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From Antitrust Law Daily, September 28, 2015

Monopolization claims scrapped in iron workers collective bargaining suit

By Greg Hammond, J.D.

A steel reinforcement or “rebar” business’ monopolization claims against a competitor and a local iron workers union were dismissed by the federal district court in Cleveland. The business failed to establish antitrust standing and injury, and the claims were additionally barred by the non-statutory labor exemption, the court concluded (Mohawk Rebar Service, Inc. v. International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers Local Union No. 17, September 24, 2015, Wells, L.).

Mohawk Rebar Service, Inc. provides rebar services for concrete applications on construction projects in Northeastern Ohio. International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers Local Union No. 17 (Local 17) is a labor union that provides iron workers to Mohawk and competitor Harris Davis Rebar, LLC. Mohawk and Local 17 entered into a collective bargaining agreement that contained a “Favored Nations Clause,” providing that if Local 17 gives a better deal to another employer doing the same kind of work, in the same area, the union must extend the same deal to Mohawk. Harris Davis was allegedly given a “better deal” by Local 17, Mohawk alleges, because Harris Davis was not obligated to contribute to the same pension fund as Mohawk. Unlike Mohawk, Harris Davis could contribute to a retirement plan that was not subject to withdrawal liability. The Harris Davis agreement would not be beneficial to Mohawk, however, because it would subject Mohawk to withdrawal liability with its current pension fund. Mohawk consequently brought monopolization, conspiracy, and breach of contract claims against Local 17 and Harris Davis, and the defendants moved to dismiss.

Antitrust standing, injury. In support of its antitrust claims, Mohawk argued that because Harris Davis carried no potential withdrawal liability, it had an unfair economic advantage, and that as a result, Harris Davis was able and would continue to be able to underbid Mohawk for construction jobs. In addition, Mohawk argued that Local 17 provided Harris Davis with an unfair competitive advantage that would eventually give it monopoly power.

The court determined that Mohawk failed to allege sufficient facts to establish antitrust standing because: (1) the connection between the alleged wrongdoing and the alleged injury was tenuous; (2) Mohawk’s purported injury was indirect and not the type the antitrust laws were intended to prevent; and (3) damages were speculative.

Specifically, the court found that Mohawk’s alleged injury was tenuous because it provided no factual allegations to support the notion that it faced a greater financial hardship at present. Rather, Mohawk claimed in a conclusory way that Harris Davis’ agreement with Local 17 afforded Harris Davis a financial advantage in the present, but Mohawk never stated what the advantage was. In addition, Mohawk admitted that its withdrawal liability was not “booked” until an actual withdrawal happens, and that it had not yet made any withdrawal from the pension fund.

Next, Mohawk claimed that Harris Davis had been able to reduce its costs as a result of its agreement with Local 17, but Mohawk was unable to describe what the costs were with any specificity. Further, because Mohawk could not describe how its own costs were greater, the court was unable to infer a causal connection between the supposed antitrust violation and Mohawk’s alleged injury. Rather, the court concluded that Mohawk’s claimed injury was of a “contingent, speculative, and unrealized nature,” because the existence and extent of Mohawk’s withdrawal liability obligation was necessarily governed by future events.

Lastly, the court determined that Mohawk failed to allege actual anticompetitive behavior or an antitrust injury. Mohawk focused on possible harm to itself, according to the court, setting forth evidence that Mohawk was underbid for a single job. This evidence, however, failed to demonstrate that competition was harmed in the relevant market.

Non-statutory exemption. Harris Davis additionally claimed that Mohawk’s claims are barred by the statutory labor exemption. The court agreed, finding: (1) Harris Davis’ agreement with Local 17 primarily affected the parties to that agreement, not Mohawk; (2) there was no dispute that retirement pay was a mandatory subject of bargaining; and (3) Mohawk never alleged that the Harris Davis agreement was not a product of a bona fide arm’s-length negotiation.

The case number is 1:14 CV 00137.

Attorneys: Peter N. Kirsanow (Benesch, Friedlander, Coplan & Aronoff) for Mohawk Rebar Services, Inc. Eben O. Mcnair, IV (Schwarzwald & Mcnair) for International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers Local Union No. 17. Jeffrey E. Hartnett (Hartnett Gladney Hetterman) for International Assoc. of Bridge, Structural, Ornamental, and Reinforcing Iron Workers. Derek E. Diaz (Hahn, Loeser & Parks) for Nucor Corp. Inna Shelley (Littler Mendelson) for Harris Davis Rebar LLC.

Companies: Mohawk Rebar Services, Inc.; International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers Local Union No. 17; International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers; Nucor Corp.; Harris Davis Rebar LLC

MainStory: TopStory Antitrust OhioNews

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