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JOU-JOU DESIGNS, INC. v. INTERNATIONAL LADIES GARM

June 12, 1980

JOU-JOU DESIGNS, INC.; COCO BOUTIQUE, INC.; TOPAZ BOUTIQUE, INC.; and TOPAZ BOUTIQUE OF LEXINGTON AVENUE, INC., Plaintiffs,
v.
INTERNATIONAL LADIES GARMENT WORKERS UNION, AFL-CIO; SPORTSWEAR JOINT BOARD, INTERNATIONAL LADIES GARMENT WORKERS UNION; LOCAL 23-25, INTERNATIONAL LADIES GARMENT WORKERS UNION; LOCAL 155, INTERNATIONAL LADIES GARMENT WORKERS UNION; and GENERAL TRADES EMPLOYEES UNION, LOCAL 5A, AFL-CIO, Defendants.



The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION AND ORDER

Plaintiff Jou-Jou Designs, Inc. ("Jou-Jou") and three affiliated companies sue to enjoin defendant labor unions from participating in an inter-union arbitration under Article XX of the AFL-CIO Constitution. Jurisdiction in this Court is asserted on the basis of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. In addition to an injunction, plaintiffs pray for a declaration that the behavior of certain union defendants is in restraint of trade and violative of the Sherman Act, and demand actual damages, to be trebled. A second claim, based upon pendent jurisdiction, seeks a declaration that the same defendants acted in tortious interference with plaintiffs' contractual relations, and prays for comparable injunctive relief and actual damages. Venue is laid under 28 U.S.C. § 1391(b).

The arbitration, if not enjoined, will determine whether one union's "Hazantown" agreement with Jou-Jou violates the AFL-CIO proscriptions on interfering with the established bargaining or work relationship of another union. Plaintiffs allege the arbitration to be part and parcel of a course of conduct by the ILGWU defendants violative of the Sherman Act under the rationale of Connell Construction Co., Inc. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 621-2, 95 S. Ct. 1830, 1834-1835, 44 L. Ed. 2d 418 (1975); and, on a separate theory, violative of rights said to be conferred on Jou-Jou by NLRB v. Plasterers' Local 79, 404 U.S. 116, 92 S. Ct. 360, 30 L. Ed. 2d 312 (1971).

 The parties' thorough written submissions and oral arguments at two hearings on plaintiffs' motion for a preliminary injunction reveal that the decisive questions of law arise from undisputed facts. No evidentiary hearing is required, and the case is ripe for final decision. *fn1"

 Finding no viable antitrust claim, and no authority to enjoin defendants' activities, we dissolve the temporary restraining order previously entered, deny the injunction, and dismiss the complaint.

 I.

 Plaintiff Jou-Jou, a New York corporation, is engaged in the apparel and clothing industry within the Southern District of New York, operating as a jobber of junior sportswear. *fn2" In keeping with the common practice in this branch of the garment industry, Jou-Jou does not produce or manufacture the garments it sells. Rather, Jou-Jou designs sample garments or patterns, which it furnishes to outside contractors together with material, and manufacturing specifications. Jou-Jou's garments are then made to its order by the outside contractors; upon redelivery Jou-Jou sells these garments to retailers. Jou-Jou employs directly, that is in its "inside" shop, approximately six workers who include sample or pattern makers and shipping and receiving clerks. None of Jou-Jou's production is carried on by these "inside" workers; all production is by workers employed by Jou-Jou's contractors, working in the contractors' "outside" shops. *fn3"

 On May 5, 1978 Jou-Jou and Local 155 of the ILGWU entered into a jobber's agreement, *fn4" known in garment industry parlance as a "Hazantown" agreement. *fn5" The Jou-Jou/Local 155 Hazantown agreement *fn6" recognized that "the Employer (Jou-Jou) and its contractors are jointly engaged in an integrated production effort and, as such, have a close unity of interest and, in any labor dispute, are not neutrals with respect to each other; and . . . the Union (Local 155) represents the workers in many such contractors' shops, and has collective bargaining agreements with their employers and desires to provide and assure employment for such workers." In pertinent part, the agreement obligated Jou-Jou: (1) to use, with certain exceptions, only outside contractors having collective bargaining agreements with Local 155, or with the latter's consent, those having such agreements with other ILGWU locals or affiliates; and (2) to make certain employee benefit payments required under the outside contractors' collective bargaining agreements with ILGWU locals. The contract contained a no strike clause and bound the parties to arbitrate disputes related to the agreement. With respect to duration and renewal, the agreement provided:

 
"10. This agreement shall be effective as of the day and year first above written (i. e., May 5, 1978) and shall continue in full force and effect until the 31st day of July, 1979, and from year to year thereafter, unless at least sixty (60) days prior to such expiration date or subsequent anniversary thereof either party gives written notice to the other of its desire to modify or terminate this agreement."

 The Jou-Jou/Local 155 Hazantown agreement did not purport to affect Jou-Jou's relations with its inside employees. Indeed, during the initial term of that agreement, the inside employees were not represented by any union. However, in February 1979 Local 155 apparently expressed a desire to negotiate with Jou-Jou concerning those inside employees. In this connection Local 155 wrote to Jou-Jou on May 11, 1979 as follows:

 
"As you undoubtedly know, our current collective labor agreement is scheduled to expire on July 31, 1979. As a condition for the renewal of the contractual relationship, the Union will request various modifications.
 
"Please let us know when it will be convenient for you to meet with us for the purpose of negotiating the new terms. We trust the the (sic) harmonious relations which have existed between us will continue." *fn7"
 
Negotiations concerning renewal of the Hazantown agreement and coverage for Jou-Jou's inside employees presumably went forward, for on July 5, 1979 Jou-Jou's then-counsel wrote to Local 155 to acknowledge agreement on the terms of a contract, which would include the inside employees. That letter *fn8" also made reference to Local 155's consent to Jou-Jou's continued use of a certain outside contractor.
 
A final integrated agreement was apparently contemplated *fn9" but never consummated, because on July 9, 1979 Local 5A of the General Trades Employees Union, an affiliate of the United Brick and Clay Workers of America, AFL-CIO, filed a petition with the National Labor Relations Board ("NLRB") requesting an election to determine whether it should be certified as the bargaining representative of Jou-Jou's inside employees. Shortly thereafter, Local 155 informed the NLRB by letter of July 17, 1979 *fn10" that it was withdrawing its interest in representing Jou-Jou's inside employees but that "we do have a Union agreement with the firm known as a Hazentown (sic) Agreement which requires the firm to use only union contractors."
 
Counsel for Jou-Jou wrote to Local 155 on July 25, 1979. That letter *fn11" recounted the events leading to the agreement respecting the inside employees, noted the pending Local 5A petition for election and concluded:
 
"In light thereof, the contract between your Union and Jou Jou Designs, Inc. will, of course, terminate on July 31, 1979 and will not renew itself in light of the foregoing."
 
Counsel for Local 155 responded:
 
"As you are well aware, the agreement we have with Jou Jou Designs is a Hazentown (sic) Agreement which requires the firm to use only Union contractors. The fact that another Union represents Jou Jou Design's inside shop is totally irrelevant.
 
"Furthermore, we consider the contract between Local 155, I.L.G.W.U. and Jou Jou Designs renewed and we plan to hold the firm to all the terms and conditions of the agreement." *fn12"
 
Jou-Jou's counsel replied:
 
"I am in receipt of your letter dated July 26, 1979 ...

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