Loewe v. Lawlor

Appellant
D. E. Loewe
Appellee
Martin Lawlor
Appellant's Claim
That the union of which Martin Lawlor was the business agent, the United Hatters Union of North America, was acting against the Sherman Anti-Trust Act inunlawful restraint of trade by attempting to organize a boycott of Loewe's company, the Danbury Hatters, in order to force Loewe to permit his company tobe unionized.
Chief Lawyers for Appellant
James M. Beck, Daniel Davenport
Chief Lawyers for Appellee
John Kimberly Beach, John H. Light
Justices for the Court
David Josiah Brewer, William Rufus Day, Melville Weston Fuller (writing for the Court), John Marshall Harlan I, Oliver Wendell Holmes, Joseph McKenna, William Henry Moody, Rufus Wheeler Peckham, Edward Douglass White
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
3 February 1908
Decision
That the United Hatters Union was indeed acting in restraint of interstate commerce, even though its activities had actually been limited to a single state, and that union members were personally liable to be sued or fined for theactivities of their union.
Significance
Loewe v. Lawlor was the first major application of the anti-trust lawsto a labor union.
The end of the nineteenth century and the beginning of the twentieth centurywas a time of great transition in the United States. Huge corporations, knownas trusts, had formed, often creating monopolies that controlled the pricesof key products. At the same time, working people had begun to form unions, organizations that enabled them to demand better wages and working conditionsfrom their employers.
In 1890, concerned about the growing power of the trusts, Congress passed theSherman Anti-Trust Act. This act held, in part:
1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make anysuch contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction therefore, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceedingone year, or by both said punishments, in the discretion of the court.
2. Every person who shall monopolize, or attempt to monopolize, or combine orconspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and on conviction therefore, shall be punishedby fine not exceeding five thousand dollars, or by imprisonment not exceedingone year, or by both said punishments, in the discretion of the court . . .
3. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefore in any circuit court of the United States .. . and shall recover three fold the damages by him sustained, and the costsof suit, including a reasonable attorney's fee.
The Congress that passed the Sherman Anti-Trust Act clearly intended it to combat the "restraint of trade" practiced by the big corporations that fixed prices, controlled distribution, and often drove smaller companies out of business. But on 3 February 1908, the Supreme Court made history by applying the antitrust law to the United Hatters of North America Union.
"Look for the Union Label"
The background to Loewe v. Lawlor is a classic story of early labor history. The United Hatters were a union of some 9,000 members, primarily in the Northeast and Midwest, with some members in California and in Ontario, Canada. Six of the union's locals, with about 3,000 members, were located in Connecticut.
Following the union principles of "unity" and "strength in numbers," the United Hatters had affiliated with the American Federation of Labor (AFL), a group of unions that is the predecessor of today's AFL-CIO. In 1908, the AFL hadover 1.4 million members in the United States and Canada--a small fraction ofAmerica's working people.
In those days, there was virtually no legislation that protected union activity, and union members were frequently fired or harassed in order to discourage them and their fellow workers from joining the union. Despite the adverse conditions, the United Hatters had managed to organize some 70 of the nation's82 hat factories. That left only 12 unorganized shops, one of which was theDanbury Connecticut company, D. E. Loewe & Co., known as Danbury Hatters.
According to the union, Danbury Hatters had:

. . . discriminatedagainst the union men in their employ, had thrown them out of employment because they refused to give up their union cards and teach boys, who were intended to take their places after seven months' instruction, and had driven theiremployes [sic] to extreme measures by their persistent, unfair and un-American policy of antagonizing union labor, forcing wages to a starvation scale and given boys and cheap, unskilled foreign labor preference over experienced and capable union workmen . . .

The union needed to decide how to respond to this apparent harassment. One approach might have been a strike.In those days, however, there was no law to prevent an employer from replacing striking workers with non-union labor. And while workers were on strike, they did not get paid.
So the United Hatters tried another tactic: they called a boycott. With the help of the AFL, they called on union members and sympathizers across the nation to refuse to buy hats that were made by Danbury Hatters, or indeed, any hat that did not have a union label.
"Lawful Combination" or Restraint of Trade?
Danbury Hatters was not happy about this threat to its business. The companyowner, D. E. Loewe, brought suit against individual members of the United Hatters, including the union's business agent, Martin Lawlor. Loewe referred tothe provisions of the Sherman Anti-Trust Act cited above, which he claimed entitled him to "three fold" the amount he had lost through the boycott, plus court costs for the suit itself. Altogether, Loewe wanted $80,000.
Loewe's argument was straightforward: by combining with unions across the country to boycott his goods, United Hatters was unlawfully restraining his trade. From Loewe's point of view, the working men and women that were refusing to buy his hats were no different from a huge corporation that tried to drivea little company out of business.
Of course, the union saw it differently. They pointed out that the Sherman Anti-Trust Act was a federal law, which applied only to trade between states. But, they said, the United Hatters local that was trying to organize Danbury Hatters existed only in Connecticut, within the boundaries of a single state.Only thirteen years before, in an 1895 case called United States v. E. C.Knight, the Court had ruled that the local activities of a nationwide Sugar Trust did not come under the provisions of the Anti-Trust Act. The union probably expected that its own local activities would find similar toleration.After all, the union's lawyer pointed out, the United Hatters was not an illegal trust but a "lawful combination."
Seeking a Political Solution
In a unanimous ruling, all nine justices found that the secondary boycott organized by the United Hatters was illegal under the Sherman Anti-Trust Act, which, said the Court "prohibits any combination which essentially obstructs the free flow of commerce between the States . . . " Moreover, the Court added:

A combination may be in restraint of interstate trade and withinthe meaning of the Anti-Trust Act although the persons exercising the restraint may not themselves be engaged in interstate trade . . . The Anti-Trust Actof July 2, 1890 makes no distinctions between classes. Organizations of farmers and laborers were not exempted from its operation . . .

Therefore, said the Court, Martin Lawlor did indeed owe $80,000 in damages to D.E. Loewe.
Unions across the country were furious with the decision in Loewe v. Lawlor. They were also scared. If manufacturers could sue them for such enormous sums every time they tried to organize, they would soon be unable to takeany action at all.
Since the judicial system seemed so unsympathetic to labor, unions tried thelegislative route. They helped pass the Clayton Antitrust Act of 1914, whichspecifically exempted labor unions from suits brought under the antitrust laws. Real legal relief for labor, however, was not to come until the 1930s, when heightened labor militancy and an increased number of strikes created a whole new set of laws recognizing workers' right to organize.
Related Cases

• Adair v. United States, 208 U.S. 161 (1908).
  
• Standard Oil Co. v. United States, 221 U.S. 1 (1911).
  
• Duplex Printing Press Co. v. Deering, 254 U.S. 443 (1921).
  
• National Labor Relations Board v. Jones and Laughlin Steel Corp.,301 U.S. 1 (1937).