Lewis v. Seanor Coal Company

• Citation: 382 F.2d 437
• Decision Date: 16 August 1967
• Docket Number: No. 16161.,16161.
• Parties: John L. LEWIS, Henry G. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950, v. SEANOR COAL COMPANY, a Corporation, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

382 F.2d 437 (1967)

John L. LEWIS, Henry G. Schmidt and Josephine Roche, as Trustees of the United Mine Workers of America Welfare and Retirement Fund of 1950, v. SEANOR COAL COMPANY, a Corporation, Appellant.

No. 16161.

United States Court of Appeals Third Circuit.

Argued March 10, 1967.

Decided August 16, 1967.

Rehearing Denied September 28, 1967.

James Q. Harty, Reed, Smith, Shaw & McClay, Pittsburgh, Pa. (Norman William Smith, Jr., Pittsburgh, Pa., on the brief), for appellant.

Harold H. Bacon, United Mine Workers of America, Welfare and Retirement Fund, Washington, D. C. (Welly K. Hopkins, Washington, D. C., and Kenneth J. Yablonski, Washington, Pa., on the brief), for appellees.

Before McLAUGHLIN, HASTIE and FREEDMAN, Circuit Judges.

OPINION OF THE COURT

FREEDMAN, Circuit Judge:

The trustees of The United Mine Workers of America Welfare and Retirement Fund of 1950 brought this action against Seanor Coal Company, the appellant, for royalty payments of forty cents per ton as fixed by the National Bituminous Coal Wage Agreement as amended in 1964, on coal produced by the company between February 1 and June 30, 1965. They claimed also the balance on a promissory note which they alleged was accelerated because of the default in the payment of royalties. The company counterclaimed for payment it had made earlier into the welfare and retirement fund under the forty cents royalty provision of the agreement.¹ The court below entered summary judgment in favor of the plaintiffs for the royalties, amounting to $38,110.93 with interest, and for the unpaid balance of the note in the amount of $52,441.82 with interest, and also entered summary judgment in favor of the plaintiffs on the company's counterclaim. (256 F.Supp. 456 (W.D.Pa.1966)). The company presents a number of issues. It asserts that (1) the agreement requiring the payment of royalties violates the Sherman Antitrust Act; (2) it also violates § 8(e) of the National Labor Relations Act; and (3) the union did not fulfill an oral agreement made by the president of the local union on which the company relied in reopening its mine, which relieved it of its contractual obligation to pay royalties.

I.

In support of its contention that the provision for the payment of royalties under the agreement is illegal under the hot cargo prohibition of § 8(e) of the National Labor Relations Act, the company relies upon two decisions of the National Labor Relations Board. Raymond O. Lewis, 144 N.L.R.B. 228 (1963), held invalid under § 8(e) the subcontracting provision of the 1958 National Bituminous Coal Wage Agreement which required that the terms and conditions of employment for subcontracting operations be at least as favorable as those fixed for employees of signatories of the agreement. Later, the board dealt with the subsequent 1964 agreement, which discontinued this requirement but added a new provision which in addition to increasing from thirty to forty cents the royalty payments to the fund for every ton of coal produced by the operator for use or for resale, also required for the first time an eighty cent royalty on coal which an operator acquired from a nonsignatory.² The Board held that this new provision also violated § 8(e). Raymond O. Lewis, 148 N.L.R.B. 249 (1964). The first decision, dealing with the 1958 agreement, came before the Court of Appeals for the District of Columbia, which remanded the case to the Board for reconsideration in the light of recent decisions rejecting the Board's interpretation of § 8(e). Lewis v. NLRB, 122 U.S. App.D.C. 18, 350 F.2d 801 (1965). The court noted that its action undermined the Board's finding in the second case that the 1964 amendment violated § 8 (e).³ A trial examiner's subsequent decision that the 1964 agreement violated § 8(e) has not yet been acted on by the Board.

The court below believed that the question whether the provision of the 1964 agreement was illegal as an unfair labor practice under § 8(e) was one for the exclusive jurisdiction of the Board. We believe it is unnecessary to decide this question.⁴ For even if the Board should again reach the same conclusion regarding the provision before it, the company would not thereby be relieved of its obligation to pay the royalties here involved. The Board dealt in the first case with an entirely different provision from that which is here involved; and in the second case it dealt not with the forty cent royalty which is here involved, but with the effect of that provision in relation to the establishment for the first time in the 1964 agreement of a difference in the royalties exacted from an operator if he purchased from nonsignatory rather than from other signatory operator if he purchased from nonsignaroyalties where the purchase was from nonsignatory operators.

It is clear, therefore, that the Board has not decided or even cast any doubt on the validity of the basic royalty provision of forty cents per ton but instead has limited its inquiry to the effect under § 8(e) of the exaction from the coal operators of the doubled royalty where they purchased coal from outside, nonsignatory operators. The basic provision of forty cents royalty per ton for coal produced by the employer is radically different from the special provision requiring an eighty cents royalty on coal acquired from outside nonsignatory operators and standing alone is beyond the range of § 8(e). The essence of a proscribed "hot cargo" agreement is that it applies pressure on an employer, directly or indirectly, to require him to cease doing business with a third party in order to persuade the third party to accede to the union's objectives.⁵ Its focus, therefore, is on the effect of the agreement upon the relationship of the employer who is a party to the collective bargaining agreement with an outside employer. The Board recognized this in its second decision in Raymond O. Lewis, supra, where it held that the requirement of an eighty cent royalty on coal acquired from nonsignatory operators was to restrain signatory operators from acquiring coal from nonsignatories and thus to limit the coal operators' relationships to other operators who had signed a union contract. This element of discrimination is of course absent from that portion of the agreement which fixes the forty cent royalty, for that has no relation to purchases from nonsignatory operators, and indeed existed independently of it before 1964.

In these circumstances, any finding by the Board that the 1964 agreement is invalid under § 8(e) would not affect the severable basic royalty provision.⁶ Section 8(e) does not invalidate an entire collective bargaining agreement because it contains a "hot cargo" provision; the statute merely makes a contract with such a provision unenforceable and void to the extent that it contains the "hot cargo" provision.⁷ Indeed, it is particularly requisite in a case such as this not to allow the possible invalidity of a provision which is not operative as to these parties to afford a basis for noncompliance with a valid obligation, for the Supreme Court has pointed out that royalty payments into a welfare fund which are bargained for have the characteristics of compensation to the workers for their services.⁸

II.

The company's claim that the agreement violates the Sherman Antitrust Act is not a defense to the trustees' action. It is now well established that the remedy for violation of the antitrust law is not avoidance of payments due under a contract, but rather the redress which the antitrust statute establishes, — a private treble damage action. Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959); Bruce's Juices, Inc. v. American Can Co., 330 U.S. 743, 67 S.Ct. 1015, 91 L.Ed. 1219 (1947). See also Hanover Shoe, Inc. v. United Shoe Machinery Corp., 377 F.2d 776, 791 (3 Cir. 1967). To permit avoidance of payments required under the contract would go beyond the remedy prescribed by the antitrust statute and, as the Supreme Court has pointed out in Bruce's Juices, Inc. v. American Can Co., supra, 330 U.S. at 756-757, 67 S.Ct. 1015, would have the incongruous effect of affording an injured party simple compensatory damages where he is a defendant while allowing him to treble the identical damages where he is a plaintiff. Moreover, the general rule is especially applicable here, where as we have already pointed out the payments required by the contract have the characteristics of compensation to the employees for services they have already rendered.⁹ The company claims, however, that the case falls within the exception prescribed where judicial recognition of the contract would work to enforce "the precise conduct made unlawful by the Act."¹⁰ This exception is of no avail to the company, for it is directed to cases where the contract price itself has been inflated because of unlawful price fixing, whereas here there is involved a contract valid on its face and the fact that it provided the occasion for a restrictive agreement does not require that it should itself be invalidated.

III.

The company's final defense is the alleged oral modification of the 1964 agreement. It asserts that shortly after it had terminated operation of its mine in February 1965 because of heavy losses, it reopened the mine in reliance upon the statement of the president of the local union that if it did so "the productivity per employee would increase sufficiently to enable the Defendant to meet its obligations under the labor contract." The company alleges that this statement was intended to induce it to reopen the mine and to incur new and additional obligations including the royalties, and that in reliance on the representation it reopened the mine but that "the increase in productivity per employee promised and represented * * * has in fact not occurred."

In its pleading the company presented these claims as establishing an estoppel against the plaintiffs from claiming that any royalties...