Court Opinion

ID: 5367865
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:56:14.58125+00
Date Added: 2024-06-11T08:29:58.644152
License: Public Domain

Dore, J.
(dissenting). The agreed statement of facts discloses that the number of firms engaged in the moving business since 1929 have been far in excess of demand except at the peak season, and because of this fact the firms resorted to cut-throat competition which caused prices to decline to a level below the cost of "such services; that it became a general practice among many firms in the business, in violation of prior contracts with defendant union, to pay their employees rates of pay substantially less than those provided in the contracts between the union and the firms; that some of the employers exacted a “ kick-back ” from their employees, and others required the employees to work on a so-called “ share basis ” which gave them a portion of the price obtained for the services rendered and thus enabled such employers to pay rates so low that the wage was a fraction of what the employees were *337entitled to under the terms of prior existing agreements; that as a result, fictitious arrangements to give employees the status of independent contractors were made, thus avoiding the State and Federal laws respecting workmen’s compensation, social security and unemployment insurance taxes; and that the conditions brought about widespread unemployment among union employees and resulted in the payment of wages less than a living wage.
The submission further stipulates that the only means known for performance of the agreements between the union and the employers was to establish prices for services that would be equal to the cost of rendering such services, and that as a result the agreement in question was made, requiring employers to render services for a price not less than the cost, and that conditions in the industry have been consequently alleviated.
Section 340 of the General Business Law, making illegal and void contracts for monopoly or in restraint of trade, provides: “ 2. The provisions of this article shall not apply to cooperative associations * * * of farmers, * * * or dairymen, * * * nor to contracts, agreements or arrangements made by such associations, nor to bona fide labor unions. 3. The labor of human beings shall not be deemed or held to be a commodity or article of commerce as such terms are used in this section and nothing herein contained shall be deemed to prohibit or restrict the right of workingmen to combine in unions, organizations and associations, not organized for the purpose of profit.”
The foregoing provisions have been construed to exempt all agreements of bona fide labor unions from the provisions of subdivision 1 of section 340. (American Fur Mfrs. Assn., Inc., v. Associated F. C. & T. Mfrs., Inc., 161 Misc. 246; affd., 251 App. Div. 708.) In the American Fur Manufacturers case the Special Term expressly ruled that the amendment of 1933, adding to the clause “ The provisions of this article shall not apply * * * ” the words “ nor to bona fide labor unions,” meant that all the provisions of the article were inapplicable and that labor unions were given the same preferential treatment as the other co-operative associations mentioned in subdivision 2, for otherwise the addition of the amendment would be unnecessary and futile, since before the amendment the common law was sufficient so far as union organization was concerned and no legislative act could have made it more effective. While the unanimous affirmance in this court was without opinion, that ruling of the Special Term was not dictum but was the very ratio decidend of the whole case, and in view of the great importance of the question, it is unlikely this court would have affirmed without comment if it considered wholly unsound the ruling that the *338collective agreement there attacked was cloaked with immunity by virtue of the amendment exempting labor unions.
Barns v. Dairymen’s League Co-Operative Assn., Inc. (220 App. Div. 624) sustained as lawful a milk producers’ association that had among its objectives the fixing of prices.
It is admitted that the exemption of labor unions in section 340 was intended to protect them in lawful endeavors to secure the interest of the workingman by agreements as to wages, hours or other conditions of labor, and that a union agreement fixing such wages or other conditions of employment in which no actual monopoly is involved would be valid. But the submission before us stipulates as a fact that the only means known in this industry to secure the payment of the union wage or a living wage was to establish minimum prices equal to the cost of rendering the services.
The agreement does not prevent competition but sets up standards of fair competition, merely excluding limitless free cut-throat competition based on the rendition of services below cost. To secure compliance with the provisions against charges for services below such cost, it has set up machinery for the registration of estimates and contracts.
There is no evidence before us that market prices or the public interest has been adversely affected, and the agreement does not purport to set up any monopoly prohibited by the common law or the Donnelly Act.  In New York Clothing Manufacturers’ Exchange, Inc., v. Textile Finishers Association, Inc. (238 App. Div. 444), the controversy involved an agreement among defendants doing eighty per cent of the business in question; the agreement fixed on the basis of actual cost the minimum prices to be charged; this court, pointing out that the agreement was one for the rendition of services (and concededly the word “ services ” was not then contained in the act), nevertheless, quoted with approval the statement in Barns v. Dairymen’s League Co-Operative Assn., Inc. (supra, at p. 640): “ Before it [the court] will condemn, there must appear the elements of injury to the public, or monopolistic control of a particular article of commerce, or' unreasonable interference with and damage to the business of an individual, or the doing of illegal or unconscionable acts, or specific intent to do injury to some one else, or, in brief, at least some of the circumstances which would lead a court in good conscience to say that a given set of defendants were overstepping the bounds of reasonable ambition and fair play and were becoming a nuisance to their fellow men.”
In the New York Clothing Manufacturers’ Exchange case we also quoted with approval the following statement of Justice Hughes *339in Appalachian Coals, Inc., v. United States (288 U. S. 344): “In applying this test, a close and objective scrutiny of particular conditions and purposes is necessary in each case. Realities must dominate the judgment. The mere fact that the parties to an agreement eliminate competition between themselves is not enough to condemn it.”
Immediately after our decision in the New York Clothing Manufacturers’ Exchange case (supra) the Donnelly Act was amended to include “ services ” held excluded by this court from the operation of the act. But it is significant to note that the Legislature made no attempt to amend the act to exclude the application of the rule of reason applied by this court to combinations alleged to be in restraint of trade.
Here, only seventeen per cent of the firms engaged in the industry in New York city are subject to the agreement, doing twenty-six per cent of the moving business and owning forty-nine per cent of the storage places, and the rules promulgated permit a member on consent of the stabilization committee to meet on occasion the below minimum prices of independent movers and warehousemen.
If United States v. Socony-Vacuum Oil Co. (310 U. S. 150) be construed as overruling the Appalachian Coals case (supra), it is not incumbent upon the courts of this State to abandon their consistent application of the rule of reason. A Federal decision contrary in principle is not binding upon us in respect of a State statute not involving a Federal question. (Marsich v. Eastman Kodak Co., 244 App. Div. 295; affd., 269 N. Y. 621.) The holding in the Socony-Vacuum case that the rule of reason has no application appears to be clearly contrary to previous decisions of the Supreme Court of the United States. (See Cement Mfrs. Assn. v. United States, 268 U. S. 588; Chicago Board of Trade v. United States, 246 id. 231, and Appalachian Coals, Inc., v. United States, 288 id. 344.)
On the facts, too, the cases can be distinguished. In this case no specific price is fixed but minimum prices are agreed on based upon the actual cost of services, and it is stipulated that the schedule of basic costs was on the average not higher than the rates and charges for the same services filed by the employers subject to the collective labor agreement with the Interstate Commerce Commission and the Public Service Commission of the State of New York pursuant to Federal and State statutes. Each mover and warehouseman may charge any price above basic costs.
In the Socony-Vacuum case the system the defendants employed involved buying up all the supplies. There is no such fact involved in this case. Finally, in the Socony-Vacuum case the rights of labor were not involved.
*340In the same term in which the Supreme Court of the United States decided the Socony case, that same court said in Apex Hosiery Co. v. Leader (310 U. S. 469, 503, 504): “ Furthermore, successful union activity, as for example consummation of a wage agreement with employers, may have some influence on price competition by eliminating that part of such competition which is based on differences in labor standards. Since, in order to render a labor combination effective it must eliminate the competition from non-union made goods, see American Steel Foundries v. Tri-City Central Trades Council, 257 U. S. 184, 209, an elimination of price competition based on differences in labor standards is the objective of any national labor organization. But this effect on competition has not been considered to be the kind of curtailment of price competition prohibited by the Sherman Act. [Citing cases.] ”
The Socony-Vacuum case was decided under the Sherman AntiTrust Law. The court decided that a price-fixing agreement violated that law regardless of its good intention. That decision is obviously not controlling here where the court is only asked to determine that the 1933 amendment of our State statute exempts minimum price provisions in a labor agreement from the Donnelly Anti-Trust Act, if such provisions are designed in good faith to establish and maintain wage, hour and working conditions in a bona fide collective bargaining agreement. The Sherman Act contains no provisions for the exemption of labor unions and yet, as indicated above, curtailment of price competition was not regarded as a violation of the act where it resulted from an elimination of price competition based upon differences in labor standards.
The minimum prices here concerned are stipulated to agree with the actual costs.
It is stated in the majority opinion that the agreement under “ thinly veiled ” language authorizes the stabilization committee to fix prices, and also that under the “ guise ” of increasing wages and regulating working conditions, the aim is to fix prices. The words indicate the opposite of bona fides and apparently suggest an ulterior and sinister object. But there is nothing whatever in the stipulated facts to justify such suggestions or to show that the arrangement before us was a subterfuge and not a 'bona fide activity of the labor union in furtherance of its natural and proper objects. . The immunity granted by the Donnelly Act is restricted to a bona fide labor activity. When in a proper case the facts show that the agreement is not bona fide but merely a subterfuge and device to enable employers to fix prices, I entirely agree that the agreement would not be within the immunity of the exemption. But the stipulation of facts accepted by this court establishes the good faith of this contract.
*341The union by joining the contract aims to protect labor and to further its legitimate purposes as to wages, hours and working conditions. The employer joins the contract so as to be enabled to fulfill its collective agreement with the union and to correct the ruinous abuses named in the contract (a part of this stipulation) which were indisputably shown to follow from limitless, free, unrestrained, cut-throat competition. There is no evidence before us that the agreement has affected market prices.
This agreement recognizes the vital interest of employers, employees, and the public in the maintenance of fair trade practices in this industry, and the elimination of the disastrous and ruinous consequences not of fair competition but of cut-throat competition below the cost necessary to pay a living wage. Such voluntary co-operative effort between business and labor should not be struck down by the courts unless the law expressly forbids. Here the statute expressly exempts.
Judgment should be directed for defendants sustaining the validity of the agreement and adjudging that plaintiffs are bound by its terms and provisions.
Judgment directed in favor of the plaintiffs, without costs. Settle order on notice.