23-795-cv Drabinsky v. Actors’ Equity Association

United States Court of Appeals For the Second Circuit August Term, 2023

(Argued: December 5, 2023 Decided: July 2, 2024)

Docket No. 23-795-cv _____________________________________

GARTH DRABINSKY,

Plaintiff-Appellant,

v.

ACTORS’ EQUITY ASSOCIATION,

Defendant-Appellee. _____________________________________ Before:

SACK, LOHIER, and KAHN, Circuit Judges.

Broadway producer Garth Drabinsky alleges that the union representing theater actors and state managers unlawfully boycotted, defamed, and harassed him during his production of the musical Paradise Square. Drabinsky brought antitrust claims and New York state tort claims against the union. The United States District Court for the Southern District of New York (Schofield, J.) held that Drabinsky’s antitrust claims were barred by the statutory labor exemption derived from the Clayton Antitrust Act of 1914 and the Norris-LaGuardia Act of 1932, and that his tort claims were barred under Martin v. Curran,

(1951). We AFFIRM. LUKE HASSKAMP, Bona Law PC (Jarod Bona, Bona Law PC, La Jolla, CA; Molly Donovan, Bona Law PC, New York, NY; Aaron Gott, Bona Law PC, Minneapolis, MN; Richard Alan Roth, The Roth Law Firm, PLLC, New York, NY; Joshua D. Wright, Lodestar Law & Economics, PLLC, McLean, VA, on the brief), La Jolla, CA, for Plaintiff-Appellant.

JEFFREY L. KESSLER, Winston & Strawn LLP (David L. Greenspan, Winston & Strawn LLP, New York, NY; Evan Hudson-Plush, Cohen, Weiss and Simon LLP, New York, NY, on the brief), New York, NY, for Defendant-Appellee.

Andrew Lyubarsky, Matthew Ginsburg, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Washington, DC, for Amicus Curiae AFL-CIO in support of Defendant-Appellee.

LOHIER, Circuit Judge:

The Sherman Antitrust Act of 1890 prohibits contracts, combinations, and

conspiracies “in restraint of trade,” as well as monopolies over trade.

, 2. In the years following the Act’s passage, the Supreme Court repeatedly

enjoined union activity as an unlawful restraint of trade. See, e.g., Loewe v. Lawlor,

, 304–05 (1908); see also Duplex Printing Press Co. v. Deering,

, 484–85 (1921) (Brandeis, J., dissenting). Prompted by labor unions to

respond, Congress enacted the Clayton Antitrust Act in 1914 and the Norris-

2 LaGuardia Act in 1932 “to immunize labor unions and labor disputes from

challenge under the Sherman Act” and exempt them from sure ruin under the

guise of antitrust law enforcement. H.A. Artists & Assocs. v. Actors’ Equity Ass’n,

(1981). The principal and until now unresolved question in this

appeal is whether an antitrust plaintiff suing a union bears the burden of proving

that the statutory labor exemption does not apply, or whether the union must

raise the exemption as an affirmative defense. We conclude that the plaintiff

bears the burden of proving (and therefore must plead) that the exemption does

not apply.

The union in this case, Actors’ Equity Association (“Equity”), represents

over 50,000 theater actors and stage managers. The plaintiff, Broadway producer

Garth Drabinsky, alleges that Equity organized an illegal boycott that ousted him

from the business of producing live shows. Drabinsky claims that Equity

violated the Sherman Act and various state laws, including defamation. The

United States District Court for the Southern District of New York (Schofield, J.)

dismissed Drabinsky’s complaint (the “Complaint”) under Federal Rule of Civil

Procedure 12(b)(6). As most relevant to this appeal, it held that Equity’s conduct

3 was exempt from antitrust liability under the Sherman Act. We agree and

therefore affirm.

BACKGROUND 1

Paradise Square, a Broadway musical, explores racial conflict and the

calamitous 1863 Civil War race riots in New York City. The show, originally

conceived a decade ago, was produced by Drabinsky, a Tony Award-winning

producer whose previous hits include Ragtime and a 1994 revival of Show Boat.

From the start, Drabinsky’s Paradise Square production was marred by conflict.

Cast members complained bitterly about Drabinsky’s management, his repeated

displays of racial insensitivity, unpaid wages, and safety concerns on the set.

Equity, which represents the cast members, responded by spreading rumors

about Drabinsky to its members and to the Broadway League, the trade

association for theater producers. Equity also instituted a one-day work

stoppage, exposing Drabinsky to even more negative attention and press. Equity

ultimately placed Drabinsky on its “Do Not Work” list in order to discourage

1The following facts are drawn from the Complaint and assumed to be true for purposes of our de novo review of the District Court’s judgment dismissing the Complaint for failure to state a claim upon which relief can be granted. Schlosser v. Kwak,

(2d Cir. 2021). 4 Equity’s members and members of its four “sister” unions (representing

television, radio, concert, and film performers) from working with him.

Drabinsky originally sued Equity in federal court under state law based on

diversity jurisdiction, claiming that the union engaged in an unlawful campaign

of defamation and harassment. Equity countered that the District Court lacked

subject-matter jurisdiction over the case under

because complete

diversity between the parties was lacking. Drabinsky amended his complaint to

add federal antitrust claims, which he now acknowledges were intended to

invoke the District Court’s federal-question jurisdiction. Equity moved to

dismiss the amended complaint for failure to state a claim. The District Court

granted the motion with prejudice, holding that Equity’s conduct was exempt

from antitrust liability under the statutory labor exemption derived from the

Clayton and Norris-LaGuardia Acts. And Drabinsky’s state claims, the District

Court determined, were barred under New York law because he failed to allege

that Equity’s members had individually ratified Equity’s allegedly unlawful

conduct.

This appeal followed. The American Federation of Labor and Congress of

Industrial Organizations (popularly known as the “AFL-CIO”) filed an amicus

5 brief in support of Equity, urging affirmance of the District Court’s holding that

the statutory labor exemption bars Drabinsky’s antitrust claims.

DISCUSSION

I. Federal Antitrust Claims

The Sherman Antitrust Act declares illegal “[e]very contract, combination

. . . , or conspiracy, in restraint of trade.”

. It also penalizes those

who “monopolize, or attempt to monopolize, or combine or conspire . . . to

monopolize any part of . . . trade.”

. The Act “was largely directed

at business monopolies and trade restraints, but it was almost immediately

invoked against unions.” Conn. Ironworkers Emps. Ass’n v. New Eng. Reg’l Council

of Carpenters,

(2d Cir. 2017). “Indeed, in the early 1900s, the

federal courts” routinely relied on the Act to enjoin union activity and “held

unions liable for antitrust violations to nearly the same extent as manufacturers.”

We have elsewhere described the extended history of Congress’s response

to the proliferation of injunctions against labor unions,

at 100–02, and see no

need to repeat it here. Suffice it to say that

[t]he basic sources of organized labor’s exemption from federal antitrust laws are §§ 6 and 20 of the Clayton Act, []

and

6

, and the Norris-LaGuardia Act, []

, 105, and 113. These statutes declare that labor unions are not combinations or conspiracies in restraint of trade, and exempt specific union activities, including secondary picketing and boycotts, from the operation of the antitrust laws. [] They do not exempt concerted action or agreements between unions and nonlabor parties.

Connell Constr. Co. v. Plumbers & Steamfitters Loc. Union No. 100,

, 621–

22 (1975) (citing United States v. Hutcheson,

(1941), and Mine Workers

v. Pennington,

(1965)).

Congress adopted the Clayton Act in 1914 and “created the first so-called

labor exemption to antitrust scrutiny,” Conn. Ironworkers,

,

“protect[ing] peaceful labor activities from the reach of antitrust laws and

limit[ing] the issuance of judicial injunctions in labor disputes,”

.

Section 6 of the Clayton Act establishes that “[t]he labor of a human being is not

a commodity or article of commerce” and exempts from antitrust liability

employees who “lawfully carry[] out the legitimate object[ives]” of their union.

. Section 20 of the Clayton Act prohibits “injunctions against

identified types of union activity,” such as strikes and boycotts. Conn.

Ironworkers,

(citing

); see also H.A. Artists,

(same); Jou-Jou Designs, Inc. v. Int’l Ladies Garment Workers Union,

905, 910 (2d Cir. 1981) (“Picketing to obtain a [labor agreement] is protected by

the statutory exemption from the anti-trust laws in the Clayton Act . . . .”).

When the Supreme Court “narrowly interpreted the anti-injunction

provisions in Section 20 of the Clayton Act,” Congress reacted by enacting the

Norris-LaGuardia Act in 1932, which “clos[ed] the judicially-recognized gaps in

the Clayton Act,” Conn. Ironworkers,

; see Deering, 254 U.S. at 473–

74; Hutcheson, 312 U.S. at 230–31, and “reaffirmed . . . [Congress’s] intent to

exempt most labor activity from the anti-trust laws,” Jou-Jou Designs, 643 F.2d at

910. The federal courts have since “mediat[ed] the friction between national

antitrust and labor policies” largely by “expand[ing]” rather than contracting the

labor exemption. 2 Conn. Ironworkers,

.

The statutory exemption has two important limits. “The test of whether

labor union action is or is not within the prohibitions of the Sherman Act is (1)

whether the action is in the union’s self-interest in an area which is a proper

subject of union concern and (2) whether the union is acting in combination with

2Justice Frankfurter memorably described the Norris-LaGuardia Act as “remov[ing] the fetters upon trade union activities, which according to judicial construction § 20 of the Clayton Act had left untouched, by still further narrowing the circumstances under which the federal courts could grant injunctions in labor disputes.” Hutcheson,

; see

, 104, 105.

8 a group of employers.” Intercont’l Container Transp. Corp. v. N.Y. Shipping Ass’n,

(2d Cir. 1970); see Hutcheson,

; Conn. Ironworkers,

.

With those limits in mind, we turn to the present appeal. Drabinsky

claims that Equity violated Sections 1 and 2 of the Sherman Act by placing him

on its “Do Not Work” list and effectively barring him from theater production.

Relying on the statutory labor exemption derived from Sections 6 and 20 of the

Clayton Act and the Norris-LaGuardia Act, Equity responds that its union

activity is broadly immune from suit under the Sherman Act.

We have never specifically addressed which party bears the burden of

proof with respect to the statutory labor exemption. 3 Does the plaintiff bear the

burden of showing that the union’s conduct is not covered by the exemption, or

is it up to the union to establish that the exemption applies? In answering that

question, we bear in mind that “[m]ost immunities are affirmative defenses,” In

re Stock Exchs. Options Trading Antitrust Litig.,

(2d Cir. 2003),

and that the burden of proving exceptions to the antitrust laws typically lands on

3We have, however, implied that a different type of immunity, the nonstatutory labor exemption, is an affirmative defense for which the union bears the burden of proof. See Conn. Ironworkers,

. 9 defendants, not plaintiffs, see USS-POSCO Indus. v. Contra Costa Cnty. Bldg. &

Const. Trades Council,

, 805 n.3 (9th Cir. 1994).

But because the statutory labor exemption presumptively protects union

activity from the reach of the Sherman Act, see id. at 809, we are persuaded that

the exemption is not an affirmative defense. Instead, the plaintiff bears the

burden of proving that the exemption does not apply. Put another way, a

plaintiff must plead at least one of the two limitations to the exemption as an

element of any claim that the union violated the antitrust laws. See USS-POSCO

Indus., 31 F.3d at 805 n.3; Jou-Jou Designs, 643 F.2d at 910 (dismissing antitrust

complaint that failed to allege that the union conspired with a non-labor group);

see also

(labor unions and their members presumptively are not

“illegal combinations or conspiracies in restraint of trade, under the antitrust

laws”). Placing the burden on the plaintiff rather than the union protects the

union’s conduct from antitrust scrutiny.

In assigning to the plaintiff the burden of proving that the statutory labor

exemption does not apply to a union’s conduct, we join the Sixth, Seventh, and

Ninth Circuits. See USS-POSCO Indus., 31 F.3d at 805 n.3; Mid-Am. Reg’l

Bargaining Ass’n v. Will Cnty. Carpenters Dist. Council,

, 890 n.22

10 (7th Cir. 1982); James R. Snyder Co. v. Assoc. Gen. Contractors of Am., Detroit

Chapter, Inc.,

, 1118–19, 1121 (6th Cir. 1982). We acknowledge that

another sister circuit, the First Circuit, is an outlier on this issue, but this is for

understandable reasons. In American Steel Erectors, Inc. v. Local Union No. 7,

International Association of Bridge, Structural, Ornamental & Reinforcing Iron

Workers,

(1st Cir. 2008), the First Circuit appears to have accepted the

union’s odd concession that the labor exemption constituted an “affirmative

defense[] against [the] Plaintiffs’ Sherman Act claims.”

. For this reason,

it is not at all clear to us that the First Circuit actually addressed the issue before

us head on. And if it did, we respectfully decline to follow its lead.

We therefore turn to whether Drabinsky has adequately pleaded that the

statutory labor exemption does not apply to Equity’s conduct by alleging that

Equity was not acting in its self-interest or that Equity combined with non-labor

groups. H.A. Artists,

. We agree with the District Court that he

has failed to do so.

A. Equity Acted in Its Legitimate Self-Interest

A union acts in its self-interest when its conduct is reasonably related to

legitimate union goals such as protecting members’ wages and working

11 conditions.

at 718 n.23; see also Intercont’l Container Transp. Corp., 426 F.2d at

887–88 (“Union activity having as its object the preservation of jobs for union

members is not violative of the anti-trust laws.”); Allied Int’l, Inc. v. Int’l

Longshoremen’s Ass’n,

(1st Cir. 1981) (“[T]he labor exemption

has been applied when the union acts to protect the wages, hours of

employment, or other working conditions of its member-employees, objectives

that are at the heart of national labor policy.”), aff’d,

(1982).

Congress has made it easier for us to assess the legitimacy of the union’s interest

by specifying that certain labor actions, including strikes and boycotts, are

presumptively protected from antitrust liability.

, 104; see USS-

POSCO Indus., 31 F.3d at 808–09. More generally, so long as the union’s conduct

promotes legitimate labor goals, it retains the benefit of the labor exemption and

remains impervious to antitrust liability based on “any judgment regarding the

wisdom or unwisdom, the rightness or wrongness, the selfishness or

unselfishness of the end of which the particular union activities are the means.”

Hutcheson,

.

The immunity lifts and the labor exemption is lost as soon as the union

stops acting in pursuit of its legitimate self-interest and thus “cease[s] to act as [a]

12 labor group[].” USS-POSCO Indus., 31 F.3d at 808 (quoting Jacksonville Bulk

Terminals, Inc. v. Int’l Longshoremen’s Ass’n,

(1982)). We agree

with the Ninth Circuit that “[w]hether the interest in question is legitimate

depends on whether the ends to be achieved are among the traditional objectives

of labor organizations.”

An obvious example is “if a union is involved in

illegal activities unrelated to its mission, such as dealing drugs or gambling,

those would not be objectives falling within the union’s legitimate interest.”

Because Drabinsky challenges Equity’s labor boycott — a presumptively

protected labor activity — he must make “a very strong showing” that Equity

was not acting in its self-interest and so is not entitled to the statutory labor

exemption.

But Drabinsky’s Complaint suggests the opposite. Even reading

the allegations in the light most favorable to him, Equity engaged in the boycott

precisely to protect its members’ wages and working conditions. The Complaint

alleges, for example, that Paradise Square cast members objected to unsafe

conditions on set, a racially hostile work environment, and unpaid wages.

Equity placed Drabinsky on its “Do Not Work” list only after it heard from its

members. It explained that Drabinsky was added to the list because he had

13 breached the union contract. For these reasons, we think the Complaint itself

shows that Equity pursued its legitimate self-interest in placing him on the list.

Drabinsky makes a few arguments in response. First, he describes the cast

members’ complaints about working conditions and wages as pretextual. But no

allegation supports that description. Second, he says that Equity was motivated

by personal animus against him. But the Complaint has no factual, non-

conclusory allegations that Equity was motivated by an illegitimate purpose in

the way that Drabinsky suggests. In any event, a plausible allegation that

Equity’s actions were prompted by “personal antagonism,” without more, is not

enough to expose Equity’s boycott to antitrust scrutiny. See Hunt v. Crumboch,

(1945) (holding that a union did not incur antitrust liability

when it refused to work with the petitioner “due to personal antagonism”).

Third, Drabinsky contends that even if Equity’s “ends are legitimate,” we

should “also scrutinize whether the means used to achieve them are necessary”

because “[t]he means employed by the union bear on the degree of scrutiny we

will cast on the legitimacy of the union’s interest.” Appellant’s Br. 31–32

(quoting USS-POSCO Indus., 31 F.3d at 808–09). Here, Drabinsky asks us to

consider whether a lifelong boycott that discourages five unions, not just Equity,

14 from working with him genuinely serves Equity’s interest. He suggests that the

scope of the boycott casts doubt on Equity’s claimed objective of protecting the

wages and working conditions of the Paradise Square cast members. We are not

persuaded. The statutory labor exemption contemplates and protects not only a

boycott (of whatever duration), but one specifically undertaken in combination

with other related unions. See Hutcheson,

. For example, the

Norris-LaGuardia Act establishes that a “labor dispute” triggering the statutory

labor exemption “involves persons who are engaged in the same industry, trade,

craft, or occupation; . . . or who are members of the same or an affiliated

organization of . . . employees.”

(a). The alleged scope of Equity’s

boycott in this case says nothing about Equity’s motivations for instituting it and

does not itself establish that the boycott is subject to the antitrust laws.

Finally, Drabinsky contends that the boycott does not further Equity’s self-

interest because he was never the employer for the Paradise Square production

and thus lacked control over the wages and working conditions of the cast

members. We reject this argument for three reasons. As an initial matter, the

Complaint, which alleges that Drabinsky controlled various aspects of the

production, including hiring, firing, and pay, itself contradicts Drabinsky’s

15 argument. Second, Drabinsky’s argument asks us to probe the effectiveness

rather than the intent of the union’s action. But “[a]s long as the union’s action is

intended to serve the interests of its members it is no proper concern of the

courts whether the action is that best adapted to suit its purpose.” Intercont’l

Container Transp. Corp.,

n.2. And third, the plain text of the

statutory labor exemption makes clear that Drabinsky does not need to serve as

the employer of Equity members for Equity’s boycott to qualify as protected

labor activity. See

(c).

For these reasons, we conclude that the Complaint fails to allege that

Equity was not acting in its legitimate self-interest when it placed Drabinsky on

the “Do Not Work” list.

B. Equity Did Not Combine with Non-Labor Groups

As explained, a union that combines with a non-labor group to act in

restraint of trade forfeits the protection of the statutory labor exemption even

when it acts in its legitimate self-interest. H.A. Artists,

; Intercont’l

Container Transp. Corp.,

. This limitation ensures that workers and

employers do not conspire to monopolize a market and suppress competition.

See Allen Bradley Co. v. Loc. Union No. 3, Int’l Bhd. of Elec. Workers,

,

16 809–10 (1945). Here, Drabinsky claims that non-labor groups participated in the

boycott, pointing out that some members of Equity and its sister unions are also

producers with whom he directly competes. We are not convinced that these are

non-labor groups as defined by statute to overcome the statutory labor

exemption.

To bring the union outside the statutory labor exemption, Drabinsky must

allege that Equity acted in combination with its producer-members to boycott

Drabinsky. See Hunt, 325 U.S at 824 (explaining that if “business competitors

conspired and combined to suppress petitioner’s business,” they would be liable

under the Sherman Act (emphasis added)). But Drabinsky fails to allege that any

producer-members of Equity were involved in placing him on the “Do Not

Work” list. At most, Drabinsky alleges that Equity’s membership includes

unnamed producers who compete with him for work generally. Having failed to

allege a more direct connection between Equity’s producer-members and the

boycott, Drabinsky has inadequately pleaded that the statutory labor exemption

does not apply to Equity’s conduct in this case. Cf. Allen Bradley, 325 U.S. at 799–

800 (holding that the defendants were not protected by the statutory labor

17 exemption because the union had combined with contractors and manufacturers

in order to boycott the plaintiffs’ business).

We have another reason to reject Drabinsky’s argument. “[A] challenged

combination includ[ing] independent contractors or entrepreneurs . . . may come

within the statutory exemption if the non-employee parties to the combination

are in job or wage competition with the employee parties, or in some other

economic interrelationship that substantially affects the legitimate interests of the

employees.” Home Box Off., Inc. v. Dirs. Guild of Am., Inc.,

(S.D.N.Y. 1982), aff’d,

(2d Cir. 1983) (per curiam); see Am. Fed. of

Musicians of U.S. & Canada v. Carroll,

, 105–07 (1968) (holding that

orchestra leaders, who were “deemed to be employers and independent

contractors” were in a labor group with orchestra employees because the leaders

were in job and wage competition with employees). Here, the producer-

members form part of the same “labor group” as the rest of Equity’s members

because they are also actors or stage managers in wage and job competition with

the other members of the union. 4

4 The Supreme Court in H.A. Artists stated that theatrical producers “are plainly a ‘non- labor group’” where the labor group is Equity.

n.21. But the Court recognized that there is an exception “when the employer himself is in job competition

18 In sum, even the most charitable reading of the Complaint leads us to

conclude that the producer-members of Equity constitute part of the “labor

group.” We accordingly reject Drabinsky’s argument that Equity is not entitled

to the labor exemption because it combined with a non-labor group. 5

II. State-Law Claims

Lastly, we turn to Drabinsky’s three state-law tort claims charging Equity

with defamation, “intentional tort,” and negligence. We agree with the District

Court that these claims are barred by Martin v. Curran,

(1951), which

requires that a plaintiff seeking to hold a union liable “for tortious wrongs”

allege “the individual liability of every single member.”

at 281–82; see also

Palladino v. CNY Centro, Inc.,

, 148–51 (2014) (holding that the

Martin rule remains good law).

with his employees.”

The relationship between Equity’s producer-members and its other members fits within this exception because every Equity member is in job and wage competition with other members of Equity.

5In his reply brief, for the first time, Drabinsky requested leave to amend his Complaint to add allegations about Equity’s combination with a non-labor group and to clarify that Drabinsky was never the employer for Paradise Square. Drabinsky abandoned this argument by not raising it in his opening brief, JP Morgan Chase Bank v. Altos Hornos de Mex., S.A. de C.V.,

(2d Cir. 2005), and he forfeited this argument by not raising it with the District Court, Green v. Dep’t of Educ.,

(2d Cir. 2021). 19 To satisfy Martin, Drabinsky must allege the “participation, authorization

or ratification” of the challenged conduct by every Equity member. Morrissey v.

Nat’l Mar. Union of Am.,

(2d Cir. 1976). Drabinsky has failed to

meet the Martin requirement. The Complaint does not allege that all 50,000-plus

Equity members participated in, authorized, or ratified either Equity’s boycott or

its false statements about Drabinsky. Drabinsky asks us to excuse his failure by

pointing out that Equity’s members delegated decision-making authority to

certain small councils and committees that in turn impliedly authorized Equity’s

actions. But not even the delegated actions of committees and councils can be

attributed to all of Equity’s members under Martin. 303 N.Y. at 279–80; see

Palladino,

. As a final matter, we note that although Martin

applies only to intentional torts, see Torres v. Lacey,

(1st Dep’t

1957); Piniewski v. Panepinto,

(4th Dep’t 1999), Drabinsky’s

negligence claim in substance simply parrots his intentional tort claims. As a

20 result, that claim is also barred by Martin. See Salemeh v. Toussaint ex rel. Loc. 100

Transp. Workers Union,

(1st Dep’t 2006).

CONCLUSION

For the foregoing reasons, the judgment of the District Court is

AFFIRMED.

21