United States Court of Appeals
For the First Circuit
No. 07-1832
AMERICAN STEEL ERECTORS, INC., AJAX CONSTRUCTION CO.,
AMERICAN AERIAL SERVICES, INC., BEDFORD IRONWORKS, INC.,
AND D.F.M. INDUSTRIES, INC.,
Plaintiffs, Appellants,
v.
LOCAL UNION NO. 7, INTERNATIONAL ASSOCIATION OF BRIDGE,
STRUCTURAL, ORNAMENTAL & REINFORCING IRON WORKERS,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Circuit Judge,
Stahl and Siler,* Circuit Judges.
Michael E. Avakian with whom Smetana & Avakian, Carol
Chandler, Geoffrey R. Bok, Stoneman, Chandler & Miller LLP, Thomas
M. Triplett, and Schwabe Williamson & Wyatt, P.C. were on brief for
appellants.
Paul F. Kelly with whom Indira Talwani, Segal, Rottman &
Coleman, and Mickey Long, were on brief for appellees.
John C. Scully and W. James Young on brief for amicus curiae
National Right to Work Legal Defense Foundation, Inc.
Maurice Baskin and Venable LLP on brief for amicus curiae
Associated Builders and Contractors, Inc.
August 1, 2008
*
Of the Sixth Circuit, sitting by designation.
STAHL, Circuit Judge. Five non-union New England-based
steel erectors--Aerial Services, Inc.; D.F.M. Industries, Inc.;
American Steel Erectors, Inc.; Bedford Ironworks, Inc.; and Ajax
Construction, Inc. ("Plaintiffs" or "non-union contractors")1--
brought suit against Local Union No. 7 of the International
Association of Bridge, Structural, Ornamental & Reinforcing Iron
Workers ("Local 7" or "the Union")2, an iron workers union that has
a collective bargaining agreement ("CBA") with the Building Trades
Employers' Association of Boston and Eastern Massachusetts
("BTEA"). Plaintiffs' complaint alleged that Local 7 conspired
with the BTEA and assorted named and unnamed union contractors to
shut non-union contractors out of the structural steel industry in
the greater Boston area, in violation of federal antitrust and
labor laws. Plaintiffs also alleged various state torts and
violation of the Massachusetts Fair Business Practices Act, G.L. c.
93A. The district court dismissed the state law claims as pre-
empted by federal labor law, and, in a subsequent order, granted
1
A sixth plaintiff named on the complaint, Ronald Beauregard
d/b/a/ Independent Welding, voluntarily withdrew from the case on
February 13, 2006.
2
Charles Wright, Local 7's former President and current
business agent, and the Steel Erection and Ornamental Iron Industry
Advancement Fund, were also originally named as defendants.
Plaintiffs voluntarily dismissed the fund on March 29, 2005.
Wright filed a motion to dismiss, which the district court granted
on June 10, 2005, citing Montplaisir v. Leighton, 875 F.2d 1, 4
(1st Cir. 1989) ("The [Supreme] Court has long held that 'union
agents' are not personally liable to third parties for acts
performed on the union's behalf in the collective bargaining
process."). Plaintiffs do not appeal Wright's dismissal.
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Local 7's motion for summary judgment on the federal claims.
Plaintiffs now appeal both orders. We affirm the dismissal of the
state law claims, but reverse the district court's grant of summary
judgment on the federal labor and antitrust claims, and remand for
further proceedings consistent with this opinion.
I. Background
We recite the facts in the light most favorable to
Plaintiffs, the non-movants. Franceschi v. U.S. Dep't of Veterans
Affairs, 514 F.3d 81, 84 (1st Cir. 2008).
To understand the context from which Plaintiffs'
allegations arise, some explication of the relevant industry is
warranted. The structural steel industry is comprised of steel
fabricators, who manufacture steel products to meet design
specifications, and steel erectors, who assemble the fabricated
steel. General contractors requiring structural steel work
typically solicit bids for "fab and erect" packages. The packages
are submitted by fabricators, who solicit bids for the erection
work from steel erectors. In New England there are relatively few
fabricators (around twenty) and many erectors (over 200). As a
result, the competition for erection subcontracts in the Boston
area is fierce, and the general rule is that the lowest bidder will
be awarded the erection contract. That fierce competition gave
rise to the instant dispute.
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Local 7 negotiates collective bargaining agreements with
contractors that employ iron workers in eastern Massachusetts, such
as steel erection contractors. Among other things, employers who
sign a CBA ("signatory contractors" or "union employers") agree to
pay Local 7 workers a union scale wage. Plaintiffs have not
entered into a CBA with Local 7.
Because of the labor-intensive nature of steel erection
work, labor expenditures account for about half of the cost.
Signatory contractors are obligated to pay laborers the minimum
wage set by the CBA. Non-union contractors, such as Plaintiffs,
are not bound to the CBA minimum wage and can negotiate their labor
costs. As a result, non-union erectors are often able to submit
lower bids for erection contracts.
The gravamen of Plaintiffs' complaint relates to a job
targeting program, the Market Recovery Program ("MRP"), which Local
7 created to mitigate the disadvantage imposed on signatory
contractors by union wages.3 Under the MRP, Local 7 "targets"
certain construction projects and offers a subsidy to signatory
3
Job targeting programs have become increasingly common since
the early 1980s, as the share of the construction workforce that is
unionized experienced steep declines. In an attempt to protect
their membership and aid union contractors in competing with open
shop outfits, various unions across the country have established
funds much like the MRP at issue here, which are financed by wage
deductions and used to subsidize the bids of unionized contractors
on targeted projects. See Herbert R. Northrup & Augustus T. White,
Subsidizing Contractors to Gain Employment: Construction Union 'Job
Targeting,' 17 Berkeley J. Emp. & Lab. L. 62, 64-68 (1996).
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contractors bidding on the project. The subsidy is intended to
offset the higher cost of union labor, thus enabling union
employers to bid competitively against non-union contractors. When
a signatory contractor is awarded the target project contract,
Local 7 executes an agreement with the contractor detailing the
terms and amount of the subsidy. The subsidy is taken from the
target fund (the "Fund"), which is financed with sums withheld by
union employers from Local 7 member paychecks. The job targeting
program was first established by member vote, and it was
incorporated into the Union by-laws in 1992.
In November 1993, Local 7 and the BTEA agreed to codify
the method of Fund contributions in their CBA. Section 9 of the
2000-2006 CBA provides that "the Working Dues Deduction of two
percent (2%) of the total package plus .85 for a Market Recovery
Program and .03 for the Political Action League will be withheld
out of net pay for each and every hour paid." The MRP monies are
paid directly to Local 7, which deposits them into the Fund. The
Fund then distributes wage subsidies on a case-by-case basis to
BTEA employers who successfully bid on targeted projects.
The plaintiff steel erection contractors bid on many of
the projects that Local 7 targeted. Plaintiffs allege 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. To this end, Plaintiffs claim that
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Local 7 used Fund subsidies and other tactics to ensure that
contracts were awarded to signatory contractors, rather than
Plaintiffs. Specifically, Plaintiffs assert that Local 7 used Fund
subsidies to assist signatory employers in underbidding Plaintiffs
on erection jobs. Plaintiffs also claim that Local 7 used
subsidies, threats, and picketing to pressure fabricators,
developers, owners, and general contractors (none of which directly
employ Local 7 workers) into breaching contracts with Plaintiffs
and replacing them with signatory contractors.
As a result of Local 7's efforts, Plaintiffs argue that
they were excluded from a large portion of the structural steel
market in the greater Boston area. For example, on one project,
Plaintiff D.F.M. submitted the lowest bid for the erection work to
a fabricator and was awarded the subcontract. Subsequently, the
fabricator breached its agreement with D.F.M. and gave the project
to a signatory contractor, who was the beneficiary of a subsidy
from Local 7. In another instance, D.F.M. was awarded a steel
erection contract for a new Fox25 TV station, but Local 7 picketed
the job site until the fabricator breached its agreement with
D.F.M. and hired a union contractor. Plaintiffs allege that, at
that job site, equipment belonging to D.F.M. was vandalized and
stolen after Local 7 began its picket. On yet another occasion,
according to Plaintiffs, the erection work on a Stop & Shop was
taken from Plaintiff Ajax due to a Fund subsidy. In addition, John
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J. Paulding, the president of fabricator C&I Steel, Inc., ("C&I")
submitted an affidavit averring that Local 7 agents had offered him
Fund money if he agreed to "work" with them and that, on a number
of projects, Local 7 threatened "problems" on the job if he did not
hire a signatory contractor. Paulding contended that "problems" is
well-known industry short-hand for project delays, increased
financial costs, and property destruction.
On December 2, 2004, Plaintiffs filed a complaint against
Local 7, its agent, Charles Wright, and the Steel Erection and
Ornamental Iron Industry Advancement Fund, alleging violations of
the Sherman Act and the Labor Management Relations Act ("LMRA"), as
well as the commission of various state torts. In particular,
Plaintiffs alleged a conspiracy between Local 7 and its signatory
contractors to pressure fabricators to hire only union employers,
through a combination of threats, disruptive behavior, and MRP
subsidies, in violation of § 1 and § 2 of the Sherman Act.4
Additionally, Plaintiffs argued that the MRP constituted an
unlawful restraint on trade because the Fund was the recipient of
deductions from paychecks of Local 7 members working on public
4
Under § 1 of the Sherman Act, a "contract, combination ... or
conspiracy in restraint of trade or commerce ... is ... illegal."
15 U.S.C. § 1. "The usual [§] 2 [Sherman Act] claim requires
monopoly or near monopoly power in some market, and a wrongful
exclusionary act designed to enhance such power in that market or
to achieve an improper advantage in another market."
Arroyo-Melecio v. Puerto Rican Am. Ins. Co., 398 F.3d 56, 66 (1st
Cir. 2005) (citing Town of Norwood v. New England Power Co., 202
F.3d 408, 420-21 (1st Cir. 2000)).
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projects, and subsidies were paid to signatory contractors working
on public projects, in violation of the Davis-Bacon Act and the
Massachusetts prevailing wage law.5 Plaintiffs also alleged that
Local 7's conduct violated a provision of LMRA, 29 U.S.C. § 187(a)
and (b), which prohibits unions from engaging in any unfair labor
practices as defined by § 8(b)(4) of the National Labor Relations
Act ("NLRA"). The state law claims included two counts of tortious
interference with advantageous contractual and economic relations
and one count of violation of the Massachusetts Fair Business
Practices Act, G.L. c. 93A.
Defendants Local 7 and Charles Wright moved to dismiss
the pendent state torts on February 1, 2005, arguing that the state
claims were pre-empted by federal labor law. Plaintiffs countered
5
Federally-funded construction projects are subject to the
Davis-Bacon Act, 40 U.S.C. §§ 3141-3144, which requires contractors
working on federally-funded projects to pay workers no less than
the prevailing wage, which is determined by the Secretary of Labor.
See Am. Steel Erectors, Inc. v. Local Union No. 7, Int'l Ass'n of
Bridge, Structural, Ornamental & Reinforcing Iron Workers, 480 F.
Supp. 2d 471, 474 (D. Mass. 2007). The Act also prohibits
employers from making any "subsequent deduction or rebate" from the
paychecks of employees working on federally-funded projects,
"regardless of any contractual relationship which may be alleged to
exist between the contractor or subcontractor and the laborers...."
40 U.S.C. § 3142(c)(1). The state of Massachusetts has enacted its
own prevailing wage statute, known as a "Little Davis-Bacon Act,"
which requires contractors working on state-subsidized projects to
pay no less than the Massachusetts prevailing wage. See G.L. c.
149, § 26. Plaintiffs' complaint does not allege a direct
violation of either the state or federal Davis-Bacon Act; rather,
their theory seems to be that by violating federal and state
prevailing wage laws in its administration of the MRP, Local 7 has
exposed itself to antitrust liability.
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that the claims were exempt from federal pre-emption. The district
court found that Plaintiffs' allegations clearly fell within
activity protected or prohibited by the NLRA because Plaintiffs had
alleged that the same conduct violated both the NLRA and state tort
laws. The court held that Plaintiffs' allegations could not
benefit from the relevant exceptions to pre-emption, as the factual
allegations of the complaint did not implicate conduct so related
to local responsibility that state regulation would be expected.
Rather, the court found that "[t]he gravamen of the Complaint is
that Local 7 use[d] economic weapons to coerce nonunion employers
into hiring union workers [which was] an allegation that [lay] at
the heart of the regulatory province of the NLRB." Am. Steel
Erectors, Inc. v. Local Union No. 7, Int'l Ass'n of Bridge,
Structural, Ornamental & Reinforcing Iron Workers, No. Civ. A.
04-12536RGS, 2006 WL 300422 at *4 (D. Mass. Feb. 6, 2006).
Accordingly, the district court dismissed the state claims as pre-
empted by federal law.
Local 7 filed an Amended Motion for Summary Judgment on
the remaining claims on August 1, 2006. The district court issued
a Memorandum and Order on March 30, 2007, finding that (1) the
conduct of Local 7 in administering the MRP was sheltered from
antitrust liability by the statutory labor exemption, and (2) the
conduct of Local 7 in using Fund subsidies to encourage the use of
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signatory contractors was not coercive conduct prohibited by the
LMRA.
Plaintiffs now appeal the district court's dismissal of
the state law claims and grant of summary judgment on the remaining
counts.
II. Discussion
We review the district court's grant of summary judgment
de novo, with all reasonable inferences resolved in favor of the
nonmoving party. Fenton v. John Hancock Mut. Life Ins. Co., 400
F.3d 83, 87 (1st Cir. 2005). Nonetheless, we must ignore
"conclusory allegations, improbable inferences, and unsupported
speculation." Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d
5, 8 (1st Cir. 1990). Summary judgment is appropriate where there
is no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
"A dispute is genuine if the evidence about the fact is such that
a reasonable jury could resolve the point in the favor of the
non-moving party. A fact is material if it carries with it the
potential to affect the outcome of the suit under the applicable
law." Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.
1996)(citations omitted).
Local 7 has raised the statutory and nonstatutory
exemptions from antitrust liability as affirmative defenses against
Plaintiffs' Sherman Act claims, and thus would bear the burden at
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trial of proving those defenses apply. To be entitled to summary
judgment, the party with the burden of proof must provide evidence
sufficient for the court to hold that no reasonable trier of fact
could find other than in its favor. See Torres Vargas v. Santiago
Cummings, 149 F.3d 29, 35-36 (1st Cir. 1998).
A. Antitrust Liability
We turn first to the district court's finding that
Local 7's conduct is protected from antitrust liability by virtue
of the statutory labor exemption.6
"[T]here is an inherent tension between national
antitrust policy, which seeks to maximize competition, and national
labor policy, which encourages cooperation among workers to improve
the conditions of employment." H.A. Artists & Assocs., Inc. v.
Actors' Equity Ass'n, 451 U.S. 704, 713 (1981). In an effort to
balance these competing interests, Congress passed the Clayton Act
and the Norris-LaGuardia Act, which immunize certain organized
labor conduct from antitrust liability. See id. at 713-714; see
also Connell Constr. Co., Inc. v. Plumbers & Steamfitters Local
Union No. 100, 421 U.S. 616, 621 (1975) ("The basic sources of
organized labor's exemption from federal antitrust laws are [§§] 6
and 20 of the Clayton Act, ... 15 U.S.C. [§] 17 and 29 U.S.C. [§]
52, and the Norris-LaGuardia Act, ... 29 U.S.C. [§§] 104, 105, and
6
We express no opinion regarding the substance of Plaintiffs'
underlying antitrust claims.
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113."). A review of Supreme Court jurisprudence on the dichotomy
between federal labor and federal antitrust law renders it pellucid
that antitrust laws must not be applied to vitiate congressional
intent to permit organized labor activity; the Court has noted that
"the [Sherman] Act is aimed primarily at combinations having
commercial objectives and is applied only to a very limited extent
to organizations, like labor unions, which normally have other
objectives." Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S.
207, 213 n.7 (1959).
Nonetheless, unions, particularly when acting in concert
with non-labor groups, are not given carte blanche to engage in
anticompetitive activities. As the Supreme Court has explained,
"[i]t would be a surprising thing if Congress, in order to prevent
a misapplication of [antitrust] legislation to labor unions, had
bestowed upon such unions complete and unreviewable authority to
aid business groups to frustrate its primary objective." Allen
Bradley Co. v. Local Union No. 3, Int'l Bhd. of Elec. Workers, 325
U.S. 797, 809-810 (1945).
To balance the competing federal policies supporting
organized labor on one hand and business competition on the other,
two labor exemptions from the antitrust laws have been developed,
one statutory and one nonstatutory. The Supreme Court articulated
the statutory exemption in United States v. Hutcheson, 312 U.S.
219, 231 (1941), determining that the Sherman, Clayton, and
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Norris-LaGuardia Acts must be read in harmony to effectuate
Congress's intent to free organized labor from certain constraints
imposed by the antitrust laws. Reading the three statutes
together, the Supreme Court held that union activity is exempt from
antitrust liability "so long as [the] union acts in its
self-interest and does not combine with non-labor groups."
Hutcheson, 312 U.S. at 232. Regarding the first prong of this
"two-prong test," our court has stated that "activities are in the
self-interest of a labor organization if they bear a reasonable
relationship to a legitimate union interest." Allied Int'l, Inc.
v. Int'l Longshoremen's Ass'n, 640 F.2d 1368, 1379 (1st Cir.
1981)(internal quotations omitted). The union conduct at issue
must satisfy both prongs of the Hutcheson test in order to qualify
for the statutory exemption. See USS-POSCO Industries v. Contra
Costa County Bldg. & Constr. Trades Council, 31 F.3d 800, 807 (9th
Cir. 1994)(citing H.A. Artists & Assocs., 451 U.S. at 704).
It soon became apparent, however, that much legitimate
collective bargaining activity, which Congress did not intend to be
quelled by the lumbering behemoth of antitrust liability,7
nevertheless fell outside the purview of the statutory exemption.
7
Local 7, quite correctly, points out that antitrust suits
ordinarily entail massive discovery and are expensive to defend.
See, e.g., Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1967
(2007)(raising the pleading requirements for an antitrust claim, in
light of the "unusually high cost of discovery in antitrust
cases").
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Such activity was vulnerable to antitrust attack because it
constituted a combination between labor unions and non-labor
employers. Accordingly, the Supreme Court recognized "that a
proper accommodation between the congressional policy favoring
collective bargaining under the NLRA and the congressional policy
favoring free competition in business markets requires that some
union-employer agreements be accorded a limited nonstatutory
exemption from antitrust sanctions." Connell Constr. Co, 421 U.S.
at 622. The nonstatutory exemption shields some restraints on
competition imposed through the bargaining process, where the
alleged anticompetitive conduct is anchored in the collective-
bargaining process, concerns only the parties to the collective
bargaining relationship, and relates to wages, hours, conditions of
employment, or other mandatory subjects of collective bargaining.
Brown v. Pro Football, Inc., 518 U.S. 231, 250 (1996); see also
California ex rel. Lockyer v. Safeway, Inc., 371 F. Supp. 2d 1179,
1185 n. 5 (C.D. Cal. 2005).
The district court entered judgment for Local 7 on
Plaintiffs' antitrust claims on the grounds that the Union's
job-targeting program was protected by the statutory labor
exemption. In reviewing this determination, we focus first on the
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second part of the Hutcheson test: whether, in administering the
MRP, Local 7 was acting in combination with a non-labor group.8
There is no serious dispute that Local 7, as an iron
workers union, is a "labor group," and that the signatory
contractors, as employers of the members of Local 7, are a "non-
labor group." See H. A. Artists & Assocs., Inc., 451 U.S. at
715-16, 717 n. 21 (stating that "[e]mployers almost always will be
a 'nonlabor group'"). The only question remaining, then, in
determining whether the disputed activity here fails the second
prong of Hutcheson, is whether the MRP constitutes a "combination"
between Local 7 and the signatory contractors.
Local 7 argues that the MRP is the brainchild of the
Union alone, and was established and incorporated into the Union's
by-laws over a year before the wage deduction provision was added
to its CBA with the BTEA. According to Local 7, only the Union
determines which jobs to target, and sets the amount of the wage
deductions and subsidies. Plaintiffs concede that the MRP was
established and administered unilaterally by the Union, but argue
that it was funded by deductions from member paychecks pursuant to
8
In arriving at its decision, the district court focused
almost entirely upon the MRP alone. Thus, for the purpose of
determining whether the statutory exemption applies, we need go no
further; if the MRP alone cannot be afforded the protection of the
statutory exemption, that settles the question. We are aware,
however, that Plaintiffs have alleged a smorgasbord of exclusionary
conduct including, but not limited to, the MRP. We will examine
the other allegations and their impact upon any labor exemption
available to Local 7 further below.
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a CBA between the Union and signatory contractors. Additionally,
Plaintiffs contend that Local 7 and signatory contractors
collaborated in identifying target projects, and that Fund
subsidies were doled out pursuant to ad-hoc agreements between the
Union and the signatory contractor successful in its bid on a
targeted project.
Upon examination of how the MRP operates, it is a thin
fiction to pretend that the program does not represent a
combination between labor and non-labor groups. The MRP may have
been initially conceived by Local 7 alone, but the method and
amount of wage deductions that entirely finance the Fund are
written into the CBA between Local 7 and the BTEA; the agreement
that $0.85/hr would be deducted from each employee's wages and
earmarked for the "Market Recovery Program" is codified within the
text of a negotiated CBA between the Union and a non-labor
employers' group. A collective bargaining agreement is by
definition a combination between a labor group and a non-labor
group. Brown, 518 U.S. at 237. Additionally, funds were
distributed to signatory contractors working on targeted projects
pursuant to separate agreements between Local 7 and those
contractors on a project-by-project basis. Thus with regard to
both the input and output of its funds, the MRP could not operate
except in tandem with signatory contractors. Furthermore, although
Local 7 disputes this, there is evidence in the record from which
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a rational fact-finder could reasonably infer that the Union and
signatory contractors worked together to identify and "win"
targeted projects away from non-union employers.9 Accordingly,
because the MRP was codified by and operated through agreements
between a labor group and a non-labor group, the statutory
exemption cannot apply.10 See Connell Constr. Co., 421 U.S. at 622
(statutory exemption does not apply to "concerted action or
agreements between unions and nonlabor parties"); see also Phoenix
Elec. Co. v. Nat'l Elec. Contractors Ass'n, 81 F.3d 858, 860 (9th
9
For example, there is a letter in the record from Griffin
Iron Works, Inc., a signatory contractor, to Local 7, which states
that "[t]hrough a concentrated effort with the New England District
Council and Griffin Iron Works, Cardi's Furniture's new store was
turned around from a non-union project to a union project," and
notes that "Local 7 ... agreed to pay $10,000.00 towards the New
England District Council's effort to turn this project around."
10
Local 7 misreads the law by muddling the question whether the
statutory exemption is applicable with cases where the nonstatutory
exemption was found inapplicable. The Union cites to Allen
Bradley, 325 U.S. at 809, and Connell, 421 U.S. at 623-24, for the
proposition that "the test requires evidence of a restraint of
trade entered into by non-labor groups." That is not the second
prong of the Hutcheson test for the statutory exemption, however;
rather, both of those cases dealt with the applicability of the
nonstatutory exemption. The Court already having found therein a
combination between labor and non-labor that removed the disputed
activity from the protection of the statutory exemption, it was
left to decide only whether the combination was engaged in activity
permitted by federal labor policy favoring collective bargaining
(and thus protected by the nonstatutory exemption), or activity
that constituted an illegal restraint on trade (and thus
unprotected by the nonstatutory exemption). It is disingenuous for
Local 7 to argue that the MRP has no impact on business competition
when its very purpose is to render union employers more
competitive. Whether the Fund constitutes an illegal restraint on
competition is a question to be taken up under our discussion of
the nonstatutory exemption, infra.
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Cir. 1996)(job targeting program established through collective
bargaining between electrical workers union and signatory
contractors association protected by nonstatutory exemption from
antitrust laws); Local Union 257, Int'l Bhd. of Elec. Workers v.
Sebastian Elec., 121 F.3d 1180, 1186-87 (8th Cir. 1997)(same).11
The fact of that combination takes the MRP out of the
purview of the statutory exemption but does not necessarily render
it vulnerable to antitrust liability. The nonstatutory exemption
was created for this express purpose; through it, courts recognized
that in order "to give effect to federal labor laws and policies
and to allow meaningful collective bargaining to take place, some
restraints on competition imposed through the bargaining process
must be shielded from antitrust sanctions." Brown, 518 U.S. at
237. Because the district court chose not to make a finding as to
the applicability of the nonstatutory exemption to this case, it is
left to us to determine whether Local 7 adduced sufficient evidence
to prove its entitlement to that exemption or whether we must
remand the question for further development of the record. See
Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 173 (1st Cir.
1998)(holding that this court may affirm a grant of summary
11
Because the conduct at issue need fail only one prong of the
Hutcheson test in order to remove it from the protection of the
statutory exemption, we find it unnecessary to review the district
court's determination that Local 7 was acting in its own legitimate
self-interest.
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judgment "on any independently sufficient ground made manifest by
the record").
The case for the applicability of the nonstatutory
exemption is strongest where the alleged restraint operates
primarily in the labor market and has only tangential effects on
the business market. Clarett v. Nat'l Football League, 369 F.3d
124, 134 n. 14 (2d Cir. 2004); see also California ex rel. Lockyer,
371 F. Supp. 2d at 1188 n.8. Conversely, the Supreme Court has
generally refused to exempt union-employer agreements "that were
alleged to have injured or eliminated a competitor in the
employer's business or product market ... in spite of any resulting
detriment to the labor policies favoring collective bargaining."
Clarett, 369 F.3d at 131-33 (providing overview of Supreme Court's
nonstatutory exemption jurisprudence). As the Court has explained,
[t]he nonstatutory exemption has its source in
the strong labor policy favoring the
association of employees to eliminate
competition over wages and working conditions
…. Labor policy clearly does not require,
however, that a union have freedom to impose
direct restraints on competition among those
who employ its members. Thus, while the
statutory exemption allows unions to
accomplish some restraints by acting
unilaterally … the nonstatutory exemption
offers no similar protection when a union and
a nonlabor party agree to restrain competition
in a business market.
Connell Constr. Co., 421 U.S. at 622-23 (internal citations
omitted). The Court most recently found the nonstatutory exemption
applicable where the disputed "conduct took place during and
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immediately after a collective-bargaining negotiation. It grew out
of, and was directly related to, the lawful operation of the
bargaining process. It involved a matter that the parties were
required to negotiate collectively. And it concerned only the
parties to the collective-bargaining relationship." Brown, 518
U.S. at 250.
Other circuits have found that job targeting programs,
similar in structure and implementation to the program at issue
here, do fall within the bailiwick of the nonstatutory exemption.
See Phoenix Elec. Co., 81 F.3d at 863 ("A subsidy program that
targets some jobs for more competitive wage components of signatory
union subcontractor bids, and does not bar nonunion bidders from
bidding on the same jobs, is in harmony with the policies of both
the labor and antitrust laws."); Local Union 257, 121 F.3d at 1186-
87 (holding that job targeting program was protected by
nonstatutory exemption because "the Target Fund primarily affects
only the parties to the collective bargaining relationship, [] the
wage reimbursement arrangement at issue concerns a mandatory
subject of collective bargaining (i.e., wages), and [] the
arrangement is the product of bona fide arm's-length bargaining").
But Plaintiffs' allegations do not relate only to the MRP; rather,
they paint the MRP as only one part--if the central part--of a
wider conspiracy between Local 7, its signatory contractors, and
the general contractors and steel fabricators from which they
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solicit steel erection work, to shut open-shop outfits such as
Plaintiffs out of the steel erection market in the greater Boston
area. We must consider the entirety of the alleged activity when
determining the applicability of the nonstatutory exemption,
casting aside only those allegations that amount to no more than
"conclusory allegations" or "unsupported speculation." See
Medina-Munoz, 896 F.2d at 8.12
We find there are sufficient genuinely disputed issues of
material fact here to render summary judgment inappropriate.
Plaintiffs have alleged concerted union-employer action that
extended beyond merely the wage deduction provided for in the CBA
and the job-by-job subsidy agreements, to collaboration in the
identification and acquisition of target projects. Local 7 has
12
In its order granting summary judgment to Local 7 on
Plaintiffs' federal law claims, the district court appeared to
almost entirely ignore these other allegations and focused solely
on the MRP. The court did state, within the discussion of
Plaintiffs' LMRA claim, that "[t]here is nothing in the record to
support plaintiffs' assertion that the Union resorted to coercive
restraints or tactics," perhaps indicating that it was refusing to
credit Plaintiffs' other allegations. However, with only that
cryptic remark to guide us, we remain somewhat mystified as to why
the district court passed over these allegations entirely in its
discussion of Plaintiffs' antitrust claims. Whether we are
entitled to credit these allegations is certainly material to our
legal analysis: if Plaintiffs' allegations are taken as true, they
would appear to nudge this case away from an allowable restraint
arrived at through collective bargaining, as job targeting programs
alone have been found to be, see, e.g., Local Union 257, 121 F.3d
at 1186-87, and towards the type of illegal restraint on business
competition considered verboten by the Supreme Court in cases such
as United Mine Workers of America v. Pennington, 381 U.S. 657
(1965) and Connell.
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steadfastly maintained, however, that target projects are
identified solely by the Union and then announced to signatory
contractors simultaneously via a "blast fax." Furthermore,
Plaintiffs have argued that signatory contractors and the
fabricators or general contractors who employ them are complicit in
the union's efforts to shut non-union employers out of the market,
pointing to evidence that fabricators broke contracts with non-
union employers and replaced them with union employers in response
to threats and/or monetary inducements by Local 7. The Union
counters that Plaintiffs have proffered no reliable evidence of
exclusionary agreements between Local 7 and fabricators or general
contractors, citing to deposition testimony by Plaintiffs'
representatives admitting no general or specific knowledge of any
such agreements. The district court did not squarely address these
disputes, and standing as we do one step removed from the record,
we are not in a position to resolve them. Accordingly, we reverse
the district court's grant of summary judgment to defendant Local
7 on Plaintiffs' antitrust claims. Cf. Ramirez-Carlo v. United
States, 496 F.3d 41, 46 (1st Cir. 2007)(grant of summary judgment
will be reversed if "the evidence on record is sufficiently
open-ended to permit a rational fact finder to resolve the
[liability] issue in favor of either side."). We remand for
further fact-finding with regard to the extent of the collaboration
between Local 7, signatory contractors, and the construction
-22-
companies that hire them, to determine whether Local 7 is protected
from antitrust liability by the nonstatutory exemption.
We make one final observation regarding Plaintiffs'
antitrust claims. Much argument has been devoted throughout this
case to the question whether the MRP violates the Davis-Bacon Act
and the comparable Massachusetts prevailing wage statute. It seems
apparent from the record that the MRP is funded in part by
deductions from union members working on Davis-Bacon projects, and
that signatory contractors bidding on Davis-Bacon projects have
availed themselves of subsidies from the Fund. Thus, the MRP may
very well violate the Davis-Bacon Act; a string of recent circuit
decisions seems to indicate as much. See generally Can-Am
Plumbing, Inc. v. Nat'l Labor Relations Bd., 321 F.3d 145 (D.C.
Cir. 2003); Int'l Bhd. of Elec. Workers v. Brock, 68 F.3d 1194 (9th
Cir. 1995); Bldg. & Constr. Trades Dep't v. Reich, 40 F.3d 1275
(D.C. Cir. 1994). But Plaintiffs have alleged no cause of action
under the Davis-Bacon Act, and, in any case, most likely would not
have standing to do so. Cf. United States v. Binghamton Constr.
Co., 347 U.S. 171, 177 (1954)("The language of the [Davis-Bacon]
Act and its legislative history plainly show that it was not
enacted to benefit contractors, but rather to protect their
employees from substandard earnings by fixing a floor under wages
on Government projects.").
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Plaintiffs, however, have made an acrobatic attempt to
shoehorn a possible Davis-Bacon violation into their antitrust
claims, arguing that Local 7's putative Davis-Bacon violation is
relevant to the first prong of the Hutcheson analysis. Plaintiffs
contend that the MRP could not be characterized as within the
Union's legitimate self-interest if it were administered in
violation of prevailing wage statutes. Because we need not address
the first prong of Hutcheson, we do not reach this issue. We note
that Reich and its progeny do not appear to stand for the
proposition that a Davis-Bacon violation exposes an otherwise
exempt job targeting program to antitrust liability. Nevertheless,
it may be that it is not within the interest of federal labor
policy to protect the unlawful provision of subsidies to signatory
contractors on prevailing wage jobs.13
B. LMRA Claim
In addition to their antitrust claims, Plaintiffs allege
a violation of § 303 of the LMRA, 29 U.S.C. § 187. "Section 303(a)
[of the LMRA], 29 U.S.C. § 187(a), makes it unlawful for a labor
organization to engage in conduct defined as an unfair labor
13
Because the district court issued its ruling on the antitrust
claims solely on the basis of the statutory exemption, neither
party on appeal has sufficiently raised or adequately briefed the
question whether a Davis-Bacon violation could render union
activity ineligible for the nonstatutory exemption. We thus
decline to opine on that question at this time. See United States
v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990)("[I]ssues adverted to in
a perfunctory manner [on appeal], unaccompanied by some effort at
developed argumentation, are deemed waived.").
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practice under § 8(b)(4)of the NLRA." Summit Valley Indus., Inc.
v. Local 112, United Bhd. of Carpenters & Joiners of Am., 456 U.S.
717, 722 (1982). Under § 8(b)(4)(ii), it is an unfair labor
practice for a union to threaten, coerce, or restrain an employer
with an object of forcing the employer (A) to join any labor or
employer organization or enter into an agreement prohibited by §
8(e) of the NLRA,14 or (B) to cease doing business with another
party. 29 U.S.C. § 158(b)(4)(ii)(A)&(B); Intercity Maint. Co. v.
Local 254, Serv. Employees Int'l Union, 241 F.3d 82, 87 (1st Cir.
2001).
The district court refused to read Plaintiffs' complaint
to allege a § 8(b)(4)(ii)(B) "cease doing business" violation. It
seems to us that the complaint clearly does allege such a
violation; Paragraph 177 of the complaint states:
Since on or about July 1999 Local 7 has
violated § 8(b)(4)(ii)(A) and (B) of the Labor
Act, 29 U.S.C. §§ 158(b)(4)(ii)(A) & (B), by
engaging in threats of picketing and other
restraint and coercion against Plaintiffs and
other contractors to obtain agreements
prohibited by § 8(e) ... and where an object
is to cause Non-Labor businesses to ... cease
doing business with Plaintiffs.
14
Section 8(e), 29 U.S.C. § 158(e), provides in relevant part:
"It shall be an unfair labor practice for any labor
organization and any employer to enter into any contract
or agreement, express or implied, whereby such employer
ceases or refrains or agrees to cease or refrain from
handling, using, selling, transporting or otherwise
dealing in any of the products of any other employer, or
to cease doing business with any other person ...."
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However, Plaintiffs' arguments before the district court and on
appeal focused almost entirely on unlawful § 8(e) agreements, which
implies a violation of § 8(b)(4)(ii)(A) only. We recognize that
the statute is not without its complexities. There is, however, a
difference between a claim brought under § 8(b)(4)(ii)(A) and a
claim brought under § 8(b)(4)(ii)(B), which is apparent from the
plain language of the statute: a successful § 8(b)(4)(ii)(A) claim
requires proof that a union is acting to coerce employers into an
unlawful agreement to cease doing business with another party,
while a successful § 8(b)(4)(ii)(B) claim requires proof that the
union's coercive tactics are intended to force an employer to cease
doing business with another party, regardless of any agreement.15
In their appellate papers, Plaintiffs somewhat
confusingly assert that their § 8(b)(4)(ii)(B) claim was
acknowledged by the district court, although that court plainly
stated that it did "not read the Complaint, despite its prolixity,
15
The unlawful agreements at issue, as defined by § 8(e) of the
NLRA, are commonly referred to as "hot cargo agreements." The
statute was intended to bar "an employer and union from entering
into an agreement under which the employer ceases handling or
otherwise dealing with the products of other employers." R.M.
Perlman, Inc. v. New York Coat, Suit, Dresses, Rainwear & Allied
Workers' Union Local 89-22-1, 33 F.3d 145, 151 (2d Cir. 1994).
Section 8(b)(4)(ii)(B), on the other hand, targets union activity
such as strikes and secondary boycotts, where an object of such
activity is to "'force or require [the striking workers'] employer
or another person to cease doing business with a third party.'"
Allied Int'l, 640 F.2d at 1374 (quoting Local 1976, United Bhd. of
Carpenters v. N.L.R.B., 357 U.S. 93, 98 (1958)).
-26-
to allege an alternative 'cease doing business' violation of the
LMRA." Am. Steel Erectors, Inc., 480 F. Supp. 2d at 479 n. 16.
But then Plaintiffs themselves seem to ignore any § 8(b)(4)(ii)(B)
claim they may have had, characterizing the LMRA issue on appeal as
"[w]hether the district court erred in holding, as a matter of law,
that contract breaches and terminations obtained by Local 7 from
neutral fabricators and general contractors through threats,
coercion, and restraints were permissible under 29 U.S.C. §
158(e)." If Plaintiffs cannot sort out their allegations and
develop their arguments sufficiently, it is not for us to do so for
them; accordingly, we consider the § 8(b)(4)(ii)(B) issue waived.
See United States v. Slade, 980 F.2d 27, 31 (1st Cir. 1992)("[A]
party is not at liberty to articulate specific arguments for the
first time on appeal simply because the general issue was before
the district court."); see also Zannino, 895 F.2d at 17.
We thus turn our attention to whether summary judgment
was warranted on Plaintiffs' § 8(b)(4)(ii)(A) claim, regarding
Local 7's alleged use of coercive tactics to pressure neutral
employers into unlawful § 8(e) agreements. The Supreme Court has
held that
[T]he relevant inquiry under ... 8(e) is
whether a union's activity is primary or
secondary--that is, whether the union's
efforts are directed at its own employer on a
topic affecting employees' wages, hours, or
working conditions that the employer can
control, or, instead, are directed at
affecting the business relations of neutral
-27-
employers and are 'tactically calculated' to
achieve union objectives outside the primary
employer-employee relationship.
N.L.R.B. v. Int'l Longshoremen's Ass'n, 473 U.S. 61, 81 (1985).
However, an agreement between an employer and a union representing
that employer's employees is not prohibited by § 8(e), even if it
may impact the business of a secondary party, as long as the
union's objective is the preservation of work for those employees.
See Nat'l Woodwork Mfrs. Ass'n v. N.L.R.B., 386 U.S. 612, 645-46
(1967)(agreement within negotiated CBA between carpenters' union
and general contractor providing that carpenters would not handle
prefabricated doors did not violate § 8(e), even though
manufacturer of prefabricated doors lost contractor's business as
a result).
Plaintiffs contend Local 7 used coercive tactics--
including picketing, threats, and the lure of lucre--to pressure
fabricators and general contractors (i.e., "neutral employers" who
do not themselves hire Local 7 members or have a collective
bargaining relationship with Local 7) into agreements to hire only
union erectors. As evidence, Plaintiffs point to substantially the
same factual allegations underlying their antitrust claims,
discussed above. Therefore, the same factual disputes remain. For
example, Local 7 argues that there is no evidence the Union entered
into generalized agreements with fabricators for across-the-board
exclusion of all non-union employers from jobs in the relevant
-28-
market. This argument both mischaracterizes Plaintiffs' factual
allegations and misapprehends the law. There is no requirement
that an agreement need be of a generalized exclusionary nature to
fall afoul of § 8(e); rather, the use of coercive measures by a
union to pressure a single neutral employer into a single agreement
to cease doing business with a single non-union employer, or the
application of such measures on a project-by-project basis (both of
which Plaintiffs have alleged), would suffice. See, e.g., N.L.R.B.
v. Bangor Bldg. Trades Council, 278 F.2d 287, 289-90 (1st Cir.
1960)(union violated NLRA by picketing job site to pressure
contractor not to use non-union subcontractor). It is also worth
noting that the law does not require a written contract; the
statute specifically references "any contract or agreement, express
or implied." 29 U.S.C. § 158(e)(emphasis added).
In evaluating Plaintiffs' § 8(b)(4)(ii)(A) claim, the
district court again focused only on the MRP and did not address
Plaintiffs' other allegations. Viewing the facts in the light most
favorable to Plaintiffs, as we must, we find that there are genuine
issues of material fact with regard to the nature and extent of
Local 7's allegedly coercive tactics, and whether Local 7 through
use of those tactics pressured neutral employers into agreements to
refrain from using non-union contractors in violation of § 8(e).
We therefore reverse the district court's grant of summary judgment
-29-
to defendant Local 7 on Plaintiffs' LMRA claim, and remand for
further proceedings.
C. State Law Claims
We review de novo the district court's dismissal of
Plaintiffs' state law claims, accepting as true all well-pleaded
facts and drawing all reasonable inferences in Plaintiffs' favor.
See Santos-Rodriguez v. Doral Mortgage Corp., 485 F.3d 12, 15 (1st
Cir. 2007).
Federal law preempts state law (1) when Congress has
expressly so provided, (2) when Congress intends federal law to
"occupy the field" and (3) to the extent that state law conflicts
with any federal statute. See Crosby v. Nat'l Foreign Trade
Council, 530 U.S. 363, 372-73 (2000)(internal citations omitted).
"[T]he NLRA itself contains no express pre-emption
provision," but "Congress implicitly mandated two types of pre-
emption as necessary to implement federal labor policy." Chamber
of Commerce of U.S. v. Brown, 128 S.Ct. 2408, 2412 (2008). The
first, familiarly known as "Garmon pre-emption," prohibits states
from regulating activities that are arguably protected or
prohibited by § 7 and § 8 of the NLRA.16 See San Diego Bldg. Trades
16
Section 7 of the NLRA protects employees' right "to
self-organization, to form, join, or assist labor organizations, to
bargain collectively through representatives of their own choosing,
and to engage in other concerted activities for the purpose of
collective bargaining or other mutual aid or protection." 29
U.S.C. § 157. Section 8 prohibits employers and employees
respectively from engaging in certain "unfair labor practices." 29
-30-
Council v. Garmon, 359 U.S. 236, 244 (1959); see also Bldg. &
Constr. Trades Council of Metro. Dist. v. Associated Builders &
Contractors of Mass./R.I., Inc., 507 U.S. 218, 224-25 (1993). The
second, "Machinists pre-emption," is a recognition of Congress's
intention to occupy the field of labor dispute regulation,
prohibiting state regulation of areas outside the four corners of
the NLRA if Congress intended them "to be controlled by the free
play of economic forces." Machinists v. Wis. Employment Relations
Comm'n, 427 U.S. 132, 140 (1976)(citation omitted).
There are three exceptions to federal labor law pre-
emption. Tamburello v. Comm-Tract Corp., 67 F.3d 973, 977 (1st
Cir. 1995). "The first is where Congress has expressly carved out
an exception to the [National Labor Relations Board]'s primary
jurisdiction." Id. Second, the NLRA does not pre-empt state law
"when the regulated activity touches 'interests so deeply rooted in
local feeling and responsibility that, in the absence of compelling
congressional direction,' courts 'could not infer that Congress had
deprived the States of the power to act.'" Id. (citing Sears,
Roebuck & Co. v. San Diego County Dist. Council of Carpenters, 436
U.S. 180, 195 (1978)). And the final exception applies "if the
regulated activity is merely a peripheral or collateral concern of
the labor laws." Id.
U.S.C. § 158.
-31-
We agree with the district court's pre-emption analysis,
and we need not rehash it here at length. See Talbott v. C.R.
Bard, Inc., 63 F.3d 25, 30-31 (1st Cir. 1995)("where [a] district
judge produces a well-reasoned opinion that reaches the correct
result, a reviewing court should not write at length merely to put
matters in its own words")(citing In re San Juan Dupont Plaza Hotel
Fire Litig., 989 F.2d 36, 38 (1st Cir. 1993)). Plaintiffs' state
law claims incorporate by reference all the factual allegations
that form the basis for Plaintiffs' federal claims, and assert no
others. Plaintiffs have thus effectively conceded that the same
conduct that gives rise to their state claims is conduct "arguably
protected or prohibited" by federal labor law; accordingly,
Plaintiffs' state law claims are pre-empted as per Garmon.
There being no applicable express carve out from federal
jurisdiction, Plaintiffs' state law claims could only be saved from
pre-emption by the second or third exception delineated above.
However, Plaintiffs have not pled allegations that sufficiently
implicate interests "so deeply rooted in local feeling and
responsibility" or of "peripheral or collateral concern" to federal
labor laws so as to except them from federal pre-emption.17 Local
17
Plaintiffs also argue that the district court's decision is
inconsistent with case law finding no pre-emption of state
prevailing wage statutes, but Plaintiffs' complaint asserted no
claim under the Massachusetts prevailing wage statute and
Plaintiffs did not directly advance that argument below in their
opposition to defendants' motion to dismiss. We therefore will not
consider it here. See McCoy v. Mass. Instit. of Tech., 950 F.2d
-32-
7's conduct may be prohibited rather than protected by the NLRA,
but either way it is well within the regulatory purview of federal
labor law rather than that of state police power. See Garmon, 359
U.S. at 244 ("When it is clear or may fairly be assumed that the
activities which a State purports to regulate are protected by [§]
7 of the [NLRA], or constitute an unfair labor practice under [§]
8, due regard for the federal enactment requires that state
jurisdiction must yield. . . . Nor has it mattered whether the
States have acted through laws of broad general application rather
than laws specifically directed towards the governance of
industrial relations."). We affirm the district court's dismissal
of Plaintiffs' state law claims as pre-empted by federal labor law.
III. Conclusion
For the reasons stated above, we affirm the dismissal of
Plaintiffs' state law claims, but reverse the district court's
summary judgment order and remand for further proceedings
consistent with this opinion. Each party should bear its own
costs.
13, 22 (1st Cir. 1991)("It is hornbook law that theories not raised
squarely in the district court cannot be surfaced for the first
time on appeal.").
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