K.D. Hercules v. Laborers Local 78 of the Laborer's International Union of…

Background

K.D. Hercules, Inc., K.D. Hercules Group, Inc., and Kyriakos Diakou sued Laborers Local 78 of the Laborers’ International Union of North America and Mason Tenders’ District Council of New York. The plaintiffs alleged that, from June through October 2019, the unions engaged in unlawful secondary activity by demonstrating at a construction site where K.D. was working. They alleged that the unions used large inflatable rat balloons and flyers urging tenants to ask Riverbay Corporation to terminate K.D., describing K.D. as a “substandard and unsafe” contractor that exploited immigrant workers and exposed the community to danger.

The plaintiffs asserted claims under Section 303 of the Labor Management Relations Act and Section 8(b)(4) of the National Labor Relations Act. They also asserted New York claims for defamation, defamation per se, tortious interference with contract, tortious interference with prospective economic advantage, business disparagement, and intentional infliction of emotional distress. They separately sought exemplary damages. The defendants moved to dismiss the tortious-interference and emotional-distress claims as preempted, meaning displaced by federal labor law, and moved to dismiss the exemplary-damages claim as unavailable under New York law.

Section 303 Preemption

The court held that Section 303 preempted the claims for tortious interference with contract and tortious interference with prospective economic advantage. Section 303 provides a federal claim for harm caused by conduct that is an unfair labor practice, including union conduct intended to force one person to stop doing business with another. The court characterized Riverbay as the secondary employer and found that the plaintiffs’ interference claims relied on the same allegations that the unions pressured Riverbay to terminate K.D. through flyers and inflatable rats. Because those allegations concerned secondary activity governed by Section 303, the state interference claims were preempted.

The court also noted that the interference claims were preempted under the federal labor-law rule commonly called Garmon preemption, which generally leaves the National Labor Relations Board with authority over conduct that federal labor law protects, prohibits, or arguably covers.

Intentional Infliction of Emotional Distress

The court held that the intentional-infliction-of-emotional-distress claim was preempted under Garmon. That claim was based on the same alleged union conduct as the secondary-boycott claim, and the court found that the conduct was the type addressed by federal labor law.

The court rejected the plaintiffs’ argument that the conduct was only indirectly related to federal labor law. It also rejected two claimed exceptions: one for conduct only marginally related to federal labor law and another for conduct involving interests deeply rooted in local concerns, such as violence or imminent threats to public order. The court found that the alleged use of inflatable rat balloons and distribution of flyers constituted ordinary peaceful secondary activity and that the complaint did not plausibly allege violence or a threat to public order.

Exemplary Damages and Leave to Amend

The court explained that New York law does not recognize punitive or exemplary damages as an independent cause of action. It stated that whether such damages might be an available remedy if the plaintiffs succeeded on other claims was premature and could be addressed later. The court nevertheless dismissed the separate exemplary-damages claim.

The plaintiffs requested permission to file another amended complaint. The court denied that request, finding that the tortious-interference, emotional-distress, and exemplary-damages claims failed as a matter of law and that amendment would not cure the defects.

Disposition

The defendants’ motion to dismiss was granted. The request for leave to replead was denied. The claims for tortious interference with contract, tortious interference with prospective economic advantage, intentional infliction of emotional distress, and exemplary damages were dismissed with prejudice. The opinion does not state a disposition for the plaintiffs’ other claims.