FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
INTERNATIONAL LONGSHORE AND No. 14-35504
WAREHOUSE UNION; PACIFIC
MARITIME ASSOCIATION, D.C. No.
Plaintiffs-Counter-Claim- 3:12-cv-01058-SI
Defendants-Appellees,
v. OPINION
ICTSI OREGON, INC., an Oregon
corporation,
Defendant-Counter-Claimant-
Plaintiff-Appellant.
Appeal from the United States District Court
for the District of Oregon
Michael H. Simon, District Judge, Presiding
Argued and Submitted October 7, 2016
Portland, Oregon
Filed July 24, 2017
Before: Diarmuid F. O’Scannlain, Richard R. Clifton,
and Jacqueline H. Nguyen, Circuit Judges.
Opinion by Judge O’Scannlain;
Concurrence by Judge Clifton
2 ILWU V. ICTSI OREGON
SUMMARY*
Antitrust
The panel affirmed the district court’s dismissal of an
antitrust claim alleging anticompetitive activities engaged in
jointly by a labor union and a multi-employer collective
bargaining association.
The panel held that the district court did not err in
entering partial final judgment under Federal Rule of Civil
Procedure 54(b) on an antitrust counterclaim in an action
brought under § 301 of the Labor Management Relations Act.
The panel affirmed the district court’s conclusion that the
antitrust issues were discrete and complex, and that the entry
of partial final judgment would not result in duplicative
proceedings.
The panel held that the counterclaimant had standing to
challenge an alleged antitrust conspiracy redounding to the
benefit of the collective bargaining association even though
it was a member of the association.
The panel held that the Noerr-Pennington doctrine
immunized the counterclaim defendants from antitrust
liability for their conduct in filing lawsuits because they did
not engage in sham litigation.
The panel held that the remainder of the counterclaim
defendants’ alleged joint activity was immunized from
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
ILWU V. ICTSI OREGON 3
antitrust liability under § 1 of the Sherman Act because of the
nonstatutory labor exemption. The panel concluded that
under the Mackey test, the alleged agreement restraining trade
primarily affected the parties to the agreement and no one
else; the agreement concerned wages, hours, or conditions of
employment that were mandatory subjects of collective
bargaining; and the agreement was produced from bona fide,
arm’s length collective bargaining. The panel held that an
agreement that violates labor law does not always fail the
second prong of the Mackey test.
Judge Clifton concurred entirely in the result and
reasoning of the disposition as to the merits of the appeal. He
wrote separately to express concern over the district court’s
decision to enter partial final judgment under Rule 54(b), and
agreed with the opinion’s admonition that a preferable
approach would have been for the district court to certify its
order for interlocutory appeal.
COUNSEL
Thomas M. Triplett (argued), Michael T. Garone, and Kelly
T. Hagan, Schwabe Williamson & Wyatt P.C., Portland,
Oregon, for Defendant-Counter-Claimant-Plaintiff-Appellant.
Ronald F. Wick (argued), Cozen O’Connor, Washington,
D.C.; Eleanor J. Morton (argued) Emily M. Maglio, and
Robert S. Remar, Leonard Carder LLP, San Francisco,
California; for Plaintiffs-Counter-Claim Defendants-
Appellees.
4 ILWU V. ICTSI OREGON
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether allegedly anticompetitive
activities engaged in jointly by a labor union and a multi-
employer collective bargaining association violate antitrust
law.
I
A
ICTSI Oregon, Inc. (“ICTSI”), a subsidiary of
International Container Terminal Services, Inc., began
operating a marine shipping facility (“Terminal 6”) in 2011,
leased from the Port of Portland. It employed longshoremen
and mechanics, among others, represented by the
International Longshore and Warehouse Union (“ILWU”), a
labor union that represents many of the shore-based laborers
of the maritime industry.
ICTSI is a member of the Pacific Maritime Association
(“PMA”), a multi-employer collective bargaining association
representing many types of maritime employers who hire
dockworkers and longshoremen. PMA represents ICTSI in
collective bargaining negotiations with ILWU.
ILWU and PMA are parties to a collective bargaining
agreement known as the Pacific Coast Longshore and Clerks
Agreement (the “CBA”) covering the entire West Coast of
the United States which governed the employment terms for
all longshoremen employed by ICTSI during all times
relevant to this appeal. The CBA is administered by the Joint
ILWU V. ICTSI OREGON 5
Coast Labor Relations Committee (“Joint Committee”). The
parties disagree over whether the Joint Committee, which
meets regularly as the master labor-management committee
under the CBA, has the authority to issue contractual
interpretations that are binding on all signatories. ILWU and
PMA agreed that, with some exceptions, all reefer work—the
work of plugging, unplugging, and monitoring refrigerated
shipping containers—would be performed by ILWU for all
PMA members.
ILWU sought to perform the reefer work at Terminal 6,
but such work had historically been within the jurisdiction of
the International Brotherhood of Electrical Workers
(“IBEW”). The Joint Committee met on May 23, 2012, to
resolve the disputed work assignment and determined that the
work belonged to ILWU and then ordered ICTSI to assign the
work accordingly. ICTSI argued, and still argues, that the
reefer work at Terminal 6 was not its to assign under the
terms of its lease with the Port of Portland. On June 4, 2012,
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 at Terminal 6 to
ILWU. The Joint Committee issued another decision a few
days later, incorporating the arbitrator’s decision and
reiterating its previous command that ICTSI grant the
disputed work to ILWU. ICTSI also alleges that PMA, with
the encouragement of ILWU, threatened numerous daily fines
of $50,000 and even expulsion of ICTSI from the collective
bargaining association to goad it into compliance with the
Joint Committee decisions.
6 ILWU V. ICTSI OREGON
Meanwhile, ICTSI commenced a § 10(k) proceeding
under the National Labor Relations Act (“NLRA”), before the
National Labor Relations Board (“NLRB”), to resolve the
jurisdictional dispute between the rival unions. 29 U.S.C.
§ 160(k). The NLRB issued a decision on August 13, 2012,
finding that ILWU workers were not entitled to the reefer
work at Terminal 6, but rather that IBEW workers were. Int’l
Bhd. of Elec. Workers, 358 N.L.R.B. 903, 907 (2012).1
B
1
While the NLRB proceeding was pending, ILWU and
PMA jointly filed this suit against ICTSI in federal district
court under § 301 of the Labor Management Relations Act
(“LMRA”), 29 U.S.C. § 185, asking it to order ICTSI to
comply with the recently issued Joint Committee decisions.
ICTSI counterclaimed and alleged, among other things,
that ILWU and PMA violated Sections 1 and 2 of the
Sherman Act through their agreement to assign the disputed
work to ILWU and their actions taken to enforce such
agreement. 15 U.S.C. §§ 1–2. Specifically, ICTSI alleged that
1
PMA responded by filing a suit in federal district court seeking to
vacate the NLRB’s decision. The district court granted summary judgment
to PMA, but we reversed, concluding that the district court lacked
jurisdiction to review the NLRB’s decision. Pac. Mar. Ass’n v. NLRB,
827 F.3d 1203, 1213 (9th Cir. 2016).
ILWU V. ICTSI OREGON 7
ILWU and PMA used the collective bargaining process to
create a monopoly over longshoreman work on the West
Coast: ILWU benefits because only its workers are able to
perform longshoreman work for PMA-member employers,
and PMA benefits because it collects fees for each hour
worked by ILWU longshoremen.
ICTSI further alleged in its counterclaim that in service of
their agreement to monopolize West Coast port services,
ILWU and PMA worked together to commit various illegal
anticompetitive acts which reduced competition in the
relevant market2—raising prices and injuring consumers.
ICTSI claimed at least $4,000,000 in damages to itself as
well.
2
ICTSI, in its counterclaim, specifically alleged that (1) PMA, with
the encouragement of ILWU, threatened ICTSI with daily fines of $50,000
for refusing to give the disputed reefer work to ILWU workers; (2) PMA
threatened ICTSI with fines for initiating proceedings with the NLRB;
(3) ILWU and PMA improperly used the Joint Committee to issue
determinations before using the federal courts to enforce the collusive,
illegal decisions issued by the Joint Committee; (4) ILWU and PMA
discriminated against non-PMA members, as well as ICTSI, by the terms
of the CBA granting some PMA members an exemption from provisions
granting certain work to ILWU; (5) a PMA board member boycotted the
Port of Portland over ICTSI’s refusal to give the disputed reefer work to
ILWU; (6) ILWU members engaged in slowdown activity at Terminal 6
even after the NLRB determined that ITCSI did not control the disputed
reefer work; (7) ILWU and PMA filed sham lawsuits against ICTSI;
(8) ILWU and PMA interfered in ICTSI’s contractual relationship with the
Port of Portland; (9) ILWU caused other unions to lose similar work in
ports in Washington and San Francisco; (10) ILWU threatened third
parties in other Oregon ports in order to gain access to longshoreman
work; (11) ILWU violated the labor laws; and (12) ILWU and PMA used
a jointly-run hiring hall to send inefficient and unqualified workers to
ICTSI.
8 ILWU V. ICTSI OREGON
2
The district court stayed most of the parties’ claims
pending resolution of various disputes filed before the NLRB.
However, the district court allowed ILWU and PMA to file a
joint motion to dismiss ICTSI’s antitrust counterclaim and
then granted it under Federal Rule of Civil Procedure
12(b)(6), concluding that a shared monopoly claim was not
viable under Section 2 of the Sherman Act and that the
alleged anticompetitive conduct was immunized from
antitrust scrutiny because of a combination of the Noerr-
Pennington doctrine, the statutory labor exemption, and the
nonstatutory labor exemption.
ICTSI moved for entry of a partial final judgment
pursuant to Federal Rule of Civil Procedure 54(b), which the
district court granted, dismissing ICTSI’s antitrust
counterclaim with prejudice. All other issues remain stayed
in the district court pending the resolution of related NLRB
proceedings.3 This timely appeal followed.
3
The related NLRB proceedings cited by the district court are Case
Nos. 19-CC-87504, 19-CD-87505, 19-CC-82533, and 19-CC-82744. The
cases were consolidated for review by an administrative law judge. Int’l
Longshore & Warehouse Union, AFL–CIO, 363 N.L.R.B. No. 12,
2015 WL 5638153, at *2 (Sept. 24, 2015). On September 24, 2015, a
three-member panel of the NLRB affirmed the judge’s decision that
ILWU violated labor law by engaging in improper job actions against
ICTSI and that ILWU must cease engaging in such activity. Id. A three-
member panel of the NLRB affirmed another administrative law judge’s
decision in Case No. 19-CC-100903, concluding that ILWU had engaged
in improper work slowdown activities at Terminal 6 against ICTSI. Int’l
Longshore & Warehouse Union, AFL–CIO, 363 N.L.R.B. No. 47,
2015 WL 7750748 (Nov. 30, 2015).
ILWU V. ICTSI OREGON 9
II
A
ILWU and PMA contend that the district court erred in
entering a Rule 54(b) partial final judgment on the antitrust
counterclaim. They assert that the facts and legal arguments
of the antitrust counterclaim substantially overlap with other
claims and counterclaims before the district court, and that
the district court’s grant of a partial final judgment will
generate piecemeal appeals and waste judicial resources. See
Romoland Sch. Dist. v. Inland Empire Energy Ctr., LLC,
548 F.3d 738, 747 (9th Cir. 2008). Accordingly, they argue
that we should vacate the judgment. See Morrison-Knudsen
Co. v. Archer, 655 F.2d 962, 966 (9th Cir. 1981) (concluding
that if “[t]he claims disposed of by the Rule 54(b) judgment
[are] inseverable, both legally and factually, from claims that
remained unadjudicated in the district court, and there [are]
no unusual and compelling circumstances that otherwise
dictated entry of an early, separate judgment on that part of
the case,” the partial final judgment should be vacated).
We are satisfied that the district court did not err in
concluding that ICTSI’s antitrust counterclaim involved
discrete legal issues separate from those involved in the § 301
ILWU filed petitions for review of both of these NLRB decisions with
the United States Court of Appeals for the District of Columbia Circuit.
Petitioners’ Opening Brief at 3, Int’l Longshore & Warehouse Union v.
NLRB, Nos. 15-1443, 16-1036 (D.C. Cir. Jan. 25, 2017) (discussing both
petitions for review—the case challenging the Sept. 24, 2015 NLRB
decision is referenced as Nos. 15-1344 and 15-1428 (D.C. Cir.)). The
cases were consolidated for oral argument and are currently pending
before the D.C. Circuit. Id. Proceedings in the instant case still before the
district court remain stayed.
10 ILWU V. ICTSI OREGON
litigation or the adjudications still proceeding before the
NLRB. It is true that the factual issues involved in such claim
are closely tied to the factual issues in the labor-law claims
still pending before the district court, but the antitrust
counterclaim involves distinct points of law. Also, the legal
issues before us are complicated and not routine. See Wood
v. GCC Bend, LLC, 422 F.3d 873, 882 (9th Cir. 2005)
(observing that in cases where common factual issues
abound, the entry of a Rule 54(b) partial final judgment
should be reserved for complex and distinct legal issues).
Finally, we agree with the district court’s determination that
entry of a partial final judgment would result in no
duplicative proceedings, even if we reversed the dismissal of
the antitrust counterclaim. Id. at 879.
Whether the district court’s decision to grant ICTSI’s
Rule 54(b) motion was correct is a close call. In
circumstances such as these, we strongly prefer that the
district court “certify its order for interlocutory appeal,”
which allows “the Court of Appeals to protect its docket by
determining for itself whether to accept the issue for review.”
Morrison-Knudsen Co., 655 F.2d at 966. However, because
the issues before us are discrete and complex and we must
give substantial deference to certain elements of the district
court’s analysis, we conclude that the district court did not err
in entering a partial final judgment under Rule 54(b).
B
ILWU and PMA also contend that ICTSI lacks standing
to challenge an alleged conspiracy redounding to the benefit
of PMA because ICTSI itself was a member of PMA when
PMA allegedly benefitted from said conspiracy. To have
standing as an antitrust plaintiff, a party must demonstrate
ILWU V. ICTSI OREGON 11
antitrust injury, meaning it must show “injury of the type the
antitrust laws were intended to prevent and that flows from
that which makes defendants’ acts unlawful.” Atl. Richfield
Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (quoting
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,
489 (1977)). An injury caused by an antitrust violation will
not count as an antitrust injury “unless it is attributable to an
anti-competitive aspect of the practice under scrutiny.” Id.
We confronted an analogous situation in Big Bear
Lodging Ass’n v. Snow Summit, Inc., 182 F.3d 1096 (9th Cir.
1999). The plaintiffs in Big Bear alleged that a group of their
competitors had engaged in a price-fixing scheme. Id. at
1102. Logically, then, the plaintiffs alleged a course of
conduct from which they also stood to benefit. Id. We
observed, however, that in such situations competitors “may
have standing to challenge practices used to enforce a price-
fixing conspiracy” if they allege injury from “practices used
to enforce” the illegal conspiracy. Id.
Here, ICTSI has alleged that ILWU and PMA’s illegal
restraint of trade harmed competition by raising prices to
supra-competitive levels. Importantly, ICTSI also alleged that
it was harmed directly by the efforts of ILWU and PMA to
enforce their illegal agreement. For example, ICTSI alleged
that ILWU and PMA filed sham lawsuits against ICTSI in an
attempt to force its hand.4 This meets the Big Bear
requirement that a party allege “injury resulting from
practices used to enforce the alleged [illegal anticompetitive]
conspiracy.” Id. ICTSI thus has standing to bring its antitrust
counterclaim.
4
See supra note 2 (describing the harmful and illegal actions ILWU
and PMA allegedly took against ICTSI to enforce their illegal agreement).
12 ILWU V. ICTSI OREGON
III
On the merits of the appeal, ICTSI contends that the
district court made several errors in dismissing its
counterclaim.5
A
ICTSI first contends that the district court erred in its
interpretation of the Noerr-Pennington doctrine, which
provides immunity and “broad antitrust protection for those
who ‘petition the government for a redress of grievances.’”
USS-POSCO Indus. v. Contra Costa Cnty. Bldg. & Constr.
Trades Council, AFL-CIO, 31 F.3d 800, 810 (9th Cir. 1994)
(quoting City of Columbia v. Omni Outdoor Advert., Inc.,
499 U.S. 365, 378 (1991)). ICTSI alleges that ILWU and
PMA filed sham lawsuits in furtherance of their conspiracy
to restrain trade and to monopolize longshore services.
Although Noerr-Pennington immunity extends to judicial
proceedings,6 it does not protect persons engaging in sham
5
“We review dismissal of a complaint without leave to amend de
novo.” Big Bear, 182 F.3d at 1101. “All allegations of material fact are
taken as true and construed in the light most favorable to the nonmoving
party.” Id. (quoting Cahill v. Liberty Mut. Ins., 80 F.3d 336, 337–38 (9th
Cir. 1996)). However, the party must allege “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “A complaint may be dismissed without leave to amend
only ‘when it is clear that the complaint cannot be saved by further
amendment.’” Big Bear, 182 F.3d at 1101 (quoting Dumas v. Kipp,
90 F.3d 386, 389 (9th Cir. 1996)).
6
ICTSI argues that ILWU and PMA waived the affirmative defense
of Noerr-Pennington immunity. But this appeal followed ILWU and
PMA’s successful motion to dismiss ICTSI’s antitrust counterclaim. Even
ILWU V. ICTSI OREGON 13
litigation. USS-POSCO Indus., 31 F.3d at 810. Litigation will
be labeled a sham if it is “objectively baseless,” and
“conceal[s] ‘an attempt to interfere directly with the business
relationships of a competitor.’” Id. (quoting Prof’l Real
Estate Investors, Inc. v. Columbia Pictures Indus., 508 U.S.
49, 60–61 (1993)). In the context of a series of alleged sham
proceedings, however, “the question is not whether any one
[suit] has merit . . . but whether they are brought pursuant to
a policy of starting legal proceedings without regard to the
merits and for the purpose of injuring a market rival.” Id. at
811. In such a context, the legal success of an occasional
sham suit is irrelevant. Id. (“[E]ven a broken clock is right
twice a day.”).
ICTSI has not alleged enough sham suits to establish a
pattern of baseless or repetitive claims. ICTSI points to only
two allegedly meritless suits, one by PMA and one by ILWU
and PMA. Two sham suits cannot amount to “a whole series
of legal proceedings” or a “pattern of baseless, repetitive
claims.” Amarel v. Connell, 102 F.3d 1494, 1519 (9th Cir.
1996) (quoting USS-POSCO Indus., 31 F.3d at 811; Prof’l
Real Estate Investors, 508 U.S. at 58).
Because there is no pattern of baseless claims, we engage
in a two-step inquiry, evaluating each suit individually. Step
one asks whether the alleged sham suit was meritless. Prof’l
assuming that Noerr-Pennington immunity is an affirmative defense—an
assumption that may not be warranted—it would not be waived unless
ILWU and PMA omitted it from their answer to ICTSI’s counterclaim.
See Fed. R. Civ. P. 8(c)(1); see also Bayou Fleet, Inc. v. Alexander,
234 F.3d 852, 861 (5th Cir. 2000) (rejecting waiver argument where
plaintiff “knew Noerr-Pennington was a potential issue throughout most
of the discovery process”). ILWU and PMA have not yet answered the
antitrust counterclaim.
14 ILWU V. ICTSI OREGON
Real Estate Investors, 508 U.S. at 60. The burden is on “the
plaintiff to disprove the challenged lawsuit’s legal viability.”
Id. at 61 (emphasis omitted). “Only if challenged litigation is
objectively meritless may a court” proceed to step two to
analyze whether the baseless suit was an attempt to directly
interfere with the business of a competitor. Id. at 60–61.
This means that ICTSI must “disprove the challenged
lawsuit’s legal viability.” Id. at 61. A suit has merit “[i]f an
objective litigant could conclude that the suit is reasonably
calculated to elicit a favorable outcome.” Id. at 60. For
example, a suit is not objectively meritless if it is “arguably
warranted by existing law or at the very least [is] based on an
objectively good faith argument for the extension,
modification, or reversal of existing law.” Id. at 65.
1
PMA’s suit collaterally attacking the NLRB’s § 10(k)
jurisdictional award was not objectively baseless. The district
court, in fact, granted summary judgment in that case to
PMA. Pac. Mar. Ass’n, 827 F.3d at 1204 (reviewing the
district court’s decision). While we reversed that decision,
holding that the district court lacked jurisdiction, we noted
that the NLRB’s § 10(k) determination likely violated the
NLRA. Id. at 1210. Even if the NLRB’s jurisdictional award
survives all further challenges, PMA’s suit challenging the
agency’s determination is at least “arguably warranted by
existing law” given that two federal courts have concluded it
had substantial merit. Prof’l Real Estate Investors, 508 U.S.
at 65.
ILWU V. ICTSI OREGON 15
2
The joint suit by ILWU and PMA against ICTSI under
§ 301 of the LMRA—from which the antitrust counterclaim
of this appeal grew—is a more difficult case. The district
court stayed claims related to reefer work at the Port of
Portland pending resolution of the inter-union jurisdictional
disputes before the NLRB and our court. But ILWU and
PMA maintained the joint suit even after success became
very unlikely. Once a § 10(k) order becomes final, it takes
precedence over any inconsistent arbitration award. See
Carey v. Westinghouse Elec. Corp., 375 U.S. 261, 272
(1964); Int’l Longshoremen’s & Warehousemen’s Union,
Local 32 v. Pac. Mar. Ass’n, 773 F.2d 1012, 1021 (9th Cir.
1985).
The NLRB has also repeatedly held that a § 301 suit
brought to achieve results contrary to a § 10(k) award is
illegal and constitutes an unfair labor practice. See, e.g., Sheet
Metal Workers Int’l Ass’n, 357 N.L.R.B. 1577, 1578 (2011)
(affirming an ALJ’s determination that “following the
Board’s 10(k) award, [a union]’s maintenance of its [§] 301
lawsuit was incompatible with the Board’s award and,
therefore, had an objective that was illegal under Federal
law”); Local 30, United Slate, Tile, & Composition Roofers,
Damp & Waterproof Workers Ass’n, 307 N.L.R.B. 1429,
1430 (1992).
However, the facts of ILWU and PMA’s § 301 lawsuit
suggest that it may be legally viable. ILWU and PMA
brought their § 301 claim on June 13, 2012. The NLRB
issued its § 10(k) determination on August 13, 2012. In
response to such determination, the district court stayed the
16 ILWU V. ICTSI OREGON
§ 301 claim pending final resolution and then the exhaustion
of appeals related to the NLRB’s jurisdictional determination.
ILWU and PMA did not bring a frivolous § 301 suit when
they initiated this lawsuit against ICTSI: an arbitrator had
interpreted a CBA binding on PMA, ILWU, and ICTSI, and
§ 301 authorizes suits in federal court to enforce such
decisions. Therefore, ILWU and PMA’s suit to enforce the
arbitrator’s decision was not objectively baseless or frivolous
at the time it was filed.
Though the suit was maintained after the NLRB’s
unfavorable ruling, ILWU and PMA were also collaterally
challenging the § 10(k) award that would trump their § 301
suit. As recounted above, the collateral attack on the NLRB’s
§ 10(k) decision proved unsuccessful, but only after two
federal courts observed that the NRLB’s decision was likely
incorrect. ILWU continues to fight the NLRB’s § 10(k)
decision as well. See supra note 3. It would make little sense
to hold that a suit lacked merit because it was maintained
while the plaintiffs were actively challenging the
impediments to such suit. The § 301 suit has not been
frivolously maintained; rather, it has been “arguably
warranted by existing law or at the very least [is] based on an
objectively good faith argument for the extension,
modification, or reversal of existing law.” Prof’l Real Estate
Investors, 508 U.S. at 65. That ends the inquiry: the § 301 suit
is covered by Noerr-Pennington immunity.
B
ICTSI next contends that the district court erred when it
concluded that the remainder of ILWU and PMA’s alleged
ILWU V. ICTSI OREGON 17
“Joint Activity”7 is immunized from antitrust liability under
Section 1 of the Sherman Act because of the nonstatutory
labor exemption, even though such activity allegedly includes
actions by ILWU and PMA that violate labor law.8
1
The nonstatutory, or implied labor, exemption
“recognizes that, 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 v. Pro Football, Inc., 518 U.S. 231, 237
(1996); see also United Mine Workers of Am. v. Pennington,
381 U.S. 676, 711 (1965) (Goldberg, J., concurring in part
and dissenting in part) (discussing how the nonstatutory
exemptions protects the scheme of collective bargaining
sanctioned and mandated by the NLRA from being
“destroyed by the imposition of Sherman Act” penalties).
This exemption includes “some union-employer agreements.”
7
The Joint Activity includes all of the allegations discussed above,
such as ILWU and PMA agreeing to discriminate against ICTSI and other
non-PMA employers by treating PMA members preferentially. Supra note
2; see also supra note 3 (discussing NLRB decisions concluding that
ILWU violated labor law).
8
For example, it includes allegations that ILWU and PMA entered
into an illegal agreement to engage in secondary boycotts against ICTSI
with the purpose of seizing work for ILWU. The NLRA, in § 8(e),
prohibits “hot cargo” agreements, as well as secondary boycotts or
agreements to not do business with third parties, between employers and
unions. 29 U.S.C. § 158(e).
18 ILWU V. ICTSI OREGON
Connell Const. Co. v. Plumbers & Steamfitters Local Union
No. 100, 421 U.S. 616, 622 (1975).9
The nonstatutory exemption shields collective bargaining
agreements and actions related to collective bargaining from
antitrust liability. Phoenix Elec. Co. v. Nat’l Elec.
Contractors Ass’n, 81 F.3d 858, 860 (9th Cir. 1996). The
exemption prevents courts, sitting in antitrust, from asserting
authority over the collective bargaining process and
determining “through application of the antitrust laws, what
is socially or economically desirable collective-bargaining
policy.” Brown, 518 U.S. at 242. It reflects antitrust law’s
complex relationship with labor law—a relationship
complicated by Congress’s struggle to determine where
socially desirable anticompetitive action in support of labor
ends and socially undesirable anticompetitive action, whether
in support of labor or not, begins. See, e.g., Richard A.
Epstein, Labor Unions: Saviors or Scourges?, 41 Cap. U. L.
Rev. 1, 18–23 (2013) (discussing the historical development
of antitrust laws and its interaction with labor law).
Whether the nonstatutory exemption applies depends on
the so-called Mackey test. Phoenix Elec., 81 F.3d at 861
(citing Mackey v. Nat’l Football League, 543 F.2d 606, 614
(8th Cir. 1976)). An alleged agreement restraining trade is
shielded from antitrust liability only if the following three
parts of the test are satisfied: “(1) the restraint primarily
affects the parties to the agreement and no one else, (2) the
agreement concerns wages, hours, or conditions of
9
The statutory labor exemption applies only where unions act
unilaterally; therefore, it does not shield collective bargaining agreements
from antitrust scrutiny. See United States v. Hutcheson, 312 U.S. 219,
231–32 (1941).
ILWU V. ICTSI OREGON 19
employment that are mandatory subjects of collective
bargaining, and (3) the agreement is produced from bona fide,
arm’s-length collective bargaining.” Id. Though developed in
the Eighth Circuit, the Mackey test was formally adopted by
this court in Continental Maritime of San Francisco, Inc. v.
Pacific Coast Metal Trades District Council, 817 F.2d 1391
(9th Cir. 1987). Id.
2
ICTSI contends that the district court misapplied the
Mackey test and thus erred in concluding that the Joint
Activity was covered by the nonstatutory exemption. ICTSI
also argues that conduct violating labor laws, particularly
violations of Section 8(e) of the NLRA prohibiting secondary
boycotts and related actions, cannot qualify for the
nonstatutory exemption because post-Mackey cases have
modified the test to exclude unfair labor practices and other
illegal conduct. Both arguments rely on ICTSI’s allegations
that some of the Joint Activity violated labor laws.10
ICTSI’s arguments focus on whether the second prong of
the Mackey test—does the alleged agreement concern a
mandatory subject of collective bargaining—precludes illegal
agreements or related conduct from being covered by the
nonstatutory exemption. ICTSI asserts that an illegal
agreement never qualifies as a “mandatory subject[] of
collective bargaining,” and thus any illegal conspiracy fails
prong two. See Phoenix Elec., 81 F.3d at 861. Alternatively,
ICTSI contends that the Supreme Court and our circuit have
modified the Mackey test by adding the requirement that the
alleged agreement conforms to the requirements of labor law.
10
See supra note 8.
20 ILWU V. ICTSI OREGON
3
A cursory glance at Supreme Court precedent would seem
to suggest ICTSI’s contention that an illegal agreement
always fails the Mackey test is correct. For instance, in 1975
the Supreme Court denied the nonstatutory exemption,
observing that “[t]here is no legislative history in the 1959
Congress suggesting that labor-law remedies for § 8(e)
violations were intended to be exclusive.” Connell, 421 U.S.
at 634. And the Supreme Court later read Connell as holding
that agreements running afoul of Section 8(e) of the NLRA
were “subject to the antitrust laws.” Kaiser Steel Corp. v.
Mullins, 455 U.S. 72, 85 (1982). The Court explained that
Connell decided whether the agreement in question violated
§ 8(e) because “[i]t was necessary to do so to determine
whether the agreement was immune from the antitrust laws.”
Id.
However, we extensively analyzed Connell post-Kaiser
and rejected the notion that every § 8(e) violation loses the
benefit of the nonstatutory exemption. Richards v. Neilsen
Freight Lines, 810 F.2d 898, 905–06 (9th Cir. 1987). In
Richards, a trucking company alleged that the Teamsters
union conspired with several rival trucking companies to
engage in boycott agreements in violation of § 8(e). Id.
Though the trucking companies were all formally rivals, the
defendant companies were also customers of the plaintiff
trucking company because the defendants would use the
plaintiff company for the final stages of certain local
deliveries. Id. at 900. The plaintiff alleged that the boycott
agreements were for the purpose of pressuring the plaintiff to
accept the Teamsters union. Id. at 905–06.
ILWU V. ICTSI OREGON 21
We concluded that “[e]ven if such conduct were a
violation of the labor law, it would bear such a close and
substantial economic relation to a union’s legitimate [ends]
that it falls well within the purpose and the coverage of the
exemption from antitrust liability.” Id. at 904. The Richards
court read Connell to hold that agreements violating § 8(e)
would fall outside the nonstatutory exemption only when the
alleged agreements “pose actual or potential anticompetitive
risks other than those related to a reduction in competitive
advantages based on differential wages or working
conditions.” Id. at 906.
The alleged agreements in Richards “may have had an
effect on [the plaintiff],” but such effect “apart from
competition related to wages and working conditions, was not
pervasive as with the agreement at issue in Connell.” Id.
Then-Judge Kennedy, writing for the court, concluded by
observing that “[i]t is not paradoxical that a labor law
violation may still be within the antitrust exemption, for the
violation will carry its own remedies under the labor laws.”
Id.
While acknowledging that agreements violating § 8(e)
could expose parties to antitrust liability, we concluded that
Connell stood for the proposition that antitrust liability would
attend such agreements only where there was some showing
of substantial anticompetitive effects outside of those
anticipated and protected by the nonstatutory exemption. Id.
at 905 (citing Connell, 421 U.S. at 625 (discussing how the
union’s goal in this case would have substantial
anticompetitive effects “that would not follow naturally from
the elimination of competition over wages and working
22 ILWU V. ICTSI OREGON
conditions”)).11 We conclude this logic also extends to actions
taken in support of such an agreement. See id. at 905–06
(discussing actions taken by the union to support the
agreement).
Here, the Joint Activity alleged to violate § 8(e) has the
purpose of gaining the reefer work at Terminal 6 for ILWU
by suppressing competition. ICTSI contends that the
conspiracy’s ultimate purpose is “to expand the ILWU/PMA
bargaining unit at the expense of third-party bargaining units”
so that ILWU gains a monopoly, supported by PMA, over
various types of West Coast port work.
Taking ICTSI’s allegations as true, it still alleges no
anticompetitive harm unrelated to wages and working
conditions. Even if the ends of the allegedly illegal Joint
Activity were achieved, the result would be that ICTSI
replaced IBEW reefer workers with ILWU reefer workers at
Terminal 6. The relevant market in which competition would
be reduced is the labor market—specifically, the ability of
other labor unions to compete against ILWU for this kind of
work. However, in the course of advocating for benefits for
11
Whether one views suppressing competition in the labor market to
benefit labor as a desirable policy depends on one's political preferences,
but is not at issue in the instant case. See generally Alex Bryson, Union
Wage Effects, IZA World of Labor 2014:35 (July 2014),
https://wol.iza.org/uploads/articles/35/pdfs/union-wage-effects.pdf
(discussing the benefits and costs of labor unions with respect to their
impact on the labor market); Ralph K. Winter, Jr., Collective Bargaining
and Competition: The Application of Antitrust Standards to Union
Activities, 73 Yale L.J. 14, 19 (1963). Congress has presumably exempted
certain anticompetitive actions from antitrust scrutiny because it has
determined that the social benefits of suppressing competition in the labor
market sometimes outweigh the costs, and we must respect its decision.
See, e.g., Brown, 518 U.S. at 242.
ILWU V. ICTSI OREGON 23
their members, labor unions may have to suppress
competition relating to wages and working conditions. See
Richards, 810 F.2d at 806 (discussing the impact union
activity had on competition in the labor market). Any harms
flowing from suppressing competition among labor unions in
the instant case would be “related to a reduction in
competitive advantages based on differential wages or
working conditions.” Id.
In fact, the situation in this case is very analogous to
Richards: ICTSI alleges that formal rivals, who are also
customers, have entered into illegal agreements with a union
which would allow the union to seize work at the facility
operated by ICTSI. Richards could be distinguished from this
case insofar as the work sought by ILWU is currently being
performed by another union, IBEW, instead of non-unionized
workers. But, the only anticompetitive harm that ICTSI
alleges is that ILWU would be able to capture anticompetitive
wages by suppressing competition, leading to higher prices
for consumers. The suppressed competition just happens to be
another labor union instead of individual workers. In both
cases competition amongst labor is being suppressed to
benefit a specific union. ICTSI alleges agreements that, even
if illegal and “carry[ing] [their] own remedies under the labor
laws,” id., are still “within the purpose and the coverage of
the exemption from antitrust liability.” Id. at 904.
“[I]n some cases a violation of the labor laws may involve
conduct whose consequences are so far-reaching that it falls
outside the exemption,” but that is not the case here. Id. at
906. For example, in Connell, a building trades union (“Local
100”) “supported its efforts to organize mechanical
subcontractors by picketing certain general contractors.”
421 U.S. at 618. If Local 100 succeeded, “the restriction on
24 ILWU V. ICTSI OREGON
subcontracting would eliminate competition . . . on subjects
unrelated to wages, hours, and working conditions [and]
could result in significant adverse effects on the market and
on consumers . . . unrelated to the union’s legitimate goals of
organizing workers and standardizing working conditions.”
Id. at 624. Here, ICTSI has failed sufficiently to allege that
the Joint Activity will lead to anticompetitive harms “that
would not follow naturally from the elimination of
competition over wages and working conditions.” Id. at 625.
ICTSI counters Richards by pointing out that illegal
conduct is not a mandatory subject of collective bargaining.
But, we have never explicitly or implicitly overruled
Richards, which held that agreements violating § 8(e) did not
automatically lose the benefit of the nonstatutory exemption.
For example, Phoenix Electric and Richards can be
reconciled by reading Richards as holding that illegal
agreements still satisfy prong two of the Mackey test if such
agreements concern mandatory subjects of collective
bargaining. Compare Phoenix Elec., 81 F.3d at 861, with
Richards, 810 F.2d at 905–06. As discussed above, Richards
also covers conduct in support of an illegal agreement. See
Richards, 810 F.2d at 905–06. This interpretation is
supported by our court’s emphasis in later cases on whether
or not the alleged conduct is “regulated by labor law” and
“anchored in the collective-bargaining process.” See, e.g.,
California ex rel. Harris v. Safeway, Inc., 651 F.3d 1118,
1131 (9th Cir. 2011) (en banc). And work assignments are a
mandatory subject of collective bargaining. Antelope Valley
Press, 311 N.L.R.B. 459, 460 (1993). Labor law, not antitrust
law, should generally govern work assignment disputes.
Illegal conduct relating to “mandatory subjects of
collective bargaining,” such as wages or conditions of
ILWU V. ICTSI OREGON 25
employment, does not remove the alleged agreements or
related conduct from the scope of the nonstatutory exemption
under the Mackey test. This includes violations of § 8(e).
4
ICTSI further contends that Richards is no longer good
law. ICTSI points to two cases in particular, Brown, 518 U.S.
231, and Safeway, 651 F.3d 1118, that purportedly overrule
Richards.
In Brown, the Supreme Court held that the nonstatutory
exemption covered an employer-only agreement among a
multi-employer bargaining unit. 518 U.S. at 238. Brown arose
out of failed collective bargaining negotiations between the
National Football League, a group of employers, and the NFL
Players Association, a labor union. Id. at 234–35. When the
parties bargained to impasse over the pay and working
conditions of young, rookie players on the various teams’
development squads, the League unilaterally imposed the
terms of its last, best offer on the players. Id. Hundreds of
players on the development squads brought a suit under
Section 1 of the Sherman Act. Id. at 235. At trial, the district
court held that the League could not avail itself of the
nonstatutory exemption. Id. The Court of Appeals for the
District of Columbia Circuit reversed in an opinion eventually
affirmed by the Supreme Court. Id. The Supreme Court
concluded that the nonstatutory exemption applied because
the alleged conduct grew out of a lawful collective bargaining
process, involved matters of mandatory bargaining, and
concerned only the parties to the collective bargaining
relationship. Id. at 250.
26 ILWU V. ICTSI OREGON
Brown contains numerous references tying the Supreme
Court’s holding to approval of the alleged conduct in labor
law cases.12 The Court began its analysis by “assum[ing] that
such conduct, as practiced in this case, is unobjectionable as
a matter of labor law and policy.” Id. at 238. More
importantly, the court specifically tied its conclusion to such
legality. Id. (“On that assumption [of legality], we conclude
that the exemption applies.”).
But Brown did not review the applicability of the
nonstatutory exemption generally. Rather, Brown dealt with
whether the exemption, traditionally applied to collective
bargaining agreements between employers and employees,
should extend to the context of employer-only agreements. Id.
at 238. In this respect, tying the holding of Brown to labor
law’s approval seems to make sense: employer-only collusion
logically presents a greater risk of cartel-generating activity
that harms the interests of labor than an agreement formed
with the input of both management and labor. And the Court
also recognized that the scope of the collective bargaining
exemption from antitrust scrutiny cannot be limited strictly to
terms to which both labor and management give consent: the
nonstatutory exemption must apply, for instance, to a multi-
employer bargaining group’s discussions about positions
taken both before and after impasse. Id. at 243–44.
12
When collective bargaining is undertaken in good faith, but labor
and management reach an impasse as to terms covering wages, working
conditions, and other mandatory terms of bargaining, the employer is
allowed to impose its last, best offer without committing an unfair labor
practice or violating the law. Brown, 518 U.S. at 238 (“Both the Board and
the courts have held that, after impasse, labor law permits employers
unilaterally to implement changes in pre-existing conditions, but only
insofar as the new terms meet carefully circumscribed conditions.”).
ILWU V. ICTSI OREGON 27
Though Brown’s holding does rely, in part, on the labor-
law legality of the conduct in question, the opinion also notes
that such conduct’s close relation to the collective bargaining
process distinguishes it from the class of behavior governed
by antitrust law. The Supreme Court noted that “labor laws
give the Board, not antitrust courts, primary responsibility for
policing the collective-bargaining process.” Brown, 518 U.S.
at 242. In expanding the nonstatutory exemption to some
employer-only agreements, the Supreme Court did not require
that only conduct blessed by the labor laws could receive the
exemption going forward. Nor did the court overrule
Richards, Phoenix Electric, Mackey, or related cases. But see
Eller v. National Football League Players Ass’n, 731 F.3d
752, 754–55 (8th Cir. 2013) (“[A] nearly unanimous Supreme
Court . . . overrul[ed] Mackey . . . .”).
Similarly, in Safeway our court applied Brown to
determine whether the nonstatutory exemption applied in the
context of a multi-employer bargaining association’s
unilateral action. 651 F.3d at 1128–32. In Safeway, a group of
employers decided to share and to redistribute certain
revenues in the event that a party to their agreement
experienced a strike or lockout. Id. at 1123. The en banc court
denied the nonstatutory exemption, noting that the employers’
agreement was not “approved or regulated by labor law.” Id.
at 1131 (emphasis added). The conduct in the instant
case—work assignments—is regulated by labor law. The
revenue sharing agreement in Safeway was not the type of
issue historically regulated by labor law. Id. at 1130. Finally,
we never held that conduct violating labor laws automatically
fell outside of the nonstatutory exemption.
28 ILWU V. ICTSI OREGON
5
But does the Mackey test justify application of the
nonstatutory exemption to the alleged Joint Activity?
First, the alleged conduct primarily affects the parties to
the agreement. ICTSI is a member of PMA and a party to the
CBA, and there are no allegations in ICTSI’s counterclaim
that the CBA purports to govern the conduct of nonparties.
See Phoenix Elec., 81 F.3d at 862 (finding it relevant to the
first prong of Mackey that an agreement “does not attempt to
impose its terms on any nonsignatory party”).
Second, the alleged anticompetitive agreement between
ILWU and PMA giving rise to the Joint Activity concerns a
mandatory subject of collective bargaining under Section 8(d)
of the NLRA. 29 U.S.C. § 158(d). Work assignments are a
mandatory subject of collective bargaining, though the scope
of the bargaining unit is not. Antelope Valley Press,
311 N.L.R.B. at 460. ICTSI admits in its pleadings that
ILWU and PMA have negotiated collective bargaining
agreements for many years “covering virtually all longshore
work in all West Coast ports.” Specifically, ICTSI alleges
that the CBA assigned reefer work within the bargaining unit
to ILWU, and that ILWU had performed this work at some
West Coast ports before that time. ICTSI alleges, therefore,
that the alleged agreements between ILWU and PMA
concerned work assignments within the bargaining unit of the
West Coast. See Maui Trucking, Inc. v. Operating Eng’rs
Local Union No. 3, 37 F.3d 436, 439 (9th Cir. 1994)
(suggesting that the “relevant work universe [is] coextensive
with the bargaining unit”).
ILWU V. ICTSI OREGON 29
Finally, the alleged Joint Activity was the result of a bona
fide, arm’s-length agreement. ICTSI alleges that there is at
least a factual question as to the third Mackey
requirement—the good faith requirement—because ILWU
and PMA would both benefit in the event that ILWU gains
jurisdiction over additional work. ICTSI argues that the
nonstatutory exemption presupposes an adversarial
relationship.
Phoenix Electric gives little direction on what the good
faith requirement entails, but the Eighth Circuit offers more
guidance in Mackey, 543 F.2d at 615–16. In first applying
what would become the Mackey test, the Eighth Circuit held
that the evidence of one-sided bargaining in which one party
dominated the other to impose unilaterally its own terms
could not qualify as bona fide bargaining. Id. at 615 (“[T]he
parties’ collective bargaining history reflected nothing which
could be legitimately characterized as bargaining.”). The
court noted an absence of any quid pro quo in the bargaining
process in Mackey, and the relative bargaining strengths of
the parties was also significant. Id. at 616. Presumably, this
is part of the analysis that we adopted in Phoenix Electric
when we endorsed the Mackey test. Phoenix Elec., 81 F.3d at
861.13
13
The Eighth Circuit concluded that the Supreme Court overruled
Mackey in Brown. Eller, 731 F.3d at 754–55. However, this decision does
not help ICTSI on the arm’s-length question. Instead, Brown makes it
easier for parties to argue their agreement is arm’s-length—before Brown
only union-employer agreements seemed to qualify for the nonstatutory
exemption in NFL litigation, but now employer-only agreements qualify
too (meaning employer-only agreements now qualify as arm’s-length or
such requirement no longer exists at all). Id.
30 ILWU V. ICTSI OREGON
Such conditions are absent from the allegations put
forward by ICTSI. Some degree of quid pro quo between
ILWU and PMA forms part of ICTSI’s allegations: ICTSI
notes ways in which the alleged agreements would benefit
both ILWU and PMA. And the lack of an overly adversarial
collective bargaining process should not, in itself, imperil the
nonstatutory exemption. The purpose of labor law in the
United States, after all, is to promote “sound and stable
industrial peace.” 29 U.S.C. § 171(a).
6
For all of the above reasons, the nonstatutory exemption
shields the alleged Joint Activity of ILWU and PMA from
antitrust scrutiny and ICTSI’s counterclaim was properly
dismissed.14
14
Because the nonstatutory exemption covers all the Joint Activity in
furtherance of the alleged conspiracy—including allegations that ILWU
“engaged in slowdowns, work stoppages, safety gimmicks” and similar
activities “to force ICTSI to assign the disputed work to the ILWU”—we
need not reach, and choose not to reach, the question of whether the
district court erred in applying the statutory exemption to shield certain
activity by ILWU from antitrust scrutiny. The wrongs dismissed under the
statutory exemption by the district court are shielded from antitrust
liability by the nonstatutory exemption.
We also need not, and do not, reach the question of whether the
district court erred by concluding that shared monopoly claims are not
actionable under § 2. The dismissed § 2 claim is also barred by the
nonstatutory exemption. See Brown, 518 U.S. at 235 (discussing “the
‘nonstatutory’ labor exemption from the antitrust laws” (emphasis
added)).
ILWU V. ICTSI OREGON 31
IV
The judgment of the district court is AFFIRMED.15
CLIFTON, Circuit Judge, concurring:
I concur entirely in the result and reasoning of the
disposition as to the merits of ICTSI’s appeal. I write
separately to express concern over the district court’s
decision to enter partial final judgment under Rule 54(b) on
ICTSI’s federal antitrust counterclaim. I agree with the
opinion’s admonition that, in circumstances like these, a
preferable approach would be for the district court to certify
its order for interlocutory appeal. Alternatively, the district
court in this case should have refused appellate review
altogether.
Most importantly, for purposes of Rule 54(b)
certification, it is not obvious why there was “no just reason
for delay” in entering partial final judgment on ICTSI’s
antitrust counterclaim. Fed. R. Civ. P. 54(b). Entering partial
final judgment instead promoted a disfavored piecemeal
appeal. See Curtiss-Wright Corp. v. General Electric Co.,
446 U.S. 1, 10 (1980). I accept the district court’s
determination, affirmed by our court’s opinion, that the
antitrust counterclaim raised discrete and independent issues
of law. Even so, the counterclaim was ultimately secondary
to the primary dispute at issue in this case: a jurisdictional
dispute between rival unions over reefer work assignments.
15
ICTSI’s motion for judicial notice is GRANTED. See Small v.
Avanti Health Systems, LLC, 661 F.3d 1180, 1186 (9th Cir. 2011).
32 ILWU V. ICTSI OREGON
Allowing the main action to proceed at the district court, even
if stayed pending the resolution of related NLRB
proceedings, may have resulted in resolution of the parties’
primary dispute, thereby obviating the need for an appeal
addressing ICTSI’s follow-on antitrust counterclaim. Under
these circumstances, I cannot say that the interests of “sound
judicial administration” were served by this appeal. Wood v.
GCC Bend, LLC, 422 F.3d 873, 882 (9th Cir. 2005).
We have treated the judgment as final, and that makes
sense at this point for reasons of efficiency and simplicity, but
I hope this is not a course that is repeated in the future.