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US Supreme Court Decisions On-Line> Volume 459 > ASSOCIATED GEN. CONTRACTORS V. CARPENTERS, 459 U. S. 519 (1983)
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(c) The Union's allegations of consequential harm resulting from a violation of the antitrust laws, although buttressed by an allegation of intent to harm the Union, are insufficient as a matter of law. Other relevant factors -- the nature of the alleged injury to the Union, which is chanrobles.com-red
STEVENS, J., delivered the opinion of the Court in which BURGER, C.J.,and BRENNAN, WHITE, BLACKMUN, POWELL, REHNQUIST, and O'CONNOR, JJ., joined. MARSHALL, J., filed a dissenting opinion, post, p. 459 U. S. 546.
This case arises out of a dispute between parties to a multiemployer collective bargaining agreement. The plaintiff unions allege that, in violation of the antitrust laws, the multiemployer association and its members coerced certain third parties, as well as some of the association's members, to enter into business relationships with nonunion firms. This coercion, according to the complaint, adversely affected the trade of certain unionized firms, and thereby restrained the chanrobles.com-red
The Union and Associated, and their respective predecessors, have been parties to collective bargaining agreements governing the terms and conditions of employment in construction-related industries in California for over 25 years. The wages and other benefits paid pursuant to these agreements amount to more than $750 million per year. In addition, approximately 3,000 contractors who are not members of Associated have entered into separate "memorandum agreements" with the Union, which bind them to the terms of the master collective bargaining agreements between the Union and Associated. The amended complaint does not chanrobles.com-red
Paragraph 25 describes the alleged "purpose and effect" of these activities: first, "to weaken, destroy, and restrain the trade of certain contractors," who were either members of Associated or memorandum contractors who had signed agreements with the Union; and second, to restrain "the free exercise of the business activities of plaintiffs and each of them." [Footnote 4] Plaintiffs claim that these alleged antitrust violations chanrobles.com-red
Over five years later, on November 20, 1980, the Court of Appeals reversed the District Court's dismissal of the Union's federal antitrust claim. 648 F.2d 527. [Footnote 8] The majority chanrobles.com-red
of the Court of Appeals disagreed with the District Court's characterization of the antitrust claim; it adopted a construction of the amended complaint which is somewhat broader than the allegations in the pleading itself. [Footnote 9] The Court of Appeals held (1) that a Sherman Act violation -- a group boycott -- had been alleged, id. at 531-532; (2) that the defendants' conduct was not within the antitrust exemption for labor activities, id. at 532-536; and (3) that the plaintiffs had standing to recover damages for the injury to their own business activities occasioned by the defendants' "industry-wide boycott against all subcontractors with whom the Unions had signed agreements. . . ." Id. at 537. In support of the Union's standing, the majority reasoned that the Union was within the area of the economy endangered by a breakdown of competitive conditions, not only because injury to the Union was a foreseeable consequence of the antitrust violation, but also because that injury was specifically intended by the defendants. The court noted that its conclusion was consistent with other cases holding that union organizational chanrobles.com-red
We first note that the Union's most specific claims of injury involve matters that are not subject to review under the antitrust laws. The amended complaint alleges that the defendants have breached their collective bargaining agreements in various ways, and that they have manipulated their corporate names and corporate status in order to divert business to nonunion divisions or firms that they actually control. Such deceptive diversion of business to the nonunion portion of a so-called "double-breasted" operation might constitute a breach of contract, an unfair labor practice, or perhaps even a chanrobles.com-red
common law fraud or deceit, but in the context of the bargaining relationship between the parties to this litigation, such activities are plainly not subject to review under the federal antitrust laws. [Footnote 12] Similarly, the charge that the defendants "advocated, encouraged, induced, and aided nonmembers . . . to refuse to enter into collective bargaining relationships" with the Union (¦ 24(3)) does not describe an antitrust violation. [Footnote 13]
The Union's antitrust claims arise from alleged restraints caused by defendants in the market for construction contracting and subcontracting. [Footnote 14] The complaint alleges that defendants "coerced" [Footnote 15] two classes of persons: (1) landowners and chanrobles.com-red
We think the Court of Appeals properly assumed that such coercion might violate the antitrust laws. [Footnote 17] An agreement to restrain trade may be unlawful even though it does not entirely exclude its victims from the market. See Associated Press v. United States, 326 U. S. 1, 326 U. S. 17 (1945). Coercive activity that prevents its victims from making free choices between market alternatives is inherently destructive of competitive conditions, and may be condemned even without proof of its actual market effect. Cf. Klors, Inc. v. Broadway-Hale Stores, Inc., 359 U. S. 207, 359 U. S. 210-214 (1959). [Footnote 18] chanrobles.com-red
A literal reading of the statute is broad enough to encompass every harm that can be attributed directly or indirectly to the consequences of an antitrust violation. Some of our prior cases have paraphrased the statute in an equally expansive way. [Footnote 19] But before we hold that the statute is as broad as its chanrobles.com-red
The critical statutory language was originally enacted in 1890 as § 7 of the Sherman Act. 26 Stat. 210. The legislative history of the section shows that Congress was primarily interested in creating an effective remedy for consumers who were forced to pay excessive prices by the giant trusts and combinations that dominated certain interstate markets. [Footnote 20] That history supports a broad construction of this remedial provision. A proper interpretation of the section cannot, however, ignore the larger context in which the entire statute was debated. chanrobles.com-red
@ 435 U. S. 687-688 (1978) (footnotes omitted). Just as the substantive content of the Sherman Act draws meaning from its common law antecedents, so must we consider the contemporary legal context in which Congress acted when we try to ascertain the intended scope of the private remedy created by § 7.
In 1890, notwithstanding general language in many state constitutions providing in substance that "every wrong shall have a remedy," [Footnote 23] a number of judge-made rules circumscribed the availability of damages recoveries in both tort and contract litigation -- doctrines such as foreseeability and proximate cause, [Footnote 24] directness of injury, [Footnote 25] certainty of damages, [Footnote 26] chanrobles.com-red
The federal judges who first confronted the task of giving meaning to § 7 so understood the congressional intent. Thus, in 1910, the Court of Appeals for the Third Circuit held as a matter of law that neither a creditor nor a stockholder of a corporation that was injured by a violation of the antitrust laws could recover treble damages under § 7. Loeb v. Eastman chanrobles.com-red
Kodak Co., 183 F.7d 4. The court explained that the plaintiff's injury as a stockholder was "indirect, remote, and consequential." Id. at 709. [Footnote 29] This holding was consistent with Justice Holmes' explanation of a similar construction of the remedial provision of the Interstate Commerce Act a few years later: "The general tendency of the law, in regard to damages at least, is not to go beyond the first step." Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U. S. 531, 245 U. S. 533 (1918). [Footnote 30] When Congress enacted § 4 of the Clayton Act in 1914, and when it reenacted that section in 1955, 69 Stat. 282, it adopted the language of § 7 and presumably also the judicial gloss that avoided a simple literal interpretation.
There is a similarity between the struggle of common law judges to articulate a precise definition of the concept of "proximate cause" [Footnote 32] and the struggle of federal judges to chanrobles.com-red
articulate a precise test to determine whether a party injured by an antitrust violation may recover treble damages. [Footnote 33] It is common ground that the judicial remedy cannot encompass every conceivable harm that can be traced to alleged wrongdoing. In both situations, the infinite variety of claims that may arise make it virtually impossible to announce a blackletter rule that will dictate the result in every case. [Footnote 34] Instead, chanrobles.com-red
The factors that favor judicial recognition of the Union's antitrust claim are easily stated. The complaint does allege a causal connection between an antitrust violation and harm to the Union and further alleges that the defendants intended to cause that harm. As we have indicated, however, the mere fact that the claim is literally encompassed by the Clayton Act does not end the inquiry. We are also satisfied that an allegation of improper motive, although it may support a plaintiff's damages claim under § 4, [Footnote 35] is not a panacea that will enable any complaint to withstand a motion to dismiss. [Footnote 36] Indeed, in McCready, we specifically held: "The availability of the § 4 remedy to some person who claims its benefit is not a question of the specific intent of the conspirators." 457 U.S. at 457 U. S. 479. [Footnote 37] chanrobles.com-red
A number of other factors may be controlling. In this case, it is appropriate to focus on the nature of the plaintiff's alleged injury. As the legislative history shows, the Sherman Act was enacted to assure customers the benefits of price competition, and our prior cases have emphasized the central interest in protecting the economic freedom of participants in the relevant market. [Footnote 38] Last Term in Blue Shield of Virginia v. McCready, supra, we identified the relevance of this central policy to a determination of the plaintiff's right to maintain an action under § 4. McCready alleged that she was a consumer of psychotherapeutic services and that she had been injured by the defendants' conspiracy to restrain competition in the market for such services. [Footnote 39] The Court stressed the fact that "McCready's injury was of a type that Congress sought to redress in providing a private remedy for violations of the antitrust laws." 457 U.S. at 457 U. S. 483, citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 429 U. S. 487-489 (1977). After noting that her injury "was inextricably intertwined with the injury the conspirators sought to inflict on psychologists and the psychotherapy market," 457 U.S. at 457 U. S. 484, the Court concluded that such an injury "falls squarely within the area of congressional concern." Ibid. chanrobles.com-red
In this case, however, the Union was neither a consumer nor a competitor in the market in which trade was restrained. [Footnote 40] It is not clear whether the Union's interests would be served or disserved by enhanced competition in the market. As a general matter, a union's primary goal is to enhance the earnings and improve the working conditions of its membership; that goal is not necessarily served, and indeed may actually be harmed, by uninhibited competition among employers striving to reduce costs in order to obtain a competitive advantage over their rivals. [Footnote 41] At common law -- as well as in the early days of administration of the federal antitrust laws -- the collective activities of labor unions were regarded as a form of conspiracy in restraint of trade. [Footnote 42] Federal policy has since developed not only a broad labor exemption from the antitrust laws, [Footnote 43] but also a separate body of chanrobles.com-red
An additional factor is the directness or indirectness of the asserted injury. In this case, the chain of causation between the Union's injury and the alleged restraint in the market for construction subcontracts contains several somewhat vaguely defined links. According to the complaint, defendants applied coercion against certain landowners and other contracting parties in order to cause them to divert business from certain union contractors to nonunion contractors. [Footnote 44] As a result, chanrobles.com-red
If either these firms or the immediate victims of coercion by defendants have been injured by an antitrust violation, their injuries would be direct and, as we held in McCready, they would have a right to maintain their own treble damages actions against the defendants. An action on their behalf would encounter none of the conceptual difficulties that chanrobles.com-red
Partly because it is indirect, and partly because the alleged effects on the Union may have been produced by independent factors, the Union's damages claim is also highly speculative. There is, for example, no allegation that any collective bargaining agreement was terminated as a result of the coercion, no allegation that the aggregate share of the contracting market controlled by union firms has diminished, no allegation that the number of employed union members has declined, and no allegation that the Union's revenues in the form of dues or initiation fees have decreased. Moreover, although coercion against certain firms is alleged, there is no assertion that any such firm was prevented from doing business with any union firms, or that any firm or group of firms was subjected to a complete boycott. See nn. 9 15 and 16 supra. chanrobles.com-red
The indirectness of the alleged injury also implicates the strong interest, identified in our prior cases, in keeping the scope of complex antitrust trials within judicially manageable limits. [Footnote 50] These cases have stressed the importance of avoiding chanrobles.com-red
The same concerns should guide us in determining whether the Union is a proper plaintiff under § 4 of the Clayton Act. [Footnote 51] chanrobles.com-red
We conclude, therefore, that the Union's allegations of consequential harm resulting from a violation of the antitrust laws, although buttressed by an allegation of intent to harm the Union, are insufficient as a matter of law. Other relevant factors -- the nature of the Union's injury, the tenuous and speculative character of the relationship between the alleged antitrust violation and the Union's alleged injury, the potential for duplicative recovery or complex apportionment of damages, and the existence of more direct victims of the alleged conspiracy -- weigh heavily against judicial enforcement of the Union's antitrust claim. Accordingly, we hold that, based on the allegations of this complaint, the District chanrobles.com-red
The facts set forth in paragraphs 23 and 24, initially alleged in support of the Union's federal antitrust claim, are realleged in each of the other claims for relief: breach of collective bargaining agreements (¦¦ 29-31); intentional interference with contractual relations (¦¦ 32-35); intentional interference with business relationships (¦¦ 36-39); and violation of the California antitrust statute (¦¦ 40-43).
The word "coerced" did not appear in the complaint as originally filed. Even as amended after the filing of motions to dismiss, the complaint does not allege that the defendants used any coercion to persuade nonmembers of Associated to refuse to enter into collective bargaining agreements with the Union (¦ 24(3)). The complaint alleges neither the identity nor the number of landowners, general contractors, or others who were coerced into making contracts with nonunion firms.
The Court of Appeals majority read subparagraph (4) of paragraph 24, quoted supra, at 459 U. S. 522, as though it alleged that the defendants had coerced landowners and other persons who let construction contracts "to hire only construction firms, primarily subcontractors, who had not signed with the Unions." 648 F.2d 532 (emphasis added); see also id. at 544 (denying petition for rehearing). The word "only" does not appear in the amended complaint, and it implies that the defendants' activities gave rise to a broader restraint than was actually alleged.
The Court of Appeals denied the petition for rehearing and rehearing en banc on May 22, 1981. Accompanying the order was a statement by the majority rebutting the petitioners' assertion that the opinion rendered multiemployer bargaining units unlawful, and a dissent by Circuit Judge Sneed. 648 F.2d 543, 545.
The Court of Appeals did not reverse the District Court's dismissal of the complaint with regard to these allegations. 648 F.2d 531-532, 537, 540.
See also Ames v. American Telephone & Telegraph Co., 166 F.8d 0 (CC Mass.1909). Applying "ordinary principles of law" to the general language of the statute, the court held that a stockholder had no legally cognizable antitrust claim against defendants for illegally acquiring the corporation, thereby rendering plaintiff's stock worthless. Plaintiff's claim was not distinguishable from any injury sustained by the company itself. Therefore, the court stated, a contrary result would "subject the defendant not merely to treble damages, but to sextuple damages, for the same unlawful act." Id. at 823.
Some courts have focused on the directness of the injury, e.g., Loeb v. Eastman Kodak Co., 183 F.7d 4, 709 (CA3 1910); Productive Inventions, Inc. v. Trico Products Corp., 224 F.2d 678, 679 (CA2 1955), cert. denied, 350 U.S. 936 (1956); Volasco Products Co. v. Lloyd A. Fry Roofing Co., 308 F.2d 383, 394-395 (CA6 1962), cert. denied, 372 U.S. 907 (1963). Others have applied the requirement that the plaintiff must be in the "target area" of the antitrust conspiracy, that is, the area of the economy which is endangered by a breakdown of competitive conditions in a particular industry. E.g., Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539, 546-547 (CA5 1980); Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 17-18 (CA1 1979); Calderone Enterprises Corp. v. United Artists Theater Circuit, Inc., 454 F.2d 1292, 1292-1295 (CA2 1971). Another Court of Appeals has asked whether the injury is "arguably within the zone of interests protected by the antitrust laws." Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1151-1152 (CA6 1975). See generally Berger & Bernstein, supra, n 31.
In keeping with the inclusive language and remedial purposes of § 4, this Court has "refused to engraft artificial limitations chanrobles.com-red
The plaintiff unions fit comfortably within the language of § 4. The complaint alleges that plaintiffs suffered injury as a result of a restraint of trade that was "designed to weaken and destroy plaintiffs and each of them." Complaint ¦ 26. The Court does not suggest that a union is not a "person" within the meaning of § 4, or that plaintiffs cannot prove injury to their "business or property." Moreover, it would require a strained reading of § 4 to conclude that a party that an antitrust violation was aimed at cannot prove that it suffered injury "by reason of" an antitrust violation.
Far from supporting the Court's conclusion, ante at 459 U. S. 531-533, the common law background of the antitrust laws highlights the anomaly of denying a remedy to the intended victim of unlawful conduct. Since antitrust violations are essentially "tortious acts," Bigelow v. RKO Radio Pictures, Inc., 327 U. S. 251, 327 U. S. 264 (1946), [Footnote 2/2] the most apt analogy is to the common law of torts. Although many legal battles have been fought over the extent of tort liability for remote consequences chanrobles.com-red
of negligent conduct, it has always been assumed that the victim of an intentional tort can recover from the tortfeasor if he proves that the tortious conduct was a cause-in-fact of his injuries. An inquiry into proximate cause has traditionally been deemed unnecessary in suits against intentional tortfeasors. [Footnote 2/3] For example, if one party makes false representations to another, intending them to be communicated to a third party and acted upon to his detriment, the third party can bring an action for misrepresentation against the originator of the false information if he suffers injury as a result. [Footnote 2/4] Indeed, in many situations the common law holds chanrobles.com-red
Nor does the present case implicate the consideration of statutory policy underlying this Court's decisions in Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), and Hawaii v. Standard Oil Co., 405 U. S. 251 (1972). Critical to the denial of standing in those cases was the risk of duplicative recovery that would have been created by affording the plaintiffs chanrobles.com-red
There is no risk of double recovery here. The plaintiff unions seek recovery for injuries distinct from those that other parties may have suffered. One such distinct injury chanrobles.com-red
Any recovery of lost dues by the plaintiff unions would not duplicate recoveries that might be obtained by either unionized carpentry firms or employees of those firms. A recovery of lost dues by a union would not duplicate a recovery for lost profits that might be obtained by a firm for which union members worked, for union dues are not an element of a firm's profits. Nor would a recovery of lost dues by a union duplicate recoveries of lost wages that employees might obtain. Although periodic union dues are based on a percentage of wages, there would be no double recovery, because union dues would be subtracted from lost wages in calculating the employees' damages. The Hanover Shoe rule barring the assertion of a "pass-through" defense would not prevent subtraction of union dues from wages in determining the employees' damages. The Hanover Shoe rule was designed to avoid the "additional long and complicated proceedings involving massive evidence and complicated theories" that would be required to determine the extent to which price overcharges were passed through to an indirect purchaser. 392 U.S. at 392 U. S. 493. In sharp contrast, where union dues are a percentage of wages, there is no difficulty in determining the amount of dues that a union lost as a result of a reduction in the wages earned by union members. chanrobles.com-red