Mullins v. Kaiser Steel Corp.

Decision Date09 March 1979
Docket NumberCiv. A. No. 78-0650.
Citation466 F. Supp. 911
PartiesJulius MULLINS et al., Plaintiffs, v. KAISER STEEL CORPORATION, Defendant.
CourtU.S. District Court — District of Columbia

Stephen J. Pollak, Washington, D. C., for plaintiffs.

A. Douglas Melamed, Washington, D. C., for defendant.


JUNE L. GREEN, District Judge.

The difficult questions before the Court concern the legality and enforceability of a clause of the National Bituminous Coal Wage Agreement of 1974 (hereinafter the "1974 Agreement")1 providing for a royalty payment to the United Mine Workers of America Health and Retirement Funds (hereinafter the "Funds") on all bituminous coal procured or acquired by a signatory employer for use or for sale on which contributions to the Funds had not been made (hereinafter the "purchase-of-coal clause").2 The purchase-of-coal clause is only one component of the 1974 Agreement which establishes the terms and conditions of employment for Kaiser Steel Corporation (hereinafter "Kaiser") coal mining employees. The 1974 Agreement also requires Kaiser to make payments to the Funds based on the hours worked and coal produced by its employees.3 Kaiser, a member of the BCOA and therefore a signatory to the 1974 Agreement, made contributions on the coal produced by its own 400 UMWA employees but failed to make any contributions pursuant to the purchase-of-coal clause. Kaiser never acknowledged any coal purchases voluntarily despite the fact that the terms of the 1974 Agreement were apparently based on the parties' understanding that the Trustees of the Funds would rely upon signatory operators to furnish information concerning the amount of coal produced and purchased (Complaint, Exhibit A, p. 29). The signatories reported under separate entries the tonnage of coal purchased and produced and also calculated the amount of contributions payable to the Funds on "remittance advice forms" supplied by the Trustees.

Kaiser also failed to inform the Trustees voluntarily of its decision to withhold Fund contributions required by the purchase-of-coal clause. Had Kaiser elected to test the purchase-of-coal clause during the term of the 1974 Agreement, a contract provision calling for renegotiation in the event of a successful challenge could have been invoked by the Union in order to remedy the resulting deficiency in pension benefit contributions from signatories.4 The Trustees contend that Kaiser effectively foreclosed the intended application of the renegotiation provision by failing to disclose coal purchases and deprived covered employees of part of their bargained-for wages which the Trustees now seek to recover.

On April 11, 1978, the Trustees of the Funds brought this suit under Section 301 of the Labor-Management Relations Act (LMRA), 29 U.S.C. ž 185 and Section 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. ž 1132 seeking to recover from Kaiser contributions alleged to be due and owing to the Funds pursuant to the purchase-of-coal clause.5

Plaintiffs have moved for summary judgment arguing that the principles announced in Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959) require judicial intervention and enforcement of payments pursuant to the purchase-of-coal provisions regardless of Kaiser's claims of illegality.

In opposition to the Trustees' motion and in support of its own motion for summary judgment, Kaiser contends that its agreement with the United Mine Workers union to contribute to the Funds pursuant to the coal purchase royalty clause is illegal, unenforceable and void as a "hot cargo" provision under Section 8(e) of the Labor-Management Relations Act, 29 U.S.C. ž 158(e); that is, an implied agreement to cease doing business with non-signatory employees and signatories which are delinquent in Fund contributions. Kaiser also urges that the Kelly v. Kosuga decision permits the interposition of the defense of antitrust illegality under Sections 1 and 2 of the Sherman Act, 15 U.S.C. žž 1 and 2 because the contract provision relied upon by the Trustees is itself unlawful.6

Finally, the Trustees argue that the Court is without jurisdiction to hear a Section 8(e) defense and failing this, that several disputed issues of material fact preclude summary judgment in favor of Kaiser.

Antitrust Defense

The decision in Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959) restated the position of the United States Supreme Court regarding recognition of a defense of antitrust illegality to an action brought on a contract. In Kelly, as in prior decisions, the Court attempted to accommodate the competing interests involved: enforcement of a contract provision which may in itself be unlawful or in furtherance of illegal ends and thereby frustrating public policy, or denial of recovery which may result in unjust enrichment at the plaintiff's expense or otherwise impose a penalty unrelated to the character of plaintiff's illegal acts and thereby give defendant a windfall.

The contract sued upon in Kelly7 provided for the sale of fifty carloads of onions at market price to an onion grower and included an agreement by the vendor not to deliver onions on the futures market in order to maintain artificially high prices. This contract was one aspect of a larger price maintenance scheme in which other onion growers purchased additional onions from the vendor and then agreed among themselves not to market the onions. The vendee accepted delivery of thirteen carloads but only made partial payment before refusing delivery of the remaining thirty-seven carloads. After repudiation by the vendee, the vendor sold the rapidly deteriorating onions at a reduced price in mitigation of damages and brought suit on the contract for the unpaid purchase price. The vendee argued that the sale was made pursuant to and as an indivisible part of an agreement restraining trade in violation of the Sherman Act. Plaintiff's motion to strike this affirmative defense was granted by the trial court which rendered summary judgment for the plaintiff.

The Supreme Court upheld a judgment for the contract price in favor of the vendor and stated:

As a defense to an action based on contract, the plea of illegality based on violation of the Sherman Act has not met with much favor in this Court. This has been notably the case where the plea has been made by a purchaser in an action to recover from him the agreed price of goods sold.

358 U.S. at 518, 79 S.Ct. at 431. The Court noted its extreme reluctance to supplement the express remedies provided by the antitrust laws with an additional remedy of contract avoidance and also restated the limits of the defense of antitrust illegality:

Past the point where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Sherman Act, the courts are to be guided by the overriding general policy, as Mr. Justice Holmes put it, "of preventing people from getting other people's property for nothing when they purport to be buying it." . . . Supplying a sanction for the violation of the Act, not in terms provided and capricious in its operation, is avoided by treating the defense as so confined (citations omitted).

358 U.S. at 520-21, 79 S.Ct. at 432.

The general rule emerging from Kelly is that a contract should be enforced whether or not it fosters illegal ends, unless the alleged illegality is of such a character that enforcement of the contract would "make the courts a party to the carrying out of one of the very restraints forbidden by the Sherman Act." 358 U.S. at 520, 79 S.Ct. at 432. The extreme difficulty confronting Kaiser in attempting to demonstrate that the purchase-of-coal clause falls within the narrow exception noted in Kelly is underscored by the fact that the Supreme Court has sustained the defense of antitrust illegality on only one occasion. The unique factors present in Continental Wall Paper Co. v. Louis Voight & Sons Company, 212 U.S. 227, 256, 29 S.Ct. 280, 290, 53 L.Ed. 486 (1909) which led the Court to condemn a monopolization and price-fixing scheme characterized as "certain in results . . widespread in its operation, and . . . evil in its purposes" and to sustain an antitrust defense to a contract action are not present in this case. See D. R. Wilder Manufacturing Company v. Corn Products Refining Company, 236 U.S. 165, 177, 35 S.Ct. 398, 59 L.Ed. 520 (1915).

In similar decisions preceding Kelly v. Kosuga, the Supreme Court sought to reconcile conflicting policies underlying antitrust law and contract principles by adhering to a difficult formula distinguishing between enforceable "collateral" agreements not illegal in themselves and "inherently" illegal agreements. Compare Continental Wall Paper Co., supra, with Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679 (1902). The Kelly decision signals abandonment of this troublesome test and in its place the Supreme Court has invited attention to the nature of the remedy sought as the touchstone for determining whether or not an alleged antitrust illegality should counsel a court to refuse assistance to a party presenting a contractual claim.8 See Kelly v. Kosuga, 358 U.S. at 521, 79 S.Ct. 429.

The Trustees are seeking to recover one component of agreed compensation pursuant to the terms of a contract which has expired. The amounts claimed are based on purchases actually made. The contract is at an end ÔÇö decisions to purchase or not to purchase have been made and acted upon. Whether or not an express or implied agreement not to make future purchases of coal, like the nondelivery agreement referred to in Kelly at 521, 79 S.Ct. 429, would warrant a different result, the Court concludes that requiring payments pursuant to the purchase-of-coal clause cannot be said to be enforcing a restraint of trade within the meaning of Kelly v. Kosuga.9

The "Hot Cargo" Defense

The Court disagrees with the arguments advanced...

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7 cases
  • Kaiser Steel Corporation v. Mullins
    • United States
    • U.S. Supreme Court
    • January 13, 1982
    ...Act or the NLRA. It nevertheless rejected Kaiser's defense of illegality and granted the trustees' motion for summary judgment. 466 F.Supp. 911 (1979). The Court of Appeals affirmed, 206 U.S.App.D.C. 334, 642 F.2d 1302 (1980), also rejecting Kaiser's defense without adjudicating the legalit......
  • Mullins v. Kaiser Steel Corp.
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • May 4, 1981
    ...respectfully dissent. * Sitting by designation pursuant to 28 U.S.C. § 292(a) (1976).1 The district court's opinion is reported at 466 F.Supp. 911 (D.D.C.1979).2 Article XX(d)(1) of the 1974 Agreement reads as follows, except that the specified rates of contribution have been eliminated:Dur......
  • Waggoner v. R. McGray, Inc.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • August 24, 1979
    ...before (a) district court" in a section 301 action. (Huge v. Long's Hauling Co. (3rd Cir. 1978) 590 F.2d 457, 461; Mullins v. Kaiser Steel Corp. (D.D.C.1979) 466 F.Supp. 911 (district court cannot entertain a section 8(e) defense to a section 301 action).) Prior to the Supreme Court's decis......
  • Burke v. French Equipment Rental
    • United States
    • U.S. District Court — Central District of California
    • September 30, 1980
    ...Hauling Co., 590 F.2d 457, 461 (3d Cir. 1978), cert. denied, 442 U.S. 918, 99 S.Ct. 2840, 61 L.Ed.2d 285 (1979); Mullins v. Kaiser Steel Corp., 466 F.Supp. 911 (D.D.C.1979). The Court, however, is guided by the language in McGray, wherein the Court held district courts may not decide, indep......
  • Request a trial to view additional results

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