United Food & Commercial Workers Local Union Nos. 137, 324, 770, 899, 905, 1167, 1222, 1428, and 1442 v. Food Employers Council, Inc.
| Decision Date | 03 September 1987 |
| Docket Number | No. 85-6081,85-6081 |
| Citation | 827 F.2d 519 |
| Parties | 126 L.R.R.M. (BNA) 2223, 56 USLW 2150, 107 Lab.Cas. P 10,114, 1987-2 Trade Cases 67,694 UNITED FOOD & COMMERCIAL WORKERS LOCAL UNION NUMBERS 137, 324, 770, 899, 905, 1167, 1222, 1428, and 1442, Plaintiffs-Appellants, v. FOOD EMPLOYERS COUNCIL, INC.; Albertson's, Inc.; American Stores Co.; Alpha Beta Co.; Arden Group, Inc; the Boys Market, Inc.; Federated Department Stores, Inc.; Household International, Inc., Vons Grocery Co.; Hughes Markets, Inc.; Lucky Stores, Inc.; Safeway Stores, Inc.; Stater Brothers, Inc.; and Joseph M. McLaughlin, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Nicholas W. Clark, Washington, D.C., and Steven J. Kaplan, Los Angeles, Cal., for plaintiffs-appellants.
William B. Irvin, Los Angeles, Cal., and Richard W. Odgers, San Francisco, Cal., for defendants-appellees.
Appeal from the United States District Court for the Central District of California.
Before BROWNING, Chief Judge, GOODWIN and FARRIS, Circuit Judges.
Appellant unions brought suit against appellee employers alleging that a "most-favored nations" clause in their collective-bargaining agreement violates the antitrust laws. The unions sought a judgment declaring the clause illegal and enjoining its enforcement. The district court dismissed on the ground that the unions lacked standing to challenge the agreement under the antitrust laws. We affirm dismissal of the unions' claim for injunctive relief, but reverse dismissal of the prayer for declaratory relief.
Appellants are local unions representing retail food clerks employed in southern California supermarkets. Appellees (referred to collectively as "the Council") are the major supermarket chains in that area, a trade association representing these supermarkets for collective-bargaining purposes, and the president of the association.
In mid-1984, the unions and the Council negotiated a collective-bargaining agreement (the Master Food Agreement) containing a most-favored nations clause. This clause provided that if a local union agreed with an independent grocery chain on terms or conditions of employment more favorable than those in the Master Food Agreement, any grocery-chain party to the Agreement could adopt these more favorable terms and conditions in its stores in the relevant local area. Continuation of terms and conditions in an existing agreement between a union and an independent grocery chain was permitted as long as the independent did not add more than one store to its chain. Also, the most-favored nation clause did not apply to chains having fewer than 101 employees providing no single store employed more than 25 employees.
The allegations of the complaint, briefly summarized, are as follows. After learning that independent grocery chains having labor contracts with appellant unions had formed their own association, the Council informed the unions that the Master Food Agreement then in negotiation must include a most-favored nations clause. The unions objected on the ground that such an agreement "would involve the unions in an antitrust conspiracy with the defendants to drive out of business and otherwise competitively disadvantage" the independent grocery chains.
The unions explained to the Council that "the inevitable effect of the clause would be that the unions could not, as they had done in the past, grant more favorable terms to independent food companies that may be in need of such terms to remain viable competitors." They further explained that under the proposed clause a reduction in wages in all stores would follow if the unions granted a concession to an independent, and for this reason it would be "a practical impossibility for the unions to grant smaller independent employers the terms they needed to remain in business." The unions therefore sought an exception "for employers whose financial condition would not allow them to pay the Master Food Agreement rates and still stay in business." The Council refused. The unions nonetheless agreed to the clause because they felt compelled to do so to avoid a strike.
The complaint further alleged that the purpose and inevitable effect of the most-favored nations clause was to force the smaller independent chains to accept the terms of the Master Food Agreement regardless of their ability to pay, and to impose higher average labor costs upon them because of the difference between their operating methods and those of the larger chains. "Thus," the complaint alleged, "the clause allows defendants collectively to impose terms and conditions of employment on their unionized independent competitors that give defendants a substantial competitive advantage in terms of labor costs." The clause also had the effect of deterring increased competition by independents because they would lose existing favorable contracts with the unions if they increased the number or size of their stores.
Since the Master Food Agreement became effective independent chains have sought more favorable terms as "necessary for them to remain viable," but the unions have been unable to negotiate such agreements because of the clause. Strikes have occurred and more could occur. An independent chain has filed an unfair labor practice charge against three of the local unions for refusing to negotiate with the chain as an independent economic entity. Other independent chains have threatened to sue the unions for treble damages on the ground the clause violates the antitrust laws.
The unions allege the most-favored nations clause violates section 1 and section 2 of the Sherman Act, 15 U.S.C. Secs. 1 and 2. They seek declaratory relief under 28 U.S.C. Sec. 2201 and injunctive relief under section 16 of the Clayton Act, 15 U.S.C. Sec. 26, and under 28 U.S.C. Sec. 2202. 1
The district court dismissed on the ground that under Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), the unions lacked standing to obtain relief under the antitrust laws because they were neither competitors nor customers in the market allegedly restrained, and an elimination of competition in that market did not directly injure them; and because the independent chains allegedly injured were more appropriate persons to bring an antitrust action.
The unions concede they did not suffer "antitrust injury," as that term is defined in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), and therefore could not sue for treble damages under Section 4 of the Clayton Act. Although the unions have not expressly abandoned their claim that they have standing to seek injunctive relief under 15 U.S.C. Sec. 26, they offer nothing in their briefs on appeal to support reversal of the district court's holding that they also lacked standing to seek this relief, and we decline to consider the question. 2
The only substantial question before us is whether the unions have a remedy under the Declaratory Judgment Act to determine the validity under the antitrust laws of the most-favored nations clause in their collective-bargaining agreement with the Council, or whether they are barred from this remedy because they lack standing to sue the Council for treble damages under the antitrust laws. We consider first the language and purpose of the Act.
The plain language of the Declaratory Judgment Act entitles the unions to such a remedy. The Act provides that any court of the United States "[i]n a case of actual controversy within its jurisdiction ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. Sec. 2201.
The Council apparently concedes the unions' suit involves a 3 The unions have insisted from the beginning that the most-favored nations clause violates the antitrust laws; the Council has insisted it does not. The parties persisted in their conflicting legal positions to the verge of industrial conflict, and continue to adhere to them. The unions' interest in being relieved of the clause is evident: according to the complaint, the clause is the source of continuing difficulty in union negotiations with independent chains, of threats of administrative challenge under the labor laws, and of threats of treble-damage litigation under the antitrust laws. There is no suggestion that the Council's interest in preserving the clause has diminished: the clause assures the chains that are parties to the agreement that none will gain an advantage in labor costs over the others, and apparently gives chains that are party to the agreement significant competitive advantages over independent chains. Thus, "the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941). See also National Basketball Ass'n. v. SDC Basketball Club, Inc., 815 F.2d 562, 565 (9th Cir.1987); Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir.1986).
The unions' suit was clearly "within [the district court's] jurisdiction." As this court recently said: ...
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