Court Opinion

ID: 5367864
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:56:14.575071+00
Date Added: 2024-06-11T08:29:58.640868
License: Public Domain

Callahan, J.
Plaintiffs are stock corporations engaged in the business of moving and storing household goods. Defendant associations are membership corporations, whose members are engaged in the same business. Defendant Local 814 is a labor union, whose members are employed in the industry.
A large part of the moving and storage business in the city of New York is handled by member firms under a written agreement which is the subject of the present dispute. In percentages it is stipulated that thirty-five per centum of all firms in the industry in the boroughs of Manhattan and the Bronx are subject to this agreement, and forty-six per centum of the moving vans in operation in such boroughs are controlled by such firms.
Labor represents a substantial portion of the cost of'the services rendered by the industry, ranging from twenty-five per centum to sixty per centum in the various branches of the business.
An agreement was entered into between the union and the defendant associations on April 15, 1940, which, in addition to fixing a scale of wages for union employees, recited that chaotic and cut-throat competition was impairing the ability of the industry to maintain a fair and decent wage scale for its employees. The parties agreed that certain “ unfair trade practices ” were to be eliminated from the industry. Among those practices was one described as follows: “ (e) Quoting or obtaining or attempting to secure a price for any service which shall be less than the sum of the wages necessary under Section I of the Agreement and of reasonable items of expenses and overhead entering into the cost of operation.” The agreement provided for the creation of a moving and storage stabilization committee. This committee was authorized to obtain from employers and from other sources reports of operating costs as a basis of preventing unfair practices. It was permitted to prescribe the form of bids and was to be advised of all quotations and estimates. The committee was given the power to exclude from any rights under the agreement any employer who failed to comply with a decision of the committee. It will thus be seen, despite the thinly veiled attempt to conceal the real purpose, that under this agreement the stabilization committee was authorized to fix prices to be charged in the industry.
The plaintiffs herein contend that the agreement is in violation of the anti-monopoly law of this State (Gen. Business Law, § 340), and have refused to abide by it. The defendant union has threatened a strike because of such refusal.
Section 340 of the General Business Law provides, in substance, that every contract, agreement, arrangement or combination whereby a monopoly in the marketing or sale in this State of any
*334article or service used in the conduct of the trade is or may be created, or whereby competition or the exercise of any activity in this State in the marketing or sale, or in the supply or price of any service is or may be restrained or prevented, or whereby, for the purpose of creating a monopoly or interfering with the free exercise of any activity within the State in the sale of any article or service, the free pursuit in this State of any lawful business is or may be restricted or prevented, is declared to be against public policy, illegal and void.
The moving and storage of goods is unquestionably a trade or business for the marketing of services.
Section 340 of the General Business Law contains exceptions to the effect that the provisions of the law shall not apply (1) to certain co-operative associations, nor to contracts, agreements or arrangements made by such associations; or (2) “ to bona fide labor unions.”
The statute also provides that the labor of human beings shall not be deemed to be a commodity or article of commerce as such terms are used in the section, and that nothing contained in the section shall be deemed to prescribe or restrict the right of working men to combine in unions not organized for the purpose of profit.
The particular question presented is whether by reason of the exemption in favor of labor unions contained in the section, the statute is without application to the present agreement since a labor union is a party thereto.
We had a somewhat similar question presented to us in the case of New York Clothing Mfrs. Ex., Inc., v. Text. Fin. Assn., Inc. (238 App. Div. 444). At the time of the decision in that case, however, no exemption was granted in favor of labor unions under the statute, nor did the statute apply to the marketing of services, but only to dealings in commodities. We held in that case that the agreement which involved a scheme to control practices in the cloth sponging industry was not in restraint of trade.
We called attention to the fact that the agreement then under consideration related to “ services ” which were not attempted to be controlled by section 340 as it then existed. Our decision rested largely on the authority of Appalachian Coals, Inc., v. United, States (288 U. S. 344), where the Supreme Court of the United States applied the so-called “ rule of reason ” in determining whether an agreement regulating an industry was monopolistic. Since our decision in the New York Clothing Manufacturers case (supra) the United States Supreme Court in United States v. Socony-Vacuum Oil Co. (310 U. S. 150), has held that any agreement which proposes to fix prices is a violation of the Federal anti-trust law per se, and *335that the so-called “ rule of reason ” will not be applied to such an agreement.
The Federal anti-monopoly law provides, in effect, that every contract or conspiracy in restraint of trade or commerce is illegal. Its purposes are quite similar to those of our State statute. While it is true that Federal cases interpreting Federal statutes relating to interstate situations are not necessarily controlling on State courts when interpreting their own statutes (Marsich v. Eastman Kodak Co., 244 App. Div. 295; affd., 269 N. Y. 621), great weight should be given to the views expressed by the highest court of the land in relation to disputes involving similar issues, particularly issues relating to economic questions. The public policy of our State like that of the nation is opposed to monopolistic practices such as price fixing. This policy has been expressed so often that there is no doubt that an agreement attempting to regulate prices, such as the present contract, would be held in violation of our statute, unless the presence of a labor union as a party exempts the agreement from the State law.
In Barns v. Dairymen’s League Co-Operative Assn., Inc. (220 App. Div. 624) this court held lawful an association of milk producers which included, among its objects, the fixation of prices. We did so because we found that the exemption granted in the statute to the contracts of such associations expressly removed them from the purview of section 340 of the General Business Law.
It will be noted, however, that no express exemption is granted by the section to contracts or agreements of labor unions resulting in monopolies
The ordinary objects of labor unions are well known and have been' defined by statute (Civ. Prac. Act, § 876-a; Labor Law, §§. 700-704).
We think that section 340 does not give immunity to the contracts or 'agreements of labor unions unless they are confined to some legitimate labor activity. To grant labor unions an exemption so that they may enter into agreements to enforce monopolistic aims of employer groups by fixing the prices to be charged the public for services or commodities and thus to stifle competition, ‘would be to destroy entirely the anti-monopoly statutes.
; In practically all industries the cost of labor is a substantial part of the price of goods. To say that under the guise of increasing wages or regulating working conditions, a union may be permitted to agree with employers’ associations so as to fix the prices which the latter will charge the public for their wares or services is;so contrary to the whole purpose of the law that the statute should not be so interpreted unless the language used leaves no room for a contrary construction.
*336We think that reading section 340 as a whole the exception in favor of labor unions was only intended to protect such unions in their lawful endeavors to secure the interests of working men by agreements with respect to wages, hours or other conditions of labor. It has no relation to contracts fixing prices of goods or services. The social principle which justifies labor unions would be departed from should they become so extended in their operation as to permit the accomplishment of the object here sought.
We find that the same construction was placed on this statute in DeNeri v. Louis, Inc. (174 Misc. 1000) which decision, though modified in part, was affirmed as to the matters material here by the Appellate Division of the Second Department (261 App. Div. 920).
Nor did we hold anything contrary to the views we now express in affirming the decision in American Fur Mfrs. Assn., Inc. v. Associated Fur Coat & Trimming Mfrs., Inc. (251 App. Div. 708). That case involved an agreement providing that there was to be but one collective labor agreement in the fur industry, a legitimate labor objective.
Of course, an agreement by a labor union fixing wages as such, or contracting with relation to other conditions of employment in which no actual monopoly was involved, would be valid. When, however, the union steps beyond its normal sphere of labor activity and attempts by agreement with employers to fix the prices to be charged for goods or services by a large part of an industry, we think that those agreements come within the prohibition of section 340 of the General Business Law.
Judgment should be directed for the plaintiffs, without costs.
Martin, P. J., Townley and Glennon, JJ., concur; Dore, J., dissents.