CONNELL CONST. CO., INC. v. Plumbers & Steam. Loc. U. No. 100

• Citation: 483 F.2d 1154
• Decision Date: 19 November 1973
• Docket Number: No. 72-1243.,72-1243.
• Parties: CONNELL CONSTRUCTION COMPANY, INC., Plaintiff-Appellant, v. PLUMBERS AND STEAMFITTERS LOCAL UNION NO. 100, etc., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

483 F.2d 1154 (1973)

CONNELL CONSTRUCTION COMPANY, INC., Plaintiff-Appellant, v. PLUMBERS AND STEAMFITTERS LOCAL UNION NO. 100, etc., Defendant-Appellee.

No. 72-1243.

United States Court of Appeals, Fifth Circuit.

August 22, 1973.

Rehearing and Rehearing Denied November 19, 1973.

COPYRIGHT MATERIAL OMITTED

Joseph F. Canterbury, Jr., Smith, Smith, Dunlap & Canterbury, Dallas, Tex., for plaintiff-appellant.

William L. Keller, Allen Butler, Dallas, Tex., amicus curiae.

David Richards, Austin, Tex., for defendant-appellee.

Louis Sherman, Washington, D.C., amicus curiae.

Before MORGAN, CLARK and INGRAHAM, Circuit Judges.

Rehearing and Rehearing En Banc Denied November 19, 1973.

LEWIS R. MORGAN, Circuit Judge:

This action is brought by Connell, a general contractor, against Plumbers Local 100, alleging that a contract with that union which Connell entered under pressure from the union violates the antitrust laws. After trial, the District Court for the Northern District of Texas held for the defendant union, finding that Congress had, in amendments to the National Labor Relations Act, expressly recognized the validity of contracts such as the one in issue as a legitimate union tool in the construction industry. Connell appeals from that judgment.

I

Connell is a general contractor engaged in the construction industry in Texas. Connell was first contacted by the union and asked to enter a contract with the union whereby Connell agreed not to do any business with any plumbing and mechanical firm unless such firm was a party "to an executed, current collective bargaining agreement" with the union.¹ This initial missive from the union indicated that if Connell did not sign with 10 days, the union would undertake to place pickets at various construction sites where Connell was the general contractor. When Connell failed to sign this proposed contract, the union placed a single picket at The Bruton Venture Project in Dallas, Texas, on which Connell was the general contractor.

Upon the commencement of this picketing about 150 employees (both of Connell and its various subcontractors) left the site of this project, effectively halting construction. In January of 1971, Connell instituted this action in a Texas state court alleging a violation of the Texas antitrust laws. The Texas court granted a temporary injunction against the picketing. The union then removed the case to federal court and, after the district court refused to remand the case back to state court, Connell entered, under protest, an agreement not to do any business with subcontractors who did not have a current collective bargaining agreement with the union. It is this agreement, substantially what the union sought through its picketing, that Connell alleges to be an antitrust violation.

Connell did not have any employees of its own who were members of the appellee union at the time of the demand to contract and the picketing. In fact, Connell has never at any time material to this case had any of its own employees who belonged to this union. The subcontractor who was being used by Connell at The Bruton Venture Project did, in fact, at that time have a current collective bargaining contract with the union.

It is undisputed that Connell itself is in the practice of virtually always contracting out the mechanical work on its construction jobs. It appears that this subcontracting is generally done on the basis of bids from various mechanical subcontractors. Connell has in the past given these jobs to both unionized and nonunionized subcontractors on approximately an equal basis.

II

It becomes readily apparent that while this case is framed in the terms of antitrust, its origins and implications are most intimately connected with and extremely important to the delicate balance of labor-management power in the construction industry and national labor policy pertaining thereto. This is in a sense a labor problem and must be analyzed in light of national labor policy as set forth by Congress. The antitrust aspects of the case are bottomed on the claim that the union is undertaking to restrict competition by forcing this general contractor through contract with the union to give all its work to unionized subcontractors. It is such a contract which Connell claims restricts trade and violates the antitrust laws.

III

The instant proceeding is not the first round in the battle over the issues involved in this case. Some knowledge of the background of this action would appear helpful in putting it into proper perspective.

The instant action has more far reaching effects than merely this proceeding. It is another phase of the struggle between the trade unions in the construction industry and general contractors in Dallas. We know of at least two earlier legal proceedings.

In Dallas Building Trades v. NLRB, 1968, 130 U.S.App.D.C. 28, 396 F.2d 677, a similar subcontractor agreement was before the District of Columbia Circuit on petition for enforcement of an NLRB order. Members of the Dallas Building Trades Council had picketed a general contractor to obtain a subcontractor agreement like the one in this case. That general contractor, unlike Connell, had employees who were not union members doing work at the picketed jobsite and who would be covered by the agreement with the union. The only violation found by the Board and upheld by the District of Columbia Circuit was based on the fact that this general contractor had unorganized employees. It was held that while picketing for the contract was legal, there was also sufficient evidence to support a finding that the picketing was recognitional in nature, in addition to seeking the subcontractor agreement, and that such picketing, where an object was recognition, was limited by section 8(b)(7) of the NLRA to 30 days, which time had been exceeded by the union in this case. The council and its constituent members then turned to picketing contractors who had no employees of their own who could be covered by the agreement to avoid the recognitional problem.

The general contractors then apparently sought to challenge this picketing of generals without any employees of their own who could be covered. As set forth by the district court in this case, there has been an attempt to take the very issue involved in this action to the NLRB in the form of a labor dispute.

This same union sent a contract similar to the one in this case to K.A.S. Construction Company in Richardson, Texas, and, following that general contractor's refusal to sign the proposed agreement, commenced picketing. K.A.S. sought to bring an unfair labor practice proceeding. The regional office of the NLRB in Fort Worth refused to issue a complaint against the union and an appeal of this refusal was denied by the General Counsel of the NLRB in Washington. Although it has apparently never been expressly adjudicated, it is generally accepted that a decision by the General Counsel not to file a complaint is unreviewable. See Cox and Bok, Cases on Labor Law 138 (7th Edition 1969). Therefore, as long as the regional director and the General Counsel refuse to issue a complaint, a general contractor such as Connell has no way through the processes set up by the NLRA to challenge before the Board or in court the picketing and other economic sanctions used by a union in seeking an agreement such as the one herein.

Having thus failed to obtain an adjudication of this agreement from the NLRB in the context of a labor law issue, the general contractors sought a new line of attack. When Connell was faced with the same demand as K.A.S. earlier, it made no attempt to invoke NLRB procedures but took a different course—antitrust attack.

IV

The first question which we face in this case is whether or not this action can be maintained under federal antitrust statutes. After careful consideration, we find that it cannot be. Labor unions enjoy no blanket exemptions from the antitrust laws. See United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788 (1941). They do, however, have a somewhat special status in the realm of antitrust. The test, as it has come down in various Supreme Court opinions, seems to turn on the union's combination with non-labor groups to create a monopoly among various conspiratory interests. In other words, the purposes sought by the conspiracy must have goals which go beyond legitimate union aims and result in an anticompetitive situation.

As a basic proposition, it is usually stated that: "The antitrust laws are not concerned with competition among laborers or with bargains over the price or supply of labor—its compensation or hours of service or the selection and tenure of employees." Cox, Labor and the Antitrust Laws, 14 Pa.L. Rev. 252, 255 (1955).

Originally, in the area of antitrust and labor, the Supreme Court broadly applied antitrust law to union activities. However, the clear trend in recent years has been to grant labor a broad exemption from antitrust sanctions, applying the latter only in narrowly limited situations. Examples of the early Supreme Court position include Loewe v. Lawlor (Danbury Hatters), 208 U.S. 274, 28 S.Ct. 301, 52 L.Ed. 488 (1908), wherein an employer was allowed to sue under the Sherman Act when a union exerted pressure on him to unionize by a nation-wide boycott. Next Congress enacted sections 6 and 20 of the Clayton Act² which, at the time, were generally believed to give unions broad exemptions from antitrust laws. In Duplex Printing Press Co. v. Deering, 254 U.S. 443, 41 S.Ct. 172, 65 L.Ed. 349 (1921), the Supreme Court held that section 6 of the Clayton Act only protected the existence and lawful activities of union organizations and that section 20 prevented the application of the antitrust laws only to a labor dispute between employees and their immediate employer. The activity in that case was not...