SC port's labor dispute ruling is 'just the beginning'

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A State Ports Authority crane operator lifts and places the first cargo container to arrive at the newly opened Leatherman Terminal in March 2021. That job is at the heart of a costly and disruptive labor dispute between the maritime agency and a waterfront union. File/Provided

They're some of the most-coveted and highest-paying jobs at the Port of Charleston.

But for now, at least, they're still up for grabs.

The International Longshoremen's Association last month won a court battle to take those jobs at the $1 billion Leatherman Terminal in North Charleston, but the State Ports Authority — eyeing a potential appeal — continues to let its non-union employees do the work.

Not that there's much work to do.

Only two ships had tied up at Leatherman in the week leading up to the July 28 appeals court ruling, according to the SPA's vessel report. None are scheduled to dock over the next two weeks.

The debate over who will operate cranes at the port's newest container terminal remains deadlocked. And the pricey port facility, once touted as an answer to the nation's snarled supply chain, sits mostly idle.

The paralysis on North Charleston's waterfront symbolizes a greater uncertainty throughout the Southeast, as port leaders in the Carolinas and Georgia try to make sense of the potential new reality they've been dealt by the Fourth Circuit Court of Appeals.

"I think this is just the beginning of trying to understand what this all means," Ron Brinson, a North Charleston city councilman and former CEO of the Port of New Orleans, said of the appeals court ruling. "Every port authority in the South Atlantic, particularly Savannah, will be watching this with eagle eyes."

That clarity could take a while as the SPA contemplates possible legal maneuvers to preserve a decades-old "hybrid labor model" at Southeast ports, where non-union state employees earning $40 an hour or more operate cranes while their ILA counterparts move cargo containers through the terminal yards.

"Given the critical nature of this issue to our business and our state, we are still evaluating all our options," Barbara Melvin, the SPA's president and CEO said in a written statement. "A final decision has not been made."

She said the port has "been very successful with our hybrid operating model, remaining competitive as the eighth-largest container port in the country."

A three-judge appeals court panel, by a 2-1 margin, upheld a National Labor Relations Board ruling that gives the International Longshoremen's Association the right to operate the ship-to-shore cranes at Leatherman, which opened its first phase more than two years ago.

The union, which represents dockworkers from Maine to the Gulf Coast, argued that a decade-old revision to its contract with the U.S. Maritime Alliance calls for the ILA to run the container cranes at any new terminal that opens in ports that have historically filled that role with non-union workers.

The Leatherman dispute was the first test of that pact with the alliance, which represents most of the international container lines that transport goods to and from U.S. ports.

It's likely far from the last.

Harold Daggett, the ILA's president, said in a written statement that the "Fourth Circuit victory opens the door for hundreds, maybe thousands of new jobs" for the union.

Container ships have been a rare sight at the Leatherman Terminal in North Charleston due to a labor dispute between the State Ports Authority and the International Longshoremen's Association. Walter Lagerenne/State Ports Authority/Provided

"This ruling doesn't just apply to new work in Charleston," he said. "It will apply in Savannah, Ga., and any port area that is constructing new terminals."

Daggett was pointing out the Georgia Ports Authority's long-term plans to expand its cargo-handling operations to Hutchinson Island. GPA officials declined to comment on the appeals court ruling and its impact on their business.

The union has long been preparing for the possibility that it would prevail in South Carolina. Charles Brave, president of the local that provides dockworkers at the Port of Charleston, said in October that the ILA has been working for months to get members certified to operate the cranes at Leatherman. Some have trained on a simulator in Baltimore.

Although the ILA won at the appeals court level, the victory wasn't clear-cut. One of the three judges said in a dissenting opinion that the S.C. State Ports Authority, which owns and operates the Port of Charleston, should have prevailed.

That's in addition to an earlier ruling in favor of the SPA by an administrative law judge, whose decision was later overturned by the National Labor Relations Board. That set up the 4th Circuit showdown in Richmond, Va.

A labor expert said those prior wins could give the SPA hope that it could ultimately prevail at the highest court in the land.

"That's a sound and reasonable decision," Michael Carrouth, a Columbia lawyer who specializes in labor law, said of a U.S. Supreme Court appeal.

Other judges have already come to a different conclusion than the appeals court majority, so a further challenge "is not just tilting at windmills," he said.

"I would say it gives you very reasonable grounds to say we're going to follow up on the administrative law judge's analysis, and we're going to follow up on this dissent and push that to the Supreme Court," Carrouth said.

The SPA could also ask the full Fourth Circuit — 18 judges in all — to look at the case in what's called an "en banc" or "on the bench" hearing. But it's a long shot. The court has agreed to do so in just 37 cases out of the thousands of appeals it's reviewed over the past decade.

The SPA hadn't decided as of last week whether it will challenge last month's decision. S.C. Attorney General Alan Wilson "is talking to ports authority officials, and they are exploring their options," a spokesman said, but it's still not clear what the next move will be.

If it ultimately winds up before the nation's highest court, politics could play as big a role as law.

A majority of the labor board that overturned the administrative law judge's decision was appointed by Democrats, and the current board is seen by analysts as being pro-labor and anti-management. The two appeals court judges who ruled in favor of the ILA were also appointed by Democrats, with the dissenting judge a Republican appointee.

Two-thirds of the U.S. Supreme Court's judges were appointed by Republicans — typically seen as a pro-business party. Carrouth, the Columbia labor attorney, said that could give the SPA an edge.

The Supreme Court doesn't take every case that comes its way. It typically agrees to hear 100 to 150 of the roughly 7,000 disputes it's asked to review and resolve each year. It often takes cases when there's a discrepancy between appeals court rulings in different circuits, but that's not the issue in the Leatherman labor flap.

So, it could come down to whether the high court wants to ultimately define a key issue in the case — whether the ILA's quest to operate the cranes was a legal effort to preserve jobs for its members or an illegal attempt to expand its workforce.

The Fourth Circuit majority said the ILA wanted to preserve jobs because crane operations are among the tasks union workers perform at almost every other port on the East and Gulf coasts. Since the union's contract with the maritime alliance covers all of those locations, it should govern what happens in Charleston as well, the two judges said.

The dissenting jurist said it was an illegal job grab, because ILA members have never operated cranes in Charleston.

There's enough disagreement to have even the nation's top labor experts wavering.

"On the face of it, I would guess that the contract between the ILA and the maritime alliance — a freely entered-into agreement by both parties — would be upheld. But the state also has an interest in the deal so it may have standing to challenge," said Susan Schurman, distinguished professor of labor studies and employment relations at Rutgers University.

Unless an appeal is filed and the decision reversed, the Fourth Circuit ruling will stand. And that has anti-union activists fuming.

Mark Mix, president of the National Right to Work Foundation, called the July ruling "devastating," adding it will "put the jobs of hundreds of union-free South Carolina state employees at Charleston's Leatherman Terminal on the chopping block."

The foundation, which opposes mandatory union membership, filed a "friend of the court" brief supporting the SPA in the appeals court case.

The ports authority has also raised questions about whether ship operators would use a nearly all-union Leatherman. The maritime agency's in-house study showed container lines are charged nearly two-thirds more per container at Virginia's all-union port than in Charleston. Savannah's costs are also lower than Virginia's.

The difference comes down to labor expenses, according to the study, and it means container lines will likely bypass Leatherman in favor of less-expensive options in Charleston or elsewhere.

However the ltigation plays out, the SPA's older terminals in Mount Pleasant and North Charleston will continue to operate under the longstanding "hybrid" arrangement, with state employees running the cranes and union workers moving cargo on the ground down below.

In the meantime, Leatherman has been all but shut down.

After opening more than two years ago at the south end of the old Navy base, the terminal has operated at about 15 percent of its annual capacity of 700,000 20-foot cargo containers. The ILA has threatened to sue any alliance member that calls on the terminal while non-union workers are operating the cranes. The Fourth Circuit decision said the union has every right to do that.

Daggett, the ILA president, doubled down on the legal threat during the union's convention last month, saying the alliance, which goes by the acronym USMX, "did not back us up on our contract."

"I knew in my heart that the ILA's position was firm and that we had a right to sue," Daggett told union delegates. "Now I have lost faith in the USMX. You are not honorable."

Brinson, the former New Orleans port boss and now a consultant to ports around the country, said any doom-and-gloom predictions might be overblown. He's seen well-run terminals operated by an all-union workforce at other ports, and there's no reason to believe it couldn't work in Charleston.

"I don't think this is doomsday. But it's beginning to be a different playing field," he said.

Brinson added that the SPA needs to reconcile how the ILA would fit within and change its decades-old division of labor on the waterfront.

"It would be a mistake to label the ILA as the bad guys here," he said. "There is one fundamental reality — and you can quote this and put it in all caps — the productivity of longshore labor is a key to any modern port's competitiveness. Period. You can't take the ILA for granted."

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Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_

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