Loewe v. Lawlor
208 U.S. 274, 28 S. Ct. 301 (1908)
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Rule of Law:
A combination or conspiracy by a labor union to conduct a nationwide secondary boycott against a manufacturer's products, which is intended to and does obstruct the free flow of those products in interstate commerce, constitutes a 'combination in restraint of trade' in violation of the Sherman Antitrust Act.
Facts:
- D. E. Loewe & Co. ('Loewe') was a hat manufacturer in Danbury, Connecticut, that sold the vast majority of its products to wholesale dealers in other states.
- Loewe operated its factory as an 'open shop,' employing both union and non-union workers, contrary to the wishes of organized labor.
- The United Hatters of North America (a union whose members, including Martin Lawlor, are the defendants) demanded that Loewe unionize its factory, which would require Loewe to employ only union members.
- After Loewe refused the union's demand, the union, in conjunction with the larger American Federation of Labor (AFL), initiated a nationwide boycott against Loewe's products.
- The union organized a strike, causing workers to walk out of Loewe's factory.
- The union also organized a secondary boycott, threatening wholesalers and retailers in other states with a boycott of their own businesses if they continued to handle or sell Loewe's hats.
- This combination of actions was intended to, and did, obstruct Loewe's ability to produce and sell its hats in interstate commerce, causing the company significant financial harm.
Procedural Posture:
- D. E. Loewe & Co. filed a lawsuit in the U.S. Circuit Court for the District of Connecticut against Martin Lawlor and other members of the United Hatters of North America, seeking threefold damages under Section 7 of the Sherman Antitrust Act.
- The defendants filed a demurrer to the complaint, arguing that their alleged actions did not fall within the scope of the Sherman Act.
- The Circuit Court (the trial court) sustained the demurrer, agreeing with the defendants, and dismissed the complaint.
- Loewe & Co., as appellant, appealed the dismissal to the U.S. Circuit Court of Appeals for the Second Circuit.
- The Circuit Court of Appeals certified a question of law to the U.S. Supreme Court for instruction.
- Upon a joint application from both parties, the Supreme Court ordered the entire case record to be sent up for its review.
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Issue:
Does a combination by members of a labor union to organize a nationwide boycott against a manufacturer's goods, thereby restraining the manufacturer's ability to ship and sell those goods across state lines, constitute a 'combination in restraint of trade or commerce among the several States' prohibited by the Sherman Antitrust Act?
Opinions:
Majority - Mr. Chief Justice Fuller
Yes. A combination by a labor union that intentionally restrains a manufacturer's interstate trade through a secondary boycott violates the Sherman Antitrust Act. The Act prohibits any combination that obstructs the free flow of commerce between states, regardless of the nature of the combination. The court reasoned that the defendants' entire plan had the direct intent and effect of restraining Loewe's interstate trade. It was irrelevant that the defendants themselves were not commercial entities engaged in interstate commerce or that some of their activities (like the strike) occurred within a single state; the overall scheme was aimed squarely at the interstate market. Furthermore, the Court noted that historical records show Congress had considered and rejected amendments that would have exempted labor organizations from the Act's provisions.
Analysis:
This landmark decision was the first time the U.S. Supreme Court applied the Sherman Antitrust Act to a labor union, establishing that unions could be held liable for restraining trade. By classifying a union-organized secondary boycott as an illegal combination, the ruling significantly curtailed the power of organized labor for decades. This case made unions vulnerable to federal injunctions and treble-damage lawsuits, profoundly shaping labor law until the passage of subsequent legislation, like the Clayton Act of 1914 and the Norris-LaGuardia Act of 1932, which sought to limit the application of antitrust law to union activities.
