No. 731-TA-627, USITC Pub. No. 2583 (December 1992). On May 25, 1993, Commerce issued its Preliminary Determination, and found sales at less than fair value, or LTFV, with a weighted average margin for Pisoni of 1.26%. 58 Fed. Reg. 30015.
On September 23, 1993, the ITC issued its final determination which, despite the initial finding of sales at LTFV, found that an industry in the United States was not being materially injured or threatened with material injury by reason of the imports from Italy of keypads for woodwinds. Pads for Woodwind Instruments Keys from Italy, Investigation No. 731-TA-627. Specifically, the ITC determined that woodwind pads from Italy were "like product" with respect to the U.S. manufacturer's product, as required for the entry of an antidumping order. In addition, the ITC found that the petitioner was a "domestic producer" for the purposes of bringing the proceedings, despite its earlier extensive assembly operations in Mexico. The agency determined that the petitioner's Mexican operations ceased in 1991, and noted that, even before that time, the nature of the assembly operation was such that the equipment used in Mexico was neither extensive nor expensive, that capital investment in Mexico was not as sizable as in the United States, and the value added to the product there was not as substantial as that added in the United States. Id. at 9-10. Finally, the ITC found that "the technical expertise required to perform the assembly in Mexico was minimal. Therefore we do not exclude petitioner from the domestic industry." Id.4
The ITC also found, however, that the two products were not close substitutes for one another, because most purchasers of the Italian product still would have purchased the imports because of quality differences and other non-price factors, even if they had been fairly traded, and accordingly the effect of LTFV imports on the domestic product, if there was any, was minimal. Id. at 19. The ITC determined that, while there had been increased market penetration by the imports, there was no indication that the penetration would increase to an injurious level because of the lack of significant excess foreign capacity and the limited substitutability of the products. Id. at 22-23. One of the Commissioners dissented and found that the LTFV imports were causing injury to the domestic industry. Id. at 35-47. Defendants here appealed the negative determination of the ITC on October 29, 1993. The appeal was recently withdrawn by PMI with prejudice.
The 1992 petition cannot be viewed as "objectively baseless." The proceedings on that petition established that plaintiff had, in fact, been selling keypads at LTFV, and by a greater margin than in the 1983 proceedings. The basis for the conclusion that petitioner was not entitled to relief was thus not the same as that advanced for the denial of such relief in 1983 (when the ITC found the dumping margin insufficient to merit relief). Moreover, in the decision dissenting from the final determination in 1993, one of the Commissioners took the position that dumping materially injuring a domestic industry was indeed taking place. At a minimum, this dissent demonstrates that there was substantial ground for disagreement as to the ultimate determination in that proceeding. See PRE, 113 S. Ct. at 1930 (where rule of Ninth Circuit, in which case had been brought, would not permit plaintiff's claim as matter of law, Court held claim could nonetheless not be viewed as "sham" because it was based on an objectively "good faith argument for the extension, modification or reversal of existing law," and thus met the requirements of Rule 11, since Ninth Circuit rule had been criticized by some commentators and courts).
The possibility does exist, however remote, that the institution of two unsuccessful antidumping proceedings nine years apart was intended solely to injure plaintiffs competitively in a trade war that defendants appear to be losing, and not to secure the trade relief for which such petitions were created by Congress. Even if such a malevolent intent could be shown, plaintiffs cannot sustain their burden of proving that that defendants could not have reasonably expected success on the merits. As explained by the Supreme Court in PRE:
Whether applying Noerr as an antitrust doctrine or invoking it in other contexts, we have repeatedly reaffirmed that evidence of anti-competitive intent or purpose alone cannot transform otherwise legitimate activity into a sham... the legitimacy of objectively reasonable petitioning "directed toward obtaining governmental action" is "not at all affected by any anticompetitive purpose [the actor] may have had."
113 S. Ct. at 1927 (citations omitted).
Although, as set out above, plaintiffs's sham litigation claims are not actionable, plaintiffs might still might have stated a federal antitrust cause of action based on the alleged theft of trade secrets and alleged attempt to price fix, provided a cognizable antitrust injury had been plead. See Amended Complaint PP 28, 30, 38. However, no antitrust injury has been plead here because plaintiffs have alleged no injury to competition itself based on defendants' claimed use of plaintiffs' trade secrets to compete with plaintiffs and its attempt to conspire with plaintiffs. Rather, as set out above, plaintiffs have plead only that they were injured by defendants' actions. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 50 L. Ed. 2d 701, 97 S. Ct. 690 (1977) (no antitrust injury existed where defendant's alleged actions did not hamper competition between plaintiff and defendant and harm consumers because of damage to competition); Balaklaw v. Lovell, 14 F.3d 793, 797 (2d Cir. 1994) (same).
The remaining issues presented are whether the plaintiffs' allegations may state a common-law cause of action, and whether the factual allegations of intent and an attempt to price-fix, and of theft of trade secrets, may still state either an antitrust cause of action under state law or a claim of theft of trade secrets.
Based on the same factual allegations as the antitrust cause of action, plaintiffs allege common-law claims for abuse of process, prima facie tort and wrongful institution of civil proceedings, as well as for violations of the Donnelly Act, the New York antitrust statute.
These claims, however, fail for many of the same reasons as they do when fashioned as federal antitrust claims.
First, as the parties agree, the Donnelly Act is modelled on and governed by the same standards as the federal antitrust laws. State of New York v. Mobil Oil Corp., 38 N.Y.2d 460, 463, 381 N.Y.S.2d 426, 428, 344 N.E.2d 357, 359 (1976). Plaintiffs have suggested no reason why or how the policies underlying the Donnelly Act would he ill-served by the application of Noerr immunity to these claims. Accordingly, Noerr must apply in much the same manner to immunize claims based on non-sham litigation. Suburban Restoration Co., Inc. v. Acmat Corp., 700 F.2d 98, 101-02 (2d Cir. 1983) (holding Connecticut state-law unfair trade practices claim to be subject to Noerr immunity because Connecticut statute was coextensive with federal statute subject to Noerr).
Defendants also argue that other state common-law claims based on the filings before the Department of Commerce, abuse of process, prima facie tort, and wrongful institution of civil proceedings each require a showing of "probable cause," defined as objective baselessness, like that discussed in PRE,7 and that the claims are, in any event, time-barred. Plaintiffs point out that the concept of excuse or justification in civil proceedings is not congruent to that of probable cause, that the causes of action alleged are more distinct in their requirements than defendants would have it, and that either late discovery of the facts underlying the causes of action or construction of those facts as a continuing wrong would toll the statute of limitations.
Plaintiffs arguments cannot salvage these causes of action. To begin with, plaintiffs' claim for wrongful institution of civil proceedings, which refers exclusively to the 1992 petition, (a tort otherwise known as malicious prosecution), cannot survive a motion to dismiss because that tort does incorporate a concept of probable cause, defined as "objective baselessness," like that invoked by the Supreme Court in PRE. See Realty by Frank Kay, Inc. v. Majestic Farms Supply, Ltd., 160 A.D.2d 789, 553 N.Y.S.2d 858, 859 (2d Dep't 1990). Accordingly, this claim must be dismissed for the same reasons as plaintiffs' "sham litigation" antitrust claims.
Similarly, defendants take the position that the claim for abuse of process based on the institution of the administrative review in 1991 must be dismissed because it incorporates a concept of "excuse or justification" equivalent to "probable cause" with respect to the tort of wrongful institution of civil proceedings. Probable cause, however, as pointed out by plaintiffs, is not an element of the tort of abuse of process. See Weiss v. Hunna, 312 F.2d 711 (2d Cir. 1963). Rather, a claim of abuse of process may be brought where a plaintiff has alleged that:
(1) process has issued mandating that a party either perform or forbear from a prescribed act;
(2) such process was issued with an intent to do harm without excuse or justification; and