People v. North Ave. Furniture and Appliance, Inc.

• Decision Date: 24 May 1982
• Docket Number: No. 80SA505,80SA505
• Citation: 645 P.2d 1291
• Parties: 114 L.R.R.M. (BNA) 3162, 1982-2 Trade Cases P 64,795 The PEOPLE of the State of Colorado, Plaintiff-Appellant, v. NORTH AVENUE FURNITURE AND APPLIANCE, INC.; Harvey Townsley; Leo Hyland; and Harland Jacob, Defendants-Appellees.
• Court: Colorado Supreme Court

Page 1291

645 P.2d 1291

114 L.R.R.M. (BNA) 3162, 1982-2 Trade Cases P 64,795

The PEOPLE of the State of Colorado, Plaintiff-Appellant, v. NORTH AVENUE FURNITURE AND APPLIANCE, INC.; Harvey Townsley Leo Hyland; and Harland Jacob, Defendants-Appellees.

No. 80SA505.

Supreme Court of Colorado, En Banc.

May 24, 1982.

J. D. MacFarlane, Atty. Gen., Richard F. Hennessey, Deputy Atty. Gen., Mary J. Mullarkey, Sol. Gen., B. Lawrence Theis, Jill A. Gross, Asst. Attys. Gen., Denver, for plaintiff-appellant.

Harshman & Deister, Thomas M. Deister, Grand Junction, for defendants-appellees.

QUINN, Justice.

The People appeal from an order dismissing an indictment charging the defendants with price-fixing in violation of section 6-4-101, C.R.S.1973 (1981 Supp.), the Colorado Antitrust Statute. The district court concluded that section 6-4-103(2), C.R.S.1973, which provides that "(t)he labor of a human being is not a commodity or article of commerce," exempted the defendants' activities from antitrust prosecution. Disagreeing with this construction of the so-called "labor exemption" of the antitrust statute, we reverse and remand for reinstatement of the indictment.

I.

The defendants in this proceeding are: North Avenue Furniture and Appliance, Inc. (North Avenue), a Colorado corporation engaged in the floor covering retail business in Grand Junction, Colorado; Harland Jacob, who was North Avenue's manager; Leo Highland, the manager of Don Felsen, Inc., another floor covering store in Grand Junction; and Harvey Townsley, who operated a carpet installation service in Grand Junction. North Avenue and Don Felsen, Inc., are the two largest retail carpet stores in Grand Junction and do not have installers on their payroll. They contract out installation services to independent carpet installers, such as Harvey Townsley, who then submit a statement to the retail store at the end of each installation job. The statements are based on the amount of carpet installed rather than the number of hours spent on the actual installation. The rates for carpet installation are published on price lists upon which retailers rely in quoting installed prices to their customers.

During January 1980 Harland Jacob discussed with Harvey Townsley and other independent installation contractors the prospect of increasing the price of their services. On February 1 the three defendants, Jacob, Townsley and Leo Highland, reached an agreement which increased the rate for installation by twenty-five cents per yard. Townsley notified other installers of a mid-February meeting to discuss the price increases, and a notice of the meeting was displayed at Glenn's Flooring, the primary floor covering installation supply store in Grand Junction. On February 18 or 19 Townsley met with approximately twenty-five independent installers at Glenn's Flooring and discussed the price increases. The installers approved the twenty-five cents per yard increase as well as a minimum charge increase of ten dollars for each installation job. The installers agreed to adhere to these increases and to approach floor covering retailers with the new prices.

After the meeting a new price list was typed by a North Avenue employee and several copies were made at Townsley's expense and left at Glenn's Flooring with instructions that they be made available to installers when they placed a purchase order for supplies. ¹ Although some retailers were reluctant to accept the new rates, they generally agreed to follow them effective March 1, 1980. On February 27, the attorney general received an anonymous complaint regarding the price increase agreement and initiated a grand jury investigation which resulted in the return of an indictment on May 13, 1980.

The defendants filed a motion to dismiss the indictment, contending that the agreement for the increased carpet installation charge "dealt solely with the price of human labor" and, thus, was within the labor exemption of section 6-4-103(2), C.R.S.1973. ² In opposing the dismissal the attorney general, relying primarily upon United States Supreme Court decisions addressing the Sherman and Clayton Acts, urged that the labor exemption be restricted to legitimate labor union activities relating to the terms and conditions of employment. The court rejected this narrow construction of the labor exemption and dismissed the indictment. It ruled that carpet installation "is at least as much 'labor' as plumbing, carpeting, welding or any other form of the building trades," and, in its view, the labor exemption created by section 6-4-103(2) immunized the defendants' activity from antitrust prosecution. ³ We conclude that the district court misapprehended the nature and scope of the labor exemption in its order of dismissal.

II.

Because we have not previously construed the provisions of the Colorado Antitrust Statute, section 6-4-101, et seq., C.R.S.1973, a brief review of the sources of this statute is in order. The first Colorado Antitrust Statute was enacted in 1913 and was declared unconstitutionally vague by the United States Supreme Court in 1927. Cline v. Frink Dairy Co., 274 U.S. 445, 47 S.Ct. 681, 71 L.Ed. 1146 (1927). The present antitrust statute was enacted in 1957 and was modeled on Wisconsin's antitrust statute, W.S.A. § 133.01 et seq. (1939), ⁴ which in turn was based on relevant portions of the Sherman Act of 1890, 15 U.S.C. § 1 (1976), ⁵ and the Clayton Act of 1914, 15 U.S.C. § 17 (1976). ⁶

Section 6-4-101, C.R.S.1973 (1981 Supp.), which contains the "illegal restraint of trade" proscription, provides as follows:

"Every contract or combination in the nature of a trust or conspiracy in restraint of trade or commerce is declared illegal. Every combination, conspiracy, trust, pool, agreement, or contract intended to restrain or prevent competition in the supply or price of any article or commodity constituting a subject of trade or commerce in this state which controls in any manner the price of any such article or commodity, fixes the price thereof, or limits or fixes the amount or quantity thereof to be manufactured, produced, or sold in this state, or monopolizes or attempts to monopolize any part of the trade or commerce in this state, is declared an illegal restraint of trade."

The labor exemption, which substantially duplicates section 6 of the Clayton Act, is contained in section 6-4-103, C.R.S.1973 "(1) Nothing in this article shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations instituted for the purpose of mutual help, or engaged in making collective sales or marketing for its members or shareholders of farm, orchard, or dairy products produced by its members or shareholders, and not having capital stock or conducted for profit or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under this article.

"(2) The labor of a human being is not a commodity or article of commerce."

The historical backdrop to the Sherman and Clayton Acts and the purpose of their enactment are helpful to an understanding of our resolution of the issue raised here. The Sherman Act, which prohibits contracts or combinations in restraint of trade or commerce, contained no language expressly exempting labor union activities from its sweep. In response to the complaints of labor unions against the application of the act to their activities, Congress in 1914 passed the Clayton Act. However, the Clayton Act precipitated new litigation and renewed controversy regarding the status of trade unions. As the Supreme Court observed in United States v. Hutcheson, 312 U.S. 219, 230, 61 S.Ct. 463, 465, 85 L.Ed.2d 788, 792 (1941):

"It was widely believed that into the Clayton Act courts read the very beliefs which that Act was designed to remove. Specifically, the courts restricted the scope of § 20 to trade union activities directed against an employer by his own employees. Duplex Co. v. Deering (254 U.S. 443, 41 S.Ct. 172, 65 L.Ed. 349 (1921) ). Such a view, it was urged, both by powerful judicial dissents and informed lay opinion, misconceived the area of economic conflict that had best be left to economic forces and the pressure of public opinion and not subjected to the judgment of courts.... Agitation again led to legislation and in 1932 Congress wrote the Norris-LaGuardia Act. Act of March 23, 1932, 47 Stat. at 70, 29 U.S.C. §§ 101-115." ⁷

Federal antitrust legislation is designed to preserve free competition and to protect the public against the evils caused by economic agreements in restraint of trade. Federal labor law, on the other hand, encourages voluntary economic agreements between employers and employees by recognizing and protecting the rights of employees to organize within appropriate units and to bargain collectively regarding wages, hours, and other working conditions. The labor exemption to antitrust prosecution represents an accommodation between these discrete national policies. See Casey & Cozzillo, Labor-Antitrust: The Problem of Connell and a Remedy that Follows Naturally, 1980 Duke L.J. 235. State antitrust legislation serves the important function of protecting the public against illegal trade restraints beyond the reach of federal law, without however undercutting the legitimate rights of employees to engage in lawful, concerted activities for the purpose of improving their wages, hours and other conditions of employment. See section 8-3-106, C.R.S.1973. Given the substantial similarity in text and purpose present in the federal and state antitrust statutes, we believe that federal decisions construing the Sherman and Clayton Acts, although not necessarily controlling on our interpretation of the Colorado law, are nevertheless entitled to careful scrutiny in...