American Steel Erectors v. Local Union No. 7, Civil Action No. 04-12536-RGS.

• Citation: 480 F.Supp.2d 471
• Decision Date: 30 March 2007
• Docket Number: Civil Action No. 04-12536-RGS.
• Parties: AMERICAN STEEL ERECTORS, INC. et al. v. LOCAL UNION NO. 7, INTERNATIONAL ASSOCIATION OF BRIDGE, STRUCTURAL, ORNAMENTAL & REINFORCING IRON WORKERS.
• Court: U.S. District Court — District of Massachusetts

480 F.Supp.2d 471

AMERICAN STEEL ERECTORS, INC. et al. v. LOCAL UNION NO. 7, INTERNATIONAL ASSOCIATION OF BRIDGE, STRUCTURAL, ORNAMENTAL & REINFORCING IRON WORKERS.

Civil Action No. 04-12536-RGS.

United States District Court, D. Massachusetts.

March 30, 2007.

Carol Chandler, Geoffrey R. Bok, Stoneman, Chandler & Miller, Boston, MA, Michael E. Avakian, Smetana & Avakian, Springfield, VA, for Plaintiffs.

Burton E. Rosenthal, Indira Talwani, Mary T. Sullivan, Paul F. Kelly, Stephanie R. Pratt, Segal, Roitman & Coleman, Mickey

Long, Law Offices of Mickey Long, Boston, MA, for Defendants.

MEMORANDUM AND ORDER ON DEFENDANT LOCAL UNION NO. 7'S MOTION FOR SUMMARY JUDGMENT

STEARNS, District Judge.

On December 2, 2004, six nonunion steel erector companies — American Steel Erectors, Inc., Ajax Construction Company, Inc., American Aerial Services, Inc., Bedford Ironworks, Inc., D.F.M. Industries, Inc., and Ronald Beauregard d/b/a Independent Welding ("nonunion companies" or "plaintiffs") — brought this antitrust Complaint against Local Union No. 7 of the International Association of Bridge, Structural, Ornamental & Reinforcing Iron Workers ("Union" or "Local 7").¹ Plaintiffs allege that Local 7 conspired with the Building Trades Employers' Association of Boston and Eastern Massachusetts ("BTEA"), and various named and unnamed unionized construction companies, to injure or destroy the business of steel erector companies that do not hire members of Local 7.

At the heart of the alleged conspiracy is a Job Target Fund ("Fund") supported by dues paid by members of Local 7. Because of the labor-intensive nature of the construction industry, unionized employers are at a competitive disadvantage when bidding against "open shop" contractors on privately-funded projects. In the 1980's, unions representing the building and construction trades initiated a national program of funded job targeting to stanch the loss of jobs to nonunion shops. In the typical job targeting program, a union establishes a fund to which its members are required to contribute. The fund then offers to pay a subsidy to unionized employers bidding on projects "targeted" by the union. The subsidy is intended to make up the difference between a concessionary wage agreed to by the union and regular union scale. If the bid is successful, union workers on the job receive the union-scale wage, while the subsidized employer benefits from lower labor costs.² This is the model that Local 7 emulated in establishing the Fund. Plaintiffs recognize that the antitrust laws do not bar unions from offering incentives to employers to hire their members. Plaintiffs allege, however, that Local 7 goes a step further by administering the Fund "in a fashion that is inconsistent with State and Federal law, thereby exposing it[self] to antitrust liability." Plaintiffs' Opposition to Summary Judgment, at 2.

The Complaint alleges that the Union's activities relative to the Fund violate the Sherman Antitrust Act ("Sherman Act"), 15 U.S.C. §§ 1 and 2 (Counts I, II, and III), and the Labor Management and Relations Act ("LMRA"), 29 U.S.C. § 187 (Count IV).³ On August 1, 2006, the Union filed a motion for summary judgment, arguing that its activities with regard to the Fund are protected by both the statutory and the nonstatutory labor antitrust exemptions. The Union further contends that the claim under the LMRA fails because of plaintiffs' inability to show that the Fund subsidies paid to employers constitute "threat[s], coerc[ion], or restraint[s]" in pursuit of an unlawful objective. The court heard oral argument on the Union's motion on December 14, 2006.

FACTUAL BACKGROUND

The material facts viewed in the light most favorable to plaintiffs are as follows. Local 7 represents iron workers employed by construction companies who are signatories to a master Collective Bargaining Agreement ("CBA") negotiated between the Union and the BTEA. The plaintiffs are six open shop contractors who compete with BTEA members for steel erection work.

In or around 1990, Local 7 established the Fund to make the hiring of its members more attractive in geographical areas where union-scale wages and benefits undercut the ability of BTEA contractors to compete. In 1992, the members of Local 7 voted to adopt a check-off system under which employers would deduct Fund contributions from their paychecks. On November 1, 1993, Local 7 and the BTEA agreed to incorporate the check-off system into the CBA.⁴ Under the CBA, a BTEA employer pays the worker's job targeting contribution directly to the Union, which deposits it into the Fund.⁵ The Fund, in turn, distributes wage subsidies on a case-by-case basis to BTEA employers who successfully bid on targeted projects.

The largest Boston area construction projects employing structural steel workers are government-financed public works projects, including the "Big Dig," the Boston Harbor cleanup, and the renovation of the terminals and parking facilities at Logan Airport. Federally-funded construction projects are subject to the Davis — Bacon Act, 40 U.S.C. §§ 276a-276a-5.⁶ The Davis-Bacon Act requires contractors working on construction projects financed in whole or in part with federal funds to pay workers no less than the wage that is determined by the Secretary of Labor "to be prevailing for the corresponding classes of laborers and mechanics on projects of a [similar] character."⁷ 40 U.S.C. § 3142(b). The Act also bars the refunding of any portion of a worker's Davis — Bacon wages as a "kickback" to the employer, "regardless of any contractual relationship." 40 U.S.C. § 3142(c)(1).⁸ Massachusetts has enacted a "Little Davis-Bacon Act" requiring that the "prevailing wage" be paid on state-subsidized construction projects. See G.L. c. 149, § 26.

DISCUSSION

The parties agree as to the applicable law. "Labor exemption from antitrust laws stems from both congressional and judicial recognition of the need to ensure that organized labor is able to operate effectively without fear of antitrust liability."⁹ Labor unions are excluded from the operation of the antitrust laws by both a statutory and a nonstatutory exemption. The statutory labor exemption is derived from §§ 6 and 20 of the Clayton Act, 15 U.S.C. § 17, 29 U.S.C. § 52, and from the Norris-LaGuardia Act, 29 U.S.C. §§ 101-115. See Allied Int'l, Inc. v. Int'l Longshoremen's Ass'n, 640 F.2d 1368, 1379 (1st Cir.1981). The history of the exemption begins in 1914 with the passage of the Clayton Act. Section 6 of the Act declared that "[t]he labor of a human being is not a commodity or article of commerce ... nor shall [labor] organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws." 15 U.S.C. § 17.¹⁰ Since the enactment of § 6, "it would seem plain that restraints on the sale of the employee's services to the employer, however much they curtail the competition among employees, are not in themselves combinations or conspiracies in restraint of trade or commerce under the Sherman Act." Apex Hosiery Co. v. Leader, 310 U.S. 469, 503, 60 S.Ct. 982, 84 L.Ed. 1311 (1940). In addition, the Clayton Act provides that no injunction shall issue "prohibit[ing] any person whether singly or in concert, from terminating any relation of employment, or from ceasing to perform any work or labor, or from recommending, advising, or persuading others by peaceful means so to do...." 29 U.S.C. § 52.

In 1932, Congress reaffirmed the statutory exemption in passing the Norris-La-Guardia Act. The Act repudiated the Supreme Court's holding in Duplex Printing Press Co. v. Deering, 254 U.S. 443, 41 S.Ct. 172, 65 L.Ed. 349 (1921), that the Clayton Act's labor antitrust exemption did not immunize unions engaged in "illegal" activity. In 1935, Congress strengthened the exemption further in passing the (Wagner-Connery) National Labor Relations Act ("NLRA"), 29 U.S.C. §§ 151-169. The NLRA was intended to redress the "inequality of bargaining power" between employees and employers that "tends to aggravate recurrent business depressions, by depressing wage rates ... and by preventing the stabilization of competitive wage rates and working conditions...." Id. § 151. The NLRA guarantees the right of workers to organize unions, to bargain collectively, and to engage in coercive activity including strikes as a means of enforcing legitimate union demands.¹¹

This succession of labor-friendly statutes led to tension between federal antitrust law, which seeks "to preserve business competition and to proscribe business monopolies," Allen Bradley Co. v. Local Union No. 3, Int'l Bhd. of Elec. Workers, 325 U.S. 797, 809, 65 S.Ct. 1533, 89 L.Ed. 1939 (1945), and federal labor law, which sanctions the elimination of "competition which is based on differences in labor standards," Apex Hosiery Co., 310 U.S. at 503, 60 S.Ct. 982, in order "to preserve the rights of labor to organize to better its conditions through the agency of collective bargaining." Allen Bradley, 325 U.S. at 806, 65 S.Ct. 1533. The Supreme Court in United States v. Hutcheson, 312 U.S. 219, 231, 61 S.Ct. 463, 85 L.Ed. 788 (1941), sought to reconcile these competing considerations by holding that the Sherman Act, § 20 of the Clayton Act, and the Norris-LaGuardia Act, should be read as a "harmonizing text" defining a comprehensive statutory labor exemption to the antitrust laws.

For the statutory labor exemption to apply, a union must act unilaterally in its own self-interest and not in combination with any non-labor party.¹² Connell Constr. Co. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 622-623, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975). As the First Circuit has explained,

the Sherman Act does not proscribe concerted union activity "so long as [the] union acts in its self-interest and does not combine with non-labor groups." [Hutcheson, 312 U.S. at 232, 61 S.Ct. 463] .... Whil...