Petition — National Electrical Contractors Ass'n v. National Constructors Ass'n

Supreme Court brief1983

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. Supreme Court, US.

82-1146 FILED

No. SANT 1968

SS as

IN THE anaes

Supreme Court of the Gnited States

OCTOBER TERM, 1982

NATIONAL ELECTRICAL CONTRACTORS

ASSOCIATION, INc., et al.

Petitioners,

NATIONAL CONSTRUCTORS ASS CIATION, et al.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

EARL W. KINTER GuUY FARMER

DONALD M. BARNES (Counse! of Record)

DENNIS C. CUNEO FARMER, MCGUINN, FLOOD,

ARENT, Fox, KINTNER, BECHTEL & WARD

PLOTKIN & KAHN 1000 Potomac Street, N.W.

1050 Connecticut Ave. N.W. Suite 402

Washington, D.C. 20036-5339 Washington, D.C. 20007

(202) 857-6044 (202) 298-6910

MILTON HANDLER SHALE D. STILLER

STANLEY D. ROBINSON PETER H. GUNST

KAYE, SCHOLER, FIERMAN, FRANK, BERNSTEIN, CONAWAY

Hays & HANDLER ' & GOLDMAN

425 Park Avenue 2 Hopkins Plaza

New York, New York 10022 Baltimore, Maryland 21201

(212) 759-8400 (301) 547-0500

Attorneys for Petitioners National Electrical Contractors Association,

Robert L. Higgins and H.E. Autrey and Other Individuals Sued In Their

Individual Capacities and as Trustees of The National Electrical Industry

Fund; Colgan Electric Company, Inc. and Miller Electric Company

January 7, 1983

a a TIED

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

QUESTION PRESENTED

This petition presents a question of paramount import-

ance to the continued existence of thousands of indus ,

funds throughout the construction industry. In an unpre-

cedented expansion of the antitrust laws, the Fourth

Circuit condemned an industry fund provision contained

within a valid collective bargaining agreement as illegal

per se price fixing, thereby threatening a major industrial

union and a national employers’ association with massive

treble damage liability estimated by class counsel to ex-

cew:d one hundred twenty million dollars (Appendix, pp.

17ia-172a, at p. 172a).

The precise question presented for review is:

DID THE INCLUSION OF AN INDUSTRY

FUND PROVISION IN A COLLECTIVE BAR-

GAINING AGREEMENT CONSTITUTE ILLE-

GAL PER SE PRICE FIXING, WHERE THE

EMPLOYERS’ PAYMENTS WERE USED TO

BENEFIT THE ENTIRE ELECTRICAL CON-

TRACTING INDUSTRY, AND THERE WAS NO

FINDING THAT ANY EMPLOYER WAS EVER

FORCED TO PAY INTO THE FUND, OR THAT

IT AFFECTED THE PRICE OF ELECTRICAL

CONSTRUCTION CONTRACTS?

PARTIES TO THIS PROCEEDING

The Petitioners in this case are National Electrical

Contractors Association, Inc., Robert L. Higgins, The

International Brotherhood of Electrica! Workers, AFL-

CIO, Charles H. Pillard, Colgan Electric, Inc., Miller

Electric Co., and H.E. Autrey, Allen L. Bader, Frank H.

Bertke, Donald C. Cates, Robert W. Colgan, Joe R.

Devish, and Carl] T. Hinote in their individual capacities

and as Trustees of the National Electrical Industry Fund,

and Allan H. Stroupe, L.R. McCord, Aldo P. Lero and

Lowell C. Timm, in their official capacities as Trustees of

the National Electrical Industry Fund, and John Ostrow,

C.W. Stroupe, Warren Losh and J.D. Hilburn, Sr., in

their individual capacities.

The Respondents in this case are National Con-

structors Association and Commonwealth Electric Com-

pany, by and on behalf of itself and all others similarly

situated and The Howard P. Foley Company, by and on

behalf of itself and all others similarly situated, and Dono-

van Construction Company of Minnesota, Inc., Arthur

McKee & Company, Inc., Badger America, Inc., Cataly-

tic, Inc., C.F. Braun Constructors, Inc., Dravo Corpora-

tion, Guy F. Atkinson Company, The H.K. Ferguson

Company, Jacobs Constructors, Inc., Pullman Kellog,

Division of Pullman, Inc., and Stearns-Roger, Inc.

CORPORATE LISTING STATEMENT

National Electrical Contractors Association, Inc.

(NECA) is a non-profit trade association with auton-

omous chapters representing electrical contractor mem-

bers in collective bargaining with the International

Brotherhood of Electrical Workers, AFI,-CIO. It is a

non-stock corporation and has no parent company, sub-

sidiaries, or affiliates.

The members of NECA which are publicly owned

corporations as well as their subsidiaries which are also

NECA members are as follows:

Fischbach Corporation

Fischbach & Moore Electrical Construction, Inc.

Baldwin-Stewart Electric

Corbin-Dykes Electric

og lectrical Co.

.H. Greene Electric Co.

Tramco, Inc.

A.S. Schulman Electric Co.

W.V. Pangborne & Co.

Buffalo Electric Construction

Beach Electric Co.

W.A. Chester

Power Systems

Watson-F lag agai Co., Inc.

W.W. Clark

John Miller Electric Co.

yf & Zimmerman

M Automation

Electronic System

Fischbach Boulos

Deever Electric

Beacon Elec. Engr.

J.P. Miller

Fuel Economy

The L.E. Myers Co., Inc.

Hoosier Engineering

Keith Electrical Co., Inc.

Grissom & Johnson, "Ine.

Interstate Electric

3. E.C. Ernst Co., Inc.

4. Dynalectron

TABLE OF CONTENTS

Page

SN PUNO Sebo ccvecccndiscovectacvocdens i

PARTIES TO THIS PROCEEDING .....cscccccccccccccees ii

CORPORATE LISTING STATEMENT .........eccccccccees ii

i ee is nb ceebotccensubenmbas te 1

le dalle ba vawa sd weew eee eae 2

BEE MPEMTUTOME POVOIIOND oc cccccccccccescccsceves 2

Bs UT CO EU CARD occ ccc cccccccuvecrcsee 3

A. Preliminary Statement .................06. 3

ape Mae Rae Lo Ns wines av eee wee oees doce 3

1. The Adoption Of The Industry Fund... 3

2. How The Fund Benefits Non-NECA Con-

i cutee 6a winecacennakee ss aun ere 6

Be arr )

V. REASONS Wuy THE PETITION SHOULD BE GRANTED 12

A. This Case Presents An Important Question Of

First Impression Which Should Be Considered

By This Court—Whether Voluntary Payment

Into An Industry Fund, Typical Of Funds

Prevalent Throughout The Construction

Industry—Constitutes Illegal Per Se Price Fix-

B. The Court Of rw Unprecedented Con-

demnation Of A Voluntary Industry Fund Is In

Direct Conflict With Decisions Of The National

Labor Relations Board And Misapplies This

Court’s Holding In Perma Life ............ 15

C. The Court Of Appeals Novel Holding That A

Legal Subject Of Bargaining—Absent Any

Demonstrated Effect On Commercial

Competition—Constitutes Illegal Per Se Price

ces Conflicts With Important Antitrust

ples Established By This Court In Apex

EE UaGdicked $4.5+440eesatanpaiiie ion 19

Table of Contents Continued

D. The Fourth Circuit’s Decision To Apply A Per

Se Standard To A Collective B ining Agree-

ment Conflicts With This Court’s Decision In

Connell And Decisions Of Other Circuits ... 22

uM. 3.0 sa'cca cee das cenkauminaaennactans 24

APPENDIX:

Opinion of the Court of Appeals for the Fourth Circuit la

Memorandum Opinion of the District Court for the Dis-

EIN so hac ce cnae sted epebuvasnebene 23a

—— of the District Court for the District of Mary-

Order of the Court of Appeals Denying Rehearing ... 100a

Order of the Supreme Court Extending Time to File

Petition for Writ of Certiorari .................. 102a

EN ss ann csacasccgecbnabace 103a, 193a

“Industry Funds”, Engineering News-Record ........ ll4a

Unpublished Memorandum Opinion and Order in C.L.

Williams v. ITT Grinnell Industrial Piping, Inc.,

SERIES MIE: cin v's ca Gsine cas okueueauaeaauawh 12la

General Counsel’s Denial of Appeal from Regional Direc-

tor’s Refusal to Issue Complaint in JBEW and NCA

NIG Si ckieassa kWeoavsoe + ase vaneee aedaeaenaNs 127a

Unpublished Decision of the NLRB Administrative Law

Judge in IBEW, Local 527 and NCA, and in IBEW,

Local 716 and NCA (1979) .......ceceeceeceeees 134a

Unpublished Decision of the NLRB Administrative Law

Judge in IBEW, Local 12 (Commonwealth Electric

CE 55 Joo wetbusehecetonhsNicveanaenes 15la

NS RECT Cr ra es 169a

NEED . wo avin desc od acnwkusanebeunwate 170a

Appellee NCA Counsel’s letter re Industry Fund .... 17la

National IBEW-NCA Agreement (1977) ............. 173a

Declaration of Trust, National Electrical Industry Fund 178a

Defendants’ Proffer of Testimony ............++++++ 182a

Defendants’ Supplemental Proffer of Testimony ...... 189a

ahead

TABLE OF AUTHORITIES

CASES: Page

Apex Hosiery Co. v. Leader, 310 U.S. 469

P1940) Perawnh oAadsvewas eeseovsevabs dete 19, 20, 21

Berman Enterprises Inc. v. Local 333, Int’l Longshore-

men’s Assn, 644 F.2d 930 (2d Cir. 1981) ......... 23

Broadcast Music, Inc. v. Columbia Broadcasting Sys-

tom, ine., 443 UB. 1 (1978)... ccsccvsccess 14, 21, 23

Carpenters Local Union No. 1846 v. Pratt-Farnsworth,

Inc., 690 F.2d 489 (5th Cir. 1982) ............... 21

Columbia Broadcasting System, Inc. v. ASCAP, 620

F.2d 930 (2nd Cir. 1980), cert. denied, 450 U.S. 970

DUE Nas bb abewnd HaccKswewsneeenanesewae es 17, 18

Connell Construction Co. v. Plumbers & Steamfitters,

Local No. 100, 421 U.S. 616 (1975) ..............

Continental T.V., Inc. v. GTE Sylvania, 433 U.S. 36

DEE at asp tends ovvendvapennadwiaeledteriee sole 14

Davis-Watkins Co. v. Service Merchandise, 686 F.2d

ST SOD ods condudexvatnavesbeonnenen 14

Detroit Window Cleaners Union, Local 139 (Daelyte

Service Co.), 126 NLRB 63 (1960) .............. 12

IBEW Local 12 (Commonwealth Electric Co.), 252

DT EE OME checked ave cvovetaccseebou? 16

Meat Cutters Local 576 v. Watterau Food, Inc., 597 F.2d

EN EE TOD cise ciced coces cdactdrasuweouey 23

Mechanical Contractors Ass'n. v. Local 420, United

Ass'n of Jou men, 167 F.Supp. 35 (E.D.Pa.

1958), aff'd. 265 F.2d 607 (3rd Cir. 1959) ........ 13

Mid-American Regional Bargaining Ass’n v. Will Coun-

ty Carpenters Dis. Council, 675 F.2d 881 (7th Cir.

1982) cert. denied, 103 S.Ct. 82 (1982) ........... 20

NLRB vy. Wooster Division of Borg-Warner Corp., 356

U.S. 342 (1958) ....... Sri lg sid reg ates 15

Oil, Chemical & Atomic Workers International Union v.

National Labor Relations Board, 405 F.2d 1111

ED aw bd pe cedecocccsoneedvecnatiane 13

Parks v. IBEW, 314 F.2d 886 (4th Cir. 1963), cert. denied

Uns PURAMEED d40 vbcbs ccd caen'slapiedinwaa 8

vii

Table of Authorities Continued

Page

Perma Life Mufflers v. International Parts Corp., 392

SN ba Vis un oa bsdeddes aedeMeen eres 16, 17

Smitty Baker Coal Co. v. United Mine Workers, 620 F.2d

416 (4th Cir. 1980) cert. denied 449 U.S. 870 (1980) 23

U.S. Trotting Ass’n v. Chicago Downs Ass'n, Inc., 665

ee PE LE RG SUED ccvcccccovchoavevevesvs 14

USM Corp. v. SPS Technologies, Inc., 1982-83 Trade

Cees POSTE Cote CAE, BOUND ve cccccccccacecsces 14

United States v. General Motors, 384 U.S. 127 (1966). 22

Williams v. ITT Grinnell Industrial Piping, Inc., CA

No. 78-0562-R (E.D. Va. May 21, 1980) .........

STATUTES AND REGULATIONS:

United States Code, Title 15

EIN. Guat antine hile kwilbe s 004 05 6p eee ude cane 2, 103a

MAS, Li toe get ces sdb ictncehecaceoceuceeas 2, 103a

RTE MDE Day ANE SSE ee I 7 me PI 2, 20, 105a

EE he. cei eu oeaea bod vaen eee hekbuase 2, 1938a

United States Code, Title 28

Se ba ueb Ve des deg se cnw couse daedseiaaue 2

Ned Nid's had p-hek'e ss oo cenweeenvietcadan 2

United States Code, Title 29

UR a essa ba aha e nae be dnd dsdbhtiondica eee 2, 106a

I et wd G ad cus aa bbws ce¥adnasccebdasieten 2, 107a

I on ie as waa ae cased adnanedenn tie 2, 108a

DE LOL we nidtan ae boandousehence ecenientiten 2, 109a

CL a alepdbldbis viens ki hnbssene se ceweueyale 2, 109a

DME td cas abhehtéceus soatewsetcaduaewauee 2, 110a

NG diated bastakbieg dp hodta pea 3, 112a

EE AL is nso ane bk canevdccdee baum eens 3, 112a

PR Secduscadconcedcnccnceccaccisudvandegn 3, 112a

Table of Authorities Continued

Page

MISCELLANEOUS:

Comment, Consolidated Express: Antitrust ror a

Illegal Labor Activities, 80 Col.L.Rev. 645 (1980) 23

Engineering News Record .......cccccccccsccccees 5

Labor-Antitrust: The Problems of Connell and a Remed

That Follows Naturally, Casey & Cozzillow, 1

SAM MID. pv tii servo spavadacdas cavesaumnuaed 23

Work Stoppages in Contract Construction, 1962-73, pub-

lished by Department of Labor ..............4..

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

No.

NATIONAL ELECTRICAL CONTRACTORS

ASSOCIATION, INC., et al.

Petitioners,

. ff

NATIONAL CONSTRUCTORS ASSOCIATION, et al.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The petitioners, the National Electrical Contractors

Associatic¢n, Robert L. Higgins, H.E. Autrey, Robert W.

Colgan, the trustees of the National Electrical Industry

Fund, Cojgan Electric, and Miller Electric respectfully

pray that 4 writ of certiorari issue to review the judgment

of the United States Court of Appeals for the Fourth

Circuit ertered in this proceeding on May 17, 1982.

OPINIONS BELOW

ane gilority and dissenting opinions filed by the

Stites Court of Appeals for the Fourth Circuit are

reported % 67 F 2d 492 (4th Cir. 1982), and appear in the

chereto at pp. la-22a. The decision of the U.S.

District Court for the District of Maryland is reported at

498 F.Supp. 510 (D.Md. 1980), and appears in the Appen-

dix at pp. 23a-97a. The District Court’s injunction was

entered on October 8, 1980, and appears in the Appendix

at pp. 98a-99a. The Fourth Circuit’s Order of September

8, 1982, denying Petitioners’ Motion for Rehearing

appears in the Appendix at pp. 100a-101a.

II.

JURISDICTION

The Judgment of the United States Court of Appeals

for the Fourth Circuit was entered on May 17, 1982, bya

2-1 vote. A timely Petition for Rehearing and Suggestion

for Rehearing En Banc was denied September 8, 1982.

Petitioners’ application for an extension of time within

which to file its Petition for a Writ of Certiorari was

granted by Chief Justice Warren E. Burger on November

29, 1982, extending our time to and including January 7,

1983 (see Appendix at p. 102a). This Petition is timely

filed with this Court under the provisions of 28 U.S.C.

§ 2101(c). The Court’s jurisdiction is invoked under 28

U.S.C. § 1254(1). The co-defendants below, the Interna-

tional Brotherhood of Electrical Workers and Charles

Pillard, are also filing a petition for a writ of certiorari.

Ill.

STATUTORY PROVISIONS

The relevant statutory provisions are:

1. Sherman Act, Section 1, 15 U.S.C. Sec. 1;

2. Clayton Act, Section 4, 15 U.S.C. Sec. 15;

8. Clayton Act, Section 6, 15 U.S.C. Sec. 17;

¢ cig Act Sein ob SUS Se

6. Nurris-LaGuardia Act, Sections 1, 2, 5, 6, 13, 29

U.S.C. $§ 101, 102, 105, 106, 113

7. Labor M ement Relations Act, as amended,

Sections 8(a)(5), 8(b)(3), 8(d), 29 U.S.C.

§§ 158(a)(5), 158(b)(3), 158(d).

Pertinent portions of these statutory provisions are

reproduced in the Appendix at pp. 103a-113a; 193a.

IV.

STATEMENT OF THE CASE

Preliminary Statement

This is a class action antitrust suit brought by the

National Constructors Association and several contract-

ing companies against the International Brotherhood of

Electrical Workers, the National Electrical Contractors

Association, and certain individuals and NECA member

companies. Although conceding that this was a “case of

first impression,” a divided Fourth Circuit panel affirmed

the district court’s grant of summary judgment for plain-

tiffs, holding that an agreement between the IBEW and

NECA to include an industry fund in a bona fide collective

bargaining agreement constitutes illegal per se price fix-

ing.

1. The Adoption Of The Industry Fund

NECA is a national trade association of union and

non-union electrical contractors with 135 local chapters

throughout the country. The IBEW is an international

union consisting of more than one million trained electri-

cians and apprentices, representing the vast majority of

the nation’s union electrical construction workers. For

decades NECA and the IBEW have provided a stable

collective bargaining structure for the negotiacion of

wages, hours and working conditions throughout the

union electrical construction industry.

ena

In 1976, the IBEW, which for years had sought to

improve its members’ pension fund financed by contribu-

tions from union electrical contractors, negotiated a Na-

tional Collective Bargaining Agreement with NECA

(Appendix, pp. 173a-177a), the provisions of which were

included in all local collective bargaining agreements

negotiated between IBEW local unions and NECA chap-

ters. The employers agreed to increase their pension fund

contributions from 1% to 3% of gross labor payroll. In

return, NECA secured significant cost saving con-

cessions which benefitted NECA and non-NECA con-

tractors alike. These provisions were: (1) a clause which

substantially reduced the overtime rates paid to employ-

ees working on second and third shifts; (2) a higher ap-

prenticeship ratio which permitted emnloyers to hire

more apprentices at rates significantly iower than the

wages paid journeymen electricians, and (3) a long sought

management rights provision. NECA and the IBEW also

agreed to the National Electrical Industry Fund (the

Fund).

Typically, non-NECA contractors either (a) voluntari-

ly authorize the local NECA chapter to act as their collec-

tive bargaining agent, or (b) simply await the outcome of

IBEW-NECA contract negotiations and then voluntarily

adopt the terms and conditions of the local agreement.

(The standard form letters of assent A and B appear in the

Appendix, pp. 169a and 170a.) By pursuing either course,

non-NECA contractors may obtain union labor in any

locality in which they choose to compete for electrical

contracting work. Thus non-NECA contractors are en-

abled to bid on projects far from their local service areas

with advance knowledge of what their labor costs will be.

who voluntarily adopted collective bargin-

ing agreements which contained the industry fund provi-

sion agreed to contribute between .2% and 1% of their

gross labor payroll to the Fund, .2% of which was re-

ceived by national NECA and the balance, if any, by the

various local NECA chapters. Fund collections are placed

in trust and used to pay, inter alia, the contractor’s cost of

(1) negotiating and implementing local and national col-

‘ective bargaining agreements, (2) maintaining a national

industry arbitration system, (3) implementing employee

training programs, (4) improving industry and gov-

ernmental codes and specifications, (5) increasing indus-

try advertising, and (6) financing NECA’s industrywide

labor relations services. '

The Fund is not novel. Industry funds have long been

commonplace throughout the construction industry. The

Engineering News Record (Appendix, pp. 114a-120a, at

118a) reported in July 1980 that 48.9% of the 2,907 collec-

tive bargaining contracts monitored by the Construction

Labor Research Council included industry fund provi-

sions. Similarly, 33.7% of the approximately 5,000 labor

contracts examined by the Department of Labor’s Office

of Construction Industry Services included fund provi-

sions. Even before the Fund was established, approxi-

mately 92 IBEW-NECA local collective bargaining

agreements provided for local industry funds.

The Fund was intended as something more than a

mechanism through which NECA and non-NECA con-

tractors could pay their fair share of th» expenses of

negotiating and administering industry collective

bargaining agreements and other similar services. It was

‘The Fund can be used only to finance the industrywide services

expressly designated in its Declaration of Trust (Appendix, pp. 178a-

181a). A Board of Trustees was established to ensure that the condi-

tions of the Trust were strictly observed. There has been no findi..g

that Fund money was ever expended for any purpose inconsistent

with the purposes set forth in the Trust document.

also intended to increase the funds available to improve

the quantity and quality of the services which NECA

provided the entire electrical construction industry.

Thus, for example, it enabled NECA to increase the

number of its trained field representatives, so that

management could match the union’s ability to provide

expert labor personnel to resolve local labor-management

disputes.

Non-NECA contractors are not compelled to accept

the benefits of the local IBEW-NECA agreement.’ They

remain free to negotiate their own independent labor

agreements with the union, without any industry fund

obligation. And, as the record in this case demonstrates,

non-NECA contractors have in fact negotiated in-

dividually and collectively with the IBEW for in-

dependent agreements which do not include the Fund

provision. Thus, if a non-NECA contractor chooses to

adopt the terms of a NECA labor agreement—including

the Fund—rather than negotiate independently with the

union, it is in every sense a voluntary election on his part.

2. How The Fund Benefits Non-NECA Contractors

NECA and the IBEW have for decades provided an

effective collective bargaining structure which benefits

the entire electrical construction industry. Local NECA

* While the courts below found that the parties agreed to “insert”

the Fund provision in bargaining agreements negotiated between

the IBEW and non-NECA contractors, as well as in NECA agree-

ments, they did not find that any contractor was in fact compelled to

accept the Fund provision (498 F.Supp. at 536-37, 678 F.2d at 501-02;

Appendix, pp. 68a-69a and 15a-l6a). Indeed, petitioners demon-

strated below that the IBEW entered into numerous agreements

with non-NECA contractors, including plaintiffs, which excluded the

Fund provision altogether (Appendix, pp. 182a-187a).

chapters act as multiemployer bargaining agents in

negotiating collective barrining agreements with IBEW

local unions, which are made available for voluntary adop-

tion by non-NECA contractors. The negotiation and ad-

ministration of such agreements is a long and involved

process, the cost of which is borne by the Fund.

NECA maintains a staff of professional labor’ repre-

sentatives who are available in the field to assist union

contractors and aid in the resolution of employer-

employee disputes on the job site. If a problem cannot be

settled on the site, it may be referred to the local Labor-

Management Committee which is staffed by NECA chap-

ter members and IBEW local representatives. These

committees, provided for in the local IBEW-NECA

agreement, are utilized to resolve disputes which arise

under the local agreement. The vast majority of local

agreements further provide that determinations reached

by the local Labor-Management Committee may be

appealed to the Council on Industrial Relations for final,

binding resolution.

Established in 1921 by the IBEW and NECA, the

Council, which is composed of equal numbers of NECA

and IBEW members, has consistently resolved industry

labor disputes by private adjudication without the in-

tervention of third party arbitration—an accomplishment

expressly recognized as a unique and progressive step in

the peaceful settlement of labor disputes.’ The Council is

‘“The most successful arrangement for the adjudication of con-

tract disputes has been the agreement negotiated between the Inter-

national Brotherhood of Electrical Workers and the National Elec-

trical Contractors Association. Since 1921, the electrical industry's

Council on Industrial Relations has rendered private judicial

the principal reason why electrical contracting, alone

among the construction trades, has been termed a

virtually strike-free industry. See Parks v. IBEW, 314

F.2d 886, 894 (4th Cir. 1963), cert. denied, 372 U.S. 976

(1963).

The IBEW and NECA also undertake the selection and

training of apprentices throughout the electrical con-

struction industry. NECA contractors and IBEW mem-

bers, sitting in joint committee, screen and interview

tens of thousands of applicants annually. Once selected,

the apprentices are enrolled in the Joint Apprenticeship

Training Program, developed and managed by NECA

and the IBEW. Additionally, NECA provides extensive

employer training activities, research studies (such as

compiling the National Electrical Code), and other re-

lated services.

The benefits to the non-NECA contractor stemming

from voluntary assumption of local IBEW-NECA agree-

ments are immense. The non-NECA contractor saves the

time and cost of negotiating his own agreement and

assures himself of the right to obtain skilled labor on an

equal basis with local contractors. By adopting the local

agreement already in place he can immediately compute

his labor costs, thus expediting his bid presentation. He

also obtains immediate access to a pool of skilled electri-

cians, trained through the efforts of local NECA con-

determinations on a variety of disputed matters including wage-rate

determinations. While it has no mandatory powers to enforce com-

pliance, its record is unique; never in the more than 48 years of the

Council’s existence has a decision been violated. Its success, how-

ever, is the product of many years of experience and may not be

readily duplicated in other branches of the industry.” Work Stop-

pages in Contract Construction, 1962-73 at 15, a study published by

the Department of Labor.

tractors and the union. Without access to this labor pool

the large travelling contractor could not secure the skilled

labor he requires to compete in the local market.

The extensive industry services financed through

voluntary Fund contributions are also of great value to

the non-NECA contractor. As Williams v. ITT Grinnell

Industrial Piping, Inc.‘ recognized, each contractor who

voluntarily adopted this Fund “stood to benefit from

[Fund] activities even though it was not [a] NECA mem-

ber.” The court concluded:

The Declaration of Trust limits the fund’s use of

employer contributions to specific activities. NEIF

funds may be used to advise the public of services

pee by the electrical contractor industry. The

EIF may also seek improved and uniform govern-

ment codes. Funds may be expended to train em-

loyees or acquaint them with new products.

ement and sales personnel may also be trained

at NEIF expense. The NEIF may also pay the em-

ployer’s cost of collective bargaining. In short, each

permissible NEIF activity 1s consistent with the

“basic principles” set forth above and to the benefit of

the non-NECA contractor. (Emphasis added.)

The Decision Below

Sustaining the district court’s summary judgment

holding, a divided panel held that the Fund constituted

illegal per se price fixing, and enjoined the defendants

from receiving Fund payments from non-NECA con-

tractors who voluntarily accepted the obligations and

‘The unpublished opinion of the United States District Court for

the Eastern District of Virginia appears in the Appendix at pp.

121a-126a.

benefits of local IBEW-NECA collective bargaining

agreements.

The lower court reached this conclusion even though (1)

it saw nothing wrong with collecting the Fund from

NECA contractors; (2) the Fund provision nowhere re-

ferred to the price of electrical contracting services, and

certainly did not fix the price of such services; (3) the

Fund affected but one small element of the cost of labor;

(4) non-NECA contractors were obligated to pay into the

Fund only if they voluntarily gave NECA authority to

bargain on their behalf or voluntarily assented to local

IBEW-NECA agreements;’ (5) non-NECA contractors

remained free to negotiate their own IBEW agreements

excluding the Fund provision altogether; and (6) the

Fund had no demonstrated impact on commercial

competition.

For the lower court majority, the issue boiled down to

the simplistic proposition that the defendants had agreed

to include the Fund provision in all “IBEW construction

contracts,” thus depriving non-NECA contractors of the

“competitive advantage” they had enjoyed by obtaining a

free ride on NECA’s efforts. According to the panel

5Generally the local IBEW-NECA agreements which were

amended to include the provisions of the National Agreement are

renegotiated every year or two years. Since the Fund did not go into

effect until six months after the National Agreement was adopted,

any obligated contractor could withdraw his bargaining authority

and limit his Fund obligation to the brief remainder of a single

agreement’s duration. By the time the district court entered its

injunction, almost three years after the Fund’s adoption, all non-

NECA contractors had had more than ample opportunity to with-

draw from NECA bargaining units and negotiate their own in-

dependent labor agreements, free of any Fund obligation.

majority this “clearly interfere[d] with the market forces

that set the price of such contracts” and “would tend to

stabilize the price of electrical construction contracts, a

practice illegal per se under the Sherman Act.” Signifi-

cantly, there was no evidence before the court to support

this entirely gratuitous presumption.

We believe that in making its finding that the Fund

provision was to be inserted in “all agreements,” the

court below misapprehended the intent of the parties. As

the deposition testimony and other evidence showed,

their real intent was to insert the industry fund only in

NECA agreements and to have it apply only to NECA

members and those other contracturs who voluntarily

designated NECA as their bargaining agent or adopted

NECA agreements. Nevertheless, in view of the lower

court’s holding that lack of coercion was irrelevant and its

failure to find that any non-NECA contractor was in fact

coerced, this Court need not review the lower court’s

finding concerning the purported scope of the agreement.

The agreement, even as interpreted by the court below,

does not constitute illegal per se price fixing.’

*The lower court did not attempt to explain how the defendants

intended to accomplish the fund’s “insertion” in non-NECA agree-

ments. In fact, involuntary insertion was impossble because (1)

NECA has nothing to do with the negotiation of non-NECA agree-

ments, and (2) since industry funds are permissive, not mandatory,

bargaining subjects, any non-NECA contractor could squelch any

attempt by the IBEW to include the Fund provision in its contract by

simply refusing to talk about it. As the NLRB found, the union was

well aware that it was prohibited by labor law from negotiating to

impasse on a permissive subject of bargaining. Significantly, plain-

tiffs neither alleged nor proved that any of them was a party to a

single non-NECA agreement which included the industry fund pro-

vision, much less that they were ever compelled to adopt the Fund

provision.

To Circuit Judge Hall, dissenting, the majority’s “blind

application of the per se rule against price fixing...

ignores the realities of this case . . .” Confronting these

realities, the dissenting judge pointed out that “one of the

main purposes of the industry fund is to help defray the

costs of the negotiation process” and that under the

majority’s ruling, “non-NECA contractors would con-

tinue to enjoy the benefits of NECA’s bargaining” with-

out paying their share of those costs (678 F.2d at 503-04).

REASONS WHY THE PETITION SHOULD BE GRANTED

This Case Presents An Important Question Of First

Impression Which Should Be Considered By This

Court—Whether Voluntary Payment Into An Industry Fund,

Typical Of Funds Prevalent Throughout The Construction

Industry—Constitutes Illegal Per Se Price Fixing.

The Court should grant certiorari in this case of admit-

ted “first impression” to determine whether voluntary

payment into an industry fund, typical of thousands of

such funds long existing throughout the construction in-

dustry, constitutes illegal per se price fixing under the

antitrust laws. It has long been established that industry

funds are permissive bargaining subjects under the na-

tional labor laws and may lawfully be inserted in collec-

tive bargaining agreements. Nevertheless, the Fourth

Circuit concluded that the Fund constituted illegal per se

price fixing because it added “1% of labor costs” to

“IBEW construction contracts.”

The panel’s decision ignores entirely the recognized

status of industry funds as a bona fide permissive subject

of bargaining. See, e.g., Detroit Window Cleaners Union,

Local 139 (Daelyte Service Co.), 126 NLRB 63 (1960);

Mechanical Contractors Ass’n. v. Local 420, United

Ass’n. of Journeymen, 167 F.Supp. 35 (E.D.Pa. 1958),

affd., 265 F.2d 607 (3rd Cir. 1959). Inclusion of permis-

sive bargaining subjects in collective bargaining agree-

ments is part of “the very fabric of effective collective

bargaining.” Oil, Chemical & Atomic Workers Interna-

tional Union v. National Labor Relations Board, 405

F.2d 1111, 1117 (D.C. Cir. 1968) (Burger, J.).

This Fund is not materially different from all other

industry funds which have long been recognized as lawful

subjects of bargaining. Industry funds have existed on a

widespread basis throughout the construction industry

for many years. There is nothing mysterious or venal

about them. They are simply a method that has been

developed for collecting funds from consenting employers

to improve labor relations and employer and employee

productivity throughout the construction trades.

Typically, funds like the one at issue here are estab-

lished as provisions of collective bargaining agreements

negotiated between industry bargaining units and the

unions representing various trades and crafts. All em-

ployers who adopt such agreements pay into these funds.

The purpose is to provide funds to negotiate and adminis-

ter collective bargaining agreements, improve job pro-

ficiency, train employers in the development of better

business practices, keep them advised of new technology,

assist them in training managers and supervisors, and

similar endeavors. Since the entire unionized industry

benefits from these funds, the practice is for union em-

ployers to contribute voluntarily to them. This is precise-

ly what is involved here.

The panel majority’s per se holding totally disregards

the benefits which industry funds confer on association

and non-association contractors alike. It utterly ignores

Judge Hall’s dissenting conclusion that “[{s]ince all elec-

trical contractors benefit from NECA’s collective

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

such bargaining.” 678 F.2d at 504. Indeed, the fact that a

“restraint” is designed to eliminate “free riders” has been

cited by this Court as a reason for judging it under the

rule of reason, rather than the per se standard. Con-

tinental T.V., Inc. v. GTE Sylvania, 433 U.S. 36, 55

(1977).?

Petitioners submit that the Fund bears no resemblance

to any of the “naked” restraints traditionally considered

per se antitrust violations. Broadcast Music, Inc. v. Col-

umbia Broadcasting System, Inc., 441 U.S. 1 (1979).

Rather, it is a well recognized subject of bargaining be-

neficial to the entire electrical construction industry. The

Court should grant certiorari to resolve an unpre-

cedented question of antitrusi law: whether inclusion of

an industry fund in a multiemployer agreement pursuant

to a binding delegation of bargaining authority con-

stitutes illegal per se prive fixing.

7Since Sylvania, a substantial body of case law and scholarly

commentary has endorsed applying the rule of reason to restraints

engendered by a legitimate desire to eliminate “free riders.” See, .

e.g., Davis-Watkins Co. v. Service Merchandise, 686 F.2d 1190 (6th

Cir. 1982); U.S. Trotting Ass’n v. Chicago Downs Ass’n, Inc., 665

F.2d 781 (7th Cir. 1981); USM Corp. v. SPS Technologies, Inc.,

1982-83 Trade Cas. € 65,077 (7th Cir. 1982).

The Court Of Appeals’ Unprecedented Condemnation Of A

Voluntary Industry Fund Is In Direct Conflict With Decisions

Of The National Labor Relations Board And Misapplies This

Court's Holding In Perma Life

The lower court’s summary judgment holding—that

voluntary inclusion of an industry fund in a multiem-

ployer collective bargaining agreement constitutes per se

price fixing—is in conflict with national labor policy and

with the holdings of the NLRB and its General Counsel

dealing with this industry fund.

The decision below ignores the established labor law

principle that industry funds may properly be proposed

for inclusion in a collective bargaining agreement so long

as they are not insisted upon to the point of impasse. For

this reason alone the Court should review this case to

resolve its conflict with national labor law and policy.

NLRB vy. Wooster Division of Borg-Warner Corp., 356

U.S. 342 (1958),

Responding to plaintiffs’ charges that the IBEW

illegally coerced non-NECA contractors to adopt the

Fund provision, the NLRB extensively investigated the

implementation of the 1976 National Collective Bargain-

ing Agreement. Rejecting plaintiffs’ charges, the Board's

General Counsel concluded that “the International's poli-

cy at all times was to request, rather than insist, that the

Industry Fund be included during negotiations with non-

NECA members” (Appendix, pp. 127a-138a, at p. 129a,

emyhasis added),

In the three cases where it was alleged that isolated

local unions of the IBEW used coercion to obtain con-

tractor acceptance of the Fund, the Administrative Law

Judges found no coercion (Appendix, pp. 134a-150a and

15la-168a). The only case which Plaintiffs elected to

appeal was affirmed by the National Labor Relations

Board. IBEW Local No. 12 (Commonwealth Electric

Co.), 252 NLRB No. 40 (1980).

The lower court sidestepped the Board’s determination

by the astonishing holding that coercion was irrelevant.

Relying solely on this Court’s in pari delicto holding in

Perma Life Mufflers v. International Parts Corp., 392

U.S. 134 (1968), the lower court majority held that even if

non-NECA contractors voluntarily elected to become

parties to the “conspiracy” by accepting the fund obliga-

tion, they were still entitled to relief under the antitrust

laws."

The court’s reliance on Perma Lie misses the mark.

That case held only that a nominal co-conspirator, injured

by a naked per se restraint, was not necessarily barred

from asserting a claim because of his own participation in

the illegal conspiracy. The Perma Life holding comes into

*The court's unprecedented expansion of Perma Life has this

extraordinary result: A non-NECA contractor goes to the local

union's hiring hall with the option of either assenting to an IBEW-

NECA collective bargaining agreement, which contains the Fund

provision, or of negotiating a separate independent agreement with-

out the Fund. Since the industry fund is a permissive subject of

bargaining, the union cannot and will not, as the NLRB found, insist

on its inclusion in the independent agreement. If, however, the

employer prefers not to negotiate independently, he will simply

accept the IBEW-NECA agreement as his own. If the lower court

decision stands, the employer adopting the second option may be

allowed to sue and collect three dollars for every dollar he voluntarily

contributes to the Fund. Thus the voluntary inclusion of a valid

bargaining subject in an unexceptional collective bargaining agree-

ment is converted into—according to class counsel's estimate—a

$120,000,000 treble damage windfall (Appendix, p. 172a).

play only after a restraint of trade has been established,

and the secondary question then arises whether those

who are restrained are entitled to damages. But the ex-

istence of the restraint must first be established.’

The court below did not find that collecting Fund pay-

ments from NECA members was in any sense an illegal

restraint of trade. The holding was that the Fund could

not be collected from consenting non-NECA contractors

because it eliminated a competitive advantage enjoyed by

those contractors. But if this was a “competitive advan-

tage” it was one that non-NECA contractors relinquished

voluntarily, presumably because they believed that the

countervailing benefits they received justified the Fund

obligation.'’ The fact that non-NECA contractors

voluntarily accepted the Fund negates the existence of

any restraint imposed upon them. See Columbia

* The facts in Perma Life highlight its inapplicability to this case.

There the plaintiff franchisees had been presented with form fran-

chise agreements, containing a variety of illegal restraints (i.e.,

vertical price fixing, tie-ins, exclusive dealing arrangements and

territorial restrictions), on a take-it-or-leave-it basis. This Court held

only that the franchisees acceptance of their franchises did not bar

them, on the theory of in pari delicto, from claiming injury as a result

of their franchisers’ imposition of the illegal restraints.

The vast majority of non-NECA contractors who accepted the

terms of IBEW-NECA collective bargaining agreements paid into

the Fund without protest, presumably because they recognized that

they had voluntarily agreed to accept the Fund obligation, and be-

cause they realized that they benefitted from the industry services

which the Fund financed. The sole class representatives in this case

are two dissatisfied former NECA members who desire to free ride

on NECA's efforts. Yet even they concede the value of NECA’s

services. Thus the General Counsel of one of the two class represent-

Broadcasting System, Inc. v. ASCAP, 620 F.2d 930, 936

(2nd Cir. 1980), cert. denied, 450 U.S, 970 (1981).

There is no valid distinction between a NECA member

who authorizes u chapter to negotiate for him, and is thus

bound by any lawful agreement made, and a non-NECA

contractor who voluntarily gives the chapter written au-

thority to negotiate contracts and amendments on his

behalf or voluntarily adopts an already negotiated agree-

ment containing the Fund. Both NECA and non-NECA

contractors have voluntarily agreed to accept the terms

of a valid collective bargaining agreement, including the

industry fund. Yet, as a result of the lower court’s in-

comprehensible distinction, voluntary adoption of the

Fund by NECA contractors is permissible, while

voluntary adoption by non-NECA contractors is per se

illegal price fixing."

atives, William Schwartzkopf of plaintiff Commonwealth Electric,

testified that Commonwealth voluntarily continued to make NEIF

payments in the St. Paul, Minnesota area in recognition of th. valu-

able collective bargaining and 'abor relations services performed by

the local NECA chapter. Schwartzkopf Dep., pp. 490-493; 530-533.

Since the class representative voluntarily elected to contribute to

the Fund, how can it now be heard to demand treble damages?

'' The lower court's illogical distinction dissolves under analysis.

Assume that a contractor joins NECA, and agrees to be bound by the

terms of a local IBEW-NECA agreement, including the industry

fund.’ There is no violation here under the lower court's holding.

During the term of the agreement, he resigns from NECA, but

continues to operate under the terms of the IBEW-NECA agree-

ment, and continues to pay without protest into the industry fund.

Under the lower court's decision, his resignation from NECA con-

verts lawful payment into illegal per se price fixing. No rationale can

justify this result.

We submit that plaintiffs failed to demonstrate any

restraint of trade, much less illegal per se price fixing, in

the absence of proof that they were compelled to forego

their alleged “competitive advantage.” Despite the ab-

sence of any restraint on any contractor’s freedom of

choice, the lower court, by its egregious misapplication of

the in pari delicto doctrine, violated fundamental anti-

trust principles and endangered the institutions which

maintain the collective bargaining structure of an entire

industry. In so doing the lower court has come into se-

rious conflict with national labor law and policy. This

conflict should be resolved by the Court.

The Court Of Appeals’ Novel Holding That A Legal Subject Of

Bargaining—Absent Any Demonstrated Effect On Commercial

Competition-Constitutes Illegal Per Se Price Fixing Conflicts

With Important Antitrust Principles Established By This

Ce ort in Apex Hosiery

Just as no finding was ever made that any non-NECA

contractor was compelled to accept the Fund provision,

no finding was ever made that payment into the Fund

affected commercial competition in any business market.

The district court expressly declined to make any such

finding—and for good reason. The Fund obligation was

simply so small an element of cost in comparison with the

other labor and cost factors that go into making up a job

bid that it could not be presumed to have any demonstr-

able impact on the composition of competitive bids."

“Executives from a number of plaintiffs testified at deposition

that the Fund did not affect their competitive position (Appendix, pp.

189a-192a; 187a-188a). The district court held that all such evidence

was irrelevant because proof of anticompetitive effect was

Nowhere does the Fund provision even refer to the

price of electrical contracting work. Yet, despite the ab-

sence of any finding of actual anticompetitive effect, the

court below adopted a conclusive presumption that the

industry fund “would tend to stabilize the price of elec-

trical construction contracts, a practice illegal per se

under the Sherman Act.” This holding makes a mockery

of the axiom that a labor agreement is not an actionable

restraint of trade absent “some form of restraint upon

commercial competition in the marketing of goods or

services.” Apex Hosiery Co. v. Leader, 310 U.S. 469, 495

(1940). Accord, Mid-American Regional Bargaining

Ass'n v. Will County Carpenters Dis. Council, 675 F.2d

881 (7th Cir. 1982) cert. denied, 103 S.Ct. 82 (1982).

The lower court’s suggestion that the price fixed was

the price of “IBEW construction contracts” (678 F.2d at

501) makes its decision even more mystifying. The only

“IBEW construction contracts” at issue are collective

bargaining agreements. Collective bargaining agree-

ments are not commodities which are bought and sold;

they have no “price” which can be fixed in violation of the

antitrust laws. The only price they direc ly affect is the

price of labor; and the price of labor is, by statute, “not a

commodity or article of commerce.” 15 U.S.C. See. 17.

There is simply no justification for equating an insignif-

icant increase in the cost of labor with fixing the price of

electrical contracting work in a commercial market. An

increase in the cost of labor may or may not result in a

unnecessary as a matter of law (498 F.Supp. at 537-39; Appendix, pp.

69a-72a). The court of appeals, though not mentioning this evidence,

implicitly agreed with the district court (678 F.2d at 501; Appendix,

mp. Lba-16a).

commercial price increase. The requirement that an

actual effect on commercial competition be proven cannot

be satisfied by the expedient of labelling every increase in

the cost of labor as “price fixing.’ See Broadcast Music,

Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1,

9 (1979). Otherwise, every collective bargaining agree-

ment which increased the cost of labor would be suspect

as price fixing.

The panel’s facile per se price fixing theory is totally

unrealistic. There is no reason for singling out one partic-

ular bargaining subject—an industry fund which equitab-

ly distributes necessary industry labor costs—and labell-

ing it illegal per se price fixing. Bargaining subjects

typically impact the cost of labor. The very purpose of

collective bargaining is to establish the cost of labor. By

equating a one per cent or less increment of labor cost

with illegal per se price fixing, the court below ignored the

crucial distinction made in Apex Hosiery between a valid

collective bargaining agreement, sanctioned by national

labor policy, and a restraint directly imposed on commer-

cial competition. See Carpenters Local Union No. 1846 v.

Pratt-Farnsworth, Inc., 690 F.2d 489, 533-34, n.24 (5th

Cir. 1982).

The lower court’s rule of per se illegality does not

discriminate between “good” and “bad” industry funds,

but would summarily condemn them all. By this in-

discriminate misapplication of the per se standard, peti-

tioners were deprived of the opportunity of defending the

Fund under the rule of reason. Instead, the lower court

created a new category of illegal per se price fixing out of

whole cloth, without any showing that any price was fixed

or that there was any anticompetitive effect on commer-

cial competition, much less a demonstration that industry

funds have a universally pernicious effect on commercial

competition.

The Court should grant certiorari to decide whether

inclusion of a legal subject of bargaining in a collective

bargaining agreement, absent any demonstrated effect

on commercial competition, constitutes illegal per se price

fixing.

The Fourth Circuit's Decision To Apply A Per Se Standard To

A Collective Bargaining Agreement Conflicts With This

Court’s Decision In Connell And Decisions Of Other Circuits.

This Court and the courts of appeal have been reluctant

to apply the per se standard in a collective bargaining

context. In Connell Construction Co. v. Plumbers &

Steamfitters, Local No. 100, 421 U.S. 616 (1975), the

Court found that a secondary boycott agreement was

subject to the antitrust laws. But, instead of holding that

the boycot: was per se illegal (as it did in a non-labor

context in United States v. General Motors, 384 U.S. 127

(1966)), the Court remanded the case “for consideration

whether the agreement violated the Sherman Act.” The

Court noted:

In this area, the accommodation between federal

labor and antitrust policy is delicate. Congress and

this Court have carefully tailored the antitrust stat-

utes to avoid conflict with the labor policy favoring

lawful employee organization, not only by delineat-

ing exemptions from antitrust coverage but also by

adjustin the — of the antitrust remedies them-

selves. /d. at 636.

The Fourth Circuit’s imposition of per se liability is in

conflict with the approach taken by the Second and

Eighth Circuits. These circuits have held that, even when

labor’s antitrust exemption is inapplicable, labor anti-

trust cases should ordinarily be evaluated under the rule

of reason. Rerman Enterprises Inc. v. Local 333, Int'l

Longshoremen’s Ass’n, 644 F.2d 930 (2d Cir. 1981); Meat

Cutters Local 576 v. Wetterau Foods, Inc., 597 F.2d 133,

136, n.6 (8th Cir. 1979). Recent scholarly commentary

- also favors the application of the rule of reason. See, e.g.,

Casey & Cozzillow, Labor-Antitrust: The Problems of

Connell and a Remedy That Follows Naturally, 1980

Duke L.J. 235, 278; Comment, Consolidated Express:

Antitrust Liability for Illegal Labor Activities, 80 Col.

L.Rev. 645, 660-63 (1980)."

But even were the Fund not part of a legitimate collec-

tive bargaining agreement, it should not have been

summarily condemned as illegal per se price fixing. The

court below stated:

The critical analysis in determining whether a partic-

ular activity 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 designed to increase

economic efficiency and make the market more

rather than less competitive. 678 F.2d at 500 (citing

Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979)).

The required “critical analysis” has not been made

here. Nor could it be made without a trial on the merits

enabling the jury to weigh all material aspects of the

Fund—its purpose, its effect, its benefits and its

voluntariness. Yet the court below condemned the Fund

'’ The court below made no attempt to distinguish its own earlier

precedent in Smitty Baker Coal Co. v. United Mine Workers, 620

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

the cases cited above, rejected the imposition of per se liability in a

collective bargaining context. Indeed, despite the dissent’s reliance

on Smitty Baker, the panel majority fails even to mention it.

as illegal per se price fixing on a motion for summary

judgment. The lower court’s failure to recognize that the

industry fund should be evaluated under the rule of

reason conflicts with prevailing law and should be re-

viewed by this Court.

VI.

CONCLUSION

This case presents important issues concerning indus-

try funds which have never before been considered under

the antitrust laws. Industry funds have existed in the

construction industry on a widespread basis for years.

They have never before been condemned or even con-

sidered under the antitrust laws. They should not have

been summarily adjudged illegal per se price fixing with-

out any inquiry under the rule of reason into their utility

or actual competitive impact.

The court below, by inventing a novel and in-

supportable per se price fixing classification and applying

it to a lawful and prevalent type of labor agreement,

greatly expands the impact of the antitrust laws on cx ‘lec-

tive bargaining and creates serious conflicts with national

labor law and policy. It also threatens to inflict financial

ruin on petitioners, who for decades have provided re-

sponsible and peaceful collective bargaining for the entire

electrical construction industry. Petitioners respectfully

submit that the lower court’s decision is of immense legal

and practical significance to the entire construction indus-

try and certiorari should be granted.

Respectfully submitted,

EARL W. KINTER Guy FARMER

DONALD M. BARNES (Counsel of Record)

DENNIS C, CUNEO FARMER, MCGUINN, FLOOD,

ARENT, Fox, KINTNER, BECHTEL & WARD

PLOTKIN & KAHN 1000 Potomac Street, N.W.

1050 Connecticut Ave. N.W. Suite 402

Washington, D.C. 20036-5339 Washington, D.C. 20007

(202) 857-6044 (202) 298-6910

MILTON HANDLER SHALE D. STILLER

STANLEY D. ROBINSON PETER H. GUNST

KAYE, SCHOLER, FIERMAN, FRANK, BERNSTEIN, CONAWAY

Hays & HANDLER & GOLDMAN

425 Park Avenue 2 Hopkins Plaza

New York, New York 10022 Baltimore, Maryland 21201

(212) 759-8400 (301) 547-0500

Attorneys for Petitioners National Electrical Con-

tractors Association, Robert L. Higginsand H.E. Autrey

and Other Individuals Sued In Their Individual Capuci-

ties and as Trustees of The National Electrical Industry

Fund; Colgan Electric Company, Inc. and Miller Elec-

tric Company

January 7, 1983

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Nos. 80-1808

80-1809

NATIONAL ELECTRICAL CONTRACTORS

ASSOCIATION, INC., et al.

Defendants-Appellants

Vv.

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, Circvit 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 mate 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 electrical 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 ily con-

— 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 per-

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

monthly to the National Electrical Industry Fund in a

form and manner ss 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

responsible 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 part 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 with 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 language 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 regard 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 al) 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 discuss 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 preceeding 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 trai.sacts business. . .

The ies agree that Miller and Colgan are neither inhabitants

of Maryland nor are they found there.

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 of

an already clear agreement.’

Anpellants 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 bvt 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 to a 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.”

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 freely 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; Plymouth 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

Agreement. . . 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 [ndustry 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 accomplished

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 anon-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. vy. 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. 181 (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 “unlike 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.

In 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 scale 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,

[t]o 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 HowarpD 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., DRAvVo

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

FERGUSON COMPANY, JACOBS CONSTRUCTORS, INC.. PULLMAN

KELLOGG, DIVISION OF PULLMAN, INCc.,

STEARNS-Rocer, INc.,

Vv.

NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, INC.,

RosBert L. HicGiIns, THE INTERNATIONAL BROTHERHOOD OF

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

COLGAN ELEctTRIC, INc., MILLER ELEcTrRIc Co., and

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

DonaLpD C. CATES, RoBeRT W. CoLGAN, Joe R. DEVISH, and

CARL T. HINOTE, in their individual capacities and as

Trustees of the National Electrical Industry Fund, and

ALLAN H. Stroupe, L. R. McCorp, ALpo P. LerRo and

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

the National Electrical Industry Fund, and

JoHN Ostrow, C. W. StRoUPE, WARREN Los and J. D.

HILBURN, SRr., 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 ©tokes & 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.

Vv.

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 ali 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 a con-

—— 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

hg saps 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 part of the funds

collected under this trust shall be used for any purpose

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 becorne 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 al/ 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 illegal, 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, seeking to recover on a breach 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

showing of “threatened loss or damage”; and 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 — 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 by 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

atv ge and upon the execution of proper bond

against damages for an yoy aps ftir

“aegeny 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 573 (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. .fid-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

mernbers 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 injury 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 brought 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 ay ag 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 recognized 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 vy. Monroe, 484 F. Supp. 1806 (N.D, Ill.

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 “(tjo 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 “(t)o 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, 482 U.S. at 344; and (2)

whether the association is competent to speak for ite 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 deserves closer

analysis.

In Associated General 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 reauires 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, infra 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 plaiitiff 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. Illinc’s,

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. /d. at 738,

746-47. |

40a

The defendants in the instant case argue that //linois Brick

did not consider the implications uf 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 7 yd as a result of his economic relationship

to a target of the conspiracy or to one of the conspirators.

[Footnotes ommitted. ]

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 /llinois 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, that

distinction has been held to permit an indirect purchaser to

obtain an injunction as long as he van 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 is: ae 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 J/linois Brick, the Third Circuit

considered the supermarket plaintiffs’ standing under § 16,

noting first that the rationales of ///inois Brick had no applica-

tion outside § 4 claims. The court then described the special

position of the indirect purchaser:

For unlike other bg 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

damage 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 Illinois

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, "less the plaintiff can show direct

injury. InNAACP v. New . ork 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.

v. Kroger Co., 1978-2 Trade Cases § 62,373 (S.D. Ohio 1978), in

which the court found that the reasoning of J/linois Brick did

preclude the plaintiffs’ requested injunction.

This court is not persuaded that the cases the defendants

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 iiius. (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, maintain 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-

dda

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 Eiectric 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 greg oay hase 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

45a

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. Subaru 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

5 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.

48a

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 v.

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. Jd. 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.

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 goes 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 54-55; 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 will 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

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

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

Practice 4 8.17[5) (2d ed. 1979); Heart Disease Research

Foundation v. General Motors, 463 F.2d 98 (2d Cir. 1972);

Weiner v. Bank of King of Prussia, 358 F. Supp. 684, 701-02

(E.D. Pa. 1973). Nevertheless, the pleader should be allowed

considerable leeway, and the provision of details may

be left to discovery. 2A Moore's Federal Practice § 18.17[5) at

n. 5. On the whole, courts should be slow to dismiss an action on

the pleadings, especially when antitrust violations are alleged.

Hospital Building Co. v. Trustees of Rex Hospital, 511 F.2d

678 (4th Cir. 1975), rev'd on other grounds, 425 U.S. 738 (1976);

South Carolina Council of Milk Producers, Inc. v. Newton,

360 F.2d 414 (4th Cir.), cert. denied, 385 U.S. 984 (1966); 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

7 Section 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.

53a

IBEW. The defendants’ cross-motion seeks

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