Opinion
104461/08.
Decided September 23, 2009.
Plaintiff, Bruce Richards, the president and chief executive officer of Marathon Asset Management LP (Marathon), brings this action to recover damages from defendants Construction and General Building Laborers Local 79 (Local 79) and John Doe 1 through 12, arising out of events in which defendants allegedly harassed and defamed him in connection with a construction project at 184 Kent Avenue in Brooklyn, New York (the development). Before the court is plaintiff's motion, pursuant to CPLR 3025 (b) and 1003 (a), for leave to amend the complaint. Local 79 opposes plaintiff's motion and cross-moves, pursuant to CPLR 3211, for an order dismissing the complaint.
FACTUAL ALLEGATIONS
Marathon is a global investment and asset money management company, which manages investment funds focusing on real estate and real estate finance. Marathon's real estate fund invests in a corporate entity that has an interest in the development. Plaintiff alleges that on March 3 and 4, 2008, representatives of Local 79 erected a 12-foot inflatable rat in front of Marathon's offices. According to plaintiff, Local 79's representatives shouted that plaintiff "exploits workers," and distributed allegedly defamatory leaflets, which stated as follows:
Some of the leaflets also allegedly contained a picture of plaintiff.
" SHAME!
ON BRUCE RICHARDS
CEO of MARATHON MANAGEMENT for allowing workers to be exploited at 184 Kent Avenue.
Allowing contractors who pay workers in a fashion which permits them to bypass the City, State and Federal tax structure is not only against the law, it costs taxpayers millions of dollars in lost tax revenue.
Untrained and unskilled workers will always lead to an unsafe work-place, shoddy workmanship and a lower quality finished product.
While New York City construction workers rebuild our city, help show your support for their desire to work in a safe environment, receive a living wage, and be treated with the dignity and respect that they deserve.
Does BRUCE RICHARDS think it's worthwhile to exploit workers just so he can save a little money?
Call BRUCE RICHARDS at 212-381-4400 and tell him that all workers deserve a living wage."
(Complaint, ¶ 16).
On March 6, 2008, plaintiff was being honored at a fundraising event. Plaintiff alleges that defendants set up the inflatable rat in front of the building where the event was being held; that these representatives allegedly yelled that plaintiff was a "scumbag" and a "rat," "exploits workers," and that he should be arrested. When plaintiff arrived at the event, they allegedly surrounded plaintiff and screamed "asshole" and obscenities.
Later that month, defendants allegedly appeared outside plaintiff's residence, where they again shouted that he "exploits" workers. On the same day, defendants threatened to follow plaintiff to California in order to disrupt an event at which plaintiff would be addressing a large audience. Plaintiff also alleges that defendants made telephone calls to Marathon's receptionist in which they stated that plaintiff exploits workers by "paying below minimum wage" and hiring "non-union workers," and that on other occasions, defendants called to imply that plaintiff was in physical danger, because the speaker stated that he "better watch his back." According to plaintiff, defendants threatened to go to plaintiff's son's school, in order to humiliate and intimidate plaintiff and his son. Plaintiff thereafter filed a criminal complaint against Local 79 and one of its members on March 20, 2008. It appears that the New York Police Department saw no criminal conduct and did not make any arrests.
The complaint alleges four causes of action: (1) assault; (2) libel; (3) slander; and (4) intentional infliction of emotional distress. In addition to $5 million in compensatory damages, plaintiff seeks $20 million in punitive damages as a result of the above conduct.
DISCUSSION
Plaintiff moves for leave to amend the complaint, and submits a proposed amended complaint, which (1) adds Marathon as a party plaintiff; (2) adds a cause of action for libel by Marathon; (3) asserts additional facts supporting the causes of action for assault, libel, and slander (and clarifies that plaintiff and Marathon seek to recover for libel and slander per se); (4) withdraws the cause of action for intentional infliction of emotional distress; and (5) adds a cause of action for tortious interference with prospective business relations by Marathon.
In reply and in opposition to Local 79's cross motion, plaintiff also requests leave to file and serve a proposed amended complaint, which alleges additional facts concerning the union membership's ratification of the alleged conduct, and also names seven union members (Jose Andino, Jose Chicas, Anthony Reid, Bernard Callegari, Gerard Kraft, John Doherty, and Chaz Rynkiewicz) as individual defendants. All of the causes of action are directed at the individual defendants. The proposed amended complaint seeks an unspecified amount of compensatory damages and $100 million in punitive damages. It is well settled that, pursuant to CPLR 3025 (b), leave to amend pleadings "shall be freely given," absent prejudice or surprise to the opposing party ( McCaskey, Davies Assoc. v New York City Health Hosps. Corp., 59 NY2d 755, 757). Nevertheless, in order to conserve judicial resources, the court is required to examine the underlying merits of the proposed causes of action ( Eighth Ave. Garage Corp. v H.K.L. Realty Corp. , 60 AD3d 404 , 405 [1st Dept], lv dismissed 12 NY3d 880; Zaid Theatre Corp. v Sona Realty Corp. , 18 AD3d 352, 355 [1st Dept 2005]). Leave to amend should be denied where the proposed pleading clearly lacks merit ( Peach Parking Corp. v 346 W. 40th St., LLC , 42 AD3d 82 , 86 [1st Dept 2007]; Davis Davis v Morson, 286 AD2d 584, 585 [1st Dept 2001]). In other words, the proposed amendment should be sustained unless its "alleged insufficiency or lack of merit is clear and free from doubt" ( Miller v Staples Off. Superstore E., Inc. , 52 AD3d 309 , 313 [1st Dept 2008] [internal quotation marks and citation omitted]).
Pursuant to CPLR 1003, "[p]arties may be added at any stage of the action by leave of court or by stipulation of all parties who have appeared." In considering an application to add a party, the court must consider any prejudice to the existing parties to the action ( see Haughton v Merrill Lynch, Pierce, Fenner Smith, 305 AD2d 214, 215 [1st Dept], lv dismissed in part and denied in part 100 NY2d 608, rearg denied 1 NY3d 546; see also Acevedo v Holton, 239 AD2d 194, 195 [1st Dept 1997] [prejudice requires a showing of "some special right lost in the interim, some change of position or some significant trouble or expense that could have been avoided had the original pleading contained what the amended one now wants to add'"] [citation omitted]).
CPLR 1024 provides that "[a] party who is ignorant, in whole or in part, of the name or identity of a person who may properly be made a party, may proceed against such person as an unknown party by designating so much of his name and identity as is known." When the true name of a person becomes known, "all subsequent proceedings shall be taken under the true name and all prior proceedings shall be deemed amended accordingly" (CPLR 1024). A plaintiff may amend a complaint to reflect the true names of the parties in question, provided that such parties were fairly apprised that they were the intended defendants and are not prejudiced by the amendment ( see Opiela v May Indus. Corp. , 10 AD3d 340 , 341 [1st Dept 2004]; ICD Group Intl. v Achidov, 284 AD2d 244, 244-245 [1st Dept 2001]).
Here, although plaintiff requests leave to add the seven union members as defendants in his reply, the court shall consider this request since Local 79 had an opportunity to respond. Plaintiff claims that Local 79 filed a post-hearing brief at an NLRB proceeding, in which it admitted that these union representatives were present outside Cipriani's Restaurant on March 6, 2008, where a fundraising event was being held, when the alleged assault occurred (Auslander Reply Affirm., Exh. B, at 8). Local 79 concedes that plaintiff may proceed on his non-per se defamation claims. Given that the complaint alleges that the "John Doe" defendants civilly assaulted and defamed him at a fundraising event on March 6, 2008, and the lack of prejudice to these defendants, this request is granted ( see Lebowitz v Fieldston Travel Bur., 181 AD2d 481, 482 [1st Dept 1992]).
As for the addition of Marathon as a party plaintiff, Local 79 does not contend that it will be prejudiced thereby. In its reply, Local 79 also concedes that Marathon's defamation claim is sufficient to the extent that it seeks recovery for non-per se libel. Furthermore, this action is still at an early stage. Therefore, the court grants that portion of plaintiff's motion, and turns to Local 79's arguments in support of dismissal.
What Local 79 does contend is that the complaint and proposed amendments are preempted by the National Labor Relations Act (NLRA) ( 29 USC § 151, et seq.). Specifically, Local 79 argues, with respect to the assault and tortious interference claims, that plaintiff fails to allege conduct of sufficient severity to avoid preemption. Local 79 points out that Marathon filed an unfair labor practice complaint with the National Labor Relations Board (NLRB) against it arising out of the same conduct (Local 79's Mem. of Law, Exh. B). Moreover, Local 79 contends that plaintiff's defamation claims are also preempted, inasmuch as plaintiff only proposes per se claims, and fails to allege any actual or special damages. Plaintiff contends that the defamation claims are not preempted because they allege malice and injury. According to plaintiff, none of the remaining claims are preempted because they are based on violent, threatening union activity. Local 79 aruges that plaintiff may only proceed on the non-per se defamation claims.
Local 79 also contends that the complaint and plaintiff's proposed amendments are barred by Martin v Curran ( 303 NY 276 [1951]), since plaintiff fails to allege that the individual union members authorized or ratified any of the alleged tortious conduct. However, Local 79 withdraws this argument (Local 79's Reply Mem. of Law, at 4). Accordingly, the court need not reach this issue at this time. Plaintiff also requests leave to add additional facts as to the union membership's ratification of the alleged conduct. Because Local 79 had an opportunity to respond, and does not object, this request is granted.
CPLR 3211 (a) (2) provides that a party may move for judgment dismissing one or more causes of action on the ground that "the court has not jurisdiction of the subject matter of the cause of action."
In San Diego Bldg. Trades Council, Millmen's Union, Local 2020 v Garmon ( 359 US 236, 244), the U.S. Supreme Court held that "(w)hen it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8, due regard for the federal enactment requires that state jurisdiction must yield." Therefore, "state regulations and causes of action are presumptively preempted if they concern conduct that is actually or arguably either prohibited or protected by the Act" ( Belknap, Inc. v Hale, 463 US 491, 498, citing Garmon, 359 US at 245). The purpose of Garmon preemption is "to prevent conflict between, on the one hand, state and local regulation and, on the other, Congress' integrated scheme of regulation, embodied in §§ 7 and 8 of the NLRA, which includes the choice of the NLRB, rather than state or federal courts, as the appropriate body to implement the Act" ( Building Constr. Trades Council of Metropolitan Dist. v Associated Bldrs. Contrs. of Mass./R.I., Inc., 507 US 218, 225 [internal quotation marks and citation omitted]).
Consequently, the court must first decide whether defendants' alleged conduct is "arguably prohibited" by federal labor law, within the meaning of Garmon. Plaintiff alleges in the proposed amended complaint that defendants picketed, distributed allegedly defamatory leaflets, and placed an inflatable rat outside Marathon's offices, plaintiff's residence, a fundraising event, and a hotel in San Francisco (Proposed Amended Complaint, ¶¶ 20-28, 29-33, 34-41, 42-46). Plaintiff claims that defendants made purportedly defamatory statements that Richards "exploits workers" ( id., ¶¶ 20, 23, 31, 37). Additionally, plaintiff alleges that, on March 6, 2008, as Richards was entering Cipriani's Restaurant to attend the fundraising event, defendants assaulted him by surrounding him and making menacing and lewd gestures at him ( id., ¶ 29, 32). Plaintiff alleges that defendants also tortiously interfered with Marathon's prospective business relations at a conference held in San Francisco ( id., ¶¶ 84-93). According to plaintiff, in April 2008, Marathon made presentations to at least six prospective investors and one existing investor at the conference ( id., ¶ 87). Plaintiff contends that none of these entities subsequently invested in any of Marathon's funds, despite its record of performance and reputation ( id.), although any nexus between that and defendants' alleged conduct here is speculative.
The court finds that plaintiff alleges conduct which is "arguably prohibited" by the NLRA. Section 8 (b) (4) (B) of the NLRA provides that it shall be an unlawful labor practice for a labor organization or its agents to force or require any person to cease doing business with any other person ( 29 USC § 158 [b] [4] [B]). Section 8 (b) (4) (D) states that it is unlawful to engage in forcing or requiring an employer to assign particular work to employees in a particular labor organization ( 29 USC § 158 [b] [4] [D]). Section 8 (b) (4) (7) states that it is unlawful for a labor organization to picket any employer where any object thereof is to force or require the employer to bargain with the labor organization ( 29 USC § 158 [b] [4] [7]).
However, the Garmon Court announced that preemption does not apply where the activity: (1) touches "interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to act," or (2) involves conduct that would only peripherally implicate the concerns underlying the federal labor laws ( Garmon, 359 US at 243-244). "The paradigmatic example of a case wherein the challenged conduct touches concerns deeply rooted in local feeling and responsibility is an action to enjoin or to recover compensation for violent or threatened violent picketing" ( Palm Beach Co. v Journeymen's Prod. Allied Servs. of Am. Canada Intl. Union Local 157, 519 F Supp 705, 713 [SD NY 1981]; see also Wolf St. Supermarkets v McPartland, 108 AD2d 25, 30 [4th Dept], appeal dismissed 65 NY2d 785).
As noted by the Court in United Mine Workers of Am. v Gibbs ( 383 US 715, 729), "the permissible scope of state remedies in this area is strictly confined to the direct consequences of such conduct, and does not include consequences resulting from associated peaceful picketing or other union activity." Therefore, where the consequences of peaceful and violent conduct are separable, recovery may only be had for the latter ( McPartland, 108 AD2d at 30). Where the consequences cannot be separated, recovery may only be had if the violent conduct was "so pervasive that the proof might support that the conclusion that all damages resulting from the picketing were proximately caused by its violent component or by the fear which that violence engendered" ( id. [internal quotation marks and citation omitted]).
Applying the above principles to this case, the purported tortious interference with prospective business relations claim lacks merit. Marathon does not allege any violence or even threats of violence in connection with this alleged conduct. The sole basis for this claim is that Local 79's representatives erected an inflatable rat outside a hotel, and distributed allegedly defamatory leaflets in a restroom of the hotel (Proposed Amended Complaint, ¶¶ 85-93). Therefore, Marathon's tortious interference with prospective business relations claim is preempted by federal labor law ( see Jou-Jou Designs v International Ladies' Garment Workers' Union, Local 23-25, 94 AD2d 395, 404 [1st Dept], affd 60 NY2d 1011; Billy Jack for Her, Inc. v New York Coat, Suit, Dress, Rainwear Allied Workers' Union, ILGWU, AFL-CIO, Local 1-35, 10, 22, 48, 77, 89 189, 511 F Supp 1180, 1191 [SD NY 1981] ["a finding of preemption is unavoidable here because of the close relationship between the controversy as it is presented under state law and as it would have been presented under federal law had [plaintiff] filed a complaint with the NLRB"]).
In contrast, it cannot be said at this stage, when plaintiff's allegations are deemed true, that plaintiff's claim of civil assault, not criminal, is preempted by the NLRA. Specifically, plaintiff alleges that defendants made threats of violence on March 6, 2008 when they surrounded him outside a restaurant, and made unspecified menacing, aggressive, and lewd gestures at him, which placed him in imminent apprehension of harmful conduct (Proposed Amended Complaint, ¶¶ 31, 32, 52-53). While Marathon filed an unfair practice complaint arising out of the same event in which Richards was allegedly civilly, not criminally, assaulted by union members, plaintiff may recover damages for civil assault based upon a threat of violence if established ( see McPartland, 108 AD2d at 30). Accordingly, the assault cause of action cannot be dismissed at this time.
In opposition to this motion, defendants have not submitted affidavits denying plaintiff's contention that threats of violence were made against him on March 6, 2008. However, defendants contend that the claim is preempted because it involves only a single act of a "wholly imagined threat of violence" which did not pervade all of the union's conduct. Contrary to defendants' argument, where the purported act of violence can be separated from the lawful picketing, the violence need not be pervasive in order for the state claim to survive ( see Wolf St. Supermarkets v McPartland, 108 AD2d at 30, supra [internal citations omitted]).
The NLRB complaint alleges that, "on or about March 6, 2008, the Union blocked Bruce Richards, president of Marathon and members of his family, from entering into Cipriani's Restaurant" (Local 79's Mem. of Law, Exh. B).
In Linn v United Plant Guard Workers of Am., Local 114 ( 383 US 53, 61, 62), the Court concluded that the exercise of state jurisdiction over defamation claims arising in the context of labor disputes:
"would be a merely peripheral concern of the Labor Management Relations Act,' provided it is limited to redressing libel issued with knowledge of its falsity, or with reckless disregard of whether it was true or false. Moreover, we believe that an overriding state interest' in protecting its residents from malicious libels should be recognized in these circumstances. . . . We similarly conclude that a State's concern with redressing malicious libel is so deeply rooted in local feeling and responsibility' that it fits within the exception specifically carved out by Garmon."
The Linn Court expressly adopted the "actual malice" standard articulated in New York Times Co. v Sullivan ( 376 US 254), i.e., that the statement was made "with knowledge of its falsity, or with reckless disregard of whether it was true or false" ( Linn, 383 US at 65). This is because cases involving speech "[are to be considered] against the background of a profound . . . commitment to the principle that debate . . . should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks" ( Sullivan, 376 US at 270). Under Linn, it is also necessary to allege actual or special damages ( Linn, 383 US at 65). "In so holding, the court demonstrated its disapproval of the rule of defamation per se in the context of labor disputes, a New York rule which presumes injury'" ( McPartland, 108 AD2d at 32, quoting Eden Park Health Servs. v Ottley, 87 AD2d 967 [3d Dept 1982]). Moreover, a defamed party in a labor dispute is not entitled to punitive damages absent a showing of either actual or special damages ( Linn, 383 US at 66).
Special damages have been defined as "the loss of something having economic or pecuniary value," such as lost profits ( Liberman v Gelstein, 80 NY2d 429, 434-435 [internal quotation marks omitted]). Actual damages, however, may be broader than economic loss, and may include injury to reputation. "While special damages as so defined are included in the term actual damages . . ., the Supreme Court did not limit actual damages to out-of-pocket or pecuniary damage" ( Hogan v Herald Co., 84 AD2d 470, 480 [4th Dept], affd 58 NY2d 630; see also Blumenstein v Chase, 100 AD2d 243, 246 [2d Dept 1984]). "Indeed, the more customary types of actual harm inflicted by defamatory falsehood include impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering. Of course, juries must be limited by appropriate instructions, and all awards must be supported by competent evidence concerning the injury, although there need be no evidence which assigns an actual dollar value to the injury'" ( Hogan, 84 AD2d at 480, quoting Gertz v Robert Welch, Inc., 418 US 323, 350 [emphasis in original]).
In the proposed amended complaint, plaintiff alleges that defendants knew or reasonably should have known that the statements published in the leaflets were untrue (Proposed Amended Complaint, ¶¶ 59, 61, 77, 79). Plaintiff further alleges that defendants either knew or should have known of the falsity of their statements alleging that he had engaged in illegal or criminal activity ( id., ¶ 70). He further alleges that the defamatory statements constituted libel per se and slander per se, since they injured his character and professional reputation ( id., ¶¶ 65, 74). Plaintiff alleges that the defamatory statements concerning Marathon were libelous per se since they injured the company's reputation in its industry ( id., ¶ 83). In view of these allegations, the proposed amended complaint has sufficiently alleged actual malice and injury from the allegedly defamatory statements ( see McPartland, 108 AD2d at 32). Thus, plaintiff's defamation claims are only preempted to the extent that they seek recovery for libel per se and slander per se ( id.). However, a court should not dismiss portions of a cause of action if a portion of the cause of action is sufficient ( see Lacks v Lacks, 12 NY2d 268, 271). Accordingly, the defamation claims in the second, third and fourth causes of action of the amended complaint, which are not based on per se claims, are adequate to avoid preemption.
Although Local 79 requests that these allegations be stricken, it has not moved to strike the allegations as scandalous or prejudicial ( see CPLR 3024 [b]).
In view of these determinations, the court also grants leave to plaintiff to add additional facts supporting the causes of action for assault, libel, and slander. These new facts merely expand upon the allegations in the complaint.
CONCLUSION AND ORDER
Accordingly, for the these reasons, it is
ORDERED that the motion (sequence number 002) of plaintiff Bruce Richards for leave to amend the complaint is granted, in part, to the extent that leave shall be granted to (1) add Marathon Asset Management LP as a plaintiff, (2) add a cause of action for libel by Marathon Asset Management LP, (3) assert additional facts supporting the causes of action for assault, libel, and slander, (4) withdraw the cause of action for intentional infliction of emotional distress, and is otherwise denied, (5) allege ratification of the tortious conduct by the union membership, and (6) reflect the true names of defendants sued as "John Doe"; and it is further
ORDERED that plaintiff shall serve defendants with a copy of the amended complaint in accordance with this decision and order within 20 days after receipt of a copy of this decision and order; and it is further
ORDERED that defendants shall serve an answer to the amended complaint within 20 days of service of a copy of the amended complaint; and it is further
ORDERED that the cross motion of defendant Construction and General Building Laborers Local 79 to dismiss the complaint is denied; and it is further
ORDERED that the action shall bear the following caption:
And it is further ORDERED that a copy of this order shall also be served upon the Clerk of the Court and the Clerk of the Trial Support Office (Room 158).
This Constitutes the Decision and Order of the Court.