Douds v. Metropolitan Federation of Architects, Engineers, Chemists & Technicians, Local 231
21 L.R.R.M. (BNA) 2256, 1948 U.S. Dist. LEXIS 3002, 75 F.Supp. 672 (1948)
Rule of Law:
A secondary employer that performs work for a primary employer which, but for a strike, would be performed by the primary employer's striking employees, and where the primary employer actively supervises the secondary employer's work, is considered an 'ally' of the primary employer and not a neutral third party for purposes of the secondary boycott provisions of the Taft-Hartley Act.
Facts:
- Ebasco Services, Inc. (Ebasco) is a corporation engaged in supplying engineering services, including planning, designing, and drafting plans for industrial and public utility installations.
- The Metropolitan Federation of Architects, Engineers, Chemists and Technicians, Local 231 (union) was the bargaining agent for Ebasco's employees until their agreement expired on September 1, 1947, leading to a strike on September 5, 1947.
- Project Engineering Company (Project) was formed in 1946 as a partnership, with an inception independent of Ebasco, and conducted business identical to Ebasco.
- Ebasco began subcontracting work to Project in December 1946, a practice Ebasco had not engaged in prior to August 1946.
- After the strike began, approximately 75% of Project's business consisted of work secured from Ebasco, and some work that had been started by Ebasco's employees was transferred in an unfinished condition to Project for completion.
- Ebasco exercised extensive control and supervision over Project's work, including setting maximum wage rates, receiving detailed time sheets of Project employees working on Ebasco assignments, having Ebasco supervisory personnel regularly visit Project’s plant to oversee the work, and delivering Project's final plans and drawings to Ebasco's clients as Ebasco's own work.
- Union delegations approached Project on multiple occasions, asking it to refuse to accept work that had come from Ebasco.
- On October 28, 1947, the union ordered Project picketed, with pickets carrying signs labeling Project as a 'scab shop for Ebasco,' leading to a number of resignations at Project.
Procedural Posture:
- Charles T. Douds, Regional Director of the Second Region of the National Labor Relations Board (NLRB), filed a petition in the U.S. District Court for the Southern District of New York to enjoin the Metropolitan Federation of Architects, Engineers, Chemists and Technicians, Local 231 (union) from engaging in activities alleged to violate Section 8(b)(4)(A) of the Taft-Hartley Act.
- Project Engineering Company (Project), the 'charging party,' requested and received permission to intervene in the district court proceedings.
- The District Court conducted hearings where testimony was presented by the petitioner (NLRB), the respondent (union), and the intervening charging party (Project).
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Issue:
Does a union's picketing of a company that is performing work subcontracted by a struck primary employer, where the subcontracted work is the kind the primary employer's striking employees would normally do and where the primary employer exercises significant control over the work, constitute an unlawful secondary boycott under Section 8(b)(4)(A) of the National Labor Relations Act as amended by the Taft-Hartley Act?
Opinions:
Majority - Rifkind, District Judge
No, the union's picketing of Project did not constitute an unlawful secondary boycott under Section 8(b)(4)(A) because Project was not a neutral third party, but rather an 'ally' of the struck primary employer, Ebasco. The court interpreted the statutory prohibition against forcing a person 'to cease doing business with any other person' in light of the legislative history of the Taft-Hartley Act, which aimed to outlaw traditional secondary boycotts against 'wholly unconcerned' third parties. The court found that Project had forfeited its neutrality and made itself a party to the dispute by performing work for Ebasco that Ebasco's striking employees would otherwise have done, especially given the increased volume of Ebasco's work at Project after the strike began. The close operational relationship between Ebasco and Project, including Ebasco's extensive supervision and the integration of Project's work into Ebasco's services, demonstrated that Project was 'firmly allied to Ebasco.' The court emphasized that corporate ownership or legal insulation is not conclusive as to neutrality and looked to the 'reality relevant to the purposes of a particular statute,' citing Rutherford Food Corp. v. McComb and N.L.R.B. v. Hearst Publications, Inc. Since the economic effect on Ebasco's employees was precisely that which would flow from Ebasco's hiring strikebreakers directly, the union's actions against Project were not an extension to a 'remote front' but to one 'intimately and indeed inextricably united' to the primary dispute. The court suggested that a broader construction of the Act, which would outlaw such union activity, would likely cast grave doubts upon its constitutionality.
Analysis:
This case is highly significant for establishing the 'ally doctrine,' which defines the permissible scope of union activity during a strike and limits the reach of secondary boycott prohibitions under the Taft-Hartley Act. It clarifies that an employer loses its 'neutral' status—and thus its protection from secondary picketing—if it performs 'struck work' for a primary employer under circumstances indicating a close operational relationship. This precedent ensures that employers cannot easily circumvent legitimate strikes by subcontracting struck work to closely tied entities and then claiming protection from picketing, thereby preserving the effectiveness of a primary strike. The ally doctrine continues to be a crucial interpretative tool in labor law, defining the boundaries between lawful primary picketing and unlawful secondary activity.
