337 F. 2d 777 - Lopes v. Ss Ocean Daphne M T Ss

The significant question raised by this appeal is whether certain sections of the Merchant Seamen's Act1 apply where a foreign seaman ships aboard a foreign flag vessel which is owned and operated by a U.S. corporation. We think the answer must be 'No', because it was not the intent of Congress that these statutes should apply to foreign flag vessels using foreign crews, whether or not they are owned and operated by American citizens.

The libellant Lopes, a foreign seaman, shipped at Baltimore aboard the S.S. Ocean Daphne, which was registered under the laws of Liberia and flew that flag. The vessel was owned and operated by Ocean Carriers, Inc., a New York corporation, and engaged in foreign commerce between ports of the United States and Europe. The articles signed by libellant complied with Liberian law but not with the above sections of the Act. He seeks the penalties prescribed by section 575 of the Act.

We cannot distinguish the case in principle from the recent decisions of the Supreme Court in McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 83 S.Ct. 671, 9 L.Ed.2d 547 (1963); Incres S.S. Co. v. International Maritime Workers, 372 U.S. 24, 83 S.Ct. 611, 9 L.Ed.2d 557 (1963); and Benz v. Compania Naviera Hidalgo, 353 U.S. 138, 77 S.Ct. 699, 1 L.Ed.2d 709 (1957). In Benz the Court declined to apply the provisions of the Taft-Hartley amendments to the National Labor Relations Act in a suit for damages 'resulting from the picketing of a foreign ship operated entirely by foreign seamen under foreign articles while the vessel was temporarily in an American port.' The vessel in question was owned by a Panamanian corporation and flew the Liberian flag. The crew were nationals of countries other than the United States. The only American contact was that the vessel was transiently in a United States port and American labor unions participated in its picketing. The Court found nothing in the Act itself or its legislative history to indicate a clearly expressed affirmative intent on the part of Congress that it apply to foreign seamen on foreign flag vessels in United States ports.

In McCulloch the National Labor Relations Board had asserted its jurisdiction over a representation election aboard a vessel registered under the laws of Honduras and flying the Honduran flag. The crew was foreign. The vessel was owned by a Honduran corporation which was a wholly owned subsidiary of an American corporation and was regularly engaged in commerce between Central and Sough American and U.S. ports. The Supreme Court affirmed the action of the United States District Court for the District of Columbia in enjoining the Board's action holding that the Act did not give the Board jurisdiction over foreign flag vessels carrying foreign crews. The Court conceded the power of Congress to make laws affecting foreign flag vessels in American ports and waters, but the Court held that it would not construe the Act to so apply in the absence of clearly expressed specific intent on Congress' part, which it did not find in this case. The Court rejected the Board's test for finding the Act applicable wherein it sought to strike a balance between the vessel's contacts with its flag country and those which it had with the United States.2 In rejecting the Board's approach, the Court foreclosed the possibility of drawing a distinction between the factual situation existing in Benz, where a foreign flag vessel was foreign owned and only transiently in a U.S. port, and that existing in McCulloch, where a foreign flag vessel was beneficially U.S. owned and shipped regularly out of U.S. ports. The vessel in McCulloch did, however, substantially affect the commerce of Honduras, the nation whose flag it flew.

In Incres the Court again refused to apply the Act where the vessel was a foreign flag vessel (Liberian) beneficially owned by Italian nationals, but regularly engaged for seven months in the year running cruises out of U.S. ports and did not substantially affect the commerce of the nation (Liberia) whose flag it flew. The conclusion is inescapable that the Court will not apply American law affecting internal management to foreign flag vessels in the absence of a clearly expressed specific intent on the part of Congress, and this is true without regard to the beneficial ownership of such vessel.

The libellant contends that Congress clearly and specifically expressed its intent that the sections in question of the Merchant Seamen's Act should apply to a foreign flag vessel which is U.S. owned, thus distinguishing his case from Benz, McCulloch, and Incres. He purports to find this intention in the language of section 713,3 which is the definition section of the Act. We must confess that a superficial consideration of the case lends some support to this argument. It is true that the section uses the phrase 'vessel belonging to any citizen of the United States' in defining the terms 'owner', 'master', and 'seaman' as used throughout the Act. It is equally true that in refusing to apply the sections in question of this Act to 'foreign vessels' as distinguished from 'American vessels', the courts have pointed to this phrase in the definition section as one justification for their decisions.4 But in those cases the vessels were foreign owned as well as foreign registered, and there was no need to distinguish between a foreign registered vessel which was foreign owned and a foreign registered vessel which was U.S. owned. Not only was the distinction not necessary in those cases, but it also was not important in the history of shipping before the mass flight of the American merchant fleet to the Panlibhon flags of convenience to escape the burden of U.S. taxation and other expenses of American registration in the years just prior to World War II.

In this historical context, the dichotomy between U.S. and foreign vessels then before Congress did not involve the category of U.S. owned-foreign registered vessels. Thus the provisions contained in section 5975 expressly making them applicable to seamen on 'foreign vessels' entering U.S. ports, i.e., foreign flag vessels which invariably were foreign owned, do not ipso facto indicate Congress' intention in the present situation, but it may indicate a general intent that the remainder of the Act should not impinge upon the rule of international maritime law which holds that the internal economy and management of a vessel should normally be controlled by the law of the flag. Cf. Wildenhus' Case, 120 U.S. 1, 12, 7 S.Ct. 385, 30 L.Ed. 565 (1887). See also Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), and footnote 9 in McCulloch, discussing the application of the Jones Act, 46 U.S.C.A. 688, and distinguishing those cases on the ground that the application of that Act does not affect 'the pervasive regulation of the internal order of a ship.' There can be no doubt that the application of the sections of the Merchant Seamen's Act here in question would affect 'the pervasive regulation of the internal order of a ship.'

In Ktistakis v. Liberian S.S. Star, 304 F.2d 356 (4 Cir. 1962), this court refused to apply the Act to a foreign registered vessel which was foreign owned, and in doing so it followed the lead of the older cases in relying upon the language of this section. The dictum in that opinion to the effect that the sections under consideration were 'intended to apply to vessels belonging to citizens of the United States' was declared prior to the decisions in McCulloch and Incres, which show the dictum to be in error. We welcome the opportunity to limit that decision to its facts.

In view of the fact that the statute was enacted more than 100 years before the flag of convenience problem arose, we cannot find in Congress' use of this phrase in a definition section-- one concerned primarily with defining the relationships between seamen and masters rather than the extent of the application of American laws to foreign vessels-- the necessary clear and specific Congressional intent called for by the Benz, McCulloch, and Incres decisions. Having come to this conclusion, we do not reach the questions raised by the existence of our treaties with Liberia6 entered into since the enactment of the Merchant Seamen's Act. Whatever hope may have existed for the construction contended for by the libellant before McCulloch, it no longer exists.

We have considered the libellant's claim for liquidated damages and find it without merit.

Affirmed.