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AGFA CORPORATION v. UNITED MARKETING GROUP

July 10, 2003

AGFA CORPORATION, PLAINTIFF,
v.
UNITED MARKETING GROUP, INC., AND PROFICO, LTD., DEFENDANTS.



The opinion of the court was delivered by: Loretta Preska, District Judge

MEMORANDUM AND ORDER

Presently pending are plaintiff Agfa Corporation's ("Agfa") motion to dismiss the counterclaim of defendants United Marketing Group, Inc. and Profico, Ltd. (collectively, the "defendants") and defendants' cross-motion to dismiss plaintiff's complaint. For the reasons stated herein, plaintiff's motion is granted, and defendants' cross-motion is denied.

BACKGROUND

Plaintiff's complaint alleges the following pertinent facts. Agfa is engaged in the business of manufacturing and selling graphic arts films, papers, chemicals, accessories and electronic prepress equipment and proofing products. (Complaint, hereafter, "Compl.," at ¶ 9). Among the products manufactured and sold by Agfa are categories of products known as recording films and papers (referred to throughout plaintiff's complaint as "Recording Product"), which are used extensively in the graphics arts industry. (Id.). Agfa distributes Agfa-branded Recording Product in the United States primarily through authorized Agfa dealers (hereafter, "Authorized Dealers") pursuant to an express Authorized Dealer agreement. (Id. at ¶ 10). The dealer agreement utilized by Agfa provides that Authorized Dealers are obligated to purchase all of their requirements for Agfa-branded products, including Recording Products, from Agfa. (Id. at ¶ 11). In addition to its system of Authorized Dealers, Agfa also sells Recording Product in the United States through alternative channels of distribution. (Id. at ¶ 16). However, Recording Product sold by Agfa through such alternative channels of distribution is not intended to be sold by Agfa's Authorized Dealers. (Id. at ¶ 17).

According to plaintiff's complaint, defendants are engaged in the sale of Recording Product to graphic arts suppliers. (Compl. at ¶ 19). Defendants have not contracted with Agfa to participate in Agfa's distribution channels in any capacity. (Id. at ¶ 20). Upon information and belief, defendants acquired Agfa-branded Recording Product on the "gray market," that is, they purchased Recording Product that had either been improperly diverted from Agfa's official distribution system or they imported the Recording Product from foreign markets. (Id. at ¶ 21). Defendants then re-sold the Agfa-branded Recording Product to one or more graphic arts suppliers known to defendants to be Agfa Authorized Dealers. (Id. at ¶ 22). At the time of such sales, defendants were aware of the contractual obligation of Agfa's Authorized Dealers to purchase all of their Agfa-branded Recording Product exclusively from Agfa. (Id. at ¶ 23). In at least one case, defendants made sales of more than $750,000 to an entity known by them to be an Agfa Authorized Dealer. (Id. at ¶ 24).

As a result of defendants' activities, Agfa purportedly lost selling opportunities to one or more Authorized Dealers, incurred exposure to end-users' warranty and rebate claims without consideration, and mistakenly extended credits and rebates to one or more Authorized Dealers. (Compl. at ¶ 25). In at least one case, Agfa was compelled to terminate its relationship with an Authorized Dealer as a result of that Dealer's purchases from defendants. (Id. at ¶ 26).

Defendants' counterclaim, in turn, alleges that defendants purchased certain Agfa products products in the stream of interstate and foreign commerce from sellers other than Agfa. (Defendants' counterclaim, hereafter, "Defs' Counterclaim," at ¶ 7). According to defendants, they have never had a contractual relationship with Agfa and have "every right" to purchase Agfa products from the stream of interstate and foreign commerce without interference by Agfa. (Id. at ¶ 9).

On October 23, 2002, plaintiff filed an original Complaint (the "Complaint") against defendants alleging tortious interference with contract. On January 31, 2003, defendants filed an Answer, Affirmative Defense, and Counterclaim (the "Counterclaim").*fn1 In their Counterclaim, defendants allege that the filing of this action by Agfa constitutes a violation of sections one and two of the Sherman Act and of the Donnelly Act, the New York analog of the Sherman Act.

On December 9, 2002, plaintiff moved to dismiss the Counterclaim. On February 12, 2003, defendants cross-moved to dismiss the Complaint.

DISCUSSION

I. Legal Standard

When deciding a motion to dismiss under Rule 12(b)(6), I must construe the complaint liberally, "accepting all factual allegations in the complaint as true, and drawing all reasonable inferences in the [pleader's] favor." Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 235-36 (1974)). Dismissal is proper only when "it appears beyond doubt that the [pleader] can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); accord Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir. 1994).

II. The Noerr-Pennington Doctrine and Plaintiff's Motion to Dismiss the Counterclaim
The Noerr-Pennington doctrine provides immunity from liability for conduct seeking to influence government action. Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 136 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657, 669-70 (1965). "Essentially, the Doctrine protects under the First Amendment efforts to influence governmental action through litigation, lobbying, and the like. Such activities are immunized from antitrust liability, provided that such activities are more than a mere `sham.'" Bath Petroleum Storage, Inc. v. Market Hub Partners, L.P., No. 00-7302, 2000 U.S.App. LEXIS 25440, at *3 (2d Cir. Oct. 11, 2000) (affirming district court's dismissal of a claim under the Noerr-Pennington doctrine). Immunity under the Noerr-Pennington doctrine attaches regardless of whether the claim is based on a state or a federal cause of action. See Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 128-29 (3d Cir. 1999) (applying Noerr-Pennington to state tort law claims because "we have been presented with no persuasive why these state tort claims, based on the same petitioning activity as the federal claims, would not be barred by the Noerr-Penninqton doctrine"); H.L. Hayden Co. v. Siemens Medical Sys., Inc., 672 F. Supp. 724, 745 (S.D.N.Y. 1987) (granting summary judgment on state Donnelly Act claim because summary judgment was appropriate on federal Sherman Act claims).

To invoke the "sham" exception to the doctrine, a party must allege that the lawsuit is "objectively baseless in the sense that no reasonable [person] could realistically expect success on the merits." Bath Petroleum, 2000 U.S.App. LEXIS 25440, at *3-4 (quoting Professional Real Estate Investors, Inc. v. Columbia Pictures Indus., 508 U.S. 49, 56-57 (1993). If a court first determines that the challenged litigation is objectively meritless, that court may then examine the subjective motivation of the litigant. See T.F.T.F. Capital Corp. v. Marcus Dairy, Inc., 312 F.3d 90, 93 (2d Cir. 2002); see also Cheminor Drugs, 168 F.3d at 122-23. "Where possible, . . . this analysis should be addressed to the face of the ...


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