Petition — Miller Electric Co. v. National Constructors Assn.

Supreme Court brief1983

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Supreme Court, U.S.

FILED

: RUAN 71983

IN THE ALEXANDER L. STEVAS

CLERK

Supreme Court of the Unit

OCTOBER TERM, 1982

MILLER ELEcTRIC COMPANY and

COLGAN ELECTRIC CoMPANY, INC.,

Petitioners,

¥e

NATIONAL CONSTRUCTORS ASSOCIATION, ef al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT —

EARL W. KINTNER

(Counsel of Record)

DONALD M. BARNES

DENNIS C. CUNEO

ARENT, Fox, KINTNER, PLOTKIN & KAHN

Washington Square

1050 Connecticut Ave., N.W.

Washington, D.C. 20036-5339

(202) 857-6099

Counsel for Miller Electric Company

and Colgan Electric Company, Inc.

PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.

QUESTION PRESENTED

This petition presents a question of paramount impor-

tance concerning the fixing of venue in an antitrust case.

Section 12 of the Clayton Act, 15 U.S.C. § 22, provides

that a suit under the antitrust laws may be brought in any

district wherein the defendant corporation “transacts

business.” The iast time this Court interpreted this provi-

sion was some 34 years ago in United States v. Scophony

Corp., 333 U.S. 795 (1948), when it interpreted “trans-

acts business” as meaning “substantial” business activity

within the forum. In contrast, the decision below found

that two small electrical contractors were venued in the

District of Maryland merely because they belonged to a

trade association located there and paid dues to local

independent chapters affiliated with it. Because of this

holding, trade association members, wherever located,

may find themselves subject to suit in distant districts

merely because of trade association membership. The

precise question for review is:

1. Inthe absence of any direct commercial activity

within a district, does membership in a trade

association headquartered in the district con-

stitute “transact[ing] business” there under § 12

of the Clayton Act.

PARTIES

Plaintiffs in the proceedings below included:

National Constructors Association

Commonwealth Electric Company

The Howard P. Foley Company

Donovan Construction Company of Minnesota, Inc.

Arthur McKee & Company, Inc.

reo America, Inc.

Catalytic, Inc.

C. F. Braun Constructors, Inc.

Dravo Corporation

Guy F. 2 nson Company

The H. K. Ferguson Company

Jacobs Constructors, Inc.

Pullman Kellog, Division of Pullman, Inc.

Stearns-Roger, Inc.

Defendants in the proceedings below included:

National Electrical Contractors Association, Inc.

Robert L. Higgins

International Brotherhood of Electrical Workers

Hinman op tng ,

te) ectric Company, Inc.

Miller Electric Company

H. E. Autre

Allen L. Bader

Frank H. Bertke

Donald C. Cates

Robert W. Colgan

Joe R. Devish

Carl T. Hinote

Allan H. Stroupe

L. R. MeCord

Aldo P. Lero

Lowell C. Timm

John Ostrow

C. W. Strou

Warren Los

J. D. Hilburn, Sr.

RELATED COMPANIES

Petitioners Miller Electric Company and Colgan Elec-

tric Company, Inc. have no parent companies, sub-

sidiaries or affiliates.

TABLE OF CONTENTS

Page

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REASONS FOR GRANTING THE WRIT .............-0000- 5

A. By Predicating Venue On Trade Association

embership, The Decision Below Ingores The

Sound Policy Reasons For Requiring Sub-

stantial Business Activity Within The Forum

For Purposes Of § 12 Of The Clayton Act... 7

B. Membership In A Trade Association Located In

The Forum Does Not Constitute “Transact[ing]

Business” There Under § 12 Of The Clayton

BER 3. cod can VECbs dane dasneneenanbedduscex 10

C. In The Absence Of Any Direct Transactions

Within The Forum, It Is Improper.To Predi-

cate Venue On The Mere Fact That A Defend-

ant, Located Outside The Forum, Benefited

From Acts Performed By A Trade Association

PE RED Jaws ccasugcdatvbstiddeess ou2 14

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APPENDIX: Fourth Circuit Opinion ................ la

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Injunction Issued By The District Court ........... 98a

Order Denying Petitions For Rehearing And Sugges-

tions For Tebsering UES siccncvesbutdeniedsedas 100a

Disclosure of Respondents’ Corporate Affiliations And

Pe IRIE: <n 65 oS cv t.cussaverecnsensaeevas

102a

TABLE OF AUTHORITIES

CASES: Page

Academy of Ambulatory Foot Surgery v. American

Podiatry Association, 516 F.Supp. 378 (S.D.N.Y.

SE as eekecnnls abide wands sued adudedeieenanks 14

American Society of Mechanical Engineers, Inc. v. Hy-

drolevel Corporation, ___. U.S. —— (1982) ..... 12

Athletes Foot of Delaware, Inc. v. Ralph Libonati Co.,

445 F.Supp. 35 (D. Del. 1977) .......ccccccccecs 10

B. J. Semel Associates, Inc. v. United Fireworks Manu-

facturing Co., 355 F.2d 827 (D.C. Cir. 1966) ..... 16

Bartholomew v. Virginia Chiropractors Association,

Inc., 612 F.2d 812 (4th Cir. 1979) ............... 14

Bogus v. American a and Hearing Association, 389

F.Supp. 327 (E.D. Pa. 1975), rev'd and aff'd on other

grounds, 582 F.2d 277 (3d Cir. 1978) ........... 6, 13

Caribe Trailers Systems, Inc. vy. Puerto Rico Maritime

Shipping Authority, 475 F.Supp. 711(D.D.C. 1979) 6

Courtesy Chevrolet, Inc. v. Tennessee Walking Horse

Breeders’ and Exhibitors’ Association, 344 F.2d 860

Sa DEED Sw icinn b cha dddcdhosnOvabeounvellaa ves 13

Eastman Kodak Co. v. Southern Photo Materials Co.,

PE MA CHEED 5 v0e was cacevéetwedcabis (in 8,9

Fashion Two Twenty, Inc. v. Steinberg, 339 F.Supp. 836

EC UEEE cokkss dccbas bs ponacsodendahes

Friends of Animals, Inc. v. American Veterinary Medi-

cal Association, 310 F.Supp. 620 (S.D.N.Y. 1970) 13

Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) .. 12

Golf City, Inc. v. Wilson Sporting Goods Co., Inc., 555

a ee CUES MEUED 5 elvne cdccntcranerdaahes 6, 13

Hanson v. Denckla, 357 U.S. 235 (1958) ............. 15

International Shoe v. Washington, 326 U.S. 310 (1945) 6

J.&B.&S. Restaurant Corp., Inc. v. Henry’s Drive-In,

Inc., 353 F.Supp. 389 (W.D.N.Y. 1973) .........

Midwest Fur Producers Association v. Mutation Mink

Breeders Association, 102 F.Supp. 649 (D. Minn.

Table of Authorities Continued

Page

0.S.C. Corp. v. Toshiba America, Inc., 491 F.2d 1064

SRA DOUEE tv bnvce dene t vuvesksboceeee eee 6, 10

Philadelphia Housing Authority v. American Radiator

& Standard Sanitary Corporation, 309 F.Supp. 1053

a SO acces ba aes ddcccenenameien ten 10, 11

- Sherman College of Straight Chiropractic v. American

Chiropractic Association, Inc., 534 F.Supp. 438

Ses SE os bet colveenosdi var eens ameeerad 13

State of Illinois v. Harper & Row Publishers, Inc., 308

a Se GUNLEM Bas EOUOED 60c0 vedp eee nccune 6

United States v. National City Lines, 334 U.S. 573

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STATUTES AND LEGISLATIVE MATERIAL:

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OTHER AUTHORITIES:

Note, Antitrust Venue: Transacting Business Under The

Clayton Act, 55 Geo.L.J. 1066 (1967) ............

National Trade and Professional Associations Of The

United States (C. Colgate, Jr. 17th ann. ed. 1982) 6

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1982

MILLER ELECTRIC COMPANY and

CoLGAN ELEcTRIC CoMPANY, INC.,

Petitioners,

Vv.

NATIONAL CONSTRUCTORS ASSOCIATION, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Petitioners, Miller Electric Company (“Miller”) and

Colgan Electric Company, Inc. (“Colgan”) respectfully

pray that a writ of certiorari issue to review the judgment

of the United States Court of Appeals for the Fourth

Circuit entered May 17, 1982.

OPINIONS BELOW

The majority and dissenting opinions (App. at 1a) filed

by the Court of Appeals are reported at 678 F.2d 492;

petitions for rehearing and suggestions for rehearing en

banc were denied on September 8, 1982 (App. at 100a).

The decision of the United States District Court for the

District of Maryland (App. at 23a) is reported at 498

F.Supp. 510; its injunction (App. at 98a) was entered on

October 8, 1980.

JURISDICTION

The opinion of the Court of Appeals for the Fourth

Circuit was filed on May 17, 1982. Timely petitions for

rehearing and suggesticns for rehearing en banc were

filed on June 1, 1982, and denied on September 8, 1982.

The jurisdiction of this Court is invoked pursuant to 28

U.S.C. § 1254(1).

On November 29, 1982, Chief Justice Burger extended

the time within which to file a petition for a writ of

certiorari to and including January 7, 1983.

STATUTORY PROVISION

The relevant statutory provision is § 12 of the Clayton

Act, 15 U.S.C. § 22, which reads:

Any suit, action, or proceeding under the antitrust

laws — a corporation may be brought not —

the judicial district whereof it is an inhabitant, but

also in any district wherein it may be found or trans-

acts business; and all process in such cases may be

served in the district of which it is an inhabitant, or

wherever it may be found. [Emphasis added].

STATEMENT OF THE CASE

Miller and Colgan are small electrical contractors head-

quartered in Jacksonville, Florida, and Toledo, Ohio,

respectively. They, together with some 5,700 electrical

contractors, are members of the National Electrical Con-

tractors Association (“NECA”), a trade association head-

quartered in the District of Maryland. Respondents, who

collectively constitute the giants of the contracting indus-

try,’ commenced this suit on August 5, 1977, by filing a

‘The corporate affiliations of the respondents that are publicly

held or are subsidiaries of publicly held corporations are listed in

(footnote continues)

class action complaint seeking treble damages and injunc-

tive relief for an alleged violation of § 1 of the Sherman

Act, 15 U.S.C. § 1. In essence, the complaint challenged

the legality of the 1976 National Collective Bargaining

Agreement between NECA and the International

Brotherhood of Electrical Workers (“IBEW”). The

named defendants included the IBEW and certain of its

officials, NECA and certain of its officials, and Miller and

Colgan. Miller and Colgan were the only individual

NECA members named as defendants.

On September 9, 1980, the district court, on a motion

for partial summary judgment, found that one provision

of the challenged collective bargaining agreement, the

provision establishing the National Electrical Industry

Fund, violated the Sherman Act. A nationwide class of

electrical contractors was certified, and on October 10,

1980, a permanent injunction was entered against all

defendants, including Miller and Colgan.

In the course of its decision, and as necessary predicate

for including Miller and Colgan within the injunction, the

district court found that venue, under the “transacts

business” provision of § 12 of the Clayton Act, was proper

in the District of Maryland. The court noted that the

question of whether Miller and Colgan were properly

venued in the District of Maryland was “a close one.” 498

F.Supp. at 525; App. at 44a.

(footnote continued)

Appendix (at 102a), which contains the “Disclosure Of Corporate

Affiliations And Financial Interests” filed by respondents with the

Fourth Circuit on December 4, 1980. In contrast, petitioners Miller

and Colgan, which are small, family-owned corporations, had annual

sales of $12 million and $16 million, respectively, when this suit was

filed.

The court reached its decision although it was uncon-

tested that neither company: (1) had performed any elec-

trical contracting service in the District of Maryland; (2)

had solicited business or advertised in Maryland; (3) was

qualified to do business in Maryland; (4) owned or leased

property in Maryland; (5) had a post office address, tele-

phone listing or bank account in Maryland; or (6) had any

officers, employees, directors or agents who were resi-

dents of Maryland. 498 F.Supp. at 525; Anp. at 46a.

The court predicated its venue finding on the facts that

Miller and Colgan belonged to a Maryland-based trade

association, NECA, and paid dues to NECA chapters

located outside of Maryland. NECA is a federation of 135

independent, autonomous chapters located throughout

the United States. Miller and Colgan belonged to the

chapters located in Florida and Ohio, respectively, and

paid their dues directly to those chapters. A portion of

those dues was ultimately remitted by the chapters to

National NECA in Bethesda, Maryland.’ The court char-

acterized these dues payments to the local chapters as

“purchases of services from the National Electrical Con-

tractors Association. . . in Bethesda, Maryland” because

the defendants received “benefits” from their mem-

bership in NECA, including public relations, labor rela-

tions, congressional lobbying and electrical code making.

498 F.Supp. at 525-26; App. at 46a. The court distin-

guished prior precedent—that trade association mem-

bership and dues payments were insufficient to establish

? The amounts eventually remitted to NECA in Maryland by local

NECA chapters and attributable to Miller and Colgan averaged

$6,576 and $5,921 per year, respectively. 498 F.Supp. at 526; App. at

46a-47a.

venue—by characterizing the services provided by

NECA to its members as “extensive” and “valuable.” 498

F.Supp. at 527, n.6; App. at 50a.

On appeal, a divided panel of the Fourth Circuit

affirmed, finding that Miller and Colgan were “transact-

ing business” in Maryland because of their membership

in, and payment of dues to, NECA.’ 678 F.2d at 492; App.

at 8a. Circuit Judge Hall filed a sharp dissent, noting that

“(t]he holding that mere membership and payment of

trade association dues is enough to constitute ‘transact-

[ing] business’ under § 12 of the Clayton Act, 15 U.S.C.

§ 22, flies in the face of the well established rule that a

defendant’s contacts with the forum state must be of a

‘substantial character’ in order for venue to be proper.”

678 F.2d at 504; App. at 21a-22a. [Emphasis in original].

The case was remanded for a determination of liability

and damages, which respondents contend exceed

$100,000,000.*

REASONS FOR GRANTING THE WRIT

In considering the merits of this petition, the Court

should be aware that more is at stake than simply the

rights and interest of these two litigants—much more.

The way in which the question raised in this petition is

answered will profoundly affect the fixing of venue in

antitrust lawsuits involving trade associations and their

members. The core of the finding below is that mem-

bership in a trade association is sufficient to satisfy the

*The appellate court erreoneously characterized the payments

made to local NECA chapters as payments made to National NECA

in Maryland. 678 F.2d at 497; App. at 8a.

‘NECA has filed, this date, a petition for certiorari to review this

liability determination. Miller and Colgan have joined in that peti-

tion.

“transacts business” test of § 12 of the Clayton Act. The

implications of this decision on the nation’s 40,000 trade

and professional associations and their millions of

members’ are manifest. The last time that this Court

interpreted the “transacts business” provision of § 12 of

the Clayton Act was some 34 years ago in United States v.

National City Lines, 334 U.S. 573 (1948), and United

States v. Scophony Corporation, 333 U.S. 795 (1948). In

those two cases, this Court construed “transacts busi-

ness” as requiring commercial transactions of “sub-

stantial character” within the forum. In the intervening

years since 1948, the lower courts have reached divergent

conclusions on how “substantial” those contacts must be

to confer venue under § 12.’ The unprecedented decision

here, which adds to the confusion, mandates a reexamina-

tion of the application of this wide-reaching venue provi-

sion.

5 National Trade And Professional Associations Of the United

States, p. 7 (C. Colgate, Jr. 17th ann. ed. 1982).

* A number of courts have refused to find venue where the defend-

ant’s qualitative and quantitative contacts with the forum were not

direct or substantial. See e.g., Golf City Inc. v. Wilson Sporting

Goods Co., Inc., 555 F.2d 426 (5th Cir. 1977); 0.S.C. Corp. v. Toshiba

America, Inc. , 491 F.2d 1064 (9th Cir. 1974); Caribe Trailer Systems,

Inc. v. Puerto Rico Maritime Shipping Authority, 475 F.Supp. 711

(D.D.C. 1979). Conversely, other courts have found venue using an

analysis that is closer to the due-process, minimun contacts test of

International Shoe v. Washington, 326 U.S. 310 (1945) than the

substantial business test of Scophony. See, e.g., Bogus v. American

Speech and Hearing Association, 389 F.Supp. 327 (E.D. Pa. 1975),

rev'd and aff'd on other grounds, 582 F .2d 277 (3d Cir. 1978); Fashion

Two Twenty, Inc. v. Steinberg, 339 F.Supp. 836 (E.D.N.Y. 1971);

State of Illinois v. Harper & Row Publishers, Inc., 308 F.Supp. 1207

(N.D. Ill. 1969).

The basic vice of the decision below is that it bases

venue on peripheral, indirect contacts with the forum.

Thus, two small electrical contractors, located in Florida

and Ohio, respectively, who have never solicited nor per-

formed any electrical contracting business in Maryland,

nevertheless find themselves venued there because of

their membership in a trade association. The decision

effectively emasculates the concept of “substantial” com-

mercial transactions within the forum, as required by

Scophony. The decision is wrong as a matter of policy and

fairness, conflicts with the underlying congressional in-

tent of § 12 of the Clayton Act, and will adversely affect

trade associations and their members throughout the

country.

A. By Predicating Venue On Trade Association Activity, The

Decision Below Ignores The Sound Policy Reasons For

Requiring Substantial Business Activity Within The

Forum For Purposes Of § 12 Of The Clayton Act.

The Clayton Act’s venue provision, § 12, was referred

to in the congressional debate as:

[Ojne of the most important [provisions] connected

with the whole subject matter of antitrust legislation

. . . (UJnless the venue be properly p , on the

one hand, you oi subject the defendant to black-

mail. . . On the other hand, if venue be not properly

placed, the plaintiff in humble pen may be de-

prived of the benefits of this bill.

51 Cong. Rec. 9467 (1914) (remarks of Congressman Sum-

ners).

In interpreting § 12 of the Clayton Act, the courts have

generally been able to deal consistently with the terms

“inhabitant” and “found” but have differed over the in-

terpretation of “transacts business”. See Note, Antitrust

Venue: Transacting Business Under the Clayton Act, 55

Geo.L.J. 1066, 1068 (1967). This Court first interpreted

the “transacts business” provision in Eastman Kodak

Company v. Southern Photo Materials Co., 273 U.S.

359, 370-71 (1927). It held that “a corporation is engaged

in transacting business in a District . . . in such sense as

to estab'ish the venue of a suit... if in fact, in the

ordinary and usual sense, it ‘transacts business’ therein of

any substantial character.” /d. at 373. This interpretation

of the statute was affirmed 21 years later in United States

v. Scophony Corporation of America, supra, and United

States v. National City Lines, supra.

In Scophony, this Court definitively held that the

“transacts business” provision of § 12 does not permit a

finding of venue based on any contact with the forum.

Rather, a finding of venue requires a “substantial” level

of commercial activity in the forum by the defendant. An

examination of the facts in Scophony places the sub-

stantiality requirement of § 12 in context.

There, defendant, a British corporation, created an

American affiliate to exploit its inventions and patents in

the United States. Through a series of complex con-

tractual arrangements, the British corporation trans-

ferred its patents, inventions and all of its equipment then

in the United States to the American affiliate. It had the

right to elect three of the five directors of the A )»erican

affiliate and constantly supervised the affiliate’s activi-

ties. Moreover, the British corporation was represented

in the United States by two of its directors, one of whom

held a comprehensive power of attorney to protect

Scophony’s interests in the United States. In the words of

Mr. Justice Rutledge, “Scophony then and there was

carrying on largely, if not exclusively, the only business

in which it could engage at the time [in the forum].” 333

U.S. at 810. After analyzing this commercial milieu, the

Court readily found that the British corporation satisfied

the “transacts business” standard, which it interpreted to

mean “(tjhe practical, everyday business or commercial

concept of doing or carrying on business ‘of any sub-

stantial character.’. . .” Jd. at 807. (Quoting from East-

man Kodak, supra.).

The facts of Scophony clearly indicate that the “trans-

acts business” provision of § 12 is not satisfied merely by

showing some contact with the forum—contacts rising to

the level of “substantial” business in the forum are re-

quired. The “transacts business” test is assuredly not a

talisman that can be used to transform any sort of forum

contact into a predicate for venue under § 12.

A few months after the Scophony decision, this Court,

in National City Lines, supra, again examined § 12 and

explained why the “transacts business” provision was

only satisfied by the “carrying on” of “substantial” busi-

ness in the forum. Section 12, the Court explained, was

enacted to liberalize the then-existing venue provision

applicable to antitrust suits, but it was not intended to

provide plaintiffs with an unlimited choice of forums. In

examining the legislative history of § 12, the Court con-

cluded:

Congress therefore was not indifferent to possibili-

ties of abuse involved in the various proposals for

change [of the venue provision]. Exactly the opposite

was true. For the broader ng $ were not re-

ported because they gave the plaintiff the choice.

ey were rejected because the choice given was too

wide, giving plaintiffs the power to bring suit and

force trial in districts far removed from the places

where the company was incorporated, had its head-

uarters, or carried on its business. In adopting § 12

ongress was not willing to give plaintiffs free rein to

haul defendants hither and yon at their caprice.

Id, at 587-88.

To strike the proper balance between the interests of

antitrust plaintiffs and defendants, in accord with con-

gressional intent, the Court reaffirmed that § 12 required

“substantial” commercial activities within the forum.

That requisite substantiality is missing here.

B. Membership In A Trade Association Located In The

Forum Does Not Constitute “Transact(ing) Business”

There Under § 12 Of The Clayton Act.

The collective theme of Fastman Kodak, Scophony

and National City Lines is that the test of venue under

§ 12is whether a corporation has made its presence felt in

a particular area to advance its essential business pur-

poses. In the typical § 12 venue case, the court analyzes a

corporation's quantitative and qualitative contacts with

the forum, including the dollar value and percentage of its

in-forum sales and purchases, the continuity and regular-

ity of its business activities within the district, and the

existence of sales solicitation and advertising in the

forum. See, e.g., O.S.C. Corp. v. Toshiba America, Inc.,

491 F.2d 1064 (9th Cir. 1974); Athletes Foot of Delaware,

Inc. v. Ralph Libonati Co., 445 F.Supp. 35 (D. Del. 1977);

J. &Bi&S., Restaurant Corp., Inc. v. Henry's Drive-In,

Inc., 353 F.Supp. 389 (W.D.N.Y. 1978); Philadelphia

Housing Authority v. American Radiator & Standard

Sanitary Corp., 309 F.Supp. 1053 (E.D. Pa. 1969).

This is not the typical case.

Here, venue is not predicated on any commercial activ-

ity conducted by these two small electrical contractors in

the District of Maryland. It is undisputed that Miller and

Colgan have never performed nor solicited any electrical

contracting services there. Rather, venue has been predi-

cated on membership in a Maryland-based trade associa-

tion, the payment of dues to independent chapters of that

trade association that are located outside Maryland, and

use of its services outside of Maryland. To counsel's

knowledge, excluding the decision here, the precise ques-

tion of whether trade association membership and dues

payment are sufficient for venue under § 12 of the

Clayton Act has been addressed on only two occasions.

The decision here conflicts with the two other decisions

that have considered the question.

In Philadelphia Housing Authority v. American

Radiator & Standard Sanitary Corp., 309 F.Supp. 1053

(E.D. Pa. 1969), Judge Lord rejected a venue claim based

on facts that a defendant belonged to a trade association

located in the forum, regularly attended meetings there,

and employed the association to perform services in its

behalf. Similarly, in Midwest Fur Producers Ass’n v.

Mutation Mink Breeders Ass’n, 102 F.Supp. 649, 652

(D.Minn, 1951), the court, in dismissing the case for lack

of venue, held that “mere membership in an organization

does not show that defendant is transacting business

here.” These two decisions correctly found that the venue

test under Scophony—substantial commercial activity

‘ within the district—precluded the fixing of venue based

merely on membership in a trade association and partici-

pation in trade association activities.

Here, the district court attempted to distinguish this

precedent by the following characterization: petitioners’

NECA membership and dues payments amounted to

“purchases” of “valuable” and “extensive” services. 498

F.Supp. at 527; App. at 50a. But this distinction begs the

question. The raison d’etre of any trade association is to

provide valuable services to its members. The

characterization of trade association membership as

“valuable” is a meaningless tautology. Venue analysis

should not be reduced to the use of expedient labels, i.e.

the subjective determination of the “value” of trade asso-

ciation membership. Rather, that analysis should focus

on the key venue issue—does a defendant, through its

trade association membership or otherwise, have a sub-

stantial commercial presence in the forum?

The unprecedented and far-reaching effects of the deci-

sion below are manifest. If trade association membership

and payment of dues are deemed sufficient to meet the

“transacts business” test of § 12, all members of a trade

association will be venued in the district where the assuci-

ation is headquartered. Indeed, as a direct result of this

holding, some 5,700 members of NECA, from Alaska to

Maine, could now find themselves venued in the District

of Maryland, irrespective of the utter lack of any commer-

cial activity by them within Maryland. Predicating venue

merely on trade association membership ignores the clear

teaching of Scophony—venue can only be found if the

defendant engages in substantial business in the forum.

The plain fact is that the business of these two electrical

contractors in the “ordinary and usual sense” is electrical

contracting, which they have never conducted in Mary-

land. To equate membership in a Maryland trade associa-

tion as substantial business activity in Maryland would

stand the “transacts business” test of § 12 on its head.

The question of predicating venue on trade or profes-

sional association activity is of great importance. Two

recent cases decided by this Court, Goldfarb v. Virginia

State Bar, 421 U.S. 773 (1975), and American Society of

Mechanical Engineers, Inc. v. Hydrolevel Corporation,

—__— U.S. —— (1982), have effectively made trade and

professional associations more amenable to antitrust law-

suits. Since most associations have nationwide mem-

bership, the venue issue, as it relates to trade association

activity, has become increasingly important.

The lower courts have not developed consistent stand-

ards for applying the “transacts business” provision of

§ 12 to trade association activity. Thus, on a similar set of

operative facts, the Tennessee Walking Horse Associa-

tion was found properly venued in California, while the

Professional Golfers’ Association was found improperly

venued in Louisiana. Compare: Courtesy Chevrolet, Inc.

v. Tennessee Walking Horse Breeders’ and Exhibitors’

Ass’n, 344 F.2d 860 (9th Cir. 1965) with Golf City, Inc. v.

Wilson Sporting Goods Co., 555 F.2d 426 (5th Cir. 1977).

Similarly, the American Speech and Hearing Association

found itself venued in Pennsylvania because it held three

conferences and had 393 members there, while the Amer-

ican Veterinary Medical Association’s sponsorship of two

conferences and 183 members in New York were deemed

insufficient to constitute “transact[ing] business” there.

Compare: Bogus v. American Speech and Hearing

Ass’n, 389 F.Supp. 327 (E.D. Pa. 1975), rev’d and aff'd on

other grounds, 582 F.2d 277 (3d Cir. 1978) with Friends of

Animals, Inc. v. American Veterinary Medical Ass’n,

310 F.Supp. 620 (S.D.N.Y. 1970).

Because venue governs access to federal courts, the

status of trade association activity and membership

under § 12 of the Clayton Act is too important to be left in

flux.” This Court should grant the writ to give needed

guidance.

’ For other examples of the divergent treatment of this question by

the lower courts, see: Sherman College of Straight Chiropractic v.

American Chiropractic Ass’n, Inc. 534 F.Supp. 438, 444-45 (N.D. Ga.

1982) (sponsorship of 3 or 4 seminars over a five-year period, public

service announcements, and mailing of promotional material to a

local chiropractic school constitute “carrying on business of any sub-

(footnote continues)

C. In The Absence Of Any Direct Transactions Within The

Forum, It Is Improper To Predicate Venue On The Mere

Fact That A Defendant, Located Outside The Forum,

Benefited From Acts Performed By A Trade Association

In The Forum

As the district court recognized, neither Miller nor

Colgan paid any dues directly to National NECA in Mary-

land. Rather, all dues were paid to local chapters which,

as respondents recognized below, are “independently in-

corporated local trade associations” that are “separate”

from National NECA.* Thus, venue was predicated on

indirect transactions with the forum by these two com-

panies. To bridge the venue gap, the district court

effectively considered the local independent chapters as

(footnote continued)

stantial character” for purposes of § 12); Academy of Ambulatory

Foot Surgery v. American Podiatry Ass’n, 516 F.Supp. 378

(S.D.N.Y. 1981) (presence of 313 members in the district, affiliation

with a state association in the district, and receipt of $18,824 in

advertising revenues not sufficient to constitute “transacting busi-

ness”), and Midwest Fur Producers Ass’n v. Mutation Mink Breed-

ers, supra, (presence of 166 members in Minnesota, and provision of

advertising and marketing services which benefited those members

in Minnesota not sufficient to confer venue under § 12). Indeed, in

reaching its decision below, the Fourth Circuit failed to distinguish,

reconcile or even cite its previous decision which is inconsistent with

the decision reached in this case. See Bartholomew v. Virginia Chi-

roprators Ass'n, Inc., 612 F.2d 812 (4th Cir. 1979) (maintenance of a

training program for peer review conducted in the district, dis-

semination of peer review guidelines and a relative value fee schedule

in the district, and 53 members located in district insufficient to

establish venue.)

*This admission is contained in pages 4 and 52 of respondents’

Appellate Brief in the Fourth Circuit.

the alter egos of National NECA and further equated

defendants’ use of NECA services in areas outside of

Maryland as transacting business in Maryland.

It is doubtful that such tenuous contacts even meet the

minimum contact requirements of the due process clause.

Hanson v. Denckla, 357 U.S. 235, 252-53 (1958) (“(Tyhis

suit cannot be said to be one to enforce an obligation that

arose from a privilege the defendant exercised in [the

forum]. . . [I]t is essential in each case that there be some

act by which the defendant purposefully avails itself of

the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its

laws.”) It is difficult to fathom how the paying of dues toa

“local trade association” located outside of Maryland, for

services received and used outside of Maryland, invokes

the benefits and protections of Maryland’s laws.

These peripheral contacts, which are questionable

under the due process clause, are clearly inadequate to

meet the substantial business test of § 12 of the Clayton

Act. The focus of venue here is the payment of dues for

trade association services. But those dues were not paid

directly into Maryland, and more importantly, those

services were not used by Miller and Colgan in Maryland.

Instead, those “services” were used by petitioners in

their activities that took place far away from the District

of Maryland.

The decision below amounts to a new rule of vicarious

venue. There has heen no showing that Miller and Colgan

had any commercial presence in Maryland. Rather, the

presence and activities of National NECA in Maryland

have been imputed to them. This, we respectfully submit,

is an unprecedented expansion of the “transacts busi-

ness” provision of § 12 of the Clayton Act. Membership in

a Maryland trade association and the use of its services

outside of Maryland do not constitute a commercial pre-

sence in Maryland. As noted by Judge, now Chief Justice

Burger in his dissent in B. J. Semel Associates, Inc. v.

United Fireworks Manufacturing Company, 355 F.2d

827, 834 (D.C. Cir. 1966), Section 12 “contemplates venue

when business is transacted in this jurisdiction, not. . .

with persons in [this jurisdiction].”* [Emphasis in origin-

al]. The facts here are even one step removed from those

in Semel. Petitioners’ transactions were with local in-

dependent chapters located outside of the District of

Maryland. To equate these indirect contacts with carry-

ing on “substantial” business in Maryland violates the

letter and the spirit of this Court’s decisions in Scophony

and National City Lines, supra. If the decision below is

allowed to stand, antitrust plaintiffs suing trade associa-

tions or their members will be able to “haul defendants

hither and yon at their caprice,” National City Lines,

supra, 334 U.S. at 588, the very license Congress

cautiously withheld when it enacted § 12.

* Compare the district court’s statement below: “(T]he court finds

that both Miller and Colgan were in effect “transacting business”

with national NECA in Bethesda, Maryland. . .” 498 F.Supp. at 527;

App. at 50a. [Emphasis added].

CONCLUSION

The decision below departs from the congressional poli-

cy underlying § 12 of the Clayton Act, conflicts with

controlling precedent of this Court, and dangerously ex-

pands the amenability of trade associations and their

members to antitrust suits in distant districts. The lower

courts, which have failed to develop consistent standards

for applying § 12 to trade association activity, are.in need

of this Court’s guidance. Petitioners pray that certiorari

be granted.

Respectfully submitted,

EARL W. KINTNER

(Counsel of Record)

DONALD M. BARNES

DENNIS C. CUNEO

ARENT, Fox, KINTNER, PLOTKIN & KAHN

Washington Square

1050 Connecticut Ave., N.W.

Washington, D.C. 20036-5339

(202) 857-6099

»Counsel for Miller Electric Company

and Colgan Electric Company, Inc.

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Nos. 80-1808

80-1809

NATIONAL ELECTRICAL CONTRACTORS

ASSOCIATION, INC., et al.

Defendants-Appellants

NATIONAL CONSTRUCTORS ASSOCIATION, et al.

Plaintiffs-Appellees

Appeal from the United States District Court for the District

of Maryland. Herbert F. Murray, District Judge.

Argued March 3, 1981 Decided May 17, 1982

Before WIDENER and HALL, Circuit Judges, MICHAEL,

District Judge*

* United States District Court for the Western District of

Virginia, sitting by designation.

Stanley D. Robinson (Kaye, Scholer, Fierman, Hays & Hand-

ler; James P. Garland, Anthony W. Kraus, Nora Winay, Sem-

mes, Bowen & Semmes; Laurence J. Cohen, Richard M. Res-

nick, Sherman, Dunn, Cohen, Leifer & Counts; Milton Hand-

ler, Michael Malina; Peter H. Gunst, Mary K. Farmer, Frank,

Bernstein, Conaway & Goldman; Guy Farmer (Farmer, Wells,

McGuinn, Flood & Sibal, on brief) and Donald M. Barnes (Ear!

W. Kintner, Dennis C. Cuneo, Arent, Fox, Kintner, Plotkin &

Kahn, on brief) for Appellants; Wilbur D. Preston, Jr. (Robert

M. Wright, Gerson B. Mehlman, James R. Chason, Whiteford,

Taylor, Preston, Trimble and Johnston, on brief); Alan D.

Cirker (Anthony J. Obadal, Zimmerman and Obadal; Ira

Greenberg, Stokes & Shapiro, on brief) for Appellees; (K. L.

Estabrook, Donald F. Nicolai, Lindabury, McCormick and

Estabrook, on brief) for Amicus Curiae Mechanical Con-

tractors Association of America, Inc.; (John P. Frank, Lewis

and Roca, on brief) for Stephen J. Burton, Felhaber, Larson,

Fenlon and Vogt, on brief) for Amicus Curiae NECA, Pipe,

and Masonry; (Robert J. Fenlon, StephenJ. Burton, Felhaber,

Larson, Fenlon and Vogt, on brief) for Amicus Curiae The

Sheet Metal and Air Conditioning Contractors National Asso-

ciation, Inc.; (J. Albert Woll and Lawrence Gold on brief) for

Amicus Curiae The American Federation of Labor and Con-

gress of Industrial Organizations; (Jerry J. Williams, Keith B.

Bardellini, Freshman, Mulvaney, Marantz, Comsky, Forst,

Kahan & Deutsch, on brief) for Amicus Curiae Construction

Industry Advancement Fund of Southern California, Fund for

Construction Industry Advancement, San Diego Construction

Industry Advancement Fund, and Associated General Con-

tractors, San Diego County, Inc.

WIDENER, Circuit Judge:

The National Electrical Contractors Association, the Inter-

national Brotherhood of Electrical Workers, and other defend-

ants appeal the award of a permanent injunction to plaintiffs

who include the National Constructors Association and numer-

ous construction companies, after a finding that the actions of

the defendants amounted to price fixing illegal under § 1 of the

Sherman Act, 15 U.S.C. § 1. National Constructors Associa-

tion, et al. v. National Electrical Contractors Association,

Inc., et al., 498 F. Supp. 510(D. Md. 1980). This appeal is taken

under 28 U.S.C. § 1292(a)(1) permitting appeals from the

award of injunctive relief. A FRCP 54(b) certificate was en-

tered by the district court relating to the counterclaims. We

affirm, and modify the injunctive order only slightly.

This case involves a private antitrust action for injunctive

relief under § 16 of the Clayton Act, 15 U.S.C. § 26, and

damages under § 4 of that Act, 15 U.S.C. § 15, fora violation of

§ 1 of the Sherman Act, 15 U.S.C. § 1.' The plaintiffs below,

appellees here, are the National Constructors Association

(NCA), an unincorporated trade association made up of com-

panies who perform electrical construction work and transact

business in the electrical construction industry, and other

corporations performing electrical contracting work which em-

ploy IBEW electrical workers.* The defendants below, appel-

lants here, are the National Electrical Contractors Association

(NECA), an incorporated trade association, whose members

perform electrical construction work; the International

Brotherhood of Electrical Workers (IBEW), an unincorpo-

rated labor union representing electrical workers throughout

the country, Charles H. Pillard, President of IBEW In-

ternational; Robert L. Higgins, Executive Vice President of

NECA; Miller Electric Co. and Colgan Electric Co., corpora-

tions engaged in electrical contracting work and members of

NECA; and the trustees of the National Electrical Industry

Fund.’

'§ 1 of the Sherman Act provides in part:

Every contract, combination in the form of trust or otherwise,

or conspiracy, in restraint of trade or commerce among the

several States, or with foreign nations, is declared to be illegal

* The district court has certified a class of plaintiffs as those elec-

trical contractors who, since July 1, 1977 have not been members of

NECA and who perform electrical construction work using workers

obtained or employed under the terms of collective bargaining agree-

ments with locals of the IBEW, which agreements contain or in-

corporate by reference the terms of Article 6 of the NECA-IBEW

national agreement.

The plaintiffs/appellees may be referred to as NCA or as appellees.

* The defendants/appellants may be referred to as NECA or as the

appellants.

NECA is the largest trade association in the electrical con-

tracting industry, consisting of at least 133 local trade associa-

tions or chapters whose members are both union and non-union

electrical contractors. The IBEW is the largest union

representing electrical workers, representing the vast major-

ity of all of the organized electrica) workers in the nation. At

the time of the district court's order the members of NECA

performed slightly more than 50% of the electrical contracting

work in the nation. Since 1960 NECA members have per-

formed between 50 and 60% of such work. Because of their

respective positions, much of the collective bargaining in the

electrical contracting industry is done by IBEW and NECA.

Local chapters of NECA are assigned territories throughout

the country which coincide with the jurisdiction of one or more

of the more than 400 IBEW locals. The local chapters of NECA

act as multi-employer bargaining representatives and negoti-

ate local collective bargaining agreements with the local IBEW

unions. Individual electrical contractors who are not members

of NECA usually enter into a labor agreement with the IBEW

in one of several ways: (1) Letter of Assent—A—An “A”

Letter of Assent authorizes the local NECA chapter to act as

the collective bargaining representative for the employer in

negotiations with the local union. As such, the employer is, of

course, considered a member of the NECA chapter bargaining

unit, (2) Letter of Assent—B—A “B” Letter of Assent binds

the employer to the terms of the local IBEW-NECA collective

bargaining agreement and all approved amendments, but does

not make the employer part of the bargaining unit. (3) Interna-

tional agreements—Designed for employers operating on a

national basis, such an agreement binds the employer to the

terms of local union contracts in the areas in which the employ-

er performs work. (4) Project agreements-—These agreements

apply to a single construction site and contain any provisions

that may be agreed upon. A local contractor may also negotiate

separately with the IBEW although this is not commonly done.

Both NECA and IBEW International reserve the right to

approve or veto all collective bargaining agreements entered

into by the local organizations.

NECA and IBEW International also enter into national

agreements, whose terms are incorporated into local agree-

ments between NECA and IBEW. It is a provision of the 1976

National Agreement between NECA and IBEW‘ that appel-

lees challenged below as being in violation of the Sherman Act.

The first five articles of the 1976 agreement provide for the

National Electrical Benefit Fund (a pension fund), shift work,

management rights, and apprentice ratios. Article 6, the one

challenged below, provides for the establishment of an indus-

try fund. Article 6 states:

The parties agree to the establishment of a le con-

stituted trust to be called the National Electrical ~ ustry

All construction agreements in the electrical industry

shall contain the following language:

“Each individual employer shall contribute one per-

cent (1%)* of the gross labor payroll to be forwarded

monthly to the National Electrical Industry Fund in a

form and manner —— by the trustees no later than

fifteen (15) calendar days following the last day of the

month in which the labor was performed. Failure to do so

will be considered a breach of this agreement on the part of

the individual em ~ er.” *(an amount not to exceed 1%

nor less than 0.2 of 1% as determined by ech local chapter

and approved by the trustees)

a National Electrical Contractors Association will be

nsible to see that the objects of the fund, as outlined

in t e trust, are adhered to strictly.

No of the funds collected under this trust shall be

used for purely social activities.

No of the funds collected under this trust shall be

used for any purpose which is held to be in conflict with the

‘This agreement was announced in the spring of 1976 and ratified

at the October 1976 meeting of the NECA Board of Governors. The

agreement went into effect on July 1, 1977.

interests of the International Brotherhood of Electrical

Workers and its local unions.

Both parties will be provided w th a copy of the Trust

and any further amendments.’

On December 8, 1976, President Pillard of IBEW and Vice

President Higgins of NECA signed the agreement containing

the provision for the industry fund. Contemporaneously they

signed a paper called “Basic Understandings and Interpreta-

tions of the IBEW-NECA Agreement” which provided in part:

Article Six—Industry Fund

(1) Itis understood that because of the cost of adminis-

tration of labor agreements, industry advancement and

services rendered to the electrical contracting industry by

the National Association and the NECA chapters that the

intent of this Article is to insert the industry fund con-

tribution mnguege in all IBEW construction agreements

containing the NEBF language except those covering em-

ployees of utility companies and municipalities and em-

ployees working under contractor equipment mainte-

nance agreements and employees working for motor

shops. In return, NECA will provide basic service to

electrical contracting employers employing workmen

obtained from the IBEW without re to the affiliation

of the individual employer with NECA.

Appellees challenged the industry fund provision under the

Sherman Act, alleging that the fund added a 1% charge to the

cost of all their electrical construction contracts with IBEW

whether the contractor belonged to NECA or not. Appellees

noted that prior to the 1976 agreement members of NECA paid

dues and a service charge for their membership in and services

‘The National Agreement provides that less than 1% of the labor

payroll may be collected by the local NECA chapter, but the local

must collect at least .2 of 1%, the amount which must be remitted to

the national organization. Both parties, as well as the district court,

have treated the required contribution to be 1%. The record supports

a conclusion that 1% is the usual amount collected.

received from NECA.” The 1976 agreement thus increased

their cost of doing business. Thus, non-NECA members, who

paid no dues or service charges, had a competitive advantage

over NECA members when bidding on contracts. In order to

end this situation, argued appellees, appellants initiated the

1% contribution to be applied uniformly to all IBEW construc-

tion contracts whether the contractor was a member of NECA

or not, thereby stabilizing the price of electrical construction

contracts, As a result, non-NECA contractors no longer had a

competitive edge over their NECA competitors. Appellees

claimed that appellants’ actions constituted price fixing, a per

se violation of the Sherman Act. The district court agreed and

in a thorough and detailed opinion granted summary judgment

for the appellees, finding the anticompetitive purpose neces-

sary for a finding of price fixing a per se violation of the

Sherman Act.’

The district court also summarily dismissed as without merit

the NECA defendants’ counterclaims that appellees were en-

gaged in a boycott, illegal under § 1 of the Sherman Act, by

their concerted refusal to pay what they owed into the industry

fund, 498 F. Supp. at 551. The NECA defendants appeal this

grant of summary judgment for the appellees on the counterc-

laims.

Before dealing with appellants’ substantive arguments, we

note that appellants Colgan Electric and Miller Electric argue

as a separate issue that the district court erred in not granting

their motion to dismiss the complaint because venue was im-

proper as to them since they were not transacting business in

*The dues were $50.00 per year with a service charge of .2% of

their labor payroll after the first year of membership.

' The district court discussed at length the evidence before it which

had been produced by both sides regarding the agreement. We need

not diseuss such evidence in any detail except as it applies to the

issues to be dealt with later in this opinion.

Maryland as required by § 12 of the Clayton Act, 15 U.S.C.

§ 22.* The district court found that they were in fact transact-

ing business in Maryland because of their dealings with NECA

to which they both belonged and paid substantial amounts in

the form of dues and industry fund contributions. We cannot

say that such a conclusion is clearly erroneous, and accordingly

affirm the district court’s denial of the motion to dismiss.

United States v. Scophony Corp., 333 U.S. 795 (1947). See

especially Scophony at p. 807, and the concurring opinion of

Justice Frankfurter at p. 818.

Appellants’ primary contention on appeal is that summary

judgment for the appellees in their price fixing case was inap-

propriate. Preliminarily we note that the Supreme Court has

cautioned against the granting of summary judgment in anti-

trust cases, stating in Poller v. Columbia Broadcasting Sys-

tems, 368 U.S. 464, 473 (1962), that “summary procedures

should be used sparingly in complex antitrust litigation where

motive and intent play leading roles .. .,” and we have had

occasion to follow this case in Morrison v. Nissan Co., Ltd.,

601 F.2d 139 (4th Cir. 1979). This is not to say that summary

judgment is never appropriate in antitrust cases, see White

Motors Co. v. United States, 372 U.S. 253 (1963), and in fact

grants of summary judgment in such cases have been explicitly

affirmed. Citizens Publishing Co. v. United States, 394 U.S.

131 (1969); First National Bank v. Cities Service, 391 U.S. 253

(1968).

With these rules in mind, we analyze appellants’ arguments.

They initially contend that summary judgment was inappro-

*§ 12 of the Clayton Act reads in part:

Any suit, action, or under the antitrust eae agent

a corporation ma brought not only in the judicial

whereof it is an tant, ~--+ yap deeaaaabeaaaaanseteed

be found or transacts business .

The agree that Miller and Co are neither inhabitants

of land nor are they found oe

priate because a genuine issue of fact exists regarding the

meaning of Article 6 of the NECA-IBEW National Agree-

ment. First, they argue that the language of Article 6, when

considered in connection with the remainder of the National

Agreement, is ambiguous on its face. The district court dis-

agreed, holding instead that the language in the agreement

clearly required the inclusion of the fund in all IBEW electrical

construction contracts at issue here. We agree that there is

nothing ambiguous at all about the agreement’s language. On

its face the agreement requires inclusion of the industry fund

clause in all such contracts.

Even if the language itself is clear, argue the appellants, a

consideration of the evidence submitted in the form of docu-

ments and pre-trial depositions create an issue of fact as to the

meaning of Article 6. To support his argument, appellants

principally rely upon several pieces of evidence which we shall

consider separately. We find no error in the district court’s

rejection of the pre-trial depositions submitted by the appel-

lants as sufficient to create an issue of fact. This testimony

amounted to no more than a denial of the meaning of the clear

words of the contract. In no way does it seek to clarify the

terms of the contract, but instead seeks to change the terms o.

an already clear agreement.’

Appellants also contend that other documents submitted to

the district court create a question of fact as to the meaning of

Article 6. The minutes of the October 1976 Board of Governors

meeting of NECA reflect that Robert Higgins, Executive Vice

President of NECA, read to the group a letter from its counsel,

* This also applies to IBEW President Pillard’s letter to NCA in

June 1977 in which Pillard denied the interpretation of the agreement

that NCA placed upon it, but immediately followed the denial with

the statement that: “It is true that, by July 1, 1977, we expect that all

local IBEW-NECA agreements will have been amended to include a

number of new provisions, including contributions to the [Industry]

Fund.”

10a

Henry H. Glassie, with reference to whether or not the NECA

bylaws would have to be amended to reflect the industry fund

as a change in NECA dues. Concluding that they would not,

Glassie in part stated, as transcribed, as follows: “If the indus-

try fund provided for in the Article 6 of the agreement referred

to in proposal number 3 applies to the NECA members, as

such, a change in the by-laws would be involved. However, we

are informed that the contribution to this fund as provided in

Article 6 will be required of all union electrical contractors

whether they are members of NECA or not. Indeed, would be

applicable to a company after resignation from NECA. And

moreover that the contribution will not be required of non-

NECA members and nonunion members of NECA.”

We first note that the minutes of the meeting are self con-

tradictory. At one place they state that the industry fund

contributions are “required of all union electrical contractors

whether they are members of NECA or not.” In the second

sentence following, the minutes then contradict themselves as

they state that “the contribution will not be required of non-

NECA members and non-union members of NECA.” The very

best that can be said of the minutes is that they both corrobo-

rate and flatly contradict NECA’s position in the case. There

was a mistake made in reading the letter from Glassie, how-

ever, or in the transcription of the minutes of the meeting. The

letter itself did not contain the critical words “non-NECA

members and,” but read (in the form of a clause in the letter)

“The contribution will not be required of non-union members of

NECA.” Even if we accept the minutes of the meeting instead

of the content of the letter (and no reason is offered as to why

the letter is not the proper document to use), they do not clarify

any claimed ambiguity existing in the agreement but amount

at the best to no more than an ambiguous interpretation there-

of. The letter from Glassie obviously supports the already clear

contract terms, and, indeed, its observation that contribution

would not be required of non-union members of NECA only

states the obvious. In all events, the status of non-union mem-

bers of NECA is not a matter of dispute in this case and is of no

consequence.

lla

Appellants next rely upon a December 1976 letter from

Charles Pillard, President of IBEW International, to its locals

which notes that local unions are to seek to reopen agreements

with non-NECA employees by mutual consent to include the

industry fund in “all non-NECA inside and outside construc-

tion agreements.” We see no way that this letter supports

appellants’ position, rather, it supports appellees’ contention

that the provision for the industry fund goes in all applicable

contracts. We reject appellants’ argument that this evidence

shows that they merely intended to request the inclusion of the

fund in labor contracts, for the letter obviously applied to

existing contracts which would require agreement to change.

Appellants next rely upon three letters from Pillard to three

different local unions, their text being very similar, advising

the locals that they must bargain in good faith with contractors

who terminated their letters of assent. Again, we do not see

how these letters support appellants’ contentions. At best they

show that the local unions were advised as to their obligations

under the National Labor Relations Act to bargain in good

faith as toa whole contract and not take a take or leave it stance

in negotiations.

Finally, appellants rely upon a June 1978 letter from Pillard

to the union locals which stated that local unions should

specifically remove from the bargaining table the industry

fund if a contractor objected to its inclusion. Not only was this

letter sent almost a year after this lawsuit was filed, it only

reflects how the union at that later time wished to handle the

industry fund. It does not clarify the agreement itself.

All of this evidence taken together shows no more than

appellants’ attempt to change the meaning of the National

Agreement to reflect how they now wish the contract to be

read. None seeks to clarify any particular language or term in

the National Agreement. As such, they have no effect upon an

obviously clear agreement.

The National Agreement and the Basic Understanding must

be considered together as documents which are a part of the

12a

same transaction. Gordon v. Vincent Youmans, Inc., 358 F.2d

261 (5th Cir. 1966); 4 Williston, Contracts (3d Ed.) § 628. The

agreement states very clearly that the industry fund goes “in

all construction agreements in the electrical industry.” As

such, we need go no further to find appellants’ intent. Loca-

france U.S. Corp. v. Intermodal Systems Leasing, 558 F.2d

1113 (2d Cir. 1977); E. P. Hinkel Co. v. Manhattan Co., 506

F.2d 201 (D.C. Cir. 1974). But, even if we go further, the Basic

Understanding says the same thing, to wit: “in all IBEW

construction agreements containing the NEBF language.”

The evidence shows, without dispute, in the NECA-IBEW

Employees Benefit Agreement, that all contracts with IBEW

unions contain NEBF provisions whether the contractor be-

longs to NECA or not. These two documents, then (the Na-

tional Agreement and the Basic Understanding), read sepa-

rately or together leave no doubt as to the applicability of the

industry fund to all IBEW construction contracts. Appellants’

evidence shows no more than that NECA and the IBEW

sought to read the contract differently at a later date.

We also agree with the district court that the evidence

presented was so removed in time and self serving as to not

create a genuine issue of fact as to the meaning of the contract.

The district court did not err in relying upon the clear language

of the agreement in deciding the issue in the appellees favor.”

‘0 Appellants further claim that in actuality IBEW did not insist

upon inclusion of the fund in every contract signed, and that some

labor contracts entered into during this time did not include the

industry fund. The fact that the IBEW was somewhat less diligent

than it might have been in enforcing the provisions of the National

Agreement is not a defense, especially since the language of the

agreement itself leaves no room for debate that the fund was to be

included in all construction contracts. An activity does not have to be

a complete success to violate the antitrust laws. United States v.

Trenton Potteries Co., 273 U.S. 392, 402 (1927); United States v.

Bensinger Co., 430 F.2d 584 (8th Cir. 1970); Plymouth Dealers

Assoc. v. United States, 279 F.2d 128 (9th Cir. 1960).

13a

Va. Impression Products Co. v. SCM Corp., 448 F.2d 262 (4th

Cir. 1971).

Appellants next claim that the district court erred in con-

cluding that the agreement in question constituted price fixing

illegal per se under the Sherman Act. Instead, they contend

that no restraint of trade existed. Alternately, if a restraint of

trade is found, appellants contend that it must be judged under

the rule of reason.

Although a literal reading of the Sherman Act would make

illegal all contracts if they restrain trade in any particular, the

Supreme Court has construed the statute to outlaw only un-

reasonable or undue restraints. Standard Oil of N.J. v. United

States, 211 U.S. 1 (1911). In Standard Oil the Court estab-

lished the rule of reason as a method of examining the actions of

parties to determine if § 1 has been violated by looking at the

purpose, character, and effect of the actions in question.

Unreasonableness is based upon either the nature of the con-

tract or upon the surrounding circumstances that give rise to

an inference that the parties intended to restrain trade or

enhance prices. National Society of Professional Engineers v.

United States, 435 U.S. 679 (1978). By this standard, the

courts decide whether conduct is unreasonably anticompeti-

tive in character or in effect.

Certain practices whose nature and effect are so clearly

anticompetitive have been held to be illegal per se. Those

specifically include price fixing."' E.g. United States v.

'! As the Supreme Court noted in Northern Pacific RW v. United

States, 356 U.S. 1, 5 (1958): “because of their pernicious effect on

competition and lack of any redeeming virtue [such activities] are

conclusively presumed to be unreasonable and therefore illegal with-

out elaborate inquiry as to the precise harm they have caused or the

business excuse for their use.” The Court mentioned price fixing,

division of markets, group boycotts, and tying arrangements.

l4a

Socony-Vacuum Oil Co., 310 U.S. 150 (1940); Pa. W. & P. Co.

v. Consolidated G.E. L. & P. Co., 184 F.2d 552 (4th Cir. 1950).

The critical analysis in determining whether a particular activ-

ity constitutes a per se violation is whether the activity on its

face seems to be such that it would always or almost always

restrict competition and decrease output instead of being de-

signed to increase economic efficiency and make the market

more rather than less competitive. Broadcast Music, Inc. v.

CBS, 441 U.S. 1 (1979).

As just noted, price fixing is one of those practices that the

Court has held to be illegal per se under the Sherman Act.

United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).

The Court stated at 223 “a combination formed for the purpose

and with the effect of raising, depressing, fixing, pegging or

stabilizing the price of a commodity in interstate or foreign

commerce is illegal per se.” To be guilty of price fixing, the

conspirators do not have to adopt a rigid price, substantially

less has been found to be price fixing.* An activity can violate

the per se rule even if its effect upon prices is indirect. United

States v. General Motors, 384 U.S. 127, 147 (1966). In essence,

an interference with the market forces treely setting the prices

of goods is sufficient. Jn Re Yarn Processing Patent Validity

Litigation, 541 F.2d 1127, 1137 (5th Cir.) cert. den. 433 U.S.

910 (1977).

“Catalano, Inc. v. Target Sales, Inc., 446 U.S. 643 (1980),

elimination of interest free short term credit; United States v. Con-

tainer Corp. of America, 393 U.S. 333 (1969), exchange of price

information as stabilizing although lowering prices; United States v.

Parke, Davis & Co., 362 U.S. 29 (1960), setting minimum prices;

Kiefer-Stewart Co. v. Seagram & Sons, 340 U.S. 211 (1951), setting

maximum prices; United States v. Socony-Vacuum Oil, 310 U.S. 150

(1940), buying surplus gasoline to stabilize prices; P! ymouth Dealers

Assoc. of Northern Cal. v. United States, 279 F.2d 128 (9th Cir.

1960), establishing price list from which negotiations began.

l5a

There can be no doubt that the agreement in question here,

which adds a 1% charge to all IBEW construction contracts

falls within the definition of price fixing. By taking the addi-

tional 1% of labor costs from non-NECA contractors it robs

them of a competitive advantage beneficial to the public. It

clearly interferes with the market forces that set the price of

such contracts. The industry fund would tend to stabilize the

price of electrical construction contracts, a practice illegal per

se under the Sherman Act.

Appellants further contend that even if the per se doctrine is

applicable the district court erred because a genuine issue of

fact existed as to the purpose of the fund. Additionally, they

argue that the district court erred as a matter of law because it

concluded that an anticompetitive effect need not be shown in

order to prove price fixing. Appellants would argue instead

that both anticompetitive purpose and effect must be proven.

Such an argument is without merit. We know of no better

statement of the rule than that of this court in United States v.

Society of Ind. Gasoline Marketers, 624 F.2d 461, 465 (4th Cir.

1979), cert. den. 101 S.Ct. 859, where we stated: “Since in a

price-fixing conspiracy the conduct is illegal per se, further

inquiry on the issues of intent or the anti-competitive effect is

not required. The mere existence of a price-fixing agreement

establishes the defendants’ illegal purpose since ‘[t]he aim and

result of every price-fixing agreement, if effective, is the

elimination of one form of competition.’ United States v. Tren-

ton Potteries, 273 U.S. 392, 397...” See also 2 Areeda &

Turner, Antitrust Law § 314." As this decision makes clear, a

specific finding of anticompetitive purpose and effect is not

“In United States v. McKesson & Robbins, 351 U.S. 305 (1956),

the Court stated: “It has been held too often to require elaboration

now that price fixing is contrary to the policy of competition underly-

ing the Sherman Act & that its illegality does not depend on a

showing of its unreasonableness, since it is conclusively presumed to

be unreasonable. It makes no difference whether the motives of the

l6a

needed. But, even if it were, there is no doubt, as the district

court found, that, on its face, this agreement has an

anticompetitive purpose, which is to add the 1% of labor cost to

all IBEW construction contracts which could only stabilize

prices of NECA and non-NECA contractors.

This brings us to appellants’ objections to the injunctive

order entered by the district court which was in two parts.

The first part of the injunction enjoins NECA and IBEW

and others named from “seeking to continue, continuing,

enforcing, maintaining, or renewing Article 6 of the National

Acreement. . . as to any person, corporation, or other entity

which is not a member of the National Electrical Contractors

Association or from entering into, maintaining or participating

in any act, contract, agreement, understanding, plan, pro-

gram, or other arrangement with any person, corporation, or

other entity which is not a member of the National Electrical

Contractors Association that includes any provision for imple-

mentation of Article 6 of the aforesaid agreement.” The second

part of the injunction enjoins the same defendant from “de-

manding, soliciting, collecting or receiving from any person,

corporation or entity which is not a member of the National

Electrical Contractors Association contributions to the Na-

tional Electrical Industry Fund, or any alternate or substitute

therefor, the effect of which would be to add a surcharge,

determined by a uniform formula, to the cost of procuring all

contracts with the IBEW in the electrical construction indus-

try.”

Appellants object to the first part of the injunction as being

overbroad in that a non-NECA employer who voluntarily as-

participants are good or evil, whether the price fixing is ace~mplished

by express contract or by some more subtle means; whether the

participants possess market control; whether the amount of in-

terstate commerce affected is large or small; or whether the effect of

the agreement is to raise or to decrease prices.”

17a

sents to pay into the industry fund should not have been

included. That objection is without merit. In Perma Mufflers

v. International Parts Corp., 392 U.S. 134 (1968), the Court

held that the fact the plaintiff may have been in pari delicto

does not prevent a suit under § 1 of the Sherman Act. The

Court said the courts do not “have power to undermine the

antitrust acts by denying recovery to injured parties merely

because they have participated to the extent of utilizing illegal

arrangements formulated and carried out by others.” p. 139.

Thus, under Perma Mufflers there is no reason to deny non-

NECA employers relief although they may have previously

voluntarily assented to a NECA-IBEW agreement.

Appellants next object to the second part of the injunction

which they say could be construed to prohibit any demand that

an IBEW local might unilaterally make in collective bargaining

to be characterized as a uniform surcharge on labor contracts.

They say that it prevents the union, even acting unilaterally,

from doing the very thing that §7 of the National Labor

Relations Board Act, 29 U.S.C. § 157, permits unions to do,

that is, to bargain collectively on any permissive or mandatory

subject of bargaining. That objection is well taken only to a

very small extent. The question of whether or not the industry

fund is either a permissive or mandatory subject of collective

bargaining is not before us, but, for present purposes, we will

assume that it is a permissive subject of collective bargaining.

Merely, however, because establishment and maintenance

of the industry fund may be a permissive subject of collective

bargaining does not automatically exempt the IBEW from the

provisions of the antitrust laws. This was specifically held in

Allen Bradley v. Local Union No. 3, IBEW, 325 U.S. 797

(1945). In Allen Bradley the Court upheld a finding of the

district court which had found Local 3 of IBEW guilty of a

violation of the Sherman Act for acting in concert with business

organizations and with manufacturers of goods to restrain

competition in and monopolize the marketing of such goods in

New York City. The Court found that “. . . the same labor

union activities may or may not be in violation of the Sherman

18a

Act, dependent upon whether the union acts alone or in

combination with business groups.” 325 U.S. at 810. The gist of

the Court’s reasoning, which is applicable here, is found on the

same page of the opinion where it said: “For if business groups,

by combining with labor unions, can fix prices and divide up

markets, it was little more than a futile gesture for Congress to

prohibit price fixing by business groups themselves.” The Su-

preme Court in Allen Bradley did require a modification of the

decree “so as to enjoin only those prohibited activities in which

the union engaged in combination ‘with any person, firm or

corporation which is a non labor group.’ p. 812. The second

part of the order complained of does no more than this. It

enjoins the “above mentioned defendants” (which include

NECA and IBEW) from demanding, etc., from non-NECA

members contributions to the National Electrical Industry

Fund. The order must be read in the context of the case instead

of divorced from it. As such, it undoubtedly means the defend-

ants acting together and not the defendants acting severally. It

leaves IBEW entirely free to pursue any legitimate object of

collective bargaining acting unilaterally, but, this, of course,

does not include IBEW acting “with any person, firm or

corporation which is a non-labor group,” Allen Bradley, p. 812,

to violate the Sherman Act, and this expressly includes the

maintenance of the industry fund as expressed in the contract

between NECA and IBEW.

The standard by which we review such injunctive orders is

“whether the relief represents a reasonable method of

eliminating the consequences of the illegal conduct.” National

Society of Professional Engineers v. United States, 435 U.S.

679, 698 (1978). We think the order of the district court meets

that standard; it does no more than enjoin the enforcement of,

and collection of money under, a contract held to violate the

antitrust laws.

Despite what we have just said with respect to the second

part of the order complained of, out of perhaps an over abund-

ance of caution, and in order to prevent any reading out of

context of that part of the district court’s order, we direct that

19a

the district court modify the second part of its order so that it

applies to IBEW only when IBEW is engaged in the prohibited

activities “in combination with any person, firm or corporation

which is a non-labor group.” Allen Bradley at 812.

We have discussed in some detail the principal contentions of

appellants and note that we have considered all of their other

assignments of error and find them without merit, including

those relating to the granting of summary judgment in favor of

appellees on the NECA defendants’ counterclaims. Except as

may be otherwise indicated in this opinion, we rely upon the

district court’s complete and thorough discussion of the issues

in this case, and its judgment is accordingly

AFFIRMED AS MODIFIED."

HALL, Circuit Judge, dissenting:

Through its blind application of the per se rule against price

fixing, the majority ignores the realities of this case and, as a

consequence, reaches a manifestly inequitable result. As I

believe that the facts before us do not justify an extension of

the per se price fixing rule, I must respectfully dissent.

We are aware that, on its particular facts, this is a case of first

impression and as such we should be careful in applying the per se

rule. Broadcast Music, Inc. v. CBS, 441 U.S. 1, 9 (1979). Cases are

legion, however, declaring the illegality of price fixing in various

forms, and the agreement here, we think, is as clear as the one struck

down in Citizens Publishing Co. v. U.S. 394 U.S. 131 (1969). The

conclusion reached by the Court in that case that “(t]he joint operat-

ing agreement exposed the restraints so clearly and unambiguously

as to justify the rather rare use of a summary judgment in the

antitrust field,” p. 136, is applicable here. The Supreme Court,

indeed, in United States v. Container Corp., 393 U.S. 333 (1969), a

price fixing case “unlie any other” decided by that Court, found a

per se antitrust violation in reviewing a dismissed complaint, certain-

ly without the benefit of any more documents than we have available

here.

20a

Under a provision in the collective bargaining agreement

between the National Electrical Contractors Association

(NECA) and the International Brotherhood of Electrical

Workers (IBEW), the IBEW could not sign any employment

contract unless the employer agreed to pay one percent of its

gross monthly labor payroll into the National Electrical Indus-

try Fund. Finding that this requirement acts to increase the

labor costs to non-NECA contractors and “would tend to sta-

bilize the price of electrical construction contracts,” the major-

ity concludes that the agreement is per se illegal under the

Sherman Act, 15 U.S.C. § 1.

This case, however, is inherently different from those relied

on by the majority in that all of the parties involved here

receive an extremely important benefit from the NECA/

IBEW negotiations, that being the establishment of a fixed

wage level. “Assenting” non-NECA contractors (i.e., those

who agree to follow the terms of the NECA/IBEW agreement

through either “A” or “B” Letters of Assent or International

Agreements) receive the benefit directly by accepting all of the

gains and concessions secured by NECA during the course of

the negotiations.

Non-assenting contractors who bargain directly with the

Union enjoy the benefit in a similar, albeit indirect, manner.

They have the terms of the NECA/IBEW agreement, espe-

cially the wage level, on which they can rely during the course

of their independent negotiations. The salary level agreed to

by NECA may be employed as a ceiling on the Union’s de-

mands. Indeed, the Union has an incentive to obtain a high

wage rate from NECA which it will then attempt to carry over

into its non-NECA contracts. See generally P. Samuelson,

ECONOMICS 586-87 (10th ed. 1976). Thus, any wage con-

cessions NECA is able to draw out of IBEW spill over to the

benefits of all non-assenting non-NECA contractors.

Since all electrical contractors benefit from NECA's collec-

tive bargaining, it is only fair that they share in the costs of

such bargaining. In this regard, it is clear that one of the main

2la

purposes of the industry fund is to help defray the costs of the

negotiation process. Under the majority’s ruling, however,

although both assenting and non-assenting non-NECA con-

tractors would continue to enjoy the benefits of NECA’s

bargaining, neither can be required to contribute to the fund.

Moreover, they will receive a windfall in the form of treble

damages.

'n Smitty Baker Coal Co. v. United Mine Workers of Amer-

ica, 620 F.2d 416 (4th Cir.), cert. denied, 449 U.S. 870 (1980),

we ruled that a protective wage clause, requiring a union to

demand the wage sca/e from all employers who were not mem-

bers of the multi-employer bargaining unit, did not constitute a

per se violation of the Sherman Act. Rather,

([tlo amount to an antitrust violation the agreement must

be rooted in an anti-competitive purpose, and must effect

an anti-competitive result, as evidenced by action “ruin-

ing” a competitor’s business or driving him “out of busi-

ness.” Unless there is such an agreement between the

labor organization and the non-labor group and such an

anti-competitive result, there is no conspiracy actionable

under the antitrust laws.

Id. at 431-32 (emphasis supplied).

Since the one percent industry fund charge at issue here has no

greater effect on electrical contractor prices than would a

protective wage clause, I would follow the Smitty Baker stand-

ard and avoid the majority’s untenable extension of the per se

rule.

As a final matter, I also disagree with the majority’s con-

clusion that the trial judge did not err in finding defendants

Colgan Electric Co. (Colgan) and Miller Electric Co. (Miller)

within the venue of the court. The record indicates that their

most significant contact with the judicial district of Maryland

was the payment of dues to NECA which has its national office

located in that state. The holding that mere membership and

payment of trade association dues is enough to constitute

“transact(ing] business” under § 12 of the Clayton Act, 15

22a

U.S.C. § 22, flies in the face of the well established rule that a

defendant’s contacts with the forum state must be of a “sub-

stantial character” in order for venue to be proper. See

Bartholomew v. Virginia Chiropractors Association, 612 F.2d

812, 815 (4th Cir. 1979), cert. denied, 446 U.S. 938 (1980).

Consequently, the district court clearly erred in failing to

dismiss the complaint against defendants Colgan and Miller.

For the foregoing reasons, I respectfully dissent.

23a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

Civil No. HM77-1302

NATIONAL CONSTRUCTORS ASSOCIATION and COMMONWEALTH

ELECTRIC CoMPANY, by and on behalf of itself and

all others similarly situated and

THE Howarp P. FoLtey Company, by and on behalf of itself

and all others similarly situated and

DONOVAN CONSTRUCTION COMPANY OF MINNESOTA, INC.,

ARTHUR MCKEE & Company, INc., BADGER AMERICA, INC.,

CaTALYTIC, INc., C. F. BRAUN Constructors, INc., DRAVO

CorRPORATION, Guy F. ATKINSON CoMPANY, THE H. K.

FERGUSON COMPANY, JACOBS CoNsTRUCTORS, INC., PULLMAN

KELLOGG, DIVISION OF PULLMAN, INC.,

STEARNS-ROGER, INC.,

Vv.

NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, INC.,

Rosert L. Hiccins, THE INTERNATIONAL BROTHERHOOD OF

ELECTRICAL WorKERS, AFL-CIO, CHARLES H. PILLARD,

CoLGAN ELectric, INc., MILLER ELEcTRIC Co., and

H. E. Autrey, ALLEN L. BADER, FRANK H. BERTKE,

DoNnALD C. CaTEes, Ropert W. CoLcaNn, Joe R. DEVISH, and

Car_ T. Hinorte, in their individual capacities and as

Trustees of the National Electrical Industry Fund, and

ALLAN H. Stroupe, L. R. McCorp, ALpDo P. LERo and

LoweLL C. Tim, in their official capacities as Trustees of

the National Electrical Industry Fund, and

JoHN Ostrow C. W. StroupeE, WARREN Losi and J. D.

HILBuRN, Sr., in their individual capacities.

Filed: September 9, 1980

Wilbur D. Preston, Jr., Robert M. Wright, Nevett Steele, Jr.,

and Ward B. Coe, III, of Whiteford, Taylor, Preston, Trimble

& Johnston, Baltimore, Maryland; Anthony J. Obadal, Steven

R. Semler, Howard J. Kaufman, Alan D. Cirker; Stephen C.

Yohay, of Zimmerman and Obadal, Washington, D.C.; Ira

24a

Genberg, Peter R. Spanos, of Stokes & Shapiro, Atlanta,

Georgia, Attorneys for Plaintiffs.

Guy Farmer, of Farmer, Shilbey, McGuinn & Flood, Washing-

ton, D.C.; Alan I. Baron, Peter H. Gunst, of Frank, Bernstein,

Conaway & Goldman, Baltimore, Maryland; Attorneys for

Defendant National Electrical Contractors Association, Inc.

and all other defendants EXCEPT Defendants International

Brotherhood of Electrical Workers, AFL-CIO and Charles H.

Pillard.

Thomas X. Dunn, Richard M. Resnick, of Sherman, Dunn,

Cohen and Liefer, Washington, D.C.; James P. Garland,

Anthony W. Kraus, Steven D. Frenkil, Nora Winay, of Sem-

mes, Bowen & Semmes, Baltimore, Maryland, Attorneys for

Defendants International Brotherhood of Electrical Workers

and Charles H. Pillard, International President of IBEW.

Herbert F. Murray, United States District Judge

25a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MARYLAND

Civil No. HM77-1302

NATIONAL CONSTRUCTORS ASSOCIATION, ETC. et al.

NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, INC., et

al.

MEMORANDUM OPINION

I. Factual Background

This is a private antitrust action for treble damages and

declaratory and injunctive relief, brought under § 1 of the

Sherman Antitrust Act, 15 U.S.C. § 1. Currently pending

before the court are eight motions, on which the court has

heard extensive oral argument. An explanation of the factual

background of the dispute is essential to an understanding of

the pending motions.

_ Plaintiff National Constructors Association (NCA) is an un-

incorporated trade association whose members are “corpora-

tions who perform electrical construction work and who other-

wise transact business in the electrical construction industry.”

Amended Complaint at 4. Of the remaining plaintiffs, Com-

monwealth, Foley, Donovan, Catalytic, Braun, Atkinson, Fer-

guson and Pullman-Kellog are corporations which perform

electrical construction work and employ electrical construction

workers who are members of the defendant IBEW and its local

unions. McKee, Badger, Dravo, Jacobs and Stearns-Roger are

also corporations which perform electrical construction work,

but rather than employ IBEW workers directly, they hire

electrical construction contractors who in turn employ IBEW

labor. None of those corporate plaintiffs except Donovan is a

member of defendant National Electrical Contractors Associa-

tion, Inc. (NECA).

26a

Defendant NECA is an incorporated trade association

whose members, like those of NCA, perform electrical con-

struction work. Although NECA’s principal place of business

is in Bethesda, Maryland, the association has approximately

133' local chapters nationwide. NECA and its local chapters

provide various services to member companies, including

representing members in collective bargaining with the IBEW

and its local unions. Amended Complaint © 4(a)(iii).

Defendant IBEW is an unincorporated labor organization

whose local unions throughout the United States represent at

least some of the electrical workers whom the corporate plain-

tiffs employ. Defendant Charles H. Pillard is now and at all

pertinent times was International President of the IBEW;

defendant Robert L. Higgins is and at all pertinent times was

Executive Vice President of NECA.

Defendants Colgan Electric Co. and Miller Electric Co. are

corporations engaged in the electrical contracting business and

are members of defendant NECA. The remaining defendants

are the trustees of the National Electrical Industry Fund

(NEIF), which is more fully described below.

At the heart of the plaintiffs’ suit is the collective bargaining

structure in the electrical construction industry. Local chap-

ters of NECA, which is the largest trade association in the

industry, are assigned regional territories throughout the

country which coincide with the jurisdictions of one or more

IBEW local unions. Acting as a multi-employer bargaining

unit representing its chapter members, each NECA chapter

periodically negotiates a collective bargaining agreement with

the IBEW union or unions in its territory. Each “Local Agree-

ment” provides for wages, hours, terms and conditions of

employment, and any other subjects of bargaining permitted

‘Some of the pleadings set the figure at 330. Suffice it to say that

the local chapters are numerous.

27a

by the National Labor relations Act. A Local Agreement is

either “inside,” covering labor on the interior or buildings, or

“outside,” covering labor on outdoor power lines. Although the

IBEW locals also negotiate with other local contractors’ associ-

ations, the majority of the Local Agreements are the result of

collective bargaining between the unions and NECA chapters.

Individual electrical contractors who are not members of

NECA usually enter into a labor agreement with the IBEW in

one of three ways. The most prevalent practice is for the

contractor to sign a short-form agreement known as a Letter of

Assent, which binds the signatory to the terms of the existing

NECA-IBEW Local Agreement for the area in which the

contractor works. There are two types of Letters of Assent:

Type “A” authorizes the local NECA chapter to act as the

signatory’s collective bargaining agent for all matters con-

tained in the existing NECA-IBEW Local Agreement, and

remains in effect until the contractor gives timely notice of

termination. Type “B” does not authorize NECA to act as the

contractor’s collective bargaining agent, but merely binds the

signatory for a stated period (usually the life of the current

Local Agreement) to all the terms of the existing Local Agree-

ment and any amendments that might be made to it.

The second method by which an unassociated contractor

enters into a labor agreement with the IBEW is by signing an

“International Agreement.” Large general contractors which

perform construction work at several sites across the country

usually adopt this second method. The International Agree-

ment is in effect a nationwide Letter of Assent, which binds the

signatory to the terms and conditions of the NECA-IBEW

Local Agreements for any and all geographic areas in which

the general contractor seeks to procure IBEW labor. Made

available by the IBEW’s international office, an International

Agreement is terminable at will upon sixty days’ notice.

The third means of negotiating with the IBEW is by signing

a “Project Agreement.” As the name implies, such an agree-

ment is usually designed to cover a single construction project

28a

which the contractor has in the area, and may contain any

terms on which the parties agree. Although a Project Agree-

ment is negotiated independently of the NECA agreements,

the IBEW usually seeks to procure the terms of the Local

Agreements in an unassociated contractor’s Project Agree-

ment.

Both NECA and the IBEW International reserve the power

to approve all collective bargaining agreements entered into

by local chapters or local unions. Either national body may veto

an agreement if its terms do not conform to the association's or

the union’s policies.

As of December 1976, the vast majority of contractors in the

electrical construction industry procured IBEW labor under

the terms and conditions of NECA-IBEW Local Agreements,

either as members of local NECA chapters, or as signatories to

Letters of Assent or International Agreements.

In the summer and fall of 1975, national officials of NECA

and the IBEW began negotiation of the agreement which the

plaintiffs contend violates § 1 of the Sherman Act. The parties

undertook the negotiations at least in part to provide for in-

creased employer contributions to the National Electrical

Benefit Fund (NEBF), which is a pension fund for IBEW

workers, jointly administered by NECA and the IBEW and

funded by payments provided for in electrical construction

industry collective bargaining agreements. At the meetings

that began in 1975, International President Charles H. Pillard

and his Administrative Assistant Marcus Loftis represented

the IBEW; Executive Vice President Robert L. Higgins and

Director of Labor Relations Mark Hughes represented

NECA.

In the spring of 1976, the parties tentatively agreed to what

will hereinafter be referred to as the National Agreement, a

copy of which is appended hereto as Exhibit A. The first five

articles of the agreement contained provisions for the NEBF,

shift work, management rights and apprentice ratios. Article

Six, which is the crux of this litigation, provided as follows:

29a

ARTICLE SIX—INDUSTRY FUND

The parties agree to the establishment of a —_ con-

se trust to be called the National Electrical Industry

und.

All construction agreements in the electrical industry

shall contain the following language:

“Each individual employer shall contribute one percent

(1%)* of the gross labor payroll to be forwarded monthly

to the National Electrical Industry Fund in a form and

manner prescribed by the trustees no later than fifteen

(15) calendar days following the last day of the month in

which the labor was performed. Failure to do so will be

considered a breach of this agreement on the part of the

individual employer.”

*(an amount not to exceed 1% nor less than 0.2 of 1%, as

determined by each local chapter and approved by the

trustees)

The National Electrical Contractors Association will be

shay agen to see that the objects of the fund, as outlined

in the trust, are adhered to strictly.

No of the funds collected under this trust shall be

used for purely social activities. No of the funds

collected under this trust shall be used for any p

which is held to be in conflict with the interests of the

International Brotherhood of Electrical Workers and its

local unions.

Both parties will be provided with a copy of the Trust

and any future amendments. .

The industry fund thus created was to be used primarily to

cover NECA’s “costs of administration of labor agreements,

industry advancement and services rendered to the electrical

contracting industry.” See Exhibit 10 to plaintiffs’ motion for

summary judgment.

As required by the association's bylaws, the NECA Board of

Governors ratified the National Agreement at a meeting in

Dallas in October 1976. The IBEW rules did not require a

similar ratification vote. On December 8, 1976, both Charles

Pillard and Robert Higgins signed the agreement, which was

to become effective on July 1, 1977.

30a

Between December 1976 and July 1977, NECA and the

IBEW took steps to implement the National Agreement, in-

cluding the new NEIF. Local IBEW unions and NECA chap-

ters were instructed to insert the industry fund provision in

existing NECA-IBEW Local Agreements. Although the de-

fendants contend that the language of Article 6 was to be

inserted only in contracts between the IBEW and NECA

members, the plaintiffs argue that the defendants sought to

have the language included in all construction agreements in

the electrical industry.

The plaintiffs allege that prior to July 1, 1977, NECA mem-

bers paid dues to their association in order to pay for the

services NECA offered such as advertising, negotiating, train-

ing employees and disseminating information. Because those

dues added to NECA members’ cost of doing business, non-

NECA members allegedly had a competitive edge in bidding

on electrical construction projects. The plaintiffs claim that by

providing for a uniform 1% contribution to a fund that would

support NECA services, and by ensuring that the 1% require-

ment was in all construction contracts in the industry, regard-

less of a contractor’s affiliation with NECA, the defendants

agreed to fix, maintain and stabilize the price of contracts with

the IBEW—and consequently all prices in the electrical con-

struction industry—for the purpose of eliminating non-NECA

members’ competitive advantage. The plaintiffs contend that

under the line of cases beginning with United States v. Socony-

Vacuum Oil Co., 310 U.S. 150 (1940), the National Agreement

constitutes a price fixing agreement which is on its face a per se

violation of § 1 of the Sherman Act. They seek a declaratory

judgment that the NEIF is il'egal, an injunction preventing

the defendants from enforcing the NEIF provisions, and

monetary relief of three times the amount each plaintiff has

already paid into the fund.

NECA and the trustees of the NEIF have filed counter-

claims alleging that the plaintiffs have engaged and are engag-

ing in an illegal conspiracy and boycott in violation of § 1 of the

Sherman Act. The activity alleged to be illegal is the plaintiffs’

3la

concerted undertaking to refuse to pay into the NEIF, with

the alleged purpose of injuring NECA and compelling it to

acquiesce in the plaintiffs’ plans for “a single multitrade

bargaining agreement [in] all unionized sectors of the in-

dustrial construction industry.” Memorandum in Support of

Motion of NECA and the Trustees of the NEIF for Summary

Judgment, at 1.’

Of the eight motions now before the court, three are motions

to dismiss. The first is the defendants’ motion to dismiss NCA

as a plaintiff on the grounds it lacks standing. The second is the

defendants’ motion to dismiss those plaintiffs who do not hire

IBEW labor directly, but instead employ electrical contractors

who in turn hire IBEW workers. Those parties will be referred

to hereinafter as the “indirect-hire plaintiffs.” The third mo-

tion is that of defendants Miller and Colgan to dismiss the

complaint as to them, on the grounds that they as corporations

were not involved in any alleged conspiracy.

The fourth and fifth motions to be decided are cross-motions

for summary judgment on the plaintiffs’ claim that the Nation-

al Agreement is on its face a price-fixing agreement illegal per

se. The sixth motion is the plaintiffs’ motion for class certifica-

tion, and the remaining two are cross-motions for summary

judgment on the boycott counterclaims. The court will discuss

the motions in the order in which they have been described.

II. The Motion To Dismiss Plaintiff NCA

The primary issue is whether NCA has standing to sue for

injunctive relief under § 16 of the Clayton Act, 15 U.S.C. § 26.

The defendants argue that a private plaintiff does not have

*The NEIF trustees have filed a number of related actions

throughout the country, secking to recover on a Lreach of contract

theory the amounts which several electrical contractors have refused

to pay into the NEIF. For purposes of this opinion, the related

actions will be referred to as the “collection cases.”

32a

standing at all under the antitrust laws, unless it can show

some injury or threatened injury personal to itself; and that

NCA has made no such showing. NCA claims that strict stand-

ard applies only under § 4 of the Clayton Act (15 U.S.C. § 15),

where a plaintiff seeks monetary damages; and that § 16 embo-

dies more flexible general rules of standing, including the tests

set out in Warth v. Seldin, 422 U.S. 490 (1975), and Hunt v.

Washington Apple Advertising Commission, 432 U.S. 333

(1977), for determining when an association may sue in a purely

representational capacity on behalf of its members.

If NCA could meet the stricter standard of showing direct

injury to itself, there would be no need to explore the relative

leniency of § 16 requirements. However, the court is not per-

suaded that the association is threatened with any personal

harm. NCA alleges that the NEIF scheme compels NCA mem-

bers to support a rival trade association, NECA, and “neces-

sarily places a financial stricture on the operation of their own

association, therefore tending to have a stifling effect upon the

achieving of their association's purposes either now or in the

future.” Plaintiffs’ Memorandum in Opposition to Defendants’

Motion to Dismiss NCA, at 2. NCA further contends that the

NEIF scheme frustrates NCA’s associational goal of reducing

operating costs. In the court’s view, the awkwardness and

abstractness of the plaintiffs’ description of the supposed inju-

ry reveals that NCA'’s contentions are without merit. Con-

sequently, the court must determine whether the standing

requirements of § 16 are nonetheless broad enough to emcom-

pass NCA.

There is long-standing authority in support of the defend-

ants’ proposition that personal injury is a prerequisite to in-

stituting any private antitrust action. In United States v.

Borden, 347 U.S. 514, 518 (1954), the Supreme Court said,

Under § 16 of the Act, . . . a private plaintiff may obtain

injunctive relief against [anti-trust] violations only on a

sho of “threatened loss or Pa this must be

of a sort personal to the plaintiff... . . (The private plain-

tiff, though his remedy is made available pursuant to

33a

public policy as determined by Congress, may be expected

to oo it only when his personal interest will be

served.

However, since Borden was decided, two important trends

have developed: first, the courts have increasingly acknowl-

edged that standing requirements under § 16 are broader and

more flexible than those under § 4; and second, the courts have

recognized that under certain circumstances, an association

may have standing solely as the representative of its members.

Section 4 of the Clayton Act provides as follows:

Any person who shall be injured in his business or

property by reason of anything forbidden in the anti-

trust laws may sue therefor in any district court of the

United States in the district in which the defendant

resides or is found or has an agent, without respect to

the amount in controversy, and shall recover threefold

the damages by him sustained, and the cost of suit,

including a reasonable attorney’s fee.

Section 16, however, states in pertinent part:

Any person, firm, corporation, or association shall be

entitled to sue for and have injunctive relief, in any

court of the United States having jurisdiction over the

parties, against threatened loss or damage 7 a viola-

tion of the antitrust laws, including sections 13, 14, 18,

and 19 of this title, when and under the same conditions

and principles as injunctive relief against threatened

conduct that will cause loss or damage is granted b

courts of equity, under the rules governing suc

proceedings, and upon the execution of proper bond

against damages for an ye improvidently

— and a showing that the danger of irreparable

oss or damage is immediate, a preliminary injunction

may issue.

In Hawaii v. Standard Oil Co. of Calif., 405 U.S. 251 (1972),

the Supreme Court analyzed the “business or property”

requirement in § 16. The Court speculated that the language

difference was probably attributable to the different impacts of

the remedies offered by the two sections: while 100 simul-

taneous injunctions could be no more effective than one, 100

34a

treble-damage awards could be far more devastating to a de-

fendant than a single monetary judgment. 405 U.S. at 261-62.

Without commenting further on the § 16 standards, the Court

concluded that a party could not sue under § 4 without showing

injury to its commercial interests. /d. at 264.

Most lower federal court cases interpreting Hawaii v.

Standard Oil have concluded that the standing requirements

under § 16 are more lenient and more flexible than those under

§ 4. In Re Multidistrict Vehicle Air Pollution MDL #31, 481

F.2d 122 (9th Cir.), cert. denied, 414 U.S. 1045 (1973); Tug-

boat, Inc. v. Mobil Towing Co., 534 F.2d 1172 (5th Cir. 1976);

Mid-West Paper Products Co. v. Continental Group, Inc., 596

F.2d 578 (3d Cir. 1979). Contra, NAACP v. New York Clear-

ing House Assn., 431 F. Supp. 405(S.D.N.Y. 1977), relying on

Nassau County Ass'n of Inc. Agents, Inc. v. Aetna Life & Cas.

Co., 497 F.2d 1151 (2d Cir.), cert. denied, 419 U.S. 968 (1974).

The cases recognizing a distinction between § 4 and § 16 re-

quirements imply that a party may sue for injunctive relief

under the antitrust laws whenever the party can show the

threat of an injury cognizable in equity and proximately caused

by the defendant’s antitrust violation. Mid-West v. Con-

tinental, supra; Tugboat v. Mobil Towing, supra. See also

Buckley Towers Condominium, Inc. v. Buchwald, 595 F.2d

253 (5th Cir. 1979).

At about the same time that the courts began to hold the

requirements of § 16 were more lenient, the Supreme Court

was developing the doctrine that in certain well-defined cir-

cumstances, an association may have standing to represent its

members even when the association as such had suffered no

injury. In Warth v. Seldin, supra, 422 U.S. 490 (1975), the

court considered whether various individuals and associations

had standing to challenge an allegedly exclusionary zoning

ordinance. Writing for the Court, Justice Powell first set out

the general standing requirements in any litigation: each plain-

tiff must show first that there is a justiciable case or con-

troversy, and second that the plaintiff has “such a personal

stake in the outcome of the controversy as to warrant his

35a

invocation of federal court jurisdiction and to justify exercise of

the court’s remedial powers on his behalf.” 422 U.S. at 498-99,

citing Baker v. Carr, 369 U.S. 186 (1962). In elaborating on

those prerequisites with respect to associations the Court said,

Even in the absence of mild to itself, an association

may have standing solely as the representative of its mem-

bers. . . . The association must allege that its members,

or any one of them, are suffering immediate or threatened

injury as a result of the challenged action of the sort that

would make out a justiciable case had the members them-

selves wigs og suit. So long as this can be established, and

so long as the nature of the claim and of the relief sought

does not make the individual participation of each injured

party indispensable to proper resolution of the cause, the

association may be an appropriate representative of its

members, entitled to invoke the court’s jurisdiction [cita-

tions omitted]. 422 U.S. at 511.

In Hunt v. Washington Apple Advertising Commission,

supra, 432 U.S. 333 (1977), the Court reiterated the language

just quoted from Warth, and rephrased it into a three-part

test:

Thus we have i ep that an association has standing

to bring suit on behalf of its members when: (a) its mem-

bers would otherwise have standing to sue in their own

right; (b) the interests it seeks to protect are germane to

the organization’s purpose; and (c) neither the claim

asserted nor the relief requested requires the participa-

tion of individual members in the lawsuit. 432 U.S. at 343.

In establishing that test, the Court expressly rejected the

defendant’s claim that the Advertising Commission could not

sue because it had no “personal stake” in the outcome of the

case, and had alleged no “distinct and palpable injury” to itself.

At 341-42.

In light of the developments in Warth, Hunt and the Hawaii

v. Standard Oil line of cases, this court is persuaded that a

plaintiff need not meet the strict personal injury standards of

§ 4 in order to sue for injunctive relief under § 16, and that an

association may have standing under § 16 if it meets the three-

part test of Hunt. Associated General Contractors v. Otter

36a

Tail Power Co., 611 F.2d 684 (8th Cir. 1979); National Office

Machine Dealers Ass’n v. Monroe, 484 F. Supp. 1306 (N.D. IIl.

1980). The court has discovered no persuasive authority that

would indicate associational standing is precluded in the anti-

trust context, and can think of no compelling reason why that

should be the rule. the question remains whether NCA has

satisfied all three prerequisites under Hunt; the court finds

that it has.

The first requirement, that NCA’s members or any one of

them would have standing to sue in their own right, is clearly

met. As corporations doing business in the electrical construc-

tion industry, and as signatories to labor agreements with the

IBEW, at least some of NCA’s members undoubtedly have

standing to allege that the NEIF provision was to be inserted

into all construction contracts in the electrical contracting

industry, that the scheme as so defined violated the antitrust

laws, and that the violation either caused or threatened to

cause them direct, personal damage in the amount of the NEIF

assessments. The court does not read Hunt to require that

each of an association’s members have independent standing.

In this case, it is sufficient that a significant proportion of the

association’s members are obligated to contribute to the

allegedly-illegal NEIF.

NCA has also satisfactorily shown that the interest it seeks

to protect are germane to the organization’s purpose. Among

the association’s objectives are “[t]o unite members of the

Association in a concerted effort to influence and improve

craftsmen efficiency and job performance as well as all other

activities affecting operating costs and client relationships”

and “(tJo inspire in labor and management a constant adher-

ence to the highest ethical concept of individual and collective

social responsibility.” NCA Constitution Article II a. and e.

Challenging an industry fund which allegedly raises operating

costs and allegedly results from an illegal conspiracy between

labor and management is certainly pertinent or relevant to

NCA’s stated purposes. The court does not believe the second

prong of the Hunt test imposes a stricter standard than that.

37a

The defendants argue that NCA cannot prove germaneness

because it cannot show that the NEIF has any direct adverse

impact on the association’s professed goals. However, if that

were the test under Hunt, the requirement of a showing of

direct, personal injury to the association would in effect be

reinstated.

In Hunt itself, the association whose standing was in dispute

was the Washington Apple Advertising Commission, a state

agency whose purpose was “protecting and enhancing the mar-

ket for Washington apples.” The Commission had no members

in the traditional sense. The Supreme Court first noted that

“{iJf the Commission were a voluntary membership

organization—a typical trade association—its standing to

bring this action as the representative of its constituents would

be clear under prior decisions of this Court [citing Warth v.

Seldin, supra).” 432 U.S. at 343. In a single sentence, the

Court concluded that the Commission’s efforts to remedy the

injuries allegedly suffered by Washington apple growers was

“central” to the Commission’s stated purpose. /d. at 344. As far

as establishing germaneness is concerned, NCA’s objections

are no more abstract and amorphous than those the Court so

readily accepted in Hunt, especially in light of the fact that

NCA is a “typical trade association” in the very industry

affected by the NEIF.

Although the question is a much closer one, the court is also

persuaded that “neither the claim asserted nor the relief re-

quested requires the participation of individual members in the

lawsuit.” The third prong of the Hunt test involves two con-

siderations: (1) whether the nature of the claims involves in-

dividualized proof, Hunt, supra, 432 U.S. at 344; and (2)

whether the association is competent to speak for its members,

Associated General Contractors v. Otter Tail, supra, 611 F.2d

at 691. For the reasons set forth infra in connection with the

motion for class certification, the court does not believe the

primary issues in the case require individualized proof. The

defendants’ contention that NCA’s members’ interests are too

38a

diverse to be represented by the association dese: ves closer

analysis.

In Associated Genera! Contractors v. Otter Tail, supra, the

Eighth Circuit found too many actual and potential conflicts

among the members of a trade association to permit the associ-

ation to speak for all of them. The association sought to enjoin

the enforcement of an agreement that the court felt could

benefit some members, hurt others, and affect still others not

at all. 611 F.2d at 691. The defendants in the case at bar argue

that NCA’s members have similarly conflicting interests, and

point to the fact that many member corporations have not

joined in the suit or have voiced their opinion that the NEIF

provisions do not injure them. In the court’s view, such a

“division within NCA” (see Exhibit E to the Reply Memoran-

dum in Support of Defendants’ Motion to Dismiss NCA) is not

the kind of conflict that requires individual participation in the

lawsuit. There is no evidence that any NCA member feels it

stands to benefit from the NEIF, and that NCA’s presence in

the litigation therefore works against that member’s interest.

The defendants have argued that some NCA members may

oppose the suit to the extent it jeopardizes their delicate

negotiating relationships with the IBEW. However, the court

does not find that argument sufficient to establish the necessi-

ty of the allegedly dissenting members’ individual participa-

tion. To hold otherwise would be to incorporate into the Hunt

test a sort of adequacy-of-representation standard even more

stringent than the one applied under Rule 23(a)(4) on a motion

for class certification. See Part VI, injva at pp. 52-57. the plain

language of Hunt’s third prong does not warrant such a hold-

ing. To the extent Associated General Contractors implies a

different result, this court is not inclined to follow the Eighth

Circuit’s lead, at least under the circumstances presented by

this case.

Because NCA meets all the prerequisites for an association

bringing suit on behalf of its members, and because the court

knows of no reason why those prerequisites should not apply in

an antitrust case, the defendants’ motion to dismiss NCA must

be denied.

39a

III. The Defendants’ Motion For Dismissal On The Plead-

ings

The defendants have moved to dismiss the claims for dam-

ages and injunctive relief brought by those plaintiffs who do

not hire IBEW labor directly, but instead employ electrical

construction contractors who in turn employ IBEW workers.

These “indirect-hire” plaintiffs are McKee, Badger, Dravo,

Jacobs and Stearns-Roger. The defendants contend that those

plaintiffs lack standing under §§ 4 and 16 of the Clayton Act

because they cannot show any direct injury to themselves

proximately caused by the allegedly-illegal NEIF. Although

the court agrees that the indirect-hire plaintiffs have no stand-

ing to sue for treble damages, the court finds that those plain-

tiffs are not precluded from seeking injunctive relief. Accord-

ingly, the defendants’ motion must be granted in part and

denied in part. .

The indirect-hire plaintiffs have conceded that their claim

for treble damages under § 4 of the Clayton Act is barred by

the holding in Jllinois Brick Co. v. Illinois, 431 U.S. 720

(1977). That case established that a plaintiff has no standing to

recover monetary damages if he alleges only that the “over-

charge” resulting from an illegal price-fixing scheme was

passed on to him as an indirect purchaser, through the chain of

distribution, in the form of higher costs. The Court reasoned

first that such “offensive” use of the passing-on theory should

not be permitted when “defensive” use of the same theory had

been prohibited in Hanover Shoe, Inc. v. United Shoe

Machinery Corp. 392 U.S. 481 (1968); and second that the

overcharged direct purchaser in a price-fixing scheme was the

only party “injured in his business or property” within the

meaning of § 4 of the Clayton Act. Jilinois Brick v. Illinois,

431 U.S. at 728-29. The Court also noted its concern with

preventing multiple, overlapping recoveries and with ensuring

that damage recoveries would not be so divided as to dis-

courage private enforcement of the antitrust laws. Jd. at 738,

746-47.

40a

The defendants in the instant case argue that //linois Brick

did not consider the implications of the passing-on theory in a

suit for injunctive relief under § 16, and that the standing

requirements under that section were therefore unaffected by

the Supreme Court decision. The defendants contend further

that the test under § 16 both before and since //linois Brick has

been the “target area” test, which is defined as follows in

NAACP v. New York Clearing House Ass'n, 431 F. Supp. 405,

409-10 (S.D.N.Y. 1977):

In order to have standing to sue under the Clayton Act a

plaintiff must show more than that he was injured as a

result of an alleged antitrust violation, or even that his

injury was foreseeable or intended. He must show that he

is “within that area of the economy which is endangered by

a breakdown in competitive conditions in a particular in-

dustry.” In other words, the plaintiff must suffer direct

injury as a result of the anti-competitive consequences of

the defendants’ acts. If not, then he cannot sue even if he

has suffered 1 oy as a result of his economic relationship

to a target of the conspiracy or to one of the conspirators.

[Footnotes onmulteed.

According to the defendants, the indirect-hire plaintiffs do not

pass that test.

The court does not agree that the “target area” test is the

correct one to apply when an indirect purchaser seeks only

injunctive relief. Even before //linois Brick was decided, the

courts were beginning to recognize a distinction between §§ 4

and 16 of the Clayton Act. Hawaii v. Standard Oil, 405 U.S.

251 (1972); In re Multidistrict Vehicle Air Pollution MDL #31,

481 F.2d 122 (9th Cir. 1973). See the discussion supra in con-

nection with the motion to dismiss NCA. Since 1977, thai

distinction has been held to permit an indirect purchaser to

obtain an injunction as long as he can show the traditional

“equitable entitlement” to such relief.

One of the leading cases on point is Mid-West Paper Prod-

ucts Co. v. Continental Group, supra, 596 F.2d 573 (3d Cir.

1979). At issue was an alleged conspiracy among manufactur-

ers to fix the price of paper bags used in packaging cookies,

4la

coffee, pet foods and the like. The indirect purchasers were

supermarkets who bought the prepackaged groceries for re-

sale to their customers. After dismissing the supermarkets’ § 4

claims on the authority of Jllinois Brick, the Third Circuit

considered the supermarket plaintiffs’ standing under § 16,

noting first that the rationales of J/linois Brick had no applica-

tion outside § 4 claims. The court then described the special

position of the indirect purchaser:

For unlike other Fg rage plaintiffs, who may be only

remotely affected by the ripples caused by the con-

spirators’ tampering with the supply and demand curve,

indirect purchasers can state unequivocally that under all

circumstances prevalent in the real economic world,

money is passing from their hands into the pockets of the

price fixers as a result of the conspiracy, and that no

rational pricing decisions by an intermediary will erase

this fact. [Footnotes omitted.] 596 F.2d at 593.

The court concluded that indirect purchasers were not pre-

cluded from obtaining injunctive relief as long as they could

establish that “equity principles” entitled them to it. Jd. at 594.

The Fifth Circuit reached a similar conclusion in Jn re Beef

Industry Antitrust Litigation, MDL #248, 600 F.2d 1148 (5th

Cir. 1979). The plaintiff cattlemen, ranchers and feeders

alleged that the defendant supermarkets fixed the price at

which beef was purchased from slaughterhouses and packers,

and ultimately from the producers. The Fifth Circuit held that

the district court had erroneously dismissed the plaintiffs

claims for an injunction. Finding that “the policy considera-

tions underlying the pass-on rule are not implicated in claims

for injunctive relief,” Judge Wisdom then wrote:

To secure injunctive relief under section 16 of the Clayton

Act, the plaintiffs need show only “threatened loss or

by a violation of the antitrust laws.” 15 U.S.C.

§ 26. to show a threat of such injury, plaintiffs in a case

such as this would not have to show the extent of their

harm. It would suffice to show by a preponderance of the

evidence that the alleged price-fixing had or will have

some adverse impact on the prices they receive for their

42a

cattle, or that the conspiracy reduced the packers’ demand

for fat cattle. 600 F.2d at 1167.

The Eighth Circuit adopted a similar rule in Paschall v.

Kansas City Star Co., 605 F.2d 403, 408 (8th Cir. 1979):

To proceed under section 26, the injunctive relief provi-

sion, the plaintiff need only show that there is a threat that

he will suffer fact of injury and that such threatened fact of

injury is causally related to the defendant’s pending anti-

trust violation. [Footnotes omitted. }’

Judge Watkins of this court, in Dart Drug Corp. v. Corning

Glass Works, Civil No. 72-664-W (D. Md. Oct. 29, 1979), relied

on the Third and Fifth Circuit decisions to hold that //linois

Brick did not preclude injunctive relief for indirect purchasers,

but that the plaintiff “must still establish, as § 16 requires, that

principles of equity entitle it to such injunctive relief.” Unpub-

lished Memorandum Opinion at 24.

The defendants in the present action cite several cases for

the proposition that an antitrust plaintiff may never have

standing, under § 4 or § 16, unless the plaintiff can show direct

injury. In NAACP v. New York Clearing House, supra, 431 F.

Supp. 405 (S.D.N.Y. 1977), the court held that the standing

requirements developed in treble damage suits applied to ac-

tions for injunctions as well. Although Judge Weinfeld ac-

knowledged that the Supreme Court had recognized a distinc-

tion between the requirements of §§ 4 and 16, he was bound by

the Second Circuit’s consistent application of the “target area”

test to claims for injunctive as well as monetary relief. See,

e.g., Nassau County Ass'n of Insurance Agents, Inc. v. Aetna

Life & Casualty Co., 497 F.2d 1151 (2d Cir.), cert. denied, 419

U.S. 968 (1974); Long Island Lighting Co. v. Standard Oil Co.

of Calif., 521 F.2d 1269 (2d Cir. 1975), cert. denied, 423 U.S.

§ Paschall involved alleged violations of § 2 of the Sherman Act

rather than price-fixing, and did not discuss purchasers. However,

nothing in the court’s interpretation of § 16 tended to limit that

interpretation to the given facts.

43a

1073 (1976). The defendants also cite Parkview Markets, Inc.

which the court found that the reasoning of //linois Brick did

preclude the plaintiffs’ requested injunction.

This court is not persuaded that the cases the deiendants

have cited state the controlling rule of law. To begin with, the

majority of those cases are from the Second Circuit, whose

acknowledged rule rejecting the distinction between §§ 4 and

16 has not been adopted in the Fourth Circuit. Moreover,

because Parkview Markets does not focus on an indirect pur-

chaser claiming threatened injury from a price-fixing scheme,

the case sheds little light on the question of when such a

plaintiffs alleged injury should be considered too remote.

Many of the other cases the defendants cite were decided prior

to cases such as Mid-West Paper and Paschall, supra, and in

the court’s view do not reflect the most recent developments in

this area of the law.

In sum, the weight of authority compels the conclusion that

in order to have standing to sue for injunctive relief under § 16,

an indirect purchaser must show only an “equitable entitle-

ment” to such relief. The court interprets that requirement to

mean that the plaintiffs must (1) “demonstrate a significant

threat of injury from an impending violation of the antitrust

laws or from a contemporaneous violation likely to continue or

recur,” Zenith Radio Corp. v. Hazeltine Research, Inc. 395

U.S. 100, 130 (1969), and (2) show that the threatened injury is

proximately caused by the antitrust violation. Mid-West Paper

v. Continental, supra, 596 F.2d at 594; In Re Beef Industry

Antitrust Litigation, supra, 600 F.2d at 1167; Paschall v.

Kansas City Star, supra, 605 F.2d at 409.

The violation which the indirect-hire plaintiffs here allege is

the defendants’ continuing conspiracy to fix, mai: .ain and

stabilize the prize of contracts with the IBEW. A scheme

which raises a direct-hire contractor’s cost of procuring IBEW

labor very plainly threatens to raise the indirect-hire com-

pany’s cost of employing that contractor. There is also a defi-

doa

nite causal link between any overcharge illegally exacted from

those who contract directly for IBEW labor and the threat that

the overcharge will be passed on and therefore affect the

indirect-hires’ own cost of doing business. Cf. Mid-West v.

Continental, supra, 596 F.2d at 593. Even if the effect on them

is secondary and indirect, the plaintiffs in question are close

enough to the “ripples” of the conspiracy to be entitled, under

general principles of equity, to seek to enjoin the activity which

threatens them. The harm they anticipate is clearly definable,

and they are only one step removed from the employers who

are directly affected by the alleged antitrust violation. The

indirect-hire plaintiffs therefore have standing to seek injunc-

tive relief under § 16, and the defendants’ motion to dismiss the

plaintiffs’ claims under that section must be denied. However

the motion must be granted with respect to the indirect-hires’

claims for damages under § 4.

IV. Motion Of Defendants Colgan And Miller To Dismiss

Complaint

Defendants Colgan Electric Co. and Miller Electric Co. have

moved to dismiss the complaint as to each of them, on two

grounds: first, that venue does not lie in this district as toeither

of them, and second, that the complant fails to state a claim

against either Colgan or Miller on which relief can be granted.

Although the question is a close one, the court is of the view

that venue is proper in this district. And under the liberal rules

of pleading, the allegations of the amended complaint are suffi-

cient to Withstand the defendants’ motion to dismiss for failure

to state a claim.

The starting point for an analysis of venue in connection with

a corporate defendant in an antitrust case is the special venue

provisions of § 12 of the Clayton Act, 15 U.S.C. § 22:

Any suit, action, or proceeding under the antitrust laws

against a corporation may be brought not only in the

judicial district whereof it is an inhabitant, but also in any

district wherein it may be found or transacts business; and

452.

all process in such cases may be served in the district of

which it is an inhabitant, or wherever it may be found.

The parties do not dispute that Colgan and Miller are neither

inhabitants of nor found in the District of Maryland. The only

issue at this state of the analysis is therefore whether one or

more of the defendant corporations “transacts business” in this

district.

In general, the concept of “transacting business” is to be

broadly defined, in order to facilitate actions against antitrust

violators in the district where the injuries occurred and where

the injured plaintiffs are at home. Learning Systems, Inc. v.

Levin, 351 F. Supp. 532 (E.D. Mo. 1972); National Auto Brok-

ers Corp. v. General Motors Corp., 332 F. Supp. 280

(S.D.N.Y. 1971); L.S. Good & Co. v. H. Daroff & Sons, 263 F.

Supp. 635 (N.D.W. Va. 1967). To that end, the test of venus is

“(t]he practical, everyday business or commercial concept of

doing or carrying on business ‘of any substantial character.’

United States v. Scophony Corp., 333 U.S. 795, 807 (1948);

Grappone, Inc. v. Suburu of America, Inc., 403 F. Supp. 123,

128 (D.N.H. 1975); Donlan v. Carvel, 193 F. Supp. 246, 248 (D.

Md. 1961). Beyond those general guidelines, the determination

whether a corporation is transacting business within a particu-

lar district must ultimately be made on a case-by-case basis,

according to the particular facts presented. Grappone v. Sub-

aru, supra, 403 F. Supp. at 128; United States v. Scophony,

supra, 333 U.S. at 819 (Frankfurter, J., concurring).

The facts concerning Colgan’s and Miller’s business transac-

tions in Maryland do not make it readily apparent whether the

corporations’ commercial contacts with the district have been

“substantial” or not.‘ Affidavits submitted by the president of

‘For venue purposes, a defendant's contacts with a district are

scrutinized as of the time of the alleged antitrust violations; that is,

when the cause of action accrued. Board of County Commissioners

v. Wilshire Oil Co., 523 F.2d 125 (10th Cir. 1975); Eastland Con-

struction Co. v. Keasbey and Mattison Co., 358 F.2d 777 (9th Cir.

1966).

46a

each corporation attest that neither defendant has made or

solicited sales, performed services or advertised its business in

Maryland. Neither corporation has been qualified to do busi-

ness here, has had a resident agent, place of business, address,

telephone or bank account here, or has owned property here.

However, the plaintiffs contend that both corporations have

engaged in certain transactions in Maryland which make venue

in this district appropriate under 15 U.S.C. § 22.

The most important of the transactions the plaintiffs cite are

Colgan’s and Miller's purchases of services from the National

Electrical Contractors Association through the association's

headquarters in Bethesda, Maryland. Colgan has been an ac-

tive member of NECA since 1949; Miller since 1932. Both

corporations have paid NECA dues and additional service

charges in exchange for such benefits as “labor relations serv-

ices, marketing services, public relations services, representa-

tion with congressional bodies. . . [and] electrical code making

services,” Colgan deposition of March 17, 1978, at 71, and

various NECA publications, Autrey deposition of March 23,

1978 at 53-60. Representatives of both companies testified at

their depositions that their companies’ memberships in NECA

were highly beneficial and valuable, Colgan deposition at 71, 72

and 77; Autrey deposition at 55-56,

Between 1970 and 1977, before the NEIF went into effect,

Colgan and Miller paid NECA’ the following amounts annual-

ly:

Colgan Miller

1970 $ 2,824.55 $3,025.11

1971 3,354.09 3,113.03

1972 3,621.61 3,733.65

*The amounts represent the percentage of payments made to the

local chapters which ultimately went to National NECA in Bethesda.

Colgan deposition at 85-86,

47a

Colgan Miller

1973 3,708.60 3,934.55

1974 5,060.00 5,310.00

1975 6,340.00 8,256.58

1976 7,129.00 9,925.00

1977 11,542.00 7,117.00

Answers of Colgan and Miller to plaintiffs’ interrogatory no.

23, first set. Beginning in July 1977, each corporation made

payments into the NEIF to support NECA services; 20% of

those payments went directly to the association's national

office in Bethesda. In the last six months of 1977, Colgan’s

NEIF payments totalled approximately $19,000, and Miller's

approximately $41,000, Although the plaintiffs assert that

they have been unable to obtain comparable information for

the years 1978 and 1979, they contend that the corporations’

total payments for NECA services has undoubtedly increased

since 1977, Motions Hearing Transcript, December 21, 1979, at

1053,

The corporations’ transactions with NECA are the primary

foundation for the plaintiffs’ argument that venue is appropri-

ate in this district. However, the plaintiffs cite some additional

transactions between the defendants and Maryland com-

panies, Between 1971 and 1979, Colgan repeatedly and con-

tinuously purchased tool parts and repair services from the

Black & Decker Company, which handled the billing and in-

voicing through its office in Towson, Maryland. The annual

expenditure was anywhere from approximately $2,300 in 1972

to approximately $180 in 1977. Plaintiffs’ Opposition to Motion

to Dismiss of Colgan and Miller (hereinafter “Plaintiffs’

Opposition”) at 7. Miller conducted similar transactions with

Black & Decker, but only in the amount of $400 - $500 a year. In

1974, Colgan sold $471.63 worth of “computer forms” to the

Arundel Asphalt Company in District Heights, Maryland, The

plaintiffs also contend that Colgan was “transacting business”

with the Rouse Company of Columbia, Maryland. Rouse had

two construction projects in Florida and Ohio, on which Con-

gan worked as a subcontractor for the Lathrop Company.

Asa

Although Colgan had no contractual relationship with Rouse,

the plaintiffs argue that “Colgan was intimately involved with

Rouse in performing these projects.” Plaintiffs’ Opposition at

The court finds that none of the two defendants’ dealings

with Black & Decker, Arundel Asphalt or Rouse was sub-

stantial enough to qualify as “transacting business.” Colgan’s

link with Rouse is too indirect. A single sale of computer forms

for just over $400 is hardly continuous or substantial enough to

justify subjecting Colgan to venue here. Although the Black &

Decker purchases were more regular and longer-lived, their

total value over a seven-year period was only about $6,700 for

Colgan and $2,000 - $3,500 for Miller. The total for the four

years prior to the end of 1976, when the National Agreement

was signed, was only about $2,541. In short, the question

whether venue is appropriate in Maryland as to defendants

Colgan and Miller under § 12 of the Clayton Act depends on

whether the corporations’ purchases of services from NECA in

Bethesda constitutes “transacting business” within the mean-

ing of the statute.

The defendants cite Philadelphia Housing Authority vy.

American Radiator & Standard Sanitary Corp., 309 F, Supp.

1053 (E.D, Pa, 1969), for the proposition that active mem-

bership in a trade association whose head office is in a particu-

lar district is alone insufficient to establish venue in that dis-

trict. Jd, at 1055. In Philadelphia Housing, two corporate

defendants moved to dismiss the antitrust actions against

them on the grounds that venue was improper in the District of

Columbia. The plaintiffs maintained that both defendants were

active members of a trade association whose meetings they

regularly attended in the District; that both had employed the

association to perform services on the corporations’ behalf; and

that the president of one of the corporations had at one time

served as an officer of the association. Judge Lord of the

Eastern District of Pennsylvania found nothing in the corpora-

tions’ relationship to the association that would constitute

“transacting business” for venue purposes. /d. at 1055, Colgan

49a

and Miller argue by analogy that because their purchases of

services from NECA are part of their active membership in the

association, those dealings cannot be characterized as business

transactions.

The court agrees that it would be anomalous to confer venue

as to a corporation merely because the corporation has joined a

trade association headquartered in a given district. The court

also agrees with Judge Lord’s conclusion that mere attendance

at a trade association meeting, or the fact that a corporation’s

president is an officer of the association, does not mean that the

corporation “transacts business” in the association’s home dis-

trict. However, the facts of the present case are dis-

tinguishable from and more complex than those Judge Lord

considered. Both Colgan and Miller expended somewhere in

the neighborhood of $44,000 between 1970 and mid-1977 for the

services NECA provided. Each corporation considered its

membership in the association to be a highly important aspect

of its business activities, and took every opportunity to make

that membership known to others. Robert Colgan, president

of Colgan Electric, wrote an article in the Electrical Con-

tractor Magazine (a NECA publication) in September, 1976, in

which he averred that his company’s investment in NECA was

an investment in his business, the entire industry, and even in

the country. Exhibit B to Plaintiffs’ Opposition. In the same

vein, H. E. Autrey, president of Miller, testified at his deposi-

tion that membership in NECA was the corporation’s “total

way of life in the construction industry.” Autrey deposition at

55-56, The nature of the NECA services themselves indicates

how intimately related they were to the conduct of the two

corporations’ business: NECA assisted in collective bargain-

ing, marketing, public relations and political lobbying, among

other services. a

When a corporation regularly and continuously expends

several thousand dollars a year to procure a wide variety of

services which it deems integral to the conduct of its business,

the corporation's affiliation with the association gues beyond

the kind of membership discussed in Philadelphia Housing,

50a

characterized only by attendance at meetings and service as an

officer of the association. When the expenditures total at least

$44,000 for the seven years immediately preceding and during

the formation of the supposedly illegal conspiracy, the transac-

tions involved are “substantial” within the meaning of United

States v. Scophony, supra, 333 U.S. at 807. It is the continuity

of the transactions and their importance to the companies, as

well as the dollar amounts, which lead the court to conclude

that both Colgan and Miller were and are “transacting busi-

ness” with NECA within the meaning of 15 U.S.C. § 22.

Furthermore, although many of the companies’ dealings with

NECA were through the local chapters, the court finds that

both Miller and Colgan were in effect “transacting business”

with national NECA in Bethesda, Maryland, as well as with

the local chapters. The payments listed above went to the

national headquarters in Maryland, in return for the services

both companies prized very highly. Publications and other

materials distributed through the local chapters were de-

veloped and produced at the association’s national headquar-

ters. Autrey deposition at 54-&5; Colgan deposition at 72. It

would be not only unrealistic, but also contrary to the liberal

interpretation afforded § 22, to deny that the two companies’

transactions with NECA were transactions with an association

in the state of Maryland.

For all of the foregoing reasons, the court has concluded that

venue will lie in this district as to both Colgan and Miller. The

complaint therefore cannot be dismissed for lack of venue. The

defendants’ second ground for their motion to dismiss—that

* Although the corporations in Philadelphia Housing were alleged

to have employed the trade association there “to perform services on

their behalf,” 309 F. Supp. at 1055, there is no indication that the

services were as extensive and/or considered as valuable as those

offered by NECA. Furthermore, Judge Lord did not even address

the allegation.

5la

the complaint fails to state a claim on which relief can be

granted—is similarly without merit.

A complaint wi!l survive a motion to dismiss under Rule 12

(b)(6) of the Federal Rules of Civil Procedure “unless it

appears to a certainty that plaintiff is entitled to no relief under

any state of facts which could be proved in support of the

claim.” 2A Moore’s Federal Practice § 12.08 at 2274 (2d ed.

1970); Conley v. Gibson, 355 U.S. 41 (1957); George C. Frey v.

Pine Hill Concrete, 554 F.2d 551 (2d Cir. 1977). The general

test for adequacy of the pleadings under Rule 8 of the Federal

Rules is whether the statement of the claim contains the re-

quired elements, stated plainly and succinctly, and whether it

gives the opposing party fair notice of the nature and basis of

the claim. 2A Moore’s Federal Practice § 8.17[1] (2d ed. 1979);

Conley v. Gibson, supra; Local 1852 v. Amstar Corp., 363 F.

Supp. 1026 (D. Md. 1973), aff'd, 508 F.2d 839 (4th Cir. 1974),

cert. denied, 421 U.S. 1000 (1975). The more specific require-

ments for an allegation of conspiracy are that the pleader

provide, whenever possible, some details of the time place and

alleged effect of the conspiracy; “[iJt is not enough merely to

state that a conspiracy has taken place.” 2A Moore’s Federal

Foundation v. General Motors, 463 F.2) ° % . 1972);

Weiner v. Bank of King of Prussia, 358}. app. o84, 701-02

(E.D. Pa. 1973). Nevertheless, the pleader should be allowed

considerable leeway, and the provision of further dc’. ils may

be left to discovery. 2A Moore’s Federal Practice 4 18.17[5] at

n. 5. On the whole, courts should be slow to dismiss an action on

the pleadings, especially when antitrust violation: are alleged.

Hospital Building Co. v. Trustees of Rex Hospwal, 511 F.2d

678 (4th Cir 1975), “ev’d on other grounds, 425 U S. 738 (1976);

South Carolina Council of Milk Producers, Inc “. Newton,

360 F.2d 414 (4th Cir.), cert. denied, 385 U.S. 934 (4066); Burch

v. Goodyear Tire & Rubber Co., 420 F. Supp. 82 (D. Md. 1976),

aff'd, 554 F.2d 533 (4th Cir. 1977).

In light of those principles of pleading, the court is satisfied

that the plaintiffs’ amended complaint gives a sufficiently clear

—

52a

and succinct description of the alleged conspiracy, with enough

details as to time and place, to give both Colgan and Miller

notice of the basis of the claim against them. Although neither

corporation is mentioned by name in the section of the com-

plaint which describes the alleged antitrust violation in detail,

paragraphs 4(e) and (f) of the complaint plainly assert that each

corporation “has performed acts in furtherance of the con-

spiracies alleged herein.” The more detailed explanation in

paragraphs 20-25 provides ample notice of the time, nature and

purported effects of the conspiracy. Although neither Colgan’s

nor Miller’s precise role in the conspiracy is outlined, the

discovery process is the proper tool for exploring such detail.

In fact, discovery has revealed additional information which

further convinces the court that the plaintiffs can show some

set of facts, based the pleadings, that might entitle the plain-

tiffs to relief against Colgan and Miller. See Part V, infra.

Because a dismissal on the pleadings is unwarranted under

the circumstances of this case, and because venue is proper in

the District of Maryland as to both Colgan and Miller, the

motion of those two defendants to dismiss the complaint as to

them must be denied.

V. Plaintiffs’ And Defendants’ Cross-Motions For Summary

Judgment On The Plaintiffs’ Claims

The plaintiffs’ motion for summary judgment on their own

claims, as opposed to the defendants’ counterclaims, seeks a

declaratory judgment that Article Six of the NECA-IBEW

National Agreement constitutes a per se violation of § 1 of the

Sherman Act,’ in that the agreement amounts to a conspiracy

to fix, maintain and stabilize the cost of contracts with the

7Section 1 provides in pertinent part: “Every contract, combina-

tion in the form of trust or otherwise, or conspiracy, in restraint of

trade or commerce among the several States, or with foreign nations,

is declared to be illegal.” 15 U.S.C. § 1.

58a

IBEW. The defendants’ cross-motion seeks summary judg-

ment on the plaintiffs’ price-fixing allegations, on the grounds

that the allegations fail to state a claim on which relief can be

granted. In the court’s view, the undisputed facts presented in

the record show that the defendants’ agreement to set up and

implement the National Electrical Industry Fund was a price-

fixing agreement illegal per se. The plaintiffs are entitled to

summary judgment on that issue, and the defendants’ cross-

motion must be denied.

On any motion for summary judgment, the moving party

must show that there are no genuine disputes as to any mate-

rial fact, and that the movant is entitled to judgment as a

matter of law. Poller v. Columbia Broadcasting System, 368

U.S. 464, 467 (1962). See also Fli-Back Co., Inc. v. Philadel-

phia Manufacturers Mutual Insurance Co., 502 F.2d 214, 218

(4th Cir. 1974). The starting point for an analysis of both the

facts and the law in the present case is United States v. Socony-

Vacuum Oil Co., 310 U.S. 150 (1940). In Socony, the Court

held:

Under the Sherman Act a combination formed for the

purpose and with the effect of raising, depressing, fixing,

pegging, or stabilizing the price of a commodity in inter-

state or foreign commerce iS illegal pev se. tid. at 223.)

. . . But that does not mean that both a and a

power to fix prices are necessary for the establishment ofa

conspiracy under § 1 of the Sherman Act... . It is the

“contract, combination . . . or pr eg in restraint of

trade or commerce” which § 1 of the Act strikes down,

whether the concerted activity be wholly nascent or abor-

tive on the one hand, or successful on the other. . . In view

of these considerations a conspiracy to fix prices violates

§ 1 of the Act though no overt act is shown, though it is not

established that the conspirators had the means available

for accomplishment of their objective, and though the

conspiracy embraced but a part of the interstate or foreign

commerce in the commodity.

. Id. at 225 n.59

A. The Agreement

The existence of an agreement between NECA and the

IBEW is undisputed. It is rare in an antitrust case that the

court need not construe a combination or conspiracy solely

from the speeches, correspondence and meetings of the de-

fendants. In the present case, the court has before it not only

voluminous records of such speeches, correspondence and

meetings, but also a copy of the exact terms of the defendants’

agreement, reduced to writing and signed by representatives

of NECA and the IBEW on December 8, 1976.

Although the fact of an agreement is undisputed, the appli-

cation of the antitrust laws depends on what the defendants

agreed to do. By its terms, Article Six of the National Agree-

ment (quoted in Part I above) establishes the NEIF, and then

provides that each individual employer will contribute to the

fund 1% of his gross labor payroll every month. Most

importantly, Article Six provides that the 1% payment obliga-

tion will be inserted into “/all] construction agreements in the

electrical industry” (emphasis added). That language is critic-

al, because it shows that the NEIF was to apply to all electrical

contractors, and not just to those who were members of NECA

or who were affiliated with NECA as nonmember signatories

to Letters of Assent, Project Agreements or International

Agreements.

The plain language of Article Six, indicating that all con-

struction agreements were to be affected, is corroborated by

the language of the National Agreement as a whole. The

preamble states, “The appropriate contents of this agreement

and the enabling clauses herein shall be inserted in all agree-

ments between the parties and in all construction agreements

between the Local Unions of the IBEW and the Local Chap-

ters of NECA.” (Emphasis added.) The preamble does not

state unequivocally that all contents of the agreement will be

inserted in only NECA-IBEW contracts. Articles Three, Four

and Five, dealing with shift work, management rights and

apprentice ratios, specifically provide that their language is to

be inserted in agreements between local IBEW unions and

55a

local NECA chapters, while tha language is conspicuously

missing from Article Six. That distinction, combined with the

qualifying word “appropriate” in the preamble, demonstrates

that the parties agreed to insert the NEIF provisions in all

contracts without regard to NECA affiliation.

That conclusion is further buttressed by a document entitled

“Basic Understandings and Interpretations of the IBEW-

NECA Agreement,” also signed on December 8, 1976 by

Robert Higgins for NECA and Charles Pillard for the IBEW.

The memorandum clarifies how each article of the National

Agreement is to be interpreted and applied. Under Article Six,

the document states that “the intent of this Article is to insert

the industry fund contribution language in all IBEW construc-

tion agreements containing the NEBF language. .. .” An

affidavit of Marcus Loftis, Administrative Assistant to the

International President of the IBEW, explains which con-

tracts contained the NEBF language. Mr. Loftis submitted

the affidavit to the United States District Court for the Dis-

trict of Alaska on July 1st, 1977 in connection with Case v.

IBEW, Civ. No. 77-65. Paragraph 7 of the affidavit states:

Since the inception of the pension benefit contributions in

1946, both the affiliated contributions in 1946, both the

affiliated construction Locals and the electrical con-

tractors, be they affiliated members of Chapters of

NECA, members of other employer associations, or in-

dependent contractors, have always included within the

terms of their collective bargaining agreements the one

percent gross payroll benefit contribution to NEBF.

Exhibit 48 to plaintiffs’ motion for summary judgment. If the

reach of the NEIF was to be as extensive as that of the NEBF,

it is clear that the language of Article Six was not subject to the

limiting provisions of the preamble or the other articles of the

National Agreement.

That interpretation is also supported by a letter from Henry

H. Glassie to Robert L. Higgins, Executive Vice President of

NECA, on October 7, 1976. Mr. Glassie is an attorney whom

Higgins had consulted on the question whether NECA’s adop-

56a

tion and implementation of the National Agreement would

require a formal amendment of NECA’s bylaws. Mr. Glassie

responded in his letter as follows:

If the Industry Fund provided for in Article 6 of the

agreement referred to in Proposal #3 applied to NECA

members as such, a change in the By-Law would be in-

volved. However, we are informed the contribution to this

fund as provided in Article 6 will be required of all union

electrical contractors whether they are members of

NECA or not-indeed would be . yrserae to a company

after resignation from NECA; and moreover, that the

contribution will not be required of non-union members of

NECA. Accordingly, on balance, it is our opinion that the

adoption of Ordinary Proposal #3 would not require the

formality of an amendment of the By-Laws."

There are other documents in the record which reinforce the

‘conclusion that NECA and the IBEW intended to obtain

NEIF payments from all electrical contractors employing

IBEW labor. Among them are Exhibit 30 to the plaintiffs’

motion, a letter dated October 26, 1976 from H. E. Autrey,

then president of defendant Miller Electrical Company, to

A. M. Scherffius of the E. I. duPont de Nemours Company;

Exhibit 33, the November 1976 issue of Electrical Contractor

Magazine; Exhibit 14,a NECA “Chapter Alert” dated Decem-

ber 20, 1976; Exhibit 28, a letter dated December 28, 1976 from

* After the plaintiffs submitted the letter to the court, the defend-

ants took Mr. Glassie’s deposition in order to establish what he had

intended to say in the letter. Before he was deposed, the defendants

told Mr. Glassie that a letter he had written in 1976 was going to be

interpreted as implying that non-members of NECA would be forced

to pay into the NEIF. Glassie deposition at 34. Because the deponent

was thereby “primed” to refute that interpretation, and because the

deposition was taken some three and one-half years after the letter

was written, the letter is still persuasive support for the fact that the

defendants meant to insert the NEIF provision into all electrical

industry construction agreements.

57a

Charles Pillard to “All Local Unions Who Have Agreements

Containing the 1% NEBVF Clause;” and Exhibit 31, a letter

dated January 3, 1977 from Mark Hughes to Bernard Healey.

The materials submitted by the defendants to support a differ-

ent interpretation of Article Six are temporally far removed

from the formation of the National Agreement itself, and are

therefore so likely to be self-serving that in the court’s view,

they fail to create a genuine factual dispute.

B. Anticompetitive Purpose

Although it is clear what the defendants agreed to do, the

question remains whether the purpose behind the agreement

was to achieve some end forbidden by the antitrust laws. The

plaintiffs contend that the NEIF provisions were designed to

ensure that all electrical contractors employing IBEW labor

would pay a higher price for procuring that labor, with the

amount of the increase going to pay for industry services

provided by NECA. The ultimate aim of the price manipula-

tion, according to the plaintiffs, was to eliminate the competi-

tive advantage in bidding which non-NECA contractors en-

joyed by virtue of not having to include NECA dues in their

cost of doing business. NECA was allegedly suffering from

what the plaintiffs describe as a “Jehovah complex”: the associ-

ation felt it was providing valuable services to the entire elec-

trical construction industry, and felt it was justified in compel-

ling all the beneficiaries to pay for the services.

Because the crux of the plaintiffs’ claim is an allegation of

price-fixing, and because the plaintiffs allege that the price

fixed was that of contracts with the IBEW, the court must

decide the preliminary issue whether § 6 of the Clayton Act, 15

U.S.C. § 17, imposes a bar to the plaintiffs’ action.

58a

The first sentence of § 6 asserts that “[t]he labor of a human

being is not a commodity or article of commerce.” Ordinarily,

the courts have interpreted that sentence to exclude from the

antitrust laws any alleged restraints on the labor market itself.

Carroli v. Protection Maritime Insurance Co., Ltd., 512 F.2d

4 (1st Cir. 1975); Nichols v. Spencer International Press, 371

F.2d 332 (7th Cir. 1967); Kennedy v. Long Island Railroad

Co., 319 F.2d 366 (2d Cir., cert. denied, 375 U.S. 830 (1963).

See also A. Cox, Labor and the Antitrust Laws—A Prelimi-

nary Analysis, 104 U. Pa. L. Rev. 252, 254 (1955). The pri-

mary rationale behind the court’s interpretation is that Con-

gress in § 6 meant to guarantee that the lawful activities of

labor organizations would not be subject to the antitrust laws,

and to that end, Congress excluded the labor market

altogether as one in which trade could be restrained. 51 Cong.

Rec. 14018 (1914). Consequently, there can be no antitrust

violation unless some restraint on competition in a commercial

market for goods or services is at issue. Apex Hosiery Co. v.

Leader, 310 U.S. 469, 495 (1940); Armco Steel Corp. v. UMW,

505 F.2d 1129, 1134 (4th Cir. 1974); Kennedy v. Long Island

Railroad Co., supra, 319 F.2d at 373.

The defendants argue that the price of a contract for labor is

indistinguishable from the price of labor itself, and that the

plaintiffs’ antitrust allegations therefore cannot survive appli-

cation of § 6 of the Clayton Act. Although the court would

* The full text of § 6 reads:

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

commerce. Nothing contained in the antitrust laws shall be

of mutual help, and not having capital stock or conducted for

profit, or to forbid or restrain individual members of such

organizations from lawfully carrying out the ee a objects

59a

ordinarily agree, the facts of this case make it possible to

distinguish between the price or cost of labor and the price of

procuring a contract for that labor.

Under most circumstances, the cost of labor is the amount an

employer pays, to the benefit of his employees, in return for

their services. The ultimate price of the labor may be broken

down into several components, including wages, health care

benefits, pension contributions and bonuses. Yet each compo-

nent is a benefit to the employee, paid in exchange for his labor.

Any supposed restraints on the determination of the aggregate

price are not within the ambit of the antitrust laws, because the

“jtem” whose price is involved is the labor of a human being.

In the present case, however, one element of the price

electrical contractors were to be required to pay for IBEW

labor was not to be paid to employees at all. NEIF contribu-

tions were to be paid directly into a fund controlled wholly by

NECA and set up for the purpose of financing NECA’s serv-

ices. The benefits flowing from the payments were to go to

employers in the industry, whether or not the employers

would otherwise want the benefits or choose to purchase them.

In no sense does Article Six of the National Agreement reflect

an amount that IBEW laborers charge for their labor. It in-

stead represents a charge which an employer group and the

union agreed all employers in the electrical construction indus-

try would have to pay, in addition to employee compensation,

in order to procure a contract with the IBEW. In the court’s

view, the price of a labor contract under those circumstances is

distinguishable from the price of labor itself, and might there-

fore be subject to illegal manipulation.

Nevertheless, the distinction would be irrelevant if the

plaintiffs were alléging an illegal restraint on the labor market

itself. In other words, if the plaintiffs claimed that manipula-

tion of the cost of procuring labor interfered with their freedom

or ability to hire workers, the court would have no trouble

dismissing the claims on the authority of Kennedy v. Long

Island Railroad, supra, Apex Hosiery, supra, and Armco

60a

Steel, supra. In the instant case, however, the heart of the

complaint is the alleged restraint on competition in the market

for electrical construction services. Those services are clearly

within a commercial market subject to the antitrust laws.

Because of the combination of circumstances here—the price of

a labor contract is distinguishable from the price of labor and

the plaintiffs do not allege any restraint on competition in the

labor market itself—the court finds that § 6 of the Clayton Act

is no bar to the present action.

In order to link the alleged manipulation of the price of labor

contracts with the alleged restraint on competition, and in

order to determine that Article Six of the National Agreement

constitutes a price-fixing conspiracy illegal per se, the court

must be satisfied that there is no genuine factual dispute as to

the defendants’ anticompetitive purpose in establishing an

implementing the NEIF, United States v. Socony, supra, 310

U.S. at 223; United States v. National Society of Professional

Engineers, 555 F.2d 978, 983 (D.C. Cir. 1977), aff'd, 435 U.S.

679 (1978); State of Arizona v. Cook Paint & Varnish Co., 391

F, Supp. 962, 965-67 (D. Ariz. 1975), aff'd, 541 F.2d 226 (9th

Cir. 1976), cert. denied, 430 U.S. 915 (1977).

The plaintiffs take the position that the “NECA

defendants”—that is, all defendants except the IBEW and

Charles Pillard—conceived of the NEIF as a means to elimi-

nate the competitive bidding advantage non-NECA-members

enjoyed by virtue of not having to pay NECA dues to support

the association's services to the industry. By ensuring that

every contractor in the electrical construction industry

employing IBEW labor” contributed to the cost of NECA

“The IBEW is virtually the only union in the country to have

organized workers in the electrical construction industry. Almost

every union job in the industry employs IBEW labor. Plaintiffs’

Memorandum in Support of Motion for Determination of This Suit as

a Class Action, at 7-8.

6la

services according to a defined formula, the NECA defendants

allegedly sought to equalize every contractor's cost of doing

business and destroy the non-NECA-members’ competitive

advantage. In order to implement the plan, NECA enlisted the

help and bargaining power of the IBEW, which agreed to the

scheme as a concession to management, in return for the

advantageous provisions of the National Agreement concern-

ing pension benefits, shift work and apprentice ratios.

The record reveals that there is not genuine factual dispute

over the accuracy of the plaintiffs’ contentions, One of the most

compelling portions of the record is the transcript of a speech

made by Robert Colgan, then President of NECA, to the

District 1 NECA Council meeting at Sutton, Massachusetts on

September 10, 1976. Although NECA and the IBEW had

announced their proposed agreement in the spring of 1976, it

could not become official until approved by the local chapters.

Accordingly, Colgan and other NECA officials traveled

around the country in the summer and fall of 1976, meeting

with the local chapters and encouraging them to approve the

agreement,

In his September 10th speech in Massachusetts, Colgan

discussed how the insertion of the NEIF into collective

bargaining agreements would eliminate non-NECA con-

tractors’ cost advantage:

I don’t want a national constructor going to our customers

and say I have an international pomment and I can em-

ep a Mage oer thom or I can jemen Ay pel ony faye 4 on

re tte pra ie many oo a

na constructors will | poy. bill, but they have

very

62a

that we have done over the years deserves somebody else

who's getting the benefits from it to help pay for the way

that we have helped this industry grow. / have all of my

life I have always resented those porate who felt it was an

oeporounly Jor them to remain on the outside to employ

I Ah ¢ and say I don't have to pay that bill, if you

get a NECA contractor bk wang | to cost you more money.

want that in the ng agreement and as you all

know most of it is in the ning agreement. I want it in

the barg

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.