United States District Court, D. Connecticut
CONNECTICUT IRONWORKERS EMPLOYERS' ASSOCIATION, et al., Plaintiffs,
NEW ENGLAND REGIONAL COUNCIL OF CARPENTERS, Defendant.
RULING AND ORDER
R. Underhill United States District Judge
case involves a “turf battle” between two sets of
construction organizations. The defendant, New England
Regional Council of Carpenters (the
“Carpenters”), has entered into collective
bargaining agreements (“CBAs”) with non-party
construction companies and construction managers
(collectively, the “employers”). The agreements
contain restrictive subcontracting clauses (sometimes known
as “hot cargo” clauses, but which I call the
“CBA clauses”) that prohibit signatories from
subcontracting work to any employer that has not acceded to a
Carpenters' CBA. The plaintiffs-construction trade
unions,  contractors,  and trade
associations (collectively, the
“Ironworkers”)-allege that the Carpenters have used
the CBA clauses to expand the scope of their work by
preventing the Ironworkers from bidding on and performing
work that traditionally was assigned to the Ironworkers.
According to the complaint, that conduct constitutes
anticompetitive behavior, in violation of sections 1 and 2 of
the Sherman Act, 15 U.S.C. §§ 1 & 2, and unfair
labor practices, in violation of 29 U.S.C. § 1987.
previously granted summary judgment for the Carpenters,
see Conn. Ironworkers Emp'rs Ass'n v. New Eng.
Reg'l Council of Carpenters, 157 F.Supp.3d 173, 175
(D. Conn. 2016) (“Ironworkers I”), after
I concluded that the Carpenters' conduct was shielded
from antitrust scrutiny by both the non-statutory exemption
to the antitrust laws and the construction industry proviso
contained in Section 8(e) of the National Labor Relations Act
(“NLRA”), 29 U.S.C. § 158(e). On appeal by
the Ironworkers, the Second Circuit agreed that the
Carpenters' actions fell within the construction industry
proviso, and affirmed with respect to the unfair labor
practices claim. See Conn. Ironworkers Emp'rs
Ass'n v. New Eng. Reg'l Council of Carpenters,
869 F.3d 92, 96-97 (2d Cir. 2017) (“Ironworkers
II”). The Court concluded, however, that
“there are factual disputes that preclude a decision on
whether the conduct falls within the non-statutory exemption,
” and reversed with respect to the Ironworkers'
Sherman Act claim. Id. The Court remanded “for
further proceedings consistent with this opinion, including
for such additional discovery as will permit the District
Court to be informed of the relevant history and permit the
parties to move for summary judgment or, if necessary, to
proceed to trial.” Id. at 97.
the remand, and before allowing additional discovery, I
scheduled a new argument on the undecided issue raised by the
Carpenters' previously-briefed motion for summary
judgment. After examining the parties' submissions, I
conclude that the Ironworkers have failed to provide
evidentiary support for the actual adverse effect on
competition required to state a prima facie case for
violation of the Sherman Act under the rule of reason.
Therefore, I again grant the Carpenters' motion for
Standard of Review
judgment is appropriate when the record demonstrates that
“there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). When ruling on a summary
judgment motion, the court must “view the evidence in
the light most favorable to the non-moving party and draw all
reasonable inferences in its favor.” Sologub v.
City of New York, 202 F.3d 175, 178 (2d Cir. 2000);
Aldrich v. Randolph Ctrl. Sch. Dist., 963 F.2d 520,
523 (2d Cir. 1992) (court is required to “resolve all
ambiguities and draw all inferences in favor of the nonmoving
party”). “The burden of showing that no genuine
factual dispute exists rests upon the moving party.”
Carlton v. Mystic Transp., 202 F.3d 129, 133 (2d
Cir. 2000). When a motion for summary judgment is properly
supported by documentary and testimonial evidence, however,
the nonmoving party may not rest upon the mere allegations or
denials of the pleadings, but must present sufficient
evidence supporting its position “to require a jury or
judge to resolve the parties' differing versions of the
truth at trial.” Anderson v. Liberty Lobby,
477 U.S. 242, 249 (1986); Colon v. Coughlin, 58 F.3d
865, 872 (2d Cir. 1995).
trial court's function at this stage is to identify
issues to be tried, not decide them, ” Graham v.
Long Island R.R. Co., 230 F.3d 34, 38 (2d Cir. 2000),
and so “[o]nly when no reasonable trier of fact could
find in favor of the non-moving party should summary judgment
be granted.” White v. ABCO Eng'g Corp.,
221 F.3d 293, 300 (2d Cir. 2000). Summary judgment therefore
is improper “[w]hen reasonable persons, applying the
proper legal standards, could differ . . . on the basis of
the evidence presented.” Sologub, 202 F.3d at
the mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported
motion for summary judgment; the requirement is that there be
no genuine issue of material fact. . . . Only
disputes over facts that might affect the outcome of the suit
under the governing law will properly preclude the entry of
Anderson, 477 U.S. at 247-48.
complete failure of proof concerning an essential element of
the nonmoving party's case necessarily renders all other
facts immaterial, ” and in such circumstances, there is
“no genuine issue as to any material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986); accord Goenaga v. March of Dimes Birth Defects
Found., 51 F.3d 14, 18 (2d Cir. 1995) (movant's
burden satisfied if it can point to an absence of evidence to
support an essential element of nonmoving party's claim).
To present a “genuine” issue of material fact and
avoid summary judgment, the record must contain contradictory
evidence “such that a reasonable jury could return a
verdict for the non-moving party.” Anderson,
477 U.S. at 248.
the context of antitrust cases, ” the Second Circuit
has noted that “summary judgment is particularly
favored because of the concern that protracted litigation
will chill pro-competitive market forces.” PepsiCo
v. Coca-Cola Co., 315 F.3d 101, 104 (2d Cir. 2002) (per
curiam). Thus, “[a]lthough all reasonable inferences
will be drawn in favor of the non-movant, those inferences
‘must be reasonable in light of competing inferences of
acceptable conduct.'” Id. at 105 (quoting
Top Mkts. v. Quality Mkts., 142 F.3d 90, 95 (2d Cir.
Ironworkers and the Carpenters are both construction
organizations that operate throughout New England. The
Carpenters have entered into CBAs with many construction
companies and construction managers in the region that
contain restrictive subcontracting clauses. Those
clauses-“colloquially called ‘hot cargo'
clauses”-“bar signatories from subcontracting
work to any employer that is not also a signatory to a
Carpenters' CBA.” See Ironworkers II, 869
F.3d at 97. The Ironworkers allege that the Carpenters have
used the CBA clauses anticompetitively “to prevent the
Ironworkers from performing the relevant work, ”
thereby “secur[ing] work in the New England area that
allegedly belonged to the Ironworkers.” See
Id. at 97-98. They assert that the Carpenters'
conduct constitutes anticompetitive behavior in violation of
sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1
Carpenters moved for summary judgment in May 2014, Doc. No.
85, arguing that their actions were “shield[ed] . . .
from antitrust scrutiny” by “the non-statutory
labor exemption and the ‘construction industry
proviso' provided in Section 8(e)” of the NLRA.
See Ironworkers I, 157 F.Supp.3d at 175. I granted
the Carpenters' motion. In a ruling issued on January 20,
2016, I held that the Carpenters had “established the
requisite elements to be afforded the protection of the
construction industry proviso” and had also shown that
“the subcontracting provisions at issue, ” as
“lawful provisions of a valid CBA, . . . [were]
protected by the non-statutory labor exemption.”
Id. at 187. Therefore, I concluded, “the
Carpenters [were] not subject to antitrust scrutiny for their
attempts to enforce the subcontracting agreements.”
Id. at 188.
Ironworkers appealed and the Second Circuit reversed in part.
Although the Court agreed that “the construction
industry proviso applies to the disputed subcontracting
practices, ” it decided that “disputes of
material fact prevent [it] from deciding . . . whether the
non-statutory exemption applie[d].” Ironworkers
II, 869 F.3d at 104. The Court referred to the standard
for applying the non-statutory exemption set forth in
Local 210, Laborers' International Union of
North America v. Labor Relations Division, Associated
General Contractors of America, New York State
Chapter, 844 F.2d 69 (2d Cir. 1988) (“Local
First, the agreement at issue must further goals that are
protected by national labor law and that are within the scope
of traditionally mandatory subjects of collective bargaining.
Second, the agreement must not impose a direct restraint on
the business market [that] has substantial anticompetitive
effects, both actual and potential, that would not follow
naturally from the elimination of competition over wages and
working conditions that results from collective bargaining
Id. at 79-80 (citations, internal quotation marks,
and alterations omitted).
respect of the first prong of the Local 210 test, I
had relied on Local 210 and a Supreme Court decision
on which it relied, Fibreboard Paper Prod. Corp. v.
NLRB, 379 U.S. 203 (1964)
(“Fibreboard”), for the proposition that
most “subcontracting clauses are within the
scope of the mandatory subjects of collective
bargaining.” See Ironworkers II, 869 F.3d at
107. Quoting Justice Stewart's concurrence in
Fibreboard, I concluded that “the
‘substitution of one group of workers for another to
perform the same task in the same location under the ultimate
control of the same employer' is a mandatory subject of
collective bargaining.” Ironworkers I, 157
F.Supp.3d at 184 (quoting Fibreboard, 379 U.S. at
224 (Stewart, J., concurring)) (internal brackets omitted).
Because “each subcontracting agreement . . . was a part
of an existing CBA, ” and the Ironworkers failed to
show that “the type of subcontracting agreement at
issue [was] anything other than a lawful subject of a CBA,
” I held that the CBA clauses were protected by the
non-statutory exemption. Id. at 92 (emphasis
Second Circuit deemed my reliance on Local 210 and
Fibreboard “misplaced.” Ironworkers
II, 869 F.3d at 107. Both decisions, the Court
determined, were “premised on the fact that the
particular subcontracting clauses . . . were designed to
‘preserve work traditionally performed by a
union for a particular employer.'” Id.
(quoting Local 210, 844 F.2d at 73) (emphasis in
Ironworkers II); see also Id. (“[T]he
‘contracting out' of the work previously
performed by members of an existing bargaining unit is a
subject about which the National Labor Relations Act requires
employers and the representative of their employees to
bargain collectively.”) (quoting Fibreboard,
379 U.S. at 209 (emphasis in Ironworkers II). Those
precedents stood only “for the proposition that work
preservation-not restrictive subcontracting
generally-is a legitimate labor purpose and a mandatory
subject of collective bargaining.” Id. With
respect to the present case, the Second Circuit concluded
that “the record [was] insufficient to determine
whether or not the subcontracting clauses were in fact
being used to preserve work . . . or whether [they] were used
for work expansion.” Id. at 108.
Because the latter “purpose . . . would not fall within
the scope of traditionally mandatory subjects of collective
bargaining, ” the Court held that I “erred in
finding, as a matter of law, that the disputed subcontracting
practices were entitled to the protection of the
‘non-statutory exemption.'” Id.
Second Circuit remanded “for further proceedings
consistent with [its] opinion, including for such additional
discovery as will permit the District Court to be informed of
the relevant history and permit the parties to move for
summary judgment or, if necessary, to proceed to
trial.” Id. at 109. On remand, prior to
reopening discovery, I elected to address the undecided
alternative ground raised by the Carpenters'
previously-briefed motion for summary judgment. This ruling
addresses the unresolved issues raised by that motion.
the Second Circuit's determination that the CBA clauses
are not entitled to the non-statutory exemption, the
Carpenters' motion for summary judgment presents two
further matters for decision. First, what is the proper
standard for analysis of the Ironworkers' claims? The
Ironworkers insist that the CBA clauses constitute
“group boycott[s]” that should be deemed
“per se violations of the antitrust
laws.” Mem. Opp'n Mot. Summ. J., Doc. No. 100, at
40. The Carpenters, conversely, argue that the CBA clauses
are “exclusive dealing requirements” that should
be “analyzed under the rule of reason.” Mem.
Supp. Mot. Summ. J., Doc. No. 86, at 32- 33. I agree that the
CBA clauses-which at worst substitute one group of unionized
workers for another-are not “manifestly
anticompetitive.” See Bus. Elecs. Corp. v. Sharp.
Elecs. Corp., 485 U.S. 717, 723 (1988). Accordingly,
per se condemnation is inappropriate, and I analyze
the clauses under the rule of reason.
do the CBA clauses function as “unreasonable”
restraints under the rule of reason? The multi-part,
burden-shifting rule of reason requires that the
“plaintiff bear the initial burden of showing that
the challenged action has had an actual adverse
effect on competition as a whole in the relevant
market.” Capital Imaging Assocs., P.C. v. Mohawk
Valley Med. Assocs., 996 F.2d 537, 543 (2d Cir. 1993)
(“Capital Imaging”). Here, I conclude
that the Ironworkers have failed to present evidence
sufficient to show that the CBA clauses are anticompetitive
under the rule of reason. As a result, the Ironworkers cannot
state a prima facie case for violation of the Sherman Act,
and I grant the Carpenters' motion for summary judgment.
Should the CBA clauses be analyzed under the per se rule
or the rule of reason?
arrangements alleged to violate the antitrust laws are
analyzed under the so-called rule of reason, a multi-part
test through which the factfinder “weighs all of the
circumstances of a case in deciding whether a restrictive
practice should be prohibited as imposing an unreasonable
restraint on competition.” See Bus. Elecs.
Corp., 485 U.S. at 723. A few arrangements, however,
such as “group boycotts, ” are considered
“unlawful per se.” FTC v. Ind.
Fed'n of Dentists, 476 U.S. 447, 458 (1986). In
order to avoid application of the rule of reason- which
entails a “burdensome” and “demanding
calculus, ” Am. Steel Erectors v. Local Union No.
7, Int'l Ass'n of Bridge, Structural, Ornamental
& Reinforcing Iron Workers, 815 F.3d 43, 61, 67 (1st
Cir. 2016) (“ASE II”)-the Ironworkers
attempt to obtain the benefit of the per se rule by
“forcing the [CBA clauses] into the ‘boycott'
pigeonhole.” See Ind. Fed'n of Dentists,
476 U.S. at 458. The Carpenters respond that the CBA clauses
are not a “group boycott, ” but rather akin to
“exclusive dealing requirements” that should be
“analyzed under the rule of reason.” Mem. Supp.
Mot. Summ. J., Doc. No. 86, at 32-33. I agree with the
Are the CBA clauses a proscribed “group
courts often list so-called “‘[g]roup
boycotts' . . . among the classes of economic activity
that merit per se invalidation” under the
antitrust laws, it is “far from certain” what
conduct “fall[s] within the forbidden category.”
Nw. Wholesale Stationers v. Pac. Stationery &
Printing Co., 472 U.S. 284, 294 (1985); see also
Spectators' Commc'n Network v. Colonial Country
Club, 253 F.3d 215, 223 (5th Cir. 2001) (observing that
“the distinction between boycotts that are per
se illegal and those judged by the rule of reason is
often a vexing one”). Broad dicta in older cases
notwithstanding, “per se condemnation is not
visited on every arrangement that might, as a matter of
language, be called a group boycott or concerted refusal to
deal.” U.S. Healthcare v. Healthsource, Inc.,
986 F.2d 589, 593 (1st Cir. 1993). Instead, the Supreme Court
has “limit[ed] the per se rule in the boycott
context to cases involving horizontal agreements among direct
competitors.” NYNEX Corp. v. Discon, Inc., 525
U.S. 128, 135 (1998); cf. Bogan v. Hodgkins, 166
F.3d 509, 515 (2d Cir. 1999) (stating that the “classic
model of a group boycott” is “a concerted attempt
by a group of competitors at one level to protect themselves
from competition from non-group members who seek to compete
at that level”) (quoting Smith v. Pro
Football, 593 F.2d 1173, 1178 (D.C. Cir. 1978))
(internal quotation marks omitted). Thus, for the Ironworkers
to prevail on their boycott claim under the per se
rule, “a horizontal agreement is a prerequisite.”
PepsiCo, 315 F.3d at 110.
Carpenters argue that this case “obviously [does] not
present” a group boycott under recent precedent,
see Ind. Fed'n of Dentists, 476 U.S. at 458,
because the challenged agreements were made “between
parties at different levels of the market structure.”
Mem. Supp. Mot. Summ. J., Doc. No. 86, at 32. The Carpenters
and the employers “did not compete” with one
another; rather, the Carpenters “w[ere] an upstream
supplier” of labor for the employers. See MacDermid
Printing Sols. v. Cortron Corp., 833 F.3d 172, 185 (2d
Cir. 2016). Thus, the Carpenters argue, the ...