Source: https://case-law.vlex.com/vid/433-u-s-623-606848778
Timestamp: 2020-04-06 22:15:37
Document Index: 196150070

Matched Legal Cases: ['§ 1', '§ 16', '§ 2283', '§ 283', '§ 16', '§ 2283', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 1', '§ 1']

433 U.S. 623 (1977), 76-156, Vendo Co. v. Lektro-Vend Corp. - Federal Cases - Case Law - VLEX 606848778
Docket Nº: No. 76-156
Citation: 433 U.S. 623, 97 S.Ct. 2881, 53 L.Ed.2d 1009
Party Name: Vendo Co. v. Lektro-Vend Corp.
Case Date: June 29, 1977
433 U.S. 623 (1977)
97 S.Ct. 2881, 53 L.Ed.2d 1009
Lektro-Vend Corp.
Petitioner vending machine manufacturer acquired most of the assets of another vending machine manufacturing company controlled by respondent Stoner and his family. As part of the acquisition agreement, the latter company undertook to refrain from owning or managing any business engaged in the manufacture or sale of vending machines, and respondent Stoner, who was employed by petitioner as a consultant under a 5-year contract, agreed not to compete with petitioner in the manufacture of such machines during the term of his contract and for five years thereafter. Subsequently, petitioner sued respondents (Stoner, the company which he and his family controlled, and another corporation with which he had a relationship) in an Illinois state court for breach of the noncompetition covenants. Shortly thereafter, respondents sued petitioner in Federal District Court, alleging that it had violated §§ 1 and 2 of the Sherman Act in that the covenant against competition was an unreasonable restraint of trade. After protracted litigation in the state court action, the Illinois Supreme Court affirmed a judgment in petitioner's favor in an amount exceeding $7 million. Then in the antitrust action, which, in the meantime, had lain "dormant," the District Court granted respondents' motion for a preliminary injunction against collection of the Illinois judgment, holding that § 16 of the Clayton Act (which authorizes any person to seek injunctive relief against violations of the antitrust laws) constituted an "expressly authorized" exception to the Anti-Injunction Act, 28 U.S.C. § 2283 (which prohibits a federal court from enjoining state court proceedings "except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments"), and further found that an injunction was necessary to protect the court's jurisdiction within the meaning of that exception in § 283 by preserving a case or controversy, since the state collection efforts would eliminate the two corporate respondents (which would then be controlled by petitioner) as plaintiffs in the federal suit. The Court of Appeals affirmed, also finding that § 16 of the Clayton Act was an express
exception to § 2283, but not reaching the issue of whether an injunction was necessary to protect the District [97 S.Ct. 2884] Court's jurisdiction.
Held: The judgment is reversed, and the case is remanded. Pp. 630-643; 643-645.
(b) The test as to whether an Act of Congress qualifies as an "expressly authorized" exception to the Anti-Injunction Act is whether the
Act of Congress, clearly creating a federal right or remedy enforceable in a federal court of equity, could be given its intended scope only by the stay of a state court proceeding.
Mitchum v. Foster, 407 U.S. 225, 238. Here, while the private action conferred by § 16 of the Clayton Act meets the first part of the test in that such an action may be brought only in a federal court, it does not meet the second part of the test, since, as is demonstrated by § 16's legislative history suggesting that § 16 was merely intended to extend to private citizens the right to enjoin antitrust violations, § 16 is not an "Act of Congress [which] could be given its intended scope only by the stay of a state court proceeding." Mitchum, supra, distinguished. Pp. 632-635.
(c) To hold that § 16 could be given its "intended scope" only by allowing an injunction against a pending state court action would completely eviscerate the Anti-Injunction Act, because this would mean that virtually all federal statutes authorizing injunctive relief would be exceptions to that Act. While § 16 embodies an important congressional policy favoring private enforcement of the antitrust laws, the importance of the policy to be "protected" by an injunction under § 16 does not control for purposes of the Anti-Injunction Act, since the prohibitions of that Act exist separate and apart from the traditional principles of equity and comity that determine whether or not the state proceeding can be enjoined. Pp. 635-639.
(d) For an Act countenancing a federal injunction to come within the "expressly authorized" exception to the Anti-Injunction Act, it must necessarily interact with, or focus upon, a state judicial proceeding, and § 16 of the Clayton Act is not such an Act. Pp. 640 641.
(e) The District Court's finding that the injunction was "necessary in aid of its jurisdiction" within the meaning of that exception to the Anti-Injunction Act is supported neither by precedent nor by the factual premises upon which such finding was based. Although such exception may be fairly read as incorporating cases where the federal court has obtained jurisdiction over a res prior to the state court action, here both the federal and state actions are in personam actions, which traditionally may proceed concurrently, without interference from either court, and an injunction to "preserve" a case or controversy does not fit within the "necessary in aid of its jurisdiction" exception. It does not appear that, even if the two corporate respondents ceased to litigate the federal action, respondent Stoner would lose his standing to vindicate his rights, or that the two corporate defendants would necessarily be removed from the action. Pp. 641-643.
MR. JUSTICE BLACKMUN, joined by THE CHIEF JUSTICE, concluded that, although § 16 of the Clayton Act may be an "expressly authorized" exception to the Anti-Injunction Act in limited circumstances where the state proceedings are part of a "pattern of baseless, repetitive [97 S.Ct. 2885] claims" being used as an anticompetitive device, all the traditional prerequisites for equitable relief are satisfied, and the only way to give the antitrust laws their intended scope is by staying the state proceedings, California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, the District Court failed properly to apply the California Motor Transport rule, because it did not and could not find the state litigation to be part claims" being used, in and of itself, as an anticompetitive device, and that therefore § 16 did not itself authorize the District Court's injunction. Pp. 643-645.
REHNQUIST, J., announced the Court's judgment and delivered an opinion, in which STEWART and POWELL, JJ., joined. BLACKMUN, J., filed an opinion concurring in the result, in which BURGER, C.J., joined, post, p. 643. STEVENS, J., filed a dissenting opinion, in which BRENNAN, WHITE, and MARSHALL, JJ., joined, post, p. 645.
After nine years of litigation in the Illinois state courts, the Supreme Court of Illinois affirmed a judgment in favor of petitioner and against respondents in the amount of $7,363,500. Shortly afterwards, the United States District Court for the Northern District of Illinois enjoined, at the behest of respondents, state proceedings to collect the judgment. 403 F.Supp. 527 (1975). The order of the United States District Court was affirmed by the Court of Appeals for the Seventh Circuit, 545 F.2d 1050 (1976), and we granted certiorari to consider the important question of the relationship between state and federal courts which such an injunction raises. 429 U.S. 815 (1976).
The Illinois state court litigation arose out of commercial dealings between petitioner and respondents. In 1959, petitioner Vendo Co., a vending machine manufacturer located in Kansas City, Mo., acquired most of the assets of Stoner Manufacturing, which was thereupon reorganized as respondent Stoner Investments, Inc. Respondent Harry H. Stoner and members of his family owned all of the stock of Stoner Manufacturing, and that of Stoner Investments. Stoner Manufacturing had engaged in the manufacture of vending machines which dispensed candy, and, as a part of the acquisition agreement, it undertook to refrain from owning or managing any business engaged in the manufacture or sale of vending machines. Pursuant to an employment contract, respondent Harry Stoner was employed by petitioner as a consultant for five years at a salary of $50,000, and he agreed that, during the term of his contract and for five years thereafter, he would not
compete with petitioner in the business of manufacturing vending machines.
In 1965, petitioner sued respondents1 in state court for breach of these noncompetition covenants. Shortly thereafter, respondents sued petitioner in the United States District Court for the Northern District of Illinois, complaining that petitioner had violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Respondents alleged that the covenants against competition were unreasonable restraints of trade because they were not reasonably limited as to time and place, and that the purpose of petitioner's state court lawsuit was to "unlawfully harass" respondents and to...