Connecticut Ironworkers Employers Assoc Inc et al v. New England Regional Council of Carpenters

Filing 37

ORDER granting in part and denying in part 17 Motion to Dismiss. Signed by Judge Stefan R. Underhill on 3/20/12. (Hungerford, A.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
Connecticut Ironworkers Employers Assoc.,
et al.,
Plaintiffs,

No. 3:10cv165 (SRU)

v.
New England Regional Council of
Carpenters,
Defendant.
RULING AND ORDER ON MOTION TO DISMISS
This case arises out of the negotiation and enforcement of a union signatory
subcontracting clause in the New England Regional Council of Carpenters‟ (“Council of
Carpenters”) collective bargaining agreements (“agreements”) with non-party construction
companies and construction managers (“construction employers”). Plaintiffs allege that the
Council of Carpenters attempted to and has successfully prevented plaintiffs from bidding on,
being awarded, benefitting from and performing construction work typically performed by the
plaintiff union organizations. The union signatory subcontracting clause in the agreements
broadens the scope of work that must be allocated to the Council of Carpenters‟ members
(“Carpenters”) in a manner that excludes signatories of the plaintiff unions from competing for
work even though the construction employers do not currently employ or intend to employ
Carpenters on the job sites at issue.
For example, plaintiffs allege that Fusco, Inc., the construction manager on a New
London school project, entered into an agreement with the Council of Carpenters that shifts
relevant work traditionally performed by the members of plaintiff unions to the “general trades”
category. Carpenters typically perform “general trades” work. Accordingly, Carpenters can now
“claim” work on the job site and plaintiff employers can no longer bid on the work traditionally

performed by its signatory plaintiff unions. The use of a union signatory subcontracting clause
to give a particular union a monopoly in a particular market is not necessarily unlawful.
Plaintiffs allege that, because there are no Carpenters performing bargaining unit work on the
disputed job sites, there can be no legitimate business purpose for the exclusion of the plaintiff
organizations/employers. The exclusion of plaintiffs from the marketplace absent a legitimate
business justification, plaintiffs contend, constitutes a restraint on trade in violation of sections 1
and 2 of the Sherman Act and a violation of labor laws.
Defendant counters that this is nothing more than a jurisdictional dispute between labor
organizations, and that its union signatory subcontracting clause is lawful and expressly
permitted by the National Labor Relations Act (“NLRA”) and the non-statutory labor exemption
to the antitrust laws. Although courts generally accept that a certain amount of anti-competitive
conduct will occur in the labor organization arena, not every anti-competitive act is protected by
the NLRA or the labor exemption to the antitrust laws. Accepting the allegations in the
complaint as true, the agreements between the Council of Carpenters and the construction
employers are not true collective bargaining agreements because those agreements do not
embody a desire to set the terms and working conditions of Carpenters working on the identified
job sites. Accordingly, the agreements are not axiomatically either exempt from scrutiny under
the NLRA or subject to the antitrust labor exemption. For the following reasons, the Council of
Carpenters‟ motion to dismiss (doc. # 17) is granted in part and denied in part.
I.

Background
The facts relied on in this ruling are drawn from the complaint. For present purposes, I

accept the material allegations of the complaint as true and draw all reasonable inferences in
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favor of the plaintiffs.
A. The Parties
1. Defendant
The Council of Carpenters is a labor organization that engages in organized labor
activities in the New England region. The Council of Carpenters has entered into collective
bargaining agreements with non-party general contractors and construction companies including
Suffolk Construction, Fusco Co., Dimeo Construction, Bond Brothers, Turgeon Construction
Co., and Berry & Son.
2. Plaintiff Employer Association Parties
Connecticut Ironworkers Employers Assoc., Inc. is a Connecticut corporation that
engages in collective bargaining on behalf of employers who do business with various labor
organizations, including plaintiff labor organizations.
Associated Sheet Metal and Roofing Contractors of Connecticut, Inc. (“Sheet Metal
Contractors”) is a Connecticut corporation that engages in collective bargaining on behalf of
member employers and with Plaintiff Sheet Metal Workers Local Unions concerning relevant
work.
3. Plaintiff Employer Parties
M.R.S. Enterprises (“M.R.S.”) is a Connecticut corporation that employs plaintiff union
members in the relevant market area and negotiates collective bargaining agreements with
plaintiff unions.
Barrett, Inc. (“Barrett”) is a Connecticut corporation that performs relevant work within
the relevant market area and employs Sheet Metal Workers union members.
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Ernest Peterson (“Peterson”) and Berlin Steel Construction Co. (“Berlin Steel”) are
Connecticut corporations that perform relevant work in the relevant market area and employ
plaintiff union organizations‟ members.
4. Plaintiff Pension Fund Parties
Sheet Metal Workers‟ Local No. 40 Pension Fund (“Local 40 Fund”), a defined benefit
pension plan under ERISA, is comprised of members of the Sheet Metal Worker‟s Local No. 40
whose members perform relevant work in the relevant market area. Local 40 Fund is not
permitted to carry a “funding standard account deficiency” at the end of its 13-year
rehabilitation. If employers who are signatories to the Local 40 Fund are forced to allocate work
to non-members of Local 40, the pension fund will be underfunded and may trigger withdrawal
liability that would jeopardize the pension rights of the participants.
Iron Workers‟ Local Nos. 15 and 424 Pension Funds (“Local 15 Fund” and “Local 424
Fund”) are defined benefit pension plans under ERISA and are comprised of members of The
International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers‟ Local
Nos. 15 and 424 (“Locals 15 and 424”). The members of Locals 15 and 424 perform relevant
work in the relevant market area. The plaintiff Pension Funds are also subject to funding
requirements as well and their signatory employers also risk the triggering of withdrawal liability
in the event of a funding deficiency.
Contributions to the plaintiff Pension Funds are based on a fixed sum per hour worked.
If plaintiff employers and labor union organization members are frozen out of relevant work then
plaintiff employers, union organization members, and employer associations will face increased
pension contributions to compensate for the reduction of hours performed by union members. In
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some instances the plaintiff employers who are forced to hire Carpenters may be exposed to
double payments if the plaintiff employers are required to fund plaintiff pension funds as well as
benefit funds for defendant Carpenters.
5. Plaintiff Labor Organization Parties1
The plaintiff labor organization parties (collectively “the unions” or “union plaintiffs” or
“union members”) are comprised of the following organizations: The International Association
of Bridge, Structural, Ornamental and Reinforcing Iron Workers‟ Local Nos. 15, 37 and 424;
Sheet Metal Workers‟ Local Nos. 38 and 40; Painters, Drywall Finishers, Glaziers and Allied
Trades District Council 11 of the International Union of Painters and Allied Trades (“IUPAT”),
AFL-CIO; IUPAT Glaziers Locals No. 1331 and 1274. Each is an unincorporated association
and labor organization that engages in collective bargaining and enforcement of collective
bargaining agreements with signatory employers on behalf of its members.
B. Relevant Work and Market Area
The “relevant work” at issue in the case includes: exterior building enclosure systems
such as exterior metal panels, composite wall panels, foam panels, and insulated panel systems;
exterior panelized window systems, punched windows, curtain walls, store fronts; and metal
roofing systems and related components. The relevant work typically falls within the jurisdiction

1

Several of the plaintiffs are unincorporated associations and labor organizations within the
meaning of 29 U.S.C. § 152(5). Section 152(5) defines a labor organization as: “any
organization of any kind, or any agency or employee representation committee or plan, in which
employees participate and which exists for the purpose, in whole or in part, of dealing with
employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or
conditions of work.”
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of Iron Workers, Glaziers, and Sheet Metal Workers, but not Carpenters. The “relevant market
area” is Connecticut, Rhode Island, and Western Massachusetts.
C. Facts Alleged in the Complaint
The Council of Carpenters negotiated a union signatory subcontracting clause into certain
agreements with construction employers that barred signatories to those agreements from
subcontracting work to any firm that is not also a signatory of the Council of Carpenters. The
agreements, characterized as collective bargaining agreements, do not concern job sites at which
Carpenters perform relevant work. The Council of Carpenters enforces the union signatory
subcontracting clause of the agreements to the exclusion of the plaintiff labor organizations, who
cannot perform relevant work; plaintiff employers, who cannot bid on relevant work; and the
remaining plaintiffs, who cannot benefit from the performance of such work. The language of
the union signatory subcontracting clause requires that relevant work traditionally performed by
Iron Workers, Sheet Metal Workers, and Glaziers within the relevant market area be performed
by Carpenters regardless of who bid the work. This arrangement, plaintiffs argue, conflicts with
the traditional course of conduct in the relevant market area. Traditionally, relevant work such
as metal siding, exterior siding systems, or metal installations was performed by Iron Workers,
Sheet Metal Contractors, and Glaziers.
Prior to 2009, the Council of Carpenters had never sought to bid on or perform relevant
work, and the collective bargaining agreements entered into by the Council of Carpenters from
1999 through April 2010 do not claim the relevant work. Since 2008, however, the Council of
Carpenters has sought to amend its current agreements to broaden the scope of work claimed by
the Council of Carpenters to include relevant work traditionally performed by plaintiff union
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organizations. In doing so, the union signatory subcontracting clause of the agreements
prohibits its signatories from hiring subcontractors to perform relevant work who are not also
signatories with the Council of Carpenters. The above-described conduct is aimed at
monopolizing the relevant work in the relevant market area to the exclusion of the plaintiff
employers and plaintiff union organizations.
The exclusion of plaintiff employers and union organizations serves no legitimate
business justification because, as six of the seven specific examples set forth in the Complaint
demonstrate, Carpenters do not actually perform relevant work on the job sites covered by the
union signatory subcontracting clause. The plaintiffs identify the following examples:
1. 360 State Street Project, New Haven, Connecticut
The State Street Project was performed under a Project Labor Agreement. Plaintiff
unions were party to the agreement. Article III of the Agreement stated that work assignments
shall be based on subcontractor preference. Although Carpenters were not performing
bargaining unit work at the job site, Suffolk Construction, the construction manager on the site,
had an agreement with the Council of Carpenters that only the Council of Carpenters‟ signatories
could perform relevant work on the job site. One subcontractor, after lengthy negotiation, was
permitted to perform work claimed by Glaziers with members of Glaziers even though that
subcontractor did not have an agreement with the Council of Carpenters.
2. New Rowe Residences, New Haven, Connecticut
The Council of Carpenters worked in concert with Dimeo Construction, construction
manager on the project, to assign metal siding work (traditionally defined as “Division 7” work)
to Carpenters. By reclassifying the work as “General Trades” or “Carpenters” and stating that
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“all work to be completed with Union Carpenters,” the parties prevented plaintiff employers and
signatories to plaintiff unions from bidding on the work. The agreement to reserve relevant work
for Carpenters does not serve a legitimate business purpose because Dimeo does not intend to
have Carpenters perform bargaining unit work on the job site.
3. St. Francis Hospital, Hartford, Connecticut
Turner Construction is the construction manager for the St. Francis Hospital, Hartford,
Connecticut project. No Carpenters are performing bargaining work at the job site. The Council
of Carpenters, nonetheless, attempted to coerce Turner Construction into telling plaintiff
employers that they cannot bid the relevant work unless all work is awarded to Carpenters.
Turner did not acquiesce to the pressure.
4. Bryant University Project, Smithfield, Rhode Island
Bond Brothers, the construction manager at the Bryant University Project in Smithfield,
Rhode Island, is a signatory to the Council of Carpenters. Bond Brothers has included in its
“scope checklist” for “glass and glazing” (relevant work) that all glass/glazing subcontractors
must also be signatories to the Council of Carpenters. Accordingly, plaintiff employers and/or
signatories to plaintiff unions were prohibited from bidding on the job even though the
construction manager had no intention of using Carpenters to perform the relevant work.
5. Immaculate Conception Catholic Regional School, Cranston, Rhode Island
M.R.S. was awarded a contract to perform relevant work on the job site. E. Turgeon
(“Turgeon”) was the general contractor. On May 14, 2009, Turgeon sent a letter to M.R.S.
notifying it that the contract would be cancelled because M.R.S. intended relevant work to be
performed by plaintiff union members and that Turgeon had an exclusive relationship with the
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Council of Carpenters and M.R.S. was not a signatory to the Council of Carpenters.
6. Bay State Medical Center Hospital Project, Springfield, Massachusetts
The project was governed by a Project Labor Agreement. Plaintiff unions and
construction manager, Berry & Son, Inc., were party to the Project Labor Agreement, which
provided that subcontractors would appropriately assign all work in question. Nonetheless, a
separate memorandum of understanding between Berry & Son and the Council of Carpenters
stated that certain work would be performed only by Carpenters, including work traditionally
performed by Glaziers. The memorandum of understanding violated the terms of the Project
Labor Agreement. Carpenters are not, however, performing any bargaining unit work on the
project and Berry & Son does not intend for Carpenters to perform work on the job site.
Plaintiff unions and employers were not permitted to bid on the project because of the agreement
between Berry & Son and the Council of Carpenters, notwithstanding the Project Labor
Agreement.
7. Schools Project, New London, Connecticut
Fusco, Inc. is the construction manager on the job site. Originally the scope of work on
the project included relevant work, which is traditionally performed by plaintiff unions. Fusco
redrafted the specifications and scope of work to include a “General Trades” category. Fusco
reclassified the “Roofing Package” as work included in “General Trades.” Signatories of the
Council of Carpenters traditionally bid on General Trades work. The effect of the change was to
preclude plaintiff labor organizations and their signatory contractors from bidding the work in
question. Fusco, however, does not have Carpenters performing bargaining unit work on the
site.
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D. Counts One and Two
In count one of the complaint, plaintiffs allege that the conduct set forth above constitutes
a violation of sections 1 and 2 of the Sherman Act. The complaint alleges that the Council of
Carpenters, in concert with its signatories, has attempted to restrain trade by prohibiting
contractors unaffiliated with the Council of Carpenters from bidding, being awarded, and
performing work traditionally performed by plaintiff union members. That conduct, plaintiffs
allege, exceeds that allowed by the labor exemptions in that it consists of an agreement between
a labor organization and an employer that serves no legitimate business purpose and, although
characterized as done pursuant to a collective bargaining agreement, is outside the collective
bargaining process. Plaintiffs also claim that the agreements at issue are designed to expand the
Council of Carpenters‟ jurisdiction and restrict the jurisdiction of plaintiffs. All plaintiffs seek
declaratory relief and M.R.S. seeks damages.
In count two, M.R.S. alleges a violation of 29 U.S.C. § 187, which sets forth that “[i]t
shall be unlawful, for the purpose of this section only, in an industry or activity affecting
commerce, for any labor organization to engage in any activity or conduct defined as an unfair
labor practice in section 158(b)(4) of this title.”2 M.R.S. alleges that the Council of Carpenters
has engaged in conduct that encourages and induces individuals, including general contractors
and construction managers affiliated with the Council of Carpenters, to refrain from engaging in
commerce with plaintiffs. In doing so, the Council of Carpenters is attempting to force M.R.S.

2

Initially, count two was brought on behalf of all plaintiffs. Plaintiffs have conceded that only
M.R.S. has standing to pursue the claims alleged in count two. Doc. # 23 at 25. Accordingly,
count two is dismissed with respect to all plaintiffs except M.R.S.
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to enter into an agreement with the Council of Carpenters or accept being frozen out of the
bidding process. M.R.S. seeks actual damages for the loss of the Immaculate Conception
Catholic Regional School Project.
II.

Standard of Review
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is designed

“merely to assess the legal feasibility of a complaint, not to assay the weight of evidence which
might be offered in support thereof.” Ryder Energy Distribution Corp. v. Merrill Lynch
Commodities, Inc., 748 F.2d 774, 779 (2d Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d
636, 639 (2d Cir. 1980)).
When deciding a motion to dismiss pursuant to Rule 12(b)(6), the court must accept the
material facts alleged in the complaint as true, draw all reasonable inferences in favor of the
plaintiffs, and decide whether it is plausible that plaintiffs have a valid claim for relief. Ashcroft
v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1949-50 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).
Under Twombly, “[f]actual allegations must be enough to raise a right to relief above the
speculative level,” and assert a cause of action with enough heft to show entitlement to relief and
“enough facts to state a claim to relief that is plausible on its face.” 550 U.S. at 555, 570; see also
Iqbal, 129 S. Ct. at 1940 (“While legal conclusions can provide the framework of a complaint,
they must be supported by factual allegations.”). The plausibility standard set forth in Twombly
and Iqbal obligates the plaintiff to “provide the grounds of his entitlement to relief” through
more than “labels and conclusions, and a formulaic recitation of the elements of a cause of
action.” Twombly, 550 U.S. at 555 (quotation marks omitted). Plausibility at the pleading stage
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is nonetheless distinct from probability, and “a well-pleaded complaint may proceed even if it
strikes a savvy judge that actual proof of [the claims] is improbable, and . . . recovery is very
remote and unlikely.” Id. at 556 (quotation marks omitted).
Defendant also moves to dismiss the claims of the plaintiff union and pension funds for
lack of standing. The party who seeks to exercise the jurisdiction of the court bears the burden
of establishing the court‟s jurisdiction. Thompson v. County of Franklin, 15 F.3d 245, 249 (2d
Cir. 1994). To survive a Rule 12(b)(1) motion, a plaintiff must clearly allege facts demonstrating
that the plaintiff is a proper party to invoke judicial resolution of the dispute. Id. Although the
plaintiff bears the ultimate burden of establishing jurisdiction by a preponderance of the
evidence, “until discovery takes place, a plaintiff is required only to make a prima facie showing
by pleadings and affidavits that jurisdiction exists.” Koehler v. Bank of Bermuda, 101 F.3d 863,
865 (2d Cir. 1996). “When considering a party‟s standing, we „accept as true all material
allegations of the complaint, and must construe the complaint in favor of the complaining
party.‟” Thompson, 15 F.3d at 249 (quoting Warth v. Seldin, 422 U.S. 490, 501 (1975)). If a
plaintiff has failed to allege facts supportive of standing, it is within the court‟s discretion to
allow or to require the plaintiff to supply, by amendment to the complaint or by affidavits,
further particularized allegations of fact deemed supportive of standing. Id.
III.

Discussion
Council of Carpenters moves to dismiss the complaint for failure to state a claim for

violations of sections 1 and 2 of the Sherman Act. As a general rule, agreements to refrain from
dealing with others, such as the union signatory subcontracting clause at issue here, are
“vulnerable to challenge under federal antitrust laws unless they are protected by both the
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construction industry proviso and by an exemption from antitrust scrutiny.” Local 210,
Laborer’s Intern. Union of North America v. Labor Relations Division Assoc. General
Contractors of America, N.Y.S. Chapter, Inc., 844 F.2d 69, 73 (2d Cir. 1988). The Council of
Carpenters contends that the Construction Industry Proviso of section 8(e) of the NLRA and the
non-statutory labor exemption to the antitrust laws permit defendant to enter into the challenged
union signatory subcontracting clause. Defendant further claims that plaintiffs fail to meet the
requirements of Twombly and Iqbal in pleading an antitrust claim and that the union and pension
fund plaintiffs lack standing to bring their claims. Before considering the adequacy of the
pleadings, I address the application of the construction industry proviso and non-statutory labor
exemption from the antitrust laws to the union signatory subcontracting clause.
A. The Construction Industry Proviso
In 1959, Congress enacted the Landrum-Griffin amendments to the NLRA. The
amendments included section 8(e), codified at 29 U.S.C. §158(e), and commonly referred to as
the “hot-cargo” provision, which provides:
It shall be an unfair labor practice for any labor organization and any employer to
enter into any contract or agreement, express or implied, whereby such employer
ceases or refrains or agrees to cease or refrain from handling, using, selling,
transporting or otherwise dealing in any of the products of any other employer, or
to cease doing business with any other person, and any contract or agreement
entered into heretofore or hereafter containing such an agreement shall be to such
extent unenforceable and void: Provided, That nothing in this subsection shall
apply to an agreement between a labor organization and an employer in the
construction industry relating to the contracting or subcontracting of work
to be done at the site of the construction, alteration, painting, or repair of a
building, structure, or other work: Provided further, That for the purposes of
this subsection and subsection (b)(4)(B) of this section the terms “any employer”,
“any person engaged in commerce or an industry affecting commerce”, and “any
person” when used in relation to the terms “any other producer, processor, or
manufacturer”, “any other employer”, or “any other person” shall not include
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persons in the relation of a jobber, manufacturer, contractor, or subcontractor
working on the goods or premises of the jobber or manufacturer or performing
parts of an integrated process of production in the apparel and clothing industry:
Provided further, That nothing in this subchapter shall prohibit the enforcement of
any agreement which is within the foregoing exception.
(emphasis in bold added). The bolded language is commonly referred to as the Construction
Industry Proviso (“proviso”) and generally exempts those in the construction industry from the
prohibitions of section 8(e). Defendant contends that plaintiffs‟ antitrust claims fail because the
union signatory subcontracting clause with the construction employers is entirely lawful under
the proviso. Plaintiffs counter that exemption under the proviso is an affirmative defense and
therefore inappropriate in a pre-answer Rule 12(b)(6) motion. Because the facts supporting the
defense appear on the face of the complaint it is properly raised in a Rule 12(b)(6) motion.
McKenna v. Wright, 386 F.3d 432, 436 (2d Cir. 2004); see also generally Cal. State Council of
Carpenters v. Associated General Contractors of Cal., Inc., 648 F.2d 527, 532-33 (9th Cir. 1980)
(discussing labor‟s antitrust exemptions raised in motion to dismiss), rev’d in part on other
grounds, Associated General Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459
U.S. 519 (1983).
Plainly read, the proviso would seem to shelter the union signatory subcontracting
agreements because the proviso expressly states that section 8(e) does not apply to agreements
that limit the contracting of construction site work. In Connell Construction Co. v. Plumbers &
Steamfitters Local Union No. 100, however, the Supreme Court held that literal compliance with
the proviso is insufficient and that section 8(e) should be interpreted in light of its “statutory
setting and the circumstances surrounding its enactment.” 421 U.S. 616, 628 (1975). After a
review of the legislative history of section 8(e), the Court held that, even though Congress
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expressly permitted labor organizations and employers in the construction industry to enter into
agreements otherwise prohibited, Congress intended the proviso to apply only to agreements in
the context of a collective-bargaining relationship. Id. at 629-33. The Court, principally
concerned with job sites at which union workers and nonunion workers were employed, i.e.,
shoulder-to-shoulder friction, went on to state that agreements “with „stranger‟ contractors, not
limited to any particular job site” were not agreements obtained in the context of a collectivebargaining relationship. Id. at 631-33. The collective-bargaining process concerns only the
parties to the collective bargaining relationship, and relates to wages, hours, conditions of
employment, or other relevant subjects of collective bargaining. Id. at 622. Accordingly, under
the holding of Connell, the Council of Carpenters‟ union signatory subcontracting clause falls
within the protective reach of the proviso only if the agreements containing the clause were
obtained in the context of a collective-bargaining relationship.
Plaintiffs contend that the union signatory subcontracting clauses at issue here, although
incorporated into agreements purporting to be collective bargaining agreements, are not
protected by the proviso because the agreements are not true collective bargaining agreements.
The agreements between the Council of Carpenters and the construction employers, plaintiffs
allege, do not encompass the traditional subjects of collective bargaining but serve only to
expand the Carpenters‟ scope of work and jurisdiction and to freeze plaintiff unions out of the
market. Although the complaint does not explicitly allege that the agreements were obtained
outside the context of a collective-bargaining agreement, the complaint does state that Carpenters
do not perform work on the job sites at issue nor does the Council of Carpenters intend its
members to perform work on those job sites. The complaint also alleges that there is no
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legitimate business purpose for the subcontracting agreements.
The Council of Carpenters counters that, because plaintiffs refer to the agreements as
collective-bargaining agreements, plaintiffs are estopped from denying the validity of the
agreements. It also contends, relying on the Supreme Court‟s holding in Woelke & Romero
Framing, Inc. v. N.L.R.B., 456 U.S. 645 (1982), that it does not matter whether its members are
performing work on the specified job sites in order for its agreements to fall under the proviso‟s
protection. Both arguments fail at this stage.
Regardless of the term used to describe the agreements between the Council of
Carpenters and the construction employers, if the agreements do not embody the traditional
subjects of collective bargaining, the union signatory subcontracting clause of the agreement is
not protected by the proviso. The holding in Woelke that the union signatory subcontracting
clause in that case was lawful even though the underlying concern was not shoulder-to-shoulder
friction between union and non-union members, as had been the issue in Connell, has no bearing
on the facts of the instant case. The Woelke Court considered the impact of section 8(e) on
union signatory subcontracting clauses sought in the context of the renegotiation of a collective
bargaining agreement. Id. at 648. The Court held that section 8(e) applies to union signatory
subcontracting clauses so long as they are sought or negotiated in the context of a collective
bargaining agreement, and that the proviso did not shelter only clauses aimed at preventing
shoulder-to-shoulder friction. Id. at 654. Here, plaintiffs allege that the union signatory
subcontracting clauses between the Council of Carpenters and the construction employers are not
part of a true collective bargaining agreement. Accordingly, even if it is permissible for the
Council of Carpenters to enter into union signatory subcontracting clauses pertaining to job sites
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at which it does not have members performing work or intending to perform work, the Council
of Carpenters must nevertheless demonstrate that the clause was sought or negotiated in the
context of a collective-bargaining relationship – a showing that has not been made at the
pleading stage in this case.
B. Non-Statutory Labor Exemption to the Antitrust Laws
Defendant also moves to dismiss on the basis that its agreements are shielded from
antitrust scrutiny by the non-statutory labor exemption to the antitrust laws. The defense
appears on the face of the complaint and therefore it is properly raised in a Rule 12(b)(6) motion.
McKenna, 386 F.3d at 436. In Connell, the Court recognized that certain clauses in collective
bargaining agreements, even those concerning the construction industry, can act as a “direct
restraint on the business market” in a manner having “substantial anticompetitive effects, both
actual and potential.” 421 U.S. at 625. Restrictive clauses like the one at issue in this case may
be challenged under federal antitrust laws unless the clause is protected by both the construction
industry proviso and an antitrust labor exemption. Local 210, 844 F.2d at 73.
“[T]he [Sherman] Act is aimed primarily at combinations having commercial objectives
and is applied only to a very limited extent to organizations, like labor unions, which normally
have other objectives.” Klor’s Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 213 n.7 (1959).
Nevertheless, “[i]t would be a surprising thing if Congress, in order to prevent a misapplication
of [antitrust] legislation to labor unions, had bestowed upon such unions complete and
unreviewable authority to aide business groups to frustrate its primary objective.” Allen Bradley
Co. v. Local Union No. 3, Int’l Bhd. of Elec. Workers, 325 U.S. 797, 809-10 (1945).
Courts have long recognized the tension between national antitrust policy and national
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labor policy. In light of the competing interests of congressional policy favoring both collective
bargaining under the NLRA and free competition in business, two antitrust exemptions are
recognized. Connell, 421 U.S. at 622. The statutory exemption provides that union activity is
exempt from antitrust liability “so long as [the] union acts in its self-interest and does not
combine with non-labor groups.” 3 United States v. Hutcheson, 312 U.S. 219, 232 (1941). The
non-statutory exemption provides that, where the alleged anticompetitive conduct is inherent in
the collective-bargaining process, concerns only the parties to the collective bargaining
relationship, and relates to wages, hours, conditions of employment, or other relevant subjects of
collective bargaining, the restraints are lawful. See Connell, 421 U.S. at 622. Having already
concluded that protection by the proviso is not apparent from the complaint, I consider whether
the non-statutory labor exemption to the antitrust laws bars plaintiffs‟ claims.
In this circuit, a court assessing whether an agreement is protected by the non-statutory
exemption should consider the relative impact of the agreement on the product market and the
interests of the union members. See Local 210, 844 F.2d at 79. The Local 210 decision also
instructs the district court to balance the conflicting policies embodied in labor and antitrust
laws. The court should first consider whether the agreement at issue furthers goals that are
protected by national labor law and are within the scope of traditionally mandatory subjects of
collective bargaining. Second, the court should consider whether the agreement imposes a direct
restraint on the market that has substantial anticompetitive effects that do not follow naturally

3

Defendant has not claimed that the challenged agreements fall within the statutory exemption.
In any event, the agreements would not fall under the statutory exemption because the
agreements concern union and non-labor party conduct. See Local 210, 844 F.2d at 79.
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from the collective bargaining agreement. If the agreement is a legitimate collective bargaining
agreement, then the “touchstone in assessing its validity must be the policies embodied in federal
labor law.” Id. at 81. Traditionally, mandatory subjects in a collective bargaining agreement
include wages, hours, fringe benefits, workplace conditions, and other subjects that are more
likely to embody legitimate employee concerns about compensation, workplace, or security, and
less likely to be restraints on competition. See 1B Phillip E. Areeda & Herbert Hovenkamp,
Antitrust Law, at ¶ 256d3 (3d ed. 2007). Accordingly, agreements between unions and firms that
do not employ the unions‟ members are treated as encompassing non-mandatory subjects. Id.
Accepting the allegations in the complaint as true, it is not evident from the face of the
complaint that collective-bargaining agreements between the Council of Carpenters and the
construction employers further goals that are protected by national labor law and are within the
scope of traditionally mandatory subjects of collective bargaining and the restraints imposed on
the marketplace naturally flow from the collective bargaining agreements. If plaintiffs prove that
the agreements between Carpenters and construction employers are not true collectivebargaining agreements because the agreements do not set wages, hours, terms and conditions of
work and other relevant subjects of collective bargaining, the union signatory subcontracting
clause would not have been obtained within the collective-bargaining relationship and would not
be entitled to protection under the non-statutory labor exemption. Accordingly, the motion to
dismiss on those grounds is denied.
C. Antitrust Injury
1.

Section 1

Section 1 of the Sherman Act provides that “[e]very contract, combination in the form of
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trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or
with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. Pleading a section 1 claim
“requires a complaint with enough factual matter (taken as true) to suggest that an agreement
was made” in restraint of trade. Twombly, 550 U.S. at 556. A plaintiff must offer “plausible
grounds to infer an agreement,” which means “enough facts to raise a reasonable expectation that
discovery will reveal evidence of illegal agreement.” Id.
Here, plaintiffs allege that the union signatory subcontracting clause violates antitrust
laws because the Council of Carpenters has no legitimate business reason for restricting
plaintiffs‟ ability to bid on, be awarded, perform, and benefit from performing work on the job
sites. Generally, restrictions on entities with whom contractors can subcontract are entirely
permissible so long as those restrictions affect only the parties to the agreements, and the
agreements concern wages, hours, or conditions of employment in the context of bona fide arm‟s
length bargaining. Areeda ¶ 256d at 113-14. Courts have found antitrust violations where
agreements concern other issues. Connell, 421 U.S. at 625-26 (even where the goal of the union
is legal, i.e., organizing as many subcontractors as possible, agreements outside those of a lawful
collective bargaining agreement cannot claim a non-statutory exemption from the antitrust laws).
An agreement between a union and an employer,
outside a collective bargaining relationship, which imposes a direct restraint upon a
business market, and which is not justified by congressional labor policy because it has
actual or potential anticompetitive effects that would not flow naturally from the
elimination of competition over wages and working conditions, is not exempt from
antitrust scrutiny.
Larry V. Muko, Inc. v. Southwestern Pa. Bldg. & Constr. Trades Council, 609 F.2d 1368, 1373
n.99 (3d Cir. 1979), cert denied, 459 U.S. 916 (1982).
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Here, if the Council of Carpenters‟ union signatory subcontracting clauses are not part of
a bona fide arm‟s length collective bargaining relationship and serve only to exclude plaintiffs‟
union members from job sites without also protecting the wages, hours and working conditions
of Carpenters, the agreements could violate antitrust laws. Defendant counters that plaintiffs‟
contention that the Council of Carpenters has entered into the union signatory subcontracting
clauses in an attempt to expand work jurisdiction to work not traditionally performed by its
members in the relevant market areas necessarily defeats the allegation that the Council of
Carpenters lacks a legitimate purpose in entering into the agreements. Even if the Council of
Carpenters has entered into the agreements in an effort to expand its scope of work and
jurisdiction, doing so does not negate the anti-competitive impact of the agreements if the
Council of Carpenters has not negotiated the agreements within the context of a collective
bargaining relationship. Indeed, if plaintiffs prove that the agreements are not part of a
legitimate collective bargaining process, it does not matter what plaintiffs allege the Council of
Carpenters‟ ultimate goal might be. Accepting as true that Carpenters do not intend to perform
work on the six job sites identified in the complaint, it is plausible that discovery will reveal that
those agreements are not the by-product of a collective-bargaining relationship and therefore
violate the antitrust laws. Accordingly, the motion to dismiss for failure to state a section 1
claim is denied.
2. Section 2
Plaintiffs have alleged that the Council of Carpenters has attempted to monopolize the
relevant work in the relevant market area for Carpenters in violation of 15 U.S.C. § 2. Compl. at
¶ 61. A section 2 claim, unlike a section 1 claim, is aimed at a “pernicious market structure in
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which the concentration of power saps the salubrious influence of competition.” Berkey Photo,
Inc. v. Eastman Kodak Co., 603 F.2d 263, 272 (2d Cir. 1979), cert denied, 444 U.S. 1003 (1980).
To establish a defendant‟s liability under section 2 of the Sherman Act, a plaintiff must show
“(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or
maintenance of that power as distinguished from growth or development as a consequence of a
superior product, business acumen, or historic accident.” Delaware & Hudson Ry. Co. v.
Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990) (quoting United States v. Grinnell
Corp., 384 U.S. 563, 570-71 (1966)). “Monopoly power „is a matter of capacity – the possession
of power to control prices or exclude competition.‟” Broadcast Music, Inc. v. Hearst/ABC
Viacom Entm’t Servs., 746 F. Supp. 320, 327 (S.D.N.Y. 1990) (citing Berkey Photo, Inc. v.
Eastman Kodak Co., 603 F.2d at 272). “Before monopoly power may be assessed, the relevant
geographic and product markets must be defined.” Broadcast Music, Inc., 746 F. Supp. at 372.
Here, the geographic market is the New England region and the relevant product market
is the construction industry. Accepting the allegations in the complaint as true, the Council of
Carpenters possesses the monopoly power to exclude competition from the construction industry
within the New England region. The inquiry next turns to whether plaintiffs have adequately
pled attempted monopolization. To do so requires the plaintiff to plead “(1) anticompetitive
conduct; (2) intent to monopolize; and (3) a dangerous probability of obtaining monopoly
power.” Delaware & Hudson Ry., 902 F.2d at 180. For the reasons already discussed, the
plaintiffs have sufficiently alleged anticompetitive conduct. See Section C (1), supra. With
respect to the two remaining elements, accepting as true that the Council of Carpenters has
monopoly power, plaintiffs have sufficiently alleged that the Council of Carpenters intends for
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its agreements to exclude others from the market and, if successful, it follows that there exists a
dangerous probability that the Council of Carpenters would obtain monopoly power.
Accordingly, the motion to dismiss for failure to state a section 2 claim is denied.
D. Standing of Union and Pension Funds to Bring Antitrust Claims
Defendant also moves to dismiss the claims of the plaintiff unions and pension funds on
the ground that the harms complained of are too remote and indirect to confer standing.4 A
private plaintiff must demonstrate standing in order to bring a federal antitrust action. See
Cargill, Inc. v. Monfort of Colo., 479 U.S. 104, 110 & nn.5-6 (1986). In the Second Circuit, the
court assumes the existence of a violation when addressing the issue of standing. Daniel v.
American Bd. of Emergency Med., 428 F.3d 408, 436-37 (2d Cir. 2005). In evaluating whether a
plaintiff has standing, the district court must consider whether plaintiff has pled: (1) an injury in
fact to plaintiff‟s business or property, (2) that is not remote from or duplicative of that sustained
by a more directly injured party, (3) that qualifies as an antitrust injury, and (4) that translates
into reasonably quantifiable damages. Id.
Mere injury or the possibility of injury is not enough to confer standing; the plaintiffs
must demonstrate an antitrust injury. “The antitrust injury requirement obligates a plaintiff to
demonstrate, as a threshold matter, „that the challenged action has had an actual adverse effect
on competition as a whole in the relevant market; to prove it has been harmed as an individual
competitor will not suffice.‟” George Haug Co. v. Rolls Royce Motor Cars, Inc., 148 F.3d 136,
139 (2d Cir. 1998) (quoting Capital Imaging v. Mohawk Valley Med. Assoc., 996 F.2d 537, 543
4

Note that the Council of Carpenters did not move to dismiss the claims by the employer
association plaintiffs on standing grounds.
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(2d Cir. 1993)). The requirement to demonstrate standing applies with equal force to claims,
such as those here, for equitable relief. See generally Cargill, Inc., 479 U.S. at 111-12.
Assuming for the purposes of this motion that the challenged agreements are anticompetitive, the agreements first and foremost harm the plaintiff employers – M.R.S., Barrett,
Peterson, and Berlin Steel. The plaintiff employers have been prevented from bidding on the
following projects: New Rowe Residences, Bryant University, Immaculate Conception Catholic
Regional School (M.R.S. only), Bay State Medical Center, and the New London Schools.5 The
plaintiff employers have suffered a lost opportunity to compete. That is a recognized injury
under antitrust law.
The union plaintiffs have also stated an injury that is recognized under antitrust law. The
facts alleged in the complaint indicate that Council of Carpenters prevented members of the
plaintiff-unions from bidding on relevant work. In arguing that the this harm is too indirect to
support standing, the Council of Carpenters relies heavily on Associated General Contractors of
Cal v. Cal. State Council of Carpenters, 459 U.S. 519 (1983). That case, however, is
distinguishable. In Associated General Contractors, the defendant was an employer association
that had allegedly attempted to coerce general contractors and potential clients to hire non-union
contractors and subcontractors. Id. at 902-03. The Supreme Court held that the union-plaintiffs‟
injury was too remote to confer standing.
In conducting its standing inquiry, the Court noted that it was “appropriate to focus on the
nature of the plaintiff‟s alleged injury,” because “the Sherman Act was enacted to assure
5

With respect to the 360 State Street and St. Francis projects, the complaint states that the
plaintiffs were not prevented from bidding on those projects because the contractors did not
acquiesce to pressure from Carpenters.
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customers the benefits of price competition, and our prior cases have emphasized the central
interest in protecting the economic freedom of participants in the relevant market.” Id. at 908.
The Court held that there was no standing in part because “the Union was neither a consumer nor
a competitor in the market in which trade was restrained.” Id. at 909.
In this case, in contrast, the plaintiff-unions are competitors in the market in which trade
was restrained. Here, the defendant-union has allegedly attempted to block rival unions from job
sites. In essence, the defendant-union is attempting to monopolize work that had previously been
performed by the plaintiff-unions‟ members, and push the plaintiff-unions out of the relevant
market. The plaintiff-unions thus are part of the class the Sherman Act was designed to protect,
because the harm here goes to “the central interest in protecting the economic freedom of the
participants in the relevant market.” Id. at 908.
Finally, in Associated General Contractors, the allegations were much vaguer than the
allegations in this case. Specifically, in Associated General Contractors there was no allegation
that any construction “firm was prevented from doing business with any union firms.” Id. at
911. Here, such allegations form the basis for the complaint. In short, the plaintiff-unions have
alleged sufficient facts to demonstrate that they have standing to bring this case, and the motion
to dismiss the union plaintiffs for lack of standing is denied.
Unlike the unions‟ injuries, the possibility of injury to the pension fund plaintiffs is both
remote and indirect. The pension fund plaintiffs argue that they risk becoming underfunded at
some point in the future if Carpenters are permitted to enforce the union signatory subcontracting
clause. The injury is wholly indirect, being based entirely on the consequences of direct harm to
the union plaintiffs, and thus too remote to confer standing. The pension fund plaintiffs have
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failed to demonstrate an antitrust injury that would confer standing for a claim for money
damages.
Although the pension fund plaintiffs appear to acknowledge that they do not have
standing to pursue a claim for money damages, they argue that they do have standing to pursue a
claim for declaratory or injunctive relief. The pension fund plaintiffs are correct that the
“antitrust standing analysis is more flexible and less demanding for claims for injunctive relief
than it is for those seeking money damages, because „one injunction is as effective as 100, and . .
. 100 injunctions are no more effective than one.‟” Freedom Holdings, Inc. v. Cuomo, 592 F.
Supp. 2d 684, 693 (S.D.N.Y. 2009) (quoting Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104,
111 n.6). Nevertheless, even a plaintiff seeking injunctive relief must satisfy Article III standing
requirements, and thus assert an injury that is “sufficiently direct and non-speculative.” Id. at
694. The injury of the pension fund plaintiffs is completely indirect and speculative, and as
such, cannot satisfy even the lower standing requirements for injunctive relief. Accordingly, the
motion to dismiss the pension fund plaintiffs for lack of standing is granted.
E. Labor Law Violation
In the second count, M.R.S. alleges that the Council of Carpenters, in concert with its
signatory construction employers, has violated 29 U.S.C. § 158(b)(4) (section 8(b)(4) of the
NLRA) by encouraging and inducing its signatory contractors to refrain from engaging and
entering into contracts with M.R.S. in violation of 29 U.S.C. § 187. M.R.S. claims that the
Council of Carpenters attempted to force M.R.S. to enter into agreements with the Council of
Carpenters for work not traditionally performed by Carpenters and thus to expand the relevant
work performed by Carpenters into the jurisdiction of work traditionally performed by plaintiffs.
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Furthermore, M.R.S. contends that the conduct is aimed at expanding the Council of Carpenters‟
representation to employees performing work not traditionally performed in the relevant market
area. This includes job sites in which there are no Carpenters performing bargaining unit work.
Section 8(b)(4) of the NLRA makes it unlawful to, inter alia, threaten, coerce, or restrain
any person engaged in commerce or in an industry affecting commerce, where the object thereof
is forcing or requiring any person to cease using, selling, handling, transporting, or otherwise
dealing in the products of any other producer, processor, or manufacturer, or to cease doing
business with any other person. Here, M.R.S. alleges that Carpenters forced Turgeon, a
Carpenters signatory, to cease doing business with M.R.S. in violation of section 8(b)(4).
Council of Carpenters moves to dismiss the claim on the basis that M.R.S. fails to state a
claim under section 8(b)(4); defendant also argues that, because M.R.S. allegedly could not
transact business in Rhode Island at the time the May 2009 contract was rescinded, its claim
must fail. Defendant maintains that, because the union signatory subcontracting clause is part of
a valid collective bargaining agreement, any restraint is protected by the construction industry
proviso. Because it is not settled that the challenged union signatory subcontracting agreements
are part of a valid collective bargaining agreement, whether the agreements are protected by the
construction industry proviso is an open question. Furthermore, whether M.R.S. could transact
business in Rhode Island cannot be determined from the face of the complaint. Accordingly, the
motion to dismiss the second count of the complaint is denied.
IV.

Conclusion
Accepting as true the allegations in the complaint, the challenged agreements between

Carpenters are not necessarily protected by the construction industry proviso or the non-statutory
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labor exemption to the antitrust laws. Accordingly, the plaintiffs have stated an antitrust claim.
Nevertheless, the pension fund plaintiffs have asserted an injury that is both indirect and
speculative, and thus, the motion to dismiss count one for lack of standing is granted with respect
to those plaintiffs. The motion to dismiss count one is denied in all other respects.
So ordered.
Dated at Bridgeport, Connecticut this 20th day of March 2012.
/s/ Stefan R. Underhill
Stefan R. Underhill
United States District Judge

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