Corporate & Securities Law

The First Circuit Denies Antitrust Imunity to Labor Union

By Matthew S. Wild

The First Circuit recently denied antitrust immunity to a labor union and certain contractors in an action by non-union shops alleging that the defendants forced them from the market in violation of Sections 1 and 2 of the Sherman Act. American Steel Erectors, Inc. v. Local Union No. 7, No. 07-1832, 2008 WL 2941576 (1st Cir. Aug. 1, 2008) (attached American Steel Erectors v. Local 7). In particular, “Plaintiffs allege a conspiracy between the Union and union employers to monopolize the structural steel industry in the Boston area and push non-union employers like Plaintiffs out of the market. To this end, Plaintiffs claim that Local 7 used Fund subsidies and other tactics to ensure that contracts were awarded to signatory contractors, rather than Plaintiffs. Specifically, Plaintiffs assert that Local 7 used Fund subsidies to assist signatory employers in underbidding Plaintiffs on erection jobs. Plaintiffs also claim that Local 7 used subsidies, threats, and picketing to pressure fabricators, developers, owners, and general contractors (none of which directly employ Local 7 workers) into breaching contracts with Plaintiffs and replacing them with signatory contractors.” The district court granted Defendants summary judgment holding that this activity was immune from the antitrust laws under the statutory labor exemption. The First Circuit reversed. For that exemption to apply, “the union [must] act[] in its self-interest and … not combine with non-labor groups.” Id. (quoting United States v. Hutcheson, 312 U.S. 219, 231 (1941). The First Circuit held that the activity did not satisfy the second prong for numerous reasons. At base, the court noted that the because the subsidies are collected through, and paid to, employers through collective bargaining agreements, they by definition involve a combination with non-labor groups. Although not addressed by the district court, the First Circuit also determined that the non-statutory labor exemption — which “shields some restraints on competition imposed through the bargaining process, where the alleged anticompetitive conduct is anchored in the collective-bargaining process, concerns only the parties to the collective bargaining relationship, and relates to wages, hours, conditions of employment, or other mandatory subjects of collective bargaining” — did not apply. The First Circuit held that “there are sufficient genuinely disputed issues of material fact here to render summary judgment inappropriate. Plaintiffs have alleged concerted union-employer action that extended beyond merely the wage deduction provided for in the CBA and the job-by-job subsidy agreements, to collaboration in the identification and acquisition of target projects.”

Full post as published by Antitrust Commentary on August 05, 2008 (boomark / email).