# Petition — Ackerman-Chillingworth v. Pacific Electrical Contractors Ass'n

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1979
- **Citation:** 439 U.S. 1089

## Text

78-703 | OCT on
No. 78- (
In The
Supreme Court of the United States

October Term, 1978

ACKERMAN-CHILLINGWORTH,
Division of MARSH & McLENNAN, INCORPORATED,
a Delaware corporation, ef al.,
Petitioners,
v.
PACIFIC ELECTRICAL CONTRACTORS
ASSOCIATION, a Hawaii corporation, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

WILLIAM M. SWOPE
ROBERT A. ROWAN
1000 Bishop Street
Honolulu, Hawaii 96813
Counsel for Petitioners

Of Counsel:

CADES SCHUTTE FLEMING & WRIGHT

1000 Bishop Street

Honolulu, Hawaii 96813

satis tant nines te sce

. —

SUBJECT INDEX

I I ii gre cme ene chow dws 0 vases slses
I aha Boece g oa ow ae ha sdeniae eieckus
QUESTIONS PRESENTED ..................20000
STATUTES AND RULES INVOLVED ..............
py eg Ay eddy | ko
REASONS FOR GRANTING THE WRIT............

I. THE DECISION BELOW PRESENTS
IMPORTANT QUESTIONS CONCERNING
THE CONTINUED VIABILITY OF THE
SUPREME COURT’S ANNOUNCED
POLICY OF HOLDING GROUP
BOYCOTTS PER SE VIOLATIONS
OP THe SHERMAN ACT. .......0.c..cce0e.

A. This case presents a unique opportunity

to clarify the law of group boycotts and

the application of the per se rule. ...........
B. The decision below is in direct conflict

with Supreme Court decisions holding

group boycotts to be per se violations of

ca deb kw dcnsaacamndies a
C. The decision below misstates the role of

respondents’ alleged “purpose” to even a

7

8

URES GE PONE GEIGER. nn 5 ccc ccc ccces 10

D. Review is required to prevent confusing
and inequitable application of the per se
rule m the flower courts... ........6..0cc00e-

II. THE DECISION BELOW IS IN DIRECT
CONFLICT WITH THE DECISIONS OF
THIS COURT AND OTHER CIRCUITS
HOLDING SUMMARY PROCEDURES
INAPPROPRIATE IN COMPLEX
ANTITRUST LITIGATION WHERE
MOTIVE AND INTENT PLAY
a eee

11

Ill. THE DECISIONS BELOW, BY
SANCTIONING RESPONDENTS’ USE OF A
LABOR AGREEMENT TO ENHANCE
THE COMPETITIVE STATUS OF ODA
AND PECA, HAVE CREATED A
DANGEROUS PRECEDENT WITH
APPLICATIONS FAR BEYOND THE

ES ON Kien seh wed ina ee ees 14
Ge gh Sere dunes e's sewed oye 6s 15
APPENDIX (In Separate Volume)

COURT OF APPEALS OPINION ...... APPENDIX A
DISTRICT COURT OPINION ......... APPENDIX B
DENIAL OF PETITION FOR

0 Ber nee APPENDIX C
STATUTES AND RULES............. APPENDIX D

TABLE OF AUTHORITIES

CASES:
Allen Bradley Co. v. Electrical Workers Local 3, 325

oF Re GRR ere rr ree 4
Alpha Distributing Co. v. Jack Daniel Distillery, 454

F.2d 443 (9th Cir. 1972), cert. denied 419 U.S. 842

Cate Rec ae ie ges 0S SON Ae ey h wwe oelene e's 11
Chicago Board of Trade v. United States, 246

Se oe ee ie Ea ccd ua eae ewes a 10
Connell Construction Co. v. Plumbers Local 100, 421

In a Sand he ald nie whale gis vaihrs 0 48 4

Cullum Electric & Mechanical, Inc. v. Mechanical
Contractors Ass'n, 436 F. Supp. 418 (D.S.C. 1976),

affa GOO F.2d S21 (4th Cir. 1978) ....o0 5 ccc ceveevess 12
DeFilippo v. Ford Motor Co., 516 F.2d 1313
(3d Cir. 1975), cert. denied 423 U.S. 912 (1975) ...... 12

E. A. McQuade Tours, Inc. v. Consol. Air Tour Manual
Comm., 467 F.2d 178 (5th Cir. 1972), cert. denied
a OE 2.0 vk aaa aeons Cee awe «eee ee 12
Eastern States Retail Dealers’ Ass’n v. United States,
Ee irae ssa oN a end dee cab hese bea ou 8

Fashion Originators’ Guild v. FTC, 312

Ue EEE on Ss otek hued wa oC een cawes 5, 8
Helix Milling Co. v. Terminal Flour Mills Co.,

523 F.2d 1317 (9th Cir. 1975), cert. denied 423 U.S.

a cnsnabs ap ne, HIE EP EO ES OT ee he 11
Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke and

Liquors, Ltd., 416 F.2d 71 (1969), cert. denied 396

U.S. 1062 (1970), reh. denied, 397 U.S. 1003

UME 6d a 00 WOKS MAE NS id ORAS oA KERR ES S, 9, ii, 12
Keifer-Stewart Co. v. Joseph E. Seagram & Sons, Inc.,

See A EP oats hn do cok ie ee as sda Ra s
Klor’s, Inc. v. Broadway-Hale Stores, lne., 359

a re rar hy eae Seas cere 5, 8, 9
Klor’s, Ine. v. Broadway-Hale Stores, Inc., 255

sae Oe CORE SMe BON oes ba vb nass taascarvenes 9, 10
Lamb Enterprises, Inc. v. Toledo Blade Co., 461 F.2d 506

(6th Cir. 1972), cert. denied 409 U.S. 1001 (1972)..... 12

Mazaleski v. Treusdell, 562 F.2d 701 (D.C. Cir. 1977) .. 14
Mutual Investors, Inc. v. Putnam Management Co.,

ee Re: | ar 11
National Society of Professional Engineers v.

United States, 98 S. Ct. 1855 (1978) ............068. 10
Norfolk Monument Co. v. Memorial Gardens, Inc.,

Se a CUE bce are aC es kin way ae nee unt 2kks 14
Poller v. Columbia Broadcasting System, 368

ite SD ih tg ho Gee yh eG 84 hes aoe ke 14
Radiant Burners, Inc. v. Peoples Gas, Light and Coke Co.,

TR OR heen nr eer 5
Radovich v. National Football League, 352

A EE sa noc an ka sky see DAA EKER RS aR KS 9
Schmidt v. McKay, 555 F.2d 30 (2d Cir. 1977) ......... 14
Staren v. American National Bank & Trust Co.,

Pe i Re ae eee 14
Sulmeyer v. Coca Cola Co., 515 F.2d 835 (5th Cir. 1975),

corte. Gemvem 406 U.S. SE4 (IGT) 2. nc cccecsvccccces 12
Taxi Weekly, Inc. v. Metropolitan Taxicab Bd. of Trade,

et ae Cy PO cis do co teevccevenesssoas 12
United States v. General Motors Corp., 384

oh Se PE cose seca ve cee eahen as Sieeruwess 5, 8, 9

Worthen Bank & Trust Co. v. National BankAmerica,
Inc., 485 F.2d 119 (8th Cir. 1973), cert. denied 415
Ty OO CA scans kvacdudc tee uodevuseneo ane 12

SECONDARY AUTHORITIES:
Barber, Refusals to Deal Under the Federal Antitrust

Lawe, 106 U.PA.. L. BEV. SAT (IBGB) «nn occ cccscucass 12
Bird, Sherman Act Limitations on Noncommercial

Concerted Refusals to Deal, 1970 Duke L.J. 247 ..... 11
Handler, Recent Developments in Antitrust Law:

1958-1959, 59 COLUM. L. REV. 843 (1959) ........... 10

Horsley, Per Se Illegality and Concerted Refusals to |
Deal, 13 B.C. IND. & CoM. L. REV. 484 (1972) .... 8, 11

L. Sullivan, Antitrust § 90 at 258-59 (1977) ............ 11
Note, A Return to the Rule of Reason in Group Boycott
Cases?, 42 U. COLO. L. REV. 467 (1971) ............ 9

Note, Boycott: A Specific Definition Limits the
Applicability of a Per Se Rule, 71 Nw. U.L.

RV. CIS CENT con dod bss dnnneeneseen sae sees 8, 11
Woolley, /s Boycott a Per Se Violation of the Antitrust
Laws?, 27 RUTGERS L. REV. 773 (1974)........... 9, 10

STATUTES AND RULES:

Pet, R. Civ. B.. GO). « ccvicvecescastv esse 3, 14
Sherman Act, 15 U.S.C. § 1 (1976)............. 2,3, 8, ll

In the
Supreme Court of the United States

OCTOBER TERM, 1978

NO. 78—

ACKERMAN-CHILLINGWORTH,
Division of MARSH & McLENNAN,
INCORPORATED, a Delaware corporation,
et al.,

Petitioners,
VS.

PACIFIC ELECTRICAL CONTRACTORS
ASSOCIATION, a Hawaii non-profit
corporation, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

Petitioners respectfully pray that a Writ of Certiorari issue
to review the judgment and opinion of the United States Court
of Appeals for the Ninth Circuit entered on March 22, 1978,
with rehearing denied on July 31, 1978. Petitioners are the
insurance agents and agencies named in Footnote 1 and re-

*Ackerman-Chillingworth, Division of Marsh & McLennan, Incorporated, a
Delaware corporation; Alexander of Hawaii, Inc., dba Mid-Pacific Insur-
ance Division, a Hawaii corporation; American Mutual Underwriters,
Ltd., a Hawaii corporation; Bayly, Martin & Fay of Hawaii, Inc., a Hawaii
corporation; Davies Insurance Agencies, Inc., a Hawaii corporation;
Stanley S. Hashimoto; Occidental Underwriters of Hawaii, Ltd., a Hawaii
corporation; Jack T, Osakoda and Raymond T. Tanaka.

1

spondents are the individuals, trade association and labor
union named in Footnote 2.

OPINIONS BELOW

The Opinion of the District Court for the District of Hawaii
is reported at 405 F. Supp. 99 (1975) and is printed as Appendix
B hereto. The Opinion of the Court of Appeals for the Ninth
Circuit is not yet reported and is printed as Appendix A
hereto. The Order denying rehearing is likewise not yet re-
ported and is printed here as Appendix C.

JURISDICTION

The Opinion and Judgment of the Court of Appeals for the
Ninth Circuit was entered on March 22, 1978. A timely Petition
for Rehearing was denied on July 31, 1978. This Court has
jurisdiction to grant a Writ of Certiorari under 28 U.S.C.
§§ 1254 and 2101, and under Rule 21 of the Rules of this Court.

QUESTIONS PRESENTED

1. Whether a collective bargaining agreement between a
trade association and a labor union mandating that all trade
association members and non-member electrical contractors
bound by that agreement must participate in a group workers’
compensation insurance plan is a per se violation of the Sher-
man Act, 15 U.S.C. § 1, when combined with an agreement or
understanding that all member and non-member electrical
contractors must utilize the exclusive services of the trade
association’s executive secretary as their insurance agent or
solicitor, thereby precluding the electrical contractors from
doing business or continuing to do business with petitioners.

2. Whether respondents’ conduct, if not illegal per se as a

.

?Pacific Electrical Contractors Association, a Hawaii non-profit corpora-
tion; International Brotherhood of Electrica! Workers, Local No. 1186;
Walter T. Oda and Akito Fujikawa. Petitioners do not seek review of the
Ninth Circuit's decision as to two of the original defendants in this action,
Insurance Company of North America (“INA”) and Pacific Employers
Insurance Company (“PEIC”), and accordingly, those parties are not
respondents herein.

to

concerted refusal to deal, is nevertheless an unreasonable re-
straint of trade in violation of the Sherman Act, 15 U.S.C. § 1.

3. Whether respondents’ agreement to refuse to deal with
petitioners and to compel others to do likewise can be saved by
an allegedly benign motivation.

4. Whether respondents’ alleged motivation, even if a rel-
evant question, can properly be adjudicated on a motion
for summary judgment, where coniroverted by competent
evidence.

STATUTES AND RULES INVOLVED

This case involves Section 1 of the Sherman Act, 15 U.S.C.
§ 1, and Rule 56(c) of the Federal Rules of Civil Procedure,
both of which are set forth in Appendix D,

STATEMENT OF THE CASE

A civil antitrust action was filed by petitioners on Sep-
tember 6, 1974 in federal district court pursuant to 15 U.S.C.
$§ 15 and 25, seeking treble damages and injunctive relief
under the Sherman and Clayton Acts. Petitioners’ complaint
also sought damages jor violations of the National Labor Rela-
tions Act, 29 U.S.C. §§ 158(b) (4) (ii) and 158(e).

Petitioners moved for summary judgment on the grounds
that the undisputed facts presented a per se violation of the
Sherman Act as well as a violation of the National Labor
Relations Act. Respondents cross-moved for summary judg-
ment asserting that the undisputed facts presented no viola-
tions of either Act, whether per se or otherwise.

The district court granted respondents’ motion for sum-
mary judgment on all counts of petitioners’ complaint.
Petitioners thereafter appealed to the Ninth Circuit solely on
the antitrust issues, pursuant to 28 U.S.C. § 1292(a) (1). The
Ninth Circuit affirmed the district court’s award of summary
judgment in respondents’ favor over a vigorous and incisive
dissent by Circuit Judge Shirley M. Hufstedler.

Petitioners are insurance agents and solicitors engaged in
the business of selling workers’ compensation insurance in
Hawaii. Respondent Pacific Electrical Contractors Associa-
tion (““PECA”) is a trade association composed of approxi-

3

mately 63 electrical contractors. Respondent Walter T. Oda
(“Oda”) is PECA’s executive secretary. Respondent Interna-
tional! Brotherhood of Electrical Workers, Local No. 1186
(“IBEW”) is a labor organization engaged in collective bar-
gaining with PECA. Respondent Akito Fujikawa (“Fuji-
kawa’”) is IBEW’s business agent. In addition to its 68 member
contractors, PECA also represents approximately 65 non-
member electrical contractors who employ IBEW personnel.
All 128 contractors are bound by the terms of the PECA-
IBEW collective bargaining agreement.

Prior to the formation of the mandatory group insurance
plan challenged by petitioners, the 128 electrical contractors
represented by PECA purchased their workers’ compensation
insurance from approximately 22 different insurance carriers
through approximately 20 competing insurance agents and
solicitors, including petitioners. This competition has been
eliminated by the challenged agreement.

In May 1973, Fujikawa, representing IBEW, proposed to
PECA that all electrical contractors bound by the PECA-
IBEW labor agreement combine their workers’ compensation
insurance through a single insurance carrier or through a
Taft-Hartley trust fund.® Fujikawa’s stated purpose in making
this proposal was two-fold: (1) to improve claims processing
and benefits to its workers, and (2) to assist PECA financially
by allowing PECA to manage the proposed plan and thereby
derive needed revenues. It was Fujikawa’s expressed interest
in PECA’s financial situation which caused the district court to
rule that the resulting amendment to the collective bargaining
agreement was not immunized from antitrust scrutiny by fed-
eral labor law or policy. The district court’s ruling on ‘his
point, although contested by IBEW, was not disturbed on
appeal.®

*The Taft-Hartley trust approach was later abandoned as unworkable,

*Appendix B at 22-23; 405 F. Supp. at 113.

*Although the district court expressly found that IBEW's purpose was
“unmistakably tainted” under this Court's rulings in Allen Bradley Co. v.
Electrical Workers Local 2, 325 U.S. 797 (1945) and Connell Construction
C8 v. Plumbers Local 100, 421 U.S. 616 (1975), neither of the courts below
found this “tainted purpose” relevant to their antitrust analysis, not-
withstanding their apparent focus on “intent.”

4

Although PECA was initially reluctant to adopt Fujikawa’s
proposal, its interest perked when apprised of the substantial
revenues to be derived thereby. PECA’s interest originally
focused on the potential dividends which might be paid by the
insurance carrier, which could be used to offset PECA dues,
“with the inference,” according to Oda, “that non-members
would be forfeiting their dividends.” Later, concluding that
dividends were an unstable and speculative source of income,
Oda devised an alternative plan to generate revenue for
PECA. In return for being designated as the agent for the
plan, Oda pledged to rebate his net commissions to PECA,

Oda’s appointment as exclusive agent® for the group plan
and his promised rebates to PECA were not made part of the
formal amendment to the collective bargaining agreement;
they were, nevertheless, an integral part of respondents’
agreement as implemented. Article XIX to the PECA-IBEW
labor agreement merely provides that all contractors bound by
the labor agreement must participate in the group dividend
plan which “will be administered by PECA.”

The evidence presented to the district court, including
minutes of respondents’ various meetings and conferences,
was not accepted in its entirety by the district court or the
Ninth Circuit. However, both courts were forced to assume, at
least for purposes of summary judgment, that “a majority of
the PECA-member contractors and Oda agreed that hence-
forth the contractors would purchase insurance only through
Oda, compelling all signatory contractors to the collective bar-
gaining agreement to do likewise.”

Petitioners assert that this agreement, which, by its terms,
deprived the non-member contractors of their freedom to deal
with an agent of their choice and foreclosed a large segment of
the Hawaii insurance market from competition by petitioners,
is per se unlawful as a group boycott under this Court’s rulings
in United States v. General Motors Corp., 384 U.S. 127 (1966);
Radiant Burners, Inc. v. Peoples Gas, Light and Coke Co.,
364 U.S. 656 (1961); Klor’s, Inc. v. Broadway-Hale Stores,
Inc., 359 U.S. 207 (1959); and Fashion Originators’ Guild v.

®A “closed” plan in insurance terminology.
7Appendix A at 12, n. &. See also 405 F. Supp. at 111.

5

FTC, 312 U.S, 457 (1941).

The Ninth Circuit, disregarding the teachings of these
cases and relying instead on its own decision in Joseph E,
Seagram & Sons, Inc. v. Hawaiian Oke and Liquors, Ltd., 416
F.2d 71 (1969), cert. denied 396 U.S, 1062 (1970), veh. denied
397 U.S. 1003 (1970), ruled that respondents’ conduct was
lawful because, “PECA, Oda and the contractors agreed to
deal with Oda alone, not to improve Oda’s competitive position
as an insurance solicitor but to aid PECA and to improve the
quality of the contractors’ insurance plan."

In a well-reasoned dissent, Judge Hufstedler explained
that:

PECA was not just a trade association, nor was Oda simply

a trade association's executive secretary. . . . Oda was an

insurance solicitor selling INA/PEIC workmen's compen-

sation policies to 114 of the 128 electrical contractors,

PECA, as recipient of Oda’s commissions, in a very real

sense Was in the insurance agency business. (Appendix A,

dissent at 23),

* * »

Once it is recognized that, through Oda, PECA was in
the insurance sales’ business, the resemblance of this ar-
‘angement to the classic vertical boycott model emerges.
(/d. at 24).

Judge Hufstedler further noted that the majority opinion com-
pletely ignored the affidavits submitted by INA specifically
stating that the exclusive use of a single agent was unneces-
sary to derive the legitimate benefits of a group insurance
program.,®

‘Appendix A at 10, n, 7,

*“Tt is obvious that all of the insurance for a safety group must be written by
a single insurance company, However, there is no requirement that all of
the insurance be written through a single insurance agent... .” Affidavit
of Edmond Rondepierre, Associate General Counsel of INA, Record on
Appeal at 907-08,

6

REASONS FOR GRANTING THE WRIT
I,

THE DECISION BELOW PRESENTS IMPORTANT
QUESTIONS CONCERNING THE CONTINUED VIA-
BILITY OF THE SUPREME COURT'S ANNOUNCED
POLICY OF HOLDING GROUP BOYCOTTS PER SE
VIOLATIONS OF THE SHERMAN ACT.

A. This case presents a unique opportunity to clarify the
law of group boycotts and the application of the per
se rule,

Although apparently not convinced by petitioners’ proof,
the Ninth Circuit’s opinion nevertheless assumed an exclu-
sionary conspiracy with both vertical'® and horizontal!! as-
pects which was foreed upon the non-member contractors
through the mandatory nature of the PECA-IBEW collective
bargaining agreement:

In this summary proceeding the District Court, despite
the dearth of evidence, assumed that a majority of the
PECA-member contractors and Oda agreed that hence-
forth the contractors would purchase insurance only
through Oda, compelling all signatory contractors to the
collective bargaining agreement to do likewise. 405 F.
Supp. at 111. In light of the factors discussed below, this
assumption would not lead to a different result in our appli-
cation of the standard of reasonableness. (Appendix A at
12, n. 8).

The issue presented to this Court is simply: Can such an
agreement, which on its face precludes petitioners from doing
business with both the conspiring PECA members and the 68
non-member contractors bound by respondents’ labor agree-
ment, be saved by an allegedly benign purpose “to aid PECA

The vertical agreement is among Oda/PECA as insurance agent, the
PECA members as insurance purchasers, and IRE W/ Fujikawa as repre-
sentative of the insurance beneficiaries, IBEW/Fujikawa’s “tainted” in-
tent to produce revenues for PECA was not disputed by the Ninth Circuit;
it was simply ignored.

''The horizontal aspect is the agreement among the PECA contractors to use
Oda exclusively and to compel the non-PECA contractors to do likewise.

and to improve the quality of the contractors’ insurance”?

Petitioners submit that while proof of exclusionary or coer-
cive intent may itself be sufficient to invoke the application of
the per se rule when coupled with proof of conspiracy and acts
in furtherance thereof, the converse cannot be true; /.e., the
alleged absence of anticompetitive intent cannot save a combi-
nation or conspiracy which by its terms compels the con-
spirators and others to cease business relations with strangers
to the group. !?

B. The decision below is in direct conflict with Supreme
Court decisions holding group boycotts to be per se
violations of the Sherman Act.

This Court has consistently ruled for over 70 years that
group boycotts and concerted refusals to deal are per se viola-
tions of the Sherman Act.'* The rationale underlying the adop-
tion of the per se rule is well-stated in Klor’s. In condemning
Broadway-Hale’s solicitation of agreements from its suppliers
not to deal with its competitor, this Court stated:

This combination takes from Klor’s its freedom to buy

appliances in an open competitive market and drives it out

of business as a dealer in the defendants’ products. It de-
prives the manufacturers and distributors of their freedom
to sell to Klor’s at the same prices and conditions made
available to Broadway-Hale, and in some instances forbids

them from selling to it on any terms whatsoever. (359 U.S.

at 213).

Commenting on the Klor’s holding in General Motors, this
Court noted:

This was not new doctrine, for it had long been recognized

that “there are certain agreements or practices which be-

cause of their pernicious effect on competition and lack of
any redeeming virtue are conclusively presumed to be un-

'2See, Horsley, Per Se Illegality and Concerted Refusals to Deal, 13 B.C.
IND. & Com. L. REv. 484 (1972); Note, Boycott: A Specitic Definition
Limits the Applicability of a Per Se Rule, 71 Nw. U.L. REV. 818 (1977).

SSee e.g., Eastern States Retail Dealers’ Ass'n v. United States, 234 U.S.
600 (1914); Fashion Originators’ Guild v. FTC, 312 U.S. 457 (1941);
Keifer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211
(1951).

reasonable and therefore illegal without elaborate inquiry

as to the precise harm they have caused or the business

excuse for their use,” and that group boycotts are of this

character. (384 U.S. at 146).

The instant case presented the Ninth Circuit with a factual
situation not unlike that in Klor’s, with the added dimension of
a trade association-labor union contract and its intimidating
effect on the trade association’s non-member contractors. To
paraphrase the language of Klor’s, this combination took from
petitioners their freedom to solicit insurance business in an
open market, and effectively drove petitioners out of the con-
tractors’ workers’ compensation market. It deprived the con-
tractors, particularly the non-PECA member contractors who
derive no benefit from Oda’s rebate of net commissions to
PECA, of their freedom to purchase workers’ compensation
insurance through an agent of their own choice.

Despite the clarity of this Court’s earlier instructions to the
lower federal courts, and particularly the Ninth Circuit in
Klor’s, General Motors and Radovich v. National Football
League, 352 U.S, 445 (1957),'4 the Ninth Circuit again came to
its “own philosophical conclusions as to what restraints of trade
should be prohibited.”'® Relying primarily on its often-
criticized decision in Hawaiian Oke,'® the Ninth Circuit held
there was not even a triable issue of fact under the “rule of
reason,” let alone a per se violation of the Sherman Act be-
cause, in its view, respondents’ conspiracy was primarily
motivated by a legitimate economic purpose.

Relying on the same kind of reasoning that found
Broadway-Hale’s boycott of Klor’s “no more than a squab-
ble... by which the ‘public’ could [not] conceivably suffer

'4In reversing the Ninth Circuit's dismissal of Radovich’s boycott allega-
tions, this Court bluntly warned: “The law is its own measure of right and
wrong... , andthe judgment of the courts cannot be set up against it ina
supposed accommodation of its policy with the good intention of the parties
.... Ud. at 454, n. 10) (Emphasis in original).

'S Klor’s, Inc. v. Broadway-Hale Stores, Inc., 255 F.2d 214, 228 (9th Cir.
1958).

'6See, e.g., Woolley, 1s a Boycott a Per Se Violation of the Antitrust Laws?,
27 RUTGERS L. REV. 773 (1974); Note, A Return to the Rule of Reason in
Group Boycott Cases?, 42 U. Coo. L. REv. 467 (1971).

9

injury,”'? the Ninth Circuit affirmed summary judgment
against petitioners.

C. The decision below misstates the role of respondents’

alleged ‘‘purpose”’ to even a rule of reason analysis.

In deciding this case on the basis of respondents’ alleged
motivation, the Ninth Circuit not only dtsregarded the blunt
and emphatic pronouncements of this Court in group boycott
cases,'® but even misinterpreted the role of “purpose” to the
rule of reason approach.

As Justice Brandeis explained in Chicago Board of Trade v.
United States, 246 U.S. 231, 238 (1918), “purpose” is a relevant
factor in rule of reason analysis, “not because a good intention
will save an otherwise objectionable [restraint], or the reverse;
but because knowledge of intent may help the court to predict
consequences.”

Justice Brandeis’ point, obviously lost on the Ninth Circuit,
was recently crystallized by Justice Stevens in National Soci-
ety of Professional Engineers v. United States, 98S. Ct. 1355,
1363 (1978):

Contrary to its name, the Rule [of Reason] does not open

the field of antitrust inquiry to any argument in favor of a

challenged restraint that may fall within the realm of

reason. Instead, it focuses directly on the challenged re-
straint’s impact on competitive conditions.

The application of Justice Brandeis’ comments to group
boycotts is likewise succinctly stated in a recent commentary,
Woolley, /s a Boycott a Per Se Violation of the Antitrust
Laws?, 27 RUTGERS L. REV. 773, 790-91 (1974):

Whether or not the boycotter who excludes another from

the market has good or evil intentions is of little significance

to the victim or the consumer, or to the fair or efficient
manufacture and distribution of goods. It makes no sense

17255 F.2d at 235.

'®“Tn its unanimous decision in Klor’s the Supreme Court rather bluntly and
emphatically informed the lower courts that when in the past it proclaimed
the per se unlawfulness of group boycotts, it meant precisely what it said.
The prohibition is absolute. There are to be no exceptions, however ex-
tenuating may be the conditions generating the boycott.” Handler, Recent

Developments in Antitrust Law: 1958-1959, 59 COLUM. L. REV. 843, 862
(1959).

10

for an economic regulatory statute to hinge its regulation

on the subjective state of mind of the wrongdoer if its goal is

to preserve access to the market or intensity of competi-

tion.!®

D. Review is required to prevent confusing and inequit-
able application of the per se rule in the lower courts.

The Ninth Circuit’s 1969 decision in Hawaiian Oke, while
perhaps defensible if limited to its particular facts,?° has over
the past decade spawned a mutitude of irreconcilable lower
court decisions avoiding, in various ways, the unqualified in-
structions of this Court that group boycotts are per se offensive
to the policies of the Sherman Act.

The Ninth Circuit has recently signified its intention to
decide such cases entirely on a “rule of reason” analysis. See,
e.g., Mutual Investors, Inc. v. Putnam Management Co., 553
F.2d 620 (9th Cir. 1977); Helix Milling Co. v. Terminal Flour
Mills Co., 523 F.2d 1317 (9th Cir. 1975), cert. denied 423 U.S.
1053 (1976); Alpha Distributing Co. v. Jack Daniel Distillery,
454 F.2d 443 (9th Cir. 1972), cert. denied 419 U.S. 842 (1974).
In the last cited case the Ninth Circuit specifically stated:

The critical inquiry in such “refusal to deal” cases is not
whether there was a refusal to deal, or whether a refusal to
deal was carried out by agreement with others, but rather
whether the refusal to deal, manifested by a combination or

19See also, Bird, Sherman Act Limitations on Noncommercial Concerted
Refusals to Deal, 1970 Duke L.J. 247, 289, reaching the same conclusion for
a somewhat different reason: “(OJne of the reasons urging adoption of a per
se rule was the difficulty in isolating the ‘real’ purpose motivating a certain
action.”

20Several commentators have viewed Hawaiian Oke as involving no more
than a switch in distributors, arguing that the effect of the defendants’
agreement was merely to replace one exclusive distributor with another,
the number of distributors in the market thereby remaining constant.
These commentators suggest that without any evidence of anticompetitive
effect, the application of the per se rule may properly depend upon whether
the defendants were motivated by an anticompetitive intent. See Note,
Boycott: A Specific Definition Limits the Applicability of a Per Se Rule, 71
Nw. U. L. REV. 818, 826 (1977); Horsley, Per Se Illegality and Concerted
Refusals to Deal, 13 B.C. IND. & Com. L. REV. 484, 498-99 (1972); L.
Sullivan, Antitrust § 90 at 258-59 (1977).

11

conspiracy, is so anticompetitive, in purpose or effect, or

both, as to be an unreasonable restraint of trade. (454 F.2d

at 452).

Relying to a large extent on the Hawaiian Oke decision,
and the pre-Klor’s law review article on which it was based,?!
the Third, Fifth, Sixth and Eighth Circuits?? have recently
required, as a prerequisite to the application of this Court’s per
se doctrine, proof of the complex issue of defendant's purpose
or motivation, as wel! as proof of exclusionary effect or public
injury—precisely the questions which the per se doctrine was
designed to avoid.?3 ‘

This situation, at the very least, has created confusion in
the law. The proliferation of commentaries attempting to ex-
plain these decisions have only added to the confusion. This
point is perhaps best made by the district court’s opinion in
Cullum Electric & Mechanical, Inc. vs Mechanical Contrac-
tors Ass'n, 436 F. Supp. 418, 428-29 (D.S.C. 1976) aff'd 569
F.2d 821 (4th Cir. 1978):

Despite pronouncements of the Supreme Court, a mul-
titude of lower courts have continued to evaluate alleged
boycotts under a “rule of reason” analysis rather than by
the per se doctrine employed by the Supreme Court in the
aforementioned cases. As one commentator has observed,
“the law in Washington, however, is quite different from
the law in the rest of the country.” Woolley, /s a Boycott a
Per Se Violation of the Antitrust Laws?, 27 Rutgers L.

21 Barber, Refusals to Deal Under the Federal Antitrust Laws, 103. U. Pa. L.
REV. 847 (1955).

22See DeFilippo v. Ford Motor Co., 516 F.2d 1313 (3rd Cir. 1975), cert.
denied 423 U.S. 912 (1975): BE. A. McQuade Tours, Inc. v. Consol. Air
Tour Manual Comm., 467 F.2d 178 (Sth Cir. 1972), cert. denied 409 U.S.

- 1109 (1973); Sulmeyer v. Coca Cola Co., 515 F.2d 835 (Sth Cir. 1975), cert.
denied 424 U.S. 934 (1976): Worthen Bank & Trust Co. v. National Ban-
kAmerica, Inc., 485 F.2d 119 (8th Cir. 1973), cert. denied 415 U.S. 918
(1974); Lamb Enterprises, Inc. v. Toledo Blade Co., 461 F.2d 506 (6th Cir.
1972), cert. denied 409 U.S. 1001 (1972).

23Not all of the Circuits have, however, adopted the broad limitations of
Hawaiian Oke. Most notably, the Second Circuit appears to have confined
Hawaiian Oke to its facts. See Taxi Weekly, Inc. v. Metropolitan Taxicab
Bd. of Trade, 539 F.2d 907 (2nd Cir. 1976).

12

Rev. 773 (1974). The article cited above catalogs and dis-
cusses a large collection of lower court decisions which
employ various theories to qualify the per se rule; these
cases, however, involve many factual situations which
might arguably appear to fall well within the category of
boycotts which the Supreme Court would consider per se
illegal. This apparent dichotomy between the Supreme
Court and lower court views of the law applicable to group
boycotts has prompted many other articles as well.
{Citations omitted]. These sources contain numerous cita-
tions to decisions in which lower courts, in one way or
another, have declined to adhere to the application of a per
se rule of illegality in cases involving allegations of group
boycotts. Reported decisions also indicate that this trend
has continued since the publication of the most recent of the
articles cited above [1974]. While a discussion of all of these
decisions might not prove to be a totally impossible under-
taking, it would certainly be fruitless to attempt to recon-
cile the various approaches taken therein. To state that the
law concerning group boycotts and Section 1 of the Sher-
man Act lacks consistency would be to understate the truth
by a wide margin. (Emphasis supplied).
It is respectfully submitted that this admitted confusion in
the lower federal courts requires clarification by this Court.

THE DECISION BELOW IS IN DIRECT CONFLICT
WITH THE DECISIONS OF THIS COURT AND OTHER
CIRCUITS HOLDING SUMMARY PROCEDURES IN-
APPROPRIATE IN COMPLEX ANTITRUST LITIGA-
TION WHERE MOTIVE AND INTENT PLAY SIGNIFI-
CANT ROLES.

In audition to the substantive antitrust issues, this case
presents the additional question of whether an adjudication
based ultimately on respondents’ alleged motivation, even if
relevant in group boycott cases, can properly be made on a
motion for summary judgment, particularly when the alleged

13

motivation is refuted by counter-affidavits.24 The most basic
requirement of Fed. R. Civ. P. 56(¢), that there be an absence
of any “genuine issue as to any material fact,” appears to
prohibit such an adjudication.

The lower federal courts have repeatedly held, in a variety
of contexts, that summary judgment is not a proper vehicle for
resolution of disputes involving motivation or intent or “con-
cerning state of mind and conflicting interpretations of per-
ceived events.””° This is particularly true “when [the] essential
facts are solely within the control of the moving party.”6

This Court has itself cautioned the lower federal courts on
several occasions that, “summary procedures should be used
sparingly in complex antitrust litigation where motive and
intent play leading roles, the proof is largely in the hands of the
alleged conspirators, and hostile witnesses thicken the plot.”?7

Iil.

THE DECISIONS BELOW, BY SANCTIONING RE-
SPONDENTS’ USE OF A LABOR AGREEMENT TO EN-
HANCE THE COMPETITIVE STATUS OF ODA AND
PECA, HAVE CREATED A DANGEROUS PRECEDENT
WITH APPLICATIONS FAR BEYOND THE INSTANT
CASE. ;

Although the district court expressly found that IBEW’s
stated purpose to assist PECA financially was “unmistakably
tainted” for purposes of the labor exemption, both of the courts
below relied on this very purpose to immunize the ensuing
labor and non-labor agreements from the antitrust laws. The
decisions below are not only illogical in this respect, but have,
in effect, created a precedent explicitly permitting a labor
agreement to be used to enhance the competitive status of a
non-labor group at the expense of its competitors in the
marketplace.

24See note 10, supra at 7.

°Schmidt v. McKay, 555 F.2d 30, 37 (2nd Cir. 1977); Accord, Staren v.
American Nat'l Bank & Trust Co., 529 F.2d 1257 (7th Cir. 1976).

26 Mazaleski v. Treusdell, 562 F.2d 701, 717 (D.C.Cir. 1977).

27Poller v. Columbia Broadcasting System, 368 U.S. 464, 473 (1962); Nor-
folk Monument Co. v. Memorial Gardens. Inc., 394 U.S. 700, 704 (1969).

14

Unless the Court of Appeals is reversed, its decision will
serve as an open invitation to others engaged in collective
bargaining to create similar anticompetitive schemes utilizing
the collective bargaining process to obtain a powerful advan-
tage over their competitors. Extension of the practices con-
doned by the Court of Appeals will not only affect the livelihood
of many thousands of insurance agents and reduce the services
they pro vide to the insurance consumer, but will dramatically
and adversely affect every other trade or business desiring to
deal with those bound by a labor agreement.

CONCLUSION

The importance of the questions presented, the admitted
confusion in the lower courts and the inherently anticompeti-
tive effect of respondents’ scheme require this Court’s review.

For the reasons stated above, petitioners urge this Court to
grant a Writ of Certiorari to review the decision of the United
States Court of Appeals for the Ninth Circuit.

Respectfully submitted,

WILLIAM M. SWOPE
ROBERT A. ROWAN
1000 Bishop Street
Honolulu, Hawaii 96813

Counsel for Petitioners
Of Counsel:

CADES SCHUTTE FLEMING & WRIGHT
1000 Bishop Street
Honolulu, Hawaii 96813

October 24, 1978.

15

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_1965%3A1. Public record. Not legal advice.