to be brought for the first time. In so doing he was well aware of both the Fleitmann and the United Copper Securities Co. cases. If Fanchon & Marco is the law, and we think it is, it should follow that a stockholder, in a proper case, should be able to bring a derivative action seeking injunctive relief from threatened violations of the antitrust laws.
While the defendants press upon the courts for consideration in opposition of the above ruling mainly three cases, to wit, General Investment Co. v. New York Central Railroad Co., 6 Cir., 23 F.2d 822; Continental Securities Co. v. Michigan Central Railroad Co., 6 Cir., 16 F.2d 378, and Ashwander v. Tennessee Valley Authority, 1936, 297 U.S. 288, 56 S. Ct. 466, 80 L. Ed. 688, we do not consider them decisive of the question here posed. In the General Investment Co. case the plaintiff filed its bill to restrain the pending consolidation of two railroad companies 'on the ground that, if completed, it would endanger plaintiff's interest as a stockholder in each of them substantially as set forth in the present bill.' (23 F.2d 823.) Here, as the Court pointed out, while it was a suit in equity for an injunction against threatened loss or damage to the complainant by violation of the antitrust laws, the right did not extend to a stockholder where the threatened loss was not to him directly but to the corporation. While this case along with Continental Securities and Ashwander cases may suffice as an answer to the right of the stockholder suing in his own right, they are no answer to the main contention of a person, as plaintiffs here, who are suing in a derivative action on behalf of the corporation.
However before one is entitled to equitable relief under § 16 of the Antitrust Act,
15 U.S.C.A. § 26, he must show first that the defendant has violated the antitrust laws, and second, that he is threatened with loss or damage as a result of that violation. Bedford Cut Stone Company v. Journeymen Stone Cutters' Association of America, 1927, 274 U.S. 37, 54-55, 47 S. Ct. 522, 71 L. Ed. 916; Schwartz v. General Electric Co., D.C.S.D.N.Y.1952, 107 F.Supp. 58. In the case before us it is assumed that the defendants are violating and will continue to violate the antitrust laws. The threatened harm is stated by paragraph forty-eight of the complaint to be as follows: 'The consummation of the agreements herein described would constitute violations of the said Sections (antitrust laws), and would therefore subject the corporations Baldwin and Midvale, of which the plaintiffs are stockholders, to liabilities for such civil damages and criminal prosecutions.'
Private antitrust actions are not founded upon the mere circumstances of a conspiracy in restraint of trade, but upon injuries that would directly or proximately result from the commission of the act in violation of the antitrust laws. Story Parchment Company v. Paterson Parchment Paper Company, 1931, 282 U.S. 555, 566, 51 S. Ct. 248, 75 L. Ed. 544; Chiplets, Inc., v. June Dairy Products Co., D.C.1953, 114 F.Supp. 129, 143. 'He must show that he is within that area of economy, which is endangered by a breakdown of competitive conditions in a particular industry. Otherwise he is not injured 'by reason' of anything forbidden in the antitrust laws. Such a construction is in accordance with the basic and underlying purposes of the antitrust laws to preserve competition and to protect the consumer. Recovery and damages under the antitrust law ia available to those who have been directly injured by the lessening of competition and withheld from those who seek the windfall of treble damages because of incidental harm.' Conference of Studio Unions, v. Loew's Inc., 9 Cir., 1951, 193 F.2d 51, 54-55. Also see Beegle v. Thomson, 7 Cir., 1943, 138 F.2d 875; Sunbeam Corporation v. Payless Drug Store, D.C.N.D.Cal.1953, 113 F.Supp. 31, 42; Ring v. Spina, D.C.S.D.N.Y.1949, 84 F.Supp. 403, 406. In sum the injury which the laws envision is the injury to the economy of the plaintiff, by virtue of restrictions of trade or something that proximately flows from it, in the competitive field in which it is engaged when the illegal act is committed.
In our case Midvale is going out of the business of producing iron and steel products. It intends to go into the investment business. It therefore can sustain no threatened harm or damages within the meaning of § 16 of the Antitrust Laws, 15 U.S.C.A. § 26. The money which Midvale or Baldwin may, in some future time, be required to pay as treble damages or penalties as the result of possible actions brought against them for violations of the antitrust laws, is not threatened harm or damages which proximately flow from the violations within the meaning of Section 16.
We come now to a consideration of whether or not the complaint asserts a cause of action for which a Pennsylvania Court would grant injunctive relief. It is claimed that the sale of the assets will violate the Federal antitrust law and is therefore ultra vires. Since the acts herein complained of are primarily acts which only a federal court could take jurisdiction of ( General Investment Co. v. Lake Shore & M.S. Railroad Co., 1922, 260 U.S. 261, 286, 43 S. Ct. 106, 67 L. Ed. 244) a Pennsylvania court would hold that redress if any would have to be relegated to the federal court under the antitrust laws. If it be contended that the acts alleged in the complaint contravene Delaware law, irrespective of the antitrust violations, acts which would exist though no antitrust laws had been enacted, Clayton v. Farish, 191 Misc. 136, 73 N.Y.S.2d 727, 740, suffice it likewise to say they are not set out in the complaint and further those asserted have been ruled upon as not violative of Delaware law, Gomberg v. Midvale, in this opinion.
Accordingly, plaintiffs' prayer for a final injunction in civil action No. 20,012, and plaintiffs' prayer for a final injunction under the first and second causes of action in civil action No. 20,019 will be denied; and defendants' motion to dismiss the complaint with respect to the third cause of action will be allowed.