What if the West Coast Ports Shut Down by Lockout or Strike? Is it Time to Invoke Taft-Hartley?

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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Since the expiration of a labor contract in July 2014, negotiations for a new contract have dragged on between management representatives of the Pacific Maritime Association (PMA)—a multi-employer bargaining association representing terminal operators, stevedores, and shipping companies—and the longshore workers union, the International Longshore and Warehouse Union (ILWU). Working without a contract for nearly nine months, 20,000 ILWU members have engaged in a work slowdown for more than three months; this pressure from negotiating parties has had a significant economic impact on both management and the union. All 29 West Coast ports, from Bellingham, Washington to San Diego, California, have been affected.

 

Even with the help of federal mediators from the Federal Mediation and Conciliation Service (FMCS), who have been involved since early January, the labor dispute appears to be on the verge of a strike or lockout.

 

PMA made its “best and final offer” on February 4, 2015, which according to PMA President and Chief Executive Officer James McKenna included a 14 percent raise on top of a $147,000 annual average salary, fully paid health care (which costs employers $35,000 per employee), and an ILWU pension in the amount of $88,800 per year. Yet the parties remain at loggerheads in spite of federal mediation.

 

On February 6, 2015, McKenna warned that the PMA could lock out the dockworkers from all terminals along the West Coast within 10 days if the two sides did not reach a new contract. According to a PMA press release, spokesman Wade Gates stated,

 

After three months of union slowdowns, it makes no sense to pay extra for less work, especially if there is no end in sight to the union’s actions, which needlessly brought West Coast ports to the brink of gridlock.

 

ILWU President Robert McEllrath responded by blasting the PMA for threatening to shut down West Coast ports in the midst of negotiations.

 

West Coast ports handle more than half of all international ocean freight arriving and leaving the United States. The slowdown has already affected rail and trucking in and around the ports, and has forced manufacturers, retailers, and agricultural and food service employers to stockpile goods or find alternative means, where possible, to bypass the West Coast ports for deliveries and exports. A strike or lockout that shuts down the ports would have catastrophic effects on the nation’s economy. A 10-day lockout in 2002 cost the economy $1 billion per day. Today, such a shutdown would cost more than $2 billion daily, according to a study by the National Association of Manufacturers and the National Retail Federation.

 

Time for Taft-Hartley?

 

The time is rapidly approaching for the Obama administration to step in to end the dispute.

 

Federal labor law provides a process under section 176 of the Taft-Hartley Act of 1947 for addressing national labor disputes, such as the current West Coast ports impasse, which threaten the free flow of commerce or jeopardize the health and safety of the country. But invoking the Taft-Hartley provisions is controversial since federal labor policy is intended to promote free collective bargaining without government interference. Invoking the Taft-Hartley provisions is also politically controversial for elected officials who rely on the support of organized labor, although it may be popular with the public at large.

 

For example, in 1971, President Nixon invoked the Taft-Hartley Act to end a dock strike. President Carter used the Act in 1978 in an attempt to stop a strike by coal miners. In 2002, President Bush put into motion efforts to end the West Coast port shutdown under the Act, and threatened military intervention to end the lockout, which caused then secretary-treasurer (and current president) of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Richard Trumka, to complain:

 

If every employer thinks the federal government will step in, why should employers negotiate and let the national bargaining process work? Why not just lock out, claim that the economy is being hurt, invite the government in and get your way?

 

Nevertheless, the law provides a process designed to provide the president with the needed tools to act in the interests of the nation to step in to halt a labor dispute.

 

Invoked 36 times in the past 65 years in efforts to keep labor unions working during contract disputes, the law requires a multi-step process aimed at resolving the dispute. However, it does not guarantee the resolution of the labor conflict or the elimination of work slowdowns; in many cases, it has failed.

 

There is, however, recent precedent for President Obama to act in railway and airline disputes under the Railway Labor Act (RLA). As recently as 2013, President Obama was requested under section 9A of the Railway Labor Act (45 U.S.C. 159a) to establish a Presidential Emergency Board to end the Long Island Rail Road strike. He did so by Executive Order on November 21, 2013 under section 9A(c) of the RLA, which provides that the president, upon such request, shall appoint an emergency board to investigate and report on the disputes.

 

The Taft-Hartley Process

 

If there is a lockout by PMA or a strike by the ILWU in the current West Coast ports labor dispute, the president and Congress will consider a process for invoking the Taft-Hartley Act. It appears that with the FMCS already involved by invitation of the parties, the next action will take place at Step 2 of the process—the president’s appointment of a Board of Inquiry. The six-step process leading up to action by Congress is as follows:

 

Step One

 

The FMCS assumes the following duties:

 

  • preventing or minimizing interruptions of the free flow of commerce growing out of labor disputes;
  • assisting parties to labor disputes in industries affecting commerce; and
  • helping settle such disputes through conciliation and mediation.

Step Two

 

If the FMCS is not able to bring the parties to agreement within a reasonable time:

 

  • the FMCS shall seek to induce the parties voluntarily to seek other means of settling the dispute without going to a strike or lockout; or
  • the president may appoint a Board of Inquiry to inquire into the issues involved in the dispute based on the president’s assessment that “a threatened or actual strike or lockout, affecting an entire industry or a substantial part thereof engaged in trade, commerce, transportation, transmission, or communication among the several States or with foreign nations, or engaged in the production of goods for commerce, will, if permitted to occur or to continue, imperil the national health or safety.”

The Board of Inquiry’s report must

 

  • include the facts about the dispute, including each party’s position, but not contain any recommendations;
  • be filed with the FMCS by the president; and
  • be made available to the public.

Step Three

 

The president may choose to direct the attorney general of the United States to petition any U.S. District Court to enjoin or stop a strike or lockout.

 

Step Four

 

The court shall enjoin a strike or lockout and make any other appropriate orders if the court finds that the strike or lockout

 

  • affects an entire industry or a substantial part engaged in trade, commerce, transportation, transmission, or communication among the several states or with foreign nations, or engaged in the production of goods for commerce; and
  • will imperil the nation’s health or safety if permitted to occur or continue.

Whenever a district court has enjoined a strike or lockout based on these criteria—forcing striking or locked-out workers to return to work—the parties to the labor dispute have been required to make every effort to adjust and settle their differences, with the assistance of the FMCS, within the next 60 days.

 

Step Five

 

The president reconvenes the Board of Inquiry. At the end of a 60-day period, unless the dispute has been settled by that time

 

  • the Board of Inquiry will report to the president the current position of the parties and the efforts that have been made for settlement;
  • the president will make such report available to the public; and
  • the National Labor Relations Board (NLRB), within 15 days, will conduct a secret ballot of the employees of each employer involved in the dispute asking if they wish to accept the final offer of settlement. After this vote and within five days, the NLRB will then certify the results to the attorney general of the United States.

Step Six

 

The attorney general of the United States will move the court to discharge the injunction of the strike or lockout. In addition, the president will submit a full and comprehensive report to Congress of the proceedings, including the findings of the Board of Inquiry and the ballot taken by the NLRB, along with any recommendations to make for consideration and appropriate action.

 

It is then up to Congress to take up the new labor contract for the parties to end the dispute.

 

Conclusion

 

The work slowdown on the West Coast ports has already damaged 7,000 truckers and the railroads that operate on the ports, as well as truckers and other employers throughout the country that are unable to make deliveries, export their products, or import needed goods on time or, in some cases at all. In anticipation of labor problems on the West Coast—and based on the bitter experience from the 2002 West Coast ports labor dispute—savvy employers that were informed about the issue began stockpiling goods in advance of the slowdown and, where possible, diverting exports and imports to East Coast and Gulf Coast ports where the International Longshoremen’s Association (a competitor of the ILWU), is not involved in any labor dispute.

 

If manufacturers, retailers, and farmers throughout the country continue to suffer or the slowdown results in a full-blown strike or lockout or in the unlikely event the dispute spreads to ports in the East, it would be time for the administration to take the politically controversial step of invoking the Taft-Hartley Act.

 

A broad consortium of national employer organizations (including such trade associations as the U.S. Chamber of Commerce, National Association of Manufacturers, National Retail Federation, Retail Industry Leaders Association, and American Trucking Associations) have directly urged the parties to end the dispute, as have members of Congress. The business groups have met with Obama administration officials from the White House and the Departments of Commerce, Labor, and Transportation, as well as leaders in Congress to urge resolution of the labor dispute. In a letter late last year to the president, calling for FMCS involvement, the business groups wrote

 

The impact this [a West Coast ports shutdown] would have on jobs, downstream consumers and the business operations of exporters, importers, retailers, transportation providers, manufacturers and other stakeholders would be catastrophic.

 

The U.S. Senate Committee on Commerce, Science, and Transportation has scheduled a hearing for February 10, 2015 on “Keeping Goods Moving.” The next step should come from the administration to “keep the goods moving” before the situation worsens.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

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