Cesnik v. Chrysler Corp., 77-3313.

• Citation: 490 F. Supp. 859
• Decision Date: 06 May 1980
• Docket Number: No. 77-3313.,77-3313.
• Parties: Donald E. CESNIK and Clarence C. Griffith, Jr., Plaintiffs, v. CHRYSLER CORPORATION, Fedders Corporation and Airtemp Corporation, Defendants.
• Court: U.S. District Court — Middle District of Tennessee

490 F. Supp. 859

Donald E. CESNIK and Clarence C. Griffith, Jr., Plaintiffs, v. CHRYSLER CORPORATION, Fedders Corporation and Airtemp Corporation, Defendants.

No. 77-3313.

United States District Court, M. D. Tennessee, Nashville Division.

May 6, 1980.

COPYRIGHT MATERIAL OMITTED

H. Frederick Humbracht, John R. Edwards, Robert J. Warner, Jr., Nashville, Tenn., for plaintiffs.

James O. Bass, Jr., Gerard Thomas Nebel, Nashville, Tenn., for Chrysler.

Dick Lansden, Nashville, Tenn., Lawrence Weiss, New York City, for Fedders and Airtemp.

MEMORANDUM

WISEMAN, District Judge.

In 1976 the defendants Chrysler Corporation and Fedders Corporation entered into a contract whereby Chrysler would sell the assets of its Airtemp Division to Fedders. After the sale, Airtemp Division became Airtemp Corporation, a wholly-owned subsidiary of Fedders, and the third named defendant in this action.¹ The plaintiffs maintain that, as part of this transaction, Chrysler and Fedders also agreed that Chrysler would not rehire any of its former Airtemp managerial employees who refused employment by Fedders. As former Airtemp managers who refused employment with Fedders and who were then unable to obtain new employment with Chrysler, the plaintiffs assert in Count I of their two count complaint that the agreement between Chrysler and Fedders violated section 1 of the Sherman Act, 15 U.S.C. § 1 (1976), in that the agreement restrained competition for the services of these employees. The Court's jurisdiction over Count I is based on 15 U.S.C. § 15, as well as 28 U.S.C. § 1331(a).

The plaintiffs have also stated a claim under state tort law in Count II, alleging that the defendants' agreement tortiously interfered with the plaintiffs' employment relationships with Chrysler. The Court's jurisdiction over this count is independently based on diversity of citizenship. 28 U.S.C. § 1332(a), (c).

I. THE FACTS

The only factual issue before the Court is whether there was an agreement between Chrysler and Fedders that Chrysler would not rehire any of its former Airtemp Division managerial employees who refused employment with Fedders. The parties have stipulated that on February 23, 1976, Chrysler and Fedders executed an agreement for the sale of Airtemp Division's non-automotive assets to Fedders, and Fedders formed Airtemp Corporation to receive part of those assets, including Chrysler's facilities in Bowling Green, Kentucky, where the plaintiffs were employed by Chrysler. The defendants acknowledge that during the course of contract negotiations, Chrysler and Fedders discussed the transfer of Chrysler employees to Fedders. The parties further stipulate that Fedders agreed to make offers to the managerial employees of the Bowling Green plant, and that on or about March 9, 1976, Fedders, through its Airtemp Corporation, made employment offers to the plaintiffs. Mr. Cesnik never accepted employment with Fedders, while Mr. Griffith withdrew his acceptance of Fedders' employment. Finally, it is agreed that Chrysler formally terminated the plaintiffs on or about April 9, 1976.

As for the disputed issue, the Court finds that between December 18, 1975, and February 23, 1976, the defendants made an agreement that Chrysler would dismiss all of its managerial employees in the Airtemp Division, and Fedders would make offers of employment to those individuals.² At Fedders' suggestion and insistence, Chrysler agreed not to rehire any employees whom it discharged and who failed to accept Fedders' employment offer. This finding is based on the testimony of Matthew Bolin, former president of Chrysler's Airtemp Division who later became the president of Fedders Airtemp Corporation; William Blakeslee, a vice-president of Chrysler Corporation; Roger Helder, vice-president and controller of Chrysler; Victor Tomlinson, a senior attorney for Chrysler; Sam Muscanera, house counsel for Fedders and Airtemp Corporation; and, of course, the testimony of the plaintiffs, Mr. Cesnik and Mr. Griffith.

Mr. Bolin testified through his deposition that he attended a meeting with Fedders' representatives on December 18, 1975, during which the group discussed the agreements between Chrysler and Fedders relating to the sale of Airtemp's assets. The agreements were subsequently embodied in a memorandum drafted by William Blakeslee on December 22, which outlined the agreements between Chrysler and Fedders.³ That memorandum contained the explicit statement, identified as Item No. 8, that: "Chrysler will not offer employment to any Airtemp employee that Fedders wants to hire but refuses to work for Fedders." Mr. Bolin testified to the existence of that agreement, and indicated that the agreement was not modified at the December 18 meeting, nor was he aware of any changes in the agreement after that date.

Mr. Blakeslee, the author of the memorandum, testified about the December 18 meeting, and that he reviewed with the representatives of Chrysler and Fedders the items that had been discussed, including the agreement at issue. He further testified that, to his knowledge, the agreement was never modified by either party. Mr. Blakeslee understood that this agreement was the result of the negotiations, and he was quite certain that the agreement prohibited the rehiring of Chrysler employees such as the plaintiffs. Roger Heldin, vice-president and controller of Chrysler, was also present at the December 18 meeting, and his testimony directly supported Blakeslee's. Victor Tomlinson, Chrysler's senior attorney, was yet another participant at the December 18 meeting, and his memorandum of December 19⁴ also referred to the agreement which became Item No. 8 of the Blakeslee memorandum. His understanding of the agreement's effect was also the same as Blakeslee's, i. e., that the agreement prevented Chrysler from rehiring individuals in the position of the plaintiffs.

Sam Muscanera, house counsel for Fedders and Airtemp Corporation, testified for Fedders, and related his involvement in the drafting of the sale of assets contract.⁵ Significantly, the final written contract did not contain the agreement at issue; more significantly however, Muscanera testified under cross-examination that the agreement was omitted from the written agreement for "employee morale purposes." This admission strongly suggests that the omission from the written agreement did not nullify its existence in fact.

The plaintiffs' own experience further persuades the Court of the agreement's existence. Mr. Bierman, the manager-administrator of Airtemp Corporation,⁶ informed both plaintiffs that Chrysler would not rehire employees who refused to work with Fedders, and in fact both plaintiffs were unable to gain reemployment with Chrysler.⁷ Specifically, it was Matthew Bolin, the former president of Airtemp Division who became president of Airtemp Corporation, who notified both plaintiffs that Chrysler would not rehire them if they accepted employment with Fedders.⁸

Although the testimony of any one witness might not have been persuasive, as a whole the testimony of all the witnesses persuades the Court that the alleged agreement existed. Therefore, the Court finds that Chrysler and Fedders did agree that Chrysler would not rehire any of its former managerial employees who refused Fedders employment, and the agreement was in fact invoked against the plaintiffs. The Court will not address issues relating to damages, however, because of the further conclusion that the agreement was not illegal.

II. SHERMAN ANTITRUST CLAIM

The Court has found that Chrysler and Fedders agreed that Chrysler would not reemploy any of its former Airtemp Division managerial employees who had been offered employment by Fedders. The plaintiffs' theory is that this agreement created an unreasonable restraint on competition between Fedders and Chrysler for the services of the former Airtemp Division employees, in violation of section 1 of the Sherman Act. Before the merits of that claim may be addressed, however, the plaintiffs must show that they have standing to litigate their Sherman Act claim. The question of standing presents a number of related issues, which this Court will now address.

A. Standing

Section 4 of the Clayton Act, 15 U.S.C. § 15, provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . .." The Sixth Circuit applies a two-pronged test for standing in antitrust cases, a test derived from Association of Data Process Service Organizations v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). See Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1151-52 (6th Cir. 1975). The first prong requires the plaintiff to allege that the defendant caused him injury in fact; the second prong requires that the plaintiff's interest be within the zone of interests that the statute (in this case, section 1 of the Sherman Act) protects or regulates.

The plaintiffs have satisfactorily alleged an injury in fact, in that the agreement between the defendants deprived them of a realistic employment opportunity. There is, however, a legal question as to whether the loss of an employment opportunity qualifies as an injury "to business or property" in the sense required in order for a plaintiff to have standing under section 4 of the Clayton Act. In Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957), the Supreme Court apparently recognized that the deprivation of a work opportunity is an injury to business or property within the meaning of section 4. See Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1176 (5th Cir. 1976). See also P. Areeda & D. Turner, Antitrust Law, § 338(c) (1978). In Radovich, a professional football player claimed that the NFL had blacklisted him from employment opportunities in that league, pursuant to an agreement among the member teams. The Court held that his complaint stated a cause of...