Appendix — Building & Construction Trades Council of Philadelphia & Vicinity v. Altemose Construction Co.

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“| Office-Supreme Court, US.

85-8 2 FILED

No, JUL 15 1985

" NE REneT EV AS,

CLERK

IN THE

Supreme Court of the Wuited States

OCTOBER TERM, 1985

BUILDING & CONSTRUCTION TRADES COUNCIL OF

PHILADELPHIA AND VICINITY, et

al.,

Petitioners,

ALTEMOSE CONSTRUCTION COMPANY AND

CHAMBER OF COMMERCE OF THE UNITED STATES,

Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BERNARD N. KATZ LAURENCE J. COHEN

Lewis Tower Building 1125 - 15th Street, N.W.

15th & Locust Streets Washington, D.C. 20005

Philadelphia, PA 19102 GEORGE KAUFMANN

RICHARD B. SIGMOND 2101 L Street, N.W.

260 South Broad Street Washington, D.C. 20037

Philadelphia, PA 19102

LAURENCE GOLD

815 - 16th Street, N.W.

Washington, D.C. 20006

(202) 637-5390

(Counsel of

Record)

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

@ Go «

Appendix

TABLE OF CONTENTS

A—Opinion of the United States Court of

Appeals for the Third Circuit —...............

B—Opinion of the United States District

Court for the Eastern District of Penn-

RE eR Fa as RAPE nad ea RO

C—Order of the United States Court of Ap-

peals for the Third Circuit denying peti-

tion for rehearing .................... REE Aen TE,

D—Statutes and Rule Involved _...................

Page

APPENDIX A

UNITED STATES COURT OF APPEALS

THIRD CIRCUIT

Nos. 83-1581, 83-1582

ALTEMOSE CONSTRUCTION COMPANY, ASSOCIATED BUILD-

ERS AND CONTRACTORS, INC., THE CHAMBER OF COM-

MERCE OF THE UNITED STATES OF AMERICA

BUILDING & CONSTRUCTION TRADES COUNCIL OF

PHILDELPHIA AND VICINITY, et al.

Appeal of Altemose Construction Company

Appeal of the Chamber of Commerce of the

United States of America

Argued Sept. 11, 1984

Decided Jan. 8, 1985

Rehearing and Rehearing In Banc

Denied Feb. 15, 1985

John W. Pelino (argued), David A. Gradwohl, Howard

A. Rosenthal, Pelino & Lentz, P.C., Philadelphia, Pa., for

Altemose Construction Co.

Gerard C. Smetana (argued), Gary L. Starkman,

Arvey, Hodes, Costello & Burman, Chicago, Ill., for The

United States Chamber of Commerce.

Richard B. Sigmond (argued), Bernard N. Katz, Mar-

garc* A. Browning, Meranze, Katz, Spear & Wilderman,

Philadelphia, Pa., for Building and Construction Trades

Council of Philadelphia and Vicinity, et al.

Laurence J. Cohen, Robert D. Kurnick, Sherman, Dunn,

Cohen, Leifer & Counts, P.C., Washington, D.C., for

Building and Construction Trades Department, AFL-

CIO, amicus curiae.

Before GIBBONS and GARTH, Circuit Judges, and

TEITELBAU\M, District Judge.”

OPINION OF THE COURT

GIBBONS, Circuit Judge:

Altemose Construction Company (Altemose), a general

contractor, Associated Builders and Construction Con-

tractors, Inc. (ABC), an association of open shop contrac-

tors, and the Chamber of Commerce of the United States

of America, an association whose members purchase con-

struction and are construction users, brought this action

for declaratory relief pursuant to 28 U.S.C. § 2201-02

(1982), treble damages pursuant to 15 U.S.C. $15

(1982), and injunctive relief pursuant to 15 U.S.C. § 26

(1982). Altemose and The Chamber of Commerce appeal

from a summary judgment in favor of defendants. The

defendants are the Building and Construction Trades

Council of Philadelphia (the Council), an association of

local building trade unions in the Philadelphia area, and

fifty-six local unions who are members of the Council.

The complaint charges that the defendants conspired

among themselves and with other named co-conspirators

* Hon. Hubert I. Teitelbaum, Chief Judge of the United States

District Court for the Western District of Pennsylvania, sitting by

designation.

}

to eliminate competition in the commercial construction

industry in the Philadelphia area by excluding open shop

contractors from that industry and by forcing all con-

tractors to employ only union subcontractors, in violation

of sections 1 and 2 of the Sherman Act, 15 U.S.C. §$ 1, 2

(1982). The district court held that there were no mate-

rial issues of disputed fact and that the defendants were

entitled to a judgment in their favor as a matter of law.

We reverse and remand for further proceedings.

Count I

The complaint pleads two counts. Count I alleges that

the local union defendants and the Council conspired with

non-labor entities to exclude non-union general and sub-

contractors from the Philadelphia area construction mar-

ket. The trial court dismissed Count I because the plain-

tiffs failed to present any evidence of a combination or

conspiracy with non-union entities in opposition to de-

fendants’ motion for summary judgment. Our review of

this ruling is plenary.

The Count I Defendants and Alleged Co-Conspirators

The Council is an association of building trades local

unions in the Philadelphia area which are in good stand-

ing with international unions affiliated with the Building

and Construction Trades Department, AFL-CIO. Among

other tasks, the Council resolves jurisdictional disputes

among these local unions. Local unions which are mem-

bers of the Council may not inaugurate strikes or place

pickets against a general contractor “fair to union labor”

without the Council’s consent. A general contractor “fair

1Counterclaims are pending in the district court. The court

ordered that the summary judgment on plaintiffs’ claims be entered

as a final judgment pursuant to Fed.R.Civ.P. 54(b). Thus we have

appellate jurisdiction.

to union labor” is defined in the Council’s by-laws as one

that employs union labor and subcontracts work only to

subcontractors employing union labor. The by-laws also

provide that “any contractor who works on a struck job

or employs non-union men to work on a struck job, shall

be declared unfair and all Union men shall be called off

from his work or shop,” and that “{nJo local . . . shall

enter into any agreement with a Contractors’ or Employ-

ers’ Association to work with non-union men.” The

by-laws provide further:

To the extent it is legally permitted and in con-

formity with both the law and existing contract obli-

gations, any trade affiliated with the Building Trades

may picket any job that has a non-union condition,

if the General Contractor has a Building Trades

Agreement or is a member of G.B.C.A. and maintain

the picket line with full support and sanction of the

Building Trades until the situation is corrected.

The reference in the quoted by-law provision to

G.B.C.A. is to the General Building Contractors Associa-

tion, an association of general contractor and subcontrac-

tor members who engage in collective bargaining with

building trades unions through that organization. The

reference to a Building Trades Agreement is to standard

agreements which the Council has obtained from over 400

contractors and subcontractors in the Philadelphia area.

The Council publishes a Union Directory of Fair Con-

tractors and Subcontractors. The fair contractors and

subcontractors all have collective bargaining agreements

with local unions which are members of the Council. The

collective bargaining agreements give union members the

right not to work with non-union laborers and oblige the

contractors and subcontractors to hire only union em-

ployees and to refrain from subcontracting with subcon-

tractors who are not on the Council’s fair contractor list.

Since 1966, over 90% of the construction work in the

Philadelphia area has been performed by firms listed in

the Council’s Union Directory of Fair Contractors and

Subcontractors.

It is undisputed that the Council is a labor organiza-

tion, and that in obtaining Building Trades Agreements

it is, at least in part, pursuing the labor objective of

maintaining area standards for wages and working gon-

ditions. The plaintiffs’ theory in Count I of the com-

plaint, however, is that the Council and its members have

acted in concert with contractors and subcontractors on

its fair contractor list to exclude from the construction

market in the Philadelphia area all firms which are not

on that list.

Standards for Proof of Conspiracy

This court recently outlined the legal standard govern-

ing sufficiency of evidence of conspiracy. We noted that

the court must examine all admissible evidence, direct

and circumstantial, in order to determine whether a trier

of fact could reasonably infer concert of action. In re

Japanese Electronic Products, 723 F.2d 238, 303-05 (3d

Cir.1983). For purposes of this appeal that standard

will be applied in determining whether or not summary

judgment was proper on Count I. Section 6 of the Norris-

LaGuardia Act, 29 U.S.C. § 106, (1982), does not require

the application of any different standard. That section

requires “clear proof” that an actor is an agent of a

union, but the clear proof requirement is inapplicable to

proof of conspiracy or other wrongful acts in antitrust

actions against labor unions. Ramsey v. United Mine

Workers, 401 U.S. 302, 91 S.Ct. 658, 28 L.Ed.2d 64

(1971). Moreover, even with respect to proof of agency,

the “clear proof” standard should be applied by the fact-

finder in drawing inferences and making findings. On a

Rule 56 motion we may not draw inferences or make

findings. Thus even on issues of union authorization,

participation in, or ratification of acts complained of, our

role is to determine only whether such inferences are,

under the evidence, logically permissible. Our plenary

review of the grant of summary judgment is no different

when the defendants are labor unions than in any other

summary judgment context. If logical inferences of

union authorization, participation in, or ratification of

the acts complained of are permissible, it will be for the

trier of the facts to apply the “clear proof” standard of

section 6.

The Summary Judgment Record

There is evidence in the summary judgment record

from which a factfinder could conclude that the Council

and its member locals resorted to rather vigorous efforts

to obtain Building Trades Agreements. The defendants

have picketed jobsites where non-union tradespersons

were working. They have resorted to threats of violence

and actual violence at various jobsites. They have em-

ployed economic pressure not only upon contractors, but

upon developers, owners, and financial institutions, to

force contractors to employ union labor and union sub-

contractors exclusively.

Altemose, a general contractor, has refused to sign a

Building Trades Agreement. It employs a permanent

labor force which is not covered by collective bargaining

agreements with Council members, and it follows a policy

of awarding subcontracts to the lowest bidder, whether

or not the subcontractor employs union labor. In April,

1971, Altemose obtained a general contract to build

Valley Forge Plaza in Montgomery County, Pennsylvania,

a project consisting of an office building, a hotel, theaters,

stores and shops. The Council insisted that unless Alte-

mose signed a Building Trades Agreement there would be

picketing on the jobsite. On June 5, 1972, approximately

1000 persons, includiug some principals of the Council,

committed what was described by a Pennsylvania trial

judge as a “virtual military assault” on the Valley

Forge jobsite, inflicting physical damage estimated at

$300,000. See Altemose Construction Co. v. Building and

Construction Trades Council, 449 Pa. 194, 198, 296 A.2d

504, 507 (1972), cert. denied, 411 U.S. 932, 93 S.Ct.

1901, 36 L.Ed.2d 392 (1973). Thereafter the Council

repeated its demand that Altemose execute a Building

Trades Agreement. Picketing occurred at other Altemose

jobsites as well.

After Altemose filed an unfair labor practice charge,

the National Labor Relations Board was successful in

obtaining an injunction, pursuant to section 10(1) of the

National Labor Relations Act, 29 U.S.C. § 160(1) (1982)

restraining the Council from engaging in secondary boy-

cotts pending Board resolution of the charge.? While the

dispute between Altemose and the Council members con-

tinued, the Council threatened non-union subcontractors

and intimidated them into ceasing to do business with

Altemose. It also pressured material suppliers, who ad-

vised Altemose they would no longer furnish material for

its construction projects. Union members and the public

were urged to withdraw deposits from First Pennsyl-

vania Bank, a major financier of the Valley Forge Proj-

ect. Businesses were urged to cancel, and did cancel,

reservations at the Sheraton Hotel, a tenant in the Valley

Forge complex. Altemose found it difficult to obtain per-

formance bonds for its projects because of the labor

unrest caused by the Council, and in some instances found

its bid rejected although it was the low bidder.

Although the record evidence with respect to other

ABC contractors is less dramatic than with respect to

Altemose, there is evidence that the Council engaged in

similar activities directed at them. Union-sponsored pick-

eting forced general contractors to replace non-union sub-

2 Hirsch v. Building and Constr. Trades Council, 530 F.2d 298

(3d Cir. 1976). The Board’s resolution of the charge is discussed

at Part II A 2, infra.

contractors with subcontractors listed in the Union Direc-

tory of Fair Contractors and Subcontractors. Union pres-

sure was directed toward their material suppliers, and

toward financial institutions which might furnish fund-

ing for their projects.

Thus the summary judgment record clearly would sup-

port a finding that the Council and its members exerted

both primary and secondary pressure in order to pre-

vent non-union firms from obtaining construction work

in the Philadelphia area. The defendants contend, how-

ever, that such pressure, whether or not legal as a mat-

ter of labor law, is exempt from antitrust scrutiny be-

cause of the statutory and nonstatutory labor antitrust

exemptions. The plaintiffs, relying on Allen Bradley Co.

v. Local 3, International Brotherhood of Electrical Work-

ers, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939 (1945),

and Connell Construction Co., Inc. v. Plumbers & Steam-

fitters Local 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d

418 (1975), contend that the defendants forfeited both

exemptions by acting in concert with the contractors

listed in the Union Directory of Fair Contractors and

Subcontractors. Defendants counter that there is no

evidence, direct or circumstantial, in the summary judg-

ment record which would permit an inference of concert

of action between the labor defendants and the favored

contractors.

There is evidence of a predominantly unionized con-

struction market in the Philadelphia area. The Council

has obtained over 850 Building Trades Agreements with

general contractors; its member locals have collective

bargaining agreements with more than 4,000 subcon-

tractors, and as a result approximately 90% of the con-

struction market is served by contractors listed in the

Union Directory of Fair Contractors and Subcontractors.’

Standing alone, that evidence probably would not permit

3 Most of the ten percent balance could be found to be small

residential construction, which has not been organized.

an inference of concern of action among the defendants

and the favored contractors aimed at excluding non-

union firms from the market. One result of the Council’s

pressure tactics was to favor contractors on its list of

fair contractors. Another result, however, was to obtain

the work for members of its local unions. Absent some

additional evidence, the inference that the Council acfed

in concert with the contractors in pursuit of the first

objective would be highly speculative.

The summary judgment record contains, however, some

such additional evidence. There is evidence that the Gen-

eral Building Contractors Association, a contractor orga-

nization, polices its members to be sure that they deal

only with subcontractors on the Council’s fair contractors

list. That conduct appears to be conscious parallel con-

duct which prima facie is inconsistent with contractor

economic interest in awarding work to the lowest bidder.

There is evidence that in at least one instance an officer

of the Council complained to the General Building Con-

tractors Association that one of its members had hired

a non-union subcontractor, that the matter was discussed

with the member, and the offense was rectified. (Depo-

sition of Joseph M. Washkill). Moreover, Altemose pro-

duced evidence from which it could be found that the

Council promised that if Altemose signed a Building

Trades Agreement the Council would send it unionized

companies that would finish its jobs at prices lower than

that bid by ABC subcontractors.

The General Building Construction Association is com-

prised of non-labor members. Unlike the theatrical

agents in H.A. Artists & Associates, Inc. v. Actors Equity

Ass’n., 451 U.S. 704, 101 S.Ct. 2102, 68 L.Ed.2d 558

(1981), the Association’s efforts are aligned on the side

of purchasers rather than sellers of labor. If it acted in

concert with the Council, this case would be governed by

Allen Bradley Co., supra, for purposes of the statutory

exemptions in sections 6 and 20 of the Clayton Act, 15

10a

U.S.C. § 17, 29 U.S.C. § 52 (1982), and sections 1, 5 and

13 of the Norris-LaGuardia Act, 29 U.S.C. §§ 104, 105

and 113 (1982). Further, Connell Construction Co. v.

Plumbers & Steamfitters Local 100, supra, would in such

circumstances rule out the application of the nonstatutory

exemption of the Sherman Act to an agreement betwee

the General Building Contractors Association and the

Council restraining competition of the non-union contrac-

tors who are members of ABC.

We hold that the trial court erred in granting sum-

mary judgment on Count I for lack of evidence from

which concert of action between labor and non-labor

entities could be inferred. The record contains circum-

stantial evidence that the unions maintained a fair con-

tractor list; that the Council exerted primary and sec-

ondary pressure which had the inevitable effect of bene-

fiting contractors on the list; that firms not on the list

were almost totally excluded from the market; that the

General Building Contractors Association policed its

members to prevent use of non-union contractors, al-

though the contractors’ economic interest would suggest,

prima facie, use of the lowest responsible bidders with-

out regard to unionization; and that an officer of the

Council offered to obtain bids from firms on the fair con-

tractors list if Altemose would sign a Building Trades

Agreement. A finder of fact evaluating this evidence

could reasonably infer that the Council and the General

Building Contractors Association acted in concert to ex-

clude non-union firms from the market. The evidence of

such concert of action is not overwhelming, but it is not

our task on a motion for summary judgment to weigh it,

so long as it is sufficient to support a reasonable infer-

ence.

II.

Count II

The second count of the complaint alleges that the local

unions and the Council conspired to force non-union em-

lla

ployers out of the Philadelphia construction market. This

count does not allege participation by non-union entities

in a conspiracy having secondary effects. The trial court

dismissed Count II holding that even if such a con-

spiracy were proved, both the statutory and the non-

statutory exemptions preclude an antitrust cause of ac-

tion. As with the summary judgment on Count I, ofr

review is plenary.

The Exemptions

The concerted coercive activities in which the Council

and its member locals may be found to have engaged

would clearly result in antitrust liability if engaged in

by non-labor parties. The defendants contend that be-

cause they are labor organizations, while they may be

accountable under federal labor law or state tort law,

they are exempt from antitrust liability. Courts and com-

mentators commonly refer to two separate sources of

exemption: statutory and non-statutory.

(1) The Statutory Exemption

The statutory sources of antitrust exemption for labor

organizations are sections 6 and 20 of the Clayton Act,

15 U.S.C. §17 (1982), and 29 U.S.C. § 52 (1982), and

sections 4, 5 and 13 of the Norris-LaGuardia Act, 29

U.S.C. $§ 104, 105 and 113 (1982). These statutes declare

that labor unions are not in themselves combinations or

conspiracies in restraint of trade, and exempt many of

their activities from the operation of the ar-titrust laws.

Interpreting these interrelated statutes, the Supreme

Court in United States v. Hutcheson, 312 U.S. 219, 232,

61 S.Ct. 463, 466, 85 L.Ed. 788 (1941), held that uni-

lateral union activity having a labor objective is exempt

“(slo long as a union acts in its self-interest and does

not combine with non-labor groups,” even though the

underlying dispute is a jurisdictional one with another

12a

union, and does not concern mandatory subjects of col-

lective bargaining. In United Mine Workers v. Penning-

ton, 381 U.S. 657, 662, 85 S.Ct. 1585, 1589, 14 L.Ed.2d

626 (1965), and Allen Bradley Co. v. Local 3, Interna-

tional Brotherhood of Electrical Workers, 325 U.S. 797,

65 S.Ct. 1533, 89 L.Ed. 1939 (1945), however, the Court

interpreted the exemption statutes as inapplicable to con-

certed action or agreements between unions and non-

labor parties having effects outside the parties’ collective

bargaining relationship. That interpretation of the statu-

tory exemption was reiterated in Connell Construction Co.

v. Plumbers & Steamfitters Local 100, 421 U.S. 616, 622,

95 S.Ct. 1830, 1835, 44 L.Ed.2d 418 (1975). See Larry v.

Muko, Inc. v. Southwestern Pennsylvania Building and

Construction Trades Council, 609 F.2d 1368, 1373 (3d

Cir. 1979); Consolidated Express Inc. v. N.Y. Shipping

Ass’n, 602 F.2d 494, 517 (3d Cir. 1979), vacated and

remanded on other grounds, 448 U.S. 902, 100 S.Ct.

3040, 65 L.Ed.2d 1131 (1980).

The Building Trades Agreements which the Council

sought to impose on Altemose and other ABC members

were essentially the same as the agreement considered by

the Supreme Court in Connell, in that when executed

they obliged the signatories to refrain from subcontract-

ing to non-union subcontractors. In Connell, the Supreme

Court held that the challenged agreement was subject to

antitrust sanctions. The trial court held, nevertheless,

that the statutory exemption applied in this case, be-

cause in Connell the plaintiff had executed the agreement,

whereas the plaintiffs here refused to do so. The court’s

reasoning misinterprets both the complaint and the Su-

preme Court’s caselaw.

Count II alleges, and the summary judgment record

would permit a finding, that the open shop contractors

have been injured in their business and property by the

exclusion of subcontractors from the construction market

in the Philadelphia area, and by the inability of general

13a

contractors to obtain bids from union subcontractors.

The record is clear that the Council has obtained Build-

ing Trades Agreements from hundreds of signatories.

It is true that in Connell the Court made reference to

the fact that the plaintiff had signed a contract, implying

that this satisfied the Bradley-Pennington requirement

of participation in the combination of a non-labor party.

421 U.S. at 620, 622, 95 S.Ct. at 1834, 1835. The opinion

cannot be read as suggesting, however, that contractors

who do not sign a contract but are affected by agree-

ments between a union and non-labor parties are unpro-

tected by the antitrust laws. Clearly the Council did not

act unilaterally when it obtained hundreds of agreements

from contractors the intent and effect of which was to

exclude non-union contractors from the market. Thus

we cannot affirm the summary judgment on Count II on

the theory that the Clayton Act and the Norris-LaGuar-

dia Act exempt the conduct complained of.

(2) The Nonstatutory Exemption

The nonstatutory exemption involves the interrelation-

ship between judge-made interpretations of the Sherman

Act and several subsequent congressional labor law en-

actments. The seminal nonstatutory exemption case is

Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982,

84 L.Ed. 1311 (1940), in which the Court held that the

Sherman Act did not apply to a conspiracy by labor

union members to obstruct or prevent delivery in inter-

state commerce of goods manufactured by a party with

which they had a labor dispute. Conceding that neither

the Clayton Act nor the Norris-LaGuardia Act afforded

exemption, the Court held that Congress nevertheless did

not intend the Sherman Act ¢o reach the conduct in ques-

tion. We have noted that

Apex Hosiery establishes two principles central to

the subsequent development of the nonstatutory ex-

emption. First, the rationale of the exemption is

l4a

protection of the union’s power to eliminate com-

petition in the labor market over wages and working

conditions. Restraints operating on that primary

market are presumptively outside the scope of the

Sherman Act. Second, restraints, like those in Du-

plex Printing [Press] Co. [v. Deering, 254 U.S. 443,

41 S.Ct. 172, 65 L.Ed. 349 (1921)] ..., which are

aimed at controlling a secondary product or service

market are suspect, and are presumptively covered

by the Sherman Act.

Consolidated Express, Inc., 602 F.2d at 514.

Critical to the application of the nonstatutory exemp-

tion, therefore, is the identification and lawfulness of

the labor parties’ objectives. The lawfulness of those ob-

jectives, moreover, depends upon several statutes enacted

subsequent to the Apex Hosiery interpretation of the

Sherman Act.

The first such enactment was the Labor Management

Relations Act of 1947. Pub.L. No. 101, ch. 120, 61 Stat.

136, codified as amended at 29 U.S.C. §§ 141-97 (1982).

Section 8(b) (4) of that statute for the first time made

it an unfair labor practice for a union to coerce “the em-

ployees of any employer” with the object of “forcing or

requiring any employer . . . to cease using, selling,

handling, transporting, or otherwise dealing in the prod-

ucts of any other producer, processor, or manufacturer

.... This prohibition against activity aimed at second-

ary targets did not, however, reach restraints embodied

in collective bargaining arrangements. Thus under the

Labor Management Relations Act unions, as a matter of

labor law, remained free to seek such restraints by col-

lective bargaining and picketing.

The Labor-Management Reporting and Disclosure Act

of 1959 imposed further restraints upon union activity

directed at secondary targets. That act amended section

8(b) (4) to extend the prohibitions against coercion di-

i ieee tall

15a

rected toward secondary targets to coercion of employers

as well as to coercion of employees. Pub.L. No. 86, ch.

257, § 704(a), 73 Stat. 542, codified at, 29 U.S.C. § 158-

(b) (4) (i) (1982). In addition a new section 8(e) was

added to the National Labor Relations Act, making it an

unfair labor practice for any labor organization to enter

into a contract or agreement whereby an employer

“agrees to. . . cease doing business with any other per-

son... .” Id. § 704(b). The section 8(e) prohibition

against contract provisions thus was added to the sec-

tion 8(b) (4) prohibition against coercion. The section

8(e) prohibition against contract clauses in which em-

ployers agreed to refrain from doing business with other

persons was qualified, however, by the proviso that

nothing in this subsection (e) shall apply to an

agreement between a labor organization and an em-

ployer in the construction industry relating to the

contracting or subcontracting of work to be done

at the site of the construction. ...

Id. In addition, despite the general prohibitions of sec-

tions 8(b) (4) and 8(e), applicavle to labor organiza-

tions, and the prohibitions in section 8(a) against em-

ployer assistance in organizing, the Labor-Management

Reporting and Disclosure Act of 1959 provided that:

[i]t shall not be an unfair labor practice under sub-

sections (a) and (b) ... for an employer engaged

primarily in the building and construction industry

to make an agreement covering employees engaged

(or who, upon their employment, will be engaged)

in the building and construction industry with a la-

bor organization of which building and construction

employees are members . . . because (1) the ma-

jority status of such labor organization has not been

established ..., or (2) such agreement requires as

a condition of employment, membership in such la-

bor organization. .. .

16a

Pub.L. No. 86-257 § 705(a), 73 Stat. 545, codified at 29

U.S.C. § 158(f) (1982). This section thus authorizes pre-_

hire agreements on representation in the construction in-

dustry.

After the enactment of the Labor Management Reia-

tions Act of 1947 and the Labor-Management Reporting

Act of 1959, it was for some time unclear whether the

Supreme Court would consider those statutes as pre-

emptive of the Sherman Act insofar as it might apply

to secondary activities by labor organizations. In Connell

Construction Co. v. Plumbers & Steamfitters Local 100,

421 U.S. 616, 633-34, 95 S.Ct. 1830, 1840-41, 44 L.Ed.2d

418 (1975), the Court held that section 8(e) was not

preemptive of the Sherman Act, leaving open the preemp-

tion question with respect to section 8(b). Jd. Connell is

a construction industry case, and the Court held that the

authorization in section 8(f) of pre-hire agreements in

the construction industry did not apply “outside the con-

text of a collective-bargaining relationship.” * Jd. at 635,

95 S.Ct. at 1841. Thus it is clear that contractual pro-

visions prohibiting contracts with nonunion firms, en-

tered into outside the collective bargaining context, and

coercive concerted activities aimed at obtaining such

agreements, remain subject to antitrust scrutiny under

the Sherman Act.

The district court held that despite Connell the Build-

ing Trades Agreements challenged here, and the coercive

activities exerted in an effort to obtain such agreements,

were exempt from Sherman Act scrutiny on two grounds.

First, the court reasoned, there is in the record no

agreement prohibiting the use of non-union contractors,

* Recently in Woelke & Romero Framing, Inc. v. NLRB, 456 US.

645, 102 S.Ct. 2071, 72 L.Ed.2d 398 (1982), the Court in an unfair

labor practice case construed the proviso to be applicable to sul:

contractor clauses in collective bargaining agreements whether <

not restricted to jobsites at which both union and nonunion worke)

are employed.

17a

whereas in Connell the plaintiff executed, but later dis-

avowed such an agreement. We have already rejected

that reasoning with respect to the statutory exemptions.

Part II A(1), supra. It is no more persuasive with re-

spect to the nonstatutory exemption. Altemose and other

ABC contractors, not in a collective bargaining relation-

ship with the defendants, were subject to coercion aimed

at obtaining the prohibited contracts. Moreover, there

is ample evidence that other signatories refrained from

doing business with those plaintiffs as a result of such

agreements.

Alternatively the court held that in this case, unlike

Connell, the unions could not be found to have violated

the federal labor law. The court reasoned that if the

union activity was legal as a matter of labor law it must

be exempt under the antitrust laws.*° The court found

that the coercion against Altemose was justified because

even though the union had no collective bargaining rela-

tionship with Altemose, the coercion had an organiza-

tional purpose at all times. On this record, however, the

existence of a purpose to organize employees of Altemose

and other ABC contractors is a disputed issue of material

fact which could not be resolved in the defendants’ favor

on a Rule 56 motion. There is evidence in the record from

which a factfinder could infer that the Council had no

such purpose. Moreover the Council itself does not enter

into collective bargaining agreements. At best it sought

from Altemose and the ABC contractors an agreement to

enter into pre-hire agreements if they should later enter

into collective bargaining agreements.

Recognizing that disputed fact issues as to the Coun-

cil’s purpose would ordinarily preclude summary judg-

5 But see United Mine Workers v. Pennington, 381 U.S. 657,

85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); Larry V. Muko, Inc. v.

Southwestern Pennsylvania Building and Construction Trades Coun-

cil (Muko I), 609 F.2d 1368, 1375, n. 1.

18a

ment, the trial court held that the plaintiffs were col-

laterally estopped from contending for the absence of an

organizational purpose by virtue of the decision of the

National Labor Relations Board in Altemose’s unfair

labor practice case. In that proceeding the Board found

that the respondent unions had violated section 8(b) (7)

of the Act, 29 U.S.C. § 158(b) (7) (1982), by engaging

in organizational picketing for more than thirty days.

We are not persuaded that collateral estoppel justified a

summary judgment. We have held that a Board decision

may be given preclusive effect in a subsequent antitrust

ease. Consolidated Express, 602 F.2d at 503. In that

case, however, the party against which collateral estoppel

was asserted was a respondent, which controlled its side

of the litigation before the Board. Altemose, as the charg-

ing party, had no control over the factual or legal issues

tried before the Board because the General Counsel con-

trolled the litigation. 29 U.S.C. § 160 (1982). Moreover,

ABC and the Chamber of Commerce were not involved in

the Board proceeding even as charging parties. Thus it

is clear that no plaintiff had a full and fair opportunity

to litigate the issue of organizational p rpose before the

Board, and all are free to attempt to cv so in this pro-

ceeding.*

Thus there are material issues of disputed fact over

whether the Council and those acting in concert with it

had an organizational purpose. A fortiori there are mate-

rial fact issues as to the existence of a collective bargain-

ing relationship. Absent such a relationship the pre-hire

exception for the construction industry is inapplicable.

If it is inapplicable, Connell precludes application of a

nonstatutory exemption to the antitrust laws.

6 This case is fundamentally different, therefore, from Donald

Schriver, Inc. v. NLRB, 635 F.2d 859 (D.C.Cir.1980), on which

the trial court relied, which was before the court on the Board’s

petition for enforcement.

19a

III.

Conclusion

Since there are mate”ial issues of disputed fact which

preclude application o* *h» statutory and non-statutory ex-

emptions either to Count i or to Count II, the court erred

in entering summary judgment for the defendants. The

judgment appealed from will, therefore, be reversed and

the case remanded for trial.

20a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

PENNSYLVANIA

Civil Action No. 73-773

ALTEMOSE CONSTRUCTION COMPANY, ASSOCIATED BUILD-

ERS AND CONTRACTORS, INC., THE CHAMBER OF COM-

MERCE OF THE UNITED STATES OF AMERICA

BUILDING AND CONSTRUCTION TRADES COUNCIL OF

PHILADELPHIA AND VICINITY, ET AL.

[Filed July 6, 1983]

MEMORANDUM OF DECISION

NORMA L. SHAPIRO, J. July 5, 1983

I. PROCEDURAL AND FACTUAL BACKGROUND

Before the court in this labor-antitrust litigation are

cross-motions for summary judgment. The issue is

whether the union activities to obtain certain agreements

in the construction industry are protected from antitrust

attack by labor exemptions to the antitrust laws. Plain-

tiffs’ motion was for partial summary judgment; it seeks

only an adjudication on the question of liability. De-

1 The individual plaintiff also seeks treble damages.

a ee Ee ee ae

AP “elem

2la

fendants filed an answer and cross-motions for summary

judgment, and a second motion to dismiss. After supple-

mental memoranda were filed, the court held oral argu-

ments on a voluminous record.* Defendants’ cross-

motions are now granted.°

This is an action for both declaratory and injunctive

relief under the Declaratory Judgment Act,* and for dam-

ages pursuant to $4 and 16 of the Clayton Act.' The

plaintiffs are Altemose Construction Co. (‘Altemose’’),

a general contractor in the Philadelphia area; Associated

Builders and Constructors, Inc. (“ABC’’), an association

of open shop contractors, and the Chamber of Commerce

(“Chamber”), an association whose members purchase

construction services. The defendanis are the Building

and Construction Trades Council of Philadelphia (“Coun-

cil”), a labor association of local trade unions, and fifty-

six labor organizations who are members of the Council.°

There are also other unnamed union contractors, sup-

pliers and financial! institutions implicated in a conspiracy

2 This case had been previously assigned to two other district

judges before transfer to this judge. A prior opinion by then

District Judge Higginbotham dismissed the counterclaims based

on the antitrust laws. See Altemose Const. v. Bldg. & Const. Trades

Council, 443 F.Supp. 492 (E.D. Pa. 1977).

% Plaintiffs’ statement of material facts is accepted as a basis

for decision. Any disputed facts are resolved in favor of the plain-

tiffs, except as noted. See infra at n. 75. Moreover, all inferences

drawn are viewed in the light most favorable to the plaintiffs. See

infra at p. 15.

#28 U.S.C. §§ 2zvi-02 (1982). Only the association plaintiffs

desire injunctive relief. Altemose seeks treble damages.

515 U.S.C. $§ 15, 26 (1973). Section 4 of the Clayton Act provides

the jurisdiction of this court, and the treble damage remedy for

violations of §§ 1 & 2 of the Sherman Act (15 U.S.C. §§$1 & 2).

Section 16 of the Clayton Act provides an equitable remedy.

* Several of the defendant unions are no longer members of the

Council.

22a

to restrain trade and monopolize the construction market

in a five county geographic area.

In the construction industry owners and developers

solicit bids from general contractors for particular build-

ing projects. The general contractor who receives the

contract will ordinarily subcontract most of the specialty

work to other subcontractors who perform the work at

the job site. There is no established pattern as to the

amount of work performed by the general contractor’s

own employees and that which is subcontracted. Some

general contractors employ no construction employees

other than supervisory personnel. A subcontractor is

usually a separate business enterprise specializing in

one phase of construction. Labor relations policy for

each subcontractor is decided initially by that business

enterprise. Union subcontractors in the greater Phila-

delphia area have agreed to be bound by the terms of

multi-employer collective bargaining agreements with the

various trade unions.

The purpose of the Council is “[t]o establish and main-

tain legal and proper business relations and agreements

between [itself] and other responsible parties, either in-

dividuals or associations, to the extent that the best in-

terest of the buiiding industry be served for both em-

ployers and employees.” By-Laws Art. II, § 3. Its geo-

graphic jurisdiction is the five counties of Delaware Val-

ley; Philadelphia, Chester, Bucks, Delaware and Mont-

gomery, and “completely covers the building and con-

struction industry, either in erection, repair, alteration

or demolition.” Exb. 22 at 1. More importantly for its

member unions, the Council is prohibited from entering

into any agreement with a contractor or employers’ asso-

ciation which requires union members to work with non-

union men. Id. at 22.

Most building trade union By-Laws have a prohibition

against their members working with non-union employ-

ees or non-union firms. These clauses generally require

members to report non-union jobs to the union and

23a

refuse to handle non-union goods. The General Building

Contractors Association (“GBCA”) represents active gen-

eral contractor and subcontractor members who assign

to it their rights to bargain collectively with certain

defendant unions. Seme of the defendant trade unions

have established standard collective bargaining agree-

ments with GBCA. The collective bargaining agreemerts

give the union members the right not to work with non-

union laborers. The GBCA member contractors hire only

union employees under the terms of these agreements and

never contract with subcontractors who are not on the

Council’s fair contractor list. The administration expense

of the collective bargaining agreements is financed

through an Industry Advancement Fund to which em-

ployers make contributions based on hours worked by

their union employees. Contributions are required from

all employers of covered workers even though such em-

ployers are not GBCA members.

The Council seeks to establish and maintain adequate

wages and working conditions by members of its con-

stituent unions by means of a Building Trades Agree-

ment which the Council attempts to have general .ontrac-

tors sign.’ The Council has entered into over four hun-

dred (400) of these agreements with general contractors.

They require the general contractor to do business only

with subcontractors who enter into collective bargaining

agreements with the appropriate craft union members

of the Council. The only subcontractors with whom the

general contractor may do business under such an agree-

ment are Council approved union (so-called “fair’) sub-

contractors. These fair subcontractors all have collective

bargaining agreements with the appropriate trade or

craft unions. The “fair” list is circulated by the Council

7See Appendix for Text of Forms 1, 2 and 3. The forms include

a clause binding the firm and any other operation in which the

signatory firm has a substantial interest, whether or not under

separate corporate or company name, eg., App. I “Scope of

Obligation.”

24a

throughout the industry. Since 1966, over 90% of the

non-residential construction work has been performed by

union contractors.

In order to obtain these subcontracting agreements

from general contractors, the defendants have picketed

jobsites where non-union men are working; there have

been threats of violence as well as actual violence at var-

ious construction sites in the course of this picketing. The

unions have also employed economic pressure on devel-

opers, owners and financial institutions to force general

contractors to employ union labor exclusively. Some con-

tractors have acceded to union demands and hire only

union labor or signed an agreement not to subcontract

any work to any subcontractor who has not contracted

with the appropriate craft union. Although these tactics

have been employed against Altemose since 1971, Alte-

mose has refused to sign such an agreement.

In April 1971, Altemose obtained a general contract to

build Valley Forge Plaza in Montgomery County, Penn-

sylvania. The project consisted of an office building, a

hotel, movie theaters and various stores and shops. Alte-

mose representatives had several mectings with repre-

sentatives of the Council concerning the exclusive use of

union labor on the project. The Altemose policy was that

specialty work for the project would be given to the low-

est bidding subcontractor whether or not it employed

union labor. It was anticipated that this would result in

unionized subcontractors for 1} ve than half the project

work. The Council and its member unions insisted that

unless Altemose signed a subcontractor’s trade agreement

there would be picketing at the jobsite.

On occasion, between August, 1971 and May, 1972,

several Altemose construction projects were picketed by

union members to protest Altemose’s refusal to enter into

a subcontractor’s trade agreement with the Council. On

June 5, 1972 approximately 1,000 persons, including some

principals of the Council, came to the Valley Forge Plaza

25a

construction site; what was described by a Pennsylvania

trial judge as a “virtual military assault” resulted in the

“systematic decimation of the project. Damage was esti-

mated at $300,000....’

Thereafter, negotiations took place at which time the

Council repeated its demand that the Valley Forge project

be built solely with union labor. Altemose refused.

Picketing occurred at another Altemose job-site in No-

vember, 1973 and several projects were continuously

picketed from January, 1975 through April, 1975 to pro-

test the Altemose refusal to sign a union subcontractor

agreement with the Council. After unfair labor practice

charges were filed, the NLRB issued an injunction on

April 22, 1975,° but picketing resumed on April 28, 1975.

Its stated purpose was to require Altemose to observe

area wages and standards (rather than to compel it to

sign a union subcontractor agreement). After further

litigation before the NLRB, the picketing ceased at those

sites and the Board issued its decision.’®

During the period of labor dispute, material suppliers

and subcontractors informed Altemose that they would

no longer be involved with its construction projects be-

cause of the continuing labor problems. The pressure

against non-union subcontractors consisted of threats and

intimidation to force them to cease doing business with

Altemose and other general contractors. Investors in the

projects were urged by the unions to withdraw their

financial support. The union membership and general

public were urged to withdraw their funds from First

Pennsylvania Bank, a major financier of the Valley Forge

Project. Because of the labor unrest, Altemose also

8 See Altemose Const. Co. v. B.T.C.T. Council of Phila., 449 Pa.

194, 198, 296 A.2d 504, 508 (1972), cert. denied, 411 U.S. 932

(1973).

® Hirsch v. Building & Constr. Trades Council of Phila., (E.D. Pa.

C.A. Nos. 75-646-647), aff'd, 530 F.2d 298. (3rd Cir. 1976).

10 See infra at n. 75-79 and accompanying text.

26a

found it more difficult to obtain performance bonds for

its projects and did not receive some jobs even though it

had been the low bidder. Some business associations can-

celled reservations for use of the Sheraton Hotel in the

Valley Forge complex because of their union sympathies.

The union actions against other general contractors

who are members of the ABC were similar in kind to

those experienced by Altemose. Union sponsored picket-

ing pressured general contractors to utilize union subcon-

tractors; the union pressure directed at these general

contractors was to replace non-union with union subcon-

tractors on the Council’s “fair” list. Union pressure was

also directed toward suppliers of material and capital

(i.e., investors and financial institutions) to convince

them to withdraw support for the projects. It cannot be

denied that the Council’s actions in a sense protected

union employers as well as its union members.

Count I of the complaint alleges that the unions

have conspired with non-labor entities—unnamed co-

conspirators (i.e., union employers, suppliers, develop-

ers)—to force non-union general contractors and subcon-

tractors out of the Philadelphia construction market and

create a monopoly of union contractors in violation of

Sections 1 and 2 of the Sherman Act.'' The plaintiffs

11 Section 1 of the Sherman Act (15 U.S.C. §1) provides:

Every contract, combination in the form of trust or other-

wise, or conspiracy, in restraint of trade or commerce among

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

illegal. Every person who shall make any contract or engage

in any combination or conspiracy hereby declared to be illegal

shall be deemed guilty of a felony, and, on conviction thereof,

shall be punished by fine not exceeding one million dollars if a

corporation, or, if any other person, one hundred thousand

dollars or by imprisonment not exceeding three years, or by

both said punishments, in the discretion of the court.

Section 2 of the Sherman Act (15 U.S.C. § 2) provides:

Every person who shall monopolize, or attempt to monopolize,

or combine or conspire with any other person or persons, to

Seren ee Sener ces eo nan

27a

contend that the unions have combined with employers

of union labor in a concerted effort to control the product-

market for construction services by using secondary

tactics '* to force general contractors to execute industry-

wide subcontracting agreements providing for the exclu-

sive use of union labor. The subcontracting agreements

require the general contractor to subcontract work only

to subcontractors who are parties to collective bargaining

agreements with the union. The unions and union con-

tractors are alleged to have agreed to impose direct

restraints on competition in the market for construction

services that restrict the construction industry’s size,

allocate the market and create a geographical enclave for

union employers. Such conspiratorial activities without

legitimate labor objectives and with predatory intent may

be a violation of the antitrust laws. Allen Bradley Co. v.

Local No. 3, 325 U.S. 797 (1945). See also, United Mine

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

Count II alleges that the unions have conspired among

themselves to restrain trade and monopolize the construc-

tion market through the use of the subcontracting agree-

ments to force non-union employers out of the market

and protect the unions and their members. Antitrust lia-

monopolize any part of the trade or commerce among the sev-

eral States, or with foreign nations, shall be deemed guilty of

a felony, and, on conviction thereof, shall be punished by fine

not exceeding one million dollars if a corporation, or, if any

other person, one hundred thousand dollars or by imprisonment

not exceeding three years, or by both said punishments, in the

discretion of the court.

12 Pressure exerted upon the employer with whom the union has

a labor dispute is “primary,” and lawful; pressure exerted on a

neutral third party in his relations with the primary employer is

“secondary,” and unlawful, under § 8(b) (4) of the National Labor

Relations Act. See, St. Antoine, Secondary Boycott: From Antitrust

to Labor Relations, 40 Antitrust L.J. 242 (1971); Lesnick, Job

Security and Secondary Boycotts: The Reach of NLRA §8§ 8(b) (4)

and 8(e), 112 U. Pa. L. Rev. 1000 (1965); R. Gorman, Labor Law

Text, 240 (1976).

28a

bility is allegedly imposed by the use of illegal methods

having substantial anti-competitive effects in the product

market to achieve otherwise legitimate objectives (i.e.,

standardization of wage and working conditions). See

Connell Construction Co. v. Plumbers & Steamfitters

Local 100, 421 U.S. 616 (1975). Plaintiffs argue that

even if this is union conduct ordinarily legal under the

labor laws, it is here subject to antitrust attack because

the anti-competitive effects outweigh the benefits sought

to be achieved by the labor laws. See Meat Cutters v.

Jewel Tea Co., 381 U.S. 678 (1965).

Because of these practices engaged in by the defendants

and their effect on the construction industry, Altemose

alleges that it is prevented from bidding for construction

work in Philadelphia County. The association plaintiffs

claim that the union tactics are designed to force non-

union labor out of the industry, increase construction

costs and injure their business in violation of the Sher-

man Act. Defendants assert the union objective was to

organize and obtain recognition and that this conduct

was immune from antitrust liability by statute and case

law.”

The issues are: (1) whether liability is imposed under

the teaching of Connell Construction Co., supra, where

unions use picketing and secondary pressure to obtain

subcontracting agreements but do not succeed; (2)

whether Connell is applicable when unions seek to orga-

13 Dean St. Antoine describes this conflict between the labor and

antitrust laws as an “intractable” problem. St. Antoine, Connell:

Antitrust at the Expense of Labor Law, 62 Va. L. Rev. 603 (1976).

Professor Winter concludes that the conflict between antitrust and

labor policies is “so irreconcilable that . . . the regulatory distinc-

tions employed must be largely arbitrary—there are no general

principles by which these policies can be harmonized.” Winter,

Collective Bargaining and Competition: The Application of Anti-

trust Standards te Union Activities, 73 Yale L.J. 14, 16-17 (1963).

See also, Cox, Lal»»» and the Antitrust Laws—A Preliminary Analy-

sis, 104 U. Pa. L. Rev. 252, 254-55 (1955).

29a

nize the employees of a general contractor, and (3)

whether there is sufficient probative evidence of a con-

spiracy between the unions and non-labor entities to

present a jury question.

II. STANDARDS GOVERNING

SUMMARY JUDGMENT rs

Cross-motions for summary judgment do not warrant

the grant of summary judgment to either party unless

one of them is entitled to judgment as a matter of law

upon material facts not in genuine dispute. See Manetas

v. International Carriers, Inc., 541 F.2d 408 (3rd Cir.

1976).

In Sunshine Books, Ltd. v. Temple University, 697

F.2d 90 (8rd Cir. 1982), the Court of Appeals summar-

ized the law as follows:

Rule 56 of the Federal Rules of Civil Procedure

provides that a trial court may enter summary judg-

ment “if the pleadings, depositions, answers to inter-

rogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue

as to any material fact and that the moving party is

entitled to a judgment as a matter of law.” We have

characterized summary judgment as “‘a drastic

remedy’ ”, and have made clear “that courts are to

resolve any doubts as to the existence of genuine

issues of fact against the moving parties.” Ness v.

Marshall, 660 F.2d 517 at 519 (3d Cir. 1981) (quot-

ing Tomalewski v. State Farm Life Insurance Co.,

494 F.2d 882, 884 (3d Cir. 1974). Moreover,

“{ijnferences to be drawn from the underlying facts

contained in the evidential sources submitted to the

trial court must be viewed in the light most favor-

able to the party opposing the motion.” Goodman v.

Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.

1976°, cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50

L.Ed. 2d 748 (1977)) ...

30a

Id. at 95 (quoting Hollinger v. Wagner Mining Equip.

Co., 667 F.2d 402, 405 (3rd Cir. 1981). While the

Supreme Court has cautioned that summary judgment

should be used sparingly in antitrust cases,“* summary

adjudication may be granted even in these complex cases.

See Zenith Radio Corp. v. Matsushita Electric Industrial

Co., Ltd., 513 F.Supp. 1100, 1140 n.53 (E.D. Pa. 1981),

appeal docketed, Nos. 81-2331, 81-2332 and 81-2333 (3rd

Cir. August 24, 1981). See also, Mid-South Grizzlies v.

National Football League, 550 F.Supp. 558 (E.D. Pa.

1982); American Structures v. Fidelity & Deposit Co.,

545 F.Supp. 1021 (E.D. Pa. 1982).

But it is the movant’s burden to show the absence of

a genuine issue of material fact. Adickes v. S. H. Kress

& Co., 398 U.S. 144 (1970). This burden of proof can be

satisfied by affidavit or otherwise as provided in Fed. R.

Civ. P. 56(e).1° When a motion for summary judgment

is properly supported, Fed. R. Civ. P. 56(e) “makes it

clear that ‘an adverse party may not rest upon his plead-

ing’ . . . ‘[I]t is incumbent upon the plaintiff to produce

significant probative evidence demonstrating that a

genuine issue of fact exists’... ”. Sunshine Books Ltd.

v. Temple University, supra, 697 F.2d at 96 (quoting

Pan-Islamic Trade Corp. v. Exxon Corp., 632 F.2d 539,

554 (5th Cir. 1980), cert. denied, 454 U.S. 927 (1981)."°

14 See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464,

473 (1962). One commentator has suggested that the Poller case

rests on certain assumptions about the evidence in the case and its

application to the substantive antitrust principles involved. Thus,

“the often quoted general language of Poller is in itself no barrier

to summary judgment.” P. Areeda & D. Turner, Antitrust Law

§ 316 at 62 (1978). Even so the case has become a “magic wand

waved indiscriminately by those opposing summary judgment mo-

tions in antitrust actions.” Mutual Fund Investors, Inc. v. Putnam

Management Co., 553 F.2d 620, 624 (9th Cir. 1977).

15 See Zenith Radio Corp. v. Matsushita Electric Industrial Co.,

supra, 513 F.Supp. at i118 n. 3.

16 Pan-Islamic involved sworn denials of any conspiracy. We are

faced with the same question here. See also, Parsons v. Ford Motor

3la

Failure to discharge this burden requires the grant of

summary judgment despite a party’s right to trial." A

party should not be allowed to proceed in the hope of

developing evidence at trial to support his claims. Par-

sons v. Ford Motor Co., 669 F.2d 308, 313 (5th Cir.

1982), cert. denied, 103 S.Ct. 73 (1983).

Ill. SHERMAN ACT §$ 1 & 2 CLAIMS

A. Jurisdiction and Standing

The defendants challenge both the interstate commerce

connection of the activities complained of and standing of

the plaintiffs to contest the alleged restraints.

It is clear that the interstate commerce nexus is a

prerequisite for federal jurisdiction and an element of

the substantive claim under the Sherman Act. See Hospi-

tal Building Co. v. Trustees of Rex Hospital, 425 U.S.

738, 742 n. 1 (1976).** The Sherman Act reaches “to

Co., 669 F.2d 308, 313 (5th Cir. 1982), cert. denied, 103 S.Ct. 73

(1983) (plaintiff’s failure to present significant probative evidence

of conspiracy in response to defendant’s sworn denials warrants

summary disposition) and Zenith Radio Corp. v. Matsushita, supra.

17 Summary disposition avoids an often expensive and needless

trial on the merits. See Lupia v. Stella D’Oro Biscuit Co., Inc., 586

F.2d 1163, 1167 (7th Cir. 1978), cert. denied, 440 U.S. 982 (1979) ;

Zweig v. Hearst Corp., 521 F.2d 1129, 1135-36 (9th Cir.), cert.

denied, 423 U.S. 1025 (1975).

18 The jurisdictional reach of the Sherman Act “extends to both

activities that are actually in interstate commerce and to activities

that, though purely intrastate in character, nevertheless, substan-

tially affect interstate commerce.” Cardio-Medical Assoc. v. Crozer-

Chester Med. Ctr., 536 F.Supp. 1065, 1073 (E.D. Pa. 1982) (em-

phasis in original). Because we assume that the plaintiffs’ activities

are intrastate in nature, our discussion is confined to the interstate

ramifications of the restraint. The procedural contours and juris-

dictional anomalies of the interstate commerce question are dis-

cussed in Zenith Radio Corp. v. Matsushita Elec. Indus. Co., 494

F.Supp. 1161, 1171 n. 21-77 (E.D. Pa. 1980) and need not be

reiterated here.

32a

the utmost extent of [Congress’] constitutional power.”

United States v. South-Eastern Underwriters Assn., 322

U.S. 583, 558 (1944). The test focuses on the impact

of the anticompetitive behavior on interstate commerce.”

See Manderville Island Farms v. American Crystal Sugar

Co., 334 U.S. 219 (1948). In McClain v. Real Estate Bd.,

444 U.S. 282 (1980), the Court concluded that to estab-

lish the requisite interstate nexus, it is only necessary

that the alleged restraint “be shown ‘as a matter of

practical economics’ to have a not insubstantial effect

on the interstate commerce involved.” Id. at 246 (quoting

Hospiial Building Co. v. Rex Hospital Trustees, supra,

425 U.S. at 745). Applying this test in the light most

favorable to the plaintiffs, we find the requisite effect on

interstate commerce present. The foreclosure of the con-

struction market resulting from the alleged restraint

would force those construction contractors affected to

seek projects in other areas of the interstate market.*°

It would also reduce the amount of construction materials

and goods supplied to contractors through interstate

commerce. Moreover, the record shows that a combina-

tion of out-of-state developers and financiers provided

consulting and financial support for the projects involved

herein. Both the direct ramifications of the alleged re-

straint and its ancillary consequences involve a not in-

substantial amount of interstate commerce. See Hospital

Building Co. v. Trustees of Rex Hospital, supra, 425 U.S.

at 745-46."!

12Qn the history of the interstate cornmerce connection, see

P. Areeda and D. Turner, supra at n. 14, Vol. I at 228-340.

20 Altemose does business in other states and purchases mate-

rials from out-of-state suppliers.

21 Chief Judge Emeritus Lord’s persuasive analysis of Hospital

Building, supra in Cardio-Medical Assoc. v. Crozer-Chester Med.

Ctr., 552 F.Supp. 1170, 1203 (E.D. Pa. 1982) suppcrts our conclu-

sion. In Cardio-Medical, Judge Lord noted, while distinguishing

the facts before him, that Hospital Building involved ua substantial

interstate commerce nexus through the interstate purchase of build-

33a

The defendants attack the standing of both Altemose

and the association plaintiffs. Defendants argue that the

alleged market foreclosure affected only subcontractors

rather than Altemose as the general contractor. We view

this argument as foreclosed by Connell Construction Co.

v. Plumbers & Steamfitters Local 100, 421 U.S. 616

(1975). See Associated General Contractors of Calif,

Ine. v. Calif. State Council of Carpenters, US. —,

103 S.Ct. 897, 910 n. 44 (1983). The loss of business

from higher labor costs is a sufficiently direct antitrust

injury to establish standing under the factual matrix

test adopted in this circuit. See Midwest Paper Products

v. Continental Group, 596 F.2d 574, 582-83 (8rd Cir.

1979) ; Bogus v. American Speech & Hearing Ass’n., 582

F.2d 277, 282 (8rd Cir. 1978).

The standing of the Chamber and ABC as associations

bringing suit on behalf of their members is determined

by applying the factors set forth in Hunt v. Washington

Apple Comm., 432 U.S. 333 (1977). “[Wle have recog-

nized that an association has standing to bring suit on

behalf of its members when: (a) its members would

otherwise have standing to sue in their own right; (b)

the interests it seeks to protect are germane to the or-

ganization’s purpose; and (c) neither the claim asserted

nor the relief requested requires the participation of the

individual members in the lawsuit.” ** Id. at 343.

To the extent that the plaintiff associations challenge

the genera] pattern of union conduct in securing these

ing supplies and financing. Accord, Schnabel v. Building Trades

Council of Phila., Etc., C.A. No. 82-2256, Slip. Op. at 28 (E.D. Pa.

April 13, 1983). Because we have analyzed the nexus between the

alleged restraint and interstate commerce and found that jurisdic-

tion is established, we need not delve into the academic quandary

rooted in a more liberal reading of McClain. See e.g., Pao v. Holy

Redeemer Hospital, 547 F.Supp. 484, 488-89 (E.D. Pa. 1982).

22 The Court quoted extensively from Worth v. Seldin, 422 U.S.

490, 511-12 (1975). Accord, Phila. Citizens in Action v. Schweiker.

669 F.2d 887, 880 n. 1 (8rd Cir. 1982).

34a

subcontracting agreements, the standing requirements are

satisfied. Any challenge not to the agreements as anti-

competitive per se but to the particular conduct of the

unions in securing a specific subcontracting agreement

from a particular contractor requires joinder as plaintiff

the individual contractor; the organizational intent of

the unions as to each individual contractor would be

critical.** The association plaintiffs cannot fulfill the

third requirement of the Court’s standing test and do

not have standing to assert charges on behalf of specific

contractors.

Plaintiffs have alleged two distinct types of conspira-

ciéS' as violative of both Sections 1 & 2 of the Sherman

Act." The conspiracy averred in Count I is an illegal

combination of the labor defendants with union contrac-

tors, suppliers, and lending institutions to restrain trade

in and monopolize the construction market. Although

identical in purpose and market effect, the consnir«cy

alleged in Count II is among the labor defendz!« oy.

The elements of a claim under Section 1 of te Sher-

man Act have been set forth by the Third Circuit:

In order w sustain a cause of action under § 1 of

the Sherman Act, the plaintiff must prove: (1) that

the defendants contracted, combined or conspired

among each other; (2) that the combination or con-

spiracy produced adverse, anti-competitive e!fects

within relevant product and geographic markets;

(3) that the objects of and the conduct pursuant

to that contract or conspiracy were i’egal; and (4)

that the plaintiff was injured as a proximate result

of that conspiracy. ...

Unless the particular restraint falls within a cate-

gory that has been judicially determined to be illegal

25 See infra at p. 26.

*4 See supra at pp. 8-12.

35a

per se, the legality of a restraint challenged under

$ 1 of the Sherman Act must be assessed under the

rule of reason. Under the rule of reason standard,

only those restraints upon interstate commerce

which are unreasonable are proscribed by $1 of

the Sherman Act.*°

Martin R. Glauser Dodge Co. v. Chrysler Corp., 570 F.2d

72, 81-82 (3d Cir. 1977), cert. denied, 486 U.S. 913

(1978) (citations omitted).

In addition to the dual conspiracies to restrain trade

in violation of Section 1, plaintiffs have alleged two dis-

tinct conspiracies to monopolize in violation of Section 2.

See Zenith Radio Corp. v. Matshushita Elec. Indus. Ce.,

supra, 513 F.Supp. at 1319. A conspiracy to monopolize

requires, (1) “proof of concerted action deliberately en-

tered into with the specific intent to accomplish the un-

lawful result of achieving a monopoly;” and (2) proof

of “at least one overt action in furtherance of the con-

spiracy.” L. Sullivan, Handbook of Antitrust Law 132-

33 (1977). “Proof of such a conspiracy does not require

successful accumulation of monopoly power.” Zenith Ra-

dio Corp. v. Matshusita Elec. Indus. Co., supra, 513

F.Supp. at 1319.*° These claims, like those under Section

1, also require proof of illicit concerted action or com-

25 Although the plaintiffs argue that the conduct in this case is a

species ot group boycott which requires application of the per se

rule under Alors, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207

(1959), the recent decision in Muko J] suggests otherwise. Larry

V. Muko, Inc. v. Southwestern Pa., Etc., 670 F.2d 421 (8rd Cir.),

gert. denied, 103 S.Ct. 229 (1982).

** Attempted monopolization by combination is discussed in

American Tobacco v. United States, 8328 U.S. 781 (1946). As stated

by Professor Sullivan, “there is a substantial area of potential

overlap between the offenses of conspiracy to restrain trade, con-

spiracy to monopolize. .. .” Sullivan, Antitrust, supra at 133.

Professors Areeda and Turner find any attempted distinction

between conspiracies under Sections 1 & 2 redundant. P. Areeda

and D. Turner, supra, n. 14 at 358.

36a

bination. In practice, the conspiracy claims under Sec-

tions 1 & 2 in both counts are supported by similar, if

not identical, evidence. Id. at 1820. See Edward J. Swee-

_ey & Sons v. Texaco, 637 F.2d 105, 118 (3rd Cir. 1980).

The combinations which plaintiffs allege to support the

conspiracies to monopolize violating Section 2 are the

same combinations alleged to be a restraint of trade vio-

lating Section 1; therefore, a failure of proof regarding

the existence of concerted action and unity of purpose on

the Section 2 claims condemns the claims under Section

l.as well.

B. Count Il—Exclusivity of Labor Law Remedies for

Unilateral Union Activities—Impact of Connell

Labor’s partial exemption from the antitrust laws rep-

resents an attempt of both Congress and the courts to

reconcile the conflicting policies expressed in the labor

and antitrust laws. In labor-antitrust cases, we must

first determine whether the labor exemption is applicable

and, if the conduct is not exempt, then determine liabil-

ity under traditional antitrust principles. See Larry V.

Muko, Inc. v. Southwestern Pa., Etc., 670 F.2d 421, 427

(3rd Cir. 1982) cert. denied, 108 S.Ct. 229 (1982)

(“Muko” II). Because the defendants argue that both

statutory and non-statutory exemptions apply to the

conduct at issue, it is necessary to explore the Court’s

recent pronouncemen* in the construction industry con-

text.

In Connell Construction Co. v. Plumbers and Steam-

fitters Local 100, 421 U.S. 616 (1975) ,”* the Court, divid-

28 Professor Handler has called Connell the “principal culprit” in

making the treatment of labor unions under the antitrust laws one

of the most frustrating areas of antitrust jurisprudence. Handler,

Reforming the Antitrust Laws, 82 Colum. L. Rev. 1287, 1339 (1982).

The decision has been severely criticized for its disconcerting im-

pact in the field. See King & Smith, New Antitrust Developments

Affecting Labor Law, 33 Syracuse L. Rev. 945, 985-93 (1982) ;

ne ae

37a

ing 5-4, reversed a judgment for union defendants on

| the ground that a subcontracting agreement was exempt

from federal antitrust law; it held that a subcontracting

agreement, “which is outside the context of a collective

bargaining relationship and not restricted to a particular

jobsite, but which- nonetheless obligates a [general con-

tractor] to subcontract work only to firms that havera

contract with [the trade union]”’, stated a cause of ac-

tion under federal antitrust law. Id. at 635. The case

was remanded for consideration of whether the agree-

ment did in fact violate the Sherman Act.

In Connell, Local 100, a bargaining representative for

the plumbing and mechanical trades in Dallas, sought to

compel general contractors to agree that in letting sub-

contracts for mechanical work they would deal only with

firms that were parties to the union’s current collective

bargaining agreement. The union disclaimed any interest

in representing the general contractors’ employees. V’hen

Connell, a general contractor, refused to sign such an

agreement, the union positioned a single picket at one

major construction site whereupon construction at the

site came to a halt. Connell filed suit in state court to

enjoin the picketing, and the union removed the case

to federal court. Connell signed the union agreement

under protest and amended its complaint to claim the

agreement violated Sections 1 and 2 of the Sherman Act.

The union defended on the ground that its labor activ-

ities were exempt from the antitrust laws.

Justice Powell, writing for the majority, acknowledged

two types of labor exemption from operation of the anti-

Handler and Zifchak, Cvllective Bargaining and the Antitrust Laws:

The Emasculation of tae Labor Exemption, 81 Colum. lL. Rev. 459

(1981); Casey and Colzillio, Labor-Antitrust: The Problems of

Conneli and a Remedy That Follows Naturaily, 1980 Duke L. J. 235

(1980) ; Supreme Court, 1974 Term, 89 Harv. L. Rev. 234 (1975).

See also, Muko v. Southwestern Pa., Etc., (Muko 1) 609 F.2d 1368,

1377 (3rd Cir. 1979) ‘Aldisert, J., dissenting).

38a

trust laws. First, the statutory exemption provided by

the Clayton and Norris-LaGuardia Acts protects uni-

lateral union activity such as secondary picketing and

boycotts.2® Second, there is a nonstatutory exemption,

which “has its source in the strong labor policy favoring

the association of employees to eliminate competition over

wages and working conditions”. 421 U.S. at 622.

The executed union-subcontractor agreement with Con-

nell was a union combination with the employer, a non-

labor entity; the Court held that the statutory exemption

accorded labor organizations did not apply. Addressing

the non-statutory exemption,*® the Court found that the

agreements excluded non-union subcontractors from a

portion of the market even if their competitive advan-

tages were not derived from substandard wages and

working conditions but rather from more efficient operat-

ing methods. Because the agreements imposed direct re-

straints on the product market not following naturally

from the elimination of competition over wages and work-

ing conditions, it contravened antitrust policy to a de-

gree not justified by labor policy and the nonstatutory

exemption was not available.

29 The statutory exemption is grounded in §6 and § 20 of the

Clayton Act (15 U.S.C. § 17; 29 U.S.C. §52) and §§ 4, 5, 13 of the

Norris-LaGuardia Act (29 U.S.C. §§ 104, 105, 113) which declare

that labor unions are not combinations in restraint of trade and

exempt specific union activities from the operation of the antitrust

laws. See infra at n. 37. See also United Mine Workers v. Penning-

ton, 381 U.S. 657, 661-62 (1965) ; Muko I, supra 609 F.2d at 1372.

30 Labor policy contemplates some lessening of business competi-

tion by the elimination of competition regarding wages and working

conditions. See United Mine Workers v. Pennington, 381 U.S. 657,

666 (1965); Meat Cutters v. Jewel Tea Co., 318 U.S. 676, 692-93

(1965). For a history of the non-statutory exemption see Consol.

Exp. Inc. v. N.Y. Shipping Assn., 602 F.2d 494, 513-15 (8rd Cir.

1979), vacated, 448 U.S. 902 on remand 641 F.2d 90 (3rd Cir.

1980), mandamus and prohibition denied, sub. nom., In re Int'l

Longshoreman’s Assn., 451 U.S. 905 (1981) (hereinafter Conez).

39a

The Court then considered the union’s argument that

the agreement was specifically allowed by the construc-

tion industry proviso to Section 8(e) of the National

Labor Relations Act (hereinafter NLRA).** The Court

held that Section 8(e) extends only to agreements in

the context of collective bargaining relationships and

“possibly common-situs relationships on particular jgb-

sites.” 421 U.S. at 633. Finally, the Court held that the

remedies under the NLRA for violation of Section 8(e)

were not exclusive. Thus, an antitrust suit based on

illegal hot cargo agreements was not inconsistent with

the remedial scheme of the NLRA.

Justice Stewart, joined by Justices Douglas, Brennan,

and Marshall, dissented on the ground that the union’s

conduct was regulated solely by the NLRA and was

immune from federal antitrust prosecution because Con-

gress intended the labor laws to provide the exclusive

remedies for the unlawful conduct alleged by Connell.®?

3129 U.S.C. §158(e) (1976). Section 8(e) provides that:

[i]t shall be an unfair labor practice for any labor organiza-

tion and any employer to enter into any contract or agreement,

express on implied, whereby such employer ceases or refrains or

agrees to cease or refrain from handling, using, selling,

transporting or otherwise dealing in any of the products of

any other employer, or to cease doing business with any other

person, and any contract or agreement entered into heretofore

or hereafter containing such an agreement shall be to such ex-

tent unenforcible and void. . .

The construction industry proviso to this subsection, however,

exempts from its operation any agreement “between a labor

organization and an employer in the construction industry relating

to the contracting or subcontracting of work to be done at the

site of the construction, alteration, painting, or repair of a building,

structure, or other work... .” Id.

32 Both the majority opinion and the dissent in Connell appar-

ently agreed that Congress rejected the use of antitrust sanctions

to curb secondary union activities when it considered revising the

NLRA in 1947. Compare 421 U.S. at 634 & n. 15 (Powell, J.) with

id. at 641 (Stewart, J. dissenting). Justice Powell found that this

legislative choice had no relevance to the issue whether Congress

40a

Justice Douglas in a separate uissent emphasized that

Connell failed to allege or prove any conspiracy between

the union and the other unionized subcontractors. This

infirmity in the complaint in his view placed the union’s

conduct under the exclusive purview of the labor laws.

The Court majority held the statutory exemption in-

applicable because the union agreement was with a non-

labor party. It is not clear if the Court was referring

to the union-Connell agreement alone or to the union

agreements with Connell and other general contractors.

It seems more likely that the Court viewed the union-

Connell agreement itself an antitrust combination * and

held that the statutory exemption applied only to a union

acting alone and not to any union-non-labor agreement.”

In considering the claim of non-statutory exemption,

the Court pointed to three significant factors in finding

the direct restraint imposed by the subcontracting agree-

ment had substantial anticompetitive effects not flowing

from legitimate labor concerns. First, the union had

no interest in representing Connell’s employees so that

the congressional policy in favor of collective bargaining

was not implicated. 421 U.S. at 626. This takes the

agreement outside of the scope of the construction in-

dustry proviso of § 8(e) of the NLRA as well. Jd. at 633.

intended to preclude antitrust attack when hot cargo agreements

were forbidden as unfair labor practices by the Landrum-Griffin

amendments to the NLRA enacted in 1959. 29 U.S.C. § 158(e)

(1976). See 421 U.S. at 634.

33 The complaint alleged that the subcontractor agreement vio-

lated §§ 1 & 2 of Sherman. 421 U.S. at 620-21. Moreover, immedi-

ately prior to the conclusion of the opinion, the Court stated that

“the union’s agreement with Connell is subject to the federal anti-

trust laws.”’ Id. at 635.

34 This assumes that a union-employer agreement is not neces-

sarily immune from antitrust sanctions because the union’s uni-

lateral action to secure it was immune. See St. Antoine, supra

n. 13, at 614.

4la

The Court pointed out that in a collective bargaining

context, labor law safeguards contained in Sections 8(b)7

and 8(b) (4) (b) come into play, but “[T]hese careful

limits on the economic pressure unions may use in aid

of their organizational campaigns would be undermined

seriously if the provision to § 8(e) were construed to

allow unions to seek subcontracting agreements, at largé,

from any general contractor vulnerable to picketing.”

421 U.S. at 633. See also, Woelke & Romero Framing,

Inc. v. NLRB, —— U.S. ——, 102 8.Ct. 2071, 2082 n. 16

(1982). Because the union did not seek to represent the

general contractor’s employees in collective bargaining,

labor law protections were not present and antitrust laws

applied.

Second, the multi-employer collective bargaining agree-

ment with subcontractors which the union action against

Connell sought to protect contained a “most favored na-

tion” clause by which the union agreed that if it granted

a more favorable contract to any employer it would ex-

tend those terms to all other member subcontractors. In

this manner, the unionized subcontractors would be pro-

tected from competition on all subjects covered by the

multi-employer agreements, even if unrelated to wages

and working conditions. Third, because the subcontractor

agreements prohibited contracting with any firm that

did not have a contract with Local 100, the union had

the power to control access to the market. This the Court

said gave the union the ability to create a geographical

enclave for local contractors.

Although the broad dicta can be read to subject all

coercive union action excluding non-union firms from the

subcontracting market to the antitrust laws, the afore-

mentioned factors limit the aciual holding of Connell.

In this case, it is undisputed that Altemose did not

actually sign any subcontractor agreement as did the

plaintiff in Connell. Altemose argues that it should not

have to sign an agreement with the identical market

arene eel

42a

effects as those in Connell to validate its claim under

the antitrust laws and that Connell forbids any direct

restraints on the product market that benefit a favored

employer group even when achieved by unilateral union

conduct. Its claim in essence is that Connell proscribes

action by unions among themselves to secure the type

of subcontracting agreements declared unlawful in that

case, or alternatively, that the antitrust laws also inter-

dict secondary union pressure to secure a lawful “hot-

cargo clause.” ** This overextends the holding in Con-

nell*® and ignores the remedial scheme of the Taft-

Hartley and Landrum-Griffin Amendments to the labor

| laws. The conduct alleged in Count II is without anti-

trust significance.

1. Statutory Exemption Viewed in Conjunction with

the Labor Laws.

The statutory labor exemption originates in the Clay-

ton Act, 15 U.S.C. $17 and 29 U.S.C. § 52, and the

Norris-LaGuardia Act 29 U.S.C. $§ 104, 105 and 113.

Connell, supra, 421 U.S. at 621-22. Section 6 of the

Clayton Act, 15 U.S.C. 17, provides:

The labor of a human being is not a commodity

or articie of commerce. Nothing contained in the

antitrust laws shall be construed to forbid the exist-

ence and operation of labor . . . organizations, insti-

tuted for the purposes of mutual help, and not hav-

ing capital stock or conducted for profit, or to forbid

%> The Supreme Court in Connell left this question open. 421

U.S. at 684 n. 14.

36 Although the Court did refer to the other agreements with

general contractors and the multi-employer collective bargaining

agreement to assess the effect on the product market, it specifically

noted that Connell did not argue the case on a conspiracy between

the union and unionized subcontractors. The Court focused exclu-

sively on the executed agreement with Connell in its statement of

the holding. 421 U.S. at 625 n. 2 and 635.

;

43a

or restrain individual members of such organizations

from lawfully carrying out the legitimate objects

thereof; nor shall such organizations, or the mem-

bers thereof, be held or construed to be illegal com-

binations or conspiracies in restraint of trade, under

the antitrust laws.

Section 20 of the Clayton Act prohibits the courts from

enjoining specified acts by employees that occur in the

course of disputes “concerning terms or conditions of

employment,” and states that these acts cannot be “held

to be violations of any law of the United States.” 29

U.S.C. § 52.

The Norris-LaGuardia Act re-emphasizes and further

expands the intended scope of the labor exemption. The

Act prohibits injunctions against employees engaged in

various activities during a labor dispute, even where a

claim of an unlawful combination or conspiracy is

made.** The right to bargain collectively is specifically

protected.** Although the Act does not by its terms pro-

87 As under the . iyton Act, the specified activities are protected

only in the context of a labor dispute. A labor dispute is defined

by the Norris-LaGuardia Act as including “any controversy concern-

ing terms or conditions of employment, or concerning the associa-

tion or representation of persons in negotiating, fixing, maintaining,

changing or seeking to arrange terms or conditions of employment

regardless of whether or not the disputants stand in the proximate

relations of employer and employee.” 29 U.S.C. § 113(c). Contrary

to the arguments advanced by the plaintiffs, we have no difficulty in

finding that the parties were engaged in a labor dispute within the

meaning of §113(c). See Marine Cooks & Stewards v. Panama

Steamship Co., 362 U.S. 365 (1960); NLRB v. Rice Milling Co.,

321 U.S. 665 (1951); Utilities Ser. Eng. v. Colo. Bldg. & Const.

Trades, 549 F.2d 173, 176-77 (10th Cir. 1977).

38 29 U.S.C. § 102 provides:

Whereas under prevailing economic conditions . . . the indi-

vidual unorganized worker is commonly helpless to exercise

actual liberty or contract and to protect his freedom of labor,

and thereby to obtain acceptable terms and conditions of

employment, wherefore, though he should be free to decline

44a

vide a labor exemption from antitrust laws, “it has been

interpreted broadly as a statement of congressional pol-

icy that the courts must not use the antitrust laws as a

vehicle to interfere in labor disputes.” H. A. Artists &

Associates v. Actors’ Equity Association, 451 U.S. 704,

714 (1981). See Sullivan, supra at 723.

The seminal case regarding the statutory exemption is

United States v. Hutcheson, 312 U.S. 219 (1941).*

Hutcheson involved a nationwide jurisdictional dispute

between the Carpenters’ and the Machinists’ unions. Pur-

suing its jurisdictional objective, the Carpenters struck

and picketed the Anheuser-Busch Brewing Company,

picketed another company located next to Anheuser-

to associate with his fellows, it is necessary that he have full

freedom of association, self-organization, and designation of

representatives of his own choosing, to negotiate the terms and

conditions of his own employment, and that he shall be free

from the interference, restraint, or coercion of employers of

labor, or their agents, in the designation of such representa-

tives or in self-organization or in other concerteed activities

for the purposes of collective bargaining or other mutual aid

or protection.

39 The first case to employ a species of the statutory exemption

was Milk Wagon Drivers, Union Local 753 v. Lake Valley Farm

Products, Inc., 311 U.S. 91 (1940). There the Court noted that

federal courts did not have jurisdiction to grant injunctions in

cases involving labor disputes under the Norris-LaGuardia Act

even though a secondary boycott in violation of the Sherman Act

was alleged. Id. at 103. In Apex Hosiery Co. v. Leader, 310 U.S.

469, 60 S.Ct. 982, 84 L.Ed. 1311 (1940) the Court discussed the

Clayton and Norris-LaGuardia Act provisions, but decided that the

conduct did not violate the terms of the Sherman Act. Thus, it was

not necessary to examin: the statutory exemption. See Mid-

American Reg. Bar. v. Will County Carpenters District Council, 675

F.2d 861, 865 n. 11 (7th Cir.), cert. denied, 103 S.Ct. 182 (1982).

Apex is sometimes considered the origin of the non-statutory exemp-

tion because the union’s goal of the elimination of price competition

based on the differences in labor standards was not the type of

restraint in price competition prohibited by the Sherman Act.

See, Conex, supra, 602 F.2d at 513-14.

45a

Busch on land leased from Anheuser-Busch, and asked

union members and their friends for a national boycott

of Anheuser-Busch beer. Officers of the Carpenters were

charged with a criminal violation of the Sherman Act.*°

The Court found no antitrust violation. It rejected

the Government’s argument that strikes growing out of

jurisdictional disputes are Sherman Act violations:

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

not combine with non-labor groups, the licit and the

illicit under § 20 of the Clayton Act are not to be

distinguished by any judgment regarding the wis-

dom or unwisdom, the rightness or wrongness, the

selfishness or unselfishness of the end of which the

particular union activities are the means.

Id. at 232 (footnote omitted). The Court then considered

whether the picketing of Anheuser-Busch and its tenant

and the call for a consumer boycott was within the im-

munity granted to labor unions by Section 20 of the

Clayton Act and reasoned that this conduct was lawful

unless the enlistment of employees of other employers

made it a violation. The Court held there was antitrust

immunity ** by reading in the Clayton Act the Norris-

LaGuardia Act’s definition of a labor dispute which

applies “regardless of whether or not the disputants

stand in the proximate relation of employer and em-

ployee.” 4? In the Court’s view the Sherman, Clayton,

and Norris-LaGuardia Acts, read together, provide “a

harmonizing text of outlawry of labor conduct.” * As

recently emphasized by the Court “under Hutcheson, no

federal injunction may issue over a ‘labor dispute’, and

§ 20 [of the Clayton Act] removes all such allowable con-

4 312 U.S. at 220.

41 Td. at 282-37.

42 29 U.S.C. § 113(c) (1976).

43 312 U.S. at 231.

a a

46a

duct from the taint of being a violation of any law of the

United States, including the Sherman Act.” H. A. Artists,

supra, 451 U.S. at 715 (quoting Hutcheson, 312 U.S. at

236).

The teaching of Hutcheson, therefore, is that union

actions immune from injunction under the Clayton or

Norris-LaGuardia Acts are also immune from antitrust

treble damages or criminal prosecutions. Hutcheson in

effect overruled both Duplex Printing Press Co. v. Deer-

ing ** and Bedford Cut Stone Co. v. Journeymen Stone

Cutters Ass’n.* which had previously subjected these

union tactics to the antitrust laws. See National Wood-

work Mfg. Ass’n. v. NLRB, 386 U.S. 612, 623 (1967).

Hutcheson made clear that these and other forms of sec-

ondary pressure were protected by the Norris-LaGuardia

Act’s definition of “labor dispute” and were free from

injunctive restraints; *° since the conduct was not subject

4* 254 U.S. 448 (1921). Duplex was a private Sherman Act suit

to enjoin a peaceful, nationwide, secondary boycott in aid of organi-

zational efforts at the plaintiff’s factory, effected, first, by refusal

of union members employed by plaintiff’s customers to handle non-

union manufactured goods, and second, by inducing customers to

cease dealing with the plaintiff.

45274 U.S. 37 (1927). In Bedford Stone the Court condemned a

union’s unilateral refusal to work on plaintiff’s non-union quarry

stone brought to the construction worksite and held the union’s

conduct to be an unlawful secondary boycott.

46 See, e.g., American Fed’n. of Musicians v. Carroll, 8391 U.S. 99

(1968) (union’s pricing practices affecting orchestra leaders in-

volved “labor dispute” and thus were exempt from antitrust) ;

United States v. American Fed’n of Musicians, 318 U.S. 741 (1943)

(per curiam) (primary and secondary boycott to prevent technologi-

cal innovation in music industry) ; Milk Wagon Driver’s Union Local

753 v. Lake Valley Farm Prods., Inc., 311 U.S. 91 (1940) (secondary

organizational picketing) ; New Negro Alliance v. Sanitary Grocery

Co., 308 U.S. 552 (1938) (consumer picketing). Cf., Bakery Sales

Drivers Local 33 v. Wagshal, 333 U.S. 437 (1948) (union boycott

in aid of commercial dispute between bakery and retailer enjoined

on ground that no labor dispute existed). See also, American Fed’n

of Labor v. Swing, 312 U.S. 321 (1941) (organizational picketing).

47a

to injunction, it was also immune from the antitrust

laws. See Ramsey v. UMW, 401 U.S. 302, 313 (1970).

After Hutcheson, the secondary pressures such as those

brought to bear on Altemose in this case were no longer

deemed illegal.*

Congress enacted the Taft-Hartley Act* in 1947 to

remedy a perceived imbalance in the labor relations field.

In Section 8{b) (4) Congress outlawed pressure tactics

47 See Handler & Zifchak, supra n. 28 at 477 (citing inter alia)

United States v. American Fed’n of Musicians, 318 U.S. 741 (1943)

(per curiam) (Sherman Act injunction denied against union efforts

to prevent use of recorded music in commercial music industry, in-

cluding attempts to secure hot cargo agreements from employer's;

lower court relied upon Hutcheson and Hod Carriers cases);

United States v. Building & Constr. Trades Council, 313 U.S. 539

(1941) (per curiam) (Sherman Act indictment against recogni-

tional picketing and refusal to handle materials delivered by rival

union certified by NLRB dismissed) ; United States v. United Bhd.

of Carpenters, 313 U.S. 589 (1941) (per curiam) (indictment for

secondary pressure and product boycott directed at company whose

employees had elected rival union as bargaining agent, dismissed) ;

United States v. International Hod Carriers Dist. Council, 318 U.S.

539 (1941), aff’d per curiam United States v. Carozzo, 37 F.Supp.

191 (N.D. Ill. 1941) (indici*ew! for inter alia, strikes and threats

of strikes to prevent manufacturers ‘of labor saving concrete truck-

mixers from selling them to emp'oeyers in Chicago, disinissed) ;

Gundersheimers, Inc. v. Bakery Int'l Confectionery Worker’s Union,

119 F.2d 204 (D.C. Cir. 1941) (secondary strike to compe! employer

to cease importing non-union goods) ; JLGWU v. Donnelly Garment

Co., 119 F.2d 892, modified, 12] F.2d 561 (8th Cir. 1941) (Sherman

Act injunction against secondary boycott denied on basis of

Hutcheson, Apex, and Milk Wagon Drivers; United States v. Gold,

115 F.2d 236 (2d Cir. 1940); United States v. B. Goedde & Co., 40

F.Supp. 523 (E.D. Ill. 1941) (product boycott of non-union-made

building materiais). The Court has subsequently cited Hutcheson

as taking all labor disputes as defined by the Norris-LaGuardia Act,

outside of the reach of the Sherman Act. American Fed’n. of

Musicians v. Carroll, 391 U.S. 99, 106 (1968).

48 Labor Management Relations Act, ch. 120, 61 Stat. 186 (1947)

(current version at 29 U.S.C. $$ 141-197 (1976) ).

48a

with certain secondary objectives *® in order to confine

labor disputes to the situs of the primary employer.”

Secondary tactics banned under Section 8(b) (4) may be

enjoined upon petition by the NLRB*™ compensatory

damages are also available under Section 303." It re-

mained lawful for unions to induce customers of the

primary employer to boycott the primary’s goods, or to

negotiate with secondary employers voluntary agreements

‘so-called “hot-cargo” agreements) requiring them to

boycott the primary employer.™

In 1959 Congress passed the Landrum-Griffin Amend-

ments ™ to close loopholes in the Taft-Hartley prohibi-

tions.” It became an unfair labor practice to “threaten,

restrain or coerce” a person including the secondary em-

ployer in furtherance of a proscribed objective.” “Hot

#2 For the changes in the law effected by the Taft-Hartley and

Landrum-Griffin Amendments, see gen., Handler & Zifchak, supra,

n. 28, at 471-75.

5© 29 U.S.C. § 158(b)4. The section prohibited unions from strik-

ing or inducing employees of a neutral, “secondary” employer to

strike, to force the secondary employer either to cease dealing with

the primary employer target or induce the primary to change his

method of business. Thus, “[T]he forms of labor boycotts con-

demned in Duplex and Beford Stone were for the most part outlawed

as a matter of labor law.”’ Handler & Zifchak, supra, n. 28, at 472.

51§10(1) of the Taft-Hartley Act, 29 U.S.C. § 160(1).

52 § 303(b) of Taft-Hartley Act, 29 U.S.C. § 187.

53 See Local 1976, United Bhd. of Carpenters v. NLRB (Sand

Door), 357 U.S. 93 (1958).

‘4 Labor Management Reporting and Disclosure Act, Pub. L.

No. 86257, 73 Stat. 519 (1959) (current version at 29 U.S.C.

§§ 158-97, 401-5381 (1976) ).

55 National Woodwork Mfrs. Ass'n v. NLRB, 386 U.S. 612, 633-48

(1967) ; NLRB v. Servette, Inc., 377 U.S. 46, 51-54 (1964).

56 Formerly, only inducements directed at the secondary employ-

er’s employees were proscribed.

49a

Cargo” agreements*’ and any secondary pressure to

secure an unlawful cargo clause were outlawed.”® Finally,

the amendments limited primary picketing with an orga-

nizationa! or recognitional objective and clarified the

right of unions to engage in various other practices.”

57 Section 8(e), of course, contained two provisos which exempted

with certain qualifications, agreements negotiated in the construc-

tion and garment trades. 29 U.S.C. $158(e). The Court, however,

had found those agreements with primary work preservation char-

acteristics to be lawful. See National Woodwork, supra, 386 U.S. at

644-65; NLRB v. Pipefitters Local 638, 429 U.S. 507 (1977). .

58 29 U.S.C. § 158(b) (4) (ii) (A) (1976). hue

59 29 U.S.C. §$ 158(b) (7). §$8(b) (7) (C) proscribes suck picket-

ing for more than thirty days when the union fails to petition for a

representation election under §9(c) of the NLRA, (29 U.S.C.

§ 159(c)). Only injunctive relief was made available for violations

of § 8(b) (7) (ec).

™ See 29 U.S.C. §158(b) (4) (B) (primary strikes and picket-

ing); §$158(b) (4) (consumer picketing); §158(b)(7) informa-

tional picketing.

The changes effected by Landrum-Griffin, italicized hereinafter,

previde that it shall be an unfair labor practice for a union:

(4) (i) to engage in, or to induce or encourage any individual

employed by any person engaged in commerce or in an industry

affecting commerce to engage in, a strike or a refusal in the

course of his employment to use, manufacture, process, trans-

port, or otherwise handle or work on any goods, articles, mate-

rials, or commodities or to perform any services; or

(ii) to threaten, coerce, or restrain any person engaged in

commerce or in an industry affecting commerce, where in either

case an object thereof is:

(A) forcing or requiring any employer or self-employed

person to join any labor or employer organization or to

enter into any agreement which is prohibited by sub-

section (e) of this section;

(B) forcing or requiring any person to cease using,

selling, handling, transporting, or otherwise dealing in the

products of any other producer, processor, or manufacturer,

or to cease doing business with any other person, or forc-

50a

ing or requiring any other employer to recognize or bar-

gain with a labor crganization as the representative of

his employees unless such labor organization has been

certified as the representative of such employees under the

provisions of section 159 of this title: Provided, That noth-

ing contained -n this clause (b) shall be construed to make

unlawful, where not otherwise unlawful, any primary strike

or primary picketing ;

bargain wich a particular labor organization as the repre-

sentative of his employees if another labor »rganization

has been certified as the representative of such employees

under the provisions of section 159 of this title;

(D) forcing or requiring any employer to assign par-

ticular work to employees in a particular labor organiza-

tion or in a particular trade, craft, or class rather than

to employees in another labor organization or in another

trade, craft or class, unless such employer is failing to

conform to an order or certification of the Board determin-

ing the bargaining representative for employees perform-

ing such work:

Provided, That nothing contained in this subsection

shall be construed to make unlawful a refusal by any

person to enter upon the premises of any employer

(other than his own employer), if the employees of

such employer are engaged in a strike ratified or

\ approved by a representative of such employees whom

such employer is required to recognize under this

Subchapter: Provided further, That for the purposes

of this paragraph (4) only, nothing contained in such

paragraph shall be construed to prohibit publicity

other than picketing, of the purpose of truthfully ad-

vising the public, including consumers and members of

a labor organization, that a product or products are

produced by an employer with whom the labor organi-

zation has a primary dispute and are distributed by

another employer, as long as such publicity does not

have an effect of inducing any inJividual employed by

any person other than the primary employer in the

course of his employment to refuse to pick up, deliver,

or transport any goods, or not to perform any serv-

ices, at the establishment of the employer engaged in

such distribution.

29 U.S.C. § 158(b) (4) (1976).

a ee ee

5la

Section 303 was amended to include a damage remedy

for outlawed secondary pressure. Pressure in the form

of strikes, inducements to strike, or coercion to obtain or

enforce a hot cargo agreement became unfair labor prac-

tices under Section 8(b) (4) and remedial by a damage

action under Section 303. This is because Section 8(b)

(4) (A) makes it illegal to coerce an employer to enter

into an agreement violating Section 8(e), and Section

&(b) (4) (B) outlaws secondary pressure to engorce a

voluntary hot cargo agreement, whether legal or illegal.

However, no Section 303 damages remedy exists for the

voluntary execution of an illegal hot cargo agreement;

only injunctive relief was made available.”

The remedial scheme embodied in the Taft-Hartley and

Landrum-Griffin Amendments to the labor laws strictly

limited labor’s use of secondary activities but left intact

its statutory exemption to the antitrust laws for the type

of conduct considered in Hutcheson. The authorities

agree that the legislative history of the Taft-Hartley Act

was explicit that its remedies were exclusive with respect

to conduct prohibited therein.’ The legislative history of

the Landrum-Griffin Amendments does not contain direct

evidence of exclusivity but neither does it suggest that

the legislation was intended to resurrect antitrust liabil-

ity.” Congress in Landrum-Griffin provided a deterrent

61 See 29 U.S.C. § 160(1).

®2 This conclusion draws support from the overwhelming number

of scholars and commentators who have examined the question.

See cf. St. Antoine, supra, n. 13 at 603; Handler & Zifchack, supra,

n. 28, at 514-15, Handler, Changing Trends in Antitrust Doctrines:

An Unprecedented Supreme Court Term—1977, 77 Colum. L. Rev.

979 (1977) ; Note the Supreme Court, 1974 Term, 89 Harv. L. Rev.

47 at 237 (1975); Note, 21 Vill. L. Rev. 342, 351-353 (1975-76) ;

Note, 61 Cornell L. Rev. 436, 459 (1976). See Connell, supra, 421

U.S. at 640-44 (Stewart J., dissenting).

63 Justice Stewart persuasively argued that the sequence of

events occurring during the debate of the bill reveals “unmistake-

52a

to illegal hot cargo agreements by permitting Section 303

damage actions for secondary pressure to obtain or en-

force such agreements.

The legislative scheme, when viewed in conjunction

with Connell, makes clear that absent the execution of a

“hot cargo” agreement which is prohibited by § 8(e),

mere union pressure or coercion of whatever form is

regulated exclusively under the labor laws by Section

8(b) (4) enforcement and damage actions under Section

303. Here, even if the subcontracting agreements

sought from Altemose and members of the ABC violated

Section 8(e) because no agreement was voluntarily ex-

ecuted, Count II at most alleges violations of the sec-

ondary boycott prohibitions of Section 8(b) (4). Union

picketing and violence designed to secure an unlawful

Section 8(e) agreement would violate Section 8(b) (4)

(a) and possibly Section 8(b)(1)(a). The numerous

other secondary activities which plaintiffs allege as overt

acts in a union-Council conspiracy to force Altemose out

of business are also regulated exclusively by the labor

laws. Secondary pressure applied against the various

subcontractors, supplier and developers, to force *ese

third parties to bring pressure on the primary employer

target Altemose) to accede to union demands, would be a

secondary boycott in violation of Section 8(b) (4) (b).

And the union’s attempts to force existing non-union sub-

contractors off the job under the subcontracting agree-

ments would violate Section 8(b)(4)(b). As recently

stated “. . . the legislative history of Section 8(b) (4)

manifests a clear Congressional intention to remedy

illegal secondary activities exclusively by way of the labor

ably” that Congress chose with great care the labor law remedy

over the antitrust remedy. 421 U.S. at 634, 651-54.

64 See Connell, 421 U.S. at 634 (“But whatever significance this

legislative choice has for antitrust suits based on those secondary

activities prohibited by § 8(b) (4), it has no relevance to the ques-

tion whether Congress meant to preclude antitrust suits based on

the ‘hot cargo’ agreements outlawed in 1959.”).

58a

laws. Recovery of treble damages by way of the antitrust

laws, for the same illegal activities, is prescripted” at

least when the unions act alone. C & K Coal Co. v

U.M.W., 537 F.Supp. 480, 503 (W.D. Pa. 1982), aff’d in

part, 704 F.2d 690 (8rd Cir. 1983) (citing Allied Inter.

v. Int. Longshoremen’s 640 F.2d 1368, 1381 (1st Cir.

1981) ). -

The distinction between the facts of this case, where

union pressure was used to try to force Altemose to sign

the subcontracting agreement, and Connell, where the

contractor actually did sign the agreement, is decisive.

Here the full panoply of remedies unler the labor laws,

including the damage remedy under Section 303, were

available to Altemose and members of the plaintiff asso-

ciations for union coercion to secure an illegal subcon-

tract agreement or illegal union secondary pressure on

third parties. In either case, Section 8(b) (4) proscribed

these activities, and the labor laws provide the exclusive

remedy.

In Connell, because the contractor signed the agree-

ment, Section 303 did not provide a damage remedy for

the violation of Section 8(e) itself. Thus, the antitrust

remedy was not cumulative® and the statutory exemp-

tion was inapplicable. But the union conduct in this case

which forms the basis for the conspiracy alleged in Count

II is regulated exclusively under the labor laws and is

statutorily immune from the antitrust laws. See Allen

Bradley v. Electrical Worker, 325 U.S. 797, 809 (1945) ;

Hunt v. Crumboch, 325 U.S. 821, 825 (1945); Jou-Jou

Designs v. Intern. Ladies. Etc., 643 F.2d 905, 910 (2nd

Cir. 19 cert. denied, 103 S.Ct. 174 (1982); Utilities Ser.

Eng. v. Colo. Bldg. & Const. Trades, 549 F.2d 173, 178

(10th Cir. 1977) ; Iodice v. Calabres, 512 F.2d 383 (2nd

Cir. 1975) ; Levering & Garrigues Co. v. Morrin, 71 F.2d

284 (2nd Cir.), cert. denied, 293 U.S. 595 (1934).

55 See Connell. supra, 421 U.S. at 634 n. 16.

54a

2. Non-Statutory Immunity—Evistence of a Col-

lective Bargaining Relationship *°

Even if the statutory immunity were inapplicable,

there is a non-statutory exemption from the antitrust

laws for certain activities of organized labor. This is a

“shorthand description of an interpretation of the Sher-

man Act, making that statute inapplicable io restraints

imposed in the interest of lawful union monopoly power

in the labor market.” Conex, supra, 602 F.2d at 513. But

secondary product or service market restraints such as

those sought here must meet a high standard to warrant

exemption. Id. at 514. The unions organizational interest

furthered by the subcontracting agreements is the jus-

tification here claimed. To determine if this confevs non-

statutory immunity, we must first examine the validity

of the conduct under the labor laws. If the conduct is

66 Because plaintiffs attack the subcontracting agreements in

general as violative of the labor and aniitrust laws, the discussion

of the collective bargaining relationship created by the agreements

under § 8(f) applies to the association plaintiffs as well. See infra

at n. 82 and accompanying text. But since the association plaintiffs

do not have standing to contest union conduct taken against indi-

vidual member contractors, only the history of the labor dispute

with Altemose is pertinent in determining whether a sufficient

collective bargaining context existed to satisfy the criteria of

Connell.

67 In Connell it is arguable from a reading of the Court’s opinion

that the antitrust exemption did not turn on the validity of the

agreement under § 8(e) because the Court first addressed the ex-

emption question and then proceeded to determine the validity of

the agreement under the labor laws. See Casey, supra n. 28,

at 256 n. 117 (suggesting that the Court would have found no ex-

emption regardless of the outcome of the § 8(e) issue). Whatever

academic significance this may have has been laid to rest in Kaiser

Steel Corp. v. Mullins, US. , 102 S.Ct. 851 (1982). The

Court explaining the Connell mode of analysis stated “[Wle ad-

dressed the § 8(e) issue on the merits and found that § 8(e) did

not allow the agreement at issue ....[AJ]s a result, the agreement

was subject to the antitrust laws... .” Id. at 860. In summary

the Court went on “In Connell we decided the § 8(e) issue in the

55a

unlawful under the labor laws, antitrust immunity is

probably lost and traditional antitrust analysis fol-

lows.”

The history and purpose of the construction industry

proviso to Section 8(e) is traced in Pacific Northwest

Chapter v. NLRB, 654 F.2d 1301 (9th Cir. 1981), aff’d

in part sub. nom., Woelke Romero Framing, Inc. v.

NLRB, U.S. , 102 S.Ct. 2071 (1982). In Local

1976, United Brotherhood of Carpenters v. NLRB, (Sand

Door) ,’° the Supreme Court held a union could not engage

in strikes cr other concerted activity to enforce “hot

cargo” agreements. However, Sand Door suggested that

first instance. It was necessary to do so to determine whether the

agreement was immune from the antitrust laws.” Id.

68 In Conex, supra, the court stated that a § 8(e) violation auto-

matically precludes recognition of non-statutory immunity. 602

F.2d at 518-19. But in Muko J the court retreated from this view

suggesting that a §8(e) violation does not necessarily lead to a

finding of non-exemption. Muko IJ, supra, 609 F.2d at 1375. And

the court reserved judgment on the effect of a §8(e) violation

standing alone. See discussion Areeda & Turner, supra n. 14,

at 82-84.

69 See Sullivan, supra n.27, at 730. Casey, supra n. 28, at 272-75.

See also, Berman Enterprises v. Local 333, 644 F.2d 930, 935-36

(2d Cir. 1981), cert. denied, 102 S.Ct. 506 (1982); Grandad Bread

v. Continental Banking Co., 612 F.2d 1105, 1110 (9th Cir. 1979),

cert. denied, 101 S.Ct. 854 (1981); Meat Cutters Local 576 v.

Wetterau Foods, Inc., 597 F.2d 133 (8th Cir. 1979). The Third

Circuit, however, has stated in dicta that an NLRB holding that

agreements were legal under the labor laws was “not conclusive

on the issue of their illegality under the antitrust laws.” Conez,

supra, 602 F.2d at 519 (quoting Heat Insulators v. United Con-

tractors, 494 F.2d 1353, 1354 (3rd Cir. 1974). We view this lan-

guage appropriate in the context of executed collective bargaining

agreements which were at issue in Conex. See Meat Cutters v.

Jewel Tea Co., supra, 381 U.S. 676.

7 United Brotherhood of Carpenters v. NLRB, 357 U.S. 93

(1958). Sand Door was widely interpreted as permitting voluntary

“hot cargo” agreements. See supra n. 53.

56a

employers and unions might enter into these agreements

that required employees to boycott the goods or services

of another party with whom the union had a dispute so

long as it was done voluntarily. 357 U.S. at 108. Con-

gress enacted Section 8(¢)™ to eliminate the loopholes for

“hot cargo” agreements created by the Sand Door deci-

sion and to accomodate the special conditions of the con-

struction industry.” The intent of Section 8(e) was to

preserve the pattern of collective bargaining existing

prior to the Landrum-Griffin Amendments as well as

reduce labor controversy at the site of the construction

project.

In defining the scope of permissible agreements under

the construction industry proviso to Section 8(e), the

Woelke Romero Court stated it was deciding “‘a question

left unresolved in Connell: the ext« it the proviso shelters

agreements sought or negotiated within the context of a

collective bargaining relationship.” 102 S.Ct. at 2076-77

71Jt must be remembered that §8(e) with its construction in-

dustry proviso was added to the Act by the 1959 Landrum-Griffin

Amendments, P.L. 86-257, 23 Stat. 543-544. For the text of 29

U.S.C. § 158(e), see supra at n. 31.

72 The unique nature of the construction industry is summarized

in the Senate Report:

The occasional nature of the employment relationsmp makes

this industry markedly different from manufacturing and other

types of enterprise. An individual employed typically works

for many empioyers and for none of them continuously. Jobs

are frequently of short duration, depending upon various stages

of construction.

S.Rep. No. 187, 86th Cong., Ist Sess. 27, (1959) U.S. Code Cong.

& Admin. News, pp. 2318, 2344; I Legislative History of the Labor-

Management Reporting and Disclosure Act of 1959 423. With its

enactment, Congress necessarily chose to tolerate a degree of “top

down” pressure for unionization. See Woelke Romero, supra, 102

S.Ct. at 2081-82. But the “top down” organizing effect of subcon-

tractor agreements is limited by other provisions of the NLRA when

sought in the collective bargaining context. Jd. See gen., 29 U.S.C.

§ 158(B) (7) (c); 29 U.S.C. §158(f).

57a

n. 8. In Connell, the unions expressly disavowed any in-

tent to organize or represent employees. 421 U.S. at 619,

631, 639.° Because the legiclative history of Section 8(e)

revealed the Congress believed broad subcontracting

clauses were part of the industry collective bargaining

pattern prior to the adoption of the Landrum-Griffin

Amendment of 1959,* the Court held that the construc-

tion industry provision to Section 8(e) is not limited to

union signatory subcontracting clauses applying to job-

sites at which both union and non-union workers are

employed, but shelters such clauses so long as they are

sought or negotiated in the context of a collective bar-

gaining relationship. Id. at 2083. So the question in this

case is whether the agreement can be said to be sought

in the context of a collective bargaining relationship.

The NLRB has found with regard to those parties that

the union picketing on various occasions was for organi-

zational objectives.** On September 9, 1975, an Admin-

istrative Law Judge (“ALJ”) found that the picketing

of Altemose Construction sites which occurred from Jan-

uary 20 through April 23, 1975 and April 23 through

May 1, 1975 was for organizational and recognitional

objectives; the ALJ inferred an organizational objective

73 As previously noted, the Connell decision hinged on the absence

of a collective bargaining relationship between the union and the

general contractor. A number of courts have limited Connell to

the proposition that a hot cargo agreement, if an unfair labor

practice because secured outside of the collective bargaining prac-

tice, may be the basis of an antitrust suit. See Gorgan v. Swanson

Painting Co., 682 F.2d 807 (9th Cir. 1982); Donald Schriver Inc.

v. NLRB, 635 F.2d 859 (D.C. Cir. 1980), cert. denied, 451 U.S. 976

(1981). The NLRB general counsel has also taken this position

regarding § 8(e). See NLRB Guidelines for handling § 8(e) Con-

struction Industry Proviso Cases under the Supreme Court’s Con-

nell Decision; 9105 CCH Labor Law Reports.

74 Woelke Romero, supra, 102 S.Ct. at 2080.

75 See App. Ex. 18 at 476(a).

76 App. Ex. 18 at 482(a). NLRB Case No. 4-CP-233.

58a

in part from the testimony of Council agent Magrann,

and from the resumption of picketing after April 23.

Therefore, the ALJ found the union in violation of Sec-

tion 8(b)(7)77 and the NLRB upheld this decision in-

cluding the finding of organizational purpose.” Thus,

regarding these activities, Altemose is collaterally es-

topped from denying that the Council’s conduct had an

organizational purpose.”

However, in state court proceedings the trial court

found no organizational or recognitional purpose in

union conduct occurring at the Valley Forge construc-

tion site in 1972. This finding was made on application

for preliminary injuctive relief. Under Pennsylvania law

there must be preliminary findings to support a court’s

77 App. Exh. 18 at 486(a).

78 222 NLRB No. 198 aff’d mem., 93 LRRM 3025 (3rd Cir. 1976).

Moreover, in related cases which are referred to by the plaintiffs

the Board found organizational objectives in the picketing. In

Samnoff v. Building Construction Trades Council, 346 F.Supp. 1071

(E.D. Pa. 1972), rev. on other grounds, 425 F.2d 203 (3rd Cir.),

vacated, 414 U.S. 808 (1973), the Board on remand found the

picketing violative of § 8(b)(7)(c) because of its recognitional

object. See 201 NLRB No. 42 at 2038, aff’d mem., 485 F.2d 680 (3rd

Cir. 1973). See e.g., Daniels. v. 1.G.W., 494 F.2d 1230, 1239 (2nd

Cir. 1974) (explaining the subsequent history of Samnoff) ; Samuel

Long, Inc., 201 NLRB No. 42 at 203 (finding of recognitional ob-

jective) ; Hirch v. Building & Const. Trades Council, Etc., 530 F.2d

298, 304 (3rd Cir. 1976) (finding of organizational purpose).

7 In Conex, supra, 602 F.2d at 503, 511, the court held that a

prior judgment of the NLRB was entitled to preclusive effect as to

all labor law issues in an antitrust action. Accordingly, the rule

of collateral estoppel is applicable to prior administrative proceed-

ings involving these parties, and the adjudicative facts are treated

as undisputed for the purpose of this opinion. See United States v.

Utah Const. and Mining Co., 384 U.S. 394, 422 (1966). The plain-

tiffs do not contend that these administrative proceedings were

inadequate to fairly present their claims. See Nasem v. Brown, 595

F.2d 801, 806-07 (D.C. Cir. 1979) ; Jaden Elec. v. Int’l. Broth., Etc.,

508 F.Supp. 983, 988 (D.N.J. 1981).

59a

determination to issue a temporary injuction but these

findings are not conclusive of the rights of any party to

the litigation. Pa. R. Civ. P. § 1581(¢); 18 P.L.E., In-

junction § 108 at 395. On appeal from a decree which

grants a preliminary injunction, the Supreme Court will

“only look to see if there were any apparently reasonable

grounds for the action of the court below, and... wil

not further consider the merits of the case or pass upon

the reasons for or against such action... .” Linden-

felser v. Lindenfelser, 385 Pa. 342, 348, 123 A.2d 626

(1956); Drum » Dinkelacker, 261 Pa. 392, 105 A. 509

(1918). In affirming the grant of the injunction, the

Pennsylvania Supreme Court expressly did not decide

whether the activities complained of [i.e.: unlawful vio-

lent picketing] were protected or prohibited under the

labor laws. See Altemose Construction Co. v. B. & C. T.

Council of Philadelphia, 449 Pa. 194, 203 n. 8, 296 A.2d

504 (1972). Thus, these findings in the state proceedings

are not determinative. Because of the organizational ob-

jective, the parties were engaged in a labor dispute

within the collective bargaining context in 1975. Thus,

Connell and Woelke Romero compel the conclusion that

no § 8(e) violation occurred in that time frame.*® Those

80 Furthermore, Form 3 which was then in effect does not pro-

hibit subcontracting to non-union firms as did the agreement in

Connell; it has an ancillary purpose to organize the general con-

tractor’s employees. Any antitrust claim based on Form 3 is with-

out merit.

The unions here at the time of the picketing denied any organiza-

tional objective. The unions wanted to picket Altemose as long as

they could and §8(b) (7) limits this right to thirty days. Anti-

trust consequences from lack of organizational intent in mass

picketing was inconceivable in 1972. Subcontracting agreements

in the construction trade had been upheld by the courts on numerous

occasions even in the absence of a collective bargaining relationship.

See Suburban Tile Center, Inc. v. Rockford Bldg. Trades Council,

354 F.2d 1 (7th Cir.), cert. denied, 384 U.S. 960 (1966) ; Construc-

tion Laborers Local 383 v. NLRB, 323 F.2d 422 (9th Cir. 1963) ;

Papazian v. Los Angeles Bldg. Trades Council, 838 L.R.R.M. 2710

60a

activities taken to obtain subcontracting agreements prior

to 1975 were also in a collective bargaining context.

In Donald Schriver, Inc. v. NLRB, 635 F.2d 859 (D.C.

Cir. 1980), cert. denied, 451 U.S. 976 (1981), the court

found that an Section 8(f) prehire agreement covering

the full conditions of employment of a contractor’s own

employees was sufficient to satisfy the collective bargain-

ing requirement of Connell. The court reasoned that:

The requirement in Connell that there be a col-

lective bargaining relationship only has meaning

within its own context. Connell required a collective

bargaining relationship to guarantee that a union

seeking a subcontracting agreement could not side-

step § 8(b) (7) and apply unlimited secondary pres-

sure on nonunion subcontractors. An attempt by a

union to establish an § 8(f) relationship is suffi-

cient to satisfy that concern; a union seeking an

$ 8(f) agreement covering wages and other terms

of employment remains subject to the restrictions of

§ 8(b) (7). Dailas Building and Construction Trades

Council v. NLRB, 396 F.2d 677 (D.C. Cir. 1968).

Whether an § 8(f) relationship is otherwise deemed

to be a “collective-bargaining relationship” is a ques-

tion totally academic to this case, missing tk entire

purpose and thrust of Connell.

Shriver, supra, 635 F.2d at 875. The court held that a

subcontracting agreement sought in the context of an

(C.D. Cal. 1973); Los Angeles Bldg. Trades Council (Fowler-

Kenworthy Elec. Co.), 151 N.L.R.B. 770 (1965); Los Angeles Bldg.

Trades Council (Couch Elec. Co.), 151 N.L.R.B. 413 (1965). Not

until the Fifth Circuit’s consideration of Connell had the issue of

whether a collective bargaining relationship was required arisen.

Connell, supra, 483 F.2d at 1178-74. See also, Samnoff, supra, 346

F.Supp. 1971 (E.D. Pa.), rev’d on other grounds, 475 F.2d 203

(8rd Cir. 1973) (Becker, J., picketing to obtain subcontracting

agreement legal even absent organizational purpose) (Citing Essex

County Dist. Coun. of Carpenters, Etc. v. NLRB, 332 F.2d 636 (8rd

Cir. 1964).

6la

Section 8(f) prehire agreement does not violate Section

8(e).

Recognizing the concerns expressed in Shriver as well

as the attendant interests of the employees of the gen-

eral contractor, the court of appeals has held in related

litigation that picketing directed at obtaining a subcon-

tractor agreement is recognitional in nature and, there-

fore, Section 8(b)(7)(c) limitations are applicable.

Hirsch v. Building & Construction Trades Council, Etc.,

530 F.2d 298, 303 (8rd Cir. 1976). Altemose, in fact,

did resort to Section 8(b) (7) remedies and secured a

cease and desist order in 1975.*' Therefore, the pertinent

question is whether Forms 1 and 2 establish a Section

8(f) pre-hire agreement—(i.e., whether they create a

sufficient collective bargaining relationship on their race

to take this case beyond the ambit of Connell).

An organizational purpose is evinced by the agree-

ments themselves. See Schriver, supra, 635 F.2d at 868

n. 11. Form 1 has numerous sections. Although the

Recognition Section states that the agreement “is not

deemed to imply direct recognition . . . under Section

8(b),’”’ * this does not preclude its being organizational or

recognitional in nature. The Council, of course, does not

have members as individual workers but is made up of

affiliate unions so that there can be no true § 9 relation-

ship. What the agreement does provide is that all em-

ployers on the job site will enter into a collective bar-

gaining agreement with the appropriate craft union.

This is accomplished by both the subcontracting obliga-

tions section, and the direct obligations section applicable

to the general contractor. The text reads:

S51 See supra at n. 77. It does not appear in the record why

Altemose did not resort to a § 8(b) (7) remedy in 1972.

82 The reference to §8(b) of the Labor Management Relations .

Act of 1947 is a misnomer (Representation-elections). We believe

the intent was to refer to 29 U.S.C. § 159. Section 8(b), 29 U.S.C.

§ 158(b) merely refers to unfair union labor practices.

62a

SUBCONTRACTING OBLIGATIONS

1. The Employer agrees to provide in the specifi-

cations on doing any business with subcontractors

for work on the building or construction job site

that such subcontractors as a condition precedent

to their commencing work on the job site will enter

into collective bargaining agreements with the ap-

propriate craft union member of the Council which

is the recognized collective bargaining agent of the

particular trade. In no event, will the Employer sub-

contract any work to any subcontractor who is not

in such contractual relations or who does not achieve

such contractual relations prior to commencing work.

2. A list of all subcontr«*ors will be posted on

the site of the job.

DIRECT OBLIGATIONS

The following obligations of the Employer will

apply when contract has been entered into between

the Employer and the Council. If, however, it has

been deemed necessary by the Council to picket or

take other appropriate economic action against the

Employer prior to achieving contractual relations, in

which even such picketing or other economic action

shail be deemed to be taken for the purposes of

achieving this collective bargaining agreement only

to obtain accord to the portion of this contract re-

ferred to as “Subcontracting Obligation.”

1. The Employer, with reference to work required

by him in the industry, agrees to enter into collec-

tive bargaining agreements with only member unions

of the Council which are recognized collective bar-

gaining agents for the particular trade or craft re-

quired for the job.

(Emphasis added.)

63a

Under this agreement the employer (general contrac-

tor) must enter into a collective bargaining relationship

with the respective craft unions. The employer agrees to

pay union wages and observe union working conditions,

rules and regulations under Para. 3.

3. The Employer agrees to abide by all the ryles

and regulations of the respective trades affiliated

with the Building and Construction Trades Council,

and to comply with the rates and the specified hours

as recognized by the respective trades. In the event

that the employer should engage subcontractors to

perform such work, then the employer agrees that

such subcontractors will observe hours, wages, fringe

benefits and working conditions as recognized by the

different trades.

Form 1 also contains a grievance procedure * and a ref-

erence to work stoppages and strikes upon termination.™

All the indicia in Form 1 establish the existence of

at least a pre-hire agreement under Section 8(f). Its

purpose is to initiate a collective bargaining relationship

with the general contractor and it establishes enforceable

terms concerning the conditions of employment when the

general contractor is the employer. It is the first step

toward a more specific § 9(a) collective bargaining agree-

ment. The Board has certified this method of conve-

nience bargaining. See Standard Brands, Inc., 175

NLRB No. 122, 71 LRRM 1057 (1969), and pre-hire

agreements achieved through this type of bargaining are

enforceable in an action under Section 301 of the LMRA,

29 U.S.C. $185. See McNeff v. Todd, USS. ;

51 U.S.L.W. 4497 (Apr. 27, 1983). It is a method to

secure a multicraft contract from a general contractor

which would have the “advantage not only of promoting

union organizational objectives within a collective bar-

83 Enforcement 2.A.

84 Td. at 2.D.

64a

gaining context, but also of meeting the subsidiary Con-

nell test of protecting the union employees of the general

contractor from being forced to work with non-union em-

ployees.” * This agreement is far more explicit in orga-

nizational purpose than that in Los Angeles Building

Construction Trades Council (B&J Investment Co.), 214

NLRB No. 86, 87 LRRM 1424 (1974) ** which the Court

in Conneil distinguished as a pre-hire contract under

Section 8(f). Connell, supra, 421 U.S. at 631 n.10. See

also, Schriver, supra, 635 F.2d at 873 n.22. It is un-

disputed that Altemose employed workers of the respec-

tive trade unions constituting the Council.

Form 2 expliciiiy requires the general contractor to

enter into collective bargaining agreements with member

unions of the Council which are recognized collective bar-

gaining agents for the particular craft or trade required

for the job and with reference to work required by it.

These agreements must contain the Union Security Clause

permitted by Section 8(f)(2) of the LMRA. The plain-

tiffs argue that this is merely an agreement which re-

quires the signatory contractor to enter into a pre-hire

agreement in futuro and it cannot be a pre-hire contract

hecause the Council is not a labor organization composed

of ind’yidual laborers. This is too formalistic a reading

of Section 8(f). In fact, the NLRB has suggested that

the execution with a Building and Trades Council of an

agreement including a subcontractor’s clause covering

existing employees of the general contractor fulfills the

criteria for a pre-hire agreement under Section 8(f).

See Memorandum of General Counsel on Connell, 9105 at

15, 84-85 CCH Labor Reports (1970). These agreements

which require an employer to enter into a collective bar-

gaining relationship evince sufficient organizational pur-

85 St. Antoine, supra n. 13, at 629-30.

86 The Board in B & J Investments referred to the agreement

as a “collective bargaining contract”. 214 NLRB at 563.

65a

pose to satisfy the concerns of Connell. See McNeff,

supra, 51 U.S.L.W. at 4500 n.9.

The remaining arguments concerning the legality of

the subcontracting agreements can be addressed seriatim.

First, the particular union requirements of the agree-

ments ** are not illegal. Pacific Northwest, supra, 654

F.2d at 1323. Shriver, supra, 635 F.2d at 885. Ner does

lack of specification of a particular jobsite in the agree-

ment make them illegal. Pacific Northwest, supra, 654

F.2d 1320, aff’d sub. nom., Woelke Romero, supra, 102

S.Ct. at 2083; Schriver, supra, 635 F.2d at 882. The dis-

tribution of a list of subcontractors party to the collective

bargaining agreements, the so-called “fair” contractors

list, is not an illegal act in regard to Count II; whether

some conspiratorial purpose can be inferred in Count I

will be discussed hereafter. Finally, Altemose has no

standing to challenge the Industry Advancement Fund

provided for by any collective bargaining agreements to

which it is not a party.**

Because the agreements seek to establish terms and

conditions of employment for then existing employees of

the general contractor, a collective bargaining relation-

ship sufficient to s tisfy the concerns of Connell is pres-

ent; the limitations of Section 8(b) (7) (C) are applicable

and the agreements do not violate Section 8(e). Such

amendments which are legal under the labor law enjoy

non-statutory exemption from the antitrust laws. The

union conduct alleged in Count II is statutorily immune

from challenge under Sections 1 and 2 of the Sherman

Act because the alleged conspiracy is in reality unilateral

87 See Form I, Subcontracting Obligations 1; Form 2, Employ-

ment # (2).

88 The Industry Advancement Fund to which contributions are

made based on employee hours does not have the price fixing im-

plications condemned in Nat. Elec. Contractors v. Nat. Construction,

675 F.2d 492, 521 (4th Cir. 1982). Plaintiffs’ general assertion of

unlawfulness under § 1 of the Sherman Act is without merit.

66a

union activity. Alternatively, the union subcontracting

agreements have sufficient organizational intent to estab-

lish as a matter of law a collective bargaining relation-

ship which provides sufficient justification for application

of the non-statutory exemption to the union activities

complained of here.

C. Count I—Conspiracy with Non-Labor Entities

In Count I the plaintiffs invoke Allen Bradley Co. v.

Local 3, International Brotherhood of Electrical Workers,

325 U.S. 797 (1945), in which the Court found that

labor’s statutory exemption had been forfeited because

the union defendant conspired with employers to restrain

trade in the product market.*® Id. at 809. The Court con-

cluded that, “when the unions participated with a com-

bination of businessmen who had complete power to elimi-

nate all competition among themselves and to prevent all

competition from others, a situation was created not in-

cluded within the exemptions of the Clayton and Norris-

LaGuardia Acts.” Id. See also, Philadelphia Record Co.

v. Manufacturing Photo-Engravers Ass’n., 155 F.2d 799

(3rd Cir. 1946). The plaintiffs allege that the unions

have conspired with union employers, developers, sup-

pliers and financial institutions to drive non-union con-

89 In Allen Bradley, the plaintiffs were non-New York City manu-

facturers of electrical equipment. The defendant was the local union

representing electrical workers in New York City. The plaintiffs

challenged industry wide agreements negotiated by the union which

provided that contractors would purchase equipment only from city

electrical manufacturers and the manufacturer would sell only to

contractors employing only union members. The unions obtained

these agreements by using labor union methods, such as strikes and

boycotts. The effect of these closed shop and hot cargo agreements

was to establish a market closed to competition from out-of-state

manufacturers. The Court noted that the evidence of conspiracy

extended beyond closed shop and hot cargo restraints imposed in

the collective bargaining agreements which “standing alone would

not have violated the Sherman Act.” 325 U.S. at 809.

one

67a

tractors out of 12 market for construction services.

Under this type of conspiracy to restrain trade in the

product market, the unions can claim neither statutory

nor non-statutory exemptions to the antitrust laws. See

Conex, supra, 602 F.2d at 514. The defendants deny the

existence of any conspiracy or agreement of the Council

and its union members with an employer or non-lbor

organizations.”

1. Inferring Conspiracy from Circumstantial

Evidence

Because defendants deny any conspiracy, to withstand

a motion for summary judgment the plaintiffs must come

forward with “significant probative evidence” that the

defendants had a “conscious comitment to a common

scheme.” See Edward J. Sweeney & Sons v. Texaco, Inc.,

637 F.2d 105, 111 (8rd Cir. 1980), cert. denied, 451 U.S.

911 (1981); Klein v. American Luggage Works, Inc.,

323 F.2d 787, 791 (8rd Cir. 1963). The existence of a

conspiracy by its nature is not conducive to direct proof.

Circumstantial evidence must often establish the requisite

concert of action. See United States v. Paramount Pic-

tures, Inc., 334 U.S. 131, 142 (1948); American Tobacco

Co. v. United States, 328 U.S. 781, 810 (1946). Accord-

ingly, we must assess the probative value of the circum-

stantial evidence offered by the plaintiffs to determine if

there is a genuine issue of material fact regarding the

existence of a conspiracy. If the inference from the cir-

cumstantial evidence to the ultimate fact of conspiracy is

not permissible as a matter of law, it cannot raise an

issue of material fact to defeat a properly supported

motion for summary judgment. See Zenith Radio Corp.

% See, e.g., Affidavit of Ralph Williams, Business Representative

of the Council, Exhibit 1 at 12 and 13.

91 See Sunshine Books v. Temple University, supra, 697 F.2d at

96 and discussion of Fed. R. Civ. P. 56(e), supra, at n. 16 and

accompanying text.

68a

v. Matsushita Elec. Indus. Co., supra, 513 F.Supp. at

1171. As stated in a similar context:

When a trial court grants a directed verdict in a

circumstantial evidence case, the court makes a legal

determination that the narrative or historical mat-

ters in evidence allow no permissible inference of

the ultimate fact urged by the opposing party. It

decides that no reasonable person could reach the

suggested conclusion on the basis of the hard evi-

dence without resorting to guesswork or conjecture.

To permit a jury to draw an inference of the ulti-

mate fact under these circumstances is to substitute

the experience of logical probability for what the

courts described as “mere speculation.” Galloway v.

United States, 319 U.S. [872] at 395; Columbia

Metal Culvert Co. v. Kaiser Aluminum & Chemical

Corp., 579 F.2d [20] at 25.

Sweeny, supra, 637 F.2d at 116. Thus, to withstand

the motion for summary judgment, plaintiffs’ circum-

stantial evidence of conspiracy in this case must be such

that a “reasonable person could reach the conclusion on

the basis of the hard evidence without resorting to guess-

work or conjecture.” Sweeny, supra. We scrutinize the

plaintiffs’ circumstantial evidence accordingly.

2. Evidence of Conspiracy in the Record

Notwithstanding an extensive record, plaintiffs have

failed to set forth specifically the circumstantial evidence

believed probative of a conspiracy with non-labor en-

tities. They rely essentially on the same evidence proffered

®2 Although the discussion of the permissible inferences from

evidence was made in the context of appeal from a directed verdict,

it is equally applicable to a motion for summary judgment. See

Zenith Radio, supra, 513 F.Supp. at 1171 (“ ‘Mere speculation’, in

the forra of an inference which is not supported by logic, is not

sufficient to withstand a motion for summary judgment.”) (Foot-

note omitted).

69a

in support of Count I as probative of a conspiracy with

union employers—both general contractors and subcon-

tractors—and others. We have endeavored to segregate

the evidence apparently relied on by plaintiffs.

Initially, plaintiffs note that the avowed purpose of the

Council is to organize the construction industry and, ob-

tain adequate wages and working conditions. But this

purpose is made lawful by the labor laws and itself

cannot give rise to an inference of conspiracy with non-

labor parties. The unions may achieve their goal by

organizing non-union firms, pressuring non-union firms

to meet area wages, or forcing them out of the market.

Plaintiffs argue that the unions here chose to try to force

non-union firms from the market ™ by picketing general

contractors to obtain the subcontracting agreements re-

stricting subcontracting to union firms. But there is no

evidence in the record to suggest that the unions in seek-

ing the subcontractor agreements tried to protect a select

group of union contractors and deny non-union firms the

option of becoming union or paying union scale wages.

The evidence suggests the opposite; the unions’ sole pur-

pose was to organize as many contractors as possible to

standardize wages and working conditions in the industry.

The unions pursuit of subcontracting clauses to secure

only union employment might benefit all union employers

by stabilizing wages rates, but it is not probative evi-

dence of a conspiracy with them as a matter of law

*8 See Leslie, Principles of Labor Antitrust, 66 Va. L. Rev. 1183,

1183-88 (1980).

* The antitrust implications of this type of conduct are obvious.

Where the unions seek to limit the number of firms in the product

market by creating barriers to entry, a predatory purpose to erect

and enforce a cartel of particular firms in the product market may

be inferred. In this manner the employer cartel could regulate

prices and outputs, while the union policed the arrangement to pro-

tect the dominent position of the cartel. See Leslie, supra n.93,

1190-92. This was the effect of the arrangement condemned in

Allen Bradley.

70a

under the prior precedent of the Court. See Bernhardt,

The Allen Bradley Doctrine: An Accommodation of Con-

flicting Policies, 110 Pa. L. Rev. 1094, 1101-02 (1962).

In United Mine Workers v. Pennington, 381 U.S. 657

(1965), the Court reaffirming Allen Bradley stated that,

“To]ne group of employers may not conspire to eliminate

competition in the industry and the union is liable with

the employers if it becomes a party to that conspiracy.”

Id. at 665-66. But a union may pursue a policy uni-

laterally and implement it even though such a policy

affects some employers adversely and benefits others.

Such union conduct “is not alone sufficient evidence to

maintain a union-employer conspiracy charge under the

Sherman Act.” Id. at 665 n. 2. Cf., Jou-Jow Designs,

supra, 643 F.2d at 910 (the implication that certain sub-

contractors would benefit from a hot cargo agreement is

not an allegation that they conspired to achieve it) ;

Smitty Baker Coal, supra, 620 F.2d at 434 (union seek-

ing to compel all non-member coal operators to conform

to union wage scale at behest of employer group does

not show concert of action); Jodice v. Calabrese, supra,

512 F.2d at 390 (union secondary boycott which forced

firms not to deal with non-union employer is insufficient

evidence of conspiracy); Webb v. Bladen, 480 F.2d 306,

308 (4th Cir. 1971) (union secondary boycott which

<orced firms not to deal with non-union subcontractors

was insufficient evidence of conspiracy.) A jury may not

infer a union-employer conspiracy from a union’s pursuit

of a uniform wage and/or employment policy which in-

directly benefits an employer group since the identify of

interests is merely coincidental and not necessarily the

product of a conspiracy. Meat Cutters v. Jewel Tea Co.,

supra, 381 U.S. at 720 (Goldberg J., dissenting and con-

curring). To infer a conspiracy from this evidence would

allow juries to become the arbiters of the social and eco-

nomic desirability of union action in a particular case,

7la

which is nothing more than mere speculation. We there-

fore find this evidence alone lacking in probative value.

The secondary pressure tactics employed by the Coun-

cil ®* against various materialmen, financial institutions,

and developers to force those business entities not to do

business with Altemose or any other non-union contractor,

do not support an inference of conspiracy with those en-

tities. See American Fed. of Musicians v. Carrol, 391

U.S. 99, 105 n. 8 (restraint instituted by union conduct

and acquiesced to by so-called employer group was not

evidence of a conspiracy) ; Allen-Bradley, sup..a, 325 U.S.

at 809 (union pressure alone resulting in individual re

fusals of all employers to buy electrical equipment not

made by the union-labor is nct a Sherman Act violation) ;

Hunt v. Crumboch, supra, 325 U.S. at 822-23 (union

refusal to negotiate with employer causing third party

to cancel existing contract did not create a consviracy).

As the Court of Appeals recently stated, this theory

“suggests that the victim who hands over his wallet to

an armed robber thereby becomes a co-conspirator in

the armed robbery. Absent extrinsic agreement, there is

no concert of action with a non-labor party....” C&K

Coal Co., supra, 704 F.2d at 699. It would be at best

“mere speculation”, as well as contradictory to the in-

tent of labor’s statutory exemption, if a jury were per-

mitted to draw an inference of conspiracy from the favor-

able results of union secondary tactics. See Mid-City

Regional Bargaining Assn. v. Will County Carpenters

* There are no antitrust consequences from the fact that the

union tactics included violence directed at Altemose and other

subcontractors since the Sherman Act “draws no distinction between

restraints effected by violence and those achieved by peaceful

means,” Apex Hosiery; supra, 310 U.S. at 513. To the extent that

Altemose Const. Co. v. Atlantic Cape May, Etc., 493 F.Supp. 1181,

1188 (D.N.J. 1980), differs with this conclusion, we note that its

disregard of Apex Hosiery is at odds with its subsequent citation

with approval by the Court in Allen Bradley, supra, 325 U.S. at

810. See also, Schnabel v. Building & Const. Trades Council of

Phila., Etc., supra, at 45.

72a

District Council, 675 F.2d 881, 886-87 (7th Cir.), cert.

denied, 103 S.Ct. 132 (1982).

There is evidence of a predominantly unionized con-

struction market. The Council is shown to have executed

over eight hundred fifty (850) contracts with general

contractors. The unions have collective bargaining agree-

ments with more than four thousand (4,000) subcon-

tractors. This active union organizational effort has

resulted in approximately 90% of the construction market

being unionized. The Council distributes a list of so-

called “fair,” i.e., union subcontractors, to general con-

tractors with whom it executes a subcontracting agree-

ment. This list is provided so that the general contractors

will know who the union subcontractors are. There is no

evidence that union-employers prompted or encouraged

the distribution of the “fair’’ list.

The inference from these facts supports the conclusion

that the unions’ unilateral organizational activities were

very successful. Even if this circumstantial evidence can

be said to give rise to an inference: of some union-

employer scheme, it simply does not rise to the level of

“significant probative evidence” which is required to

demonstrate that a genuine issue of fact exists as to the

conspiracy charged in Count I.

Although we are cognizant of a party’s right to have a

jury resolve disputed facts, “ ‘a party resisting a motion

(for summary judgment] cannot expect to rely merely

upon bare assertions, conclusory allegations or suspi-

cions’.” O’Brien v. Eli Lilly Co., 668 F.2d 704, 712 (8rd

Cir. 1981) (quoting Ness v. Marshall, 660 F.2d 517, 519

(3rd Cir. 1981)). That is the cumulative nature of the

extensive evidence in this case. We conclude, tneretore,

that in absence of any proof of knowledge or intentional

participation in an illegal combination or common scheme

of the union with non-labor entities, summary judgment

must be granted with respect to Count I.

73a

IV. CONCLUSION

We hold that the evidence in support of Count I is

insufficient as a matter of law to provide an inference

of conspiracy to violate Sections 1 or 2 of the Sherman

Act. We also hold that based on the evidence of record

in support of Count II, any concerted action is solely

among the union defendants, such union activity is pro-

tected by a statutory exemption to the antitrust laws.

Alternatively, we find that the subcontracting agree-

ments at issue have sufficient indicia of organizational

intent to establish they were negotiated and enforced

in a collective bargaining context and, not being in viola-

tion of 29 U.S.C. § 158(e), enjoy non-statutory exemp-

tion from the antitrust laws. For these reasons, de

fendants’ cross-motion for summary judgment must be

granted

74a

EXHIBIT I.

AGREEMENT

THIS AGREEMENT made and entered into this

day of ————— 19—, by and between here-

inafter called the Employer which term shall also include

a contractor who may not necessarily be a direct em-

ployer of employees in the crafts); and the Philadelphia,

Pennsylvania Building and Construction Trades Council,

affiliated with the AFL-CIO, hereinafter called the Union.

WITNESSETH:

In consideration of the mutual promises hereinafter

named, the parties hereto agree as follows:

RECOGNITION OF COUNCIL.

1. The Employer agrees to recognize the Philadelphia

Pennsylvania Building and Construction Trades Council

as the spokesman of the workers in the industry and the

representative of the respective trades taken collectively.

This is not deemed to imply direct recognition in the

sense of its meaning under Section 8(b) of the Labor

Management Relations Act of 1947, as amended, in that

the Council does not have as its members any individual

workers, but in fact is made up of affiliated local unions

who are the direct collective bargaining representatives

of their respective trades.

SUBCONTRACTING OBLIGATIONS.

1. The Employer agrees to provide in the specifications

on doing any business with subcontractors for work on

the building or construction job site that such sub-

contractors as a condition precedent to their commencing

werk on the job site will enter into collective bargaining

75a

agreements with the appropriate craft union member of

the Council which is the recognized collective bargaining

agent of the particular trade. In no event, will the Em-

ployer subcontract any work to any subcontractor who is

not in such contractual relations or who does not achieve

such contractual relations prior to commencing work.

2. A list of all subcontractors will be posted on the

site of the job.

DIRECT OBLIGATIONS.

The following obligations of the Employer will apply

when contract has been entered into between the Em-

ployer and the Council. If, however, it has been deemed

necessary by the Council to picket or take other appropri-

ate economic action against the Employer prior to achiev-

ing contractual relations, in which event such picketing

or other economic action shall be deemed to be taken for

the purposes of achieving this collective bargaining agree-

ment) only to obtain accord to the portion of this con-

tract referred to as “Subcontracting Obligation.”

1. The Employer, with reference to work required by

him in the industry, agrees to enter into collective bar-

gaining agreements with only member Unions of the

Council which are recognized collective bargaining agents

for the particular trade or craft required for the job.

2. The employment as above referred to include skilled,

semi-skilled and unskilled labor on all work now and

hereafter being done directly and indirectly by the Em-

ployer.

3. The Employer agrees to abide by all the rules and

regulations of the respective trades affiliated with the

Building and Construction Trades Council, and to comply

with the rates and the specified hours as recognized by

the respective trades. In the event that the employer

should engage subcontractors to perform such work, then

the employer agrees that such subcontractors will observe

76a

hours, wages, fringe benefits and working conditions .s

recognized by the different trades.

RESPONSIBILITIES FOR THE JOB.

It is recognized that the Employer, because of the com-

plexities of the industry in certain types of job site build-

ing and construction, carries a responsibility for insuring

that the total job and that all work which takes place on

the job be in accord with the obligations contained in this

agreement. Recognizing this responsibility and recogniz-

ing the problems that arise when an owner of the prop-

erty limits the scope of the Employer’s work and con-

tracts work out directly by passing the Employer, when

a destruction of standards occurs carrying with it a by-

passing of the intent and obligations under this agree-

ment, it is further agreed as follows:

1. The Employer in entering into his contract with the

owner assumes for purposes of his obligations with the

Council the complete responsibilit’ for all work on the

site being performed under the conditions set forth in

this agreement whether or not there are in fact sub-

contractors who are not engaged by the Employer.

2. In order to meet the obligations contained in Para-

graph 1. the Employer agrees that he will in his contract

with the owner of the property or the contracting party

for the building and construction work, require that all

building and construction work at the job site where

performed directly by the owner or whether performed

by tenants who utilize facilities of the site be performed

in accord with the obligations in this agreement.

LEGALITY AND SEPARABILITY.

1. It is the intention of the parties to this agreement

to conform in all ways to the requirements of the law

and to have entered into an agreement permitted by the

Labor Management Relations Act of 1947 as amended.

77a

In the event any portion of this agreement is declared

illegal, it shall have no effect on the balance of the agree-

ment.

ENFORCEMENT.

1. It is agreed by and between the Employer and the

Council that both will exert every honorable means

towards the execution of this agreement, and will co-

operate in every possible way towards furthering the in-

terests of both parties hereto.

2. All complaints shall be settled in accord with the

following procedure:

A. All disputes, grievances or complaints involving

the interpretation or application of this Agreement which

cannot be resolved by the parties within twenty-four (24)

hours after either party has raised the issue concerning

the dispute, grievance or complaint, then either party may

request in writing the American Arbitration Association

to designate an arbitrator within twenty-four (24) hours

to heat the issues so raised, and said arbitrator shall

set a hearing and dispose of the said issues within forty-

eight (48) hours thereafter.

B. The decision of the arbitrator shall be final and

binding upon the parties. The cost of the arbitration

shall be borne equally by the parties.

C. The arbitrator is specifically authorized to levy

sanctions, deterent money awards and affirmative orders

in the event the Employer violates any provisions of this

agreement, which provisions are not remedied or cannot

be lawfully remedied by the use of legal strike, picketing

and other economic action by the Council. In rendering

such affirmative orders, the arbitrator shall be authorized

to liquidate damages in areas in which specific monetary

damages cannot be ascertained or made certain.

D. Nothing contained herein shall be construed to re-

quire arbitrator of a strike or work stoppage which may

78a

occur at the natural expiration of the current term of

this agreement, unless this agreement is automatically

renewed or the term extended with modifications as herein

provided.

DISTRICT.

This agreement is to cover the follewing Pennsylvania

Counties in their entirety: Philadelphia, Delaware, Mont-

gomery, Bucks and Chester.

SCOPE OF OBLIGATION.

All of the aforegoing provisions shall be binding not only

upon the company, firm and individual who is signatory

to this agreement, but shall also be binding pon any

other operations, regardless of whether or not they are

under separate company or corporate names in which

the firm signatory to this contract has a substantiai

interest. It is the intent of the parties to this agree-

ment to bind not only the firm in question, but also to

make such contract coverage applicable to any operations

to which the signatory is related by virtue of common

direction or ownership in whole or in part in any five

county jurisdiction.

DURATION OF AGREEMENT.

1. This agreement shall go into effect on the

day of —————,, 19—, and shall continue from year to

year thereafter unless either party gives written notice

to the other, ninety days prior to any annual termination

date, of the desire to change any of the terms of this

agreement.

79a

EXHIBIT Il.

THIS AGREEMENT made and entered into this

day of —————,, 19—, by and between hereinafter called

the Employer, and the Philadelphia, Pennsylvania Build-

ing and Construction Trades Council, affiliated with the

AFL-CIO, hereinafter called the Union.

WITNESSETH:

In consideration of the mutual promises hereinafter

named, the parties hereto agree as follows:

RECOGNITION OF COUNCIL.

1. The employer agrees to recognize the Building and

Construction Trades Council of Philadelphia and Vicinity

as the spokesman of the workers in the industry and the

representative of the respective trades taken collectively.

EMPLOYMENT.

1. The Employer, with reference to work required by

him in the industry, agrees to enter into collective bar-

gaining agreements with only member Unions of the

Council which are recognized collective bargaining agents

for the particular trade or craft required for the job.

All such agreements shall contain the Union Security

Clause permitted by Sec. 8(f) (2) of the Labor Manage-

ment Relations Act of 1947 as amended.

2. The Employer further agrees to provide in their

specifications when doing any business with sub-contract-

ors for work on the job site, that such sub-contractors,

as a condition precedent to their commencing work on

the job site, will enter into collective bargaining agree-

ments only with a member Union of the Council who is

the recognized Collective Bargaining Agent of the par-

ticular trade. All such agreements shall contain the

80a

Union Security Clause permitted by Sec. 8 (f) (2) of the

Labor Management Relations Act of 1947 as amended.

3. The employment as above referred to includes

skilled, semi-skilled and unskilled labor on all work now

and hereafter being done directly and indirectly by the

Employer.

4. The employer agrees to abide by all the rules and

regulations of the respective trades affiliated with the

Building and Construction Trades Council, and to comply

with the rates of wages and the specified hours as recog-

nized by the respective trades. In the event that the

employer should engage sub-contractors to perform such

work, then the employer agrees that such sub-contractors

will observe hours, wages, fringe benefits and working

conditions as recognized by the different trades.

5. It is also agreed by the parties hereto that a list of

al! sub-contractors will be posted on the site of the job.

6. It is agreed by and between the employer and the

Council that both will exert every honorable means toward

the execution of this agreement, and will cooperate in

every possible way towards furthering the interests of

both parties hereto.

7. (a) All disputes, grievances, or complaints involv-

ing the interpretation or application of this Agreement

which cannot be resolved by the parties within twenty-

four (24) hours after either party has raised the issue

concerning the dispute, grievance or complaint, then

either party may request in writing the American Arbi-

tration Association to designate an Arbitrator within

twenty-four (24) hours to hear the issues so raised, and

said Arbitrator shall set a hearing and dispose of the

said issues within forty-eight (48) hours thereafter.

(b) The decision of the Arbitrator shall be final and

binding upon the parties. The cost of the Arbitration

shall be borne equally by the parties.

8la

(ec) Nothing contained herein shall be construed to re-

quire arbitration of a strike or work stoppage which may

occur at the natural expiration of the current term of

this Agreement, unless this Agreement is automatically

renewed or the term extended with modifications as

herein provided.

DISTRICT.

This Agreement is to cover the following Penna.

Counties in their entirety:

PHILADELPHIA, DELAWARE, MONTGOMERY, BUCKS and

CHESTER.

DURATION OF AGREEMENT.

1. This Agreement shall go into effect on the day

of , 19 , and shall remain in full force and

effect until the day of , 19 , and shall con-

tinue from year to year thereafter unless either party

gives written notice to the other, ninety days prior to

any annual termination date, of the desire to change any

of the terms of this Agreement.

IN WITNESS WHEREOF, the parties hereto have here-

unto set their hands and seals the day and year first

above written.

FOR THE

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