Petition — Smitty Baker Coal Co. v. United Mine Workers

Supreme Court brief1980

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Gapreme Court, Ua

FILED

JUL 9 1980

IN THE |

AK, JR., CLERR

SUPREME COURT OF THE UNITE

OCTOBER TERM, 1979

NO.

—8U-33

SMITTY BAKER COAL COMPANY, INC.,

Petitioner,

UNITED MINE WORKERS OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CLAUDE K, ROBERTSON

J. EDWARD INGRAM

Of Counsel: Fowler & Robertson

Seventh Floor

Joseph E, Wolfe First Tennessee Building

Earls, Wolfe & Farmer Knoxville, Tennessee 37902

P, O. Box 196 (615) '637-4311

Pg Sa Counsel for Petitioner

TENNESSEE LAW PRINTERS, P. O. Box 277, Knoxville, Tennessee, Phone 525-4202

7-4-80-60

QUESTIONS PRESENTED FOR REVIEW

1. Did the Fourth Circuit err in holding union

conduct, which injured Petitioner, protected by

labor's statutory exemption from the antitrust laws

nothwithstanding the illegality of such conduct under

federal labor laws?

2. Is proof of an express predatory intent to

absolutely ruin a single non-unit employer a condi-

tion precedent to union liability under the Sherman

Act (15 U.S.C. §8$ 1 and 2) and Section 4 of the Clay-

ton Act (15 U.S.C. § 15)?

3. Does a union "conspire" in violation of the

antitrust laws by:

(a) Imposing through a multiemployer

"National" contract an express boycott of all

coal produced by non-signatories of the ''National"”

contract;

(b) Replacing the express boycott with a

penalty clause imposing economic sanctions on

coal purchases from non-signatories to the

"National" contract;

gaining freedom and to uniformly impose the

"National" contract on all other bargaining units;

(d) Engaging in concerted "top down" orga-

nizing with the economic assistance of favored

employees to force recognition and adherence to

the "National" contract by non-unit employers;

(e) legally striking non-unit employers

and refusing to bargain with them thereby

perpetuating the combination, avoiding economic

disadvantage to the favored employers, and ime

posing the multiemployer agreement on such

non-unit employers?

4. Did the Courth Circuit usurp the jury's func-

tion in violation of the Seventh Amendment by setting

aside a finding of conspiracy between the union and

non-labor groups by the Jury and the District Court?

o. Did the Fourth Circuit err in affirming the

District Court determination that illegal union conduct

which injured Petitioner would be sanctioned because

it occurred in the context of a national strike and

despite the fact that the union had no labor dispute

with Petitioner?

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW ......

UE SAI oon ene ark ae no oe

Ss as es ew eek hee ee

CONSTITUTIONAL AND STATUTORY PRO-

ee er re ae ee are

mua Dw

ees Ge Se yg ke a we ee ee oe

Pere Pee ee ee on os lew Oe *

. see Comepivate Preven 1.4.2.6 2b tee ae

. Impact of Conspiracy on Petitioner

. The Decision of the District Court

F.,

REASONS FOR GRANTING THE WRIT .......

The Decision of the Fourth Circuit

SUUMMGEF ccc pete e nee toe ee ee

The Lower Courts Have Misconstrued

This Court's Decisions in Pennington And

Subsequent Decisions Regarding Con-

spiracies Between Labor and Non-Labor

Groups and Labor's Antitrust Exemption

. The Lower Courts Have Misconstrued

This Court's Decisions Regarding "Pred -

atory Intent" and Causation Under the

Antitrust Laws ae oe oe ak en a oe . a . . . . ee

D, The Courts Below Have Invaded The Prov-

ince of The Jury in Violation of The

Seventh Amendment ......2-ecc000-. 30

CONGR 6 2 6 62 bbe eee bee ee ee ce’ ee

Appendix A —

Opinion of the Court of Appeals ......... 34

Appendix B —

Constitutional and Statutory Provisions ..... 84

TABLE OF AUTHORITIES

Cases:

Allied Chemical & Alkali Workers v.

Pittsburgh Plate Glass Co.,

aia On. dh en ase ak ke eee ee 24

Amax Coal Co. v. NLRB,

614 F.2d 872 (8d Cir. 1980) ....... cs. ae

Connell Co. v. Plumbers & Steamfitters,

gS A) seu, oe oe

25, 26, 29

Consolidated Express, Inc. v.

N. Y. Shipping Ass'n.,

602 F.2d 494 (8d Cir. 1979) .....200.2.. 26, 28

Continental Ore Co. v.

Union Carbide Corp..,,

us Ae: ee er eee oo 47, 30

Dick v. New York Life Ins. Co.,

oe Re ee ee eee |

FMC v. Pacific Maritime Ass'n.,

435U.S. 40(1978) ..... aye eae es 26

Greenville Publishing Co., Inc. v.

Daily Reflector, Inc.,

496 F.2d 391 (4th Cir. 1974) . . ee ce ecces 28

Hooker Chemical & Plastics Corp. v. NLRB,

Sie me SG CO Clr. 2978). 0 0s 0 24

In Re International Union, U.M.W.A. and

BCOA, etal.,

165 NLRB No. 49, 1967 CCH-NLRB

(i. giv.) ne eee ee ee ee ee ee 23

In Re Raymond O. Lewis, et al.,

148 NLRB No. 31, 1964 CCH-NLRB

UP Pe ee ee ee 23

Larry V. Muko, Inc. v. Southwestern

Pennsylvania Trades Council,

pe 8) 2 ee a er eee a 23, 29

Meat Cutters Union v. Jewell Tea Co.,

OGl GiB. GG CARED « 0 es eee wees 28

National Society of Professional Engineers v. U.S.

SOS UE, GFF GFP cw cece ett awe ee 27

NLRB v. Enterprise Ass'n. of Steamfitters,

GaP UB. Dae Geer ee bc os ¢ 4 hes Oe 29

NLRB v. Iron Workers,

S06 U8. SEe Gee 6 528 We ee es 25

Perma Life Mufflers v. International Parts,

ge ee ee ee ee 28

Radovich v. National Football League,

won UB. OG Gare 6 we 8 6 ee ee se 8 29

Ramsey v. UMW [Ramsey I],

265 F.Supp. 388, affirmed 416 F.2d 655

(6th Cir. 1969), reversed and remanded

401 U.S. 302 (1971)

Ramsey v. UMW [Ramsey II], 481 F.2d 742

(6th Cir. 1973)cert. den, 402 U.S. 983... ‘7, 27

Scotia Coal Co. v. UMW,

E.D. Ky. 1975,

No. 2031, affirmed per curiam

No. 76-2485 (6th Cir. 1978) cert. den.

na SEN acs 6-4 @-4. 0-4 4 oe 0 ke @ 6 6060 ° 17

Seymour v. Coughlin Co.,

609 F.2d 346 (%h Cir. 1979)

cert. den. 48 L.W. No. 45 (No. 79-1491) ... 24

Smitty Baker Coal Co. v. UMW,

457 F. Supp. 1123 (W.D. Va. 1978) ....... 16

Solar Fuel Co. v. UMW,

346 F. Supp. 789 (W.D. Pa., 1972)

aff'd. 481 F.2d 1399 (3d Cir. 1973) ......-. 17

South East Coal Co. v. UMW and

Consolidation Coal Co.,

434 F.2d 767 (6th Cir. 1970)

~~ ee pe OE ee 17

Tennessee Consolidated Coal Co. v. UMW,

434 F.2d 767 (6th Cir. 1970)

cert. den. 402U.S. 983 ...... eae ar ee

UMW v. Pennington [Pennington I]

LS ae | 17, 23, 27, 31

Lewis v. Pennington (Pennington II]

257 F. Supp. 815 (E.D. Tenn, 1966)

affirmed 400 F.2d 806 (6th Cir. 1968)

es Ge ee es POO oe eee het es

U.S. v. Griffith,

334 U.S. 100 (1948) 0 #2 6 © 6-2 2 @ &.2¢ F< 28 28

Western States Regional Council No. 3. v.

NLRB,

398 F.2d 770 D.C. Cir. 1968) ...... ooo of

Constitutional Provisions:

U.S. Constitution, Amendment VII ,

Statutes:

Clayton Act (15 U.S.C. 84) ...

Sherman Act (15 U.S.C. §$§1, 2)

28U.S.C. $158), 158) ....

20 eee, CASE es eee es

28U.S.C. $8§1254(1), 2101¢)...

Other Amenities:

Areeda & Turner, Antitrust Law, Vol. 1,

1229, at p. 221 (1978) .....

vii

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1979

NO.

SMITTY BAKER COAL COMPANY, INC.,

Petitioner.

Vv.

UNITED MINE WORKERS OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

TO THE HONORABLE, THE CHIEF JUSTICE AND

ASSOCIATE JUSTICES OF THE SUPREME COURT

OF THE UNITED STATES:

PETITIONER, SMITTY BAKER COAL COMPANY, INC.,

RESPECTFULLY PRAYS THAT A WRIT OF

CERTIORARI ISSUE TO REVIEW THE

JUDGMENT OF THE UNITED STATES

COURT OF APPEALS FOR THE

FOURTH CIRCUIT IN THIS CASE.

OPINIONS BELOW

The decision of the Fourth Circuit is not yet officially

reported. It is unofficially reported in 1980-1 Trade

Cases, 463,286 and is reproduced in Appendix A hereto.

The decision of the District Court is officially reported

at 457 F.Supp. 1123 (W.D. Va. 1978).

JURISDIC TION

The judgment and opinion of the Fourth Circuit was filed

on April 11, 1980. This Petition for Certiorari is filed

within 90 days of that date. This Court's jurisdiction is

respectfully invoked pursuant to 28 U.S.C. §§1254(1) and

2101(c).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Statutory provisions involved are Sections | and 2 of

the Sherman Act (15 U.S.C. §§1 and 2); Sections 4 and

6 of the Clayton Act (15 U.S.C. §§15 and 17); Section 20

of the Clayton Act (29 U.S.C. §52); Sections 2, 4 and 6

of the Norris-LaGuardia Act (29U.S.C. §§102, 104 and

106); and the Labor Management Relations Act, as

amended [29 U.S.C. §§141, 151, 157, 158(d) and 158(e)].

Also involved is the Seventh Arnenament to the Constitu-

tion of the United States. These provisions are reproduced

in pertinent part in Appendix B hereto.

STATEMENT OF THE CASE

A. NATURE OF THE CASE

Petitioner, Smitty Baker Coal Company, Inc. ("Smitty

Baker") brought this suit in 1973 to recover damages for

injuries to its business and property as a result of the

blatant conspiracy, strike and boycott aimed at its mining

operations in Lee County, Virginia. Respondent United

Mine Workers of America ("UMW") was the principal

moving entity in the conduct of which Smitty Baker com -

plains. -No labor dispute existed between UMW and

Smitty Baker, Smitty Baker charged UMW with viola-

tions of the Sherman Act.' The jurisdiction of the U. S.

District Court was invoked under Section 4 of the Clayton

Act.* The case was tried before a jury in 1975 and sub-

mitted on instructions which were unchallenged on appeal.

The jury returned its special verdict finding UMW guilty

of an antitrust conspiracy with non-labor groups which

was the proximate cause of damages to Smitty Baker in

the amount of $1,250,000 on November 1, 1975,

Nearly three years later the District Court set aside

the jury verdict and entered judgment N.O.V. for UMW.

In so doing the District Court affirmed the jury's finding

of conspiracy but disagreed that the conspiracy proximately

caused damage to Smitty Baker. Almost two years later,

on cross -appeals, the Fourth Circuit reversed the District

Court and jury findings of conspiracy and affirmed the Dis -

trict Court's grant of judgment N.O.V. to UMW.

B, THE FACTS NOT IN DISPUTE

Smitty Baker was a small coal company formed in 1969

by Ralph Baker and his son Smitty. The elder Baker had

worked around the mines most of his life, having gone to

school only through the fourth grade. (3a) Prior to com-

mencing operations, Baker approached Peabody Coal Com-

pany about obtaining a lease of coal lands. Peabody was a

large combine which controlled about ninety percent of

available coal reserves in Lee County, Virginia, but which

lis U.S.C. §§1 and 2.

715 U.S.C, §15.

had no mining operations there. Peabody required

Smitty Baker to sign the 1968 National Bituminous Coal

Wage Agreement as a condition of granting the company

two leases. The 1968 National Agreement was one in a

series negotiated since the early 1950's between UMW

and the Bituminous Coal Operators Association (BCOA)

of which Peabody was a member. Smitty Baker had

no employees at the time this collective bargaining

agreement was imposed uponit. Nor was it contacted

by UMW until sometime subsequently. Smitty Baker

was not a member of BCOA,

Smitty Baker operated its mines successfully in the

next few years. It experienced no difficulty in its mining

operations or in marketing its production to the Tennessee

Valley Authority. However, on September 30, 1971, the

UMW contract with the BCOA expired. UMW had given

BCOA the required statutory sixty -day notice of termina -

tion. No such notice was given Smitty Baker or other

non-BCOA signatories. Recognizing that the UMW —

BCOA contract was expiring, and upon learning that

UMW intended to strike Smitty Baker even though its labor

contract was still in effect, Baker attempted to make arrange -

ments to counter any effect of a strike against BCOA mem-

bers on the corporation's business. He requested that UMW

permit the Smitty Baker employees to continue working with -

out interruption. In exchange Smitty Baker would agree to

whatever terms UMW negotiated with BCOA and would apply

them retroactively to October 1, 1971. This conditional

offer was refused and Smitty Baker's work force went on

strike forcing closure of the company's mines, even

though no labor dispute existed.

After commencement of the strike, Baker attempted to

get UMW to permit employees in rotation tocross the picket

lines to do maintenance work. Maintenance or "dead

work" is critical in a coal mine to prevent rapid de-

terioration from acid mine water and other inherent

natural conditions. UMW had traditionally permitted

such non -productive maintenance work during strikes.

Baker was rebuffed on every occasion. UMW never

allowed such maintenance work to be done. UMW

never requested or offered to bargain with Smitty Baker

for a contract,

Finally, on or about November 15, 1971, UMW and

BCOA agreed to their new 1971 "National" contract.

The following day UMW requested Smitty Baker to sign

a stipulation to be bound by the new UMW -BCOA contract.

UMW field representatives did not yet even have the

actual contract for Baker to see. Baker refused as he

had just the day before hired several Southern Labor

Union employees to attempt to salvage the mines. These

employees went into the newer of the company's two

mines for one shift. When they exited they were assaulted

by a mob of UMW members. Threats and abusive state-

ments were made and some violence ensued. The SLU

employees never returned to work. UMW and SLU filed

unfair labor practice charges which were later said to have

been withdrawn.°

On December 15, representatives of Peabody and UMW

visited Baker » insist that he sign the UMW -BCOA contract.

The Peabody representative told Baker that the company's

then -expired lease on one of the coal properties would not be

SThe complement of SLU employees was both former supervisors and

new employees, UMW and SLU filed charges with the NLRB against each

other, SLU withdrew from the dispute and UMW then withdrew its charges.

Baker was never given a written confirmation of this by the NLRB or UMW,

UMW was unable to produce a copy of such NLRB confirmation at the trial

even though UMW argued that it had received one.

renewed by Peabody until Smitty Baker signed the UMW -

BCOA contract. On December 17, Baker offered to

sign such a stipulation pending NLRB confirmation that

all charges had been withdrawn. This would have per-

mitted the employees to return to work at the new wages

and benefits for thirty (30) days and to go back on strike

if no NLRB confirmation was received by the end of that

period, UMW refused this offer although the employees

supported it. At this point no one had been in the mines

to determine their condition.

Baker then turned the matter over to the company's

attorney. Attorneys for UMW and the company began

negotiations in late December, 1971. UMW continued

to insist on the new UMW-BCOA contract. The company

countered with its own proposal which substantially

embodied the 1968 contract which had not been terminated

No progress was made. By late January 1972, Smitty

Baker's employees became so frustrated that they pre-

pared and submitted their own meager document which

would have permuted them to do dead work in an attempt

to avoid complete destruction of the mines. The agree-

ment of both the company and the Union was obtained.

The employees then entered the newer of the company's

two mines for maintenance work only to find substantial

damage which was beyond the company's ability to repair.

The other mine was too deteriorated and dangerous for the

men or federal mine inspectors to evenenter. Unable

to restore the mines or to even make its payments on the

severely damaged equipment, Smitty Baker was forced into

a distress sale of its one non-expired lease, equipment

and other assets in March 1972,

C. THE CONSPIRACY PROVEN

The evidence of the conspiracy is predominantly from

the writings, records, minutes and testimony of the named

conspirators and their representatives. Since 1950, UMW

has forfeited its bargaining freedom by the "straightjacket”

agreement with the major coal producers represented by

BCOA. BCOA was formed in 1950 by a group of large

coal producers for the purpose of promoting ‘stable, just

and harmonious industrial relations on a national basis."

BCOA initially represented about 50% of the productive

capacity of the industry. Thereafter, departing from its

prior practices, UMW negotiated collective bargaining

agreements only with BCOA. The ensuing period was one

of no strikes against BCOA members. Successive wage

and benefit increases were negotiated. These UMW-

BCOA contracts were then printed and sent to UMW Dis-

tricts to obtain the signatures of non-BCOA coal producers,

The UMW Districts were not authorized to agree to any

other contract with a non-BCOA company. No deviation

from the terms of the UMW-BCOA contract was, in fact,

ever approved, Offers by non-BCOA producers to bargain

for any different contract were consistently met with mob

violence, strikes, boycotts and other unlawful conduct by

UMW.

Simultaneously with the formation of BOCOA, UMW estab-

lished an International Organizing Committee "to promote

an intensified and integrated organizing campaign in the

nonunion areas of the Bituminous Coal Industry". By 1952,

John L, Lewis, who prior to 1950 was the champion of the

coal miner as UMW president, had changed his "tune" and

was no longer harping about the greed of the big companies

‘running rampant and the preservation of union jobs, In-

stead he was advocating increased productivity and a "con-

centration of production into fewer units" with the re-

sultant elimination of the many small productive units

in the industry and loss of jobs for UMW members.

By 1956, the UMW-BCOA contract covered approxi -

mately 60% of the industry work force. Lewis noted

that the National Contract was ‘tailored to fit the future

requirements of constantly progressive industrial

techniques" and was "making possible larger combina -

tions of operating units in the country, which is an end

greatly desired. ..". With tu.e new concentration of

production came concomitant unemployment, From

1950 to 1970 almost 275,000 coal miners —many of them

UMW members —lost their jobs.

As the leader of UMW's organizing committee, Tony

Boyle concentrated the union's organizing efforts on the

non-union areas of the coal fields. Scores of small

mines and all the major non-union operations had signed

the UMW -BCOA contvact by 1956, In that year dele -

gates to the UMW convention were told of the union's

success in organizing the West Kentucky Coal Co. and

the Nashville Coal Co. —two large southern producers.

What the delegates were not told was that UMW had taken

control of the stock of those companies at a cost of over

25 million dollars. The acquisition was accomplished

through a series of otherwise unsecured stock acquisition

loans to Cyrus Eaton by UMW which were foreclosed

when Eaton conveniently defaulted. Eaton had no personal

liability for the loans. The UMW's stated purpose of the

acquisition and organizing was because this non-union coal

was "breaking the price of coal down in every market that

it could penetrate." After discovery of these acquisitions

in the Pennington I'case, UMW sold the stock to Island

Creek Coal Company at a loss of over 10 million dollars.

By 1958, the UMW-BCOA combination was threatened

from an unexpected source. Unemployed miners with

no other means of livei.\ood began to establish thou -

sands of small mining operations which were not subject

to the UMW -BCOA "National" contract, At the same

time, the industry encountered a period of slack demand.

BCOA operators began demanding commitments from

UMW to eliminate the possibility of these non-union com -

panies escaping the "national" contractterms. UMW

severely criticized BCOA companies for purchasing or

brokering coal not produced under their "National Agree-

ment" and sought commitments to halt the practice. The

solution was the Protective Wage Clause (PWC) of the

1958 "National" contract.

Joseph Moody, of the Southern Coal Producers Asso -

ciation and subsequent BCOA Chairman, was deeply in-

volved in the formulation of the PWC. As reflected in

the Association mintes, Moody explained the theory behind

the PWC as follows:

In the promulgation of this contract over the years

and especially in the past ten years, we have estab-

lished a wage situation whereby most operators and

industry as a whole, had to go to general mechaniza-

tion of their operations because of the very high cost

of labor. In so doing, in the case of the coal industry,

there was a major decrease in the number of employees

and according to the bureau of labor statistics, there

was a drop from 400,000 to less than 200,000. ...

and so we find a surplus of labor throughout the coal

fields. The law of supply and demand took over and

we discovgred that the labor price established by the

contract, was not the price established by the number

of miners available for work. The situation encouraged

the establishment of mines, not under the union con-

tract. .. . Lastly the coal market was rather

seriously weakened as far as price was concerned as

there was a premium on noncontract, low priced

coal,

As embodied in the 1958 "National" contract, the PWC

had various clauses to deal with the concerns of UMW and

BCOA about noncontract, low priced coal. Paragraph A,

demanded by BCOA, required the union to enter into only

the "National contract" and to fully enforce it against all

operators organized by UMW. Paragraph B, demanded

by UMW, required signatory operators to boycott coal not

produced under the "National" contract. Paragraphs C

and E established a "Joint Industry Contract Committee"

(JICC) to enforce the PWC, Paragraph D and E required

BCOA and UMW to exchange lists of al/ operators "whose

operations are under contract with the union" and "all

contracts . . . entered into by the Mine Workers with any

person engaged in the production of bituminous coal."

These exchanges helped BCOA to determine which pro-

ducers would and would not be boycotted and to insure that

UMW was enforcing the "National Contract" against all

union operators, including non-BCOA signatories,

UMW and the BCOA operators each contributed

$150,000 to fund the enforcement activities of the JICC.

Formal determinations were made that many companies

were in violation of the PWC. However, before further

enforcement activities occurred, Congress passed the

Landrum -Griffen Act. Its "hot cargo" provisions cast

doubt on the legality of the boycott provisions of Para-

graph B of the PWC. Thus a resolution was adopted sus -

pending enforcement of Paragraph B to provide the opera-

tors with "an official document with important defensive

aspects" in the event they “are confronted with the possi-

bility of lawsuits —including antitrust treble damage

suits . . . °

Other provisions of the PWC were not suspended. As

JICC minutes of July 27, 1960 reflect:

It was pointed out by counsel present that certain

provisions of the Protective Wage Clause were not

affected by the Labor-Management Reporting and Dis -

closure Act of 1959 and that it was not only the right

but the duty of the Committee to continue to function

as an instrumentality for the advancement of the in-

terests of the contracting parties to the National

Bituminous Coal Wage Agreement.

The PWC was challenged before the NLRB. UMW and BCOA

joined in its defense. Nevertheless, the interruption of

Landrum -Griffen on the work of the JICC was having its

effect. On March 12, 1964, Fox (President of BCOA)

wrote to the president of Island Creek Coal Company,

(purchaser of UMW's stock in West Kentucky and Nash -

ville Coal Companies):

The matter of the competition of those in the bitu-

minous industry who are non-signatories to the National

Bituminous Coal Wage Agreement and thereby not obli-

gated to pay a higher wage scale and the 40-cent royalty

has been discussed on many occasions with the United

Mine Workers,

I hope that my presentations and the presentations

of others in the industry to the officials of the United

Mine Workers of America will make them appreciate

the seriousness of this situation, to not only the coal

companies, but to the United Mine Workers of America

as well. [emphasis supplied]

One month later in April, 1964, the new 1964 UMW-

BCOA National Bituminous Coal Wage Agreement was

announced, ‘Two clauses in this contract carried for-

ward and supplemented the PWC provisions previously

challenged before the NLRB.

The new "Eighty Cent Welfare Clause” required signa-

tory operators to pay a forty cent per ton penalty to the

UMW Welfare Fund for all coal purchased or acquired

from those not signatories to the "National" contract.

Thus the absolute boycott was replaced with an economic

penalty to encourage a boycott.

Carried forward were the provisions of Paragraph B

of the PWC regarding the "Application of Contract to

Coal Lands", Prior to 1958, and in fact since at least

the Ickes-Lewis Agreement of 1943, UMW collective

bargaining agreements had all provided that, "The

Operators agree that they will not lease any operating

mines subject to this [Agreement] as a subterfuge for the

purpose of avoiding this [Agreement]."" However, Para-

graph B of the 1958 PWC, as carried forward in the ex-

press language of the 1964, 1968 and 1971 UMW-BCOA

contracts was much broader. This new ‘Coal Lands

Clause" provided that the National Contract "covers the

operation of all of the coal lands, coal producing and

coal preparation facilities owned or held under lease... .

at the date of this Agreement, or acquired during its term

which may hereafter (during the term of this Agreement)

be put into production or use," It is this PWC provision

as contained in the 1968 National Contract which obligated

Peabody Coal Company to require Smitty Baker to sign the

UMW -BCOA contract as a condition of leasing its coal land

even though Smitty Baker had not yet hired any employees.

Nothing was said about the remaining PWC provisions

in the 1964 contract. There was no express rescission

of the PWC. UMW argues in this case that it was not

included since the 1958 National Contract was not in-

corporated by direct or indirect reference in the 1964

contract. However, in 1968 the "National" contract

included what, at first blush, appears to be a PWC

rescission clause, However, this language relates to a

"Most Favored Nation" PWC contained in a 1941 UMW

contract, This PWC with the most favored nation

language was carried forward in the Ickes-Lewis Supple -

mental Wage Agreement of 1943. It was subsequently

rescinded in the various 1947 and 1948 contracts. The

1950 UMW -BCOA contract contained the identical rescis -

sion language and the same language was carried forward

in the 1952, 1955, 1956, 1958 and 1964 amendments.

It had to be reinserted in the 1968 UMW-BCOA "National"

contract because the 1968 contract deleted incorporation

of the 1950 and 1952 Contracts, and instead, incorporated

agreements from 1941 and 1945 which had contained a most

favored nation clause denominated as a protective wage

clause ,4

In summary, petitioner proved a tacit agreement between

UMW and the large coal producers and their associations

represented by BCOA to utilize their ‘'National" contract to

force a concentration of the productive units in the coal in-

*The rescission obviously relates to the "most favored nation clause”

since it refers to provisions of contracts "providing for a protective wage

clause and a modification of this Agreement” if a more favorable agreement

is entered into by UMW, _If there were any real concern over UMW "“nego-

tiating” terms different from those in the UMW-BCOA contract, one would

think BCOA would insist on "most favored nation" clause. The absence of

such a provision is further evidence of the UMW-BCOA "straight-jacket "

agreement,

dustry. This was done by UMW's commitment to bargain

only with BCOA and in turn to impose the resulting ''Na-

tional" contract on all other units in the industry. The

parties expressed their arrangement, previously evi-

denced only by their conduct, inthe 1958PWC, Reacting

to industry conditions and competitive forces they ex-

pressly provided for the boycott of coal not produced

under their contract. They also expressly limited

UMW's bargaining freedom, In the face of the antitrust

judgment against UMW in Pennington I, affirmed by the

Sixth Circuit in December, 1963, UMW and BCOA dropped

the express boycott and forfeiture provisions from their

1964 "National" contract and substituted therefor the

"Eighty -Cent Penalty" clause which amounts to nothing but

an economic penalty equivalent to a boycott and the "Coal

Lands Clause" as modified to facilitate top down orga-

nizing by UMW so as by insure that all possible units in

the industry were brought under the UMW-BCOA "National"

contract,

From 1950 through March of 1972 UMW refused to bar -

gain with any unit in the industry other than BCOA. Con-

sistently since the formation of BCOA, UMW reserved the

weapon of a strike to those non-BCOA units which balked

at signing the UMW-BCOA contract, BCOA assisted

UMW's organizing by first a boycott, then an economic

penalty and an expanded coal lands clause, Smitty Baker

was forced to sign the UMW-BCOA contract to obtain coal

leases, Yet in 1971, when UMW and BCOA had their first

real disagreement over contract terms in over twenty

years, the balance of the units in the industry were struck

even though UMW had not terminated contracts with the

non-BCOA units and had no labor dispute with the non-BCOA

production units. And notwithstanding that strike against

all units, including BCOA, UMW still steadfastly refused to

bargain with any unit but 3COA, thereafter simply

imposing the BCOA contract on the balance of the units

in accordance with the conspiratorial agreement.

The District Court concurred with the jury that a con-

spiracy had been proven. However, it concluded that the

UMW conduct was exempt from the antitrust laws be -

cause national labor policy entitled UMW to strike all

bargaining units in the industry although the only labor

dispute was with BCOA,

The Fourth Circuit recognized that such an exemption

was untenable, It therefore chose to compartmentalize

the proofs, reweigh the evidence giving UMW the benefit

of every inference, and concluded that there was no proof

of a conspiracy and that UMW's conduct was within labor's

statutory exemption from the antitrust laws.

D. IMPACT OF CONSPIRACY ON PETITIONER

The UMW-BCOA contract was forced on Smitty Baker,

as a condition for its leases, by Peabody notwithstanding

the fact that Peabody had no mining operations in Lee

County, Virginia (although it had a monopoly on available

coal lands), Further, Peabody had no contract or com-

mitment to purchase Smitty Baker's coal production.

Smitty Baker was brought under the terms of the "National"

contract at a time when it had no employees and with no

Opportunity to bargain as to mandatory and nonmandatory

subjects or economic and noneconomic terms. There was

obviously no election or NLRB certification.

Smitty Baker had even less control over its destiny when

the UMW-BCOA contract expired in 1971, UMW struck the

Smitty Baker operations even though its contract had not

been terminated as required by statute.° | Throughout the

528 U.S.C. $158(d).

strike UMW refused to bargain or to offer to bargain for

any contract while it negotiated with BCOA. And then,

when Smitty Baker's small capital reserves were de-

pleted and its mines deteriorated beyond the capacity

of the company to restore, UMW offered as its only al-

ternative the new BCOA contract. UMW offered no jus-

tification for such conduct at trial but, for the first time,

on appeal advanced the theory that it struck the Smitty

Baker mines to bring pressure on BCOA to agree toa new

contract.

E. THE DECISION OF THE DISTRICT COURT

The jury returned a special verdict form finding UMW

had conspired with the large producers in violation of

the antitrust laws and that Smitty Baker was injured as a

result of the activities of UMW pursuant to the conspiracy.

In granting UMW a judgment N.O.V. the District Court

agreed that UMW had conspired with the large producers.

However, the Court disagreed with the jury's conclusion

that the proven illegal conduct materially contributed to

Smitty Baker's injury. He felt that the UMW strike was

not part and parcel of an illegal conspiracy. He stated:

The strike was uniformly enforced as to all em-

ployment units organized by UMW, large and small

alike. Plaintiff can scarcely be heard to argue that

the UMW's refusal to allow plaintiff to continue to

operate, under a mere stipulation to be retroactively

bound to the new agreement, was a manifestation of a

conspiracy to drive small operators out of business,

The integrity of a nationwide industrial strike could

not be maintained if such variations were allowed to

prevail. Smitty Baker Coal Co. v. United Mine Wkrs.,

457 F, Supp. 1123 at p. 1133 (W.D. Va. 1978),

F, THE DECISION OF THE COURT OF APPEALS

The Fourth Circuit disagreed with the District Court's

analysis as to the existence of a conspiracy between UMW

and the large producers, Writing for the panel, Judge

Russell undertook a detailed analysis of the Pennington

line of cases against UMW and various commentary on the

decision.® Adopting the concurring opinion of Mr, Justice

Douglas in Pennington as the authoritative expression of the

majority's conclusions in Pennington, Judge Russell con-

cluded that the following four elements were essential to

UMW's liability in this case:

1, Agreement with a substantial number of larger

employers to establish a wage scale for unit employees;

and,

2. Which wage scale the union and the employer group

knew that marginal employers could not afford; and,

3. Which wage scale the union undertook to impose on

the marginal nonmember operators; and,

4, With the intent to drive these marginal operators out

of business. (4la).

SFor other cases involving similar issues under the antitrust laws, see UMW

v. Pennington, [Pennington I), 381 U.S, 657 (1965); Lewis v, Pennington,

[Pennington II), 257 F, Supp, 815 (E.D, Tenn,, 1966) aff'd 400 F, 2d 806 (6th

Cir,, 1968) cert. den, 393 U.S, 983; Ramsey v, UMW [Ramsey I), 265 F.

Supp. 388, aff'd by equally divided ct,, 416 F,2d 655 (6th Cir, ) reversed and

remanded 401 U,S, 302 (1971); Ramsey v, UMW [Ramsey II], 481 F.2d 742

(6th Cir,, 1973); Tennessee Consolidated Coal Co, v. UMW, 434 F, 2d 767

(6th Cir,, 1970) cert, den, 402 U.S, 983; South-East Coal Co, v. Consolida-

tion Coal Co, and UMW, 434 F.2d 767 (6th Cir,, 1970) cert, den, 402 U.S,

983; Solar Fuel Co, v. UMW, 346 F. Supp. 789(W.D, Pa., 1972) aff'd

without opinion 481 F, 2d 1399 (3rd Cir,, 1973); Scotia Coal Co, v, UMW,

E,D, Ky., 1975, Civil Action No, 2031, aff'd per curiam, Sixth Circ, No.

76-2485 (1978), cert. den, «U.S. (Oct. 1978),

Judge Russell then concluded that Smitty Baker had failed

to prove any agreement to establish a wage scale which

the union and unit employers knew non-unit employers

could not meet; and, that there was no proof that the

union had agreed to impose any such wage scale on the

plaintiff .

Thus there was a complete absence of predatory

intent on the part of the Union. The wage scale

offered the plaintiff by the Union was one that the

plaintiff could meet... . The plaintiff's reason

for abandoning the mines on Peabody's land was... .

because of the strike on October 1, 1971, and, ac-

cording to its evidence, because of the start-up ex-

penses for reopening the mines at the termination of

the strike. (47a).

Concluding that the strike activity and the refusal to allow

maintenance work were unilateral, Judge Russell concluded

that such actions were protected by labor's statutory ex-

emption noting that 'this case is simply not a Pennington-

type case atall." (55a). The judgment N.O.V. in favor

of UMW was affirmed both for the reason stated by the

District Court and for the failure of the plaintiff to adduce

sufficient proof of an antitrust violation to permit the sub-

mission of such issue tothe jury. (56a).

REASONS FOR GRANTING THE WRIT

A. SUMMARY

The Court of Appeals and the District Court have unduly

compartmentalized UMW's antitrust liability to only those

cases falling factually and legally within the four corners

of the Pennington decisions. Petitioner respectfully urges

that such a restrictive view is incorrect. It is true that

much of the proof of conspiracy in this case was ori-

ginally discovered in the Pennington line of cases. It

is also true, as was urged of both Courts below, that

some of the conspiratorial terms constituting the anti -

trust violations against Smitty Baker have not been

those directly applied to plaintiffs in the prior Penning-

ton-type cases,”

The substantive violation of the antitrust laws here

involved is more akin to a refusal to deal (or a conditional

refusal to deal) by UMW pursuant to a horizontal agree -

ment with non-labor business competitors of Smitty Baker.

UMW has agreed with BCOA that it wil’ refuse to deal

with employers outside the favored bargaining groups un-

less and until it has reached agreement with the favored

employers. Then and only then will UMW deal with com-

petitors only on the terms reached with the favored group.

The antitrust laws have consistently condemned refusals

to deal precipitated by competitors urging a particular

anti-competitive policy.

Such conduct is not immunized simply because it man-

ifests itself in the context of a purported "national strike"’.

UMW has no right to illegally strike at Smitty Baker, to

refuse to deal or bargain, to boycott by refusing to pro-

vide employees to do traditional "dead work" or to refuse

to negotiate while it is engaged in negotiations with BCOA.

This is hardly unit by unit bargaining. Such activities are

no more legitimate than UMW's strikes, refusals to deal

and boycotts to impose the terms of the UMW-BCOA "Na-

Tal prior Pennington-type cases involved strikes and imposition of

the UMW-BCOA "National" contract, However, no prior case has invol-

ved the concerted action of UMW and BCOA in "top down” organizing under

the expanded "Coal Lands Ciause" of the PWC,

tional" contract on non-BCOA producers in the Penning -

ton-type cases mentioned above. ®

UMW and the lower courts seize upon this ‘National

Strike" defense with singular sanctity. UMW lamely

argues that the principal target of the strike was BCOA.

Such a strike against Smitty Baker was illegal even

under the labor laws. Smitty Baker's contract with UMW

had not expired or been terminated by UMW. And, if

UMW is to be believed, the strike at Smitty Baker had

an unlawful secondary motive —to pressure BCOA of

which Smitty Baker was not a member. However, it is

incredulous that striking BCOA's competitors could pos -

sibly bring pressure to bear on BCOA. It is more be-

lievable that, absent the illicit conspiracy, UMW would

pressure BCOA by allowing other units in the industry

to continue operations during the strike against BCOA,

This would subject BCOA members to potential losses of

profits and markets to competitors in other non-BCOA

units. The pressure on BCOA by such a non-comspira-

torial tactic is obvious.

We candidly agree that this is not a Pennington -type

case as Judge Russell perceives those cases. But that

begs the question. Smitty Baker was subjected to an

illegal strike and refusal to bargain while UMW and BCOA

were setting the terms for the entire industry. Once its

operations were depleted by this illegal strike, UMW

would only offer it the UMW-BCOA "National" contract.

Plaintiff could not afford it by that time and, with the

deteriorated condition of its mines and equipment, was

forced to liquidate its few remaining assets.

erhe Pennington-type cases ID, at fn. 6, involved producers both

signatory and non-signatory to the "National" contract. However, none

of them were members of BCOA,

In the context of this case, the Sherman Act does not

merely condemn agreements to drive small coal pro-

ducers out of business, It condemns agreements in

restraint of the trade of small operators which injure

them in their business or property. And proof of such

an illicit agreement does not require direct proof of

predatory intent, Such intent may be inferred from the

conduct of the parties. Nor is it a defense that the

UMW's goals may have been objects of legitimate union

concern. Legitimacy of purpose does not immunize

otherwise illegal conduct, Neither labor policy or anti-

trust policy sanction such conduct just because the goal

is arguably legitimate.

B. THE LOWER COURTS HAVE MISCONSTRUED

THIS COURT'S DECISIONS IN PENNINGTON AND

SUBSEQUENT DECISIONS REGARDING CONSPIR-

ACIES BETWEEN LABOR AND NON-LABOR

GROUPS AND LABOR'S ANTITRUST EXEMP-

TION.

Antitrust Laws |

The situation that has developed in the coal industry

since 1950 is nothing short of extraordinary. The main

producer associations in the country have pooled their

efforts through BCOA with UMW to prohibit contracting

on any other basis with the smaller units in the industry,

Successive substantial across the board wage increases

during the 1950's led to forced mechanization or elimina-

tion of small producers, Massive unemployment pro-

duced a new wave of non-union production, which UMW -

BCOA addressed through the 1958PWC. The UMW

Journal, official reporter of the union, interpreted the

union obligation under the PWC:

"The U.M.W.A. also agreed, in the clause,

that it would not make any agreement on wages,

hours or conditions of work on any basis other than

is specified in the contract."

The favored employer obligation was an express boy-

cott of non-union coal production and a prohibition against

leasing coal bearing lands except to signatories of the

UMW -BCOA "National" contract. UMW admits these

obligations were a quid pro quo.

With their arrangements under attack before the

NLRB, and faced with the Pennington I antitrust judgment

against UMW, together with the main producers com-

plaining of ‘the competition of those in the bituminous

industry who are non-signatories" the express boycott

of the PWC was replaced with the economic penalty of

the "Eighty -Cent Penalty Clause" applicable to anyone

dealing in coal not produced under the UMW -BCOA "Na-

tional" contract. In addition, the 'Coal Lands Clause"

which prohibited leasing to non-signatories was carried

forward in subsequent agreements.

Peabody Coal Co., a member of BCOA, owned or con-

trolled about 90% of the available coal reserves in Lee

County, Virginia, It leased those reserves but had no

mining operations there itself, Yet, pursuant to the

obligation of BCOA members under the "Coal Lands

Clause" Peabody required Smitty Baker to sign the UMW -

BCOA 1968 "National" contract as a condition precedent

to leasing Smitty Baker coal reserves,

While operating under this contract, Smitty Baker's

operations were struck to bring pressure on BCOA. .

At the time, UMW had not terminated the 1968 contract

with any bargaining unit other than BCOA, Yet all non-

BCOA units, including Smitty Baker were struck. UMW

refused to bargain for a contract with Smitty Baker or

any other non-BCOA unit because of its continuing agree -

ment to only bargain with BCOA. And, once the 1971

UMW -BCOA contract was agreed to, UMW refused to

bargain with Smitty Baker or any other non-BCOA unit

other than to demand the economic and non-economic

terms of the 1971 National Contract.

This is the very forfeiture of ability to bargain unit by

unit which this Court addressed in Pennington I, 381 U.S.

657 at 666 (1965). Recently this Court has again recog-

nized that, “Labor policy clearly does not require, how-

ever, that a union have freedom to impose direct re-

straints on competition among those who employ its

members." Connell Co. v. Plumbers & Steamfitters,

421 U.S. 616 at 622-23 (1975). And, the fact that union

goals are to protect work opportunities and to organize

as many contractors as possible does not immunize the

union from antitrust sanctions. Connell, supra at 625;

Larry V. Muko, Inc. v. Southwestern Pennsylvania, 609

F.2d 1368 at 1377 (1979) [Adams Concurring].

The methods utilized by the union in concert with BCOA

in this case are certainly not immune. UMW had admitted

that the "'Eighty-Cent Penalty Clause" was prompted by the

Same economic and industrial considerations which led to

the PWC. In Re Raymond O. Lewis etal., 148 NLRB

No. 31, 1964 CCH-NLRB 413,334 (1964). As later stated,

regarding this clause, "the economics of the bituminous

coal industry are such that non-signatories are faced with

two alternatives: either become signatories or lose their

Signatory customers." In Re International Union,

U.M.W. and B.C.0O.A. etal., 165 NLRBNo,. 49, 1967

CCH-NLRB @ 21, 492 (1967). Obviously, this penalty

clause does not qualify as a wage standard provision be -

Cause a penalty is imposed whenever a purchase is made

from non-signatory operators without regard to the wage

standards of such employers. Connell, 421, U.S. 616,

at p. 623,

The "Coal Lands Clause" as introduced in 1958 and

carried forward in all subsequent contract is not a legit -

imate work preservation clause, Its application to

Smitty Baker was not to preserve work of UMW employees

of Peabody. There was none in Lee County much less any

in danger of displacement by the Smitty Baker operations,

This provision was calculated to satisfy UMW-BCOA ob-

jectives elsewhere. Amax Coal Co. v. N.L.R.B., 614

F.2d 872, 883-85 (3d Cir. 1980), declared the identical

clause secondary and illegal.

Smitty Baker was not a member of BCOA,.? Amax,

supra at 880. UMW did not notify any unit but BCOA that

the 1968 contract was terminated. This failure to comply

with the notice requirements of Section 8() of the Labor

Management Relations Act and the contract itself made

the strike at Smitty Baker illegal. Amax, supra, at 888.

The sixty-day notice provisions of the statute are manda-

tory. Allied Chemical & Alkali Workers of Pittsburgh

Plate Glass Co., 404U.S. 157, 187 (1971); Seymour v.

Coughlin Co., 609 F.2d 346 (%h Cir. 1979)cert. den, No.

79-1491, 48U.S.L.W. No. 45. Hooker Chemical & Plas-

tics Corp. v. N.L.R.B., 573 F.2d 965, 970 (7th Cir.

"initially, Smitty Baker offered to be bound by the UMW-BCOA nego-

tiations retroactively if UMW would not strike its operations. This condi-

tional offer was refused and did not constitute an unequivocal intention to

be bound in collective bargaining by group rather than individual action,

Western States Regional Council No, 3v. N,L,R.B,, 398 F.2d 770, 773

(D.C, Cir, 1968),

1978). UMW's refusal to negotiate except to insist upon

imposition of the BCOA multiemployer agreement on

Smitty Baker is, in any event, a violation of Section

8(b)(3) of the Act, Amax, supra, at 881,

This whole scheme of penalties and "top-down" or-

ganizing is perverse to national labor policy. In this

case UMW and Peabody used economic weapons to force

recognition before Smitty Baker even had any employees,

The major purpose of the 1959 addition of Section 8(b)(7)

to the Act was to ensure that employees were free to

make an uncoerced choice of their bargaining agent.

N.L.R.B. v. Iron Workers, 434U.S. 335 (1978), As

this Court recognized in Connell, supra.,

"One of the major aims of the 1959 Act was to

limit ‘top down'organizing campaigns, in which unions

used economic weapons to force recognition from an

employer regardless of the wishes of his employees,"

421U.S. at 632.

It is respectfully urged that Congress did not intend to

create a loophole for concerted "top-down" organizing

campaigns conducted by a union and a major employer

group.

The conduct offending the antitrust laws in this case

is the concerted 'top-down" organizing by UMW and Pr a-

body; the illegal strike at the Smitty Baker mines at a

time when UMW had no dispute with Smitty Baker; the

illegal secondary purpose of UMW to bring pressure to

bear on BCOA (if UMW''s justification can be believed);

and the concerted refusal of UMW to negotiate any collec -

tive bargaining agreement with Smitty Baker short of the

1971 UMW-BCOA contract despite the depleted condition

of Smitty Baker as a result of the illegal strike and despite

the fact that Smitty Baker's previous contract was still

in full force and effect.’° As noted above, none of these

actions are sanctioned under federal labor law. They

are all illegal. Congress has drawn the line between

legitimate and illegitimate labor organization activities

in Sections 8(b) and 8(e) of the Labor Management

Relations Act. Consolidated Express, Inc. v. N. Y.

Shipping Ass'n., 602 F.2d 494 at 524 (3rd Cir. 1979).

There can be no statutory or non-statutory immunity

from the antitrust laws for such illegal conduct. This

conduct obviously restrained the trade of Smitty Baker

and other coal producers not members of BCOA while in-

Sulating the BCOA members from competition from such

nen-member producers during the term of the strike.

FMC v. Pacific Maritime Assn., 435 U.S. 40 at p. 48

(1978). Thereafter, it was business as usual for the

conspirators —Agreed upon imposition of the terms

they had set on the balance of the units in the industry.

The primary effect of the UMW-BCOA agreement goes

beyond inhibiting the union from offering any other em-

ployer a more favorable contract —a problem which con-

cerned this Court in Connell, 421 U.S. at p. 623. Here

the agreement prohibited the union from offering any

differentterms—economic or non-economic —to any

employer not a member of the BCOA unit. The union

has forfeited all flexibility to adjust its contracting

policies to meet the needs of union members or employers. !}

1015 prior Pennington-type cases, the issue of strike legality for recognition

or unfair labor practice purposes as opposed to a UMW-~-BCOA conspiracy has

been one of fact. In the case at bar, no such factual difficulty exists. Rec-

ognition had been achieved by the UMW-Peabody imposition of the contract

on Smitty Baker and there was no labor dispute with Smitty Baker at the time

of the strike.

Mumw's District 28 covered Lee County, Virginia. The District 28

President testified as follows:

(Continued on next page)

C. THE LOWER COURTS HAVE MISCONSTRUED

THIS COURT'S DECISIONS REGARDING "'PRED-

ATORY INTENT" AND CAUSATION UNDER THE

ANTITRUST LAWS.

The Fourth Circuit held that decisions of this Court

in Pennington Iand Ramsey I established a standard of

predatory intent to accomplish absolute ruin as a pre-

requisite to union liability under Section 4 of the Clayton

Act. Judge Russell analyzes the cases and concludes

there is no room for doubt that there must be an anti-

competitive purpose to "ruin" the small marginal com-

petitors in order to establish an antitrust violation in the

Pennington -type situation, (34a). He states that this is

necessary to furnish evidence of predatory intent. (40a).

This standard does not comport with the provisions of

Section 4 of the Clayton Act which provides its remedy to

anyone injured in his business or property. Absolute

ruin is hardly the touchstone of standing in antitrust cases.

Further, intent is often inferred where evidence of a con-

spiracy must come from the conspirators themselves.

Continental Ore Co. v. Union Carbide Corp., 370U.S.

690 (1962); National Society of Professional Engineers v.

U. S., 435U.S. 679 at p. 690 (1978). As Mr. Justice

Douglas once wrote, it is "not always necessary to find a

specific intent to restrain trade or to build a monopoly in

(Continued)

Q. Do you or have you, I should say, negotiated any district contracts

since you have been president of District 28,

A. No, no district contracts, We have done a good deal in nego-

tiating, but the final analysis is the National Bituminous Coal Wage Agree-

ment,

Q. You seek to have coal operators in your area execute that agree-

ment, is that correct?

A, Yes.

Q. Do you have any authority as a district president to deviate from the

terms of that agreement?

A. No, sir, in no way.

order to find that the antitrust laws have been violated

[as it]is sufficient that a restraint of trade or monopoly

results as a consequence of defendant's conduct or

business arrangements." U.S. v. Griffith, 334U.S.

100 (1948). See also Greenville Publishing Co., Inc. v.

Daily Reflector, Inc., 496 F.2d 391 (4th Cir. 1974),

The jury, the District Court and the Fourth Circuit’

agree in this case that Smitty Baker was injured by the

strike and subsequent actions of UMW at the Smitty

Baker mines, (47a). UMW interposed arguments of

intervening cause from the hiring of Southern Labor Union

employees by Smitty Baker for one day, These argu -

ments were rejected by the jury and ignored by the Fourth

Circuit, Yet there is no dispute that the strike and all

the consequences thereof was the material cause of Smitty

Baker's injury. Perma Life Mufflers v. International

Parts, 392 U.S. 134 at 143-44 (1968). Under these cir-

cumstances, a more appropriate inquiry should have been

if there were less restrictive ways for UMW and BCOA

to achieve whatever legitimate objectives they had,

Consolidated Express, Inc. v. N. Y. Shipping Ass'n..,

602 F.2d 494 at p. 517 (3d Cir. 1979); Meat Cutters Union

v. Jewell Tea Co., 381 U.S. 676 at 737 (1965) [Douglas

dissenting]; see also Areeda & Turner, Antitrust Law,

Vol. 1, 4229 at p. 221. The burden of establishing the

legitimacy of its objectives and the use of reasonable

restraints no broader than necessary to accomplish those

objectives was on UMW. No such evidence exists ex-

cept that of conduct and restraints which were illegal

under the labor laws and the antitrust laws. Consolidated

Express, Inc. v. New York Shipping Ass'n., Supra. at

p. 517. The actual and potential anticompetitive effects

of UMW's conduct involve more than would naturally flow

from the elimination of competition over wages and work-

ing conditions. Larry V. Muko v. Southwestern Penn-

sylvania, 609 F.2d 1368 at p. 1373, They demonstrate

the ability of a union and a multi-employer bargaining

group to stifle or even eliminate competition from com -

petitors of the multi-employer group almost at will.

"There can be no argument in this case, whatever its

force in other contexts, that a restraint of this magni-

tude might be entitled to an antitrust exemption if it were

included in a lawful collective bargaining agreement."

Connell, supra. at 625-26. With or without a collective

bargaining contract, the union's conduct at the time that

it occurred was proscribed secondary activity and in

restraint of trade. As such it cannot be saved by argu-

ments that it occurred in a collective bargaining context,

NLRB v. Enterprise Ass'n. of Steamfitters, 429U.S.

507 at 520 (1977).

The Courts below have unduly increased a plaintiff's

burden in antitrust proceedings involving a labor union.

Such action is not justified by the prior decisions of this

Court. Once all issues of labor's antitrust exemption

are resolved, this Court's language in Radovich v. Na-

tional Football League, 352 U.S. 445 (1957) should con-

trol:

Petitioner's claim need only be tested under the

Sherman Act's general prohibition on unreasonable

restraints of trade ... Congress has, by legisla-

tive fiat, determined that such prohibited activities

are injurious to the public and has provided sanctions

allowing private enforcement of the antitrust laws by

an aggrieved party ... In the face of such a policy

this Court should not add requirements to burden the

private litigant beyond what is specifically set forth

by Congress in those laws, 352U.S. at 453-54.

D,. THE COURTS BELOW HAVE INVADED THE

PROVINCE OF THE JURY IN VIOLATION OF

THE SEVENTH AMENDMENT

The proofs in this case were submitted to the jury

under instructions that were unchallenged by UMW in the

Fourth Circuit. The jury found for Smitty Baker and

awarded damages which approximated UMW's presenta -

tion in mitigation of plaintiff's claimed damages. (Ex-

hibit 54 to trial record), On proper instructions:the

jury found UMW had participated in a conspiracy in vio-

lation of the antitrust laws. The jury found that UMW's

conduct in furtherance of that conspiracy had proxi-

mately damaged Smitty Baker.

The District Court and the Fourth Circuit chose to

disagree with the jury. Such disagreement is not in fact

based on the failure of the record to support a conspiracy

which has injured Petitioner. Rather, those courts chose

to compartmentalize the proof wiping the slate clear after

scrutiny of each. Petitioner was not given the full bene -

fit of its proof as required in Sherman Act cases. Con-

tinental Ore Co. v. Union Carbide Corp., 370U.S. 690

(1962). Disregarding the proven illegal secondary im-

plications of UMW's conduct in this case the Fourth

Circuit found such conduct to be within labor's statutory

exemption from the antitrust laws. Ignoring the evidence

on the historical changes in patterns of bargaining and

the UMW-BCOA reactions over twenty years to competi -

tive threats from non-union and non-BCOA coal producers,

the Fourth Circuit has approved conduct which is clearly

conspiratorial without giving Petitioner the full benefit

of its proofs. That this illegal arrangement has had a

long and successful run over the period since 1950 is no

reason to sanction its effects under the labor laws or the

antitrust laws.

Where Petitioner has proven a loss and a violation by

Respondent of the antitrust laws of a nature as to be

likely to cause that type of loss, the jury must be per -

mitted to draw, from the circumstantial evidence alone,

the inference that the necessary causal relation exists.

Continental Ore, supra. The actions of the District

Couxt and of the Fourth Circuit are an encroachment

upon Petitioner's right to jury trial under the Seventh

Amendment to the United States Constitution and the prov-

ince of the jury as principal arbiter of factual disputes.

As once stated by Mr. Justice Frankfurter:

When a court indifferent to the established basis

upon which powers have been allocated between the

Court and jury is beguiled into rejection of every view

which seems to it less reasonable than its own, a vio-

lation of constitutional rights might well be said to

have occurred, Dick v. New York Life Insurance

Company, 359U.S, 437 (1959).

CONCLUSION

It is respectfully urged that this Court now should

clarify once and for all the confusion engendered among

the bar and the lower federai courts by the three -way

division of this Court in Pennington. That division has

now spawned requirements of "express predatory intent"

and "absolute ruin" to burden an antitrust litigant against

a labor union far beyond the normal civil antitrust plain-

tiff. Pennington and other decisions have dealt exten-

sively with labor's exemption from the antitrust laws and

the need to balance and harmonize national labor and

antitrust policies.!2 However, the Fourth Circuit has now

12 the Solicitor General recently stated that, "The proper scope of the

labor exemption from the antitrust laws has been a vexing issue for decades "

(Continued on next page)

tilted the scales in favor of exemption without adding the

weight of illegal union conduct to the balancing process.

Further, in appucent disregard for the rule of Conti-

nental Ore, the Fourth Circuit has compartmentalized

the proofs in this case and, in disregard of the conspir-

acy findings of the jury and trial court, has rejected

every view of the evidence which seems to it less rea-

sonable than its own.

For the reasons assigned, Petitioner prays that the

Petiton for Writ of Certiorari be granted and that the

Writ issue to review the decision and judgment of the

United States Court of Appeals for the Fourth Circuit

entered in Cases No. 78-1814 and No. 78-1815 o0n

April 11, 1980.

Respectfully submitted,

CLAUDE K. ROBERTSON

J. EDWARD INGRAM

Fowler & Robertson

Seventh Floor

' First Tennessee Bldg.

Knoxville, Tennessee 37902

(615) 637-4311

Counsel for Petitioner Smitty

Baker Coal Company, Inc.

12 Continued) and that, "The contours of the court of appeals’ antitrust

exemption test can best be determined upon review of a full trial record

which demonstrates its practical application." Memorandum for the

United States as Amicus Curiae, November 30, 1979 in International Long-

shoremens Ass'n. v. Consolidated Express, Inc., No. 78-1902 in the Supreme

Court at pp. 4-5. This case presents those issues squarely and on a full

record, There is no arguable “work preservation" issue in this case as

there is in Granddad Bread, Inc. v, Continental Baking Co,, No. 79- 1841 —

in the Supreme Court,

OF COUNSEL:

Joseph E. wolfe

Earls, Wolfe & Farmer

P.O. Box 19

Norton, Virginia

(703) 679-0777

Dated: July 8, 1980

APPENDIX A

UNITED STATES COURT OF APPEALS

For the Fourth Circuit

No. 78-1814

Smitty Baker Coal Company, Inc., Appellant,

-versus -

United Mine Workers of America, Appellee.

No. 78-1815

Smitty Baker Coai Company, Inc., Appellee,

-versus -

United Mine Workers of America, Appellant.

Appeals from the United States District Court for the

Western District of Virginia, at Abingdon. James C. Turk,

District Judge

Argued: June 4, 1979 Decided: April 11, 1980

Before HAYNSWORTH, Chief Judge, BRYAN, Senior Circuit

Judge, and RUSSELL, Circuit Judge.

Claude K. Robertson, J. Edward Ingram (Fowler, Rowntree,

Fowler and Robertson; Joseph E. Wolfe, Earls, Wolf &

Farmer on brief) for Appellant in No. 78-1814, and for Ap-

pellee in No. 78-1815; Stuart B. Campbell, Jr.; E.H. Rayson

(Harrison Combs on brief) for Appellee in No. 78-1814, and

for Appellant in No. 78-1815.

Appendix A

(2]

RUSSELL, CIRCUIT JUDGE;

This is an action by the plaintiff Smitty Baker Coal Com-

pany, Inc, (Smitty Baker) charging a conspiracy by the de -

fendant United Mine Workers (UMW) violative of the anti-

trust laws, to which it joined an action under the National

Labor Management Relations Act. The action under the

National Labor Management Relations Act was abandoned

and the cause proceeded solely under the antitrust claim,

At trial the plaintiff recovered a verdict against the defend -

ant for $1,250,000, 7 After trial defendant moved for judg-

ment notwithstanding the verdict in its favor, or in the al-

ternative for a newtrial. Following submission of briefs

and full oral argument, the district court, in a carefully

reasoned memorandum opinion,” denied defendant's motion

for a new trial and granted the motion for judgment notwith -

standing the verdict for the defendant. In its

[3]

opinion granting the motion it concluded that, while there

was sufficient evidence from which the jury might infer a

conspiracy under the Sherman Act, the plaintiff had failed

to produce any facts to support its contention that it had

suffered damages as a result of the conspiracy. The plain-

tiff appeals from the judgment notwithstanding the verdict

in favor of the defendant, and the dismissal of its action;

the defendant cross -appeals from the finding of conspiracy.

1 sherman Antitrust Act, 15 U.S.C. §§ 1 and 2,

2 — ,

After verdict the plaintiff moved for trebling of damages and attorneys

fees. Because of later proceedings these motions were not acted upon,

Smitty Baker Coal Co, v. United Mine Wkrs,, (W.D, Va, 1978), 457

F, Supp, 1123

Appendix A

So far as pertinent to our decision, the significant

facts in this case are as follows: In 1969 Ralph Baker,

who had worked about mines most of his adult life, ap-

proached a representative of Peabody Coal Company, the

owner of considerable coal lands in Lee County, Virginia,

with a request for a lease of certain of such lands. Pea-

body granted the request. The lease dated August 1,

1969, however, was not taken in Ralph Baker's name but

in the name of a corporation, which Ralph Baker had had

chartered and which is the plaintiff in this action. The

sole stockholder of this corporation was Ralph Baker's

nineteen -year -old son, Smitty Baker, then a student at

Lincoln Memorial University. The capital of the corpora-

tion consisted of 100 shares, issued for a consideration

of one

[4]

dollar per share, thus giving the corporation a capital

of exactly one hundred dollars. No additional stock was

ever issued and no other contributions to capital made.

The actual payment to the corporation for the stock issued

was made by Ralph Baker from his funds. Throughout

the life of the corporation the complete control and man-

agement of the corporation were always exercised by

Ralph Baker; so far as the record indicates, Smitty Baker

never took any significant part in such management.

Before beginning operations at its leased site, the plain-

tiff entered into a collective bargaining agreement with the

defendant UMW. _ Ralph Baker testified he did this because

he was told when given the lease by Peabody that he "would

have to sign an United Mine Workers Agreement."' This

demand, it is alleged, was made because of the Coal Lands

Clause in the 1968 agreement, of which Peabody was a sig-

4 Appendix A

natory. The labor agreement accepted by

(S]

the plaintiff under these circumstances was the standard

1968 contract negotiated between the UMW and a multi-

employer bargaining group of mining employers, The

negotiation of this contract followed a practice long estab-

lished in the coal industry, whereby a group of the larger

operators would join together as a multi-employer bar -

gaining unit known as the Bituminous Coal Operators Asso -

ciation (BCOA) to negotiate on their behalf a iabor contract

with the negotiating council of the Union. The contract

so negotiated bound all the operator-members of the unit,

Non-member operators, however, became bound by the

contract only if they thereafter agreed to do so.°

The plaintiff was not in a position to begin mining opera-

tions until about October, 1969. From the outset these

operations were successful, Its efforts at selling its coal

resulted in a contract with Tennessee Valley Authority

(TVA) for the supply to the latter of 2,000 tons of coal a

4This Coal Lands Clause was in this language:

"As part of the consideration for this agreement, the operators signatory

hereto agree that this agreement covers the operation of all the coal lands,

coal producing and coal preparation facilities owned or held under lease by

them, or any of them, or by any subsidiary or affiliate at the date of this

agreement, or acquired during its terms which may hereafter [during the

term of this agreement] be put into production or use, The operators

agree that they will not lease, license or contract out any coal lands, coal

producing or coal preparation facilities for the purpose of avoiding the

application of this agreement or any section, paragraph or clause thereof, "

Scce Ramsey v, Mine Workers, (1971) 401 U.S, 302, at 305, n, 2.

Appendix A

week. The plaintiff was actually offered later a contract

for 2,000 more tons by TVA but it refused the offer.

Experiencing no difficulty in its mining operations or in

the marketing of its productions, it had a pre-tax profit

of $20,985 and an after -tax profit of

[6]

$9,968.12 for the year ending December 31, 1970, on its

hundred dollar capital investment, Despite the fact that

its operations ceased on October 1 of the year following

due to the strike to which we later refer, 1971 was sim-

ilarly a profitable yesr, showing after tax profits of

$36,104.38 and a net worth of $57,657.15 at the end of that

year.

The relations between the plaintiff and the UMW as the

representative of the former's employees were apparently

cordial and cooperative during the period of the 1968 labor

contract. However, the 1968 collective bargaining con-

tract was, by its terms, terminable by either party on

September 30, 1971, provided sixty days' notice of such

termination was given the other party. The required sixty -

day notice of termination was concededly given by the UMW

to the multi-employer group with whom the contract had

been negotiated initially but Baker testified his company

was not personally given such notice.

(7 ]

In any event, though, Baker admitted he knew that the con-

tract was being terminated on October Ist and he attempted

to make plans to counter any effect of the strike on the cor -

poration's business, Accordingly, on September 30, the

date fixed for the contract's termination, Baker called to-

gether the local officers of the UMW Union and proposed to

them that, if the local would not strike and its members

would continue working after September 30, he would stipu -

late on behalf of the plaintiff to pay, retroactive to October l,

Appendix A

the wages as fixed in the contract which might later be

negotiated between the multi-employer group and the

Union, This proposal was refused; and, when the local

UMW joined the general strike by UMW members, fol-

lowing the traditional UMW practice of "no contract -no

work, " the plaintiff's mines were forced to close. No

particular discussions between Baker and the UMW took

place thereafter until November 16, 1971,

On November 14, 1971, the UMW and the multi-

employer bargaining group reached an agreement on a

new collective bargaining agreement. Considerable

publicity, particularly in the coal field, was given this

development. Baker testified, though, that he did not

hear of the agreement until two days later. Inthe mean-

time, on November 15, 1971, Baker testified he was called

to the mines to "sign a contract." At the mines he met

a representative of the Southern Labor Union (SLU), a

rival labor organization of the UMW. The SLU represen-

tative was accompanied by some employees of the plaintiff.

He produced 10 signed cards, Three of these cards were

signed

[8]

by supervisors in the plaintiff's mines, three by employees

of the plaintiff, and four by individuals not previously em-

ployed by the plaintiff. Within the hour Baker signed the

agreement submitted to him by SLU as the collective bar -

gaining representative of the plaintiff's employees.

The next day, November 16, a representative of the

UMW visited Baker and requested him to sign a stipulation

agreeing to the terms of the new contract which the UMW

had negotiated with the multi-employer group. Baker re-

fused, offering as the only reason for not signing that he

had just signed a contract with the SLU and he "didn't think

Appendix A

(he ] could sign two contracts."" The UMW representative

reacted to this statement by declaring that in his opinion

Baker in negotiating and executing a contract with the SLU

had committed an unfair labor practice.° The meeting

terminated with the UMW representative stating that he in-

tended to take the matter to the National Labor Relations

Board, which he did, An investigation of the charges of

the UMW by the Board began in December but before the in-

vestigation was concluded, the SLU elected not to contest

the charges and abandoned its claim to represent plaintiff's

employees. ‘The UMW then with-

[9]

drew its charges, assuming that it was agreed that it was

the legal representative of a majority of plaintiff's em-

ployees in the bargaining unit.

While the NLRB charges were pending there were no

communications between the defendant UMW and the plain -

tiff. On December 13, however, Baker's wife was told in

Srhe employees of the plaintiff who went on strike at the time the Union

claimed the contract had terminated did not lose their status as employees

during the strike. The circumstances under which strikers, on termination

of the contract, may lose their status as employees are detailed in NLRB v.

Fleetwood Trailer Co., (1967) 389 U.S. 375 at 378-79. Those circum-

stances did not prevail here. Furthermore, the Union remained the pre-

sumed bargaining agent for these employees even though its contract had

terminated, since the plaintiff made no showing that the Union had lost its

status as the representative of a majority of the employees in the unit.

Terrell Machine Company v. N,L,R,B., (4th Cir. 1970) 427 F.2d 1088,

1090, cert. denied, 298 U.S, 929. Moreover, the plaintiff with its opera-

tions completely closed by a strike called by the Union, had every indication

that the Union continued to represent a majority of its employees in the

bargaining unit and to bargain with and enter into a contract with a rival

union in that context could well have been regarded as an unfair labor

practice. N.L.R,B. v. Trosch, (4th Cir, 1963) 321 F,2d 692, 695, cert.

denied, 375 U.S. 993 (1964)

Appendix A

a telephone call from the NLRB that the charges filed by

the UMW against the plaintiff had been dropped. Baker

told a representative of Peabody the next day that the

charges had been dismissed, and expressed a desire to

talk about a renewal of the corporation's lease. The

representative of Peabody replied that he and a representa -

tive of the UMW would call on him (Baker) the next day.

On December 15 the representatives of Peabody and the

UMW visited Baker. The UMW representative presented

Baker with the new contract and asked him to sign it.

Baker took no exception to the contract or any of its pro-

visions and expressed a willingness to sign the contract

when he was formally advised in writing by the NLRB

that the charges had been dropped. Until then he said he

would not sign. Thus rebuffed the representative of the

UMW left.

The next day Baker had a meeting with the officers of the

local UMW at his request. At that meeting he told them,

as an inducement for his employees returning to work, that

he was

[10]

willing to stipulate to pay the wages and benefits provided

in the 1971 contract, and to sign the contract itself as

soon as he received a letter from NLRB that the charges

filed by the UMW had been dismissed, and that if he did

not receive such letter within thirty days the employees

could resume their strike. When this conversation was re-

ported to the negotiator for the UMW he promptly commun -

icated with Baker, requesting a more specific statement of

Baker's proposal. This resulted in the parties bringing

their attorneys into the negotiations, and proposals pre-

pared by the attorneys for the parties, were exchanged

between the parties over a period of time.

Sometime in January, 1972, Baker, through his coun-

sel, for the first time raised the point that he could not

pay the wage scale and the employee benefits provided

in the new 1971 contract. In answer to this contention

the UMW requested the opportunity to examine the plain -

tiff's books.’ When this request was refused the UMW

proposed that Baker resume operations under the new

1971 contract with a rider thereto that if it developed that

the plaintiff could not successfully

(11)

operate under that contract, there would be a renegotia -

tion of the terms of the contract. This proposal was re-

jected by Baker through his counsel, who proposed that

work be resumed under the 1968 contract. The UMW,

while finding this proposal unacceptable, suggested

another meeting. The suggestion was unanswered by

Baker. At the end of January the Union employees of the

plaintiff submitted to Baker a proposal to perform main-

tenance work as a prelude for further negotiations. This

was agreed to by Baker. When, however, work under this

agreement began in February, 1972, it was discovered that

a rock fall had occurred in the mines, requiring some re-

pair work. Baker then said that to make the necessary

repairs would require more funds than the plaintiff had,

and he determined to abandon the development and liqui-

This was a perfectly legitimate request under the circumstances, in

fact, where an employer asserts financial inability to meet the wage de-

mands in a bargaining agreement, he is obligated to make available to

the Union his financial records so that the Union can determine whether

the claim is sound and a failure to do so may lay the employer open to an unfair

labor charge.. See Labor Board v. Truitt Mfg, Co, (1956) 351 U.S, 149,

152-53; N,L.R B. v. Southland Cork Company, (4th Cir. 1965) 342 F, 2d

702, 706; Teleprompter Corp, v. N.L.R,B,, (1st Cir, 1977) 570 F. 2d 4,

9; N, Y. Printing Pressmen & Offset, Etc, v, N.L,R,B., (2d Cir. 1976)

538 F.2d 496, 499-501.

Appendix A

date the assets of the plaintiff. Some $42,000 was rea-

lized from the liquidation, Baker then began opera-

tions in March on another mining tract, with a labor con-

tract, executed before any employees had been hired,

with the SLU. This action followed,

In its antitrust complaint the plaintiff stated initially

the history of labor relations in the coal industry, and

particularly the part the UMW played in that history,

during the period of the 50's and early 60's, It alleged

an agreement of the UMW with the multi-employer group

on a Protective Wage Clause (PWC) for inclusion in the

collective bargaining agreement reached by them, the

purpose of which, according to the plaintiff's

[12]

allegations, was to boycott "non-union and sweetheart

produced coal” and that, "in furtherance of that conspir -

acy, '' the UMW, by this Clause, obligated itself not to

“enter into, be a party to, or permit any other or different

contract than the National Contract, as amended, and * * *

[to] fully enforce the National Contract in all other bar-

gaining units." It adds that the PWC, though omitted

from the 1964 and 1968 agreements, has "continued [to

be enforced by the UMW] to the present time."" How-

ever in describing particularly the plaintiff's own opera -

tions commencing in 1969, the plaintiff directs its com-

plaint at the strike on October 1, 1971, against it by the

UMW, which the plaintiff claims was begun inviolation of

the terms of its agreement with the UMW and was thus in

violation of the National Labor Relations Act, It avers

that this so-called illegal strike was continued until the

plaintiff "was insolvent and * * * forced to abandon its

mines,."’ It charged that the Union refused during the

strike to negotiate "a contract [with it] with which plain-

tiff could live" and thereby end the strike. This refusal

Appendix A

the plaintiff charges, was "in furtherance of the terms

of the conspiracy with the large coal operators of the in-

dustry, '' as hereinabove enumerated, aimed at forcing

the National Contract upon all companies in the indus -

tries regardless of their ability to operate under a con-

tract "all of which [was] in violation of §§1 and 2 of the

Sherman Antitrust Act" and which was "not for the pur -

pose of improving the wages, hours and working conditions

of [UMW's] members,"

[13]

The action in due course proceeded to trial, A con-

siderable part of the testimony at trial consisted of tes -

timony and records from certain Pennington+ype cases

earlier tried. After the conclusion of the testimony, the

defendant moved for a directed verdict. The motion was

refused and the district court submitted the cause to the

jury under instructions which treated the action as a

Pennington-Ramsey type case, ® later discussed, Thus,

tracking largelyRamsey, the district court said in its

jury instructions:

"A labor union violates the Sherman Antitrust

Act when it agrees with one bargaining unit of em-

ployers to impose upon other employers specified

wage terms which are harmful or ruinous to the

business of such other employers. Any agreement

by a union with a business group to secure uniform

labor standards throughout the industry is not exempt

from the Antitrust Laws, and where a union agrees

with one set of employers that the Union will insist

on imposing or maintaining on other bargaining units

specified wage standards harmful or ruinous of the

Mine Workers v. Pennington, (1965) 381 U.S, 657; Ramsey v. Mine

Workers, (1971) 401 U.S, 302.

Appendix A

business of those employers, it may be liable under

the Antitrust Laws for the damages caused by its

agreed upon conduct.”

The jury returned a verdict for the plaintiff but, upon

motion of the defendant, the district court set aside the

jury verdict and granted judgment notwithstanding the

verdict (n.o.v.) in favor of the defendant.

[14]

In its order granting the motion for judgment n.o.v,

the district court first held "that the evidence was suf-

ficient for the jury to infer that a conspiracy did exist

between the UMW and certain of the major coal pro-

ducers," It reached this conclusion on the basis of what

it found in this case to be "an almost identical factual

situation" to that found in a decision of the Sixth Circuit,

Tennessee Consolidated Coal Co. v. United Mine Wkrs.

of Am. (6th Cir, 1969) 416 F,2d 1192, cert. denied,

397 U.S. 964 (1970). The two facts inthe record which

it cited as supporting this conclusion were "the Protec -

tive Wage Clause of 1958, " which it found ambiguous and

subject to jury construction, and the "Eighty Cent Clause."

The district court, however, found "that there was in-

sufficient evidence for the jury to find that the plaintiff's

injuries were suffered as a direct and proximate cause

of the conspiracy." It was on this latter basis that the

district court granted judgment n.o.v. in favor of the

UMW.

We address first the conspiracy issue as raised by the

UMW. In its conspiracy allegations and largely in its

proof at trial the plaintiff sought to identify its claim both

factually and legally with the Pennington line of cases,

Similarly the district court premised its conspiracy ruling

on a decision,

Appendix A

[15]

which is but an "off -shoot" of Pennington.” Accordingly,

any discussion of the conspiracy ruling must begin with

an analysis of the Pennington decision itself. Before

doing so, however, it seems appropriate to review the

Statutory and decisional background of Pennington.

Pennington represented another step in what was the

reconciliation of two conflicting national policies, one

expressed in the antitrust laws and designed to prevent

monopoly and promote competition, and the other a labor

policy favoring collective bargaining over labor standards

between employers and employees with the inevitable goal

of eliminating competition among workers over wages

and labor costs, With such disparate aims, the two

policies would inescapably clash unless carefully harmo -

nized, }° And, as Dean St. Antoine has written,

"rennsune Consolidated Coal Co. v, United Mine Wkrs, of Am.,,

416 F.2d 1192,

10), Allen Bradley Co, v. Union, (1945) 325 U.S, 797, 806, Mr. Justice

Black stated the problem thus:

"The result of all this is that we have two declared congressional

policies which it is our responsibility to try to reconcile. The one seeks

to preserve a competitive business economy; the other to preserve the

rights of labor to organize to better its conditions through the agency of

collective bargaining. "

See also Comment, Labor-Antitrust: Collective Bargaining and the

Competitive Economy, 20 Stan.L.Rev, 684, 704 (1968):

"But collective-bargaining agreements over labor standards inevitably

have anticompetitive consequences; to infer from these agreements the

necessary elements of a conspiracy to restrain trade under the antitrust

laws makes no accommodation for the fact that the national labor policy

is based upon the conclusion of these agreements, "

Appendix A

[16]

"To harmonize them, the type of competition which the

law is intended to foster (under the antitrust laws) must

be carefully distinguished from the type of competition

which union-employer bargaining can properly displace. -

Both Congress and the Supreme Court have sought to

achieve a reasonable accommodation of the conflicting

aims of the two policies and to mark out the distinction

identified by Dean St. Antoine. The Clayton Act, 15

U.S.C. §17, and 29U.S.C. 52, and the Norris-LaGuardia

Act, 29U.S.C. $104, 105, and 113, along with the Wagner

Act, 29U.S.C. §151, et seq., with its encouragement of

collective bargaining between labor and management,

represent Congress’ contribution to this reconciliation.

In these statutes Congress declared explicitly that the

"labor of a human being is not a commodity or article

of commerce" and that "the antitrust laws [may not] be

construed to forbid the existence * * * of labor * * * organ-

izations, * * *, or to forbid or restrain individual mem-

bers of such organizations from lawfully carrying out the

legitimate objects thereof; * * *,")”

The Supreme Court, inturn, recognized that, in

giving effect to these efforts by Congress to reconcile the

two national policies, it had to adapt the antitrust remedies

so as to give effect to this distinction of competiton over

wages and working conditions from competition in the sale

and

St. Antoine, Collective Bargaining and the Antitrust Laws, 115

Pitt. Legal J. 25 (1967),

15 U.S.C, § 17

Appendix A

[17]

marketing of goods and services and to ‘the strong labor

policy favoring the association of employees to eliminate

competiton over wages and working conditions."1% With

these ends in mind, it has sought to establish guide lines

for reconciling the two declared congressional policies

and, in so doing, has gone on to create what it has de-

scribed as a non-statutory exemption !4 in favor of labor,

which protects wage competition from the prohibition of

the antitrust laws even though this competition affects

price competition among employers. ?}°

The first case in which the Supreme Court began this

modern attempt to harmonize the two conflicting policies

was Apex Hosiery Co. v. Leader, (1940)310U.S. 469,

a case cited and followed in Connell Co. v. Plumbers &

Steamfitters.\® In Apex the Supreme Court held that no

activity whether by a

13-This point was made recently by Mr, Justice Powell in Connell Co,

v. Plumbers & Steamfitters, (1975) 421 U.S. 616, 622, reh, denied, 423

U.S, 884, where, speaking for the court, he said that the various Con-

gressional declarations of labor policy “require[d] tolerance for the lessening

of business competition based on differences in wages and working conditions, "

14-7he commentator in The Supreme Court, 1974 Term, 89 Harv, L, Rev.

47, 236, n. 13, finds "[t]he distinction between ‘statutory’ and ’nonstatu-

tory’ exemptions, however, is somewhat misleading. All the major cases

involving labor's antitrust exemption have purported to accommodate the

Clayton, Norris-LaGuardia, Wagner, and Sherman Acts, "

1Sconnell Co. v. Plumbers & Steamfitters, 421 U.S. at 622,

16510 U.S, at 503-04,

We date the "modern" attempt at reconciliation from the enactment of

the Norris-LaGuardia Act which made obsolete much of the earlier decisions,

See Allen Bradley v, Union, 325 U.S, at 805; Levy, The Connell Construc-

tion Company Case: Antitrust Liability 5 San Fernando Valley L. Rev, 259,

271 (1976),

In the Levy article, the author says:

"The Apex decision came in 1940 when there were six new Justices

on the Supreme Court appointed by President Roosevelt, This was the

beginning of the reinterpretation of antitrust legislation and its impact

on labor unions, "

Appendix A

[18]

union or anyone else, was within the proscription of the

Sherman Act unless it had or was intended to have an ef -

fect on "commercial competition.” It then proceeded to

eliminate wage competition from the term “commercial

competition," as used by it;

Vle ok O

"LA ]n elimination of price competition based on dif -

ferences in labor standards is the objective of any

national labor organization, but this effect on com-

petition has not been considered to be the kind of cur-

tailment of price competition prohibited by the Sherman

Act." (Italics added)

After thus exempting price competition arising out of

the elimination of differences in wage rates from the type

of s- agoeuan contemplated under the antitrust prohibi -

tions,’® the

[19]

Supreme Court one year later in United States v. Hutch-

eson, (1941) 312 U.S. 219 addressed more specifically

the statutory exemptions in favor of labor organizations,

Saying:

17491 U.S, at 636.

18 00 Connell, 421 U.S, at 622:

"The nonstatutory exemption [for labor from the antitrust laws]

has its source in the strong labor policy favoring the association

of employees to eliminate competition over wages and working

conditions, Union success in organizing workers and standardizing

wages ultimately will affect price competition among employees,

but the goals of federal labor law never could be achieved if this

effect on business competition were held a violation of the anti-

trust laws, "

Appendix A

"So long as a union acts in its self-interest and

does not combine with non-labor groups, the

licit and illicit under §20 [of the Clayton Act]

are not to be distinguished by any judgment re-

garding the wisdom or unwisdom, the rightness

or wrongness, the selfishness or unselfishness

of the end of which the particular union activities

are the means," 19

However, in Allen Bradley Co. v. Union, 325 U.S. 797,

the Supreme Court was confronted with the question of

whether a labor organization committed an antitrust vio -

lation when, “in order to further their own interests as

wage earners," it joined in a conspiracy of employers

to monopolize and fix prices in an industry. In answer-

ing this question, the court said that a union may not,

even though it is pursuing its own goals in so doing, “with

impunity aid and abet business men who are violating the

[Sherman] Act," for "Congress never intended that unions

could, consistently with the Sherman Act, aid non-labor

groups to create monopolies and to control the marketing

of goods and services." ”

312 U.S. at 232,

Cf. Connell, 421 U.S, at 625. There, the court seems to hold

that a "most favored nation" clause in a non-collective bargaining agree-

ment with employers that restrains the "business market, " as distinguished

from the "wage market, " is without labor's exemption but suggests that,

if the agreement is a part of a collective bargaining agreement the result

would not be the same, This appears to be the import of the following

statement in the opinion:

"There can be no argument in this case, whatever its force in

other contexts, that a restraint of this magnitude might be entitled

to an anti-trust exemption if it were included in a lawful collective

bargaining agreement." pp, 625-26,

20505 U.S, at 808,

Appendix A

[20]

In short, by joining in a business conspiracy by employers

which is in violation of the antitrust laws the Union for-

feits its right to shelter under labor's exemption and be-

comes liable with the employers under the antitrust laws,

But, more importantly, as several commentators have

emphasized, "What Allen Bradley holds is that the Union's

liability under the antitrust laws in these circumstances,

apart from any issue of exemption, arises out of its

participation in a conspiracy intended to achieve a re-

straint of commercial competition by the business inter -

ests. =

21395 U.S. at 807.

The holding in Allen Bradley was summarized by Professor Handler in

Recent Antitrust Developments-1965, 40 N, Y,U,L, Rev, 823, 835 (1965):

“What would be an antitrust infraction for a group of employers

acting in their capacity as competing sellers or buyers is not

immunized by reason of labor's complicity, "

For another summarization of Allen Bradley see Bernhardt, The Allen

Bradley Doctrine: An Accommodation of Conflicting Policies, 110

U. Pa. L. Rev. 1094, 1107 (1962):

"The Allen Bradley doctrine is concerned with the labor exemption

being used to shelter employer violations from the antitrust laws,

Therefore, the employer participation in a conspiracy found to

violate the antitrust laws under the doctrine must itself amount to

a violation independently, The employer activity must be of the

kind that business interests would be likely to undertake in the

absence of the union rather than mere cooperation with the union

in the achievement of typical Union goals," (Emphasis added)

Appendix A

[21]

It was against this background that the Supreme Court

approached Pennington. The plaintiff therein was a small

nonmechanized coal mining operator. His complaint was

that the defendant Union had participated in an antitrust

conspiracy by "joinling] hands with organized business to

drive marginal operators out of existence, "2? "all for the

purpose of eliminating [such marginal operators] from

the industry, limiting production and pre -empting the

market for the large, unionized operators. "23 Asa re-

sult of the conspiracy, he claimed his business had been

destroyed. The action had arisen in the mid-1950's and

in the early 1960's during the period of large scale

mechanization of coal mining. It was the plaintiff's theory

that, in return for the agreement of the large operators

to substantial wage increases in the collective bargaining

negotiations, the Union agreed not to oppose mechaniza-

tion and —critical to the action —had, in the collective

bargaining negotiations during the period, undertaken at

the behest of the multi-employer group, to impose on the

marginal non-member operators such as the plaintiff the

Same substantial wage scales secured by it from the large,

mechanized

[22]

operators in order to eliminate these marginal producers

as competitors in the commercial business of coal mar-

keting. In pursuance of this agreement, the Union and the

multi-employer group began a systematic pattern of wage

22 Mine Workers v, Pennington, 381 U.S, at 674 (Douglas, J., con-

curring).

See Mr. Justice White's summarization of plaintiff's claim in 381

U.S, at 664.

Appendix A

increases which they knew the marginal operators such

as the plaintiff could not meet and did tizis with the intent

of driving these marginal operators out of business as

competitors of the then-members of the multi-employer

group. This obligation of the Union to impose a uniform

wage scale on the industry for these anti-competitive

purposes was allegedly formalized in a Protective Wage

Clause (PWC) in the 1958 collective bargaining agreement

negotiated between the Union and the multi-employer bar -

gaining unit (BCOA),24

74 he Clause was described in Ramsey v, United Mine Workers of

America, a related case, as "the central legal document” in the case

(481 F.2d at 752) and in Solar Fuel Company v. United Mine Workers of

America, (W.D. Pa. 1972) 346 F. Supp. 789, 792, aff'd,, 481 F.2d

1399, cert. denied, 416 U.S. 909 (1974), another like case, as “the heart

of the matter."

The Clause provides:

"During the period of this Contract, the United Mine Workers of

America will not enter into, be a party to, nor will it permit any

agreement or understanding covering any wages, hours or other con-

ditions of work applicable to employees covered by this Contract on

any basis other than those specified in this Contract or any applicable

District Contract, The United Mine Workers of America will dili-

gently perform and enforce without discrimination or favor the con-

ditions of this paragraph and all other terms ana conditions of this

Contract and will use and exercise its continuing best efforts to ob-

tain full compliance therewith by each and all the parties signatory

thereto, "

This is in effect a "most favored nation" clause. The validity of such

a clause, in the antitrust context, is covered in Associated Milk Dealers,

Inc. v. Milk Drivers U., Local 763, (7th Cir. 1¥70) 422 F.2d 546, 554,

Moreover a “most favored nation" clause, which is what the PWC was, is

within the definition of a mandatory collective bargaining agreement,

Dolly Madison Industries, (1970) 183 N,L.R,B, 1037, In this area of

mandatory bargaining, the rule of exemption is especially appropriate.

See Meat Cutters v, Jewel Tea, (1965) 381 U.S, 676, 689:

“Employers and unions are required to bargain about wages, hours and

working conditions, and this fact weighs heavily in favor of antitrust

exemption for agreements on these subjects. "

Appendix A

[23]

Assuming that the Protective Wage Clause was to be

deemed ambiguous, and assuming, when considered in

the light of the circumstances of its adoption, that it did

represent an absolute obligation by the Union to impose

the wage scale set in the contract with the multi-employer

group on all other employers, the legal questions presented

in the case were whether the action of the Union under the

Clause would, first, be exempt from the antitrust law,

and, if not exempt, under what circumstances, if any,

would such

[24]

action constitute an antitrust violation.*° In deciding the

case and in resolving these basic issues the court divided

aa any antitrust suit against a labor organization, it is not sufficient

merely to find that the activity of the labor organization was without the

labor exemption; there must in addition be proof of an antitrust violation

itself, This point was noted in Apex where the court said that "activities

of labor organizations not immunized by the Clayton Act are not neces-

sarily violations of the Sherman Act." 310 U,S, at 512.

Recently in FMC v, Pacific Maritime Assn,, (1978) 435 U.S, 40, 61

the Supreme Court reiterated the same thought:

"It is plain from our cases that an antitrust case need not be tried and

a violation found before a determination can be made that a collec-

tive-bargaining agreement is not within the labor exemption, just as

it is clear that denying the exemption does not mean that there is an

antitrust violation, "

The court then added as a footnote to this statement:

"In Connell Construction Co, v, Plumbers & Steamfitters, 421 U.S,

616 (1975), for example, the Court, after concluding that the agree-

ment in question was not entitled to the non-statutory labor exemption

from the antitrust laws, remanded for consideration whether the agree-

ment violated the Sherman Act. See also Meat Cutters v. Jewel Tea,

381 U.S, 676, 688-689 (1965) (opinion of White, J.) n. 19 at p. 61.

. Kheel, Labor Law, § 48. 03[3], 48-49, vol. 10 (1977), is to the same

effect.

"Two issues involving the labor exemption seem fairly well settled.

First, loss of the exemption is not tantamount to a finding of antitrust

(Continued on next page)

Appendix A

into three groups, each composed of three Justices, Mr.

Justice White, who wrote what is generally referred to as

the Court's opinion, spoke for one group. Mr, Justice

Douglas, writing for another group, concurred in Mr.

Justice White's opinion, but, in so doing, gave his con-

struction of Mr. Justice White's opinion. Mr. Justice

Goldberg, speaking for a third group, dissented by con-

25 Continued) liability. Once the exemption is lost, a separate de-

termination of the alleged antitrust violation must be made in which

the plaintiff is required to prove his case by a preponderance of evi-

dence, Second, at least for purposes of the non-statutory exemption,

a claim of exempt status is not limited to a labor organization, i.e.,

an employer may assert the exemption, "

In the Comment, Antitrust Law-Most Favored Nation Clause and

Labor's Antitrust Exemption, 19 J,Pub.L., 399 at 403, n, 29, the editor

says:

"Even when it is determined that a [most-favored nation] clause is

beyond the scope of the exemption, it does not automatically follow

that every case will result in an antitrust violation, That is to say,

once an agreement is placed beyond the protection of the exemption,

it remains to be proved that a violation has occurred; and in the

cases claiming an alleged conspiracy under the Sherman Act, preda-

tory intent is an integral part of such proof," (Emphasis added)

Levy, 5 San Fernando Valley Law Review at 278 declares:

"Pennington, however, required proof of predatory intent to find that

a ‘most-favored nations’ clause violates antitrust statutes, "

And in Embry-Riddle Aeronautical Univ. v. Ross Aviation, Inc,, (5th

Cir. 1974) 504 F, 2d 896, 904, the court said:

"In effect the court placed the exemption issue and the issue of liability

on the merits before the jury under one instruction, Perhaps the pref-

erable practice would be to separate them, "

Appendix A

cluding generally that labor's exemption extended to any

subject of mandatory bargaining in the collective bar -

gaining process.

Mr. Justice White began his opinion by declaring that

it was perfectly legitimate for a Union to "conclude a

wage

[25]

agreement with the multi-employer bargaining unit"’ and

to seek "as a matter of its own policy, and not by agree -

ment with all or part of the employers of that unit, ...

the same wages from other employers."26 From this

point in his opinion he proceeds by focusing primarily on

the exemption question 2” and only

26 531 U.S. at 664.

27 he phrased the question presented by the appeal as follows:

"The question presented by this phase of the case is whether in the

circumstances of this case the union is exempt from liability under

the antitrust laws," 381 U.S, at 661,

He concluded his opinion with the statement:

"Thus the relevant labor and antitrust policies compel us to con-

clude that the alleged agreement between UMW and the large opera-

tors to secure uniform labor standards throughout the industry, if

proved, was not exempt from the antitrust laws," 381 U,S, at 669,

The author of the Comment on Connell in 89 Harv, L, Rev, at 242,

no. 63, offers a reason for this focus by Mr, Justice White on exemption

by observing that this was the significant issue in the case since "(t]he dis-

trict court provided the Pennington Court with an explicit finding that the

union intended to drive out the smaller operators," This "explicit find-

ing" was sufficient to establish a substantive antitrust violation (the second

issue in the case), leaving only the issue of the applicability of the exemp-

tion (the first issue in the case).

Appendix A

[26]

incidentally on the issue of an antitrust violation. He

held that "a union forfeits its exemption from the anti-

trust laws when it is clearly shown that it has agreed

with one set of employers to impose a certain wage scale

on other bargaining units."°° He predicated such ruling

on the reasoning that the Union, by such an agreement,

gave up its freedom to bargain with other employers on

terms different

(27]

from those stated inthe agreement. He seems to have

accepted the district court's construction of the Pro-

tective Wage Clause as ambiguous on whether it imposed

an obligation on the Union to compel all other employers

inthe industry with whom it bargained to comply with the

wage scale as set forth in the multi-employer agreement

and assumed that if it were construed as imposing such

an obligation on the Union, the agreement by the Union

to such a provision would be without labor's exemption.

Having reached this conclusion, he then tersely turned

to the second and crucial issue of an antitrust violation

and said:

"One group of employers may not conspire to eliminate

competitors from the industry and the union is liable

[under the Sherman Act] with the employers if it be-

comesa party to the conspiracy. This is true even

though the union's part in the scheme is an under -

taking to secure the same wages, hours or other con-

- ditions of employment from the remaining employers

of the industry." 29

28581 U.S. at 665,

29581 U.S, at 665-66.

Appendix A

[28]

It is obvious that this latter declaration in Mr. Justice

White's opinion on the issue of an antitrust violation is

in effect a restatement of the ruling made in Allen Brad-

ley and in.his concurrence Mr, Justice Douglas, speaking

for his group of three Justices, so construed Mr, Justice

White's opinion ("As we read the opinion of the Court, it

reaffirms the principles of Allen Bradley Co. v. Union,

325 U.S. 797 * * *"), Onthe basis of this construction,

Mr. Justice Douglas then formulated the issue in the case ©

to be submitted by an appropriate instruction at retrial .°°

He said:

"On the new trial the jury should be instructed that

if there were an industry -wide collective bargaining

agreement whereby employers and the union agreed

on a wage scale that exceeded the financial ability of

some operators to pay and that if it was made for the

purpose of forcing some employers out of business,

the union as well as the employers who participated in

the arrangement with the union should be found to have

violated the antitrust laws,"

30 the court ordered retrial for error in the instructions on an issue un-

related to those raised here.

? 381 U.S, at 672-73.

This language in Mr, Justice Douglas® opinion caused the author Pro-

fessor Meltzer in Labor Unions, Collective Bargaining, and the Antitrust

Laws, 32 U,Chi,L. Rev. 659, 720-21, to comment:

"Thus, Mr. Justice Douglas’ opinion rested explicitly on the

existence of a predatory purpose, "

Appendix A

[29]

Later in his opinion Mr. Justice Douglas, by way of further

clarification, emphasized that the "purpose" requirement

in his instruction consisted of both "knowledge" that the

marginal operators ''would be driven out of business"

and "intent" to do so. °”

Mr. Justice Douglas’ construction of Mr. Justice

White's opinion and his statement of the circumstances

under which an antitrust violation against the Union could

be found has been considered a proper summarization of

the decision of the court in Pennington,°3 Without the

concurrence of Mr. Justice Douglas and those Justices

joining him, Mr, Justice White's opinion would have

lacked the necessary majority and it was only the gloss

put on it by Mr. Justice Douglas’ opinion that gave it the

required concurrence.** Because of this, Mr. Justice

Douglas’ construction of Mr. Justice White's opinion has

been looked to as the authoritative expression of the con-

clusions reached by the majority in Pennington, This un-

questionably was the view of the district court on remand

in Pennington. Thus that court, after reviewing both Mr.

Justice White's and Mr. Justice Douglas’ opinions, said:

[30]

"Upon careful consideration, the Court has

reached the conclusion that the Pennington case

teaches that it is necessary to find predatory intent

92581 U.S, at 675,

33 sce Consol, Exp., Inc. v. N. Y. Shipping Ass'n,, (3d Cir. 1979) 602

F,2d 494, 516; Embry-Riddle Aeronautical Univ, v, Ross Aviation, Inc,,

504 F,2d at 903; Associated Milk Dealers, Inc, v. Milk Drivers U,, Local

753, (7th Cir, 1970) 422 F, 2d 546, 554,

*4 See Consol, Exp., Inc, v. N. Y, Shipping Assn,, 602 F.2d at 516,

Appendix A

to drive small coal operators out of business in

oxder to hold the employer and Union for a viola-

tion of the Sherman Act,"%°

That construction of Pennington, which in effect

adopted the approach of Mr, Justice Douglas’ concurring

opinion, was approved on appeal to the Court of Appeals

and the dismissal of

(31]

the antitrust claim was sustained,°° 400 F.2d 806, 814

(1968).°7 The Circuit Court, in thus sustaining the Dis -

trict Court, said:

3h ewis v. Pennington, (E,D, Tenn, 1966) 257 F. Supp, 815, 829,

This opinion of the district court has been summarized in the article

by Di Cola, Labor Antitrust: Pennington, Jewel Tea and Subsequent

Meandering, 33 U, Pitt,L, Rev. 705, 726 (1972):

"On remand the Pennington case was tried before District Judge Taylor,

sitting without a jury. After reviewing the Sup.eme Court's decision,

Judge Taylor concluded that a finding of predatory intent to drive small

coal companies out of business was necessary to hold the employer and

union for a Sherman Act violation, He also emphasized that Mr,

Justice White's second footnote indicate that the antitrust laws were

‘not designed to protect marginal operators’ and that ‘ill effects alone

on marginal operators [are] not enough to show intent." Thus Judge

Taylor adopted the Douglas ‘reading’ in Pennington with emphasis on

the sufficiency of evidence relating solely to marginal producers’

damages (White), The requirement of additional proof of predatory

intent was crucial here in that the District Judge stated that the ‘pre-

ponderance of proof’ showed that all but one of the plaintiffs could not

afford to pay the wages and royalties provided for in the 1950 industry-

wide agreement as periodically amended, By centering his opinion on

predatory intent, Judge Taylor managed to harrnonize the White and

Douglas opinions better than anyone could have expected, "

38 The plaintiff in Pennington had stated a common law claim under

Tennessee law based on evidence of violence and intimidation by the Union,

That claim was disposed of in 257 F, Supp, at 864, et seq. The damages

awarded in those claims to the various plaintiffs were affirmed in Dean Coal

Company v. United Mine Workers of America, (6th Cir, 1970) 421 F, 2d 1380,

37TCertiorari of that decision of the Circuit Court was denied, 393 U.S,

983, rehearing was denied, 393 U.S, 1045 (1969),

Appendix A

"We thus understand Pennington to teach:

1) a conspiracy between employers and labor formed

with the intention of driving competitors out of

business is a violation of the Sherman Act;

2) ‘predatory intent’ (as used by Mr, Justice White

(381 U.S. at 668, 85S. Ct. 1585) and by Judge

Taylor) is merely shorthand, employed to de-

scribe this anti-competitive conspiracy; and

3) such an anti-competitive conspiracy must be es-

tablished by ‘clear proof .'"%®

[32]

Subsequently in Ramsey v. United Mine Workers of

America, (E.D. Tenn. 1967) 265 F. Supp. 388, a case

like Pennington, the Court was again called upon to de-

termine whether "predatory intent" was an essential ele -

ment in an action against a labor organization whose

activities might not qualify for exemption under the Clay-

ton Act. The district court seems to have so concluded 39

Such decision was affirmed by an equally divided court in

416 F.2d 655 (6th Cir. 1969). Both groups in the Circuit

Court filed opinions explanatory of their differences.

The point of difference in the two opinions was limited

strictly, as Judge O'Sullivan, speaking for those members

who would reverse, made plain, to whether the requirement

of "clear proof" under the Norris-LaGuardia Act, 29U.S.C.

Bin Ramsey v, Mine Workers, 401 U.S, 311, the court found that "clear

proof” in the Pennington rule meant preponderance of the evidence, In the re-

trial of Pennington Judge Taylor had held that whether "preponderance" or

“clear proof" was used the result would be the same,

39065 F. Supp. 398-99.

Appendix A

§ 106, related to the evidence of an antitrust violation or

simply to "the determination of the authority” of the in-

dividual union officers to act for the Union.*° There

was no conflict in the two opinions on the correctness

of the construction given the Pennington Supreme Court

decision in Lewis v. Pennington, 400 F.2d at 813-14,

i.e., that a conspiracy of employers and labor ‘formed

with the intention of driving competitors out of business"

would be a violation of the Sherman Act, but that without

such "predatory intent" there could be no violation, See

416 F.2d 660-61 and 663 (opinion of Judge Edwards) and

416 F .2d at 673 (opinion of Judge O'Sullivan). Judge

Edwards also in his opinion went on to justify the court's

reliance on its previous ruling in Pennington II that "pred-

atory intent'’ was a requirement for an antitrust violation

in that context.

[33]

He said:

"The Supreme Court had granted certiorari in relation

to this court's first decision in the same case [i.e.,

Pennington I| and had remanded it with instructions

for retrial. If the trial court, or this court, had

interpreted those instructions erroneously in the

course of retrial or appeal, we find it difficult to

believe that the Supreme Court would have ignored

the error." 416 F.2d at 661.

There was an appeal from this opinion of the divided

court, ‘The Supreme Court, in its opinion on appeal, di-

rected its attention primarily to the measure of proof

standard to be applied in the case, i.e., whether "clear

40416 F.2d 661,

Appendix A

proof" or preponderance of evidence is required in sus -

taining a claim of conspiracy, and it was on this issue

alone that the Supreme Court in that case divided, The

Court, though, refused to decide, at the request of the

plaintiff, that the language of the Protective Wage Clause

(PWC) constituted a per se illegal conspiracy. The Court

was also requested by the Union to reconsider its holding

in Pennington. ‘The Court refused to do so but in so doing

confirmed Mr. Justice Douglas’ construction of the

Pennington case as essentially reaffirmation of Allen

Bradley.4 Thus Mr, Justice White, in denying the

request, began by quoting from Allen Bradley:

"We know that Congress feared the concentrated

power of business organizations to dominate markets

and prices. . .. A business monopuly is no less

such because a union participates, and such participa-

tion is a violationof the Act."

Mr. Justice White continued:

"Hence we also adhere to the decision in Pennington:

‘(T]he relevant labor and antitrust policies compel

us to conclude that the alleged agreement between

[34]

UMW and the large operators to secure uniform labor

standards throughout the industry, if proved, was not

exempt from the antitrust laws,’ 3810U.S. at 669,

Where a union, by agreement with one set of employers,

insists on maintaining in other bargaining units speci-

fied wage standards ruinous to the business of those

employers, it is liable under the antitrust laws for the

damages caused by its agreed-upon conduct. "42

41505 U.S, 797.

42 401 U.S, at 313,

Appendix A

That language, though not as clear as Mr. Justice

Douglas’ language in Pennington, leaves no room for

doubt that there must be the anticompetitive purpose

to "ruin" the small marginal competitors in order to

establish an antitrust violation in the Pennington-type sit -

uation. Mr, Justice Douglas in his dissenting opinion in

this case was similarly clear on the requirements for an

antitrust violation under the circumstances relied on in

that case. He stated the charge against the defendant

in that case to be an agreement between the employer -

group and the union "to force some (including petitioners)

out of business," and "to impose a wage scale upon the

total industry which had the purpose and effect of driving

the small, marginal operators out of business." On the

basis of these charges he concluded that only if it were

established that the purpose of the agreement was "to do

in one or more operators" was there an antitrust violation .4°

[35]

On remand of Ramsey for retrial under the measure of

proof standard established by the Supreme Court, the dis -

trict court, on the basis of Mr. Justice White's language

at 401 U.S. 313, quoted above, ruled:

"The foregoing language to which emphasis has

been added would appear to have eliminated any need

for proof of predatory intent, and to have established

a per se rule of labor union antitrust liability where

it is made to appear by a proper standard of proof

that the Union has agreed with one or more employers

to maintain specified wage standards in negotiations

with other employers and where such wage standards

are shown to be ruinous to the business of the other

employers." (Itaclis added) 344 F, Supp. at 1033.

401 U.S, at 316, 317 and 320,

Appendix A

It will be noted that while the district court said that

under its construction of Ramsey, it was unnecessary

to prove "predatory intent" as an element of plaintiff's

action, it did follow Mr. Justice White's language to

the effect that, in order tu make out an action, the plain-

tiff had to establish "by a proper standard of proof" two

facts: First, "that the Union has agreed with one or

more employers to maintain specified wage standards in

negotiations with other employers, " and two, that “such

wage standards are shown to be ruinous to the business

of the other employers." Implicit in these requirements

is the necessity for finding that the agreement had an

anti-competitive purpose, i.e., to drive ‘the other em -

ployers out of business" for the benefit of the employer -

parties tothe agreement. As so construed the ruling

of the district court is simply following the basic require -

ments of proof of a restraint of trade under Sections 1 and

2 of the Sherman Act, On appeal of this decision of the

district court, the Court of Appeals affirmed but in so

[36]

doing it reiterated its prior conclusion in Ramsey that

predatory intent (which in essence is no more than an anti-

competitive purpose) is an essential element in a labor

organization's antitrust liability . 44

Subsequently, in South-East Coal Co. v. Consolidated

Coal Co., (6th Cir. 1970) 434 F.2d 767, the Sixth Circuit,

confronted again with the problem of construing Pennington

and Ramsey, Summarized its view of those decisions as

follows:

"Reviewing the Ramsey decision's interpretation

of Pennington, four conclusions may be drawn appli -

44491 F,2d at 755.

Appendix A

cable to the present dispute. First, the National

Agreement containing the Protective Wage Clause

is, on its face, a valid labor contract which seeks

to implement the perfectly legal goals of uniformity

of wages and working conditions. Second, if this

agreement was made or entered into by the union in

pursuance of its own self interests, there are no

grounds for concluding a violation of the antitrust

laws. Third, if however, the employers and union

entered into this contract with the conscious know-

ledge or intent that it would be used to drive com-

petitors out of business (more than the incidental

effects caused by the adoption of a uniform wage

agreement which may result in certain operators

not being able to function profitably), then a viola -

tion of the antitrust laws has occurred. Fourth,

it is this either expressly or impliedly agreed -

upon use of the valid contract, that is, that it will

be used to drive competitors out of business, that

comprises the agreement or conspiracy which is

illegal for purposes of the antitrust laws. Without

deciding the question of the legality of the '80-cent

clause' suffice it to be said that these conclusions

are also applicable to that provision." 434 F.2d at 782.

It also in this same case approved the following jury in-

structions given by the district court at trial:

(37]

"You are instructed that if you believe there was

an industry -wide collective bargaining agreement,

whereby employers and the union agreed on the wage

scale that exceeds the financial ability, of some small

operators, including the plaintiff, to pay, and that the

agreement was made for the purpose of forcing some

employers, including the plaintiff, out of business,

Appendix A

or injuring its business, and you believe that the de -

fendants, the Consolidation Coal Company and the

United Mine Workers, deliberately entered into and

participated in such an arrangement, and that the re-

sult of such an arrangement was the sole cause of

damage, if any, to the plaintiff, then you will find

for the plaintiff .''' 45

It would appear established beyond controversy by these

Sixth Circuit decision, particularly its last in South-East

Coal, that for an agreement between the Union and the

multi-employer group to constitute an antitrust violation

it must arise out of a predatory intent, however it is

described, whether, as Mr. Justice Douglas said, "to do

in one or more competitors," or as Mr. Juciice White

said "with the purpose and effect of driving the small

marginal operators out of business" or, as the plaintiff

itself has expressed it, “with the purpose to eliminate

competitors, "or, again as Mr. Justice White has said,

where the wage scales demanded are "ruinous to the

business of the other employers." And this is the view

of the Pennington-+type case as phrased in other decisions

and in the opinions of commentators. To repeat: itis

not enough that the Union may have entered into a contract

with a multi-employer unit in a national industry to estab-

lish

[38]

an antitrust violation by the Union or, for that matter, the

employer-group. That may in some cases take the action

out of the exemption enjoyed by labor but it will not per se

amount to an antitrust violation. To amount to an anti-

trust violation the agreement must be rooted in an anti -

4454 F,2d at 783, The Supreme Court denied certiorari in this case,

402 U.S. 983 (1971).

Appendix A

competitive purpose, and must effect an anti-competitive

result, as evidenced by action ‘ruining’ a competitor's

business or driving him "out of business."" Unless

there is such an agreement between the labor organiza -

tion and the non-labor group and such an anti-competitive

result, there is no conspiracy actionable under the anti -

trust laws. The district court, however, seems to have

found that Tennessee Consolidated Coal Co. v. United

Mine Wkrs. of Am., 416 F.2d 1192, was to the contrary

and rested its conclusion that there was sufficient evi-

dence of an antitrust conspiracy in this case to require

the submission of that issue to the jury on its understanding

of that authority, (i.e., Tennessee Consolidated), We

think the district court misconstrued Tennessee Consoli-

dated.

In Tennessee Consolidated the critical issue related to

the Protective Wage Clause —whether it was sufficiently

ambiguous to make its proper construction a question for

the jury. The court did not deal with the issue of whether

predatory intent was essential to a finding of an antitrust

conspiracy in connection with an agreement between labor

and non-labor groups or whether there was sufficient evi-

dence in the case of predatory intent or intent to "ruin"

marginal operators in order to reduce competition in the

coal industry in that case,

[39]

Apparently, the defendants in that case did not dispute that

there was sufficient evidence of predatory intent, assuming

the Protective Wage Clause was construed as plaintiff

argued, to justify the submission of that issue to the jury.

In submitting the issue to the jury it must be assumed that

the district court followed the rulings of the Sixth Circuit

in South-East Coal, Pennington (2d case) and Ramsey (2d

case), that predatory intent was an essential element in

Appendix A

plaintiff's claim of a right of action under the Sherman

Act. This conclusion is fortified by noting the members

of the panel in Tennessee Consolidated, They were

Judges Weick, Peck and Combs, Two of these judges

(Judges Peck and Combs) had been members of the panel

which ruled on Lewis v. Penningtonin 400 F .2d 806, de-

cided one year before Tennessee Consolidated. In Lewis

v. Pennington there was no mistaking the position of the

panel, It concluded unequivocally that "intent to elimi -

nate" a competitor or competitors and "predatory intent"

were required for a finding of an antitrust conspiracy in

a case just like Tennessee Consolidated. These same

two members of the Tennessee Consolidated panel par -

ticipated in the en banc rehearingin Ramsey, 416 F.2d

655, decided exactly seven days after Tennessee Con-

solidated. Both Judges Peck and Combs joined in Judge

Edwards' opinion in Ramsey I, which reaffirmed un-

qualifiedly the decision in Lewis v. Pennington and, while

Judge Weick joined in Judge O'Sullivan's opinion in Ram~

sey I, he did not do so because he thought the ruling in

Lewis v. Pennington was wrong —in fact, Judge O'Sullivan

accepted the binding character of Lewis v. Pennington

just as

[40]

Judge Edwards had done in his opinion, except on the one

issue of measure of proof. It would be incomprehensible

to assume that Judges Peck and Combs would have joined

the opinion in Tennessee Consolidated if the latter opinion

were different from Lewis v. Pennington in its holding

on predatory intent as an essential element of an anti-

trust conspiracy in this context. We accordingly find

nothing in Tennessee Consolidated inconsistent with the

principle stated supra under which there must be some

evidence that the intent of the Union's action was to "ruin"

Appendix A

and to "drive out of business" the plaintiff and other

marginal producers, in short, evidence of a predatory

intent,

[41]

It is thus manifest from this review of the pertinent

authorities applying the Pennington doctrine, on which

the plaintiff relies for an antitrust conspiracy, that such

doctrine requires (a) an agreement between the Union and

an employer-group consisting of a substantial number of

the larger employers in an industry to establish a wage

scale for the employees -of -the -group -members -of-the

Union, (b) which wage scale the Union and the employer

group knew that the marginal employers in the industry

could not afford, and (€) which wage scale the Union un-

dertook to impose on the marginal nonmember operators,

(d) with the intent to drive these marginal operators out

of business and to remove them as competitors of the

employer-group. And this is the view of the Pennington

model as taken in other decisions and as expressed by com-

mentators.*® Were the rule otherwise, labor

46 0c Consol, Exp.,, Inc. v. N. Y. Shipping Ass*n., (3d Cir, 1979)

602 F,2d 494, 516; Embry-Riddle Aeronautical Univ, v. Ross Aviation,

Inc., (5th Cir, 1974) 504 F.2d 896, 903; Associated Milk Dealers, Inc.

v. Milk Drivers U., Local 753, (7th Cir. 1970) 422 F.2d 546, 554; Lewis

v. Pennington, (6th Cir. 1968) 400 F,2d 806, 814, cert. denied, 393 U.S,

983; St. Antoine, Connell: Antitrust Law at the Expense of Labor Law,

62 Va.L. Rev. 603, 613 (1976): Meltzer, Labor Unions, Collective Bar-

gaining, and the Antitrust Laws, 33 U. Chi. L, Rev. 659, 720-21; Cox,

Labor and the Antitrust Laws: Pennington and Jewel Tea, 46 Boston U,L, Rev,

317, 324 (1967); Comment, Labor's Exemption from Federal Antitrust Law:

The Diminishing Protection for Union Activities, 28 U.Fla.L.Rev. 620,

629, n. 77; Comment, Antitrust Law-Most Favored Nation Clause and Labor's

Antitrust Exemption, 19 J,Pub,L, 399, 403 (197_).

Thus Professor Cox in 46 Boston U,L, Rev, at 324, concluded discussion

of Pennington with this observation, which is confirmed by later decisions

and by the comments of other scholars:

"In the end, I think, the rule of the Pennington case will be con-

fined to situations in which there is a rather specific agreement to put

(Continued on next page)

Appendix A

[42]

organizations would be subject to liabilities greater than

and different from those to which businesses would be sub-

jected. Such a result would mock the congressionally -

granted exemptions in favor of labor organizations,

[43]

Under this construction of the Pennington line of cases,

the first factto be established by a plaintiff in its proof of

an antitrust conspiracy is an agreement between the union

and the employer -group to establish a wage scale which

both knew the other employers not members of the group,

such as the plaintiff, could not meet. The record, how-

ever, is completely devoid of any evidence to support any

46 (Continued) some of the employers in the industry out of business,

established by something more than evidence that the union and sig-

natory employers were aware that marginal operators could not afford

to pay the union scale."

In the Comment in 28 U, Fla,L, Rev, at 629, the writer said:

"To find a conspiracy [by labor] with a non-labor group, the courts

have consistently required proof of predatory purpose or a design to

injure or eliminate a competitor, "

Dean St, Antoine in 62 Va,L.Rev, at 613 finds that

"In Pennington the key question was whether a labor agreement

dealing with wages would violate the antitrust laws if its purpose

was to put certain competitors out of business, The answer was ‘yes',"

In Embry-Riddle, 504 F.2d 908, the court said:

"At least in cases falling within the Pennington model, for non-

exemption and liability to be found the union must be proved to have

had a purpose to injure or eliminate the competitor of a company whose

employees it represents, "

In Associated Milk Dealers, 422 F.2d 554, the court said:

"Therefore, a majority of the Supreme Court in Pennington requires

proof of predatory purpose as a prerequisite to finding that a most

favored nation clause violates the antitrust laws, "

(Continued on next page)

Appendix A

such premise inthis case. Infact, the evidence conclu-

sively demonstrates the contrary. The plaintiff all

through its operations under the 1968 contract, for in-

stance, paid the wages prescribed in that contract and at

the same time earned a reasonable, if not an exorbitant,

profit.

[44]

Moreover, even as late as 1972 it sought to continue oper -

ations under the wage scale fixed inthe 1968 contract,

And in its development of its damage claim, it claimed

that, working under the wage scale fixed in the 1968 agree -

ment, it would have realized what many would have re-

garded as an excessive rate of profit. Nor did the plaintiff

seek to offer any proof that it could not have operated pro -

fitably under the wage scale set in the new collective bar-

gaining contract executed in November, 1971. _ It did, it

is true, profess such an inability in the late stages of the

negotiations between it and the Union but, when the Union

requested an opportunity to verify the claim by a review of

plaintiff's records, the plaintiff refused, even though plain-

tiff was obligated under the National Labor Relations Act to

extend to the Union the right to verify the employer's claim

of financial inability.47 The plaintiff's refusal supports the

46 continued)

In Consolidated Express, 602 F, 2d at 516, the court, after carefully re-

viewing Pennington and Ramsey, said:

"Since the three Justices who joined in the Douglas opinion would have

upheld the union's claim of antitrust immunity absent a showing of

predatory intent, and three others would have upheld the claim of im-

munity on broader grounds announced by Justice Goldberg, the Douglas

opinion may well be read as limiting antitrust liability for agreements

concerning subjects at the ‘very heart’ of the collective bargaining pro-

cess to cases where predatory intent can be shown, "

*Te50 Note 7 infra,

Appendix A

inference that the records would not support the claim,

and the plaintiff's evidence in support of its damage claim

fully supports the inference.

But the plaintiff not only fails to establish the first

requirement of the Pennington model, it also fails to

offer any credible evidence in support of the second re-

quirement, i.e, that the Union had agreed to impose any

such wage scale on the plaintiff. In all the Pennington-

type cases, proof of this element of the antitrust conspirac y

rested basically on the Protective Wage Clause included in

the 1958contract. This Clause, however, was not included

[45]

in the 1964 agreement between the Union and the employer

bargaining unit but, since the Clause was not expressly

repudiated in the 1964 agreement, it has been held in at

least one case that the Clause remained in effect, 48 It

is this Clause which, as the Court said in South-East, is

"the crux of the Union's illegal contract" in all these

Pennington range of cases, representing the offensive agree -

ment of the Union under the second requirement of Pennington.

But in 1968 the parties expressly rescinded any prior Protec -

tive Wage Clause provision and absolved the Union of any

obligation such as plaintiff had argued in the Pennington-type

cases the Union had assumed, 49

Since the plaintiff's claim relates to a period after its

rescission, an express Protective Wage Clause cannot be

relied on to establish any undertaking of the Union by agree -

48 colar Fuel Company v, United Mine Workers of America, (W.D, Pa,

1972) 346 F. Supp. 789, at 794-95, aff"d,, 481 F.2d 1399 (1973), cert,

denied, 416 U.S. 909 (1974).

49 see Solar Fuel Company v. United Mine Workers of America, 346

F, Supp. at 794-95,

(Continued on next page)

Appendix A

ment with the employer -unit to impose a wage scale on

nonmember operators. The plaintiff contends that, though

the parties had ostensibly rescinded the Protective Wage

Clause, they covertly continued

[46]

it in practice thereafter, The only evidence that the plain-

tiff can marshal in support of this claim that the Union was

seeking to continue to compel, at the behest of the em -

ployer-group, all nonmember coal operators to conform

to the wage scale incorporated in the contract with the

multi-employer group is that the Union endeavored to in-

duce all operators with whom it bargained to adopt the

terms and conditions of the industry contract negotiated with

the multi-employer group. The mere fact that the Union

thus sought a uniform wage scale from all employers does

not, however, show that such action was by agreement,

either express or covert, with the employer-group. The

Union had followed this practice from its earliest days as

a Union, Pennington found such practice perfectly proper. °°

It was not, however, an inflexible practice by the Union,

49 Continued)

Section A of the Protective Wage Agreement is as follows:

"During the period of this Contract, the United Mine Workers of Amer-

ica will not enter into, be a party to, nor will it permit any agreement

or understanding covering any wages, hours or other conditions of work

applicable to employees covered by this Contract on any basis other than

those specified in this Contract or any applicable District Contract, The

United Mine Workers of America will diligently perform and enforce with-

out discrimination or favor the conditions of this paragraph and all other

terms and conditions of this Contract and will use and exercise its con-

tinuing best efforts to obtain full compliance therewith by each and all

the parties signatory thereto, "

Appendix A

The Union —at least, local units of the Union——agreed

to variations in the wage scale in agreement with in-

dividual operators. It was because of the frequency of

this practice that the employer -group demanded the in-

clusion of the Protective Wage Clause in the 1958 agree -

ment. ‘The employer -group wanted a specific agreement

to protect its members from this practice. 5! Moreover,

while the Union sought such uniformity

[47]

in its negotiations in 1971 it was willing to make variations

from such uniform scale, as it demonstrated in this case

when it offered, if the plaintiff could show financial hard-

ship, to renegotiate the wage scale. All these undisputed

circumstances negatived entirely any possibility of a con-

tinued covert unwritten agreement between the Union and

the employer -group on a Protective Wage Clause.

Finally, even were there some evidence of a continued

covert Protective Wage Clause it certainly was not intended

as a method of driving the plaintiff out of business, Thus

there was a complete absence of predatory intent on the part

of the Union. The wage scale offered the plaintiff by the

Union was one that the plaintiff could meet, as we shall

develop at some greater length later. The plaintiff's rea-

son for abandoning the mines on Peabody's land was not

due to the exactions of the wage scale in the 1971-72 con-

tract, It abandoned the operations because of the strike

on October 1, 1971, and, according to its evidence, because

of the start-up expenses for reopening the mines of the ter -

mination of the strike.

As a matter of fact this case is simply not a Pennington-

type case at all. It satisfies none of the criteria for such

Ol see Lewis v. Pennington, 257 F. Supp. at 824,

Appendix A

acase. Neither can the plaintiff find any support for its

cause of action on the basis of any of the Pennington

cases. In finding that it was a Pennington-+ype case, the

district court

[48]

misconceived the essential elements of such a case and

failed to note the absence of such elements here. What

the plaintiff is complaining of is not a conspiracy between

a labor organization and a non-labor group. It suffered

no injury and can claim no wrong on account of the 1968

agreement between the Union and the multi-employer-

group. What it really complains of begins with the strike

on the part of the Union at midnight on September 30, 1971.

This unilateral action of the Union —taken without colla-

boration with any outside group and certainly not at the

behest of the multi-em ployer -group—is the beginning

point of plaintiff'sclaim. And all other claims by the

plaintiff flow from this event.

The plaintiff's real plaint is that the Union had no right

to strike against it on September 30, 1971. It bases this

position upon the provision in the 1968 contract which

authorizes either party on sixty days' notice in writing

prior to September 30 to terminate the contract, The

plaintiff says it received no such notice, even though it did

know that the Union intended to strike on September 30

and had given notice to other signatories of the contract.

Assuming that the Union had failed to give the plaintiff the

required notice of termination of the contract on Septem -

ber 30 and that the strike was a breach of the Union's agree-

ment with the plaintiff, the latter might have had a remedy

against the Union under Section 303

[49]

of the Labor Management Relations Act (LMRA), 29U.S.C.

§ 187, see Riverton Coal Co. v. United Mine Workers of

Appendix A

America, (6th Cir. 1972) 453 F.2d 1035, cert. denied,

407 U.S. 915, but certainly not a remedy under the anti -

trust laws, Larry R. George Sales Co. v. Cool Attic

Corp., (Sth Cir. 1979) 587 F.2d 266, 274; Salerno v.

American League of Prof. Baseball Clubs, (2d Cir. 1970)

429F .2d 1003, 1004, cert..denied, 400U.S. 1001 (1971);

McAlpine v. AAMCO Automatic Transmissions, Inc. ,

(E.D. Mich, 1978) 461 F. Supp. 1232, 1264; see also

Gateway Coal Co. v. Mine Workers, (1974) 414U.S. 368.

The argument is also made that the Union while en-

gaged in a strike refused to negotiate with the plaintiff

between October 1 and November 16, and that this repre-

sented an antitrust conspiracy. As a factual basis for

this claim the plaintiff points to its interview with its

employees on September 30, when Baker, its operating

head, requested the employees not to strike on the next

day, promising in turn that he would sign on the plaintiff's

behalf a stipulation to be bound retroactively to October 1

by any wage provisions which might be agreed upon as a

result of the negotiations between the Union and the multi -

employer group. By this statement the plaintiff expressed

no desire to negotiate a full colltive bargaining contract;

it recognized it was beyond its competency to deal ade-

quately with the whole range of working conditions to be

embraced in a complete collective bargaining agreement.

What it was actually requesting of the Union was that the

Union members continue to work in its mines with only

an agreement on wage rates to be later negotiated and

without any other agreement; in short, it

[50]

was asking the Union to abandon its traditional rule of "no

contract, no work." The Union refused, In refusing

to negotiate such a contingent agreement with the plaintiff,

Appendix A

and in delaying to request negotiations with the plaintiff

until November 16, the Union was not acting in concert

with any non-labor group, but was, as the district court

aptly remarked, attempting in its own interest and in

that of its members to protect "[t he integrity of a nation-

wide industry strike."°* It may be that it did prefer to

proceed first to negotiate with the multi-employer -group

but, if it did, this was its right, as Mr, Justice White

had declared in Pennington. Again, this, however, was

a unilateral decision of the Union, taken in what it con-

ceived to be the interests of its members, and could not

Support an antitrust claim.

[51]

After November 16 the plaintiff was offered a contract

by the Union (UMW). The plaintiff offered no objection

to the contract or any of its provisions on that date. It

made no request for changes. It simply said it was pre-

vented from signing the contract because it had the day

before signed a contract with another Union, By signing

that contract with another Union (SLU)—a voluntary act

on the part of the plaintiff —it disqualified itself, in its

view, from negotiating with the UMW, though apparently

UMW continued to represent a majority of plaintiff's em-

ployees. When later an unfair labor charge against the

plaintiff arising out of plaintiff's contract with the other

Union (SLU) was dismissed, the plaintiff again dallied

about negotiating a contract with UMW, asserting that it

52 rhe district court said:

"Plaintiff can scarcely be heard to argue that the UMW's refusal to

allow plaintiff to continue to operate, under a mere stipula-

tion to be retroactively bound to the new agreement, was a mani-

festation of a conspiracy to drive small operators out of business,

The integrity of a nationwide industry strike could not be maintained

if such variations were allowed to prevail." 457 F, Supp, at 1133,

Appendix A

had to have written confirmation from the National Labor

Relations Board of the dismissal. A little later when

pressed by UMW to negotiate, the plaintiff, having em -

ployed the counsel who had handled the Pennington case

and the other cases it spawned, first asserted as an ex-

cuse for not signing the UMW contract that it could not

afford the wage scale inthe newcontract. The UMW

countered this claim with a request to see the plaintiff's

books °° and, when refused, offered to renegotiate the

agreement if, after the reopening of the mines,

[52]

the plaintiff contended it could not operate profitably

under the agreement. At this point the plaintiff would

argue that the representative of the Union, with whom it

had been dealing for some weeks, was without authority

to bind the Union. It is obvious that this whole record

is more an indication of dalliance on the part of the plain-

tiff than by the Union; but, irrespective of which party

dallied, such dalliance would not be an antitrust violation.

Though the plaintiff did not assert it at the time as a

ground for objecting to the 1971 contract, the Coal Lands

Clause in that contract (as well as in the 1968 contract)

is cited now as infecting both the 1971 and 1968 contracts

with an obligation, not on the Union as in the Protective

Wage Clause, but on the employers, as a mechanism

employed by the parties to those agreements to effect an

antitrust violation. Presumably this is now asserted as

a ground for the plaintiff's failure to agree to the 1971

contract. The Coal Lands Clause in one form or another;

however, has been incorporated in every UMW contract

since 1943, when the War Labor Board ordered its inclu -

See Notes 7 and 47 infra,

Appendix A

sion in all collective bargaining agreements in the coal

industry.°? Such a Clause is within the scope of manda-

tory collective

[53]

bargaining.°* It is not tainted by any requirement which

would limit the rights of the Union in its bargaining with

other parties —the point which Mr, Justice White found

might be inherent in the PWC if that Clause were properly

to be construed as limiting the power of the Union to ne-

gotiate with other employers than those in the multi -

employer group. Nor was the Coal Lands Clause intended

to do other than to protect the legitimate interests of the

Union; it was not at all an attempt, in concert with the

multi-employer-group, to "ruin" any party's business or

to drive such party out of business. Devoid of any pred-

atory purpose, intended only to serve the legitimate in-

terests of the Union's constituency, and binding only the

parties themselves, the Coal Lands Clause is insufficient

3se¢ Lewis v. Pennington, 257 F. Supp. at 824:

"A 1943 order of the National War Labor Board directed that each UMW

contract include a provision relating to leased mines, that ‘Operators

agree that they will not lease any operating mines subject to this

Agreement as a subterfuge’ to avoid the Agreement's provisions, This

cause by reference was contained in the Ickes-Lewis Agreement in

1943 andinthe National Bituminous Coal Wage Agreement of 1945,

The 1952 Agreement provides that operators ‘agree that they will not

lease out any coal lands as a subterfuge for the purpose of avoiding the

application of this Agreement,’ It expresses a covenant which the

basic agreement would in any event imply."

In all the Agreements, including the 1968 and 1972 Agreements, the

application of the Clause is always limited to the use of the lease as a

"subterfuge to avoid the application of the collective bargaining agreement. "

See Note 24 infra,

Appendix A

as a matter of law to support an antitrust action by the

plaintiff, particularly since there is no showing what -

soever that the plaintiff was ever frustrated in its busi-

ness by such Clause.°°

[54] |

It is of interest that the plaintiff in Pennington raised

this same issue of the Coal Lands Clause as well as the

Eighty Cent Clause but appears to have abandoned it on

appeal, prompting this comment by the Court of Appeals

in the second appeal of Pennington:

"However, plaintiffs do not on this appeal advance a

claim of a concerted refusal to deal, and a review of

the record in light of the District Court's finding con-

cerning these clauses (i.e., the Coal Lands Clause

and the Fighty Cent Clause) (257 F. Supp. at 862)

demonstrates that no Sherman Act violation could be

founded on those clauses under Hutcheson... . and

Allen Bradley... ."°°

The same situation prevails in this case and warrants

the same disposition as was given the clause in Lewis v.

Pennington. Moreover, what has been said about the Coal

Lands Clause is equally applicable to the Eighty Cent Clause,

a provision also dealt with in Lewis v. Pennington adversely

to any claim by the plaintiff here. It should further be

noted that the plaintiff can base no claim on this Eighty

Cent Clause because it makes no allegation that it intends

to buy coal from others and thus is prejudiced by this

Fer, Allen Bradley, 325 U.S, at 809, where the Court assumed that an

agreement "not to buy goods manufactured by companies which did not em-

ploy the members of Local No, 3. . . . standing alone would not have vio-

lated the Sherman Act,

56 400 F, 2d at 813,

Appendix A

Clause in that it was ever frustrated in its sales by.the

Clause. In effect the Eighty Cent Clause has no real

place in this case,

[55]

After all is said and done and after Pennington and all

its brood are carefully reviewed, the fact remains that

what the plaintiff is complaining of is that the Union struck

its mines in October and that, until there was some agree -

ment, it had refused to agree for its members to engage

in maintenance work in the plaintiff's mines, as a result

of which it was not able to continue the operation of its

mines. That and that only is what this suit is about,

That and that alone represents the events which caused

such injury as the plaintiff asserts, For those acts,

however, there can be no antitrust liability on the part

of the Union. They represent actions taken unilaterally

by the Union, without consultation or by agreement with

the employer-unit, solely with a view to the interests and

legitimate objectives of its members. There was no com-

bination with employers in either the strike or in the re-

fusal to allow maintenance work in the plaintiff's mines,

Moreover, both of these actions were protected by labor's

statutory exemption,

We conclude that on this record there was insufficient

evidence of an antitrust conspiracy on the part of the de-

fendant to permit the submission of that issue to the jury

and the district court should have so ruled. Even were

this not so, the plaintiff failed in its proof to offer suffi-

cient evidence of damages by reason of any conduct of the

Union for the reasons stated by the district court in its

detailed analysis of the evidence.

Appendix A

[56]

The grant of judgment n.o.v. by the district court is

affirmed both for the reason stated by the district court

and for the failure of the plaintiff to adduce sufficient

proof of an antitrust violation to permit the submission

of such issue to the jury.

The judgment of the district court is accordingly.

AFFIRMED.

APPENDIX B

STATUTES INVOLVED

15 USCA:

§ 1. Trusts, etc., in restraint of trade illegal;

penalty

Every contract, combination in the form of trust or other -

wise, or conspiracy, in restraint of trade or commerce

among the several States, or with foreign nations, is declared

to be illegal. Every person who shall make any contract or

engage in any combination or conspiracy hereby declared to

be illegal shall be deemed guilty of a felony, and, on con-

viction thereof, shall be punished by fine not exceeding one

million dollars if a corporation, or, if any other person,

one hundred thousand dollars or by imprisonment not exceed-

ing three years, or by both said punishments, in the discre-

tion of the court.

As amended Dec. 21,1974, Pub.L. 93-528, § 3, 88 Stat.

1708; Dec. 12, 1975, Pub.L. 94-145, §2, 89 Stat. 801

§ 2. Monopolizing trade a felony; penalty

Every person who shall monopolize, or attempt to monopo-

lize, or combine or conspire with any other person or per-

sons, to monopolize any part of the trade or commerce

among the several States, or with foreign nations, shall be

deemed guilty of a felony, and, on conviction thereof, shall

be punished by fine not exceeding one million dollars if a

corporation, or, if any other person, one hundred thousand

dollars or by imprisonment not exceeding three years, or

by both said punishments, in the discretion of the court.

As amended Dec. 21, 1974, Pub.L. 93-528, § 3, 88 Stat.

1708.

Appendix B

§ 15. Suits by persons injured; amount of recovery

Any person who shall be injured in his business or prop-

erty by reason of anything forbidden in the antitrust laws

may sue therefor in any district court of the United States

in the district in which the defendant resides or is found or

has an agent, without respect to the amount in controversy,

and shall recover threefold the damages by him sustained,

and the cost of suit, including a reasonable attorney's fee.

Oct. 15, 1914, c. 323, § 4, 38 Stat. 73.

§ 17. Antitrust laws not applicable to labor organi-

zations

The labor of a human being is not a commodity or article

of commerce. Nothing contained in the antitrust laws shall

be construed to forbid the existence and operation of labor,

agricultural, or horticultural organizations, instituted for

the purposes of mutual help, and not having capital stock

or conducted for profit, or to forbid or restrain individual

members of such organizations from lawfully carrying out

the legitimate objects thereof; nor shall such organizations,

or the members thereof, be held or construed to be illegal

combinations or conspiracies in restraints of trade, under

the antitrust laws. Oct. 15, 1914, c. 323, § 6, 38 Stat.

731.

29 USCA Sec. 52 (Sec. 20 of the Clayton Act):

§ 52. Statutory restriction of injunctive relief

No restraining order or injunction shall be granted by

any court of the United States, or a judge or the judges

thereof, in any case between an employer and employees,

or between employers and employees, or between employ -

Appendix B

ees, or between persons employed and persons seeking

employment, involving, or growing out of, a dispute con-

cerning terms or conditions of employment, unless neces -

sary to prevent irreparable injury to property, or toa

property right, of the party making the application, for

which injury there is no adequate remedy at law, and such

property or property right must be described with particu-

larity in the application, which must be in writing and

sworn to by the applicant or by his agent or attorney.

And no such restraining order or injunction shall pro-

hibit any person or persons, whether singly or in concert,

from terminating any relation of employment, or from

ceasing to perform any work or labor, or from recom -

mending, advising, or persuading others by peaceful

means so to do; or from attending at any place where any

such person or persons may lawfully be, for the purpose

of peacefully obtaining or communicating information, or

from peacefully persuading any person to work or to ab-

stain from working; or from ceasing to patronize or to

employ any party to such dispute, or from recommending,

advising, or persuading others by peaceful and lawful

means so to do; or from paying or giving to, or withhold-

ing from, any person engaged in such dispute, any strike

benefits or other moneys or things of value; or from peace-

ably assembling in a lawful manner, and for lawful pur -

poses; or from doing any act or thing which might law-

fully be done in the absence of such dispute by any party

thereto; nor shall any of the acts specified in this para -

graph be considered or held to be violations of any law of

the United States. Oct. 15, 1914, c. 323, § 20, 38 Stat.

738.

Appendix B

29 USCA Sec. 102 (Sec. 2 of the Norris-LaGuardia

Act):

§ 102: Public policy in labor matters declared

In the interpretation of this chapter and in determining

the jurisdiction and authority of the courts of the United

States, as such jurisdiction and authority are defined and

limited in this chapter, the public policy of the United States

is declared as follows:

Whereas under prevailing economic conditions, de-

veloped with the aid of governmental authority for owners

of property to organize in the corporate and other forms

of ownership association, the individual unorganized

worker is commonly helpless to exercise actual liberty

of contract and to protect his freedom of labor, and there-

by to obtain acceptable terms and conditions of employ -_

ment, wherefore, though he should be free to decline to

associate with his fellows, it is necessary that he have

full freedom of association, self-organization, and desig-

nation of representatives of his own choosing, to negotiate

the terms and conditions of his employment, and that he

shall be free from the interference, restraint, or coercion

of employers of labor, or their agents, in the designation

of such representatives or in self-organization or in other

concerted activities for the purpose of collective bargain-

ing or other mutual aid or protection; therefore, the fol-

lowing definitions of and limitations upon the jurisdiction

and authority of the courts of the United States are enacted.

Mar. 23, 1932, c. 90, § 2, 47 Stat. 70.

Appendix B

29 USCA Sec. 104 (Sec. 4 of the Norris-LaGuardia

Act):

§ 104. Enumeration of specific acts not subject

to restraining orders or injunctions

No court of the United States shall have jurisdiction to

issue any restraining order or temporary or permanent

injunction in any case involving or growing out of any

labor dispute to prohibit any person or persons partici -

pating or interested in such dispute (as these terms are

herein defined) from doing, whether singly or in concert,

any of the following acts:

(a) Ceasing or refusing to perform any work or to re-

main in any relation of employment;

(b) Becoming or remaining a member of any labor

organization or of any employer organization, regardless

of any such undertaking or promise as is described in

section 103 of this title;

son participating or interested in such labor dispute, any

strike or unemployment benefits or insurance, or other

moneys or things of value;

(d) By all lawful means aiding any person participating

or interested in any labor dispute who is being proceeded

against in, or is prosecuting, any action or suit in any

court of the United States or of any State;

(e) Giving publicity to the existence of, or the facts

involved in, any labor dispute, whether by advertising,

speaking, patrolling, or by any other method not involving

fraud or violence;

Appendix B

(f) Assembling peaceably to act or to organize to act

in promotion of their interests in a labor dispute;

(g) Advising or notifying any person of an intention to

do any of the acts heretofore specified;

(h) Agreeing with other persons to do or not to do any

of the acts heretofore specified; and

(i) Advising, urging, or otherwise causing or inducing

without fraud or violence the acts heretofore specified, re-

gardless of any such undertaking or promise as is described

in section 103 of this title. Mar. 23, 1932, c. 90, § 4,

4 Stat. 70.

29 USCA Sec. 106 (Sec. 6 of the Norris-LaGuardia

Act):

§ 106. Responsibility of officers and members of

associations or their organizations for

unlawful acts of individual officers, mem-

bers, and agents

No officer or member of any association or organiza -

tion, and no association or organization participating or

interested in a labor dispute, shall be held responsibie

or liable in any court of the United States for the unlawful

acts of individual officers, members, or agents, except

upon clear proof of actual participation in, or actual au-

thorization of, such acts, or of ratification of such acts

after actual knowledge thereof. Mar. 23, 1932, c. 90,

§ 6, 47 Stat. 71.

Appendix B

Labor Management Relations Act, 1947 (29 USCA):

§ 141. Short Title; Congressional Declaration

of Purpose and Policy

(a) This chapter may be cited as the "Labor Manage-

ment Relations Act, 1947."

(b) Industrial strife which interferes with the normal

flow of commerce and with the full production of articles

and commodities for commerce, can be avoided or sub-

stantiall

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