On July 24, 2017, the US Court of Appeals for the Ninth Circuit affirmed the dismissal of an antitrust counterclaim brought by ICTSI Oregon, Inc. (ICTSI), the operator of a marine shipping facility, against the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). ILWU is a labor union that represents many ICTSI employees, including longshoremen and mechanics. PMA is a multi-employer collective bargaining association covering the West Coast of the United States, which represents employers, including ICTSI, in negotiations with labor unions.
The opinion elucidates the current law surrounding the scope of Noerr-Pennington immunity and the implied labor exemption to antitrust liability.
- ICTSI’s antitrust counterclaim arose out of a labor dispute concerning ILWU’s collective bargaining agreement (CBA) with PMA, which required that all “reefer work” (i.e., plugging, unplugging and monitoring refrigerated shipping containers) performed by PMA members must be assigned to ILWU workers. When ICTSI instead assigned its reefer work to a rival union, the collective bargaining agreement administrator, the Joint Coast Labor Relations Committee, notified ICTSI that it was in violation of the CBA and faced monetary fines and expulsion from the collective bargaining association.
- ICTSI initiated a proceeding before the National Labor Relations Board (NLRB) to resolve the dispute. The NLRB ruled that the rival union workers were entitled to the reefer work. While the NLRB proceedings were pending, ILWU and PMA filed suits in the US District Court for the District of Oregon seeking an injunction ordering ICTSI to comply with the Joint Committee decision and assign the work to ILWU.
- ICTSI filed counterclaims alleging that ILWU and PMA violated Sections 1 and 2 of the Sherman Act in their agreement to allocate the reefer work to ILWU. ICTSI alleged that ILWU and PMA used the collective bargaining process to establish a monopoly over longshoremen work on the West Coast, and committed various anticompetitive acts to further the monopolization.
- While the district court stayed most of the claims pending resolution of various labor disputes before the NLRB, it dismissed ICTSI’s antitrust counterclaims with prejudice, based on the Noerr-Pennington doctrine, and the nonstatutory labor exemption to the Sherman Act. ICTSI appealed to the 9th Circuit, which affirmed.
- The 9th Circuit explained that the Noerr-Pennington doctrine immunized ILWU and PMA’s allegedly anticompetitive conduct, as the immunity covers parties who “petition the government for a redress of grievances”–a protection that extends to judicial proceedings. While the court agreed that the immunity does not extend to “sham lawsuits,” it held that ICTSI had failed to meet its burden of showing that the suits were not legally viable.
- The nonstatutory, or implied, labor exemption protects collective bargaining agreements and actions relating to the agreements from antitrust liability. The court utilized the three-part Mackey test to find that the exemption applied, finding that (1) the restraint primarily affected the parties to the agreement and no one else; (2) the agreement concerned wages, hours or conditions of employment that are mandatory subjects of collective bargaining; and (3) the agreement was produced from bona fide, arm’s-length collective bargaining.
- ICTSI contended that the contested agreement between ILWU and PMA violated labor law, specifically § 8(e) of the NLRA prohibiting secondary boycotts, and argued that any activity that violates labor laws cannot qualify for the implied labor exemption. The court’s opinion clarified that agreements violating § 8(e) can only expose parties to antitrust liability upon “some showing of anticompetitive effects outside of those anticipated and protected by the nonstatutory exemption.” Because ICTSI alleged competitive harm relating only to wages and working conditions, the type of competitive harm anticipated by the exemption, the 9th Circuit found the ILWU and PMA were immune from antitrust liability.
WHAT THIS MEANS
- While the intersection of antitrust and labor law remains complex, this ruling provides some bright-line rules to practitioners. It supports unions and collective bargaining associations asserting Sherman Act immunity under the nonstatutory labor exemption–even where their conduct may independently violate the labor law, as long as the anticompetitive effects of the labor law violations are those anticipated by the exemption (i.e., conduct relating to wages and working conditions).
- The bar remains high for claimants seeking to overcome a Noerr-Pennington defense through the sham lawsuit exemption, absent a series of repetitive or baseless claims.
Noah Feldman-Greene, McDermott summer associate, also contributed to this Antitrust Alert post.