Cal. ex rel. Harris

Cal. ex rel. Harris

Opinion

 [*1122]  GOULD, Circuit Judge:

We must decide whether an agreement among competitors to share revenues during the term of a labor dispute is exempt from the antitrust laws under the non-statutory labor exemption, and if not, whether the agreement should be condemned as a per se violation of the antitrust laws or on a truncated "quick look," or whether more detailed scrutiny is required. We conclude that the agreement is not immune from the antitrust laws, but that summary condemnation, whether as a per se violation or on a "quick look," is improper. We affirm the district court.

I. Factual and Procedural History

In the fall of 2003, the collective-bargaining agreement between several local chapters of the United Food and  [**4] Commercial  [*1123]  Workers ("UFCW") and three large supermarket chains operating in Southern California (Albertson's, Ralphs, and Vons, a subsidiary of Safeway, Inc.) was set to expire. Another grocery chain, Food 4 Less,² had a separate contract with UFCW that was set to expire several months later, in February 2004. Before the contracts expired and with the consent of the union, Albertson's, Ralphs, and Vons formed a multi-employer bargaining unit in the summer of 2003 for negotiation of a successor labor contract.

Albertson's, Ralphs, Vons, and Food 4 Less ("Defendants" or "grocers") entered into a Mutual Strike Assistance Agreement³ ("MSAA") in September 2003, in anticipation of the potential use of "whipsaw" tactics, where unions exert pressure on one employer within a multi-employer bargaining unit through, for example, selective strikes or picketing. Among other things, the MSAA provided that if one party to the agreement was struck by the union, the other grocers (with the exception of Food 4 Less) would lock out all their union employees within  [**5] 48 hours.

Pertinent to the antitrust claims that we assess, the MSAA also included a revenue-sharing provision ("RSP"), providing that in the event of a strike/lockout, any grocer that earned revenues above its historical share relative to the other chains during the strike period would pay 15% of those excess revenues as reimbursement to the other grocers to restore their pre-strike shares.⁴ The MSAA specified that the strike/lockout period would begin at the start of the week in which the strike/lockout commenced and continue for two weeks following the end of the strike/lockout.⁵ According to a responsible grocer executive, the 15% figure was designed to estimate the incremental profit the grocers earned on each additional dollar of revenue.

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