James R. Snyder Co., Inc. v. Associated General Contractors of America, Detroit Chapter, Inc.

Citation677 F.2d 1111
Decision Date29 April 1982
Docket Number80-1031,Nos. 80-1030,s. 80-1030
Parties110 L.R.R.M. (BNA) 2543, 94 Lab.Cas. P 13,531, 1982-1 Trade Cases 64,710, 10 Fed. R. Evid. Serv. 879 JAMES R. SNYDER COMPANY, INC., Ebeling & Hicks, Inc., Clarence Gleeson, Inc., and Leo J. Vendervennet & Sons, Inc., Plaintiffs-Appellants, Cross-Appellees, v. ASSOCIATED GENERAL CONTRACTORS OF AMERICA, DETROIT CHAPTER, INC., Barton-Malow Co., Darin & Armstrong, Inc., R. E. Dailey & Co., Thomas E. Dailey, A. Z. Shmina & Sons Co., Detroit Building Employers Labor Council, Stanley E. Veighey, John W. Lanzetta, Frank D'Agostino and John McCoy, Defendants-Appellees, Cross-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Donald E. Mather, Mount Clemens, Mich., Jerry S. Cohen, Washington, D.C., Harold E. Kohn, P. A., Philadelphia, Pa., for plaintiffs-appellants, cross-appellees.

William M. Saxton, Butzel, Lang, Gust, Klein & Van Zile, Detroit, Mich., Delmer C. Gowing, III, Bloomfield Hills, Mich., for defendants-appellees, cross-appellants.

Before EDWARDS, Chief Judge, and ENGEL and MARTIN, Circuit Judges.

ENGEL, Circuit Judge.

Among numerous issues raised in these cross-appeals is a significant question concerning the application of the Federal Rules of Evidence, as they affect admission of coconspirators' out-of-court statements, and the extent to which our circuit's construction of these rules in criminal prosecutions applies also to civil litigation. Equally important, these appeals require us to consider the difficult issue of the sufficiency of the evidence of an alleged illegal antitrust conspiracy, where that evidence consisted almost entirely of actions which are permitted under the nation's labor laws. Upon consideration of these and other issues, we affirm a judgment entered by the district court following direction of a jury verdict in favor of the defendants.

Plaintiffs are independent masonry contractors in Detroit, Michigan. They are also members of the Detroit Mason and Construction Association (DMCA). DMCA members employ bricklayers and laborers in the metropolitan area of Detroit. Since 1958, the DMCA has negotiated labor agreements on behalf of its members and other masonry contractors with unions representing both the bricklayers and laborers.

The defendants, the Associated General Contractors of America (AGC), Detroit Chapter, Inc., the Detroit Building Employers Labor Council (also known as the Construction Employers Council) (CEC), and various members and officers of those organizations, entered into a multi-trade/multi-employer labor agreement 1 which had the effect of establishing wage rates and fringe benefits for construction workers in the metropolitan Detroit area. In their complaint, plaintiffs alleged that defendants had conspired with the unions which had participated in the multi-trade/multi-employer agreement to impose the terms of that agreement upon smaller non-signatory employers in an attempt to drive them out of business. Plaintiffs claimed that this conduct violated section 1 of the Sherman Act, 15 U.S.C. § 1 (1976). Plaintiffs sought treble damages and injunctive relief under sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26 (1976).

Trial commenced before a jury, but at the conclusion of the plaintiffs' proof the district court entered a directed verdict in favor of the defendants. The district court held that the plaintiffs had failed as a matter of law to establish a prima facie case for relief under the Sherman Act. The plaintiffs appeal, claiming that the trial judge improperly excluded from evidence certain out-of-court statements by alleged coconspirators which tended to prove an illegal agreement existed. They also claim that the evidence was sufficient to submit the issues to the jury regardless of whether the out-of-court statements were admitted into evidence. The defendants cross-appeal from the trial court's denial of their motion to dismiss for lack of jurisdiction under the Sherman Act.

I.

Because it raises the issue of subject matter jurisdiction, we first address the cross-appeal. Defendants contend that plaintiffs failed to prove that the alleged agreement restrained "trade or commerce among the several states...." 15 U.S.C. § 1. Defendants properly assert that without proof of such interstate effects Sherman Act jurisdiction would be lacking.

At the jurisdictional hearing held prior to trial by the district court, plaintiffs presented evidence in an attempt to show that their activity as masonry contractors, while not directly in interstate commerce, substantially affected interstate commerce. Because defendants' alleged antitrust violations altered plaintiffs' interstate activities, plaintiffs argue that defendants' illegal acts served as a basis for Sherman Act jurisdiction. At the close of the proofs submitted during the jurisdictional hearing, the district court found that plaintiffs engaged in no masonry work outside the State of Michigan, or at least they would not be bound by the terms of any labor contract negotiated in Michigan if they were to do so. 2 It therefore concluded that plaintiffs' businesses were not directly in interstate commerce for the purposes of this litigation.

Because Sherman Act jurisdiction exists not only when activities are in interstate commerce but also when activities have an effect on interstate commerce, see McLain v. Real Estate Board of New Orleans, 444 U.S. 232, 242, 100 S.Ct. 502, 509, 62 L.Ed.2d 441 (1980), the district court continued its factual determination and found that plaintiffs acquired between fifteen and twenty-five percent of their prime commodity, bricks and masonry products, from outside Michigan. It further found that as a result of the monetary settlement contained in the multi-trade/multi-employer labor agreement, plaintiffs later had to accept labor contracts with the bricklayers and laborers which provided wages and fringe benefits in excess of what they otherwise would have had to pay; that the plaintiffs lost business due to the need to increase their bid prices on construction projects to cover the higher labor costs they incurred as a result of the new labor contract; and that because plaintiffs were less successful in securing construction projects, they purchased fewer bricks and other masonry products from out of state.

The district court also found, however, that the total demand for masonry work in the Detroit area was not affected by the wage scale paid to bricklayers and laborers. Therefore, any work lost by plaintiffs was gained by other masonry contractors. Because plaintiffs' competitors also purchased bricks and masonry products from out of state, the same amount of those materials continued to flow into the State of Michigan from interstate commerce, and any work lost by plaintiffs was gained by others.

The defendants relied upon a number of cases in which it has been held that the mere substitution of purchasers of goods from interstate commerce confers no jurisdiction under the Sherman Act. See Page v. Work, 290 F.2d 323, 332 (9th Cir. 1961), cert. denied, 368 U.S. 875, 82 S.Ct. 121, 7 L.Ed.2d 76 (1961); Dominion Parking Corp. v. B & O Railroad, 450 F.Supp. 441, 446 (E.D.Va.1978). The rationale of those decisions was that interstate commerce was not substantially affected since the same amount of supplies still flowed into the state.

The district court below, however, relied upon Lehrman v. Gulf Oil Corp., 464 F.2d 26 (5th Cir. 1972), in finding that the plaintiffs had established jurisdiction under the Sherman Act. In Lehrman, a single Gulf service station in Texas sued Gulf for treble damages under the Sherman Act, alleging that Gulf's complicated system of setting wholesale prices for its gasoline was used as a mechanism for fixing the retail prices at which dealers resold Gulf gasoline. Because the vast majority, if not one hundred percent, of the gasoline sold by Gulf to Lehrman was produced in the State of Texas, Gulf asserted that Lehrman had not shown jurisdiction under the Sherman Act. The Fifth Circuit held that since the Lehrman service station also sold tires, batteries and accessories which were manufactured outside of Texas, and since there was a reduction in Gulf's interstate purchase of those items even if the absolute volume of such purchases remained constant in Texas after Lehrman went out of business, a sufficient nexus with interstate commerce existed.

We agree with the district court that the Sherman Act has sufficient reach to touch the activities here. That reach has been held to extend as far as Congress' constitutional power to regulate interstate commerce. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 201, 95 S.Ct. 392, 401, 42 L.Ed.2d 378 (1974). Whatever questions may have existed concerning Sherman Act jurisdiction where there has been a substitution of purchasers of goods from interstate commerce, they no longer exist after the more recent decisions of the Supreme Court on this subject.

In Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976), the plaintiff alleged that the defendants were engaged in an unlawful conspiracy to restrain trade in the furnishing of medical and surgical hospital services and that they were attempting to monopolize the hospital business in Raleigh, North Carolina. The district court dismissed petitioner's amended complaint on the pleadings, finding no Sherman Act jurisdiction. The Fifth Circuit, sitting en banc, affirmed. The Supreme Court reversed, holding that four of petitioner's allegations supplied the requisite jurisdictional facts. First, petitioner purchased supplies from out-of-state sources. Second, petitioner received revenues from out-of-state insurance firms. Third, petitioner remitted management fees to its out-of-state parent corporation. Fourth, petitioner would borrow from out-of-state lenders to finance some of its...

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6 books & journal articles
  • Trial Proceedings and Motions
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    ...witness are within the power of the trial judge to decide preliminary matters. ” James R. Snyder Co. v. Associated Gen. Contractors, 677 F.2d 1111 (6th Cir. 1982), cert. denied, U.S. 1015. The court has the factfinding responsibilities on preliminary fact questions. Those fact-finding respo......
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    ...witness are within the power of the trial judge to decide preliminary matters. ” James R. Snyder Co. v. Associated Gen. Contractors, 677 F.2d 1111 (6th Cir. 1982), cert. denied, U.S. 1015. The court has the factinding responsibilities on preliminary fact questions. Those factinding responsi......
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    ...witness are within the power of the trial judge to decide preliminary matters. ” James R. Snyder Co. v. Associated Gen. Contractors, 677 F.2d 1111 (6th Cir. 1982), cert. denied, U.S. 1015. The court has the factinding responsibilities on preliminary fact questions. Those factinding responsi......
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