author: Justice Brennan Justice Powell, Justice Rehnquist,

text:
    CLAYTON v. INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, et al.
    No. 80-5049.
    Argued March 4, 1981
    Decided May 26, 1981

      Brennan, J., delivered the opinion of the Court, in which White, Marshall, Blackmun, and Stevens, JJ., joined. Powell, J., filed a dissenting opinion, in which Burger, C. J., joined, post, p. 696. Rehnquist, J., filed a dissenting opinion, in which Burger, C. J., and Stewart and Powell, JJ., joined, post, p. 698.

      Everett F. Meiners argued the cause and filed a brief for petitioner in No. 80-54. John T. McTernan, by appointment of the Court, 449 U. S. 1008, argued the cause for petitioner in No. 80-5049 and respondent in No. 80-54. With him on the briefs was Elizabeth B. Spector.

      M. Jay Whitman argued the cause for respondents in No. 80-5049. With him on the brief were John A. Fillion and Lawrence Rosenzweig.

      Together with No. 80-54, ITT Gilfillan, a Division of International Telephone & Telegraph Corp. v. Clayton, also on certiorari to the same court-.

      Briefs of amici curiae were filed by J. Albert Woll, Laurence Gold, and Marsha Berzon for the American Federation of Labor and Congress of Industrial Organizations; by James C. Paras, Bruce A. Nelson, Thomas E. Wilson, and Stephen A. Bokat for the Chamber of Commerce of the United States; and by Wesley J. Fastiff and Kathleen M. Kelly for Safeway Stores, Inc., et al.

   Justice Brennan

delivered the opinion of the Court.

An employee seeking a remedy for an alleged breach of the collective-bargaining agreement between his union and employer must attempt to exhaust any exclusive grievance and arbitration procedures established by that agreement before he may maintain a suit against his union or employer under § 301 (a) of the Labor Management Relations Act, 1947, 61 Stat. 156, 29 U. S. C. § 185 (a). Republic Steel Corp. v. Maddox, 379 U. S. 650, 652-653 (1965); see Hines v. Anchor Motor Freight, Inc., 424 U. S. 554, 563 (1976); Vaca v. Sipes, 386 U. S. 171, 184 (1967). The question presented by these eases is whether, and in what circumstances, an employee alleging that his union breached its duty of fair representation in processing his grievance, and that his employer breached the collective-bargaining agreement, must also attempt to exhaust the internal union appeals procedures established by his union’s constitution before he may maintain his suit under §301.

I

After eight years in the employ of ITT Gilfillan, Clifford E. Clayton, a member of the United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) and a shop steward of its Local 509, was dismissed for violating a plant rule prohibiting defined misbehavior. Pursuant to the mandatory grievance and arbitration procedure established by the collective-bargaining agreement between ITT and Local 509, Clayton asked his union representative to file a grievance on his behalf on the ground that his dismissal was not for just cause. The union investigated Clayton’s charges, pursued his grievance through the third step of the grievance procedure, and made a timely request for arbitration. It then withdrew the request, choosing not to proceed to arbitration. Clayton was notified of the union’s decision after the time for requesting arbitration had expired.

The UAW requires every union member “who feels aggrieved by any action, decision, or penalty imposed upon him” by the union to exhaust internal union appeals procedures before seeking redress from a "civil court or governmental agency.” UAW Constitution, Art. 33, § 12. These procedures, established by Arts. 32 and 33 of the UAW Constitution and incorporated into Art. IY of Local 509’s bylaws, direct the employee first to seek relief from the membership of his local. Art. 33, § 3. If not satisfied with the result obtained there, the employee may further appeal to the International Executive Board of the UAW, and eventually to either the Constitutional Convention Appeals Committee or to a Public Review Board composed of "impartial persons of good public repute” who are not members or employees of the union. Arts. 32, 33, §§ 3-11.

Clayton did not file a timely internal appeal from his local’s decision not to seek arbitration of his grievance. Instead, six months after the union’s withdrawal of its request for arbitration, Clayton filed this action under § 301 (a) of the Labor Management Relations Act, 1947, 29 U. S. C. § 185 (a), in the District Court for the Central District of California. He alleged that the union had breached its duty of fair representation by arbitrarily refusing to pursue his grievance past the third step of the grievance procedure, and that the employer had breached the collective-bargaining agreement by discharging him without just cause.

Both the union and the employer pleaded as an affirmative defense Clayton’s failure to exhaust the internal union appeals procedures. App. 12, 18. The District Court sustained this defense, finding that Clayton had failed to exhaust the internal appeals procedures; that those procedures were adequate as a matter of law; that Clayton had been advised of their existence; and that his failure to exhaust could not be excused as futile. Record 397-404. Accordingly, the court dismissed Clayton’s suit against both the union and the employer.

The United States Court of Appeals for the Ninth Circuit affirmed the dismissal of Clayton’s suit against the union and reversed the dismissal of his suit against the employer. 623 F. 2d 563 (1980). Focusing on the adequacy of the relief available under the internal union appeals procedures the Court of Appeals held that Clayton’s failure to exhaust was fatal to his claim against the union, because by filing an internal appeal Clayton might have received money damages, the relief he sought in his § 301 suit against the union. Id., at 566. However, the Court held that Clayton’s failure to exhaust did not bar his suit against the employer, because the internal appeals procedures could not result in either reinstatement of his job, which was the relief Clayton sought from the employer under § 301, or in reactivation of his grievance. Id., at 569-570.

In No. 80-5049, Clayton argues that his § 301 claim against the UAW and Local 509 should be allowed to proceed despite his failure to exhaust internal union procedures. In No. 80-54, ITT Gilfillan argues that if Clayton’s failure to exhaust bars his suit against the union, it must also bar his suit against the employer.

The Courts of Appeals are divided over whether an employee should be required to exhaust internal union appeals procedures before bringing suit against a union or employer under § 301. Some hold that the employee’s failure to exhaust internal union procedures may not be asserted as a defense by an employer. Others permit the defense to be asserted by an employer if the internal appeals procedures could result in reactivation of the grievance. With respect to a union, some courts hold that the employee’s failure to exhaust is excused if union officials would be so hostile to an employee that he could not hope to obtain a fair hearing. Others would also excuse the employee’s failure to exhaust if the substantive relief available through the internal procedures would be less than that available in his § 301 action.

We granted certiorari to resolve the conflict. 449 U. S. 950 (1980). We reverse the dismissal of Clayton’s suit against the union and affirm the reversal of the dismissal of his suit against the employer. We hold that where an internal union appeals procedure cannot result in reactivation of the employee’s grievance or an award of the complete relief sought in his § 301 suit, exhaustion will not be required with respect to either the suit against the employer or the suit against the union.

II

In Republic Steel Corp. v. Maddox, 379 U. S. 650 (1965), we were asked to decide whether an employee alleging a violation of the collective-bargaining agreement between his union and employer must attempt to exhaust exclusive contractual grievance and arbitration procedures before bringing-suit under §301 (a). In deciding that issue we looked to principles of federal common law. See Textile Workers v. Lincoln Mills, 353 U. S. 448, 457 (1957). Two considerations influenced our decision to require exhaustion. First, Congress had “expressly approved contract grievance procedures as a preferred method for settling disputes and stabilizing the 'common law’ of the plant.” 379 U. S., at 653. Second, a contrary rule, allowing an employee to bring suit under § 301 without attempting to exhaust the contractual grievance procedures, would “deprive employer and union of the ability to establish a uniform and exclusive method for orderly settlement of employee grievances.” Ibid, The rule established by Republic Steel was thus intended to protect the integrity of the collective-bargaining process and to further that aspect of national labor policy that encourages private rather than judicial resolution of disputes arising over the interpretation and application of collective-bargaining agreements. See Hines v. Anchor Motor Freight, Inc., 424 U. S., at 567, 570-571.

The contractual procedures we required the employee to exhaust in Republic Steel are significantly different from the procedures at issue here. In these cases, the Court is asked to require exhaustion of internal union procedures. These procedures are wholly a creation of the UAW Constitution. They were not bargained for by the employer and union and are nowhere mentioned in the collective-bargaining agreement that Clayton seeks to have judicially enforced. Nonetheless, Clayton’s employer and union contend that exhaustion of the UAW procedures, like exhaustion of contractual grievance and arbitration procedures, will further national labor policy and should be required as a matter of federal common law. Their argument, in brief, is that an exhaustion requirement will enable unions to regulate their internal affairs without undue judicial interference and that it will also promote the broader goal of encouraging private resolution of disputes arising out of a collective-bargaining agreement.

We do not agree that the policy of forestalling judicial interference with internal union affairs is applicable to these cases. This policy has been strictly limited to disputes arising over internal union matters such as those involving the interpretation and application of a union constitution. As we stated in NLRB v. Marine Workers, 391 U. S. 418 (1968), the policy of deferring judicial consideration of internal union matters does not extend to issues “in the public domain and beyond the internal affairs of the union.” Id., at 426, n. 8. Here, Clayton’s dispute against his union is based upon an alleged breach of the union’s duty of fair representation. This allegation raises issues rooted in statutory policies extending far beyond internal union interests. See United Parcel Service, Inc. v. Mitchell, ante, at 66, and n. 2 (Stewart, J., concurring); Hines v. Anchor Motor Freight, Inc., supra, at 562; Vaca v. Sipes, 386 U. S., at 182; Humphrey v. Moore, 375 U. S. 335 (1964).

Our analysis, then, focuses on that aspect of national labor policy that encourages private rather than judicial resolution of disputes arising over collective-bargaining agreements. Concededly, a requirement that aggrieved employees exhaust internal remedies might lead to non judicial resolution of some contractual grievances. For example, an employee who exhausts internal union procedures might decide not to pursue his § 301 action in court, either because the union offered him a favorable settlement, or because it demonstrated that his underlying contractual claim was without merit. However, we decline to impose a universal exhaustion requirement lest employees with meritorious § 301 claims be forced to exhaust themselves and their resources by submitting their claims to potentially lengthy internal union procedures that may not be adequate to redress their underlying grievances.

As we stated in NLRB v. Marine Workers, supra, at 426, and n. 8, courts have discretion to decide whether to require exhaustion of internal union procedures. In exercising this discretion, at least three factors should be relevant: first, whether union officials are so hostile to the employee that he could not hope to obtain a fair hearing on his claim; second, whether the internal union appeals procedures would be inadequate either to reactivate the employee’s grievance or to award him the full relief he seeks under § 301; and third, whether exhaustion of internal procedures would unreasonably delay the employee’s opportunity to obtain a judicial hearing on the merits of his claim. If any of these factors are found to exist, the court may properly excuse the employee’s failure to exhaust.

Clayton has not challenged the finding of the lower courts that the UAW internal appeals procedures are fair and reasonable. He concedes that he could have received an impartial hearing on his claim had he exhausted the internal union procedures. See Glover v. St. Louis-San Francisco R. Co., 393 U. S. 324, 330-331 (1969). Accordingly, our inquiry turns to the second factor, whether the relief available through the union’s internal appeals procedures is adequate.

In his suit under § 301, Clayton seeks reinstatement from his employer and monetary relief from both his employer and his union. Although, the UAW Constitution does not indicate on its face what relief is available through the internal union appeals procedures, the parties have stipulated that the Public Review Board can award backpay in an appropriate case, Tr. 35-36, and the two decisions of the Public Review Board reprinted in the joint appendix both resulted in awards of backpay. App. 89-109. It is clear, then, that at least some monetary relief may be obtained through the internal appeals procedures.

It is equally clear that the union can neither reinstate Clayton in his job, see n. 15, supra, nor reactivate his grievance. Article IX of the collective-bargaining agreement between Local 509 and ITT Gilfillan provides that the union may obtain arbitration of a grievance only if it gives “notice ... to the Company in writing within fifteen (15) working days after the date of the Company’s decision at Step 3 of the Grievance Procedure.” By the time Clayton learned of his union’s decision not to pursue the grievance to arbitration, this 15-day time limit had expired. See n. 2, supra. Accordingly, the union could not have demanded arbitration even if the internal appeal had shown Clayton’s claim to be meritorious. The union was bound by its earlier decision not to pursue Clayton’s grievance past the third stage of the grievance and arbitration procedure. For the reasons that follow, we conclude that these restrictions on the relief available through the internal UAW procedures render those procedures inadequate.

Where internal union appeals procedures can result in either complete relief to an aggrieved employee or reactivation of his grievance, exhaustion would advance the national labor policy of encouraging private resolution of contractual labor disputes. In such cases, the internal union procedures are capable of fully resolving meritorious claims short of the judicial forum. Thus, if the employee received the full relief he requested through internal procedures, his § 301 action would become moot, and he would not be entitled to a judicial hearing. Similarly, if the employee obtained reactivation of his grievance through internal union procedures, the policies underlying Republic Steel would come into play, and the employee would be required to submit his claim to the collectively bargained dispute-resolution procedures. In either case, exhaustion of internal remedies could result in final resolution of the employee’s contractual grievance through private rather than judicial avenues.

By contrast, where an aggrieved employee cannot obtain either the substantive relief he seeks or reactivation of his grievance, national labor policy would not be served by requiring exhaustion of internal remedies. In such cases, exhaustion would be a useless gesture: it would delay judicial consideration of the employee’s § 301 action, but would not eliminate it. The employee would still be required to pursue judicial means to obtain the relief he seeks under § 301. Moreover, exhaustion would not lead to significant savings in judicial resources, because regardless of the outcome of the internal appeal, the employee would be required to prove de novo in his § 301 suit that the union breached its duty of fair representation and that the employer breached the collective-bargaining agreement. As we recently stated, one of the important federal policies underlying § 301 is the ‘relatively rapid disposition of labor disputes.’ ” United Parcel Service, Inc. v. Mitchell, ante, at 63, quoting Auto Workers v. Hoosier Cardinal Corp., 383 U. S. 696, 707 (1966). This policy is undermined by an exhaustion requirement unless the internal procedures are capable of either reactivating the employee’s grievance or of redressing it.

In reliance upon the Court of Appeals’ opinion in these cases, the UAW contends that even if exhaustion is not required with respect to the employer, it should be required with re-speet to the union, because the relief Clayton seeks against the union in his § 301 suit is available through internal union procedures. But cf. n. 17, supra. We disagree. While this argument might have force where the employee has chosen to bring his § 301 suit only against the union, the defense should not be available where, as here, the employee has filed suit against both the union and the employer. A trial court requiring exhaustion with respect to the suit against the union, but not with respect to the suit against the employer, would be faced with two undesirable alternatives. If it stayed the action against the employer pending resolution of the internal appeals procedures, it would effectively be requiring exhaustion with respect to the suit against the employer, a result we have held would violate national labor policy. Yet if it permitted the action against the employer to proceed, and tolled the running of the statute of limitation in the suit against the union until the internal procedures had been exhausted, it could very well find itself with two separate § 301 suits, based on the same facts, proceeding at different paces in its courtroom. As we suggested in Vaca v. Sipes, 386 U. S., at 197, this is a result that should be avoided if possible. The preferable approach is for the court to permit the employee’s § 301 action to proceed against both defendants, despite the employee’s failure to exhaust, unless the internal union procedures can reactivate the grievance or grant the relief that would be available in the employee’s § 301 suit against both defendants.

Ill

In contrast to contractual grievance and arbitration procedures, which are negotiated by the parties to a collective-bargaining agreement and are generally designed to provide an exclusive method for resolving disputes arising under that agreement, internal union appeals procedures are created by the union constitution and are designed to settle disputes between an employee and his union that arise under that constitution. Because of this distinction, the policies underlying Republic Steel, encouraging private resolution of grievances arising out of the collective-bargaining process, are not directly applicable to the issue whether to require exhaustion of internal union procedures.

We conclude that the policies underlying Republic Steel are furthered by an exhaustion requirement only where the internal union appeals procedures can either grant the aggrieved employee full relief or reactivate his grievance. For only in those circumstances is there a reasonable possibility that the employee’s claim will be privately resolved. If the internal procedures are not adequate to.effect that relief, the employee should not be required to expend time and resources seeking a necessarily incomplete resolution of his claim prior to pursuing judicial relief. If the internal procedures are inadequate, the employee’s failure to exhaust should be excused, and he should be permitted to pursue his claim for breach of the duty of fair representation and breach of the collective-bargaining agreement in court under § 301.

In this case, the internal union appeals panels cannot reactivate Clayton’s grievance and cannot grant Clayton the reinstatement relief he seeks under § 301. We therefore hold that Clayton should not have been required to exhaust internal union appeals procedures prior to bringing suit against his union and employer under § 301.

Affirmed in part, reversed in part, and remanded.

Justice Powell,

with whom The Chief Justice joins, dissenting.

I join Justice Rehnquist’s dissent, and write briefly to emphasize a rationale — suggested by an amicus curiae — that is consistent both with national labor policy and the relevant precedents.

In briefest summary, I would hold that in the circumstances of this case no issue concerning the breach of the union’s statutory duty of fair representation properly can be said to arise at all. The union has not made a final determination whether to pursue arbitration on Clayton’s behalf. Clayton should not be able to claim a breach of duty by the union until the union has had a full opportunity to make this determination. No such opportunity exists until Clayton exhausts the procedures available for resolving that question. Thus, as Clayton cannot claim a breach of duty by the union, he cannot bring a breach of contract suit under § 301 against his employer.

In my view, the asserted distinction in a tripartite case such as this one between contractual and internal union remedies, ante, at 687, is immaterial. The situation presented in this case is well within the doctrine underlying Republic Steel Corp. v. Maddox, 379 U. S. 650 (1965), that employees must pursue all procedures established for determining whether a union will go forward with a grievance. Employees must pursue available procedures even if the collective-bargaining agreement contains time limits that appear on their face to bar revival of the grievance. As the Court noted in John Wiley & Sons v. Livingston, 376 U. S. 543, 556-557 (1964), “[q]uestions concerning the procedural prerequisites to arbitration do not arise in a vacuum; they develop in the context of an actual dispute about the rights of the parties to the contract or those covered by it.” Therefore, “it best accords with the usual purposes of an arbitration clause and with the policy behind federal labor law to regard procedural disagreements not as separate disputes but as aspects of the dispute which called the grievance procedures into play.” Id., at 559. Thus, the question whether such time limits should be waived in a particular case is itself an arbitrable matter.

Justice Rehnquist,

with whom The Chief Justice, Justice Stewart, and Justice Powell join, dissenting.

The Court of Appeals for the Ninth Circuit held that the defense of exhaustion of internal union remedies was available to the union defendant in this § 301 action but not to the employer defendant. The result of this ruling was to put the employer in the unenviable position of having to defend the manner in which the union represented one of its employees (Clayton) during a grievance procedure. The Court’s opinion today rights what I view as the principal error in the decision below by requiring the actions against the employer and union to proceed simultaneously. Ante, at 695. The Court reaches this conclusion by holding that in this particular case the exhaustion defense should not be available to either the union or employer. I, however, view differently than does the Court the benefits to be obtained from requiring exhaustion in these cases, and would require Clayton to exhaust his intraunion remedies before proceeding against either his union or employer.

The Court does not require exhaustion of internal union remedies in this case because it finds the remedies cannot provide Clayton with all the substantive relief he seeks (i. e., money damages and reinstatement) or with reactivation of his grievance. Ante, at 693. The Court, however, concedes that where the internal remedies can provide such relief, the exhaustion defense should be available to the employer and union alike. Ante, at 692, and n. 20. Presumably, this would require exhaustion in a § 301 case where the only relief sought was money damages and money damages were obtainable through the internal union procedures. In such a case, the employee would be able to obtain all “the substantive relief he seeks.” Ante, at 693.

The Court creates a three-prong test for determining when a district court should exercise its discretion and require exhaustion of intraunion remedies. Ante, at 689. Admittedly, a district court when exercising this discretion should carefully consider the first criterion referred to by the Court— whether union officials are so hostile to the employee that he could not obtain a fair hearing on his claim. Ibid. However, there is no question that this criterion does not come into play in this case. Ibid.

The second prong of the Court’s test is “whether the internal union appeals procedures would be inadequate either to reactivate the employee’s grievance or to award him the full relief he seeks under § 301 . . . .” Ibid. Exhaustion is not required in this case, the Court says, because the UAW’s internal union appeals procedures cannot provide Clayton with reinstatement or reactivation of his grievance.

However, no prior case of this Court has held that exhaustion should not be required unless the internal union remedies can provide all the substantive relief requested or reactivation of the grievance. The principal difficulty with the Court’s opinion lies in its framing of this second criterion which reflects much too narrow a view of the purposes of the exhaustion defense and the benefits which will likely result from requiring exhaustion in a case where a union has established a means for reviewing the manner in which it has represented an employee during a grievance. It is worth noting that neither NLRB v. Marine Workers, 391 U. S. 418 (1968), on which the Court so heavily relies, nor any other case of this Court, supports the language used by the Court in the second prong of its test. In fact, Marine Workers simply states exhaustion should not be required “when the administrative remedies are inadequate.” Id., at 426, n. 8. Our focus therefore should be on the adequacies of the union remedies when viewed in the context of the underlying purpose of the exhaustion defense — which is to encourage private rather than judicial resolution of disputes.

The exhaustion of intraunion remedies, even where those remedies cannot provide reinstatement or reactivation of a grievance, does promote private resolution of labor disputes. Resort to the intraunion appeals procedures provides the union with its first opportunity to focus on the issue of fair representation — as opposed to the alleged breach of the collective-bargaining agreement. Resort to the union appeals procedures gives the union an opportunity to satisfy the employee that its decision not to pursue a grievance was correct. If successful on this score, litigation is averted. Where a union determines through its appeals procedures that it mishandled an employee’s grievance, litigation may also be averted because at that point both the union and the employer have a strong incentive to pursue private resolution of the grievance. Even where a collective-bargaining agreement does not provide for reactivation of a grievance, it is reasonable to assume that many employers, when confronted with both a determination by a union that it had breached its duty of fair representation and the immediate prospect of an employee commencing litigation, would seriously consider voluntarily reactivating the grievance procedure to avoid the additional burden and costs of litigation. Should litigation nonetheless occur, exhaustion may well have narrowed the factual and legal issues to be decided and thus result in a savings of judicial resources. A fact that should also not be discounted is that the conscientious handling by a union of an employee’s intraunion appeal cannot help but enhance the union’s prestige with its members. Cf. Republic Steel Corp. v. Maddox, 379 U. S. 650, 653 (1965). Exhaustion promotes union democracy and self-government as well as the broader policy of noninterference with internal union affairs. A union’s incentive to maintain internal procedures which provide substantial procedural protection and which can afford significant substantive relief will be greatly undermined if an employee can simply bypass the procedures at will.

The error in the Court’s analysis results in part from its apparent belief that intraunion remedies must provide a complete substitute for either the courts or the contract grievance procedure in order to be deemed “adequate.” The purpose of intraunion remedies, however, is quite different. These remedies are provided to facilitate or encourage the private resolution of disputes, not to be a complete substitute for the courts. Intraunion remedies can serve this purpose so long as they have the capacity to address whether the union wrongfully handled the grievance. Obviously, if a union appeals procedure cannot address this question, exhaustion should not be required.

An additional question which is also of great importance is whether a union should ever be found to have breached its duty of fair representation when a union member shuns an appeals procedure which is both mandated by the union con-sitution and established for the purpose of allowing the union to satisfy its duty of fair representation. It seems to me not at all unreasonable to say that a union should have the right to require its members to give it the first opportunity to correct its own mistakes. Responsible union self-government demands a fair opportunity to function. This is especially true in a situation such as here where exhaustion of the union remedies could eliminate the need to litigate altogether. Congress has recognized the importance of these values in § 101 (a) (4) of the Labor-Management Reporting and Disclosure Act of 1959, 73 Stat. 522, 29 U. S. C. § 411 (a) (4). This section provides in part:

“No labor organization shall limit the right of any member thereof to institute an action in any court, or any proceeding before any administrative agency .... Provided, That any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal or administrative proceedings against such organizations or any officer thereof . . . .”

In §101 (a)(4), Congress has restricted the power of unions to limit the rights of their members to resort to the courts. At the same time, however, Congress gave the judiciary the discretion to require union members to exhaust hearing procedures. As this Court explained in Marine Workers, the language in § 101 (a) (4) is

“a statement of policy that the public tribunals whose aid is invoked may in their discretion stay their hands for four months, while the aggrieved person seeks relief within the union. We read it, in other words, as installing in this labor field a regime comparable to that which prevails in other areas of law before the federal courts, which often stay their hands while a litigant seeks administrative relief before the appropriate agency.” 391 U. S., at 426.

Section 101 (a)(4) reflects what I believe to be the reasonable compromise Congress reached when trying to balance two somewhat competing interests — furtherance of the national labor policy in favor of private resolution of disputes on the one hand and the desire not to unduly burden or “exhaust” an individual employee with time-consuming procedures on the other. It is fair to say that § 101 (a) (4) represents Congress’ judgment that limiting access to the courts for at least four months is not an unreasonable price to pay in exchange for the previously mentioned benefits exhaustion may provide.

The language of § 101 (a) (4) also goes a long way to satisfy the third prong of the test set forth by the Court today. Exhaustion of internal union procedures should not be required where such would unreasonably delay an employee’s opportunity to obtain a judicial hearing on the merits of his claim. Ante, at 689. Intraunion procedures which take years to complete serve no worthwhile purpose in the overall scheme of promoting the prompt and private resolution of claims. But a requirement that an employee not be permitted to go to court without first having pursued an intra-union appeal for at least four months does substantially further this national labor policy without placing any unfair burden on an employee. As such, I think all interested parties would be well served by a requirement that employees exhaust their intraunion procedures for this limited period of time prescribed by Congress.

       The collective-bargaining agreement between Local 509 and ITT Gil-fillan establishes a four-step grievance procedure, with binding arbitration as the fourth step. Article IX of the agreement provides that if the union wishes to request arbitration, it must do so within 15 working days after completion of the third step of the grievance procedure. App. 31-36.

       Clayton was notified of the union’s decision by a letter written by the International Representative responsible for servicing Local 509. Id., at 78-79. Neither the union nor the employer contests Clayton’s allegation that he received this letter more than 15 working days after completion of the third step of the grievance procedure. See id., at 7; Tr. 88-99.

       Under Art. 33, § 3, of the UAW Constitution, Clayton had 30 days from the date the union withdrew its request for arbitration to initiate the internal union appeals procedures.

       To prevail in an action under § 301 against either the employer or the union, an employee must ordinarily establish both that the union breached its duty of fair representation and that the employer breached the collective-bargaining agreement. Hines v. Anchor Motor Freight, Inc., 424 U. S. 554, 570-571 (1976).

       See, e. g., Johnson v. General Motors, 641 F. 2d 1075, 1083 (CA2 1981) ; Geddes v. Chrysler Corp., 608 F. 2d 261, 264 (CA6 1979); Petersen v.
        Rath Packing Co., 461 F. 2d 312, 315 (CA8 1972); Retana v. Apartment, Motel, Hotel and Elevator Operators Union, 453 F. 2d 1018, 1027, n. 16 (CA9 1972).

       See, e. g., Varra v. Dillon Companies, Inc., 615 F. 2d 1315, 1317-1318 (CA10 1980); Baldini v. Local Union No. 1095, 581 F. 2d 145, 150 (CA7 1978); Winter v. Local Union No. 639, 186 U. S. App. D. C. 315, 319-320, 569 F. 2d 146, 150-151 (1977); Harrison v. Chrysler Corp., 558 F. 2d 1273, 1278 (CA7 1977).

       See, e. g., Fizer v. Safeway Stores, Inc., 586 F. 2d 182, 183-184 (CA10 1978); Winter v. Local Union No. 639, supra, at 318, 569 F. 2d, at 149; Imel v. Zohn Mfg. Co., 481 F. 2d 181, 184 (CA10 1973), cert., denied, 415 U. S. 915 (1974).

       See, e. g., Tinsley v. United Parcel Service, Inc., 635 F. 2d 1288, 1290 (CA7 1980); Geddes v. Chrysler Corp., supra, at 264; Baldini v. Local Union No. 1095, supra, at 149; Buzzard v. Local Lodge 1040, 480 F. 2d 35, 41 (CA9 1973). These cases compare the relief available through internal procedures with the relief available against the union under §301.

       Section 301 (a) of the Labor Management Relations Act, 1947, 61 Stat. 156, 29 U. S. C. § 185 (a), provides:
      “Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.”

       Section 203 (d) of the Labor Management Relations Act, 61 Stat. 153, 29 U. S. C. §173 (d), provides that “[f]inal adjustment by a method agreed upon by the parties is declared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.”

       We also noted that exhaustion would serve the interests of both the union and the employer:
      “[It] complements the union’s status as exclusive bargaining representative by permitting [the union] to participate actively in the continuing administration of the contract. In addition, conscientious handling of grievance claims will enhance the union’s prestige with employees. Employer interests, for their part, are served by limiting the choice of remedies available to aggrieved employees.” 379 U. S., at 653.
      Moreover, exhaustion would not adversely affect the employee:
      “[I]t cannot be said, in the normal situation, that contract grievance procedures are inadequate to protect the interests of an aggrieved employee until the employee has attempted to implement the procedures and found them so.” Ibid.

      We concluded that since an employee bringing a § 301 claim is asserting rights created by a collective-bargaining agreement, he should also be required to pursue the dispute-resolution procedures created by that agreement. See Hines v. Anchor Motor Freight, Inc., 424 U. S., at 562-563; Vaca v. Sipes, 386 U. S. 171, 184 (1967).

       Indeed, the parties concede that Clayton has exhausted the grievance and arbitration procedures that were expressly created by the collective-bargaining agreement.

       This policy has its statutory roots in § 101 (a) (4) of the Landrum-Griffin Act, 73 Stat. 522, 29 U. S. C. §411 (a)(4), which is part of the subchapter of that Act entitled “Bill of Rights of Members of Labor Organizations.” Section 101(a)(4) provides:
      “No labor organization shall limit the right of any member thereof to institute an action in any court, . . . Provided, That any such member may be required to exhaust reasonable hearing procedures (but not to exceed a four-month lapse of time) within such organization, before instituting legal . . . proceedings against such organizations or any officer thereof . . . .”

       In NLRB v. Marine Workers, we held that respondent union could not discipline one of its members for failing to exhaust internal appeals procedures before filing an unfair labor practice charge with the National Labor Relations Board, because the unfair labor practices charge was “in the public domain and beyond the internal affairs of the union.” 391 U. S., at 425. “A proceeding by the [NLRB] is not to adjudicate private rights but to effectuate a public policy,” and “[a]ny coercion used to discourage, retard, or defeat . . . access [to those proceedings] is beyond the legitimate interests of a labor organization.” Id., at 424. Moreover, “[t]here cannot be any justification to make the public processes wait until the union member exhausts internal procedures plainly inadequate to deal with all phases of the complex problem concerning employer, union, and employee member. If the member becomes exhausted, instead of the remedies, the issues of public policy are never reached and an airing of the grievance never had.” Id., at 425. See also 105 Cong. Rec. 17899 (1959) (remarks of Sen. Kennedy) (§ 101 (a) (4) not intended “to eliminate existing'grievance procedures established by union constitutions for redress of alleged violations of their internal governing laws”).

       App. 8-9. Reinstatement is available only from the employer, because the union has no power to order reinstatement under the collective-bargaining agreement. Damages, however, can be assessed against both the employer and the union. As we stated in Vaca v. Sipes, 386 U. S., at 197-198, an employee who establishes that the union breached its duty of fair representation in processing his grievance, and that the employer breached the collective-bargaining agreement, may be entitled to an award of damages “apportion [ed] . . . between the employer and the union according to the damage caused by the fault of each. Thus, damages attributable solely to the employer’s breach of contract should not be charged to the union, but increases if any in those damages caused by the union’s refusal to process the grievance should not be charged to the employer.”

       The UAW Constitution states only that the Constitution Convention Appeals Committee has “the authority to consider and decide all appeals submitted to it,” Art. 33, § 8, and that the Public Review Board has the “authority and duty to make final and binding decisions on all cases appealed to it,” Art. 32, §3 (b), and to “dispose of all facets of the appeal.” Art. 33, § 11.

       The record does not indicate whether this monetary relief includes backpay only, or whether it also may include prospective monetary relief and incidental or punitive damages, relief that Clayton is apparently seeking in his § 301 action. See App. 9.

       The parties stipulated at trial that once Local 509 withdrew its request for arbitration, that “was the end of the road so far as remedies under the contract were concerned.” Tr. 109; see also id., at 260, 268. That stipulation is consistent with the collective-bargaining agreement. Although Art. VIII, § 5, which establishes time limits for processing grievances, states that “[t]he time limits contained herein may be extended by mutual agreement in writing by the parties concerned,” there is no comparable waiver provision in Art. IX, which establishes the 15-day time limit for requesting arbitration. See also Tinsley v. United Parcel Service, Inc., 635 F. 2d, at 1292; Baldini v. Local Union No. 1095, 581 F. 2d, at 150; Harrison v. Chrysler Corp., 558 F. 2d., at 1279.
      Although most collective-bargaining agreements contain similarly strict time limits for seeking arbitration of grievances, there are some exceptions. The UAW informs us that “[s]ome employers and unions have, through collective bargaining, agreed to allow the reinstatement of withdrawn grievances where a union tribunal reverses the union’s initial decision. This is true, for example, in the current UAW contracts with the major automobile and agricultural implement manufacturers.” Brief for Respondents in No. 80-5049, p. 18, n. 40. In such cases, the relief available through the union’s internal appeal procedures would presumably be adequate.

       Accordingly, we need not discuss the third factor, whether exhaustion of the union’s otherwise adequate internal appeals procedures would unreasonably delay the employee’s opportunity to obtain a judicial hearing on the merits of his claim.

       Allowing a defendant in a § 301 action to demand exhaustion of internal union procedures when those procedures could lead to reactivation of a stalled grievance is wholly consistent with Republic Steel Corp. v. Maddox, 379 U. S. 650 (1965). In Republic Steel, we held that an employer may rely on a provision in a collective-bargaining agreement requiring its employees to submit all contractual grievances to arbitration prior to bringing suit under § 301. If a provision in the collective-bargaining agreement also permits reactivation of a grievance after an internal union appeal, an employer or union should also be able to rely on that provision and thus defend the § 301 suit on the ground that the employee failed to exhaust internal union procedures.

       In addition, by reactivating the grievance, the union might be able to rectify the very wrong of which the employee complains — a breach of the duty of fair representation caused by the union’s refusal to seek arbitration — and the employee would then be unable to satisfy the precondition to a § 301 suit against the employer.

       Of course exhaustion might deplete the employee’s energy and resources to the point where he chooses not to pursue his § 301 claim in court, but that result is surely inconsistent with federal policy.

       Even if the union admitted during the internal appeals procedures that it had breached its duty of fair representation, an admission the UAW has- apparently made only once in the 20 years preceding 1977, see Klein, Enforcement of the Right to Fair Representation: Alternative Forums, The Duty of Fair Representation 103 (1977), the employee would still not be saved the time and expense of proving that breach in his § 301 suit. While a union’s admission that it breached its duty of fair representation is certainly evidence a court can consider, an employer defending a § 301 suit would still be entitled to prove that no such breach had occurred. See Vaca v. Sipes, 386 U. S., at 186-187.

       We are also not persuaded by the Court of Appeals’ assumption that exhaustion would narrow and focus the issues for ultimate judicial determination. The Court of Appeals stated:
      “The UAW’s liability (if any) for breach of its duty of fair representation would depend on the reasons for the union’s withdrawal of the arbitration request. There is little in the record to indicate why the local official changed his mind and withdrew the arbitration request. But the missing motive is 'precisely the sort of information that an appellate body within the union would have elicited, compiling a record that would greatly assist the court now.” 623 F. 2d, at 566 (emphasis added).
      There are three reasons why we are not persuaded by this analysis. First, the record does indicate why the union withdrew its request for arbitration of Clayton’s grievance. The letter from Local 509’s International Representative to Clayton, informing him that the union had withdrawn its request for arbitration, listed five reasons in support of the union’s decision. See n. 2, supra. Second, since the UAW Constitution does not on its face require any of the decisionmaking panels of the union to explain the reasons underlying their disposition of an employee’s internal union appeal, there is no guarantee that exhaustion will result in a useful interpretation of union rules. Third, in many eases the union tribunal is not permitted to consider certain allegations the employee could assert under § 301. In these cases, for example, Clayton alleges that the union “acted arbitrarily . . . and discriminatorily” in refusing to seek arbitration of his grievance. App. 6 (emphasis added). The UAW Constitution, however, states that the Public Review Board can only consider allegations that the employee’s grievance “was improperly handled [by the union] because of fraud, discrimination, or collusion with management.” Art. 33, § 8 (b) (emphasis added). This standard offers the aggrieved employee less protection than the “arbitrary, discriminatory, or in bad faith” standard for breach of the duty of fair representation that we developed in Vaca v. Sipes, supra, at 190. As the General Counsel to the Public Review Board has stated:
      “The UAW acknowledges that it has a duty of fair representation to its members. Moreover, it acknowledges that its members may assert a claim for a breach of the duty of fair representation within the system of internal remedies. It does not concede to its members, however, that arbitrary, perfunctory, or negligent conduct amounts to a breach of the duty of fair representation, -nor does it permit them even to assert this type of claim before the PRB, since the standard of review is jurisdictional. That is, unless the requisite claim is made (fraud, discrimination, or collusion) the board may not entertain it.” Klein, supra, at 99.
      See also Johnson v. General Motors, 641 F. 2d, at 1081. Of course, if an allegation cannot be considered by the Public Review Board, no record helpful to a court will be made with respect to that issue. In sum, we conclude that the prospect that exhaustion would create a record helpful to a court in a subsequent § 301 action is too speculative to be given much weight.

      Brief for the American Federation of Labor and Congress of Industrial Organizations as Amicus Curiae 3-4, 5-14.


source: Caselaw Access Project

author: Justice Stewart Justice Brennan,

license: Public Domain

text:
    H. A. ARTISTS & ASSOCIATES, INC., et al. v. ACTORS’ EQUITY ASSN. et al.
    No. 80-348.
    Argued March 23, 1981
    Decided May 26, 1981

      Stewart, J., delivered the opinion of the Court, in which White, BlackmuN, Powell, Rehnquist, and Stevens, JJ., joined, and in all but Part II-D of which Burger, C. J., and Brennan and Marshall, JJ., joined. Brennan, J., filed an opinion concurring in part and dissenting in part, in which Burger, C. J., and Marshall, J., joined, post, p. 723.

      Howard Breindel argued the cause for petitioners. With him on the briefs was Charles Donelan.

      Jerome B. Lurie argued the cause for respondents. With him on the brief were Sidney E. Cohn, Mary K. O’Melveny, Nan Bases, and Samuel Estreicher.

      Laurence Gold argued the cause for the American Federation of Labor and Congress of Industrial Organizations as amicus curiae urging affirmance. With him on the brief were /. Albert Woll and George Kaufmann.

         David Alter, Joseph Ferraro, Mortimer Becker, Henry Kaiser, Ronald Rosenberg, and Paul P. Selvin filed a brief for the American Federation of Television and Radio Artists et al. as amici curiae urging affirmance.

   Justice Stewart

delivered the opinion of the Court.

The respondent Actors’ Equity Association (Equity) is a union representing the vast majority of stage actors and actresses in the United States. It enters into collective-bargaining agreements with theatrical producers that specify minimum wages and other terms and conditions of employment for those whom it represents. The petitioners are independent theatrical agents who place actors and actresses in jobs with producers. The Court of Appeals for the Second Circuit held that the respondents’ system of regulation of theatrical agents is immune from antitrust liability by reason of the statutory labor exemption from the antitrust laws, 622 F. 2d 647. We granted certiorari to consider the availability of that exemption in the circumstances presented by this case. 449 U. S. 991.

I

A

Equity is a national union that has represented stage actors and actresses since early in this century. Currently representing approximately 23,000 actors and actresses, it has collective-bargaining agreements with virtually all major theatrical producers in New York City, on and off Broadway, and with most other theatrical producers throughout the United States. The terms negotiated with producers are the minimum conditions of employment (called “scale”); an actor or actress is free to negotiate wages or terms more favorable than the collectively bargained minima.

Theatrical agents are independent contractors who negotiate contracts and solicit employment for their clients. The agents do not participate in the negotiation of collective-bargaining agreements between Equity and the theatrical producers. If an agent succeeds in obtaining employment for a client, he receives a commission based on a percentage of the client’s earnings. Agents who operate in New York City must be licensed as employment agencies and are regulated by the New York City Department of Consumer Affairs pursuant to New York law, which provides that the maximum commission a theatrical agent may charge his client is 10% of the client’s compensation.

In 1928, concerned with the high unemployment rates in the legitimate theater and the vulnerability of actors and actresses to abuses by theatrical agents, including the extraction of high commissions that tended to undermine collectively bargained rates of compensation, Equity unilaterally established a licensing system for the regulation of agents. The regulations permitted Equity members to deal only with those agents who obtained Equity licenses and thereby agreed to meet the conditions of representation prescribed by Equity. Those members who dealt with nonlicensed agents were subject to union discipline.

The system established by the Equity regulations was immediately challenged. In Edelstein v. Gillmore, 35 F. 2d 723, the Court of Appeals for the Second Circuit concluded that the regulations were a lawful effort to improve the employment conditions of Equity members. In an opinion written by Judge Swan and joined by Judge Augustus N. Hand, the court said:

“The evils of unregulated employment agencies (using this term broadly to include also the personal representative) are set forth in the defendants’ affidavits and are corroborated by common knowledge. . . . Hence the requirement that, as a condition to writing new business with Equity’s members, old contracts with its members must be made to conform to the new standards, does not seem to us to justify an inference that the primary purpose of the requirement is infliction of injury upon plaintiff, and other personal representatives in a similar situation, rather than the protection of the supposed interests of Equity’s members. The terms they insist upon are calculated to secure from personal representatives better and more impartial service, at uniform and cheaper rates, and to improve conditions of employment of actors by theater managers. Undoubtedly the defendants intend to compel the plaintiff to give up rights under existing contracts which do not conform to the new standards set up by Equity, but, as already indicated, their motive in so doing is to benefit themselves and their fellow actors in the economic struggle. The financial loss to plaintiff is incidental to this purpose.” Id., at 726 (emphasis added).

The essential elements of Equity’s regulation of theatrical agents have remained unchanged since 1928. A member of Equity is prohibited, on pain of union discipline, from using an agent who has not, through the mechanism of obtaining an Equity license (called a “franchise”), agreed to comply with the regulations. The most important of the regulations requires that a licensed agent must renounce any right to take a commission on an employment contract under which an actor or actress receives scale wages. To the extent a contract includes provisions under which an actor or actress will sometimes receive scale pay — for rehearsals or “chorus” employment, for example — and sometimes more, the regulations deny the agent any commission on the scale portions of the contract. Licensed agents are also precluded from taking commissions on out-of-town expense money paid to their clients. Moreover, commissions are limited on wages within 10% of scale pay, and an agent must allow his client to terminate a representation contract if the agent is not successful in procuring employment within a specified period. Finally, agents are required to pay franchise fees to Equity. The fee is $200 for the initial franchise, $60 a year thereafter for each agent, and $40 for any subagent working in the office of another. These fees are deposited by Equity in its general treasury and are not segregated from other union funds.

In 1977, after a dispute between Equity and Theatrical Artists Representatives Associates (TARA) — a trade association representing theatrical agents, see n. 7, supra — a group of agents, including the petitioners, resigned from TARA because of TARA’s decision to abide by Equity’s regulations. These agents also informed Equity that they would not accept Equity’s regulations, or apply for franchises. The petitioners instituted this lawsuit in May 1978, contending that Equity’s regulations of theatrical agents violated §§ 1 and 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. §§ 1 and 2.

B

The District Court found, after a bench trial, that Equity’s creation and maintenance of the agency franchise system were fully protected by the statutory labor exemptions from the antitrust laws, and accordingly dismissed the petitioners’ complaint. 478 E. Supp. 496 (SDNY). Among its factual conclusions, the trial court found that in the theatrical industry, agents play a critical role in securing employment for actors and actresses:

“As a matter of general industry practice, producers seek actors and actresses for their productions through agents. Testimony in this case convincingly established that an actor without an agent does not have the same access to producers or the same opportunity to be seriously considered for a part as does an actor who has an agent. Even principal interviews, in which producers are required to interview all actors who want to be considered for principal roles, do not eliminate the need for an agent, who may have a greater chance of gaining an audition for his client.
. . . . .
“Testimony confirmed that agents play an integral role in the industry; without an agent, an actor would have significantly lesser chances of gaining employment.” Id., at 497, 502.

The court also found “no evidence to suggest the existence of any conspiracy or illegal combination between Actors’ Equity and TARA or between Actors’ Equity and producers,” and concluded that “[t]he Actors Equity franchising system was employed by Actors’ Equity for the purpose of protecting the wages and working conditions of its members.” Id., at 499.

The Court of Appeals unanimously affirmed the judgment of the District Court. It determined that the threshold issue was, under United States v. Hutcheson, 312 U. S. 219, 232, whether Equity’s franchising system involved any combination between Equity and any “non-labor groups” or persons who are not “parties to a labor dispute.” 622 F. 2d, at 648-649. If it did, the court reasoned, the protection of the statutory labor exemption would not apply.

First, the Court of Appeals held that the District Court had not been clearly erroneous in finding no agreement, explicit or tacit, between Equity and the producers to establish or police the franchising system. Ibid. Next, the court turned to the relationship between the union and those agents who had agreed to become franchised, in order to determine whether those agreements would divest Equity’s system of agency regulation of the statutory exemption. Relying on Musicians v. Carroll, 391 U. S. 99, the court concluded that the agents were themselves a “labor group,” because of their substantial “economic inter-relationship” with Equity, under which “the union [could] not eliminate wage competition among its members without regulation of the fees of the agents.” 622 F. 2d, at 650, 651. Accordingly, since the elimination of wage competition is plainly within the area of a union’s legitimate self-interest, the court concluded that the exemption was applicable.

After deciding that the central feature of Equity’s franchising system — the union’s exaction of an agreement by agents not to charge commissions on certain types of work— was immune from antitrust challenge, the Court of Appeals turned to the petitioners’ challenge of the franchise fees exacted from agents. Equity had argued that the fees were necessary to meet its expenses in administering the franchise system, but no evidence was presented at trial to show that the costs justified the fees actually levied. The Court of Appeals suggested that if the exactions exceeded the true costs, they could not legally be collected, as such exactions would be unconnected with any of the goals of national labor policy that justify the labor antitrust exemption. Despite the lack of any cost evidence at trial, however, the appellate court reasoned that the fees were sufficiently low that a remand to the District Court on this point “would not serve any useful purpose.” Id., at 651.

II

A

Labor unions are lawful combinations that serve the collective interests of workers, but they also possess the power to control the character of competition in an industry. Accordingly, there is an inherent tension between national antitrust policy, which seeks to maximize competition, and national labor policy, which encourages cooperation among workers to improve the conditions of employment. In the years immediately following passage of the Sherman Act, courts enjoined strikes as unlawful restraints of trade when a union’s conduct or objectives were deemed “socially or economically harmful.” Duplex Printing Press Co. v. Deering, 254 U. S. 443, 485 (Brandeis, J., dissenting). In response to these practices, Congress acted, first in the Clayton Act, 38 Stat. 731, and later in the Norris-LaGuardia Act, 47 Stat. 70, to immunize labor unions and labor disputes from challenge under the Sherman Act.

Section 6 of the Clayton Act, 15 U. S. C. § 17, declares that human labor “is not a commodity or article of commerce,” and immunizes from antitrust liability labor organizations and their members “lawfully carrying out” their “legitimate object [ives].” Section 20 of the Act prohibits injunctions against specified employee activities, such as strikes and boycotts, that are undertaken in the employees’ self-interest and that occur in the course of disputes “concerning terms or conditions of employment,” and states that none of the specified acts can be “held to be [a] violatio[n] of any law of the United States.” 29 U. S. C. § 52. This protection is re-emphasized and expanded in the Norris-LaGuardia Act, which prohibits federal-court injunctions against single or organized employees engaged in enumerated activities, and specifically forbids such injunctions notwithstanding the claim of an unlawful combination or conspiracy. While the Norris-LaGuardia Act’s bar of federal-court labor injunctions is not explicitly phrased as an exemption from the antitrust laws, it has been interpreted broadly as a statement of congressional policy that the courts must not use the antitrust laws as a vehicle to interfere in labor disputes.

In United States v. Hutcheson, 312 U. S. 219, the Court held that labor unions acting in their self-interest and not in combination with nonlabor groups enjoy a statutory exemption from Sherman Act liability. After describing the congressional responses to judicial interference in union activity, id., at 229-230, the Court declared that

“[s]o long as a union acts in its self-interest and does not combine with non-labor groups, the licit and the illicit under § 20 [of the Clayton Act] are not to be distinguished by any judgment regarding the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end of which the particular union activities are the means.” Id., at 232 (footnote omitted).

The Court explained that this exemption derives not only from the Clayton Act, but also from the Norris-LaGuardia Act, particularly its definition of a “labor dispute,” see n. 14, supra, in which Congress “reasserted the original purpose of the Clayton Act by infusing into it the immunized trade union activities as redefined by the later Act.” 312 U. S., at 236. Thus under Hutcheson, no federal injunction may issue over a “labor dispute,” and “§ 20 [of the Clayton Act] removes all such allowable conduct from the taint of being a Violation of any law of the United States,' including the Sherman [Act].” Ibid.

The statutory exemption does not apply when a union combines with a “non-labor group.” Hutcheson, supra, at 232. Accordingly, antitrust immunity is forfeited when a union combines with one or more employers in an effort to restrain trade. In Allen Bradley Co. v. Electrical Workers, 325 U. S. 797, for example, the Court held that a union had violated the Sherman Act when it combined with manufacturers and contractors to erect a sheltered local business market in order “to bar all other business men from [the market], and to charge the public prices above a competitive level.” Id., at 809. The Court indicated that the union efforts would, standing alone, be exempt from antitrust liability, ibid., but because the union had not acted unilaterally, the exemption was denied. Congress “intended to outlaw business monopolies. A business monopoly is no less such because a union participates, and such participation is a violation of the Act.” Id., at 811.

B

The Court of Appeals properly recognized that the threshold issue was to determine whether or not Equity’s franchising of agents involved any combination between Equity and any “non-labor groups,” or persons who are not “parties to a labor dispute.” 622 F. 2d, at 649 (quoting Hutcheson, 312 U. S., at 232). And the court’s conclusion that the trial court had not been clearly erroneous in its finding that there was no combination between Equity and the theatrical producers to create or maintain the franchise system is amply supported by the record.

The more difficult problem is whether the combination between Equity and the agents who agreed to become franchised was a combination with a “nonlabor group.” The answer to this question is best understood in light of Musicians v. Carroll, 391 U. S. 99. There, four orchestra leaders, members of the American Federation of Musicians, brought an action based on the Sherman Act challenging the union’s unilateral system of regulating “club dates,” or one-time musical engagements. These regulations, inter alia, enforced a closed shop; required orchestra leaders to engage a minimum number of “sidemen,” or instrumentalists; prescribed minimum prices for local engagements; prescribed higher minimum prices for traveling orchestras; and permitted leaders to deal only with booking agents licensed by the union.

Without disturbing the finding of the Court of Appeals that the orchestra leaders were employers and independent contractors, the Court concluded that they were nonetheless a “labor group” and parties to a “labor dispute” within the meaning of the Norris-LaGuardia Act, and thus that their involvement in the union regulatory scheme was not an unlawful combination between “labor” and “nonlabor” groups. The Court agreed with the trial court that the applicable test was whether there was “job or wage competition or some other economic interrelationship affecting legitimate union interests between the union members and the independent contractors.” Id., at 106.

The Court also upheld the restrictions on booking agents, who were not involved in job or wage competition with union members. Accordingly, these restrictions had to meet the “other economic interrelationship” branch of the disjunctive test quoted above. And the test was met because those restrictions were “ ‘at least as intimately bound up with the subject of wages’ ... as the price floors.” Id., at 113 (quoting Teamsters v. Oliver, 362 U. S. 605, 606). The Court noted that the booking agent restrictions had been adopted, in part, because agents had “charged exorbitant fees, and booked engagements for musicians at wages . . . below union scale.”

c

The restrictions challenged by the petitioners in this case are very similar to the agent restrictions upheld in the Carroll case. The essential features of the regulatory scheme are identical: members are permitted to deal only with agents who have agreed (1) to honor their fiduciary obligations by avoiding conflicts of interest, (2) not to charge excessive commissions, and (3) not to book members for jobs paying less than the union minimum. And as in Carroll, Equity’s regulation of agents developed in response to abuses by employment agents who occupy a critical role in the relevant labor market. The agent stands directly between union members and jobs, and is in a powerful position to evade the union’s negotiated wage structure.

The peculiar structure of the legitimate theater industry, where work is intermittent, where it is customary if not essential for union members to secure employment through agents, and where agents’ fees are calculated as a percentage of a member’s wage, makes it impossible for the union to defend even the integrity of the minimum wages it has negotiated without regulation of agency fees. The regulations are “brought within the labor exemption [because they are] necessary to assure that scale wages will be paid . . . .” Carroll, 391 U. S., at 112. They “embody ... a direct frontal attack upon a problem thought to threaten the maintenance of the basic wage structure.” Teamsters v. Oliver, 358 U. S. 283, 294. Agents must, therefore, be considered a “labor group,” and their controversy with Equity is plainly a “labor dispute” as defined in the Norris-LaGuardia Act: “representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee.” 29 U. S. C. § 113 (c).

Agents perform a function — the representation of union members in the sale of their labor — that in most nonenter-tainment industries is performed exclusively by unions. In effect, Equity’s franchise system operates a substitute for maintaining a hiring hall as the representative of its members seeking employment.

Finally, Equity’s regulations are clearly designed to promote the union’s legitimate self-interest. Hutcheson, 312 U. S., at 232. In a case such as this, where there is no direct wage or job competition between the union and the group it regulates, the Carroll formulation to determine the presence of a nonlabor group — whether there is “ ‘some . . . economic interrelationship affecting legitimate union interests 391 U. S., at 106 (quoting District Court opinion) — necessarily resolves this issue.

D

The question remains whether the fees that Equity levies upon the agents who apply for franchises are a permissible component of the exempt regulatory system. We have concluded that Equity’s justification for these fees is inadequate. Conceding that Carroll did not sanction union extraction of franchise fees from agents, Equity suggests, only in the most general terms, that the fees are somehow related to the basic purposes of its regulations: elimination of wage competition, upholding of the union wage scale, and promotion of fair access to jobs. But even assuming that the fees no more than cover the costs of administering the regulatory system, this is simply another way of saying that without the fees, the union’s regulatory efforts would not be subsidized — and that the dues of Equity’s members would perhaps have to be increased to offset the loss of a general revenue source. If Equity did not impose these franchise fees upon the agents, there is no reason to believe that any of its legitimate interests would be affected.

Ill

For the reasons stated, the judgment of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Brennan,

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

I join all but Part II-D of the Court’s. opinion. That part holds that respondents’ exaction of a franchise fee is not a “permissible component of the exempt regulatory system.” Ante, at 722. Bather, I agree with the Court of Appeals that the approximately $12,000 collected annually in fees is not “incommensurate with Equity’s expenses in maintaining a full-time employee to administer the system,” 622 F. 2d 647, 651 (CA2 1980), and thus is not “unconnected with any of the goals of national labor policy which justify the antitrust exemption for labor,” ibid.

The Court justifies its conclusion by suggesting that, since the union could increase its dues to offset the revenue lost from invalidation of the fee system, “there is no reason to believe that any of [the union’s] legitimate interests would be affected,” if the fee system were found to violate the antitrust laws. Ante, at 722. The union could of course raise its dues, but the issue here is whether the conceded antitrust immunity of the franchising system includes the franchise fee.

I find somewhat incongruous the Court’s conclusion that an incident of the overall system constitutes impermissible regulation, but that agents in general may be significantly regulated because they are not a “nonlabor group.” This incongruity is highlighted by the similarity between union hiring halls and the franchising system, a similarity which the Court itself acknowledges: “Equity’s franchise system operates as a substitute for maintaining a hiring hall as the representative of its members seeking employment.” Ante, at 721. The Court disregards this similarity in concluding that the franchising system does not “directly benefit” the agents who are required to pay the fees. Ante, at 722, n. 31. It reaches this conclusion by incorrectly assuming that the only parties who directly benefit from the hiring hall and the franchising system are employers and employees and producers and actors, as the case may be. But surely the agents also benefit from the franchising system, which provides an orderly and protective mechanism for pairing actors who seek jobs with producers who seek actors. The system is thus the means by which the agents ultimately receive their commissions; it is as much the source of their livelihood as it is that of the actors.

Because the fee is an incident of a legitimate scheme of regulation and because it is commensurate in amount with the purpose for which it is sought, I would also affirm this holding of the Court of Appeals.

       The respondent Donald Grody is the executive secretary of Equity.

       The basic sources of organized labor's exemption from federal antitrust laws are §§ 6 and 20 of the Clayton Act, 38 Stat. 731 and 738, 15 U. S. C. § 17 and 29 U. S. C. § 52, and §§ 4, 5, and 13 of the Norris-LaGuardia Act, 47 Stat. 70, 71, and 73, 29 U. S. C. §§ 104, 105, and 113.

       Such vulnerability was, and still remains, particularly acute for actors and actresses without established professional reputations, who have always constituted the overwhelming majority of Equity’s members.

       The challenge was grounded on allegations of common-law tortious interference with business relationships.

       Judge Mantón dissented without opinion.

       For contemporary descriptions of agent abuses of actors and actresses, see generally A. Harding, The Revolt of the Actors (1929). See also New Rules for Actors, N. Y. Times, Sept. 24, 1928, p. 20, col. 3; The New Republic, Oct. 24, 1928, p. 263. Cf. Ribnik v. McBride, 277 U. S. 350, 359-375 (Stone, J., joined by Holmes and Brandeis, JJ., dissenting) (general abuses by employment agencies, particularly at times of widespread unemployment). The Court’s decision in Ribnik v. McBride was overruled unanimously in Olsen v. Nebraska, 313 U. S. 236.

       The petitioners do not dispute this. The regulations have undergone revision in some details, largely as a result of negotiations between Equity and Theatrical Artists Representatives Associates (TARA), which until shortly before this litigation began was the only association voicing the concerns of agents with regard to their representation of Equity members. Until their voluntary resignation in late 1977, most of the petitioners were members of TARA. The petitioners are now members of the National Association of Talent Representatives (NATR). Unlike TARA, which functions only in the legitimate theater field, NATR also functions in the fields of motion pictures and television. In those fields, agents operate under closely analogous agent regulations maintained by the Screen Actors’ Guild and the American Federation of Television and Radio Artists.
      The history of the negotiations and disputes between Equity and TARA are described in the opinion of the District Court in the present case. 478 F. Supp. 496, 498 (SDNY).

       The minimum, or “scale,” wage varies. In August 1977, for example, the minimum weekly salary was $335 for Broadway performances, and $175 for performances off Broadway. Seale wages are set by a collective-bargaining agreement between Equity and the producers, to which the agents are not parties. When an agent represents an actor or actress whose professional reputation is not sufficient to demand a salary higher than scale, the agent hopes to develop a relationship that will become continually more remunerative as the performer’s professional reputation grows, and with it the power to demand an ever higher salary. No agent is required to represent an actor or actress whom he does not wish to represent.

       It is Equity’s view that commissions in the industry are not necessarily related to efforts by the agents, and that an agent often functions as little more than an “order taker,” who is able to collect a percentage of a client’s wages for the duration of a show for doing little more than answering a producer’s telephone call. Indeed, an agent may collect a commission on the salary of an actor or actress he represents even if the client obtains the job without the agent.

       Equity argues that this restriction is necessary because there is an incentive for agents to represent as many actors and actresses as possible — and not necessarily to serve them all well — beeaus’e an agent receives a commission whenever his client is employed at a salary higher than scale, regardless of the extent of his involvement in obtaining employment for the client.

       The Court. of Appeals recognized that even if there had been an agreement between Equity and a “non-labor group,” the agreement might still have been protected from the antitrust laws under the “non-statutory” exemption. 622 F. 2d, at 649, n. 1. See Connell Construction Co. v. Pumbers & Steamfitters, 421 U. S. 616, 622. See n. 19, infra.

       See generally Meltzer, Labor Unions, Collective Bargaining, and the Antitrust Laws, 32 U. Chi. L. Rev. 659 (1965); Winter, Collective Bargaining and Competition: The Application of Antitrust Standards to Union Activities, 73 Yale L. J. 14 (1963). See also Leslie, Principles of Labor Antitrust, 66 Va. L. Rev. 1183 (1980).

       See Winter, supra n. 12, at 30-38.

       As is true under the Clayton Act, the specified activities are protected only in the context of a labor dispute. The Norris-LaGuardia Act defines a labor dispute to include “any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employer and employee.” 29 U. S. C. §113 (c).

       In Milk Wagon Drivers v. Lake Valley Farm Products, Inc., 311 U. S. 91, 103, the Court stated: “'For us to hold, in the face of [the Norris-LaGuardia Act], that the federal courts have jurisdiction to grant injunctions in cases growing out of labor disputes, merely because alleged violations of the Sherman Act are involved, would run counter to the plain mandate of the Act and would reverse the declared purpose of Congress.”

       See also Apex Hosiery Co. v. Leader, 310 U. S. 469. There, in the Term preceding that in which the Hutcheson case was decided, the Court reasoned that the Sherman Act prohibits only restraints on “commercial competition,” 310 U. S., at 497, 499, 510-511 — or those market restraints designed to monopolize supply, control prices, or allocate product distribution — and that unions are not liable where they merely further their own goals in the labor market.

       In Hunt v. Crumboch, 325 U. S. 821, decided the same day as Allen Bradley, the Court ruled that the labor exemption protected a union's boycott of a truck hauler through successful secondary pressure on purchasers of the hauler’s services with whom the union had contracts, because of the absence of union participation in a conspiracy with the hauler’s competitors. See 325 U. S., at 824; Meltzer, supra n. 12, at 677, and n. 74.

        Mine Workers v. Pennington, 381 U. S. 657, also dealt with a union combination with employers, but the grounds of decision were unrelated to the antitrust exemption.

       Even where there are union agreements with nonlabor groups that may have the effect of sheltering the nonlabor groups from competition in product markets, the Court has recognized a “nonstatutory” exemption to shield such agreements if they are intimately related to the union’s vital concerns of wages, hours, and working conditions. See, e. g., Meat Cutters v. Jewel Tea Co., 381 U. S. 676. This nonstatutory exemption was described as follows in Connell Construction Co. v. Plumbers & Steamfitters, 421 U. S., at 622:
      “The Court has recognized . . . that a proper accommodation between the congressional policy favoring collective bargaining under the NLRA and the congressional policy favoring free competition in business markets requires that some union-employer agreements be accorded a limited non-statutory exemption from antitrust sanctions. . . .
      “The nonstatutory exemption has its source in the strong labor policy favoring the association of employees to eliminate competition over wages and working conditions. Union success in organizing workers and standardizing wages ultimately will affect price competition among employers, but the goals of federal labor law never could be achieved if this effect on business competition were held a violation of the antitrust laws. The Court therefore has acknowledged that labor policy requires tolerance for the lessening of business competition based on differences in wages and working conditions.”
      Neither the District Court nor the Court of Appeals in this case decided whether the nonstatutory exemption would independently shield the respondents from the petitioners’ antitrust claims. See n. 11, supra.

       Of course, a party seeking refuge in the statutory exemption must be a bona fide labor organization, and not an independent contractor or entrepreneur. See Meat Drivers v. United States, 371 U. S. 94; Columbia River Packers Assn. v. Hinton, 315 U. S. 143. See generally 1 P. Areeda & D. Turner, Antitrust Law § 229c, pp. 195-198 (1978). There is no dispute about Equity’s status as a bona fide labor organization.

       As the employers of Equity’s members, producers are plainly a “non-labor group.” Employers almost always will be a “nonlabor group,” although an exception has been recognized, for example, when the employer himself is in job competition with his employees. See Musicians v. Carroll, 391 U. S. 99 (orchestra leaders who both lead an orchestra and play an instrument).

       These consisted of a minimum scale for sidemen, a “leader’s fee,” which was twice the sidemen’s scale in orchestras of at least four, and an additional 8% for social security, unemployment insurance, and other expenses. In addition, if a leader did not appear but designated a sub-leader, and four or more musicians performed, the leader was required to pay from his leader’s fee 1.5 times the sidemen’s scale to the subleader.

       The Court did not explicitly determine whether the second prong of the Hutcheson test for the statutory exemption had been met, i. e., whether the union had acted in its “self-interest.” But given its various findings that the challenged restrictions were designed to cope with job competition and to protect wage scales and working conditions, 391 U. S., at 108, 109, 110, 113, it clearly did so sub silentio.

       Several cases before Carroll also upheld union regulation of the practices of independent entrepreneurs affecting the wages or working conditions of union members. See Milk Wagon Drivers v. Lake Valley Farm Products, Inc., 311 U. S. 91; Teamsters v. Oliver, 358 U. S. 283 (Oliver I); Teamsters v. Oliver, 362 U. S. 605 (Oliver II). In Milk Wagon Drivers, the Court held that the union had engaged in a “labor dispute” within the meaning of the Norris-LaGuardia Act when it attempted to organize independent “vendors” who supplied milk to retail stores. There the union feared that the “vendor system” was designed to escape the payment of union wages and the assumption of union-imposed working conditions. In Oliver I, the Milk Wagon Drivers decision was invoked to protect from state antitrust challenge a union’s successful efforts to prescribe through collective-bargaining agreements a wage scale for truck-drivers, and minimum rental fees for drivers who owned their own trucks. The union feared that driver-owners, whose fees included not only an entrepreneurial component but also a “wage” for the labor of driving, might undercut the union scale by charging a fee that effectively included a subseale wage component. The Court stated that “[t]he regulations embod[ied] ... a direct frontal attack upon a problem thought to threaten the maintenance of the basic wage structure established by the collective bargaining contract.” 358 U. S., at 294. See also Oliver II, supra, at 606 (after remand to the state court).

       Indeed, the District Court in Carroll, whose judgment was affirmed by this Court “in its entirety,” 391 U. S., at 114, drew parallels with the restrictions at issue in the present case. The court noted that “[a]p-parently, similar abuses by booking agents existed in other fields too. Edelstein v. Gillmore, 35 F. 2d 723, 726 (2d Cir. 1929) (actors).” Carroll v. AFM, 241 F. Supp. 865, 892 (SDNY).
      The petitioners argue that theatrical agents are indistinguishable from “numerous [other] groups of persons who merely supply products and services to union members” such as landlords, grocers, accountants, and lawyers. But it is clear that agents differ from these groups in two critical respects: the agents control access to jobs and negotiation of the terms of employment. For the actor or actress, therefore, agent commissions are not merely a discretionary expenditure of disposable income, but a virtually inevitable concomitant of obtaining employment.

       See Carroll v. AFM, 241 F. Supp., at 881-882; Harding, supra n. 6, at 319-325.

       The Court of Appeals found that “the union cannot eliminate wage competition among its members without regulation of the fees of the agents.” 622 F. 2d, at 651 (emphasis added). Wage competition is prevented not only by the rule precluding commissions on scale jobs. Actors and actresses could also compete over the percentage of their wages they were willing to cede to an agent, subject only to the restrictions imposed by state law.

       In many industries, unions maintain hiring halls and other job referral systems, particularly where work is typically temporary and performed on separate project sites rather than fixed locations. By maintaining halls, unions attempt to eliminate abuses such as kickbacks, and to insure fairness and regularity in the system of access to employment. In a 1947 Senate Report, Senator Taft explained: “The employer should be able to make a contract with the union as an employment agency. The union frequently is the best employment agency. The employer should be able to give notice of vacancies, and in the normal course of events to accept men sent to him by the hiring hall.” S. Rep. No. 1827, 81st Cong., 2d Sess., 13 (1947), quoted in Teamsters v. NLRB, 365 U. S. 667, 673-674.
      The National Labor Relations Board and the courts have ruled that union demands for hiring halls are a mandatory subject of collective bargaining, and that strikes to obtain such provisions are protected activity. See, e. g., Houston Chapter, Associated General Contractors, 143 N. L. R. B. 409, enf’d, 349 F. 2d 449 (CA5); NLRB v. Tom Joyce Floors, Inc., 353 F. 2d 768, 771 (CA9). Cf. Teamsters v. NLRB, supra, at 672-673, 676.

       See Carroll, 241 F. Supp., at 881. We have, in fact, found no case holding that a union may extract such fees from independent agents who represent union members.

       As already indicated, the franchise fees are not segregated in any manner but merely deposited in the union’s general fund.

       The respondents offer union hiring hall fees as an analogy in support of Equity’s collection of franchise fees. In that context, the respondents argue, without citation, that a union may impose reasonable fees upon employers to meet the costs of maintaining a union-run hiring hall. But even if the respondents’ statement of labor law is correct, the analogy would not be persuasive. Assuming that hiring hall fees are so imposed, the fees are borne by parties who directly benefit from the employment services of the hiring halls and are collected by the entities that provide them. That is not true in the present case.
      The view expressed in the separate opinion filed today as to who are the beneficiaries of the franchising system will undoubtedly surprise the agents who brought this lawsuit. Post, at 724.