The United States brought a civil action in a Federal District
Court charging a violation of § 1 of the Sherman Act by a Chicago
trade association of plastering contractors, a local labor union of
plasterers, and the union's president. The complaint alleged a
combination and conspiracy to restrain competition among Chicago
plastering contractors, and charged that the effect was to restrain
interstate commerce.
Held: the complaint stated a cause of action on which
relief could be granted on proper proof. Pp.
347 U. S.
187-190.
(a) The contention that the Sherman Act was inapplicable here
because the interstate buying, selling and movement of plastering
materials had ended before the local restraints became effective,
cannot be sustained. P.
347 U. S.
189.
(b) Wholly local business restraints can produce effects
condemned by the Sherman Act. P.
347 U. S.
189.
(c) Where a complaint filed by the Government under the Sherman
Act charges every element necessary to relief, a defendant who
desires more evidential facts may call for them under Rule 12(e) of
the Federal Rules of Civil Procedure, and if the Government's claim
is frivolous, a full-dress trial can be avoided by invoking the
summary judgment procedure under Rule 56. P.
347 U. S.
189.
(d) Section 20 of the Clayton Act does not render a labor union
immune from prosecution for violation of the Sherman Act upon a
charge that the union and its president have combined with business
contractors to suppress competition among them. P.
347 U. S.
190.
118 F. Supp. 387 reversed.
Page 347 U. S. 187
MR. JUSTICE BLACK delivered the opinion of the Court.
The United States brought this civil action in a Federal
District Court charging the defendants (appellees here) with having
violated § 1 of the Sherman Act, which forbids combinations or
conspiracies in restraint of interstate trade or commerce.
* Holding that the
complaint failed to state a cause of action on which relief could
be granted under the Act, the District Court dismissed. The case is
before us on direct appeal, 15 U.S.C. § 29, and the only question
we must decide is whether the District Court's dismissal was error.
We hold it was.
In summary, the Government's complaint alleges:
Defendants are (1) a Chicago trade association of plastering
contractors; (2) a local labor union of plasterers and their
apprentices; (3) the union's president. These contractors and union
members employed by them do approximately 60% of the plastering
contracting business in the Chicago area of Illinois. Materials
used in the plastering, such as gypsum, lath, cement, lime, etc.,
are furnished by the contractors. Substantial quantities of this
material are produced in other states, bought by Illinois
building
Page 347 U. S. 188
materials dealers and shipped into Illinois, sometimes going
directly to the place of business of the dealers and sometimes
directly to job sites for use by the plastering contractors under
arrangements with the dealers. The practical effect of all this is
a continuous and almost uninterrupted flow of plastering materials
from out-of-state origins to Illinois job sites for use these by
plastering contractors. Restraint or disruption of plastering work
in the Chicago area thus necessarily affects this interstate flow
of plastering materials adversely. Since 1938, the Chicago
defendants have acted in concert to suppress competition among
local plastering contractors, to prevent out-of-state contractors
from doing any business in the Chicago area, and to bar entry of
new local contractors without approval by a private examining board
set up by the union. The effect of all this has been an unlawful
and unreasonable restraint of the flow in interstate commerce of
materials used in the Chicago plastering industry.
The District Court did not question that the foregoing and other
factual allegations showed a combination to restrain competition
among Chicago plastering contractors. But the court considered
these allegations to be "wholly a charge of local restraint and
monopoly," not reached by the Sherman Act. And the court held that
there was no allegation of fact which showed that these powerful
local restraints had a sufficiently adverse effect on the flow of
plastering materials into Illinois. At this point, we disagree. The
complaint plainly charged several times that the effect of all
these local restraints was to restrain interstate commerce. Whether
these charges be called "allegations of fact" or "mere conclusions
of the pleader," we hold that they must be taken into account in
deciding whether the Government is entitled to have its case
tried.
Page 347 U. S. 189
We are not impressed by the argument that the Sherman Act could
not possibly apply here because the interstate buying, selling, and
movement of plastering materials had ended before the local
restraints became effective. Where interstate commerce ends and
local commerce begins is not always easy to decide, and is not
decisive in Sherman Act cases.
See Mandeville Island Farms v.
American Crystal Sugar Co., 334 U. S. 219,
334 U. S. 232.
However this may be, the complaint alleged that continuously since
1938, a local group of people were to a large extent able to
dictate who could and who could not buy plastering materials that
had to reach Illinois through interstate trade if they reached
there at all. Under such circumstances, it goes too far to say that
the Government could not possibly produce enough evidence to show
that these local restraints caused unreasonable burdens on the free
and uninterrupted flow of plastering materials into Illinois. That
wholly local business restraints can produce the effects condemned
by the Sherman Act is no longer open to question.
See, e.g.,
United States v. Women's Sportswear Manufacturers Assn.,
336 U. S. 460,
336 U. S.
464.
The Government's complaint may be too long and too detailed in
view of the modern practice looking to simplicity and reasonable
brevity in pleading. It does not charge too little. It includes
every essential to show a violation of the Sherman Act. And where a
bona fide complaint is filed that charges every element
necessary to recover, summary dismissal of a civil case for failure
to set out evidential facts can seldom be justified. If a party
needs more facts, it has a right to call for them under Rule 12(e)
of the Federal Rules of Civil Procedure. And any time a claim is
frivolous, an expensive full dress trial can be avoided by invoking
the summary judgment procedure under Rule 56.
We hold it was error to dismiss the Government's complaint for
failure to state a cause of action.
Page 347 U. S. 190
This leaves the separate contention of the union that it is
immune from prosecution for violation of the Sherman Act because of
§ 20 of the Clayton Act. This contention has no merit under the
allegations of the complaint here, because they show, if true, that
the union and its president have combined with business contractors
to suppress competition among them.
Allen Bradley Co. v. Local
Union No. 3, 325 U. S. 797.
Reversed.
* 26 Stat. 209, as amended by 50 Stat. 693, 15 U.S.C. § 1, so
far as here relevant, reads:
"Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal. . .
."
The complaint here also charged a violation of § 2 of the
Sherman act, but the Government has not pressed that claim here.
Cf. Standard Oil Co. v. United States, 337 U.
S. 293,
337 U. S.
314.
MR. JUSTICE MINTON, with whom MR. JUSTICE DOUGLAS joins,
dissenting.*
That, accepting the pleadings as true, there are and were
conspiracies to restrain is not open to question. The question is
whether the Sherman Act applies, and that depends upon whether the
conspiracies are to restrain interstate commerce. In my opinion,
the activities here complained of are wholly intrastate, and the
restraint upon interstate commerce, if any, is so indirect, remote,
and inconsequential as to be without effect, and wholly foreign to
an intent or purpose to conspire to restrain interstate
commerce.
There is no interference with interstate commerce. That commerce
ends when the plaster and lath reach the building site, whether
they come first to material suppliers and at rest in their
warehouses and afterwards on order delivered to the contractors on
the job, as most of the transactions are alleged to be handled, or
are delivered directly to the job. The construction of a building
and the incorporation therein of plaster and lath are purely local
transactions.
"Nor is building commerce, and the fact that the materials to be
used are shipped in from other states
Page 347 U. S. 191
does not make building a part of such interstate commerce."
Anderson v. Shipowners' Assn., 272 U.
S. 359,
272 U. S.
364.
The Government does not and could not contend that building is
commerce. It contends that the appellees' acts affect commerce,
relying upon such cases as
Labor Board v. Denver Building &
Const. Trades Council, 341 U. S. 675, and
Walling v. Jacksonville Paper Co., 317 U.
S. 564. But those cases arose under different statutes,
the sweep of which is broader than that of § 1 of the Sherman Act,
which declares illegal only those contracts, combinations and
conspiracies "in restraint of trade or commerce among the several
States." The Denver Council case arose under the Labor Management
Relations Act, which provides:
"SEC. 10. (a) The Board is empowered, as hereinafter provided,
to prevent any person from engaging in any unfair labor practice
(listed in section 8) affecting commerce. . . ."
61 Stat. 146, 29 U.S.C. § 160(a). Section 2 of that Act defines
"affecting commerce" as follows:
"(7) The term 'affecting commerce' means in commerce, or
burdening or obstructing commerce or the free flow of commerce, or
having led or tending to lead to a labor dispute burdening or
obstructing commerce or the free flow of commerce."
61 Stat. 138, 29 U.S.C. § 152(7).
The
Jacksonville Paper case arose under the Fair Labor
Standards Act, which is applicable to "employees who [are] engaged
in commerce or in the production of goods for commerce. . . ." 52
Stat. 1062, 29 U.S.C. § 206. Furthermore, that case dealt with
transactions that took place in the stream of commerce.
Compare
317 U. S.
Page 347 U. S. 192
Carr Bros. Co., 317 U. S. 572. In
the instant cases, the stream of commerce stops at the building
site.
Insofar as the factual allegations in these complaints are
concerned, the appellees are essentially charged with conspiring to
divide the plastering and lathing business in the Chicago area
among themselves, limiting the number and classes of persons who
may become contractors or union members and reducing competition
among the contractors, primarily by means of union control over
those who may engage in the business either as contractors or as
union members. The acts of the appellees here complained of thus
are all related to local building construction and those permitted
to engage in such construction. The allegations do not establish
any interference with the flow of commerce at its beginning or end
or in the course of its flow, or that anything is done to influence
the place from whence or to which the materials come or go, or
their price. To be sure, the complaints contain bald statements to
the effect that the alleged conspiracies are in restraint of
interstate commerce. However, these conclusional allegations add
nothing, and do not conceal the failure to set forth facts showing
any direct or substantial restraint on interstate commerce or a
purpose or intent to do so. What is charged in these cases may
constitute a restraint under state jurisdiction, and may remotely
or indirectly affect interstate commerce. But that has been
consistently held to be no violation of the Sherman Act.
Apex
Hosiery Co. v. Leader, 310 U. S. 469,
310 U. S. 495;
Levering & Garrigues Co. v. Morrin, 289 U.
S. 103,
289 U. S.
107.
Industrial Assn. of San Francisco v. United States,
268 U. S. 64, was a
case involving far more offensive action than the instant cases. In
that case, contractors and suppliers, in order to force an "open
shop," required builders to secure permits for certain
materials
Page 347 U. S. 193
from a builders' exchange, refusing such permits to those who
did not maintain an open shop. Some of the materials came from
other States, and the permits were so handled as to control
materials, such as plumbers' supplies, that came altogether from
out-of-state sources. This Court, commenting on the "established
general facts" of the plan, said:
"Interference with interstate trade was neither desired nor
intended. On the contrary, the desire and intention was to avoid
any such interference, and, to this end, the selection of materials
subject to the permit system was substantially confined to
California productions. The thing aimed at and sought to be
attained was not restraint of the interstate sale or shipment of
commodities, but was a purely local matter, namely, regulation of
building operations within a limited local area, so as to prevent
their domination by the labor unions. Interstate commerce --
indeed, commerce of any description -- was not the object of
attack, 'for the sake of which the several specific acts and
courses of conduct were done and adopted.'
Swift & Co. v.
United States, 196 U. S. 375,
196 U. S.
397. The facts and circumstances which led to and
accompanied the creation of the combination and the concert of
action complained of, which we have briefly set forth, apart from
other and more direct evidence, are 'ample to supply a full local
motive for the conspiracy.'
United Mine Workers v. Coronado
Coal Co., 259 U. S. 344,
259 U. S.
411."
268 U.S. at
268 U. S.
77.
In language prophetic, this Court further said:
"But here, the delivery of the plaster to the local
representative or dealer was the closing incident of the interstate
movement, and ended the authority
Page 347 U. S. 194
of the federal government under the Commerce Clause of the
Constitution. What next was done with it was the result of new and
independent arrangements."
268 U.S. at
268 U. S.
79.
Although the permits were used so as to interfere with the free
movement of materials and supplies from other States, this Court
said:
"It was, however, an interference not within the design of the
appellants, but purely incidental to the accomplishment of a
different purpose. The court below laid especial stress upon the
point that plumbers' supplies, which for the most part were
manufactured outside the state, though not included under the
permit system, were prevented from entering the state by the
process of refusing a permit to purchase other materials, which
were under the system, to any one who employed a plumber who was
not observing the 'American plan.' This is to say, in effect, that
the building contractor, being unable to purchase the permit
materials, and consequently unable to go on with the job, would
have no need for plumbing supplies, with the result that the trade
in them, to that extent, would be diminished. But this ignores the
all-important fact that there was no interference with the freedom
of the outside manufacturer to sell and ship or of the local
contractor to buy. The process went no further than to take away
the latter's opportunity to use, and therefore his incentive to
purchase. . . ."
"
* * * *"
"The alleged conspiracy and the acts here complained of spent
their intended and direct force upon a local situation -- for
building is as essentially local as mining, manufacturing or
growing crops -- and if, by
Page 347 U. S. 195
a resulting diminution of the commercial demand, interstate
trade was curtailed either generally or in specific instances, that
was a fortuitous consequence so remote and indirect as plainly to
cause it to fall outside the reach of the Sherman Act."
268 U.S. at
268 U. S. 80,
268 U. S.
82.
As I see it, that is all that happens here. Interstate commerce
has ended. There is no intent or purpose to restrain interstate
commerce. The effect upon commerce is incidental, remote, and
indirect. It is a restraint that spends itself on a purely local
incident. If contractors of materials and supplies may combine to
compel an open shop by far more drastic measures, as in the
Industrial Association case, then surely the workers and
contractors may combine to promote a closed system by an agreement
local in its nature.
The case of
Levering & Garrigues Co. v. Morrin,
289 U. S. 103,
which followed the
Industrial Association case, is in
point here. In that case, the companies, engaged in the building of
steel bridges, operated open shops. The unions, by strike and other
techniques, sought to force closed shops. The companies sought an
injunction under the Sherman Act. The complaint was dismissed for
failure to state a cause of action. This Court said:
"Accepting the allegations of the bill at their full value, it
results that the sole aim of the conspiracy was to halt or suppress
local building operations as a means of compelling the employment
of union labor, not for the purpose of affecting the sale or
transit of materials in interstate commerce. Use of the materials
was purely a local matter, and the suppression thereof the result
of the pursuit of a purely local aim. Restraint of interstate
commerce was not an object of the conspiracy. Prevention of
Page 347 U. S. 196
the local use was in no sense a means adopted to effect such a
restraint. It is this exclusively local aim, and not the fortuitous
and incidental effect upon interstate commerce, which gives
character to the conspiracy. . . . If thereby the shipment of steel
in interstate commerce was curtailed, that result was incidental,
indirect, and remote, and therefore not within the antitrust acts,
as this court, prior to the filing of the present bill, had already
held. . . ."
289 U.S. at
289 U. S.
107.
If a union may strike and obtain its objective of a closed shop
without interfering with interstate commerce, as in the
Levering case, the unions in the instant cases could
certainly bargain and agree with the employers to reach the same
result.
See also United Leather Workers' International Union v.
Herkert & Meisel Trunk Co., 265 U.
S. 457,
and see United States v. Frankfort
Distilleries, 324 U. S. 293,
324 U. S. 297,
where the cases discussed above are distinguished.
The Government has relied heavily upon
Mandeville Island
Farms v. American Crystal Sugar Co., 334 U.
S. 219. But that decision, as did the
Frankfort
Distilleries case, recognized the distinct line of cases I
rely upon here as distinguishable from the holding therein. 334
U.S. at
334 U. S.
234.
In No. 440, it is alleged that the appellees have prevented and
discouraged out-of-state plastering contractors from doing business
in the Chicago area by slowdowns, fines on union labor,
intimidation, and other means. Assume that such tactics are
effective to keep out-state contractors from seeking contracts in
the Chicago area. Contracting to plaster a building in Chicago by
an out-state contractor is not commerce, even if the contractor did
intend to bring his men from out-state, any more than bringing men
from one State into another to play baseball is commerce.
Toolson v. New
York
Page 347 U. S. 197
Yankees, 346 U. S. 356;
Federal Baseball Club of Baltimore v. National League of
Professional Baseball Clubs, 259 U. S. 200,
259 U. S. 208.
The materials to plaster the building flow without interruption to
the building site. There, a local labor situation arises that has
nothing to do with commerce or any conspiracy to restrain it. That
is all that is involved here, and therefore commerce in the sense
of that term as used in the Sherman Act is not involved.
I would affirm.
* [This opinion applies also to No. 439,
United States v.
Employing Lathers assn. et al, post, p.
347 U. S.
198.]