310 U.S. 469 (1940), 638, Apex Hosiery Co. v. Leader

Docket Nº:No. 638
Citation:310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311
Party Name:Apex Hosiery Co. v. Leader
Case Date:May 27, 1940
Court:United States Supreme Court

Page 469

310 U.S. 469 (1940)

60 S.Ct. 982, 84 L.Ed. 1311

Apex Hosiery Co.



No. 638

United States Supreme Court

May 27, 1940

Argued April 1, 2,1940




Members of a labor union, bent on unionizing a hosiery factory in which but a few of them were employed, forcibly, and in violation of civil and criminal laws of the State, took possession of the plant and held it during a protracted "sit-down" strike, during which much of the machinery was willfully injured or destroyed and during which the business, largely interstate, was entirely suspended. When the plant was seized, there were on hand 130,000 dozen pairs of finished hose, of a value of $800,000, ready for shipment on unfilled orders, mostly destined to points outside of the State. Shipment was prevented by the strikers, who repeatedly refused requests made by the owner for permission to

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remove the merchandise for shipment in filling the orders. It was not shown that the interruption of business caused by the strike affected, or was intended to affect, competition and prices in the market.


1. That there was no conspiracy "in restraint of trade or commerce among the several States" within the meaning of the Sherman Anti-Trust Act, and that, therefore, the District Court, in a suit by the employer based on the Act in which there was no diversity of citizenship, was without jurisdiction to give judgment for the damages suffered by the employer. First Coronado Case, 259 U.S. 344; United Leather Workers v. Herkert, 265 U.S. 457, followed. Pp. 481, 486.

2. The effect of the strike was to restrict substantially the interstate transportation of the manufactured product, so as to bring the acts causing it within the reach of the commerce power, but the question for decision is not one of constitutional power, but of the extent to which Congress has exercised it under the Sherman Act. P. 484.

3. The jury's verdict must be taken, in view of the instructions of the court, as a finding supported by evidence that the strikers intended to prevent shipments in interstate commerce in the sense that they must be taken to have intended the natural and probable consequences of their acts. P. 485.

4. The liability of the strikers for damages under the Sherman Act turns not on the power of Congress to regulate commerce, but on the extent to which Congress has exerted its power in the enactment of the law. P. 488.

5. In the application of the Sherman Act, it is the nature of the restraint and its effect on interstate commerce, and not the amount of the commerce, which are the tests of violation. Restraints not within the Act when achieved by peaceful means are not brought within it merely because, without other differences, they are attained by violence. P. 485.

6. Labor organizations and their activities are not wholly excluded from the operation of the Sherman Act. P. 487.

7. The Sherman Act does not condemn all combinations and conspiracies which interrupt interstate transportation. P. 486.

8. The Act is to be interpreted in the light of its legislative history and of the particular evils at which it was aimed. P. 489.

9. The end sought by the Act was prevention of restraints to free competition in business and commercial transactions which tend to restrict production, raise prices or otherwise control the market to

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the detriment of purchasers or consumers of goods and services, all of which had come to be regarded as a special form of public injury. P. 493.

10. The phrase "restraint of trade" had a well understood meaning at common law. The words "or commerce among the several States" were added to relate the prohibited restraint of trade to interstate commerce for constitutional purposes, so that Congress, through its commerce power, might suppress and penalize restraints on the competitive system which involved or affected interstate commerce. It was in this sense of preventing restraints on commercial competition that Congress exercised all the power it possessed. P. 494.

11. The contracts and combinations in restraint of trade made illegal by the common law were contracts for the restriction or suppression of competition in the market, agreements to fix prices, divide marketing territories, apportion customers, restrict production and the like practices, which tend to raise prices or otherwise take from buyers or consumers the advantages which accrue to them from free competition in the market. P. 497.

12. The Sherman law took over the common law concept of illegal restraints by condemning them wherever they occur in or affect commerce between the States. It extended its condemnation to restraints effected by any combination in the form of trust or otherwise, or conspiracy, as well as by contract or agreement, having those effects on the competitive system and on purchasers and consumers of goods or services which were characteristic of restraints deemed illegal at common law, and it gave both private and public remedies for the injuries flowing from such restraints. P. 497.

13. Restraint on competition or on the course of trade in articles moving in interstate commerce does not violate the Act unless the restraint is shown to have, or is intended to have, an effect upon prices in the market or otherwise to deprive purchasers or consumers of the advantages which they derive from free competition. P. 500.

14. A combination of employees necessarily restraining competition among themselves in the sale of their services to their employer was not considered an illegal restraint of trade at common law when the Sherman Act was adopted, either because it was not thought to be unreasonable or because it was not deemed a "restraint of trade." P. 501.

15. Since the enactment of the declaration in § 6 of the Clayton Act, it would seem plain that restraints on the sale of the employee's

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services to the employer are not, in themselves, combinations or conspiracies in restraint of trade or commerce under the Sherman Act. P. 502.

16. The mere fact that strikes or agreements not to work, entered into by laborers to compel employers to yield to their demands, may restrict the power of such employers to compete in the market with those not subject to such demands does not bring the agreement within the condemnation of the Sherman Act. P. 503.

17. This Court has held the Sherman Act inapplicable in cases, like the present, in which local strikes, although conducted by means illegal under local law, in a production industry, prevented interstate shipment of substantial amounts of the product, but in which it was not shown that the restrictions on shipments had operated to restrain, or were intended to restrain, commercial competition in some substantial way. P. 508.

18. The Sherman Act was not enacted to police interstate transportation, or to afford a remedy for wrongs which are actionable under state law and result from combinations and conspiracies which fall short, both in their purpose and effect, of any form of market control of a commodity. P. 512.

19. The maintenance in our federal system of a proper distribution between state and national governments of police authority and of remedies private and public for public wrong is of far-reaching importance. An intention to disturb the balance is not lightly to be imputed to Congress. P. 513.

108 F.2d 71, affirmed.

CERTIORARI, 309 U.S. 644, to review the reversal of a judgment for triple damages recovered in an action under the Sherman Anti-Trust Act.

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STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

Petitioner, a Pennsylvania corporation, is engaged in the manufacture, at its factory in Philadelphia, of hosiery, a substantial part of which is shipped in interstate commerce. It brought the present suit in the federal district court for Eastern Pennsylvania against respondent Federation, a labor organization, and its officers, to recover treble the amount of damage inflicted on it by respondents in conducting a strike at petitioner's factory alleged

Page 481

to be a conspiracy in violation of the Sherman Anti-Trust Act. 26 Stat. 209, 15 U.S.C. § 1. The trial to a jury resulted in a verdict for petitioner in the sum of $237,310, respondents saving by proper motions and exceptions the question whether the evidence was sufficient to establish a violation of the Sherman Act. The trial judge trebled the verdict of $711,932.55, in conformity to the provision of the Sherman Act as amended by § 4 of the Clayton Act, 1914, 38 Stat. 731, 15 U.S.C. § 15, and gave judgment accordingly. The Court of Appeals for the Third Circuit reversed, 108 F.2d 71, on the ground that the interstate commerce restrained or affected by respondents' acts was unsubstantial, the total shipment of merchandise from petitioner's factory being less than three percent of the total value of the output in the entire industry of the country, and on the further ground that the evidence failed to show an intent on the part of respondents to restrain interstate commerce. We granted certiorari,309 U.S. 644, the questions presented being of importance in the administration of the Sherman Act.

The facts are undisputed. There was evidence from which the jury could have found as follows. Petitioner employs at its Philadelphia factory about twenty-five hundred persons in the manufacture of hosiery, and manufactures annually merchandise of the value of about $5,000,000. Its principal raw materials are silk and cotton, which are shipped to it from points outside the state. It ships interstate more than 80 percent of its finished product, and, in the last eight months of 1937, it shipped, in all, 274,791 dozen pairs of stockings. In April, 1937, petitioner was operating a nonunion shop. A demand of the respondent Federation at that time for a closed shop...

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