Court Opinion

ID: 8913259
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:55:54.282451+00
Date Added: 2024-06-11T17:08:44.059231
License: Public Domain

SNEED, Circuit Judge,
dissenting:
I respectfully dissent.
The proper disposition of this case turns on what is the proper characterization of the plaintiffs’ complaint. The majority characterize it as alleging an agreement “to coerce owners of property, general contractors, and ‘other letters of construction contracts,’ with whom the Unions had no collective bargaining relationship, to hire only construction firms, primarily subcontractors, who had not signed with the Unions.” P. 532. When so characterized the majority concludes that the “flip side” or obverse of Connell Construction Co. v. Plumbers & Steamfitters Local 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975), compels the conclusion that an antitrust cause of action was properly alleged by the complaint.
It is my view that the majority has mischaracterized the complaint. The district court’s characterization was proper. The pertinent portion of its Memorandum and Order in which the proper characterization appears is set forth is as follows:
In the present case, the plaintiff unions claim that defendants have violated the antitrust laws by conspiring among themselves to deter plaintiff unions from organizing the subcontractors with whom the defendant contractors deal. The essence of plaintiffs’ claim seems to be that defendants violated the antitrust laws insofar as they declined to enter into agreements with plaintiffs to deal only with subcontractors which were signatories to contracts with plaintiffs, precisely the type of agreement which subjected the union in Connell to antitrust liability. Defendant employers are accused of conspiring in certain activities which would not have a “potential for restraining competition in the business market in ways that would not follow naturally from elimination of competition over wages and working conditions.” Connell, supra, 421 U.S. 635, 95 S.Ct. at 1841, 44 L.Ed.2d at 433. Consequently, in light of the explicit holding and discussion in Connell and the considerable body of case law declining to recognize an antitrust cause of action alleged by a union against an employer in the normal type of labor dispute, plaintiffs’ first cause of action under the antitrust laws must be dismissed. (Italics added.)
California State Council of Carpenters v. Associated General Contractors, 404 F.Supp. 1067, 1070 (N.D.Cal.1975).
This characterization makes clear that, rather than being the “flip side” of Connell, the antitrust allegations of the complaint set forth a claim which, if sustained by proof, would permit unions to achieve precisely what Connell prohibited. That is, employers with whom plaintiffs have no collective bargaining relationship will be eliminated from the relevant market with the resulting impairment of competition. This will come about not because of an agreement by employers,with the plaintiffs of the type condemned by Connell, but because the now real threat of antitrust liability will divert virtually all subcontracting to employers having a collective bargaining relationship with the plaintiffs. Those with a taste for irony will no doubt savor the spectacle of Connell self-destructing.
The relevant portions of the plaintiffs’ first amended complaint are set forth in the margin.1 Even if it were conceded that the *542district court’s characterization is unduly narrow, it does not follow that the complaint sets forth a cause of action under the antitrust law. The plaintiffs complain about various actions by the defendants that injure them. Their basic injury, as they allege it, is impairment of their ability to represent a greater portion of the workers in the construction industry. The injury, therefore, is to the plaintiffs’ organizational and representational efforts. An injury of this type without more is not within the ambit of the antitrust law. Lacking is the restraint upon commercial competition in the marketing of goods and services. See Apex Hoisery Co. v. Leader, 310 U.S. 469, 497, 60 S.Ct. 982, 994, 84 L.Ed. 1311 (1940); Clothing & Textile Workers v. J. P. Stevens & Co., 475 F.Supp. 482 (S.D.N.Y.1979). Injuries to a union’s organizational and representational efforts must be redressed pursuant to the terms of the National Labor Relations Act. 29 U.S.C. § 151 et seq. (1976). See Motor Coach Employees v. Lockridge, 403 U.S. 274, 91 S.Ct. 1909, 29 L.Ed.2d 473 (1971); San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959). Whether the Act provides a sufficient remedy is simply not relevant.
The majority’s effort to escape the conclusion that the complaint states a cause of action not justifiable under the Sherman Act requires that the complaint be characterized as alleging a conspiracy directed at two groups of employers. According to the majority, the complaint alleges a conspiracy directed at, first, employers which otherwise would enter into collective bargaining agreements with the plaintiffs. In this fashion the complaint is brought within the Sherman Act in accordance with the authorities set forth in footnote five of the majority opinion.
It is doubtful that a significant injury to these employers is alleged. The “loss” of the benefits of a collective bargaining relationship with the plaintiffs cannot be assumed to constitute an economically significant injury in view of the economic realities of employer-employee relations. Employers without collective bargaining agreements with the plaintiffs may make more profit than those who have such agreements. Their absence from this lawsuit constitutes some evidence of their evaluation of their “injury.” To the extent they are injured, the injury resembles that suffered by Brer Rabbit when, against his spurious entreaties to be spared such a fate, he was hurled into the briar patch by Brer Fox. Harris, How Mr. Rabbit Was Too Sharp For Mr. Fox, Uncle Remus (Frost ed. 1921). The absence from this suit of these uninjured employers leaves only the plaintiffs’ complaint about the alleged injury to their organizational and representational efforts. This is an injury only cognizable under the labor laws.
*543The majority also construes the complaint to allege a boycott of employers which have collective bargaining relationships with the plaintiffs. Here a significant injury to the employers is properly alleged. But this construction of the complaint raises a standing problem. As the majority point out, “In this circuit, legal causation has traditionally been judged under the so-called target area test.” P. 537. Under the two-step analysis required by this test, the employers which are directly harmed by the alleged boycott have standing to sue under the Sherman Act. According to the majority so also do the plaintiffs. Under the “target area test,” as employed by the majority, both have standing. This is an anomalous result. Instantly it raises the possibility of standing for antitrust purposes of employees, whether unionized or not, whose employer is injured in his business by an unlawful conspiracy. No doubt the employer’s injury also hurts his employees. But this court has never permitted a reading of the target area test that would allow the employees of the victim of a boycott to bring an antitrust damage action in the victim’s place. Gutierrez v. E. & J. Gallo Winery Co., 604 F.2d 645 (9th Cir. 1979); Contreras v. Grower Shipper Vegetable Association, 484 F.2d 1346 (9th Cir. 1973), cert. denied, 415 U.S. 932, 94 S.Ct. 1445, 39 L.Ed.2d 490 (1974); see Hoopes v. Union Oil Co., 374 F.2d 480 (9th Cir. 1967); Twentieth Century Fox Film Corp. v. Goldwyn, 328 F.2d 190 (9th Cir.), cert. denied, 379 U.S. 880, 85 S.Ct. 143, 13 L.Ed.2d 87 (1964); Karseal Corp. v. Richfield Oil Corp., 221 F.2d 358 (9th Cir. 1955); Conference of Studio Unions v. Loew’s Inc., 193 F.2d 51 (9th Cir. 1951), cert. denied, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687 (1952).
However, even if standing might be accorded the plaintiffs on the basis of such cases as Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172 (5th Cir. 1976), and International Association of Heat and Frost Insulators v. United Contractors Association, 483 F.2d 384 (3d Cir. 1973), amended, 494 F.2d 1353 (3d Cir. 1974), the essential injury remains one to their organizational and representational ability. Where that is the case labor law provides the comprehensive regulatory scheme sufficient to require that it be treated as having preempted antitrust law. See Clothing & Textile Workers v. J. P. Stevens & Co., supra.
When all is said and done, this is a labor case wearing an antitrust costume and inspired no doubt by the employer victory in Connell Construction Co. v. Plumbers & Steamfitters Local 100, supra. It should remain a labor case. I would affirm.
ORDER
Before SNEED, PREGERSON, and ALARCON, Circuit Judges.
An active judge of this court requested a vote on the appellant’s suggestion for en banc consideration of this court’s opinion, filed herein on November 20, 1980. The required vote has been taken, but failed to attain a majority of the active judges of the court. Accordingly, the petition for rehearing is DENIED and the suggestion for rehearing en banc is REJECTED.
The Associated General Contractors, in their petition for rehearing en banc, suggested that “The present opinion of the panel could be read as disapproving multiemployer bargaining entirely.” To eliminate the possibility that anyone else might read the opinion as rendering multiemployer bargaining or multiemployer bargaining units unlawful, the following explanation is intended to make it clear that California State Council did not, and indeed could not, have that effect.
To begin with, there is a vital difference between an agreement designed to promote collective bargaining, and a conspiracy aimed at destroying the collective bargaining process by locking unionized subcontractors out of the subcontracting market. Multiemployer bargaining has long had the approval of both the NLRB and the Supreme Court. See NLRB v. Truck Drivers Local 449 (“Buffalo Linen”), 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676 (1957); R. Gorman, Labor Law § 6 at 87 (1976), the NLRB rules permit multiemployer bargaining units if all parties, union and employer, consent or *544agree to bargain on a multiemployer basis. NLRB, Twenty-Third Annual Report 36 (1958); 4 T. Kheel, Labor Law § 14.03[4][b] (1979). Such consent or agreement will normally be demonstrated by a substantial history of collective bargaining on that basis. Id.; R. Gorman, supra. The certification of a multiemployer bargaining unit therefore involves more than just an agreement among employers — it also requires the consent or agreement of the unions and the approval of the NLRB.
In California State Council, the union did not claim that it was somehow injured by the formation of multiemployer bargaining units. Indeed, as the complaint stated, the union collectively bargained with the AGCC, a multiemployer bargaining unit, for nearly twenty years. On the contrary, what was alleged in California State Council was that the AGCC conspired to coerce employers with whom the union had no collective bargaining relationship to agree not to hire subcontractors who had signed with the union. It was on the basis of this conduct, the equivalent of a group boycott and the obverse of the union conduct condemned in Connell, that the majority found that a claim had been stated under the Sherman Act.
Agreements among employers are not, in themselves, violative of the Sherman Act. To state a claim under the Sherman Act, one must allege that such an agreement has either an anticompetitive purpose or a substantial anticompetitive effect. L. Sullivan, Antitrust 194, 303-04 (1977). See also Neeld v. National Hockey League, 594 F.2d 1297, 1298 (9th Cir. 1979); Alpha Distributing Co. v. Jack Daniel Distillery, 454 F.2d 442, 452 (9th Cir. 1972). Thus, many innocent agreements among employers, such as the bylaws of national and local chambers of commerce, could not possibly be thought to fall within the Sherman Act.
Moreover, mere elimination of competition over wages and working conditions cannot give rise to an antitrust claim.1 The Supreme Court stated the applicable test in Connell as follows:
[An] agreement, which is outside the context of a collective bargaining relationship and not restricted to a particular jobsite, but which nonetheless obligates [a company] to subcontract work only to [certain firms], may be the basis of a federal antitrust suit because it has a potential for restraining competition in the business market in ways that would not follow naturally from elimination of competition over wages and working conditions.
421 U.S. at 635, 95 S.Ct. at 1841 (emphasis added). Thus, although multiemployer bargaining units may affect or restrain competition in the area of wages and working conditions, such restraints will not be considered to violate the antitrust laws. Accordingly, the question of whether multiemployer bargaining units may be exempt under one of the labor antitrust exemptions need not arise.
At any rate, even if the antitrust laws had been interpreted so as to bring multiemployer bargaining units within the scope of the Sherman Act, the statutory exemption found in section 4 of the NorrisLaGuardia Act, 29 U.S.C. § 104, when read together with section 20 of the Clayton Act, 29 U.S.C. § 52,2 clearly exempts “[becoming or remaining a member ... of any employer organization” from the antitrust laws. 29 U.S.C. § 104(b).
In summary, an employer agreement falls within the prohibitions of the Sherman Act only if it has an anticompetitive purpose or effect on some aspect of competition other than competition over wages or working conditions. Certification of multiemployer bargaining units involves not just an agreement among employers but also the consent *545or agreement of the unions and the approval of the NLRB. Moreover, membership in multiemployer organizations is expressly made exempt from the antitrust laws under the statutory exemption found in section 4 of the Norris-LaGuardia Act.3

. XXIV
Pursuant to said plan, scheme, agreement and conspiracy, defendants and each of them have knowingly, willfully and maliciously committed the following acts:
(1) Changed names and corporate status without reason, and as a part of the above described plan, agreement, scheme, and conspiracy, in a fraudulent manner;
(2) Created and maintained double-breasted contracting situations, in which contractors have established and maintained union and non-union divisions, departments, and/or other such entities;
(3) Advocated, encouraged, induced, and aided non-members of defendant Associated General Contractors of California, Inc. to *542refuse to enter into collective bargaining relationships with plaintiffs and each of them;
(4) Advocated, encouraged, induced, coerced, aided and encouraged owners of land and other letters of construction contracts to hire contractors and subcontractors who are not signatories to collective bargaining agreements with plaintiffs and each of them;
(5) Advocated, induced, coerced, encouraged, and aided members of Associated General Contractors of California, Inc., nonmembers of Associated General Contractors of California, Inc., and “memorandum contractors” to enter into subcontracting agreements with subcontractors who are not signatories to any collective bargaining agreements with plaintiffs and each of them;
(6) Held open-shop meetings for members of defendant Associated General Contractors of California, Inc. and non-members, where said members and non-members were induced, encouraged, coerced, and aided to maintain non-union shops, double-breasted operations, and to do and complete all of the activities described herein. These non-members referred to in this subparagraph were both memorandum contractors and non-memorandum contractors.
(7) Breached the collective bargaining agreements between defendants and each of them and plaintiffs and each of them, by failing to pay agreed-upon wages, by failing to use the hiring hall, by failing to pay Trust Fund contributions, by failing to observe other terms and conditions of employment, and by generally weakening the good-faith requirement of the collective bargaining agreements.

. For some limitations on this rule, see United Mine Workers v. Pennington, 381 U.S. 657, 664-669, 85 S.Ct. 1585, 1590-1593, 14 L.Ed.2d 626 (1965).

. For further elaboration of this point, see California State Council of Carpenters v. Associated General Contractors of California, Inc., 648 F.2d 527 at 533-534 nn. 8 & 9 and accompanying text (9th Cir. 1980).

. In his dissent from this order, Judge Sneed suggests several scenarios of employer behavior that, he says, might constitute conduct violative of the antitrust laws as interpreted by the majority. The majority opinion, like the Court’s opinion in Connell Construction Co. v. Plumbers Local 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975), was not intended to establish a comprehensive set of rules governing all imaginable future group conduct by employers. The majority simply holds that employers may not be exempt from the antitrust laws when they indulge in conduct directly analogous to the union conduct found to be non-exempt in Connell.