Aydin Corporation, a Delaware Corporation v. Loral Corporation, a New York Corporation, and Conic Corporation, a Delaware Corporation

718 F.2d 897 1983-2 Trade Cases 65,492 AYDIN CORPORATION, a Delaware corporation, Plaintiff-Appellant, v. LORAL CORPORATION, a New York corporation, and Conic Corporation, a Delaware corporation, Defendants-Appellees. No. 81-4592. United States Court of Appeals, Ninth Circuit. Argued and Submitted Sept. 16, 1982. Decided July 12, 1983. Michael L. Harrison, Harrison, Hearn & Berthold, San Jose, Cal., for plaintiff-appellant. Ernest Leff, Hahn, Cazier & Leff, Los Angeles, Cal., for defendants-appellees. Appeal from the United States District Court for the Northern District of California. Before WALLACE, KENNEDY, and NELSON, Circuit Judges. WALLACE, Circuit Judge: 1 Aydin Corporation (Aydin) sued Loral Corporation (Loral) and Conic Corporation (Conic), a subsidiary of Loral, alleging violations of the federal antitrust laws. Aydin also alleges that they violated California statutory and common law. The district judge granted summary judgment for Loral and Conic on all counts. We affirm in part and reverse in part and remand. 2 * Moyes served as head of the TerraCom Division of Conic (TerraCom) for several years prior to 1979. He also served as a director of Conic. On March…

Aydin Corporation (Aydin) sued Loral Corporation (Loral) and Conic Corporation (Conic), a subsidiary of Loral, alleging violations of the federal antitrust laws. Aydin also alleges that they violated California statutory and common law. The district judge granted summary judgment for Loral and Conic on all counts. We affirm in part and reverse in part and remand.

I

Moyes served as head of the TerraCom Division of Conic (TerraCom) for several years prior to 1979. He also served as a director of Conic. On March 29, 1979, Moyes and directors of Loral and Conic signed a handwritten agreement terminating Moyes’s employment. The agreement contained provisions resolving salary and stock obligations, as well as an agreement by Moyes not to “disrupt, damage, or impair” Conic’s business.

On May 4, 1979, Moyes signed a more formal agreement with Loral and Conic which generally followed the provisions of the March 29th agreement. The May 4th agreement provided in part that Moyes would “preserve the confidentiality of all trade secrets and other confidential information” and that he would not:

After termination of his employment with Conic, Moyes became employed by Ay-din as head of…

concurring in part and dissenting in part:

Although I agree that the plaintiff’s antitrust claim must be dismissed, in my view the case presents an issue different from the one discussed by the majority. I respectfully submit a separate concurrence on this aspect of the appeal. I also dissent from the remand of one of the plaintiff’s state claims, for I would dismiss that part of the action as well.

The majority states: “Aydin must establish that Moyes competes at the same market level as Loral and Conic.” It further states: “Moyes is not a competitor of Loral and Conic in any significant measure and does not operate at the same level of the market structure.” The problem with these statements is that Aydin is the plaintiff, and Aydin does compete at the same market level as Conic. Moyes’s agreement with Conic in fact serves to restrain Aydin as though Aydin itself were bound not to hire Conic employees. For analytic purposes, at least, the agreement thus operates as a horizontal division of the market among competitors.

The majority in effect holds that a chief executive officer and his company cannot agree to'lessen competition, even when they contract to do so explicitly and…