UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK.
March 11, 1983
Bulkferts, Inc. and Mahmud-Ahmed Sipra
Salatin Inc., Asif M. Sultan, Franco Ferri Inc., Andrea Ferri, and Arnaldo Ferri.
The opinion of the court was delivered by: CARTER
Carter, D.J.: In January 1982, the government of Pakistan announced the opening of bids on a fertilizer supply contract. Defendants' Memorandum in support of its Motion at 2. The plaintiff, Bulkferts, Inc. ("Bulkferts") was the lowest bidder and thus received the contract. Defendant, Salatin, claims to have been the second lowest bidder, and furthermore, asserts that were it not for unlawful actions on the part of Bulkferts,
it would have received the contract. Defendants' Memorandum in Support of its Motion at 4.Making essentially those allegations, they filed suit against Bulkferts in the United States District Court for the District of New Jersey. The action was dismissed for lack of personal jurisdiction. Plaintiffs' Memorandum in Opposition to the Motion at 10.
Shortly thereafter, the defendants brought an action in the New York Supreme Court for injunctive relief against Bulkferts. They sought an order requiring Bulkferts to pay over the profits from its contract with the government of Pakistan. The motion for a preliminary injunction was denied; however, they did obtain an ex parte temporary restraining order prohibiting Bulkferts and the other defendants in the case from drawing down the final $937,500 of a letter of credit taken out by the government of Pakistan for payment of the contract. Id. at 11.
The crux of plaintiff's allegations are that once Salatin realized that Bulkferts would be awarded the fertilizer supply contract, Salatin embarked upon a campaign to interfere with Bulkferts' contract with the government of Pakistan and to drive it out of business. Id. at 9. Plaintiff asserts, specifically, that the defendants, in particular Salatin and Ferri, entered into a conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (1973) to restrain the plaintiff from entering the international fertilizer trade and commerce, and to monopolize the trade in fertilizer. Id. at 3. They also claim that the actions which defendants supposedly took to influence the government of Pakistan with respect to plaintiff's fertilizer supply contract, and the lawsuits filed by Salatin against Bulkferts were intended to interfere with Bulkferts' business and thus violated the anti-trust laws.
Defendants have moved to dismiss the first, second and third counts of the plaintiff's complaint pursuant to Rule 12(b) (6), F.R. Civ. P., or in the alternative for summary judgment under Rule 56.
Both sides have submitted affidavits and other materials in support of their positions; however neither has submitted the statement of facts required of motions for summary judgment under Local Rule 3(g).
Defendants seek summary judgment on the conspiracy count on the grounds that Salatin and Franco Ferri, Inc. ("Ferri") could not enter into a conspiracy within the meaning of the Sherman Act, because the latter was not an "independent business entity," and because Ferri was allegedly Salatin's agent. Defendants' Memorandum in Support of their Motion at 10; Affidavit of Asif Sultan P34. Plaintiff hotly contests these assertions. Affidavit of Patrick F. J. Macrory P2.
It is undisputed that in order to prove a conspiracy under the Sherman Act, there must be a "plurality of actors" and they must constitute "distinct economic entities." Fuchs Sugar & Syrups v. Amstar Corp. 602 F.2d 1025, 1031 n. 5 (2d Cir. 1979), cert. denied, 444 U.S. 917, 100 S. Ct. 232, 62 L. Ed. 2d 172 (1979). Proof of the independence of the actors requires an analysis of the "economic realities of their relationship." Id.; see generally, Brager v. Leumi Securities 429 F. Supp. 1341, 1345 (S.D.N.Y. 1977) (Weinfeld, J.), aff'd 646 F.2d 559 (1980), cert. denied, 451 U.S. 987, 68 L. Ed. 2d 845, 101 S. Ct. 2322 (1981); Las Vegas Sun Inc. v. Summa, Corp. 610 F.2d 614, 617 (9th Cir. 1979), cert. denied, 447 U.S. 906, 100 S. Ct. 2988, 64 L. Ed. 2d 855 (1980); Hunt-Wesson Foods v. Ragu Foods 627 F.2d 919, 927 n. 5 (9th Cir. 1980), cert. denied, 450 U.S. 921, 67 L. Ed. 2d 348, 101 S. Ct. 1369 (1981); DuPont Glore Forgan, Inc., v. AT&T, 537 F. Supp. 1104, 1111 (S.D.N.Y. 1977) (Weinfeld, J.); aff'd, 578 F.2d 1367, cert. denied, 439 U.S. 970 (1978); Morse v. Swank 459 F. Supp. 660, 666 (S.D.N.Y. 1978) (Tenney, J.).
Furthermore, a principal and his agent may conspire within the meaning of the Sherman Act; however, this requires security of a number of elements, including what other, if any, activities the agent performs on behalf of his principal, and the degree to which the agent is authorized to exercise his discretion with respect to the transaction in question. Fuchs, supra, 602 F.2d at 1031 n. 5. Aside from the failure to comply with our local rules, these are factual questions which cannot be addressed on a motion for summary judgment.
Defendants' efforts to dispose of the plaintiff's allegations concerning the existence of a monopoly in restraint of trade, fail similarly. To prove an attempt to monopolize, one must show an intent to obtain a monopoly in the market in question, and conduct evidencing a probability that the attempt will be successful. Brager, supra, 429 F. Supp. at 1346. Neither issue is appropriate for summary judgment.
Finally, defendants seek refuge in the "Noerr-Pennington doctrine" for their actions allegedly to influence the government of Pakistan and for the litigation filed against Bulkferts. In an earlier case, the development and origins of the doctrine were discussed at some length. Reameco, Inc. v. Allegheny Airlines, supra 496 F. Supp. 546, 555-57 (S.D.N.Y. 1980) (Carter, J.). Put simply, it states that joint efforts to influence legislative, executive or judicial bodies do not violate the anti-trust laws even though intended to eliminate competition, unless the campaign is a mere sham. See, id. at 555, citing Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc. 365 U.S. 127, 135-36, 81 S. Ct. 523, 528-29, 530-31, 5 L. Ed. 2d 464 (1961); United Mine Workers v. Pennington 381 U.S. 657, 670, 85 S. Ct. 1585, 1593, 14 L. Ed. 2d 626 (1965).
In essence, the Supreme Court held that activities which are within the penumbra of First Amendment rights will not be proscribed even where the sole purpose of undertaking them is anti-competitive. Reameco, supra, 496 F. Supp. at 556. An exception lies where the actions are merely a "pattern of baseless, repetitive claims" against the plaintiff which are not undertaken to influence official behavior. California Motor Transport Co. v. Trucking Unlimited 404 U.S. 508, 513, 92 S. Ct. 609, 613, 30 L. Ed. 2d 642 (1972); Reameco, supra, 496 F. Supp. at 556; First American Title Co. v. South Dakota Land Title Association 541 F. Supp. 1147, 1158-59 (D.S.D. 1982); see also, Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers 542 F.2d 1076, 1081 (9th Cir. 1976), cert. denied, 430 U.S. 940, 51 L. Ed. 2d 787, 97 S. Ct. 1571 (1976).
It is questionable, however, whether the doctrine applies to activities influencing foreign governments such as those herein alleged. See, Dominicus Americana Bohio v. Gulf & Western 473 F. Supp. 680, 690 n. 3 (S.D.N.Y. 1979) (Carter, J.); Occidental Petroleum Corp. v. Buttes Gas & Oil Co. 331 F. Supp. 92, 107-08 (C.D.Cal. 1971), aff'd 461 F.2d 1261 (9th Cir. 1972), cert. denied, 409 U.S. 950, 93 S. Ct. 272 (1972). Nonetheless, it is unnecessary to dwell on that issue, since the application of Noerr-Pennington to the actions filed by defendants against Bulkferts and defendants' alleged efforts to influence the Pakistani government, turn on an ascertainment of the defendants' intent, and hence may not be addressed on a motion for summary judgment. First American Title Co., supra, 541 F. Supp. at 1159; Federal Prescription Service v. American Pharmaceutical Ass'n 214 U.S. App. D.C. 76, 663 F.2d 253, 262 (D.C. Cir. 1981), cert. denied, 455 U.S. 928, 71 L. Ed. 2d 472, 102 S. Ct. 1293 (1982).
However, counts two and three, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq. (Supp. 1982), must be dismissed inasmuch as the plaintiff does not allege that the defendants were engaged in a pattern of racketeering activity related to "obtaining an interest in an enterprise or operating an enterprise. "Under section 1962(b) and the relevant case law, it is necessary to show the above in order to come within the purview of the statute.
See Moss v. Morgan Stanley, No. 82 Civ. 5182, slip. op. at 32 (S.D.N.Y. Jan. 10, 1983) (Pollack, J.); Erlbaum v. Erlbaum, [1982 Transfer Binder] FEDERAL SECURITIES LAW REPORTER (CCH) P98,772 at 93,921 (E.D. Pa. July 13, 1982); Spencer, Inc. v. Agency Rent-A-Car, Inc., [1981 Transfer Binder] (CCH) FEDERAL SECURITIES LAW REPORTER P98,361 at 92,215-16 (D. Mass. Nov. 17, 1981). Accordingly, counts two and three of the complaint pleading violations of RICO, are dismissed, and summary judgment is denied as to count one.
It Is So Ordered.