## Facts

- Connell Construction Co., a Texas general contractor, subcontracted plumbing and mechanical work through competitive bids from union and nonunion firms.
- Plumbers and Steamfitters Local Union No. 100 represented plumbing and mechanical workers in the Dallas area and had a multiemployer collective-bargaining agreement with an association of mechanical contractors.
- That multiemployer agreement included a “most-favored-nation” clause extending any more favorable later terms granted to another employer to all association members.
- Local 100 demanded Connell sign an agreement to subcontract plumbing and mechanical work only to firms with an executed, current collective-bargaining agreement with Local 100.
- Connell had no employees Local 100 sought to represent; Connell’s employees were represented by other unions.
- After Connell refused, Local 100 picketed a Connell jobsite, causing many workers employed by Connell and subcontractors to leave and halting construction.
- Connell signed the agreement under protest and sued, alleging violations of federal and Texas antitrust law; Local 100 sought similar agreements from other general contractors.

## Issues

1. Whether the subcontracting agreement was exempt from federal antitrust law under the nonstatutory labor exemption, considering NLRA § 8(e)’s construction-industry proviso.
2. Whether federal labor law preempted Texas antitrust claims based on the same conduct.
3. Whether the Supreme Court should determine Sherman Act liability or remand for the lower court to decide in the first instance.

## Decision

- The Court held (5–4) that the agreement was not protected by the nonstatutory labor exemption and was subject to federal antitrust scrutiny.
- The Court held that federal labor law preempted application of Texas antitrust law to this dispute.
- The Court reversed the judgment upholding an antitrust exemption, affirmed preemption of state law, and remanded for determination of whether the agreement violated the Sherman Act.

## Legal Principles

- The nonstatutory labor exemption does not extend to union-employer arrangements that impose direct restraints on competition in the product market beyond those attributable to eliminating competition based on wages, hours, and working conditions.
- A union’s agreement with a neutral employer that dictates the employer’s dealings with independent firms may fall outside the exemption where the union lacks a bargaining relationship with that employer’s workforce and the agreement functions as a market restraint.
- NLRA § 8(e)’s construction-industry proviso, even if it prevents the agreement from being an unfair labor practice under federal labor law, does not itself confer immunity from federal antitrust law.
- Federal labor law may preempt state antitrust remedies where the challenged conduct is arguably protected or prohibited by the NLRA, to avoid conflicting regulatory standards.

## Conclusion

The Court limited labor-based antitrust immunity by holding that a union-imposed subcontracting restriction on a general contractor with no bargaining relationship to the union could be challenged under federal antitrust law, while also holding that state antitrust claims were displaced by federal labor policy and remanding for a full Sherman Act analysis.


Connell Constr. Co. v. Plumbers & Steamfitters Loc. Union No. 100, 421 U.S. 616 (1975)