Amicus Curiae Brief — Brown v. Pro Football, Inc.

Po ed

In THE - |

Supreme Court of the United Stifen

OCTOBER TERM, 1995

ANTONY BROWN, ef al.,

Petitioners,

Vv.

Pro FoorTBALL, INC.,

d/b/a WASHINGTON REDSKINS, et al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF THE ALLIANCE OF MOTION PICTURE

AND TELEVISION PRODUCERS

AS AMICUS CURIAE SUPPORTING RESPONDENTS

RICHARD M. COOPER

Counsel of Record

ARI S, ZYMELMAN

WILLIAMS & CONNOLLY

725 12th Street, N.W. -

Washington, D.C. 20005

February 15, 1996 (202) 434-5000

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TABLE OF CONTENTS

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I.

II.

ITT.

THE CIRCUMSTANCES OF # MULTI-

EMPLOYER COLLECTIVE BARGAINING IN

THE MOTION PICTURE INDUSTRY ARE

QUITE DIFFERENT FROM THE CIRCUM-

STANCES OF BARGAINING IN A PROFES-

SIONAL SPORTS LEAGUE ..........0000000000000.......

THE POTENTIAL EFFECTS OF THIS CASE

ON COLLECTIVE BARGAINING IN THE

MOTION PICTURE INDUSTRY RAISE

SRE scatclnecsitunlnisboranhasein tonakdsoateeitvemheninaiissercn

CONCERTED MULTI-EMPLOYER CONDUCT

SOLELY AFFECTING A LABOR MARKET

SUBJECT TO COLLECTIVE BARGAINING

SHOULD BE GOVERNED BY LABOR LAW,

NOT BY ANTITRUST LAW ........................0.-0-.-

A. National Labor Policy Applies to, and the

NLRA Adequately Governs, Employer Con-

duct in a Labor Market Subject to Collective

I isn kiical i ar

B. The Same National Labor Policy and Labor

Law Principles That Apply to Single

Employer Collective Bargaining Units Also

Apply to Multi-Employer Units —........0000000.....

C. Concerted Unilateral Imposition by Employ-

ers in a Multi-Employer Bargaining Unit of

Terms They Previously Had Offered to the

Union Is Protected by National Labor Policy

as a Permissible Economic Weapon During

I ek chniartccdihiicaaiphinsaiss Gest adinan bhincbapiaidaieiniicbone

12

14

17

19

ii

TABLE OF CONTENTS—Continued

Page

D. A Labor Market Subject to Collective Bar-

gaining Is Peripheral to Antitrust Law........ 21

E. In a Labor Market Subject to Collective Bar-

gaining, Conduct by Employers or Unions

Directly Affecting Only the Labor Market

Should Be Governed by National Labor Pol-

icy Rather Than by National Antitrust

UIT isccicecniisncticaatibeiaimmncigitajecadas tied ete Se 25

IV. THIS COURT SHOULD NOT EXCLUDE THE

CONCERTED LOCKOUT IN A MULTI-

EMPLOYER BARGAINING UNIT FROM

THE NON-STATUTORY EXEMPTION ............. 29

FA cinisessviontiinschhoneaninsnpiindenlandlacdbatand allan 30

iii

TABLE OF AUTHORITIES

CASES: Page

Allen Bradley Co. v. Local 3, IBEW, 325 U.S. 797

RES aa ES © ERD CE acer are 18, 21

American Ship Bidg. Co. v. NLRB, 380 U.S. 300

GEARS en Oe ce 15, 25

Anderson v. Shipowners’ Ass’n, 272 U.S. 359

a lta 13

Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940).. 18, 22

Associated General Contractors, Inc. v. California

State Council of Carpenters, 459 U.S. 519

(SERRE ES RSS ee 14

Belknap, Inc. v. Hale, 463 U.S. 491 (1983) -............ 21

Charles D. Bonanno Linen Service, 243 N.L.R.B.

5 TRE SRT RR Ce DN A SO 17

Charles D. Bonanno Linen Service v. NLRB, 454

Re) RE REE Ae ne ne 6, passim

Connell Constr. Co. v. Plumbers & Steam/fitters

Local 100, 421 U.S. 616 (1975) ........................ 14, 21, 28

Detroit Newspaper Publishers Ass’n v. NLRB, 372

SE WE IEE REI, BIIIT D ccicreinecsisnsinetontmanchonssnonnene 5, 18

First Nat'l Maintenance Corp. v. NLRB, 452 U.S.

RSE STA IS Ne aoe 14, 25

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

a ccluenlislleenabnianne 20

Golden State Transit Corp. v. City of Los Angeles,

RS AE ay eee es 14

Golden State Transit Corp. v. City of Los Angeles

(“Golden State IT’), 493 U.S. 103 (1989) .......... 16, 28

H.A. Artists & Assocs., Inc. v. Actors’ Equity

po we | GS S| Rs | merce CREE 26

H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970)........ 14

Livadas v. Bradshaw, 114 S. Ct. 2068 (1994)... 16, 28

Local 174, Teamsters v. Lucas Flour Co., 369 U.S.

RSE EN OR SC Ye ene Eee 14

Local 76, Int’l Ass’n of Machinists v. Wisconsin

Employment Relations Comm’n, 427 U.S. 132

i siedeumabatibniced 16, 21

Local Union 1809, Amalgamated Meat Cutters v.

Jewel Tea Co., 381 U.S. 676 (1965) —.................. 18, 25

iv

TABLE OF AUTHORITIES—Continued

Page

Metropolitan Life Ins. Co. v. Massachusetts, 471

Tes II MUTI ccinscainiciescnssnonsansatscepaltibacdiabelelaecesnshaibatnati 14

NLRB v. Brown Food Store, 380 U.S. 278 (1965)... 15, 19,

29, 30

NLRB v. Crompton-Highland Mills, 337 U.S. 217

“ROMA T ROLE a TRS A aay neers AEP og CARR 2 Fe SR 20

NLRB v. Herman Sausage Co., 275 F.2d 229 (5th

SG RD cibnectichhtgsdidc cleaccicasodnacnib dae aes 17

NLRB v. Insurance Agents’ Int'l Union, 361 U.S.

4 RRR a eRe pate Cee eae Rea OAR ee 12, passim

NLRB v. Intracoastal Terminal, 286 F.2d 954 (5th

a a eel 17

NLRB v. Katz, 369 U.S. 736 (1962) ..................... 15, 17, 20

NLRB v. Mackay Radio & Tel. Co., 304 U.S. 333

5. |: SERS Accor ana tae eek Ree eee See : 15

NLRB v. Servette, Inc., 377 U.S. 46 (1964) ........... 15

NLRB v. Truck Drivers Local 449, Int’l Bhd. of

Teamsters (“Buffalo Linen’), 353 U.S. 87

1.) SERRE pe rare Bier eS ekcipmsbee Mee! Sete kN, 12, passim

NLRB v. Washington Aluminum Co., 370 U.S. 9

IEEE Kaho hy ARNE Ce APO AN Me! AI LE ep 15

North American Soccer League v. NLRB, 613 F.2d

1379 (5th Cir.), cert. denied, 449 U.S. 899

a ee 4,18

Radovich v. NFL, 352 U.S. 445 (1957) ........0.......... 13

Silver v. New York Stock Exch., 373 U.S. 841

PIE pat iaciciban deh cicteitetsintathdiabehensitiodubedeetibalinscsiaved ieee 28

Teamsters v. Morton, 377 U.S. 252 (1964) | Ce 21

Thornhill v. Alabama, 310 U.S. 88 (1940) .00000..... 15

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

PSE Lae a SMe ete re ly a eee 12, 13, 21

United States v. Aluminum Co. of Am., 148 F.2d

i 26

United States v. Hutcheson, 312 US. 219 (1941).. 26

STATUTORY PROVISIONS:

Ta Ta I a 25

Re Toh |. | RRR Renee: One eC eee nea 26

29 U.S.C. § 151 et seq. (1944) ...... SIT SR eR TOOL 5

Vv

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES: Page

Richard A. Posner & Frank H. Easterbrook, Anti-

NE Oe ND ince ian ceeisacachdetliaadeeciohclage 24

1 Philip Areeda & Donald F. Turner, Antitrust

COS TTS ilidicicctcinadabiba mantles 22

Jan Vetter, Commeniary on “Multiemployer Bar-

gaining Rules’: Searching for the Right Ques-

tions, 75 Va. L. Rev. 285 (1989) ........................-.. 6

1 Patrick Hardin (ed. in chief), The Developing

Labor Law (8d ed. 1992) .......................2...- 10, 17, 18, 20

Roger D. Blair & Jeffrey L. Harrison, Monopsony

| Se NCE: Serer IEF RRMA RAP a SA Aa OM. 23

BRIEF OF THE ALLIANCE OF MOTION PICTURE

AND TELEVISION PRODUCERS

AS AMICUS CURIAE SUPPORTING RESPONDENTS

This brief, in support of Respondents Pro Football,

Inc., et al., is submitted in accordance with Rule 37 of

the Rules of this Court. The Alliance of Motion Picture

and Television Producers (“AMPTP”) has obtained and

is filing herewith the written consent of Petitioners and

Respondents to the submission of this brief.

INTEREST OF THE AMICUS

AMPTP represents in multi-employer collective bar-

gaining approximately two hundred companies that pro-

duce filmed entertainment for exhibition in theaters and

on television (hereinafter “the motion picture industry”).

AMPTP conducts such bargaining with thirty-five guilds

and unions (hereinafter collectively “unions”) that repre-

sent employees in the industry. Because labor relations

in the motion picture industry may be profoundly affected

by the Court’s decision, this case is a matter of vital

concern to the employers in the industry.

SUMMARY OF ARGUMENT

The circumstances of multi-employer collective bargain-

ing in the motion picture industry differ from those of

bargaining in a professional sports league. Because the

firms in the industry are not a joint venture, there is no

structural necessity for multi-employer bargaining. Em-

ployers and unions engage in such bargaining voluntarily

because both find it advantageous; either side will aban-

don it if it no longer appears advantageous. Thus, em-

ployees in the industry do not have to choose between

collective bargaining and antitrust protection. They can

enjoy all rights under the NLRA and whatever protection

antitrust law may provide by choosing to bargain in

single-employer units.

Adoption of the Solicitor General’s position would

threaten the continuation of multi-employer bargaining in

this and similar industries. During impasse, if a union

2

used whipsaw tactics, the employers would be deterred

by antitrust law from responding with concerted use of

economic weapons. Even if employers acted individually

during impasse, they would still face daunting -antitrust

risks because the limited options permitted by labor law

would ensure some parallel conduct, and the duty to

conduct any renewed negotiations concertedly would

necessitate communications among the employers about

terms of employment.

National labor policy applies to, and the NLRA ade-

quately governs, employer conduct in a labor market

subject to collective bargaining. The NLRA establishes

a process that includes bargaining in good faith and resort

to economic weapons in aid of bargaining. Impasse is

merely a stage in that process.

The national labor policy and labor law principles that

apply to single-employer bargaining units also apply to

multi-employer units. Labor law addresses adequately the

additional considerations raised by a multi-employer unit.

Under labor law, concerted unilateral imposition by em-

ployers in a multi-employer unit of terms previously

offered to the union is a permissible economic weapon

during impasse. Unilateral imposition of terms is not

different in kind from other economic weapons available

to parties in a labor dispute.

A labor market subject to collective bargaining is, at

most, peripheral to antitrust law. Historically, there has

been little antitrust interest in conduct that affects only

a labor market. Antitrust can contribute little to resolu-

tion of a labor dispute because, almost always, antitrust

would be merely one among many influences on the terms

of the collective bargaining agreement that eventually

resolves the dispute.

Conduct affecting only a labor market subject to collec-

tive bargaining should be governed by labor law, not

antitrust law. Both laws concern process, not results.

Here, the process of labor law (collective bargaining

backed by economic weapons) should prevail over the

process of antitrust (competition). An exemption from

3

the antitrust laws for the entire collective bargaining

process is necessary to fulfill national labor policy.

In any event, the Court should protect the concerted

lockout as a necessary defense against whipsaw tactics.

ARGUMENT

I. THE CIRCUMSTANCES OF MULTI-EMPLOYER

COLLECTIVE BARGAINING IN THE MOTION

PICTURE INDUSTRY ARE QUITE DIFFERENT

FROM THE CIRCUMSTANCES OF BARGAINING

IN A PROFESSIONAL SPORTS LEAGUE.

There are important differences in the organization of

work and in economic structure between the motion pic-

ture industry and a professional sports league. Due to

those differences, our industry provides a setting for multi-

employer collective bargaining quite different from that

of a league.’

In the motion picture industry, work by the unionized

employees generally is project-based, and _ therefore

episodic. An employee generally does not work for only

one employer, but, rather, for a particular employer on

a particular film project for a period of weeks or months;

and, when that project is finished, the employee may

work on a different project for a different employer.

During the course of a year, an employee may work for

several different employers; and compensation may vary

from project to project. In a sports league, by contrast,

a player signs a contract with a particular team for one

Or more entire seasons, and plays under that contract

throughout its duration; even after a trade, the player

continues to be subject to the same contract (but with

a different contracting party).

Unlike the teams in a sports league, the firms in the

motion picture industry are not organized as a single

1 The offhand statement in Petitioners’ Brief {hereinafter “Pet.

Br.”’|] 44 that the structures of the two industries are the same is,

as will be shown, demonstrably incorrect.

i |

4

joint venture.* Motion picture production companies op-

erate independently of one another. In this industry, there

is no organization analogous to the NFL in professional

football. Therefore, there is no structural necessity for

multi-employer bargaining.* Such bargaining occurs only

because each union and each employer involved finds it ,

advantageous.

In the motion picture industry, multi-employer collec-

tive bargaining has existed for decades, and is entirely

voluntary on both sides. The employees are represented

not just by one union, but by thirty-five.* There are no

certified bargaining units. The employers have not chal-

lenged the claims by the unions to represent their respec-

tive members, and the multi-employer unit within which

2 There are also no multi-employer restraints on free movement

of employees, such as those in a sports league.

3In North American Soccer League v. NLRB, 613 F.2d 1379

(5th Cir.), cert. denied, 449 U.S. 899 (1980), the Board and the

court both found that a multi-employer bargaining unit was

appropriate because “the League exercises a significant degree of

control over essential aspects of the clubs’ labor relations.” 613

F.2d at 1382. No such finding has been made, or is possible, with

respect to the motion picture industry. There has never been a

determination by the NLRB or any court with respect to a multi-

employer bargaining unit in the motion picture industry.

4 AMPTP bargains with the American Federation of Television

and Radio Artists; The American Federation of Musicians of the

United States and Canada; Directors Guild of America, Inc.;

International Alliance of Theatrical Stage Employees and Moving

Picture Technicians, Artists and Allied Crafts of the United States

and Canada, and its twenty-three West Coast Studio Locals; Screen

Actors Guild, Inc.; Writers Guild of America, West, Inc.; Writers

Guild of America, East, Inc.; Studio Transportatien Drivers, Local

#399 of the International Brotherhood of Teamsters; International

Brotherhood of Electrical Workers, Local #40; United Association

of Journeymen and Apprentices of the Plumbing and Pipe Fitting

Industry of the United States and Canada, Local #78; Southern

California District Council of Laborers and its affiliate, Studio

Utility Employees, Local #724 (both affiliated with the Laborers’

International Union of North America, AFL-CIO); and the Opera-

tive Plasterers and Cement Masons International Association of the

United States and Canada, Local #7565.

5

bargaining with each union takes place has developed

entirely by mutual consent of unions and employers.

Although there have been labor disputes, impasses, and

Strikes from time to time, collective bargaining in the

industry is well-established, the multi-employer unit is

stable,” and in 175 negotiations since 1982, 170 have

resulted in a collective bargaining agreement without

resort by either side to economic weapons. This record

of relative labor peace has benefitted the consuming pub-

lic as well as the parties.

Thus, in the motion picture industry, employees do not

face the stark choice posed by the court of appeals be-

tween “the protections of the NLRA or the Sherman

Act,” Pet. App. 30a. They need not, as Judge Wald

put it, “forfeit” either set of protections in order to enjoy

the other, Pet. App. 34a. If employees are dissatisfied

with multi-employer bargaining or for any other reason

want to preserve whatever antitrust remedies are avail-

able against concerted employer conduct in the market

for their labor, the employees can, through their union,

withhold consent from multi-employer bargaining and,

instead, bargain with the employers individually, with

full enjoyment of all rights under the National Labor

Relations Act, 29 U.S.C. § 151 et seq. (1994) (“NLRA”).

See, e.g., Detroit Newspaper Publishers Ass’n v. NLRB,

372 F.2d 569 (6th Cir. 1967) (unions may unilaterally

withdraw from multi-employer bargaining unit and bar-

gain with employers individually ).

Except in an industry organized as a single joint ven-

ture, employees can always have collective bargaining.

The choice is not between collective bargaining and anti-

trust protection, but between multi-employer bargaining

and antitrust protection. Giving up antitrust protection

is simply a corollary of consenting to bargaining with a

group of employers for the very purpose of having them

5 From 1975 to 1982, the employers formerly in a single multi-

employer unit broke into two separate multi-employer units. Since

1982, however, the members of the AMPTP have negotiated as a

single urit with all of the unions.

6 |

act concertedly in the bargaining process. Similarly, be-

cause in the motion picture industry there is no structural

necessity for multi-employer bargaining, employers can

insist on single-employer bargaining if they view that as

more advantageous. In contrast, in the case of a sports

league, multi-employer bargaining appears to be a neces-

sity.

Pa ee mn

For the unions in our industry, multi-employer bargain-

ing provides at least the following advantages. First,

where work is episodic, employees generally do not work

long enough for a single employer to qualify for health

and pension benefit plans; therefore, by far the most

practical way to establish such plans is on a multi-

employer basis. Second, multi-employer bargaining makes

it easier for the unions to obtain standardization of scale

compensation, other terms of employment, and working

conditions throughout much of the industry; and it estab-

lishes a pattern likely to be accepted by employers out-

side the multiemployer unit. Thus, when employees

move from employer to employer, most of them work

under essentially the same terms and conditions of em-

ployment. Third, multi-employer bargaining provides

substantial savings in transaction costs for negotiating and

administering collective bargaining agreements.® For the

unions, multi-employer bargaining has two main disadvan-

tages: (i) the effectiveness of whipsaw strikes and other

whipsaw tactics is eliminated or greatly diminished by

employers’ ability to use concerted defensive weapons,

and (ii) employers may concertedly use the same

weapons Offensively in the bargaining process.

The employers also benefit to some extent from in-

creased efficiency attributable to standardization of terms

and conditions and from savings in transaction costs.

Their primary and overriding benefit, however, is from

6 Additional advantages of multi-employer bargaining to unions

generally are discussed in Charles D. Bonanno Linen Service v.

NLRB, 454 U.S. 404, 409 n.3 (1982); Jan Vetter, Commentary on

“Multiemployer Bargaining Rules’: Searching for the Right Ques-

tions, 75 Va. L. Rev. 285 (1989).

|

eT NT TE TR TTD

7

the ability to use economic weapons in concert. For

them, the principal disadvantage is that the unions can

shut down the entire industry with a strike, and their

power to do so is an ever-present factor in the bargain-

ing.

Finally, in the motion picture industry, unlike profes-

sional sports leagues, there has been no litigation with

respect to the use of economic weapons in a labor dis-

pute. There is no judicial experience with the applica-

tion of antitrust law to collective bargaining and labor

relations generally in this industry.

II. THE POTENTIAL EFFECTS OF THIS CASE ON

COLLECTIVE BARGAINING IN THE MOTION

PICTURE INDUSTRY RAISE CONCERN.

If the decision below were rejected on a basis appli-

cable to the motion picture industry, the framework for

bargaining in that industry would be shattered in a way

likely to lead to much more troubled labor relations. The

likely result is erosion or elimination, from the employer

side, of the multi-employer unit.

The Solicitor General’s position is that the non-

statutory exemption would terminate at impasse (or as

soon as counsel can advise that impasse has been

reached). Brief for the United States and the Federal

Trade Commission as Amici Curiae Supporting Petition-

ers [hereinafter “S.G. Br.”] 7. Thereafter, there would

be no non-statutory exemption for any concerted action by

the employers (other than renewed participation in nego-

tiations). Jd. at 18. Antitrust claims could be brought

against employers not only for concerted unilateral im-

position of terms (as occurred in this case), but also for

concerted maintenance of the status quo, a concerted

lockout (including a concerted defensive lockout in re-

sponse to a whipsaw strike), and any other concerted use

of an economic weapon offensively or defensively.’

7 The Solicitor General’s position thus goes far beyond the posi-

tion of Judge Wald, who would provide no exemption for concerted

imposition of terms, but would apply the non-statutory exemption

8

Under the Solicitor General's view, once impasse is

reached, the union could engage in whipsaw tactics and

the employers could not respond with a defensive con-

certed lockout without risking treble damage liability for

a per se antitrust violation, The union could also use or

threaten whipsaw tactics to extract interim agreements

from weaker employers, but the employers could not re-

spond (without antitrust risk) with either concerted main-

tenance of the status quo or concerted unilateral imposi-

tion of terms; nor could an individual employer withdraw

from the multi-employer unit and negotiate a separate

permanent agreement.

Moreover, even while pursuing whipsaw tactics, the

union could signal its readiness to resume bargaining.

The employers would then have a duty to bargain concert-

edly. Each meeting of the employers in connection with

the negotiations could be used by the union as further

evidence of an alleged conspiracy. The employers’ dis-

cussions at such meetings would arguably be subject to

discovery in antitrust litigation brought by the union. The

chilling effect on collective bargaining would be sub-

stantial.

Thus, the logic of the bargaining process would create

an enormous incentive for a union to bargain to impasse,

because then its economic weapons become much stronger

and the employers’ weapons much weaker (because no

longer permissibly concerted).

Petitioners contend that the decision below would

create the same kind of incentive on the employers’ side

to bargain to impasse to be able to impose terms uni-

to concerted use of other economic weapons. See Pet. App. 53a

n.7, Petitioners appear to be of two minds on this point. Their

general position is that the non-statutory exemption is coextensive

with a collective bargaining agreement, so that, without the consent

of the union, there would be no non-statutory exemption for any

use of an economic weapon by employers (before or after the reach-

ing of impasse). See, e.g., Pet. Br. 18. However, at Pet. Br. 40,

petitioners endorse Judge Wald’s positicn. See also Pet. App. 22a-

23a (reference to petitioners’ position below).

9

laterally. For two reasons, however, the situations of

unions and employers are not symmetrical, and unions

would have much stronger incentives and opportunity to

bargain to impasse than would employers.

First, in most circumstances, a union’s ability to use

whipsaw tactics with a threat of an antitrust claim against

any concerted employer defense is a more powerful

weapon than the employers’ ability concertedly to impose

terms unilaterally.

Before impasse, employers could respond to a whipsaw

strike or other whipsaw tactic by a concerted lockout or

other concerted defensive action. After impasse is

reached, however, any such action by the employers would

risk antitrust liability, in most circumstances for an al-

leged per se violation. Thus, the threat of treble damage

liability would strongly deter the employers from any con-

certed defense. The employers’ principal advantage from

multi-employer bargaining would thereby be destroyed.

The employers’ option at impasse to impose terms of-

fered to the union is, in general, not nearly so powerful.

That option does not destroy any defenses: the union can

still strike or use other tactics. Moreover, the option has

value only if the terms offered are materially less generous

than the status quo. In an economy characterized by in-

creasing productivity and by inflation, employers’ good

faith offers to unions will, in general, be more generous

than the status quo. Concerted unilateral imposition of

such terms is not an economic weapon at all, except as a

possible defensive response to a strike (in the hope that

the more generous terms will attract the employees back

to work).

Second, it would be easier for a union than for an

employer to conceal a strategy of deliberately bargaining

to impasse. Although unions (like employers) have a

duty to bargain in good faith, as a practical matter a

union could bargain to impasse on any of a variety of

mandatory subjects of bargaining. The union could sim-

ply adhere to one or another apparently legitimate de-

mand for improvement in pay or benefits or working

10

conditions. By contrast, the employers would have to

(i) propose a term materially less generous than the status

quo, and, probably, (ii) adhere to that proposal until

impasse. In most circumstances, such conduct would be

an obvious signal of bad faith. Employers whose overall

bargaining strategy is to offer terms less generous than the

status quo, with no reasonable basis for belief that the

union would accept them, in order to drive the negotia-

tions to impasse so that those terms could be imposed

unilaterally, would very probably be found to have com-

mitted an unfair labor practice. See, e.g., 1 Patrick Har-

din (ed. in chief), The Developing Labor Law 625-27

(3d ed. 1992) (citing cases) [hereinafter “Hardin”]. In

a multi-employer unit, moreover, multiple employers

would have to agree on the strategy; and that agreement

would be reflected in communications subject to scrutiny

in a later unfair labor practice proceeding. Thus, it is

more difficult for multiple employers, than for a single

union, to conduct and to conceal an unlawful bargaining

strategy. If any unfair labor practice is found, any uni-

lateral imposition of terms is improper." Thus, generally

that would not be a viable strategy for employers.”

The Solicitor General’s position threatens multi-

employer bargaining for additional reasons. Even if em-

ployers act unilaterally during impasse, the employees are

likely to have a non-frivolous basis for an antitrust claim

based on (i) parallel conduct (because, under labor law,

employers’ options during impasse are limited to main-

tenance of the status quo, imposition of terms offered to

the union, and lockout) and (ii) meetings among the

employers, necessary for good faith concerted bargaining

as required by labor law, at which the parallel conduct

could have been agreed to. As a practical matter, simul-

8 See n.17, infra.

® Petitioners’ analysis of incentives would apply, under current

law, to an employer in a single-employer unit. It has not been

thought, however, that the risk that individual employers will

improperly bargain to impasse so as to be able to impose terms

justifies a ban on unilateral imposition of terms.

11

taneous duties (i) under labor law to bargain concertedly,

and (ii) under antitrust law to act individually would

create an extraordinarily fertile field for antitrust claims.

If the bargaining process is punctuated by a series of

impasses and resumed negotiations, the problems for em-

ployers are aggravated. The Solicitor General does not

address whether, after the first impasse and while renewed

negotiations are ongoing, the non-statutory exemption

would immunize the employers’ concerted use of economic

weapons defensively or offensively. If the answer is that

it would not, then the incentive for a union to reach im-

passe is increased, because then the first impasse ensures

that the employers will be under an antitrust threat if

they take any concerted action during any subsequent

negotiations as well as during any impasse. If the answer

is that the exemption would cover concerted use of eco-

nomic weapons during resumed negotiations, then assess-

ment of the antitrust risk becomes very complicated.

Although the exemption turns on and off with the nego-

tiations, any similarity in the employers’ conduct during

periods of impasse and periods of negotiation can be

exploited in antitrust litigation.

Faced with the logic of the Solicitor General's position if

it were adopted by this Court, employers in our industry

are likely to conclude that the benefits of multi-employer

bargaining no longer outweigh the risks. Without multi-

employer bargaining, the employers would risk whipsaw

tactics, but that risk «vould be present even with it once

impasse is reached. The employers would give up the

Savings in transaction costs and whatever gains in effi-

ciency they derive from standardization of terms and

conditions; but those advantages probably would not out-

weigh the new and inescapable antitrust risks of multi-

employer bargaining.

If Judge Wald’s position were adopted, the results for

multi-employer bargaining in our industry would be less

severe, see pp. 29-30, infra, but still adverse. Unilateral

concerted implementation of terms or concerted main-

tenance of the status quo—principal defenses against

12

whipsaw interim agreements—would carry antitrust risk.”

The principal remaining concerted economic weapon to

protect the bargaining unit from whipsaw tactics and

bring the union back to the table would be a lockout—a

more painful, and less desirable, weapon for all concerned.

In sum, in the realities of collective bargaining, the two

sides of the issue presented here are not mirror images.

In the vast majority of circumstances, whipsaw tactics and

antitrust claims threaten the multi-employer unit in a way

and to a degree that imposition of previously offered terms

does not.

Ill. CONCERTED MULTI-EMPLOYER CONDUCT

SOLELY AFFECTING A LABOR MARKET SUB-

JECT TO COLLECTIVE BARGAINING SHOULD

BE GOVERNED BY LABOR LAW, NOT BY ANTI-

TRUST LAW.

This case involves matters central to national labor

policy, but, at most, peripheral to the antitrust laws. See,

e.g., United Mine Workers vy. Pennington, 381 U.S. 657,

664 (1965).

The NLRA establishes for employers and employees a

comprehensive. process for “the ordering of the parties’

industrial relationship through the formation of a con-

tract.” NLRB vy. Insurance Agents’ Int'l Union, 361 US.

477, 485 (1960). Multi-employer bargaining and em-

ployers’ concerted use of economic weapons permitted by

labor law in aid of bargaining are “a vital factor in the

effectuation of the national policy of promoting labor

peace through strengthened collective bargaining.” NLRB

v. Truck Drivers Local 449, Int'l Bhd. of Teamsters

(“Buffalo Linen”), 353 U.S. 87, 95 (1957). This Court

in Insurance Agents got to the heart of the matter: “The

presence of economic weapons in reserve and their actual

exercise on occasion by the parties, is part and parcel of

10 The Solicitor General’s comment that the rule of reason “may”

protect such conduct, S.G. Br. 19 n.5, is small comfort to employers

who face the risk of treble damages. Moreover, Congress did not

intend antitrust juries to substitute for the NLRB in administering

a code of conduct for labor relations.

13

the system that the Wagner and Taft-Hartley Acts have

recognized.” 361 U.S. at 489. As is illustrated by the

experience of collective bargaining in our industry (since

1982: 175 negotiations, and 170 agreements without

resort to economic weapons), the availability of the eco-

nomic weapons, with only occasional use, generally is

sufficient to drive the parties to agreement. That is how

Congress intended the process to work.

In contrast, a labor market with a multi-employer col-

lective bargaining process that affects only that market

is peripheral to the antitrust laws because (i) there is no

antitrust interest in competition among the employees,

e.g., Pennington, 381 U.S. at 664 (citing Apex Hosiery

Co. v. Leader, 310 U.S. 469, 664 (1940) ); and (ii) there

is no antitrust interest in competition among the employ-

ers in the unionized labor market: '' whether such com-

petition is preserved, restricted, or eliminated depends en-

tirely on the parties’ collective bargaining agreement.”

This Court has nevet held that concerted multi-

employer conduct that is permitted by labor law in the

collective bargaining process and that directly affects only

the labor market is subject to the antitrust laws; and it

should not do so now.”

11 In both Anderson v. Shipowners’ Ass’n, 272 U.S. 359 (1926),

and Radovich v. NFL, 352 U.S. 445 (1957), there was no recog-

nized union and no collective bargaining.

12 If the collective bargaining agreement preserves any competi-

tion among the employers with respect to terms and conditions

of employment, and if antitrust principles apply to such competition

(a question not raised by the instant case), the applicability of

antitrust law derives not independently from the decision of Con-

gress to enact the law but from the decisions of the parties to the

collective bargaining agreement (by virtue of power vested in

them by the NLRA) to make the law applicable. Such a situation

does not reflect an independent and strong antitrust interest in

governing conduct in such markets.

13 In the four cases in which the Court has considered the non-

statutory exemption—Allen Bradley Co. v. Local 3, IBEW, 325

U.S. 797 (1945); Pennington, 381 U.S. 657; Local Union 1809,

Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676 (1965) ;

14

A. National Labor Policy Applies to, and the NLRA

Adequately Governs, Employer Conduct in a Labor

Market Subject to Collective Bargaining.

“The ordering and adjusting of competing interests

through a process of free and voluntary collective bargain-

ing is the keystone of the federal scheme to promote in-

dustrial peace.” Local 174, Teamsters v. Lucas Flour

Co., 369 U.S. 95, 104 (1962). “[T]he Act is not in-

tended to serve either party’s individual interest, but to

foster in a neutral manner a system in which the conflict

between these interests may be resolved.” First Nat'l

Maintenance Corp. v. NLRB, 452 U.S. 666, 680-81

(1981). Thus, petitioners’ view of national labor policy

as favoring employees and unions, Pet. Br. 19, is incor-

rect. Once employees’ organizational and representational

rights are protected, national labor policy is neutral as

between employees/unions and employers.

Under national labor policy and the NLRA, once a

group of employees have chosen a union to represent

them, their employer is required to bargain with their

union. The duty of the employer (as well as the union)

is to bargain in good faith, albeit with no duty to reach

agreement on particular terms. H.K. Porter Co. v. NLRB,

397 U.S. 99, 102 (1970). “[T]he Act provides a frame-

work for the negotiations; it ‘is concerned primarily with

establishing an equitable process for determining terms

and conditions of employment.’” Golden State Transit

Corp. v. City of Los Angeles, 475 U.S. 608, 616 (1986)

(quoting Metropolitan Life Ins. Co. v. Massachusetts,

471 U.S. 724, 753 (1985)) (emphasis added).

The framework for this “equitable process” embraces

the duty to bargain in good faith and the use of economic

weapons in aid of bargaining positions. “[T]he use of

and Connell Constr. Co. v. Plumbers & Steamfitters Local 100, 421

U.S. 616 (1975)—the antitrust concern focused on an effect on a

product market. In Associated General Contractors, Inc. v. Cali-

fornia State Council of Carpenters, 459 U.S. 519 (1983), the

Court did not reach the claim presented under the exemption be-

cause it held that the union lacked antitrust standing.

food

15

economic pressure by the parties to a labor dispute is not

a grudging exception . . . ; it is part and parcel of the

process of collective bargaining.” Insurance Agents, 361

U.S. at 495.

Thus, as a matter of labor law, each side has offensive

and defensive economic weapons. Before or during im-

passe, a union can strike, NLRB v. Washington Alum-

inum Co., 370 U.S. 9, 14 (1962); and an employer can

respond by hiring permanent replacements. NLRB v.

Mackay Radio & Tel. Co., 304 U.S. 333 (1938). Before

or during impasse, a union can conduct a slowdown or

peaceful harassing tactics; and an employer can respond

by discharging employees who violate work rules. /nsur-

ance Agents, 361 U.S. at 493. During impasse, a union

can seek an interim agreement; an employer can respond

by unilaterally imposing terms it had previously offered

to the union. NLRB vy. Katz, 369 U.S. 736 (1962).

Before or after impasse, an employer can lock out its

employees and hire temporary replacements; American

Ship Bldg. Co. v. NLRB, 380 U.S. 300 (1965); NLRB

v. Brown Food Store, 380 U.S. 278 (1965); and a union

can respond by picketing to publicize the labor dispute

and signal others not to enter the employer’s premises,

Thornhill vy. Alabama, 310 U.S. 88 (1940), and by seek-

ing assistance from companies that do business with the

employer (but not from their employees), NLRB vy.

Servette, Inc., 377 U.S. 46 (1964). All of these eco-

nomic weapons are affirmatively permitted by national

labor policy, in aid of resolution of labor disputes by col-

lective bargaining."*

Indeed, this Court has held that, to the extent permitted

by labor law, the use of economic weapons in aid of col-

lective bargaining is a right guaranteed by national labor

policy against regulation under other laws. “ ‘[R]esort

14 Use of any of these weapons in a manner or for a purpose

inimical to collective bargaining, is prohibited. See, e.g., American

Ship, 380 U.S. at 308 (“[T]here is here no aliegation that the

employer used the lockout in the service of designs inimical to the

process of collective bargaining.”’).

16

to economic weapons should more peaceful measures not

avail’ is the right of the employer as well as the employee

.... Local 76, Int'l Ass'n of Machinists v. Wisconsin

Employment Relations Comm'n, 427 U.S. 132, 147

(1976) (footnote & citation omitted; emphasis added;

alteration in original). When the Court referred to “the

right,” it was stating national labor policy, not state law.

Similarly:

In Machinists we reiterated that Congress intended

to give parties to a collective bargaining agreement

the right to make use of “economic weapons,” not

explicitly set forth in the Act, free of governmental

interference. 427 U.S. at 150. “[T]he congressional

intent in enacting the comprehensive federal law of

labor relations” required that certain types of peace-

ful conduct “must be free of regulation.” /d., at 155.

The Machinists rule creates a free zone from which

all regulation, “whether federal or State,” id., at

153, is excluded.

Golden State Transit Corp. v. City of Los Angeles

(“Golden State II’), 493 U.S. 103, 110-11 (1989) (foot-

note omitted; emphasis added; alteration in original).”°

“{T]he interest in being free of governmental regulation

of the ‘peaceful methods of putting economic pressure

upon one another,’ Machinists, 427 U.S. at 154, is a

right specifically conferred on employers and employees

by the NLRA.” 493 U.S. at 112 (emphasis added). See

also id. at 115 (Kennedy, J., dissenting) (agreeing that

the interest in freedom from regulation originates in

“Congress’ intent to create the free zone of bargaining

... described in Machinists’’).

Under labor law, impasse is not the end of the collec-

tive bargaining process, the bargaining unit, the duty to

15 Thus, petitioners’ contention that the right to use economic

weapons in the process of collective bargaining derives solely from

state law, Pet. Br. 34-35, is incorrect. Whatever State law may

provide, this is a right “implicit in the structure of the Act (as

was the right to self-help upheld in Machinists).” Livadas v.

Bradshaw, 114 S. Ct. 2068, 2075 n.11 (1994).

17

bargain, or the applicability of national labor policy and

labor law. The collective bargaining process continues,

albeit by immediate means other than negotiation, with

a view to ultimate resolution by negotiation culminating

in an agreement. The bargaining unit remains intact.’

The duty to bargain survives, and can be activated by

either side at any time. “{AJn impasse normally only

suspends the duty to bargain, and changed circumstances

may end the suspension.” 1 Hardin at 696 (footnote

omitted}. National labor policy and labor law continue

to apply, and continue to govern the conduct of labor

and management, during and after impasse for the pur-

pose of achieving agreement.” In sum, “{a]s a recurring

feature in the bargaining process, impasse is only a tem-

porary deadlock or hiatus in negotiations ‘which in almost

all cases is eventually broken, through either a change of

mind or the application of economic force.’” Bonanno,

454 U.S. at 412 (quoting Charles D. Bonanno Linen

Service, 243 N.L.R.B. 1093, 1093-94 (1979) ).*

B. The Same National Labor Policy and Labor Law

Principles That Apply to Single-Employer Collec-

tive Bargaining Units Also Apply to Muliti-

Employer Units.

These principles of labor law apply to both single-

employer and multi-employer collective bargaining units.

6 For example, in the absence of unusual circumstances, impasse

does not justify an employer in withdrawing unilaterally from a

multi-employer unit. Bonanno, 454 U.S. 404.

‘7 For example, after impasse is reached, an employer may not

unilaterally implement terms better than those previously offered

to the union. Katz, 369 U.S. at 745. The employer also may not

unilaterally change any term that was not a subject of bargaining

with the unions. NLRB v. Intracoastal Terminal, 286 F.2d 954

(5th Cir. 1961). If the impasse resulted from bad faith bargaining

or an unfair labor practice on the part of the employer, the employer

is prohibited from implementing any unilateral changes. E.g.,

NLRB v. Herman Sausage Co., 275 F.2d 229 (5th Cir. 1960).

18 Thus, the Solicitor General greatly exaggerates the practical

and legal significance of impasse, and would give it further signifi-

cance that is contrary to national labor policy.

18

Multi-employer units have long been accepted by na-

tional labor policy. “[{I]n many industries the multi-

employer bargaining basis was a vital factor in the effec-

tuation of the national policy of promoting labor peace

through strengthened collective bargaining.” Buffalo

Linen, 353 U.S. at 95. This Court has identified main-

tenance of the stability of the multi-employer unit as a

“proper and pre-eminent goal” of labor law. Bonanno,

454 US. at 419.

As is true in the motion picture industry, multi-

employer bargaining, outside the context of professional

sports leagues, is entirely consensual.

Unlike other bargaining units, the multi-employer

unit is consensual. . . . The formation of the unit

must be entirely voluntary, the assent of the union

having representative status also being required. The

Board will not approve the creation of such a unit

over the objection of any party, union or employer.

1 Hardin at 511. See also Bonanno, 454 U.S. at 412;

Detroit Newspaper Publishers Ass’n, 372 F.2d 569.” As

in our industry, employers and unions in other industries

consent to multi-employer bargaining because it provides

to both sides substantial benefits.

When parties conduct collective bargaining on a multi-

employer basis, they do so under the same national labor

policy and the same rules of labor law that would apply

if they bargained employer by employer. In principle,

in entering into multi-employer bargaining, neither the

union nor the employers gain or lose any rights, protec-

tions, or duties under labor law. Cf. 1 Hardin at 508.

A multi-employer unit does, of course, introduce addi-

tional complexities. Stability of the employer in a single-

19 Professional sports leagues are atypical of the general run

of multi-employer bargaining units because a league is a joint

venture and, together with its member clubs, is in some respects

a single joint employer. See North Am. Soccer League, 613 F.2d

at 1382. Thus, in the setting of a league, multi-employer bargain-

ing may not be consensual.

ee

19 |

employer unit ordinarily is not a concern. A_ multi-

employer unit, however, can become unstable due to divi-

sions Originating within the employer group or to use of

whipsaw tactics by a union.”

Labor law addresses these risks adequately by prohibit-

ing (i) employer withdrawal from the unit once the

bargaining process has begun, Bonanno; and (ii) any

“separate agreements that would permit either the union

or the employer to escape the binding effect of an agree-

ment resulting from group bargaining,” id. at 415; and

by permitting (iii) a concerted lockout and hiring of

temporary replacements in defense against a whipsaw

strike, Buffalo Linen; Brown Food; and, arguably from

analogy to the law governing an employer in a single-

employer unit,” (iv) concerted maintenance of the status

quo or (after impasse) imposition of previously offered

terms.”

C. Concerted Unilateral Imposition by Employers in

a Multi-Employer Bargaining Unit of Terms They

Previously Had Offered to the Union Is Protected

by National Labor Policy as a Permissible Economic

Weapon During Impasse.

This Court has recognized that, after impasse is

reached, unilateral imposition of terms is just another

economic weapon. Bonanno, 454 U.S. at 415-16 n.9.

Petitioners’ argument, Pet. Br: 34-37, that such action is

simply a return to “backdrop rights” under state law and

not use of an economic weapon fine-tuned by federal

labor law, is incorrect.

0“ “‘Whipsawing’ is the process of striking one at a time the

employer members of a multi-employer association.” Buffalo Linen,

353 U.S. at 90 n.7. See also Bonanno, 454 U.S. at 421 n.1 (Burger,

C.J., dissenting).

21 Neither the Solicitor General nor petitioners contend that, in

a multi-employer bargaining unit, the employers’ concerted uni-

lateral imposition during impasse of terms previously offered to a

union is an unfair labor practice.

*2 Whipsaw interim agreements are jermitted after impasse has

been reached. Bonanno, 454 U.S. at 413.

20

Under the NLRA, an empoyer’s background right to

set the terms of employment disappears when a collective

bargaining relationship is established; and it is not

restored as long as that relationship continues—whether

or not bargaining is actually occurring. Cf. Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1, 22 n.15 (1987)

(referring to “the basic fact that a nonunion employer

.is freer to set employment terms than is a unionized

employer”). Labor law views any change in terms not

as the mere operation of a business, but as the use of an

economic weapon that may subvert both the union’s role

as representative of the employees and the overall process

of good-faith collective bargaining. Precisely because it

views the changing of terms as an economic weapon,

labor law regulates it closely—just as it regulates strikes,

lockouts, and other economic weapons.

Thus, an employer is prohibited by labor law from

changing terms in a way that would undermine the union

or the collective bargaining process. See Katz, 369 US.

at 745; Insurance Agents, 361 U.S. at 485. In general,

during negotiations, an employer must maintain the status

quo, Katz, 369 U.S. at 743; and, in a multi-employer

unit all the employers must do so. After impasse is

reached, an employer’s labor law right to impose terms

unilaterally is limited to those previously offered to the

union, NLRB v. Crompton-Highland Mills, 337 U.S. 217

(1949); and, in a multi-employer unit, the same rule

presumably applies to concerted action by the employers,

! Hardin at 508.

The NLRB and this Court long ago rejected the notion

that economic weapons are limited to the strike and lock-

out. Both employers and unions can use economic

weapons that are not mentioned in the NLRA but none-

theless are recognized by the NLRA.” See, e.g., Insur-

* Petitioners argue, without support, that the unilateral imposi-

tion of terms is somehow outside the free zone for economic

weapons because it is not “painful for both sides.” Pet. Br. 36

(emphasis in original). Also not painful for both sides, however,

are, e.g., employees’ slowdowns and other harassing tactics, (recog-

21

ance Agents; Machinists; Bonanno. Unilateral imposition

of terms is simply one of the permitted forms of economic

pressure (and less harmful to the employees than a lock-

out), which becomes available once the obligation to

maintain the status quo disappears upon impasse. That

it is part of the continued operation of a business does

not distinguish it from other economic weapons, e.g.,

hiring of replacement workers.

Petitioners assert that employers will bargain to im-

passe in order to impose terms indefinitely. Pet. Br. 41.

Impasse, however, is almost always temporary; and al-

most all labor disputes end in agreement. After impasse

is reached, it is economic pressure (by both unions and

employers) that brings parties back to the bargaining

table and to agreement.

In sum, unilateral imposition of terms during impasse

is among the economic weapons permitted and protected

by national labor policy and labor law.

D. A Labor Market Subject to Collective Bargaining

Is Peripheral to Antitrust Law.

It is undisputed that the employer conduct challenged

by petitioners affected only the labor market. Pet. App.

30a n.8. Therefore, the concerns about effects on product

markets that underlie Allen Bradley, Pennington, and

Connell are absent.

Historically, in the absence of alleged effects on prod-

uct markets, there has been little antitrust interest in the

conduct of parties in labor markets subject to collective

bargaining. Apart from a small number of private cases

involving professional sports leagues during the last

twenty years or so, see Pet. Br. 22 n.13, during the 106

nized as a permitted economic weapon in Insurance Agents, 361

U.S. at 490), employees’ appeals to managements of companies

doing business with an employer (recognized as a permitted eco-

nomic weapon in Teamsters v. Morton, 377 U.S. 252, 259 (1964)),

and employers’ hiring of permanent replacements for economic

strikers (recognized as a permitted economic weapon in Belknap,

Inc. v. Hale, 463 U.S. 491, 500 (1983) ).

TIE NE ee

22

years since enactment of the Sherman Act this has not

been an area to whose governance antitrust has made a

substantial contribution. In view of the long history and

widespread use of multi-employer bargaining, see Pet.

App. 25a-28a, the paucity of antitrust litigation in this

area is strong evidence that it is peripheral to antitrust

concerns.”

This historical record also reflects the fact that anti-

trust has little to contribute to the resolution of labor

disputes. If applied to such a dispute, the antitrust im-

pulse to promote consumer welfare by attacking supplier

cartels would be blocked by the statutory exemption.

E.g., Apex Hosiery, 310 U.S. at 504. If applied to a

multi-employer bargaining unit, the antitrust impulse to

promote economic efficiency by attacking a buyer cartel

would be blocked by the employers’ labor law duty to act

in concert in the bargaining process. As the instant case

illustrates, antitrust can function, at most, to readjust the

relative bargaining power of employees and employers.

In the end, the labor dispute would be resolved not by

antitrust law but by a collective bargaining agreement;

antitrust would be merely one factor influencing the terms

of that agreement.

In this kind of market, antitrust would not protect or

promote competition. In an industry without concerted

restraints on employer competition for employees (e.g.,

the motion picture industry), antitrust would not increase

competition among employers. The employer “restraints”

that would be attacked under the Sherman Act (e.g.,

concerted lockouts) operate not against individual em-

ployees one by one or outside the context of negotiating

a new contract, but rather only against the employees

collectively and during a labor dispute in the context of

collective bargaining. The “restraints” are simply weapons

*4See 1 Philip Areeda & Donald F. Turner, Antitrust Law

" 229d, at 202 (1978) (“Apart from the peculiarity of the sports

case, the general propositions are clear enough. In a context where

a union enjoys a collecitve bargaining immunity, the employer

would normally enjoy the same immunity.’”’).

23 -

in the economic warfare that is part and parcel of collec-

tive bargaining. They have no other function, purpose,

Or existence. Even in a sports league, antitrust would

not directly increase competition. True, the employees

might use their bargaining power (enhanced by an anti-

trust claim or by antitrust deterrence of concerted em-

ployer defenses against whipsaw tactics) to achieve in

the bargaining increased competition among teams for

players. They might instead, however, use that same

power to bargain for, e.g., higher minimum pay or better

benefits. Any increase in competition would be directly

attributable not to antitrust but to the bargaining goals

of the parties.

Judge Wald’s concern that a sports league’s monopsony

power might reduce the supply of talented athletes “to

the detriment of consumers,” Pet. App. 4la, is mis-

placed.” First, in this case, it is undisputed that no such

*5 Petitioners and Judge Wald hypothesize that employers acting

in concert are a collective monopsony and therefore are economically

inefficient. This hypothesis is factually questionable outside a sports

league; and, even as applied to a sports league, is incorrect as a

matter of economic theory.

In many industries, e.9., trucking, construction, sheet metal,

multi-employer bargaining units commonly do not include all em-

ployers, and therefore do not have monopsony power.

Even where it is arguable, as in the case of a sports league, that

the employers in the aggregate have monopsony power, there is no

reason to believe the outcome of collective bargaining would be

economically inefficient. The employers face a monopolist union;

therefore, there is a bilateral monopoly. Under economic theory,

in such a labor market, the quantity of labor demanded will be the

same as it would be if the union and all the employers constituted

a single firm, which set its demand for labor at the level that

maximized its profit. In such a market the price of the labor,

within certain bounds, is irrelevant to the quantity supplied be-

cause “price is not a rationing device under conditions of bilateral

monopoly, Instead, it is just a means of dividing the profit be-

tween the two parties.” Roger D. Blair & Jeffrey L. Harrison,

Monopsony 116 (1998) (emphasis in original). The profit-

maximizing quantity of labor depends not on the bargain between

union and employers (within certain bounds), but on the size of

the product market in which the employers participate. If, indeed,

24

effect occurred. Pet. App. 29a n.8. Therefore, on this

record, Judge Wald’s concern is speculative. Second, as

the film “Hoop Dreams” illustrates, there is no shortage

of young athletes aspiring to play in a professional sports

league. The notion that current levels of compensation

in professional team sports are artificially depressing the

supply of talented athletes is implausible.” Third, more

generally, and more importantly, where a union and em-

ployers consent to a multi-employer bargaining unit,

under national labor policy the compensation for the

employees in the unit is to be determined not by competi-

tion among the employers but by, or in accordance with,

a collective bargaining agreement. National labor policy

has no preference for setting compensation by competi-

tion among employers. A collective bargaining agreement

may specify a procedure for determining compensation;

that procedure may be competition; and that competition

may be constrained by whatever restrictions the union

and employers include in the agreement. Alternatively,

and far more commonly, the agreement may specify levels

of compensation and preclude wage competition alto-

gether.

In sum, a labor market subject to collective bargaining

is, at most, peripheral to antitrust law.

the NFL is an economically significant monopoly, then it is very

likely that the compensation of members of the NFLPA is above

the economically optimal level and includes a share of the NFL’s

monopoly profit. Even without a bilateral monopoly, there is little

chance that there will be any deadweight loss from monopsony in

this market because labor is not fungible and employers will be

-bie to discriminate to maximize economic efficiency. See Richard

A. Posner & Frank H. Easterbrook, Antitrust 150 (2d ed. 1981).

26 Moreover, it is far from clear that consumers are better served

by a league that abolishes all restraints on free agency and as a

result pays the highest competitive salaries and attracts the best

athletes than by a league that retains some such restraints, pays

somewhat lower salaries, attracts somewhat less talented athietes,

but has more evenly-matched teams. Judge Wald’s economic analy-

sis (the more the players are paid, the better for consumers) can-

not explain why some fans, faced with a choice, would prefer to

watch college basketball or football rather than professional be-

cause they view it as a better game.

25

E. In a Labor Market Subject to Collective Bar-

gaining, Conduct by Employers or Unions Directly

Affecting Only the Labor Market Should Be Gov-

erned by National Labor Policy Rather Than by

National Antitrust Policy.

Labor law and antitrust law are both about process,

not economic results. Each dictates a particular kind of

process for achieving results; neither dictates the results

themselves.”

Labor law establishes a framework for the process of

collective bargaining: organization of employees into

unions; recognition of unions by employers; and, between

unions and employers, negotiations backed by permitted

economic weapons. That framework “is premised on the

belief that collective discussions backed by the parties’

economic weapons will result in decisions that are better

for both management and labor and for society as a

whole.” First Nat'l Maintenance Corp., 452 U.S. at 678:

see also American Ship, 380 U.S. at 317. A principal

function of unions is to eliminate competition over wages.

See Jewel Tea, 381 U.S. at 692-93 (opinion of White,

J.); id. at 711 (“{B]usiness competition based on wage

competition is not national policy.”) (opinion of Gold-

berg, J.).™

Section 1 of the Sherman Act, 15 U.S.C. § 1 (1994),

mandates competition as the process for economic effi-

27 Thus, contrary to the analogy drawn in S.G. Br. 23, labor law

and antitrust law are quite different from the Fair Labor Standards

Act and the Occupational Safety and Health Act, which are

concerned not with the process by which substantive results (fair

labor standards, workplace safety) are reached, but with the sub-

stantive results themselves.

*8 Petitioners’ contention, Pet. Br. 33, that they have organized

to preserve competition distorts reality. If all that petitioners

wanted were competition, there would be no collective bargaining

process. By choosing to organize and enter into such a process,

petitioners seek the substitution of a collective bargaining agree-

ment for a regime of unrestrained competition. The existence or

non-existence of competition among the employers for the services

of petitioners will be determined not by the antitrust laws but by

the outcome of the bargaining process.

26

ciency and consumer welfare. Similarly, Section 2 of the

Act, 15 U.S.C. §2 (1994), bars actual and attempted

monopolization, but not the acquisition of monopoly by

“skill, foresight and industry.” United States v. Alumi-

num Co. of Am., 148 F.2d 416, 430 (2d Cir. 1945)

(L. Hand, J.).

The two processes around which labor law and anti-

trust law, respectively, are organized are fundamentally

different.

In the case of a multi-employer bargaining unit, labor

law affirmatively permits the concentration of economic

power on both the employee and employer side, directs

that the two aggregates bargain in good faith, and au-

thorizes them, in accordance with certain rules, to resort

to concerted use of economic weapons to bring about

ultimate agreement. National labor policy discourages

resort to the courts to resolve labor disputes.”

The process dictated by antitrust law is competition.

In the absence of the Clayton and Norris-LaGuardia Acts

and the non-statutory exemption, if antitrust would apply

to a labor market it would require competition among

employees and competition among employers as the proc-

esses that would determine the terms and conditions of

employment. Antitrust policy, moreover, encourages re-

sort to the courts to resolve claims of antitrust violations.

A fundamental problem with petitioners’ position is that

it would involve the courts in the forbidden task of bal-

ancing the economic power of employers and unions.

Concerted behavior by a multi-employer group is part of

the collective bargaining process protected by national

29 Originally, that policy was directed to protection of the organi-

zational activities of employees from judicial interference. See,

e.g., United States v. Hutcheson, 312 U.S. 219, 229-31 (1941).

Subsequently, the policy was given broader scope. “While the

Norris-LaGuardia Act’s bar of federal-court labor injunctions is

not explicitly phrased as an exemption from the antitrust laws, it

has been interpreted broadly as a statement of congressional policy

that the courts must not use the antitrust laws as a vehicle to

interfere in labor disputes.” H.A. Artists & Assocs., Inc. v. Actors’

Equity Ass’n, 451 U.S. 704, 714 (1981).

- Teo ae

27

labor policy; antitrust actions are not. Where labor mar-

kets are subject to collective bargaining, courts should not

be regulating labor relations or attempting to resolve

labor disputes in those markets in the guise of applying

the Sherman Act.

In the context of a labor dispute, the process called

for by national labor policy and that called for by anti-

trust policy are not merely different, but competing. The

Solicitor General argues they are not competing because,

once impasse is reached, employers can comply with both

labor law and antitrust law. S.G. Br. 17. In some cir-

cumstances, however, that is impossible. If each employer

acts individually and continues to operate, it must choose

either the status quo or terms offered to the union; and

both may require concerted action that the employees

would attack on antitrust grounds. An employer who

sought to avoid antitrust liability by individually imposing

terms less restrictive and therefore more generous than

both the status quo and the multi-employer offer would

commit an unfair labor practice.

More fundamentally, the test proposed by the Solicitor

General is inappropriate. The appropriate test is whether

national labor policy can be fulfilled if the non-statutory

exemption does not encompass, but leaves subject to anti-

trust challenge, concerted resort by employers to economic

weapons as permitted under labor law.”

8° The Solicitor General acknowledges that “the antitrust laws

should yield to the more specific and later enacted, obligations of

the NLRA” where the two conflict. S.G. Br. 16. The Solicitor

General recognizes a conflict, however, only when the legally

enforceable obligations the two laws impose on employers directly

conflict. Thus, the logic of the Solicitor General’s test would

preclude immunity for employers’ concerted use of economic

weapons even before impasse, a consequence the Solicitor General

does not propose. Moreover, the Solicitor General apparently does

not recognize a conflict when the policies of the two bodies of law

conflict or when the processes they require conflict. The Solicitor

General’s position is thus analogous to one that recognizes that a

State law is preempted by a federal law when it imposes an obliga-

tion inconsistent with an obligation imposed by the federal law,

28

National labor policy cannot be fulfilled if employers

in a multi-employer bargaining unit are subject to liability

for concertedly making “use of economic pressure .

[that] is part and parcel of the process of collective bar-

gaining.” Insurance Agents, 361 U.S. at 495. National

labor policy embraces multi-employer bargaining units

and protects the stability of such units. Such units will

not be stable if, during impasse, employers risk antitrust

liability if they respond to a whipsaw strike with a con-

certed lockout or if they respond to union efforts to

obtain whipsaw interim agreements with concerted main-

tenance of the status quo or concerted imposition of

terms. Nor is national labor policy fulfilled if employers,

having entered into a multi-employer unit with the con-

sent of the union, and having an ongoing duty to bargain

concertedly, must risk antitrust liability if they con-

certedly resort to economic weapons permitted by labor

law to advance their bargaining position. National labor

policy requires that employers under a duty to bargain

concertedly be able to support their bargaining with con-

certed use of economic weapons; antitrust law would

strip employers of that ability.

Thus, although exemptions from the antitrust laws

should be no broader than is “necessary to make the

{conflicting statutory scheme] work,” Silver v. New York

Stock Exch., 373 U.S. 341, 357 (1963), cited in S.G.

Br. 13, here the minimum exemption necessary to make

national labor policy work is an exemption for the proc-

ess of collective bargaining, including resort to concerted

use of economic weapons as permitted by labor law.

National labor policy cannot be fulfilled if concerted

conduct in the labor market that labor law treats as a

right, Golden State II, 493 U.S. at 110-12; Livadas,

but not when its provisions would frustrate implementation of

the policy of the federal law. In the field of preemption, this Court

has rejected such an approach. See, e.g., Connell, 421 U.S. at 635

(“The Court has held repeatedly that federal law pre-empts state

remedies that interfere with federal labor policy or with specific

provisions of the NLRA.”).

29

114 S. Ct. at 2075 n.11, can be treated under antitrust

law as a wrong.

IV. THIS COURT SHOULD NOT EXCLUDE THE CON-

CERTED LOCKOUT IN A MULTI-EMPLOYER BAR-

GAINING UNIT FROM THE NON-STATUTORY

EXEMPTION.

This Court should reject the Solicitor General’s invita-

tion to go beyond the facts of the case by holding that

the non-statutory exemption does not protect any con-

certed employer conduct during impasse. $.G. Br. 17-26.

The Solicitor General, contrary to the position of Judge

Wald in dissent, see Pet. App. 22a n.7," would, after

impasse is reached in a multi-employer bargaining unit,

lump the concerted lockout and other concerted employer

use of economic weapons with the concerted unilateral

impesition of terms, and would subject them all to anti-

trust challenge. /d. at 18 n.5. That approach would con-

flict with “the proper and pre-eminent goal [of] maintain-

ing the stability of the multiemployer unit.” Bonanno,

454 US. at 419.

[T]he ground rules for multiemployer bargaining

have not come into being overnight. They have

evolved and are still evolving, as the Board, employ-

ing its expertise in the light of experience, has sought

to balance the “conflicting legitimate interests” in

pursuit of the “national policy of promoting labor

peace through strengthened collective bargaining.”

Buffalo Linen, 355 U.S. at 95, 96.

Id. at 413. Among the ground rules that the Board has

established, and this Court has approved, is the right of

employers in a multi-employer unit to resort to a con-

certed lockout. See Buffalo Linen, 353 U.S. at 97;

Brown Food, 380 U.S. at 285 (allowing hiring of tem-

31 At least at some points in their brief, petitioners appear to

agree with Judge Wald, rather than with the Solicitor General, on

this issue. See n.7, supra.

30

porary replacements necessary to preserve “the right of

lockout recognized by Buffalo Linen”).

In Bonanno, this Court approved a Board rule that

impasse was not a sufficiently significant or unusual cir-

cumstance to justify withdrawal by an employer from the

multi-employer unit. Bonanno reflects a view not merely

of impasse, but also of the relationship among the em-

ployers in such a unit after impasse is reached. The

employers continue to be bound together even during

impasse. See id. at 414.

Buffalo Linen and Brown Food each involved a con-

certed lockout before impasse, and Bonanno involved an

attempt to withdraw from the multi-employer unit during

impasse. Thus, none of these cases involved a concerted

lockout during impasse. Nevertheless, the rationales

underlying all three cases—protection of the stability of

the multi-employer unit, legitimacy of resort to economic

weapons in aid of collective bargaining—together with

the relative insignificance of impasse in the overall collec-

tive bargaining process, support protection, under the

non-statutory exemption, of the use of a concerted lock-

out as an economic weapon during impasse.

As this Court has recognized, whipsaw tactics can

destroy a multi-employer unit. Brown Food, 380 U.S.

at 283-85; see also Buffalo Linen, 353 U.S. at 96. The

only effective defense, before or after impasse is reached,

is concerted action by the employers. Therefore, the con-

certed lockout and other economic weapons necessary to

preserve multi-employer units should be protected by the

non-statutory exemption from antitrust attack.

CONCLUSION

For the foregoing reasons, the judgment of the Court

of Appeals should be affirmed.

31

Respectfully submitted,

RICHARD M. COOPER

Counsel of Record

ARIS. ZYMELMAN

WILLIAMS & CONNOLLY

725 12th Street, N.W.

Washington, D.C. 20005

February 15, 1996 (202) 434-5000