A. Terzi Production v. Theatrical Protect. Union, 97 Civ. 3615(SS).

• Decision Date: 17 April 1998
• Docket Number: No. 97 Civ. 3615(SS).,97 Civ. 3615(SS).
• Citation: A. Terzi Production v. Theatrical Protect. Union, 2 F.Supp.2d 485 (S.D. N.Y. 1998)
• Parties: A. TERZI PRODUCTIONS, INC. and Anthony Terzi, Plaintiffs, v. THEATRICAL PROTECTIVE UNION, Local No. One, I.A.T.S.E., AFL-CIO; Kevin McGarty, Individually and as President; Ronald Lynch, Individually and as Junior Business Agent, Defendants.
• Court: U.S. District Court — Southern District of New York

2 F.Supp.2d 485

A. TERZI PRODUCTIONS, INC. and Anthony Terzi, Plaintiffs, v. THEATRICAL PROTECTIVE UNION, Local No. One, I.A.T.S.E., AFL-CIO; Kevin McGarty, Individually and as President; Ronald Lynch, Individually and as Junior Business Agent, Defendants.

No. 97 Civ. 3615(SS).

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

April 17, 1998.

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Goldstein & Morris, LLP, Mark L. Goldstein, New York City, for Plaintiffs.

Spivak, Lipton, Watanabe, Spivak & Moss, Franklin K. Moss, James M. Murphy, New York City, for Defendants.

ORDER AND OPINION

SOTOMAYOR, District Judge.

Defendants Theatrical Protective Union, Local No. One, I.A.T.S.E., AFL-CIO ("Local One" or the "Union"), Kevin McGarty ("McGarty"), and Ronald Lynch ("Lynch"), move to dismiss causes of action two through seven of the Second Amended Complaint (the "Complaint"), pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons discussed below, the Court grants the motion in part, and denies it in part.

BACKGROUND

This action arises out of the Union's picketing of plaintiffs' job site with the conceded purpose of compelling plaintiffs to enter into a collective bargaining agreement. Plaintiff A. Terzi Productions, Inc. ("ATP") is a contractor of technical and production services. Plaintiff Anthony Terzi ("Terzi") was at all relevant times ATP's "principal." Defendants McGarty and Lynch, who are sued here both in their individual and representative capacities, were at all relevant times Local One's president and junior business agent, respectively.

For purposes of this motion, the Court must assume that the facts alleged in the Complaint are true. See Walker v. New York, 974 F.2d 293, 298 (2d Cir.1992). These facts are as follows. On September 12 and 13, 1996, approximately 200 of Local One's members picketed a televised fashion show held at the Armory in New York City to pressure ATP into a labor agreement. ATP had been hired by the show's producer (the "Producer") to set-up and dismantle the show's stage materials, among other things. At the time, ATP's employees were not members of Local One, nor did they seek or want Local One's representation. (Complaint ¶ 18.)

Local One's picketers demonstrated around-the-clock on both days of the show, bearing signs and distributing leaflets. (Complaint ¶¶ 19-20, 22.) The picketers also engaged in violent and disruptive behavior. They threatened the Producer with bodily harm and financial ruin to compel him to remove ATP from the show; they verbally assaulted ATP's and the Producer's employees and interfered with their ingress and egress at the show; and they made racist statements such as "ATP uses `niggers.'" (Complaint ¶¶ 21-25.) Police officers were deployed to the picketing site to prevent violence, although plaintiffs do not allege that anyone was arrested. (Complaint ¶ 22.)

In addition, McGarty, Local One's president, made threatening calls to Terzi prior to and during the show warning that the Union would cause "problems" for plaintiffs at the show and at other job sites unless ATP immediately signed a collective bargaining agreement. (Complaint ¶¶ 26-27.) Upon information and belief, Local One and its agents also tried to persuade other businesses not to do business with ATP and Terzi. (Complaint ¶ 28.)

ATP signed a collective bargaining agreement with Local One on September 13, 1996 (the "Agreement"), directly following the show. (Complaint ¶ 40.) However, ATP claims its was "forcibly coerced" into doing so by threats that, if the Agreement were not signed immediately, defendants would slash the tires of ATP's vehicles and prevent Terzi and ATP's employees from safely exiting the area. (Complaint ¶¶ 41-42.) Picketers placed nails under ATP's vehicles' tires for this purpose. (Complaint ¶ 42.) However, once the Agreement was signed, all picketing and threatening conduct ceased. (Id.)

The Complaint, which seeks recovery based upon seven causes of action, claims that plaintiffs have suffered substantial damages as a result of defendants' conduct, including the loss of present and future business opportunities, and harm to their good will and reputation within the industry. The first cause of action alleges that defendants engaged in illegal and unfair labor practices in violation of Section 303(b) of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 187(b), and Section 8(b)(4)(ii)(B) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(b)(4)(ii)(B). The second, third, fourth, sixth and seventh causes of action allege various state law tort claims against defendants, specifically, fraudulent inducement with respect to the Agreement, tortious inference with plaintiffs' contractual relationships, tortious inference with plaintiffs' business and prospective contractual relations, defamation, and prima facie tort. The fifth cause of action alleges that McGarty and Lynch, through Local One, engaged in a pattern of racketeering activity under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), in violation of the Hobbs Act, 18 U.S.C. § 1951, the federal wire fraud statute, 18 U.S.C. § 1343, and the Travel Act, 18 U.S.C. § 1952. By the present motion, defendants seek to dismiss all but the first cause of action.

DISCUSSION

A district court's function on a motion to dismiss under Fed.R.Civ.P. 12(b)(6) is to assess the legal feasibility of the complaint. Kopec v. Coughlin, 922 F.2d 152, 155 (2d Cir.1991). The issue "is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). Allegations contained in the complaint must be accepted as true construed favorably to the plaintiff. See Walker v. New York, 974 F.2d 293, 298 (2d Cir.1992). Dismissal is warranted only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Ricciuti v. NYC Transit Authority, 941 F.2d 119, 123 (2d Cir.1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (footnote omitted)).

The Court will first address the adequacy of plaintiffs' state law claims and then turn to their RICO claim.

I. Plaintiffs' State Claims

A. Ratification

Defendants argue that all of plaintiffs' state tort claims—counts two, three, four, six and seven of the Complaint—must be dismissed as against Local One because the Complaint does not adequately allege that Local One's members unanimously authorized or ratified the alleged tortious conduct after having actual notice, as required by the holding of Martin v. Curran, 303 N.Y. 276, 101 N.E.2d 683 (1951).

In Martin, the New York Court of Appeals held that the officers of the National Maritime Union, an unincorporated association, were not liable for the unlawful acts of some of its union members because plaintiffs failed to plead and were unable to establish "that the individual members of the union authorized or ratified the tort complained of." Id., 303 N.Y. at 280, 101 N.E.2d at 684. The Court stated:

A voluntary, unincorporated membership association is neither a partnership nor a corporation. It is not an artificial person, and has no existence independent of its members. A part of the members of a voluntary organization cannot bind the other without their consent before the act which it is claimed binds them is done, or they, with full knowledge of the facts, ratify and adopt it.

Id., 303 N.Y. at 280, 101 N.E.2d at 685 (internal citations omitted).

The Court of Appeals in Martin also concluded that N.Y. Gen. Ass'n Law § 13 (McKinney 1994), which permits suits to be brought against the officers of an unincorporated association (such as a labor union) in their representative capacity, did not alter the unanimous authorization or ratification requirement.¹ The Court explained that § 13 was not meant to effect a substantive change in the law of associational liability but rather only simplified service of process by eliminating the need to join every member of the union in an action. Thus, Martin interpreted § 13 as a mere procedural tool and held that where association officers are named as representative defendants, the plaintiff must still allege and prove the individual liability of each member of the association. Id., N.Y. at 281, 101 N.E.2d at 685.

This Court acknowledged in Modeste v. Local 1199, Drug, Hospital, and Health Care Employees Union, 850 F.Supp. 1156, 1166 (S.D.N.Y.), aff'd, 38 F.3d 626 (2d Cir.1994), that "the Martin rule makes it very difficult for a plaintiff to maintain a cause of action against an unincorporated labor union in the State of New York." See also Jund v. Town of Hempstead, 941 F.2d 1271, 1281 (2d Cir. 1991) (noting that, given the large size of many unions "and the unlikelihood that a formal vote would be taken to authorize patently illicit activity," Martin's requirement of unanimous authorization or ratification is "a virtually impossible burden to meet").

While often criticized, the Martin rule has been consistently followed and remains good law. See People v. Newspaper and Mail Deliverers' Union of New York and Vicinity, 649 N.Y.S.2d 760, 768, 770, 170 Misc.2d 790, 802, 805 (Sup.Ct. New York County 1996) (noting that, in contrast to federal law, New York "still adheres" to the rule established in Martin "limit[ing] union liability to two situations: the authorization or the ratification of conduct by the union membership"); Building Indus. Fund v. Local Union No. 3, Int'l Bhd. of Elec. Workers, AFL-CIO, 1996 WL 935625 at *2 (E.D.N.Y. May 29, 1996) (recognizing the Martin rule's continuing vitality in New York); Purnell v. Diesso, 1996 WL 37770 at *3 n. 2 (S.D.N.Y. Jan.31, 1996) (dismissing plaintiff's claim against union for infliction of emotional distress under Martin rule); R.M....