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BUILDING INDUS. FUND v. LOCAL UNION NO. 3

February 8, 1996

BUILDING INDUSTRY FUND et al., Plaintiffs, against LOCAL UNION No. 3, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO et al., Defendants.


The opinion of the court was delivered by: ROSS

 ROSS, United States District Judge:

 This rather complex case represents another unfortunate chapter in a long history of labor discord in the electrical segment of the construction industry in New York City. Plaintiffs in this action, a number of individual corporations engaged in the business of providing electrical contracting services and materials in the New York metropolitan area, and the Building Industry Fund, alleged to be an unincorporated trade association of over one hundred such contractors, have filed a civil suit under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(a), (c) and (d) (hereinafter "RICO"); the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2 (hereinafter "Sherman Act"); the Labor Management Relations Act, 29 U.S.C. § 187 (hereinafter "LMRA"); and state tort law. Defendants named in the Second Amended Complaint include four entities: Local Union No. 3 of the International Brotherhood of Electrical Workers, AFL-CIO; the Joint Industry Board of the Electrical Industry; the Association of Electrical Contractors, Inc.; and the New York Electrical Contractors Association. Plaintiffs allege that defendants have engaged in a twenty-year campaign of threats, violence and extortion, amounting to a pattern of racketeering activity, a conspiracy to restrain trade in and monopolize the New York electrical services market, and a systematic program of unfair labor practices. Presently pending before the court, after months of voluminous expedited discovery, are motions for summary judgment on all counts by each of the four defendants. For the reasons that follow, the motions are granted in part and denied in part.

 FACTUAL BACKGROUND

 The New York Electrical Contractors Association, Inc. and the Association of Electrical Contractors, Inc. (hereinafter "NYECA" and "AECI" respectively, or jointly "the Associations") are trade organizations which, together, represent approximately two hundred individual companies, each engaged in providing electrical services in the New York metropolitan region. In the construction industry, project contracts are typically awarded to general contractors, who then sub-contract specific parts of the job to smaller trade contractors which perform such specialized services as electrical, plumbing, and dry wall installation. The Associations act as multi-employer bargaining units, and have for many years been bound by a series of collective bargaining agreements with Local Union No. 3, International Brotherhood of Electrical Workers, AFL-CIO (hereinafter "Local 3"), which represents the electrician employees of between four and five hundred electrical contractors (hereinafter "Local 3 contractors").

 In the collective bargaining agreement of January 1, 1943, the contractors and Local 3 established an entity to be known as the Joint Industry Board of the Electrical Industry (hereinafter "JIB"), whose stated purpose at the time was, among other things, to negotiate collective bargaining agreements, arbitrate disputes between employees and employers, and operate pension plans. JIB Ex. B, at 7 ("History and Organization of JIB"). Today, the stated purposes include administering qualified employee benefit plans, instituting initiatives for the betterment of the electrical industry, and promoting harmony between management and labor by deciding controversies, problems or disputes arising under the collective bargaining agreement. Schuck Aff., P 8; JIB, Ex. C and Pl.'s Ex. 5 (Rules and Regulations of JIB). JIB is composed of thirty representatives: fifteen chosen by Local 3, ten chosen by NYECA, four chosen by AECI, and one by independent contractors affiliated with Local 3. *fn1" The Local 3 contractors contribute funds for the operation of JIB, and the Associations guarantee those funds with respect to its members.

 Sometime in the early 1970's, Local 363 of the International Brotherhood of Teamsters (hereinafter "Local 363") also began organizing electricians. Labor strife between Local 363 and Local 3 ensued, which at one point was described in the media as a "violent war over the right to represent electrical workers," including "bombings, arson, sabotage of work sites, beatings, and death threats." Michael Oreskes, Corruption is Called a Way of Life in New York Construction Industry, N.Y. Times, Apr. 25, 1982, § 1, at 1. Ultimately, Local 363 entered a collective bargaining agreement with another multi-employer trade association known as the United Construction Contractors Association (hereinafter "Contractors Association"). Throughout this period, however, Local 363 apparently remained the minority representative of electrical workers in New York City.

 The collective bargaining agreement between Local 363 and the Contractors Association provided for the creation of a fund to be called the Building Industry Fund (hereinafter "Fund"), to which each employer was obligated to contribute. JIB Ex. AT, art. 35 (Collective Bargaining Agreement between Local 363 and Contractors Association). The Fund was established to promote the business, welfare and interests of the electrical industry, support various training and educational programs, and stabilize and improve employer-union relations. It was to be administered by employer-appointed trustees, who were to meet with the union every three months.

 On October 18, 1989, the National Labor Relations Board (hereinafter "NLRB") held a representation election among various classes of electrical workers in the employ of the individual Contractors Association members, which Local 363, the incumbent union, boycotted. On the eve of election, all but six members of the Contractors Association withdrew from that organization. Local 3 was elected, and on February 23, 1993, the NLRB certified Local 3 as the representative of all Contractors Association electricians. Thereafter, the former Contractors Association contractors refused to bargain with Local 3, and on October 29, 1993, the NLRB entered a cease and desist order, *fn2" which the Second Circuit later enforced on September 2, 1994. *fn3" Thus, all former members of the Contractors Association are presently obligated to engage in collective bargaining with defendant Local 3.

 Plaintiffs allege that sometime prior to January 1, 1975, and continuing to the present, all four defendants entered into an unlawful "conspiracy," the purpose of which, through racketeering acts of extortion, was to restrain trade, monopolize the market for electrical contracting in New York City, and drive plaintiffs out of business. Paragraphs 25 through 27 of the Second Amended Complaint (hereinafter "the complaint") allege that members of Local 3 employed arson, threats, vandalism, and other forms of violence and harassment against plaintiffs and other electrical contractors to secure contracts for Local 3 contractors at the expense of Local 363 contractors. They also allege that strikes, sit-ins and secondary boycotts were threatened and carried out. In some cases, the Local 3 members allegedly responsible for these activities are also identified as representatives of JIB. Although the complaint alleges that JIB, AECI, and NYECA were complicit in these activities, it does not detail their involvement, except to allege that all defendants were part of the "conspiracy."

 Furthermore, plaintiffs allege that JIB has used the funds it receives from Local 3 contractors to mount a systematic campaign to harass them through litigation and administrative proceedings. Most of these activities have taken the form of "prevailing wage law" suits pursuant to N.Y. Lab. Law § 220. A final allegation does not appear in the complaint, but in plaintiffs' papers on the instant motion. Plaintiffs allege that defendants conspired illegally to fund JIB in violation of 29 U.S.C. § 186, creating a "slush fund" to support its litigation activities.

 DISCUSSION

 I. Summary Judgment Standard

 Summary judgment is appropriate when there exists no genuine issue of material fact in a case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A disputed material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. The moving party bears the burden of demonstrating that no material fact is in dispute. Hurwitz v. Sher, 982 F.2d 778, 780 (2d Cir. 1992) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970)), cert. denied, 508 U.S. 912, 124 L. Ed. 2d 255, 113 S. Ct. 2345 (1993). In examining the record, the court must resolve all ambiguities against the movant and draw all favorable inferences in favor of the nonmovant. Adickes, 398 U.S. at 158-59, 90 S. Ct. at 1609; Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir. 1989). Once the moving party has made the necessary showing, mere allegations or denials by the non-moving party are insufficient to show that there exists a triable issue of fact. Project Release v. Prevost, 722 F.2d 960, 968 (2d Cir. 1983). Further, "to defeat a motion for summary judgment a plaintiff cannot rely on 'conjecture or surmise,' Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.), cert denied, [502] U.S. [849], 112 S. Ct. 152 (1991), and 'must do more than simply show that there is some metaphysical doubt as to the material facts,' Matsushita Ileac. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986)." Heilweil v. Mount Sinai Hosp., 32 F.3d 718, 723 (2d Cir. 1994), cert. denied, 513 U.S. 1147, 115 S. Ct. 1095, 130 L. Ed. 2d 1063 (1995). The non-moving party must instead "produce 'significant probative evidence tending to support [its position].'" Id. (quoting United States v. Pent-R-Books. Inc., 538 F.2d 519, 529 (2d Cir. 1976), cert. denied, 430 U.S. 906, 51 L. Ed. 2d 582, 97 S. Ct. 1175 (1977)). "Summary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated." Ramseur, 865 F.2d at 465.

 II. Threshold Determinations Affecting All Counts

 A. Standing of the Fund

 The Fund purports to be a trade association of electrical contractors, the purpose of which is "to promote and improve the lawful and legitimate business, welfare and interests of the electrical/construction industry." Second Am. Compl., P 1. Neither the defendant Associations nor JIB contest The Fund's standing as a plaintiff in this suit. JIB, in fact, agrees that the Fund is an unincorporated trade association of over 100 electrical contractors, of which each corporate plaintiff is a member. JIB Rule 3(g) Statement, PP 2-4. *fn4" As a trade association, the Fund would have standing to sue on behalf of all of its members if it met the following three-prong standard established by the Supreme Court:

 
Thus we have recognized that an association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

 Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 343, 53 L. Ed. 2d 383, 97 S. Ct. 2434 (1977); see also Self-Insurance Inst. v. Korioth, 993 F.2d 479, 484 (5th Cir. 1993); National Coal Ass'n v. Lujan, 298 U.S. App. D.C. 338, 979 F.2d 1548, 1551 (D.C. Cir. 1992); National Ass'n. of Pharmaceutical Mfrs. v. Ayerst Lab., 850 F.2d 904, 914 (2d Cir. 1988); American Booksellers Ass'n, Inc. v. Houghton Mifflin Co., 1995 U.S. Dist. LEXIS 2522, at *9-10, 1995-1 Trade Cas. (CCH) P70,931, No. 94 Civ. 8566 (S.D.N.Y. March 3, 1995).

 Local 3, on the other hand, argues that the Fund lacks standing to bring this suit as a separate and individual plaintiff because it is not a representational, membership organization or a trade association, and further, has not alleged any direct injury to itself as required by Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 112 S. Ct. 1311, 1318, 117 L. Ed. 2d 532 (1992); see also Manson v. Stacescu, 11 F.3d 1127, 1130 (2d Cir. 1993) (stating that RICO standing is limited "to plaintiffs whose injuries were proximately caused by the RICO predicate acts," citing Holmes). Rather, Local 3 claims, the Fund is only a trust fund of employer contributions created by the collective bargaining agreement between Local 363 and the Contractors Association, which should be terminated by virtue of the certification of Local 3 as the union with which the corporate plaintiffs must negotiate. Because plaintiff has not responded to the alleged lack of standing, Local 3 argues that it must be deemed uncontested that the Fund is a trust fund which lacks standing to sue for damages suffered by the contractors from whom it receives its contributions. Local 3 Reply Mem., at 4. If Local 3 had asserted in its Rule 3(g) Statement as an undisputed fact that the Fund is merely a trust fund that lacks standing in this case, and supported that assertion by evidence of record, and if the plaintiffs had still not responded, then the lack of standing would have been deemed admitted. General Electric v. New York State Dep't of Labor, 936 F.2d 1448, 1452 (2d Cir. 1991). However, Local 3 raised the issue only in its memorandum of law.

 Standing should ordinarily not be presumed, and the burden rests upon the plaintiff to demonstrate standing. Autoinfo, Inc. v. Hollander Publishing Co., 1991 U.S. Dist. LEXIS 11019, at *2, No. 90 Civ. 6994, 1991-92 Trade Cas. (CCH) P 69, 529 (August 7, 1991) (dismissing RICO and Sherman Act claims for failure to establish standing) (citing Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 45, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976) and Data Processing Serv. v. Camp, 397 U.S. 150, 153, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970)). In the case at bar, plaintiffs have made no independent attempt to establish the Fund's standing, despite Local 3's raising the issue, leaving the court to scour the record itself for evidence. *fn5"

 The collective bargaining agreement between Local 363 and the Contractors Association that was in force from July 1, 1986 through July 30, 1989, clearly indicates that the Fund is simply one of several funds to which the members of the Contractors Association agreed to contribute. JIB Ex. AT, at 35. Interestingly, the fund was established to promote the business, welfare and interests of the electrical industry, support various training and educational programs, and "stabilize and improve employer-union relations," goals similar to those articulated by defendants in establishing JIB and questioned by plaintiffs in this suit. See, e.g., Schuck Decl., P 8; JIB Ex. B, at 5. Although Anthony Cardillo claims to be the present "chairman" of the Fund, Cardillo Aff., P 1, the agreement refers only to trustees chosen by the employers who shall administer the fund and meet with union officials once every three months. The agreement does not suggest that the individual contractors are "members" of the Fund, or that there are employer "representatives" sitting on a Board of Directors, but only that each employer is obligated to make financial contributions to the fund. Indeed, because the Contractors Association was the representative trade association and multi-employer bargaining unit at the time the agreement was negotiated, see JIB Ex. AT, at 1, the Fund would have been redundant in such a role.

 The Contractors Association itself apparently became largely defunct when all but six of its members withdrew from the organization just prior to the certification election in November, 1989. If the Fund filled this void by becoming an actual trade association and multi-employer bargaining representative for the Local 363 contractors at that time, plaintiffs have provided no evidence to that effect. Therefore, based upon the present record, the court finds that the Fund is not a representative trade association to which the standing requirements of Hunt could be applied, but is rather a fund of finances to be used for certain stated purposes. Because plaintiffs have offered no evidence that contributions to the fund suffered at any point as a result of any of the activities alleged in the Second Amended Complaint, the fund itself is not properly a plaintiff in this action. Further, even were the court to find that the Fund is a trade association, the record is devoid of evidence which would enable it to hold that the Fund meets all three elements of the Hunt standard. For these reasons, the Fund is dismissed as a plaintiff in this action for lack of standing to sue.

 B. Hearsay in Plaintiffs' Affidavits

 JIB argues that much of the evidence upon which plaintiffs rely in resisting summary judgment is inadmissible hearsay that must be discounted by the court. Plaintiffs counter that "the court may consider hearsay evidence in opposition to a motion for summary judgment." Pl.'s Mem. of Law, at 16. Plaintiffs' argument, however, fails fully to take account of JIB's argument and the applicable law.

 Plaintiffs have submitted twenty affidavits in opposition to the motions for summary judgment allegedly based upon personal knowledge of various illegal acts by defendants Local 3 and JIB. Many of the statements made by the affiants, however, involve what someone told them about Local 3's conduct, or what someone told someone else regarding why certain electrical contracts were lost. *fn6" Such statements are classic examples of hearsay: out of court statements made by someone other than the witness offered for the truth of the matter asserted. Fed.R.Evid. 801(c). *fn7"

 In opposing summary judgment, "supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e). Thus, while a party opposing summary judgment generally need not prove its evidence in admissible form, e.g., Gache v. Town of Harrison, 813 F. Supp. 1037, 1052 (S.D.N.Y. 1993), it is equally well-settled that an affidavit that is solely based upon hearsay is a nullity in reviewing a summary judgment motion. Burlington Coat Factory Warehouse v. Esprit de Corp., 769 F.2d 919, 924 (2d Cir. 1985); Schwimmer v. Sony Corp. of America, 637 F.2d 41, 45 (2d Cir. 1980). Those portions of an affidavit that constitute hearsay may be ignored while other portions supported by admissible evidence may be considered. See Witter v. Abell-Howe Co., 765 F. Supp. 1144, 1147 (W.D.N.Y. 1991); First City Fed. Sav. Bank v. Bhogaonker, 684 F. Supp. 793, 798 (S.D.N.Y. 1988). The party offering the hearsay affidavit must make "a showing that admissible evidence will be available at trial." Burlington Coat Factory, 769 F.2d at 924; Spence v. Maryland Casualty Co., 803 F. Supp. 649, 664 (W.D.N.Y. 1992); Isaacs v. Mid America Body & Equip. Co., 720 F. Supp. 255, 256 (E.D.N.Y. 1989) ("The test is whether the affiant's, statements 'would be admissible in evidence under any rule of evidence or exception thereto, if the affiant was on the stand testifying.'") (quoting 6 J. Moore Federal Practice, P 56.22[1] at 56-752 to 56-755 (2d ed. 1988)).

 Plaintiffs do not deny that many of the statements in the twenty affidavits are hearsay. Instead, plaintiffs argue that their hearsay evidence may be considered because there exists other evidence that is not hearsay, and that they have not relied solely upon hearsay evidence. The import of the cases, however, is that plaintiffs bear the burden of showing not just that unspecified "other" admissible evidence exists to support their claims, but that the very same statements currently presented in hearsay form either meet a hearsay exception or will be presented in admissible form at trial. Plaintiffs have not made such a showing.

 Plaintiffs rely primarily on two cases for their argument that hearsay evidence may be considered in a motion for summary judgment: United States v. Private Sanitation Indus. Ass'n, 862 F. Supp. 861, 866-67 (E.D.N.Y. 1994) and Amendolare v. Schenkers Int'l Forwarders, Inc., 747 F. Supp. 162, 165-66 (E.D.N.Y. 1990). Both of these cases are distinguishable from the case at bar. First, neither case involved the admissibility of affidavits submitted in opposition to a motion for summary judgment. The evidence at issue in Private Sanitation was a memorandum prepared by a law firm. The evidence at issue in Amendolare was deposition testimony. Thus, neither case addressed the specific requirements of Rule 56(e). Second, the court in Amendolare made a specific finding that the deposition testimony at issue would be admissible under Rule 801(d)(2)(E), while the court in Private Sanitation concluded that the memorandum in question was at least potentially admissible at trial, and could therefore be considered in reviewing the summary judgment motion. Plaintiffs have not made any showing that the various statements that involve hearsay, and sometimes double hearsay, will be ...


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