Note by Julie K. Robberson
In 1972, Copperweld Corp. (Copperweld) acquired Regal Tube Company (Regal), a manufacturer of steel tubing, from Lear Siegler, Inc. (Lear Siegler). Lear Siegler promised in the purchase agreement not to compete with Regal for five years. Immediately after the acquisition, Copperweld reorganized Regal as a wholly owned, separately incorporated subsidiary. Meanwhile, a former officer of Regal, who had become an officer of Lear Siegler, started a separate business to compete with Regal while he was still working for Lear Siegler. This new corporation was the plaintiff, Independence Tube Company (Independence). Although Copperweld's lawyers advised that Independence was not bound by the noncompetition agreement with Lear Siegler, Copperweld sent letters to Independence's business contacts warning that Copperweld would take any steps necessary to protect its trade secrets and the terms of its purchase agreement. One of these letters was sent to Yoder Company, which had agreed to supply Independence with a tubing mill. Two days after receiving this letter, Yoder Company cancelled its agreement to build a mill for Independence, causing Independence a nine-month delay in commencing operations. Independence sued Copperweld, Regal, and Yoder. A jury found that Copperweld and Regal had conspired to violate section 1 of the Sherman Act; Yoder was exonerated. This United States Court of Appeals for the Seventh Circuit affirmed. On certiorari the Supreme Court reversed and held that a parent and its wholly owned subsidiary are incapable of conspiring with each other under section 1 of the Sherman Act. Copperweld Corp. v. Independence Tube Corp., 104 S. Ct. 2731 (1984).
About the Author
Julie K. Robberson.
Citation
59 Tul. L. Rev. 781 (1985)