Sun-Land Nurseries, Inc. v. Southern California Dist. Council of Laborers, SUN-LAND

• Decision Date: 27 August 1985
• Docket Number: No. 85-6029,SUN-LAND,85-6029
• Citation: 769 F.2d 1381
• Parties: 120 L.R.R.M. (BNA) 2295, 103 Lab.Cas. P 11,634, 1985-2 Trade Cases 66,751 NURSERIES, INC., a California corporation, Plaintiff-Appellant, v. SOUTHERN CALIFORNIA DISTRICT COUNCIL OF LABORERS, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1381

769 F.2d 1381

120 L.R.R.M. (BNA) 2295, 103 Lab.Cas. P 11,634,

1985-2 Trade Cases 66,751

SUN-LAND NURSERIES, INC., a California corporation, Plaintiff-Appellant, v. SOUTHERN CALIFORNIA DISTRICT COUNCIL OF LABORERS, et al.,

Defendants-Appellees.

No. 85-6029.

United States Court of Appeals, Ninth Circuit.

Argued June 7, 1985.

Submitted July 8, 1985.

Decided Aug. 27, 1985.

Van A. Goodwin, Littler, Mendelson, Fastiff & Tichy, San Diego, Cal., for plaintiff-appellant.

Julius Reich & Alexander B. Cvitan, Reich, Adell & Crost Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before WALLACE, TANG, and WIGGINS, Circuit Judges.

WALLACE, Circuit Judge:

Sun-Land Nurseries, Inc. (Sun-Land) appeals from the district court's judgment that certain hot cargo agreements fall within the construction industry proviso to section 8(e) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158(e), and that therefore those agreements are automatically exempt from antitrust scrutiny under sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2. We have jurisdiction under 28 U.S.C. Sec. 1291. We affirm in part, reverse in part, and remand.

I

Sun-Land is a landscaping company to which general contractors may subcontract work on major construction projects. The present dispute arose after the Teamsters Local 420 (Teamsters) terminated its representation of Sun-Land's employees either because of an internal power struggle or in the hope of improving its relations with the Southern California District Council of Laborers (Laborers). Toyota Landscape Co. v. Building Material & Dump Truck Drivers Local No. 420, 726 F.2d 525, 527, 529 (9th Cir.), cert. denied, --- U.S. ----, 105 S.Ct. 104, 83 L.Ed.2d 49 (1984) (Toyota ). Sun-Land brought suit against the Teamsters, and we ultimately held that the termination constituted a violation of the collective bargaining agreement between the Teamsters and Sun-Land. Id. at 529. In the meantime, however, Sun-Land's employees elected the Independent Union of Craftsmen (Independent Union) as their new bargaining representative.

Unfortunately for Sun-Land, many of the general contractors in the area in which it does business are parties to various multi-employer agreements that prohibit the subcontracting of work to any employer that does not have a current bargaining agreement with the Laborers or one of the basic craft unions specifically named in the agreements (the Major Unions). Sun-Land claims that, as a result of these subcontracting limitation clauses and its lack of affiliation with either the Laborers or any of the Major Unions, its business suffered drastically. It therefore brought suit against the Laborers arguing that the subcontracting clauses constitute both an unfair labor practice under section 8(e) of the NLRA, 29 U.S.C. Sec. 158(e), and an unreasonable restraint on trade under sections 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1, 2.

The district court granted summary judgment in favor of the Laborers, holding that under the construction industry proviso, the challenged clauses are exempt from section 8(e)'s prohibition against hot cargo agreements and that therefore they are automatically exempt from Sherman Act scrutiny. The district judge rejected Sun-Land's attempts to distinguish Woelke & Romero Framing, Inc. v. NLRB, 456 U.S. 645, 102 S.Ct. 2071, 72 L.Ed.2d 398 (1982) (Woelke ), and reasoned that Woelke compelled his section 8(e) holding. The district judge relied on Suburban Tile Center v. Rockford Building Trades Council, 354 F.2d 1, 3 (7th Cir.), cert. denied, 384 U.S. 960, 86 S.Ct. 1585, 16 L.Ed.2d 678 (1966) (Suburban Tile), for his holding on the labor antitrust exemption. He reasoned that we implicitly adopted Suburban Tile' § automatic exemption holding in Brogan v. Swanson Painting Co., 682 F.2d 807 (9th Cir.1982) (Brogan ), by completely ignoring an antitrust claim after finding that a clause in a collective bargaining agreement did not violate the labor laws. The district court concluded that Brogan amounted to an implicit rejection of the balancing approach to the labor antitrust exemption advanced in Ackerman-Chillingsworth v. Pacific Electrical Contractors Association, 579 F.2d 484, 501-04 (9th Cir.1978) (Hufstedler, J., concurring in part and dissenting in part), cert. denied, 439 U.S. 1089, 99 S.Ct. 872, 59 L.Ed.2d 56 (1979). Finally, the district court concluded that its automatic exemption holding was not inconsistent with Connell Construction Co. v. Plumbers & Steamfitters Local Union No. 100, 421 U.S. 616, 95 S.Ct. 1830, 44 L.Ed.2d 418 (1975) (Connell ), or United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965) (Pennington ).

We dismissed the initial appeal in this case for lack of subject matter jurisdiction on the ground that there was no final order or judgment. The parties then obtained a final judgment, however, and filed a new notice of appeal. We now review the merits.

II

The parties raise a narrow issue: whether the subcontracting limitation clauses involved here fall within the construction industry proviso to section 8(e). There are no factual issues in dispute. Nor do the parties dispute that the clauses fall within the general prohibition of section 8(e). ¹ They also agree that the clauses would be sheltered from section 8(e) liability by a literal reading of the construction industry proviso. ² The disagreement is over whether the clauses are sheltered by the construction industry proviso in light of legislative history. The question is thus reviewable de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984) (McConney ).

The question here is the same general one that was presented to the Supreme Court in Connell and Woelke. In Connell, the Court decided that, despite the proviso's literal language, it does not apply to agreements obtained outside the context of collective bargaining because Congress did not intend to authorize such agreements. 421 U.S. at 633, 95 S.Ct. at 1840. Within the collective bargaining arena, however, a unanimous Court in Woelke held "that the construction industry proviso to Sec. 8(e) ... ordinarily shelters union signatory subcontracting clauses," 456 U.S. at 666, 102 S.Ct. at 2083 (emphasis added), and upheld certain clauses even though they were not "limited in application to particular jobsites at which both union and nonunion workers are employed." Id.

The Court has held that the construction industry proviso is not to be interpreted literally, but "must be interpreted in light of the statutory setting and the circumstances surrounding its enactment." Id. at 653, 102 S.Ct. at 2077, quoting Connell, 421 U.S. at 628, 95 S.Ct. at 1837. This rule is a variation on a general rule of statutory construction: unambiguous statutory language is conclusive "in the absence of 'a clearly expressed legislative intent to the contrary.' " United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981), quoting Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). Instead of being conclusive, the proviso's language may be given only the effect Congress clearly intended it to be given. See Woelke, 456 U.S. at 654, 102 S.Ct. at 2077. This modification of the general rule is justified because the proviso is an exception to the general prohibition against hot cargo agreements. See generally Easterbrook, The Supreme Court, 1983 Term--Foreward: The Court and the Economic System, 98 Harv.L.Rev. 4, 14-18, 42-58 (1984). The general prohibition was enacted to overrule Local 1976, United Brotherhood of Carpenters & Joiners v. NLRB, 357 U.S. 93, 78 S.Ct. 1011, 2 L.Ed.2d 1186 (1958), in which the Court indicated that employers and unions were free to enter into hot cargo agreements designed to boycott non-union products or services, id. at 108, 78 S.Ct. at 1020. Woelke, 456 U.S. at 654-55, 102 S.Ct. at 2077.

In Woelke, the Court rejected a nonunion employer's contention that the proviso should not apply to construction industry hot cargo agreements unless they are limited to construction projects where union and nonunion workers are both employed. Id. at 654, 102 S.Ct. at 2077. The employer argued that Congress intended the proviso to permit "only those subcontracting agreements that are designed to reduce friction at particular jobsites," id. at 661, 102 S.Ct. at 2080, and intended the general prohibition to "restrict the ability of unions to engage in top-down organizing." Id. at 663, 102 S.Ct. at 2081. The Court rejected the job friction argument as a misreading of congressional intent and reasoned that Congress accepted as tolerable in the construction industry "whatever top-down pressure such clauses might entail." Id. The Court concluded from its own examination of the legislative history that "Congress 'wished to preserve the status quo' regarding agreements between unions and contractors in the construction industry." Id. at 657, 102 S.Ct. at 2078 (emphasis in original), quoting National Woodwork Manufacturing Association v. NLRB, 386 U.S. 612, 637, 87 S.Ct. 1250, 1264, 18 L.Ed.2d 357 (1967). Thus, whether a particular clause is within the scope of the proviso is determined "by examining Congress' perceptions regarding the status quo in the construction industry." Id.

With respect to the agreements being challenged in Woelke, the Court concluded that "Congress believed that broad subcontracting clauses similar to those at issue ... were part of the pattern of collective bargaining prior to 1959, and that the Board and the courts had found them to be lawful." Id. at 660, 102 S.Ct. at 2080. In addition, the Court found Congress' perceptions to be accurate and found no evidence to support the narrow construction urged...