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UNITED STATES v. FISH SMOKERS TRADE COUNCIL

April 22, 1960

UNITED STATES of America, Plaintiff,
v.
FISH SMOKERS TRADE COUNCIL, INC.; Fish, Sea Food, Smoked Fish and Canning Workers Union of Greater New York, Local 635, American Federation of Labor; Vita Food Products, Incorporated; Banner Smoked Fish Corp.; Rosola Food Products, Inc.; American Smoked Fish Corp.; Nova Scotia Food Products Corp.; Ten Eyck Smoked Fish Corp.; Solomon Pruzan; Meyer Salzman; and Irving Masour, Defendants



The opinion of the court was delivered by: RYAN

This civil suit was filed under Section 4 of the Sherman Act to prevent and restrain continuing violations of Section 1 of the Act by defendants. 15 U.S.C.

Originally, there were eleven named defendants: Fish Smokers Trade Council, Inc.; *fn1" Fish, Sea Food, Smoked Fish and Canning Workers Union of Greater New York, Local 635, AFL; Vita Food Products, Incorporated; Banner Smoked Fish Corp.; Rosola Food Products, Inc.; American Smoked Fish Corp.; Nova Scotia Food Products Corp.; Ten Eyck Smoked Fish Corp.; Solomon Pruzan; Meyer Salzman and Irving Masour. All defendants except the Union and the individual defendants have consented to final judgment enjoining and restraining them from entering into any agreement in restraint of trade as specified in the complaint. There remain then as defendants only the Union and its three officers.

 It is alleged that since 1952 the named defendants and co-conspirators, consisting of jobber members of the Union, officers and members of the Fish Smokers Council, along with persons unknown, have engaged and continue to be engaged in a combination and conspiracy to suppress and eliminate competition in the sale and distribution of smoked fish in restraint of commerce; that the conspiracy was carried out by a continuing agreement and concert of action whereby jobbers of smoked fish were to be induced and compelled to become members of the defendant Union and to refrain from competing with each other; the Union was to impose fines and penalize jobber members who sold to customers of fellow jobber members; the smokehouses were to boycott jobbers not members of the Union; and the Union was to circulate blacklists to the smokehouses, undertake strike action against smokehouses and picket or threaten to picket customers of non-member jobbers. Injunctive relief is sought directing the defendant Union to sever or expel from membership all jobbers engaged in the buying and selling of fish for their own account; and enjoining the defendant Union and the individual defendants in the future from organizing jobbers or entering into any agreement for the purpose of eliminating competition in the purchase and sale of smoked fish. The answer pleads that he commerce involved is minimal, that the jobbers are proper subjects of unionization because their work is similar to that of chauffeur employees, that there could have been no conspiracy between the Union and the smokehouses since the latter derived no benefit from the arrangement and were not willing participants, and that, in any event, the allegedly unlawful activities came to an end in 1954. The answer further challenges the jurisdiction of the Court, asserting that the activities complained of are matters exclusively within the province of the National Labor Relations Board and that the Union did not authorize the acts of the individual defendants, as is required by Section 6 of the Norris-LaGuardia Act, to make it subjected to the relief sought.

 There is one principal issue raised by the pleadings and that is whether the jobbers are independent business men as plaintiff maintains and therefore not a proper subject of unionization; if they are, then it follows that the defendants' alleged activities in forcing them into the Union and into agreements to allocate their customers is an act in restraint of trade within the stricture of the antitrust laws, Allen Bradley Co. v. Local Union No. 3, 325 U.S. 797, 65 S. Ct. 1533, 89 L. Ed. 1939. If, however, these jobbers are a labor group as defendants contend, then their activities are protected by the Clayton and Norris-LaGuardia Acts and under Milk Wagon Drivers' Union, etc. v. Lake Valley Farm Products, 311 U.S. 91, 61 S. Ct. 122, 85 L. Ed. 63. *fn2"

 The defendant, Fish, Sea Food, Smoked Fish & Canning Workers Union, is an affiliated local of the Amalgamated Meat Cutters & Butcher Workmen with a membership of about 700 employed in the live fish trade, in smokehouses and in the distribution of smoked fish as jobbers whose duties will be later more particularly described. It is organized under the laws of New York and has its principal place of business in he City of New York. Defendant Pruzan is its president; Salzman, its secretary-treasurer; and Masour, its business representative. The Fish Smokers Trade Council, Inc., was a membership corporation organized under the laws of the State of New York and composed of practically all the smokehouses in the metropolitan area; its function was to represent the smokehouses and negotiate on their behalf with the Union. The six smokehouse corporations were members of the Trade Council and five of them are New York corporations with their principal place of business in this city. The co-conspirators not named as defendants are the smoked fish jobber members of the Union and the officers and members of the Trade Council (the other smokehouses). *fn3"

 By stipulation, the record of the second criminal trial, consisting of all the testimony and exhibits, was received in evidence on this trial and has been made the record of this trial.

 No additional witnesses or exhibits were proffered by the parties; there were, however, two additional stipulations -- one covered statistical information on the smoked fish industry; the other stipulation recited certain facts agreed upon by the parties and which are conceded. These stipulated facts are incorporated in the findings which I now make.

 The commerce involved is the purchase and sale of smoked fish. From 1952 through 1955, there were about 15 smokehouses in the metropolitan area doing an annual total volume of sales of smoked fish in excess of 7 million dollars. The fish is caught in the waters off New England, Alaska, the Great Lakes, the West Coast and outside the territorial limits of the United States, and sold raw -- fresh or frozen -- or partly cured, to the smokehouses in New York and nearby New Jersey and shipped by truck and rail. The smokehouses process salmon, whitefish, chubs, eels, black cod, sturgeon, herring, trout, ciscoes, butterfish, carp, mackerel and spoonbill into kippered salmon, sturgeon, lox and shad. The process consists of putting the fish in a brine solution, smoking it and packing it for distribution. Most of the smokehouses sell the smoked fish to jobber wholesalers who, in turn, sell to their retail customers -- 'appetizing' shops and restaurants; only about six of them sell directly to retail customers of their own. These 15 smokehouses employ approximately 220 'production employees' -- all members of defendant Union -- wet workers, packers and chauffeurs; it is only with the last that we are concerned. Of the chauffeurs, 19 are paid a straight salary and 2 a salary plus commissions; 6 of these devote all their time to delivering fish to retail customers of the smokehouses by whom they are employed; 7 from 50% To 85%, 6 from 20% To 5%, and 1 only 1% Of their time delivering to such retail customers; the balance of their time is spent in driving to pick up the raw fish purchased by the smokehouse from the public cold storage, bringing it to the smokehouse for processing nd delivering it to shipping companies for shipments to the smokehouse's customers within and without the state. The chauffeurs are instructed on their routes by the smokehouses; they are told where to go, what merchandise to deliver, how much to charge and to whom to deliver. The chauffeurs do not sort or select the fish in the smokehouse for any particular customer; they do not make adjustment in price or weight; they have no authority to extent credit, although sometimes they do collect the bills from the customers for the smokehouses. All that these chauffeurs do is pick up the pre-selected fish which has been packaged for the particular customer and mark its weight on the delivery ticket, put it on the truck and upon arrival take it off the truck and bring it into the customer's establishment or shipping company office. They do not own their trucks; they do not pay the insurance on them or the cost of maintaining them; they are on a fixed salary regardless of the quality of their work or the quality of the fish or customer. The chauffeurs have the benefit of Social Security and income taxes are withheld for their tax accounts by the smokehouses, as are health and welfare benefits. They work a fixed weekly period. What merchandise a customer rejects, they return to the smokehouse at no loss to them, for the customer is not theirs but the smokehouse's which bears the loss. In short, they are salaried employees -- paid regularly for fixed hours of work.

 The jobbers on the other hand -- numbering about 75 in the metropolitan area -- purchase the fish from any of the 15 smokehouses they choose -- for cash or credit. The majority of them alone or with a helper, like the chauffeurs described, go into the smokehouse, pick up the box of fish and place it on the truck and take it off the truck to deliver it to their customer. Unlike the chauffeurs, however, they select and sort the fish for their particular customers; they select the customers they have solicited and determine what price they will charge and, consequently, what profit they stand to make. These jobbers make adjustments, extend credit to their customers and suffer the loss of non-payment or of fish not sold, since, except for defects, they may not return it to the smokehouses. The jobbers work their own hours and under their own conditions; their income depends upon their industry and fortitude and their contacts and salesmanship. They have no taxes withheld for them by the smokehouses. They own their trucks and pay the insurance and maintenance on them. With many of these jobbers, the smokehouse paints its name on the sides and back of the truck -- the jobber's name being on the door of the truck. This is of no significance other than to advertise the smokehouse from which the jobber purchases all or some of his fish; it does not bind the jobber to the smokehouse in any respect, in fact, it is to the benefit of the smokehouse since advertising of the product of the smokehouse is had at small cost. The businessman character of the jobber is particularly evident in those larger jobbers who, like the smokehouses, have chauffeur employees do the physical work and these employees are members of the defendant Union. These men do the driving, the carrying and the lifting. This type of jobber in some instances is a corporation, which just handles the orders, courts the customers, fixes and sets prices and makes collections; indeed, some of them in addition also operate their own 'appetizing' stores.

 There was some sketchy evidence that about 30 years ago one of the largest smokehouses sold its trucks and routes to its chauffeurs and set them up as independent distributors instead of chauffeur employees. However, the greater part of the routes so sold were meat and 'provision' routes and smoked fish was but a sideline; in the past 20 years only 2 chauffeurs have become jobbers. In any event, there is certainly no evidence here of any wholesale conversion of employees into 'vendors' for the purpose of avoiding union wages and conditions, such as was found in Milk Wagon Drivers' Union, etc. v. Lake Valley Farm Products, supra. While a jobber and a chauffeur employee perform identical physical work, one has sole discretion in the performance of this work while the other just follows his employer's orders.

 Some of the wholesale jobbers and other customers to whom the smokehouses sell are located outside the state and, in turn, the customers to whom the jobbers sell are in states other than those in which the jobbers are located. Fresh and smoked fish is perishable -- it must be kept moving. The transportation, purchase, receipt and processing of fresh fish into smoked fish by the smokehouses and its subsequent distribution and sale to jobbers and retailers constitutes a regular and continuous flow of smoked fish in interstate commerce from the fisherman to the ultimate consumer.

 Prior to 1952, a few jobbers had joined the Union voluntarily for various reasons not here important. Their status and their working conditions do not appear to have been any different from those just described. Then, in October, 1952 -- the year of the conspiracy -- about half of the smokehouses in the City of New York entered into an agreement appointing the Fish Smokers Trade Council, Inc., their collective bargaining agent for the purpose of negotiating and executing a contract on their behalf with the Union. On the same day the Council entered into a collective bargaining agreement with the Union. This agreement, which was to run for two years, contains the conventional provisions for wages, hours, vacations, welfare payments and the like, and then under the paragraph headed 'Recognition' the following clause, hereinafter referred to as Clause 7:

 'In the event that an Employer uses any means for the distribution of its products other than through its own employees, such as agent-distributors, etc., then such agent-distributors, etc., must be members of the Union, subject to its rules and regulations.'

 There is no question but that by 'agent-distributors' were meant the jobbers and that the clause meant exactly what it said -- and was so understood by the parties to the contract; that only jobber members of the Union were to be sold fish by the smokehouses and non-members excluded from purchasing smoked fish. Another clause which had been inserted by the Union in the contract reading: 'No existing routes operated by salesman-distributors shall be combined or consolidated with any other route operated by salesmen-distributors or agent distributors without the written consent of the Union' had, at the request of the Council, been deleted because it had not been negotiated by them and because the Council recognized the impossibility of performance since it had no control over the routes of 'salesmen-distributors'. Apparently neither clause had been negotiated; they were both the Union's idea but, after some hesitation, the Council assented to Clause 7. At this point there was clearly an agreement between the Union and the smokehouses to restrain trade by a concerted refusal to sell to jobbers who were not members of the Union. By 1953, the rest of the smokehouses -- who had had ...


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