Contract Services, Inc.

862 DECISIONS OF NATIONAL LABOR RELATIONS BOARD Contract Services, Inc. and National Maritime Union of America, AFL-CIO, Petitioner. Case 4-RC-8995 April 3, 1973 DECISION AND ORDER BY CHAIRMAN MILLER AND MEMBERS KENNEDY AND PENELLO On January 11, 1971, the National Maritime Union of America, AFL-CIO (herein called the NMU), filed a petition with the Regional Director for Region 4 seeking an election in a unit of certain employees employed by the Employer in its bus transportation operation in the Panama Canal Zone (herein called the Canal Zone). All of the employees in the proposed unit are Panamanian nationals. After the petition was filed the Regional Director administra- tively dismissed the petition in reliance on United Fruit Co,' and the Board sustained the dismissal. Thereafter, on April 14, 1971, NMU filed suit in the United States District Court for the Eastern District of Pennsylvania seeking review of the Board's decision in declining to assert jurisdiction and an order directing the Board to conduct a hearing in the matter. Subsequently, the General Counsel filed a motion to dismiss the complaint on the grounds that the district court lacked jurisdiction over the subject matter of the action and that the complaint failed to state a claim on which relief should be granted. The court, on November 9, 1971, issued a memorandum and order denying, without prejudice, the Board's motion to dismiss the NMU's complaint and ordering a hearing before the Court to determine (1) whether the effect on foreign relations is a valid factor for the Board to consider in deciding to decline jurisdiction; (2) if so, whether the assertion of jurisdiction would adversely affect the United States-Panamanian relations; (3) whether the Canal Zone is a state, foreign country, or territory within the definition of commerce in the National Labor Relations Act, as amended; and (4) whether there are any other reasons why the Court should decline to order the Board to comply with its alleged statutory duties in this case. After the Court issued its order, the Board reconsidered its decision denying NMU's appeal from the Decision of the Regional Director and, by order dated December 10, 1971, the Board reinstated the petition. Moreover, so that it could articulate its position on the issues raised by the Court, the Board directed a hearing which was held before Hearing Officer Solomon S. Spector on April 4, 1972. All parties appeared at the hearing and were afforded full opportunity to be heard, to examine and cross- examine witnesses, and to adduce evidence bearing on the issues. Pursuant to the Board's Rules and Regulations, the case was thereafter transferred to the Board for decision. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Hearing Officer's rulings made at the hearing are free from prejudicial error and are hereby affirmed. Upon the entire record in this case, including the briefs filed with the Board by the Employer and the Petitioner, the Board, for the reasons set forth hereinafter, answers in the affirma- tive each of the foregoing questions posed by the court with the exception of the last question which we find unnecessary to reach in light of our decision to decline to exercise jurisdiction at this time based upon foreign policy considerations.2 The Employer, a Delaware corporation, is engaged in the operation of a local bus system transporting U.S. military dependents to and from school within the Canal Zone, pursuant to a fixed-cost contract with the U.S. Navy for a 5-year period.3 The current contract is effective from August 1, 1971. The dollar volume of such service exceeds $250,000 per annum. All buses and related equipment used by the Employer pursuant to the current contract are purchased from continental United States and exceed $50,000 in value per annum. It is clear from the above that the Employer's volume of business, purchases, and relationship to our national defense bring it within our standards for the assertion of jurisdiction.4 The Employer, however, contends that the Board should not assert jurisdiction over its transportation enterprise in the Canal Zone. In support of its position the Employer argues (1) that the Canal Zone is not a "territory" within the "commerce" definition of the National Labor Relations Act, as amended, 1 159 NLRB 135, direct review denied, National Maritime Union of America v NLRB, 267 F Supp 1 17 (D C N Y) 2 In addition to declining to assert jurisdiction because of foreign policy considerations, Member Kennedy would also decline jurisdiction based on the fact that the Board has consistently refused to assert jurisdiction over school bus enterprises S L Lines, Inc, d/b/a Pacific-Scenic-Lines, 164 NLRB 1179, Community Enterprises, Inc, d/b/a Community Charter Bus System, 164 NLRB 1186, Brothers Coach Corp, 158 NLRB 931, Camp Baumann Buses, Inc and VS Buses, Inc, 142 NLRB 648, Raybern Bus Service, Inc, 128 NLRB 430 Thus, in accordance with the foregoing cases, he would not assert jurisdiction over such enterprises in the Canal Zone 3 The Employer's only other enterprise, also conducted solely in the Canal Zone, is under a 3-year contract with the U S Army to perform environmental testing a Charleston Transit Company, 123 NLRB 1296, Siemons Mailing Service, 122 NLRB 81 But for such services the U S Navy might be obligated to use military personnel to fulfill such tasks instead of other essential duties pertaining to the maintenance , operation, and protection of the Panama Canal See Gerommo Service Co, 129 NLRB 366 202 NLRB No. 156 CONTRACT SERVICES, INC 863 and (2) that, in any event, the Board should adhere to its decision in United Fruit, supra, and decline to assert jurisdiction so as not to interfere with international affairs involving United States-Pana- manian relations. Accordingly, the Employer re- quests that the petition be dismissed. Legislative history does not shed any light on whether business operations conducted by U.S. employers in the Canal Zone are to be included within the meaning of "commerce" as that term is defined by Section 2(6) of the National Labor Relations Act.5 Reference is made to Puerto Rico,6 the Virgin Islands, 7 and Guam8 in Section 14(c) of the Act9 as examples of territories, but such reference is not meant to be exhaustive.10 Thus, the Board and the courts have interpreted the term "Territory" as used in the Act to include not only Puerto Rico, the Virgin Islands, and Guam but also, before statehood, Alaskaii and Hawaii.12 In Star-Kist Samoa, Inc., supra, the Board found that American Samoa is not a "Territory," relying particularly on the fact that Congress has not established any form of self-government for Ameri- can Samoa, that is to say, American Samoa is not an "organized" territory.13 However, we note that the Canal Zone, unlike American Samoa, possesses a highly organized form of self-government which was initially established by the Panama Canal Act of 1912.14 Laws of the Canal Zone were incorporated into the Canal Zone Code which was adopted by Congress in 1934 and revised effective January 2, 1963.15 Under the Canal Zone Code, a governor appointed by the President as his designee is empowered with "official control and jurisdiction" over the Canal Zone and performs "all duties in connection with the civil government of the Canal Zone . . . ." 16 A system of Magistrate's Courts is established with its own rules of procedure and 5 Sec 2(6) of the Act provides that The term "commerce" means trade , traffic, commerce, transporta- tion, or communication among the several States, or 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, or the District of Columbia, or within the District of Columbia or any Territory , or between points in the same State but through any other State or any Territory or the District of Columbia or any foreign country 6 See Ronrico Corporation, 53 NLRB 1135 7 See Caribe Lumber and Trading Corp, 148 NLRB 277 8 See RCA Communications, Inc, 154 NLRB 34 9 Sec 14(c)(2) of the Act provides that Nothing in this Act shall be deemed to prevent or bar any agency or the courts of any State or Territory (including the Commonwealth of Puerto Rico , Guam , and the Virgin Islands), from assuming and asserting jurisdiction over labor disputes over which the Board declines to assert j urisdiction 10 See Star-Kist Samoa, Inc, 172 NLRB 1467 11 International Longshoremen 's & Warehousemen 's Union v Juneau Spruce Corp, 342 U S 237 12 American Factors, Lid (Hilo Branch), 104 NLRB 199, and Pacific Laundry Co, Ltd, 99 NLRB 1011 provision for appeal to the United States District Court for the District of the Canal Zone.17 This Federal district court is imbued with all the powers of any U.S. district court and appeals from the district court are within thejurisdiction of the United States Court of Appeals for the Fifth Circuit.18 Although we are mindful of provisions of the Canal Zone Code, the body of law enacted by Congress to govern the Canal Zone, we find no specific provision of the Canal Zone Code, nor do we find any other specific delegation by Congress to the Canal Zone government, which pertains to matters covered by our Act. In the absence of such provision or delegation we must assume, at least, that Congress intended no specific exemption from "commerce" of the operations of U.S. employers in the Canal Zone. On the other hand, we note no specific inclusion of the Canal Zone as being covered by our Act, as is found, for example, in the Fair Labor Standards Act,19 the Labor-Management Reporting and Dis- closure Act,20 the Welfare and Pension Plans Disclosure Act,21 and the Equal Employment Oppor- tunity Act.22 In these circumstances, we conclude that while there is no specific evidence of congres- sional intent, nevertheless business operations con- ducted in the Canal Zone by U.S. employers appear to fall within the definition of the term "commerce" as defined in the National Labor Relations Act, Section 2(6), and we believe, therefore, that we have the statutory authority to assert jurisdiction. This Board, however, has the discretionary power to decline to exercise its statutory jurisdiction to the fullest extent.23 Such discretion has been recognized by the Supreme Court when it stated in Denver Building and Construction Trades Council, "[e]ven when the effect of activities on . . . commerce is sufficient to enable the Board to take jurisdiction of a complaint, the Board sometimes properly declines to 13 We note, in passing, the Supreme Court's decision in U S v Standard Oil of California, 404 U S 558, rehearing denied 405 U S 969, wherein the Court held that'Amencan Samoa was a "Terntory" within the meaning of Sec 3 of the Sherman Act (I5 US C § 3 ) since both organized and unorganized "Territories" are within the meaning of that term as used in the Sherman Act 14 37 Star 560 15 76A Stat 1 16 2 Canal Zone Code § 33 17 5 Canal Zone Code § 711 et seq 18 See 28 U S C §§ 1404, 1406, 1869, and 28 U S C §41 19 29 U S C § 213(f) See, e g , James v Contract Services, Inc, Civil No 6725, U S District Court for the District of the Canal Zone, Balboa, Division , December 23, 1969, wherein the Employer herein was the subject of an action brought for its failure to comply with the terms of the FLSA 20 29 U S C § 402(b) 21 29 U S C § 302(a)(9) 22 42 U S C § 2000 e (i) 23 See , e g, N L R B v Denver Building and Construction Trades Council [Gould & Preisner], 341 U S 675, 684 (1951), N L R B v WGOK, Inc, 384 F 2d 500, 502 (C A 5, 1967), N L R B v Jones Sausage Company, 257 F 2d 878, 880 (C A 4, 1958), N L R B v W B Jones Lumber Company, Inc, 245 F 2d 388, 390-391 (C A 9, 1957) 864 DECISIONS OF NATIONAL LABOR RELATIONS BOARD do so, stating that the policies of the Act would not be effectuated by its assertion of jurisdiction in that case."24 In declining to act in such cases the Board is merely exercising its "complete discretionary power to determine in each case whether the public interest requires it to act."25 Moreover, the Board has continually exercised this discretion, with judicial approval, and has declined to assert jurisdiction in certain representation as well as unfair labor practice cases. Thus, even though a petition has been filed alleging that a question concerning representation affecting commerce exists, the Board has declined to exercise jurisdiction where employees of foreign nationalities and international considerations are involved.26 As the court in N.M. U. v. N.L.R.B. stated, "the opinion of the Supreme Court in McCulloch v. Sociedad Nacional [372 U.S. 10] makes it perfectly clear that considerations of international relations are highly relevant-indeed, indispensa- ble-in determining the extent of the Board's jurisdiction. This court perceives no reason why such considerations are not equally relevant to the Board's determination whether to assert jurisdiction."27 Inasmuch as we agree with the court's interpretation of McCulloch v. Sociedad Nacional, supra, and in agreement with prior Board decisions, we hold that in deciding whether or not to exercise our discretion to assert jurisdiction herein, the effect thereof on foreign relations is a necessary and proper factor to be considered. In determining whether the assertion of jurisdiction herein would adversely affect United States-Panama- nian relations, we note that the issue of Panamanian sovereignty over the Canal Zone has long been a sensitive topic of negotiations between the two governments. In 1903 the United States negotiated a treaty which ceded to the United States the right in perpetuity to maintain, operate, and defend a canal in Panama and the right to act in the 10-mile strip surrounding the canal with "all the rights, power and authority" which "it would possess and exercise if it were the sovereign." 28 Thus, the United States use of the Canal Zone and jurisdiction there are treaty rights which may be modified or terminated by another treaty with Panama. We noted in 1966 in United Fruit Company29 that the United States and Panama were at that time "negotiating the terms of a new treaty, to replace the 1903 treaty and its 24 Id, 341 U S at 684 25 N L R B v Newark Morning Ledger Company, 120 F 2d 262, 268 (C A 3, 1941) 26 United Fruit, supra, in 1, and see British Rail-International, Inc, 163 NLRB 721 (1967) 27 Supra, in 1, 267 F Supp at 126 28 Art III of Convention for the Construction of a Ship Canal, 33 Stat 2234, TS 431 29 159 NLRB 135, 136 amendments, which will govern the relationship between them with respect to the area of the Canal Zone. The President of the United States has announced that the two countries have already agreed that the 1903 treaty will be abrogated; that the new treaty will effectively recognize Panama's sovereignty over the area of the present Canal Zone . . " It was the existence of those negotiations and the legitimate and prudent concern that such negotiations might be disturbed that led the Board in United Fruit, supra, to deem it inappropriate to assert jurisdiction at that time. The Board's decision was fully upheld by the Federal district court.30 The negotiations, which began in 1964, resulted in the initialing of three draft treaties in 1967. After neither government took any action to have the treaties ratified, further negotiations came to a halt. Intensive negotiations for a new Panama Canal treaty to replace the treaty of 1903 resumed in June of 1971.31 Although by year's end all major treaty issues had been explored, it was contemplated that agreement would require further intensive negotia- tion. To this end congressional subcommittees held hearings on the negotiations, giving rise to consider- able criticism in Panama of some of the views expressed. In appearing before the Subcommittee on the Panama Canal of the House Committee on Merchant Marine and Fisheries on November 29, 1971, then U.S. Ambassador Mundt stated32 that "Panama seeks the application of its laws to various activities in the present Canal Zone. Certain jurisdic- tional rights and activities, including commercial operations, not necessary for the administration, operation and defense of the canal, can be trans- ferred to Panama without adversely affecting the United States interests . . . . There is widespread support in Latin America," he noted, "for Panama's efforts to obtain greater practical exercise of its sovereignty and to terminate the objectionable aspects of the U.S. presence in the Canal Zone, which," he stated, "is exactly one of the U.S. objectives in the current negotiations." Negotiations were being conducted at the time when Ambassador Mundt was making his statement before the House Committee. Thereafter, between June 1971 and January 1972, negotiators have held some 40 formal negotiating sessions in addition to a number of subcommittee meetings.33 Moreover, we are present- 30 National Maritime Union v N L R B, 267 F Supp 117(1967) 31 See Report of the Secretary of State, United States Foreign Policy 1971 (Department of State Publication 8634) at 149 (March 1972) 32 Vol LXV, No 1696, Department of State Bulletin (December 27, 1971) at pp 734-735, Department of State Press Release "Information On Panama Canal Treaty Negotiations." January 12, 1972, at p 2 33 Department of State Press Release "Information on Panama Canal Treaty Negotiations," January 12. 1972, at p 4 CONTRACT SERVICES, INC 865 ly advised by the Office of Interoceanic Canal Negotiations of the United States State Department that the negotiations are continuing. In light of the foregoing facts, we are of the opinion that we ought not at this time reach out to inject further U.S. governmental regulation of matters affecting Panamanian citizens employed in the Canal Zone, when the entire matter of the scope and effect of this country's presence in that zone is a matter undergoing international negotiations. To assert jurisdiction for the first time in this Board's history at this particular juncture would be to risk a negative impact on negotiations. Having refrained thus far from exercising the full extent of our statutory jurisdiction by asserting jurisdiction in this distant area, we see no compelling reason to do so now, and have no desire to take any action which might be a factor in jeopardizing the prospects for a negotiated settlement of the respective rights and duties of the United States and the Panamanian government with respect to Canal Zone matters. Based upon the foregoing, we conclude that the Canal Zone is a state, foreign country, or territory within the definition of "commerce" as defined by Section 2(6) of the National Labor Relations Act, but that it would not effectuate the policies of the Act to assert jurisdiction in the instant case since such action might at this time adversely affect United States-Panamanian relations. Accordingly, we shall dismiss the petition. ORDER It is hereby ordered that the petition in Case 4-RC-8995 be, and it hereby is, dismissed.