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COMBS v. ASSOCIATED ELEC. COOP.

December 7, 1990

HARRISON COMBS, et al., Plaintiffs,
v.
ASSOCIATED ELECTRIC COOPERATIVE, INC., Defendants. ASSOCIATED ELECTRIC COOPERATIVE, INC., Plaintiffs, v. INTERNATIONAL UNION, UNITED MINE WORKERS OF AMERICA, et al., Defendants


Thomas A. Flannery, United States District Judge.


The opinion of the court was delivered by: FLANNERY

THOMAS A. FLANNERY, UNITED STATES DISTRICT JUDGE.

 This matter comes before the Court on the motion of defendant United Mine Workers of America ("UMWA") for summary judgment on Count II of the complaint of Associated Electric Cooperative, Inc. ("AECI"). The issue presented by this motion is whether UMWA is exempt from damages for potential antitrust violations arising from the collective bargaining agreement between UMWA and signatory employers, including AECI. The Court finds that UMWA should be exempted from antitrust damages and will grant UMWA's motion.

 I. Background

 AECI was a signatory to the 1978, 1981, and 1984 National Bituminous Coal Wage Agreements ("NBCWA") and is currently a signatory to the 1988 NBCWA. *fn1" The terms of the NBCWA require that signatory employers make payments to the UMWA Health and Retirement Funds based upon the amount of coal produced by each employer. Article XX(d)(1)(v) of the NBCWA ("the purchase-of-coal clause") also requires signatories to make payments to the Funds on purchased coal, unless royalties on that coal have previously been paid by the coal operators who produced the coal. *fn2"

 AECI owns and operates two power plants, known as the Thomas Hill and New Madrid plants. AECI became a party to the NBCWAs in January 1, 1980, when it assumed ownership and operation of coal mines adjacent to its Thomas Hill facility. Because these mines produce less than thirty percent of the coal required to operate the AECI power plants, AECI is forced to purchase a significant amount of coal from other coal producers.

 In 1983, the Trustees of the UMWA Funds commenced this litigation against AECI, alleging that AECI had failed to pay royalties on coal purchased for its New Madrid plant. On January 10, 1983, the Judicial Panel on Multidistrict Litigation consolidated fifteen cases, including this case, involving the purchase-of-coal clause of the NBCWA in the United States District Court for the Western District of Pennsylvania. In re Bituminous Coal Wage Agreements Litigation, 580 F. Supp. 670, 673 (W.D. Pa. 1984), vacated and remanded, 756 F.2d 284 (3d Cir.), cert. denied, 474 U.S. 863, 88 L. Ed. 2d 149, 106 S. Ct. 180 (1985).

 In the multidistrict litigation, AECI and several other employers moved for partial summary judgment on the ground that the purchase-of-coal clause was illegal under § 8(e) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(e). *fn3" 580 F. Supp. at 673-74. AECI also claimed that the clause violated § 1 of the Sherman Act, 15 U.S.C. § 1, *fn4" and sought injunctive relief and damages *fn5" under the federal antitrust laws. *fn6" UMWA responded that it was exempt from antitrust damages under the rule announced by the Third Circuit in Consolidated Express, Inc. v. New York Shipping Ass'n (Conex), 602 F.2d 494, 521 (3d Cir. 1979), vacated and remanded on other grounds, 448 U.S. 902, 65 L. Ed. 2d 1131, 100 S. Ct. 3040 (1980), on remand, 641 F.2d 90 (3d Cir. 1981).

 The District Court, per Judge Mansmann, granted the employers' motion for partial summary judgment based on the labor law issues, holding that the purchase-of-coal clause on its face violated § 8(e) of the NLRA. 580 F. Supp. at 681. Turning to the antitrust claims, the Court found that UMWA had failed to show that it was entitled to the Conex exemption from damages liability. The Court also held, however, that the finding of a § 8(e) violation does not establish a per se antitrust violation and that the available facts pertaining to the antitrust claims did not warrant summary judgment on behalf of the employers. Id. 580 F. Supp at 685-87.

 Prior to trial on the antitrust issues, the ruling of the District Court was certified for appeal pursuant to 28 U.S.C. § 1292(b). The Third Circuit disagreed with the findings of the District Court on the labor law issues, holding that the purchase-of-coal clause did not, on its face, violate § 8(e). 756 F.2d at 291. The Circuit left open the possibility that an "as applied" violation of § 8(e) might be found on remand. As for the antitrust claims, the Court declined to "meet those issues" because "the outcome of the individual cases may moot the antitrust claims." Id. at 293. The Circuit Court then vacated the judgments of the District Court and remanded for further proceedings. Id.

 Upon remand, this case was returned to the United States District Court for the District of Columbia for trial on the remaining issues. UMWA has once again moved for summary judgment on AECI's claim for antitrust damages (Count II of AECI's complaint) on the grounds that it is exempt from such damages under Conex. AECI opposes the motion, arguing that the Conex exemption is not available in the District of Columbia Circuit and that, even assuming Conex is applicable, UMWA has failed to make a satisfactory showing that it is entitled to that exemption. *fn7"

 II. The "nonstatutory" labor exemption

 Labor unions are statutorily exempted from the reach of the federal antitrust laws under §§ 6 and 20 of the Clayton Act, 15 U.S.C. § 17 and 29 U.S.C. § 52, and under the Norris-LaGuardia Act, 29 U.S.C. §§ 104, 105, and 113. Connell Constr. Co. v. Plumbers and Steamfitters Local Union No. 100, 421 U.S. 616, 621-22, 44 L. Ed. 2d 418, 95 S. Ct. 1830 (1975). These statutes declare that labor unions are not combinations or conspiracies in restraint of trade, and they exempt certain union activities, including secondary picketing and boycotts, from the operation of the antitrust laws. Id. (citation omitted). These statutory exemptions protect only the unilateral actions of the union, however; they do not exempt concerted actions or agreements between unions and nonlabor parties. Id. at 622. Because the basis of AECI's complaint under the antitrust laws is the collective bargaining agreement between UMWA and the signatory employers, UMWA is not entitled to, nor does it argue for, any of the statutory exemptions.

 The Supreme Court has also recognized a limited nonstatutory exemption to the federal antitrust laws in situations when the statutory exemptions are not available.

 Connell, 421 U.S. at 622 (citing cases); see also Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 688-90, 14 L. Ed. 2d 640, 85 S. Ct. 1596 (1965). This nonstatutory exemption is only available when the concerted union and nonlabor actions are in furtherance of legitimate union objectives and when the restraints on trade are merely incidental disadvantages of efforts to achieve those objectives. See Connell, 421 U.S. at 623 ("curtailment of competition based on efficiency is neither a goal of federal labor policy nor a necessary effect of the elimination of competition among workers"). "The nonstatutory exemption offers no . . . protection when a union and a nonlabor party agree to restrain competition in a business market." Id. at 622-23.

 Because Connell involved a restraint on trade that did not further a legitimate union goal, id. at 625-26, the Supreme Court had no occasion to define those labor practices that would qualify for the nonstatutory exemption. That task has been left primarily to the lower federal courts, and, although the District of Columbia Circuit has recognized the exemption set forth in Connell, it also has not had opportunity to further develop that exemption. See, e.g., Mullins v. Kaiser Steel Corp., 206 U.S. App. D.C. 334, 642 F.2d 1302, 1307 n. 5 (D.C. Cir. 1980), rev'd on other grounds, 455 U.S. 72, 70 L. Ed. 2d 833, 102 S. Ct. 851 (1982); International Longshoremen's Ass'n, AFL-CIO v. NLRB, 198 U.S. App. D.C. 157, 613 F.2d 890, 906 (D.C. Cir. 1979), aff'd, 447 U.S. 490, 65 L. Ed. 2d 289, 100 S. Ct. ...


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