H. A. Artists & Assocs., Inc. v. Actors’ Equity Assn., 451 U.S. 704 (1981)

H. A. Artists & Assocs., Inc. v. Actors’ Equity Assn.

No. 80-348

Argued March 23, 1981
Decided May 26, 1981
451 U.S. 704

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

Respondent union, which represents most of the stage actors and actresses in the United States, has entered into collective bargaining agreements with virtually all major theatrical producers throughout the country, fixing minimum (scale) wages and other conditions of employment for those represented by the union. Because of abuses by theatrical agents who, as independent contractors, negotiated employment contracts for actors and actresses with producers, particularly abuses as to the extraction of high commissions tending to undermine collectively bargained rates of compensation, the union, in 1928, unilaterally established a licensing system for the regulation of agents, prohibiting union members from using an agent who has not obtained a license from the union. The essential elements of the licensing system have remained unchanged. To obtain a license, an agent must agree to comply with union regulations which, inter alia, prohibit agent commissions on scale portions of wages received by an actor or an actress from a producer, limit commissions on wages in excess of scale pay, and require payment to the union of franchise fees. Petitioners, agents who refused to obtain union licenses, instituted this action, contending that the union’s regulations violated §§ 1 and 2 of the Sherman Act. After trial, the District Court dismissed the complaint, finding that the union’s agency franchise system was protected from liability by the antitrust exemptions of unions and their members arising under the Clayton Act and the Norris-LaGuardia Act. The Court of Appeals affirmed, determining that the central feature of the union’s franchising system -- the exaction of an agreement by agents as to their commissions -- was immune from antitrust challenge. The court suggested that, if the exactions of franchise fees exceeded the union’s costs in administering its license system, they could not legally be collected; but despite the lack of any cost evidence at trial, the court concluded that the fees were sufficiently low that a remand on the point would not serve any useful purpose.

Held:

1. Labor unions, acting in their self-interest and not in combination with nonlabor groups, enjoy statutory exemption from Sherman Act liability, but the exemption does not apply when a union combines with a "nonlabor group," or persons who are not "parties to a labor dispute" within the meaning of the Norris-LaGuardia Act. United States v. Hutcheson, 312 U.S. 219. Here, the union’s franchising of agents did not involve any combination between the union and any "nonlabor groups." The record amply supports the conclusion that there was no combination between the union and the theatrical producers, and the determination of whether the combination between the union and those agents who agreed to become franchised was a combination with a "nonlabor group" depends on whether there was

job or wage competition or some other economic interrelationship affecting legitimate union interests between the union members and the independent contractors.

Musicians v. Carroll, 391 U.S. 99, 106. Because of the peculiar structure of the legitimate theater industry, where it is customary, if not essential, for union members to secure employment through agents whose fees are calculated as a percentage of the member’s wage -- thus making it impossible for the union to defend even the integrity of the minimum wages it has negotiated with producers without regulation of agency fees -- the union’s regulations are within the labor exemption. Agents must, therefore, be considered a "labor group," and their controversy with the union is plainly a "labor dispute" as defined in the Norris-LaGuardia Act. The union’s regulations are also clearly designed to promote its legitimate self-interest. Pp. 713-722.

2. However, the union’s justification for the franchise fees -- based only on the suggestion in the most general terms that they are related to the basic purposes of its regulations -- is inadequate to warrant the conclusion that the fees are a permissible component of the exempt regulatory system. P. 722.

622 F.2d 647, affirmed in part, reversed in part, and remanded.

STEWART, J., delivered the opinion of the Court, in which WHITE; BLACKMUN, POWELL, REHNQUIST, and STEVENS, JJ., joined, and in all but Part II-D of which BURGER, C.J., and BRENNAN and MARSHALL, JJ., joined. BRENNAN, J., filed an opinion concurring in part and dissenting in part, in which BURGER, C.J., and MARSHALL, J., joined, post, p. 723.