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SAGE REALTY CORP. v. ISS CLEANING SERVS. GROUP

July 31, 1996

SAGE REALTY CORPORATION, 7 THIRD AVENUE LEASEHOLD LLC, 4 THIRD AVENUE LEASEHOLD LLC, 767 THIRD AVENUE ASSOCIATES, MADISON AVENUE LEASEHOLD LLC, 320 WEST 13TH ST. LLC and WATER STREET LEASEHOLD LLC, Plaintiffs, against ISS CLEANING SERVICES GROUP, INC. and REALTY ADVISORY BOARD ON LABOR RELATIONS, INC., Defendants.


The opinion of the court was delivered by: CHIN

 CHIN, D.J.

 In this case, the owners of six commercial buildings and their managing agent seek relief for alleged antitrust violations that occurred during the January 1996 strike by office building maintenance employees in New York City. Plaintiffs contend that defendants engaged in a group boycott that blocked union members from returning to work on a limited basis for certain large, well-known cleaning service contractors. In turn, plaintiffs were prohibited from employing those union members through the established cleaning service contractors.

 Defendants move to dismiss the complaint, contending that plaintiffs cannot state an antitrust claim for two reasons: first, plaintiffs have failed to allege that defendants' conduct caused a cognizable antitrust injury, and second, the non-statutory labor exemption bars plaintiffs' antitrust claim. For the reasons set forth below, I agree. Because plaintiffs fail to sufficiently allege facts demonstrating antitrust injury and because defendants' conduct is protected from the antitrust laws by the non-statutory labor exemption, defendants' motion is granted and the complaint is dismissed.

 BACKGROUND1

 I. The Parties

 II. The Office Building Cleaning Industry

 Office building maintenance workers in New York are primarily employed by two types of entities: a RAB-member building or a cleaning service contractor. The RAB, which was formed in 1938 as a multi-employer association through which employers in the building service industry could bargain with the Union, currently has approximately 1000 members who control about 65% of the office buildings in New York. Since its formation, the RAB has negotiated numerous collective bargaining agreements on behalf of its members with the Union. Approximately one-quarter of the Union members who work in RAB-member buildings are employed directly by the RAB-member.

 The remaining Union members who work in RAB-member buildings are employed by cleaning service contractors, most of which belong to the SEA. The SEA was formed over thirty years ago as a multi-employer association and currently has nineteen members. Until 1993, the SEA entered into collective bargaining agreements on behalf of its members with the Union. Since that time, however, the SEA has negotiated a pattern collective bargaining agreement, and subsequently each member enters its own agreement with the Union.

 Finally, in some limited circumstances, the Union directly enters into contracts with Independent Buildings. In general, however, Independent Buildings obtain cleaning services by hiring a cleaning service contractor. Some cleaning service contractors, such as ISS, provide services for both RAB buildings and Independent Buildings.

 III. The Strike

 On December 31, 1995, the Union's existing collective bargaining agreements and contracts expired. On January 4, 1996, after several days of fruitless negotiations, the Union went on strike. Both RAB buildings and Independent Buildings were affected.

 In order for the cleaning service contractors to continue servicing their customers, they began using non-Union labor. As a result, the Union sent representatives to picket those buildings where non-Union personnel were being employed. Disturbances resulted and the police were summoned on several occasions. The business of some commercial building tenants was also occasionally disrupted because delivery services would not cross the picket lines.

 IV. The Union's Effort to Settle the Strike with Independent Buildings

 Attempting to settle the strike with Independent Buildings while it continued to negotiate with the RAB, the Union offered to enter into so-called "you too" agreements with various cleaning service contractors. Each "you too" agreement provided for modest wage and benefit increases to workers and a cessation of the strike at the building covered by the agreement. More importantly, the "you too" agreement also included a "most favored nations" clause. This clause provided that:

 In other words, by signing the "you too" agreement, the cleaning service contractor would be able to settle with the Union, and resume employing Union members, at no risk of getting a worse deal than the RAB received after it settled with the Union. At the same ...


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