LOEWE v. LAWLOR 208 U.S. 274 (1908)

This case fits a pattern of antilabor decisions that supported injunctions against trade unions and struck down maximum hours acts, minimum wage acts, and acts prohibiting yellow dog contracts. In Loewe, the Court, while crippling secondary boycotts, held that unions were subject to the antitrust laws and therefore were civilly liable for triple damages to compensate for injuries inflicted by their restraints on interstate commerce.

Loewe originated in an attempt by the United Hatters Union, AFL, to organize a manufacturer of hats in Danbury, Connecticut. Most hat firms in the country were unionized. The few nonunion firms sweated their workers and were able to undersell unionized competitors, threatening their survival as well as the jobs of their unionized labor. Loewe's firm refused to negotiate a union contract and defeated a strike. The union retaliated with a secondary boycott, a refusal by the national membership of the AFL to buy Loewe's hats or patronize retailers who sold them. Loewe sued the union under the sherman antitrust act after the boycott resulted in a substantial loss of orders. The union demurred to the charges, admitting that it had engaged in the boycott but alleging that it had not violated the antitrust law, because that law did not cover the activities of trade unions and because the boycott in this case was not a conspiracy in restraint of commerce among the states. Invoking the doctrine of the Sugar Trust Case (united states v. e. c. knight co. , 1895) that manufacturing is a purely local activity, the union claimed that neither it nor the manufacturer engaged in interstate commerce. Although Loewe's hats, once manufactured, were shipped to purchasing retailers in twenty-one states, the union argued that it did not interfere with the actual transportation across state lines and that any restraint on interstate commerce resulting from the boycott was, according to the Sugar Trust Case, remote and indirect.

Overruling a lower federal court decision in favor of the union, the Supreme Court, in a unanimous opinion by Chief Justice melville w. fuller, for the first time held that the Sherman Act applied to union activities; that a secondary boycott conducted across state lines is a conspiracy in restraint of interstate commerce; and that even if the restraint were remote and indirect, the Sherman Act applied because it covered "every" combination in the form of a trust "or otherwise" in restraint of interstate commerce. In 1911, however, the Court embraced the rule of reason, enabling it subsequently to find that corporations, not unions, might engage in reasonable restraints; that is, the act did not prohibit all restraints except by unions. In Loewe, however, the Court construed the act broadly, even to the point of using the stream of commerce doctrine to show the scope of the commerce power. There is no evidence, however, that Congress, when adopting the Sherman Act, intended to cover union activities.

The case presents the phenomenon of a labor union being held within the terms of an antitrust act and contrasting opinions of the Court. In the Sugar Trust Case the Court held a ninety-eight percent monopoly not to violate the act because manufacturing is local and any effect upon or relationship with interstate commerce is necessarily indirect; here, though, a small hatmakers' union came within the act because its boycott was interstate, despite its having done nothing to control the price or transportation of the product of a manufacturer. Moreover, the decision in this case came one week after the decision in Adair v. United States (1908), where the Court declared that there is "no connection between interstate commerce and membership in a labor organization," as it struck down an act of Congress prohibiting the use of yellow-dog contracts by railroads against railroad workers engaged in interstate commerce. If Adair correctly invalidated the attempt by Congress to protect railroad workers under the commerce power, then a week later the Court should have decided that Congress under the same commerce power cannot, via the Sherman Act, reach an admittedly indirect relationship between a hatters' union and interstate commerce. Both the legislative history of the antitrust law and the Sugar Trust and Adair precedents opposed the decision in the Danbury Hatters' Case. Following the Court's decision, a triple-damages suit against the union in the lower federal court resulted in a fine of $252,000. The Danbury Hatters went unorganized, hatmakers everywhere suffered, and unionization everywhere was thwarted to an inestimable extent by the threat of Sherman Act suits. Loewe is one of the major cases on the subject of labor and the constitution.

Leonard W. Levy
(1986)

Bibliography

Lieberman, Elias 1960 Unions Before the Bar. Pages 56–70. New York: Harper & Row.