WJ Milner & Co. of Fla. v. INTERNATIONAL BRO. OF EL. WKRS.

• Decision Date: 21 March 1973
• Docket Number: No. 72-2120.,72-2120.
• Citation: 476 F.2d 8
• Parties: W. J. MILNER AND CO. OF FLORIDA, Plaintiff-Appellant, v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 349, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

476 F.2d 8 (1973)

W. J. MILNER AND CO. OF FLORIDA, Plaintiff-Appellant, v. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL 349, et al., Defendants-Appellees.

No. 72-2120.

United States Court of Appeals, Fifth Circuit.

March 21, 1973.

Albert E. Phillips, J. Alex Porter, Atlanta, Ga., Peter C. Jones, Miami, Fla., for plaintiff-appellant.

Seymour Gopman, North Miami Beach, Fla., Kaplan, Dorsey, Sicking & Rodenberg, Joseph H. Kaplan, Miami, Fla., Thomas J. Pilacek, North Miami Beach, Fla., Robert A. Sugarman, Miami, Fla., for defendants-appellees.

Before GEWIN, BELL and GODBOLD, Circuit Judges.

GEWIN, Circuit Judge:

In the district court, W. J. Milner and Company brought separate actions against three labor unions¹ pursuant to § 303(b) of the Labor Management Relations Act, 29 U.S.C. § 187(b),² seeking recovery for damages incurred by reason of their allegedly unlawful secondary boycott activities. There appears to be no dispute about the fact that the conduct of the unions was unlawful. After hearing oral argument, the court, D.C., 341 F.Supp. 151, granted the union's motion for summary judgment and dismissed Milner's claims with prejudice on the ground that Milner did not have a federal cause of action under § 303(b). We reverse.

The pertinent facts in this case can be stated briefly. W. J. Milner and Company is engaged in the business of selling electrical supplies on a commission basis to distributors and wholesale outlets in the state of Florida. A substantial portion of Milner's business³ is derived from a contractual arrangement under which it has the exclusive right in the peninsular Florida area to sell the building wire products manufactured by Southwire Company of Carrollton, Georgia. In its complaint, Milner alleged that during the three years prior to the instigation of this action, the defendant unions exerted unlawful secondary pressure against a number of South Florida electrical contractors seeking to persuade or induce them not to use Southwire's building wire products on their job sites. As a result of these activities, damages were claimed by Milner for loss of commissions in the amount of $201,588.00.

Milner contends that the district court's denial of a right of recovery on the basis of United Mine Workers v. Osborne Mining Co., 279 F.2d 716 (6th Cir. 1960) was improper. This argument rests on legislative history and post-Osborne decisions construing § 303(b) which are said to recognize a broader concept of standing than that adopted in Osborne. Milner urges that standing should be extended to those persons whose business or property is so closely related to the product, which is the subject of the boycott activity, that it is reasonably foreseeable that such business or property will be injured thereby. The unions, on the other hand, assert that the Osborne decision is still viable; that it was approved by this circuit in Abbott v. Local Union No. 142, 429 F.2d 786 (5th Cir. 1970) and that it was properly held by the district court to be dispositive of the instant case. Rejecting Milner's forseeability test as overbroad, they maintain that standing under § 303(b) has been consistently limited either to the actual objects of the secondary boycott or to persons whose interests are inseparably identified with those of the actual objects by virtue of a financial or controlling relationship.

In order to resolve this issue, we must fathom some meaning from the broad wording of § 303(b) which confers a right of action upon persons injured in their business or property by reason of a secondary boycott. While not commanded by a literal reading of the statute, our analysis in this case proceeds upon the general premise, suggested in the legislative history and adopted by a number of courts, that Congress intended to create some limitation on standing to sue under § 303(b). Therefore, what we must decide in the instant case is where this limitation begins. Although neutral and primary employers have been granted standing to sue under § 303(b), the right to sue of third parties who are neither neutrals nor primaries has never been clearly articulated.

The seminal case interpreting § 303 is United Brick & Clay Workers v. Deena Artware, 198 F.2d 637 (6th Cir. 1952), cert. denied, 344 U.S. 897, 73 S.Ct. 277, 97 L.Ed. 694. The relevance of that decision to the case at hand lies not in its recognition of a right of recovery under § 303 for primary as well as neutral employers, but rather in the court's explanation of its holding. In flatly rejecting the union's position that this section protected only innocent third party employers (neutrals), the court pointed out § 303's broad language and suggested that if Congress had intended to limit recovery thereunder, it could easily have done so.

Almost a decade later, the Sixth Circuit was presented with the issue not before the court in Deena Artware: whether a person who was neither a primary nor a neutral employer could recover under § 303. In United Mine Workers v. Osborne Mining Company, 279 F.2d 716 (6th Cir.), cert. denied, 364 U.S. 881, 81 S.Ct. 169, 5 L.Ed.2d 103 (1960), this question was answered in the negative. There one of the plaintiffs, Love & Amos Coal Company, was a coal sales agency under contract with the primary employer in the labor dispute to sell its coal on a commission basis. Love & Amos claimed damages against the union for the commissions it would otherwise have received had the illegal secondary boycott activity not caused a reduction in the primary employer's coal productivity. Although Love & Amos contended that some of the union's illegal activities were directed at it and not solely at the primary employer, the court found that recovery was not sought on this theory. It observed that Love & Amos' cause of action instead was based upon the destruction of the primary employer's business and that the damages claimed to have been suffered arose solely from the contractual relationships with the primary employer. In denying Love & Amos' standing to sue, the court held that the damages alleged were incidental and too remote for recovery under federal law. United Mine Workers v. Osborne Mining Co., 279 F.2d 716, at 729.

After Osborne, several cases were decided recognizing a cause of action under § 303 in favor of third party plaintiffs who were neither the neutral nor primary objects of secondary boycott activity. In Gilchrist v. United Mine Workers, 290 F.2d 36 (6th Cir. 1961), the third party was a partnership which had been engaged in the mining and sale of coal for a number of years. It had a close relationship with the primary object of the secondary boycott, G. & R. Coal Company, a closed corporation whose principal officers, directors and shareholders were also members of the partnership. They were parties to a contract under which the partnership agreed to furnish certain coal mining land and mining equipment to the coal company. In return, the coal company agreed to stripmine the coal and load it for shipment and ultimate sale by the partnership. In determining that the partnership had standing to sue, under § 303, the court went to some lengths to distinguish Osborne. It found that the partnership had an integrated coal business in which the actual mining was delegated to an instrumentality (G. & R. Coal Company) controlled entirely by partnership members. This was thought to give the partnership the status of a principal and not an agent as was true of the third party in Osborne. The court further noted that the partnership's physical property was damaged and that its coal business was disrupted and destroyed. The damages sustained thereby were deemed to be direct and not remote or incidental as in Osborne where the damage sought arose solely as a consequence of the destruction of the primary employer's business.

It was evident at this point that § 303's broad language was not going to be carried to its literal limits to confer a cause of action upon all persons suffering damage as a result of secondary boycott activity. Yet, it was still somewhat unclear from Gilchrist which considerations were essential to its limitation of Osborne and a recognition of standing to sue: the integrated character of the partnership's business enterprise or the directness of the physical injury to its property. An answer to this question was hinted in Wells v. International Union of Operating Engineers, Local 181, 303 F.2d 73 (6th Cir. 1962) where the employees of a primary employer were permitted to recover damages under § 303. Although the court failed to give adequate explanation for this conclusion, it is implied from the opinion that these employees were considered to be the object of the secondary boycott just as much as the primary employer was because they were the very individuals sought to be organized by the union. Thus, even though these employees received damages based on their contractual relationship with the primary employer, this decision in light of Gilchrist's direct injury test did not come into conflict with the Osborne rationale.

Pennsylvania Railroad Co. v. National Maritime Union, 206 F.Supp. 797 (E.D. Pa.1962) was another decision in the series of cases dealing with standing under § 303 to embrace the Gilchrist line of reasoning. The third party there, Pennsylvania Railroad, owned certain dockside ore unloading facilities which it leased to Tidewater Company, the neutral employer as far as the secondary boycott activity was concerned. The railroad claimed damages against the union because the boycott resulted in the loss of certain payments in the nature of a commission it was entitled to receive under the agreement with Tidewater. The district court denied the union's motion to dismiss. It held that Osborne was not controlling because the railroad owned the unloading facilities where the secondary activity took place. The union's conduct, therefore, represented a direct interference with the...