First Circuit Holds That Concerted Action By Independent Contractor Jockeys Seeking Better Pay Is Protected Conduct Under The Labor-Dispute Exemption
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  • First Circuit Holds That Concerted Action By Independent Contractor Jockeys Seeking Better Pay Is Protected Conduct Under The Labor-Dispute Exemption

    On April 4, 2022, the United States Court of Appeals for the First Circuit reversed a district court’s ruling that a group of jockeys violated federal antitrust law by engaging in a group boycott and jointly refusing to participate in races in an effort to obtain better pay.  Confederacion Hipica de Puerto Rice, Inc. v. Confederacion de Jinetes Puertorriquenos, Inc., No. 19-2201 (1st Cir., April 4, 2022).  The First Circuit held that the jockeys’ status as independent contractors, rather than traditional employees, did not preclude them from claiming protection for their concerted action under the labor-dispute exemption to the antitrust laws because the issue in the dispute was labor-related.

    Puerto Rico is home to one horse-racing track, operated by one of the plaintiffs.  Since 1989, jockeys at the track have been paid a $20 “mount fee” for each race they ride, about one fifth of the mount fee jockeys are paid in the mainland United States, plus a share of the prize money for the race, but only if they finish one of the top five positions.  In 2016, increasingly dissatisfied with this compensation and other grievances as to the terms and conditions under which they raced, the jockeys began a series of work actions as part of an attempt to jointly negotiate better compensation and employment conditions.  When these efforts failed, the jockeys refused to register for races, resulting in the cancellation of three days of racing.  The owner of the racetrack and several horse owners responded by filing an antitrust lawsuit against the jockeys, their spouses and conjugal partnerships, and one of the associations representing them, alleging that the work stoppage constituted an illegal group boycott in violation of Section One of the Sherman Act.

    The district court issued a temporary and permanent injunction in favor of plaintiffs and later granted plaintiffs’ motion for summary judgment on damages, finding that the jockeys had acted in concert to restrain trade by organizing a group boycott in violation of Section 1 of the Sherman Act.  The district court held that because the jockeys were independent contractors, not employees, their activities did not fall within the labor-dispute exemption that otherwise protects legitimate joint labor conduct, such as striking and collective bargaining, from antitrust scrutiny.

    The First Circuit reversed this judgment, ruling that the district court had erred by concluding that the jockeys’ independent contractor status categorically excluded them from the exemption.  The Court began by noting the “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.”  The Court then turned to the statutory framework for the exemption, which flows from both the Clayton Act, 15 U.S.C. § 17 (“The labor of a human being is not a commodity or article of commerce.”) and the Norris-LaGuardia Act, 29 U.S.C. §§ 113 et seq.  The Norris-LaGuardia Act, the First Circuit explained, provides that labor dispute may exist “regardless of whether or not the disputants stand in the proximate relation of employer and employee.”  The Court distinguished Columbia River Packers Ass’n v. Hinton, 315 U.S. 143 (1942), in which a group of fishermen were found to be “independent entrepreneurs” not entitled to the labor-dispute exemption because the dispute was over the price of a good – fish – not the labor of a human being.  As the Supreme Court explained, that dispute was “altogether between fish sellers and fish buyers” and “related solely to the sale of fish,” without “implicating wages or hours or other terms and condition of employment.”  Here, by contrast, the First Circuit found that the dispute was clearly a labor dispute because it centered on the compensation paid to the jockeys for their labor.

    The court also rejected plaintiffs’ argument that the labor-dispute exemption did not apply because the Puerto Rican government, not plaintiffs, set the wages by regulation.  The court found this argument failed “both factually and legally.”  First, the court found plaintiffs had substantial ability to influence the regulated compensation and to provide additional compensation in ways the jockeys had requested.  Second, the labor dispute does not exempt regulated industries and the dispute was fundamentally about the compensation the jockeys were paid.  Thus, because the challenged conduct was protected by the labor-dispute exemption, the First Circuit reversed and remanded to the district court with orders to dismiss the case.

    The distinction between independent contractors and employees for the purposes of state and federal labor law is a key issue in for “gig economy” firms, such as ride-sharing services, and is currently the subject of fierce debate in many state and federal courts and in a number of state legislatures around the country.  This case makes clear, however, that for the purposes of evaluating concerted action by independent contractors under the antitrust laws, the independent contractor/employee distinction will not be dispositive.  As the gig economy evolves, it is likely that additional cases will arise that explore just how far the labor-dispute exemption extends in different factual contexts beyond the traditional employer/employee relations.