Supreme Court Loewe v. Lawlor Decision Holds Union Members Personally Liable for Damages

The U.S. Supreme Court rules unanimously 9-0 in Loewe v. Lawlor (the “Danbury Hatters’ Case”) that the Sherman Antitrust Act applies to labor unions and that individual union members can be held personally liable for damages caused by union boycotts. Chief Justice Melville W. Fuller writes for the Court, determining that the Sherman Act encompasses all combinations restraining trade including labor organizations, effectively outlawing the secondary boycott as a union tactic. The case arises when D.E. Loewe & Company, a fur hat manufacturer in Danbury, Connecticut, declares itself an “open shop” in 1901—becoming the third open shop ever established in Danbury, the center of the pelt industry since 1780.

Loewe’s declaration sparks a strike and boycott by the United Hatters of North America (UHU), which has organized 70 of 82 firms in the hat manufacturing industry. Dietrich Loewe refuses to unionize, preferring to undersell competitors by paying sub-standard wages. The company sues the union for violating the Sherman Antitrust Act, alleging the boycott interferes with interstate commerce. The defendants include not just union business agent Martin Lawlor but 240 individual union members. The union argues the Sherman Act was intended solely for business corporations and should not apply to labor organizations, but the Supreme Court rejects this interpretation in its February 3, 1908 decision.

The jury awards $74,000 in damages, which is automatically trebled under Sherman Act provisions to $222,000—eventually settled in 1917 for slightly over $234,000 (approximately $3.9 million in 2009 currency). The American Federation of Labor raises $216,000 through voluntary contributions from union members nationwide to help pay the judgment. The Loewe decision has devastating consequences for labor organizing: it deprives unions of an important and effective tactic, creates chilling effects by making individual members personally liable for potentially bankrupting damages, and demonstrates that antitrust laws designed to restrain corporate monopolies are instead weaponized against workers. The ruling leads the AFL to launch an aggressive campaign convincing Congress to address labor concerns in antitrust reform, but prosecution of labor under antitrust laws continues until the Norris-LaGuardia Act (1932) provides express exemptions. Loewe v. Lawlor exemplifies judicial capture serving corporate interests: the same courts refusing to vigorously enforce the Sherman Act against Standard Oil’s 90% oil monopoly or J.P. Morgan’s railroad consolidations enthusiastically deploy the statute to bankrupt workers exercising their collective power.