642 F.2d 1302 (D.C. Cir. 1980), 79-1463, Mullins v. Kaiser Steel Corp.

Docket Nº:79-1463.
Citation:642 F.2d 1302
Party Name:, 1980-2 Trade Cases 63,537 Julius MULLINS et al. v. KAISER STEEL CORPORATION, Appellant.
Case Date:September 17, 1980
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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642 F.2d 1302 (D.C. Cir. 1980)

, 1980-2 Trade Cases 63,537

Julius MULLINS et al.

v.

KAISER STEEL CORPORATION, Appellant.

No. 79-1463.

United States Court of Appeals, District of Columbia Circuit

September 17, 1980

Argued Dec. 18, 1979.

Rehearing Denied Nov. 12, 1980.

Certiorari Granted May 4, 1981.

See 101 S.Ct. 2044.

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A. Douglas Melamed, Washington, D. C., with whom Robert A. Hammond, III and John H. Harwood, II, Washington, D. C., were on the brief, for appellant.

Stephen J. Pollak, Washington, D. C., with whom Ralph J. Moore, Jr., Wendy S. White, E. Calvin Golumbic and Walter P. O'Connell, Washington, D. C., were on the brief, for appellees.

Before WILKEY and MIKVA, Circuit Judges, and FLANNERY [*], United States District Judge for the District of Columbia.

Opinion for the Court filed by Circuit Judge MIKVA.

Dissenting opinion filed by Circuit Judge WILKEY.

MIKVA, Circuit Judge:

This suit was brought against Kaiser Steel Corporation (Kaiser) by the Trustees of the United Mine Workers of America Health and Retirement Funds, seeking payment of contributions due to these funds under the terms of the National Bituminous Coal Wage Agreement of 1974 (1974 Agreement). Kaiser's principal defense was that the contract provision sued on was illegal under both the antitrust prohibitions of the Sherman Act, §§ 1-2, 15 U.S.C. §§ 1-2 (1976), and the "hot cargo" proscriptions of the National Labor Relations Act (NLRA), § 8(e), 29 U.S.C. § 158(e) (1976). Rejecting these defenses, the district court granted summary judgment to the Trustees and awarded them attorneys' fees. 1 For the reasons set forth below, we affirm.

I. THE PURCHASE-OF-COAL CLAUSE

The 1974 Agreement was a collective bargaining agreement between the United Mine Workers of America (UMW) and various coal operators and associations of coal operators, most notably the Bituminous Coal Operators Association (BCOA). As a member of BCOA, Kaiser became an employer-signatory to the 1974 Agreement.

Among the customary provisions of a collective bargaining agreement setting the terms and conditions of employment, the 1974 Agreement defined the obligations of the parties with respect to the management and funding of various health and retirement trusts established for the benefit of miners. Of particular importance to this litigation is Article XX(d) which provided three ways to measure the employer's obligation to contribute to these funds: first, by the amount of coal produced by the employer for sale or use; second, by the number of hours worked by the employees; and, third, by the amount of coal "procured or acquired" for sale or use for which no contribution had been made. In effect, this third provision-the so-called "purchase-of-coal clause"-required a signatory employer to contribute to the health and retirement funds for each ton of coal purchased from other producers who were not themselves parties to the 1974 Agreement and, hence, did not have a collective bargaining agreement with the UMW. It is the purchase-of-coal clause under which the Trustees now seek payment, and it is the purchase-of-coal clause that Kaiser claims should not be enforced on grounds of illegality.

Previous collective bargaining agreements between the UMW and BCOA had contained a similar provision, except that the predecessor clause required a contribution for coal bought from non-union producers that was double the required contribution for coal that UMW workers had mined. Due to this feature, the earlier

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clause had been called a "penalty clause" and was the subject of considerable litigation; sometimes the legality of the clause was sustained, but sometimes it was not. Compare United Mine Workers (Dixie Mining Co.), 188 N.L.R.B. 753 (1971) (upholding clause) with Riverton Coal Co. v. United Mine Workers, 453 F.2d 1035 (6th Cir.), cert. denied, 407 U.S. 915, 92 S.Ct. 2439, 32 L.Ed.2d 690 (1972) (invalidating clause). See generally International Union, UMW v. NLRB, 468 F.2d 1139 (D.C.Cir.1972). Under the current purchase-of-coal clause, the rates of contribution for the coal produced by union and non-union miners are equivalent. Whatever penalty may have been implicit in the disparity of payments in the earlier clause, that particular defect has been eliminated.

The terms of the 1974 Agreement clearly indicate that the parties were concerned about the legality of the purchase-of-coal clause and about having their bargained-for agreement undone by subsequent legal rulings on that point. Article XX(d)(1), which sets forth the rates of contribution, also provides that the UMW shall have the right to require the parties to meet and negotiate in good faith a replacement for the purchase-of-coal clause if the clause is adjudged to be invalid or unlawful. A similar provision is repeated in the article on severability, which requires renegotiation if the parties are prevented by legal authorities from "implementing or effectuating the economic benefits, including health and retirement fund payments, required by this Agreement." 1974 Agreement, Art. XXIX(b). Both these provisions are set forth in the margin. 2

In addition to establishing the rates of contribution for the health and retirement funds, the 1974 Agreement required the employers to file monthly reports with the Trustees, setting forth the amount of coal

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produced internally and also the tonnage purchased elsewhere. 1974 Agreement, Art. XX(d)(5). An employer's failure to comply with the reporting requirement was stated in the contract to be an independent contract violation. 1974 Agreement, Art. XX(d) (7).

While the 1974 Agreement was in effect, Kaiser regularly reported and made contributions for coal it had produced; for purchased coal, it did neither. In April, 1978, four months after the 1974 Agreement expired under its terms, the Trustees brought this suit. They alleged that Kaiser had made coal purchases for which contributions were required under the purchase-of-coal clause, a fact Kaiser does not dispute. 3 On that basis, the Trustees sought compliance with the purchase-of-coal clause and payment to the funds accordingly.

The Trustees filed a motion for summary judgment, which was granted by the district court. Kaiser's cross-motion, grounded on several affirmative defenses, was denied. Kaiser has brought the matter here. 4

II. KAISER'S ILLEGALITY DEFENSE

The gist of Kaiser's defense to this suit is that the pertinent contract clause is unenforceable. The argument has two branches: first, that the purchase-of-coal provision was, in reality, an anticompetitive penalty, violative of sections 1 and 2 of the Sherman Act; and, second, that the purchase-of-coal provision violated section 8(e) of the NLRA-the so-called "hot-cargo" provision of the labor law, which precludes unions from bargaining for secondary boycotts of non-union goods. For either or both of these reasons, it is argued, the offending contract clause ought not be enforced.

In an appeal from a summary judgment, Kaiser is, of course, entitled to have its version of the facts presumed. Bishop v. Wood, 426 U.S. 341, 347, 96 S.Ct. 2074, 2078, 48 L.Ed.2d 684 (1976). It is not similarly entitled to have its legal characterization of the disputed contract clause prevail. This is not a case in which a contract's illegality is manifest. 5 See generally 14 Williston on

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Contracts § 1630B (3d ed. 1972) (indicating procedural implications of whether or not contract is manifestly illegal). The narrow issue on appeal, therefore, is not whether an illegal contract clause should be enforced but rather whether Kaiser's proffered defense of illegality should be entertained. By granting summary judgment for the Trustees, notwithstanding Kaiser's claim that the clause was in two ways illegal, the district court decided that Kaiser was not entitled to interpose the illegality defense. This, we now hold, is correct. 6

In holding as we do today, we join two other courts of appeals on this question. In Huge v. Long's Hauling Co., 590 F.2d 457 (3d Cir. 1978), cert. denied, 442 U.S. 918, 99 S.Ct. 2840, 61 L.Ed.2d 285 (1979), the Third Circuit decided a case exactly like the one here on appeal: a suit under the 1974 Agreement by welfare fund trustees to enforce the purchase-of-coal clause met by the defense of illegality under the Sherman Act and section 8(e). The Huge court held that neither defense could be interposed. More recently, the Ninth Circuit, in Waggoner v. R. McGray, Inc., 607 F.2d 1229 (9th Cir. 1979), considered whether a suit by the trustees of a benefit fund should be dismissed on the ground that the provision sued on violated section 8(e) and was, thus, unenforceable. The court held that because the defendants had not first presented their unfair labor practice allegations to the Labor Board, the district court should have decided the trustees' contract claim without

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reference to the section 8(e) defense. 607 F.2d at 1236.

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