United States v. HAMILTON GLASS COMPANY
| Citation | 155 F. Supp. 878 |
| Decision Date | 30 September 1957 |
| Docket Number | No. 57C432.,57C432. |
| Parties | UNITED STATES of America v. HAMILTON GLASS COMPANY and Glaziers' Local No. 27 of the Brotherhood of Painters, Decorators and Paperhangers of America. |
| Court | U.S. District Court — Northern District of Illinois |
Earl A. Jinkinson, Bertram M. Long, Harry H. Faris, Dorothy M. Hunt, Chicago, Ill., for plaintiff.
Holmes Baldridge, Chicago, Ill., for defendant Hamilton Glass Co.
Leo Segall, Chicago, Ill., for defendant Glaziers' Local No. 27 of the Brotherhood of Painters, Decorators and Paperhangers of America.
This is a proceeding for an injunction under Section 4 of the Sherman Act, 15 U.S.C.A. § 4. It was brought by the United States of America against two defendants Hamilton Glass Company and Glaziers' Local No. 27 of the Brotherhood of Painters, Decorators and Paperhangers of America. By its action, the plaintiff seeks to restrain alleged continuing violations of Section 1 of the Sherman Act, 15 U.S.C.A. § 1. In its complaint the plaintiff alleges that the defendant Local No. 27, along with the defendant Hamilton Glass and all other glazing contractors having union contracts with Local No. 27, have conspired in an unreasonable restraint of interstate trade and commerce in pre-glazed sash and other pre-glazed products. The alleged offense is asserted to consist of various acts by which the defendants have restrained the flow of such products into the Chicago area, thereby denying to potential purchasers the cost-savings which would result from the use of such products.
The defendants have moved to dismiss the complaint on the grounds (1) that the complaint fails to state a claim upon which relief can be granted and (2) that this court lacks jurisdiction to entertain the suit.
In considering the defendants' contention that the complaint fails to state a claim upon which relief may be granted, the court is guided by the test whether the plaintiff would be entitled to recover upon any state of facts which might be proved in support of the allegations. As this court has stated in a previous consideration of the nature of a motion to dismiss which challenges the legal sufficiency of the complaint, "If a liberal reading discloses that, at least by general statement, the plaintiff has charged every element to a recovery, summary dismissal is not justified." United States v. American Linen Supply Co., D.C.N.D.Ill.1956, 141 F.Supp. 105, 110.
The defendants' theory with respect to their contention that the complaint fails to state a claim upon which relief can be granted is that the complaint does not state a violation of Section 1 of the Sherman Act, inasmuch as it not only fails to allege any restraint upon commercial competition in the marketing of pre-glazed sash and other pre-glazed products, but also fails to allege intent on the part of the defendants to restrain such competition. The government's theory, on the other hand, is that the complaint does in fact allege that the offenses charged have restrained commercial competition in the marketing of the products in question. It is also the government's position that the complaint contains no allegation of intent to restrain such competition because no such allegation is required.
The complaint charges that the defendants and co-conspirators have combined in "unreasonable restraint of * * * interstate trade and commerce in pre-glazed sash and pre-glazed products." The conspiracy is alleged to consist of an agreement whereby Local No. 27, aided by the defendant Hamilton Glass Company and co-conspirators, (1) has compelled builders, general contractors, manufacturers of the products in question and others in Chicago area to pay additional sums to the union members whenever pre-glazed products are used by these persons, or to have the products reglazed on the job site, and (2) has induced such persons, by strikes, work stoppages, or threats thereof, not to make use of such products. (However, according to the complaint, whenever pre-glazed products are manufactured or supplied by the defendant Hamilton Glass Company or other co-conspirators, the agreement provides that strikes are not to be called or threatened.) The alleged practices, according to the complaint, have increased the volume of business of the defendant Hamilton Glass Company and the other co-conspirators. The general effects of the conspiracy are alleged to be the following:
A complaint charging violation of the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note is insufficient unless it alleges a restraint upon commercial competition in the marketing of goods and services. In a thorough analysis of the purposes underlying the enactment of the Sherman Act, the United States Supreme Court, in Apex Hosiery Co. v. Leader, 1940, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311, stated that the Act does not condemn every combination in restraint of interstate commerce, but rather that it was directed against "restraints to free competition in business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services, all of which had come to be regarded as a special form of public injury." 310 U.S. at page 493, 60 S.Ct. at page 992. The Court pointed out that it had never applied the Sherman Act in any case "unless the Court was of opinion that there was some form of restraint upon commercial competition in the marketing of goods or services." 310 U.S. at page 495, 60 S.Ct. at page 993. Further, the Court noted that, "Restraints on competition or on the course of trade in the merchandising of articles moving in interstate commerce is not enough, unless the restraint is shown to have or is intended to have an effect upon prices in the market or otherwise to deprive purchasers or consumers of the advantages which they derive from free competition." 310 U.S. at pages 500-501, 60 S.Ct. at page 996.
The complaint of the government in this case meets the requirements of the Sherman Act as set forth in the Apex case. The complaint alleges both a restraint upon commercial competition in the marketing of goods and services and an effect, produced by the restraint, upon market prices and upon other advantages which the consumer derives from free competition.
A restraint upon commercial competition in the marketing of goods and services can be found in the allegations of the complaint which relate to the purported practices of the defendants and co-conspirators which are said to prevent products from being used in the Chicago area that would compete with the services performed by the defendants, thereby reducing the demands in a free market for the defendants' services. The complaint does not expressly allege that the products in question would compete with the defendants' services; however, it is clear that this is the theory of the complaint. In judging its sufficiency we are to look to the four corners of the complaint, reading all its paragraphs together to determine whether the required elements of a Sherman Act offense are stated therein. United States v. Armour & Co., 10 Cir., 1943, 137 F.2d 269. In the complaint's definitions of terms1 and in the allegations that the offenses charged have resulted in a substantial reduction of the use of pre-glazed products in the Chicago area, and in an increase in the business of the co-conspirators, it is evident that the theory of the complaint is that of a restraint upon the competition of pre-glazed products with the business of the union glazing contractors.
An effect upon market prices is charged first in the allegation that where pre-glazed products are used by builders, general contractors and others in the Chicago area, the defendants have compelled the users thereof either to pay union members for the glazing that would have been required had the products not been employed, or to have the products reglazed on the job site, and second in the allegation that the public has been denied the cost savings which result from the use of such products in the Chicago area. See United States v. New York Electrical Contractors Ass'n, D.C.S.D.N.Y.1941, 42 F.Supp. 789, where an indictment charging a union local and certain contractors' associations with refusing to install electrical equipment manufactured outside the state, and with causing such equipment to be rewired before installation, was held to satisfy the requirements of the Apex decision, where the indictment specifically alleged that the aforesaid practices added to the cost of such equipment.
It should be noted that while the defendants recognize that the complaint alleges an effect upon market prices of pre-glazed products resulting from the practices of requiring stand-by pay or reglazing when such products are used by persons in the Chicago area, the defendants maintain that such an effect upon market prices is not the type of effect prohibited by the Sherman Act. The defendants contend that whenever a wage agreement is consummated between a union and an employer, there is some effect on the price of articles involved; such effect, however, is regarded as "incidental" or "remote" with respect to any actionable restraint of trade. However, the price effect alleged in the present complaint is not the type of effect normally regarded as incidental or remote under the Sherman Act. The activities here alleged are performed by a combination of the union and employers and insulate both employer and employee from the competition of products which would replace their services or curtail the demand...
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