vessels are transferred to Empresa by United Fruit.
Empresa has no other relationship with anyone else except with the United Fruit.
And let me underscore this fact that by controlling where Empresa operates and how it operates.
In effect, United Fruit selected Honduras and thereby itself assume whatever burden might attach to having business in an area in which -- from which may emerge dual claims of two sovereignties.
And certainly, United Fruit, just as it created the situation, could terminate it tomorrow because the exercise of this kind of dominance constructively and actively over the Empresa fleet.
Now, Marc Hetu is the vice president and let me say at this point that the officers of United Fruit testified to the Board, it's so fully and fairly and their testimony is primarily the testimony in which the Board has to rely.
The documents were provided by United Fruit and their testimony came from their officers.
They knew the fact.
And Marc have testified that all that Empresa has ever done to corporate life is to be the nominal owner of certain vessels which has then chartered the United Fruit, lies the flag of Honduras and mans the ships period, receives the income from it.
Justice Tom C. Clark: What do you mean by nominal owner?
Mr. Herman E. Cooper: Well, it's the nominal owner because an actual owner must necessarily be considered to be as the Board found, either directly or indirectly.
The beneficial ownership is the United Fruit.
United Fruit provides the funds.
United Fruit can withdraw the fund.
United Fruit has the position by its control of Empresa to determine the size of the fleet of Empresa, where it will go and whether it will continue.
Empresa never procured cargo for its own vessels, never had anything to do with the loading or discharging of cargo.
And as one of their witnesses I think it was Mr. Sisto (ph) testified.
Empresa is owned glock, stock, and barrel by United Fruit.
Now there is no intangible evidence in this record of any independent existence or a shadow of claim to such independence which would entitle Empresa to come before this Court and say that we are a separate entity.
We are entitled to this thing of immunity because we happened to fly the Honduran flag.
Justice Byron R. White: (Inaudible)
Mr. Herman E. Cooper: Well, of course, I think if we were to view the realities and their proper context is --
Justice Byron R. White: (Inaudible)
Mr. Herman E. Cooper: No, they're the owner.
The tax advantage --
Justice Byron R. White: (Inaudible)
Mr. Herman E. Cooper: Well, only because they own all the stock of Empresa.
Justice Byron R. White: For insurance?
Mr. Herman E. Cooper: For insurance, they get all of the virtues and advantages of the Honduran registry but none of the responsibility for actual direct ownership.
But they exercise the control it's so dominating that for all the purposes certainly under the Act, they should either be regarded as the employer or -- sir?
Justice Byron R. White: (Inaudible)
Mr. Herman E. Cooper: Right, exactly.
Justice Byron R. White: (Inaudible)
Mr. Herman E. Cooper: Those really follow the corporate law.
Unknown Speaker: (Inaudible)
Mr. Herman E. Cooper: Of course.
We are naturally confined to the narrow limits of what constitutes an employer under the Act.
Now, this is significant above all other as to the real nature of this relationship between the smeared reflection known as Empresa and United Fruit.
Justice Hugo L. Black: (Voice Overlap) on what you're asking now.
Suppose the judgment were obtained against these companies.
It was filed by the Union that there would be no argument to show that United Fruit really ought to pay it.
Mr. Herman E. Cooper: I think that would be a very sound argument because in the commercial side of the case where the real beneficial ownership and stock control whether United Fruit with the kind of dominance which is here demonstrated, it might be under commercial law that such a credible proceeding against United Fruit.
Unfortunately, that is not our problem.
This is not a company likely to be involved with creditors of that carrier.
Now, this to me is the most significant and I submit it invites the attention of the Court.
Empresa, unlike any independent shipping company or corporation, does not hold out its vessels in the world charter markets is available.
Every one of its vessels is limited to being time chartered to United Fruit.
It has no arm's length relationship.
It has no competitive position.
It can't bargain about what the time rates shall be.
It is limited entirely to serving the purposes and objective and the advantages of United Fruit.
And the income of Empresa comes only from the source.
Now, as the Court well know, time chartering nearly means that you lease a vessel with the crew and supply.
United Fruit has the choice because of its dominant position to bareboat these chartes.
Bareboat -- bareboat chartered these vessels from Empresa which in effect would mean that United Fruit would then be the active open operator of these vessels.
But United Fruit makes the decision not to bareboat them because this would immediately put these vessels under the contract which United Fruit now has with the National Maritime Union.
And therefore, United Fruit has consistently made this choice to avoid contracting relations with the N.M.U. on this vessel that it will only time charter, trusting in this way to avoid the consequences of a bareboat charter and such relationship.
Justice John M. Harlan: Whether that's impossible or United Fruit under Honduran law to simply have their vessels apply the Honduran (Inaudible)
Mr. Herman E. Cooper: And to bareboat them to the -- to United Fruit, though.
Justice John M. Harlan: And so they have the vessels operating in Honduras?
Mr. Herman E. Cooper: Yes, I think the United Fruit that has property in Honduras, there's no restriction.
There are some restrictions under Honduran law with respect to the unions which may represent its employees and the nature of the labor relations which it should prevail.
But there's no restrictive legislation that I know of and I may be an error which prohibits United Fruit from owning these vessels actually before 1941, Your Honor.
They did operate vessels of American flag registry in Honduras as they do now.
Justice John M. Harlan: And not under Honduras flag?
Mr. Herman E. Cooper: Under Honduran flag.
My impression and I'm not in the position to respond accurately.
My impression is that they could, that United Fruit could own the vessels under the Honduran registry.
Now, with respect to the operation of the control, the operative control of what happens to these vessels once they're time chartered to United Fruit.
Ostensibly, the master is the one and responsible for the internal order and control of the operations of that vessel but the master himself is subject to the direction of United Fruit, perhaps not directly.
But as one of the witnesses testified on behalf of United Fruit, it would be surprising if Empresa did not fulfill a request coming from United Fruit and it would certainly be surprising if United Fruit would supposedly demonstrate dominance of Empresa, could not impose its will directly or directly on the master of the vessel.
Because the master takes his reports and orders from the United Fruit Marine Department which is based in the United States and which is the overall agency which in turn passes upon and determines the operations of its entire fleet.
It's this United Fruit Marine Department and this is the test as to what is the unit here, solicits general cargo business, schedules run, fixes destination, departure and arrival times.
All in the same trade routes with the use of the same docks and terminal facilities for both United States and Honduran-flag vessel.
The cargo and the passenger rates are set by this United Fruit Marine Division, the same for all vessels both United States and Honduras.
And the United Fruit uses these Honduran vessels interchangeably with its United States flag vessels for the same cargo and the same ports and the decision as to which vessel shall be utilize by this marine department does not depend on the flag but on the availability, the size, and the speed of the vessel.
The supplies which go into these ships both Honduran as well as United States flag are principally brought in the United States from another subsidiary of United Fruit, Maritrop Trading Corporation.
The food is purchased in the same source whether it's the United States ship or a Honduran-flag vessel.
They're both dry-docked and repaired usually in the United States as United Fruit decides.
And as this whole question of do we really have an independent entity is sharply revealed by this following circumstance that United Fruit in this constant testimony of United Fruit, witnesses makes all decisions as to capital improvements or the acquiring of old or new United Fruit ships or Empresa ships.
All funds are advanced by United Fruit to acquire new ships.
United Fruit decides the capital expenditures and substantial operational changes for Empresa.
It decides the size of the Empresa fleet whether it should expand, whether it should be eliminated in its own interest.
It transfers the ships to other United Fruit subsidiaries or to other companies without any indication that Empresa itself exercises any choice in this matter.
Now, I'm certain it's going to be argued by our adversaries that this is a characteristically time charter relationship that exist between Empresa and United Fruit.
But I defy them to demonstrate another time charter relationship which gives to the charter this absolute control over life and death and existence and the dominance which is revealed by the record as existing between United Fruit ostensibly a hiree from -- a hirer from Empresa of its vessel.
During World War II when the U.S. War Shipping Administration as the requisition vessels.
It requisitioned these Empresa vessels for our war service as controlled by United Fruit.
In fact it made the demand on United Fruit and not on Empresa.
And even the contract which you -- some reference has been made to ostensibly in existence between Sociedad, the Honduran Union and Empresa.
But Article XII provides that wages to these Honduran seamen shall be paid in U.S. currency, its schedule of wages is all scaled to the American dollar and it provides the defending payments that are being made in equivalence, it's an equivalence in lempiras or in the currency prevailing in the place of payment but the base calculation is the American dollar.
All other benefits in the same contract, so-called contract, are similarly geared for the dollar and not to the local currency, the lempiras.
And in the same contract under Article XVIII, it provides that a vessel's requisition or under -- or not even requisition or under war conditions that the seaman get the identical bonus as to death or disability compensation as seaman employed in the U.S. Merchant Marine.
However, the identification is not casual.
This is not the normal relationship which you can anticipate between a so-called independent foreign entity and an American corporation.
This is if anything a captive corporation, subordinate to and subject completely to the dominance of United Fruit.
And this catalogue of facts, I submit, effectively destroys the image of Empresa as an independent entity and supports the Board's conclusion of full integration and operation in which Empresa and United Fruit are under the most generous construction joint employers.
And that this Honduran corporation is nothing but a tool and instrumentality of United Fruit subject to its absolute control.
Left with only one function and that is to serve the purposes of United Fruit which in this case seeks to hide behind its own subsidiary corporation in Honduras.
Justice Hugo L. Black: Is this name for example with directly pay on these Honduran-flag vessel sailing under the American flag.
Mr. Herman E. Cooper: No, if there were, we'd have no complaint, Your Honor.
Justice Hugo L. Black: Well --
Mr. Herman E. Cooper: Let me give you the -- the pay to a Honduran seaman working side-by-side, ship by ship is approximately 25% of that paid to American seaman notwithstanding the fact that the same cargo rates, the same passenger rates prevail on whether the ship is a Honduran ship or an American ship.
Now, from these facts, the facts in the record before the Board which were considered by the Board for almost two years, they properly concluded and I cannot improve on the language of the summary made by the Board.
Empresa's maritime operations are a part of a single integrated maritime operation under the continuous direct control and either direct or ultimate ownership of United Fruit and are an essential part of seagoing enterprise located in and directed from the United States and engage in the commerce of this nation.
And the Board further observed, that and I quote, “the relationship between United Fruit and Empresa is one in which the affairs of the subsidiary are designed essentially to further the shipping operations that are apparent and not one in which Empresa is considered an independent undertaking whose success or failure is gauged by its role in the open market.
Empresa vessels are utilized by United Fruit as an integral and necessary part of its fleet of vessels and not chartered as an alternative to acquiring vessels elsewhere or only to meet particular contingencies that may arise.
In short, the Board found that they are joint employers of the affected crew members.
And certainly, as such joint employers, the effect of that relationship submits and subjects this company to the jurisdiction of the Board and entitles us to what we have been seeking for two years, and namely an opportunity to demonstrate that a majority of the crew members of Honduran nationality or otherwise desire to be represented by the National Maritime Union.
Now, let us examine, if I may, advert to its impractical consequences that flow from this controversy.
Assume that the Board's jurisdiction is upheld.
Assume if you will and as we hope that an election ultimately comes here while we're all still around and that in this election, the National Maritime Union emerges as the choice of the majority of the seamen.
What happens then and this is a practical problem with which we are very much concerned.
Now, we then engage under the law in collective bargaining with Empresa and with United Fruit or both.
They're not required by law to reach agreement with us.
All they required by law to do is to bargain with us in good faith.
They're not obliged to reach any specific understanding as to any particular condition of the agreement.
All they're obliged to do is to demonstrate that they're sitting with us and that -- within the limits where the legal or otherwise are contractual.
They're trying to reach some understanding.
What are we really interested in here?
As the Union of American Seamen, were primarily concerned with seeing that their wage rates in some measure not entirely equal because this is unlikely but approximate more than 25% of the scales which we now receive and which their scales act constantly as a depressing impact and threat to our own existence in this economy, so that the practical consequences are that we will reach some agreement on wages.
We already have dealt with their parent organization since 1938.
We don't have to negotiate with United Fruit.
And once United Fruit comes from behind as the side of Empresa, we're not concerned that we'll reach agreement with them and that this agreement will be as every agreement is and the accommodation by all parties to the realities of the economic situation.
Justice Hugo L. Black: How are the wage rates fixed now?
Mr. Herman E. Cooper: The wage rates of the Empresa seamen?
They are fixed ostensibly by agreement between the Sociedad which claims to be its -- the collective bargaining representative and Empresa in Honduras.
Justice Hugo L. Black: They're regulated under Honduran --
Mr. Herman E. Cooper: No, there is no --
Justice Hugo L. Black: -- the whole Honduras?
Mr. Herman E. Cooper: No, this is a private law of private contract entirely just as --
Justice Hugo L. Black: No, no legal regulation.
Mr. Herman E. Cooper: No legal regulation as to wages.
Justice Hugo L. Black: No legal compulsion for --
Mr. Herman E. Cooper: None at all.
Justice Hugo L. Black: -- bargaining agreements.
Mr. Herman E. Cooper: Now, the plaintiff's arguments of the intrusion into Honduran sovereignty, I submit are really political arguments and not just the ship.
They belonged, may I say, in the halls of Congress rather than here although I appreciate that this Court necessarily is concerned with the impact of its decisions on our political life.
But whatever retaliation is threatened, it cannot be real or substantial, we're always in friction with other countries.
Justice Tom C. Clark: It seems to me when you say what you've said, you (Inaudible).
Mr. Herman E. Cooper: Well, I say it not to strengthen my position but because this is what I consider --
Justice Tom C. Clark: You have to recognize it.
Mr. Herman E. Cooper: Yes, I do.
We do recognize this reality and this is what I hope to deal with now.
It is a reality but the extent of the reality is one which necessarily diminishes the possibility of impact.
Now, Congress itself had been motivated or continued to be motivated by this vague anxieties of retaliation.
We wouldn't have many other laws which rough against the sensibilities or the sense of sovereignty which other countries feel.
Justice Hugo L. Black: Has the Union or the Government attempt to get Congress to clarify the scope of the Labor Board's jurisdiction in this field?
Mr. Herman E. Cooper: No, we haven't because we're satisfied now with the language in the Act.
And the in -- the interesting question might well be addressed to our friends here.
Justice Hugo L. Black: It hasn't yet accepted.
Mr. Herman E. Cooper: Not yet.
Justice Hugo L. Black: How long is this fight been going on?
Mr. Herman E. Cooper: Well, this specific fight had been going on --
Justice Hugo L. Black: I don't mean the specific one.
I mean all of these questions.
Mr. Herman E. Cooper: I think it has -- it clearly became amplified following the First World War or the Second World War when we have a rush of escape Panlibhon shippers to attach to themselves the advantages of foreign tax advantages as well as the low wage rates, lower insurance rates, less require -- less stringent requirements on safety measures and what have you, all of which attached to the Panlibhon fleets.
Justice Hugo L. Black: There had been no effort at all and nobody has presented to Congress or anything about it?
Mr. Herman E. Cooper: Well, there had been hearings.
Justice Hugo L. Black: (Voice Overlap) often?
Mr. Herman E. Cooper: There had been hearings at the press -- at the cabinet level, a consideration of this problem.
There had been certainly a great number of hearings in Congress.
In fact, in 19 -- when the 14 (c) of the Labor Act was passed, it was passed by Congress with full knowledge of what this problem was and the Congress themselves made no change in the Act.
It merely reaffirmed the jurisdictional limits which have until then been exercised by the Board.
Justice Hugo L. Black: There's no change in whatever it was.
Mr. Herman E. Cooper: Exactly.
Justice Hugo L. Black: It hasn't been decided.
Mr. Herman E. Cooper: We all submit of course to the decision of the courts.
Justice Hugo L. Black: Now, that's what I mean.
Mr. Herman E. Cooper: Yes, of course.
Justice Hugo L. Black: If the Congress didn't leave any particular thing in effect on these so far as its knowledge.
Mr. Herman E. Cooper: No, it did not.
Justice Hugo L. Black: Except just the language of the law.
Mr. Herman E. Cooper: Exactly, and I --
Justice Hugo L. Black: There's no step one way or the other.
Mr. Herman E. Cooper: Nothing -- nothing has happened in Congress legislatively on this issue.
Justice William J. Brennan: Have there been any efforts to get the legislation and that guaranteed ship owners (Inaudible)
Mr. Herman E. Cooper: Yes, there --
Justice William J. Brennan: -- to the foreign flag?
Mr. Herman E. Cooper: There have been such efforts.
They're reflected not only in some legislation but also in the activities of the maritime administration.
If I may continue, the question of retaliation which I submit is not very real.
We have very recently, Mexico protested because we wouldn't permit -- the coast guard wouldn't permit one of its crew ships to sail.
There's been international opposition to the Maritime Commission's implementation of the Bonner Act which seeks to regulate rate making.
And you have Prime Minister MacMillan's threat the efforts of the Maritime Commission to regulate affairs of foreign shippers.
The -- this kind of friction, we submit, insofar as Honduras is concerned, is within the control of United Fruit because United Fruit could decide tomorrow that there should no longer be a single vessel under Empresa and that decision would be rapidly implemented and become a fact.
United Fruit could decide tomorrow than set up time chartering, it would bareboat charter and this whole issue would disappear so far as Empresa is concerned.
And United Fruit is the one rather than the Honduran government, rather than Empresa which in fact makes the decision as to the real relationship between these vessels and their ownership.
Now, let's examine what happens if Board jurisdiction is rejected.
I think this is a necessary subject of concern.
It will leave the union no other recourse but self help which we would approach most reluctantly.
This in effect would mean economic pressures in effect that it would neither picketing permitted to us in the Marine Cooks.
It would mean that in -- of other cases, we would be thrust before a variety of coastal state courts and then we'd have to fight out the issue after each time a vessel was stopped, the port would be disturbed that a strike might spread in all of its complexities as these industrial disputes have a habit of doing and at the same time there could be no real resolution of the underlying question and that is the activity of the Board as an instrumentality of avoiding this kind of industrial strike on the waterfront.
And this is not the kind of in terrorem argument which I submit is characteristic of some of the amicus curiae briefs of foreign countries.
This is a concrete and foreseeable consequence if we are denied access to the orderly processes of the Labor Board.
And I may ask with all due respect, how would a rejection of Board jurisdiction contribute to fulfilling congressional purpose of avoiding through the machinery set up by the Act, the domestic industrial strife and the rest, the burdening and obstructing of the free flow of commerce, the encouraging of collective bargaining.
The Court of Appeals below recognize that American unions like the National Maritime Union have a vital interest in labor conditions on Empresa vessels and that a labor dispute between our union or any union and these vessels would disrupt the flow of commerce to and from this nation no less than if we are engaged in such an issue with an American ship.
There's been some reference made to congressional intent and we submit that it clearly upholds Board jurisdiction.
And in this relationship, I would like to make reference to one point not raised by my friend of the Board.
And that has to do with the antitrust statutes which have been hollowed by case law as representing authority for Congress to exercise extraterritorial jurisdiction and appropriate situation.
We were very troubled by a question which was asked as to legislative history, did Congress intend that it would extend the arm of the board into a situation of this character.
We could find no specific legislative history because this statute is a statute of general inclusion and specific exclusion.
And the other statute which bears the closest relationship to it is the Sherman Act in 1890.
And what we did then was to take the Sherman Act, the language of the Sherman Act, defining commerce.
And we discovered in this comparison that the frameworks of the Labor Act must have gone to the Sherman Act for the definition of commerce.
Because if you follow the description of commerce in the Labor Act and the one contained in the Sherman Act in 1890, you find that the language is almost identical in specific particulars so that when the reference is made to any foreign nation or any foreign country that the inference may fairly be drawn that the congressional intent when it framed the Sherman Act in 1890 and obtained extraterritorial jurisdiction through it or gave it and by the same token, the utilization of the same if not identical language in the Labor Act, accomplished the same purpose.
And I submit that under U.S.C. 8 Title XV and if I may take a moment to read the language so that the impression of it is left clear.
The language is contained in the Sherman Act by its commerce as follows: This commerce is used therein means trade or commerce among the several states and with foreign nations or between the District of Columbia, or any territory of the United States and any state territory or foreign nation, or between any insular possessions or other places under the jurisdiction of the United States, or between any such possession or place and any state or territory of the United States or the District of Columbia or any foreign nation or within the District of Columbia or any territory or any insular possession or other place under the jurisdiction of the United States.
It makes it very specific when you compare this language with the language utilized in the Commerce Clause of the Labor Act that Congress might well have intended and I dare not to say must have but may well have intended that the same reach granted in the antitrust statutes were to be utilized and the statute of general inclusion and specific exclusion because under the Labor Act when they wanted to cut something out, they cut it out.
When they wanted to cut out agricultural workers, they cut it out specifically.
When they wanted to cut out domestics, they cut them out specifically.
But when they were talking about the reach of the area of jurisdiction, they left it in terms of foreign commerce precisely as the language itself is conveyed by the language in the Sherman Act itself.
I would like to conclude on one note, if I may.
We -- I argued the Afran case which this Court referred to with the approval in Marine Cooks before, Judge Bryan from the Southern District of New York.
And we had the same problem there.
We had this question, does the Liberian treaty superimposed its contents over the activities of American citizens in American commerce.
And this engaged Judge Bryan's attention to a great degree because it had to do with not the extra territorial impact of United States law on Liberia but the extraterritorial impact of Liberian law through a treaty on the United States.
And he concluded after viewing the authorities and listening to the argument that the treaty relied on in that case as the treaty relied on in this case does not confer upon the plaintiffs in that case or in this case or upon their vessels, any greater rights than those of American corporations or vessel.
It goes no further than to place them on a parody with American corporations and vessels in the respects enumerated in the treaty.
I submit that all references that may have been made to the impact of the Honduran Treaty of Friendship with this country fall into the same category.
It is a fact that while we owe respect and comity to the decisions, to the laws of other countries they owe us respect too.
We are entitled to the same comity which they expect of us.
And when we are talking as we are here about American commerce by an American corporation behind the façade of Honduran corporation, are we not justified and expected that American law will be upheld notwithstanding this vague and we call it threats of reprisal which are intended to defeat the congressional purpose.
Chief Justice Earl Warren: Mr. Solicitor General.
Argument of Cox
Mr. Cox: Mr. Chief Justice, may it please the Court.
The United States has filed the brief amicus and obtained -- believed to participate in the oral argument in this case because the executive branch is convinced, not only that the decision of the National Labor Relations Board asserting jurisdiction over these vessels is wrong as a matter of law.
But more important that because we are convinced after careful study that if upheld, the decision of the Board will disturb our international relations and prejudice of the national defense.
The Government urges, therefore, that the decision below in each case should be affirmed.
In the beginning, I think it may be helpful to draw certain distinctions.
Much of the argument thus far has dealt with all foreign-flag vessels and it's been a considerable effort to speak of the Panlibhon fleet as if these were all vessels which have the same characteristic in relation to this country.
This is not true at all.
One important distinction is between apparently all Honduran vessels and a large number of Liberian and Panamanian vessels.
The 13 vessels involved in this case, whatever may be our jurisdiction over them plainly do have a very substantial connection with Honduras, on the other hand, and there are only 13 but -- 13 Honduran vessels beneficially owned by American interest so that apparently there is no case of the use of the Honduran flag simply as a flag of convenience using the term in the sense of a flag on a vessel which does not carry the trade of the flag nation or have other substantial contacts with it.
I found it convenient in my analysis of the problem to divide the universe of foreign-flag vessels which are engaged in the commerce of the United States and necessarily also with the commerce of some foreign nation into four categories which are not perfect but which I think are helpful.
But first, I would list those foreign flag vessels whose beneficial ownership is foreign and which are substantially engaged in carrying the trade of the foreign state.
The most obvious example is of course the Queen Mary and the other Cunard Liners or the claims of BOAC.
Everyone would agree that this first category of foreign-flag vessels is outside the jurisdiction of the National Labor Relations Board even though it is plainly engaged in the foreign commerce of the United States.
Justice Potter Stewart: So it would arguably be within the literal provision.
But essential --
Mr. Cox: It is clearly within the literal --
Justice Potter Stewart: Literal.
Mr. Cox: -- provision of the statute and clearly demonstrates I think that Congress did not undertake to show where the Board's jurisdiction was to break off in this respect.
In the second category, I would put those foreign flag vessels whose ultimate beneficial ownership is in U.S. interest but which are substantially engaged in carrying the trade of the flag nation.
This would be the case if the Cunard stock was held by citizens or other domiciliaries of the United States.
It is the present case because all 13 of these vessels are engaged in carrying the trade of Honduras.
They serve the Honduran academy, indeed I suspect that they are more important to interest located in Honduras and to the Honduran economy than they are to the economy of the United States.
Furthermore, let me point out that in the case of a foreign-flag vessel which carries the trade of the nation whose flag it flies but there may often be as and then dangerously would be a substantial additional contact with that nation but the present case is again an illustration.
The crew of these vessels is a Honduran crew, indeed it required to be Honduran by a Honduran law and it's covered by a Honduran collective bargaining contract.
The employees are represented by Honduran Union.
The crew signed in Honduran -- Honduras under Honduran article and it will go back to Honduras normally at the end of each voyage then they're released.
The vessels are managed by Honduran corporation whether one pierce of the corporate friction or not, the fact is that they are managed by an office in Honduras, by the people in Honduras who have a substantial amount of discretion particularly in relation to the matter that we're now concerned with, labor management relations.
The third and fourth categories have to do in my judgment with vessels who's beneficial -- with vessels which are not substantially engaged in carrying the trade of the flag nation.
And I distinguish between the third and fourth according to the ownership.
In the third category, in other words, I would put those foreign-flag vessels whose ultimate beneficial ownership is thorough but which are not engaged in carrying the trade of the flag nation.
The Incres case which is to be argued following these N.L.R.B. cases is a good example of this category.
The vessels fly the Liberian flag and apparently except for that in the text and regulatory consequences have no other contact with Liberia.
On the other hand, they're Italian owned, Italian managed.
The crew and home base are all Italian.
The only connection with the United States is that the enterprise is commerce between the United States and West Indian ports.
In the fourth category, I would put those foreign-flag vessels whose ultimate beneficial ownership is in U.S. interest which are operated essentially as part of the U.S. enterprise and which are not engaged in carrying the trade of the flag basically or perhaps the best examples are the ore boats carrying bentonite from South America but not from Panama or Liberia under whose flag they register.
Many tankers fall in this category and some iron ore boats, other boat carrier to that carrier.
This fourth group should be carefully distinguished, of course, from the present case where the vessels are carrying the trade of the flag nation.
In this fourth category, we must earnestly submit, is not presently before the Court.
The United States takes no position in this case because the issue is not before the Court and whether the National Labor Relations Board has statutory jurisdiction over foreign-flag vessels which are owned and operated as part of the United States enterprise and which are not engaged to a substantial extent in carrying the trade of the flag nation.
Justice Potter Stewart: You would not only take no position but as I understand it, Mr. Solicitor General, you urged the Court to take no position of the fact, --
Mr. Cox: We do.
Justice Potter Stewart: -- do you not?
Mr. Cox: We think that this is a case where it is very important to adhere to the normal legal principle that the Court doesn't decide more than what's before it.
Justice Potter Stewart: Well now --
Mr. Cox: Because this is -- yes.
Justice Potter Stewart: Go ahead, I didn't (Voice Overlap).
Mr. Cox: I will simply going to say that this is a problem on which there are diverse, complicated and delicate national interests and we have concluded that it would be in the national interest not to deal with that at the present time.
It may arise.
Why it will rise?
No one can tell.
Justice William J. Brennan: (Inaudible)400 vessels in this whole category?
Mr. Cox: There are today -- there are today 411 vessels in the whole Panlibhon category.
13 of those today and when I say today, I mean as of September, are Honduran and apparently are all the United Fruit or Empresa vessel.
Chief Justice Earl Warren: How many did you say?
Mr. Cox: 13 --
Chief Justice Earl Warren: 13.
Mr. Cox: -- are Honduran the other are Panamanian or Liberian.
I may say too that since the question was raised that as of September of the 411, 186 was sold by the Maritime Commission under bond that they would come back to the United States in the event of an emergency.
225 of them and these are the newer, larger and from the standpoint much more important that were constructed abroad.
None of them were constructed with the aid of a subsidy from the Federal Government.
Justice Tom C. Clark: Either to the --
Mr. Cox: Now that statement --
Justice Tom C. Clark: Either to the ship or the ship builder?
Mr. Cox: No, sir.
Now that -- that requires -- that statement alone is a little bit or maybe a little bit misleading.
The 186 that were sold by the Maritime Commission were built during World War II and were later sold by the Commission.
Many of the vessels built during World War II were of course built with federal fund but this was later sold under a formula set forth by Congress in the statute.
But the present subsidy arrangement do not and cannot apply in any respect to vessels that are not to be registered under the U.S. flag and which -- and they must be kept under the U.S. flag for substantially their useful life.
Justice Tom C. Clark: But can you make any suggestion, Mr. Solicitor General.
How many of these vessels present the problem which you say we don't have to decide in this case?
Mr. Cox: All but -- well, I was about to say all the 13.
I think that's probably a little too broad a statement.
The -- I suspect that much the largest part of them --
Justice Tom C. Clark: Because I understand Mr. Manoli, he wants to go much further than you're suggesting you want it to be.
Mr. Cox: That's quite true.
We -- and the difference I think essentially is this that Mr. Manoli argues that the flag a vessel applies is never controlling and that the Board should examine all the contacts between the vessel and the United States in order to determine whether she is engaged in the commerce of the United States.
Our position is that the flag is controlling under the ancient precepts of international law in every case where the registry of the flag is supported by some substantial connection with the flag nation so that it's not a pure friction.
In other words, in cases where the vessel is carrying the trade of the flag nation and that there is no need to determine what the rule would be in a case where the flag is in a sense only a form and the connection where the United States is otherwise predominant and I just don't think you may take --
Justice William J. Brennan: I gather --
Mr. Cox: -- the next step.
Justice William J. Brennan: -- if your position is sustained as to Empresa that probably will take care of most of the concerns of the nations that have filed amicus briefs.
Mr. Cox: It would -- it would take care of a very considerable number of them.
It would not take care, I take it, of the Liberian or Panamanian concern.
How far it would go to ease the concern of the United Kingdom or Canada, I have straight to say that the state department advices me that the foreign relations problems would be reduced if our position were sustained here regardless of what might happen in the category of cases I would say you should not decide.
Now, if that's --
Justice William J. Brennan: Now, if you -- excuse me.
Mr. Cox: Excuse me.
I just want to make this one --
Justice William J. Brennan: Go ahead.
Mr. Cox: -- the defense problem curiously is far more concerned with the question that I say is not here because it is the big boat carriers --
Justice William J. Brennan: Underlying ones under agreement in the event of emergency to come back.
Mr. Cox: This -- no.
The big boat carriers are at present time, so far as the Department of Defense is concerned, in this situation.
The owners, the present owners have assured the Defense Department that they would be made available.
There is no attached bond as to what will happen to the ship that that is the present arrangement.
The Panamanian and Liberian governments are also willing that they should be made available.
If they were to pass into the registry of any other country certainly in the West European registry, that would not be true and if they were to pass as a result of economic forces, out of the control of American -- United States Corporation of course that holding would be gone.
And since a very large pond of the essential defense planning is based on the availability of these vessels.
Anything which disturbed their present condition would be of very great concern from the standpoint of the national defense.
Now, of course this is an argument which not only support our position here but if pressed to its extreme, it would require us to say what we do not now say and that is that the flag principle should be applied 100%.
And when I say we reserve judgment, I mean exactly that, I cannot say what our position would be if that other case were here because there are diverse problems, the problems of maritime labor relation, there are problems of jobs, there are arguments back and forth.
The argument of the U.S. jurisdiction is obviously at its strongest note in this case.
And it was this difficulty which led us upon reflection to think that this was truly a situation where the old rule about case by case decision was wise not only as a judicial matter but wise from the standpoint of the national interest.
Justice William J. Brennan: Well, but I gather that certainly defense and the Labor Board are completely at odds.
Mr. Cox: Defense and the Labor Boards are completely at odds, if that is -- yes, I -- there is no -- I hesitate to go by in the position of the United States in this so far as the executive branch is concerned but the defense argument would certainly be completely at odds with the Labor Board.
Justice Hugo L. Black: May I ask you one question?
It seems to me that your argument would be based on the assumption so that we don't have to consider the corporate business at all if you would say consider the same thing, an individual owned the United Fruit and have this relationship with Honduras.
Mr. Cox: That is true, and yes, and I've been thinking about that.
I do not want to go quite so far as to say that it should be treated as utterly irrelevant in the case but I would be making the same argument I am sure, regardless of the problem of corporate ownership.
So that when I say U.S beneficially owned, I am in effect disregarding the corporate ownership.
Justice William J. Brennan: May I ask you this question.
Do you agree with Mr. Manoli too that there's no occasion for us to reach the question of jurisdiction of the lower court to issue an injunction against an election order?
Mr. Cox: We have not concerned ourselves with that and I will say just a word or two about it because Mr. Manoli's time was short but really, we have to take in the position on that because that isn't our major concern in this case.
The Court has before it here you would recall, Mr. Justice Brennan, two cases.
One coming from the District of Columbia which was a suit by the Honduran Union to enjoin this election and the other was the suit by the employer in New York to enjoin the election.
Now, as I understand the Board's view, I'm not quite sure I have it right, it takes the position that an employer may not bring an action to enjoin the holding of an election.
But the Union may because the Union has probably no other way than not so good equity of protecting its interest.
One can workout as a professor complicated whether they might strike and thereby raise the issue but for all practical purposes they have not.
And therefore, the Board would concede, as I understand it, that the action in the District of Columbia was a case within the cognizance of equity even though it would argue the action in New York was not
Now, both these cases were pending at the same time and they therefore seem to the Board and to me in consultation to the Board that it was not desirable to bring the employer issue before the Court at the same time as the underlying substantive question so that the Court would be free to publicize.
Justice William J. Brennan: Do you think the Boards position involved in the extension of Leedom and Kyne?
Mr. Cox: I might -- I myself have expressed in writing the view that Leedom and Kyne should not be extended in dealing with the elections.
That's reprinted in the clerk and based in the books on administrative law.
It has seemed to me that the concern of Congress was not interfering with the elections.
But the --
Justice William J. Brennan: But that is --
Mr. Cox: -- the difference in the concern at the certification stage.
Justice William J. Brennan: So this --
Mr. Cox: But I must say that I stepped out of character I'm afraid here.
Justice William J. Brennan: Well, no.
But this does, apart from that.
I'm familiar with your views.
But apart from that, this certainly does involve an extension of the principle of Leedom and Kyne.
Mr. Cox: Well that --
Justice William J. Brennan: Has there ever before been -- has the Board ever before exceeded to an injunction against the conduct of election?
Mr. Cox: You mean -- I think it has -- I think it has allowed unions to bring two things, yes.
And of course, it should be said I think here that if one is ever to allow interference with the conduct of an election.
Justice William J. Brennan: This is the system.
Mr. Cox: That this -- assuming that the Board is wrong on the merits is the kind of situation where it could be a problem because the mere taking of jurisdiction to deal with it --
Justice William J. Brennan: Well, I don't mean to take so much of your time.
I believe I'm sure not disagreeing with the Board's position on that.
Mr. Cox: No sir, no.
I'm stepping back into character, taking no position with respect to it.
Now, coming to the merits, one must begin, as Mr. Manoli began, with the words of the statute itself.But in this case, the words of the statute give no guidance whatsoever to the extent of National Labor Relations Board jurisdictions over foreign-flag vessels.
Section 2 (6) of the Act define commerce to include trade, traffic, commerce, transportation or communication between any foreign country and any state or territory.
Sections 9 and 10 give the Board jurisdiction over any question of representation or unfair labor practice affecting commerce.
There is no greater help in the definitions of employer and employee since except for certain specific exclusions or inclusions, I simply say employer includes any employer, the employee includes any employee.
A literal application of the definition to what Mr. Justice Stewart suggested, gives the Board jurisdiction to hold election among the crew of the Queen Mary or of the BOAC Overseas Airlines.
Justice Potter Stewart: But I guess that would be covered by the Railway Labor Act, wouldn't it?
Mr. Cox: The airliner would.
Justice William J. Brennan: Yes.
Mr. Cox: You're quite right.
Assuming that the definitions aren't different and there is a matter of exclusion.
Obviously, this was not intended.
And we must take it, I think, that Congress in the original Wagner Act left a literal universality of the language to be confined by recognition of the settled principles of international maritime law.
I should say too that no additional light has grown on the problem by the amendments that came at later stages of the Act.
The Board cites Section 14 (c) (1) which was enacted in 1959 as part of the Labor Management Reporting and Disclosure Act.
It provides that the Board shall not decline to assert jurisdiction over any labor dispute over which it would assert jurisdiction under the standards prevailing on August 1, 1959.
We think this provision is utterly irrelevant really for three reasons.
In the first place, Section 14 (c) (1) was directed to an administrative practice of declining to exercise and acknowledge statutory jurisdiction on the ground that the matter was too small to be of concern to the National Labor Relations Board.
It was not concerned and Congress at that time did not review what was the statutory jurisdiction of the National Labor Relations Board.
Second, Section 14 (c) (1) speaks of the standards prevailing on August 1, 1959.
Those were published, announced standards.
It doesn't refer, I think, to each or every decision that the Board might have handed down sometime in the past.
And finally, one can review the legislative history of the 1959 amendments through every word and he will not find a single word that addresses itself with this problem.
In the absence of any contrary guidance from the Congress, we submit that the case is governed by the settled principle that the federal statute will be construed to recognize the need for comity and reciprocity in relation to international maritime commerce and to avoid conflict with international use.
That rule is old.
It goes back at least to the words of Mr. Chief Justice Marshall in The Charming Betsy where he said that “An act of Congress ought never to be construed to violate the law of nations if any other possible construction remains.”
The rule is laid down in a number of cases including Lauritzen and Larsen.
Most pertinent here no doubt is the Benz case in 353 U.S.
There, an effort was made to bring under the National Labor Relations Act, a labor dispute affecting a foreign vessel, foreign registered and foreign owned vessel in a port of the United States engaged of course in the commerce of the United States because she was beginning to load grain to be transported to one of the West Coast ports to a foreign nation.
In the Benz case, the Court rejected this effort to extend the National Labor Relations Act saying, for us to run interference in such a delicate field of international relation, there must be presently affirmative intention of Congress clearly expressed.
It alone has the facilities necessary to make fairly such an important policy decision where the possibilities of international discord are so evident and retaliative action so certain.
We therefore conclude that such an appeal should be directed to commerce -- to Congress rather than to the Court.
It's unusually important, indeed, I think it is essential that to adhere to this principle in applying a law regulating the choice of a collective bargaining representative and the relations between employer and crew.
But the collective bargaining relationship is a unit.
It's an integral thing and only one nation that can successfully regulate it.
In this respect, the current problem differs remarkably from the situation with respect to personal interest.
There's inconvenience as the Court recognized in the Romero case in having the law applicable to compensation for personal injuries or vary with the port in which the injury occurs or the forum in which the suit is brought.
But once the case is decided, that's the end of the matter.
It's a transient thing and it does not therefore affect as here an ongoing relationship.
Now, the situation with respect to collective bargaining, the choice of representatives is quite difficult.
You can't have one bargaining representative in Honduras, another in Singapore, another in London and another in New York.
A collective bargaining agreement is designed to be a continuing thing to govern the relationships of the parties and exclusively to govern them for a year or two years whatever it may be
.You can't bring men under one contract in New York and another in Honduras.
Decisions about the bargaining unit have a continuing effect.
Once the decision is made by one jurisdiction, the organizational problems within that company will never be quite the same as if the decision had not been made.
This Court recognized this problem of representation proceeding in its earliest cases dealing with the problem of federal occupation of the field.
The Bethlehem Steel -- the Bethlehem case and the La Crosse Telephone case, both decided in the Court, clearly recognize that it would be intolerable to have both the states and the Federal Government handle questions of representation affecting the same company.
Now, the situation would be far more intolerable as between the United States and the foreign nation because the likelihood of divergence in the applicable laws is much, much greater.
For example, in the present case, the N.M.U. could not be certified to represent -- under Honduran law, under Honduran law, it may not represent the crew of this vessel.
On the other hand, Sociedad cannot lawfully appear on the Honduran law at least before the National Labor Relations Board.
That's the reason I take it that it didn't take part in those proceedings.
The provisions with respect to the bargaining unit and duties in collective bargaining are bound to be altogether different.
For example, under Honduran law as I read it, there is no right to exclusive recognition, whereas of course our law gives the majority the right to exclusive recognition or if there is any such right, it is quite different under Honduran law and its goal.
Again, you'll find that under Honduran law that the regulation and limitations on the right to strike are very different from the regulation and limitations of the right to strike in the National Labor Relations Act that conversely the guarantees of the right are considerably different.
As it's implicit in what I have said, there is a very considerable body of Honduran law regulating on the relations between employer and crew on these vessels.
Some of it is direct regulation, other parts of it deal with the rights and duties of the employer and any labor union chosen by the Honduran employees.
Those laws are collected in the lieu brief amicus filed by the Republic of Honduras.
This brings me to what I conceive to be the basic fallacy in the approach of the National Labor Relations Board.
It takes an egocentric, one might almost say a chauvinistic point of view, and repeatedly asked whether the vessels are engaged in the commerce of the United States.
Of course, they're engaged in the commerce of the United States, but a vessel trading between the United States and a foreign nation is necessarily engaged in the commerce of the foreign nation as well as the commerce of the United States and so are the vessels in this case engaged in the commerce of the flagged country to a regular and substantial degree and they're obviously important to that country.
Similarly, the N.L.R.B. approach, wholly fails to resolve the problem of dual regulation.
The Board acknowledges the likelihood of some conflict between the duties that it would impose and the duties imposed by Honduran law but it shrugs them off in the briefs saying, “This is a burden which the shipowner must bear as a consequence of doing business in a manner which subjects into the laws of due sovereignty.
Well, I doubt that that is very much comfort to the shipowner caught between conflicting laws but I'm sure that it is an utterly inadequate approach as a matter of international relation.
A friendly foreign commerce is to be carried on overseas, one must look at these problems from a detached point of view being mindful that the problems of interest of the foreign state as well as the problems and interest of the United States.
It is essential then, we think, and to the circumstances of this case and indeed in dealing with labor management relations generally to have a single internationally accepted standard for determining which of two or more nations with an interest in the labor management relations for the vessel shall have jurisdiction and which others shall stand aside.
The traditional and almost universally accepted maritime principle is that the law of the flag nation will be allowed to govern the internal affairs of the vessel such as labor management relations and the relationships between the vessel or the master and her crew.
That's the principle unrecognized in international law, in the decisions of this Court, in the treaties of the United States and in the consular regulations issued by the state department, the references are voluminous in the briefs and I don't stop to do more than what's referred to.
Justice Potter Stewart: This argument as well as the other arguments that you both have an urging would -- if adopted, would lead to a decision of your fourth category of ships, wouldn't it, in that case?
Mr. Cox: I think the --
Justice Potter Stewart: If a -- would then if you will, a mechanistic application of the law of the flag doctrine, the so-called --
Mr. Cox: Well --
Justice Potter Stewart: -- it has been referred to as an outmoded doctrine on the other side would --
Mr. Cox: I --
Justice Potter Stewart: -- would decide your fourth category, wouldn't it?
Mr. Cox: It would if one went to full extent of saying that it must be -- completely wouldn't and mechanistic.
I think that I can perhaps best to put it this way that what I'm saying is that there are very powerful reasons such as I have indicated and others that I will try to outline, they're there in my brief for holding that the flag is determined.
But as this withdrew so many legal problems, there are interests which don't logically deny those but which are entitled to be taken into account.
Now, if you have a situation where there are other interest over here that clash with the logic of that argument, where there is a real overwhelming United States interest and where the flag is in truth nothing but a picture or parts of certain text logically.
And then the matter of disregarding it may be very different, there may be reasons in that limited field.
It may have consequences in international relation but the problem may be quite different in doing it on the broad scale that the Board proposes.
So while in the sense by argument, the thrust of it goes part ways.
It seems to me that it doesn't require in any sense taking this additional step.
It might require it or it might not and --
Unknown Speaker: (Inaudible)
Mr. Cox: Well certainly Judge Friendly did.
Whether Judge Holtzoff was going 100% or not, I suppose you can't tell because in the case that he have before him, there were these --
Justice Potter Stewart: Who are these defendants?
Mr. Cox: -- the fact had a basis.
Let me put it that way.
It was validly founded in the fact that the vessel was carrying the commerce of the flag nation and indeed in this case, it had another foundation too.
Justice Potter Stewart: Of course, you can say it's a fiction by calling it a fiction.
You can call anything, anything and Mr. Cooper says that in this case, it's a fictional situation.
Mr. Cox: Well, of course most of Mr. Cooper's argument was that the corporate separation between Empresa and United Fruit is fiction.
Justice Potter Stewart: Yes, and the --
Mr. Cox: And --
Justice Potter Stewart: -- United Fruit --
Mr. Cox: -- my answer as Mr. Justice Black pointed out is that even if it's true, it doesn't make any difference that as long as there is a foundation in the carrying of the trade of Honduras, it -- then there is sufficient basis for the flag and the flag without looking further should be regarded as conclusive.
I don't think -- I suppose he will in rebuttal but I don't think Mr. Cooper really said that there was no attachment between these vessels of Honduras.
I don't see how it could.
Justice Potter Stewart: What I understood him to say was -- were -- these were United Fruit vessels.
Mr. Cox: But even if they are an American company may, as Your Honor pointed out earlier, may do business overseas.
Justice Potter Stewart: Could United Fruit vessels register under the Honduran flag?
Mr. Cox: After much passing of note --
Justice Potter Stewart: Yes.
Mr. Cox: -- we all concluded that we didn't know but we all think --
Justice Potter Stewart: That makes United Fruit --
Mr. Cox: -- yes.
Justice Potter Stewart: It's neither questions but I didn't know.
Mr. Cox: I'm sorry, that's quite fairly none of counsel's specific, the tarried answer is yes because there are some vessels which are owned by Panamanian corporation registered in Honduras whether that's in a state or not.
There are not involved in this case but there are in existence, one or two as cited.
The assertion -- may I say just one word further about the internal order doctrine.
It seems to us that labor management relations are part of the internal order governed under the traditional view by the law of the flag.
This Court has held that seamen's wages are normally governed by the law of the flag.
In Wildenhus' case, the famous passage is quoted over and over again, the Court referred to the generally accepted rule that the flag nation alone should govern the internal discipline of the ship and the general regulation of the rights and duties of the officers and crew toward the vessel or among themselves.
Now, of course if one thinks where should the underlying distinction be drawn, it would seem to put quite clearly the labor management relations on the side of things which are predominantly of the concern of the vessel.
They don't arise out of the vessels relations with the literal state or with the people of its port, they remain constant including their problems remain constant as she's on the high seas or regardless of the port she's in.
And also, things have their interaction as they do today and particularly through the intervention perhaps of their port union, others may be affected but still the core of this is something that concerns the vessel or owners and crew and goes with the vessels or owner or crew regardless of the relationship to the flag nation.
Justice Hugo L. Black: May I ask you one other question?
Mr. Cox: Yes sir.
Justice Hugo L. Black: Maybe you would want to say but there's no question is there -- of the power of Congress to regulate in this way if they get attempted to do so.
Mr. Cox: I assume not.
I assume the Congress has the power that -- yes.
It's scarcely necessary for me to mention the concern which the foreign state has exhibited with these decisions of the National Labor Relations Board.
What I would like to make a point is that their concern has not been confined to filing briefs in this Court, that it has been expressed in normal diplomatic interchange over a number of years and that the officials of the United States responsible for our foreign relation hold the opinion that insistence upon the application of the National Labor Relations Act to these vessels would have deeply disturbing consequences in international relation.
Chief Justice Earl Warren: We'll recess now.
Argument of Cox
Chief Justice Earl Warren: Solicitor General.
Mr. Cox: Chief Justice, I have just one or two moments remaining and I would like to take them with the Court's permission to indicate how the Incres case which is to be heard after these N. L. R. B. cases fits in to our scheme.
The -- we've not asked for time in that case and I think to round out the problem, it might be proper to say just a word or two about it.
Our basic proposition as I indicated before lunch is that the flag is not only so much the most convenient but indeed the only convenient way of determining which nation may regulate a unitary problem of labor management relations, that the flag should be regarded as decisive where it has some solid foundation and usually in the fact that the vessel is carrying the trade of the flag country.
Now the Incres case which is to follow this, you will find that the vessel sails under the Liberian flag but has virtually no contact with Liberia and specifically carries no Liberian trade.
If the vessel were U.S. owned and beneficially operated, if it were operated as part of an enterprise based on the United States, shall I say, in the sense that the aluminum industry is based on the United States or the parts of the steel industry.
Then we would have the question which the Government does not reach.
But in the Incres case, the vessel is not beneficially owned or managed by what is essentially a domestic corporation.
The vessel is Italian owned and operated in every beneficial sense and the immediate corporate owner is a Liberian corporation.
The crew and articles are Italian.
The owner of the New York agency which handles the bookings for these cruises is Italian.
The home port of the vessel is Italian and the only connection with this country really is that it carries trade out of New York to the Caribbean and back again.
So that even if it be said that the flag is a fiction, in our view, there is not a sufficient U.S. interest in this case to attack the fiction assuming that it can ever be attacked, virtually, everything about it is formed.
Now the case does have one added complication.
It's been held that a state court does not have jurisdiction to deal with a labor management relations problem where it is arguably dealt with in the National Labor Relations Act.
And in the case involving the Great Lakes last term, the Court said that this rule applied where the question was whether these were employees and this was a labor organization arguably within the meaning of the National Labor Relations Act.
We think those cases but notwithstanding those cases, the Court of Appeals of New York erred here because on these factual reason.
This fact, it is not even arguable we think, that the National Labor Relations Board would have jurisdiction.
Now the facts, the decisive facts in our view are all known.
There's no problem of growing inferences.
No problem of weighing or balancing or occasion for the use of expert discretion.
Second, we think the doctrine of arguably subject should not be applied in this area where the question is one of the statutory jurisdiction of the Board, vis-à-vis the claims of foreign nations because this is a matter of some one person must do it.
You can't all take hold of it.
This is not a field which involves the interpretation of some broad term contained in the Act such as employee or labor organization.
It's a matter in which the Board has no particular expertise and we would think therefore that it is not cut in to the usual doctrine to say that it has no application here.
We conclude therefore that to disregard the registry of either the Honduran vessels or the Liberian vessels in the words of this Court, does not fit the accommodations that become relevant in fair and prudent regard for the interest of foreign nations in relation to their own ships and their own nationals, and the effect upon our interest of our treatment of the legitimate interest of foreign nations.
Justice Potter Stewart: Where were those words spoken?
Mr. Cox: Those come from the Romero case.
Justice Potter Stewart: Alright.
Justice John M. Harlan: Could I ask you one question before you sit down?
It is the injunction of the District of Columbia case refer to the same certification as the two Court of Appeals?
Mr. Cox: The same direction of an election.
Justice John M. Harlan: So you've got two injunctions out.
Mr. Cox: We got two injunctions out against the same election.
Justice John M. Harlan: So it would be conceivably possible to decide this case on either one of those.
Mr. Cox: Oh yes, I think that if the case were decided in the District of -- on this certiorari to review the decree of the District Court and the District of Columbia, the other one in the sense, I take it would become moot.
Justice John M. Harlan: It is -- and it's the other one that presents the employer situation.
Mr. Cox: That's correct.
And that's one of the reasons we didn't bring the question here.
Chief Justice Earl Warren: Mr. Mandon -- Marden, is that it?
Argument of Orison S. Marden
Mr. Orison S. Marden: Mr. Chief Justice, may it please the Court.
There is a division among counsel seated on the same side of the table in this case just as there happens to be a division within the Government of the United States.
For example, Mr. Cox, although arguing more persuasively than could I, the merits of Empresa's case before this Court on the facts of our particular case has asked the Court to affirm on a theory which in our view as expressed by him has no foundation in our law or in international law and is based really on a combination of flag law with the universal arranging plus the context test that the Board, as we contend, erroneously applied here.
And Mr. Cox has affirmed the power of Congress to legislate with respect to labor relations in foreign countries on the high seas which is a thesis we deny.
On the other hand, Mr. Manoli, our opponent, has expressed the view that this Court must face up to the law of the flag problem and that somewhat contrary to the position, I think, expressed in his brief that the law of the flag is really the controlling concept which either we must affirm or deny.
To me, the impact of this case on the world community of nations can best be seen if we reverse the nationalities.
If we assume a fleet of American flag vessels based in Baltimore, home port Baltimore, flying between the ports of this country and Honduras and other South and Central American ports manned by American seamen represented by an American union, the National Maritime Union, regulated by the National Labor Relations Board.
I can hear the outcry from Maine to California if the Republic of Honduras in that situation were to assert the right to handle labor relations and regulate labor relations upon our ships on the high seas and in the reports of nations other than Honduras.
Now my friends will say, “You haven't mentioned one little fact”, and that fact is that in your supposititious case, the stock of the ship owning company in the United States was owned by Honduran interest and furthermore, you have time chartered your ships to that Honduran interest.
I say it makes no difference whatsoever.
In either case, we have the Stars and Stripes over these vessels carrying the protection of this country subject to the regulation of our Labor Board manned by American seamen and that we would reject with all the power in our -- in our -- at hand, any attempt by another country to interfere in that situation.
Now that is precisely, precisely what has happened here in the reversed situation.
For more than 20 years, Empresa and essentially a genuinely Honduran corporation as the findings of the Board show independently operated all its officers in Honduras, all its directors in Honduras, owning property in Honduras, owning land, they're paying taxes to Honduras, owning these ships, a perfectly respectable trade since the memory of man, one is not to own ships and to charter them out.
This cooperation subject to Honduran law, registering its vessels there, subject to a whole complex of labor legislation and ship legislation governing these ships, has now been told by an instrumentality of our Government that all these is to be swept aside and that each ships, at least while they're within the territorial waters of the United States, must conform to the orders and regulations of the National Labor Relations Board.
And yet, Mr. Manoli tells this Court that none of these intrudes on the sovereignty of Honduras.
Now, I won't go into the facts in great detail.
Mr. Cooper made a very impassioned plea on the facts, very much the same contentions that were made before the Board.
The Board in large part rejected his contentions as the findings of the Board show.
Board found that Empresa was independently operated and insofar as Labor Relations go on the facts putting -- is leaving aside the erroneous legal conclusion that the Board reached.
On the facts, each and every step in Labor Relations without any exception whatsoever were handled by Empresa, Empresa alone.
Empresa hires his men in Honduras.
They sign ships articles there.
They -- it is a Honduran crew entirely subject to the direction at all times of Empresa masters.
The fact that they are time chartered does not detract in the slightest from the responsibility of the shipowner over Labor Relations, that's true of every time charter unless Cooper speaks of the fact that the time charter were here.
The holder of the time charter controls the movements of the ship, well, of course he does, of course he does.
That's true in any case.
That's true if we have -- if we had -- if United Fruit had chartered a Norwegian vessel or a Greek vessel.
Of course, it controls the movement of the ship but Labor Relations on those ships so time chartered are handled by the shipowner, and that's universally true.
Now under Honduran law to which we are subject as a Honduran corporation and parenthetically during the recess, I have made inquiry with respect to Mr. Justice Stewart's question with respect to whether an -- a U.S. interest could register under Honduran law and I believe I'm reliably informed that they could but in that event, they would of course subject the entire operation to the whole colloquy of labor laws and other regulations of Honduras and with all labor grievances would have to be handled under the laws of that country and not under the laws of our country.
Now the Board order here is -- which is a strange result.
It directs that an election be held on these foreign-flag ships on a ballot which gives the unlicensed seaman a choice between the N.M.U., a Honduran union known as Sindimar and no union.
Now the N.M.U. could not possibly represent these seamen under Honduran law.
It's specifically forbidden that any union not composed of 90% Honduran citizens and not directed by a full compliment of Honduran citizens as officers and whose -- who has not been recog -- which has not been recognized under the laws of Honduras cannot, in any case, in any situation, represent Honduran citizens.
So it's completely --
Justice William J. Brennan: Mr. Marden --
Mr. Orison S. Marden: -- aborted.
Justice William J. Brennan: I gather Honduran law is that the crew must be Honduran citizens and not really Honduran vessels?
Mr. Orison S. Marden: I think citizens, yes sir.
Now that has never been -- that has never been denied since we first brought it out and I am still puzzled as to why the National Maritime Union continues a purs -- to pursuit an objective -- pursue an objective which cannot possibly result in any benefit through that union under the conceded law of Honduras and over the protest of its Government.
Now the Honduran union, Sindimar, contrary to what has been said was never a party really to the proceeding before the Board.
It sought to intervene long after the hearings had been closed and was on other claims that it represented a growing number of the seamen on our ships.
It was allowed to intervene by the Board without any hearing, without anybody having an opportunity to say anything about it.
It's a paper organization as was said was found in another Board proceeding.
It has shown no interest in the litigation before this Court or in the Court of Appeals.
The third choice is no union.
But our employees are members of a Honduran union with whom we have an existing contract and with which we've had an existing contract for over 20 years.
And yet, they were not under the Board order even given the opportunity to vote for their own union.
Now one can imagine the chaos and the confusion of the implementation of such an order by our Labor Board.
On these -- among these unlicensed seamen, not only coming into the ports of this country but under the Board order, the balloting was to take place even outside the territorial waters of the United States.
A seaman sitting in his cabin at Puerto Cortés in Honduras would be required to want a ballot as prescribed by this -- to them of foreign administrative agency.
Now, if the Board's theory that a conflicts test such as the court -- this Court announced in Lauritzen is to be applied here and we say it should not and cannot because it's an entirely different situation but assuming that it should be applied, then I think Mr. Cox has presented a most persuasive and conclusive argument for the proposition that the Honduran context far outweigh those of this country and that on application of that test, the judgment must be affirmed.
Judge Friendly found below in this as the Solicitor General has argued.
But the very fact that we have these differences illustrates to my mind the difficulties with applying the context of test.
Here we have the Board applying what they call the Lauritzen rule and reaching a conclusion different from that reached by the Court of Appeals below differing from that, urged by the Government of the United States here.
One can imagine if you apply this internationally, the difference is in the weight that Honduras would give to certain of the context or Venezuela, or Great Britain to those that others would give.
It's an impossible theory, I submit, that is being urged on this Court and while it's sufficient for the purpose of my case, I respectfully suggest to the Court that it is a test that should not be applied and without basis in law.
Now the flag, the flag rule, is one of our most ancient in international law.
It's a rule that this nation has followed since its beginning.
It's a rule that was followed long before we were -- this nation was formed.
It's a rule that is universal.
Everyone knows what it means.
It is not susceptible of the differences of opinion that come from applying such an uncertain rule as the context rule.
Now even our enemies observe the law of the flag and it is the rule, we submit, that should be applied here.
Now under that rule, on the high seas and in the ports of the flag state, the internal management of the vessel is governed entirely by the law of the flag state.
Some people call it a fiction.
Is citizenship a fiction?
Within the territorial waters of a literal state, it's perfectly true that there is power and international law recognizes that power to a limited degree to interfere with the jurisdiction of the flag state in such matters as policing the harbor at local matters.
In some cases, the wages of seamen where there's a local difficulty with free payment of wages and that sort of thing.
But with that slight exception, it is the universal rule that flag law governs.
Now why should --
Justice John M. Harlan: Of course the kind of a case as I understand it, the Solicitor General says need not be decided here is the situation where in effect the foreign nation licenses out its flag to somebody else.
Mr. Orison S. Marden: Well, Mr. Justice Harlan, it is also the cardinal principle of international law as I understand it and that has been reaffirmed in the convention of the sea that Geneva Convention on the sea, that only the sovereign which issues the registry -- permits the registry is confident to judge as to its own regulations and what it enforces.
But there is an admonition that came out of the Geneva Convention that each flag nation should actively assert its jurisdiction and really, really control the vessel and its internal management by its laws and regulations.
And I submit that category number four which is given by Mr. Cox is equally entitled to all the benefits that flow from a flag registering.
I think that if there are evils of any kind in such registrations, they must be handled in some other way.
It's too important in a world that's grappling for agreement on many things to let this matter as to which there has been agreement for so many centuries as they set aside by a unilateral action on our part.
We know of no case by any nation in any jurisdiction where a state has sought to impose its labor laws aboard foreign flag vessels.
These are -- this is the first attempt of which we know this attempt by the Labor Board.
Our neighbor Canada had the question before them recently.
The case is attached.
The decision is attached to Canada's brief amicus here.
There, vessels of British registry but owned by Canadian interest 100% and spending more than six months of each year within Canadian waters were held not to be subject to the labor laws of Canada on a state basis of application of the international rule of flag law government.
Now, this Court in the Benz case, it seems to me has already decided this one.
A close reading of that case which makes a close study of the text of the Act, the congressional debates, and the canons of construction which governed the construction of congressional legislation, came to the square conclusion that the Act was not intended to reach out and cover Labor Relations Board foreign flag, foreign ships manned by foreign crew.
The fact that that ship happened to be, as I say temporarily here, it is not in our view, the slightest consequence every vessel is here temporarily and it -- that is true in any case.
And that illustrates another fallacy in the context rule.
Empresa might win this case on the facts here.
Who knows what will happen tomorrow?
Who knows where our stock may lodge tomorrow?
Who knows where our vessels maybe time chartered and between what ports they will apply next year.
Well, in each of these cases, we have -- well, we have to come back to the Labor Board and have it adjudicated all over again whether we are subject to the laws of this country or the laws of Honduras.
And that can -- that sort of conjecture can be carried on adding some item.
And it seems to me it demonstrates so clearly that flag law must be the governing principle.
Now the Solicitor General very rightly says that this Court should not go beyond the facts of this case.
I don't suggest the contrary.
But in deciding the case, if the Court decides it on a theory which is erroneous and mischievous, and one that can only lead to further litigation and difficulty, whereas it can be decided on a simple universally applied rule.
I would think that the choice is clear and it is that choice that we respectfully urge upon the Court.
Now, so much has been covered by the earlier argument that I am going to skip some things I wanted to say.
I do want to point out that there is an existing Treaty between this country and Honduras which in our view requires application of flag law in our situation.
It's a statute which is not noble to Honduras and the United States.
It has been applied in the -- it is in existence here in a number of other cases.
I think one other -- with one other --
Justice Hugo L. Black: What part of that Treaty do you think based on that?
Mr. Orison S. Marden: I think Article X, Mr. Justice Black, which affirms the --
Justice Hugo L. Black: I'm speaking of your brief.
Mr. Orison S. Marden: They respect -- it is in the appendix to our brief at pages -- page 65.
Justice Hugo L. Black: Well, I found it on page 30.
Mr. Orison S. Marden: Oh, I see.
Well, it's the same Treaty.
Article X affirms with respect of each contracting party for vessels flying a flag of the other and Article XXII also on page 20 -- 65, advance counsel officers exclusive jurisdiction over controversies arising out of the internal order and so forth.
Justice Hugo L. Black: What about the last sentence, the part with --
Mr. Orison S. Marden: The last sentence, Your Honor, I think illustrates what I said earlier that there is an exception to the general rule of international law namely, that in the port and within the territorial waters of another nation, it is recognized that local conditions would -- might -- may warrant exercise of undoubted power to take some action and I think this might, for example, have to do with -- an illustration might be prepayment of wages which under one of our statutes is forbidden.
Justice Hugo L. Black: I would suppose that so far as reliance on your Treaties stand alone, the last (Inaudible) would make it rather difficult because it says that the local laws permits, they can exercise jurisdiction over each -- it's concerning the adjustment of wages and the execution of contracts relating they do.
I would think it's probably that we can draw argument on your Treaty, would it not?
Mr. Orison S. Marden: I think that there is -- there is power within the territorial limits of the United States to take action of almost any kind, but international comity has -- so thus far prevented this country and others from taking any steps within their territorial waters with respect to internal management of foreign-flag vessels except in certain limited areas and it's only as a matter of comity that I present the argument as test to what can happen within territorial waters.
When you go beyond territorial waters, I think there is serious doubt as to the power of Congress to legislate with respect to labor conditions on foreign-flag vessels on the high seas and in their home and other ports.
We present that in our brief.
It's -- I don't think that's ever going to reach it because I think the statutory construction points are so strong that it's unnecessary to consider constitutional points but we do urge it and we urge it seriously.
We think that --
Justice Hugo L. Black: On what constitutional provision do they have --
Mr. Orison S. Marden: Commerce, commerce power of Congress.
We suggest that Congress does not have the power to legislate under the commerce clause with respect to labor relations for example in a factory in Honduras.
We don't think the people have the power to give it to Congress in the first place under international law in the context to which our Constitution was adopted.
Justice Hugo L. Black: Why wouldn't that -- I don't know that we have ever reach that but it's been held that the commerce power of nation can regulate the kind of goods that will be shipped in commerce and the hours that which people work in the states or matters where they couldn't.
Federal government does not have jurisdiction.
Now, I think that would -- might be an answer to your argument about commerce clause?
Mr. Orison S. Marden: I appreciate as a difficult point to Your Honor but I think a point is reached where our sovereign power cannot lawfully legislate.
And I think that the high seas on foreign-flag vessels is such a point and is not different in truth from legislating with respect to labor conditions in a factory in Honduras or on a banana plantation that -- in Honduras.
Justice Hugo L. Black: As I recall that one thing which (Inaudible) had a pretty exhibitory effect on the act of Congress was that when Congress wasn't sure with committee reports with respect to (Inaudible) this kind of ship and (Inaudible) as any place in the world unless they've -- as they work more than five days a week.
Mr. Orison S. Marden: Of course we can prevent anything from coming into this interest and anything from going out.But when we assume to govern relations between the management and labor not within our own territories but in some other part of the world, it seems to me that we've reached the point that where we've exceeded our power.
Justice Hugo L. Black: Of course the questions I've asked have no relationship whatever to your main argument that the Act should not be read in going beyond what you have said.
Mr. Orison S. Marden: Yes Your Honor.
Now, as I've stated, we feel that the Benz -- the Benz holding is controlling here and that its application disposes of the case.
The labor laws of Honduras have been referred to earlier in the -- by the Solicitor General.
They're very elaborate, very complex, very detailed, very foreign, and Empresa and its employees are subject to those laws, all labor grievances must be processed before the labor courts of Honduras and in the Ministry of Labor.
And this Board order, of course, in its element effect, if it's sustained, not only requires us in precedent to breach its contract with the Honduran union with whom it has and has had an existing contract but also would require us to violate the law of Honduras in a number of respects.
The Board's order sows the seeds as Judge Friendly said below of continuous conflict between the regulatory measures of two jurisdictions.
The Solicitor General pointed out so persuasively I thought that it is impossible in this area and to have a workable arrangement whereby two nations governed the labor relations of -- on a -- aboard vessels.
You could have them changing from port to port and -- rather than assist the free flow of commerce, you will be putting a straightjacket on Congress -- on commerce.
Certainly, we couldn't enforce it beyond the three-mile limit.
Honduras could send a gunboat up here and take charge as soon as they got outside the territorial limits of the United States.
Now, we've raised as I've already indicated some constitutional questions.
I don't think it's necessary to go into them in argument.
They're in reserve.
We've urged them from the beginning.
A question of jurisdiction was raised by Mr. Justice Brennan.
It hasn't been referred to by our opponents.
It is our view that (Inaudible) sustained the jurisdiction of the District Court.
There as the Court will recall, a union brought suit to vacate a Board order which has been issued in violation of statutory command and as Mr. Justice Whitaker pointed out the sole and narrow question presented was whether the Board had acted in excess of its power.
We say here that the Board did act in excess of its powers and if there ever was a case where a court should have stepped in when it did, this was that case because if this election had proceeded, the fact would've been in the fire.
The point to Honduras would've occurred.
The breach of contract, our breach of contract would have occurred.
Our violation of law with Honduran law would have occurred.
If we say the rule is the same for employer and employee and as Judge Friendly pointed out below.
And parenthetically, I think it's of interest with all the talk of avoiding the delay of judicial action that as Mr. Cooper pointed out, we were two years in obtaining a decision of the Labor Board, I say that without any criticism.
The Board decision here came down on November 17th.
The District Court took two days to dispose of our application for a temporary injunction.
The Court of Appeals acted on January the 12th so that we were in fact ready for this Court within two months following the entry of the Board decision.
For the reasons given, we respectfully urge a premise and we particularly urge upon the Court that flag law should be the decisive basis for your premise.
Chief Justice Earl Warren: Mr. Rhyne.
Argument of Charles S. Rhyne
Mr. Charles S. Rhyne: Mr. Chief Justice and may it please the Court.
I represent Sociedad, the Honduran union which has for the past 20 years represented the crewmen, the unlicensed crewmen aboard these vessels of Empresa.
There are 335 of these unlicensed crewmen.
All of them are Honduran citizens except one who is a Jamaican.
I believe that the impact of the Board's order upon Sociedad and the crewmen that it represents is probably more drastic than on any other party before this Court.
Because if the Board order is upheld and the Board is successful in enforcing it throughout the world, it means literally this that Sociedad will go out of existence and these crewmen will lose their jobs.
Because, number one, Sociedad is not named and cannot be named under Honduran law as one of the unions for which these crewmen are allowed to vote under the Board's order
.Number two, under American law, if full American jurisdiction is shoved aboard these vessels at 75% of the master crew of each vessel must be American citizens just as the requirement that has been referred to in answer to Mr. Justice Brennan's questions.
Honduran law requires 90% of the master crew to be Honduran citizens.
Now, I'm glad that Mr. Manoli corrected his statement that our contract has gone out of existence because as we have alleged in our complaint and as they admit, the contract is in existence to April 15, 1963 and there's a provision set forth on page 21 of the record which provides that unless either party gives 30 days notice, the contract is renewed automatically for another two years.
There was one other fact that was said here by someone much more expert than I, Mr. Cooper, about wage rates in this field when he said that the Honduran wage rate were about one-fourth those of American seamen.
I can't believe that is accurate.
I have merely hearsay information but if you look at pages 16 and 17 of the record where we set forth the wage rates of these Honduran seamen in American dollars.
Some of them get as much as $210 a month and I doubt seriously that we have many crewmen aboard American vessels earning $900 a month.
So with those statements about the factual situation, I would merely say that what the -- we are faced with here is the replacement aboard these Honduran vessels of the very complex, the very modern Honduran Labor Code which, as it's been pointed out, it's attached to their brief of Honduras here which is in many ways much more modern as the Solicitor General has mentioned some of the things in our own law with the complex labor law of the United States of America through the National Labor Relations Act.
Justice Hugo L. Black: Excuse me, did you say page 16 and 17 of the record?
Mr. Charles S. Rhyne: Yes.
Justice Hugo L. Black: In number 91 and 3.
Mr. Charles S. Rhyne: No.
It's in 107, Mr. Justice Black.
Justice Hugo L. Black: 107.
Mr. Charles S. Rhyne: If you look at page 15 and 16 of the record you'll see the wage rates set forth there that are required to be paid under this contract in American dollars.
Now, he really believed that the issue before this Court is frankly whether or not this Treaty that has been referred to for the international law shall govern or whether or not the National Labor Relations Act should govern.
And in approaching an answer to that question, we feel that very important that we stress the regulatory scheme that exist now throughout the whole world for this flag state sovereignty that's existed for many centuries.
It is to prevent turmoil and conflict.
Its contained rules of practical necessity which Mr. Marden says, even our enemies adhere to.
Now that is what the Board would tear down because what it says is that instead of Honduras having the exclusive power and control over Honduran flag vessels throughout the world, the National Labor Relations Act would replace that regulation whereas under international law today, Honduras has the full physical power and control over every vessel that flies its flag.
Now, this juridical order that exist on the high seas today is key to the flag and the flag isn't just an empty gesture because with the flag, goes many duties and responsibilities in addition to the taxes and other things that were referred to here that the country might get.
For example, this Board order would, we feel, prevent Honduras from carrying out these duties and responsibilities that go with the flag.
One illustration of how important the flag is, is that it's only the flag nation which can order ships around for its own national interest.
A good illustration is the order issued by the President of Honduras telling all Honduras' vessels long before this quarantine to stay out of Cuba.
That is the power of the flag and it's universally recognized and followed.
And I think we have to also keep in mind in connection with this problem that all international law rules are really two-way streets.
Everything that we can do to Honduras here and Honduran crewmen as -- was pointed out by Mr. Marden, they can do to us and I think one other fact that I should call to the Court's attention is set forth in the brief of the Republic of Honduras here and that is its entire merchant fleet consists of 22 vessels.
The 13 vessels here are therefore more than one-half its entire merchant fleet.
So the impact on the Republic of Honduras is not inconsiderable.
So this regulatory scheme that exist now and what we would tear down if the National Labor Relations Board order is allowed to go into effect, is one that is not only universally adhered to but -- and workable but it comes into conflict with this election order rather quickly because the conduct of this election in foreign ports, ports of Honduras or any other place where these ships might be by a mail or anything else is a flagrant violation of Honduran authority under international law.
And the Honduran government has filed its protest here.
You'll find in the record the very concisely stated protest of the ambassador.
He protested through the diplomatic channels which are referred to by the Solicitor General.
But we have not only the problem of clash of sovereignties on the open seas and imports throughout the whole world.
For example, if this Board order is upheld and some of these ships go into the harbor in London, who will the London authorities look to, the United States of America or Honduras?
They fly in with a Honduran flag yet you have this Labor Relations Act that might have something to do with some instance that might occur there.
Because the nations of the world look to the flag state, if a ship cuts an international cable or anything like that, the protest always go to the flag state.
So this flag is not an empty gesture.
The country that grants the use of its flag accepts rather grave and important responsibilities.
Now there's been a reference here to comity.
I think that while it's true that within the territorial waters of the United States, we have under this comity practice never interfered in the internal management affairs of vessels flying foreign flags that this Treaty that is referred to which recognizes our flag and the flag of Honduras is conclusive within the territorial waters of each nation really makes the international law rule that applies on the open seas, applied within the territorial waters of each nation so it makes this rule universal.
And I think it's rather interesting that while so many nations throughout the whole world have adopted new labor code within the last 15, 20, or 30 years, not a single nation has ever before asserted that its Labor Relations Act applies on board a foreign flag vessel in its own territorial waters, although it applies that labor code to its own ships within it's own territorial waters very naturally.
So -- and certain it is that no court has ever upheld any such assertion because other than in Canada, it's probably the only place that has even been raised.
Now, we come to the National Labor Relations Act.
A lot has been set about it, but I wanted to stress just one point.
And that is from the days of Chief Justice Marshall, that has been referred to until now.
There's been a universal, uniform rule that unless there is an expressly -- expressed intention to apply a domestic statute of general terms internationally, it will not be so applied as Mr. Justice Clark said in Benz, it requires an affirmative intent clearly expressed.
Now Congress legislated here undoubtedly with that in mind, and there's a quotation in the brief of Empresa over on page 24 and 25 from a decision by Chief Justice Marshall in the exchange -- Schooner case where he said that to apply one of these domestic statutes internationally would be a breach of faith with the -- our nation throughout the civilized world.
Well, I think it would almost be a breach of faith with Congress in having acted on one rule, a rule that has been universally enunciated and adhered to by this Court to how it changed now under these circumstances because it undoubted -- it relied upon that rule in treating the very statute that's before this Court now.
And I come then to the so-called contacts theory.
I believe the Solicitor General uses the term interest and the Board uses the term contacts, and they both defined it differently.
And I would agree empathetically with what Mr. Marden have said that the law of the flag should govern because the contacts theory is not a rule of law that we can establish internationally at least but unilaterally.
As I've said before the -- a rule of international law is a two-way street.
And this contacts theory disturbs also because what we're saying in effect that we'll add up the contacts and that we think the contacts are great enough, will nullify international law.
Now such a self-assessing, self-determination of our own self-interest in deciding whether or not to abide by rules of international law, I submit, is a rather shocking thing.
This self-judging disturbs greatly because we have another instance in international law where we have self-judging involved, that we have the so-called county reservation.
We decide whether or not in our own self-interest, we're going to let a case be decided by the world court.
Now if we're going to say that in our self-interest, every time that we add up the contacts with the United States of America or in some certain way that judging those facts ourselves, we are going to -- either let international law apply or not.
We will in effect have injected another type of self-judging reservation for which there certainly is no precedent in law or experience to tear down and wipe out this international law rule which is so universally adhered to throughout the whole world.
Justice Potter Stewart: Do you understand Judge Friendly's opinion in the Second Circuit to have -- been based upon this contacts or interest, contacts primarily or not?
Mr. Charles S. Rhyne: Mr. Justice Stewart, I would say that I do not quite understand that he places the entire emphasis upon it.
It's true that my distinguished adversaries and others have referred to it as a contacts decision.
I would say that if it is so interpreted, I believe that it's based on a wrong principle.
I agree with Mr. Marden that the law of the flag should govern here and not some new theory based upon rather nebulous criteria with the Board stating one group of criteria and the Solicitor General stating still another and then the Board coming before this Court and saying to you, “We disagree with the way that Judge Friendly added up the contacts.
We think he was wrong”.
It means just this to a small union like the one I represent would be here once under the law of the flag will be here many times under the contacts theory.
It just comes down to that practical application.
Now the --
Justice Hugo L. Black: Do you say we have to adopt one of the two or the theory in order to determine what the -- what's the scope of the National Labor Relations Act?
Mr. Charles S. Rhyne: Mr. Justice Black, I think that you can interpret the National Labor Relations Act as not reaching foreign flag crewmen and that ends the case, in other words, reaffirm Benz.
So, one thing that really -- that serves me about the fourth category of the Solicitor General is this.
He doesn't explain what is going to happen about the dual sovereignty under those circumstances.
He does a very effective job in his argument in his brief in saying that you just can't have two jurisdictions or two government exercising jurisdiction on a single vessel.
But yet, he seems to leave this open, this dual sovereignty thing which he really can't answer, I agree with him in that fourth category which I feel really is not much different from the other categories.
Now a lot has been said here about the fact that the vital interests of the United States require this or require that.
It seems to me and I agree with Mr. Manoli, you ought to tell the Board whether they stay in or stay out because look at the tremendous interest of these foreign governments as shown not only by the briefs filed here but by the protest which the Solicitor General mentioned that come through diplomatic channels.
Literally, the eyes of the seafaring nations of the world are upon this Court, are you going to abide by the law of flag state sovereignty?
Are you going to break it down?
Are you going to try to state a new exception to the rule of flag state sovereignty?
And I urge very strenuously upon the Court that the real United States interest here is not entirely in the commercial field.
The real United States interest in this case, I submit, is building up not tearing down international law.
And I think that this can lead to just one conclusion and that would be a reaffirmance of the law of flag state sovereignty.
And so, I urge that the Court in affirming -- affirm on the basis of the District Court's decision of Judge Holtzoff and reaffirm the rule that this Court has said so many times of flag state sovereignty and help to build up and maintain this system of world law that we're all working for.
It hasn't been very long time less than two years when I sat across here, a couple of blocks and I've heard the President of the United States in a very dramatic and noble address say that the ultimate objective of the United States of America is a new world of law where the strong or just and the weak secured and the peace preserved forever.
It seems that this Court has a rare opportunity to -- in this case, in reaffirming the law of flag state sovereignty to say to the whole world that we're interested in building up not tearing down rules of international law to which the nations of the whole world and ourselves up to now have been affirmatively and completely committed.
And so we ask that the decision of the District Court be reaffirmed.
Chief Justice Earl Warren: Mr. Cooper, I think you have a few minutes left if you want to --
Argument of Herman E. Cooper
Mr. Herman E. Cooper: (Inaudible)
Chief Justice Earl Warren: Very well.