Summary
In Edelstein v. Gillmore, 35 F.2d 723, the Court of Appeals for the Second Circuit concluded that the regulations were a lawful effort to improve the employment conditions of Equity members.
Summary of this case from H. A. Artists Associates v. Actors' Equity AssnOpinion
No. 345.
August 12, 1929. Rehearing Denied September 26, 1929.
Appeal from the District Court of the United States for the Southern District of New York.
Suit by William Edelstein against Frank Gillmore and others. Decree for plaintiff granting a preliminary injunction [ 36 F.2d 81], and defendants appeal. Reversed.
Bill in equity to enjoin the defendants from putting into effect a certain resolution adopted by the Actors' Equity Association, the enforcement of which would, it was alleged, destroy plaintiff's business. Upon verified bill and answers, and numerous supporting affidavits, an injunction pendente lite was granted. The defendants have appealed. Reversed.
Jurisdiction rests upon diverse citizenship; the plaintiff being a subject of Holland and the defendants citizens of New York. The plaintiff Edelstein originally brought his suit against Actors' Equity Association, a voluntary unincorporated association (which for brevity will be referred to as Equity), and five of its officers, individually and in their respective official capacities. Subsequently the bill was dismissed as to all defendants except Gillmore, Mitchell, and Dulzell individually. See Ex parte Edelstein, 30 F.2d 636 (C.C.A. 2).
Plaintiff's business is that of serving as "personal representative" of theatrical artists. In the theatrical field actors are accustomed to secure their engagements through an agent to whom they pay a commission or brokerage charge. There are two types of such agents — one known as an "employment agent," the other as a "personal representative." The function of the employment agent is merely to obtain for the actor a specific engagement, for which he receives as a commission a percentage of the actor's weekly salary. The personal representative performs more extensive services; he seeks to obtain continuous employment for the actor during an agreed term, to promote his advancement, procure publicity for him, smooth out his disputes with the theatrical manager, afford him the use of office facilities, and the like. Their relations are evidenced by a contract for a term which may run several years. The personal representative's compensation is a percentage of the actor's earnings during such term. Edelstein has been in business as a personal representative for many years; he has offices both in London and New York; he has built up a valuable good will, and had outstanding, when his bill was filed, several hundred contracts with theatrical artists, many of whom were members of Equity. He says that under these contracts his compensation is usually 10 per cent. but in many cases runs as low as 5.
Equity has a membership of more than 8,000 actors and actresses. Its object, as set forth in its constitution, may be briefly summarized as the promotion of the interests of all connected with the profession of acting, and "to advise and assist them in obtaining employment and proper compensation therefor." Its members agree to abide by its legally adopted rules, and are subject to discipline, suspension, or expulsion for a violation thereof. Its rules provide that a member is not permitted to appear in any stage production with a nonmember, and in New York City and its environs Equity has almost absolute control of the supply of actors and actresses in the legitimate and musical comedy fields. Hence the stage in New York is practically a closed shop. Equity holds a charter from the American Federation of Labor.
On September 21, 1928, Equity adopted the following resolution:
"Resolved, That on or after the ninth day of October, 1928, any member securing an engagement in the legitimate and musical comedy fields through any employment agent in New York City or environs and who pays any commission to any employment agent who does not hold a permit from Equity to do his business as such with our members, or who pays directly or indirectly (i.e. either in money or in kind) more than the commission set by the Association is guilty of an act prejudicial to the welfare of the Association and will in the discretion of the Council be either censured, suspended, expelled from membership, or otherwise punished.
"This resolution is not to be construed as affecting agreements made prior to the date named in the above resolution with agents or personal representatives who do not take out our permits."
There is much dispute whether the resolution as originally passed contained the above-quoted second paragraph. It is the contention of the plaintiff that it did not, and that, consequently, the resolution was an unlawful instruction to its members to break their outstanding contracts with personal representatives who should not obtain a permit from Equity. The District Judge, however, found that the defendants were not threatening to enforce the first paragraph of the resolution as against existing contracts.
Following the passage of the resolution, publicity was given to it and letters of notification were sent to members of Equity, to theatrical producers and managers, and to personal representatives. The specific contents of such letters, so far as deemed material, will be mentioned in the opinion.
Pursuant to the policy of requiring its members to make future contracts only with agents holding permits from Equity, two sets of permit forms were prepared — one for employment agents, and one for personal representatives. The latter only need be considered, as the plaintiff does no business as an employment agent. The permit is in reality a contract between the licensee and Equity, by which the licensee agrees, among other things, as to certain terms which shall be introduced into any contract he may make with a member of Equity to act as such member's personal representative. Such terms are more favorable to the actor than those heretofore generally prevailing. The personal representative agrees to use a printed form of contract, approved by Equity, and not to vary it; to charge no more than 10 per cent. of the weekly salary received by the actor; to guarantee the actor twenty weeks' employment in each year of the term of the contract at a salary not less than the average salary paid the actor during the preceding three years; to make no contract to extend for a term of more than three years, or after he shall cease to hold a permit. Numerous other stringent conditions are provided, including the following:
"At the request of either the Licensee or the member and with the consent of Equity, any existing agreements of members with Personal representatives may be modified and under such circumstances are hereby agreed to be modified to conform to agreements herein contained. Said modification to be effective as of the date of the issuance of this permit."
The plaintiff refused to take out such a permit. Instead, he filed his bill of complaint for an injunction, charging that the enforcement of Equity's proposed permit system would unlawfully interfere with and destroy his business in New York. In defense the defendants have set out by affidavit that adoption of the permit system was made only after an extended investigation which resulted in the disclosure of serious abuses in the relations existing between actors and employment agents and personal representatives; that Equity believed that such abuses could be remedied, and the interests of its members adequately protected, only by the introduction of the permit system proposed; and that, in passing the resolution and preparing to put it into effect, the sole purpose of Equity and of the defendants was to benefit its members. The injunction which was granted forbids the defendants, during the pendency of the suit, from taking any steps to put into effect as against the plaintiff the resolution of September 21, 1928, adopted by Equity.
Justus Sheffield, of New York City (Paul N. Turner, Emily C. Holt, and Justus Sheffield, all of New York City, of counsel), for appellants.
Nathan Burkan, of New York City, for appellee.
Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
It may be, as the appellee contends, that the resolution formally adopted by Equity did not contain the paragraph which excepts from its operation contracts between plaintiff and members of Equity made prior to October 9, 1928. However that may be, the District Judge has found that the defendants are not threatening to enforce the resolution with respect to such contracts. Hence the case involves no attempt by the defendants to induce fellow members of their association to repudiate existing contracts with plaintiff. We say nothing as to that. It involves only an attempt to control their future making of agreements with the plaintiff, and we shall deal with it on that basis.
By the resolution, members of Equity are to be subjected to discipline and possible suspension or expulsion, if they shall, after the specified date, secure an engagement in the legitimate and musical comedy fields through a personal representative in New York City or environs who has not been licensed by Equity. The consequences which would follow from suspension or expulsion are such as to make it practically certain that Equity members will not employ an unlicensed personal representative. To do business with them in the future, the plaintiff must therefore obtain a license; and to obtain a license he must agree that, if he contracts with members of Equity, he will do so on the terms specified in the permit, one of such terms, to which the most strenuous objection is made, being the requirement that he modify his outstanding contracts with members, if requested by them so to do, so that old contracts shall conform to the standards set up for the new. Thus Equity is endeavoring to obtain for all its members who use the services of a personal representative, either under new contracts or under old, uniform terms in respect to such important matters as maximum rate of compensation, duration of maximum contract term, and guaranty of twenty weeks' employment in each year. The defendants are aiding and abetting in this endeavor; and there is no doubt that it will succeed, unless a court of equity intervenes. Equally beyond doubt is the fact that the plaintiff's business will be affected. If he accepts new business from Equity members, he must take it on the prescribed terms, including the modification of existing contracts — a modification conditioned, it is true, but conditioned only on a request which would seem certain to be made. If he declines a permit, he may carry out his outstanding contracts with Equity members, but he must forego the writing of any new business with them.
Beyond doubt each individual member of Equity, acting independently, is legally privileged to refuse to employ Mr. Edelstein on any terms, or to offer to employ him on terms of the offerer's dictation. Fed. Trade Comm. v. Raymond Co., 263 U.S. 565, 573, 44 S. Ct. 162, 68 L. Ed. 448, 30 A.L.R. 1114. He may make his offer identical with the standards set up by Equity, and may include therein a requirement that Mr. Edelstein shall consent to modify an existing contract with him or with another. A refusal to deal on any other terms would violate no right of Mr. Edelstein; he is privileged to accept or to reject the offer, and the fact that he will lose the new business if he refuses to modify his existing contracts would be quite immaterial. The question is whether an actor is privileged to combine with fellow actors in refusing to deal except on these terms, when their concerted economic power is such as to present to plaintiff the alternatives of accepting the terms offered or losing his New York business in the legitimate and musical comedy fields. Here the motive with which the confederates act becomes a very important, if not the controlling, factor. The District Court says:
"In so far as the purpose is to deprive plaintiff of new business because he refuses to surrender old contracts, the primary object is to injure him."
With this we cannot agree. If a personal representative has outstanding with an Equity member a contract which provides, for example, a 15 per cent. commission, it is self-evident that he is subjected to the temptation to find employment for the old client rather than for a new one with whom he has contracted for only a 10 per cent. commission, regardless of the relative professional qualifications of the two. New clients will be at a disadvantage because of the old contracts. On the other hand, if the rate of commission is the same in both contracts but the new contract contains a guaranty of employment which the old one does not, the new client is likely to be favored in the matter of placement. Equity believes that it is advantageous to its members, and to the theatrical profession generally, to have all its members on an equality in respect to absence of favoritism on the part of a personal representative in securing employment on the legitimate and musical comedy stage. The evils of unregulated employment agencies (using this term broadly to include also the personal representative) are set forth in the defendants' affidavits and are corroborated by common knowledge. See dissenting opinion of Mr. Justice Stone in Ribnick v. McBride, 277 U.S. 350, 48 S. Ct. 545, 72 L. Ed. 913, 56 A.L.R. 1327. Hence the requirement that, as a condition to writing new business with Equity's members, old contracts with its members must be made to conform to the new standards, does not seem to us to justify an inference that the primary purpose of the requirement is infliction of injury upon plaintiff, and other personal representatives in a similar situation, rather than the protection of the supposed interests of Equity's members. The terms they insist upon are calculated to secure from personal representatives better and more impartial service, at uniform and cheaper rates, and to improve conditions of employment of actors by theater managers. Undoubtedly the defendants intend to compel the plaintiff to give up rights under existing contracts which do not conform to the new standards set up by Equity, but, as already indicated, their motive in so doing is to benefit themselves and their fellow actors in the economic struggle. The financial loss to plaintiff is incidental to this purpose. See Gill Engraving Co. v. Doerr, 214 F. 111, 120 (D.C.S.D.N.Y.).
Whether in their relations to personal representatives Equity members are to be deemed a combination of employers, as appellants contend, or a "labor union," as appellee insists, is a matter disputed. To us it appears that in fact the policy adopted is aimed at improving their position from both aspects; but whether they be viewed as employers or employees would seem to make no difference. Counsel agree that both employers and laborers may respectively organize to strengthen their bargaining power in the economic struggle, and that the legal principles applicable to each group are the same. The motive of benefit to the industrial group will often justify a collective refusal to deal with one who will not accede to terms which promote the interests of such group, whether it be composed of laborers or of employers. See Nat. Fireproofing Co. v. Mason Builders' Ass'n, 169 F. 259, 269, 26 L.R.A. (N.S.) 148 (C.C.A. 2); Nat. Protective Ass'n v. Cumming, 170 N.Y. 315, 63 N.E. 369, 58 L.R.A. 135, 88 Am. St. Rep. 648; Bossert v. Dhuy, 221 N.Y. 342, 117 N.E. 582, Ann. Cas. 1918D, 661; Wilson v. Hey, 232 Ill. 389, 396, 83 N.E. 928, 16 L.R.A. (N.S.) 85, 122 Am. St. Rep. 119, 13 Ann. Cas. 82; Macauley Bros. v. Tierney, 19 R.I. 255, 33 A. 1, 37 L.R.A. 455, 61 Am. St. Rep. 770; Bohn Mfg. Co. v. Hollis, 54 Minn. 223, 55 N.W. 1119, 21 L.R.A. 337, 40 Am. St. Rep. 319; Booker Kinnaird v. Louisville Board of Fire Underwriters, 188 Ky. 771, 224 S.W. 451, 21 A.L.R. 531. We think that that motive supplies justification in the instant case. Therefore, unless we must say that because of Equity's control over the supply of actors in New York City, it is illegal to exercise their combined power against the plaintiff by collective refusal to deal with him until he obtains a permit, we see no basis for the injunction. Whether the welfare of society requires the curtailment of economic power when the group which exercises it is in complete control of a particular industrial or commercial field would seem to be a problem more appropriate for the Legislatures than for the courts. But, in any event, no authority has been cited which appears to require us to hold illegal the threatened refusal of Equity's members to deal with plaintiff except upon the terms proposed. On the contrary, the cases most nearly in point sustain the appellants. See Tannenbaum v. N.Y. Fire Ins. Exch., 33 Misc. Rep. 134, 68 N.Y.S. 342; City Trust Co. v. Waldhauer, 47 Misc. Rep. 7, 95 N.Y.S. 222; Macauley Bros. v. Tierney, supra; Am. Livestock Comm. v. Chicago Livestock Exchange, 143 Ill. 210, 32 N.E. 274, 18 L.R.A. 190, 36 Am. St. Rep. 385; cf. Boutwell v. Marr, 71 Vt. 1, 42 A. 607, 43 L.R.A. 803, 76 Am. St. Rep. 746.
But the defendants did not merely notify their own members and persons engaged in the business of acting as personal representatives of the resolution adopted by Equity. They also notified managers and producers, and it is urged that they have gone beyond the legal pale by extending a boycott beyond their own union. The letter to Rufus R. Lemaire, a producer, requests that he refrain from hiring Equity members except through agents holding Equity permits, and continues:
"As you know our members cannot work with suspended members so you will readily see the importance of careful compliance with our request and, further, we shall be compelled to regard as unfriendly any action which tends to defeat this new and healthy policy.
"Thanking you for your earnest cooperation and with best wishes. * * *"
And on October 8, 1928, a notice addressed "To all Producing Managers," contained the following:
"We are confident you will co-operate since the ultimate result will be as much to your advantage as to ours.
"The penalties we are attaching to those who break our rules are necessarily drastic.
"The actor will be Suspended.
"The Agent will lose his Permit.
"The Manager will have to get along without the services of our members."
If these communications were to be deemed a notification that managers were not to hire through plaintiff, until he secured a permit, an Equity member with whom plaintiff already had an outstanding contract, we do not say that they would be unobjectionable. That question we leave till it shall arise, and it is not now before us because the lower court found for the purpose of this injunction that old contracts were excepted from the resolution. Viewing the letters as referring only to hiring members with whom the plaintiff might contract after October 9th, we do not think it can be considered as an attempt to create a secondary boycott against plaintiff. It is a notification of a new ground for suspending or expelling Equity members and a calling of attention to the old rule which forbids members in good standing from working with suspended members. It is not an effort to coerce plaintiff's manager customers not to deal with him, as in Auburn Draying Co. v. Wardell, 227 N.Y. 1, 124 N.E. 97, 6 A.L.R. 901. Despite the phrase requesting co-operation, it really asks no action by producing managers to carry into effect the new rule. That is to be made effective solely by the disciplinary action of Equity upon its own members who violate it. From the managers nothing is expected but the observance of the old closed shop rule. In Cohn Roth Electric Co. v. Bricklayers' Union, 92 Conn. 161, 101 A. 659, 6 A.L.R. 887, it was held that there was nothing unlawful in stating to contractors what would happen under the defendant union's rules, should the contractor employ nonunion men.
For the foregoing reasons we think the preliminary injunction was improvidently issued. Accordingly the decree is reversed.
MANTON, Circuit Judge, dissents.
On Petition for Rehearing.
The foregoing opinion is predicated upon the premise that the defendants are threatening no interference with existing contracts of the plaintiff, except so far as the plaintiff voluntarily consents to modify them for the sake of obtaining new business from members of Equity. So the trial judge found, and so counsel for the defendants assert in their brief.
In his petition for rehearing, the plaintiff expresses fear that, upon dissolution of the preliminary injunction, the defendants will change their attitude and will construe Equity's letters (referred to in the opinion) as instructions to producers and managers not to employ through plaintiff any member of Equity, even though such member is under an existing contract with plaintiff, unless plaintiff shall take out a permit. We do not regard such fears as sufficiently well founded to justify a reargument or the present issuance of an injunction. Should defendants hereafter threaten interference with existing contracts, otherwise than by endeavoring to induce a voluntary modification through the refusal of new business from members of Equity until plaintiff obtains a permit, there is nothing in our decision to prevent plaintiff from then applying to the court for injunctive relief.
The petition for rehearing is denied.