Antitrust Law Daily Wrap Up, ANTITRUST—SDCal: Cargo Company’s Restraint of Trade Claim Proceeds Against Labor Union, (May 20, 2013)

By Tobias J. Gillett, J.D., LL.M.

A cargo loading and unloading company stated a claim for an unreasonable restraint of trade, but failed to state a claim for conspiracy to monopolize or for attempted monopolization, against a labor union over alleged agreements with employers to restrict certain cargo business to union contractors, the federal district court in San Diego has ruled (Terminalift LLC v. International Longshore and Warehouse Union, Local 29, May 17, 2013, Whelan, T.).

Terminalift LLC engages in the business of loading and unloading cargo from ships at the Port of San Diego. According to Terminalift’s complaint, Terminalift entered into a contract with Scientific Applications International Corporation (SAIC) to load and unload its equipment. However, members of the International Longshore and Warehouse Union, Local 29, began picketing the operation, and Local 29 informed SAIC that it would not permit SAIC’s cargo to be loaded unless SAIC reassigned the work to a union contractor. SAIC then breached its contract with Terminalift and hired SSA Marine (SSA).

In addition, SSA allegedly agreed with Local 29 that only union labor would perform certain of Terminalift’s work, and informed those Terminalift customers that they had to use union labor or face disruptions in unloading their cargo, resulting in several customers abandoning Terminalift. Local 29 also allegedly agreed with the Port of San Diego to bar Terminalift from performing work for the America’s Cup Yacht Race, and representatives of the race were informed during a meeting with the Port and Local 29 that they could not consider Terminalift for loading and unloading cargo.

Conspiracy, conspiracy to monopolize. The court concluded that Terminalift stated a claim for unreasonable restraint of trade under Section 1 of the Sherman Act, but only as to the America’s Cup Race. The court rejected Terminalift’s allegations with respect to an alleged agreement between Local 29 and PMA/SSA to use only union contractors, after which SSA purportedly contacted Terminalift’s customers and warned them to use union labor. There was no written agreement between Local 29 and PMA/SSA, and no factual allegations regarding meetings or communications between them from which a tacit agreement could be inferred.

Moreover, Local 29’s picketing occurred two months before the date it allegedly formed the agreement with PMA/SSA, and so it was “not reasonable to infer that the picketing was part of the agreement or in furtherance of a conspiracy.” The “only reasonable inference” was that the picketing and SSA’s communications with Terminalift’s customers “were independent actions,” in the court’s view.

However, Terminalift did specifically allege that Local 29 engaged in meetings with the Port “to preclude Terminalift from bidding on the offload and loadout of cargo and containers for the America’s Cup Race.” These allegations “demonstrate[d] concerted action,” and thus stated a claim under Section 1, according to the court.

The court rejected a Sherman Act, Section 2 claim based on an allegation of conspiracy to create a shared monopoly. Terminalift had alleged that Local 29 conspired with SSA and other Pacific Maritime Association (PMA) members to monopolize the market. Since the PMA members competed against each other, a conspiracy between them would constitute a shared monopoly, and therefore would not violate Section 2, in the court’s view.

Attempt to monopolize. Terminalift’s claim that Local 29 conspired with PMA member companies in an attempt to monopolize the market also was rejected. Like the previous claim, it was based on a theory of shared monopolization, and therefore failed to state a claim for attempted monopolization under Section 2. Moreover, Terminalift failed to establish a dangerous probability of success because, although it alleged that PMA companies performed over 90% of cargo handling in the relevant market, it did not allege the participation of any PMA member other than SSA, and did not allege the share of the market held by SSA.

Unlike the previous claim, Terminalift did not state a claim under Section 1. Its attempted monopolization claims focused only on Local 29’s picketing and the loss of customers from Local 29’s alleged agreement with SSA, and did not address any liability for the alleged conspiracy with respect to the America’s Cup Race.

The case is No. 11-CV-1999 W (WVG).

Attorneys: Michael E. Avakian (Wimberly, Lawson & Avakian) for Terminalift LLC. Eleanor Irene Morton (Leonard Carder, LLP) for International Longshore and Warehouse Union, Local 29.

Companies: Terminalift LLC

Cases: Antitrust CaliforniaNews