Petition — Expert Electric, Inc. v. Levine

Supreme Court brief1977

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InN THE

Supreme Court of the United Mratewors.°. cree

No. - ‘< - 2 l &

OCTOBER TERM, 1977

EXPERT ELECTRIC, INC., HENDRIX ELECTRIC, INC.,

ARGARD ELECTRIC CORP., ZIP ELECTRIC CO., INC.,

EUGENE IOVINE, INC., PHASE II ELECTRIC CORP., TAP

ELECTRICAL SERVICES AND CONTRACTING, INC.,

BISANTZ ELECTRIC CO., INC., ROBERT E. BURDEN

ELECTRICAL CONTRACTOR, INC., and FIVE STAR

ELECTRIC CORP.,

. Petitioners,

-against-

LOUIS L. LEVINE, as lidustrial Commissioner

of the State of New York,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

eae ae Saeco ce

MORRIS WEISSBERG

Attcrney for Petitioners

253 Broadway

New York, N.Y. 10007

(212) 267-3250

—— $C

Dick Bailey Printers, 290 Richmond Ave., Staten Island, N.Y. 10302

Tel.: (212) 447-5358

Supreme Court, U. & tg \

on EILE

| auG & if

‘

TABLE OF CONTENTS CF PETITION

Page

ns no's wy wad isoee shee Se eau aes 1

5s ob aah ues sates eho eee adda de® 2

EE a Ck os ACS 6 oe 6 6 keke Duka eee 2

Constitutional and Statutory Provisions Involved...... 2

ES re Pe ere G

oo id Sve ys 550 cee ee ke ewe 7

ea daha 5 tha Sanne Pine T Ree 7

Prior Administrative Proceedings .................. 10

Prior proceedings in this case in the District Court, and

ED 6 gp Gc up dveesessaveypesweese 11

Reasons for Granting the Writ.................-45. 13

l(a) Differences in issues presented in this case, and in

the prior case in State court; no res judicata. 13

1(b) Petitioners’ lack of standing to participate, as

parties, in the administrative hearing, and in the suit

for judicial review of the administrative deter-

ER ry er Oe o's Gee ki wh 18

2. Unconstitutional disqualification of the petitioners

is os 5 it eeteneneeUneew betes 21

° 3. Denial of the equal protection of the laws ......... 33

Nt eek a wae ee 38

TABLE OF CASES

Page

;

Americai Federation of Labor v. American Sash &

a MP Ess EEE ae cc ccndacenceesees 37

Anti-Fascist Refugee Committee v. McGrath, 341 U.S.

RR aS ee ee a eer ere eee 20,22

Bailey v. Richardson, 341 U.S. 918 (1950) ........... 20

Coe v. Armour Fertilizer Works, 237 U.S. 413 (1914) 16,17

Fox Publishing Corp., v. United States, 366 U.S. 683

SE Cth 2 arg bok whos RRS ChE eke O50 0 be OSE OS 19

Gem Music Corp., v. Taylor, 294N.Y. 34 (1945)...... 24

Kersh Lake District v. Johnson, 309 U.S. 485 (1939) . 17,18

Ker v. California, 374 U.S. 23 (1962) ............... 32

Lincoln Federal Labor Union v. Northwestern Iron &

NT GAR, SP EP es PEED. be osc ccccceeseeces 37

Niemotko vy. Maryland, 340 U8. 366 (49GO) .. . 5.000 32

NLRB v. Local 3 --F. 2d-- (C.A. 2, 1976) ............ 35

Phelps Dodge Refining Corp., v. FTC, 139 F.2d 393

ee oi de sw ew aune 28.29

Schware v. Board of Bar Examiners, 343 U.S. 232

a a Oe eee eM ae 4. le see eeke awe 23

iii

Sperry Products v. Association of American Railroads.

132 F. 2d 408 (C.A. 2, 1951), cert. denied 319 U.S

(| ae aR aia a ar aga yo

} “yt *

Stein v. New York, 346 U.S. 156 (1952) ............. 32.00

SO GON, Ze Wee SO UNDUE oc ccccccccceccces 37

United Construction Contractors, Association, Inc.. v.

Levine 52 A.D. 2d 371 (N.Y. 1976) ........... 12,15,14

United States v. Brown, 381 U.S. 437 (1964).......... 22

Vanderwelde v. Put & Call Brokers & Dealers

Association 344 F. Supp. 118 (S.D.N.Y. 1972) ...... 23

Yick Wo v. Hopkins, 118 U.S. 356 (1885).......... 37,38

CONSTITUTIONS, STATUTES AND RULES

CITED

U.S. Constitution, 14th Amendment. section! ....... 2

es eee bveekeees 2

New York Labor Law, section 811 ................ 3,7,9

New York Labor Law, section 816 .............. £.. 38

New York Not-for-Profit Corporations Law, section 517

Department of Labor of State of New York, Regulation

ee ee rey ee ee ee error e Tre 5,6,8,9,15,21

BEST COPY AVAILABLE

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1976

No.

EXPERT ELECTRIC, INC., HENDRIX

ELECTRIC, INC., ARGARD ELECTRIC

CORP., ZIP ELECTRIC CO., INC., EUGENE

IOVINE, INC., PHASE II ELECTRIC CORP..,

TAP ELECTRICAL SERVICES AND CON-

TRACTING, INC., BISANTZ ELECTRIC CO.,

INC., ROBERT E. BURDEN ELECTRICAL

CONTRACTOR, INC., and FIVE STAR

ELECTRIC CORP..,

Petitioners,

-against-

LOUIS L. LEVINE. as Industrial Commissioner

of the State cf New York,

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

The petitioners pray that a writ of certiorari issue to

review the judgment of the United States Court of Appeals

for the Second Circuit, filed May 12, 1977, which affirmed

two orders of the United States District Court for the

Southern District of New York, dated July 24, 1975S and

November 5S, 1976, which dismissed the complaint of the

2 3

OPINIONS BELOW At all times relevant to the issues herein. New York

The opinions and judgment of the United States Court of

Appeals for the Second Circuit were filed in that Court on

May 12, 1977, and they are not yet officially reported.

Copies of such opinions are printed beginning at page 19a

of the Appendix herein.

The first opinion of the District Court of the United

States for the Southern District of New York (Robert L.

Carter, J.) is dated July 24, 1975S. It is officially reported in

| 399 F. Supp. 2d 893, and it is printed in the Appendix

herein, beginning at page la.

The second opinion of the District Court of the United

States for the Southern District of New York (Robert L.

Carter, J.) is dated November 5, 1976, and it is not yet

officially reported. That opinion is printed in the Appendix

herein, beginning at page 14a.

JURISDICTION

This petition for certiorari to review the judgment of the

United States Court of Appeals for the Second Circuit filed

May 12, 1977, is timely being made within 90 days of the

filing of such judgment.

The jurisdiction of this Court to review such judgment is

invoked pursuant to 28 U.S.C. section 1254.

CONSTITUTIONAL AND STATUTORY PROVISIONS

INVOLVED

Section 1 of the 14th Amendment to the Constitution of

the United States, in part, provides:

“* * * nor shall any State deprive any person of

life, liberty or property, without due process of law;

nor deny to any person within its jurisdiction the

equal protection of the laws.”

| statutes provided:

§ 811. Powers and duties of industrial

commissioner; personnel

1. The industrial commissioner shall have the

following powers and duties:

(a) to encourage and promote the niaking of

apprenticeship agreements conforming to the

standards established by or pursuant to this ar-

ticle;

(b) to establish suggested standards for ap-

prcaticeship agreements in conformity with the

provisions of this article;

agreements and maintenance of standards;

(d) to register approved apprenticeship

agreements, and upon performance thereof, to

issue certificates of completion of apprenticeship;

(e) to settle differences arising out of ap-

prenticeship agreements, when such differences

cannot be adjusted locally or in accordance with

established trade procedure;

(f) to terminate or cancel any apprenticeship

agreements in accordance with the provisions of

such agreements;

(g) to encourage and promote the hiring by any

trade or group of trades of persons who are on

parole, in order to aid in the rehabilitation of such

persons;

(h) to study and disseminate information on

apprenticeship training. trends of employment

opportunities in various trades, the impact of

technological change on skill levels and

requirements, the supply of and needs for skilled

manpower, and related matters:

(i) to cooperate with the tederal government, the

state education department, the state department

of commerce and other agencies, public and

private in the state;

(j) to adopt such rules and regulations as may be

necessary for the effective administration of the

purposes and provisions of this article;

(k) to perform such other duties as may be

necessary to give full effect to the policies of the

state and the provisions of this article.

2. The industrial commissioner shall appoint a

person who shall be in charge of apprentice

training in the department of labor, and who shall

act as secretary of the state apprenticeship and

training council and of state joint apprenticeship

committees. The industrial commissioner is

further authorized to appoint such clerical,

technical, and professional assistants as shall be

necessary to effectuate the purposes of this article.

The personnel appointed under this article shall

receive an annual compensation to be fixed by the

industrial commissioner within the amount

provided by appropriation. (Labor Law, section

811)

§ 816. Apprenticeship agreements

For the puroses of this article an apprenticeship

agreement is:

(1) An individual written agreement between an

employer and an apprentice, or (2) a written

agreement between an employer or an association

of employers. and an organization of employees

describing conditions of employment for ap-

prentices or (3) a written statement describing

conditions of employment for apprentices in a

plant or plants where there is no bona fide em-

ployee organization. (Labor Law. section 816)

§ 517. Liabilities of members

(a) The members of a corporation shall not be

personally liable for the debts, liabilities or

obligations of the corporation.

(b) A member shall be liable to the corporation

only to the extent of any unpaid portion of the

initiation fees, membership dues or assessments

which the corporation may have lawfully imposed

upon him, or for any other indebtedness owed by

him to the corporation. No action shall be brought

by any creditor of the corporation to reach and

apply any such liability to any debt of the cor-

poration until after final judgment shall have been

rendered against the corporation in favor of the

creditor and execution thereon returned un-

satisfied, or the corporation shall have been ad-

judged bankrupt. or a receiver shall have been

appointed with power to collect debts, and which

receiver. on demand of a creditor to bring suit

thereon, has refused to sue for such unpaid

amount, or the corporation shali have been

dissolved or ceased its activities leaving debts

unpaid. No such action shall be brought more than

three years after the happening of any one of such

events. (Not-for-profit Corporations Law, section

517)

Regulation 601.8 of the Department of Labor of the

State of New York, adopted June 3, 1974, provided (33):

“Reinstatement of Program Deregistration. Any

apprenticeship program formally deregistered

pursuant to this Part may not be reinstated for a

period not to exceed 3 years, nor shall the sponsor

or any employer or union participant be eligible to

under any other name for such period.”’

QUESTIONS PRESENTED

1. Does res judicata bar this suit by the petitioners for a

judgment that Regulation 601.8 of the Department of

Labor of the State of New York unconstitutionally

disqualified them from exercising their statutory right

under sections 811 and 816 of the New York Labor Law to

each petitioner’s apprentice training agreement with its

own employees, by providing that for a period not ex-

ceeding three years after the Labor Department has

deregistered an apprentice training agreement, no em-

ployer or union participant therein shall be eligible to

other name, where the Labor Department has made an

administrative determination that a local labor union and

an incorporated employers’ association in which petitioners

were members violated apprentice training regulations,

and the Labor Department deregistered that apprentice

training Agreement for such violations, and the Appellate

Division of the New York Supreme Court judicially con-

firmed that administrative determination?

2. Did the New York Labor Department un-

constitutionally deprive each petitioner individually of

substantive and procedural due process under Regulation

601.8, by disqualifying each of them, individually, from

registering with the Labor Department their own ap-

prentice training agreements with their own employees,

without any charge, hearing or determination that the

petitioners authorized, ratified or participated in the

alleged violations for which the Labor Department

deregistered the apprentice training agreement between a

labor union and an incorporated employers’ association in

which the petitioners were members?

3. Did the Labor Department unconstitutionally

discriminate against the petitioners, and deny to them the

equal protection of the laws?

The aforesaid constitutional questions of law were

presented in the complaint, at pages 34-35 and at pages 37-

38 of the record in the Court of Appeals for the Second

Circuit.

STATEMENT OF THE CASE

The Facts

Peti.ioners are electrical contractors, doing alteration

and repair electrical work under contracts with commercial

firms in private industry, and also doing more than

$10,000.00 of governmental work annually under contracts

with agencies of the Federal, New York State and New

York City governments (A31).

Petitioners were members of United Construction

Contractors Association, Inc., (““United’’) which made an

agreement with Local 363, International Brotherhood of

Teamsters (‘Local 363''}, whose members include jour-

neymen and apprentice electricians, for training of ap-

prentice electricians by their Joint Apprenticeship Com-

mittee (“JAC’’). That agreement was registered by the

Labor Départment in 1971, as a_ continuation of

registration of prior similar agreements beginning in 1961

(A31).

Section 811(d) of the New York Labor Law empowers the

Labor Department to register apprenticeship agreements

and individual apprentices (A31).

In 1975, each petitioner employed one or more registered

apprentice electricians (A31).

On or about June 17, 1974, the respondent caused to be

served on United, and on Local 363, a notice of proposed

deregistration of their apprentice training agreements,

which stated, in part, that United, Local 363, JAC (A41-

44):

“1. failed to meet its responsibilities under its

master Apprenticeship program in that it failed to

complete the training of apprentices so as to

qualify as journeymen, in contravention of the

purposes of Article 23 and specifically Section 810

of the said Article. |

2. The following employers, members of the

Joint Apprenticeship Committee have violated

Article 8 of the Labor Law and the Apprenticeship

Training Regulations in that they have failed to

pay prevailing wages and supplements, employed

unregistered apprentices, used apprentices in

excess of the ratio provided in the apprenticeship

agreements for the geographical area in which the

work was performed: Abetta Electric Service

Corporation ***; Unity Electric Service Cor-

poration ***; lovine, Inc., *** Hylan Electric Co.,

Inc. ***; Gottlieb Contracting Co., Inc. ***

Franco Electric Corp.. ***; Mansfield Electric

*e* °°

Respondent held hearings on the said charges, by an

Advisory Council on Apprenticeship Training.

On May 1, 1975, respondent approved a report by such

Advisory Council on Apprenticeship Training, and can-

celled the Labor Department's registration of the ap-

prentice training agreement between United and Local 363

(A45S-54).

On June 3. 1974, defendant amended his apprentice

training regulations to read, in part, as follows (A33):

Section 601.8.

“Reinstatement of program registration. Any

apprenticeship program formally deregistered

pursuant to this Part may not be reinstated for a

period not to exceed 3 years, nor shall the sponsor

or any employer or union participant be eligible to

under any other name for such period.”’ (Emphasis

supplied)

Pursuant to defendant's above-quoted amended

regulations. his aforesaid administrative determination of

May 1. 1975, automatically cancelled the Labor Depart-

ment’s registration of each apprentice electrician whom

each petitioner then employed; and it automatically

disqualified each petitioner for a period not to exceed three

years. from registering with the Labor Department an

apprenticeship training agreement in its own name as

employer (A31-32), although section 816 of the New York

Labor Law provides, in part:

‘For the purposes of this article an apprenticeship

agreement is: (1) An individual written agreement

between an employer and an apprentice, ***.”’

None of the petitioners committed any of the acts alleged

in respondent's notice of proposed deregistration, in that

none of them failed to pay prevailing wages and sup-

plements, employed unregistered apprentices, or used

apprentices in excess of the ratio provided in the ap-

prenticeship agreement (A34; AS7-58; A70-71).

None of the petitioners agreed to, authorized, ratified, or

participated in any of the acts alleged in the notice of

proposed deregistration, or had knowledge thereof (A34;

AS7-S8; A70-71). |

Section 811 of the New York Labor Law, in part,

provides:

“1. The industrial commissioner shall have the

following powers and duties:

* * *

(d) to register approved apprenticeship

agreements, and upon performance thereof, to

issue certificates of completion of apprenticeship;

***% °°

Petitioners alleged that section 601.8 of respondent's

regulations, and his actions under color thereof, and under

color of section 811 of the New York Labor Law. following

his determination of May 1, 1975, which cancelled his

registration of the apprenticeship training agreement

between United and Local 363, in disqualifying each

petitioner from registering its own apprentice training

agreement with persons whom it wishes to employ as

apprentice electricians, unconstitutionally ascribed to each

plaintiff guilt by association for acts allegedly performed by

certain named employers other than these plaintiffs, and

for improper supervision of apprentice training by United

and Local 363, and thereby the said Regulations, and

respondent's actions implementing his Regulations,

deprived each petitioner of liberty and property without

due process of law. contrary to section t.of the Fourteenth

Amendment to the Constitution of the United States, and.

consequently. the said Regulation, and defendant’s actions

implementing it, are unconstitutional and invalid (A34-

A385).

Prior Administrative Proceedings

Petitioners, as individual contractors, were not named by

respondent as parties to any administrative proceeding;

and the respondent made no administrative determination

which named the petitioners.

On June 17, 1974, the respondent commenced an ad-

ministrative proceeding in the Labor Department by

serving notice of proposed deregistration upon United and

Local 363.

Thereafter, the respondent conducted evidentiary

hearings in the Labor Departmcnt, by an Advisory Council

on Apprenticeship Training, which he appointed, and

which consisted of three officials of AFL building trade

unions. and three building contractors who employed

members of AFL building trade labor unions. No member

or officer of a Teamsters’ Union served on such Advisory

Council.

On May 1. 1975, the respondent made an administrative

a ne 0

determination which approved and adopted a report by the

said Advisory Council on Apprentice Training, which

sustainea the charges against United and Local 363, and

cancelled the Labor Department’s registration of the

apprentice training agreement between United and Local

363.

After the New York Courts confirmed the said ad-

ministrative determination on June 2, 1976, 52 A.D.2d

371, the respondent issued an administrative order that

contractors who were members of United will be

disqualified from employing registered apprentices for

three years from June 2, 1976, namely, until June 2, 1979.

Prior State Court Litigation

On July 2, 1975, United and Local 363 commenced a

proceeding against the respondent under Article 78 of the

New York Civil Practice Law and Rules for judicial review

of the respondent's administrative determination of May4

1975, which sustained charges against them, and cancelled

the Labor Department's registration of their apprentice

training agreement.

On June 2. 1976, the Appellate Division, Third

Department, of the New York Supreme Court, confirmed

the said administrative determination, 52 A.D. 2d 371.

Thereafter, the Court of Appeals of the State of New York

denied leave to appeal to that Court, and thereby the said

State court litigation terminated on July 16, 1976.

Prior proceedings in this case in the District Court,

and in the Court of Appeals

On May 22, 1975, the summons and complaint in this

action was filed in the District Court for the Southern

District of New York; and petitioners made a motion for a

preliminary injunction, restraining the respondent from

disqualifying them from registering their own apprentice

training agreements with their own apprentices.

Without serving an answer, the respondent made a

cross-motion to dismiss the complaint under Rule 12,

F.R.C.P.

The District Court (Carter, J.) heard oral argument on

such motion and cross-motion, after which it dismissed the

complaint by memorandum decision and order No. 42854,

dated July 24, 1975.

By notice of appeal dated August 4, 1975, petitioners

appealed from the said order, and they docketed the said

appeal as No. 75-7462.

Thereafter, on petitioners’ motion, the Court of Appeals

made an order, dated September 2, 1975, which remanded

the case to the District Court for the purpose of applying to

that Court to vacate the judgment dismissing the com-

plaint, and for a rehearing.

On November 6, 1975, the District Court granted a

rehearing, which it held on March 3, 1976, on which date it

heard oral argument, and then directed a stay of

proceedings in this action until after the decision in the

case of “United Construction Contractors Association v.

Levine’’, which was awaiting oral argument of an appeal to

the Appellate Division, Third Department of the New York

Supreme Court.

On June 2, 1976, that Court made a decision which

confirmed the respondent's administrative determination

of May 1, 197S, which deregistered the apprentice training

agreement of United, Local 363, JAC: and the Court of

Appeals of the State of New York denied leave to appeal to

that Court, terminating that litigation on July 16, 1976.

On June 29, 1976, the respondent again made a motion

to dismiss the complaint, and for summary judgment on

the ground that the Appellate Division decision in United

.Construction Contractors v. Levine. 52 A.D.2d 371, was

res judicata.

BEST COPY AVAILABLE

By a decision filed November 8, 1976, the District Court

(Robert L. Carter, J.) granted the motion and dismissed

the complaint.

Petitioners appealed to the Court of Appeals which

affirmed the judgment dismissing the complaint and said

that in disqualifying each petitioner from registering its

own apprentice training agreement with its own employees,

the Labor Department only imposed on each petitioner the

natural consequence and legal effect of its membership in

the incorporated employers’ association. and it did not

affect any status or right which is peculiar and personal to

each petitioner: and that. there was such identity of parties

and issues between the prior administrative determination

followed by the State court judgment confirmation thereof,

and this subsequent Federal suit, as barred this suit as res

judicata.

REASONS FOR GRANTING THE WRIT

l(a) Differences in issues presented in this case, and in

the prior case in State Court: no res judicata. The com-

plaint shows on its face that the issue presented by the

complaint in this case is entirely different from the issues

that were presented and decided in the prior administrative

proceeding and in the judicial confirmation thereof by the

State court in United Construction Contractors Association

v. Levine, 52 A.D. 2d 371.

The complaint in this case alleged (34-35):

“*#*the provisions of Sections *** 601.8 of the said

Regulations, that upon the making of a deter-

mination deregistering an apprentice training

program. *** no employer or union which par-

ticipated therein shall be eligible to register any

apprenticeship training program under any other

name for three years *** deprived each plaintiff of

liberty and property without due process of law,

contrary to Section | of the Fourteenth Amend-

ment to the Constitution of the United States, and,

consequently, the said Regulations, and defen-

dant’s actions implementing them, are un-

constitutional and invalid.”

No such allegation was made in the State Court petition

in United Construction Contractors Association vy. Levine,

supra, 52 A.D. 2d 371; and the decision in that case did not

mention Regulation 601.8 or decide the constitutionality of

its provision that upon deregistration of an apprentice

training agreement between a labor union and an em-

ployer’s association, each employer member of such

employers’ association shall be disqualified for a period not

exceeding three years from registering its own apprentice

training agreement with its own employees.

The three decisions below in this case also did not discuss

or decide the constitutionality of the aforesaid

disqualification provision in Regulation 601.8, although

the above-quoted allegations of the complaint herein

plainly presented the constitutionality of such provision as

the principal question for decision.

The Circuit Court’s decision said that the Labor

Department's administrative determination:

“operates against the employer association and

appellants only insofar as they are members. The

State is neither seeking to hold these litigants

accountable for the acts of others nor impose a

penalty.”

We submit that the Circuit Court's above-quoted

statement erroneously gives no effect to the provision in the

Labor Department's Regulation 601.8 that:

“for a period not to exceed three years *** (no)

employer or union participant (shall) be eligible to

under any other name ***."’

We submit that Regulation 601.8 imposes a penalty

against each petitioner and seeks to hold each petitioner

civilly responsible for the acts of others by disqualifying

them, as individuals, from exercising the statutory right

given to each of them individually—in addition to, and

apart from their membership in the employer's

association—by sections 811 and 816 of the New York

Labor Law. to make individual apprentice training

agreements with their own employees, and to register such

individual apprentice training agreements with the State

Labor Department.

It is the constitutionality of this disqualification from

exercising such right for three years, provided by

Regulation 601.8, that the complaint in this case presents

for decision: and this was not presented for decision in the

prior administrative proceeding, nor in the prior State

Court judicial confirmation of the administrative deter-

mination.

The Circuit Court's decision herein, and the two

decisions of the District Court, completely overlook the fact

that sections 811 and 816 of the New York Labor Law give

to an employer an individual right to make and to register

with the State Labor Department his own apprentice

training agreement with his own employees, and, also, a

right to join an employer's association, which on behalf of

its members makes an apprentice training agreement with

a labor union for training of apprentices, and such em-

ployer’s association and labor union jointly register such

agreement with the State Labor Department, and jointly

administer such apprentice training agreement. .

We submit that deregistration of such employer-union

apprentice training agreement for apprentice training

violations can not constitutionally have the effect of

disqualifying each employer member from making and

registering with the State Labor Department its own ap-

prentice training agreement with its own employees.

otherwise each employer will be held civilly responsible and

—

disqualitied for the acts of the trade association, the labor

union, and one or more other employers, without any

evidence that it authorized, ratified or participated in the

acts for which tte Labor Department deregistered the joint

apprentice training agreement between the labor union and

the employer's association.

The United Construction Contractors’ Association, in

which each petitioner was a member, was a corporation

incorporated under the New York Not-For-Profit Cor-

poration Law, in which section 517 at all times provided:

(a) The members of a corporation shall not be

personally liable for the debts, liabilities or

obligations of the corporation.

(b) A member shall be liable to the corporation

only to the extent of any unpaid portion of the

initiation fees, membership dues or assessments

which the corporation may have lawfully imposed

upon him, or for any other indebtedness owed by

him to the corporation. No action shall be brought

by any creditor of the corporation to reach and

apply any such liability to any debt of the cor-

poration until after final judgment shall have been

rendered against the corporation in favor of the

creditor and execution thereon returned un-

Satisfied ***,

In Coe v. Armour Fertilizer Works, 237 U.S. 413-423,

(1914), it was decided that a similar Florida statute did not

make res judicata against a stockholder a money judgment

rendered by a Florida court against a Florida co ;

The Court said: rporation.

“Tt may be conceded that a judgment recovered

against a corporation, without fraud or collusion,

in a court having jurisdiction over the subject-

matter and the party, may consistently with the

Fourteenth Amendment be treated as concluding

the stockholder respecting the existence and

amount of the indebtedness so adjudged

(citations). But before a third party's property may

be taken to pay that indebtedness upon the ground

that he is a stockholder and indebted to the cor-

poration for an unpaid subscription, he is entitled,

upon the most fundamental principles, to a day in

court and a hearing upon such questions as

whether the judgment is void or voidable for want

of jurisdiction or fraud, whether he is a stockholder

and indebted. and other defenses personal to

himself."” (emphasis supplied)

In this case. as in the Coe case, supra, each petitioner

has “defenses personal to himself’ which make inap-

plicable to each petitioner, as a basis for personal

disqualification of each petitioner from registering its own

apprentice training agreements with its own employees, the

prior administrative determination and the State Court

confirmation thereof which deregistered the apprentice

training agreement between the labor union and the in-

corporated employers’ association in which each petitioner

was a member.

Such personal defenses consist of the fact that each

petitioner did not authorize, ratify or participate in the

alleged apprentice training violations found by the Labor

Department in its administrative determination for which

it deregistered the apprentice training agreement between

the labor union and the employers’ association.

In Kersh Lake District v. Johnson, 309 U.S. 485, 494-

495 (1939). holders of unpaid certificates of indebtedness

issued to pay for improvements, sued the District in

Federal court and obtained judgment directing the District

to levy and to collect additional tax to pay such certificates.

Thereafter. two individual landowners obtained judgments

in the State court that their lands were not subject to

additional tax to pay such certificates, because they had

paid in full the assessment on their lands for their

proportionate share of the cost of such improvements. The

Court held that such State court judgments were not barred

by the prior judgment of the Federal district court. The

Court said:

“The fact that the Commissioners, in the in-

junction proceedings against the District, un-

successfully attempted to interpose defenses

peculiar and personal to the individual landowners

cannot foreclose the individual landowners, who

were not present, from thereafter pleading a

defense otherwise valid. Certainly, the decree in

the injunction suit in the federal court would not

frevent an individual property owner from sub-

sequently interposing the defense that his property

was not in fact included within the Drainage

District. Cognate personal defenses such as the one

that a landowner’s proportionate drainage tax

liability has been declared by the judgment of a

competent tribunal to have been ‘ascertained and

paid,’ were not foreclosed by the Federal District

Court's judgment."’

We submit that in this case, too, the petitioners’ per-

sonal allegations in their complaint that they did not

authorize, ratify or participate in the alleged apprentice

training violations which the Labor Department deter-

mined to have been committed by the labor union and the

employers’ association in their joint administration of their

apprentice training agreement, set forth a legally sufficient

cause of action for judgment declaring that the Labor

Department's Regulation 601.8 unconstitutionally

disqualified them from registering with the Labor

Department their own apprentice training agreement with

their own employees.

I(b). Petitioners’ lack of standing to participate, as

parties, in the administrative hearing, and in the suit for

judicial review of the administrative determination. —

In support of his motion to dismiss the complaint, the

respondent said that notice of administrative hearing on

disciplinarg chaiges was mailed to all the members of the

employers’ association, including the petitioners (65).

We submit that such casual notice of an administrative

hearing on disciplinary charges. which was addressed to

the labor union. and to the employers’ association, but not

to individual members of the employers’ association, such

as each petitioner herein, does not have the legal effect of

binding each petitioner with respect to its own personal

rights and status, with the administrative decision on such

disciplinary charges, nor with the State court’s judicial

confirmation thereof.

In Coe v. Armour Fertilizer Works, supra, 237 U.S. 413,

424-425 (1914). the Court said that:

“extra-official or casual notice, or a hearing

eranted as a matter of favor or discretion”’ cannot

‘be deemed a substantial substitute for the due

process of law that the Constitution requires.”

Petitioners lacked standing to participate in or to in-

tervene in the administrative hearing, and in judicial review

of the administrative determination.

In Fox Publishing Corp.. v. United States, 366 U.S. 683,

691(1960), it was held that the plaintiff, a member of the

American Society of Composers, Authors and Publishers,

(*ASCAP”), had no legal right to intervene in a pending

anti-trust action in which a consent judgment was being

negotiated in favor of the United States against ASCAP.

The Court said:

“##® before the inadequacy of ASCAP’s

representation of appellants’ interests in the

consent decree negotiations can give rise to a right

of intervention, appellants must further

demonstrate that they are or may be bound by the

judgment on the litigation.***

“***® appellants’ arguments as to a divergence of

interests between themselves and ASCAP proves

too much, for to the extent that it is valid ap-

pellants should not be considered as members of

the same class as the present defendants, and

therefore not ‘bound’.”’

See, also, to the same effect: Bailey v. Richardson, 341

U.S 918 (1950); Anti-Fascist Refugee Committee v.

McGrath, 341 U.S. 123, 186 (1950; concurring opinion by

Jackson, J.).

The Circuit Court’s opinion cited Dunkel v. T. B.

McDonald Construction Co., 67 N.Y.S. 2d 515, 517 (N.Y.

Sup. Ct., 1946). But the Dunkel case whose facts closely

resemble the facts in this case, completely supports

petitioners’ argument that a member of an association

(unincorporated in this case) is personally liable only for

obligations of the association in which he has participated,

or which he has authorized or ratified. The Court said:

“The complaint alleges that the association is

comprised of employer-contractors who do sub-

stantially one hundred percent of the painting,

building. drapery and prop work for stage

productions in the metropolitan area; that the

association has informed its members not to work

jointly with plaintiff, who is a painting contractor

or scenic artist, and that the defendants refused to

work jointly with plaintiff on any job, thereby

causing damage to plaintiff. ***

In the action brought against the association, the

plaintiff was required to prove that he had a cause

of action ‘against all the associates.’ General

Associations Law, §13. But it is clear from the

applicable provisions of the General Associations

Law that the judgment could be issued against the

individual person or property of the officer against

whom the action was brought in a representative

capacity. General Associations Law, §15. And it is

expressly provided that an action brought against

individual members of an association, after the

association has failed to satisfy a judgment, is to be

maintained ‘as if the first action had not been

brought.’ General Associations Law, §16(1); cf.

§16(2). The cases and commentators have

uniformly interpreted this provision to mean that

the recovery of a judgment against an association

does not establish the personal liability of its

members.”’ (citations).

2. Unconstitutional disqualification of the petitioners by

Regulation 601.8.

The Labor Department's refusal to register each

petitioner's individual apprentice training agreement with

its own employees, under its Regulation 601.8, on the

ground that its deregistration of the apprentice training

agreement between the labor union and the employers’

association in which each petitioner was a member,

automatically disqualified each employer member of the

employers’ association for up to three years from

registering its own apprentice training agreement with its

own employees, unconstitutionally deprived each Petitioner

of liberty and property without due process of law, by

applying to each Petitioner an irrebuttable conclusive

presumption that each Petitioner agreed to, authorized,

ratified, or participated in the acts which the Labor

Department charged and found against United, Local 363,

JAC. as its reasons for deregistration of their apprentice

training program.

Such irrebuttable conclusive presumption was contrary

to the allegations in the complaint (A34), in the supporting

affidavit (AS7), and in petitioners’ Statement under

District Court Rule 9g) (A70-71), that the petitioners did

not authorize, ratify. participate in or have knowledge of

such acts.

Members of an association or corporation can not-

constitutionally be held individually legally responsible

criminally or civilly, or be disqualified, or made ineligible

for a statutory benefit or privilege. upon an administrative

or judicial determination that the association or cor-

poration of which they are members committed a crime, or

some wrongful civil act which disqualified it from such

Statutory benefit. privilege or activity.

Instead, it is necessary to show that the~individual

member whom the Government seeks to hold criminally or

civilly responsible for actions of the corporation or

association of which he is a member, or to whom it seeks to

deny eligibility for a statutory benefit or privilege because

of actions by a corporation or association of which he is a

member, authorized, ratified, or participated in the actions

for which such corporation or association was adjudged

criminally or civilly responsible, or for which it was denied

eligibility for a statutory benefit or privilege.

In United States v. Brown 381 U.S. 437, 455-456 (1964),

the Court said:

‘In a number of decisions, this Court has pointed

out the fallacy of the suggestion that membership

in the Communist Party, or any other political

organization, can be regarded as an alternative,

but equivalent, expression for a list of undesirable

characteristics. For, as the Court noted in

Schneiderman v. United States, 320 U.S. 118, 136,

‘under our traditions beliefs are personal and not a

matter of mere association and ... men in

adhering to a political party or other organization

notoriously do not subscribe unqualifiedly to all of

its platforms or asserted principles’’.

In Joint Anti-Fascist Refugee Committee v. McGrath.

341 U.S. 123, 179 (1950), a concurring opinion by Mr.

Justice Douglas said:

“Guilt under our system of government is per-

sonal. When we make guilt vicarious we borrow

from systems alien to ours and ape our enemies.

These short-cuts may at times seem to serve noble

purposes; but we depreciate ourselves in indulging

in them.”

In Schware v. Board of Bar Examiners, 353 U.S. 232,

246 (1956), the Court said:

“*** it cannot automatically be inferred that all

members share their evil purposes or participate in

their illegal conduct.”

In Hartford Empire Co.. v. United States. 323 U.S. 386,

405-406 (1944), the Court said:

‘There is no evidence that. as a director of Hart-

ford. he knew. approved, or voted in favor of any of

the actions taken pursuant to the conspiracy. ***

Collins is found to have been, and still to be, a

member of the Association's statistical committee,

but the bill does not charge him individually with

any conduct in that relation. Of course, any in-

junction against the Association and its officers

and agents will bind him so long as he remains in

that relationship. *** the evidence is not per-

suasive of participation in any conspiracy charged

or proved. We are of opinion that as to Collins, the

bill should be dismissed.”

In Vandervelde v. Put & Call Brokers & Dealers

Association, 344 F. Supp. 118. 185, 156 (S.D.N.Y. 1972).

the Court said:

“The key element of proof for linking an

Association member to the acts of his organization

is a showing that he knew of and condoned the acts

in issue.***

The evidence as to Krinski & Co., however, is

insufficient to justify a finding of liability. Krinski

played no direct or indirect role in the Vandervelde

controversy and the firm itself. under these cir-

cumstances. has not been shown to have any

connection to the matters at issue except that of a

‘mere member’. The complaint is dismissed as to

prevailing wages and supplements, employed

unregistered apprentices, used apprentices in

Krinski & Co.” excess of the ratio provided in the apprenticeship

, agreements for the geographical area in which the

Cc pate ga acca tamil cine Neti work was performed: Abetta Electric Service

. @ —" Corporation***; Unity Electric Co.***; lovine,

Toe Se SOR. ow Se Sener. Ses ont Inc.***: Hylan Electric Co. Inc.***; Gottlieb

assert that any of the corporate defendants par- Contracting Co. Inc.***; Franco Electric Cor-

ticipated in the alleged conspiracy or ratified that p.*#*,

wrong or profited therefrom. Indeed this first |

cause does not even impute knowledge of the |

existence of such a conspiracy to any of the cor- |

porate defendants.”

In its administrative determination, the Labor

Department made the following Findings (A53):

‘Based upon the whole record I find:

1. From the inception of the program in 1961 until

1973, not one of the 574 apprentices achieved

completion of the program or certifiable jour-

neymen Status.

2. The sponsor not only failed to meet his

obligations to provide related classroom = in-

struction but by its own actions made it impossible

for any apprentice to obtain the necessary 144

hours of related classroom instruction.

3. The sponsor in a Joint Apprenticeship Com-

See, also: Sperry Products, Inc., v. Association of

American Railroads, 132 F. 2d 408 (C.A. 2, 1941), cer-

tiorari denied 319 U.S. 744 (1942).

In its notice of proposed deregistration, the Labor

Department alleged the following grounds for deregistering

the apprentice training agreement of United, Local 363,

JAC (A41-44):

“1. The United Construction Contractors

Association, Inc., and Local #363, International

Brotherhood of Teamsters Joint Apprenticeship

Committee has failed to meet its responsibilities

under its master Apprenticeship program in that it

tailed to complete the training of apprentices so as

to qualify as journeymen, in contravention of the

purposes of Article 23 and specifically Section 810

of said Article.

2. The following employers, members of the Joint

Apprenticeship Committee have violated Article 8

of the Labor Law and the Apprenticeship Training

mittee consists of the union and each contractor

having a collective bargaining agreement with said

union. Therefore the acts of each participating

contractor in an apprenticeship program is at-

tributable to the sponsor.

4. The sponsor failed to take any substantial

corrective action with respect to violations of the

Labor Law despite the fact that such violations

were matters of public record.

S. The record indicates that the sponsor, after

agreeing to correct deficiencies in the program,

failed to do so.”’

In its above-quoted charges against United, Local 363,

Regulations in that they have failed to pay JAC. the Labor Department did not allege that any of the

A ree er

individual petitioners herein (except Eugene Iovine, Inc.),

committed any violations of apprentice training regulations

or labor laws; and it made no such finding.

While the Labor Department's above-quoted notice of

proposed deregistration alleged that Eugene lovine, Inc.,

committed (A42): ‘“Underpayment of prevailing rates.

Failure to use apprentices in the proper ratio’, its above-

quoted Findings show that it made no finding to such effect

(AS3).*

We submit that under the cases cited and quoted above,

the Labor Department could not constitutionally disqualify

each petitioner from registering its own apprentice training

agreements with its own apprentices, by adopting a

regulation that disqualification of a trade association shal!

automatically disqualify all its members from registering

an apprentice training agreement, and thereby substitute a

conclusive presumption that each member of the

association authorized, ratified or participated in the

association's violations of apprentice training regulations

and labor laws, for evidence of wrongful or illegal acts

committed by a named member of the association, or that

he authorized, ratified or participated in the association's

wrongful or illegal acts, which the Constitution requires in

order to hold an individual member legally responsible for

acts committed by the association, or by other members.

Ill.

The District Court’s decision #45343, dated November 5.

1976, said (A29):

“*** plaintiffs’ claim that they were denied due

process because they have been held responsible

for acts of JAC, United and Local! 363 which they

*Eugene lovine testified at the administrative hearing that his firm did not

commit the acts alleged against it.

did not authorize, ratify or participate in, was

alleged in the 12th paragraph of the state court

petition, and rejected by the court when it stated

that ‘the administrative determination to adopt

regulation section 601.7(c) has reasonable basis in

law and must be sustained’.”

But the complaint herein seeks to invalidate Regulation

601.8, and not Regulation 601.7(c), on the ground that

601.8 unconstitutionally disqualifies the petitioners by

providing that for three years after the Labor Department

deregisters an apprentice training program:

‘“##* the sponsor or any employer or union par-

ticipant (shall not) be eligible to register any ap-

prenticeship training program***.”” (emphasis

supplied)

Therefore, the State Court’s decision sustaining the

validity of Regulation 601.7(c) does not support the validity

of Regulation 601.8, which unconstitutionally disqualified

members of any employers’ association, not for their own

acts, but solely on the basis of their membership in an

employers’ association whose apprentice training

agreement was deregistered by the Labor Department.

Petitioners recognize that as members of United they are

bound by the Labor Department's administrative deter-

mination sustaining its charges against United, Local 363,

JAC, and deregistering United's apprentice training

agreement. Petitioners also recognize that they are bound

by the State Court's judgment confirming that ad-

ministrative determination, and that under regulation

601.7(c) such judicially confirmed administrative deter-

mination terminated petitioners right to employ registered

apprentices under such cancelled registration.

However. petitioners allege in their complaint that

regulation 601.8 unconstitutionally disqualified them from

registering their own apprentice training agreements, solely

on the ground that they were ‘employer participants” in

the deregistered apprentice training agreement of United,

Local 363. JAC.

IV.

The District Court's decision #42854, dated July 24,

1975S, said (A16):

“It is fundamentally disingenuous for these

plaintiffs, who have reaped the benefits of the

apprenticeship program. now to argue that they

are free from the statutory and regulatory com-

mitments and restrictions which the Master

Agreement bound the participants to observe and

trom the consequences of failing to do so.”

In support of its above-quoted statement, Decision

#42854 quoted Phelps Dodge Refining Corp., v. FTC, 139

F. 2d 393, 396-297 (C.A.2, 1943), where the Court said:

“Granted that his mere membership does not

authorize unlawful conduct by the association,

once he is chargeable with knowledge that his

fellows are acting unlawfully his failure to

dissociate himself from them is a ratification of

what they are doing.”

The Phelps Dodge decision further said (139 F. 2d at

396):

“The stipulation of facts states that the

Association, organized in 1934, has acted as a

clearing house for the exchange of information

submitted by its members, including reports as to

the sales of various types of insecticides, fungicides

and related items, together with the prices, terms

and discounts at which said items are sold. or

offered to be sold, and in some instances including

advance notice of future prices. Thus it admits of

no doubt that the association and some of its

members were engaged in price fixing.”’ (Emphasis

supplied)

In this case, unlike the Phelps Dodge case, the complaint

and petitioners’ Statement under District Court Rule 9g)

expressly alleged (A34; AS7; A/0-71), that no petitioner

authorized, ratified. participated in or had knowledge of

the acts alleged in respondent’s notice of proposed

deregistration as grounds for deregistering the apprentice

training agreement of United, Local 363, JAC.

In the Phelps Dodge case, the Court further said (139 F.

2d at 396-397):

“All that the record discloses about petitioner

Demmon is that he was a director of the

association and held some unnamed office in

Stauffer. It does not appear that he ever attended a

directors’ meeting or knew anything about the

illegal activities of the association or the supplying

and receipt of price lists and dealer lists by

Stauffer. The ordinary doctrine is that a director,

merely by reason of his office, is not personally

liable for the torts of his corporation; he must be

shown to have personally voted for or otherwise

participated in them (citations). The doctrine

seems applicable here. The finding against the

petitioner Demmon is therefore unsupported, and

his inclusion by name in the order is not

sustained.”

The District Court’s decision #42854, dated July 24,

1975, also said (A17):

“It is simply incredible for plaintiffs to contend

that they were unaware of the massive violations

which the hearing panel found and the Com-

mission endorsed.”

Although the complaint was served in May, 1975, the

respondent has not yet served an answer, or any affidavit

denying the allegations in the complaint, the supporting

affidavit. or petitioners’ Statement under District Court

Rule %g) (A34; A70-71), that mo petitioner authorized,

ratified. participated in. or had knowledge of the acts

alleged in respondents notice of proposed deregistration as

grounds for deregistering the apprentice training

agreement of United, Local 363, JAC.

Upon respondent's first notice to dismiss the complaint,

filed May 30, 1975, the rules required the allegations of the

complaint to be deemed admitted, for the purpose of that

motion. Yet, the first District Court decision declared

“incredible” petitioners’ allegation that they did not

authorize, ratify. participate in or have knowledge of the

acts alleged in respondent’s notice of proposed

deregistration.

Upon respondent's second motion to dismiss the

complaint. and for summary judgment, filed June 29,

1976. respondent did not file a statement under District

Court Rule 9(g) of facts which he deemed admitted; and he

did not contradict petitioners’ Statement under Rule 9g),

which listed among factual issues which required a trial

and thus precluded summary judgment, a statement that

no petitioner authorized, ratified, participated in, or had

knowledge of the acts alleged in respondent’s notice as

grounds for deregistering the apprenticeship agreement of

United. Local 363, JAC.

Vi.

The District Court’s decision #42854, dated July 24th,

1975S, also said (A17):

“The fact that not one of the 574 apprentices

achieved completion of the training program

during a span of a dozen years, and that not one

completed 144 hours of required related in-

struction should have put each participating

employer upon inquiry notice that the sponsor and

participating employers were not fulfilling their

obligations under the program. Plaintiffs’ failure

to dissociate themselves from the sponsor is thus a

ratification of the condemned activities. 139 F. 2d

at 396. Plaintiffs’ first due process contention is

devoid of merit.”

Undisputed testimony in the administrative hearing by

Henry Burfeind. supervisor of vocational training of the

Board of Education of the City of New York, contradicted

the Labor Department's charge that no apprentice com-

pleted the training program. Mr. Burfeind testified (T402-

404):

“It would not be correct to say that no student

completed the—had completed satisfactorily the

course of study that we had prescribed for this

apprentice.”

Undisputed documentary evidence in the administrative

hearing established that when the Labor Department told

United. Local 363, JAC, that apprentices were required to

attend evening classroom instruction for two sessions of two

hours each twice weekly, for 36 weeks per year, amounting

to 144 hours per year, instead of one 3-hour session weekly,

times 36 weeks, amounting to 108 hours yearly, they

complied immediately and wrote to the Labor Department

on November 20, 1973 (T488-491; Dept. Exh. 18) that

apprentices:

‘will complete 144 hours of related instruction by

the end of June, 1974, with the cooperation of the

Board of Education as discussed in our meeting of

October 13. 1973."

The Labor Department's administrative findings that no

apprentice completed the training program, and that

United. Local 363, JAC. did not correct deficiencies in the

operation of the apprentice training program, are not

binding on the Federal Courts, which may make their own

independent examination and determination whether such

alleged conditions existed during operation of the ap-

prentice training program by United, Local 363, JAC, and

whether the plaintiffs are legally responsible for and

subject to individual disqualification for conditions which

existed during operation of the apprentice training

program by United, Local 363, JAC.

In Stein v. New York, 346 U.S. 156, 181 (1952) the Court

said:

“Of course, this Court cannot allow itself to be

completely bound by state court determination of

any issue essential to decision of a claim of federal

right. else federal law could be frustrated by

distorted fact finding.”

In Niemotko v. Maryland, 340 U.S. 368, 271 (i950) the

Court said:

“In cases in which there is a claim of denial of

rights under the Federal Constitution, this Court is

not bound by the conclusions of lower courts, but

will reexamine the evidentiary basis on which those

conclusions are founded.”’

In Ker v. California, 374 U.S. 23, 34 (1962) the Court

said:

“While this Court does not sit as in ‘nisi prius to

appraise contradictory factual questions, it will,

where necessary to the determination of con-

stitutional rights, make an _ independent

examination of the facts, of findings, and the

record so that it can determine for itself whether in

the decision as to reasonableness the fun-

damental—i.e.. constitutional—criteria

established by this Court have been respected.”

Even if United. Local 363, JAC. had failed to complete

the training of apprentices, we submit that the individual

petitioners were not chargeable with knowledge thereof,

nor with ratification of deficiencies in the supervision of

apprentice training by United, Local 363, JAC. par-

ticularly, in the light of the allegations of the complaint,

the supporting affidavit. and the Statement under District

Court Rule 9(g) (A34; AS7; A70-71) that the petitioners did

not authorize, ratify or participate in such deficiencies in

the supervision of apprentice training by United, Local

363, JAC, and that they had no knowledge thereof.

3. Denial of equal protection of the laws.

The Labor Department based its administrative charges

that the employers’ association and Local 363 of the

Teamsters Union violated apprentice training regulations

upon charges against Local 363 which were physically

made and given to the Labor Department by Local 3 of the

Electricians Union (37).

For many years Local 3 and Local 363 were rivals for

— among journeymen and apprentice electricians

In sustaining such charges and deregistering the ap-

prentice training agreement between the employers’

association and Local 363, the Labor Department in-

tentionally complied with resolutions submitted by Local 3

to and adopted by the convention of the New York State

Federation of Labor in September, 1973, which

resolutions, as reported in Local 3’s magazine, read as

follows: e

‘Whereas these illegitimate and subterfuge

programs are in duplication of and unfairly

compete with long-established legitimate, bona

fide apprentice training programs;

Resolved that the New York State AFL-CIO

condemn these illicit apprentice training

programs, and call upon the Industrial Com-

missioner of the State of New York to decertify

these illegitimate and subterfuge apprentice

training programs; and be it further

Resolved that the New York State AFL-CIO call

upon Governor Rockefeller and the Legislature to

pass legislation to outlaw and to discontinue the

practice of certifying apprentice training programs

which are a duplication of existing bona fide,

indentured long-established apprentice training

programs.”

The respondent personally attended the 1973 convention

of the New York State AFL-CIO. Local 3’s magazine quoted

him as pledging to carry out the above-quoted resolution.

The Apprentice Training Council panel that heard the

charges against the employers’ association and Local 363

consisted only of officials of AFL-CIO building trades

unions and employers who had collective bargaining

contracts with such unions.

Effective June 3, 1974, the defendant amended the

regulations of. the Labor Department by adopting

Regulation 601.8, which disqualified for three years from

registering apprentices all ‘employer participants’’ in a

multi-employer apprentice training agreement.

Under Regulation 601.8 the Labor Department has

disqualified each petitioner until June 3, 1969, counting

such disqualification from June 3, 1976, when the Ap-

pellate Division of the New York Supreme Court judicially

confirmed the Labor Department’s administrative

determination sustaining the disciplinary charges against

the employers’ association and Local 363, and

deregistering their apprentice training agreement.

For many years Local 3 has exerted pressure on

governmental agencies not to deal with electrical con-

tractors who do not employ members of Local 3; not to

award public work electrical contracts to them even when

nice

they are the lowest bidders therefor, and to cancel such

contracts after award thereof; and such pressure included,

among other actions, preventing and hindering per-

formance of contracts by contractors who do not employ

members of Local 3 by physical violence at job sites, in-

cluding assaults on employees of such contractors, threats

of violence, damage to and destruction of electrical work

being performed by employees of such contractors, strikes,

picketing of and preventing delivery of supplies and

materials to job sites at which such contractors work,

taking pictures of employees at such job sites and following

them around, and other actions.

Such pressure by Local 3 has been effective in causing

governmental agencies to cancel contracts with contractors

who do not employ members of Local 3; to order such

contractors to stop work and to remove from the job sites

on the ground that the presence of their employees at

governmental job sites is causing strikes and work stop-

pages by members of Local 3 at other job sites of the same

governmental agency; and such governmental actions led

to several law suits, including a suit by the National Labor

Relations Board against Local 3 in which a preliminary

injunction was granted by the Judge Edward F. Neaher in

the Eastern District of New York and affirmed by the

Second Circuit Court of Appeals (See: NLRB v. Local 3, —

—F.2d . N.Y. Law Journal, October 14, 1976, p. 1); a

suit by Wickham Contracting Co., Inc., against the Board

of Education of the City of New York and Local 3 for an

injunction and damages caused by the Board’s order to

Wickham on July 19, 1974:

“to stop work until such time as you furnish labor

which will not cause a stoppage”’

by members of Local 3 working at other job sites of the

Board of Education (74 Civil 3248, Southern District of

New York); a suit by Mansfield Contracting Corporation

against the City of New York for an injunction and

damages because the City cancelled its $4.5 million of

electrical contracts with Mansfield, on the pretense that

Mansfield was not a responsible contractor, because it then

employed electricians and apprentices who were members

of Local 363, and the City pretended that Mansfield had a

“sweetheart” contract with Local 363, and that Local 363

was a racketeer union whose president had been indicted

for extortion, of which he was later acquitted (73 Civil

1094, Southern District of New York); a suit by Eugene

lovine. Inc., against the City of New York and Home

Insurance Company because the City refused to approve

lovine as completing contractor, on behalf of Home In-

surance Co., as surety, on a defaulted City contract, after

the City told Home that it would not approve Iovine as

completing contractor, because Iovine did not employ

electricians and apprentices who were members of Local 3

(7S Civil 2774, Southern District of New York); and a suit

by three contractors whose apprentice training agreements

with their own employees the Labor Department refused to

of Local 363, although the employers had not been

members of the employers’ association which had an

apprentice training agreement with Local 363 (Huhn v.

Ross, 76 Civil 2155, Eastern District of New York).

In the Huhn case, supra, Chief Judge Jacob Mishler in

the District Court made a decision which granted a

preliminary injunction, and said:

‘Plaintiffs’ complaint recites allegations of a

conspiracy between the Industrial Commissioner

and officials of Locals 3 and 25 to prevent those

electrical. contractors who do not maintain

bargaining relations with Locals 3 or 25 from

obtaining public contract awards. Plaintiffs do not

allege an isolated instance, but claim that there is a

deliberate scheme to deprive them and others

similarly situated of job opportunities in the

we,

building industry. Such allegations of purposeful

discrimination are sufficient to state a claim under

the equal protection clause and Civil Rights Act”’

(citations).

By deliberate discriminatory actions against contractors

who do not employ members of Local 3, since July 1, 1973,

to the date of this petition, the Labor Department has

registered only one agreement for training of apprentices in

the New York City area made by a contractor who did not

employ members of Local 3; and that agreement it

registered after it was sued in Federal court for violation of

14th Amendment rights of that contractor to due process of

law and equal protection of the laws by refusing to act for

two years on its application for registration of its apprentice

training agreement with its own employees.

Since 1973 to the date of this petition, the Labor

Department has continuously registered apprentice

training agreements submitted by employer associations

which had collective bargaining contracts with Local 3, and

the Labor Department has registered several thousand

individual apprentices who are members of Local 3, with

only one non Local 3 registration. ;

This is intentional and purposeful unconstitutional

discrimination that denied to the petitioners the equal

protection of the laws. Yick Wo v. Hopkins, 118 U.S. 356,

373-374 (1885); Lincoln Federal Labor Union v. Nor-

thwestern Iron & Metal Co., 335 U.S. 525, 531 (1948);

American Federation of Labor v. American Sash & Door

Co., 335 U.S. 538 (1948); Truax v. Raich, 239 U.S. 33, 39-

41 (1915). .

The Labor Department also intentionally discriminated

against the petitioners by deregistering the apprentice

training agreement between Teamsters’ Local 363 and the

employers’ association to which petitioners belonged. for

alleged violations of apprentice training regulations,

without deregistering for similar violations of apprentice

training regulations different apprentice training

agreements between Loca! 3 of the Electricians’ Union and

associations of electrical contractors who are competitors of

the petitioners for governmental electrical work contracts,

and who employ only members of Local 3.

Such selective prosecution of petitioners’ employers’

association and the labor union with which it had collective

bargaining contracts, without similarly prosecuting the

employers’ association of petitioners’ competitors which

had collective bargaining contracts with Local 3 of the

Electricians’ Union, the rival of Local 363 of the Team-

sters’ Union, constituted application and enforcement of

apprentice training regulations ‘with an evil eye and an

unequal hand”’, which denied to the petitioners the equal

protection of the laws. Yick Wo v. Hopkins, 118 U.S. 356,

373-374 (1885).

CONCLUSION

THE PETITION FOR A WRIT OF CER-

TIORARI SHOULD BE GRANTED.

August S, 1977

Respectfully submitted,

MORRIS WEISSBERG

Attorney for Petitioners

\ rs \

\ i

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

EXPERT ELECTRIC, INC.. HENDRIX ELECTRIC,

INC... ARGANO ELECTRIC CORP., ZIP

FLECTRIC CO.. INC., EUGENE IOVINE,

INC.. PHASE If ELECTRIC CORP., TAP

ELECTRICAL SERVICES AND CONTRACTING,

INC.. RAYMOR ELECTRIC CORP., RUSSELL

H. VENSK, INC... BISANTZ ELECTRIC CO.,

INC.. ROBERT E. BURDEN ELECTRICAL CON-

TRACTOR, INC.,. and FIVE STAR_ ELECTRIC

CORP..

Plaintiffs,

-against-

LOUIS L. LEVINE, individually and as

Industrial Commissioner of the State

of New York.

Defendant.

APPEARANCES:

Morris Weissberg. Esq.

N. George Turchin, Esq.

253 Broadway

New York, New York 10007

Attorneys for Plaintiffs

Hon. Louis J. Lefkowitz

Attorney General of the

State of New York

Two World Trade Center

New York, New York 10047

by Dominick J. Tuminaro, Esq.

Assistant Attorney General

Attorneys for Defendant

CARTER, District Judge

)

OPINION

Plaintiffs, members of the United Construction

Contractors Association, Inc. (““United’’), by order to show

cause, have moved to enjoin defendant Industrial Com-

missioner of New York from cancelling the registration of

apprentice electricians employed by plaintiffs and from

disqualifying each plaintiff from employing registered

apprentice electricians for a three-year period. A hearing

was held on May 30, 1975, at which time the plaintiffs were

afforded the opportunity to present evidentiary proof of

their factual contentions but declined to do so preferring to

stand on their position that their constitutional rights had

been violated per se by plaintiffs being disqualified from

participation in the state apprentice program without being

found personally to have violated the requirements of the

state Department of Labor. Defendant has moved pur-

suant to Rule 12 (b)(1) and (6). F.R.Civ.P., to dismiss the

action.

Background Facts

Plaintiffs are electrical contractors and members of

United. a New York membership corporation which

conducts collective bargaining negotiations and enters into

collective bargaining agreements on behalf of its members

with Local 363. International Brotherhood of Teamsters

(“Local 363°’). The local is comprised of journeymen and

apprentice electricians.

United and Local 363 formed the Joint Apprenticeship

Committee (“‘JAC’’) to sponsor an apprenticeship training

program, see Article 23 (Apprenticeship Training) of New

York’s Labor Law. and filed a Master Agreement, pur-

suant to §§811(1) (d) and 220(3) (e) of the Labor Law:,

with the State Department of Labor on or about December

1. 1971. Unter the terms of the Master Agreement and

Labor Law §§811, 812 and 815 (McKinney’s 1965), the

registered apprentices were to receive on-the-job training in

the processes of the electrician’s trade according to a

schedule of work processes contained in the Master

Agreement. The apprentices were also to receive 144 hours

of related and supplemental classroom instruction. Master

Agreement, Appendix B; Labor Law, §815 (3).

On June 17. 1974, defendant industrial commissioner,

pursuant to 12 N.Y.C.R.R. 601.7, served a notice of

proposed deregistration of the apprenticeship agreement

and program upon JAC, Local 363, and United. The notice

set forth certain allegations by the Department of Labor.

summarized by the Commissioner as follows:

1. §811(1)(d) empowers the Industrial Commissioner “‘to register approved

apprenticeship agreements. and upon performance thereof, to issue certificates

of completion of apprenticeship."’ Labor Law, §811 (1)(d) (McKinney's 1965).

_ §220(3Me) provides that *‘[a|pprentices will be permitted to work as such only

when they are registered. individually. under a bona fide program registered

with the New York State Department of Labor.” Labor Law. §220(3)(e)

(McKinney's Supp. 1974).

1. The Joint Apprenticeship Committee sponsor

allegedly failed to complete the training of ap-

prentices as provided under the standards con-

tained in Article 23 of the Labor Law and under

the terms and conditions of the Master Agreement

entered into by the Joint Apprenticeship Com-

mittee.

2. Some of the employers who were participants in

the J.A.C. allegedly failed to pay prevailing wages

or used apprentices in excess of the proper ratio for

electricians in the locality.

3. That long after the violations and shortcomings

of the program were originally made known to the

sponsor in June of 1973, the sponsor allegedly

failed to correct the violations and to comply with

the rules and regulations in their own Master

Agreement. These allegations resulted from a

survey initiated by the Department in March of

1974, which purported to show that the ap-

prentices were not receiving proper related in-

struction and that the participating employers were

still using excessive apprentices.

Order and Determination of the Industrial

Commissioner. at 1-2.

Upon request of JAC, United and Local 363, five

hearings were thereafter held, and the three respondents

were all represented by separate counsel at these hearings.

The recommendations of the hearing panel were reviewed

and subsequently sustained by the Commissioner, who

found:

1. From the inception of the program in 1961 until

1973, not one of the 574 apprentices achieved

completion of the program or certifiable jour-

neyman status.

2. The sponsor not only failed to meet its

obligations to provide related classroom in-

struction but by its own actions made it impossible

for any apprentice to obtain the necessary 144

hours of related classroom instruction.

3. The sponsor in a Joint Apprenticeship Com-

mittee consists of the union and each contractor

having a collective bargaining agreement with said

union. Therefore the act of each participating

contractor in an apprenticeship program is at-

tributable to the sponsor.

4. The sponsor failed to take any substantial

corrective action with respect to violations of the

Labor Law despite the fact that such violations

were matters of public record.

S. The record indicates that the sponsor, after

agreeing to correct deficiencies in the program,

failed to do so. /d. at 7.

Following the provisions of 12 NYCRR 601.7 (c) (4),

601.8,2_ the Commissioner cancelicd the registration of

apprentice electricians employed by plaintiffs, and, for a

period not to exceed three years, disqualified them from

both employing registered apprentices and from registering

2. 12 NYCRR 601.7 (c)(4) states:

“tc) Procedure for formal deregistration

(4) In each case in which deregistration is ordered, the com-

missioner shall publish promptly in newspapers of general circulation a

notice of the order and shall notify the registrant. In addition, the

commissioner shall promptly notify all registered apprentices of the

deregistration of the program; the effective date thereof; that such

cancellation automatically deprives the apprentice of his individual

registration; and that the deregistration removes the apprentice from

coverage for State purposes.”

12 NYCRR 601.8 provides:

“Restatement of program registration. Anyapprenticeship program

formally deregistered pursuant to this Part may not be reinstated for a

period not to exceed three years. nor shall the sponsor or any employer

or union participant be eligible to register any apprenticeship training

program under any other name for such period.”

any apprenticeship agreement or training program in their

individual names as employers.

Contentions of the Parties

Piaintiffs base their motion for a preliminary in-

junction on three grounds: (1) that they were denied due

process of law mandated by the Fourteenth Amendment,

because they have been held responsible for acts of JAC,

United and Local 363 which they did not authorize, ratify

or participate in; (2) that they were denied due process of

law because they were not provided with notice and an

opportunity to be heard, as individual employers, on the

proposed deregistration, and (3) that they were denied

equal protection of the laws as guaranteed by the Four-

teenth Amendment, because plaintiffs’ program has been

deregistered while no similar action has been taken against

their competitors’ program which allegedly produced

complaints of Article 23 violations. Because they now have

to pay all workers full wages instead of lower apprentice

wages, plaintiffs claim irreparable harm resulting from

their inability to bid competitively for public contracts.

Defendant seeks dismissal of the complaint on the

grounds that the court lacks subject-matter, jurisdiction

over the action and that the complaint fails to state a claim

upon which relief can be granted.

Discussion

Plaintiffs’ initial contention is that they cannot be held

legally responsible for acts by JAC, United, Local 363, or

by any employers other than plaintiffs which violated the

Master Agreement or the standards of Article 23.

JAC. the program’s sponsor, was formed pursuant to

the agreement by Local 363 and United. The latter, of

which all plaintiffs are members, represents the employers

in negotiations and agreements with the union; when

United added its signature to the Master Agreement it did

so on behalf of its members. This was the only agreement

on the table: the Commissioner, in registering the

program. entered into a contract with United and JAC, not

with plaintiffs individually. Plaintiffs enjoyed the benefits

of the program through their membership in_ the

signatories; they therefore cannot complain when the

Commissioner terminates these benefits when he finds the

signatories to be in violation of the terms and spirit of the

Master Agreement and Article 23.

Moreover, Labor Law §817 states:

“The provisions of this article (Article 23) shall

apply to a person, firm, corporation or craft only

after such person, firm, corporation or craft has

voluntarily elected to conform with its provisions.”’

The regulations enacted purusant to Article 23 clearly

indicate that the sponsor of the training program, in-

cluding the joint apprenticeship committee, acts as agent

for participating employers. See 12 N¥CRR 601.3(b), (c)

and (e). The Master-Agfeemefit commits” pafticipating

employers or the Apprenticeship committee acting as agent

for the employers to eyaluate periodically the apprentice’s

progress. both in job performance and related instruction,

and to maintain appropriate records. This obligation is a

prerequisite for the registration of the program. See 12

NYCRR 601.S(c) (6). The Master Agreement requires 144

hours of related instruction for each apprentice; this too, is

a condition of registration. See Labor Law, §812; 12

NYCRR 601.5 (c) (4).

Plaintiffs have not alleged that they unwittingly

became participating employers, or were forced to employ

apprenticeship labor at lower wages. In fact, the

regulations explicitly provide that no apprenticeship

program or agreement shall be eligible for registration

unless the Commissioner finds that ** . . . in the case of a

Joint Apprenticeship Committee the participating em-

ployers have agreed to register all of the apprentices in their

employ."’ 12 NYCRR 601.4 (a) (4). By voluntarily par-

ticipating plaintiffs agreed to the terms and regulations of

Article 23, including 12 NYCRR 601.8; supra n.2.

Plaintiffs cannot have it both ways. It is fundamentally

disingenuous for these plaintiffs, who have reaped the

benefits of the apprenticeship program, now to argue that

they are free from the statutory and regulatory com-

mitments and restrictions which the Master Agreement

bound the participants to observe and from the con-

sequences of failing to do so.

Plaintiffs argue, nonetheless, that mere membership

in an association does not create liability in the members

for the acts of the association. In Phelps Dodge Refining

Corp. v. FTC, 139 F. 2d 393, 396-97 (2d Cir. 1943), a

seminal case concerning the liability of members for acts of

their association, the court stated:

‘Thus the issue is reduced to whether a member

who knows or should know that his association is

engaged in an unlawful enterprise and continues

his membership without protest may be charged

with complicity as a confederate. We believe he

may. Granted that his mere membership does not

authorize unlawful conduct by the association,

once he is chargeable with knowledge that his

fellows are acting unlawfully his failure to

dissociate himself from them is a ratification of

what they are doing. He becomes one of the

principals in the enterprise and cannot disclaim

joint responsibility for the illegal uses to which the

association is put.”

The Second Circuit found in Phelps Dodge that the receipt

by a member of certain price and dealer lists mailed by its

trade association was enough from which to infer that the

member learned of the association's illegal activities, or ‘‘at

least it should put a member of a trade association upon

inquiry and charge him with knowledge of what an inquiry

would have disclosed as to his association's activities."’ /d.

at 396.

Every participating employer in a Joint Ap-

prenticeship Committee forms an integral part of the

sponsor and is responsible for seeing that its apprentices

are trained in accordance with the provisions of the Master

Agreement. It is simply incredible for plaintiffs to contend

that they were unaware of the massive violations which the

hearing panel found and the Commission endorsed. The

fact that not one of the 574 apprentices achieved com-

pletion of the training program during a span of a dozen

years, and that not one completed 144 hours of required

related instruction, should have put each participating

employer upon inquiry notice that the sponsor and partr-

ticipating employers were not fulfilling their obligations

under the program. Plaintiffs’ failure to dissociate

themselves from the sponsor is thus a ratification of the

condemned activities. 139 F. 2d at 396. Plaintiffs’ first due

process contention is devoid of merit.

Plaintiffs’ second due process assertion—that they

were denied procedural due process since the notice of

proposed deregistration did not name _ plaintiffs in-

dividually—requires no extended reply. In order to pass

constitutional muster, the Ps

“elementary and fundamental requirement of due

process in any proceeding which is to be accorded

finality is notice reasonably calculated, under all

circumstances, to apprise interested parties of the

pendency of the action and afford them an op-

portunity to present their objecftons.”’

10a

Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

306. 314 (1950). ‘Due Process,”” however, ‘‘is not a rigid

and inflexible formula, but is an elusive concept which

varies according to the factual context.”” Hudson Tire

Mart, Inc. y. Aetna Casualty and Surety Co., No. 75-7067,

at 4453 (2d Cir. June 27, 1975).

As noted earlier, insofar as the apprenticeship

program was concerned, both United and JAC represented

the interests, of participating employers. Cf. United States

v. Local 638, Enterprise Association of Steam, 360 F.

Supp. 979, 995 (S.D.N.Y. 1973), modified on other

grounds, 5SO1 F. 2d 622 (2d Cir. 1974). The notice of

proposed deregistration was served on both United and

JAC: additionally all plaintiffs received copies of that

notice on the same day. A hearing was requested, notice of

the hearing was sent to United and JAC, and both entities

were represented there by counsel; in fact, the same

counsel represent plaintiffs in this action. One of the

plaintiffs in this action, Eugene lovine, Inc., appeared and

testified at one of the hearings. Plaintiffs, then, as

members of United and as participating employers in the

JAC, received actual and constructive notice of the

proposed deregistration, and were not denied any op-

portunity to be heard.

Plaintiffs’ final point—that they suffered an invidious

discrimination in violation of the Equal Protection

Clause—similarly deserves short shrift. The complaint

alleges that at the hearings on the deregistration, the

Department of Labor produced records of over 200

violations of apprenticeship agreements and regulations by

competing contractor associations and rival labor unions.

Plaintiffs claim that the Commissioner’s failure to invoke

corrective procedures against these groups constitutes an

equal protection violation. Yet, when given the opportunity

to support this claim with some modicum of proof,

plaintiffs refused. The court, confronted with bare

lla

allegations which neither set out the nature of the pur-

ported violations, nor the specification of inaction by the

Commissioner. is thus constrained to conclude that there is

no substance to the equal protection claim.

Further. since no “‘suspect” classification or fun-

damenta! interest is here involved. the alleged selective

application of deregistration by the Commissioner must be

tested under the less rigorous “traditional equal

protection analysis; that is, it must be sustained unless it is

“patently arbitrary” and bears no rational relationship to a

legitimate government interest. Frontiero v. Richardson.

411 U.S. 677, 683 (1973).

“In the area of economics and social welfare, a State

does not violate the Equal Protection Clause merely

because the classifications made by it are imperfect.”

Dandridge v. Williams, 397 U.S. 471, 485 (1970). “A

statutory discrimination will not be set aside if any state of

facts reasonably may be conceived to justify it." McGowan

v. Maryland, 366 U.S. 420, 426 (1961). ‘“|T|he Equal

Protection Clause does not require that a State must choose

between attacking every aspect of a problem or not at-

tacking the problem at all.’ Dandridge, supra, 397 U.S. at

486-87. Neither the complaint nor plaintiffs’ accompanying

affidavits set forth the nature of the alleged violations of the

rival associations and locals. For all this court knows, those

alleged violations may concern an aspect of apprenticeship

programs entirely different from the regulatory problem

which caused the Commissioner to deregister the program

in the instant case. The state's legitimate interest in ‘‘in-

surling| that apprenticeship training programs (which are)

developed and registered . . . are of the highest possible

quality in all respects of on-the-job training and related

instruction and that all apprentice training programs

provide meaningful employment and relevant training for

all apprentices," 12 NYCRR 601.1, more than justifies the

deregistration decision here. Plaintiffs have asserted no

12a

facts which even suggest an inference of arbitrary

discrimination, see McGowan, supra, 366 U.S. at 426; this

third contention also rests on pillars of air.

The law in this Circuit is that a preliminary injunction

will issue upon “the demonstration of probable success on

the merits and irreparable harm if the relief is not gran-

ted.”’ 414 Theater Corp. v. Murphy, 499 F. 2d 1155, 1159

(2d Cir. 1974), or plaintiff must raise sufficiently; serious

questions going to the merits to make them a fair ground

for litigation and establish that the balance of hardship tips

decidedly in his favor. Gulf & Western v. Great Atlantic &

Pacific Tea Co., 476 F. 2d 687 (2d Cir. 1973). Plaintiffs

have met neither yardstick. Accordingly, the motion for

preliminary injunction must be denied.

Turning to defendant’s Rule 12(b) (1) motion to

dismiss for lack of subject matter jurisdiction,: plaintiffs,

as the parties asserting jurisdiction, have the burden of

proving all jurisdictional facts, Trinanes v. Schulte, 311 F.

Supp. 812, 813 (S.D.N.Y. 1970). Since jurisdiction over

the action is invoked under 28 U.S.C. §1331—federal

question jurisdiction—plaintiffs must show that the alleged

federal claims are substantial, 7. e., not obviously frivolous.

Hagans v. Lavine, 415 U.S. 528, 536-37 (1974). “*The

requirement of substantiality does not refer to the value of

the interests that are at stake but to whether there is any

legal substance to the position the plaintiff is presenting.”

Wright-Miller-Cooper, Federal Practice and Procedure;

Jurisdiction §3564, at 426 (1975).

At the hearing on the preliminary injunction,

plaintiffs were presented with the opportunity to offer

evidentiary proof buttressing the three contentions. They

chose not to do so, instead deciding to rest their case on the

constitutional assertions raised in the complaint. It is plain

from the complaint that plajntiffs have been denied neither

due process nor equal protection of the laws, and ac-

13a

cordingly, their claim. are devoid of merit. Defendant's

motion to dismiss is granted.

SO ORDERED.

Dated: New York, New York July 24, 1975

ROBERT L. CARTER

U.S.D.J.

l4a

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

EXPERT ELECTRIC, INC., HENDRIX ELECTRIC,

INC.. ARGANO ELECTRIC CORP., = ZIP

ELECTRIC CO.,. INC., EUGENE IOVINE,

INC.. PHASE II ELECTRIC CORP., TAP

ELECTRICAL SERVICES AND CONTRACTING,

INC... RAYMOR ELECTRIC CORP., RUSSELL

H. VENSK. INC... BISANTZ ELECTRIC CO.,

INC... ROBERT E. BURDEN ELECTRICAL

CONTRACTOR, INC., and FIVE STAR ELECTRIC

CORP..

Plaintiffs,

-against-

LOUIS L. LEVINE, individually and_= as

Industrial Commissioner of the State

of New York.

Defendant.

APPEARANCES:

Morris Weissberg, Esq.

N. George Turchin, Esq.

253 Broadway

New York. New York 10007

Attorneys for Plaintiffs

Hon. Louis J. Lefkowitz:

Attorney General of the

State of New York

15a

CARTER, District Judge

OPINION

Plaintiffs. members of the United Construction

Contractors Association, Inc. (‘“‘United’’):and the Joint

Apprenticeship Committee (“JAC’’), have moved pursuant

to Rule 60(b), F.R. Civ. P., to vacate the judgment of July

24. 1975 entered in this court. A rehearing of plaintiffs’

motion for 2 preliminary injunction is also requested.

Defendant has moved to dismiss the complaint

pursuant to Rule 12(b), F.R. Civ. P., or in the alternative

for summary judgment pursuant to Rule S6, F.R. Civ. P.

Background

A hearing was held on March 3, 1976, at which this

court stayed the proceeding pending determination by New

York state courts of a proceeding captioned, /n the Matter

of United Construct on Contractors Association, Inc., et

al. v. Louis L. Levine, as Industrial Commissioner, 52 App.

Div. 2d 371 (3d Dept. 1976). After having the Article 78

proceeding transferred to the New York State Supreme

Court. Appellate Division, Third Judicial Department by

the State Supreme Court, Special Term, the determination

of the Industrial Commissioner of the State of New York to

deregister the joint apprenticeship training program

between United and Local 363, International Brotherhood

of Teamsters (“‘Local 363°’) was confirmed.

Contention of the Parties

Plaintiffs based their original motion for a preliminary

injunction on three grounds: (1) that they were denied due

process of law because they were not provided with notice

and an opportunity to be heard, as individual employers.

16a

on the proposed deregistration, (2) that they were denied

equal protection of the law as guaranteed by the Four-

teenth Amendment, because plaintiffs’ program has been

deregistered while no similar action has been taken against

their competitors’ program which allegedly produced

complaints of Article 23 violations, and (3) that they were

denied due process of law mandated by the Fourteenth

Amendment, because they have been held responsible for

acts of JAC, United and Local 363 which they did not

authorize. ratify or participate in.

Defendant seeks dismissal of the complaint on the

grounds that this court lacks jurisdiction over the subject

matter of the complaint, that plaintiffs fail to state a claim

upon which relief can be granted, and that the decision of

the New York State Supreme Court, Appellate Division,

Third Judicial Department, Jn the Matter of United

Construction Contractors Association, Inc., et al. v. Louis

L. Levine, as Industrial Commissioner, supra, is res

judicata.

Discussion

For the reasons that follow, defendant’s motion to

dismiss is granted.

With respect to plaintiff's first claim, it is apparent

that notice of the proposed deregistration was served on

both United and JAC, the named parties in the

deregistration hearing. Insofar as both United and JAC

represented the interests of participating employers in the

apprenticeship program, it is apparent that they were

acting on behalf of the plaintiffs’ interests at the

deregistration hjarings. Therefore, notice to United and

JAC was sufficient and the individual members of these

organizations were not entitled to notice. See Rosenfeld v.

Black, 336 F. Supp. 84, 92 (E.D.N.Y. 1972). Moreover,

the individual employers did in fact receive actual notice

since they were sent copies of the notice given to United and

17a

JAC. Accordingly. the contention that plaintiffs’ due

process rights were violated is without merit. See Mullane

v. Central Hanover Bank & Trust Co.. 339 U.S. 306, 314

(1950); Hudson Tire Mart, Inc. v. Aetna Casualty and

Surety Co., 518 F. 2d 671, 673 (2d Cir. 1975). The decision

In the Matter of United Construction Contractors

Association. Inc., et al. vy. Louis L. Levine, as Industrial

Commissioner. supra, is res judicata as to plaintiffs’ second

and third contentions.

Before a prior decision can be held to be res judicata in

a subsequent suit, it must be determined that the second

suit is between the same parties and based upon the same

causes of action. McNellis v. First Federal Savings and

Loan Association of Rochester, New York, 364 F. 2d 251,

254 (2d Cir.). cert. denied, 385 U.S. 970 (1966). See also.

Raitport v. Commercial Bank Located Within This District

As A Class, 391 F. Supp. 584, 586 (S.D.N.Y. 1975); and

United States v. General Electric Company, 358 F. Supp.

731, 738 (S.D.N.Y. 1973). It is clear that in the suit before

this court there is both substantial identity of parties and

the same causes of action as existed in the state court.

Certainly. there is an identity of parties in that the

defendant is the same and the plaintiffs’ interests are the

same as existed in the state court suit. As noted earlier,

both United and JAC represented the interests of plaintiffs

in the deregistration hearing and the subsequent Article 78

proceeding in the state courts. As long as plaintiffs’ in-

terests were represented at the above proceeding by one

having authority to represent him, they are bound by the

judgment, although they were not formally a party to the

litigation. Kersh Lake District v. Johnson, 309 U.S. 485

(1940); Chicago, Rock Island & Pacific Railway Company

v. Schendel, 270 U.S. 611 (1926); Ma Chuck Moon v.

Dulles, 237 F. 2d 241, 243 (9th Cir. 1956) cert. denied, 352

U.S. 1002 (1957): Bruszewski v. United States, 181 F. 2d

419, 423 (3rd Cir.) (concurring opinion). cert. denied. 340

U.S. 865 (1950): and Battle v. Cherry. 339 F. Supp. 186,

18a

192 (N.D. Ga. 1972). Moreover, plaintiffs’ claim that they

were denied due process because they have been held

responsible for acts of JAC, United and Local 363 which

they did not authorize, ratify or participate in, was alleged

in the 12th paragraph of the state court petition. and

rejected by the court when it stated that “|tj/he ad-

ministrative determination to adopt regulation section

601.7(c) has reasonable basis in law and must be sustained

... In the Matter of United Construction, Inc., et al. v.

Louis L. Levine, as Industrial Commissioner, supra at 374.

Also. plaintiffs’ claim. that they were denied equal

protection because plaintiffs’ program has_ been

deregistered while no similar action has been taken against

their competitors’ program, was alleged in the 29th

paragraph of the state court petition and rejected when the

court stated that: ‘“‘|t]he record does not sustain the

petitioners’ claim that respondent discriminated against

petitioners in the cancellation of their agreement.”’ /d. at

375. | am compelled. therefore, to hold that the causes of

action alleged here are the same as presented and ad-

judicated in state court. Herendeen vy. Champion Intern.

Corp., 525 F. 2d 130, 133 (2d Cir. 1975). Accordingly, the

matter is res judicata and defendant's motion to dismiss is

granted.

IT IS SO ORDERED.

Dated: New York. New York November 5, 1976

ROBERT L. CARTER

U.S.D.J.

19a

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

No. 794, 964

September Term 1976

Argued: February 24, 1977

Decided: May 12, 1977

Docket Nos. 75-7462, 76-7560

EXPERT ELECTRIC, INC., HENDRIX ELECTRIC,

INC., ARGANO ELECTRIC CORP., ZIP ELECTRIC

CO., INC., EUGENE IOVINE, INC., PHASE II

ELECTRIC CORP., TAP ELECTRICAL SERVICES

AND CONTRACTING, INC., RAYMOR ELECTRIC

CORP., RUSSELL H. VENSK, INC., DISANTZ

ELECTRIC CO., INC., ROBERT E. BURDEN ELEC-

TRICAL CONTRACTOR, INC., and FIVE STAR

ELECTRIC CORP..,

Plaintiff-Appellants,

-against-

LOUIS L. LEVINE, individually and as_ Industrial

Commissioner of the State of New York,

Defendant-Appellee.

Before MANSFIELD. VAN GRAFFEILAND, Circuit

Judges, and MISHLER, District Judge.*

Consolidated appeal from two judgments entered by

*Ot the United States District Court for the Eastern District of New York,

sitting by designation.

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the District Court for the Southern District of New York,

Robert L. Carter, District Judge, dismissing plaintiffs-

appellants complaint on res judicata grounds.

Affirmed. N. GEORGE TURCHIN, Esq., New

York, N.Y.; MORRIS WEISSBERG, Esq., New York,

N.Y., for Appellants.

DOMINICK J. TUMINARO, Assistant Attorney

General (Louis J. Lefkowitz, Attorney General of the State

of New York, New York, N.Y., of counsel), for Appellee.

This is a consoiidated appeal from two orders en-

teredby the District Court for the Southern District of New

York, Robert L. Carter, District Judge, the first dated July

24, 1975, see Expert Electric, Inc., et al. v. Levine, 399 F.

Supp. 893 (S.D.N.Y. 1975), and the second, November 5,

1976, both dismissing appellants’ complaint. Appellants,

by order to show cause, commenced an action seeking to

enjoin the Industrial Commissioner from deregistering

their master apprenticeship training program, and from

disqualifying all participants from registering new

programs in their individual capacities for three years.

Appellants are electrical contracting firms and

members of United Construction Contractors Association,

Inc. (‘‘United’’), a New York membership corporation

established to jointly represent its employer participants in

all phases of labor negotiations with Local 363, In-

ternational Brotherhood of Teamsters (‘‘Local 363’). On

October 19, 1971, United and Local 363 executed a master

agreement which outlined a program for the training of

apprentice electricians. The contract called for a five year

apprenticeship term during which apprentices were to

receive on-the-job training in a schedule of trade processes

and 144 hours per year of related classroom instruction.

The agreement also recited minimum wage scales and

prescribed maximum journeyman/apprentice ratios. A

Joint Apprenticeship Committee (“JAC’’), comprised of

United and Local 363 officials. was formed to sponsor the

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program and administer its terms. On December 1, 1971,

the master agreement was filed with, and registered by, the

Apprentice Training Section of the New York State

Department of Labor pursuant to sections 220 (3) (c) and

811 (1) (d) of the Labor Law.

In 1973, a complaint was filed: with the Labor

Department charging the JAC and various employer

participants with violating the terms of the master ap-

prenticeship training agreement and applicable state

regulations. Labor Department officials met informally

with JAC representatives in June of that year to discuss the

recited deficiencies in recruiting methods and the sup-

plementary in-class educational program. However, when

no remedial steps were taken by sponsoring officials, a

formal investigation was commenced. On June 17, 1974,

the Industrial Commissioner issued a notice of proposed

deregistration and caused it to be served on the named

parties, ie., United, Local 363 and the JAC, see 12

N.Y.C.R.R. §§601.7 (b) and (c).:

The state charged that the JAC, even after notification

of the program's shortcomings, failed to take any corrective

action, thus rendering it impossible for any apprentice to

successfully complete all phases of training. In addition,

several employer participants, only one of whom is an

appellant herein,: were cited for employing unregistered

apprentices, utilizing trainees in numbers exceeding the

prescribed journeyman/apprentice ratio, or failing to pay

prevailing wage rates and supplements. A copy of the

deregistration notice was served on all participating em-

ployers. whether or not they were charged with a particular

violation.

At the request of United, Local 363, and sponsor JAC,

see 12N.Y.C.R.R. §601.7 (c) (2), hearings were conducted

on the alleged violations by the Apprenticeship and

Training Council, a panel of building contractors and

union officials. see N.Y.C.R.R. §601.9. On May 1, 1975,

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the Industrial Commissioner issued his opinion adopting

the recommendations of the hearing panel and finding

that: ,

(1) since the inception of the program in 1961, not

one of the 574 apprentices registered, successfully

achieved certifiable journeyman status; that

(2) the sponsor, JAC, failed to assure that the

required in-class instruction was provided ren-

dering it impossible for any apprentice to complete

the supplemental educational phase that

(3) the sponsor, since partially composed of em-

ployer representatives, was responsible for the

wrongful acts of participating contractors; and

that

(4) the sponsor, despite having knowledge of

program's deficiencies, and agreeing to take

corrective action, failed to follow a remedial

course.

In conjunction, appellee entered an order directing “ . . .

that the Apprenticeship Training Program of the United

Construction Contractors Association, Inc. and Local #363

International Brotherhood of Teamsters, Joint Ap-

prenticeship Committee is hereby deregistered, effective

immediately.”’ The order contained no express reference to

the operability of 12 N.Y.C.R.R. §601.8 which in essence

contemplates that employer participants in a deregistered

program be disqualified from registering new programs in

their individual capacities for a period not to exceed three

years. 4

On May 22, 1975, appellants filed a three-count

complaint in the District Court for the Southern District of

New York seeking to enjoin the program’s deregistration

and their disqualification from reinstatement. Firstly, the

contractors attacked the facial validity of regulation

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sections 601.7 (c) and 601.8, 12 N.Y.C.R.R. §§601.7(c)

and 601.8, promulgated by the Industrial Commissioner.

Appellants argued they could not, consistent with the due

process clause, be summarily subjected to deregistration

and automatic disqualification from re-registering new

programs solely because of the misdeeds of others. Their

inability to employ apprentices in the absence of a

registered training program, appellants argued, foreclosed

all opportunity to successfully bid on federal, state, and

local contracts. The demands of due process, the litigants

claimed. required proof that they knew of, participated in

or ratified the wrongful acts before they could be deprived

of a valuable property right. Secondly, appellants alleged

that the state's failure to prosecute its competitor, Local 3,

International Brotherhood of Teamsters, for similar

violations constituted a denial of equal protection. In the

last count. premised under 42 U.S.C. §1983, appellants

sought damages for the alleged loss of bidding op-

portunities.

While this federal court action was pending, United

brought an Article 78 proceeding in the New York State

Supreme Court, Appellate Division, challenging | the

sufficiency of the Industrial Commissioner’s findings.

Petitioner argued that there was no evidentiary basis to

support appellee’s order. Moreover, United claimed, since

the promulgation of the deregistration provision, AW

N.Y.C.R.R. §601.7 (c), was without statutory authority,

the Industrial Commissioner’s implementation of the

regulatory scheme and consequent order of deregistration

served to deprive petitioner of its right to due process of

law. United also asserted an equal protection claim arguing

that the Industrial Commissioner's decision not to proceed

against Local 3 was constitutionally unsound.

Judge Carter acted first. In a memorandum of

decision and order entered on July 24, 1975, the court

rejected appellants’ principal due process claim. The court

held that appellants. having enjoyed the benefits of the

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program through their membership in the signatory

associations, could not be heard to object when the state

terminated these benefits because of successive violations

by the signatories. These contractors were voluntary, not

unwitting. participants in the program. When the JAC, as

agent for the employer participants, signed the agreement

and pledged to adequately train new apprentices, the court

held. all participants were bound by the statutory and

regulatory proscriptions that circumscribed the training

scheme. Appellants’ equal protection claim was found to

be without merit. No evidence was offered to support the

firms’ contention that others guilty of similar violations

were not subjected to deregistration proceedings.

After filing a notice of appeal, appellants sought leave

from this court to apply to Judge Carter for an order

vacating his judgment and granting a rehearing on their

motion for a preliminary injunction. The requested relief

was afforded by both courts. After entertaining oral

argument, the district court issued a stay pending deter-

mination of the matter before the Appellate Division.

On June 3, 1976, the Appellate Division rendered its

decision affirming the Industrial Commissioner’s order of

deregistration. In the Matter of United Construction

Contractors Association, Inc,, et al vy. Louis Levine, 52

App. Div. 2d 371 (3d Dep’t 1976). The court noted that

Article 23 of the Labor Law, Labor Law §§811 ef seq.

(McKinney's 1965), vested the Industrial Commissioner

with broad authority in the supervision of apprenticeship

programs. Effective administration of apprenticeship

training. the court reasoned, demanded that the state be

empowered to deregister any program which was operated

in violation of established rules and regulations. The mere

tact that no specific statute authorized the promulgation of

a deregistration scheme was of little import. The plan

embodied in 12 N.Y.C.R.R. §601.7(c) which envisioned

notice. an opportunity to be heard, a decision, and sup-

porting reasons, the court concluded, had a reasonable

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basis in law and satisfied the requirements of the due

process clause.

The evidence, the court pointed out, indicated that not

one of the more than 570 registered apprentices suc-

cessfully completed all phases of training since the in-

ception of the program. The court found that such evidence

provided a sound basis for appellee to conclude that the

sponsor failed in its supervisory obligations. United could

not disassociate itself from the wrongful conduct of the

employer participants; it was the JAC’s duty to ensure the

accomplishment of the program’s aim and objectives.

Deregistration, the court declared, was not an overly harsh

penalty when the sponsor failed so grossly at its task.

United's equal protection claim was succinctly rejected as

without evidentiary foundation. Leave to appeal to the

Court of Appeals was denied.

Thereafter, appellee Levine sought to renew his

motion in the district court for dismissal on the pleadings,

and in the alternative, for summary judgment, on the

ground that the Appellate Division’s determination was res

judicata. On November 5, 1976, the district court issued a

memorandum of decision and order dismissing the

complaint. It was the court’s position that insofar as

United and the JAC were acting on behalf of appellants’

interests, the requirements of the due process clause were

satisfied when the associations were served with notice and

subsequently appeared at the hearings. Appellants’

substantive due process and equal protection claims were

rej.cted on res judicata grounds. The contractors appeal

from this. as well as the court’s earlier ruling of July 24,

1975.

Spurred by considerations of judicial economy, and a

public policy that favored injecting certainty into the legal

system. the doctrine of res judicata, judicial in origin, was

established for the primary purpose of avoiding repetitive

litigation of the same causes of action. Commissioner of

Internal Revenue v. Sunnen, 333 U.S. 591, 597, 68 S.Ct.

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71S, 719 (1933). Briefly stated, the parties to an action in

which a judgment on the merits has been rendered, or their

privies. are barred from relitigating the same cause of

action in a second proceeding. Cromwell v. County of Sac.

94 U.S. 351, 352 (1876); Baltimore S.S. Co. v. Phillips, 274

U.S. 316, 319, 47 S.Ct. 600, 602 (1927); McNellis v. First

Federal Savings and Loan ASsociation of Rochester, New

York, 364 F. 2d 251, 254 (2d Cir), cert. denied, 385 U.S.

970, 87 S.Ct. 504 (1966); Saylor v. Lindsey, 391 F. 2d 965,

968 (2d Cir. 1968). There must be both an identity of

parties and an identity of issues between the prior and

subsequent suits before operation of the res judicata

doctrine is triggered. Where a subsequent suit is based on a

different cause of action, the principle of collateral estoppel

renders the prior judgment conclusive only as to matters

necessarily litigated and determined in the prior

proceeding. Southern Pacific Railroad Co. v. United

States, 168 U.S. 1, 48-49, 18 S.Ct. 18, 27 (1897); Com-

missioner of Internal Revenue v. Sunnen, supra, at 597-98,

68 S.Ct. at 719; McNellis v. First Federal Savings and Loan

Association of Rochester, New York, supra, at 254.

The threshold requirement of identity of parties,

qualified by the doctrine of privity, finds its roots in the

ancient notion, now supplemented by the due process

clause, that a person cannot be bound by a judgment

without notice of a claim and an opportunity to be heard.

Whether such identity is evident is a factual determination

of substance, not mere form. Astron Industrial Associates,

Inc. v. Chrysler Motor Corp., 405 F. 2d 958, 961 (Sth Cir.

1968); Aerojet General Corp. v. Askew, 511 F. 2d 710, 719

(Sth Cir.), cert. denied, 423 U.S. 908, 96 S.Ct. 210 (1975).

Generally speaking, one whose interests were adequately

represented by another vested with the authority of

representation is bound by the judgment, although not

formally a party to the litigation. Aerojet General Corp. v.

Askew, supra at 719; Roode v. Michaelian, 373 F. Supp.

53. 55 (S.D.N.Y. 1974). While often justified by the

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doctrine of privity, the theory underlying this general

proposition is that the party bound is in substance the one

whose interests were at stake in the prior litigation.

Therefore. we need first examine, in order to determine

whether there was an identity of parties between the state

and federal court actions, the degree of representative

authority vested in the sponsor JAC to administer the terms

of the program.

Unfortunately, the brief one page form master

agreement provides a skimpy basis from which to discern

the extent of responsibility vested in the Committee.

However. an inspection of the regulatory scheme, 12

N.Y.C.R.R. §§601.1 et seg.. expressly confirms that the

sponsor, JAC, is fully accountable for the conduct of the

program. The sponsor is recognized as the single

representative of all participants, see 12 N.Y.C.R.R.

§601.3(e). As such, it is obligated to perform all ad-

ministrative functions, see 12 N.Y.C.R.R. §§601.5(b)(6),

(11). (12). (14). (15), (16) and (19), to assure the par-

ticipants’ compliance with all occupational health and

safety standards, see 12 N.Y.C.R.R. §601.5(b)(8), and

foremost. to guarantee “ ... that the program will be

conducted. operated, and administered in conformity with

all applicable provisions.” 12 N.Y.C.R.R. §601.5(b)(18).

In short. it is apparent from the face of the regulations

themselves that the JAC is the employer participants’

conduit to the overseeing agency, and the body vested with

representative authority over the training program’s

operation. See Kersh Lake Drainage District v. Johnson.

309 U.S. 485. 491, 60 S.Ct. 640, 644 (1940).

Whether in their representative capacities the

Committee and trade associations can be said to have had

foremost in mind the interests of participating contractors

during their appearance before the hearing panel and the

Appellate Division remains to be determined. United, as a

multi-employer unit. was presumably formed with an eye

towards securing a more advantageous position for each

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partipating contractor during labor negotiations and

contract administration. Not only was increased bargaining

power brought to the table. but the threat of favoritism and

the concomitant competitive advantage one employer may

gather was undercut, see gen. A. Cox and D. Bok, Labor

Law at 335 (7th ed. 1969); Publishers Association of New

York City v. National Labor Relations Board, 364 F. 2d

293 (2d Cir. 1966). Similarly, the Joint Apprenticeship

Committee was formed to rid the individual participants of

. the administrative burdens that accompany the training

program while garnering for each participant the cost

advantage of apprentice labor. Insofar as the association

had any interests in avoiding deregistration, they were the

collective interests of the individual participants.

Moreover. this is not a case where either the associations or

any of the individual contractors were subject to potential

criminal liability, see e.g. United States v. Sherpix. Inc..

512 F. 2d 1361 (D.C. Cir. 1975). The only interests United

and the JAC had to protect through the administrative and

judicial process were those of the participating contractors.

We conclude. therefore, that there is identity of parties.

Chicago R, I & P Railway Co. v. Schendel, 270 U.S. 611,

618. 46 S.Ct. 420, 423 (1927); Kersh Lake Drainage

District v. Johnson, supra at 491, 60 S.Ct. at 644;

Aluminum Company of America v. Admiral Merchants

Motor Freight, Inc., 486 F. 2d 717, 720-21 (7th Cir cert.

denied, 414 U.S. 1113, 94 S. Ct. 843 (1973); Aerojet

General Corp. v. Askew, supra at 719.

Privity aside, before res judicata can attach and

conclusive effect be given the Appellate Division deter-

mination, it must be found that the causes of action raised

in the state and subsequent federal actions, and the

nucleus of facts which underlay them, were identical.

Commissioner of Internal Revenue v. Sunnen, supra at

597. 68 S.Ct. at 719; Pan American World Airways, Inc. v.

Civil Aeronautics Board, 380 F. 2d 770, 776 (2d Cir. 1967).

aff'd sub nom., World Airways, Inc. v. Pan American

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World Airways, Inc., 391 U.S. 461, 99S. Ct. 1715 (1968).

While often cast in terms of “identity of issues,”’ the

determination as to whether claims are duplicative is not a

matter of precision, nor subject to the application of any

mechanical formula.

As it is, the applicable test has been variously stated by

this and other New York courts; whether a different

judgment in the subsequent action would impair the rights

created pursuant to the judgment rendered in the prior

action, Moreno v. Marbil Productions, Inc., 296 F. 2d 543,

S45 (2d Cir. 1961), citing Schuylkill Fuel Corp. v. Nieberg

Realty Corp., 250 N.Y. 304, 306-07, 165 NE. 456, 457

(1929): whether the evidentiary basis of the first and second

actions is the same. United States v. Haytian Republic, 154

U.S. 118, 125, 14 S. Ct. 992, 994 (1894); or whether the

essential facts and issues were. similarly presented in both

cases, Smith v. Kilpatrick, 30S N.Y. 66, 70-71, 111 N.E.

2d 209, 211-12 (1953). see gen. Herendeen v. Champion

International Corp., 525 F. 2d 130, 132 (2d Cir. 1975);

McNellis v. First Federal Savings and Loan Association of

Rochester, New York, supra.

The crucial element underlying all of these standards

is the factual predicate of the several claims asserted. For it

is the facts surrounding the transaction or occurrence

which operate to constitute the cause of action, not the

legal theory upon which a litigant relies. Matthews v. New

York Racing ASsociation, Inc., 193 F. Supp. 293, 294

(S.D.N.Y. 1961). Herein, it is clear that the legal claims

presented before the Appellate Division and the district

court revolved around the operation of the apprenticeship

program and the administrative proceeding that resulted in

deregistration. Appellants. before the federal court,

presented nothing in the way of evidence that was not

before the state court panel. Their challenge concerned the

same master training agreement, the same set of hearings.

the same regulatory scheme, and the same administrative

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order of deregistration that were the subject of United's

state court action.

By way of an Article 78 proceeding. the employer

association sought to contest the sufficiency of the In-

dustrial Commissioner's findings and the constitutionality

of the regulation governing deregistration, 12 N.Y.C.R.R.

§601.7(c). In addition, United took issue with appellee's

selective use of enforcement powers claiming his failure to

commence deregistration proceedings against Local 3

deprived petitioners of equal protection of the laws. The

Appellate Division, after a close analysis of the

deregistration scheme, held it had a reasonable basis in law

and sustained its constitutionality. The evidence, the court

found. was sufficient to support the Industrial Com-

missioner’s order. Petitioner's equal protection claim, the

court ruled. remained unsubstantiated.

There is no doubt as to the identity of issue between

the equal protection claim presented in the state and

federal courts. Both the association and the individual

contractors alleged that competing contracting firms in-

volved in a master apprenticeship program with Local 3

were guilty of repeated contractual and _ regulatory

violations. but were not subjected to deregistration

proceedings by the state. The Appellate Division treated

the claim fully rejecting it as without foundation. Their

determination is dispositive. Commissioner of Internal

Revenue v. Sunnen, supra.

Moreover. appellants challenge to the constitutional

propriety of the regulatory scheme incorporated in

§601.7(c) and the deregistration order itself, but mirrored

United's state court claim. Appellants’ argument, in the

context of their challenge to §601.7, that they cannot be

held liable for the misdeeds of others misses the mark. We

agree that proof of either knowledge or ratification of an

association's wrongful acts is crucial to the extension of

additional personal liability to its members, Phelps Dodge

Refining Corp. v. Federal Trade Commission, 139 F. 2d

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393, 39% (2d Cir. 1943); Vandervelde v. Put & Call Brokers

& Dealers Association, 344 F. Supp. 118, 155-156

(S.D.N.Y. 1972). But appellants’ argument misconstrues

the thrust and effect of the deregistration order. The

subject apprenticeship program finds its derivation in a

master training agreement executed by employer and labor

associations on behalf of their respective members. This

master agreement is to be distinguished from an individual

training agreement between a given employer and ap-

prentice. See Labor Law § 816 (McKinney's 1965). The

Industrial Commissioner, in registering the program,

contracted with United and the JAC, not the individual

employers. It was the Committee that was recognized by.

and answerable to. the state. Similarly, it was the United-

Local 363-JAC program that was deregistered, and ap-

pellants, in their posture as members of United, are bound

by the administrative order of deregistration and state

court affirmance. Hartford Empire Co. v. United States.

323 U.S. 386. 405-06, 65 S. Ct. 373, 383 (1945S); Dunkel v.

T.B. McDonald Construction Co., 67 N.Y.S. 2d 515, 517

(Sup. Ct. 1946).

The terms of the Industrial Commissioner's order

direct only discontinuance of the master program. The

state withdrew a benefit upon the sponsor's failure to

perform conditions that were part and parcel of the benefit

conferred. Other than stripping all participants of their

right to immediately employ apprentice electricians. the

order imposes no additional restriction on any of the ap-

pellants. The suspension operates against the employer

association and appellants only insofar as they are

members. The state is neither seeking to hold these

litigants accountable for the acts of others nor impose a

penalty.

That there was no evidence of appellants’ wrongful

involvement is irrelevant when they suffer injury only with

relation to their status as members of United. The

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requirements of the due process clause are satisfied when

association representatives are afforded notice and an

opportunity to be heard. Compare Dunkel v. T.B. Mc-

Donald Construction Co., supra. There were no claims

peculiar to appellants which required the opportunity to

appear personally. Kersh Lake Drainage District v.

Johnson. supra at 494. 60 S. Ct. at 646. Where the

representative association has standing to assert the in-

terests of its members, see Warth v. Seldin. 422 U.S. 490,

95 S. Ct. 2197 (1975). and is found to have adequately

protected those interests, any determination rendered

against the association is binding on its members. There

being identity of parties and issues between the Article 78

proceeding and the federal court action, the decision of the

Appellate Division in the prior suit is res judicata as to the

matters presented below.

The orders of July 24, 1975 and November 5, 1976 are

affirmed. s

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FOOTNOTES

_ 1. The record does not reveal the identity of the party complaining.

2. Title 12N.Y.C.R.R. §601.7 provides in pertinent part:

Voluntary and formal deregistration of registered programs.

Deregistration of a program may be effected by (a) the voluntary action of the

registrant requesting. in writing. the cancellation of the registration, or (b) by

the commissioner instituting formal deregistration proceedings in accordance

with the provisions of the Part.

(b) Formal deregistration. The commissioner may deregister any ap-

prenticeship training program if he finds that the registrant, sponsor, or any

Participating speasor has:

(1) Violated a Federal or State Law;

(2) Subverted the program intent by hiring workers as helpers, shop boys

or other titles and assigning to them work generally performed by apprentices;

(3) Not conducted. operated. and administered the program in accordance

with the intent of article 23, or the registered provisions. or the requirements of

this Part. except that deregistration proceedings for violation of equal op-

portunity requirements shall be processed in accordance with the provisions of

Part 600 of Title 12 of the Official Compilation of Codes, Rules and

Regulations of the State of New York; or

(4) Made a false or misleading statement in connection with the

registration of the program, or is not a person of good character and

responsibility.

(1) Where it appears that sufficient cause exists for deregistration, the

commissioner shall send a notice to the registrant by registered or certified

mail, return receipt requested. stating the following:

(i) The notice is sent pursuant to this section;

(ii) The ground or grounds on which it is proposed to deregister the ap-

prenticeshir ‘raining program; and

(iii) That the program will be deregistered unless, with 10 calender days of

the receipt of this notice, the registrant files with the commissioner a written

request for a hearing.

0 ‘& If the registrant requests a hearing, the commissioner shall convene a

hearing and issue his determination in accordance with section 601.9 of this

Part.

(3) In such determination. the commissioner may allow the registrant a

reasonable time to achieve voluntary corrective action.

(4) In each case in which deregistration is ordered, the commissioner shall

publish promptly in newspapers of general circulation a notice of the order and

shall notify the registrant. In addition. the commissioner shall promptly notify

all registered apprentices of the deregistration of the program; the effective

date thereof; that such cancellation automatically deprives the apprentice of

his individual registration; and that the deregistration removes the apprentice

from coverage for State purposes.

1198 LB 1-31-76

3. Appellant Eugene lovine. Inc. was charged with failing to use ap-~

prentices in the proper ratio and underpayments in the amount of $1,443.60.

4. Title 12 N.Y.C.R.R. §601.8 provides:

“Reinstatement of program registration. Any apprenticeship program

formally deregistered pursuant to this Part may not be reinstated for a period

not to exceed three years. nor shall the sponsor or any employer or union

participant be eligible to register any apprenticeship training program under

any other name for such period."

5. Appellants’ brief (p. 10) assumed a period of disqualification “for three

vears from June 2. 1976, namely. until June 2, 1979,” based on a notice issued

August 2. 1976 by Counsel's Office of the New York State Department of

Labor. The record did not present the question as to the method of determining

the period of disqualification under Section 601.8 of the Regulations Gover-

ning the REgistration of Apprenticeship Programs and Agreements.

MANSFIELD. Circuit Judge (Concurring):

In concur in Chief Judge Mishler’s carefully considered opinion. I am

satisfied that during the period of the suspension appellants are precluded

from reregistering either as members of the JAC or in their individual

capacities by 12 N.Y.C.R.R. §601.8. which provides:

“nor shall the sponsor or any employer or union participant be eligible

to register any apprenticeship training program under any other name

for such period.’ (Emphasis supplied).

Since appellants had actual notice of the deregistration proceedings and

their authorized representative (who serves as their present counsel) actively

participated in those pr ceedings on their behalf, there was no denial of due

process in the application of the regulation.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.