NATIONAL ASS'N OF WOM. & C. APPAREL SALESMEN, INC. v. FTC

• Decision Date: 21 May 1973
• Docket Number: No. 71-1880.,71-1880.
• Parties: NATIONAL ASSOCIATION OF WOMEN'S AND CHILDREN'S APPAREL SALESMEN, INC., a/k/a NAWCAS Guild, etc., et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Fifth Circuit

479 F.2d 139 (1973)

NATIONAL ASSOCIATION OF WOMEN'S AND CHILDREN'S APPAREL SALESMEN, INC., a/k/a NAWCAS Guild, etc., et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.

No. 71-1880.

United States Court of Appeals, Fifth Circuit.

May 21, 1973.

Raymond R. Dickey, Robert D. Roadman, Washington, D. C., Sherwyn E. Syna, Atlanta, Ga., for petitioners.

Joseph Martin, Jr., Gen. Counsel, Harold D. Rhynedance, Jr., Asst. Gen. Counsel, Miles J. Brown, Atty., Federal Trade Commission, Washington, D. C., for respondent.

Before JOHN R. BROWN, Chief Judge, and BELL and SIMPSON, Circuit Judges.

JOHN R. BROWN, Chief Judge:

We enter the workroom to review the propriety of an FTC cease and desist order which compels the Petitioners, National Association of Women's & Children's Apparel Salesmen (NAWCAS) to refrain from committing certain unfair trade practices within the context of their regional trade shows. Our role is chiefly that of a tailor: we must dart the seam of two interrelated public policies — the antitrust proscription and its labor exemption. The thread which fastens this seam is composed of three independently woven fibers: (i) is NAWCAS a "labor organization" under the cloak of the Norris LaGuardia Act, 29 U.S.C.A. § 104, and Clayton Act §§ 6, 20, 15 U.S.C.A. § 17, 29 U.S.C.A. § 52, special dispensation for labor? (ii) do the challenged activities arise in the context of a bona fide "labor dispute" as that term is used in these statutory provisions? and (iii) has NAWCAS acted only in its labor self-interest — eschewing any combination with non-labor groups? Unless all three questions can be answered affirmatively, NAWCAS is not entitled to don the protective cloak.

The FTC, relying heavily on an NLRB holding in a collateral proceeding, answered the first two questions negatively and issued its order.¹ National Association of Women's and Children's Apparel Salesmen, 1971, ___ F.T.C. ___ docket no. 8691. Because we are in agreement on these points, we enforce the order without addressing ourselves to the third question.²

The Wrinkled Cloak

When the National Association of Women's and Children's Apparel Salesmen was formed in 1945, its avowed purpose was to provide a forum for the free exchange of trade information and a force to represent the best interests of ready to wear clothing salesmen.³ At that time, NAWCAS stitched together 21 local affiliate groups of salesmen.⁴ One of the primary activities of these affiliates was the sponsoring of regional trade shows to minimize traveling.

There are approximately ten thousand manufacturers of women's and children's apparel in the United States, mostly centered in and around the New York City area. Although there are several industry giants, their share of the market is relatively miniscule — 90 per cent of the business going to the smaller manufacturers. Their wares are normally marketed through the efforts of the hired salesmen. Most of these men work on commissions, although the trend among the larger firms is toward compensation by a fixed salary. They also tend to work exclusively for one manufacturer — purportedly to preserve design integrity and prevent "line piracy" — unless their territory is so threadbare that they must represent two or more noncompeting lines to make an adequate living.

The most effective method of marketing apparel has been found to be that of the regional, periodic trade show.⁵ Sponsoring these shows is the role of the local affiliate. They are usually held in hotels, auditoriums, or merchandise marts. Long-term advance planning is necessary. The affiliate who sponsors the show rents the necessary facilities, solicits registration from members qualified to exhibit, and provides general logistical support for the registrants. Each show is governed by the rules and regulations of the sponsoring affiliate and violations of the rules may result in a fine or suspension. As noted by the NLRB and FTC, a number of the rules are designed to prevent members from participating in competing shows. Because of the tremendous prestige and economic impact of these shows, participation in them is almost a business necessity.

Many of NAWCAS's tangible goals⁶ were union-like. But for the first 11 years its approach was strictly velveteen. Then, at its 1956 convention, NAWCAS adopted the "California Resolution". Under this Resolution NAWCAS decided to exert economic leverage by blacklisting "uncooperative manufacturers" from the affiliates' trade shows. At first the blacklists were confined to those manufacturers who did not put forth a cooperative effort towards resolving disputes with their association-member salesmen. In 1960, however, the economic tool of excluding uncooperative manufacturers from the trade shows was extended to those manufacturers who failed to hire their salesmen under the terms of NAWCAS's standard contract.

It is this refusal to deal which the FTC seeks to collar with its order.⁷

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The Ironing Board

The FTC skirted the necessity of ruling directly on the extent of protection afforded to NAWCAS's activities by labor's cloak of antitrust immunity by relying on the opinion of the NLRB in a collateral proceeding, Bambury Fashions, Inc., 1969, ___ NLRB ___ Appendix at 146-156, to iron out the wrinkles. The Board held that because of the commercial nature of NAWCAS's trade shows it was disqualified from functioning as a labor organization.

The rationale behind this deference to the determination of the Board, is that labor's cloak of immunity must be lined with the fact that the putative labor organization is — or could be — the bargaining representative for the employees in question. This is so because the antitrust laws yield only insofar as the union pursues legitimate subjects of collective bargaining. Meat Cutter's Union v. Jewel Tea Co., 1965, 381 U.S. 676, 689 and 710, 85 S.Ct. 1596, 1601 and 1614, 14 L.Ed.2d 640, 649 and 661; American Federation of Musicians v. Carroll, 1968, 391 U.S. 99, 88 S. Ct. 1562, 20 L.Ed.2d 460; Hunt v. Crumboch, 1945, 325 U.S. 821, 65 S.Ct. 1545, 89 L.Ed. 1954. If an organization cannot, under any set of circumstances, function as the collective bargaining agent of the employees of a particular employer, that organization may not transgress the employer's rights to unrestrained competition with impunity under the cloth of a labor label. Allen Bradley Co. v. Local Union No. 3, 1945, 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939.

The authority to determine representational matters under the National Labor Relations Act is vested exclusively with the NLRB. See NLRB v. Cabot Carbon Co., 1959, 360 U.S. 203, 79 S.Ct. 1015, 3 L.Ed.2d 1175. Because of the immediacy usually attending such determinations, there is no means of securing direct judicial review of the Board's determination — it must be attacked collaterally in the context of an unfair labor practice charge.⁸ Boire v. Greyhound Corporation, 1964, 376 U.S. 473, 84 S.Ct. 894, 11 L.Ed.2d 849; Magnesium Casting Co. v. NLRB, 1971, 401 U.S. 137, 91 S.Ct. 599, 27 L.Ed.2d 735; Templeton v. Dixie Color Printing Co., 5 Cir., 1971, 444 F.2d 1064. Given this commitment, under our national labor policy, to the Board's particular expertise of the task of defining what organizations are labor organizations, we hold that it was proper for the FTC to accord dispositive weight to the Board's holding.⁹

What the Board actually held in Bambury Fashions was that NAWCAS, because of its financial stake in the trade shows themselves, was precluded from acting as a labor organization. Thus, according to the Board, the disqualifying factor "is the latent danger that it may bargain, not for the benefit of unit employees, but for the protection and enhancement of its business interests which are in direct competition with those of the employer at the other side of the bargaining table." Bambury Fashions, supra at ___. In essence it washes out to this. An organization purporting to represent the interests of a group of employees may disregard the potential impact of the antitrust laws on their chosen means if the ends to be accomplished are appropriate bargaining subjects for a labor union. But where the organization has a proprietary interest in the means, in and for themselves, it is disqualified from functioning as a labor organization under the protective cloak. "The labor exemption is inapplicable where the union acts not as a union but as an entrepreneur." Jewel Tea, supra, 381 U.S. at 733, 85 S.Ct. at 1626, 14 L.Ed.2d at 675 (Goldberg, J.); Cf. Los Angeles Meat & Provision Drivers Union, Local 626 v. United States, 1962, 371 U.S. 94, 83 S.Ct. 162, 9 L.Ed.2d 150; Columbia River Packers Association v. Hinton, 1942, 315 U.S. 143, 62 S.Ct. 520, 86 L.Ed. 750; Gulf Coast Shrimpers & Oystermans Association v. United States, 5 Cir., 1956, 236 F.2d 658.

Given this disqualification by the Board,¹⁰ the FTC was correct in buttonholing NAWCAS's anticompetitive activities.

Enforced.

SIMPSON, Circuit Judge (dissenting):

I respectfully dissent.

The majority today holds that the Federal Trade Commission properly relied upon the decision of the National Labor Relations Board in a collateral proceeding, Bambury Fashions, 1969, 179 NLRB 447, which also involved NAWCAS. In Bambury Fashions the Board concluded that NAWCAS was not qualified under the National Labor Relations Act to act as the statutory bargaining representative for certain traveling salesmen who potentially competed with employers by conducting trade shows. The majority concludes that the Commission could rely on this Board decision to hold that because NAWCAS may not act as a bargaining representative, it is not a "labor organization" entitled to the protection of the labor exemption to the federal antitrust laws. The basic holding of the majority is:

"The rationale behind this the Commission\'s deference to the determination of the Board, is that labor\'s cloak of immunity

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