Radio Corp. of America v. Raytheon Mfg. Co.

Background

A Massachusetts corporation (now called Raytheon, Inc.) sued for the benefit of a Delaware sister company for treble damages under the federal antitrust laws. The complaint alleges that a defendant’s monopoly destroyed the plaintiff’s business by early 1928, causing over $3,000,000 in damage. After that harm the plaintiff accepted a license and signed a general release, which the complaint says was obtained by illegal duress and therefore void; the release also included an agreement about exceptions tied to the defendant’s payments.

Reasoning

The central question was whether the validity of a release, offered by the defendant as a full legal defense to the damage claim, must be decided in an equity court or in a regular law proceeding. The District Court sent the case to equity and held the release valid; the Circuit Court of Appeals reversed. The Supreme Court concluded that because the plaintiff disclaimed any request for equity relief, a court of equity should not be forced to decide the release’s validity at that stage. The Court explained that a sealed release is usually a legal defense unless new facts avoid it, and it left the factual question—whether the release was so tied to the monopoly as to be void—for trial at law.

Real world impact

The ruling means disputes over whether a release bars antitrust damage claims will generally be fought in law proceedings when the injured business refuses equitable relief. The decision does not finally resolve whether this particular release is void; that factual determination must be proved at trial in a law forum.