Consolidated appeal from two judgments entered by the District Court for the Southern District of New York, Robert L. Carter, District Judge, dismissing plaintiffs-appellants complaint on res judicata grounds. Affirmed.
Mansfield, Van Graafeiland, Circuit Judges, and Mishler, District Judge.*fn* Mansfield, Circuit Judge, concurring.
This is a consolidated appeal from two orders entered by the District Court for the Southern District of New York, Robert L. Carter, District Judge, the first dated July 24, 1975, see Expert Electric, Inc., et al. v. Levine, 399 F. Supp. 893 (S.D.N.Y. 1975), and the second, November 5, 1976, both dismissing appellants' complaint. Appellants, by order to show cause, commenced an action seeking to enjoin the Industrial Commissioner from deregistering their master apprenticeship training program, and from disqualifying all participants from registering new programs in their individual capacities for three years.
Appellants are electrical contracting firms and members of United Construction Contractors Association, Inc. ("United"), a New York membership corporation established to jointly represent its employer participants in all phases of labor negotiations with Local 363, International Brotherhood of Teamsters ("Local 363"). On October 19, 1971, United and Local 363 executed a master agreement which outlined a program for the training of apprentice electricians. The contract called for a five year apprenticeship term during which apprentices were to receive on-the-job training in a schedule of trade processes and 144 hours per year of related classroom instruction. The agreement also recited minimum wage scales and prescribed maximum journeyman/apprentice ratios. A Joint Apprenticeship Committee ("JAC"), comprised of United and Local 363 officials, was formed to sponsor the program and administer its terms. On December 1, 1971, the master agreement was filed with, and registered by, the Apprentice Training Section of the New York State Department of Labor pursuant to section 220(3)(c) and 811(1)(d) of the Labor Law.
In 1973, a complaint was filed*fn1 with the Labor Department charging the JAC and various employer participants with violating the terms of the master apprenticeship training agreement and applicable state regulations. Labor Department officials met informally with JAC representatives in June of that year to discuss the recited deficiencies in recruiting methods and the supplementary in-class educational program. However, when no remedial steps were taken by sponsoring officials, a formal investigation was commenced. On June 17, 1974, the Industrial Commissioner issued a notice of proposed deregistration and caused it to be served on the named parties, i.e., United, Local 363 and the JAC, see 12 N.Y.C.R.R. §§ 601.7(b) and (c).*fn2
The state charged that the JAC, even after notification of the program's shortcomings, failed to take any corrective action, thus rendering it impossible for any apprentice to successfully complete all phases of training. In addition, several employer participants, only one of whom is an appellant herein,*fn3 were cited for employing unregistered apprentices, utilizing trainees in numbers exceeding the prescribed journeyman/apprentice ratio, or failing to pay prevailing wage rates and supplements. A copy of the deregistration notice was served on all participating employers, whether or not they were charged with a particular violation.
At the request of United, Local 363, and sponsor JAC, see 12 N.Y.C.R.R. § 601.7(c)(2), hearings were conducted on the alleged violations by the Apprenticeship and Training Council, a panel of building contractors and union officials, see N.Y.C.R.R. § 601.9. On May 1, 1975, the Industrial Commissioner issued his opinion adopting the recommendations of the hearing panel and finding that:
(1) since the inception of the program in 1961, not one of the 574 apprentices registered, successfully achieved certifiable journeyman status; that
(2) the sponsor, JAC, failed to assure that the required in-class instruction was provided rendering it impossible for any apprentice to complete the supplemental educational phase; that
(3) the sponsor, since partially composed of employer representatives, was responsible for the wrongful acts of participating contractors; and that
(4) the sponsor, despite having knowledge of program's deficiencies, and agreeing to take corrective action, failed to follow a remedial course.
In conjunction, appellee entered an order directing ". . . that the Apprenticeship Training Program of the United Construction Contractors Association, Inc. and Local #363 International Brotherhood of Teamsters, Joint Apprenticeship Committee is hereby deregistered, effective immediately." The order contained no express reference to the operability of 12 N.Y.C.R.R. § 601.8 which in essence contemplates that employer participants in a deregistered program be disqualified from registering new programs in their individual capacities for a period not to exceed three years.*fn4
On May 22, 1975, appellants filed a three-count complaint in the District Court for the Southern District of New York seeking to enjoin the program's deregistration and their disqualification from reinstatement. Firstly, the contractors attacked the facial validity of regulation sections 601.7(c) and 601.8, 12 N.Y.C.R.R. §§ 601.7(c) and 601.8, promulgated by the Industrial Commissioner. Appellants argued they could not, consistent with the due process clause, be summarily subjected to deregistration and automatic disqualification from re-registering new programs solely because of the misdeeds of others. Their inability to employ apprentices in the absence of a registered training program, appellants argued, foreclosed all opportunity to successfully bid on federal, state, and local contracts. The demands of due process, the litigants claimed, required proof that they knew of, participated in or ratified the wrongful acts before they could be deprived of a valuable property right. Secondly, appellants alleged that the state's failure to ...