Protectoseal Co. v. Barancik

Protectoseal Co. v. Barancik

Opinion

 [*586]  STEVENS, Circuit Judge.

For the first time since the enactment of the Clayton Act in 1914, this court  [*587]  must decide a case arising under ] § 8's prohibition against interlocking corporate directorates. ² [**2]  In an action brought under § 16 ³ by a corporate plaintiff, the district court entered summary judgment ordering the defendant director to resign. The issues raised by defendant's appeal are (1) whether the corporation had standing to challenge his status; (2) whether the statute was violated; (3) whether appellant was entitled to additional discovery; and (4) whether the relief granted was excessive.

 [**3]  Plaintiff corporation is engaged in the manufacture and sale of various sizes and kinds of safety containers, faucets, fittings and accessories for flammable liquids. Justrite Manufacturing Company, a competitor whose factory and sales headquarters, like the plaintiff's, are located in the Chicago metropolitan area, manufactures and sells a competing line of products. The two companies compete for the same business. Defendant testified that Justrite "did approximately a million and a half dollars worth of business" in the items and areas of competitive overlap with the plaintiff. ⁴ Plaintiff alleged -- but defendant lacked sufficient information to admit or deny -- that if the sales of plaintiff and Justrite were combined, their total sales would exceed 50% of the total sales in the United States of the line of safety containers and related products described in the complaint.

 [**4]  Defendant and his wife are directors, as well as the sole owners, of Justrite. In September of 1971, after purchasing 7,913 shares representing 16.2% of plaintiff's outstanding stock, defendant was elected a director of plaintiff. ⁵ Thereafter, presumably after receiving the advice of counsel, plaintiff made a written demand for defendant's resignation. Defendant refused to resign and this litigation ensued.

After discovery was initiated but before it was completed, the district court granted summary judgment for plaintiff. It enjoined defendant from being a director of plaintiff or voting any of his shares for the election of directors and awarded costs, including attorney's fees, to plaintiff.

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