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International Longshore and Warehouse Union v. ICTSI Oregon, Inc.

United States District Court, D. Oregon

March 24, 2014

ICTSI OREGON, INC., Defendant, and PORT OF PORTLAND and IBEW LOCAL 48, Intervenor-Defendants. ICTSI OREGON, INC., Counterclaim-Plaintiff,

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For Pacific Maritime Association: Jeffrey P. Chicoine, Miller Nash LLP, Portland, Oregon; Clifford D. Sethness and Jason M. Steele, Morgan, Lewis & Bockius LLP, Los Angeles, California.

For International Longshore and Warehouse Union and International Longshore and Warehouse Union Locals 8 and 40: Robert S. Remar, Eleanor I. Morton, Emily Maglio, Amy Endo, and Philip C. Monrad, Leonard Carder, LLP, San Francisco, California; Robert H. Lavitt, Schwerin, Campbell, Barnard, Iglitzin & Lavitt LLP, Seattle, Washington.

For ICTSI Oregon, Inc.: Michael T. Garone, Thomas M. Triplett, Romá n D. Herná ndez, and Amanda T. Gamblin, Schwabe, Williamson & Wyatt, PC, Portland, Oregon.

For the Port of Portland: Randolph C. Foster, Jeremy D. Sacks, Nathan C. Brunette, and Kathy Ann Peck, Stoel Rives LLP, Portland, Oregon; Kathy Ann Peck, Williams, Zografos & Peck PC, Lake Oswego, Oregon.

For IBEW Local 48: Norman D. Malbin, Portland, OR.


Michael H. Simon, United States District Judge.

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This matter is one of six separate but related lawsuits arising from a labor dispute at Terminal 6 at the Port of Portland.[1] The dispute arose over who is entitled to perform the work of plugging in,

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unplugging, and monitoring refrigerated shipping containers (the " reefer work" ) at Terminal 6. Plaintiffs International Longshore and Warehouse Union (" ILWU" ) and the Pacific Maritime Association (" PMA" ) contend that Defendant ICTSI Oregon, Inc. (" ICTSI" ), the operator of Terminal 6 and a member of PMA, must assign the reefer work to ILWU members. ICTSI, and Intervenor-Defendants the Port of Portland (the " Port" ) and the International Brotherhood of Electrical Workers (" IBEW" ) Local 48, contend that the reefer work must be assigned to IBEW members.

As part of this lawsuit, Defendant ICTSI asserts several counterclaims, including a counterclaim against both PMA and ILWU under the federal antitrust laws and a counterclaim against PMA for breach of fiduciary duty (ECF 109). PMA has moved to dismiss ICTSI's antitrust counterclaim (ECF 131), and ILWU has joined that motion (ECF 133). PMA has also moved to dismiss ICTSI's counterclaim against PMA for breach of fiduciary duty (ECF 131). In addition, Defendant-Intervenor, the Port, asserts several counterclaims, including a counterclaim against both PMA and ILWU for tortious interference (ECF 136). Both PMA and ILWU have moved to dismiss the Port's tortious interference counterclaim (ECF 138 and 146, respectively). For the reasons that follow, PMA and ILWU's motions are granted in part and denied in part.


A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint " may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A complaint must contain sufficient factual allegations to " plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation." Baca, 652 F.3d at 1216. " A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 663 (citing Bell A. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).


The labor dispute giving rise to this case and its related cases both before this Court and the National Labor Relations Board (" NLRB" ) is factually intensive and " highly complex and very technical." Int'l

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Longshore & Warehouse Union, AFL-CIO, 2013 WL 4587186 (NLRB Aug. 28, 2013). For purposes of the pending motions, the Court briefly summarizes the facts admitted to or alleged by ICTSI or the Port that are relevant to the specific counterclaims PMA and ILWU have moved to dismiss.

ILWU is a labor union that " represents longshore workers, longshore mechanics, gearmen, and marine clerks, employed by waterfront companies who are members of PMA, at all West Coast ports including Portland, Oregon." Compl. (ECF 1) ¶ 3; ICTSI Am. Answer and Counterclaims (ECF 109) (" ICTSI CC" ) ¶ 61. PMA is " a multiemployer collective bargaining association whose members include stevedoring companies, terminal operators, and maintenance and repair contractors that employ dockworkers, such as longshoremen" throughout the West Coast. Compl. ¶ 4; ICTSI CC ¶ 61. PMA has approximately 70 members companies, each of whom delegate bargaining authority to PMA. ILWU and PMA are parties to the Pacific Coast Longshore Contract Document (" PCLCD" ), a collective bargaining agreement covering commercial ports along the West Coast, which governs the terms and conditions of employment of all longshore workers. The PCLCD is administered by the joint Coast Labor Relations Committee (" CLRC" ), which is composed of representatives of ILWU and PMA.

PMA pays more than 50 percent of the cost to operate a joint dispatch facility with ILWU. The dispatch facility determines which longshoreman to dispatch, pays the salary and benefits of those who are dispatched, and is paid by member and non-member employers based on hours worked by longshoremen.

For decades, PMA and ILWU negotiated successive bargaining agreements. In 2008, the PCLCD included for the first time a provision that maintenance and repair work, including the reefer work at issue in this case, be performed by ILWU-represented employees. Before this time, the reefer work had been performed at some ports, including Terminal 6, by employees who were not ILWU members. When the 2008 PCLCD was negotiated, PMA members that had direct contracts with other unions for the reefer work were exempted from the new requirement that such work be assigned to ILWU members.

The Port operated Terminal 6 until February 2011, when ICTSI commenced operating Terminal 6 pursuant to a long-term lease agreement between the Port and ICTSI (" Terminal 6 Lease" ). IBEW-represented employees of the Port had performed the reefer work on Terminal 6 for decades. Because the Port was not a PMA member, it was not bound by the PCLCD and did not receive the benefit of the bargained exemption in the 2008 PCLCD for current PMA members exempting them from assigning reefer work to ILWU members. Even after ICTSI took over operations at Terminal 6, the Port continued, under the terms of the Terminal 6 Lease, to manage the reefer work and assign that work to IBEW-represented Port employees. ICTSI joined PMA in June 2011, several months after it had entered into the Terminal 6 Lease.

In 2011 and 2012, ILWU filed numerous grievances against ICTSI and other PMA members complaining about the non-ILWU workers performing the reefer work. IBEW threatened to picket if the reefer work were assigned to ILWU-represented employees. ICTSI then filed a complaint before the NLRB against IBEW, in which ILWU intervened. The night before the NLRB hearing on May 24, 2012, the CLRC held a meeting to which ICTSI and the Port were not invited and agreed that the reefer work at Terminal

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6 should be performed by ILWU-represented workers. Shortly thereafter, in June 2012, an arbitrator reached the same conclusion and ordered ICTSI to have ILWU-represented workers perform the reefer work. In August 2012 the NLRB awarded the reefer work to ILWU-represented workers.[2]

PMA, with the encouragement and direction of ILWU, threatened to fine ICTSI $50,000 per day and to expel ICTSI from the PMA if ICTSI did not have ILWU members perform the reefer work. PMA member companies also threatened to bypass the Port unless the reefer work was performed by ILWU members. Beginning in June 2012, ILWU " engaged in slowdowns, work stoppages, safety gimmicks and the like and have prosecuted numerous grievances against both ICTSI and ocean carriers calling on Portland in an effort to force ICTSI to assign the disputed work to the ILWU; and to ignore the NLRB's jurisdictional ruling." ICTSI CC ¶ 69G. PMA and ILWU also dispatched " inefficient" workers and workers who are not " Registered Longshoremen" to ICTSI. ICTSI CC ¶ ¶ 69O, P. PMA and ILWU filed this action in federal court to enforce the arbitration award and force ICTSI to assign the reefer work to ILWU members, and PMA filed another federal lawsuit seeking to invalidate the NLRB decision awarding the work to IBEW-represented workers.[3] ICTSI and the Port responded to these actions by filing several complaints before the NLRB, alleging that these actions by ILWU were unfair labor practices in violation of labor law.[4]

ICTSI also alleges that ILWU " caused" the Port of San Diego to replace a non-PMA member with a PMA member, caused EGT, LLC (" EGT" ) in the Port of Longview to terminate the services of a company that did not use ILWU-represented labor and execute a collective bargaining agreement in which EGT agreed to use ILWU-represented workers, and threatened third parties in other ports, insisting that a PMA member be retained to perform longshore services. ICTSI CC ¶ ¶ 69K-M.


A. ICTSI's Antitrust Counterclaim

In a single counterclaim against both PMA and ILWU that ICTSI labels " Antitrust," ICTSI alleges that PMA and ILWU " have violated the provisions of 15 U.S.C. § § 1 and 2 of the Sherman Act." ICTSI CC ¶ 58. PMA moves to dismiss ICTSI's antitrust counterclaim on the grounds that the alleged actions on which the antitrust counterclaim is based are exempted from the federal antitrust laws pursuant to the nonstatutory labor exemption. ILWU joins this motion and further moves to dismiss ICTSI's antitrust counterclaim to the extent it is based on allegations of ILWU's unilateral, traditional union activity on the grounds that this conduct is subject to the statutory labor exemption from federal antitrust laws. As discussed below, both of these arguments are well taken, and ICTSI's antitrust counterclaim is dismissed.

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1. The Noerr-Pennington doctrine immunizes PMA and ILWU's federal lawsuits from antitrust scrutiny

Before considering the statutory and nonstatutory labor exemptions from the federal antitrust laws argued by PMA and ILWU, the Court notes that ICTSI bases its antitrust counterclaim, in part, on the fact that PMA and ILWU have not dismissed their claims in this lawsuit and have filed a second lawsuit challenging the NLRB's jurisdiction. The Noerr-Pennington doctrine " provides broad antitrust protection for those who 'petition the government for a redress of grievances.'" USS-POSCO Indus. v. Contra Costa Cnty. Bldg. & Constr. Trades Council, AFL-CIO, 31 F.3d 800, 810 (9th Cir. 1994) (quoting City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 378, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991). This protection extends to petitioning administrative agencies and courts. Id. This protection may be lost when parties institute " sham" proceedings " with or without probable cause, and regardless of the merits of the cases." Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 511-12, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). ICTSI alleges, in conclusory fashion, that the two federal lawsuits brought by PMA and ILWU are a " sham."

ICTSI fails, however, sufficiently to allege facts from which the Court can reasonably infer that the two federal lawsuits are a sham. The act of filing these two lawsuits does not support a contention that ILWU and PMA are inappropriately using the courts to achieve an anticompetitive goal without consideration of the merits of their cases. In considering each case, they are not " objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus. Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). In fact, PMA prevailed at summary judgment in one of the cases. See Pac. Mar. Ass'n v. N.L.R.B., Case No. 3:12-cv-02179-MO, Judgment, Docket 54 (D. Or. June 17, 2013). This prohibits the application of the " sham exception."

To the extent ICTSI is attempting to allege a sham exception based on a " whole series of legal proceedings," it is doubtful that two cases are sufficient, but even if they were, the sham exception still would not apply. USS-POSCO, 31 F.3d at 811. In considering the application of the sham exception to an alleged series of legal proceedings, the question is not whether any one case has merit, but whether the cases are brought pursuant to a policy of commencing proceedings without regard to their merits. Id. Because PMA has already prevailed at summary judgment in one of the two lawsuits, it cannot reasonably be alleged that these lawsuits were brought without regard to their merits. Id. (finding that a " batting average" of approximately .500 " cannot be reconciled with the charge that the unions were filing lawsuits and other actions willy-nilly without regard to success" ). Thus, the allegations that ILWU and PMA have engaged in federal litigation cannot support ICTSI's antitrust counterclaim.

2. The statutory labor exemption applies to the alleged conduct solely performed by ILWU

Based on the " 'interlacing'" Sherman, Clayton, and Norris-LaGuardia Acts, certain conduct by organized labor is given a " statutory" exemption from federal antitrust laws. USS-POSCO, 31 F.3d at 805 (quoting United States v. Hutcheson, 312 U.S. 219, 232, 61 S.Ct. 463, 85 L.Ed. 788 (1941); see also Connell Constr. Co. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 621, 95 S.Ct. 1830, 44

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L.Ed.2d 418 (1975). As long as a union acts in its own legitimate self-interest and does not combine with nonlabor groups, these statutes exempt from antitrust scrutiny traditional union activities, including secondary picketing, boycotts, hand-billing, and encouraging work stoppages. See Connell, 421 U.S. at 622; USS-POSCO, 31 F.3d at 805, 808-809.

In applying the statutory labor exemption, courts do not distinguish the " licit and the illicit" or look to " the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end of which the particular union activities are the means." Hutcheson, 312 U.S. at 232. " [W]here a union engages in activities normally associated with labor disputes, these will be presumed to be in pursuit of the union's legitimate interest absent a very strong showing to the contrary." USS-POSCO, 31 F.3d at 808. Union activity done to " eliminate non-union shops altogether by making an example" of a particular employer is a legitimate labor goal subject to the strong presumption, as is activity done to preserve jobs for union members. See, e.g., id. at 809 (noting that traditional union activities done to eliminate non-union shops are in the union's legitimate self-interest); Intercontinental Container Transp. Corp. v. New York Shipping Ass'n, 426 F.2d 884, 887 (2d Cir. 1970) (" Union activity having as its object the preservation of jobs for union members is not violative of the anti-trust laws." ). The statutory labor exemption is not an affirmative defense but is an element (or, to be precise, its inapplicability is an element) of any claim that a union has violated the antitrust laws. USS-POSCO, 31 F.3d at 805 n.3. Accordingly, the party bringing the antitrust claim bears the burden of proving that the exemption does not apply. Id.

Here, ICTSI's antitrust counterclaim is based, in part, on allegations that ILWU engaged in the traditional activities of work stoppages, slowdowns, and filing grievances in an attempt to force ICTSI to assign the reefer work to ILWU workers. ICTSI CC ¶ 69G. ICTSI has not alleged that PMA and ILWU conspired together and agreed that ILWU would engage in such conduct, nor could such an allegation plausibly be made. PMA members suffer as a result of the alleged work stoppage and slow downs, and PMA filed its own lawsuit against ILWU to restrain this alleged conduct.

The alleged work stoppages, slowdowns, and filing of grievances by ILWU are traditional union activity, done for the purpose of trying to preserve jobs for ILWU workers. Although ILWU workers did not historically perform reefer services at Terminal 6, the negotiated compromise in the 2008 PCLCD requiring that reefer work be assigned to ILWU members was an attempt to preserve jobs for ILWU members because other jobs historically performed by ILWU members were being lost to technology. Because these actions were done in furtherance of ILWU's legitimate self-interest and were not done in concert with a nonlabor group, the Court cannot look to the wisdom or wrongness of the alleged activities. They are exempt from federal antitrust law.

ICTSI also alleges that ILWU threatened and otherwise " caused" third parties to use PMA members to provide longshore services in other ports and use ILWU labor. ICTSI CC ¶ ¶ 69K, L, M. First, such allegations are insufficient to state a claim for antitrust liability or injury. ICTSI does not allege how or why ILWU " caused" the other ports to use PMA members. ICTSI also does not allege that ILWU engaged in this conduct at the behest of PMA to reduce competition

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or drive out competitors of PMA or its members. Additionally, as discussed further below, PMA has more than 70 members who are competitors with one another, and thus does not fall within the classical definition of a " monopoly" under federal antitrust law. Second, even if these allegations by ICTSI gave rise to potential antitrust liability, the union's activities as alleged are exempt under the statutory labor exemption. The alleged conduct was engaged in by the union in its own legitimate self-interest. As admitted by ICTSI in its Answer and Counterclaims, ILWU represents longshore workers who are employed by members of PMA. Thus, having ports use vendors that are PMA members necessarily results in the use of ILWU labor. This is a legitimate union goal. Thus, the alleged conduct is exempt from federal antitrust law.

3. The nonstatutory labor exemption applies to the alleged joint action by ILWU and PMA

ICTSI also bases its antitrust counterclaim on alleged conduct pursuant to alleged agreements between PMA and ILWU. The statutory labor exemption does not exempt concerted action or agreements between unions and nonlabor parties. Connell, 421 U.S. at 622. Thus, the alleged conduct is not subject to the statutory exemption. It is, however, subject to the nonstatutory labor exemption.

a. The contours of the nonstatutory labor exemption

The Supreme Court has recognized that a proper accommodation between the congressional policy favoring collective bargaining and the congressional policy favoring free competition " requires that some union-employer agreements be accorded a limited nonstatutory exemption from antitrust sanctions." Id. This exemption " interprets the labor statutes . . . as limiting an antitrust court's authority to determine, in the area of industrial conflict, what is or is not a 'reasonable' practice" and " substitutes legislative and administrative labor-related determinations for judicial antitrust-related determinations as to the appropriate legal limits of industrial conflict." Brown v. Pro Football, Inc., 518 U.S. 231, 236-37, 116 S.Ct. 2116, 135 L.Ed.2d 521 (1996). " '[S]ome restraints on competition imposed through the bargaining process must be shielded from antitrust sanctions' to give effect to federal labor policy and to allow meaningful collective bargaining to occur." California ex rel. Harris v. Safeway, Inc., 651 F.3d 1118, 1125 (9th Cir. 2011) ( en banc ) (" Safeway " ) (alteration in original) (quoting Brown, 518 U.S. at 237). " [I]t would be difficult, if not impossible, to require groups of employers and employees to bargain together, but at the same time to forbid them to make among themselves or with each other any of the competition-restricting agreements potentially necessary to make the process work." Brown, 518 U.S. at 237 (emphasis in original). The precise boundaries of the nonstatutory labor exemption have never been delineated by the Supreme Court, and what guidance it has given " 'has come mostly in cases in which agreements between an employer and a labor union were alleged to have injured or eliminated a competitor in the employer's business or product market.'" Safeway, 651 F.3d at 1125 (quoting Clarett v. Nat'l Football League, 369 F.3d 124, 131 (2d Cir. 2004)).

Historically, the application of the nonstatutory labor exemption was only considered in cases involving union-employer agreements. See Connell, 421 U.S. at 622 (noting that the non

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statutory exemption is necessary for " some union-employer agreements" ) (emphasis added). In considering whether the nonstatutory exemption applies to an agreement between a union and an employer, the Court of Appeals for the Ninth Circuit has adopted the three-part test articulated in Mackey v. Nat'l Football League, 543 F.2d 606 (8th Cir. 1976). See Phoenix Elec. Co. ...

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