United States v. Employing Lathers Assn. of Chicago

Background

The Government sued a Chicago trade association of lathing contractors, two member contractors, and a local union of lathers, accusing them under the Sherman Act of combining to restrain trade. The complaint alleges that large quantities of lathing and related building materials are produced in other states, shipped into Chicago, and then funneled through local plastering and lathing contractors. The District Court dismissed the complaint for failing to state a claim, and the Government took a direct appeal under the statute authorizing such appeals.

Reasoning

The Court examined the written allegations and compared this case to a similar plasterers’ case it had just reversed. The majority found the complaint detailed a broad scheme: limiting the number of contractors, prescribing qualifications, excluding people (including on racial grounds), assigning work, and substantially suppressing competition. Those allegations, the Court said, pleaded that the combination directly affected the interstate flow of lathing and building materials. On that basis, the Court held the complaint states a cause of action that can go forward if proved.

Real world impact

The decision means the Government’s case will proceed in the lower court instead of being ended at the pleading stage. It puts Chicago lathing contractors, the local union, and out-of-state suppliers in a position where evidence can be presented about alleged market control and effects on interstate shipments. This ruling is not a final finding of guilt; it allows the factual and evidentiary disputes to be litigated.

Dissents or concurrances

Justice Minton, joined by Justice Douglas, dissented from the reversal, indicating they would have left the dismissal in place because they disagreed that the written complaint sufficiently alleged an unlawful restraint.