Nelson Radio & Supply Co. v. Motorola, Inc.

What This Case Is About

Nelson Radio & Supply Co. v. Motorola, Inc. established the intracorporate conspiracy doctrine — the principle that a corporation cannot conspire with its own officers, employees, and agents. While this is an antitrust case, the doctrine was later extended to § 1983 conspiracy claims, making it directly relevant to civil rights litigation against government entities and their employees.

The Facts

Nelson Radio & Supply Company was a wholesale distributor of Motorola products — heaters, radios, and communication equipment — covering territories in Alabama and Florida. For years, Nelson sold all Motorola products in its territory. In 1948, Motorola submitted a new distributor agreement that excluded communication equipment from Nelson’s franchise, reserving the right to distribute that equipment directly or through other distributors.

Nelson protested and insisted on either distributing Motorola’s communication equipment or being allowed to sell competing manufacturers’ communication equipment alongside Motorola products. Motorola refused both demands. When the parties could not reach agreement, Motorola terminated the distributor relationship on February 10, 1949, and refused to enter a new contract.

Nelson sued under the Sherman Antitrust Act and the Clayton Act, alleging that Motorola, its president Paul Calvin, its sales manager William Kelly, and its other officers and agents had conspired to restrain trade by forcing distributors to agree not to sell competing communication equipment.

What the Court Decided

The Fifth Circuit affirmed dismissal, holding:

No conspiracy under Section 1 of the Sherman Act: A corporation cannot conspire with itself. The alleged conspiracy consisted entirely of Motorola’s officers and agents acting in their normal corporate capacities. “It is basic in the law of conspiracy that you must have two persons or entities to have a conspiracy. A corporation cannot conspire with itself any more than a private individual can.” Since no one outside the corporate entity was alleged to have participated, there was no conspiracy.

No violation of Clayton Act Section 3: The Clayton Act covers only actual sales or contracts made on the prohibited condition. Here, Motorola had refused to deal with Nelson. A manufacturer has the right to select its customers and refuse to sell to anyone for any reason — the statute does not cover a refusal to make a sale.

Judge Rives dissented, arguing that the majority’s formalistic approach allowed a dominant corporation to evade antitrust laws by keeping its restraints within a single corporate entity rather than using subsidiaries.

Why This Case Matters for Your § 1983 Case

This antitrust case matters for civil rights plaintiffs because courts have applied the intracorporate conspiracy doctrine to § 1983 conspiracy claims:

• Government employees acting within their roles cannot “conspire” with each other: Under this doctrine, officers of a single government entity acting within the scope of their employment are considered a single entity incapable of conspiracy. This can defeat your § 1983 conspiracy claim if all defendants are employees of the same agency.
• Know the exceptions: Many circuits recognize exceptions when officers act outside the scope of their employment or are motivated by personal interests independent of the entity. If you can show officers were pursuing personal vendettas rather than official duties, the doctrine may not apply.
• Structure your conspiracy claims carefully: If you allege a conspiracy, try to identify participants from different agencies or entities, or allege that individual officers were acting outside their official roles.
• The doctrine is not universal: Some courts have questioned applying an antitrust rule to civil rights cases, and the scope of the doctrine varies by circuit. Research your circuit’s approach.

Key Takeaway

The intracorporate conspiracy doctrine — originating in this antitrust case — holds that a corporation (or government entity) cannot conspire with its own employees acting in their official capacities. For § 1983 plaintiffs, this means conspiracy claims are strongest when they involve participants from different government agencies or officers acting outside the scope of their employment.