Bruce Church, Inc. v. United Farm Workers of America, AFL-CIO

• Decision Date: 15 January 1991
• Docket Number: AFL-CIO,No. 1,CA-CV,1
• Citation: 169 Ariz. 22,816 P.2d 919
• Parties: BRUCE CHURCH, INC., a corporation, Plaintiff-Appellee, v. UNITED FARM WORKERS OF AMERICA,, a labor organization, Defendant-Appellant. 89-180.
• Court: Arizona Court of Appeals

Page 919

816 P.2d 919

169 Ariz. 22

BRUCE CHURCH, INC., a corporation, Plaintiff-Appellee, v. UNITED FARM WORKERS OF AMERICA, AFL-CIO, a labor organization, Defendant-Appellant.

No. 1 CA-CV 89-180.

Court of Appeals of Arizona,

Division 1, Department B.

Jan. 15, 1991.

Review Denied Oct. 8, 1991. ^*

[169 Ariz. 24] Westover Law Offices by A. James Clark, Yuma, and Golenbock & Barell by Paul J. Goldberg, New York City, for plaintiff-appellee.

Antonio Bustamante, Phoenix, and Lyons, Macri-Ortiz, Schneider, Dunphy & Camacho, P.C. by Dianna Lyons and Chris A. Schneider, Sacramento, Cal., for defendant-appellant.

OPINION

JACOBSON, Presiding Judge.

In March 1984, plaintiff Bruce Church, Inc. (Bruce Church) brought an action against United Farm Workers of America, AFL-CIO (union) for unfair labor practices in violation of the Arizona Agricultural Employment Relations Act and for tortious interference with business relations. The allegations arose out of a multistate lettuce boycott that the union conducted from 1979 to 1987 against Bruce Church-grown produce. After a 31-day trial, the jury returned a general verdict in favor of Bruce Church, awarding compensatory damages of $4,911,833 and punitive damages of $491,183.

The basic issue on appeal is the geographic scope of the Arizona Agricultural Employment Relations Act, A.R.S. §§ 23-1381 to -1395. Because we conclude that the trial court improperly applied the Arizona statutes to conduct occurring outside this state that was arguably legal in the state in which it occurred, we reverse the judgment on the unfair labor practice claims and remand this matter for a new trial on the remaining tort claim.

Factual and Procedural Background

Bruce Church, a California corporation authorized to do business in Arizona, is one of the nation's largest lettuce growers. During the time period involved in this suit, it grew sixty percent of its lettuce crop in California and forty percent in Arizona.

The union, a California unincorporated association, is a labor organization representing agricultural employees. Its principal place of business and main offices are located in Keene, California. The union has been the certified exclusive collective bargaining agent in California for Bruce Church employees since 1977. It also represents this company's employees in Arizona, but is not the certified exclusive bargaining agent in this state.

The collective bargaining agreement between Bruce Church and the union expired in 1979. After negotiations toward a new agreement failed, the union engaged in a strike against Bruce Church. A tactic employed by the union in connection with this strike was a multistate boycott against Bruce Church's "Red Coach" brand lettuce. The boycott took the form of encouraging people not to buy the product itself (a primary boycott), and, in some areas of the country, the boycott also took the form of encouraging people not to patronize several grocery chains that sold Bruce Church lettuce (a secondary boycott). The union's boycott activities included picketing, demonstrations, informal leafletting, mailings, press conferences, demonstrations, and meetings in several key cities throughout the United States and Canada. In early 1984, several grocery chains stopped buying Red Coach lettuce, and Bruce Church sales decreased significantly, allegedly as a result of the success of the boycott activities.

On March 21, 1984, Bruce Church filed this action in Yuma County Superior Court, charging the union with the following unfair labor practices in violation of § 23-1385 of the Arizona Agricultural Employment Relations Act:

(1) engaging in a secondary boycott directed at Bruce Church's customers, in violation of A.R.S. § 23-1385(B)(6);

(2) using dishonest, untruthful, and deceptive publicity to induce or encourage the ultimate consumers from purchasing Bruce Church's lettuce, in violation of A.R.S. § 23-1385(B)(8);

(3) imposing illegal economic sanctions against Bruce Church, in violation of A.R.S. § 23-1385(B)(1);

(4) threatening to or engaging in libel and slander to prevent the sale of Bruce Church's lettuce, in violation of A.R.S. § 23-1385(B)(10).

The second count of the complaint alleged that the union tortiously interfered with Bruce Church's business relations with its customers, and sought punitive damages as well as compensatory damages.

The union first challenged this action by contending that its conduct was protected as free speech under the first amendment to the United States Constitution, that the conduct was legal bargaining activity under California labor law, and that none of the activity alleged to be illegal occurred in Arizona. Bruce Church responded that secondary boycott activity was not per se constitutionally protected by the first amendment and that California law should not be applied to this Arizona suit. On August 7, 1984, the court denied the union's motion for summary judgment based on these contentions.

On November 30, 1984, the union filed its answer, basically reiterating the arguments previously made and, as affirmative defenses, claimed constitutional and California statutory protection and the bar of the applicable statute of limitations.

Pretrial discovery progressed for several years. In April 1987, the union filed its second motion for summary judgment, again arguing the statute of limitations and the applicability of California law to its activities. Bruce Church responded that, under a choice of law analysis, Arizona law should apply; that, under Arizona law, the union's secondary boycott activity was illegal; and that questions of fact remained regarding the other issues raised by the union's motion. On July 6, 1987, the trial court denied the motion, ruling that Arizona law would apply, that the applicable statute of limitations was one year and that the court would consider excluding statements published prior to that time as each exhibit was argued, and that certain statements would not be considered defamatory as a matter of law.

On February 2, 1988, the matter proceeded to jury trial. As far as secondary boycott activity was concerned, counsel for Bruce Church conceded at time of oral argument in this court that no such activity occurred in Arizona. Our review of the evidence supports this concession, as demonstrated by the trial testimony of Frank Ortiz, a former union vice-president and member of the executive board, and two other members of the executive board of the union, Arturo Mendoza and Oscar Mondragon. All three union officials testified that the union never engaged in secondary boycott activities in Arizona, although the union was aware that its activities would affect the sales of lettuce grown in Arizona as well as in California.

Cesar Chavez, the union's president, testified that, between 1979 and 1984, the boycott was centered in 15 cities that comprised about 65% of the consumption of most vegetables and fruit, located in New England, California, the midwest, and mid-Atlantic states. After Lucky Stores, a California-based grocery chain, stopped carrying Bruce Church lettuce in January 1984, the boycott expanded to a second phase with mailings directed at customers in Boston, Detroit, Chicago, and New York. Chavez testified that the union never intended for secondary boycott activity to occur in Arizona, and in fact instructed union members not to engage in secondary boycott activity here, because the union was aware that such activity was illegal in Arizona.

The deposition of Reverend Wayne Hartmire, general manager of social marketing for the union, was read to the jury. Rev. Hartmire testified that no secondary picketing occurred in Arizona, although a union support group in Phoenix may have distributed informational leafletting in front of Lucky's outlets as a primary boycott activity. Additionally, Rev. Hartmire later testified at trial, "We had supporters in Phoenix and they wanted to help, but they were also concerned about the law, so they restricted themselves to leafletting regarding Bruce Church lettuce."

At the end of the presentation of evidence, Bruce Church moved for a directed verdict on the ground that the union's activities, including those that occurred outside of Arizona, constituted a secondary boycott in violation of Arizona law. The union orally requested a "counter directed verdict" that it had not conducted a secondary boycott within the state of Arizona. Counsel for the union reviewed the only evidence that Bruce Church had presented of Arizona activities and pointed out that none of those incidents constituted secondary boycott activity. He argued that no illegal conduct therefore had occurred in Arizona and that the Arizona statutes could not constitutionally prohibit conduct outside the state, because, "It must be the acts themselves within the boundaries of the State of Arizona which are prohibited, and none others." Bruce Church responded that Arizona law could prohibit activity that occurred outside its borders because Arizona lettuce was affected by the boycott. The court rejected the union's position and directed a verdict that the union's activity constituted a secondary boycott in violation of Arizona law. It also rejected the union's contention that damages should be limited to those acts that occurred in Arizona.

The jury was instructed on four theories of recovery. First, the trial court instructed the jury on the issue of secondary boycott, which is a violation of A.R.S. § 23-1385(B)(6), as follows:

You are instructed that the evidence in this case has established that the defendant was involved in a labor dispute with the plaintiff and conducted a secondary boycott which was directed at the plaintiff through various persons or companies which the plaintiff claims were its customers.

A secondary boycott is a violation of the law, and you should award plaintiff for such violation such sum as you find appropriate to compensate the plaintiff for...