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First Circuit Lets Nonunion Firms Bring Federal-Law Claims Against Iron Workers (BNA, August 5, 2008)
Five nonunion steel erector companies in New England may proceed with their claims that a job targeting fund run by the Iron Workers and other activity in conjunction with union contractors violated federal antitrust and labor laws, the U.S. Court of Appeals for the First Circuit ruled Aug. 1 (Am. Steel Erectors Inc. v. Local 7, Int’l Ass’n of Bridge, Structural, Ornamental & Reinforcing Iron Workers, 1st Cir., No. 07-1832, 8/1/08).
Reversing a lower court’s grant of summary judgment to Iron Workers Local 7, the appeals court held that the union is not protected by the statutory labor exemption from the antitrust laws because the union’s Market Recovery Program is a “combination” between labor and nonlabor groups–a multiemployer association that has a collective bargaining agreement with the union and individual union contractors.
But the appeals court remanded the case for the U.S. District Court for the District of Massachusetts to determine whether the union is protected by the nonstatutory labor exemption from the antitrust laws. The appeals court said it was remanding to resolve genuinely disputed issues of material fact as to “the extent of the collaboration between Local 7, signatory contractors, and the construction companies that hire them.”
The appeals court also directed the lower court on remand to consider the nature and extent of the union’s allegedly coercive tactics and whether the union violated the Labor-Management Relations Act by “pressur[ing] neutral employers into agreements to refrain from using non-union contractors.”
… Michael E. Avakian of Smetana & Avakian in Springfield, Va., represented the nonunion contractors. Paul F. Kelly of Segal Roitman in Boston represented the union.
More on the Iron Workers case from Mintz Levin:
Why This Case Is Important
In an effort to balance the conflicting interests of antitrust policy, which strives to promote competition in the market place, and labor policy, which facilitates cooperation among workers, Congress and the Supreme Court have created certain statutory and nonstatutory exemptions from antitrust liability for labor groups. Despite these exemptions, Plaintiffs in this case alleged “a conspiracy between the Union and union employers to monopolize the structural steel industry in the Boston area and push non-union employers like Plaintiffs out of the market.” Relying on the statutory exemptions, the district court granted the Union’s motion for summary judgment, holding that the Union’s activities were exempt from antitrust liability. The First Circuit, however, disagreed. The First Circuit’s decision makes clear that, despite these exemptions, unions are not given carte blanche to engage in anti-competitive activities, especially when acting in concert with non-labor groups.
Five non-union New England-based steel erectors (“Plaintiffs”) brought suit against an iron workers union (the “Union”) alleging that the Union conspired with certain union contractors to shut non-union contractors out of the structural steel industry in the Boston area.
In the Boston area structural steel industry, competition for steel erection contracts is intense, with the lowest bidder usually winning the contract. Under a collective bargaining agreement (the “CBA”) entered into between the Union and certain contractors (“Union Contractors”), workers must be paid a negotiated union wage which is often higher than wages paid by non-union contractors such as Plaintiffs. Since labor expenditures account for about half of the cost of steel erection work, non-union steel erectors who are not bound by the CBA’s wages can often submit lower bids for steel erection contracts. To mitigate the disadvantage created by union wages, the Union implemented the Market Recovery Program (“MRP”) which targets certain construction projects and offers a subsidy to Union Contractors bidding on the project. The purpose of the subsidy is to offset the higher cost of union labor which then enables Union Contractors to compete against non-union contractors. The subsidies are financed through wage deductions that are paid by the Union Contractors directly to the Union, which then deposits them into a fund (the “Fund”).
Plaintiffs claimed that the Union subsidized Union Contractors in underbidding Plaintiffs for steel erection contracts, resulting in Plaintiffs being largely excluded from the structural steel industry market in the Boston area. Among other charges, Plaintiffs alleged violations of Sections 1 and 2 of the Sherman Act, which prohibit contracts, combinations or conspiracies in restraint of trade or commerce and monopolies or attempts to monopolize. The Union asserted that it is exempt from antitrust liability under the Clayton Act and the Norris-LaGuardia Act, which provide statutory immunity to certain organized labor conduct.
The district court granted the Union’s motion for summary judgment on the federal antitrust claims, finding that the conduct of the Union in administering the MRP was sheltered from antitrust liability by the statutory labor exemption.