Bodine Produce, Inc. v. United Farm Wkrs. Org. Com.

• Citation: 494 F.2d 541
• Decision Date: 19 March 1974
• Docket Number: No. 72-1300.,72-1300.
• Parties: BODINE PRODUCE, INC., an Arizona corporation, et al., Appellees, v. UNITED FARM WORKERS ORGANIZING COMMITTEE et al., Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

494 F.2d 541 (1974)

BODINE PRODUCE, INC., an Arizona corporation, et al., Appellees, v. UNITED FARM WORKERS ORGANIZING COMMITTEE et al., Appellants.

No. 72-1300.

United States Court of Appeals, Ninth Circuit.

March 19, 1974.

COPYRIGHT MATERIAL OMITTED

James Rutkowski (argued), Robert G. Begam, Langerman, Begam & Lewis, Phoenix, Ariz., for appellants.

Rex E. Lee (argued), Jenning, Strouss, & Salmon, Phoenix, Ariz., for appellees.

Before CHAMBERS, KOELSCH and SNEED, Circuit Judges.

SNEED, Circuit Judge:

Growers and/or shippers of fresh table grapes brought this action against the United Farm Workers Organizing Committee (AFL-CIO) (hereinafter referred to as UFWOC), a labor organization, and certain individuals, as representatives of all officers, agents and members of UFWOC, for damages and injunctive relief to which they claim they are entitled, under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and certain Arizona statutes, because of an alleged concerted group boycott of table grapes grown in Arizona.

Original and pendent jurisdiction in the federal courts is based on 28 U.S.C. § 1337 and 15 U.S.C. § 15.

Subsequent to the filing of the complaint, the defendants moved to dismiss the action on the ground that plaintiffs had failed to state a claim upon which relief could be granted; their contention being that the acts alleged are exempted from the prohibitions of the Sherman Act by the Clayton and Norris-LaGuardia Acts, 15 U.S.C. § 12 et seq. and 29 U.S.C. § 101 et seq. Thereafter, an amended complaint was filed and the defendants renewed their motion to dismiss. Following a hearing, the trial court denied the motion to dismiss the amended complaint but, recognizing that the motion involved "a controlling question of law to which there is a substantial ground for differences of opinion", stayed all further proceedings pending determination of an appeal by the defendants. The defendants then perfected their appeal to this Court. We affirm the district court's denial of the motion to dismiss the amended complaint.

Broadly speaking, the issues before us are: first, the scope of the exemption from the Sherman Act which is provided the defendants by the Clayton Act and the Norris-LaGuardia Act; and, second, the sufficiency of the pleadings in alleging acts not within any exemption to which the defendants are entitled. To these, and their numerous sub-issues, we now turn.

I. SCOPE OF ANTITRUST EXEMPTION AVAILABLE TO UFWOC

To understand the scope of UFWOC's exemption from the Sherman Act it is necessary to sketch, albeit briefly, the history of what is probably as yet an incomplete effort to accommodate the policies of the antitrust laws with those applicable to labor. This accommodation has not been an easy one to achieve because employees must be given great latitude to engage in concerted activity to realize those ends our laws deem legitimate¹ while employers and, to some degree, employees must avoid "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce."² How the balance should be struck has not remained constant but has been altered from time to time to reflect shifts of emphasis having their source in the evolving views of the public toward labor-management relations.

The history of this evolution has been told by many.³ Only a much abridged version is necessary here. Convenience suggests that it be divided into two parts, with the enactment of the Norris-LaGuardia Act being the division point.

A.

The Pre-Norris-LaGuardia Period.

Immediately following the enactment of the Sherman Act, it was applied by the lower federal courts to union activity.⁴ The Supreme Court in Loewe v. Lawlor, 208 U.S. 274, 28 S.Ct. 301, 52 L.Ed. 488 (1908), by reading the Act literally and relying on legislative history in what has been described as a somewhat unfair manner,⁵ held that the Act applied to combinations by labor. It is pertinent to this appeal that the facts alleged in Loewe v. Lawlor set forth concerted activity by the defendants, members of the United Hatters of North America and the American Federation of Labor, to coerce recognition of United Hatters by the plaintiff through the use of an extensive boycott of plaintiff's hats by wholesale dealers and their customers. As the latter portion of this opinion will indicate, were Loewe v. Lawlor the last word spoken by the Supreme Court and the Congress, the specific allegations set forth in the amended complaint now before us would state a cause of action under the Sherman Act. However, while much has happened since 1908, Loewe v. Lawlor nonetheless remains important in its refusal to hold that labor activity was beyond the reach of the Sherman Act.⁶

Next, for our purposes, came the Clayton Act. Spawned in the troubled waters of Congressional struggles to clarify and limit the teaching of Loewe v. Lawlor, and hotly contested in the intervening 1912 Presidential campaign, the Clayton Act was couched in delphic language designed to deny a clean-cut victory either to those who sought to reaffirm the holding in Loewe v. Lawlor or to those who sought to free labor of the restraints imposed by the Sherman Act.⁷ Section 6 of the Clayton Act, 15 U.S.C. § 17, reads:

The labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the anti-trust laws.

Section 20, 29 U.S.C. § 52, proscribed injunctions "in any case between an employer and employees . . . involving, or growing out of, a dispute concerning terms or conditions of employment, unless necessary to prevent irreparable injury to property, or to a property right . . . ." Injunctions also could not be used to prohibit any person from terminating any employment, ceasing to perform work, persuading others "by peaceful means so to do; or from . . . peacefully persuading any person to work or to abstain from working; or from ceasing to patronize or to employ any party to such dispute, or from recommending, advising, or persuading others by peaceful and lawful means so to do;" or from certain other activities, some of which were modified by the adjective "lawful". In concluding, Section 20 declared that none of the acts which were specified therein were to "be considered or held to be violations of any law of the United States."

The extent to which the scope of the antitrust laws was curbed by these provisions obviously was not clear. In Duplex Co. v. Deering, 254 U.S. 443, 41 S. Ct. 172, 65 L.Ed. 349 (1921), the Supreme Court, confronted with a request to enjoin a secondary boycott by the officers and members of the International Association of Machinists,⁸ held that the Clayton Act afforded injunctive relief and that neither Section 6 nor Section 20 had removed the secondary boycott from the reach of the Sherman Act. With respect to Section 6 the Court said:

But there is nothing in the section to exempt such an organization or its members from accountability where it or they depart from its normal and legitimate objects and engage in an actual combination or conspiracy in restraint of trade.^8a

The restraints on injunctive relief imposed by Section 20 were construed narrowly to apply only to those parties to a dispute "concerning terms or conditions of employment" who stand in a "proximate relation"⁹ to the controversy and who are "affected in a proximate and substantial, not merely a sentimental or sympathetic, sense by the cause of dispute."¹⁰ This conclusion was reinforced by pointing out the use by Congress of the words "peaceful", "peacefully", "lawful", and "lawfully". There is little doubt that were the complaint before us to be judged by the standards enunciated in Duplex, it would state a cause of action.

This broad reach of the Sherman Act was not reduced until the enactment of the Norris-LaGuardia Act in 1932. During the interval between its decision in Duplex and the passage of Norris-LaGuardia, the Court had granted an employer injunctive relief against a union that sought to regain recognition by requiring its members to refrain from handling the employer's product. Bedford Cut Stone Co. v. Journeymen Stone Cutters' Ass'n, 274 U.S. 37, 47 S.Ct. 522, 71 L.Ed. 916 (1927). As they had done in Duplex, Justices Brandeis and Holmes dissented. In Coronado Co. v. United Mine Workers, 268 U.S. 295, 45 S.Ct. 551, 69 L.Ed. 963 (1924), the Court had sustained a cause of action for damages under the Sherman Act upon a showing that a union local had destroyed a mine to halt "the production of nonunion coal and prevent its shipment to markets of other states than Arkansas the location of the destroyed mine, where it would by competition tend to reduce the price of the commodity and affect injuriously the maintenance of wages for union labor in competing mines. . . ."¹¹ Finally, a combination "under which the manufacturers and contractors would employ only union carpenters with the understanding that the latter would refuse to install nonunion-made millwork,"¹² designed to eliminate competition between non-union mills, in both Wisconsin and the southern states, and union mills in Chicago had been held sufficient to support a criminal charge under the Sherman Act. United States v. Brims, 272 U.S. 549, 47 S.Ct. 169, 7 L.Ed. 403 (1926).

B.

Norris-LaGuardia and Beyond.

Norris-LaGuardia sought to restrict the application of the Sherman Act to labor disputes and to reduce the power of the federal courts to intervene in...