Opinion
Civil No. 03-5170 (DWF/JSM)
February 9, 2004
Edward F. Fox, Kevin Patrick Hickey, Bassford Remele, Minneapolis, MN, of counsel for Plaintiffs and Counter-defendants
J. Gordon Rudd, Jr., David M. Cialkowski, Zimmerman Reed, Minneapolis, MN, of counsel for Defendant and Counter-claimant
MEMORANDUM OPINION AND ORDER
Introduction
The above-entitled matter came on for hearing before the undersigned United States District Judge on January 9, 2004, pursuant to Plaintiffs' Motion to Dismiss Defendant's Counterclaim. For the reasons stated, Plaintiffs' motion is granted.
Background
Defendant Craig C. Leverenz is a shareholder of ATS Medical, which is a competitor of Plaintiffs St. Jude Medical Inc., and St. Jude Medical S.C., Inc. (collectively, "St. Jude"). In August and September 2003, Leverenz made some anonymous postings on a YahooFinance investor message board regarding a heart valve product manufactured by St. Jude. The postings criticized St. Jude's heart valves, stating that the valves were experiencing "breakage and leaflet escapes" and causing adverse medical conditions in patients including "death." (See Amended Complaint, Exs. A-D.)
Initially, St. Jude brought this action as a "John Doe" lawsuit to attempt to stop these allegedly disparaging postings and for damages. Pursuant to Magistrate Judge Janie S. Mayeron's Order dated September 9, 2003, Leverenz's internet service provider identified Leverenz as the holder of the account from which the postings originated St. Jude then amended its complaint to name Leverenz as Defendant. The Amended Complaint raises claims against Leverenz for defamation per se, product disparagement, and interference with economic relations. After some limited discovery was ordered by the Magistrate Judge as to the source of the information in Leverenz's internet postings, Leverenz submitted an Answer and Counterclaim to the Amended Complaint. Leverenz asserts that the opinions posted on the internet were true, thus negating all of the tort claims brought against him. In his Counterclaim, Leverenz asserts one claim of "abuse of process." Leverenz contends that St. Jude's lawsuit has been brought for "the ulterior purpose of exposing non-parties for investigation and prosecution." (See Leverenz's Memorandum of Law in Opposition to Motion to Dismiss Counterclaim at 2.) The Counterclaim alleges:
Because Counterclaim Plaintiff's actions were not defamatory, were not actionably interfering with "economic relations," and were not improperly disparaging, Counterclaim Defendants' improper motive of exposing a non-party target for investigation and prosecution, combined with the service of its Complaint and summons of Leverenz, constitutes an abuse of process.
(Counterclaim at ¶ 15.)
Discussion
1. Standard of Review
In deciding a motion to dismiss, the Court must assume all facts in the Complaint to be true and construe all reasonable inferences from those facts in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). The Court grants a motion to dismiss only if it is clear beyond any doubt that no relief could be granted under any set of facts consistent with the allegations in the Complaint. Id. The Court may grant a motion to dismiss on the basis of a dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 326 (1989). The Court need not resolve all questions of law in a manner which favors the complainant; rather, the Court may dismiss a claim founded upon a legal theory which is "close but ultimately unavailing." Id. at 327.
2. The Noerr-Pennington Doctrine
In its Motion to Dismiss, St. Jude asserts that its original lawsuit is a valid exercise of its First Amendment right to petition and thus, under the Noerr-Pennington doctrine, should be immune from tort liability. Leverenz, on the other hand, contends that St. Jude's suit is baseless and harbors the wrongful ulterior purpose of exposing non-parties for investigation and prosecution. The Court disagrees with Leverenz and finds that Leverenz's counterclaim is appropriately dismissed.
In Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers of America v. Pennington, 381 U.S. 657 (1965), the Supreme Court established that the First Amendment right to petition includes a litigant's right to bring suit in state or federal court. Under the Noerr-Pennington doctrine, the act of filing a lawsuit is immune from antitrust or tort liability unless it is found to be a mere sham intended to disguise tortious or anti-competitive liability. See Noerr, 365 U.S. at 140. In the Eighth Circuit, this exception has been further defined as follows:
It is only where a defendant's resort to the courts is accompanied or characterized by illegal and reprehensible practices such as perjury, fraud, conspiracy with or bribery of government decision makers, or misrepresentation, or is so clearly baseless as to amount to an abuse of process, that the Noerr-Pennington cloak of immunity provides no protection. . . . Thus the filing of suit will fit within the "sham exception," and will give rise to tort liability, only if "clearly baseless," or if accompanied by perjury, fraud, conspiracy, bribery, misrepresentation, or other "illegal and reprehensible practices."Surgidev Corp. v. Eye Tech., Inc., 625 F. Supp. 800, 803 (D. Minn. 1986) (following Razorback Ready Mix Concrete Co., Inc. v. Weaver, 761 F.2d 484 (8th Cir. 1985)) (citations omitted); see also Lund Industries, Inc. v. Westin, Inc., 764 F. Supp. 1342, 1345 (D. Minn. 1990) (following same authority).
While the Noerr-Pennington doctrine arose in the context of the Sherman Act and antitrust litigation, the doctrine has been appropriately adopted by the courts to apply in other contexts as well. See Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 59 (1993) ("Whether applying Noerr as an antitrust doctrine or invoking it in other contexts, we have repeatedly affirmed that evidence of anti-competitive intent or purpose alone cannot transform otherwise legitimate activity into a sham."). Leverenz has provided no precedent indicating that an anticompetitive limitation to the application of the doctrine applies and the Court is not willing to impose such a restriction. See, e.g., Fischer Sand Aggregate Co. v. City of Lakeville, 874 F. Supp. 957, 959 (D. Minn. 1994) (noting that lower courts have applied the Noerr-Pennington doctrine to other areas of substantive law, including tortious interference with contractual and prospective business relations and Section 1983 claims) (citations omitted).
Thus, the Court is left to determine whether the narrow "sham" exception to the Noerr-Pennington doctrine could apply. See Fischer Sand Aggregate, 874 F. Supp. at 959-60. A lawsuit is a "sham" if it is both (1) objectively baseless in that no reasonable litigant could expect success on the merits; and (2) subjectively motivated by bad faith. See Porous Media, 186 F.3d at 1080, n. 4 (citing Professional Real Estate Investors, Inc., 508 U.S. at 61-62). As noted by another court in this district, "it is extremely doubtful that the initiation of a single lawsuit can fit within a `sham exception.'" Surgidev Corp. v. Eye Tech., Inc., 625 F. Supp. 800, 803 (D. Minn. 1986).
Leverenz does not deny that he made the internet postings at issue in this litigation. Leverenz only contends that these statements were true and that he believes that St. Jude is using its lawsuit as a means to ferret out information about former St. Jude's employees who are now working for ATS Medical, Inc., the company in which Leverenz owns stock. More specifically, Leverenz believes that St. Jude is improperly bringing the lawsuit against him as a means to determine the identity of former St. Jude's employees who may have supplied confidential information regarding the alleged problems with St. Jude's heart valve in violation of a confidentiality or non-compete agreements with St. Jude. (See Answer and Counterclaim at ¶ 8.)
The Court finds that these assertions are not sufficient to support the application of the narrow "sham" exception to the Noerr-Pennington doctrine. Based upon the Court's review of the Amended Complaint and its attachments, the Court finds that St. Jude's claims are not objectively baseless. Whether or not St. Jude ultimately will succeed on the merits, St. Jude has a legitimate basis for bringing its suit And even if Leverenz's inkling that St. Jude has an ulterior motive for bringing the lawsuit is real, that additional motive alone would not support application of the "sham" exception of the Noerr-Pennington doctrine. With these considerations in mind, Leverenz's Counterclaim is dismissed.
The dismissal of Leverenz's Counterclaim does not leave Leverenz without a remedy. Leverenz still has the opportunity to bring a motion to dismiss or can move the Court for sanctions if St. Jude's claims are frivolous or otherwise improper.
Indeed, this Court is scheduled to hear oral argument on Leverenz's motion to dismiss on March 12, 2004.
Conclusion
The Court believes it is in the best interests of the parties to negotiate a resolution of this dispute. As the parties may already be aware, Magistrate Judge Janie S. Mayeron is available to assist in the negotiation of a settlement should the parties find such services to be helpful. If the Court may be of assistance in this matter, the parties should contact Lowell Lindquist, Calendar Clerk for Judge Donovan Frank, at 651-848-1296, or Katie Haagenson, Calendar Clerk for Magistrate Judge Janie S. Mayeron, at 651-848-1190.
For the reasons stated, IT IS HEREBY ORDERED THAT:
1. Plaintiff's Motion to Dismiss Counterclaim (Doc. No. 14) is GRANTED. Defendant's Counterclaim (Doc. No. 10) is DISMISSED WITH PREJUDICE.