CACI No. 3407. Horizontal and Vertical Restraints - Agreement Between Company and Its Employee

Judicial Council of California Civil Jury Instructions (2023 edition)

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3407.Horizontal and Vertical Restraints - Agreement Between
Company and Its Employee
[Name of plaintiff] claims that [name of defendant’s agent/employee/offıcer],
who is an [agent/employee/officer] of [name of defendant], had an
agreement with [name of defendant]. You may find that [name of
defendant’s agent/employee/offıcer] and [name of defendant] had the
required agreement only if you decide that [he/she/nonbinary pronoun]
had a separate economic interest from [name of defendant] and acted in
[his/her/nonbinary pronoun] own separate interest.
New September 2003
Directions for Use
This instruction is intended to clarify the circumstances under which an employee,
agent, or officer can form an unlawful agreement. The parties may wish to develop
an example to illuminate the issue, such as an employee running a side business that
may combine with the business of his employer to restrain trade.
Sources and Authority
“[T]he Act prohibits the combination of resources of two or more independent
interests for the purpose of restraining commerce and preventing market
competition in the variety of ways listed in the statute.” (Lowell v. Mothers
Cake and Cookie Co. (1978) 79 Cal.App.3d 13, 23 [144 Cal.Rptr. 664], internal
citation omitted.)
“[A] corporation cannot conspire with itself or its agents for purposes of the
antitrust laws.” (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 720
[187 Cal.Rptr. 797], internal citation omitted.)
“It is also held that an individual acting alone through his agent or a corporation
acting alone through its officers is not a combination in restraint of trade
proscribed by the statute. The rationale of these decisions is that the acts of the
agents or employees in the operation of the business are the acts of the
principal . . . . We are of the opinion that the language of section 16720 of the
Business and Professions Code contemplates concert of action by separate
individuals or entities maintaining separate and independent interests . . . .”
(Bondi v. Jewels by Edwar, Ltd. (1968) 267 Cal.App.2d 672, 677-678 [73
Cal.Rptr. 494], internal citations omitted.)
“[I]t is well settled that a complaint for antitrust violations which fails to allege
such concerted action by separate entities maintaining separate and independent
interests is subject to demurrer.” (G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d
256, 266 [195 Cal.Rptr. 211], internal citations omitted.)
“[Under the Sherman Act,] [t]he officers of a single firm are not separate
economic actors pursuing separate economic interests, so agreements among
them do not suddenly bring together economic power that was previously
pursuing divergent goals. Coordination within a firm is as likely to result from
an effort to compete as from an effort to stifle competition. In the marketplace,
such coordination may be necessary if a business enterprise is to compete
effectively. For these reasons, officers or employees of the same firm do not
provide the plurality of actors imperative for a § 1 conspiracy.” (Copperweld
Corp. v. Independence Tube Corp. (1984) 467 U.S. 752, 769 [104 S.Ct. 2731, 81
L.Ed.2d 628], footnote omitted.)
“[M]any courts have created an exception for corporate officers acting on their
own behalf.” (Copperweld Corp., supra, 467 U.S. at p. 769, fn. 15.)
“We . . . need not reach the broader issue extensively argued in the amicus
brief, i.e., whether the Copperweld rule would apply to the Cartwright Act when
the conspiracy or combination in restraint of trade is purely intra-enterprise and
there is no coerced or unwitting compliance by the victim in the forbidden
activity.” (MacManus v. A. E. Realty Partners (1987) 195 Cal.App.3d 1106,
1111, fn. 4 [241 Cal.Rptr. 315].)
Secondary Sources
1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 602-621

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