Act are designed to protect not only the purchaser but also the seller of securities and these provisions may apply where a seller through a deceptive device is deprived of his compensation for the sale. Superintendent of Insurance v. Bankers Life & Cas. Co., supra. Thus, if the value of the goods to be exchanged has been misrepresented and has induced the transfer of stock in exchange therefor, the "in connection with the purchase and sale of securities" requirement of Section 10(b) has clearly been satisfied.
Similarly, defendants argue that the alleged misrepresentations are exclusively contained in the Tone Generation Development Contract, under which Allen paid a consideration of $ 60,000 and a cash payment for each tone generation system delivered. Only the Tone Generation Patent License Agreement, defendants argue, contains any reference to a security and that agreement relates only to patent assignments which are not in issue here. In response, Allen correctly notes that the Securities Act is not limited to transactions conducted through a securities exchange or an over-the-counter market, but it applies equally as well to private securities transactions. Superintendent of Insurance v. Bankers Life & Cas. Co., supra ; L. Loss, Securities Regulations, Vol. III, pp. 1466-1467. Moreover, Allen argues that at issue is a continuous course of conduct engaged in by defendants and that the cumulative effect of these transactions should be considered as a whole for the purpose of this action.
Rule 10b-5 specifically proscribes any person from engaging in "any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person." Moreover, notwithstanding the fact that the instant action is not a garden variety securities case, the "in connection with the purchase or sale of a security" requirement of the Act has been construed liberally to further the purpose of the Act. Kahan v. Rosenstiel, 424 F.2d 161 (3d Cir. 1970); Crane v. Westinghouse Air Brake Co., 419 F.2d 787 (2d Cir. 1969); Heit v. Weitzen, 402 F.2d 909 (2d Cir. 1968); S.E.C. v. Texas Gulf Sulphur, 401 F.2d 833 (2d Cir. 1968), cert. denied, 394 U.S. 976, 89 S. Ct. 1454, 22 L. Ed. 2d 756 (1969). In the instant case, the facts as adduced at trial may compel the conclusion that but for the alleged representations made pertaining to the Tone Generation and Capture Combination Agreements, Allen would not have entered into the related patent licensing agreements, under which the securities were transferred. In so concluding, we have given Allen the benefit of all favorable inferences, and for the above reasons, we conclude for the purpose of the motion to dismiss that we are here concerned with a continuous course of conduct. Thus, the "in connection with the purchase and sale of a security" requirement has been satisfied and, accordingly, defendants' motion to dismiss the securities claims on this ground will be denied.
Count III of the complaint alleges anti-trust violations under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 and § 3 of the Clayton Act, 15 U.S.C. § 14. Plaintiff charges that defendants prevented Allen from acquiring the technology necessary to secure a "second source" of MOS devices in order to monopolize and to unreasonably restrain competition in the manufacture, sale and distribution of such devices for use in computer organs. In addition, Allen charges that defendants refused to supply Allen with individual components and MOS devices, and that such refusal to break down the MOS system constitutes a further violation of the anti-trust laws. Defendants move to dismiss all three anti-trust claims.
Defendants correctly argue that there must be a plurality of actors to contract, combine or conspire to restrain trade in violation of Section 1 of the Sherman Act and that it is well settled that the required plurality is not supplied by a combination of a corporation and its employees. Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71, 82-84 (9th Cir. 1969), cert. denied, 396 U.S. 1062, 90 S. Ct. 752, 24 L. Ed. 2d 755 (1970); Nelson Radio & Supply Co. v. Motorola, Inc., 200 F.2d 911, 914 (5th Cir. 1952), cert. denied, 345 U.S. 925, 73 S. Ct. 783, 97 L. Ed. 1356 (1953); Clemmer v. North American Van Lines, Inc., 1969 Trade Cas. P72,936 (E.D.Pa.1969); Goldlawr, Inc. v. Shubert, 169 F. Supp. 677 (E.D.Pa.1958); 1 J. Von Kalinowski, Anti-Trust & Trade Regulation, § 6.-01 (1971). In this respect, it is unclear from a reading of the complaint whether Allen is alleging a combination or conspiracy between the corporate defendant and the individual defendants, who are or were employees of the corporation, or whether it is alleging that defendants entered into a contract in restraint of trade. Section 1, by its clear language, proscribes "Every contract * * * in restraint of trade", and it is irrelevant for the purpose of the anti-trust laws that Allen was a party to the contract. Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88 S. Ct. 1981, 20 L. Ed. 2d 982 (1968). Thus, to the extent that Allen relies on the contract between itself and Rockwell to establish the requisite plurality of actors for a Section 1 Sherman Act violation, defendants' motion to dismiss will be denied. To the extent Allen relies on an alleged combination or conspiracy between the corporation and its employees to establish the requisite plurality of actors for a Section 1 Sherman Act violation, defendants' motion to dismiss will be granted.
Similarly, defendants argue that Allen failed to state a cause of action of conspiracy to monopolize in violation of Section 2 of the Sherman Act, in that an individual officer or employee of a corporation cannot be charged with conspiring with his corporation to monopolize or to attempt to monopolize trade in violation of said section. Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., supra ; Nelson Radio & Supply Co. v. Motorola, Inc., supra, 1 J. Von Kalinowski, Anti Trust Laws and Trade Regulation, § 7.02 (1971). A reading of the complaint, however, indicates that a conspiracy to violate Section 2 is not alleged; rather, Allen alleges that Rockwell has monopolized and attempted to monopolize trade and commerce in the manufacture, sale and distribution of MOS devices for use in computer organs, for which no concerted action is required. Accordingly, defendants' motion to dismiss Allen's claim under Section 2 of the Sherman Act will be denied.
The individual defendants argue that Allen's claim under Section 3 of the Clayton Act must be dismissed on the ground that Section 3 in this context applies only to sellers and that the individual defendants have sold nothing to Allen, Section 3 of the Clayton Act, 15 U.S.C. § 14 provides in pertinent part:
"It shall be unlawful for any person engaged in commerce * * * to lease or make a sale or contract for sale of goods, wares, merchandise * * *".