The opinion of the court was delivered by: DUFFY
Plaintiffs, Association of Data Processing Services Organizations, Inc. (hereinafter "ADAPSO") and some of its computer services company members, bring this action against Citibank, N.A. (hereinafter "Citibank") and the Comptroller of the Currency (hereinafter the "Comptroller"). Plaintiffs allege that Citibank's offer and sale of certain computer services and the Comptroller's authorization of such business activities in Interpretative Ruling 7.3500 (hereinafter "I.R. 7.3500") violate Section 24 of the National Bank Act, 12 U.S.C. § 24 (1976). Both plaintiffs and defendant Citibank have moved for summary judgment.
Citibank counterclaims against ADAPSO alleging that plaintiffs' action is a sham designed solely to eliminate competition from the data processing service industry. Plaintiffs move to dismiss the counterclaim for failure to state a claim upon which relief may be granted.
Finally, the Comptroller cross-moves for an order staying this action. Today I decide only the motion to dismiss the counterclaim and the Comptroller's motion for a stay.
I turn first to the plaintiffs' motion to dismiss the counterclaim asserted by Citibank against ADAPSO.
By its counterclaim, defendant Citibank alleges that plaintiffs' action is a sham intended solely to delay or prevent Citibank's lawful entry into the data processing services market. According to Citibank, plaintiffs' purpose is to restrain trade in violation of § 1 of the Sherman Anti-Trust Act, 15 U.S.C. § 1 (1970).
In support of its motion to dismiss Citibank's counterclaim for failure to state a claim, plaintiffs rely on the doctrine announced by the Supreme Court in Eastern Railroad Conference v. Noerr Motor Freight, Inc. ("Noerr"), 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961) and United Mine Workers of America v. Pennington ("Pennington"), 381 U.S. 657, 669-671, 85 S. Ct. 1585, 1592-94, 14 L. Ed. 2d 626 (1965). The Noerr-Pennington doctrine protects First Amendment rights to associate for political purposes and to petition the government by immunizing conduct designed to influence legislative or executive action from antitrust liability.
The Noerr-Pennington doctrine was extended to the adjudicative process in California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S. Ct. 609, 30 L. Ed. 2d 642 (1972). The Supreme Court in California Motor Transport stated:
"We conclude that it would be destructive of rights of association and of petition to hold that groups with common interests may not, without violating the antitrust laws, use the channels and procedures of state and federal agencies and courts to advocate their causes and points of view respecting resolution of their business and economic interests vis-a-vis their competitors."
404 U.S. at 510, 92 S. Ct. at 611. The plaintiffs read this to mean that the bringing of lawsuits does not give rise to antitrust liability.
The court in Noerr, however, specifically pointed out that the Sherman Act would be applicable where the action taken by the plaintiff is merely a sham to cover what is actually an attempt to interfere directly with the business of a competitor. 365 U.S. at 144, 81 S. Ct. at 533. Thus, the right to petition the court for relief may not be used simply as a cloak to achieve unlawful ends.
In an attempt to invoke the "sham" exception to the Noerr-Pennington doctrine, Citibank alleges that plaintiffs' action is baseless and is "part of a larger, overall conspiratorial scheme concocted by ADAPSO's members to damage Citibank and preserve the banking and economic data processing market for themselves." Such conclusory allegations without more, however, do not satisfy Citibank's burden of showing that what appears to be an exercise of the right to petition is in reality a sham designed solely for illegal purposes. See Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board, 542 F.2d 1076, 1082-83 (9th Cir. 1976), cert. denied, 430 U.S. 940, 97 S. Ct. 1571, 51 L. Ed. 2d 787 (1977).
Citibank has failed to make any specific allegations which prove that the activities of plaintiffs both before this court and before the Federal Reserve Board
have been anything other than bona fide attempts to secure various forms of relief. In the absence of such allegations, plaintiffs should not have to litigate antitrust claims based upon their institution of this action. Accordingly, Citibank's counterclaim is dismissed.
The second motion before this court is the Comptroller's request for a stay of this action until certain ...