494 F.2d 1230 (2nd Cir. 1974), 714, Danielson v. Joint Bd. of Coat, Suit and Allied Garment Workers' Union, I.L.G.W.U.

• Citation: 494 F.2d 1230
• Party Name: Sidney DANIELSON, Regional Director of Region 2 of the National Labor Relations Board, for and on behalf of the National Labor Relations Board, Petitioner-Appellee. v. JOINT BOARD OF COAT, SUIT AND ALLIED GARMENT WORKERS' UNION, I.L.G.W.U., Respondent-Appellant.
• Case Date: February 27, 1974
• Court: United States Courts of Appeals, U.S. Court of Appeals — Second Circuit

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494 F.2d 1230 (2nd Cir. 1974)

Sidney DANIELSON, Regional Director of Region 2 of the National Labor Relations Board, for and on behalf of the National Labor Relations Board, Petitioner-Appellee.

v.

JOINT BOARD OF COAT, SUIT AND ALLIED GARMENT WORKERS' UNION, I.L.G.W.U., Respondent-Appellant.

No. 714, 73-2813.

United States Court of Appeals, Second Circuit.

February 27, 1974

Argued Jan. 17, 1974.

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Emil Schlesinger, New York City (Schlesinger, Schlesinger & Schlesinger, New York City, of counsel), for appellant.

Marvin Roth, Deputy Asst. Gen. Counsel, N.L.R.B., Washington, D.C. (Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Gerald Brissman, Associate Gen. Counsel, Jack D. Eisenberg, N.L.R.B., Washington, D.C., of counsel), for appellee.

Before FRIENDLY and MANSFIELD, Circuit Judges, and ZAMPANO, District Judge. ^[*]

FRIENDLY, Circuit Judge:

This appeal from an order of the District Court for the Southern District of New York granting an injunction against picketing on a petition of the Regional Director of the Labor Board under § 10(l) of the National Labor Relations Act raises important questions concerning the interpretation of §§ 8(b)(4), 8(b)(7), and 8(e) of the National Labor Relations Act and the standard governing the issuance of injunctions under § 10(l).

I.

The facts are simple and largely undisputed: Hazantown, Inc., a New York corporation, is engaged in the business of importing and arranging for the manufacture of women's garments. As a 'jobber' in the manufacturing process, Hazantown follows the predominant pattern of the New York garment industry. It purchases raw materials from suppliers, delivers them to contractors who manufacture garments according to Hazantown's specifications, and upon redelivery sells the garments to retail establishments. Because of this method of operation, Hazantown maintains only about seven employees, primarily shipping clerks and office workers. ¹

On September 12, 1973, agents of the Joint Board of Coat, Suit and Allied Garment Workers' Unions, I.L.G.W.U., visited Hazantown and requested it to sign the Joint Board's standard jobber's agreement. This agreement between the union and the jobber, characterized as 'the Employer,' regulates many terms and conditions of employment of the workers in the shops of contractors, but expressly states that it 'shall not be applicable to any workers employed by the Employer on his own premises or in his inside shop whether the same is located on his premises or elsewhere.' With respect to employees of contractors, the agreement deals with a great variety of subjects. Summarily stated, it provides for the fixing of piece rates; requires the jobber to provide and pay the full cost of disability benefits established by law of the State of New York; makes the jobber responsible for the payment of semi-annual work bonuses and requires

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contributions to a trust fund established to that end; requires the jobber to pay the contractor an amount sufficient to cover the compensation for workers provided in contracts between the contractor and the union, plus a reasonable amount to cover overhead and services in order to insure against diversion of the monies paid for compensation; makes the jobber liable, to a limited extent, for defaults by contractors in paying compensation to the contractors' employees; authorizes the union to have a representative visit the jobber's premises to take up complaints and to examine his books and records to determine if he is complying with the terms of the agreement; requires the jobber to make payments to the benefit funds of the union, based on the gross payments the jobber makes to his contractors; prohibits the jobber from engaging contractors not under contract with the union and from selling or handling any garments not manufactured by a union contractor; forbids him to give any work to a contractor who has been struck by or is having a labor dispute with the union; prohibits him from dealing with contractors who obtain any garment accessories or services from nonunion contractors; and requires him to confine his production as regards contractors to only as many as he actually needs to produce his garments, all such contractors to be designated to and approved in advance by the union. ²

Hazantown rejected the demand of the union agents. On September 17 the union began picketing Hazantown at the building in which it was located. The picket signs said:

Strike

Hazantown, Inc.

Mary Allen Payne

followed by the name of the union. ³ No Hazantown employees participated in the picketing or engaged in a strike. On October 16 Hazantown filed with the Labor Board a charge that the union had engaged in an unfair labor practice within § 8(b)(7)(C). ⁴ Two days later the union wrote Hazantown, confirming that it did not seek to represent any of

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Hazantown's own workers (explaining that 'As a matter of fact, our Union does not have jurisdiction over shipping clerks and receptionists, bookkeepers, or secretaries'), and that its sole desire was to obtain from Hazantown 'a jobber's agreement under which your firm would obligate itself to send work to, or deal only with, Union contractors, i.e., contractors whose employees are already represented by our Union.' Shortly thereafter the Regional director filed a petition alleging that he had reasonable cause to believe that the company's § 8(b)(7) charge was true and seeking an injunction under § 10(l).

After a brief evidentiary hearing the district judge found that the union's purposes were as stated in its letter of October 18. He had no difficulty in distinguishing Dallas Building & Construction Trades Council v. NLRB, 130 U.S.App.D.C. 28, 396 F.2d 677 (1968), on which the General Counsel heavily relied-- nor, as will be seen below, do we. He was 'inclined to think that this kind of picketing in the garment industry comes within the policy exemption provided by the Congress in Section 8(e) as it is a logical concomitant to protect its own workers, as well as complying competitors in an industry so structured.' However, he read our decisions construing § 10(l) as limiting him in effect to determining whether the Regional Director's conclusion that an unfair labor practice had been committed was more than frivolous, and whether there was some harm justifying issuance of a temporary injunction. Finding, as is not disputed, that the picket line had induced truckmen not to deliver goods to Hazantown and that Hazantown's business was seriously affected, he issued an injunction pending final adjudication by the Board of the unfair labor practice charge which the General Counsel had filed.

The union appealed and sought an expedited hearing and a stay. Upon our indicating willingness to grant the former, counsel cooperatively withdrew his request for the latter pending determination of the appeal.

II.

Unless the hearing on the complaint later filed by the General Counsel should develop facts or points of law differing substantially from those presented to the district judge and to us, we would decline to enforce an order finding that the union had violated § 8(b)(7)(C). ⁵ For reasons to be discussed, we think such an order would fly in the face of what Congress intended in enacting the garment industry proviso in 1959. The proviso, which is a part of § 8(e), the prohibition of 'hot-cargo' agreements, ⁶ reads:

Provided further, That for the purposes of this subsection (e) and section

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8(b)(4)(B) the terms 'any employer', 'any person engaged in commerce or an industry affecting commerce', and 'any person' when used in relation to the terms 'any other producer, processor, or manufacturer', 'any other employer', or 'any other person' shall not include persons in the relation of a jobber, manufacturer, contractor, or subcontractor working on the goods or premises of the jobber or manufacturer or performing parts of an integrated process of production in the apparel and clothing industry.

The development of the unique structure of the garment industry, particularly in New York City, was well described by Judge Weinfeld in Greenstein v. National Skirt & Sportswear Ass'n, Inc., 178 F.Supp. 681, 687-688 (S.D.N.Y.1959), appeal dismissed, 274 F.2d 430 (2 Cir. 1960). While the cited pages of the opinion can be read to advantage, their nub is as follows: Garment manufacturers, in an effort to avoid unionization, largely abandoned their 'inside shops,' transformed themselves into jobbers, and then engaged contractors to do the actual manufacturing. 'The jobber had no direct dealing with employees, was not responsible to them for wages, and was unconcerned with hours and adequate standards . . .. The contractors were in fierce competition with one another for the patronage of jobbers and inside manufacturers. The essential basis of this intense competition was reduced labor costs. The brunt of this economic rivalry was borne by the workers and reflected itself in depressed wages and substandard labor conditions.' Since unionization of one contractor would be ineffective if the jobber could turn to a non-union competitor, the weapon developed by the union to meet this was to require the jobber to agree to deal only with unionized contractors.

A possible problem concerning the consistency of the union's practice with § 8(b)(4) of the National Labor Relations Act as amended ⁷ was posed in

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1949 on the floor of the Senate when that body was considering Senator Taft's proposed amendments to the newly-enacted Taft-Hartley Act. This took the form of a colloquy which counsel for the union tells us, with refreshing candor, he caused to be staged between Senator Ives of New York and Senator Taft, 95 Cong.Rec. 8709 (June 30, 1949). After recounting the structure of the garment industry, Senator Ives described a hypothetical organizational drive in which 'the...