Free Excerpt: California State Antitrust and Unfair Competition Law-Exemptions, Immunities, and Other Defenses to Antitrust Liability; Labor Exemption

California State Antitrust and Unfair Competition Law

Copyright 2009, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

CHAPTER 13 EXEMPTIONS, IMMUNITIES, AND OTHER DEFENSES TO ANTITRUST LIABILITY

1-13 CA Antitrust and Unfair Competition Law § 13.01

AUTHOR: By: Patrick Clayton, Craig Corbitt, John Cove, Don T. Hibner, Jr., M. Brian McMahon, Marc Marmaro, Stuart C. Plunkett

** See complete Table of Contents at the foot of this document

§ 13.01 Labor Exemption

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Under California Business and Professions Code section 16703, ''labor, whether skilled or unskilled, is not a commodity'' for Cartwright Act purposes and is therefore not subject to the Act. A similar statutory exemption applies under federal antitrust law.n1 The Cartwright Act labor exemption is applied broadly to activities of labor organizations directed to the conditions of employment. The courts recognize that the exemption applies ''where the object of the labor combination is reasonably related to wages, hours, or conditions of employment.''n2 The exemption may be available even when the ''conventional employer-employee relationship'' does not exist, if the challenged conduct bears a sufficient relationship to working conditions.n3 This exemption and other issues relating to antitrust and unfair competition in the labor context are discussed more fully in Chapter 11.

If a legitimate labor purpose sufficient to invoke the exemption is established, the fact that the workers involved are not formally organized in a union does not nullify the exemption.n4 The exemption covers collective bargaining activity as well as ''collective efforts as a precursor or adjunct to such bargaining.''n5

The Cartwright Act labor exemption does not apply if the primary purpose of the activity in question is a restraint of trade rather than a recognized labor objective, or if the means used are not reasonably related to a proper objective.n6 For example, in Overland Publishing Co. v. H.S. Crocker Co.,n7 the California Supreme Court held that the plaintiff stated a Cartwright Act cause of action by alleging that a union had agreed with a trade association that the members of the union would not work for nonmember competitors of the association's members. Similarly, in Alfred M. Lewis, Inc. v. Warehousemen, Teamsters, Chauffeurs and Helpers Local Union No. 542,n8 an agreement between a union and an employer's association that excluded a competitor from membership in a multi-employer bargaining unit and required the union to demand a prohibitively high wage scale from the excluded competitor, was held to be subject to the Cartwright Act.

Although human labor is not a ''commodity'' under the Cartwright Act, services ''consisting in the main of human labor'' are subject to the Act.n9 For example, in Marin County Board of Realtors, Inc. v. Palsson,n10 a real estate salesman brought a Cartwright Act action against a local board of realtors that denied him membership because he was not primarily employed in real estate. The California Supreme Court rejected the argument that the Cartwright Act does not apply to ''services,'' and adopted a functional approach to the application of Section 16703, holding that the ''relevant question, in every case, is whether the practice in question is meant to further the interest of tradesmen as employees in a collective bargaining context, or whether it is designed to advance their interest as entrepreneurs.''n11

FOOTNOTES:

(n1)Footnote 1. Section 6 of the Clayton Act, 15 U.S.C. § 17, provides as follows:

The labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof, nor shall such organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.

Federal law also recognizes a ''non-statutory'' labor exemption applicable to some activities surrounding agreements between labor and non-labor organizations. See generally  Brown v. Pro Football, Inc., 518 U.S. 231 (1996) ; Connell Constr. Co. v. Plumbers & Steamfitters Local No. 100, 421 U.S. 616, 635 (1975) .

(n2)Footnote 2.  O'Shea v. Tile Layers Union, Local 19, 155 Cal. App. 2d 373, 376-77 (1957); see  Messner v. Journeymen Barbers, Hairdressers & Cosmetologists, Int'l Union, Local 256, 53 Cal. 2d 873, 886 (1960) (''valid labor objective''); Los Angeles Pie Bakers Ass'n v. Bakery Drivers, Local No. 276, 122 Cal. App. 2d 237, 243, 264 (1953) (''some reasonable relation to working conditions and the right and purposes of collective bargaining'');  Schweizer v. Local Joint Executive Bd., 121 Cal. App. 2d 45, 53 (1953) (''reasonably related to employment and collective bargaining'') (''if the primary purpose of the agreement or combination is to see that union members shall not be required to violate picket lines, where reasonably relevant to the purposes of collective bargaining, the agreement is not unlawful''); but see Kold Kist, Inc. v. Amalgamated Meat Cutters & Butchers Workmen Local No. 421, 99 Cal. App. 2d 191, 198, 221 (1950) (''no true relation between the stated objective and the means proposed to be used to accomplish it'').

(n3)Footnote 3.  Los Angeles Pie Bakers Ass'n, 122 Cal. App. 2d at 239 (labor agreement providing for compensation of non-employee drivers within labor exemption). (labor agreement providing for compensation of non-employee drivers within labor exemption).

(n4)Footnote 4.    California Dental Ass'n v. California Dental Hygienist's Ass'n, 222 Cal. App. 3d 49, 69 (1990) (finding that dental hygienists' association was furthering the interest of tradesmen as employees in a collective bargaining context and thus entitled to the protection of Section 16703).

(n5)Footnote 5. Id. at 69. .

(n6)Footnote 6.  Messner, 51 Cal. 2d at 886 (''a labor union, acting alone, violates the Cartwright Act only when its primary purpose is to accomplish a restraint of trade, not when its purpose is to obtain a valid labor objective'') (citations omitted);  O'Shea, 155 Cal. App. 2d 373 ;  Alpha Beta Foods Mkts., Inc. v. Amalgamated Meat Cutters & Butcher Workmen, Local No. 421, 147 Cal. App. 2d 343, 345-46 (1956) ;  Kold Kist, Inc., 99 Cal. App. 2d at 199 (primary objective of union's attempt to limit sale of meat products to hours during which union members worked found to be to restraint of trade);  Overland Publ'g Co. v. H.S. Crocker Co.,193 Cal. 109, 118 (1924) (combination between union and trade association to fix prices not exempt).

(n7)Footnote 7.  Overland Publ'g Co., 193 Cal. at 118..

(n8)Footnote 8.  Alfred M. Lewis, Inc. v. Warehousemen, Teamsters, Chauffeurs and Helpers Local Union No. 542, 163 Cal. App. 2d 771, 782 (1958).

(n9)Footnote 9.  Messner, 53 Cal. 2d at 886. In  Garner v. Journey Barbers', Hairdressers', Cosmetologists' & Proprietors' Int'l Union, Local No. 573, 223 Cal. App. 2d 101, 107 (1963) , a case decided under the Unfair Practices Act, the California Court of Appeal suggested the Cartwright Act labor exemption would not apply in a case in which the owner of a non-union barber shop made a loss leader claim based on a union's distribution of discount coupons to his customers. The court held that ''the purchase and sale of a haircut from a proprietor barber ... clearly amounts to a 'service or output of a service trade,' '' and thus qualifies as an ''article or product'' under the Unfair Practices Act

(n10)Footnote 10.  Marin County Bd. of Realtors, Inc. v. Palsson, 16 Cal. 3d 920 (1976).

(n11)Footnote 11.  Id. at 927 (citations omitted); see also   Messner, 53 Cal. 2d 873 ;  People v. Bldg. Maint. Contractors' Ass'n, 41 Cal. 2d 719 (1953) (injunction granted against price-fixing by building maintenance contractors).

** TABLE OF CONTENTS--California State Antitrust and Unfair Competition Law
Copyright © 2009 by Matthew Bender & Company, Inc., a member of the LexisNexis Group. All Rights Reserved.

California State Antitrust and Unfair Competition Law

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