41 Cal.2d 719, 18345, People v. Building Maintenance Etc. Assn.

Docket Nº:18345
Citation:41 Cal.2d 719, 264 P.2d 31
Opinion Judge:[10] Traynor
Party Name:People v. Building Maintenance Etc. Assn.
Attorney:[7] Edmund G. Brown, Attorney General, Clarence A. Linn, Assistant Attorney General, B. Abbott Goldberg, Deputy Attorney General, Thomas C. Lynch, District Attorney (San Francisco), and Gregory Stout, Deputy District Attorney, for Appellant. [8] Landels & Weigel, Francis McCarty and Stanley A. We...
Case Date:December 11, 1953
Court:Supreme Court of California
 
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Page 719

41 Cal.2d 719

264 P.2d 31

THE PEOPLE, Appellant,

v.

BUILDING MAINTENANCE CONTRACTORS' ASSOCIATION, INC., et al., Respondents.

S. F. No. 18345.

Supreme Court of California

Dec. 11, 1953

In Bank.

Page 720

[Copyrighted Material Omitted]

Page 721

COUNSEL

Edmund G. Brown, Attorney General, Clarence A. Linn, Assistant Attorney General, B. Abbott Goldberg, Deputy Attorney General, Thomas C. Lynch, District Attorney (San Francisco), and Gregory Stout, Deputy District Attorney, for Appellant. Landels &amp Weigel, Francis McCarty and Stanley A. Weigel for Respondents

OPINION

TRAYNOR, J.

Plaintiff appeals from an order granting a new trial after judgment was entered against defendants in an action brought to enjoin alleged violations of the Cartwright Act. (Bus. & Prof. Code, sections 16700- 16758.)

The facts are stipulated. Defendants are the Building Maintenance Contractors' Association, an unincorporated association, and its members, who are all building maintenance contractors in San Francisco. The building maintenance industry is defined as "all persons, associations, firms, partnerships and/or corporations participating in the maintenance operation (as distinguished from ownership, leasing or managing), cleaning, painting, renovating and supplying of janitorial service for buildings, lofts and stores in San Francisco." Maintenance contractors are defined as "persons, firms, partnerships and/or corporations engaged, in the building maintenance industry in San Francisco, in the business of contracting, for a fixed term, with owners, lessees or managers of buildings, lofts or stores located in San Francisco to do,

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for designated buildings, lofts or stores so located, part or all of any one or more of the following: Window cleaning, janitor work, providing of elevator operators and starters, providing of building engineers for maintaining heating equipment and for minor repairs, providing of night watchmen and providing of powder room matrons." There are 44 maintenance contractors in San Francisco of whom 30 are not members of defendant association. Members of the association, however, employ approximately 90 per cent of the total number of employees employed by all maintenance contractors in San Francisco and service approximately 90 per cent of all San Francisco buildings, lofts, and stores serviced by maintenance contractors. Maintenance contractors employ approximately 25 per cent of the employees supplied by various unions for building maintenance, and the remainder of the organized employees are supplied directly to owners, lessees, and managers. The terms and conditions of employment of the organized workers are the same whether they are employed by maintenance contractors or directly by owners, lessees, or managers. All of defendant maintenance contractors service less than one-half of one per cent of the buildings, lofts, and stores in San Francisco.

Defendants have agreed that if bids are called for by any person having an existing, unexpired contract with any member of their association, the members whose bids are solicited will report that fact to the association. The association then makes an investigation to determine whether the price under the existing contract is reasonable, whether the service is satisfactory, and whether the person soliciting bids has any specific reason, no matter how trivial or personal, for dispensing with the services of the current contractor. If the price is found to be reasonable, the service satisfactory, and there is no specific reason for changing maintenance contractors, the members are required to submit bids in excess of the current price. The amount of the excess is determined by a scale ranging from 20 per cent down to 5 per cent of the current price depending on the current job price per month. If, on the other hand, the current price is found to be unreasonable, or the service unsatisfactory, or there is a specific reason for changing contractors, members may submit any bids they see fit. Defendants entered this agreement "with the intent and for the object and purpose of conducting operations at a reasonable profit, of marketing at a reasonable profit products and services which could not otherwise be so

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marketed and of acting in furtherance of trade, and with no other intent whatever nor for any other object or purpose whatever. There is no evidence, except as stated in this stipulation, if any is stated herein, that the effect of the admitted agreement has exceeded, exceeds or will exceed the stated intentions, objects or purposes."

It is clear that defendants' agreement constitutes a trust as defined in section 16720 of the Business and Professions Code. [*] Not only have defendants agreed to fix the prices at which maintenance service will be provided (section 16720 (d), (e)), but they have also undertaken to prevent competition among themselves by forcing their customers to pay higher prices if they seek to change maintenance contractors. (section 16720 (c).) Defendants contend, however, that their agreement is exempted from the prohibitions of the Cartwright Act by virtue of sections 16723 and 16725 of the Business and Professions Code.

Section 16723 provides that "No agreement, combination or association is unlawful or within the provisions of this chapter, the object and purpose of which are to conduct operations at a reasonable profit or to market at a reasonable profit those products which can not otherwise be so marketed."

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In Cline v. Frink Dairy Co., 274 U.S. 445 [47 S.Ct. 681, 71 L.Ed. 1146], it was...

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