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

No, 95-388

Supreme Court of the

OcTOBER TERM, 1995

ANTONY BROWN, et ai.,

Petitioners,

vz.

PRO FOOTBALL, INC.,

WASHINGTON REDSKINS, ef al.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

BRIEF OF THE CHAMBER OF COMMERCE OF THE

-» UNITED STATES OF AMERICA AND THE

NATIONAL ASSOCIATION OF MANUFACTURERS!

AS AMICI CURIAE IN SUPPORT OF RESPONDENTS

Of Counsel: ZACHARY D. FASMAN *

NEAL D. MOLLEN

foci boner i | JENNY C. WU

NATIONAL CHAMBER PAUL, HASTINGS, JANOFSKY

LITIGATION CENTER, INO. & WALKER

1615 H Street, N.W. - sar Pe Ave., N.W.

ashington 0062 r

be = bape he peg Washington, D.C. 20004-2400

(202) 508-9500

pore a , Counsel for Amici Curiae

NATIONAL ASSOCIATION OF Chamber of Commerce of the

MANOPACTORERS pistes States of America and

1881 Pennsyivaia Ave,N.W. _ranutrctarn ion of

Suite 1600, North Lobby

Washington, D.C. 20004-1790

(202) 837-8000 * Counsel of Record

February 16,1996 ;

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QUESTION PRESENTED

Whether members of a multi-employer bargaining unit

are subject to antitrust liability for jointly exercising, dur-

ing the collective bargaining process, economic weapons

authorized by the federal labor laws?

(i)

TABLE OF CONTENTS

By | ee ae

po 5. 5 nen

INTEREST AS AMICI CURIAE ...00020200...e.ecccceeceeeeeeee

el cnecemenntnenilii

ESRI Re ea ee a

I. THE BARGAINING PROCESS MUST BE IN-

SULATED FROM ANTITRUST LIABILITY

IF IT IS TO FUNCTION AS ENVISIONED

Oe a a ei a ccsnrcdnisaieiaaennds a

Il.

A.

B.

The Labor and Antitrust Laws Serve Irrecon-

I i a i

The Process of Collective Bargaining De-

pends Upon the Ability of the Parties To Use

the Forms of Self-Help Petitioners and Their

Amici Seek To Proscribe ..................................

. Post-Impasse Implementation of an Employ-

er’s Final Offer Is a Form of Economic Self-

Help, Part of the Bargaining Process, and an

Indispensable Tool for Forging Agreements..

IMPLIED IMMUNITY FOR SELF-HELP BY

MEMBERS OF AN EMPLOYER ASSOCIA-

TION MUST BE AVAILABLE THROUGH-

OUT THE BARGAINING PROCESS ...............

A.

Application of Antitrust Immunity to the

Bargaining Process Is Consistent With This

Court’s Antitrust Decisions ............

(iii)

10

10

12

21

21

iv

TABLE OF CONTENTS—Continued

B. The Labor and Antitrust Rights of Employ-

ees Can Be Given Full Effect While Giving

Employer Groups the Right To Act for

Mutual Aid and Protection -.........................

C. Antitrust Immunity Must Extend Beyond

Contract Expiration

CONCLUSION

Pree errr ree errr rr rrr Tee eee rere err i rrr rrr rrr rrr)

Page

v

TABLE OF AUTHORITIES

CASES Page

American Ship Building Co. v. NLRB, 380 U.S.

300 (1965) _.... PH ERDAS GOT eG Ne Bea HE MIO ES passim

Apex Hosiery Co. v. Leader, 310 U.S. 469 (1940).. 10, 26

Arizona v. Maricopa County Medical Society, 457

Re WUE MSIE siiakcunccstindade skiceecsiiede icc stasmeenas 8

Burgess Mining & Constr. Corp., 239 NLRB.

SAUER ee My BERR RR Meee ek A 8

Charles D. Bonanno Linen Serv., Inc. v. NLRB,

GRO Tia ee CE kis os ees .....-- passim

Circuit-Wire, Inc., 309 N.L.R.B. 905 (1992) —........... 17

Colorado-Ute Elec. Ass’n v. NLRB, 939 F.2d 1392

(10th Cir. 1991), cert. denied, 504 U.S. 995

bo: ROME REN ere ne eae i er Much TOR a, eh cr NO Se 17

Connell Constr. Co. v. Plumbers and Steamfitters

Local Union No. 100, 421 U.S. 616 (1975) ......... 1,11

Copperweld Corp. v. Independence Tube Corp., 467

Ty UN IE seteienlnie eee 2,7

First Nat’l Maintenance Corp. v. NLRB, 452 USS.

666 (1981) . inca beutatbcneiehian a 6

Fort Hailfax Packing Co. v. . Comne, 482 U.S. 1

(1987) ...... siecle glee elder acne n eA aE 14

Gateway Coal Co. v. UMW, 414 U.S. 368 (1974)... 2

General Ore, Inc., 126 N.L.R.B. 172 (1960)... 25

Golden State Transit Corp. v. Los Angeles, 475 U.S.

608 (1986) _....... -siciiadsn ledihneniness coseuids eldest eae! passim

Golden State Transit Corp. v. Los Angeles, 493 U.S.

A NE Son ener in ee Te rane. Cuaeev a passim

— v. New York Stock Exchange, 422 US.

659 (1975) . wees 22

H.K. Porter Co. ' v. -NLRP, 397 US. 99° (1970) . eee 15,17

Hi-Way Billboards, Inc., 206 N.L.R.B. 22 (1973),

enforcement denied on other grounds, NLRB v.

Hi-Way Billboards, Inc., 500 F.2d 181 (5th Cir.

1974) . passim

Joy Silk Mills, Ine. v. NLRB, 185 F.2d 732 (D.C.

Cir. 1950), cert. denied, 341 U.S. 914 (1951)... 17

Laborers Health & Welfare Trust Fund wv. Ad-

vanced Lightweight Concrete Co., 484 U.S. 539

eee ele a a 1,27

vi

TABLE OF AUTHORITIES—Continued

Page

Lapham-Hickey Steel Corp., 294 N.L.R.B. 395

Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992) _... 17

(1989), enf’d, 904 F.2d 1180 (7th Cir. 1990) _... 1

Litton Financial Printing Div. v. NLRB, 501 U.S.

190 (1991) .. 27

Local 189, Amalgamated Meat Cutters v. . Jewel Tea

+ ER (git | 8s | eo ee 11

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

Employment Rel. Comm’n, 427 U.S. 132 (1976).. 12, 13

Loewe v. Lawlor, 208 U.S. 274 (1908) —.................. 10

Metropolitan Life Ins. Co. v. Massachusetts, 471

* So Bt ee re RE A ode 14

Mitsubishi Motors Corp. v. Soler Chrysler-Ply-

mouth, Inc., 473 U.S. 614 (1985) —..........0.0......... 6, 10

Mount Pleasant v. Associated Elec. Co-op, 838 F.2d

Ce Ss TD wenclicecieletiseticherassenttatee aed x

NLRB v. Brown, 380 U.S. 278 (1965) ..................... 13, 23

NLRB v. Curtin Matheson Scientific, Inc., 494 U.S.

BD Ce i crcciisecanintentaxoicechehenctantaaeicohindacdaaaa teas 1

NLRB v. Gissel Packing Co., 395 U.S. 575 (1969) .. 2

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

WTS ROOD ciintctinccnnitndercsibinerteisianediiiaclia teres 12 j

NLRB v. International Van Lines, 409 U.S. 48

CRIUUED. seccsisinosistdsteiniasigiisnandbacenattiieaducitaaameanes 18

NLRB »v. Katz, 369 U.S. 736 (1962) EPA UREL ERENTR. 19, 27

NLRB v. Truck Drivers, 353 U.S. 87 (1957) .........passim

Nationel Gerimedical Hosp. & Gerontology Ctr. v.

Blue Cross, 452 U.S. 378 (1981) ........................... 21

Orit Corp., 294 N.L.R.B. 695 (1989), enf’d mem.,

Bf & Bi teh, Se, | | Ee See 18

Presto Casting Co., 262 N.L.R.B. 346 (1982), modi-

fied on other grounds, 708 F.2d 495 (9th Cir.

19838), cert. denied, 464 U.S. 994 (19838) ........... 17

R.A. Hatch Co., 263 N.L.R.B. 1221 (1982) —.......... 17

Reliable Roofing Co., 246 N.U.R.B. 716 (1979) ...... 25

Retail Assocs., Inc., 120 N.L.R.B. 388 (1958) _...... 25

Shipowners’ Ass’n of the Pacific Coast, 7 N.L.R.B.

1002 (1988), rev. denied on other grounds, 103

F.2d 933 (D.C. Cir.), aff'd, 308 U.S. 401 (1940) .. 8

vii

TABLE OF AUTHORITIES—Continued

Page

Signatory Labor Committee of the Colo. Contract-

ors’ Ass’n, 261 N.L.R.B. 1459 (1982) 17

Teamsters Local 167 v. United States, 291 U.S. 293

6 OEEES AIRE R OIE Aa ATE IT Ne ISIS EN ce 11

Teamsters Local 24 v. Oliver, 358 U.S. 283 (1959)... 12

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

(REE CRIED Sat BL ER EOE Oe Oe ee 11

United States v. Debs, 64 F. 724 (C.C.D. Til. 1894),

aff'd on other grounds, 158 U.S. 564 (1895) 10

United States v. National Association of Securities

Dealers, 422 U.S. 694 (1975) - ree Sees 22

Williams v.1.B. Fischer Nevada, 999 F. 2d 445 (9th

I ag Ls eS a ea 8

Worldwide Detective Bureau, 296 N.L.R.B. 148

STATUTES

National Labor Relations Act

Section 1. RPA NE RESTART A 3,11

Section 8(a) ( 5) . RNS AT as ORC LE ce 27, 28

ATR RNs A Ge RC ETT AA 27

Sherman Act

ss See dataiei dishes taieedgtialane passim

MISCELLANEOUS

A. Cox, Labor and the Antitrust Laws—A Prelim-

inary Analysis, 104 U. Pa. L. Rev. 242 (1955)... 10

Brief for the National Labor Relations Board in

American Ship Building Co. ». NLRB, 64-255

eee en Te 25

Brief for the National Labor Relations Board in

Charles D. Bonanno Linen Serv., Inc. v. NLRB,

80-931 (October Term 1980)

M. Derber, Employers Associations in the United

States in Employers Associations and Industrial

Relations: A Comparative Study (J.P. Wind-

muller & A. Gladstone eds., Oxford 1984) 2

M. S. Jacobs & R. K. Winter, Jr., Antitrust Princi-

ples and Collective Bargaining By Athletes: Of

Superstars In Peonage, 81 Yale L.J. 1 (1971)... 6

P. Areeda & D. Turner, Antitrust Law (1978)... 21

BRIEF OF THE CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA AND THE

NATIONAL ASSOCIATION OF MANUFACTURERS

AS AMICI CURIAE IN SUPPORT OF RESPONDENTS

This Brief is submitted by the Chamber of Commerce

of the United States of America (the “Chamber”) and

the National Association of Manufacturers ( “NAM”), as

amici curiae in support of respondents.’

INTEREST AS AMICI CURIAE

1. The Chamber is the largest federation of business

companies and associations in the world. With substantial

membership in each of the 50 states, the Chamber rep-

resents approximately 220,000 businesses, trade and pro-

fessional organizations and state and local chambers of

commerce, and serves as the principal voice of the Amer-

ican business community. An important function of the

Chamber is to represent the interests of its members in

important matters before this Court, the lower courts, the

United States Congress, the Executive Branch, and inde-

pendent regulatory agencies of the federal government.

Accordingly, the Chamber has sought to advance those

interests by filing briefs in more than 300 cases of im-

portance to the business community. Those cases include

Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992); NLRB

v. Curtin Matheson Scientific, Inc., 494 U.S. 775 ( 1990);

Laborers Health & Welfare Trust Fund v. Advanced

Lightweight Concrete Co., 484 U.S. 539 (1988); Golden

State Transit Corp. v Los Angeles, 475 U.S. 608 (1986);

Connell Constr. Co. v. Plumbers and Steamfitters Local

Union No. 100, 421 U.S. 616 (1975); and American Ship

Building Co. v. NLRB, 380 U.S. 300 (1965).

2. The NAM is the nation’s oldest and largest broad-

based industrial trade association. Its nearly 14,000 mem-

‘The Chamber and the NAM have received the written consent

of the parties to the proceeding below to file this Brief as Amici

Curiae. Copies of these letters are on file with the Clerk of the

Court.

2

ber companies and subsidiaries, including 10,000 small

manufacturers, employ approximately 85 percent of all

manufacturing workers and produce over 80 percent

of the nation’s manufactured goods. More than 158,000

additional businesses are affiliated with the NAM through

its Associations Council and National Industrial Council.

The NAM has regularly participated in cases before this

Court raising important labor relations and antitrust issues,

including Copperweld Corp. v. Independence Tube Corp.,

467 U.S. 752 (1984); Gateway Coal Co. v. UMW, 414

U.S. 368 (1974); and NLRB v. Gissel Packing Co., 395

U.S. 575 (1969).

3. A substantial number of the members of both the

NAM and the Chamber (collectively “the amici’) engage

in multi-employer and other forms of coordinated bargain-

ing. Multi-employer bargaining in this country is “as old

as the collective bargaining process itself,” and dates to at

least the eighteenth century. M. Derber, Employers As-

sociations in the United States in Employers Associations

and Industrial Relations: A Comparative Study, 79 (J.P.

Windmuller & A. Gladstone eds., Oxford 1984). It is the

dominant form of labor negotiations in many sectors of

the economy, and is important on a national or regional

basis in many others. Employer-members of the amici in

the garment, transportation, printing and publishing, min-

ing, retail, construction, maritime, retail food, restaurant,

hotel, and building services businesses engage in multi-

employer bargaining on a local, regional, or national basis.

4. The court of appeals below held that the non-

statutory labor exemption to the Sherman Act insulates

from antitrust liability economic self-help taken by mem-

bers of a multi-employer bargaining association in the

bargaining process once a bargaining impasse has been

reached. This result, we believe, is required by the struc-

ture of the National Labor Relations Act and the deci-

sions of this Court interpreting that statute, and is con-

sistent with this Court’s decisions accommodating the anti-

trust laws with conflicting statutory schemes.

3

5. The NLRA encourages the “practice and procedure

of collective bargaining,” 29 U.S.C. § 151, by creating a

system of private industrial dispute settlement in which the

parties themselves are able to structure their relationships

without government supervision. The Court has been

scrupulous in forbidding federal, state or local interference

with this congressionally mandated “free play of economic

forces,” whether that interference has been sought by labor

or Management, recognizing repeatedly that the threat and

use of economic weapons by management and labor are

essential to the system of private governance upon which

our labor laws are premised. This system is inconsistent

with the proposition advanced here by petitioners and

their amici—that post-impasse imposition of the terms of

the employer’s final offer in bargaining—action plainly

privileged under the NLRA—can form the basis for an

antitrust action in the federal courts. If petitioners are

correct, virtually every multi-employer bargaining dispute

is likely to be resolved in a federal court treble damage

antitrust action, instead of being settled privately by the

contending parties without government interference.

6. Limitations on the utility of multi-employer _bar-

gaining are of particular concern to some of the smallest

members of the amici. The parties in this case Participate

in a highly visible and lucrative economic enterprise that

could hardly be more different from the typical multi-

employer bargaining unit. As this Court quite accurately

noted nearly forty years ago, the process of multi-employer

bargaining became more prevalent after the Wagner Act

of 1935 as smaller employers “sought through group bar-

gaining to match increased union Strength.” NLRB y.

Truck Drivers, 353 U.S. 87, 94-95 (1957). For small-

scale manufacturers and for small employers in the restau-

rant, hotel, retail and printing industries, for example,

the mutual aid and protection found in group bargaining

is not merely beneficial, but can be essential for economic

survival. For these relatively small enterprises, the argu-

ments advanced by the petitioners and their amici pose

particularly dire consequences.

4

STATEMENT

1. The professional football teams of the National

Football League (“NFL”) engage in collective bargaining

with their players through a multi-employer bargaining

association called the National Football League Manage-

ment Council (“Management Council”). The players are

represented in bargaining by the National Football League

Players Association (“NFLPA” or “Union”).

In 1989, the Management Council proposed to the

NFLPA that each club in the league be permitted to

establish a “developmental squad” for the purpose of re-

taining and training promising but inexperienced players

who were not skilled enough to make the regular team

rosters. The Management Council proposed that these

players be paid at a uniform rate of $1000 per week.

Although the NFLPA was willing—indeed eager—to

agree to the development squad concept, it adamantly

refused to bargain with the Management Council on the

subject of a collective wage rate for the players on such

a squad. The NFLPA candidly told the Management

Council that “all players, including developmental, should

have the right to negotiate salary terms, and no fixed wage

for any group is acceptable to the NFLPA.” Pet. App. 7a

(emphasis added.) Although the Management Council

again tried to engage the NFLPA in negotiations over a

collectively-bargained wage structure for the new develop-

mental squads, id., the NFLPA’s intractable, institutional

objections to collectively bargained wage rates soon pro-

duced an impasse.

The Management Council announced that in light of the

bargaining impasse, it would implement unilaterally the

offer it had made to the Union. Neither the petitioners nor

the NFLPA filed an unfair labor practice charge with the

National Labor Relations Board (“NLRB”) challenging

the right of the Management Council to take this action

under the labor laws; indeed, it appears that the petitioners

and their amici concede that the actions of the Manage-

la

5

ment Council were entirely consistent with the clubs’ col-

lective rights and obligations under the NLRA. Rather,

the petitioners, a group of developmental squad players

subject to the $1000 wage rate, filed this action under

Section 1 of the Sherman Act against the NFL and each

of the clubs challenging the Management Council’s uni-

lateral implementation of terms as an unlawful restraint

of trade.

2. a. The clubs filed a motion for summary judgment

in the district court, arguing that their concerted conduct

was immunized from antitrust challenge by the so-called

“non-statutory” labor antitrust immunity or exemption.

The district court denied this motion, and granted peti-

tioners’ competing motion for summary judgment on this

question. The district court found that the non-statutory

exemption immunized the product of collective bargain-

ing, i.c., the agreement itself, but “question[ed] the wis-

dom” of applying the exemption to bargaining tactics

adopted by a multi-employer association in the course of

bargaining after the expiration cf the previous agreement.

Pet. App. 72a.’ Opining that the procedures established

by the NLRA for fostering successful collective bargaining

negotiations had proven ineffective, the court concluded

that the NLRA’s bargaining procedures could profitably

be supplemented with the spectre of antitrust liability:

“The certainty that treble damages under the antitrust

laws would attach after a date certain [to collective action

by an multi-employe- bargaining association] would cre-

ate the atmosphere of economic certainty and urgency

necessary for the parties to negotiate seriously and sign

a new collective bargaining agreement.” Pet. App. 73a-

74a. The court subsequently found that the Management

Council’s action was a per se violation of the Sherman

Act and, after a trial on damages, awarded petitioners

* The district court thus also decided that under the Sherman

Act, absent explicit Union permission, the clubs were prohibited

from giving continuing effect to the terms of the expired collective

bargaining agreement. Pet. App. 72a-80a.

6

$30.35 million in damages and attorneys’ fees of $1.745

million. Pet. App. 9a.

b. The United States Court of Appeals for the District

of Columbia Circuit reversed. In a panel decision written

by Chief Judge Edwards, the court of appeals recognized

that the fundamental goals of the Sherman Act and the

later-enacted NLRA are, in important respects, antithet-

ical to one another. The Sherman Act, the court noted,

proscribes agreements in restraint of trade in order “to

promote the national interest in a competitive economy.”

Pet. App. 3a, quoting Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 635 (1985). Con-

versely, the NLRA “contemplates collusive activity on the

parts of both employees and employers,” and was in-

tended by Congress to foster agreements which collec-

tively fix the price of labor in a particular company, or,

in the multi-employer context, for employers throughout

a given industry within a particular region or on a na-

tional basis. Pet. App. 3a, 25a.

Accommodating these disparaie goals, the court of ap-

peals carefully reviewed the system of private industrial

governance embodied in the NLRA. As the court ex-

plained, the NLRA’s obligation to bargain in good faith

“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.” Pet. App. 17a, quoting First

Nat’l Maintenance Corp. v. NLRB, 452 U.S. 666, 678

(1981). Because the availability of these “economic

weapons” is a predominant feature of collective bargain-

ing under the NLRA, the court properly concluded that

imposing antitrust liability on a multi-employer bargain-

ing association for using those weapons—conduct that is

unquestionably privileged under the NURA—‘would both

subvert national labor policy and exaggerate federal anti-

trust concerns.” Pet. App. 29a. To accept the district

court’s rule, the court held, would be to hold “that hard

bargaining by employers with unions violates the Sherman

Act.” Id., quoting M. S. Jacobs & R. K. Winter, Jr., Anti-

7

trust Principles and Collective Bargaining By Athletes:

Of Superstars In Peonage, 81 Yale L. J. 1, 27 (1971).

Finding that this Court's decisions had not definitively

addressed the scope of the non-statutory exemption, Pet.

App. 14a-I5a, Chief Judge Edwards concluded that “the

exemption must be broad enough . .. to shield the entire

collective bargaining process established by federal law,”

Pet. App. 16a, and that “the nonstatutory labor exemp-

tion waives antitrust liability for restraints on competition

imposed through the collective bargaining process, so long

as such restraints operate primarily in a labor market

characterized by collective bargaining.” Pet. App. 29a.

¢. Judge Wald dissented. Although apparently agree-

ing that the non-statutory exemption should protect the

bargaining process, Judge Wald distinguished between

“terms” of employment and ‘tactics” of bargaining, find-

ing that only the latter deserved antitrust protection. Pet.

App. 50a-5la. While recognizing that post-impasse uni-

lateral imposition “may qualify” as an economic pressure

tactic intended to produce agreement, citing American

Ship Building v. NLRB, 380 U.S. 300, 316 (1965).

Judge Wald nonetheless rejected that possibility and con-

cluded as a matter of law that unilateral implementation

“is best understood not as a ‘bargaining tactic’ but as part

of the employer’s residual right to continue operating as

dictated by business necessity once her statutory duty to

bargain has been exhausted.” Pet. App. Sla. Judge Wald

concluded that bargaining ceases at impasse and therefore

“at the point of impasse—when an agreement is no longer

in sight or even being sought—immunity from antitrust

liability for terms employers unilateraly impose should

terminate.” Pet. App. 60a.*

% To our knowledge, no party in this case has addressed, below

or in this Court, whether a multi-employer bargaining association

is a single economic unit beyond the reach of Section 1 of the

Sherman Act, which applies only to contracts, combinations or

agreements in restraint of trade between separate entities. Copper-

weld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984). The

8

SUMMARY OF ARGUMENT

As the United States and the Federal Trade Commis-

sion (collectively referred to as “the United States” or

“the Government”) concede in their brief, if “there is a

conflict between the labor laws and the antitrust laws

such that both cannot be given full effect, the antitrust

laws should yield to the more specific, and later enacted,

obligations of the NLRA.” Brief of the United States

and the Federal Trade Commission as Amici Curiae

Supporting Petitioners (“U.S. Br.”) at 16-17. Applica-

tion of the antitrust laws to the conduct at issue in this

case would drive multi-employer bargaining disputes into

the federal courts, thus frustrating fundamental precepts

of national labor policy.

The federal labor laws authorize collective action by

both labor and management to fix prices in the labor

market, conduct that, absent exemption or immunity, nor-

mally would be illegal under the antitrust laws. The Court

has repeatedly recognized that this inherently collusive and

anti-competitive system of industrial dispute settlement

created by Congress in 1935 can function only if the

parties are free to act in their own self-interests and settle

National Labor Relations Board has always “regarded .. . a multi-

employer bargaining group... as the employer for bargaining pur-

poses.” Burgess Mining & Constr. Corp., 239 N.L.R.B. 92, 93 (1978)

(emphasis added); Shipowners’ Ass’n of the Pacific Coast, 7

N.L.R.B. 1002 (1938), rev. denied on other grounds, 103 F.2d 933

(D.C. Cir.), aff'd, 308 U.S. 401 (1940). Thus, for the limited pur-

poses of negotiating with a common union, the members of an em-

ployer group form a single economic enterprise. Under these cir-

cumstances, it makes little sense to treat the members of the multi-

employer group as disparate economic actors. Cf. Arizona v.

Maricopa County Medical Society, 457 U.S. 332, 356 (1982)

(“fijn ... joint ventures, the partnership is regarded as a single

firm competing with other sellers in the market’); Williams v.

1.B. Fischer Nevada, 999 F.2d 445 (9th Cir. 1993) (Section 1 vio-

lation impossible where franchisor and franchisee form a single

economic unit); Mount Pleasant v. Associated Elec. Co-op, 838

F.2d 268 (8th Cir. 1988) (members of rural electrical co-operative

were single economic unit even though each was separately in-

corporated).

9

their disputes privately, without interference by any gov-

ernmental authority. The Clayton Act’s express exemp-

tion for union collective action, as well as the so-called

“non-statutory exemption” at issue here, seek to harmonize

the conflicting policies underlying the federal labor and

antitrust laws by preserving a broad sphere within which

both management and labor can act without legal inter-

diction under the Sherman Act.

Petitioners and their amici, while supposedly acknowl-

edging the primacy of the collective bargaining process,

in fact ask the Court to undercut this dispute resolution

system by authorizing recourse to federal antitrust laws

in the midst of labor disputes involving multi-employer

associations. Their various claims—that management’s

right to impose the terms of its final offer following a

bargaining impasse is a mere “common law” rather than

federal statutory right, or that all “restraints of trade” con-

tained in a bargaining agreement must be eliminated when

the contract expires or an impasse is reached—all are

founded on serious misconceptions about the bargaining

process contrary to the teachings of this Court. If adopted

by the Court, the rules petitioners posit would make com-

monplace federal court involvement in the give-and-take

of multi-employer collective bargaining, something Con-

gress plainly did not intend.

Petitioners and their amici apparently believe that or-

ganized labor should be free to agree to bargain on a

multi-employer basis, reaping the benefits of union collec-

tive action by fixing wages and benefits on a broad scale,

while at the same time denying the employers in a lawful

competing association correlative rights to unit-wide self-

defense. This transparently partisan reading of the non-

statutory exemption would destroy multi-employer bar-

gaining, is wholly inconsistent with federal labor policy

and should be rejected by this Court.

10

ARGUMENT

I. THE BARGAINING PROCESS MUST BE INSU-

LATED FROM ANTITRUST LIABILITY IF IT IS

TO FUNCTION AS ENVISIONED BY CONGRESS

A. The Labor and Antitrust Laws Serve Irreconcilable

Goals

“The purpose and effect of every labor organization is

to eliminate competition in the labor market.” A. Cox,

Labor and the Antitrust Laws—A Preliminary Analysis,

104 U. Pa. L. Rev. 242, 254 (1955). Thus, trade union-

ism cannot be effective in achieving its principal goals

“unless organization is co-extensive with the market and

eliminates price competition based on differences in labor

standards.” Jd. at 276, citing S. Webb & B. Webb, /n-

dustrial Democracy (1902); see also Apex Hosiery Co.

v. Leader, 310 U.S. 469, 503 (1940) (“an elimination

of price competition based on differences in labor stand-

ards is the objective of any . . . labor organization”).

These goals are antithetical to the central mission of

the Sherman Act—‘“to promote the national interest in a

competitive economy.” Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 635 (1985).

Nearly 90 years ago, this Court held that the Sherman

Act “prohibits any combination whatever to secure action

which essentially obstructs the free flow of commerce be-

tween the states, or restricts, in that regard, the liberty

of a trader to engage in business.” Loewe v. Lawlor,

208 U.S. 274, 293 (1908). And, until Congress passed

the Clayton Act in 1914, the courts routinely held that

labor unions were just this sort of combination in re-

straint of trade. /d.; United States v. Debs, 64 F. 724

(C.C.D. Ill. 1894), aff'd on other grounds, 158 U.S. 564

(1895).

The Clayton Act was a direct response to cases such

as Loewe, and it explicitly excepted labor organizations

from the scope of the Sherman Act’s proscriptions. The

Clayton Act’s statutory exemption, however, did “not ex-

I]

empt concerned action or agreements between unions and

nonlabor parties.” Connell Constr. Co. v. Plumbers and

Steamfitters Local Union No. 100, 421 US. 616, 622

(1975); cf., Teamsters Local 167 v. United States, 291

U.S. 293 (1934) (Clayton Act was not intended to im-

munize price-fixing agreement between union and busi-

nesses). Because every collective bargaining agreement

is, by definition, such an agreement, application of the

Statutory exemption in the Clayton Act could not alone

reconcile the intent of the antitrust laws with the aspira-

tions of the 1935 Wagner Act—to foster “the practice

and procedure of collective bargaining.” See Section 1

of the NLRA, 29 U.S.C. § 151.

For this reason, in a series of decisions issued during

the past 30 years,* this Court has created a non-statutory

antitrust exemption designed to accommodate the federal

policy of encouraging collective bargaining. As the ma-

jority below correctly observed, each of the Court’s prior

cases involved the scope of protection to be afforded a

collective bargaining agreement. Pet. App. 13a-1l4a.

From this, and from dicta found in these decisions

discussing the need to protect collective bargaining agree-

ments from antitrust challenge, petitioners and their amici

unjustifiably conclude that the protections of the non-

statutory exemption do not shield the bargaining process,

but instead must be limited to collective bargaining agree-

ments. This wooden and cramped reading of the non-

statutory exemption fails to appreciate the central impor-

tance of the bargaining process and, in practice, would

result in subverting congressional intent by forcing multi-

employer labor disputes into antitrust litigation rather

than resolving them through bargaining.

4 See Connell Constr. Co. v. Plumbers & Steamfitters Local Union

No. 100, 421 U.S. 616 (1975) ; United Mine Workers v. Pennington,

381 U.S. 657 (1965); Local 189, Amalgamated Meat Cutters v.

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

ee

ene on

12

B. The Process of Collective Bargaining Depends Upon

the Ability of the Parties to Use the Forms of Self-

Help Petitioners and Their Amici Seek To Proscribe

When it enacted the Wagner Act in 1935, Congress

created a private dispute resolution mechanism through

which management and labor could “establish . . . their

own charter for the ordering of industrial relations.”

Teamsters Local 24 v. Oliver, 358 U.S. 283, 295 (1959).

Rather than compelling agreement or prescribing some

form of binding arbitration, Congress envisioned that un-

der the Act “[d]isputes about wages, hours of work, and

other working conditions [wJould . . . be resolved by the

play of competitive forces... .” S. Rep. No. 573, 74th

Cong., Ist Sess., 2 (1935), cited in Golden State Transit

Corp. v. Los Angeles, 475 U.S. 608, 617 (1986) (“Gol-

den State I’).

Thus, “economic weapons in reserve, and their actual

exercise On Occasion by the parties [were intended to be]

part and parcel of the system that the Wagner and Taft-

Hartley Acts recognized.” NLRB v. Insurance Agents’

Int'l Union, 361 U.S. 477, 489 (1960). Indeed, often

“it [is] only fear of the economic consequences of dis-

agreement that turns the parties to facts, reason, a sense

of responsibility, a responsiveness to government and pub-

lic opinion, and moral principle.” /d. at 489-90. For

this reason, the “use of economic pressure by the parties

to a labor dispute is not a grudging exception [under]

. . the [federal] Act,” but an essential attribute of the

system of private dispute resolution Congress devised.

Lodge 76, Int'l Ass'n of Machinists v. Wisconsin Employ-

ment Rel. Comm'n, 427 U.S. 132, 149 (1976) (“Ma-

chinists’) (quoting Insurance Agents’ Int'l Union, 361

U.S. at 498).

Given the potential for pain inherent in the use of these

economic weapons, however, it is not surprising that both

management and labor repeatedly have sought refuge from

their labor disputes in federal, state, and local regulatory

schemes. In Insurance Agents, the employer asked the

TLRB and this Court to condemn a work slowdown. In

eed

12

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

(1965), NLRB v. Brown, 380 U.S. 278 (1965), and

NLRB vy. Truck Drivers Local Union No. 449, 353 U.S.

87 (1957) (“Buffalo Linen”), \abor asked the NLRB and

this Court to limit the right of employers to lock out their

employees in a variety of situations. In Machinists, the

employer obtained an order from a state labor relations

commission condemning a concerted refusal to work over-

time. And in Golden State 1, at union request, the city

council terminated the employer's license to do business

when the company failed to acquiesce in the union’s bar-

gaining demands.

But in each instance, this Court concluded that the sys-

tem of private dispute settlement could not work if the

agencies of government could be enlisted as an ally in the

economic arena, thereby directly or indirectly dictating the

shape of the bargain. “Although the labor-management

relationship is structured by the NLRA, certain areas in-

tentionally have been left ‘to be controlled by the free

play of economic forces.’ The Court [has] recognized . . .

that ‘Congress has been rather specific when it has come

to outlaw particular economic weapons, and that Congress’

decision to prohibit certain forms of economic pressure

while leaving others unregulated represents an intentional

balance ‘between the uncontrolled power of management

and labor to further their respective interests.” Golden

State I, 475 U.S. at 614 (internal citations omitted).

Within this realm of economic self-help, Congress intended

that the parties be left “unrestricted by any governmental

power to regulate.” Machinists, 427 U.S. at 141 (emphasis

in original). This rule of law “creates a free zone from

which all regulation, ‘whether federal or state’ is excluded.”

Golden State Transit Corp v. Los Angeles, 493 U.S. 103,

111 (1989) (“Golden State II”) (internal citation omit-

ted.°

5 This Court’s protection of the bargaining process also is evi-

denced in cases where the Court has been willing to tolerate the

14

The narrow reading of the non-statutory exemption ad-

vanced by the petitioners and the United States simply

cannot be reconciled with these cases, or with these most

basic precepts of federal labor law. Petitioners and the

United States argue that employers’ choice of economic

weapons may become the substance of a federal treble

damages suit even though those weapons, under the de-

cisions of this Court and the NLRB, lie in the “free zone”

from which all regulation is excluded. Indeed, it is quite

apparent that petitioners are not interested in having the

bargaining process work as Congress envisioned it, but

seek a substitute for that process. In their brief, petition-

ers complain that, absent an antitrust action, an employ-

er’s implementation of terms could force a union to “take

the risk of calling a strike ....” Pet. Br. 42. Of course,

the NLRA was predicated on the threat and use of such

weapons, and not on resort to federal litigation as a sub-

stitute for economic muscle. “[T]he Act ... does not

contemplate that unions will always be secure and able

imposition of certain minimum labor standards under state law.

See Fort Halifar Packing Co. v. Coyne, 482 U.S. 1 (1987); Metro-

politan Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985). These

cases do not suggest, as petitioners maintain, that the antitrust

laws should be read to condemn forms of self-help specifically

authorized in the NLRA’s bargaining scheme. Pet. Br. 27-30. As

this Court explained in Fort Halifar, “the NLRA is concerned

with ensuring an equitable bargaining process, not with the sub-

stantive terms that may emerge from such bargaining. ‘The evil

Congress was addressing [in passing the Wagner Act] was en-

tirely unrelated to local or federal regulation establishing minimum

terms of employment.’” 482 U.S. at 20 (quoting Metropolitan Life

Ins. Co., 471 U.S. at 754). Thus, when a state exercises its tra-

ditional police powers to “establish[{] a minimal employment stand-

ard not inconsistent with the general legislative goals of the NLRA,

it conflicts with none of the purposes of the Act.” Jd. at 21 (quot-

ing Metropolitan Life Ins., 471 U.S. at 757). In this case, by con-

trast, petitioners argue that the Sherman Act should be read to

regulate directly the “equitable bargaining process” the NLRA was

enacted to ensure. Unlike minimum labor standards, which are

clearly subject to the traditional police powers of the state, the

use of self-help lies in a “free zone from which all regulation

‘whether federal or State is excluded.’” Golden State I], 493 U.S.

at 111 (quoting Machinists, 427 U.S. at 153).

15

to achieve agreement even when their economic position

is weak, or that strikes and lockouts will never result

from a bargaining impasse. It cannot be said that the

Act forbids an employer or a union to rely ultimately

on its economic strength to try to secure what it cannot

obtain through bargaining.” H.K. Porter Co. v. NLRB,

397 U.S. 99, 107-08 (1970). Petitioners’ preference for

the litigation model over the bargaining model speaks

eloquently of the manner in which they seek to “accom-

modate” the purposes of the two statutory regimes.

C. Post-Impasse Implementation of an Employer’s

Final Offer Is a Form of Economic Self-Help, Part

of the Bargaining Process, and an Indispensable

Tool for Forging Agreements

Because self-help plays an indispensable role in the

operation of federal labor policy, petitioners are forced

to concede that the antitrust laws do not, and should

not, be applied to the collective bargaining process. Pet.

Br. 40. Thus, they agree that even after contract ex-

piration and impasse, the members of a multi-employer

association may agree to hire replacement workers or

lock out their employees—concerted actions in plain re-

straint of trade—without fear of antitrust liability. Jd.

They and their amici thus are forced to claim that post-

impasse implementation of terms is qualitatively different

from other bargaining weapons. No such difference exists.

* “Terms” versus “Tactics.” The distinction advocated

by Judge Wald below between immunized “tactics” and

the “implementation of terms,” recharacterized by peti-

tioners here (see Pet. Br. 36), has been repudiated re-

peatedly by the NLRB, both in its decided cases and in

representing its views to this Court. In its brief in this

® The Board’s view on this point is authoritative. Congress “in-

tended to leave to the Board’s specialized judgment the resolution

of conflicts between union and employer rights that [are] bound

to arise” in the future. Charles D. Bonanno Linen Serv., Ine. v.

NLRB, 454 U.S. 404, 409 (1982) (“Bonanno Linen”); Buffalo

Linen, 353 U.S. at 96. In particular, balancing the various inter-

16

Court in Bonanno Linen, the NLRB recounted its experi-

ence with employer implementation:

[I]mpasse permits the employer to place into effect

those wage increases or benefits it has heretofore

offered, an action (or the possibility of it) which may

substantially shift the bargaining positions of the

parties. Jn [this use] of impasse as a bargaining tac-

tic, the emphasis is toward achieving agreement rather

than causing a permanent disruption in the relation.

Brief for the National Labor Relations Board in Charles

D. Bonanno Linen Serv., Inc. v. NLRB, 80-931 (Oct.

Term 1980) at 22 (emphasis added; internal citation

omitted ).”

The Board’s cases confirm that implementation of

terms is an indispensable part of the bargaining process,

intended to spur agreement, not to act as a substitute for

it. In Hi-Way Billboards, Inc., 206 N.L.R.B. 22 (1973),

enforcement denied on other grounds, NLRB yv. Hi-Way

Billboards, Inc., 500 F.2d 181 (Sth Cir. 1974)—the

decision which established the rule subsequently endorsed

by this Court in Bonanno Linen—the Board noted that

Once a genuine impasse is reached, the parties can

concurrently exert economic pressure on each other:

the union can call for a strike [, and] the employer

can... make unilateral changes in working condi-

tions if they are consistent with the offers the union

has rejected . . . . Such economic pressure usually

breaks the stalemate between the parties, changes the

ests served by multi-emplover bargaining and “assessing the

significance of impasse and the dynamics of collective bargaining

fare] precisely the kind/s] of judgment[s] [this Court] ruled

should be left to the Board.” Bonanno Linen, 454 U.S. at 413.

7Given the NLRB’s prior representations to this Court, it is

perhaps not surprising that the Board did not sign the United

States’ brief in this case, contenting itself with a cryptic expres-

sion of its views in an ambiguous and highly unusual footnote

on the final page of the brief. U.S. Br. 27 n.10.

ee Te eee

17

circumstances of the bargaining atmosphere, and re-

vives the parties’ duty to bargain.*

206 N.L.R.B. at 23 (footnotes omitted and emphasis

added). Petitioners’ assertion that implementation of

terms is “principally designed” as a “one-sided substitute

for a bargaining agreement” “rather than to influence the

bargaining process,” Pet. Br. 36, is thus at odds with es-

tablished labor law principles.

We do not disagree that some unscrupulous employers

might approach bargaining intent on avoiding agreement.

and manipulate the bargaining process in order to impose

terms, following impasse, that are predictably unac-

ceptable to the union. This conduct, however, consti-

tutes surface bargaining forbidden by the NLRA, con-

duct that the NLRB can fully remedy. See H.K. Porter

Co. v. NLRB, 397 U.S. 99, 107-08 (1970); Joy Silk

Mills, Inc. v. NLRB, 185 F.2d 732, 741 (D.C. Cir.

1950), cert. denied, 341 U.S. 914 (1951); Lapham-

Hickey Steel Corp., 294 N.L.R.B. 395 (1989), enf'd,

904 F.2d 1180 (7th Cir. 1990). It would be a serious

error to interpret the antitrust laws on the assumption

that some employers might act unlawfully where Con-

gress has already outlawed that conduct and set in place

a mechanism for obtaining a remedy.

Moreover, unions have a powerful economic weapon

for dealing with such conduct—an unfair labor practice

strike. This type of strike is an especially potent weapon

because the employer cannot permanently replace the

: 8 Accord Circuit-Wise, Inc., 309 N.L.R.B. 905, 921 (1992); R.A.

Hatch Co., 263 N.L.R.B. 1221, 1234 (1982); Presto Casting Co.,

262 N.L.R.B. 346, 354 (1982), modified on other grounds, 708 F.2d

{ 495 (9th Cir. 1983), cert. denied, 464 U.S. 994 (1983); Signatory

Labor Committee of the Colo. Contractors’ Ass’n, 261 N.L.R.B.

1459, 1465 (1982); see also Colorado-Ute Elec. Ass’n v. NLRB,

939 F.2d 1392, 1404-05 (10th Cir. 1991) (“the employer may try

to achieve the wage terms it desires by using its economic weapon

of implementing at impasse”; the employer’s “right to implement

at impasse [is] one of its powerful tools for achieving its wage

terms”), cert. denied, 504 U.S. 995 (1992).

18

striking employees, and they are entitled to backpay under

appropriate circumstances. See generally NLRB v. Inter-

national Van Lines, 409 U.S. 48, 50-51 (1972); Orit

Corp., 294 N.L.R.B. 695, 698 (1989), enf’'d mem. 918

F.2d 225 (D.C. Cir. 1990). Even more important, many

multi-employer bargaining associations are composed of

small employers who share an economic position simply

too precarious to withstand a significant strike by a

powerful union. In this regard, the powerful professional

sports leagues and the entertainment industry are not

typical of the majority of employers in multi-employer

associations, a form of bargaining that allows smaller in-

dividual employers to pool their economic power to com-

bat large and powerful labor unions. See Buffalo Linen,

353 U.S. at 94-95. In such circumstances, far more prev-

alent than the sports leagues and the entertainment in-

dustry, an unfair labor practice strike alone is an over-

whelming deterrent to improper manipulation of the bar-

gaining process.

* Impasse. The United States here, and Judge Wald

below, commit a similar error by positing that impasse

concludes bargaining and thus places the implementation

of terms outside of the bargaining process. The NLRB’s

traditional definition of impasse, previously endorsed by

this Court,’ is flatly contray to this view. The NLRB

repeatedly has made clear that impasse does not result

in a fundamental alteration of the relationship between

the parties or a termination of the bargaining process.

Rather, impasse is

akin to a hiatus in negotiations. In the overall on-

going process of collective bargaining, it is merely a

point at which the parties cease to negotiate and often

resort to forms of economic persuasion to establish

the primacy of their negotiating position. Moreover,

®“As a recurring feature in the bargaining process, impasse is

only a temporary deadlock or hiatus in negotiations ‘which in al-

most all cases is eventually broken, through either a change of mind

or the application of economic force.’”” Bonanno Linen, 454 U.S.

at 412 (quoting Charles D. Bonanno Linen Serv., Inc., 243 N.L.R.B.

1093, 1094 (1979)).

——————— Ke

19

the occurrence of a genuine impasse cannot be said

to be an unexpected, unforeseen, or unusual event in

the process of negotiations . . . . Therefore, it is

clear that an impasse is but one thread in the

complex tapestry of collective bargaining, rather

than a bolt of a different hue. Jn short, a genuine

impasse is not the end of collective bargaining ... .

[/]t is merely a momentary eddy in the flow of

collective bargaining.

Hi-Way Billboards, Inc., 206 N.L.R.B. at 23 (empha-

sis added); see also Worldwide Detective Bureau, 296

N.L.R.B. 148, 155 (1989) (“existence of an impasse does

| not insulate a party from the duty to bargain. When an

impasse is reached, the duty to bargain is not terminated

but only suspended.” (footnote omitted) ). As this Court

has recognized, “in almost all cases [impasse] is eventu-

ally broken, through either a change of mind or the appli-

cation of economic force.” Bonanno Linen, 454 U.S. at

412. Petitioners, their amici, and the United States (and

Judge Wald below) all err by asserting that impasse ends

bargaining; instead, impasse is simply one more step down

the road to an agreement. That road should not lead to

the federal courthouse."”

* Common Law versus Statutory Rights. Finally, peit-

tioners claim that unilateral implementation is outside

the bargaining process because it is “not a ‘right’ conferred

and protected by the NLRA. It is simply an exercise of

10 Indeed, if impasse signifies a conclusion of the bargaining

process, the NLRB’s continuing jurisdiction over the terms that

an employer implements post-impasse could hardly be justified. It

is undeniable, however, that under NLRB v. Katz, 369 U.S. 736

(1962), the Board has jurisdiction to ensure that the employer’s

post-impasse offers are consistent with its prior offers to the union.

Id., 369 U.S. at 745, 747 n.12. The purport of the Katz doctrine

itself is that at impasse the duty to bargain is merely suspended

and that neither the employer nor the union may take actions

designed to frustrate the bargaining process or make agreement

impossible. That is precisely what petitioners and their amici

here would do, by placing the entire dispute at impasse in the

hands of a federal court under an antitrust theory.

20

the employers’ residual, common law rights to operate

their businesses.” Pet. Br. 34. Petitioners assert that

because the right to implement “derives from the common

law rather than the NLRA, subjecting the exercise of that

right to the requirements of the Sherman Act presents

no... conflict with... labor law... .” ZId. at 35.

This claim is directly contradicted by the Court’s

decision in Golden State II, 493 U.S. at 112. There,

the city had attempted to limit the taxi company’s

ability to “operate [its] business[]” by imposing a dead-

line on the resolution of the company’s labor dispute with

its union. When the employer did not meet the deadline,

the city denied it the license necessary for it to stay in

business. This Court explicitly held that “the interest

in being free of governmental regulation of the ‘peaceful

methods of putting economic pressure on one another’

is a right specifically conferred . .. by the NLRA.” Id.

(footnote omitted and emphasis added). More particu-

larly, this Court held that the very right petitioners dis-

parge here, i.e., an “employer[’s] . . . right to operate

[its] business[]” was a right conferred and protected by

the NLRA, and that the city’s attempt to interfere with

that right was preempted by the NLRA. /d.”

In short, none of the various rationales offered by peti-

tioners, their amici or Judge Wald below in any way

11 Petitioners’ claim that this is a “common law” right, as opposed

to a federal statutory right, appears to be premised on the lack of

any explicit statutory reference to that right in the text of the

Act. As this Court noted in Golden State II, 493 U.S. at 111-12,

that might well also be said with respect to any number

of rights or obligations that we have found implicit in a

statute’s language. A rule of law that is the product of ju-

dicial interpretation of a vague, ambiguous, or incomplete

statutory provision is no less binding than a rule that is based

on the plain meaning of a statute. The violation of a federal

right that has been found to be implicit in a statute’s language

and structure is as much a “direct violation” of a right as is

the violation of a right that is clearly set forth in the text

of the statute.

sass inntenimmeitaiiieaeainiiail

21

establish that post-impasse unilateral implementation of

an employer’s final offer is either outside of the bargaining

process or is in some character so unique as to be the

proper subject of antitrust liability. If the non-statutory

exemption is designed to protect the collective bargaining

process, as petitioners properly concede, that protection

must also extend to post-impasse implementation of an

employer’s final offer.

II. IMPLIED IMMUNITY FOR SELF-HELP BY MEM-

BERS OF AN EMPLOYER ASSOCIATION MUST

BE AVAILABLE THROUGHOUT THE BARGAIN-

ING PROCESS

A. Application of Antitrust Immunity to the Bargain-

ing Process Is Consistent With This Court’s Anti-

trust Decisions

Contrary to the United States’ contention. protection

of the entire bargaining process under the non-statutory

labor exemption does not conflict with this Court’s other

antitrust immunity opinions. The Court has regularly im-

munized conduct otherwise arguably prohibited by the

Sherman Act whenever necessary “to make [a subsequent

Statutory process] work,” as for example, when the second

Statutory regime establishes “a regulatory agency ... em-

powered to authorize or require the type of conduct under

antitrust challenge.” National Gerimedical Hosp. & Ger-

ontology Ctr. v. Blue Cross, 452 U.S. 378. 389 (1981)

(emphasis added) (quoting Silver v. New York Stock

Exchange, 373 U.S. 341, 357 (1963)). As the leading

commentators in the antitrust field have explained, im-

munity must extend beyond the sort of direct conflict de-

manded by the United States to “conduct which the stat-

ute [here, the NLRA,] expressly or impliedly allows or

assumes.” P. Areeda & D. Turner, Antitrust Law, € 224a

at 145 (1978). The United States’ contrary claim here

—that an antitrust exemption is appropriate only when

two statutes create an unavoidable conflict by requiring in-

consistent actions—cannot be reconciled with the Court's

holdings.

22

Indeed, the United States took a very similar posiiton,

and was corrected by the Court, in Gordon v. New York

Stock Exchange, 422 U.S. 659 (1975). There, the Court

concluded that certain price-fixing agreements contained

in the rules of the New York Stock Exchange (“NYSE”)

were immune from antitrust challenge because the NYSE

had been authorized by the Securities and Exchange Com-

mission (“SEC”) to promulgate rules on the topic, and

because the SEC exercised supervisory authority over

the NYSE and its rules. The United States had argued

that immunity was inappropriate because the specific

kind of rule under review was not compelled by the SEC

and thus was not “necessary to make [the competing stat-

ute] work.” The Court held that a broader question was

determinative: “[WJhether antitrust immunity, as a matter

of law, must be implied in order to permit the Exchange

Act to function as envisioned by Congress.” Jd. at 688.

Because the antitrust laws would condemn as per se vio-

lations the commission rates explicitly approved through

the Exchange Act’s system of “[s]upervised self-regula-

tion,” the Court held that immunity was appropriate. Jd.

at 691. Accord United States v. National Ass’n of Securi-

ties Dealers, 422 U.S. 694 (1975).

Under the appropriate legal standard, the case for im-

plied immunity in this instance could hardly be more

apparent. As this Court noted in Buffalo Linen, Congress

has long recognized that multi-employer bargaining is “a

vital factor in the effectuation of the national policy of

promoting labor peace through strengthened collective

bargaining.” 353 U.S. at 95. The Court has also recog-

nized that to foster this form of bargaining, Congress

“intended to leave to the [NLRB’s] specialized judgment

the resolution of conflicts between union and employer

rights that were bound to arise in multiemployer bafgain-

ing.” Bonanno Linen, 454 U.S. at 409.

In pursuing this “vital” aspect of national labor policy,

the NLRB has adopted rules which “reflect an increasing

emphasis on the stability of multiemployer units.” Jd. at

410. Of particular significance in this case, the Board has

ae ne

23

concluded that “it is precisely at and during impasse, when

bargaining is temporarily replaced by economic warfare,

that the need for a stable, predictable bargaining unit be-

comes acute in order that the parties can weigh the costs

and possible benefits of their conduct.” Jd. at 410-12 and

n.8. And to safeguard the integrity of the multi-employer

unit, the Board (with the approval of this Court) has

authorized the members of a multi-employer unit to take

concerted self help to defend the integrity of the unit and

to advance their concerted bargaining goals. Thus, this

Court has explicitly approved unit-wide lockouts and the

unit-wide use of temporary replacements. See NLRB vy.

Brown, 380 U.S. 278, 283-85 ( 1965) (multi-employer

group may lawfully lockout employees on a_ unit-wide

basis and replace them with temporary workers); Buffalo

Linen, supra.

These are fundamental aspects of national labor policy,

established by the NLRB and ratified by this Court. The

United States however, fails even to cite Buffalo Linen,

and it cites Brown, in a footnote, for the breathtaking

proposition that while employers in organized sports may

be able to defend activities similar to the lockout ‘replace-

ment in Brown under a “rule of reason” test, for employ-

ers in other industries—presumably including the retail

food business at issue in Brown—this conduct “would

constitute a per se illegal concerted refusal to deal.” US.

Br. 18 n.5. Thus, the Government makes no attempt to

reconcile its unprecedented attack on multi-employer bar-

gaining with this Court’s statement in Brown that the

multi-employer group’s unit-wide concerted self-help was

“wholly consistent with a legitimate business purpose...

[i.e.,] a measure reasonably adapted to the achievement

of a legitimate end—preserving the integrity of the multi-

employer unit.” Brown, 380 U.S. at 285, 289 (footnote

omitted). The position advocated by the United States

would effectively disarm employers in this contest of eco-

nomic wills, and thus disrupt the Statutory scheme en-

visioned by Congress.

Indeed, the Government’s insistence that implied im-

munity is appropriate only in instances of direct, unavoid-

24

able conflicts proves too much, because it would make the

very existence of multi-employer bargaining groups illegal.

Multi-employer bargaining is entirely voluntary; no em-

ployer is compelled to join a multi-employer association.

Thus, an employer could comply with its NLRA obliga-

tions (by bargaining one-on-one with its union) and

could simultaneously obey the Sherman Act’s edict against

agreements in restraint of trade without having to invoke

an implied antitrust immunity. That the NLRA author-

izes the existence of multi-employer groups—even encour-

ages them as a “vital” aspect of national labor policy—

should not, if the United States’ view of implied immunity

is correct, be sufficient to permit the inherently anti-

competitive conduct of multi-employer bargaining. The

United States’ acknowledgment that multi-employer groups

are lawful, and its concession that these employer groups

can even engage in concerted conduct prior to impasse,

must be read as a tacit admission that its asserted rule

of direct conflict immunity is too restrictive.”

B. The Labor and Antitrust Rights of Employees Can

Be Given Full Effect While Giving Employer Groups

the Right To Act for Mutual Aid and Protection

The United States excoriates the majority below for

assertedly requiring employees to chose between rights

under the NLRA and those protected by the Sherman

12 Paradoxically, the position advocated by the United States,

born of evident antinathy for concerted employer conduct, almost

certainly would make such conduct more commonplace. Because

employers in the multi-employer groups would know that at im-

passe they will be disabled from engaging in concerted self-selp,

there would be an almost inexorable desire to use it prior to im-

passe, while fruitful negotiations are ongoing. In this setting,

the Government’s rule would act as a durational limit on the

employers’ self-help, something this Court explicitly condemned in

Golden State I: “[t]he bargaining process was thwarted when

the city in effect imposed a positive durational limit on the exer-

cise of self-help .... The city’s insistence on a settlement is

pre-empted [because] the city [entered] into the substantive

aspects of the bargaining process to an extent Congress has not

countenanced.” 475 U.S. at 615-16 (footnote and internal quote

omitted).

25

Act. This claim overlooks the fact that multi-employer

bargaining is entirely voluntary. No union is ever com-

pelled to consent to it, and no employer (except dur-

ing bargaining) can be held in a multi-employer group

against its will. Bonanno Linen, 454 U.S. at 410-11;

Retail Assocs., Inc., 120 N.L.R.B. 388, 393 (1958);

see also Reliable Roofing Co., 246 N.L.R.B. 716

(1979); General Ore, Inc., 126 N.L.R.B. 172 (1960).

Thus, members of a multi-employer bargaining unit are

free to act in concert not by virtue of their employees’

decision to organize, but by virtue of their union’s volun-

tary decision to select the multi-employer bargaining form.

Any claim to a non-statutory exemption would evaporate

if the union chose not to bargain on a multi-employer

basis. Petitioners, with the support of the United States,

seek to reap the substantial benefits of multi-employer

bargaining while simultaneously preventing employers

from taking the forms of concerted self-help absolutely

essential to maintaining the integrity of the multi-employer

process. We believe unions choosing the benefits of multi-

employer bargaining should shoulder the associated bur-

dens, including the increased strength arrayed against

them through concerted employer conduct.

A union’s voluntary decision to continue multi-employer

bargaining even with these burdens is not surprising. The

multi-employer process poses numerous advantages for

both labor and management. Unions benefit because ne-

gotiations on a multi-employer (or even industry-wide )

basis can “minimiz[e] their organizational expenses, and

increas[e] their security against raid[s] by outside organi-

zations.” See Brief for the National Labor Relations

Board in American Ship Building Co. v. NLRB, 64-255

(October Term 1965) at 29. Multi-employer bargaining

reduces the union’s negotiations costs, and eases the bur-

den of contract administration. It also promotes industry-

wide solutions to problems too complex or expensive for

any single employer to take on alone, such as the rami-

fications of technological improvements, and it makes

26

it possible for small employers to grant certain em-

ployee benefits they could not afford to administer alone.

Most importantly , however, multi-employer bargaining

serves as the single most efficient mechanism for the

union to achieve its prime objective: the “elimination of

price competition based on differences in labor stand-

ards ....” Apex Hosiery, 310 U.S. at 503.

Employers, too, benefit from broad-scale bargaining.

Employers also achieve economies of scale when they

combine for a single set of negotiations, and can achieve

industry-wide (or at least regional) solutions to structural

problems. Small employers also achieve significant protec-

tions from union pressure through collective strength; *

the association typically represents a mutual aid pact to

prevent the member companies from being “whipsawed.”

Most fundamentally, however, by joining with their busi-

ness competitors in a common labor agreement, employ-

ers can obtain protection from “competitive disadvantages

resulting from non-uniform contractual terms” setting their

labor costs. Buffalo Linen, 353 U.S. at 96.

Thus, like the employee combinations explicitly ex-

empted from antitrust scrutiny by the Clayton Act, and

the employer-union agreements immunized by the non-

statutory exemption recognized in Jewel Tea and Penning-

ton, the combination of employers in multi-employer

groups assumes—indeed depends—on collusion among

business competitors in the negotiations process. Peti-

tioners cannot be permitted to extract all of the benefits

of this process while preventing employers from exercising

the forms of self-help that make the process work.

C. Antitrust Immunity Must Extend Beyond Contract

Expiration

Petitioners’ redesign of the labor laws is not limited

to denying self-help to the employer group. Like

13 See Bonanno Linen, 454 U.S. at 409 (employers “sought

through group bargaining to match increased union strength”

(quoting Buffalo Linen, 353 U.S. at 94-95 (footnote omitted) ).

iii

27

the district court, petitioners argue that the employer

group violates the Sherman Acct if it continues in effect the

terms of its labor agreement with the union beyond the

contract’s date of expiration. Pet. Br. 45-48. Accepting

this proposition, however, would work a wholesale revision

of federal labor law and would require this Court to re-

verse its opinion in NLRB v. Katz, 369, U.S. 736 (1962),

which held that under Sections 8(d) and 8(a)(5), it is

an unfair labor practice for an employer to fail to give

effect to these terms unless and until impasse is reached.

The Court has reaffirmed this principle at least twice in

recent years, and each of these decisions would have to

fall as well if petitioners’ argument is to be accepted. See

Litton Financial Printing Div. v. NLRB, 501 U.S. 190

(1991); Laborers Health and Welfare Trust Fund v. Ad-

vanced Lightweight Concrete Co., 484 U.S. 539, 544 n.6

(1988). Even the United States, in its brief supporting

the petitioners, acknowledges that the petitioners’ position

simply “cannot be reconciled” with Katz. U.S. Br. 16.

Petitioners do not acknowledge the breadth of the alter-

ations to basic principles of federal labor law they ask

this Court to make; they insist that they seek, at most, in-

cremental change. They note that in Litton, this Court

carved an exception to the Katz rule, holding that there

is no post-expiration obligation to comply with the arbitra-

tion clause in an expired agreement with respect to dis-

putes that themselves arise after expiration. Similarly, the

NLRB has recognized that it would be antithetical to the

central role of self-help in the structure of the NLRA to

insist that a union continue to honor a no-strike pledge

contained in an expired contract or to demand that an

employer honor an expired dues check-off or union secur-

ity provision. Litton, 501 U.S. at 199.

Yet Litton explicitly reaffirmed the continuing validity

of Katz. Litton and the Board cases it cites represent a

careful accommodation of the Katz doctrine and its duty

to bargain with the larger purposes of the Act. Petition-

ers, on the other hand, do not seek to reconcile the obliga-

28

tions of Section 8(a)(5) with other important policies of

federal labor law; they seek to jettison the Katz doctrine

altogether in the multi-employer context simply to achieve

the right to bring a treble damages action under the anti-

trust laws. Nothing in Litton would support such a result.

An additional problem is posed, but left unaddressed, by

petitioners’ rather unformed proposal. The terms imple-

mented post-expiration by individual members of a multi-

employer group necessarily would have their genesis in an

agreement in restraint of trade—the joint bargaining pro-

posals of the multi-employer bargaining association. Be-

cause the petitioners would have the non-statutory exemp-

tion expire with the contract, presumably, it would be a

Sherman Act violation for the employers to implement

the fruits of their prior conspiracy. Yet in choosing terms

to implement, the various members of the employer group

would be limited under Katz to the offers made by the

multi-employer association on their behalf. For this rea-

son, the terms the various employers actually implemented

would be identical, or nearly so, and would find their

genesis in a “conspiracy,” albeit one that was lawful at

the time.

This Hobson’s choice would result in an antitrust claim

each time terms are implemented, with plaintiffs citing as

evidence the similarity in implemented terms and the fact

that the members of the association continued to meet

“in secret”—conspiring—with one another on future bar-

gaining proposals. Multi-employer bargaining disputes

would become commonplace topics for federal court

litigation.

14 Employers find small comfort in the petitioners’ fanciful as-

surance that “[i]f negotiations are advancing toward a new con-

tract, . . . the employees are likely to consent to an extension of

the employers’ immunity.” Pet. Br. 47. It would simply be un-

tenable for this Court to establish federal labor policy predicated

on the presumed charity of organized labor. It also would be naive

to believe that labor would not use the Sherman Act (rather than

the economic power derived from the solidarity of its members)

as leverage in collective negotiations.

29

In sum, the court of appeals’ decision establishes a pru-

dent and sensible rule for preventing conflicts between

national labor policy and the more general rules of anti-

trust liability. Petitioners, the United States, and the other

amici urging reversal, conversely, offer a “dizzying array

of options . . . not one of [which] makes the slightest sense

under established labor law principles.” Pet. App. 2la

(footnote omitted). Those urging reversal disagree about

the duration of the antitrust exemption (expiration versus

impasse), the character and availability of various em-

ployer self-help rights (implementation versus lockouts),

and the practical consequences of extending antitrust

liability following contract termination. If the decision

below represented a departure from settled antitrust prac-

tice, as petitioners and their amici contend, one would

expect that they could all agree on a statement of the

rule previously and uniformly applied. That they have

not done so is telling evidence that the various rules they

seek represent unprecedented departures from settled law.

CONCLUSION

The judgment of the court of appeals should be affirmed.

Respectfully submitted,

Of Counsel:

STEPHEN A. BOKAT

Rosin S. CONRAD

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

JAN S. AMUNDSON

QUENTIN RIEGEL

NATIONAL ASSOCIATION OF

MANUFACTURERS

1331 Pennsylvania Ave., N.W.

Suite 1500, North Lobby

Washington, D.C. 20004-1790

(202) 637-3000

February 16, 1996

ZACHARY D. FASMAN *

NEAL D. MOLLEN

JENNY C. Wu

PAUL, HASTINGS, JANOFSKY

& WALKER

1299 Pennsylvania Ave., N.W.

Tenth Floor

Washington, D.C. 20004-2400

(202) 508-9500

Counsel for Amici Curiae

Chamber of Commerce of the

United States of America and

National Association of

Manufacturers

* Counsel of Record