Associated General Contractors of California, Inc v. California State Council of Carpenters

• Decision Date: 22 February 1983
• Docket Number: No. 81-334,81-334
• Citation: 74 L.Ed.2d 723,459 U.S. 519,103 S.Ct. 897
• Parties: ASSOCIATED GENERAL CONTRACTORS OF CALIFORNIA, INC., Petitioner v. CALIFORNIA STATE COUNCIL OF CARPENTERS and Carpenters Northern Counties Conference Board et al
• Court: U.S. Supreme Court

459 U.S. 519

103 S.Ct. 897

74 L.Ed.2d 723

ASSOCIATED GENERAL CONTRACTORS OF CALIFORNIA, INC., Petitioner

v CALIFORNIA STATE COUNCIL OF CARPENTERS and Carpenters Northern Counties Conference Board et al.

No. 81-334.

Argued Oct. 5, 1982.

Decided Feb. 22, 1983.

Syllabus

Petitioner multiemployer association and respondents(collectively the Union) are parties to collective-bargaining agreements governing the terms and conditions of employment in construction-related industries in California.The Union filed suit in Federal District Court, alleging that petitioner and its members, in violation of the antitrust laws, coerced certain third parties and some of petitioner's members to enter into business relationships with nonunion contractors and subcontractors, and thus adversely affected the trade of certain unionized firms, thereby restraining the Union's business activities.Treble damages were sought under § 4 of the Clayton Act, which authorizes recovery of such damages by "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws."The District Court dismissed the complaint as insufficient to allege a cause of action for treble damages under § 4.The Court of Appeals reversed.

Held: Based on the allegations of the complaint, the Union was not a person injured by reason of a violation of the antitrust laws within the meaning of § 4 of the Clayton Act.Pp. 526-546.

(a) Even though coercion allegedly directed by petitioner at third parties in order to restrain the trade of "certain" contractors and subcontractors may have been unlawful, it does not necessarily follow that the Union is a person injured by reason of a violation of the antitrust laws within the meaning of § 4. Pp. 526-529.

(b) The question whether the Union may recover for the alleged injury cannot be answered by literal reference to § 4's broad language.Instead, as was required in common-law damages litigation in 1890 when § 4's predecessor was enacted as § 7 of the Sherman Act, the question requires an evaluation of the Union's harm, the petitioner's alleged wrongdoing, and the relationship between them.Pp. 529-535.

(c) The Union's allegations of consequential harm resulting from a violation of the antitrust laws, although buttressed by an allegation of intent to harm the Union, are insufficient as a matter of law.Other relevant factors—the nature of the alleged injury to the Union, which is neither a consumer nor a competitor in the market in which trade was allegedly restrained, the tenuous and speculative character of the causal relationship between the Union's alleged injury and the alleged restraint, the potential for duplicative recovery or complex apportionment of damages, and the existence of more direct victims of the alleged conspiracy weigh heavily against judicial enforcement of the Union's antitrust claim.Pp. 907-913.

648 F.2d 527(9th Cir.1983), reversed.

James P. Watson, Los Angeles, Cal., for petitioner.

Victor J. Van Bourg, San Francisco, Cal., for respondents.

Justice STEVENSdelivered the opinion of the Court.

This case arises out of a dispute between parties to a multiemployer collective bargaining agreement.The plaintiff unions allege that, in violation of the antitrust laws, the multiemployer association and its members coerced certain third parties, as well as some of the association's members, to enter into business relationships with nonunion firms.This coercion, according to the complaint, adversely affected the trade of certain unionized firms and thereby restrained the business activities of the unions.The question presented is whether the complaint sufficiently alleges that the unions have been "injured in [their] business or property by reason of anything forbidden in the antitrust laws" and may therefore recover treble damages under § 4 of the Clayton Act. 15 U.S.C. § 15.Unlike the majority of the Court of Appeals for the Ninth Circuit, we agree with the District Court's conclusion that the complaint is insufficient.

I

The two named plaintiffs(the "Union")—the California State Council of Carpenters and the Carpenters 46 Northern Counties Conference Board—are affiliated with the United Brotherhood of Carpenters and Joiners of America, AFL-CIO.The plaintiffs represent more than 50,000 individuals employed by the defendants in the carpentry, drywall, piledriving, and related industries throughout the state of California.The Union's complaint is filed as a class action on behalf of numerous affiliated local unions and district councils.The defendants are Associated General Contractors of California, Inc.("Associated"), a membership corporation composed of various building and construction contractors, approximately 250 members of Associated who are identified by name in an exhibit attached to the complaint, and 1,000 unidentified co-conspirators.

The Union and Associated, and their respective predecessors, have been parties to collective bargaining agreements governing the terms and conditions of employment in construction-related industries in California for over 25 years.The wages and other benefits paid pursuant to these agreements amount to more than $750,000,000 per year.In addition, approximately 3,000 contractors who are not members of Associated have entered into separate "memorandum agreements" with the Union, which bind them to the terms of the master collective bargaining agreements between the Union and Associated.The amended complaint does not state the number of nonsignatory employers or the number of nonunion employees who are active in the relevant market.

In paragraphs 23 and 24 of the amended complaint, the Union alleges the factual basis for five different damages claims.¹ Paragraph 23 alleges generally that the defendants conspired to abrogate and weaken the collective bargaining relationship between the Union and the signatory employers.In seven subsections, paragraph 24 sets forth activities allegedly committed pursuant to the conspiracy.The most specific allegations relate to the labor relations between the parties.² The complaint's description of actions affecting nonparties is both brief and vague.It is alleged that defendants:

"(3) Advocated, encouraged, induced, and aided non-members of defendantAssociated General Contractors of California, Inc. to refuse to enter into collective bargaining relationships with plaintiffs and each of them;

"(4) Advocated, encouraged, induced, coerced, aided and encouraged owners of land and other letters of construction contracts to hire contractors and subcontractors who are not signatories to collective bargaining agreements with plaintiffs and each of them "(5) Advocated, induced, coerced, encouraged, and

aided members of Associated General Contractors of California, Inc., non-members of Associated General Contractors of California, Inc., and 'memorandum contractors' to enter into subcontracting agreements with subcontractors who are not signatories to any collective bargaining agreements with plaintiffs and each of them;" App. E 17-19(emphasis added).³

Paragraph 25 describes the alleged "purpose and effect" of these activities: first, "to weaken, destroy, and restrain the trade of certain contractors," who were either members of Associated or memorandum contractors who had signed agreements with the Union; and second, to restrain "the free exercise of the business activities of plaintiffs and each of them."⁴Plaintiffs claim that these alleged antitrust viola- tions caused them $25,000,000 in damages.⁵ The complaint does not identify any specific component of this damage claim.

After hearing "lengthy oral argument" and after receiving two sets of written briefs, one filed before and the second filed after this Court's decision in Connell Construction Co. v. Plumbers & Steamfitters,421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418(1975), the District Court dismissed the complaint, including the federal antitrust claim.404 F.Supp. 1067(ND Cal.1975).⁶The court observed that the complaint alleged "a rather vague, general conspiracy," and that the allegations "appear typical of disputes a union might have with an employer," which in the normal course are resolved by grievance and arbitration or by the NLRB. Id., at 1069.⁷ Without seeking to clarify or further amend the first amended complaint, the Union filed its notice of appeal on October 9, 1975.

Over five years later, on November 20, 1980, the Court of Appeals reversed the District Court's dismissal of the Union's federal antitrust claim.648 F.2d 527(CA91980).⁸ The ma- jority of the Court of Appeals disagreed with the District Court's characterization of the antitrust claim; it adopted a construction of the amended complaint which is somewhat broader than the allegations in the pleading itself.⁹The Court of Appeals held (1) that a Sherman Act violation—a group boycott—had been alleged, ibid.;(2) that the defendants' conduct was not within the antitrust exemption for labor activities, id., at 532-536; and (3) that the plaintiffs had standing to recover damages for the injury to their own business activities occasioned by the defendants' "industry-wide boycott against all subcontractors with whom the Unions had signed agreements, . . ."Id., at 537.In support of the Union's standing, the majority reasoned that the Union was within the area of the economy endangered by a breakdown of competitive conditions, not only because injury to the Union was a foreseeable consequence of the antitrust violation, but also because that injury was specifically intended by the defendants.The court noted that its conclusion was consistent with other cases holding that union orga- nizational and representational activities constitute a form of business protected by the antitrust laws.¹⁰

II

As the case comes to us, we must assume that the Union can prove the facts alleged in its amended complaint.It is not, however,...