# Petition — Smitty Baker Coal Co. v. United Mine Workers > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0057%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 449 U.S. 870 ## Text 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; (c) Agreeing in exchange to forfeit its bar- 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? ii 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 A, 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 ....... A. B. 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 21 27 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 vi 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 26 15 28 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 Ww 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 5 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. 6 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- 8 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. 9 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 10 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 ll 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] 12 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. 13 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, 14 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 15 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). 16 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), 17 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), 18 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 19 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, 20 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, 21 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: 22 "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- 23 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 24 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), 25 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 26 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) 27 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 11 (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. 28 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- 29 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. 30 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. 31 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) 32 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, 33 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. 34 35 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, 3 Smitty Baker Coal Co, v. United Mine Wkrs,, (W.D, Va, 1978), 457 F, Supp, 1123 36 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- 37 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. 38 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, 39 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 40 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) 41 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. 42 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. 43 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 44 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 8 Mine Workers v. Pennington, (1965) 381 U.S, 657; Ramsey v. Mine Workers, (1971) 401 U.S, 302. 45 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, 46 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, " 47 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 11 St. Antoine, Collective Bargaining and the Antitrust Laws, 115 Pitt. Legal J. 25 (1967), 12 15 U.S.C, § 17 48 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, " 49 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, " 50 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." ” 19 312 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, 51 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) 52 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). 3 See Mr. Justice White's summarization of plaintiff's claim in 381 U.S, at 664. 53 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. " 54 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) 55 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, " 56 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). 57 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. 58 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. 1 ? 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, " 59 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, 60 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), 61 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. 62 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, 63 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, 64 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. 43 401 U.S, at 316, 317 and 320, 65 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. 66 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, 67 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 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0057%3A1. Public record. Not legal advice.