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November 21, 1963

Abdullah Ahmad BEY et al.
Francis H. MULDOON et al.

The opinion of the court was delivered by: LORD, III

On December 23, 1959, PMTA and ILA entered into a collective bargaining agreement (hereafter called the Agreement) which contained the following provision § [13(d)]: '* * * Should a system of royalties be determined between the parties hereto as an appropriate method of compensating longshoremen who may lose their job opportunities as a result of technological advancements, then the amount of such royalty shall be predicated upon the royalties paid for the same or a similar device in the Port of New York. * * *'

 Shortly after the Agreement was entered into, Pennsylvania Sugar notified PMTA of a proposed change in method of unloading sugar. Under the new system which was later put into effect, the number of men regularly employed was reduced from 133 to less than 60.

 PMTA and ILA then entered into negotiations under § 13(d) with respect to Pennsylvania Sugar's change in method. On February 26, 1960, an agreement (hereafter called Supplemental Agreement) was reached whereby the 'PMTA-ILA, Local 1291, Royalty Fund' was established, with contributions to be made by the employers at a rate of twenty-eight cents per 2240 pounds of sugar unloaded.

 Pursuant to the Supplemental Agreement, funds were paid by Jarka into a bank account which was accompanied by a letter from the attorneys of both the PMTA and ILA instructing the bank to hold the funds until submission of a trust agreement.

 This action was instituted on January 22, 1962, by plaintiffs, 'sugarworkers', claiming that they alone were entitled to the fund both as a matter of law and as a factual matter, -- that they were the sole intended beneficiaries of the agreements between PMTA and ILA. At that time, no trust agreement had yet been entered into by the parties.

 Defendants moved to dismiss. We denied the motion on June 26, 1962, 217 F.Supp. 401 (E.D.Pa., 1962), holding that plaintiffs had stated a valid cause of action under § 302 of the Labor-Management Relations Act, there being no trust agreement in existence which complied with § 302(c)(5).

 Thereafter, on July 19, 1962, an 'Agreement and Declaration of Trust' (hereafter called Trust Agreement) was entered into between PMTA and ILA and defendants again moved to dismiss, now contending that the Trust Agreement complied with § 302(c)(5). Plaintiffs, in the meantime, amended their complaint to state an additional cause of action under § 301 of the Act, contending that their asserted contractual right to the fund could be enforced under this section. Smith v. Evening News Association, 371 U.S. 195, 83 S. Ct. 267, 9 L. Ed. 2d 246 (1962). This court agreed that there was at least an alleged contractual right, and since a factual question was involved which could not be decided on a motion to dismiss, the motion was denied. We found it unnecessary to decide at that time whether the Trust Agreement was in compliance with the Act: 217 F.Supp. 404 (E.D.Pa., 1963).


 Initially, plaintiffs contend that they as sugarworkers were the sole intended beneficiaries of the collective bargaining contract and supplementary agreement. The intent of the parties, they say, was to benefit the specific 'sugarworkers' laid off as a result of changes in sugar cargo handling methods, whereas the Trust Agreement would dilute plaintiffs' rights by extending benefits to all longshoremen in the unit.

 The proof has failed to sustain plaintiffs' contention. The testimony makes it clear that § 13(d) was not incorporated into the Agreement with only sugarworkers in mind. Underlying its adoption was the fact that there had been a tremendous loss of job opportunities in New York because of technical advances that had nothing to do with sugar, such as containerization and side-port loaders.

 Robert G. Kelly, Esquire, counsel for PMTA and also a defendant, testified (N.T. pp. 195, 196):

 '* * * what the ILA was concerned about and what the New York Shipping Association had recognized was the tremendous loss of job opportunities through containerization, side-port loaders, and matters such as that. For example, a container can come into a port, loaded somewhere in the outlands, and be lifted on the ship in a very simple mechanical operation. In addition, the Grace Line had put in a sideloader that conveyed and stowed cargo with one man operating a machine where twenty-one had previously been used. These were the things that everybody was concerned about. * * * And I can assure you that we weren't thinking about sugar; we were thinking about containerization, side-port loaders, and other methods of automation. * * *'

 There is no doubt that § 13(d) was analogized to the New York situation, for it provides 'that the amount of the royalty shall be in proportion to the royalty paid in New York as the reduction in the number of men employed bears to the reduction in the number of men employed in the Port of New York.'

 Furthermore, the whole underlying history of § 13(d) shows that the thought behind it long antedated the sugar changeover. Indeed, the genesis of the concept was the use by Lavino (a stevedoring firm) of a 'slusher', a machine to move cargo to the center of the hold, sometime before 1955. In 1955, Pennsylvania Sugar adopted a conveyor system in the form of a monorail. The Union and PMTA were unable to agree on the minimum number of men to be employed after the change. The Union contended that this was a matter for negotiation; PMTA contended that the dispute was subject to arbitration. A strike resulted. In a suit to compel compliance with the collective bargaining agreement, the Pennsylvania courts held with PMTA. Philadelphia Marine Trade Association v. International Longshoremen's Association, 382 Pa. 326, 115 A.2d 419 (1955). It was an an outgrowth of this broad dispute that § 13(d) was ...

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