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                                    Decsmbsr 31, 1956


             Honorable Jack 1.   lbnt         Opinion No. S-22’+
             county 4ttorney
             SC1Paso, Texaa                   Ret   Validity    of a clause in a
                                                    contract    between general
                                                    contractors     and labor un-
                                                    ions whereby the contractors
                                                    agree not to sublet any part
                                                    of a contract     to any sub-
                                                    contractor     who will not
                                                    agree to observe the mlnl-
                                                    mumwage and classification
i
                                                    practices     set out In the
i            Dear Mr. Fantr                         general contract.
                         You have requested the oplnlon of our office      con-
             cerning the validity    of a provision   in an agreement between
             an association   of trades councils    and an assoclatlon  of gen-
             eral contractors   which would attempt to bind any subcontractor
             to observe the minimum wages and wage classifications        set out
             ln the base contract.     The contract   provision  reads as fol-
             lowsr
                         “The contractor   agrees as a term and condl-
                  tlon of employment that he will not sublet or
                  contract   out any building    or construction   work
                  of any kind unless the sub-contractor        to whom
                  work is rub-let,     or subcontracted   to, shall ob-
                  serve as minimum conditions      the wage and classl-
                  flcatlon   practices   provided in this agreement.”
                        The specific     inquiry involves  (1) whether such con-
             tract provision   violates    the appl1cabl.e Texas antitrust   stat-
             utes, Articles  7426 and 7428, and the Texas Ri ht to Work Law,
             Article  5207a, Vernon’s Civil Statutesi      and (2 f , whether the
             Attorney General or the County Attorney Is authorized         to pro-
             hlbft the application      of thls clause and declare the contract
             vold.
                         It should be pointed out in the beginning that labor
             unions are subject    to the operation of the Texas antitrust  laws,
             Article  5154 specifically   providing that Axtlcle 5153, giving
             labor. unions the right to Induce or attempt to induce by peace-
             able and lawful means any person to accept certain    employment
Ron. Jack 1. Fant, page      2   (S-224)


or to refuse to enter any pursuit or quit or relinquish    any
particular   employment or pursuit In which such person may
then bo engaged, shall not prohibit    the application of the
antitrust  laws of the State.    In the case of Best Motor Lm




              “The Texas antitrust   statutes   are valid
        laws and all persons are subject thereto,        and
        the courts have the power    to  en oln acts aqd
        conduct ln violation   thereof.    i abor unions
        are not excepted even though there exists a
        labor dispute end the picketing      is peaceful.ll
          There follows   In the oplnlon a full discus&on   by
Justice Smith of the many holdings of both the Texas and
United States Supreme Courts upholding the application    of the
antitrust  statutes to labor unions.
             The pertinent portions        of   brticle   7426, Texas Revised
Civil    Btatutes, are as follows:
              *A ‘Trust’ is a aombination of capital,
        skill or acts by two or more      persons, firma,
        corporations   or assoclationr    of persons, or
        either two or more of them for      either,  any or
        all of the following    purposes:
             ‘1. . . to create or carry out restrictions
        in the free pursuit of any business authorized
        or permitted  by laws of thlr State.”
           It 18 our opinion that the combination formed by the
above contract provision    between the association     of trades
counclla  and the association    of general contractors     constitutes
a mtrust’8 under the wordln# of this     statute ln view of the
scope and effrot   of the above quoted portion of the agreement
entered Into betueen these two parties.        Under the terms of the
contract the contractor    agrees not to contract with a subcon-
tractor who does not or will not observe as minimum conditions
the minimum wage and job olasslficatlon       practices  provided foi
in the base agreemnt betvem the trades councllr end the gen-
or81 contractors.    In this rrsprot a restriction,       conditional
though it may be, ir placed upon the buolnrss of the subcon-
tractor8 who are not presently conforming to union stander?-
and who LPI working with or doing business with the members oi
th8 lr r o o t~tloo n
                    famera     oontraotorr.           1
Hon. Jack U. Fant,     page 3    (S-224)



             The necessary    result of this provision       Is to force
the non-conforming     subcontractor      to pay higher wages and ob-
serve different     wage classifications       from those which he cus-
tomarily operates under thereby increasing             the costs of his
operations.     The provlsfon     ultimately     impels the hiring of
union Labor by the subcontractor          and thereby constitutes      an-
other restriction     on the subcontractor’s        business contrary to
law.    The provision    further limits the non-conforming         sub-
contractor’s    field   of operation and the customers with whom
he may deal.      If the contractors      observe the contract,     then
the non-union subcontractor        cannot do business with any of
the general contractors       who are members of the association
because of the terms of the contract.             The contract  amounts
to a boycott    by the trades council and the association           of
general contractors      against a subcontractor        in the area who
does not conform to union practices.             Bs a result the contrac-
tor’s business is restricted         within the contemplation      of Artl-
cle 7426     and since it is presumed that the parties          intended
the result of their actions,         a violation    of Article  7426 ap-
pears.
             The pertinent    sections     of Article     7428 are as fol-
lows:
              “Either or any of the foIlowing           acts shall
        constitute   a conspiracy in restraint          of trade2
             ‘1. . .
              “3.    Where any two or more persons, firms,
        corporations    or associations    of persons shall
        agree to boycott,     or enter Into any agreement or
        understanding    to refuse to . q . use or work with
        any goods, wares, merchandise, articles       or prod-
        ucts of any other person, firm, corporation         or
        association    of persons;    . . .I’
             It is our opinion that the above contract provision
is violative     of this provision    of Article 7428, and that the
alliance,.   agreement, or combination between the association
of trades councils      and the association     of general contractors
constitutes    a conspiracy    In restraint    of trade under this ar-
tlcle.     Undoubtedly the parties     are included under the first
portion of Section 3 as being associations           of persons and un-
der the terms of the .above provision         they have agreed to boy-
cott the non-conforming       subcontractors,    and have agreed to
refuse to use their products or the products of their labor.
It would make no difference       that the subcontractor      could free
himself from the provisions       of thls contract by conforming to
Hon. Jack 1.     Fant,   page 4   (S-224)


the union wage standards and job classlflcatlon      practices.
The agreement entered into encompasses the forbidden pur-
poses set out in the third section of Article     7428, there-
by constltutlng a conspiracy in restraint     of trade.

            As stated above, the effect  of this contract    Is
to force subcontractors    to hire union labor or to observe
union standards and job classlflcatlons,     but It Is appar-
ent that the ultimate purpose of the provision     in the con-
tract is to force a union labor requirement upon the .rlJh-
contractors   who are not parties to the agreement.    Yoilr
attention   is called to Article 7428-1, which Is as followsr
      “Art.    7428-l     Agreements denying right to work
              because    of union membership or non-member-
              ship.
           “It shall constitute   a conspiracy  in re-
     straint  of trade for any employer and any labor
     union or labor organization    or other organlza-
     tlon to enter into any agreement or combination
     whereby persons are denied the right to work
     for an employer because of membership or non-
     membership ln such union, labor organization      or
     other organization;    or whereby such membership
     or non-membership Is made a condition     of em-
     ployment or of contlnuatlon    of employment by an
     employer .H
            This article    specifically    defines   a conspiracy     In
restraint    of trade as being an arrangement whereby persons
are denied the right to work because of non-membership Ln a
union.    The effect   of the above quoted agreement is to do
exactly   that.   The Legislature      has, In this statute:      made
explicit   its intentions    formerly evidenced by Article          7428,
and specifically     defines a conspiracy      in restraint     of trade
as encompassing such agreements’as the contract             provision
here under consideration.
              Article    5207a reads as follows:
      “Art.    5207a.     Right to bargain freely  not to be
              denied;    membership ln labor union
            “Section   1. The inherent right of a person
      to work and bargain freely with his employer,     in-
      dividually    or collectively, for terms and condi-
      tions of his employaent shall not be denied or
      infringed    by law, or by any organization of what-
      ever nature.
Hon. Jack N. Fant, page 5        (S-224)


              “Sec. 2. No person shall be denied em-
        .ployment on account of membership or non-
         membership in a labor union.

               “Sec. 3.    Any contract which requires
        of prescribes    that employees or applicants
        for employment ln order to work for an em-
        ployer shall: or shall not be or remain mem-
        bers of a labor union, shall be null and
        void and against public policy.         The provl-
        slons of this Section       shall not apply to any
        contract    or contracts    heretofore  executed
        but shall apply to any renewal or extension
        of any existing     contract    and to any new
        ,agreement or contract      executed after the ef-
        fective    date of this Act.”
            It is our opinion that this contract provision           vlo-
lates Section 1 of Article       5207a and, depending on its prac-
tical application      could violate    the second and third profl-
slons of Article     4207a.   The  contract    above quoted provfdes
that the association     of general contractors       shall pay certain
wages and observe certain       job classlflcatlons     with regard to
the subcontracting     of work on their jobs.        In making such an
agreement they have agreed to pay a certain minimum and defl-
nlte amount, thereby depriving       the people who work for a sub-
contractor    of the right to bargain freely with their employer
as to their wages and working conditions.           Because of this
contract   an employee could not work for a subcontractor           en-
gaged in work for a contractor-member          of the association    of
general contractors     for less than the union wage.         The right
to bargain freely with one’s employer includes the right to
work for less than a certain       sum and at a lower job classl-
f lcat Ion than ordinary,    as well as the right to bargain for
higher wages and better      job classlflcatlons.       In this respect
the rights of the employees of the subcontractors           concerned
with this agreement have been infringed within the contempla-
tlon of Article     5207a.
            It should be noted that this prohibition      of Section
1 of Article    5207a applies   to “any organization   of whatever
nature.”    This provision    is broad enough to Include the asso-
ciation   of trades councils    or the association   of general con-
tractors,   and both would be guilty of a violation      of this
statute If the above contract were entered into and carried
out.
              Our position Is substantiated in a decision by a
trial     examiner for the National Labor Relations Board March
Hon. Jack N. Fant, page 6       (S-224)


19 1956, In Associated General Contractors , reported          in
Voiume 5, page 5O-392, C.C.H. Labor Law Reports,        Section
$3,165.     In this report the examiner struck down a sub-
contractor’s    clause in a contract between a labor union
and an association     of general contractors   which imposed
upon subcontractors      the terms of that agreement.    The ex-
aminer said, among other things       that the contract. ln-
fringed upon the workers’ statu t ory right to choose their
own bargaining agent, and Ignored the guarantee of equal
job opportunities     given to the subcontractor’s    employer
by law.     It seems that the situation    Is analogous to that
here in question.      The contract  above sets out the mini-
mumwages and the job classifications        for the employees
of the subcontractors      who were not parties to the agree-
ment and were not concerned at its Inception.         Therefore,
they have been precluded from bargaining with their em-
ployer for the terms and conditions       of their employment
and have been deprived of the right to choose their own
bargaining agent.
             It Is possible    that the practical   application
and operation of the contract provision         would be to cre-
ate a closed shop or union shop within the prohibition            of
Sections 2 and 3 of Article        5207a, but at present the
facts submitted to us do not authorize the conclusion            that
this is a necessary result of the contract provision.             Em-
ployees might conform to the specifications         of the con-
tract and yet not be union members. If the contract             did
result    in the hiring of only union labor because of a large
differential     between wages paid by non-union contractors
and union contractors,       then the provisions   of this con-
tract could violate      Sections 2 and 3 of this article.         Such
violation,     of course, would depend on subsequent determina-
tions of facts in the context and locality         of the contract.
           It should be noted that the courts in Texas which
have considered  the application   of Article 5207a have pointed
out that it is the purpose of the contract or action on the
part of management or labor to create a situation       in viola-
tion of Article  5207a which is proscribed     by the statute.    On
the facts submitted to us we cannot say that it is the WI-
equivocal purpose of the trades council      and the association
of general contractors    to cause a violation   of Sections   2
and 3 of Article   5207a.                      General Labor up;Lpn
Hon.   Jack N. Fant, page 7      (S-224)


           Turning now to your second question as to whether
the Attorney General or a County Attorney may enforce the
provisions  of Articles  7426, 7428, tid 5207a, V.C.S., we
find that Article   5199, V.C.S., provides as follows:

               “Each per son, company or corporation,    who
       shall in any manner violate       any provision of
       this chapter shall,      for each offense committed,
       forfeit    and pay the sum of one thousand dollars,
       which may be recovered       In the name of the State
       of Texas in any county where the offense was
       commltte d or where the offender       resides,  or in
       Travis Co&y;       and it shall be the duty of the
       Attorney General, or the district       or county at-
       torney under the direction       of the Attorney Gen-
       oral, to sue for the recovery of the same.”
            Included In “any provision    of this chapter” is Ar-
ticle   52C7a. Thus the County Attorney would be authorized
to enforce the penalty provisions      of this chapter under the
direction   of the Attorney General.     This authorization  applies
only to the penalty provisions    and would not seem to include
other remedies.
            Article   7436    V.C.S .? provides for penalties  whicn
may be imposed for     violations     of Articles 7426 and 7428, and
again, under this     statute,    the Attorney General or the Dis-
trict  Attorney or    County Attorney,     under the direction  of the
Attorney General,     has the duty to enforce the recovery of same.
             Articles   7426 and 7428, V.C.S.,       have as companion
statutes    in the Penal Code Articles        1632 and 1634, V.P.C.
Article   1635 of the Penal Code provides         that a violation   of
these statutes is a felony and provides           for imprisonment from
two to ten years.       Enforcement of these penal statutes would
be according to the regular duties of the County Attorney,
and Article    1636, V.P.C.,      provides   that the Attorney General
or the District      or County Attorney may compel witnesses        to
testify   in courts of inquiry.         There seems to be no statute
authorizing    the Attorney General to prosecute criminal viola-
tions of antitrust      statutes.
           ‘In addition to answering your questions by this opin-
ion, we would like to authorize you to bring action on such
~contracts under the above stated statutes,  and would assure you
of our full cooperation   in such a suit.
Iion. Jack 1. Fant,   page 8    (S-2241




             A contract between an association       of general
      contractors     and an association    of trades councils
      providing    that the members of the contractor’s
      association     shall not subcontract work unless t:le
      subcontractor     shall observe the minimumwage
      scales and work classifications        provided in said
      contract,    violates   Section 1, Article 7426, V.C.S.,
      Section 3, Article      7428, V.C.S.,    and Article  5207a,
      V.C.S.,    and either the Attorney General or the
      County Attorney,      under the direction    of the Attor-
      ney General, may sue to recover the penalties          for
      violations    of the above articles      as provided in
       Articles   5199 and 7436, V.C.S.

 APPROVED:                          Yours very truly,

J. Fred Jones                       JOX?7BEN SHEPPERD
State Affairs DIVISION              Attorney General

John Ben Shepperd
Attorney General
