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Judge rules South Carolina Ports can continue using nonunion labor

ILA ordered to drop lawsuit against USMX, Hapag-Lloyd and OOCL

The Hugh K. Leatherman Terminal at the Port of Charleston has not handled as much container ship traffic as anticipated because of an ILA lawsuit. (Photo: Walter Lagrenne/SCPA)

A National Labor Relations Board judge ruled Thursday that the International Longshoremen’s Association cannot force the use of union labor at the Port of Charleston in South Carolina and ordered it to drop a lawsuit filed against two ocean carriers that utilized the 2021-opened Hugh K. Leatherman Terminal.

Administrative Law Judge Andrew S. Gollin wrote in the decision that the “ILA’s object for its lawsuit against USMX and its carrier members was work acquisition, not work preservation,” in violation of the National Labor Relations Act.

USMX — the United States Maritime Alliance — represents longshore employers on the East and Gulf coasts. Its membership is made up of container carriers, marine terminal operators and port associations.

The 26-page decision noted that the collective bargaining agreement between USMX and the ILA “requires that all USMX carrier members and their agents use ILA bargaining unit members to load and discharge containers on and off their ships and perform all other container work at the facilities … at these ports and it prohibits the subcontracting of that unit work.”

That agreement, however, does not apply to the Port of Charleston. 

A hybrid operating model ‘since containerization began’

Judge Gollin wrote that neither the South Carolina Ports Authority nor the state of South Carolina have ever been “a party to the master contract or any other labor agreement covering the Port of Charleston. As stated, unlike other ports along the East and Gulf coasts where ILA bargaining unit employees perform all the container work, the Port of Charleston, along with the ports in Wilmington, North Carolina, and Savannah, Georgia, use a hybrid operating model. This has been the case since containerization began.”

State employees operate the SCPA’s ship-to-shore cranes and lift machines, including rubber-tired gantry cranes. The loading and unloading of ships is performed by Local 1422 members. 

“Those members are hired by the carriers and stevedoring companies, like the Charleston Stevedoring Company, which are covered under the master contract,” the NLRB noted, adding that about 270 state employees and more than 2,000 ILA members work at Port of Charleston terminals. 

During negotiations for the 2013-2018 master contract, the ILA proposed adding the following language: “All work associated with the loading and unloading of cargo aboard vessels of USMX carriers, including the receiving and delivery of all cargo and all terminal work, must be performed by ILA-represented workers. All cargo-handling work currently contracted out to port authorities must be brought under the jurisdiction of ILA and all such work must be performed by ILA-represented workers.”

The proposal was rejected, although USMX and the ILA agreed to conduct a study to determine how the business model used by the port authorities in Charleston, Savannah and Wilmington “could be altered to permit work currently performed by state employees to be performed by master contract bargaining unit employees in a more productive, efficient and competitive fashion.”

SCPA President and CEO Jim Newsome told American Shipper that no such study was ever conducted

According to the NLRB document, SCPA attempted to resolve the dispute through arbitration, but “neither ILA nor USMX expressed a willingness to do so.” 

On Jan. 7, three months before the Leatherman Terminal opened, the state and SCPA took proactive steps, filing unfair practice charges against USMX, the ILA and Local 1422 that claimed they were trying to force the use of union labor at the new facility. 

The Leatherman Terminal handled its first container ship April 9. 

‘Tortious interference with a contractual relationship’

On April 20, the ILA filed suit in New Jersey Superior Court against USMX and Hapag-Lloyd, the first shipping line to utilize the Leatherman Terminal. On April 26, the ILA amended the suit to add Orient Overseas Carrier Line Ltd., which also berthed at the terminal after its opening. The ILA sought a total of $300 million in damages for “tortious interference with a contractual relationship, tortious interference with advantageous business advantage, breach of contract and civil conspiracy.” 

USMX was named in both cases because South Carolina officials didn’t think it was helping protect the SCPA’s labor model. The ILA didn’t think USMX was helping put union longshoremen to work at Leatherman. 

The ILA said it filed suit because of attempts by USMX, Hapag-Lloyd and OOCL “to interfere with and undermine the coastwide master contact that the ILA has with its employers from Maine to Texas.” 

According to the NLRB documents, “within two weeks of the ILA filing its lawsuit, five USMX carrier members contacted [SCPA] and demanded to change their scheduled calls from the Leatherman Terminal to the Wando Terminal because they did not want to get enmeshed in the … lawsuit. Some of these carriers threatened to have their ships bypass the Port of Charleston altogether in favor of the Port of Savannah if they were not allowed to change terminals. [SCPA] eventually granted their requests to change terminals and call on the Wando Terminal.” 

A new terminal stands waiting for business

Just four container ships were processed at the new terminal between April 10 and May 4. In mid-May, the SCPA schedule showed no vessels berthed or slated to arrive at Leatherman over the next 15 days. 

The ILA action has continued to hamper activity at the Leatherman Terminal. On Friday, one container ship, the Delaware Express, was berthed at Leatherman. Only one, the Missouri Express, is expected at that terminal over the next 15 days.  

The SCPA issued a two-page statement to American Shipper in early May in which it asserted the ILA’s “forced unionization tactic violates the federal National Labor Relations Act and the public policy of the state of South Carolina. As its ultimate impact, it could endanger the current and long-standing historical operating model that exists in all South Atlantic public operating ports.”

A NLRB hearing slated for May was pushed back to give additional time to consider the lawsuit filed by the ILA. The complaints were combined and tried together June 9-10.

“I conclude ILA’s object for its lawsuit against USMX and its carrier members was work acquisition, not work preservation,” Judge Gollin wrote in Thursday’s decision. “I further conclude ILA filed its lawsuit with the object of forcing USMX and its carrier members to agree that facially valid provisions contained in the master contract and containerization agreement prohibited them from calling on the Leatherman Terminal unless bargaining unit employees performed all container work, including the lift equipment work, in violation of Sections 8(b)4(ii)(A) and 8(e). Finally, I conclude that by its lawsuit, ILA also sought to have USMX and its carrier members cease doing business with the state and [SCPA] at the Leatherman Terminal, in violation of Section 8(b)(r)(ii)(B).”

The judge also ruled that within 14 days of the decision, the ILA must drop its lawsuit against USMX, Hapag-Lloyd and OOCL and reimburse them “for all reasonable expenses and legal fees, with interest, incurred in defending against the lawsuit.”

In a statement to American Shipper on Friday, Newsome said the NLRB’s ruling was validation of the “extension of our long-established hybrid container operating model to the new Hugh K. Leatherman Terminal in North Charleston.”

“We look forward to working with the three local crafts of the International Longshoremen’s Association in Charleston to open this terminal to its full capacity,” Newsome said. “This is sorely needed in view of the significant supply chain congestion in the U.S. port industry, especially in the Southeast.”

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

Kim Link Wills

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.