Jou-Jou Designs, Inc. v. International Ladies' Garment Workers' Union, Local 23-25, JOU-JOU

• Decision Date: 30 June 1983
• Docket Number: JOU-JOU
• Citation: 94 A.D.2d 395,465 N.Y.S.2d 163
• Parties: , 115 L.R.R.M. (BNA) 3676, 99 Lab.Cas. P 10,614 DESIGNS, INC., Plaintiff-Respondent, v. INTERNATIONAL LADIES' GARMENT WORKERS' UNION, LOCAL 23-25, Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 163

465 N.Y.S.2d 163

94 A.D.2d 395, 115 L.R.R.M. (BNA) 3676,

99 Lab.Cas. P 10,614

JOU-JOU DESIGNS, INC., Plaintiff-Respondent, v. INTERNATIONAL LADIES' GARMENT WORKERS' UNION, LOCAL 23-25 Defendant-Appellant.

Supreme Court, Appellate Division First Department.

June 30, 1983.

Eric B. Chaikin, New York City, of counsel (Chaikin & Chaikin, New York City, attorneys), for defendant-appellant.

Herman E. Cooper, New York City, of counsel (Jonathan L. Sulds, New York City, with him on the brief, Herman E. Cooper, P.C., New York City, attorneys), for plaintiff-respondent.

Before KUPFERMAN, J.P., and SANDLER, SULLIVAN, ROSS and ALEXANDER, JJ.

ALEXANDER, Justice.

Local 23-25 of the International Ladies' Garment Workers' Union (hereinafter "Local 23-25") appeals from an order of Special Term (Henry R. Williams, J.,) which denied its motion to dismiss the within complaint for lack of subject matter jurisdiction by reason of federal preemption of this "labor dispute" and failure to state a "labor dispute" cause of action cognizable under Section 807 of the New York State Labor Law.

We reverse the order below and direct that the complaint be dismissed.

This action arises out of a dispute between the plaintiff Jou-Jou Designs, Inc., (Jou-Jou) and the defendant Local 23-25 regarding the union's entitlement to a "Hazantown Agreement". Jou-Jou is a New York Corporation, engaged in the apparel and clothing industry and as is the common practice in that industry, Jou-Jou does not, itself, manufacture the garments it sells. Rather, it designs sample garment patterns which are furnished, along with material and manufacturing specifications to outside subcontractors who fabricate the garments in accordance with the specifications. The finished garments are then returned to Jou-Jou which markets them through retailers. Thus the actual manufacture of the garments is accomplished by workers employed by Jou-Jou's contractors working in the contractor's "outside" shop. Only a very few workers were required in Jou-Jou's "inside" shop, since essentially the only work required therein would be sample or pattern making and shipping and receiving chores. ¹ A manufacturer who operates in this manner is known in the industry as a "jobber".

It appears that this method of operation was designed and widely employed by garment manufacturers in the New York area to avoid the impact of unionization on wages and other production costs, and for the overall well-being of the garment workers. Most, if not all of these "outside" shops were non-union and provided substandard working conditions for the employees. Moreover, the need for workers who normally would be members of the garment workers' union was diminished if not wholly eliminated. (Indeed, it appears that in 1979, Jou-Jou had only 6 inside employees, none of whom belonged to any union. (Jou-Jou Designs v. International Ladies' Garment Workers' Union, 643 F.2d 905, 907).) Finally, by "farming-out" the work to an "outside shop", the manufacturer divested himself from contact with or responsibility for the worker, no longer being responsible for wages, working conditions, etc. ²

In response to this new relationship and to extend the coverage of the collective bargaining agreement with the jobber to the employees of the contractors and to some extent, protect the interests of the "inside" employees of the jobber, the ILGWU engaged in extensive picketing and negotiating to obtain what came to be known as a "Hazantown Agreement." Such an agreement, which takes its name from the "jobber" involved in Danielson v. Joint Board of Coat, Suit and Allied Garment Workers' Union, 494 F.2d 1230 [2nd Cir., 1974], executed between the jobber and the union, in many ways made the jobber responsible for the workers' benefits and working conditions in the contractor's "outside" shop, and committed the jobber to "farm-out" its production only to contractors whose shops were approved by or represented by the union.

From May 1978 to July, 1979, the employees of the subcontractors to whom Jou-Jou farmed out the actual manufacture of its garments were represented by Local 155 of the International Ladies' Garment Workers' Union (Local 155) pursuant to a "Hazantown Agreement" between Jou-Jou and Local 155. That agreement was not renewed upon its expiration and Local 155 picketed Jou-Jou for a time, but discontinued its picketing upon learning that Jou-Jou had entered into a "Hazantown Agreement" with Local 5A of the General Trades Employees Union (Local 5A), an affiliate of the United Brick and Clay Workers' Union of America, AFL-CIO. (Local 5A had received NLRB certification as bargaining agent for the "outside" shops).

In March of 1980, believing that one of Jou-Jou's sub-contractors (Tomlino) had been pressured by Jou-Jou and Local 5A into repudiating its contract with it and entering into labor relations with Local 5A and that the "Hazantown Agreement" with Local 5A was merely a sham designed to permit Jou-Jou to use "sweatshop" non-union contractors and shield Jou-Jou from being compelled to agree to a bona fide Hazantown agreement with a "real" ³ union, Local 23-25 began picketing Jou-Jou's premises on Seventh Avenue in Manhattan. Local 155 again demanded that its "Hazantown Agreement" be renewed and commenced picketing Jou-Jou again. Local 23-25 embraced the demands of 155 and continued picketing.

Jou-Jou commenced this action against Local 23-25 alleging that the picketing was violent and unlawful and was designed solely to damage the plaintiff's conduct of its business by interfering with its contract with Local 5A. Jou-Jou's complaint sought both monetary damages and injunctive relief. Jou-Jou simultaneously sought a temporary injunction against the alleged continued violent picketing.

Contending that the complaint and application for injunctive relief were primarily directed to the allegedly unlawful object of its picketing, and therefore that the suit properly belonged in federal court the Union, prior to answering the complaint, noticed the case for removal to the federal court for determination under the standards of preemptive federal labor law. Jou-Jou opposed removal and sought remand to the state court, arguing that there was no "labor dispute" between the parties, rather, there was merely an effort by it to prevent tortious interference with the conduct of its business and obtain injunctive relief against violent picketing. At an expedited hearing, Judge Milton Pollack found that Jou-Jou had established, prima facie that there was violent picketing which was properly subject to state injunctive action and that the Union had failed to establish that the action involved a "labor dispute" arising under federal law. He therefore, returned the matter to state court.

Special Term thereafter granted the temporary injunction, notwithstanding that Local 23-25 had neither answered the complaint nor offered any evidence in rebuttal to the charges of violent picketing. Special Term also did not hold a hearing to inquire into the applicability of Labor Law § 807, but determined on the papers submitted that no "labor dispute" within the contemplation of § 807 was involved. On appeal, we, without opinion, affirmed Special Term's determination (see 76 A.D.2d 1044, 429 N.Y.S.2d 340).

This state action thereafter lay dormant while the parties engaged in substantial litigation both before the National Labor Relations Board and in the federal courts. Jou-Jou brought action in the Southern District seeking a declaration that the efforts of Locals 23-25 and 155 to secure a "Hazantown Agreement", and the initiation by them of inter-union arbitration against Local 5A violated federal anti-trust laws. They sought treble damages and injunctive relief against the arbitration proceeding.

In affirming the District Court's dismissal of Jou-Jou's complaint, the Court of Appeals for the Second Circuit confirmed that the dispute between Jou-Jou, Local 5A and Locals 155 and 23-25, involving, as it did, the picketing of a jobber and its outside contractors in order to obtain a "Hazantown Agreement", was a legitimate form of picketing that was not proscribed by § 8(b) of the National Labor Relations Act, 29 U.S.C. § 158 (Danielson v. Joint Board, 494 F.2d 1230). Nor, as the court held, could such picketing be attacked or the inter-union arbitration be enjoined on anti-trust grounds. (Jou-Jou Designs Inc., v. ILGWU, 643 F.2d 905; see also Greater Clothing Contractors Association v. Locals 1-35, 10, 22, 48, 77, 89 and 189 ILGWU, 81 Civ 3909 (SDNY)).

The Second Circuit summarily disposed of Jou-Jou's application for injunctive relief, holding that "... the Federal Courts ... [do not] have jurisdiction to afford these plaintiffs injunctive relief. The Norris-LaGuardia Act was 'intended drastically to curtail the equity jurisdiction of federal courts in the field of labor disputes' (citations omitted). The Norris-LaGuardia Act denies the Federal courts jurisdiction to issue an injunction against any lawful act 'involving or growing out of a labor dispute' (29 USC § 107.) The term 'labor dispute' includes conflicts between employees, as in this case, and not only conflicts between employers and employees. (citations omitted))" 643 F.2d at 910-911.

Against the background of these developments between these litigants, and other developments that will be discussed infra, the defendant Union moved Special Term in December, 1981, to dismiss the complaint herein, claiming failure to name the President or Treasurer of Local 23-25 as a party defendant, ⁴ lack of subject matter jurisdiction and failure of the complaint to comply with the requirements of Labor Law § 807. Defendants also sought vacatur of the preliminary injunction.

Special Term (Williams, J.) denied the motion to dismiss the complaint, finding in pertinent part, and without discussion, that "Defendant's second ground for dismissal was decided against (d...