Palm Beach Co. v. JOURNEYMEN'S AND PROD., ETC.

• Decision Date: 31 July 1981
• Docket Number: No. 81 Civ. 3702(RJW).,81 Civ. 3702(RJW).
• Citation: 519 F. Supp. 705
• Parties: PALM BEACH COMPANY, Plaintiff, v. JOURNEYMEN'S AND PRODUCTION ALLIED SERVICES OF AMERICA AND CANADA INTERNATIONAL UNION LOCAL 157, Vincent Gulino, Henry Fineguerra, and Tahari, Ltd., Defendants.
• Court: U.S. District Court — Southern District of New York

519 F. Supp. 705

PALM BEACH COMPANY, Plaintiff, v. JOURNEYMEN'S AND PRODUCTION ALLIED SERVICES OF AMERICA AND CANADA INTERNATIONAL UNION LOCAL 157, Vincent Gulino, Henry Fineguerra, and Tahari, Ltd., Defendants.

No. 81 Civ. 3702(RJW).

United States District Court, S. D. New York.

July 31, 1981.

Phillips, Nizer, Benjamin, Krim & Ballon, New York City, for plaintiff; Marc L. Silverman, David L. Bressman, Ruth D. Raisfeld, New York City, of counsel.

Lloyd Somer, New York City, for defendants Journeymen's and Production Allied Services of America and Canada International Union Local 157, Vincent Gulino, and Henry Fineguerra.

Herman E. Cooper, P. C., New York City, for defendant Tahari, Ltd.; Jonathan L. Sulds, New York City, of counsel.

OPINION

ROBERT J. WARD, District Judge.

This action was commenced in the Supreme Court of the State of New York, New York County ("the state court"), by Palm Beach Company ("Palm Beach"), a corporation organized under the laws of the State of Maine and having its principal place of business in Cincinnati, Ohio. Palm Beach is engaged, through its Evan-Picone Division, in the women's apparel business. The complaint filed in this action alleges that Local 157 of the Journeymen's and Production Allied Services of America and Canada International Union ("Local 157"), in conspiracy with the other named defendants, has engaged and continues to engage in picketing activities that constitute a tortious interference with Palm Beach's business relations, in violation of common law.¹ Palm Beach seeks both monetary damages and injunctive relief on account of this allegedly unlawful conduct.

In an ex parte temporary restraining order signed June 11, 1981, Justice Shirley Fingerhood of the state court prohibited any picketing by Local 157 at Palm Beach's premises. Shortly thereafter, Local 157 removed the action to this Court by filing a petition for removal with the clerk of this Court. Palm Beach now moves, by order to show cause, for an order remanding this action to the state court on the ground that this Court lacks original subject matter jurisdiction over a case such as this. The parties have stipulated to extend the temporary restraining order granted by the state court until the date of this Court's decision of Palm Beach's remand motion. For the reasons hereinafter stated, Palm Beach's motion is denied.

BACKGROUND

Palm Beach, through its Evan-Picone Division, engages in the design, manufacture, promotion, and sale of women's apparel. Palm Beach directly employs about 420 persons in this division, and maintains a manufacturing facility in North Bergen, New Jersey. Approximately one-third of the garments sold through this division are cut and sewn by Palm Beach employees; the remaining two-thirds are manufactured by independent contractors. Palm Beach merely acts as a jobber with respect to those garments manufactured by independent contractors, meaning that Palm Beach furnishes the contractor with the material and specifications necessary to make the garments, accepts delivery of the finished products from the contractors, and then sells the garments to retailers.

On June 1, 1979, Palm Beach and Local 133 of the International Ladies' Garment Workers' Union ("the ILGWU") entered into a three-year "Hazantown agreement,"² which provides that all garments handled by Palm Beach through the Evan-Picone Division will be manufactured either in Palm Beach's own shops or by independent contractors approved by the ILGWU. In June of this year, representatives of Local 157 commenced picketing at Palm Beach's North Bergen, New Jersey, place of business. Local 157 disclaimed any intention of seeking to organize Palm Beach's own employees. Instead, Local 157 demanded that Palm Beach enter into a Hazantown agreement with Local 157, which would require any Evan-Picone work subcontracted out by Palm Beach to be performed by contractors approved by Local 157.

Palm Beach refused to accede to Local 157's demand, and, shortly after the picketing began, commenced this action in the state court. The complaint alleges that Local 157's picketing arose, not because of Local 157's desire to secure a Hazantown agreement with Palm Beach, but actually because of a dispute between Local 157 and the ILGWU. Specifically, the complaint alleges, as developed in affidavits filed with the Court, that the ILGWU has been seeking a Hazantown agreement with Tahari, Ltd. ("Tahari"), a New York corporation also engaged in the apparel industry. Tahari currently has a Hazantown agreement with Local 157; Palm Beach contends that Local 157 is picketing its premises with the hope that Palm Beach will influence the ILGWU to discontinue its efforts to secure a Hazantown agreement with Tahari. The complaint further alleges that Tahari conspired with Local 157 in executing this plan, and thus names Tahari as a defendant along with Local 157 and two union officers. Palm Beach contends that Local 157's picketing, under these circumstances, constituted a tortious interference with Palm Beach's business relations, and hence violated state law.³ As noted above, Justice Fingerhood of the state court signed a temporary restraining order that prohibited all picketing by Local 157 at Palm Beach's premises. Local 157 then filed the petition for removal that brought the case before this Court and set the stage for the motion that is the subject of today's decision.

DISCUSSION

The right of the defendant in a state court civil action to remove the action to federal court is governed by 28 U.S.C. § 1441(a), which provides as follows:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

Palm Beach contends that the instant action is not one over which the federal district courts have original subject matter jurisdiction, and consequently moves for an order remanding this case to the state court. Defendants argue, to the contrary, that this action is one "arising under an Act of Congress regulating commerce" within the meaning of 28 U.S.C. § 1337, and thus is removable as an action "founded on a claim or right arising under the ... laws of the United States" within the meaning of 28 U.S.C. § 1441(b).⁴ Specifically, Local 157 argues that the state law upon which Palm Beach relies has been preempted by federal labor law, and that as a result Palm Beach's action must be treated as "arising under" federal law because that is the only law providing a potential basis for Palm Beach's action. This argument raises two questions for the Court's decision: first, whether federal preemption provides a proper basis for the removal of an action to federal court; second, whether the state law relied upon by Palm Beach has been preempted in the context of the instant case.

The first of these questions may be dealt with fairly briefly. In Billy Jack I, supra note 4, 511 F.Supp. at 1184-88, the Court reviewed this very question at some length and concluded that federal preemption does indeed provide a proper basis for the removal of an action to federal court. Palm Beach has presented the Court with neither a new argument nor a subsequently decided or discovered case that persuades the Court to reconsider its previous determination of this issue.⁵

The Court accordingly turns to the second question, namely, whether the state law relied upon by Palm Beach has in fact been preempted, in the context of the instant case, by the federal labor laws. In Billy Jack I, supra note 4, the Court considered whether the New York law of tortious interference with contract had been preempted in circumstances similar to those presently before the Court. See 511 F.Supp. at 1189-92. However, since the preemption question now before the Court is somewhat different from that faced by the Court in Billy Jack I, and since Palm Beach has questioned whether the Court's decision in Billy Jack I was predicated on a proper understanding of the general principles governing federal labor law preemption, the Court deals with this question below in some detail. First, the Court reviews the general principles that govern adjudication of preemption questions in the federal labor context; next, the Court proceeds to apply those principles to the case at hand.

A

In 1935, Congress enacted the National Labor Relations Act ("the NLRA"), Pub. L.No. 74-198, 49 Stat. 449 (1935), in order to correct the adverse effects on interstate commerce caused by labor-management disputes and to assure the right of employees to engage in a number of specified concerted activities. See 29 U.S.C. § 151. In enacting the NLRA, Congress clearly intended to create a uniform national labor policy to replace the host of inconsistent state laws regulating labor relations. See S.Rep.No. 573, 74th Cong., 1st Sess. 15 (1935). Congress subsequently, by its enactment in 1947 of the Labor Management Relations Act, Pub.L.No. 80-101, 61 Stat. 136 (1947), added section 8(b) to the NLRA,⁶ which proscribed certain strikes, boycotts, and forms of picketing as unfair labor practices. It was soon recognized that the enactment of section 8(b) provided a method for labor unions to avoid the impact of certain state statutes and court decisions by arguing that the less restrictive prohibitions contained in section 8(b) were the exclusive means of employer redress.

Thus was inaugurated what seems to be a never-ending stream of litigation through the federal courts concerning the extent to which the NLRA preempts state laws that are potentially applicable in disputes arising out of various labor activities. The thirty-five years since the enactment of section 8(b) have witnessed a number of decisions by the Supreme Court that seek to...