From JDSupra, Todd Lebowitz discusses a recent decision by the First Circuit Court of Appeals in which it said that jockeys, who were independent contractors, did not violate antitrust laws when they organized to protest the rates they were paid. Todd writes:
On June 4, 1923, jockey Frank Hayes rode 20-1 long shot Sweet Kiss to victory at Belmont Park. While that seems impressive, what made the win even more memorable is that at some point during the race, poor Frank died. He somehow stayed on the horse and ended up in the winner’s circle. Or six feet under it. It was his first (and last) win as a jockey.
Jockeys are in the news again, and we’ve got another surprise finish. But this one has implications far beyond the racetrack.
The First Circuit Court of Appeals ruled last week that when a group of independent contractor jockeys colluded to shut down racetrack operations as a way to try to force price increases, they didn’t violate federal antitrust law. And the reason, the court held, is that the shutdown was a “labor dispute.”
But hold your horses! That can’t be right. There are clear lines that separate federal antitrust law and federal labor law, and federal labor law doesn’t cover independent contractors. This ruling went way off the track.
Let’s review. Under federal antitrust law, independent businesses cannot collude to increase prices. But under federal labor law, individuals may engage in concerted activity to improve wages and working conditions.
These laws reach opposite conclusions, so how do you know which law applies? Well, that’s easy. It depends on whether there is a labor dispute. That’s written right into the statutes. If there’s a labor dispute, individuals can collude because their activities are protected under federal labor law.
What is a “labor dispute”? Again, easy. It’s also defined by statute. It requires a “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).
It has to be a dispute over employment.
The First Circuit, however, saw the “regardless” clause at the end and mistook it for an exception that swallows the rule. The court said that independent contractors who seek price increases can collude to stop providing services because they’re involved in a labor dispute.
But that’s wrong. In the jockey case, there was no dispute over employment because there was no employment. Without an employment relationship, there can’t be a labor dispute. Without a labor dispute, antitrust law applies.
Although the facts in this case involved jockeys at one racetrack in Puerto Rico, the effect is much broader. Decisions by the First Circuit Court of Appeals are binding on federal courts in Maine, Massachusetts, New Hampshire, Puerto Rico and Rhode Island, not just in Puerto Rico.
This ruling might not be the last word. There could be an en banc review, or the Supreme Court could take the case and reestablish the once-clear boundaries between antitrust law and labor law.
But for now, this decision appears to grant new rights to independent contractors in states within the First Circuit. You can be sure that union organizers and the plaintiffs’ bar will see how far they can ride this horse.