Cosmopolitan Interior NY Corporation v. District Council 9 International Union…

Background

Cosmopolitan Interior is a construction subcontractor that provided painting and wall-covering services. District Council 9 (DC 9) represents painters, wallpaper installers, and drywall tapers. Cosmopolitan Interior was not a signatory to DC 9’s collective bargaining agreement, which required signatory contractors to pay area-standard wages and benefits and imposed rules for subcontracting union work.

The dispute concerned Cosmopolitan Interior’s use of separate companies and union contractors to perform union work while also performing non-union work. The court found that Cosmopolitan Interior and Cosmopolitan Interiors USA operated as alter egos, and that Cosmopolitan Interior used JLM Decorating for non-union work. After Cosmopolitan USA stopped operating, Cosmopolitan Interior arranged for Par Wall Finishing to act as a “paymaster” by registering jobs, paying union painters, and making benefit contributions. DC 9 later objected to that arrangement and indicated that a formal subcontracting relationship would be permitted under the collective bargaining agreement.

Cosmopolitan Interior alleged that DC 9 engaged in unlawful secondary activity under 29 U.S.C. § 187. Its three theories were that DC 9 coerced neutral employers to stop doing business with Cosmopolitan Interior because it was not a signatory to the agreement; coerced neutral employers to pressure Cosmopolitan Interior to recognize and bargain with DC 9; and encouraged workers employed by other companies to strike or refuse to work in order to force those companies to stop doing business with Cosmopolitan Interior.

Prior partial ruling

Four days into the bench trial, the court granted in part and denied in part DC 9’s motion for judgment on partial findings under Federal Rule of Civil Procedure 52(c). In a prior related proceeding, the court ruled that Cosmopolitan Interior had not shown unlawful secondary activity concerning DC 9’s interactions with Par Wall and another union painting company, Target. The court denied the motion concerning DC 9’s interactions with Cosmopolitan Interior’s clients. The opinion addressed all three claims after considering the complete trial record.

Legal standard

The court explained that a claim under Section 187 concerning an unlawful secondary boycott requires proof of three things: unlawful union conduct, an unlawful objective to force another person or company to stop doing business with someone else, and a causal connection between the unlawful conduct and the plaintiff’s damages.

The court also applied the statute’s “publicity proviso.” That provision protects publicity, other than picketing, that truthfully informs the public about a labor dispute, so long as the publicity does not induce workers employed by another person to refuse to work or provide services. The court explained that peaceful handbilling is generally protected, while threats, coercion, intimidation, or conduct that creates a physical or symbolic barrier can fall outside that protection.

Par Wall

The court held that Cosmopolitan Interior did not prove an unlawful claim based on DC 9’s communications with Par Wall. DC 9’s president indicated that the union might file a grievance against Par Wall for violating the collective bargaining agreement by acting as a paymaster outside a formal subcontracting relationship. The court found that enforcing the agreement through a grievance or lawsuit was not an unlawful purpose. DC 9 also told Par Wall that it could continue working with Cosmopolitan Interior through a formal subcontracting relationship.

The court separately found that Cosmopolitan Interior did not prove causation. Par Wall had entered the arrangement as a favor, made little or no profit, and found Cosmopolitan Interior difficult to deal with. Par Wall’s owner testified that he most likely would have ended the arrangement even without speaking to DC 9. The court also found that Cosmopolitan Interior did not meaningfully pursue a formal, agreement-compliant subcontracting relationship or another way to obtain union labor.

J.T. Magen

Cosmopolitan Interior argued that DC 9’s president threatened J.T. Magen that glaziers and tapers would refuse to work alongside Cosmopolitan Interior’s workers at the Aetna project. The court did not decide whether that communication was a threat because Cosmopolitan Interior failed to prove that it caused J.T. Magen to terminate Cosmopolitan Interior.

The court found that J.T. Magen’s decision was driven by Cosmopolitan Interior’s inability to provide painters and the resulting risk to the project schedule, not by pressure from DC 9. The court also found that DC 9’s letters to J.T. Magen about Cosmopolitan Interior’s wage practices truthfully described the labor dispute and were protected by the publicity proviso.

New York Stock Exchange

DC 9 placed an inflatable rat outside the New York Stock Exchange and distributed handbills stating that Cosmopolitan Interior had a history of failing to pay area-standard wages and benefits. The New York Stock Exchange then ended its contract with Cosmopolitan Interior, in part to avoid the reputational impact of the display.

The court nevertheless held that DC 9’s conduct was not unlawful secondary activity. The union representatives did not block entrances, threaten the New York Stock Exchange, ask people to stop working, or use conduct equivalent to picketing. The court characterized the activity as protected informational publicity.

The court also found that Cosmopolitan Interior did not prove the handbills were materially misleading. Cosmopolitan Interior admitted that it performed open-shop work and did not pay union-scale wages and benefits on those jobs. It also failed to prove that the painter working at the New York Stock Exchange was paid area-standard wages and benefits during the relevant period. Even assuming the handbill could be read to suggest otherwise, the court found no proof that DC 9 intended to deceive or lacked a good-faith basis for its statements.

Other business partners

Cosmopolitan Interior presented evidence that DC 9 sent letters to other contractors and clients and displayed inflatable rats and handbills at other worksites. The court held that these actions also fell within the publicity proviso. There was no evidence that the union’s conduct involved picketing, coercion, or threats, and Cosmopolitan Interior did not prove that the public statements were untruthful.

The court further rejected Cosmopolitan Interior’s claim that DC 9 had blacklisted it from the market for union work. The court found that Cosmopolitan Interior’s inability to obtain additional union work was instead proximately caused by Moishe Gold’s decision to stop bidding on union work and his failure to pursue available ways to obtain union labor.

Disposition

Judge Jed S. Rakoff held that Cosmopolitan Interior failed to prove that DC 9 engaged in illegal secondary activity concerning any target of the union’s campaign. The court entered judgment in favor of DC 9 on all three claims. The Clerk was directed to enter final judgment in favor of DC 9 on all outstanding claims, dismiss the case in its entirety, and close the case.