July 28, 2017

Court of Appeals Finds West Coast Labor Agreement Exempt from Antitrust Laws

BY: Thomas Lenz, L. Brent Garrett

On July 24th, the Ninth Circuit Court of Appeals affirmed the district court’s dismissal of an antitrust claim against a labor union and a multi-employer collective bargaining association. In International Longshore and Warehouse Union et al. v. ICTSI Oregon, Inc. (9th Cir., July 24, 2017), 2017 WL 3122767, the Court of Appeals held that actions taken jointly by the International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) were exempted from federal antitrust laws

Background of Case

PMA is a multi-employer collective bargaining association representing many types of maritime employers who hire dockworkers and longshoremen. PMA and ILWU are parties to a collective bargaining agreement that covers the entire West Coast of the United States.

ICTSI Oregon, Inc. (ICTSI) operates a marine shipping facility (Terminal 6). PMA represents ICTSI in collective bargaining negotiations with the ILWU.

ILWU and PMA agreed that, with some exceptions, ILWU would perform all reefer work—the work of plugging, unplugging, and monitoring refrigerated shipping containers—for all PMA members. ILWU sought to perform the reefer work at Terminal 6, which historically had been governed by the International Brotherhood of Electrical Workers. ICTSI brought a proceeding before the National Labor Relations Board to resolve the dispute between the rival unions.

While that proceeding was pending, the joint committee governing ILWU and PMA’s collective bargaining agreement determined that ILWU should perform ICTSI’s reefer work. ILWU and PMA sued ICTSI in federal district court, seeking an order directing ICTSI to comply with the joint committee’s decision.

ICTSI filed a counterclaim to that suit. It alleged, among other things, that ILWU and PMA violated the Sherman Antitrust Act by agreeing to assign work to ILWU and by their actions taken to enforce their agreement. ICTSI alleged that they used the collective bargaining process to create an illegal monopoly over longshoreman work on the West Coast. ILWU’s workers got to perform all the longshoreman work for PMA-member employers, and PMA collected fees for each hour worked by ILWU longshoremen.

The district court dismissed the antitrust claim. ICTSI appealed.

Court of Appeals’ Analysis

First, the Ninth Circuit Court of Appeals held that the Noerr-Pennington doctrine, which provides antitrust protection for parties that petition the government or judiciary for a redress of grievances, applied to the lawsuit filed by PMA and ILWU.

Next, the court considered whether the “nonstatutory exemption” shielded the collective bargaining agreement between ILWU and PMA and actions related to their collective bargaining from antitrust liability. The court recognized a three-part test for determining whether the nonstatutory exemption shields an agreement from antitrust liability: (1) the restraint primarily affects the parties to the agreement and no one else; (2) the agreement concerns wages, hours, or employment conditions that are mandatory subjects of collective bargaining; and (3) the agreement is produced from bona fide, arm’s-length collective bargaining.

The court applied the three-part test to the case at hand. As to the first part, the alleged conduct primarily affected the parties to the agreement. ICTSI is a member of PMA and a party to the collecting bargaining agreement. ICTSI’s counterclaim did not allege that the agreement purported to govern conduct of nonparties.

Second, the alleged anticompetitive agreement between ILWU and PMA concerns work assignments, which are a mandatory subject of collective bargaining. The court held that even assuming the agreement was illegal, as ICTSI had alleged, illegal conduct relating to mandatory subjects of collective bargaining did not remove an agreement or related conduct from the scope of the nonstatutory exemption.

Third, the court held that the collective bargaining agreement between ILWU and PMA was the result of a bona fide, arm’s-length agreement. Neither party had dominated the other and there was a quid pro quo in the bargaining process.

The court concluded that the nonstatutory exemption shielded the alleged joint activity of ILWU and PMA from antitrust scrutiny. It affirmed the district court’s dismissal of the antitrust claim.

Comment

This ruling shows that antitrust exemptions for collective bargaining agreements can be very strong—strong enough to exempt an agreement covering dockworkers and longshoremen throughout the entire West Coast.

Comments

Comments are closed.

Post Comment

Author(s)

Thomas Lenz

Thomas Lenz

Partner

(626) 583-8600

tlenz@aalrr.com

Thomas Lenz is a partner handling all aspects of labor and employment law issues from the firm’s Pasadena and Cerritos offices. He heads the firm’s traditional labor and National Labor Relations Board practices. He works with employers in all major industries across California and the West. Mr. Lenz currently serves on the Executive Committee of the Labor and Employment Section for the State Bar of California. He also serves as a Lecturer in Law, teaching at the USC Gould School of Law.

full bio

L. Brent Garrett

L. Brent Garrett

Partner

(562) 653-3200

bgarrett@aalrr.com

Brent Garrett is a partner in the firm's Cerritos and Irvine offices and is a member of the firm’s Private Labor and Employment Group. He exclusively represents management in labor and employment matters. He is also a frequent contributor to the Firm’s Labor Relations Blog, providing analysis and commentary about new developments in the area of traditional labor law.

full bio

Categories

Tags