Employment Law Daily Union pact with multi-employer bargaining association exempt from antitrust attack by employer
Thursday, July 27, 2017

Union pact with multi-employer bargaining association exempt from antitrust attack by employer

By E. Darius Sturmer, J.D.

A labor union and a multi-employer bargaining association were immune from antitrust liability stemming from their filing of alleged sham litigation or their allegedly anticompetitive collective bargaining agreement, the Ninth Circuit ruled. The antitrust counterclaims, asserted by a marine shipping facility operator and association member, in response to an action brought against it under LMRA, Section 301, fell within the ambit of the Noerr-Pennington doctrine and the nonstatutory labor exemption, the appeals court decided, affirming a federal district court’s dismissal of the antitrust claim (Int’l Longshore and Warehouse Union v. ICTSI Oregon, Inc., July 24, 2017, O’Scannlain, D.).

ICTSI Oregon, Inc., operates a marine shipping facility in Portland. It employs longshoremen, mechanics, and other laborers represented by the International Longshore and Warehouse Union (ILWU). It is a member of the Pacific Maritime Association (PMA), a multi-employer bargaining association that represents many types of maritime employers that hire dockworkers and longshoremen, and is represented by the PMA in bargaining negotiations with ILWU. PMA and ILWU were parties to a collective bargaining agreement known as the Pacific Coast Longshore and Clerks Agreement, which covered the entire west coast. The agreement governed the employment terms for all longshoremen employed by ICTSI.

Jurisdictional dispute. According to the counter-complaint, ILWU sought to perform reefer work—plugging, unplugging, and monitoring shipping containers—at a particular Port of Portland terminal, but that work had historically been within the jurisdiction of the International Brotherhood of Electrical Workers (IBEW). A joint committee that administered the CBA determined that the work belonged to ILWU and ordered ICTSI to assign it accordingly. However, the facility operator refused, contending that it lacked authority to assign that work, under the terms of its lease with the port. Thereafter, an arbitrator, claiming authority under the CBA’s grievance provisions, determined that ICTSI was in violation of the CBA and ordered it to give the reefer work to ILWU, a finding adopted by the joint committee in its own reiterative decision.

ICTSI alleged that PMA, with the encouragement of ILWU, threatened to fine or expel it from the multiemployer association to goad it into compliance with the joint committee decisions. ICTSI then commenced a Sec. 10(k) proceeding before the NLRB to resolve the jurisdictional dispute between the ILWU and IBEW. The NLRB found that the IBEW workers, not those of the ILWU, were entitled to the reefer work. ILWU and PMA filed the instant suit under the LMRA, asking the court to order ICTSI to comply with the decisions.

ICTSI, however, countersued under Sec. 1 and Sec. 2 of the Sherman Act, contending that ILWU and PMA had, through their agreement to assign the disputed work to ILWU and their actions to enforce that agreement, misused the collective bargaining process to create a monopoly over longshoreman work on the west coast. It further alleged that the counter-defendants worked together to commit various illegal anticompetitive acts, which reduced competition in the relevant market and caused $4 million in damages to itself.

Partial final judgment. The Ninth Circuit noted at the outset that the district court made no error in entering partial final judgment on the antitrust counterclaim under Federal Rule of Civil Procedure 54(b). The lower court correctly concluded that the antitrust counterclaim involved discrete, complex legal issues separate from those involved in the LMRA action, and that the entry of final judgment would not result in duplicative proceedings. However, whether the court had erred in granting judgment under Rule 54(b) was a “close call.” The appeals court noted its preference that a district court certify its order for interlocutory appeal, but found it appropriate to give deference to the court’s analysis given the complexity of the issues.

Standing. The appeals court affirmed that ICTSI had standing to challenge an alleged antitrust conspiracy that benefitted the bargaining association of which it was a member. The facility operator alleged not only that the agreement between ILWU and PMA was a restraint of trade that harmed competition by raising prices to supracompetition levels, but that it was directly harmed by the efforts of ILWU and PMA to enforce their illegal agreement, the court noted.

Noerr-Pennington immunity. The Noerr-Pennington doctrine, which protects persons from antitrust liability arising out of their petitioning the government for a redress of grievances, immunized the ILWU and PMA from the Sherman Act claims, the court said. The sham exception to the doctrine did not apply because the two had not engaged in sham litigation. ICTSI failed to allege enough sham suits—just two—to establish a pattern of baseless or meritless suits, in the court’s view. The PMA suit collaterally attacking the NLRB’s jurisdictional award was not objectively baseless, and the facts of the Section 301 lawsuit suggested that it may be viable as well, and was not frivolous when brought.

Nonstatutory labor exemption. The rest of the alleged joint activity was covered by the nonstatutory labor exemption to the Sherman Act and therefore did not subject ILWU or PMA to antitrust liability, the court concluded. Evaluating the factual allegations in the suit under the test established by the Supreme Court in Mackey v. Nat’l Football League, the appeals court observed that the alleged agreement primarily affected the parties to the agreement and no one else, concerned wages and conditions of employment that were mandatory subjects of collective bargaining, and was produced through bona fide, arm’s length collective bargaining. An agreement that violated labor law did not always fail the second prong of the Mackey test, the court remarked.

Concurring opinion. Judge Clifton wrote a separate opinion concurring entirely in the result and its reasoning as to the merits of the appeal, but expressing concern over the decision to enter partial final judgment under Rule 54(b). Judge Clifton contended that a preferable approach would have been for the district court to certify its order for interlocutory appeal.

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