Vendo Co. v. Lektro-Vend Corp.

Vendo Co. (plaintiff), a vending-machine manufacturer, acquired Stoner Manufacturing, Inc., a rival manufacturer owned by Harry H. Stoner (defendant). Vendo hired Stoner as a consultant for five years. The employment contract between Vendo and Stoner stated that after the five-year employment period ended, Stoner would not compete with Vendo in the vending-machine business. Stoner’s employment with Vendo ended, and he began working with Lektro-Vend Corporation (defendant), a Vendo competitor. Vendo filed a lawsuit against Stoner in state court for breach of his noncompetition agreement. In response, Stoner filed an antitrust lawsuit against Vendo in federal district court, arguing that the noncompetition agreement was an unreasonable restraint of trade. The federal case was dormant while the state case was being litigated. Vendo was awarded over $7 million for Stoner’s breach of the noncompetition agreement. Stoner filed a motion in federal district court to enjoin the state court’s judgment. Vendo opposed the motion, arguing that the Anti-Injunction Act prohibited the district court from enjoining the state court’s proceedings. The district court granted the motion and preliminarily enjoined the collection of the state court’s judgment. The court found that the noncompetition agreement between Vendo and Stoner appeared to violate the Clayton Act, that § 16 of the Clayton Act, which allows a party to seek injunctive relief for antitrust violations, was an express exception to the Anti-Injunction Act, and that the preliminary injunction was necessary to protect the jurisdiction of the district court. The court of appeals affirmed the district court. Vendo appealed, and the United States Supreme Court granted certiorari.