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American ShipperContainerLegal issuesMaritimeNewsTop Stories

ILA sues for $200M over nonunion labor in South Carolina

Hapag-Lloyd and United States Maritime Alliance defendants in lawsuit filed after first ship worked at Port of Charleston’s Leatherman Terminal

On April 9, a Hapag-Lloyd container ship became the first cargo vessel to berth at the new Hugh K. Leatherman Terminal in North Charleston, South Carolina. It was cause for celebration for the South Carolina Ports Authority. 

Then it got Hapag-Lloyd named in a lawsuit.

The International Longshoremen’s Association (ILA) is seeking $200 million in damages in a lawsuit filed last week against Hapag-Lloyd and the United States Maritime Alliance (USMX) for the use of nonunion workers to handle cargo from the Yorktown Express

The waters are muddied by the fact that the ILA and USMX are on the same side defending an unfair labor practice charge brought earlier this year by the SCPA and the state of South Carolina. However, both cases focus on who should be allowed to handle cargo at the newly opened Leatherman Terminal at the Port of Charleston.

The lawsuit, filed Thursday in the Superior Court of New Jersey in Newark, alleges that Hapag-Lloyd and USMX are “liable for tortious interference with a contractual relationship, tortious interference with advantageous business advantage, breach of contract and civil conspiracy.”

The ILA said in a statement that the lawsuit “arises out of the USMX’s and Hapag-Lloyd’s attempts to interfere with and undermine the coastwide master contract that the ILA has with its employers from Maine to Texas.”

Both the ILA and USMX are headquartered in New Jersey. USMX is a multiemployer collective-bargaining representative for its members, which include ocean carriers, marine terminal operators and port associations. The lawsuit explains, “USMX on behalf of its members negotiates and administers with the ILA on behalf of its constituent locals of the master contract.”

According to the lawsuit, “Section 1 of the Containerization Agreement affirms the ILA’s broad jurisdiction over all container and ro/ro work traditionally performed on a coastwide basis.”

It said that “management and the carriers recognize the existing work jurisdiction of ILA employees covered by their agreements with the ILA over all container work.”

The lawsuit goes on to say that “management, the carriers, the direct employers and their agents shall not contract out any work covered by this agreement. Any violations of this provision shall be considered a breach of this agreement.”

It says Hapag-Lloyd, as well as other carriers, are required to use longshore employees covered by the master contract to load and discharge containers on and off ships at ports on the Atlantic and Gulf coasts. 

The newly opened Leatherman Terminal is not recognized by the master contract, the plaintiff acknowledged, but because it has been in the works for some 20 years, the union understood ILA workers would handle all containers as outlined in the master contract.

“USMX failed and refused to give the requested assurances to the ILA,” the lawsuit states. “On the contrary, the information that the ILA received was that the Leatherman Terminal would have non-bargaining unit workers employed in various positions unloading containers from ships and handling containers in the marine terminal instead of longshore workers represented by the ILA who are covered by the master contract.

“Both USMX and Hapag-Lloyd were on notice that the Leatherman Terminal employed non-bargaining unit workers who were not covered by the master contract unloading containers from ships and handling containers in the marine terminal,” the lawsuit says. 

“Non-bargaining unit employees were hired at Leatherman Terminal to perform various crane and terminal work unloading containers off this ship owned by Hapag-Lloyd,” the suit states. “For example, non-bargaining unit employees performed crane work, used forklifts and moved the containers onto chassis. 

“The Hapag-Lloyd ship intentionally went to Leatherman Terminal even though it knew that non-bargaining unit employees who were not covered by the master contract would be hired to unload its containers and to handle its containers on the terminal,” it says.

The lawsuit asserts USMX also was aware nonunion workers were working at the terminal and “did not do anything to dissuade Hapag-Lloyd from utilizing the non-bargaining unit labor and, indeed, may have encouraged them to do so.”

“Both Hapag-Lloyd and USMX were well aware that the work in question would have been handled by ILA members who are covered by the master contract” if the vessel had gone to another East or Gulf Coast port, it says.  

As a result, “the ILA suffered massive damages,” the lawsuit continues. “ILA members lost out on work opportunities, suffering lost wages and lost benefits, thereby also depriving the ILA of dues income. In addition, these employees lost out [on] future wages and benefits because of the precedent set for using non-bargaining unit workers at the Leatherman Terminal and at other noncontract employees on the East and Gulf coasts.”

In the months leading to the opening of the terminal, the ILA and USMX were accused together of unfair practices.

In early January, the SCPA and Attorney General Alan Wilson on behalf of the state filed an unfair labor practice charge against the ILA, its Local 1422 and the USMX with the National Labor Relations Board.

“The charge alleges that the ILA and USMX violated the National Labor Relations Act (NLRA) by attempting to implement a secondary boycott to acquire new work for the union by pressuring ocean carrier customers not to use the state’s new Hugh Leatherman Terminal,” a statement from Wilson’s office said. “A secondary boycott is when two parties, in this case the ILA and USMX, agree to hurt a third party, in this case the SC Ports Authority. Secondary boycotts are illegal under the NLRA.”

The SCPA explained that it uses a hybrid labor model in which some jobs are performed by state workers and others are handled by union members employed by private-sector companies. For some 50 years, state employees have operated the cranes and lift machines while ILA Local 1422 workers have loaded and unloaded cargo from ships, Local 1771 members have served as clerks and checkers, and 1422-A mechanics have repaired containers and chassis, according to the SCPA. 

A clause added to the master contract in 2013 said the USMX and the ILA would conduct a study to determine how the hybrid labor model “could be altered to permit work currently performed by state employees to be performed by ILA-represented employees in a more productive, efficient and competitive fashion.”   

But according to the SCPA, no such study was done. It asserted in its January filing that the attempt by the ILA and the USMX to enforce Article VII of the master contract in Leatherman Terminal operations was unlawful. 

SCPA President and CEO Jim Newsome said the filing was made to “get clarification from the NLRB as to whether Article VII of that contract applies to that Leatherman Terminal. We don’t think it does. Apparently, the ILA and the USMX think it does.”

Newsome had hoped to get the labor matter settled before the terminal opened. “We’re simply asking for a determination on an article of a contract that we’re really not even a party to, but it affects our ability to do business,” he said in January. 

American Shipper this week posed a number of questions to the SCPA, including how the ILA has gone from being named with USMX in the port authority’s unfair labor practice charge to a plaintiff suing the employer representative.

A spokeswoman for the SCPA answered only one question, responding in an email, “The SC Ports Authority and South Carolina charges against the ILA and USMX are pending and scheduled for a hearing on Tuesday, May 4.”

Hapag-Lloyd appears to simply be caught up in the lawsuit as the first ocean carrier to call the Leatherman Terminal. But the German shipping line would not say so. 

“Please understand that we do not comment on ongoing proceedings,” a spokesman said in an email to American Shipper. 

An attorney for USMX did not respond to American Shipper’s request for comment.

South Carolina Ports defends hybrid labor model 

Among Piers: Container record, terminal opening and COVID-19 vaccines

South Carolina Ports breaks all-time container record

Click for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills.

Kim Link-Wills, Senior Editor

Senior Editor Kim Link-Wills has written about everything from agriculture as a reporter for Illinois Agri-News to zoology as editor of the Georgia Tech Alumni Magazine. Her work has garnered awards from the Council for the Advancement and Support of Education, the Georgia Institute of Technology and the Magazine Association of the Southeast. Prior to serving as managing editor of American Shipper, Kim spent more than four years with XPO Logistics.

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