CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
Stevens, J., delivered the opinion of the Court in which Burger, C. J., and Brennan, White, Blackmun, Powell, Rehnquist, and O'connor, JJ., joined. Marshall, J., filed a dissenting opinion, post, p. 546.
JUSTICE STEVENS delivered the opinion of the Court.
This case arises out of a dispute between parties to a multi-employer collective-bargaining agreement. The plaintiff unions allege that, in violation of the antitrust laws, the multi-employer association and its members coerced certain third parties, as well as some of the association's members, to enter into business relationships with nonunion firms. This coercion, according to the complaint, adversely affected the trade of certain unionized firms and thereby restrained the
business activities of the unions. The question presented is whether the complaint sufficiently alleges that the unions have been "injured in [their] business or property by reason of anything forbidden in the antitrust laws" and may therefore recover treble damages under § 4 of the Clayton Act. 38 Stat. 731, 15 U. S. C. § 15. Unlike the majority of the Court of Appeals for the Ninth Circuit, we agree with the District Court's conclusion that the complaint is insufficient.
The two named plaintiffs (the Union) -- the California State Council of Carpenters and the Carpenters 46 Northern Counties Conference Board -- are affiliated with the United Brotherhood of Carpenters and Joiners of America, AFL-CIO. The Union represents more than 50,000 individuals employed by the defendants in the carpentry, drywall, piledriving, and related industries throughout the State of California. The Union's complaint is filed as a class action on behalf of numerous affiliated local unions and district councils. The defendants are Associated General Contractors of California, Inc. (Associated), a membership corporation composed of various building and construction contractors, approximately 250 members of Associated who are identified by name in an exhibit attached to the complaint, and 1,000 unidentified co-conspirators.
The Union and Associated, and their respective predecessors, have been parties to collective-bargaining agreements governing the terms and conditions of employment in construction-related industries in California for over 25 years. The wages and other benefits paid pursuant to these agreements amount to more than $750 million per year. In addition, approximately 3,000 contractors who are not members of Associated have entered into separate "memorandum agreements" with the Union, which bind them to the terms of the master collective-bargaining agreements between the Union and Associated. The amended complaint does not
state the number of nonsignatory employers or the number of nonunion employees who are active in the relevant market.
In paragraphs 23 and 24 of the amended complaint, the Union alleges the factual basis for five different damages claims.*fn1 Paragraph 23 alleges generally that the defendants conspired to abrogate and weaken the collective-bargaining relationship between the Union and the signatory employers. In seven subsections, paragraph 24 sets forth activities allegedly committed pursuant to the conspiracy. The most specific allegations relate to the labor relations between the parties.*fn2 The complaint's description of actions affecting nonparties is both brief and vague. It is alleged that defendants
"(3) Advocated, encouraged, induced, and aided non-members of defendant Associated General Contractors of California, Inc. to refuse to enter into collective bargaining relationships with plaintiffs and each of them;
"(4) Advocated, encouraged, induced, coerced, aided and encouraged owners of land and other letters of construction contracts to hire contractors and subcontractors who are not signatories to collective bargaining agreements with plaintiffs and each of them;
"(5) Advocated, induced, coerced, encouraged, and aided members of Associated General Contractors of California, Inc., non-members of Associated General Contractors of California, Inc., and 'memorandum contractors' to enter into subcontracting agreements with subcontractors who are not signatories to any collective bargaining agreements with plaintiffs and each of them"; App. E to Pet. for Cert. 17-19 (emphasis added).*fn3
Paragraph 25 describes the alleged "purpose and effect" of these activities: first, "to weaken, destroy, and restrain the trade of certain contractors," who were either members of Associated or memorandum contractors who had signed agreements with the Union; and second, to restrain "the free exercise of the business activities of plaintiffs and each of them."*fn4 Plaintiffs claim that these alleged antitrust violations
caused them $25 million in damages.*fn5 The complaint does not identify any specific component of this damages claim.
After hearing "lengthy oral argument" and after receiving two sets of written briefs, one filed before and the second filed after this Court's decision in Connell Construction Co. v. Plumbers & Steamfitters, 421 U.S. 616 (1975), the District Court dismissed the complaint, including the federal antitrust claim. 404 F.Supp. 1067 (ND Cal. 1975).*fn6 The court observed that the complaint alleged "a rather vague, general conspiracy," and that the allegations "appear typical of disputes a union might have with an employer," which in the normal course are resolved by grievance and arbitration or by the NLRB. Id., at 1069.*fn7 Without seeking to clarify or further amend the first amended complaint, the Union filed its notice of appeal on October 9, 1975.
Over five years later, on November 20, 1980, the Court of Appeals reversed the District Court's dismissal of the Union's federal antitrust claim. 648 F.2d 527.*fn8 The majority
of the Court of Appeals disagreed with the District Court's characterization of the antitrust claim; it adopted a construction of the amended complaint which is somewhat broader than the allegations in the pleading itself.*fn9 The Court of Appeals held (1) that a Sherman Act violation -- a group boycott -- had been alleged, id., at 531-532; (2) that the defendants' conduct was not within the antitrust exemption for labor activities, id., at 532-536; and (3) that the plaintiffs had standing to recover damages for the injury to their own business activities occasioned by the defendants' "industry-wide boycott against all subcontractors with whom the Unions had signed agreements . . . ." Id., at 537. In support of the Union's standing, the majority reasoned that the Union was within the area of the economy endangered by a breakdown of competitive conditions, not only because injury to the Union was a foreseeable consequence of the antitrust violation, but also because that injury was specifically intended by the defendants. The court noted that its conclusion was consistent with other cases holding that union organizational
and representational activities constitute a form of business protected by the antitrust laws.*fn10
As the case comes to us, we must assume that the Union can prove the facts alleged in its amended complaint. It is not, however, proper to assume that the Union can prove facts that it has not alleged or that the defendants have violated the antitrust laws in ways that have not been alleged.*fn11
We first note that the Union's most specific claims of injury involve matters that are not subject to review under the antitrust laws. The amended complaint alleges that the defendants have breached their collective-bargaining agreements in various ways, and that they have manipulated their corporate names and corporate status in order to divert business to nonunion divisions or firms that they actually control. Such deceptive diversion of business to the nonunion portion of a so-called "double-breasted" operation might constitute a breach of contract, an unfair labor practice, or perhaps even a
common-law fraud or deceit, but in the context of the bargaining relationship between the parties to this litigation, such activities are plainly not subject to review under the federal antitrust laws.*fn12 Similarly, the charge that the defendants "advocated, encouraged, induced, and aided nonmembers . . . to refuse to enter into collective bargaining relationships" with the Union (PM 24(3)) does not describe an antitrust violation.*fn13
The Union's antitrust claims arise from alleged restraints caused by defendants in the market for construction contracting and subcontracting.*fn14 The complaint alleges that defendants "coerced"*fn15 two classes of persons: (1) landowners and
others who let construction contracts, i. e., the defendants' customers and potential customers; and (2) general contractors, i. e., defendants' competitors and defendants themselves. Coercion against the members of both classes was designed to induce them to give some of their business -- but not necessarily all of it -- to nonunion firms.*fn16 Although the pleading does not allege that the coercive conduct increased the aggregate share of nonunion firms in the market, it does allege that defendants' activities weakened and restrained the trade "of certain contractors." See n. 4, supra. Thus, particular victims of coercion may have diverted particular contracts to nonunion firms and thereby caused certain unionized subcontractors to lose some business.
We think the Court of Appeals properly assumed that such coercion might violate the antitrust laws.*fn17 An agreement to restrain trade may be unlawful even though it does not entirely exclude its victims from the market. See Associated Press v. United States, 326 U.S. 1, 17 (1945). Coercive activity that prevents its victims from making free choices between market alternatives is inherently destructive of competitive conditions and may be condemned even without ...