Full opinion text
MEMORANDUM ROBERT L. TAYLOR, Chief Judge. These cases are the last chapter in a spate of litigation between coal operators in Scott, Anderson and Campbell Counties, Tennessee, and United Mine Workers of America (hereinafter sometimes referred to as UMW or the Union) resulting from labor disputes that arose in 1955 and continued intermittently through 1959. Case No. 3431 was tried by a jury and a verdict and judgment rendered in favor of the coal operator. The judgment was affirmed by the Court of Appeals. Pennington v. UMW, Lewis, et al., Trustees, 325 F.2d 804 (C.A.6). The Supreme Court granted certiorari and reversed the judgment of the Court of Appeals holding as error the instruction of this Court to the jury that the approach of the Union and operators to the Secretary of Labor and TVA officials for the purpose of having a wage determination by the Secretary of Labor under the Walsh-Healey Act so as to prohibit governmental purchases of coal mined by miners paying wages under the minimum fixed by the Secretary of Labor, was legal unless made pursuant to a conspiracy to put the small coal operators out of business. It also held that the trial court erred in not telling the jury to exclude any damages which the operators may have suffered as a result of the Secretary’s Walsh-Healey determination. United Mine Workers of America v. Pennington, 381 U.S. 657, 670, 671, 85 S.Ct. 1585, 14 L.Ed.2d 626. By agreement, these cases were consolidated for trial and by agreement were tried without a jury. More than 4400 • pages of testimony was introduced with 219 exhibits in a trial that lasted approximately four weeks. In the suits brought by Lewis, Roche and Schmidt, as Trustees of the United Mine Workers of America, Welfare and Retirement Fund, in another phase of Cases No. 3431, 3432, 3433, 3446, 3493, 3579, 3591 and 4385, the Trustees sued for amounts alleged to be due pursuant to the terms of the trust provisions contained in the National Bituminous Coal Wage Agreement of 1950, as amended, for royalties due from each of the defendants in those eases on the respective tonnage of coal mined by each under the Collective Bargaining Agreement. Those suits were defended on the theory that the Bituminous Coal Wage Agreement of 1950, as amended, was an instrument used in a conspiracy which violated the antitrust laws and that the contracts violated the National Labor Relations Act, as amended. It was held by the Court of Appeals in the case of Lewis v. Pennington, 6 Cir., 325 F.2d 804, cert. den. Pennington et al. v. Lewis et al., Trustees, 381 U.S. 949, 85 S.Ct. 1796, 14 L.Ed.2d 723, that regardless of the factual contentions of the defendants under these defenses, the Trustees were entitled to recover the royalties contracted for which were based on the tonnage mined by the defendants during the period of time involved. Judgment for the Trustees has been entered in that case. The defendants in the other cases insisted that the Pennington decision was erroneous. But they argued even if they were wrong in that insistence, still the enforcement of the provision for royalties, which was forced on them pursuant to an illegal agreement or conspiracy caused them damage. And they insist they are entitled to recover, as an item of damage, the royalties paid, in addition to other damages arising from the alleged conspiracy in the cross-claims or actions against UMW. In Case No. 4385, White Oak Coal Company, Inc. v. United Mine Worker’s of America, White Oak made additional defenses.but this case was disposed of and is no longer before the Court for consideration. Case No. 3579, W. R. Parton, Individually and t/a W. R. Parton Coal Company v. United Mine Workers of America, has likewise been disposed of. In Cases No. 3431, 3432, 3433, 3446, 3493, 3579, 3591 and 4385, the defendants filed cross-claims against the Trustees based upon the alleged participation by the Trustees in the alleged conspiracy in violation of the antitrust laws. A voluntary dismissal without prejudice of the suits against the Trustees was entered in each of these cases. In Cases No. 3431, 3432, 3433, 3446, 3493 and 3591, the defendants filed cross-claims against the UMW. In the case of Lewis et al. v. Parton, No. 3579, by order entered prior to the order consolidating these cases for trial, the cross-claim of the defendant Parton against UMW was assigned a new docket number, namely, No. 4988, and the order recited that the cross-claim was to be considered an original complaint against the Union. The case of Dean Coal Company v. United Mine Workers of America, No. 4463, constituted an original action against the UMW. The claims against UMW in all of these cases are based on an alleged conspiracy in which it is charged that UMW participated with major coal operators to drive small coal operators, including each of the parties to this suit (hereinafter sometimes referred to as plaintiffs or operators), out of business, in violation of Sections 1 and 2 of the Sherman Act. Damages are sought against UMW in each of these cases. THEORIES UPON WHICH CROSS-PLAINTIFFS AND PLAINTIFFS EXPECT TO RECOVER AGAINST UMW AS SET FORTH IN THE PRE-TRIAL ORDER Plaintiffs (and it will be understood this term includes all cross-plaintiffs) contend that UMW engaged in a conspiracy, agreement or understanding with the major coal companies in the United States and their representatives, particularly Bituminous Coal Operators Association (hereinafter called BCOA), Consolidation Coal Company, Peabody Coal Company, West Kentucky Coal Company, Nashville Coal Company, Island Creek Coal Company, Pittston Company and Pittsburgh-Midway Coal Company, and others, to stabilize the prices of coal, to restrain the trade of small coal producers and to monopolize the bituminous coal industry for the major coal producers. Background of the Alleged Conspiracy After World War II, the economics of the bituminous coal industry became unstable on account of more coal being produced than the markets required; that before 1950, the major coal producers and the Union were in agreement that the major problem of the industry was over-production and that the growth of small, independent and non-union producers was contributing to the problem; that the major companies and the Union disagreed on how the problem should be handled in the period right after World War II; that on its side the Union was contending that the answer was to cut down on the working time of all producers; that the Union urged a three-day work week and for many months before the 1950 contract was signed, the Union took the initiative on this question and directed the working time of the men in the industry, its • officials setting on some weeks, three-day work weeks, and other times a no day work week; that the major coal companies were opposed to the Union’s dictating the working time of the men in the industry because it cut into their profits; that both the Union and major coal companies were concerned with the prospects of a repetition of the depressed conditions in the industry that occurred in the 1920’s after the “Jacksonville scale” period, which was precipitated by companies in the South that refused to recognize the UMW contract; that in 1949, in the course of the bargaining sessions over the contract that became the National Bituminous Coal Wage Agreement of 1950, major coal producers were discussing among themselves how to accomplish the stabilization of the industry and the establishment of an organization to deal with the UMW so that agreements could be worked out that would be binding upon the entire industry and to accomplish the settlement of national problems in the industry on an authoritative basis that would govern all coal producers, thereby eliminating the chances, or greatly reducing the prospects, of some producers escaping the uniform terms of a national union contract and precipitating conditions comparable to those of the 1920’s. Formation of the Alleged Conspiracy After the signing of the 1950 National Bituminous Coal Wage Agreement, the major producers who had engaged in the discussions referred to above commencing in 1949, formed the Bituminous Coal Operators Association in 1950 and a marked change was noted in the relations between the Union and the major coal companies as disclosed in the bargaining relations before and after 1950; that the express understanding at the time of the signing of the 1950 Bituminous Coal Wage Agreement was that the major coal companies themselves were to decide on the working time for their employees; that this was a surrender on the part of the Union of its previous policy of seeking to control the working time, and of its efforts to give more equitable working opportunities for its members throughout the industry; that the understanding between the Union and the Bituminous Coal Operators Association was that the problem of stabilizing the economics of the industry, the problem recognized by both the Union and the major coal companies, was to be taken care of by establishing national contract amendments that would be applied to all bargaining units throughout the industry and these agreements were to be tailored to the abilities of the major coal companies without regard to the abilities of the smaller companies or the companies working in marginal seam areas, in spite of the fact that there were great divergencies in the geological conditions in the various fields of coal mining and a great disparity in the means and methods of production, leaving great numbers of companies that would be unable to operate under the contract and leaving their share of the markets to the major coal companies who could successfully operate under the contract as it was amended. Use of the National Bituminous Coal Wage Agreement in the Alleged Conspiracy The conspiracy as alleged involved the use of the National Bituminous Coal Wage Agreement and its successive amendments as an instrument in accomplishing the purposes of the conspiracy; that by successive amendments to the Uniform National Bituminous Coal Wage Agreement’s terms, the wage scale and the Welfare Fund payments per ton were raised to exceedingly high levels; that the mechanization program of the major coal companies was to go ahead rapidly and the successive increases in wage scale and Welfare Fund payments were designed and tailored to meet the abilities of the major coal companies to mechanize and not have their profits affected by the increasing labor costs in the successive amendments; that these amendments to the labor contract were made after careful consideration of the abilities of the major coal companies to make the increases without affecting their profits; that the Union knew that many weaker companies could not pay the increases, but had no concern as to whether they could pay; that the Union favored the taking over of the industry by the large combines of coal producers and that the Union worked toward this end; that the campaign to impose the wage contracts upon the smaller, independent and non-union mines was intense after 1950 and paralleled the formation of the International Organizing Committee by the Union; that in areas of strong resistance mobs and terrorism were used; that the Trustees of the Welfare Fund stood by and benefited, as pensioners under the Welfare Fund were organized into bands which had as their purpose the imposition of the uniform contract upon the smaller and non-union companies; that benefits under the Fund were held out to the men in the industry as being under Union control so as to regain their fading allegiance to the Union as unemployment spread; that the finances of the Union and the finances of major coal companies have been used to further the drive to bring all production under the contract; that one or more major coal companies have assisted in crushing the opposition of the principal union competitor of United Mine Workers in the bituminous coal labor fields; that the result of this conspiracy and of these activities has been that large numbers of small companies have been driven out of the industry and that thousands of men in the industry have been driven into unemployment; that when these men are put out of the industry, they cease to participate in Welfare Fund benefits and the Fund remains as a source of benefit only for the employees of those companies that survive. To accelerate the demise of the smaller companies devices were inserted into later amendments of the .National Bituminous Coal Wage Agreement which further restrained their trade; that companies which could not afford to pay the wage scale under the contract were barred from operating on the lands of signatories to the Agreement; this device which was inserted in the National Agreement was effective because the major companies have acquired great tracts of the coal lands of the country and there is little coal land left for the small companies to operate upon under conditions which would make it possible to abide by the Agreement; that in the Protective Wage Clause of 1958, the small companies were prohibited from selling coal to the signatories to the Agreement, including the major companies which supplied coal to the large markets under long-term contracts, when they could not abide by the terms of the Agreement. Protective Wage Clause in the Amendment of 1958 In 1958 the bituminous coal industry felt a recession and decreasing demand for coal so that the price of coal in the markets was to some degree affected; that this induced United Mine Workers and Bituminous Coal Operators Association and the major companies to seek a strengthening and extension of the understandings which they had between themselves with respect to the duties of the Union and the duties of the major coal companies under the conspiracy; that in December of 1958 the National Agreement was again amended, principally by the insertion of the “Protective Wage Clause” under which the Union bound itself not to enter into, be a party to, or permit any other kind of labor contract in the industry except the National Agreement which it signed with Bituminous Coal Operators Association; the Union further bound itself to enforce fully the terms of the National Agreement with respect to all signatories; on the other hand, the Bituminous Coal Operators Association and the other major coal companies who successfully signed the National Agreement bound themselves to engage in the boycott of “sub-standard coal” or coal not mined under the terms of the National Agreement; that thereby the Union expressly put upon itself a strait jacket which required it to impose upon all operators in negotiations in which it represented bargaining units of employees, the same terms which it negotiated with Bituminous Coal Operators Association; thereafter the enforcement and policing of the National Agreement terms were intensified and the efforts to force the 1958 amendment upon the industry resulted in the destruction of many of the companies and the severe damaging of many of the other companies in the industry, including the coal companies in these cases. The TVA Market That the development of the Tennessee Valley Authority as the principal purchaser of coal in the entire country caught the attention of the conspirators to the Southern Appalachian Region when TVA opened up many of its coal-using generating units in 1954, 1955 and 1956; that in 1955 the conspirators manifested their intent and purpose to take over the TVA market by working together to obtain a determination by the Secretary of Labor that the prevailing wage in the bituminous coal industry under the Walsh-Healey Act was the UMW contract scale that had been forced onto the industry, as described above; that while such joint activity with respect to such determination by the Secretary of Labor was not itself a violation of the antitrust law, the purpose and character of other activities of the conspirators to use the UMW’s scale as a competitive lever by forcing it upon competitors is manifested by these particular activities and statements made in connection therewith; because contracts for less than $10,000 were exempted from the prevailing wage determination under Walsh-Healey, small companies were able to ship coal on TVA spot orders; that the conspirators further showed their purpose and state of mind by setting about to eliminate or drastically reduce the spot market of TVA; in addition, the conspirators adopted the practice of bidding low prices to drive the TVA coal market price down to a price which a small producer could not meet at a profit; in this phase of the campaign the West Kentucky Coal Company and its subsidiary, Nashville Coal Company, took the most prominent part; the Union had over $25,000,000 of risk capital invested in these companies; that large tonnages were dumped upon the coal market of TVA by these companies at low prices; that the immediate competitors of West Kentucky Coal Company in the West Kentucky field followed the lead of the company in pricing in order to obtain TVA business and prices of the West Kentucky field fell to very low levels with the inevitable result that sales prices in the TVA coal market became depressed; that the TVA provided the principal market of the companies in these cases and the TVA prices were beaten down to such an extent that these companies suffered large losses trying to retain their position in that market and lost contracts by reason of the low pricing; that the conspiracy manifested itself in the field in East Tennessee by a squeeze applied to the local operators from the market side and the labor side; that while a price wall or ceiling was imposed upon them in its principal market, the Union, pursuant to agreement with Bituminous Coal Operators Association and other major producers, raised the labor costs on the local producers by forcing terms and labor contracts that were unreasonable in this field and by interferences with production; that the Union used force and violence, seeking to force the 1958 amendment upon this coal field, a practice which had been followed in previous years, and the Union refused to bargain with local producers with respect to the labor terms. In the cases of W. R. Parton, No. 4988, and Dean Coal Company, No. 4463, the aforesaid violence employed by the Union is asserted as an additional basis for claims of violation of the state law and common law. However, it is expected that all damages sustained by these two plaintiffs will, as in the other cases, be shown to have resulted also from the aforementioned violation of the antitrust law; and only in the event of the failure of Parton and Dean Coal Company to recover damages arising from violence under the antitrust claim, will it be necessary for the Court to pass upon their common law or state law claims as such. THEORIES OF UNITED MINE WORKERS OF AMERICA AS SET FORTH, IN PART, IN THE PRE-TRIAL ORDER UMW says that it has acted to further the best interest of its members through arms-length bargaining with representatives of coal operators within the framework of the Federal Labor Law throughout the pertinent period. Its objectives in negotiating and executing the various wage agreements have been to achieve a uniform living wage, decent and safe working conditions and various fringe benefits. It has made no agreement with any coal operator at any time to impose a wage agreement upon other operators. Its wage agreements have resulted from its own policies and not by agreement with any of the coal operators of one unit to seek the same wages or benefits from other operators. From its origin as a labor union in 1890, UMW has endeavored to unite in one organization all workers employed in and around coal mines, coal washeries, coal processing plants and coke ovens and has sought to obtain a uniform wage scale for all its members so employed. UMW Objectives and Policy UMW strives for national equality of compensation for its members because it believes that miners should receive the same wage for his labor wherever he happens to work, regardless of the particular economic circumstances of an individual operator. Wage differential should not be the basis for affording to one operator a competitive advantage over another. Removal of differences in labor standards as an element of competition is at the core of UMW policy. UMW does not subsidize marginal operators through substandard labor conditions. UMW denies that it entered into any contract or joined in any combination or conspiracy in restraint of trade or commerce in violation of the Sherman Act and denies that it has monopolized or attempted to monopolize or that it combined or conspired with any other person or persons or group of persons to monopolize any part of the trade or commerce among the several states. The 1950 agreement resulted from arms-length collective bargaining over a long period of time during which UMW was restricted in its bargaining efforts by federal court decrees and both UMW and coal operators were mandated to settle their disputes. The 1950 agreement was the only understanding between UMW and operators and was not an instrument of conspiracy. Under District Court scrutiny, NLRB and Attorney General surveillance, with assistance of members of the Presidential Inquiry Board, and with UMW’s bargaining abilities circumscribed by judicial restraints, UMW and operators, bargaining in good faith, achieved the 1950 Agreement, which, obedient to the February 11, 1950 injunction, created a union security clause to comply with Taft-Hartley, made Fund benefits available to signatories’ employees regardless of UMW membership, and eliminated the “able and willing” clause and amended the “memorial period” clauses, which had been disputed issues in the bargaining negotiations. UMW denies that the provisions of the 1950 Agreement and its amendments violated the Sherman Act. In 1950, as in all proceedings and subsequent negotiations, UMW formulated its wage demands based upon its view of what the industry as an entirety could afford to pay and of what the miner needed to maintain and improve his standards of living, in conformity with UMW’s policy of national uniformity of labor standards. UMW denies that the successive increases in the wage scale and Welfare Fund payments were tailored to meet the abilities of the major coal companies to mechanize and thus not to have their profits affected by the increased labor costs in the amendments to the National Agreement after 1950. UMW has regarded mechanization to be an exclusive management prerogative in which it in no way participates. UMW has never opposed mechanization. Mechanization was a normal procedure long prior to 1950 and was not an issue in the 1940-1950 negotiations. Prior to 1950 and since, there has been a direct relationship between wages and the expansion of mechanization in the coal industry. As output per miner increases through mechanization, UMW insisted through collective bargaining, that the higher productivity justified a higher wage rate. Between June 30, 1949 and March 5, 1950, there was no collective bargaining agreement and thus no obligation for UMW members to produce any coal. During this period, UMW directed for some weeks a working period of three days a week in mines east of the Mississippi River, but the directive was not effective west of the River. UMW neither sought nor wanted a contractual three-day work week and it was not a bargaining issue for inclusion in’ the 1950 Agreement. The reasons for the directive of the three-day work week were (1) to abate the public concern as to any alleged possible shortage of coal, (2) as a bargaining tactic and (3) to spread available work among normal labor forces to enable each miner to have some income during negotiations. Mine workers knew that bargaining negotiations would not terminate as long as miners worked full time during the bargaining process. The 1950 Agreement did not turn over to the UMW responsibility for the administration of the UMW Welfare and Retirement Fund. Administration of this Fund was the joint responsibility of the employer and employee representatives, with tie-breaking authority vesting in a neutral as required by Section 302 (c) (5) of the National Management Relations Act of 1947. The law required and the Agreement provides that all employees of signatory operators are eligible to participate in the Fund as beneficiaries. Employees in the industry were not led to believe that the Fund was under UMW control. Fund Trustees exercised every reasonable means to inform signatory employees of their rights in the Fund. Trustees of the Fund did not institute suit for delinquent royalties to eliminate small operators. Major coal companies have not fostered UMW’s domination in the industry. UMW’s bargaining history has remained substantially the same since 1890. As early as 1897, and since, UMW has bargained on a multi-employer basis in a geographic interstate area representing the largest production area in the industry, known as the central competitive field, which has changed from time to time as the volume of production shifted. The Agreement thus achieved by UMW representatives with operators’ representatives in the particular central competitive field became the guide for negotiating contracts between UMW and operators in other districts. In all negotiations, both prior to and after the 1950 Agreement’s execution, UMW, in Convention and pursuant to its constitution, has constituted and authorized its Policy Committee to deal with negotiations between the meetings of its quadrennial Conventions, and bargaining agreements can be finalized only when authorized by the UMW Policy Committee. Since 1947, the Taft-Hartley Act has mandated UMW to bargain collectively with representatives selected by the operators. In all negotiations, both prior to and after 1950, UMW negotiated with the authorized representatives of operators. In negotiations for the 1950 Agreement, UMW met ''and bargained separately with (1) representatives of the northern operators, (2) representatives of the southern operators, and (3) representatives of captive operators. Since 1950, it has bargained collectively with BCOA as the bargaining representative of the northern group of operators and captive mine owners producing the largest tonnage of coal in the competitive market for bituminous coal. The BCOA was in the process of being formed long prior to the 1950 Ageement’s execution and was established as a labor relations agency to give to the largest group of coal operators a single voice in negotiating a collective bargaining agreement with UMW. Any agreement must have operator approval and the UMW Policy Committee’s authorization. Southern coal producers have not been members of BCOA. Western operators have been in and out of BCOA. Generally, BCOA has been the first to sign. With the legal authority to demand that UMW bargain with it as Taft-Hartley mandates, southern producers have historically preferred to bargain as a separate unit and to negotiate a labor agreement after UMW has executed with other groups. Consonant with its basic policy of seeking a uniform agreement, the agreement first achieved by UMW has served as a guide for other groups. UMW has not agreed with any operator or group of operators to impose upon other groups the agreement first executed. Since 1941, UMW has sought to protect the integrity of the labor standards contained in UMW’s collective bargaining agreement and thus preserve work opportunities for its employee members covered in the contract unit. A 1943 order of the National War Labor Board directed that each UMW contract include a provision relating to leased mines, that “Operators agree that they will not lease any operating mines subject to this Agreement as a subterfuge” to avoid the Agreement’s provisions. This clause by reference was contained in the Ickes-Lewis Agreement in 1943 and in the National Bituminous Coal Wage Agreement of 1945. The 1952 Agreement provides that operators “agree that they will not lease out any coal lands as a subterfuge for the purpose of avoiding the application of this Agreement.” It expresses a covenant which the basic agreement would in any event imply. The subterfuge provisions proved inadequate. To root out circumvention, a “protective wage clause” (sometimes called PWC) was negotiated in 1958. UMW proposed it and the operators refused to accept it and offered counter-proposals which UMW rejected; and when agreement was reached, operators professed reluctant acceptance to avoid an interruption in the supply of coal. The clause was a continuation of UMW’s efforts to prevent operators from vitiating the agreement signed by them by subleasing practices. The clause’s purpose had to do with substandard wages and conditions. In negotiating the 1958 Agreement, UMW complained that signatory operators were subleasing their coal lands to individuals and newly formed corporations and other business organizations controlled by themselves and using other, variant devices and schemes, all geared to obtaining coal produced under substandard labor conditions and thereby depriving their employees of-work opportunities and labor standards required under the UMW Agreement. These complaints brought counter-charges from some signatories that UMW field representatives were entering into agreements whereby other signatories were excused from paying wage scale or the royalty payments required by the UMW Agreement. Though UMW denied the counter-charges, operators insisted upon assurances from UMW. Thus, two promises were made: First, as provided in PWC’s paragraph A, UMW assured operators signatory to the Agreement that it would not, during the Agreement’s term, enter into or permit any agreement covering labor standards applicable to employees covered by this contract on any basis other than those specified by the Agreement or applicable district agreement and that UMW would perform and enforce the paragraph’s term “without discrimination or favor” and that it (UMW) “will use and exercise its continuing best efforts to obtain full compliance therewith by each of the parties signatory hereto,” which provision it alleges emphasizes that such assurances did not run to those coal producers not yet signatory. UMW is free to negotiate a labor agreement at variance with the national agreement. Second, operators promised that if they obtained coal from others not mined by themselves, it would be obtained from operators who maintained labor standards “as favorable to the employees as those provided for in this contract,” thus assuring UMW that acquisition of coal from others would not be used by a signatory operator as a device to undercut the labor standards to which it has promised to adhere. This second provision is known as the work standards clause. The clause does not prohibit dealings between any persons. Signatories must assure themselves that coal in which they deal has been produced under labor standards at least equal to those set forth in UMW’s contract. A nonunion producer need only to see that coal is produced under standards equivalent to those in the Agreement if he wishes to sell coal to a signatory, and the clause does not impose either the UMW or its agreement on a non-signatory. It does, however, protect the job opportunities of the unionized worker and safeguards his employment and his wage and benefit scale by removing the economic inducement to signatory producers to purchase coal under substandard conditions. PWC was never enforced. The PWC was executed on December 3, 1958. Its legality was not questioned under the NLRB at the time it was executed. However, on September 14, 1959, effective sixty days later, the National Labor Relations Act was amended by the addition of a section 8(e) which invalidated the so-called “hot cargo” agreement by which an employer, in the statutory language, “ceases or refrains or agrees to cease or refrain from handling, using, selling, transporting, or otherwise dealing in any of the products of any other employer, or to cease doing business with any other person. * * * ” The purpose of Section 8(e) is to bar an agreement which sanctions a secondary boycott. On August 27, 1963, the National Labor Relations Board found that the work standards provision of PWC violated Section 8(e). But on judicial review, the Court of Appeals for the District of Columbia Circuit on August 4, 1965, concluded that the Board applied incorrect legal principles in reaching its decision and remanded the case to the Board for redetermination in accordance with proper standards. Meanwhile, the Board having invalidated the work standards clause, UMW negotiated a substitute for it, designated to meet the same problem to which the earlier clause had been directed. The substitute clause, known as the Welfare Fund clause, required a signatory operator to pay into the UMW Welfare and Retirement Fund the sum of 80 cents per ton for each ton of coal acquired by it on which the sum of 40 cents per ton had not previously been paid into the Fund. The Welfare Fund clause requiring signatories to pay 80 cents on coal procured or acquired from non-signatories is devoid of secondary pressures and does not fall within the targets at which 8(e) was aimed. Though UMW had investments in stock ownership of West Kentucky Coal Company, and loans to other stockholders secured by shares of that company’s common stock, it was not a Sherman violation to make such investments; such investments were made subsequent to the alleged conspiracy in 1950 when West Kentucky was not a UMW signatory; West Kentucky became such a signatory only upon evidence that its employees had, in writing, selected UMW as bargaining agent and its execution of the UMW agreement accorded with national labor policy. UMW made no suggestions and proposed no policies with reference to West Kentucky’s management, marketing or pricing policies. West Kentucky bids on the TVA market were formulated by West Kentucky personnel without consultation or knowledge of UMW. There was no collusion among businessmen to drive small operators from the market by predatory price-cutting or like anti-competitive business behavior. No individual coal company has a dominant share of the market. Dependable capacity to furnish the quality and quantity at a reasonable price governs the share of the market that any miner operator obtains. There are no sheltered markets for small or large operators. The 1950 and successor Agreements, like all preceding agreements, are the product of UMW’s independent judgment obtained by the independent efforts acting unilaterally and alone and in its own self-interest, free of any alliance or combination with any employer or employers for a predatory anti-competitive purpose. UMW denies that it violated the laws of the State of Tennessee with respect either to Parton Coal Company or Dean Coal Company. It denies that any of the companies are entitled to damages. Issues The issues as formulated in the pretrial order are: (1) Did the UMW engage in a combination or conspiracy, as alleged by the coal companies, so as to unreasonably restrain trade or to monopolize commerce among the several states, outside or beyond the exemption granted by the antitrust statutes to a labor organization ? (2) Did UMW violate any duty under Tennessee law to plaintiffs, Parton Coal Company and Dean Coal Company, and if so, was such violation or violations the proximate cause of the claimed damages sustained by them, or either of them? (3) If the answer to the foregoing issues, or either of them, is in the affirmative, what damages, if any, resulted to the individual plaintiff coal companies by reason thereof? Guidelines Fixed by the Supreme Court in the Pennington Case The guidelines for the decision of the antitrust phase of these cases are set forth by the majority opinion of the Supreme Court in the case of the United Mine Workers of America v. Pennington, et al, supra. The Supreme Court held that under the circumstances of the case the Union is not exempt from liability under the antitrust laws and that the action of the District Court in overruling UMW’s motion for a directed verdict and for judgment notwithstanding the verdict was proper. 381 U.S. p. 661, 85 S.Ct. 1585. The Court observed that Section 20 of the Clayton Act, 38 Stat. 738, and Section 4 of the Norris-LaGuardia Act, 47 Stat. 70, permit a union, acting alone, to engage in the conduct therein specified without violating the Sherman Act, but that neither of these sections expressly deals “with arrangements or agreements between unions and employers. Neither section tells us whether any or all such arrangements or agreements are barred or permitted by the antitrust laws. Thus Hutcheson [U. S. v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788] itself stated: ‘So long as a union acts in its self-interest and does not combine with non-labor groups, the licit and the illicit under § 20 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.’ ” p. 662, 85 S.Ct. p. 1589. The Court pointed out that the Allen Bradley Company v. Local Union No. 3, etc., 325 U.S. 797, 65 S.Ct. 1533, 89 L.Ed. 1939, decision made explicit what had theretofore been merely a qualifying expression in Hutcheson and held that “when the unions participated with a combination of business men who had complete power to eliminate all competition among themselves and to prevent all competition from others, a situation was created not included within the exemptions of the Clayton and Norris-La-Guardia Acts.” It further pointed out that subsequent cases have applied the Allen Bradley doctrine to such combinations without regard to whether they found expression in a collective bargaining agreement, and even though the device for effectuating the purpose of the combination was an agreement on wages. 381 U.S. p. 662, 85 S.Ct. 1589. The Court also pointed out that if the UMW in this case in order to protect its wage scale had presented a set of prices at which the mine operators would be required to sell their coal, the Union and the employers who happened to agree could not successfully defend this contract provision if it were challenged under the antitrust laws by the Government or by some party injured by the arrangement. In such a situation, said the Court, the restraint on the product market is direct and immediate, and is of the type characteristically deemed unreasonable under the Sherman Act and the Union gets from the promise nothing more concrete than a hope for better wages to come. The Court further observed that if the Union became a party to a collusive bidding arrangement designed to drive Phillips and others from the TVA market, as charged in the complaint, any claim to exemption from antitrust liability would be frivolous at best. It was also observed that the major part of Phillips’ case was the claim that the Union- entered into a conspiracy with the large operators to impose the agreed-upon wage and royalty scales upon the smaller, non-union operators, irrespective of their ability to pay and regardless of whether or not the Union represented the employees of these companies, all for the further purpose of eliminating them from the industry, limiting production and pre-empting the market for the large unionized operators, p. 664, 85 S. Ct. 1585. The Court then observed that wages lie at the heart of collective bargaining between employers and unions and the law contemplates agreements on wages not only between individual employers and a union, but agreements between the union and employers in a multi-employer bargaining unit. National Labor Relations Board v. Truck Drivers Local Union, etc., 353 U.S. 87, 94-96, 77 S.Ct. 643, 1 L.Ed.2d 676, 381 U.S. p. 664, 85 S.Ct. 1585 and that the union benefit from the wage scale is direct and complete and the effect on the product market results from the elimination of competition based on wages among the employers in the bargaining unit, which is not the kind of restraint Congress intended the Sherman Act to proscribe. Apex Hosiery Co. v. Leader, 310 U.S. 469, 503-504, 60 S.Ct. 982, 84 L.Ed. 1311; Adams Dairy Co. v. St. Louis Dairy Co., 260 F.2d 46 (C.A. 8), 381 U.S. p. 664, 85 S.Ct. 1585 The Court stated that a union may conclude a wage agreement with the multi-employer bargaining unit without violating the antitrust laws and it may as a matter of its own policy, and not by agreement with all or part of the employers of that unit, seek the same wages from other employers, p. 664, 85 S.Ct. 1590. Negotiations between Union and employers are not automatically exempt from Sherman Act scrutiny simply because the “negotiations involve a compulsory subject of bargaining, regardless of the form and content of the agreement.” The Board’s demarcation of the bounds of the duty to bargain has relevance to any consideration of the sweep of labor’s antitrust immunity, for the Court is concerned with harmonizing the Sherman Act with the national policy expressed in the National Labor Relations Act or promoting “the peaceful settlement of industrial disputes by subjecting labor-management controversies to the mediatory influence of negotiation.” Fibreboard Paper Prods. Corp. v. National Labor Relations Board, 379 U S. 203, 211, 85 S.Ct. 398, 403, 13 L.Ed. 2d 233. But there are limits to what a union or an employer may offer or extract in the name of wages and just because they must bargain does not mean that the agreement reached may disregard other laws. Local 24 of Internat’l Broth, of Teamsters, etc. v. Oliver, 358 U.S. 283, 296, 79 S.Ct. 297, 3 L.Ed.2d 312; United Brotherhood of Carpenters, etc. v. United States, 330 U.S. 395, 399-400, 67 S.Ct. 775, 91 L.Ed. 973. The Court further observed that a union may make wage agreements with a multi-employer bargaining unit and may in pursuance of its own union interests seek to obtain the same terms from other employers. No case under the antitrust laws could be made out on evidence limited to such union behavior. Immediately following this statement, Justice White, in Footnote 2 of the opinion, stated: “Unilaterally, and without agreement with any employer group to do so, a union may adopt a uniform wage policy and seek vigorously to implement it even though it may suspect that some employers cannot effectively compete if they are required to pay the wage scale demanded by the union. The union need not gear its wage demands to wages which the weakest units in the industry-can afford to pay. Such union conduct is not alone sufficient evidence to maintain a union-em ployer conspiracy - charge wnder the Sherman Act. There must be additional direct or indirect evidence of the conspiracy. There was, of course, other evidence in this case, but we indicate no opinion as to its sufficiency.” (Emphasis added.) The Union it said forfeits its exemption from the antitrust laws when it is clearly shown that it has agreed with one set of employers to impose a certain wage scale on other bargaining units. One group of employers may not conspire to eliminate competitors from the industry and the Union is liable with the employers if it becomes a party to the conspiracy. This is true even though the union’s part in the scheme is an undertaking to secure the.same wages, hours or other conditions of employment from the remaining employers in the industry. 381 U.S. p. 666, 85 S.Ct. 1585. The policy of antitrust law is clearly set against employer-union agreements seeking to prescribe labor standards outside the bargaining unit. “From the viewpoint of antitrust policy, moreover, all such agreements between a group of employers and a union that the union will seek specified labor standards outside the bargaining unit suffer from a more basic defect, without regard to predatory intention or effect in the particular case. For the salient characteristic of such agreements is that the union surrenders its freedom of action with respect to its bargaining policy. * * * ” p. 668, 85 S.Ct. p. 1592. Mr. Justice Douglas interpreted Mr. Justice White’s majority opinion by suggesting to the trial court how under the opinion it should charge the jury on the retrial. First, if there were an industry-wide collective bargaining agreement whereby employers and the union agreed on a wage scale that exceeded the financial ability of some operators to pay and that if it was made for the purpose of forcing some employers out of business, the union as well as the employers who participated in the arrangement with the union should be found to have violated the antitrust laws. Second, an industry-wide agreement containing those features is prima facie evidence of a violation. Justice Douglas added a footnote to this statement to the effect that acceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out is restraint of interstate commerce, is sufficient to establish an unlawful conspiracy under the Sherman Act. In support of the principle contained in the footnote, he cited a number of cases, not one of which involved a union. It is to be observed that Mr. Justice Douglas under paragraph 1 stated that if the agreement contained the two factors mentioned in that paragraph, namely, an industry-wide agreement whereby employers and the union agreed on a wage scale that exceeded the financial ability of some operators to pay and that it was made for the purpose of forcing some employers out of business, both the employer and the union to the agreement would be guilty of violating the antitrust law. Yet, in the second sentence, he says that such industry-wide agreement containing those features is only prima facie evidence of a violation of the antitrust laws. We believe that Justice Douglas meant that in order for an employer and a union to be guilty of violating the antitrust laws, the industry-wide agreement must exceed the financial ability of some operators to pay and it must be made for the purpose of putting some employers out of business. This presents a question upon which the attorneys are in disagreement. The attorneys for the operators insist that if the effect of the agreement is to force a certain number of operators out of business, regardless of the intent of the parties, the employer and the Union violated the Sherman Act. Attorneys for the Union maintain that the effect of the agreement of forcing some employers out of business is not sufficient to show an antitrust violation; that the other element of predatory intent must be present. This question has given the Court much concern. The preponderance of the proof shows that the smaller eastern Tennessee operators, including plaintiffs, with the exception of plaintiff Tennco Corporation, could not pay the wages provided in the 1950 Agreement, as amended from time to time until 1964, including the 40 cents royalty on each ton of coal produced. Upon careful consideration, the Court has reached the conclusion that the Pennington case teaches that it is necessary to find predatory intent to drive small coal operators out of business in order to hold the employer and Union for a violation of the Sherman Act. Justice White’s Footnote No. 2 indicates that the antitrust law is not designed to protect marginal operators; that ill effects alone on the marginal operators is not enough to show intent. The standard of proof necessary to show predatory intent is governed by the recent decision of the Supreme Court in United Mine Workers of America v. Gibbs (C.A. 6, March 28, 1966), 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218. This case involved interpretation of Section 6 of the Norris-LaGuardia Act which states in effect that no association participating in a labor dispute shall be held liable for the unlawful acts of individual officers, members, etc., “except upon clear proof of actual participation in, or actual authorization of, such acts, or of ratification of such acts after actual knowledge thereof.” In the ordinary case, proof would be simply by a preponderance of the evidence and in the criminal case guilt would have to be established beyond a reasonable doubt. Under Section 6 of the Norris-LaGuardia Act, as interpreted by the Supreme Court in the Gibbs case, a middle ground is reached with respect to the quantum of proof necessary for civil liability. Justice Brennan suggested that Congress meant “at least to signify meaning like that commonly accorded such similar phrases as ‘clear, unequivocal and convincing proof’ * * *. He is required to persuade by a substantial margin, to come forward with ‘more than a bare preponderance of the evidence to prevail.’ ” Justice Harlan, who was joined by Justice Clark, concurred in the decision, but felt that the statute was simply directed against a particular type of inferential proof of authorization or ratification unacceptable to those who framed the law. “For me [that is Harlan], the gist of the statute is that in the usual instance a union’s carrying on of its normal strike functions and its failure to take affirmative action to dispel misconduct are not in themselves proof of authorization or ratification of the wrongdoing.” It seems apparent that the Court in the Gibbs case by interpretation of the statute, has placed a heavier burden of proof upon a plaintiff in this type of case. Position of Coal Companies toith Respect to the Proof of Violation of Sherman Act The main proof relied upon by plaintiffs, if we interpret their position correctly, is the statement by Mr. Moses that one of the reasons for the establishment of BCOA was to avoid the possibilities of a recurrence of the effect to the Jacksonville scale in the 1920’s when southern companies got out from under the UMW contract and engaged in price cutting. It is said that this showed a purpose upon the part of the strongest companies and the Union to get together and fix wages in a national contract so as to avoid price competition; that Mr. Love made the statement in effect that BCOA and the Union had worked out a contract to stabilize prices in the industry and that that was a per se violation. It is said that the Union prior to the formation of the BCOA was urging the operators to adopt some sort of protective plan to stop the dropping prices which was a matter of concern to the Union because of the history of the 1920’s; that one of the reasons for the formation of the BCOA was to avoid price war of 1920’s; that the meaning of Mr. Moses’ statement was that the southern companies were going to be kept in line under the contract so that the 1920’s situation would be avoided; that the spokesman for BCOA and the Union felt free to discuss these matters openly as being a reasonable proposition, but that the purposes to stabilize prices encroach upon an area of per se violation; that an effort to force uniform wages throughout the industry to avoid price competition does not eliminate wages as leverage in price competition; that the working conditions in the East Tennessee mines— thin seams of coal — rough terrain, methods of production, differences in working conditions, made a uniform wage for the miners who worked in this area a tremendous disadvantage to the Tennessee operators and a great advantage to the stronger operators; that the alleged boycott provision of the land-lease clause of the 1952 contract and the alleged boycott provision contained in paragraph B of the Protective Wage Clause of the 1958 contract were Sherman violations; that a similar protective wage clause was found in violation of the Sherman Act in United Brotherhood of Carpenters, etc. v. United States, 330 U.S. 395, 398-400, 67 S.Ct. 775, 91 L.Ed. 973. The attacks of UMW on TVA for buying coal from the producers of the East Tennessee field and the investments of UMW in the West Kentucky Coal Company, the second largest producer selling coal to TVA, and the practices of that company, aided by finances from UMW, and working with other major producers in taking over markets, including %ths of the TVA market, constitute proof, plaintiffs alleged, of purposeful acts to drive the East Tennessee companies out of business. Oral Argument of Counsel for Plaintiffs In oral argument, counsel for plaintiffs stated that there are many desperate men in the coal fields of Tennessee; that there has been a great deal of violence; that there is something wrong in the industry ; that the names of the dead mines, plaintiffs’ being on the list, have been listed in the trial; that the real question is whether this condition should be brought about by a small combination of men in large cities who sit down and make arrangements with respect to the destiny of these people. He contended that the first question for consideration is whether there was an arrangement or a combination or agreement with business men by the Union to fix wages that small operators could not pay. He argued that the evidence showed such an arrangement by the UMW and BCOA and that this combination worked for the establishment of national agreements for the years 1951, 1952, 1955, 1956, 1958 and 1964. Mr. Moses, one of the leading negotiators for BCOA, stated that the purpose of BCOA was to negotiate national agreements and to settle industry problems on an authoritative basis. That is what happened in the east Tennessee coal fields. Mr. Love, who was the prime mover in setting up BCOA, stated that his purpose was to see that his competitors in the coal business paid the same wage as he paid regardless of the circumstances. From these facts, it is argued that there was a clear understanding that the contract was to be applied nationally. Counsel asserted that the effect of the combination or arrangement was to force small coal operators out of business and that the law supplied the specific intent to drive them out of business. In addition, he argued that there is clear proof in the record of a purposeful understanding to eliminate the smaller companies from having any fair chance of survival. In support of this argument, he stated that when the BCOA emerged the Union ceased to be concerned for job opportunities for its members. Concern by the Union for the smaller companies was abandoned with the emergence of BCOA. There was a joint effort of BCOA and UMW to avoid, in the negotiations, large scale negotiations in which the interest of such small companies would be given expression and publicity. On the contrary, negotiations were taken out of the public view and conducted in secret conferences between a handful of negotiators — actually a two-man bargaining team. Harry Moses used the term “two-man bargaining team.” The stated purpose of the BCOA and the Union was to maintain a stabilization of production and prices so that a recurrence of the Jacksonville situation of the 1920’s would be avoided. Moses stated that this was one of the reasons for the establishment of BCOA. Another reason for the formation of BCOA was to avoid the price war of the 1920’s. The boycott provision and the land-lease provision in the 1952 contract are evidence of the purposes of the BCOA and the Union. Counsel argued that these matters show a clear violation of the Sherman Act under the opinions of Mr. Justice White and of Mr. Justice Douglas. Oral Argument of Counsel for Defendant Counsel for the defendant stated in oral argument that adversary counsel had repeatedly claimed and repeatedly attempted to prove that contemporaneously with the negotiations of the 1950 Bituminous Coal Wage Agreement, a side agreement was made, but that they have failed to prove it. Counsel stated further that the Supreme Court commented that “a major part of Phillips’ case, however, was that the union entered into a conspiracy with the large operators to impose the agreed-upon wage and royalty scales upon the smaller, nonunion operators, regardless of their ability to pay and regardless of whether or not the union represented the employees of these companies, all for the purpose of eliminating them from the industry, limiting production and preempting the market for the large, unionized operators.” That BCOA was the same group of operators that had been bargaining with the Union since 1924, namely, the Pennsylvania, Ohio, West Virginia, northern Virginia group of operators, the old competitive field. After the 1950 Agreement, the BCOA was formed in July, 1950. Fifty per cent or a little bit more than that of the national tonnage was represented by the BCOA. That tonnage was produced in Ohio, Pennsylvania, northern West Virginia, Tennessee, Virginia and Kentucky. Two hundred sixty-two individual companies composed the membership of BCOA, 130, or about half of them, were companies that mined less than 100,000 tons a year. The record indicates that a concern that mines less than 100,000 tons a year is a small operator. After the 1950 negotiations, UMW contracts represented about 77% or 78% of the coal produced. That the Union operated through a policy committee which designated a subcommittee to negotiate with the BCOA. In June 1949, the southern group of operators terminated their contract pursuant to its terms. The northern operators did not terminate the contract. After the southern group had terminated its contract, the Union terminated the contract with the northern group. Mr. Lewis, according to defendant, then suggested to the southern and northern groups that they work three days a week in order to provide the country with coal until they could reach a successor agreement. The operators refused. Mr. Lewis then instructed the miners to work the three days a week and that is all they worked. In the meantime, the negotiators had conferences at White Sulphur Springs and at Bluefield, West Virginia, that lasted through December. They couldn’t agree. Both the southern and northern coal operators walked out of the meeting. In December, the whole mining industry was down because the miners were not working. They did not have a contract. In 1950, the coal operators filed an unfair labor practice complaint. Public concern was voiced about the shortage of coal and the President appointed a fact-finding board and the Attorney General and the Labor Board obtained injunctions to compel the groups to get back together and bargain in good faith. The Government, defendant argued, instituted contempt proceedings against the Union and its leaders. Before that the Union had been summoned into the federal court for contempt proceedings because the men were not working. It was under these conditions that the 1950 Agreement was reached. It would seem a bit unusual that the Union and the operators • who had been fighting each other for some fifteen years would enter into a conspiracy to violate the antitrust laws. The Southern Coal Producers and the Southern Tennessee Coal Producers signed the 1950 Agreement. They also signed it in 1951 and 1952. The 1952 Agreement was disapproved by the Wage Stabilization Board and the Southern Coal Producers filed a petition with the Board for approval and the Southern Tennessee Coal Producers signed it. The 1958 Agreement was also signed by that association. Counsel argued that the first indication of any charge of a conspiracy about the 1950 Agreement was when the plaintiffs were sued for the 1958 delinquent royalties. They filed the counterclaim raising this defense. The policy committee of the Union designated a subcommittee to bargain with the operators and to negotiate a contract and to report back to the policy committee for its approval or disapproval. Mr. Love