author: Mr. Justice Douglas Mr. Justice Stewart,

text:
    OTTER TAIL POWER CO. v. UNITED STATES
    No. 71-991.
    Argued December 5, 1972
    Decided February 22, 1973

      Douglas, J., delivered the opinion of the Court, in which BreNNAN, White, and Marshall, JJ., joined. Stewart, J., filed an opinion concurring in part and dissenting in part, in which Burger, C. J., and Rehnquist, J., joined, post, p. 382. BlackmuN and Powell, JJ., took no part in the consideration or decision of the case.

      Milton Handler argued the cause for appellant. With him on the briefs were Cyrus A. Field, David F. Lundeen, and Michael D. Blechman.

      Lawrence G. Wallace argued the cause for the United States. On the brief were Solicitor General Griswold, Assistant Attorney General Kauper, Samuel Huntington, Howard E. Shapiro, and Kenneth C. Anderson

      Briefs of amici curiae urging reversal were filed by Leo E. Forquer and George W. McHenry, Jr., for the Federal Power Commission; by George D. Gibson, John H. Shenefield, Frederick T. Searls, William B. Kuder, Malcolm H. Furbush, and C. Hayden Ames for General Public Utilities Corp. et al.; and by H. Thomas Austern and E. Edward Bruce for Seventeen Investor-Owned Electrical Utilities.
      Briefs of amici curiae urging affirmance were filed by John P. McKenna, John C. Scott, and Osee R. Fagan for the City of Gaines-ville, Florida; by Herbert L. Meschke and Jan M. Sebby for the Village of Elbow Lake, Minnesota; by C. Emerson Duncan II and Donald R. Allen for Missouri Basin Municipal Power Agency; and by Northcutt Ely for American Public Power Association.

   Mr. Justice Douglas

delivered the opinion of the Court.

In this civil antitrust suit brought by appellee against Otter Tail Power Co. (Otter Tail), an electric utility company, the District Court found that Otter Tail had attempted to monopolize and had monopolized the retail distribution of electric power in its service area in violation of § 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 2. The District Court found that Otter Tail had attempted to prevent communities in which its retail distribution franchise had expired from replacing it with a municipal distribution system. The principal means employed were (1) refusals to sell power at wholesale to proposed municipal systems in the communities where it had been retailing power; (2) refusals to “wheel” power to such systems, that is to say, to transfer by direct transmission or displacement electric power from one utility to another over the facilities of an intermediate utility; (3) the institution and support of litigation designed to prevent or delay establishment of those systems; and (4) the invocation of provisions in its transmission contracts with several other power suppliers for the purpose of denying the municipal systems access to other suppliers by means of Otter Tail’s transmission systems.

Otter Tail sells electric power at retail in 465 towns in Minnesota, North Dakota, and South Dakota. The District Court’s decree enjoins it from refusing to sell electric power at wholesale to existing or proposed municipal electric power systems in the areas serviced by Otter Tail, from refusing to wheel electric power oyer the lines from the electric power suppliers to existing or proposed municipal systems in the area, from entering into or enforcing any contract which prohibits use of Otter Tail’s lines to wheel electric power to municipal electric power systems, or from entering into or enforcing any contract which limits the customers to whom and areas in which Otter Tail or any other electric power company may sell electric power.

The decree also enjoins Otter Tail from instituting, supporting, or engaging in litigation, directly or indirectly, against municipalities and their officials who have voted to establish municipal electric power systems for the purpose of delaying, preventing, or interfering with the establishment of a municipal electric power system. 331 F. Supp. 54. Otter Tail took a direct appeal to this Court under § 2 of the Expediting Act, as amended, 62 Stat. 989, 15 U. S. C. § 29; and we noted probable jurisdiction, 406 U. S. 944.

In towns where Otter Tail distributes at retail, it operates under municipally granted franchises which are limited from 10 to 20 years. Each town in Otter Tail’s service area generally can accommodate only one distribution system, making each town a natural monopoly market for the distribution and sale of electriq power at retail. The aggregate of towns in Otter Tail’s service area is the geographic market in which Otter Tail competes for the right to serve the towns at retail. That competition is generally for the right to serve the entire retail market within the composite limits of a town, and that competition is generally between Otter Tail and a prospective or existing municipal system. These towns number 510 and of those Otter Tail serves 91%, or 465.

Otter Tail’s policy is to acquire, when it can, existing municipal systems within its service areas. It has acquired six since 1947. Between 1945 and 1970, there were contests in 12 towns served by Otter Tail over proposals to replace it with municipal systems. In only three — Elbow Lake, Minnesota, Colman, South Dakota, and Aurora, South Dakota — were municipal systems actually established. Proposed municipal systems have great obstacles; they must purchase the electric power at wholesale. To do so they must have access to existing transmission lines. The only ones available belong to Otter Tail. While the Bureau of Reclamation has high-voltage bulk-power supply lines in the area, it does not operate a subtransmission network, but relies on wheeling contracts with Otter Tail and other utilities to deliver power for its bulk supply lines to its wholesale customers.

The antitrust charge against Otter Tail does not involve the lawfulness of its retail outlets, but only its methods of preventing the towns it served from establishing their own municipal systems when Otter Tail’s franchises expired. The critical events centered largely in four towns — Elbow Lake, Minnesota, Hankinson, North Dakota, Colman, South Dakota, and Aurora, South Dakota. When Otter Tail’s franchise in each of these towns terminated, the citizens voted to establish a municipal distribution system. Otter Tail refused to sell the new systems energy at wholesale and refused to agree to wheel power from other suppliers of wholesale energy.

Colman and Aurora had access to other transmission. Against them, Otter Tail used the weapon of litigation.

As respects Elbow Lake and Hankinson, Otter Tail simply refused to deal, although according to the findings it had the ability to do so. Elbow Lake, cut off from all sources of wholesale power, constructed its own generating plant. Both Elbow Lake and Hankinson requested the Bureau of Reclamation and various cooperatives to furnish them with wholesale power; they were willing to supply it if Otter Tail would wheel it. But Otter Tail refused, relying on provisions in its contracts which barred the use of its lines for wheeling power to towns which it had served at retail. Elbow Lake after completing its plant asked the Federal Power Commission, under § 202 (b) of the Federal Power Act, 49 Stat. 848, 16 U. S. C. § 824a (b), to require Otter Tail to interconnect with the town and sell it power at wholesale. The Federal Power Commission ordered first a temporary and then a permanent connection. Hankinson tried unsuccessfully to get relief from the North Dakota Commission and then filed a complaint with the federal commission seeking an order to compel Otter Tail to wheel. While the application was pending, the town council voted to withdraw it and subsequently renewed Otter Tail’s franchise.

It was found that Otter Tail instituted or sponsored litigation involving four towns in its service area which had the effect of halting or delaying efforts to establish municipal systems. Municipal power systems are financed by the sale of electric revenue bonds. Before such bonds can be sold, the town’s attorney must submit an opinion which includes a statement that there is no pending or threatened litigation which might impair the value or legality of the bonds. The record amply bears out the District Court’s holding that Otter Tail’s use of litigation halted or appreciably slowed the efforts for municipal ownership. “The delay thus occasioned and the large financial burden imposed on the towns’ limited treasury dampened local enthusiasm for public ownership.” 331 F. Supp. 54, 62.

I

Otter Tail contends that by reason of the Federal Power Act it is not subject to antitrust regulation with respect to its refusal to deal. We disagree with that position.

“Repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust and regulatory provisions.” United States v. Philadelphia National Bank, 374 U. S. 321, 350-351. See also Silver v. New York Stock Exchange, 373 U. S. 341, 357-361. Activities which come under the jurisdiction of a regulatory agency nevertheless may be subject to scrutiny under the antitrust laws.

In California v. FPC, 369 U. S. 482, 489, the Court held that approval of an acquisition of the assets of a natural gas company by the Federal Power Commission pursuant to § 7 of the Natural Gas Act “would be no bar to [an] antitrust suit.” Under § 7, the standard for approving such acquisitions is “public convenience and necessity.” Although the impact on competition is relevant to the Commission’s determination, the Court noted that there was “no ‘pervasive regulatory scheme’ including the antitrust laws that ha[d] been entrusted to the Commission.” Id., at 485. Similarly, in United States v. Radio Corp. of America, 358 U. S. 334, the Court held that an exchange of radio stations that had been approved by the Federal Communications Commission as in the “public interest” was subject to attack in an antitrust proceeding.

The District Court determined that Otter Tail’s consistent refusals to wholesale or wheel power to its municipal customers constituted illegal monopolization. Otter Tail maintains here that its refusals to deal should be immune from antitrust prosecution because the Federal Power Commission has the authority to compel involuntary interconnections of power pursuant to § 202 (b) of the Federal Power Act. The essential thrust of § 202, however, is to encourage voluntary interconnections of power. See S. Rep. No. 621, 74th Cong., 1st Sess., 19-20, 48-49; H. R. Rep. No. 1318, 74th Cong., 1st Sess., 8. Only if a power company refuses to interconnect voluntarily may the Federal Power Commission, subject to limitations unrelated to antitrust considerations, order the interconnection. The standard which governs its decision is whether such action is “necessary or appropriate in the public interest.” Although antitrust considerations may be relevant, they are not determinative.

There is nothing in the legislative history which reveals a purpose to insulate electric power companies from the operation of the antitrust laws. To the contrary, the history of Part II of the Federal Power Act indicates an overriding policy of maintaining competition to the maximum extent possible consistent with the public interest. As originally conceived, Part II would have included a “common carrier” provision making it “the duty of every public utility to . . . transmit energy for any person upon reasonable request . . . .” In addition, it would have empowered the Federal Power Commission to order wheeling if it found such action to be “necessary or desirable in the public interest.” H. R. 5423, 74th Cong., 1st Sess.; S. 1725, 74th Cong., 1st Sess. These provisions were eliminated to preserve “the voluntary action of the utilities.” S. Rep. No. 621, 74th Cong., 1st Sess., 19.

It is clear, then, that Congress rejected a pervasive regulatory scheme for controlling the interstate distribution of power in favor of voluntary commercial relationships. When these relationships are governed in the first instance by business judgment and not regulatory coercion, courts must be hesitant to conclude that Congress intended to override the fundamental national policies embodied in the antitrust laws. See United States v. Radio Corp. of America, supra, at 351. This is particularly true in this instance because Congress, in passing the Public Utility Holding Company Act, which included Part II of the Federal Power Act, was concerned with “restraint of free and independent competition” among public utility holding companies. See 15 U. S. C. § 79a (b)(2).

Thus, there is no basis for concluding that the limited authority of the Federal Power Commission to order interconnections was intended to be a substitute for, or to immunize Otter Tail from, antitrust regulation for refusing to deal with municipal corporations.

HH l — l

The decree of the District Court enjoins Otter Tail from “[Refusing to sell electric power at wholesale to existing or proposed municipal electric power systems in cities and towns located in [its service area]” and from refusing to wheel electric power over its transmission lines from other electric power lines to such cities and towns. But the decree goes on to provide:

“The defendant shall not be compelled by the Judgment in this case to furnish wholesale electric service or wheeling service to a municipality except at rates which are compensatory and under terms and conditions which are filed with and subject to approval by the Federal Power Commission.”

So far as wheeling is concerned, there is no authority granted the Commission under Part II of the Federal Power Act to order it, for the bills originally introduced contained common carrier provisions which were deleted. The Act as passed contained only the interconnection provision set forth in §202 (b). The common carrier provision in the original bill and the power to direct wheeling were left to the “voluntary coordination of electric facilities.” Insofar as the District Court ordered wheeling to correct anticompetitive and monopolistic practices of Otter Tail, there is no conflict with the authority of the Federal Power Commission.

As respects the ordering of interconnections, there is no conflict on the present record. Elbow Lake applied to the Federal Power Commission for an interconnection with Otter Tail and, as we have said, obtained it. Hank-inson renewed Otter Tail’s franchise. So the decree of the District Court, as far as the present record is concerned, presents no actual conflict between the federal judicial decree and an order of the Federal Power Commission. The argument concerning the pre-emption of the area by the Federal Power Commission concerns only instances which may arise in the future, if Otter Tail continues its hostile attitude and conduct against “existing or proposed municipal electric power systems.” The decree of the District Court has an open end by which that court retains jurisdiction “necessary or appropriate” to carry out the decree or “for the modification of any of the provisions.” It also contemplates that future disputes over interconnections and the terms and conditions governing those interconnections will be subject to Federal Power Commission perusal. It will be time enough to consider whether the antitrust remedy may override the power of the Commission under § 202 (b) as, if, and when the Commission denies the interconnection and the District Court nevertheless undertakes to direct it. At present, there is only a potential conflict, not a present concrete case or controversy concerning it.

III

The record makes abundantly clear that Otter Tail used its monopoly power in the towns in its service area to foreclose competition or gain a competitive advantage, or to destroy a competitor, all in violation of the antitrust laws. See United States v. Griffith, 334 U. S. 100, 107. The District Court determined that Otter Tail has “a strategic dominance in the transmission of power in most of its service area” and that it used this dominance to foreclose potential entrants into the retail area from obtaining electric power from outside sources of supply. 331 F. Supp., at 60. Use of monopoly power “to destroy threatened competition” is a violation of the “attempt to monopolize” clause of § 2 of the Sherman Act. Lorain Journal v. United States, 342 U. S. 143, 154; Eastman Kodak Co. v. Southern Photo Materials Co., 273 U. S. 359, 375. So are agreements not to compete, with the aim of preserving or extending a monopoly. Schine Chain Theatres v. United States, 334 U. S. 110, 119. In Associated Press v. United States, 326 U. S. 1, a cooperative news association had bylaws that permitted member newspapers to bar competitors from joining the association. We held that that practice violated the Sherman Act, even though the transgressor “had not yet achieved a complete monopoly.” Id., at 13.

When a community serviced by Otter Tail decides not to renew Otter Tail's retail franchise when it expires, it may generate, transmit, and distribute its own electric power. We recently described the difficulties and problems of those isolated electric power systems. See Gainesville Utilities v. Florida Power Corp., 402 U. S. 515, 517-520. Interconnection with other utilities is frequently the only solution. Id., at 519 n. 3. That is what Elbow Lake in the present case did. There were no engineering factors that prevented Otter Tail from selling power at wholesale to those towns that wanted municipal plants or wheeling the power. The District Court found— and its findings are supported — that Otter Tail's refusals to sell at wholesale or to wheel were solely to prevent municipal power systems from eroding its monopolistic position.

Otter Tail relies on its wheeling contracts with the Bureau of Reclamation and with cooperatives which it says relieve it of any duty to wheel power to municipalities served at retail by Otter Tail at the time the contracts were made. The District Court held that these restrictive provisions were “in reality, territorial allocation schemes,'' 331 F. Supp., at 63, and were per se violations of the Sherman Act, citing Northern Pacific R. Co. v. United States, 356 U. S. 1. Like covenants were there held to “deny defendant’s competitors access to the fenced-off market on the same terms as the defendant.” Id., at 12. We recently re-emphasized the vice under the Sherman Act of territorial restrictions among potential competitors. United States v. Topco Associates, 405 U. S. 596, 608. The fact that some of the restrictive provisions were contained in a contract with the Bureau of Reclamation is not material to our problem for, as the Solicitor General says, “government contracting officers do not have the power to grant immunity from the Sherman Act.” Such contracts stand on their own footing and are valid or not, depending on the statutory framework within which the federal agency operates. The Solicitor General tells us that these restrictive provisions operate as a “hindrance” to the Bureau and were “agreed to by the Bureau only at Otter Tail’s insistence,” as the District Court found. The evidence supports that finding.

IV

The District Court found that the litigation sponsored by Otter Tail had the purpose of delaying and preventing the establishment of municipal electric systems “with the expectation that this would preserve its predominant position in the sale and transmission of electric power in the area.” 331 F. Supp., at 62. The District Court in discussing Eastern Railroad Conference v. Noerr Motor Freight, 365 U. S. 127, explained that it was applicable “only to efforts aimed at influencing the legislative and executive branches of the government.” Ibid. That was written before we decided California Motor Transport Co. v. Trucking Unlimited, 404 U. S. 508, 513, where we held that the principle of Noerr may also apply to the use of administrative or judicial processes where the purpose to suppress competition is evidenced by repetitive lawsuits carrying the hallmark of insubstantial claims and thus is within the “mere sham” exception announced in Noerr. 365 U. S., at 144. On that phase of the order, we vacate and remand for consideration in light of our intervening decision in California Motor Transport Co.

y

Otter Tail argues that, without the weapons which it used, more and more municipalities will turn to public power and Otter Tail will go downhill. The argument is a familiar one. It was made in United States v. Arnold, Schwinn & Co., 388 U. S. 365, a civil suit under § 1 of the Sherman Act dealing with a restrictive distribution program and practices of a bicycle manufacturer. We said: “The promotion of self-interest alone does not invoke the rule of reason to immunize otherwise illegal conduct.” Id., at 375.

The same may properly be said of § 2 cases under the Sherman Act. That Act assumes that an enterprise will protect itself against loss by operating with superior service, lower costs, and improved efficiency. Otter Tail’s theory collided with the Sherman Act as it sought to substitute for competition anticompetitive uses of its dominant economic power.

The fact that three municipalities which Otter Tail opposed finally got their municipal systems does not excuse Otter Tail’s conduct. That fact does not condone the antitrust tactics which Otter Tail sought to impose. Moreover, the District Court repeated what we said in FTC v. National Lead Co., 352 U. S. 419, 431, “those caught violating the Act must expect some fencing in.” The proclivity for predatory practices has always been a consideration for the District Court in fashioning its antitrust decree. See United States v. Crescent Amusement Co., 323 U. S. 173, 190.

We do not suggest, however, that the District Court, concluding that Otter Tail violated the antitrust laws, should be impervious to Otter Tail’s assertion that compulsory interconnection or wheeling will erode its integrated system and threaten its capacity to serve adequately the public. As the dissent properly notes, the Commission may not order interconnection if to do so “would impair [the utility’s] ability to render adequate service to its customers.” 16 U. S. C. § 824a (b). The District Court in this case found that the “pessimistic view” advanced in Otter Tail’s “erosion study” “is not supported by the record.” Furthermore, it concluded that “it does not appear that Bureau of Reclamation power is a serious threat to the defendant nor that it will be in the foreseeable future.” Since the District Court has made future connections subject to Commission approval and in any event has retained jurisdiction to enable the parties to apply for “necessary or appropriate” relief and presumably will give effect to the policies embodied in the Federal Power Act, we cannot say under these circumstances that it has abused its discretion.

Except for the provision of the order discussed in part IV of this opinion, the judgment is

Affirmed.

Mr. Justice Blackmun and Mr. Justice Powell took no part in the consideration or decision of this case.

Mr. Justice Stewart,

with whom The Chief Justice and Mr. Justice Rehnquist join, concurring in part and dissenting in part.

I join Part IV of the Court’s opinion, which sets aside the judgment and remands the case to the District Court for consideration of the appellant’s litigation activities in light of our decision in California Motor Transport Co. v. Trucking Unlimited, 404 U. S. 508. As to the rest of the Court’s opinion, however, I respectfully dissent.

The Court in this case has followed the District Court into a misapplication of the Sherman Act to a highly regulated, natural-monopoly industry wholly different from those that have given rise to ordinary antitrust principles. In my view, Otter Tail’s refusal to wholesale power through interconnection or to perform wheeling services was conduct entailing no antitrust violation.

It is undisputed that Otter Tail refused either to wheel power or to sell it at wholesale to the towns of Elbow Lake, Minnesota, and Hankinson, North Dakota, both of which had formerly been its customers and had elected to establish municipally owned electric utility systems. The District Court concluded that Otter Tail had substantial monopoly power at retail and “strategic dominance” in the sub transmission of power in most of its market area. 331 F. Supp. 54, 58-60. The District Court then mechanically applied the familiar Sherman Act formula: since Otter Tail possessed monopoly power and had acted to preserve that power, it was guilty of an antitrust violation. Nowhere did the District Court come to grips with the significance of the Federal Power Act, either in terms of the specific regulatory apparatus it established or the policy considerations that moved the Congress to enact it. Yet it seems to me that these concerns are central to the disposition of this case.

In considering the bill that became the Federal Power Act of 1935, the Congress had before it the report of the National Power Policy Committee on Public-Utility Holding Companies. That report chiefly concerned patterns of ownership in the power industry and the evils of concentrated ownership by holding companies. The problem that Congress addressed in fashioning a regulatory system reflected a purpose to prevent unnecessary financial concentration while recognizing the “natural monopoly” aspects, and concomitant efficiencies, of power generation and transmission. The report stated that

“[w]hile the distribution of gas or electricity in any given community is tolerated as a 'natural monopoly’ to avoid local duplication of plants, there is no justification for an extension of that idea of local monopoly to embrace the common control, by a few powerful interests, of utility plants scattered over many States and totally unconnected in operation.” S. Rep. No. 621, 74th Cong., 1st Sess., 55 (emphasis added).

The resulting statutory system left room for the development of economies of large scale, single company operations. One of the stated mandates to the Federal Power Commission was for it to assure “an abundant supply of electric energy throughout the United States with the greatest possible economy and with regard to the proper utilization and conservation of natural resources,” 16 U. S. C. § 824a. In the face of natural monopolies at retail and similar economies of scale in the subtransmission of power, Congress was forced to address the very problem raised by this case — use of the lines of one company by another. One obvious solution would have been to impose the obligations of a common carrier upon power companies owning lines capable of the wholesale transmission of electricity. Such a provision was originally included in the bill. One proposed section provided that:

“It shall be the duty of every public utility to furnish energy to, exchange energy with, and transmit energy for any person upon reasonable request therefor . . . .” S. 1725, 74th Cong., 1st Sess., §213.

Another proposed provision was that:

“Whenever the Commission, after notice and opportunity for hearing, finds such action necessary or desirable in the public interest, it may by order direct a public utility to make additions, extensions, repairs, or improvements to or changes in its facilities, to establish physical connection with the facilities of one or more other persons, to permit the use of its facilities by one or more persons, or to utilize the facilities of, sell energy to, purchase energy from, transmit energy for, or exchange energy with, one or more other persons.” Ibid.

Had these provisions been enacted, the Commission would clearly have had the power to order interconnections and wheeling for the purpose of making available to local power companies wholesale power obtained from or through companies with subtransmission systems. The latter companies would equally clearly have had an obligation to provide such services upon request. Yet, after substantial debate, the Congress declined to follow this path. As the Senate report indicates in discussing § 202 as enacted:

“The committee is confident that enlightened self-interest will lead the utilities to cooperate with the commission and with each other in bringing about the economies which can alone be secured through the planned coordination which has long been advocated by the most able and progressive thinkers on this subject.
“When interconnection cannot be secured by voluntary action, subsection (b) gives the Commission limited authority to compel inter-state utilities to connect their lines and sell or exchange energy. The power may only be invoked upon complaint by a State commission or a utility subject to the act.”' S. Rep. No. 621, 74th Cong., 1st Sess., 49.

This legislative history, especially when viewed in the light of repeated subsequent congressional refusals to impose common carrier obligations in this area, indicates a clear congressional purpose to allow electric utilities to decide for themselves whether to wheel or sell at wholesale as they see fit. This freedom is qualified by a grant of authority to the Commission to order interconnection (but not wheeling) in certain circumstances. But the exercise of even that power is limited by a consideration of the ability of the regulated utility to function. The Commission may not order interconnection where this would entail an “undue burden” on the regulated utility. In addition, the Commission has

“no authority to compel the enlargement of generating facilities for such purposes, nor to compel such public utility to sell or exchange energy when to do so would impair its ability to render adequate service to its customers.” 16 U. S. C. §824a(b).

As the District Court found, Otter Tail is a vertically integrated power company. But the bulk of its business — some 90% of its income — derives from sales of power at retail. Left to its own judgment in dealing with its customers, it seems entirely predictable that Otter Tail would decline wholesale dealing with towns in which it had previously done business at retail. If the purpose of the congressional scheme is to leave such decisions to the power companies in the absence of a contrary requirement imposed by the Commission, it would appear that Otter Tail’s course of conduct in refusing to deal with the municipal system at Elbow Lake and in refusing to promise to deal with the proposed system at Hankinson, was foreseeably within the zone of freedom specifically created by the statutory scheme. As a retailer of power, Otter Tail asserted a legitimate business interest in keeping its lines free for its own power sales and in refusing to lend a hand in its own demise by wheeling cheaper power from the Bureau of Reclamation to municipal consumers which might otherwise purchase power at retail from Otter Tail itself.

The opinion of the Court emphasizes that Otter Tail's actions were not simple refusals to deal — they resulted in Otter Tail’s maintenance of monopoly control by hindering the emergence of municipal power companies. The Court cites Lorain Journal v. United States, 342 U. S. 143, for the proposition that “[u]se of monopoly power 'to destroy threatened competition’ is a violation of the 'attempt to monopolize’ clause of § 2 of the Sherman Act.” This proposition seems to me defective. Lorain Journal dealt neither with a natural monopoly at retail nor with a congressionally approved system predicated on the existence of such monopolies. In Lorain Journal, a newspaper in Lorain, Ohio, used its monopoly position to discourage advertisers from supporting a nearby radio station seen by the newspaper to be a competitor. The theory of the case was that competition in the communications business was being foreclosed by the newspaper’s exercise of monopoly power. Here, by contrast, a monopoly is sure to result either way. If the consumers of Elbow Lake receive their electric power from a municipally owned company or from Otter Tail, there will be a monopoly at the retail level, for there will in any event be only one supplier. The very reason for the regulation of private utility rates — by state bodies and by the Commission — is the inevitability of a monopoly that requires price control to take the place of price competition. Antitrust principles applicable to other industries cannot be blindly applied to a unilateral refusal to deal on the part of a power company, operating in a regime of rate regulation and licensed monopolies.

The Court’s opinion scoffs at Otter Tail’s defense of business justification. United States v. Arnold, Schwinn & Co., 388 U. S. 365, is cited for the proposition that “[t]he promotion of self-interest alone does not invoke the rule of reason to immunize otherwise illegal conduct.” This facet of the Court’s reasoning also escapes me in the ease before us, where the health of power companies and the abundance of our energy supply were considerations central to the congressional purpose in devising the regulatory scheme. As noted above, the Commission is specifically prohibited from imposing interconnection requirements that are unduly burdensome or that interfere with a public utility’s ability to serve its customers efficiently. The District Court noted that Otter Tail had offered a “so-called ‘erosion study’ ” documenting the way in which its business would suffer if it were forced to wholesale and wheel power to municipally owned companies. The District Court gave little credence to the report’s predictions. “But regardless,” the court went on, “even the threat of losing business does not justify or excuse violating the law.” 331 F. Supp., at 64-65. This question-begging disregard of the economic health of Otter Tail is wholly at odds with the congressional, purpose in specifying the conditions under which interconnections can be required.

This is not to say that Otter Tail’s financial health is paramount in all instances, or that the electric power industry as regulated by the Commission is per se exempt from the antitrust laws. In the absence of a specific statutory immunity, cf. Hughes Tool Co. v. Trans World Airlines, 409 U. S. 363, such exemptions are not lightly to be implied, United States v. Philadelphia National Bank, 374 U. S. 321. Furthermore, no sweeping antitrust exemption is warranted, as it has been in cases involving certain pervasively regulated industries, under the doctrine of “primary jurisdiction.” Cf. United States v. Radio Corp of America, 358 U. S. 334, 346-352. See Far East Conference v. United States, 342 U. S. 570; Terminal Warehouse Co. v. Pennsylvania R. Co., 297 U. S. 500; United States Navigation Co. v. Cunard S. S. Co., 284 U. S. 474; Keogh v. Chicago & N. W. R. Co., 260 U. S. 156; Texas & Pacific R. Co. v. Abilene Cotton Oil Co,, 204 U. S. 426; cf. Carnation Co. v. Pacific Westbound Conference, 383 U. S. 213. Our duty in attempting to reconcile the Federal Power Act with the Sherman Act on the facts of the case before us requires a judgment regarding the “character and objectives” of the regulatory scheme and the extent to which they “are incompatible with the maintenance of an antitrust action.” Silver v. New York Stock Exchange, 373 U. S. 341, 358. “Repeal, [of the antitrust laws] is to be regarded as implied only if necessary to make the . . . [Act] work, and even then only to the minimum extent necessary.” Id., at 357.

With respect to decisions by regulated electric utilities as to whether or not to provide nonretail services, I think that in the absence of horizontal conspiracy, the teaching of the “primary jurisdiction” cases argues for leaving governmental regulation to the Commission instead of the invariably less sensitive and less specifically expert process of antitrust, litigation. I believe this is what Congress intended by declining to impose common carrier obligations on companies like Otter Tail, and by entrusting the Commission with the burden of “assuring an abundant supply of electric energy throughout the United States” and with the power to order interconnections when necessary in the public interest. This is an area where “sporadic action by federal courts” can “work mischief.” Cf. United States v. Radio Corp. of America, 358 U. S., at 350.

Even assuming that Otter Tail’s refusals to wholesale or wheel power to Elbow Lake and Hankinson were color-ably within the reach of the antitrust laws, I cannot square the opinion of the Court with our recent decision in Ricci v. Chicago Mercantile Exchange, 409 U. S. 289. Otter Tail’s refusal to wholesale or wheel power to Elbow Lake was the subject of two concurrent proceedings— one in the District Court, and another in the Federal Power Commission. It seems to me that the principles of Ricci, related to but not identical with the traditional doctrine of “primary jurisdiction,” should require a District Court in a case like this one to defer to the Commission proceeding then in progress. Surely the regulatory authority of the Commission with respect to interconnection is at least as substantial as the responsibility of the Commodity Exchange Commission, in Ricci, for the implementation of reasonable membership practices by its regulated contract markets. Id., at 310-311 (Marshall, J., dissenting). The responsibility of the Commission for “assuring an abundant supply of electric energy throughout the United States” and its authority to order compulsory wholesaling satisfy the three criteria enunciated in Ricci for a deferral of antitrust jurisdiction to an administrative agency: (1) that the court must first decide whether the conduct complained of, in light of the regulatory statute, is immune from the antitrust laws; (2) that “some facets of the dispute” are “within the statutory jurisdiction” of the agency; and (3) “that adjudication of that dispute . . . promises to be of material aid in resolving the immunity question.” Id., at 302.

With respect to the last of the Ricci criteria, it is useful to contrast the cursory treatment given to Otter Tail’s business-;justification defense by the Court today with the opinion of the Commission ordering permanent interconnection:

“[W]e cannot disagree with the Examiner’s view that Elbow Lake has engaged in ‘an ill-advised excursion into the power business.’ Given the facts of record before us, it is plain that Elbow Lake’s effort has not brought it the rewards it expected; indeed, its first year of operations, during which it perpetuated the rates formerly charged by Otter Tail, resulted in a financial loss. Unlike Otter Tail’s earlier service to Elbow Lake, Elbow Lake’s own system is of doubtful reliability, as evidenced by its presence before us now. . . . While it is our responsibility to take all possible steps to insure to Elbow Lake’s customers a high standard of service reliability, our terms and conditions must not invite improvident ventures elsewhere.
“We also share the Examiner’s view that Otter Tail is legitimately concerned about the possible erosion of its system. If other communities were to follow Elbow Lake’s route, and if, having miscalculated the results, they could expect to be resr cued by overly-generous interconnection terms, then Otter Tail’s fears that it will lose its customers, seriatim, seem to us to be supported. We do not mean by this that we accept a captive market concept, however. . . . The exercise of that [statutory] authority may well require, as it does here, that we order a public utility to interconnect with an isolated municipal system.” Elbow Lake v. Otter Tail Power Co., 46 F. P. C. 675, 677-678.

The opinion of the Court attempts to sidestep the Ricci problem by noting that the Commission has in fact ordered interconnection with Elbow Lake, resulting in the absence of a present actual conflict with the decree entered by the District Court. The Court goes on vaguely to suggest that there will be time to cope with the problem of a Commission refusal to order interconnection which conflicts with this antitrust decree when such a conflict arises.

But the basic conflict between the Commission’s authority and the decree entered in the District Court cannot be so easily wished away. The decree enjoins Otter Tail from “[r]efusing to sell electric power at wholesale to existing or proposed municipal electric power systems in cities and towns located in any area serviced by Defendant.” This injunction is qualified by a provision that such wholesaling be done at “compensatory” rates and under “terms and conditions which are filed with and subject to approval by the Federal Power Commission.” The setting of rates, terms, and conditions, however, is but part of the Commission’s authority under § 202 (b), 16 U. S. C. §824a(b). The Court’s decree plainly ignores the Commission’s authority to decide whether involuntary interconnection is warranted under the enunciated statutory criteria. Unless the decree is modified, its future implementation will starkly conflict with the explicit statutory mandate of the Federal Power Commission.

Both because I believe Otter Tail’s refusal to wheel or wholesale power was conduct exempt from the antitrust laws and because I believe the District Court’s decree improperly pre-empted the jurisdiction of the Federal Power Commission, I would reverse the judgment before us.

       Northern States Power Co. also supplies some towns in Otter Tail’s area with electric power at retail. But the District Court excluded these towns from Otter Tail’s area because the two companies do not compete in the towns served by each other. Of the 615 remaining towns in the area, 465 are served at retail by Otter Tail, 45 by municipal systems, and 105 by rural electric cooperatives. The cooperatives are barred by § 4 of the Rural Electrification Act of 1936, 49 Stat. 1365, as amended, 7 U. S. C. § 904, from borrowing federal funds to provide power to towns already receiving central station service. For this and related reasons, the District Court excluded the rural cooperatives from the relevant market.

       Subtransmission lines, with voltages from 34.5 kv to 69 kv are used for moving power from the bulk supply lines to points of local distribution. Of Otter Tail’s basic subtransmission system in this area, two-thirds of those lines are 41.6 kv subtransmission lines.

       The 38 distribution rural cooperatives in Otter Tail’s area generally own only low-voltage distribution lines, which in most instances could not be used to supply power to proposed municipal utilities. The few rural cooperatives that have generation and transmission services do not, it was found, cut significantly into Otter Tail’s dominant position in subtransmission.

        Elbow Lake v. Otter Tail Power Co., 40 F. P. C. 1262, aff’d, Otter Tail Power Co. v. FPC, 429 F. 2d 232 (CA8), cert, denied, 401 U. S. 947.

        Elbow Lake v. Otter Tail Power Co., 46 F. P. C. 675.

       See S. Rep. No. 621, 74th Cong., 1st Sess.; H. R. Rep. No. 1318, 74th Cong., 1st Sess.; Elbow Lake v. Otter Tail Power Co., 46 F. P. C., at 679.

       Section 202 (b) provides: “Whenever the Commission, upon application of any State commission or of any person engaged in the transmission or sale of electric energy, and after notice to each State commission and public utility affected and after opportunity for hearing, finds such action necessary or appropriate in the public interest it may by order direct a public utility (if the Commission finds that no undue burden will be placed upon such public utility thereby) to establish physical connection of its transmission facilities with the facilities of one or more other persons engaged in the transmission or sale of electric energy, to sell energy to or exchange energy with such persons: Provided, That the Commission shall have no authority to compel the enlargement of generating facilities for such purposes, nor to compel such public utility to sell or exchange energy when to do so would impair its ability to render adequate service to its customers. The Commission may prescribe the terms and conditions of the arrangement to be made between the persons affected by any such order, including the apportionment of cost between them and the compensation or reimbursement reasonably due to any of them.”

       S. Rep. No. 621, supra, n. 6, at 19.

       After noting that the “pendency of litigation has the effect of preventing the marketing of the necessary bonds thus preventing the establishment of a municipal system,” 331 F. Supp., at 62, the District Court went on to find:
      “Most of the litigation sponsored by the defendant was carried to the highest available appellate court and although all of it was unsuccessful on the merits, the institution and maintenance of it had the effect of halting, or appreciably slowing, efforts for municipal ownership. The delay thus occasioned and the large financial burden imposed on the towns’ limited treasury dampened local enthusiasm for public ownership. In some instances, Otter Tail made offers to the towns to absorb the towns’ costs and expenses, and enhance the quality of its service in exchange for a new franchise. Hankinson, after several years of abortive effort, accepted this type of offer and renewed defendant’s franchise.” Ibid.

       The Federal Power Commission said in Elbow Lake v. Otter Tail Power Co., 46 F. P. C., at 678:
      “The public interest is far broader than the economic interest of a particular power supplier. It is our legal responsibility, as the Supreme Court made clear in Pennsylvania Water & Power Co. v.
        FPC, 343 U. S. 414 (1952), to use our statutory authority to assure 'an abundant supply of electric energy throughout the United States,’ and particularly to use our statutory power under Section 202 (b) to compel interconnection and coordination when the public interest requires it. The exercise of that authority may well require, as it does here, that we order a public utility to interconnect with an isolated municipal system. The private company’s lack of enthusiasm for the arrangement cannot deter us, so long as the public interest requires it.”

       The District Court looked to Otter Tail’s service area, and measured market dominance in terms of the number of towns within that area served by Otter Tail. Computed this way, Otter Tail provides 91% of the retail market. 331 F. Supp. 54, 59. As the appellant points out, however, these towns vary in size from more than 29,000 to 20 inhabitants. If Otter Tail’s size were measured by actual retail sales, its market share would be only 28.9% of the electricity sold at retail within its geographic market area. It is important to note that another reasonable geographical market unit might be each individual municipality. Viewed this way, whichever power company sells electricity at retail in a town has a complete monopoly.

       Both of these provisions had identical counterparts in H. R. 5423, 74th Cong., 1st Sess.

       Hearings on S. 1725 before the Senate Committee on Interstate Commerce, 74th Cong., 1st Sess. (1935); Hearings on H. R. 5423 before the House Committee on Interstate and Foreign Commerce, 74th Cong., 1st Sess. (1935).

       See, e. g., S. 350 and H. R. 2101, 88th Cong., 1st Sess., providing that:
      “Any certificate issued under the provisions of this subsection authorizing the operation of transmission facilities shall be subject to the condition that any capacity of such facilities not required for the transmission of electric energy in the ordinary scope of such applicant’s business shall be made available on a common carrier basis for the transmission of other electric energy.”
      This bill was re-introduced as S. 1472 and H. R. 2072 in the 89th Congress, 1st Session, and also failed to pass. See also S. 2140 and H. R. 7791, 89th Cong., 1st Sess.
      These bills were all reintroduced in the 90th Congress, as was H. R. 12322, proposing an Electric Power Reliability Act that would have specifically provided the Commission with authority to order wheeling. In the 91st Congress, bills to establish an Electric Power Reliability Act were again introduced. Section 3 of that proposed Act included a grant of authority for the FPC to order wheeling, see, e. g., S. 1071, 91st Cong., 1st Sess. Yet another bill, H. R. 12585, 91st Cong., 1st Sess., included a very broad provision establishing open access to transmission networks at reasonable rates.
      The proposed Electric Power Reliability Act was reintroduced in the 92d Congress, 1st Session, as S. 294 and H. R. 605. H. R. 12585 from the 91st Congress was also reintroduced, as H. R. 6972, 92d Cong., 1st Sess. Still another bill would have prevented proposed regional bulk-power supply corporations from contracting with an electric utility unless that utility “permit [s] . . . the use of its excess transmission capacity for the purpose of wheeling power from facilities of such corporation ... to load centers of other electric utilities contracting to purchase electric power .from such corporation.” S. 2324, H. R. 9970, 92d Cong., 1st Sess., § 103 (c) (1) (B). None of these bills was enacted.

       The District Court was persuaded that the restrictions on wheeling contained in Otter Tail’s contracts with the Bureau of Reclamation were “in reality, territorial allocation schemes.” 331 F. Supp., at 63. I think this finding was clearly erroneous. Territorial allocation arrangements that have run afoul of the antitrust laws have traditionally been horizontal, and have involved the elimination of competition between two enterprises that were similarly situated in the market. United States v. Topco Associates, 405 U. S. 596; Timken Roller Bearing Co. v. United States, 341 U. S. 593; cf.
        White Motor Co. v. United States, 372 U. S. 253, 261-264. Otter Tail and the Bureau of Reclamation stand in a vertical, not a horizontal, relationship. Furthermore, though Otter Tail refused to wheel power to towns whose consumers it formerly served at retail, it did not exact from the Bureau a promise that the latter would not provide power to such towns by alternative means. Hence, I cannot see how these contracts operate as territorial-allocation schemes. If Otter Tail had demanded that the Bureau not sell to former Otter Tail customers, or if Otter Tail had combined with other retailers of electricity and undertaken mutual noncompetition agreements, this would be a different case.

       In ordering permanent interconnection between Otter Tail and the town of Elbow Lake municipal system, for example, the Commission correctly noted that, “The public interest is far broader than the economic interest of a particular power supplier. . . . The private company's lack of enthusiasm for . . . [the interconnection order] cannot deter us, so long as the public interest requires it.” Elbow Lake v. Otter Tail Power Co., 46 F. P. C. 675, 678.

       The Federal Power Commission, as noted above, only orders interconnection under the provisions of § 202 (b), 16 U. S. C. § 824a (b), though it has broader powers in times of war or other emergency. 16 U. S. C. §824a(c). The Commission does not normally set rates, though utilities subject to its jurisdiction must file proposed rate schedules with it, and it has the opportunity of assessing the lawfulness of those rates. 16 U. S. C. § 824d. In the event the Commission concludes that any rate or practice is “unjust, unreasonable, unduly discriminatory or preferential,” it determines the "just and reasonable rate . . . .” 16 U. S. C. § 824e (a). Under these same provisions, the Commission regulates the terms and conditions of interconnections and wheeling arrangements voluntarily entered into.
      The resulting system of regulation is thus more comprehensive than the regulatory apparatus applicable to bank mergers which was held to be insufficient to oust antitrust jurisdiction in United States v. Philadelphia National Bank, 374 U. S. 321, and the regulator scheme with respect to broadcasters which similarly failed to displace the antitrust laws in United States v. Radio Corp. of

        America, 358 U. S. 334. Nevertheless, the considerable freedom allowed to electric utilities with respect to coordination of service persuades me that the antitrust laws apply to the extent they are not repugnant to specific features of the regulatory scheme. For this reason, litigation and political activities that come within the so-called “sham” exception in California Motor. Transport Co. v. Trucking Unlimited, 404 U. S. 508, might constitute an antitrust violation. Similarly, a genuine territorial allocation agreement might be prohibited under the Sherman Act, see n. 5, supra. Were it not for the legislative history noted above, a consistent refusal to deal with municipally owned power companies might also be impermissible under the Sherman Act. For me, however, the legislative history with respect to wheeling and interconnection is dispositive.

       Unlike the situation presented in R. C. A., supra, where the regulatory agency filed a brief in this Court disavowing any conflict between its regulatory functions and the operation of the antitrust laws, id., at 350 n. 18, in this case the Federal Power Commission has taken the unusual step of filing a brief as amictis curiae in support of Otter Tail. The Commission points out that it was considering an application for interconnection filed by the town of Elbow Lake at the same time this lawsuit was progressing in the District Court. An order requiring long-term interconnection by Otter Tail with the Elbow Lake municipal system was entered by the Commission on September 13, 1971 — just four days after the District Court entered judgment. The Commission reads its authority to order interconnection, 16 U. S. C. § 824a, as a grant of exclusive jurisdiction in matters involving interconnection.

       The decree of the District Court is unreported.


source: Caselaw Access Project

author:
Mr. Justice Stewart Mr. Justice Blackmun,
      Mr. Justice Douglas,

license: Public Domain

text:
    UNITED STATES v. ENMONS et al.
    No. 71-1193.
    Argued December 4, 1972
    Decided February 22, 1973
    Stewart, J., delivered the opinion of the Court, in which Bren-Nan, White, Marshall, and Blackmun, JJ., joined. Blackmun, J., filed a concurring opinion, post, p. 412. Douglas, J., filed a dissenting opinion, in which Burger, C. J., and Powell and Rehnquist, JJ., joined, post, p. 413.

      William Bradford Reynolds argued the cause for the United States. With him on the briefs were Solicitor General Griswold, Assistant Attorney General Petersen, and Jerome M. Feit.

      Bernard Dunau argued the cause for appellees. With him on the briefs were Louis Sherman, Thomas X. Dunn, Elihu I. Leifer, Alex W. Wall, and Sam J. D’Amico.

      Briefs of amici curiae urging reversal were filed by Milton Smith and Jerry Kronenberg for the Chamber of Commerce of the United States, and by Arthur B. Hanson and Ralph N. Albright, Jr., for the American Newspaper Publishers Association.

        J. Albert Woll, Laurence Gold, and Thomas E. Harris filed a brief for the American Federation of Labor and Congress of Industrial Organizations as amicus curiae urging affirmance.

   Mr. Justice Stewart

delivered the opinion of the Court.

A one-count indictment was returned in the United States District Court for the Eastern District of Louisiana charging the appellees with a violation of the Hobbs Act, 18 U. S. C. § 1951. In pertinent part, that Act provides:

“(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.”

“Extortion” is defined in the Act, as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear...” 18 U. S. C. § 1951 (b)(2).

At the time of the alleged conspiracy, the employees of the Gulf States Utilities Company were out on strike. The appellees are members and officials of labor unions that were seeking a new collective-bargaining agreement with that company. The indictment charged that the appellees and two named coconspirators conspired to obstruct commerce, and that as part of that conspiracy, they

“would obtain the property of the Gulf States Utilities Company in the form of wages and other things of value with the consent of the Gulf States Utilities Company . . . , such consent to be induced by the wrongful use of actual force, violence and fear of economic injury by [the appellees] and co-conspirators, in that [the appellees] and the co-conspirators did commit acts of physical violence and destruction against property owned by the Gulf States Utilities Company in order to force said Company to agree to a contract with Local 2286 of the International Brotherhood of Electrical Workers calling for higher wages and other monetary benefits.”

Five specific acts of violence were charged to have been committed in furtherance of the conspiracy — firing high-powered rifles at three Company transformers, draining the oil from a Company transformer, and blowing up a transformer substation owned by the Company. In short, the indictment charged that the appellees had conspired to use and did in fact use violence to obtain for the striking employees higher wages and other employment benefits from the Company.

The District Court granted the appellees’ motion to dismiss the indictment for failure to state an offense under the Hobbs Act. 335 F. Supp. 641. The court noted that the appellees were union members on strike against their employer, Gulf States, and that both the strike and its objective of higher wages were legal. The court expressed the view that if “the wages sought by violent acts are wages to be paid for unneeded or unwanted services, or for no services at all,” then that violence would constitute extortion within the meaning of the Hobbs Act. Id., at 645. But in this case, by contrast, the court noted that the indictment alleged the use of force to obtain legitimate union objectives: “The union had a right to disrupt the business of the employer by lawfully striking for higher wages. Acts of violence occurring during a lawful strike and resulting in damage to persons or property are undoubtedly punishable under State law. To punish persons for such acts of violence was not the purpose of the Hobbs Act.” Id., at 646. The court found “no case where a court has gone so far as to hold the type of activity involved here to be a violation of the Hobbs Act.” Id., at 645.

We noted probable jurisdiction of the Government’s appeal, 406 U. S. 916, to determine whether the Hobbs Act proscribes violence committed during a lawful strike for the purpose of inducing an employer’s agreement to legitimate collective-bargaining demands.

I

The Government contends that the statutory language unambiguously and without qualification proscribes interference with commerce by “extortion,” and that in terms of the statute, “extortion” is “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear . . . Wages are the “property” of the employer, the argument continues, and strike violence to obtain such “property” thus falls within the literal proscription of the Act. But the language of the statute is hardly as clear as the Government would make it out to be. Its interpretation of the Act slights the wording of the statute that proscribes obtaining property only by the “wrongful” use of actual or threatened force, violence, or fear. The term “wrongful,” which on the face of the statute modifies the use of each of the enumerated means of obtaining property — actual or threatened force, violence, or fear — would be superfluous if it only served to describe the means used. For it would be redundant to speak of “wrongful violence” or “wrongful force” since, as the Government acknowledges, any violence or force to obtain property is "wrongful.” Rather, “wrongful” has meaning in the Act only if it limits the statute’s coverage to those instances where the obtaining of the property would itself be “wrongful” because the alleged extortionist has no lawful claim to that property.

Construed in this fashion, the Hobbs Act has properly been held to reach instances where union officials threatened force or violence against an employer in order to obtain personal payoffs, and where unions used the proscribed means to exact “wage” payments from employers in return for “imposed, unwanted, superfluous and fictitious services” of workers. For in those situations, the employer’s property has been misappropriated. But the literal language of the statute will not bear the Government’s semantic argument that the Hobbs Act reaches the use of violence to achieve legitimate union objectives, such as higher wages in return for genuine services which the employer seeks. In that type of case, there has been no “wrongful” taking of the employer’s property; he has paid for the services he bargained for, and the workers receive the wages to which they are entitled in compensation for their services.

II

The legislative framework of the Hobbs Act dispels any ambiguity in the wording of the statute and makes it clear that the Act does not apply to the use of force to achieve legitimate labor ends. The predecessor of the Hobbs Act, § 2 of the Anti-Racketeering Act of 1934, 48 Stat. 979, proscribed, in connection with interstate commerce, the exaction of valuable consideration by force, violence, or coercion, "not including, however, the payment of wages by a bona-fide employer to a bona-fide employee . In United States v. Local 807, 315 U. S. 521, the Court held that this exception covered the members of a New York City truck drivers union who, by violence or threats, exacted payments for themselves from out-of-town truckers in return for the unwanted and superfluous service of driving out-of-town trucks to and from the city. The New York City teamsters would lie in wait for the out-of-town trucks, and then demand payment from the owners and drivers in return for allowing the trucks to proceed into the city. The teamsters sometimes drove the arriving trucks into the city, but in other instances, the out-of-town truckers paid the fees but rejected the teamsters' services and drove the trucks themselves. In several cases there was evidence that, having exacted their fees, the city drivers disappeared without offering to perform any services at all. Id., at 526. See also id., at 539 (Stone, C. J., dissenting). The Court held that the activities of the city teamsters were included within the wage exception to the Anti-Racketeering Act although what work they performed was unneeded and unwanted, and although in some cases their work was rejected.

Congressional disapproval of this decision was swift. Several bills were introduced with the narrow purpose of correcting the result in the Local 807 case. H. R. 32, which became the Hobbs Act, 60 Stat. 420, eliminated the wage exception that had been the basis for the Local 807 decision. But, as frequently emphasized on the floor of the House, the limited effect of the bill was to shut off the possibility opened up by the Local 807 case, that union members could use their protected status to exact payments from employers for imposed, unwanted, and superfluous services. As Congressman Hancock explained:

“This bill is designed simply to prevent both union members and nonunion people from making use of robbery and extortion under the guise of obtaining wages in the obstruction of interstate commerce. That is all it does.
“[T]his bill is made necessary by the amazing decision of the Supreme Court in the case of the United States against Teamsters’ Union 807, 3 years ago. That decision practically nullified the anti-racketeering bill of 1934 .... In effect the Supreme Court held that . . . members of the Teamsters’ Union . . . were exempt from the provisions of that law when attempting by the use of force or the threat of violence to obtain wages for a job whether they rendered any service or not.” 91 Cong. Rec. 11900.

Congressman Hancock proceeded to read approvingly from an editorial which characterized the teamsters’ action in the Local 807 case as “compelling the truckers to pay day’s wages to local union drivers whose services were neither wanted nor needed.” Ibid. Congressman Fellows stressed the fact that the facts of the Local 807 case showed that “these stick-up men disappeared as soon as the money was paid without rendering or offering to render any service.” Id., at 11907. And Congressman Rivers characterized the facts of the Local 807 case as “nothing short of hijacking, intimidation, extortion, and out-and-out highway robbery.” Id., at 11917.

But by eliminating the wage exception to the Anti-Racketeering Act, the Hobbs Act did not sweep within its reach violence during a strike to achieve legitimate collective-bargaining objectives. It was repeatedly emphasized in the debates that the bill did not “interfere in any way with any legitimate labor objective or activity”; “there is not a thing in it to interfere in the slightest degree with any legitimate activity on the part of labor people or labor unions . . . .” And Congressman Jennings, in responding to a question concerning the Act’s coverage, made it clear that the Act “does not have a thing in the world to do with strikes.” Id., at 11912.

Indeed, in introducing his original bill, Congressman Hobbs explicitly refuted the suggestion that strike violence to achieve a union’s legitimate objectives was encompassed by the Act:

“Mr. MARCANTONIO. All right. In connection with a strike, if an incident occurs which involves—
“Mr. HOBBS. The gentleman need go no further. This bill does not cover strikes or any question relating to strikes.
“Mr. MARCANTONIO. Will the gentleman put a provision in the bill stating so?
“Mr. HOBBS. We do not have to, because a strike is perfectly lawful and has been so described by the Supreme Court and by the statutes we have passed. This bill takes off from the springboard that the act must be unlawful to come within the purview of this bill.
“Mr. MARCANTONIO. That does not answer my point. My point is that an incident such as a simple assault which takes place in a strike could happen. Aha I correct?
“Mr. HOBBS. Certainly.
“Mr. MARCANTONIO. That then could become an extortion under the gentleman’s bill, and that striker as well as his union officials could be charged with violation of sections in this bill.
“Mr. HOBBS. I disagree with that and deny it in toto.” 89 Cong. Rec. 3213.

The Government would derive a different lesson from the legislative history. It points to statements made during the floor debates that the Act was meant to have “broad coverage” and, unlike its predecessor, to encompass the “employer-employee” relationship. But that proves no more than that the achievement of illegitimate objectives by employees or their representatives, such as the exaction of personal payoffs, or the pursuit of “wages” for unwanted or fictitious services, would not be exempted from the Act solely because the extortionist was an employee or union official and the victim an employer. The Government would also find support for its expansive interpretation of the statute in the rejection of two amendments, one proposed by Congressman Celler, the other by Congressman LaFollette, which would have inserted in the Act an exception for cases where violence was used to obtain the payment of wages by a bona-fide employer to a bona-fide employee. See 91 Cong. Rec. 11913, 11917, and 11919, 11922. But both amendments were rejected solely because they would have operated to continue the effect of the Local 807 case. Their rejection thus proves nothing more than that Congress was intent on undoing the restrictive impact of that case.

III

In the nearly three decades that have passed since the enactment of the Hobbs Act, no reported case has upheld the theory that the Act proscribes the use of force to achieve legitimate collective-bargaining demands.

The only previous case in this Court relevant to the issue, United States v. Green, 350 U. S. 415, held no more than that the Hobbs Act had accomplished its objective of overruling the Local 807 case. The alleged extortions in that case, as in Local 807, consisted of attempts to obtain so-called wages for “imposed, unwanted, superfluous and fictitious services of laborers . . . .” Id., at 417. The indictment charged that the employer's consent was obtained “by the wrongful use, to wit, the use for the purposes aforesaid, of actual and threatened force, violence and fear . . . Ibid. The Government thus did not rely, as it does in the present case, solely on the use of force in an employer-employee relationship; it alleged a wrongful purpose — to obtain money from the employer that the union officials had no legitimate right to demand. We concluded that the Hobbs Act could reach extortion in an employer-employee relationship and that personal profit to the extortionist was not required, but our holding was carefully limited to the charges in that case: “We rule only on the allegations of the indictment and hold that the acts charged against appellees fall within the terms of the Act.” Id., at 421.

A prior decision in the Third Circuit, United States v. Kemble, 198 F. 2d 889, on which the Government relied in Oreen, also concerned the exaction, by threats and violence, of wages for superfluous services. In affirming a conviction under the Hobbs Act of a union business agent for using actual and threatened violence against an out-of-town driver in an attempt to force him to hire a local union member, the Court of Appeals carefully limited its holding:

“We need not consider the normal demand for wages as compensation for services desired by or valuable to the employer. It is enough for this case, and all we decide, that payment of money for imposed, unwanted and superfluous services ... is within the language and intendment of the statute.” Id., at 892.

Most recently, in United States v. Caldes, 457 F. 2d 74, the Court of Appeals for the Ninth Circuit was squarely presented with the question at issue in this case. Two union officials were convicted of Hobbs Act violations in that they damaged property of a company with which they were negotiating for a collective-bargaining agreement, in an attempt to pressure the company into agreeing to the union contract. Concluding that the Act was not intended to reach militant activity in the pursuit of legitimate unions ends, the court reversed the convictions and ordered the indictment dismissed.

Indeed, not until the indictments were returned in 1970 in this and several other cases has the Government even sought to prosecute under the Hobbs Act actual or threatened violence employed to secure a union contract “calling for higher wages and other monetary benefits.” Yet, throughout this period, the Nation has witnessed countless economic strikes, often unfortunately punctuated by violence. It is unlikely that if Congress had indeed wrought such a major expansion of federal criminal jurisdiction in enacting the Hobbs Act, its action would have so long passed unobserved. See United States v. Laub, 385 U. S. 475, 485.

IY

The Government’s broad concept of extortion — the “wrongful” use of force to obtain even the legitimate union demands of higher wages — is not easily restricted. It would cover all overtly coercive conduct in the course of an economic strike, obstructing, delaying, or affecting commerce. The worker who threw a punch on a picket line, or the striker who deflated the tires on his employer’s truck would be subject to a Hobbs Act prosecution and the possibility of 20 years’ imprisonment and a $10,000 fine.

Even if the language and history of the Act were less clear than we have found them to be, the Act could not properly be expanded as the Government suggests— for two related reasons. First, this being a criminal statute, it must be strictly construed, and any ambiguity must be resolved in favor of lenity. United States v. Wiltberger, 5 Wheat. 76, 95; United States v. Halseth, 342 U. S. 277, 280; Bell v. United States, 349 U. S. 81, 83; Arroyo v. United States, 359 U. S. 419, 424; Rewis v. United States, 401 U. S. 808, 812. Secondly, it would require statutory language much more explicit than that before us here to lead to the conclusion that Congress intended to put the Federal Government in the business of policing the orderly conduct of strikes. Neither the language of the Hobbs Act nor its legislative history can justify the conclusion that Congress intended to work such an extraordinary change in federal labor law or such an unprecedented incursion into the criminal jurisdiction of the States. See San Diego Bldg. Trades Council v. Garmon, 359 U. S. 236, 247-248; United Constr. Workers v. Laburnum Constr. Corp., 347 U. S. 656, 665; Garner v. Teamsters Local 776, 346 U. S. 485, 488; UAW Local 232 v. Wisconsin Employment Relations Bd., 336 U. S. 245, 253.

As we said last Term:

“[U]nless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance. Congress has traditionally been reluctant to define as a federal crime conduct readily denounced as criminal by the States. . . . [W]e will not be quick to assume that Congress has meant to effect a significant change in the sensitive relation between federal and state criminal jurisdiction.” United States v. Bass, 404 U. S. 336, 349 (footnotes omitted).

The District Court was correct in dismissing the indictment. Its judgment is affirmed.

It is so ordered.

Mr. Justice Blackmun,

concurring.

I join the Court’s opinion. I readily concede that my visceral reaction to immaturely conceived acts of violence of the kind charged in this indictment is that such acts deserve to be dignified as federal crimes. That reaction on my part, however, is legislative in nature rather than judicial. If Congress wishes acts of that kind to be encompassed by a federal statute, it has the constitutional power in the interstate context to effect that result. The appellees so concede. Tr. of Oral Arg. 18-19. But Mr. Justice Stewart has gathered the pertinent and persuasive legislative history demonstrating that Congress did not intend to exercise its power to reach these acts of violence.

The Government’s posture, with its concession that certain strike violence (which it would downgrade as “incidental” and the dissent as “low level,” post, at 418 n. 17), although aimed at achieving a legitimate end, is not covered by the Act, necessarily means that the legislation would be enforced selectively or, at the least, would embroil all concerned with drawing the distinction between major and minor violence. That, for me, is neither an appealing prospect nor solid support for the position taken.

This type of violence, as the Court points out, is subject to state criminal prosecution. That is where it must remain until the Congress acts otherwise in a manner far more clear than the language of the Hobbs Act.

Mr. Justice Douglas,

with whom The Chief Justice, Mr. Justice Powell, and Mr. Justice Rehnquist concur, dissenting.

The Court today achieves by interpretation what those who were opposed to the Hobbs Act were unable to get Congress to do. The Court considers primarily the legislative history of a predecessor bill considered by the 78th Congress. The bill before us was considered and enacted by the 79th Congress;, and, as I read the debates, the opposition lost in the 79th Congress what they win today. All of which makes pertinent Mr. Justice Holmes’ admonition in Missouri, K. & T. R. Co. v. May, 194 U. S. 267, 270, that “it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.”

In United States v. Local 807, 315 U. S. 521, we had before us the Anti-Racketeering Act of 1934, 48 Stat. 979, which made it a crime to use violence respecting interstate trade or commerce to obtain the “payment of money or other valuable considerations,” excluding “the payment of wages by a bona-fide employer to a bona-fide employee.” We held that the exception included demands for unwanted or superfluous services and covered those who wanted jobs, not only those who presently had them.

Congress in the Hobbs Act changed the law. The critical change was the exclusion of the employer-employee clause. The Court said in United States v. Green, 350 U. S. 415, 419: “In the Hobbs Act, 60 Stat. 420, carried forward as 18 U. S. C. § 1951, which amended the Anti-Racketeering Act, the exclusion clause involved in the Local 807 decision was dropped. The legislative history makes clear that the new Act was meant to eliminate any grounds for future judicial conclusions that Congress did not intend to cover the employer-employee relationship. The words were defined to avoid any misunderstanding.”

In Green, the Court held that it was an extortion within the meaning of the Act to use force to obtain payment of wages for unwanted and superfluous services. Id., at 417.

Here, the services were not unwanted or superfluous; they were services being negotiated under a collective-bargaining agreement.

The Court relies mostly on the legislative history of a measure covering the same topic which was passed by the previous House but on which the Senate did not act. Two years later, the bill in its present form was enacted. It was a differently constituted House that debated it and the year was 1945 rather than 1943. So the most relevant legislative history, in my view, concerns the 79th Congress, not the 78th.

The fear was expressed in the House that the elimination of the Exception Clause would open up the prospect of labor’s being prosecuted. As a consequence, Congressman Celler sought to amend the measure so as to exempt the use of violence to exact “wages paid by a bona fide employer to a bona fide employee.” His precise amendment in that regard would define “property” in the Act as not including “wages paid by a bona fide employer to a bona fide employee.” Those who objected said that it would substantially restore the 1934 Act.

Congressman Biemiller, in speaking for the Celler Amendment said:

“We fear, for example, under the bill as it now stands, that a simple, unfortunate altercation on a picket line — and we all know that human beings are frail and when tempers are hot some trouble may develop — under such a situation you may send a man to jail for 20 years or fine him $10,000.”

The Celler Amendment was rejected.

As I read the Congressional Record, Congressman Baldwin spoke for the consensus when he said:

“This bill would not have been presented to the House if organized labor had recognized law and order in striking and in establishing their rights, as they have a right to do. Everyone can remember the taxicab strike in the city of Baltimore, which does not pertain to this bill, where cabs were overthrown, bricks thrown through the windows endangering the lives of people, innocent victims. Those were the tactics of organized labor which you people support outright and which organized labor sanctioned. The leaders were locked up and put in jail for participating in those activities. Yet you stand here on the floor of this House and say they did not do it or they did not know anything about it.
“Mr. Chairman, labor has a right to strike, but when labor perpetrates that sort of thing, they are going far beyond the bounds of reason. Certainly, I do not take the position that labor has not the right to organize or to strike, but when they do so they should abide by the laws of the land and the laws of decency. If they had done that, we would not have this legislation before the House today.”

Congressman Whittington voiced the same sentiments:

“The pending bill will provide for punishing racketeers who rob or extort. There is no justification for labor unions opposing the bill as it constitutes no invasion of the legitimate rights of labor. Robbery and extortion by members of labor unions must be punished. Labor unions owe that much to the public. In demanding the protection of laws, labor unions should urge that those engaged in legitimate interstate commerce be protected from robbery and extortion.”

Congressman Celler offered another amendment which would give as a defense to a charge under the Hobbs Act that the employee “did not violate the provisions of the Norris-LaGuardia Act, the Clayton Act, or the Railway Labor Act, or the National Labor Relations Act.” But that amendment was also voted down; the only provision of the Hobbs Act which touched on that problem was 18 U. S. C. § 1951 (c), which stated that this section “shall not be construed to repeal, modify or affect” those laws. References were made in the House debates to the trucking problem in New York, where farmers bringing their produce to market in trucks were held up and money was extorted “from the drivers in order that the shipments might enter the Holland Tunnel and be delivered to their respective destinations in New York.”

Congressman LaFollette offered an amendment which would keep the 1934 Act intact but would bar the use of violence by a person not a bona fide employee to obtain property from a bona fide employer. That, too, was defeated.

In the present case, violence was used during the bargaining — five acts of violence involving the shooting and sabotage of the employer’s transformers and the blowing up of a company transformer substation. The violence was used to obtain higher wages and other benefits for union members. The acts literally fit the definition of extortion used in the Hobbs Act, 18 U. S. C. § 1951. The term “extortion” means the use of violence to obtain “property” from another. §1951 (b)(2). The crime is the use of “extortion” in furtherance of a plan to do anything in violation of the section. § 1951 (a). The prior exception covering those who seek “the payment of wages by a bona-fide employer to a bona-fide employee” was taken out of the Act by Congress. Hence, the use of violence to obtain higher wages is plainly a method of obtaining “property from another” within the meaning of § 1951 (b)(2).

Seeking higher wages is certainly not unlawful. But using violence to obtain them seems plainly within the scope of “extortion” as used in the Act, just as is the use of violence to exact payment for no work or the use of violence to get a sham substitution for no work. The regime of violence, whatever its precise objective, is a common device of extortion and is condemned by the Act.

Congressman Lemke said in the House debates on the Hobbs Act, which he opposed, “The minority is generally right.”

Whatever may be thought of the policy which the Court today embroiders into the Act, it was the minority view in the House and clearly did not represent the consensus of the House. No light is thrown on the matter by the Senate, for it summarily approved the House version of the bill.

It is easy in these insulated chambers to put an attractive gloss on an Act of Congress if five votes can be obtained. At times, the legislative history of a measure is so clouded or obscure that we must perforce give some meaning to vague words. But where, as here, the consensus of the House is so clear, we should carry out its purpose no matter how distasteful or undesirable that policy may be to us, unless of course the Act oversteps constitutional boundaries. But none has been so hardy as even to suggest that.

While we said in Kirschbaum Co. v. Walling, 316 U. S. 517, 522, that it is “retrospective expansion of meaning which properly deserves the stigma of judicial legislation,” the same is true of retrospective contraction of meaning.

I would reverse.

       This appeal was taken under 18 U. S. C. § 3731 (1964 ed.). The 1971 amendment to the Criminal Appeals Act, providing that all appeals from dismissals of indictments or informations must be taken to the Courts of Appeals, does not apply to cases instituted before January 2, 1971. Omnibus Crime Control Act of 1970, Pub. Law No. 91-644, § 14 (a), 84 Stat. 1890, codified, 18 U. S. C. § 3731. See United States v. Jorn, 400 U. S. 470, 474 n. 1, 477-478, n. 6. The present indictment was filed on October 15, 1970.

       Congressman Hobbs indicated that “wrongful” was to modify the entire section. 91 Cong. Rec. 11908.

       The Government suggests a convoluted construction of “wrongful.” It concedes that when the means used are not “wrongful,” such as where fear of economic loss from a strike is employed, then the objective must be- illegal. If, on the other hand, “wrongful” force and violence are used, even for a legal objective, the Government contends that the statute is satisfied. But that interpretation simply accepts the redundancy of the term “wrongful” whenever it applies to “force” and “violence” in the statute.

       See, e. g., United States v. Iozzi, 420 F. 2d-512; United States v. Kramer, 355 F. 2d 891, cert. granted_and case remanded for resentencing, 384 U. S. 100; Bianchi v. United States, 219 F. 2d 182.

       See, e. g., United States v. Green, 350 U. S. 415, 417; United States v. Kemble, 198 F. 2d 889.

       Section 2 of the Act provided:
      "Any person who, in connection with or in relation to any act in any way or in any degree affecting trade or commerce or any article or commodity moving or about to move in trade or commerce—
      “(a) Obtains or attempts to obtain, by the use of or attempt to use or threat to use force, violence, or coercion, the payment of money or other valuable considerations, or the purchase or rental of property or protective services, not including, however, the payment of wages by a bona-fide employer to a bona-fide employee; or
      “(b) Obtains the property of another, with his consent, induced by wrongful use of force or fear, or under color of official right; or
      “(c) Commits or threatens to commit an act of physical violence or physical injury to a person or property in furtherance of a plan or purpose to violate sections (a) or (b); or
      “(d) Conspires or acts concertedly with any other person or persons to commit any, of the foregoing acts; shall, upon conviction thereof, be guilty of a felony and shall be punished by imprisonment from one to ten years or by a fine of $10,000, or both.”

       See § 2 (a), quoted in n. 6, supra. While the specific wage exception was found only in § 2 (a) of the Act, § 3 (b) excluded “wages paid by a bona-fide employer to a bona-fide employee” from the definition of “property,” “money,” or other “valuable considerations.” The wage exception thus permeated the entire Act. United States v. Green, 350 U. S., at 419 n. 4; United States v. Local 807, 315 U. S. 521, 527 n. 2.

       S. 2347, 77th Cong., 2d Sess.; H. R. 6872, 77th Cong., 2d Sess.; H. R. 7067, 77th Cong., 2d Sess.; H. R. 653, 78th Cong., 1st Sess.; H. R. 32, 79th Cong., 1st Sess. See Callarian v. United States, 364 U. S. 587, 591 n. 5; United States v. Green, supra, at 419 n. 5.

       See United States v. Green, supra, at 419 n. 5; Note, Labor Faces the Amended Anti-Racketeering Act, 101 U. Pa. L. Rev. 1030, 1033-1034 (1953).

       The Hobbs Act also eliminated the proviso in § 6 of the Anti-Racketeering Act of 1934: “That no court of the United States shall construe or apply any of the provisions of this Act in such manner as to impair, diminish, or in any manner affect the rights of bona-fide labor organizations in lawfully carrying out the legitimate objects thereof, as such rights are expressed in existing statutes of the United States.” That proviso was one of the supports for the Local 807 decision, see 315 U. S., at 535, and it was eliminated to prevent reliance on that clause as a means of resuscitating the Local 807 decision. See 91 Cong. Rec. 11912 (remarks of Rep. Hobbs).

       See also 91 Cong. Rec. 11842 (remarks of Rep. Michener); id., at 11905 (remarks of Rep. Robsion); id., at 11909 (remarks of Rep. Sumners); id., at 11912-11913 (remarks of Rep. Whittington).
      In its report on the bill, the House Committee on the Judiciary-reproduced this Court’s decision in the Local 807 case and concluded that “[t]he need for the legislation was emphasized by the opinion of the Supreme Court in . . . United States v. Local 807 . . . .” H. R. Rep. No. 238, 79th Cong., 1st Sess., 10. See also S. Rep. No. 1516, 79th Cong., 2d Sess.

       91 Cong. Rec. 11841 (remarks of Rep. Walter).

         Id., at 11908 (remarks of Rep. Sumners). See also id., at 11900 (remarks of Rep. Hancock); id., at 11904 (remarks of Rep. Gwynne); id., at 11909 (remarks of Rep. Vursell).

       The remarks with respect to that bill, H. R. 653, 78th Cong., 1st Sess., which passed only the House, are wholly relevant to an understanding of the Hobbs Act, since the operative language of the original bill was substantially carried forward into the Act. The congressional debates on the Hobbs Act in the 79th Congress repeatedly referred to the legislative history of the original bill. See 91 Cong. Rec. 11842 (remarks of Rep. Michener); id., at 11899— 11900 (remarks of Rep. Hancock); id., at 11900 (remarks of Rep. Hobbs). Surely an interpretation placed by the sponsor of a bill on the very language subsequently enacted by Congress cannot be dismissed out of hand, as the dissent would have it, simply because the interpretation was given two years earlier.

       See also 89 Cong. Rec. 3202 (remarks of Rep. Gwynne) (Act does not cover “a clash between strikers and scabs during a strike”).

       The proponents of the Hobbs Act defended the Act as no encroachment on the legitimate activities of labor unions on the ground that the statute did no more than incorporate New York’s conventional definition of extortion — "the obtaining of property from another . . . with his consent, induced by a wrongful use of force or fear, or under color of official right.” N. Y. Penal Law § 850 (1909). See 91 Cong. Rec. 11842 (remarks of Rep. Walter); id., at 11843 (remarks of Rep. Michener); id., at 11900 (remarks of Rep. Hancock); ibid, (remarks of Rep. Hobbs); id., at 11906 (remarks of Rep. Robsion). See also United States v. Caldes, 457 F. 2d 74, 77; United States v. Provenzano, 334 F. 2d 678, 686.
      Judicial construction of the New York statute reinforces the conclusion that, however militant, union activities to obtain higher wages do not constitute extortion. For extortion requires an intent “ ‘to obtain that which in justice and equity the party is not entitled to receive.’ ” People v. Cuddihy, 151 Misc. 318, 324, 271 N. Y. S. 450, 456, aff’d, 243 App. Div. 694, 277 N. Y. S. 960; see People v. Weinseimer, 117 App. Div. 603, 616, 102 N. Y. S. 579, 588, aff’d, 190 N. Y. 537, 83 N. E. 1129. An accused would not be guilty of extortion for attempting to achieve legitimate labor goals; he could not be convicted without sufficient evidence that he “was actuated by the purpose of obtaining a financial benefit for himself . . . and was not attempting in good faith to advance the cause of unionism . . . .” People v. Adelstein, 9 App. Div. 2d 907, 908, 195 N Y. S. 2d 27, 28, aff’d sub nom. People v. Squillante, 8 N. Y. 2d 998, 169 N. E. 2d 425.
      Hence, New York's highest court has interpreted its extortion statute to apply to a case where the accused received a payoff to buy an end to labor picketing. People v. Dioguardi, 8 N. Y. 2d 260, 168 N. E. 2d 683.
      “The picketing here . . . may have been perfectly lawful in its inception (assuming it was part of a bona fide organizational effort) and may have remained so — despite its potentially ruinous effect on the employers’ businesses — so long as it was employed to accomplish the legitimate labor objective of organization. Its entire character changed from legality to criminality, however, when it was used as a pressure device to exact the payment of money as a condition of its cessation . . . .” Id., at 271, 168 N. E. 2d, at 690-691.
      In short, when the objectives of the picketing changed from legitimate labor ends to personal payoffs, then the actions became extortionate.

       The Government relies heavily on a statement by Congressman Michener, in a dialogue with two of his colleagues, to the effect that union members who “by robbery or exploitation collect a day’s wage — -a union wage — they are not exempted from the law solely because they are engaging in a legitimate union activity.” 91 Cong. Rec. 11843-11844. But Congressman Michener was referring to the activity of “robbery or exploitation,” and his statement continued: “I cannot understand how any union man can claim that the conduct described by Mr. Justice Stone is a legitimate union activity.” Id., at 11844. Mr. Chief Justice Stone’s dissenting opinion in the Local 807 case described payoffs for the superfluous and unwanted work involved in that ease. See 315 U. S., at 539.

       See 91 Cong. Rec. 11914 (remarks of Rep. Hobbs); ibid, (remarks of Rep. Walter); id., at 11920 (remarks of Rep. Gwynne).

       As noted above, the indictment in United States v. Caldes, 457 F. 2d was ordered to be dismissed by the Ninth Circuit. Two similar indictments returned in the Southern District of Florida were dismissed by the District Court without opinion in June 1970. United States v. Butcofsky, No. 70-101-CR-JE, June 24, 1970; United States v. Schiffman, No. 70-102-CR-JE, June 25, 1970. An additional indictment, based on a similar theory of the Hobbs Act, was filed in the Eastern District of New York on January 12, 1972, and is currently pending. United States v. Spero, No. 72-CR-17.
      The briefs in the present case advise us of one other Hobbs Act prosecution that may have been brought under this theory — a 1962 indictment in United States v. Webb, ND Ala., No. 15080.

       Realizing the breadth of its argument, the Government's brief concedes that there might be an exception for "the incidental injury to person or property that not infrequently occurs as a consequence of the charged atmosphere attending a prolonged labor dispute . . . .” But nothing, either in the language or the history of the Act, justifies any such exception.
      Similarly, there is nothing to support the dissent's exception for “mischievous” conduct, post, at 418 n. 17, even if we could begin to define the meaning and limits of such a term.

       91 Cong. Rec. 11914 (remarks of Rep. Marcantonio).

         Id., at 11913.

        Ibid.

        Id., at 11914; 11914-11915; 11918.

        Id., at 11916.

         Id., at 11917.

        Id., at 11918.

         Id., at 11913.

         Id., at 11919.

        Ibid.

         Id., at 11917.

         Id., at 11919. The proposed amendment read as follows:
      “(a) The term 'the payment of wages by a bona fide employer to a bona fide employee’ shall not be construed so as to include the payment of money or the transfer of a thing of value by a person to another when the latter shall use or attempt to use or threaten to use force or violence against the body or to the physical property (as distinguished from intangible property) of the former or against the body of anyone having the possession, custody, or control of the physical property of the former, in attempting to obtain or obtaining such payment or transfer.
      “ (b) The term 'the rights of a bona fide labor organization in lawfully carrying out the legitimate objects thereof, as such rights are expressed in existing statutes of the United States’ shall not be construed so as to ignore, void, set aside, or nullify the definitions set out or the words used in or the plain meaning of subsection (a) hereof.”

        Id., at 11922.

        Ibid.

       92 Cong. Rec. 7308.

       See, e. g., Addison v. Holly Hill Co., 322 U. S. 607, 615-616, for the use by Congress of the rather opaque phrase “area of production.”

       The fear was expressed in the House debates by opponents of the measure that a fistfight on a picket line during a strike could bring down on the offender a $10,000 fine and 20 years in jail or both. See 91 Cong. Rec. 11916; supra, at 414-415. And the Government actually argued in one case, United States v. Caldes, 457 F. 2d 74, 78, that a union and its members were guilty of extortion if they used the coercion of a strike to obtain economic benefits from the employer. That, however, is nonsense, as the court in Caldes
        ruled, id., at 79, for the Hobbs Act specifically does not touch collective bargaining of which the strike is a component part. 18 U. S. C. § 1951 (c). Moreover, the court in Caldes held that “mischievous” conduct during a strike and actions which are “the by-product of frustration engendered by a prolonged, bona fide collective bargaining negotiation,” id., at 78, are often only low-level acts of violence that may be unfair labor practices or, at best, subject to state, not federal, prosecution. That is my view.


author: Per Curiam and Decree.

text:
    MICHIGAN v. OHIO
    No. 30,
    Orig.
    Argued December 11, 1972
    Decided and Decree entered February 22, 1973

      Charles F. Keeley, Assistant Attorney General of Michigan, argued the cause for plaintiff on exceptions to the Report of the Special Master. With him on the brief were Frank J. Kelley, Attorney General, Robert A. Derengoski, Solicitor General, and Jerome Maslowski, Assistant Attorney General.

      Charles S. Rawlings, Assistant Attorney General of Ohio, argued the cause for defendant in answer to exceptions to the Report of the Special Master. With him on the brief was William J. Brown, Attorney General.
   Per Curiam and Decree.

Upon consideration of the Report filed Nov. 9, 1971, by Senior Judge Albert B. Maris, Special Master, exceptions filed thereto, and argument thereon, it is now ordered, adjudged, and decreed as follows:

1. The exceptions filed by the State of Michigan to the report and recommendations of the Special Master are overruled.

2. The boundary line between the States of Ohio and Michigan in Lake Erie follows a line drawn from the point in Maume.e Bay where the north cape of that bay was located in 1836 on a course having a bearing North 46° East measured from a true meridian, passing over the center of the existing circular concrete seawall on Turtle Island and continuing on the same course through the lake to the point where it intersects the boundary line between the United States and Canada.

3. In 1836 the north cape of Maumee Bay was located at the point in that bay where a line drawn North 87° 49' 44" East from Post 71 on the land boundary line between the States of Ohio and Michigan intersects a line drawn South 45° West from the center of the existing circular concrete seawall on Turtle Island, both bearings being measured from a true meridian.

4. The costs of this suit, including the expenses of the Special Master, shall be borne by the State of Michigan.