Industrial Ass of San Francisco v. United States

• Decision Date: 13 April 1925
• Docket Number: No. 365,365
• Citation: 69 L.Ed. 849,45 S.Ct. 403,268 U.S. 64
• Parties: INDUSTRIAL ASS'N OF SAN FRANCISCO et al. v. UNITED STATES
• Court: U.S. Supreme Court

268 U.S. 64

45 S.Ct. 403

69 L.Ed. 849

INDUSTRIAL ASS'N OF SAN FRANCISCO et al.

v UNITED STATES.

No. 365.

Argued March 10, 1925.

Decided April 13, 1925.

Mr. H. H. Phleger, of San Francisco, Cal., for appellants.

[Argument of Counsel from pages 65-67 intentionally omitted] The Attorney General and Mr. A. T. Seymour, Asst. Atty. Gen., for the United States.

[Argument of Counsel from pages 68-70 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the Court.

This is a suit by the United States against a number of voluntary associations, corporations, and individuals, charging them with engaging, and threatening to continue to engage, in a conspiracy to restrain trade and commerce in building materials among the several states, in violation of the Anti-Trust Act of July 2, 1890 (26 Stat. 209, c. 647; Comp. St. § 8820 et seq.). The bill prays for an injunction restraining the further execution of the alleged conspiracy, for a dissolution of certain of the associations as illegal, and for other relief. After a hearing, the federal District Court declined to dissolve any of the appellants or interfere with their general activities, but entered a decree enjoining them specifically from (a) requiring any permit for the pur chase sale, or use of building materials or supplies produced without the state of California and coming into that state in interstate or foreign commerce; (b) making, as a condition for the issuance of any permit for the purchase, sale, or use of building materials or supplies, any regulations that will interfere with the free movement of building materials, plumbers' or other supplies produced without the state; (c) attempting to prevent or discourage any person without the state from shipping building materials, or other supplies to any person within the state; or (d) aiding, abetting, or assisting, directly or indirectly, individually or collectively, others to do any of the foregoing matters or things. 293 F. 925. A reversal of this decree is sought upon the ground, mainly, that the evidence wholly fails to show any contract, combination or conspiracy in restraint of interstate or foreign trade or commerce, or a violation in any respect of the provisions of the Anti-Trust Act. Other grounds assigned, in view of the conclusion we have reached, we put aside as unnecessary to be considered.

That there was a combination and concerted action among the appellants, is not disputed. The various agreements, courses of conduct and acts relied upon to establish the case for the government arose out of a long-continued controversy—or, more accurately, a series of controversies—between employers engaged in the construction of buildings in San Francisco, upon the one side, and the building trade unions of San Francisco, of which there were some 50 in number with a combined membership of about 99 per cent. of all the workmen engaged in the building industries of that city, upon the other side.

Prior to February 1, 1921, the unions had adopted and enforced, and were then enforcing, many restrictions bearing upon the employment of their members, which the employers, and a large body of other citizens, considered to be unreasonable, uneconomic, and injurious to the building industries, resulting, it was asserted, in decreased production, increased cost, and generally retarded progress. Among the restrictions complained of, were rules limiting the number of apprentices, limiting the amount of work, limiting or forbidding the use of labor-saving devices, and interfering with the legitimate authority of the employer. The plumbers' union, for example, enforced the following, among others: No union plumber, whatever the emergency, was permitted to work on nonunion material or to work overtime on Saturday without permission of the union; detailed reports were required, showing the number of fixtures set each day, and men who exceeded the standard fixed by the union were disciplined; the time which any employer was permitted to stay on a job was limited to two hours a day; as many men as the union saw fit could be ordered on a job, regardless of the wishes of the employer. Among the restrictions imposed by the painters' union were these: Wide brushes with long handles for roof painting were prohibited, and it was required that all such work should be done with a small brush; certain labor-saving devices were prohibited; and union painters declined to paint nonunion lumber.

The unions rigidly enforced the 'closed shop'—that is, they denied the right of the employer to employ any workman, however well qualified, who was not a member of a San Francisco union; and this applied to a member of a labor union in another locality, who, moreover, practically was precluded from joining a San Francisco union by reason of the cost and onerous conditions imposed. They were confederated under the name of the Building Trades Council, by means of which their combined power was exerted in support of the demands and policies of each, until they had acquired a virtual monopoly of all kinds of building trade labor in San Francisco, and no building work of any consequence could be done in that city, except in subordination to these demands and policies.

Early in 1921, serious differences having arisen between the unions and the employers in respect of wages, hours, and working conditions, an agreement for arbitration was made and a board of arbitrators selected. The board, after a hearing, made a tentative award reducing the scale of wages for the ensuing six months. Challenging the authority of the board to reduce wages, the unions refused to be bound by the award and repudiated and abandoned the arbitration. Strikes ensued, efforts to bring the strikers back to work failed, and building operations in San Francisco practically came to a standstill. Thereupon, in an endeavor to find a solution of the difficulty, mass meetings were held by representative citizens in large numbers and from all walks of life. At these meetings it was resolved that the work of building must go forward, and that, if San Francisco mechanics refused to work, others must be employed from the outside. Funds were raised and placed in the hands of a committee of the San Francisco Chamber of Commerce, and under its direction workmen were brought in from the outside with promises of employment at the wages fixed by the arbitrators. Subsequently the Industrial Association of San Francisco was organized to take the place of the committee and carry on its work. The strikers, however, returned to work, and for a time no objection was made to the employment of nonunion workmen. But later demands were made by certain of the unions for the discharge of all nonunion workmen and the restoration of the 'closed shop.' These demands were disregarded, and there was another strike. A boycott was instituted, and acts of violence against persons and property committed. In the meantime, one of the appellants, the Builders' Exchange of San Francisco, with a membership of more than 1,000 building contractors and dealers in building materials, in co-operation with the Industrial Association and other appellants, devised and put into effect what is called the 'American plan.'

The basic requirement of the plan was that there should be no discrimination for or against an employee on account of his affiliation or nonaffiliation with a labor union, except that at least one nonunion man in each craft should be employed on each particular job as an evidence, it is suggested, of good faith. In effect, the 'American plan' and the 'open shop' policy are the same.

The principal means adopted to enforce the plan was the 'permit system,' the object of which was to limit sales of certain specified kinds of materials to builders who supported the plan. To render this restriction effective, the person concerned was required to obtain a permit from the Builders' Exchange, specifying the kinds and quantities of materials to be furnished and the particular job on which they were to be used. The materials specified were cement, lime, plaster, ready-mixed mortar, brick, terra cotta and clay products, sand, rock, and gravel. Substantially all of these were California productions and were deliberately selected for that reason, in order to avoid interference with interstate commerce. The only material exception was plaster, which was brought in from the outside, but consigned to local representatives of the manufacturers or to local dealers in San Francisco, and brought to rest in salesrooms and warehouses, and commingled with other goods and property, before being subjected to the permit rule. A suggestion was made at one time that, if necessary, the rule would be extended to all other materials used in the building trades; but it does not appear that this was done. It is said that lath of various kinds, wallboard, and Keene cement also were put under the rule; but we think the record discloses that, in fact, this was never agreed upon or carried into effect.

There is evidence of efforts to extend the 'American plan' to other cities and states. Permits were extensively withheld in respect of buildings where the 'American plan' was not adopted or not enforced. Builders and contractors were constantly urged to observe the plan and were warned that failure to do so would result in a denial of future permits. A check was kept upon shops and building jobs by inspectors, and daily reports were made as to whether the plan was being observed. Whenever it appeared in any case that the plan was not being lived up to, a warning letter was sent out. Under appropriate by-laws, members of organizations subscribing to the plan who violated it were fined, and in some instances expelled, and other methods, not necessary to be recited, in part persuasive and in part coercive, were adopted and enforced, in order to secure a thorough-going maintenance of the plan.

With the conflict between the...