Raytheon Co. v. Rheem Manufacturing Co.

This action for injunctive and declaratory relief was brought by Raytheon Company (Raytheon) against Rheem Manufacturing Company (Manufactur *174 ing) and Rheem Semiconductor Corporation (Semiconductor). The case involves the construction of a contract, and of a lease executed pursuant thereto, under which Raytheon went into possession of Semiconductor’s manufacturing plant at Mountain View, California. District court jurisdiction rests on diversity of citizenship. Prom a judgment partially in favor of defendants and partially in favor of Raytheon, the latter appeals and defendants cross appeal.

Manufacturing, a California corporation, is a diversified manufacturing company. It holds a 99.9 per cent interest in Semiconductor. The latter is a California corporation which, prior to entering into the contract with Raytheon, was engaged in the manufacture of electronic semiconductor devices at its plant in Mountain View. Raytheon is a Delaware corporation which manufactures electronic devices in two eastern cities.

In 1960, negotiations between Manufacturing and Raytheon were carried on for the purpose of exploring various possible business relationships into which the two companies…