Recently, the Second Circuit held that the New England Regional Council of Carpenters is not insulated from antitrust suits stemming from a union "turf war" between carpenters' and ironworkers' unions competing for the same construction jobs. In partially reversing the district court's decision, the Second Circuit held that restrictive collective bargaining agreement provisions aimed to win new work for unions – rather than simply preserve existing work – run afoul of federal antitrust law.
Background
In their collective bargaining agreements (CBAs) with construction companies, the New England Regional Council of Carpenters (the "Carpenters") included provisions barring the construction companies from subcontracting out certain work to non-carpenters. This led to lawsuits by numerous ironworkers' unions, industry firms, trade associations, and union pension funds (the "Ironworkers") in federal district court in Connecticut.
The Ironworkers asserted federal antitrust claims under the Sherman Act, and federal labor law claims under the National Labor Relations Act (NLRA). In doing so, the Ironworkers argued that the CBA provisions at issue prevent them from securing work that historically went to Ironworkers.
The district court, however, found for the Carpenters at the summary judgment stage on both the NLRA and antitrust claims. In doing so, the district court held that the CBA provisions are protected by the NLRA's "construction industry proviso," which permits unions in the construction industry to include certain restrictive clauses in their CBAs.
Moreover, the court held that the provisions were protected by the judicially-created "non-statutory exemption" to antitrust liability. This exemption, developed by the Second Circuit to balance the competing aims of federal antitrust and labor law, permits certain union-employer agreements even where they have anti-competitive effects.
The Second Circuit's Partial Reversal
The Second Circuit affirmed the dismissal of the Ironworkers' NLRA claims, holding that the CBA provisions were indeed protected by the NLRA's construction industry proviso. However, the court reversed as to the dismissal of the Ironworkers' antitrust claims.
According to the Second Circuit, the non-statutory exemption is applicable only when the CBA provision at issue is intended to preserve existing work traditionally performed by a union. When a CBA provision is instead an attempt to secure new work not traditionally performed by the union, the non-statutory exemption does not apply. Indeed, the Second Circuit made clear that the non-statutory exemption was never intended to be used as a weapon in turf battles between unions.
As the district court had not analyzed whether the CBA provisions were being used to preserve the Carpenters' existing work, as opposed to creating new work, the Second Circuit remanded the case back down to the district court for further proceedings. On remand, the district court also will need to determine whether the CBA provisions impose a direct restraint on the business market that has substantial anticompetitive effects, both actual and potential, that would not naturally flow from a collective bargaining agreement.