St Andrews Links Limited v. Gilfin International Limited et al, No. 3:2018cv02131 - Document 74 (N.D. Cal. 2019)
Court Description: ORDER GRANTING 57 MOTION TO DISMISS COUNTERCLAIMS by Judge William H. Orrick. Motion to dismiss is GRANTED as to the state law tort counterclaims and the counterclaim for cancellation of SAL's registrations WITH LEAVE TO AMEND. SAL's special motion to strike is DENIED without prejudice.(jmdS, COURT STAFF) (Filed on 9/5/2019)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ST ANDREWS LINKS LIMITED, Plaintiff, 8 United States District Court Northern District of California 9 Case No. 18-cv-02131-WHO ORDER GRANTING MOTION TO DISMISS COUNTERCLAIMS v. 10 GILFIN INTERNATIONAL LIMITED, et al., 11 Defendants. Re: Dkt. No. 57 12 13 14 15 16 17 INTRODUCTION Plaintiff St Andrews Links Limited (SAL), the business representing the famous golf course in St. Andrews, Scotland, moves to dismiss and has filed a special motion to strike counterclaims filed by defendants Gilfin International Limited, Gilfin International (Tapemate) Limited (collectively “Gilfin International”), Old St. Andrews Limited (“OSA”) (all three 18 19 collectively OSA) under California’s Anti-SLAPP statute (Cal. Code Civ. Proc. § 425.16). The 20 counterclaims are barred as a matter of law under California’s litigation privilege (Cal. Civ. Code 21 § 47(b)) and by the Noerr-Pennington doctrine because they are made solely in response to SAL’s 22 filing its affirmative case against OSA. OSA has also failed to allege sufficient facts. For these 23 reasons, SAL’s motion to dismiss is granted and the special motion to strike is denied as moot. 24 25 26 BACKGROUND In its Second Amended Complaint, SAL asserts the following causes of action against 27 OSA: (1) Unfair Competition and False Designation of Origin, under 15 U.S.C. §1125(a)(A) and 28 (B); (2) California Unfair Competition, under Cal. Bus. & Prof. Code Sections 17200 et seq.; (3) United States District Court Northern District of California 1 California False Advertising, under Cal. Bus. & Prof. Code Sections 17500 et seq.; (4) 2 Cancellation of U.S. Trademark Reg. No. 1,518,200, under 15 U.S.C. §§ 1052(a) and 1119, 15 3 U.S.C. §§ 1058(a) and (b) and 1119, and 15 U.S.C. §§ 1064(3) and 1119, seeking to cancel 4 Gilfin’s Registration and renewal because of its misleading nature; and (5) damages for False 5 Registration, under 15 U.S.C. § 1120. 1 6 OSA answered the SAC and asserts various counterclaims against plaintiff. It alleges that 7 as “early as 1987 and through today, the OSA Products have been sold in golf ball shaped bottles, 8 bearing a lion and golf club logo.” CC ¶ 11. “OSA has acquired and protected the rights 9 associated with the OSA Products and is the owner of U.S. Trademark Reg. No. 1,518,200, 10 covering OLD ST. ANDREWS for scotch whisky (OSA Mark).” Id. ¶ 12. The “OSA Mark, 11 covered by the OSA Registration, was first used in U.S. commerce in connection with OSA 12 Products at least as early as October 1984.” Id. ¶13. It also alleges that SAL has been aware of 13 OSA’s consistent, lawful use, marketing, and promotion of the OSA Products for at least eight 14 years and that SAL began but abandoned a “litigious campaign” against OSA in 2010 and took 15 actions with the Trademark and Patent Office that “prompted office actions that disclosed or 16 referenced OSA’s OSA Registration.” Id. ¶¶ 14-17. OSA claims that after “sitting on its rights 17 for years, SAL has attempted to interfere and disrupt OSA’s contractual relations with its 18 distributors and business partners, including OSA’s U.S. distributor Niche Import Company 19 (“Niche”), by filing the instant action,” and that SAL “is fully aware that its claims have no 20 evidentiary, factual or legal basis whatsoever, and are time-barred” but has pursued this case to 21 cause OSA’s customers to cease selling OSA products. Id. ¶¶ 18-19. 22 Based on these allegations, OSA asserted the following counterclaims: (1) intentional 23 interference with contractual relations; (2) intentional interference with prospective economic 24 advantage; (3) cancellation of the SAL’s registrations; (4) unfair competition; and (5) unfair 25 competition under Section 17200. SAL’s motions to dismiss and strike followed. 2 26 27 28 1 The two other defendants named in this suit Niche and Epic, who were alleged to have been distributors or business partners of OSA, were dismissed without prejudice on June 26, 2019 2 SAL does not move to dismiss or strike OSA’s Third (III) Counterclaim, which seeks a 2 LEGAL STANDARD 1 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint United States District Court Northern District of California 2 3 if it fails to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). To survive a 4 12(b)(6) motion, the plaintiff must allege “enough facts to state a claim to relief that is plausible 5 on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). A claim is facially plausible 6 when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the 7 defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 8 (citation omitted). There must be “more than a sheer possibility that a defendant has acted 9 unlawfully.” Id. While courts do not require “heightened fact pleading of specifics,” a plaintiff 10 must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 11 U.S. at 555, 570. In deciding whether the plaintiff has stated a claim upon which relief can be granted, the 12 13 court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the 14 plaintiff. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is 15 not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 16 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 17 2008). If the court dismisses the complaint, it “should grant leave to amend even if no request to 18 amend the pleading was made, unless it determines that the pleading could not possibly be cured 19 by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). DISCUSSION 20 21 22 I. TORT CLAIMS AND PRIVILEGE SAL first moves to dismiss OSA’s California tort claims (the two interference claims and 23 the unfair competition claims) because they are barred – as they are based only on conduct SAL 24 has taken in this litigation – under two doctrines: (1) California’s litigation privilege, Cal. Civ. 25 Code § 47(b); and (2) the Noerr-Pennington doctrine. 26 California Civil Code section 47(b) protects communications made in the context of a 27 28 declaration of non-violation of 15 U.S.C. §§ 1125(a)(A) & (B). 3 1 judicial proceeding. Cal. Civ. Code § 47. “The principal purpose of section 47(b)(2) is to afford 2 litigants and witnesses the utmost freedom of access to the courts without fear of being harassed 3 subsequently by derivative tort actions.” Silberg v. Anderson, 50 Cal. 3d 205, 213 (1990), as 4 modified (Mar. 12, 1990) (internal citation omitted). The Noerr-Pennington doctrine “shields lobbying and litigation activity” and serves as United States District Court Northern District of California 5 6 “immunity from liability, not from trial.” 3 Nunag-Tanedo v. E. Baton Rouge Par. Sch. Bd., 711 7 F.3d 1136, 1140 (9th Cir. 2013). The activity is only shielded as long as it was not a “sham.” City 8 of Columbia v. Omni Outdoor Advert., Inc., 499 U.S. 365, 380 (1991). “The ‘sham’ exception 9 to Noerr encompasses situations in which persons use the governmental process—as opposed to 10 the outcome of that process—as an anticompetitive weapon.” Id. (emphasis in original). The 11 sham litigation exception does not apply so long as the party “was genuinely seeking 12 governmental action.” Oregon Nat. Res. Council v. Mohla, 944 F.2d 531, 535 (9th Cir. 1991) 13 (citing Franchise Realty Interstate Corp. v. San Francisco Local Joint Exec. Bd. of Culinary 14 Workers, 542 F.2d 1076, 1081 (9th Cir. 1976)). 15 To be considered a sham, the lawsuit must be (1) objectively baseless and (2) brought with 16 an unlawful motive. Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 17 60 (1993) (PRE); Sosa v. DIRECTV, Inc., 437 F.3d 923, 938 (9th Cir. 2006). Litigation is 18 objectively baseless if “no reasonable litigant could realistically expect success on the merits.” 19 PRE, 508 U.S. at 60. Litigation is brought with an unlawful motive if it “conceals an attempt to 20 interfere directly with the business relationships of a competitor.” Id. at 60–61 (internal citation 21 omitted, emphasis in original). Where claims are based on activities shielded by Noerr- 22 Pennington immunity, the plaintiff must plead the sham litigation exception with specificity. 23 Oregon Nat. Res., 944 F.2d at 534–35; see also Formula One Licensing v. Purple Interactive, No. 24 C 00-2222 MMC, 2001 WL 34792530, at *2 (N.D. Cal. Feb. 6, 2001) (dismissing claims with 25 leave to amend where the sham pleadings alleged only a “meritless trademark infringement 26 27 28 3 The doctrine was originally limited to the antitrust context but now applies more broadly. See Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 1008 (9th Cir. 2008) (intentional interference claims); Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd., No. C 04-2000 CW, 2007 WL 801886, at *4 (N.D. Cal. Mar. 14, 2007) (UCL claims). 4 1 2 SAL contends that the tort counterclaims asserted against it are barred under these 3 doctrines because they are based solely on the filing of this lawsuit, which is privileged conduct. 4 SAL points to paragraphs 18 and 19 of the counterclaims where OSA alleges that SAL has 5 attempted to “interfere and disrupt” OSA’s relations with its distributors and business partners “by 6 filing the instant lawsuit” which has “caused” Niche and Epic (the former co-defendants) to cease 7 selling OSA products. CC ¶¶18-19. SAL cites a number of decisions applying both the California 8 litigation privilege and Noerr-Pennington to dismiss intentional interference claims and unfair 9 competition claims like the ones asserted here. Mot. [Dkt. No. 57] at 8-10. 10 United States District Court Northern District of California action . . . alleging the infringement of unenforceable, generic marks”). In Opposition, OSA does not dispute or distinguish those cases. Instead, it argues that 11 Noerr-Pennington does not apply because SAL’s suit is a baseless “sham” and part of a “pattern” 12 of harassment that creates exceptions to the application of the doctrine. To contend that the SAL 13 suit is objectively baseless, OSA relies only on its defenses to SAL’s trademark claims (that SAL 14 sat on its rights and its affirmative claims are time-barred). OSA does not provide any authority or 15 other support to demonstrate that these defenses make SAL’s suit baseless as a matter of law. 16 This is not, on its face, either a well-pleaded or adequately supported sham allegation. 17 OSA then argues that the “pattern” exception to Noerr-Pennington applies. That exception 18 is invoked where “the conduct involves a series of lawsuits ‘brought pursuant to a policy of 19 starting legal proceedings without regard to the merits’ and for an unlawful purpose.” Sosa v. 20 DIRECTV, Inc., 437 F.3d 923, 938 (9th Cir. 2006). However, there are no allegations in the 21 counterclaims that make this exception plausible. While there is a passing reference to the fact 22 that in 2010 or 2011 “SAL began an unsuccessful litigious campaign against OSA that it later 23 withdrew,” CC ¶ 15, there are no facts alleged concerning the nature of that campaign, whether it 24 included a series of lawsuits, and whether they were filed for an unlawful purpose. 25 While OSA is correct that the applicability of the sham and pattern exceptions should not 26 be resolved on a motion to dismiss when the court “cannot rule out the possibility” that the 27 litigation might be a sham, Catch Curve, Inc. v. Venali, Inc., 519 F. Supp. 2d 1028, 1037 (C.D. 28 Cal. 2007), there are no plausible facts alleged in the current counterclaims (or persuasive 5 1 authority provided on this motion) to make those exceptions even facially applicable. OSA also notes in its Opposition that non-litigation conduct, including harassment and United States District Court Northern District of California 2 3 threats to customers, are not encompassed within Noerr-Pennington’s protections. However, no 4 non-litigation statements or conduct have been alleged in the counterclaims nor have any evidence 5 of threats or harassment been identified. The only acts identified are the filing of this suit and then 6 the subsequent dismissal of Epic and Niche. 7 Finally, OSA argues that California’s litigation privilege does not bar its tort claims 8 because it is an inherently factual determination whether SAL’s communications to OSA’s 9 business partners were made in “good faith” and under serious consideration of litigation. But 10 there are no facts alleged about any communications made by SAL that would implicate the good 11 faith standard. The only conduct alleged (again) is the filing of this suit and the subsequent 12 dismissal without prejudice of Niche and Epic. All of that conduct on its face is directly 13 connected with this suit and there are no plausible facts alleged that this case was filed in bad faith 14 or for an improper purpose. 15 SAL’s request for dismissal of these claims with prejudice, however, is not warranted. 16 OSA may be able to cure these deficiencies and make factual and legal assertions showing the 17 facial applicability of the two identified Noerr-Pennington exceptions to save the tort claims. 18 Therefore, DISMISSAL of Claims 1, II, and IV, and V is GRANTED with leave to amend. 19 II. 20 FAILURE TO STATE CLAIMS SAL also argues that OSA fails to adequately allege its claims. As I have dismissed the 21 California tort claims with leave, I need not reach this argument concerning those claims. 22 However, if OSA decides to amend those claims, it should consider identifying wrongful conduct 23 (other than filing this lawsuit) in support of the interference and unlawful competition claims. To 24 the extent OSA bases any claim on alleged misrepresentations by SAL, it should identify those 25 representations consistent with Rule 9(b)’s heightened specificity requirements. 26 SAL argues that OSA’s claim for cancellation of SAL’s registrations is deficient because 27 OSA does not identify which of SAL’s registrations it seeks cancellation of or why those marks 28 should be cancelled. In response, OSA argues that because SAL has not been clear regarding 6 1 which of its many registrations it is asserting, OSA’s claim limiting cancellation to “the 2 trademarks asserted by SAL” is sufficient. CC ¶ 40. Yet OSA does not identify any facts in 3 support of why those many registrations should be cancelled. This claim, too, is DISMISSED 4 with leave to amend. 5 III. Finally, SAL moves to strike the state law tortious interference claims and the unfair 6 United States District Court Northern District of California ANTI-SLAPP 7 business claims under California’s Anti-SLAPP statute (Cal. Code Civ. Proc. § 425.16) arguing 8 that the conduct underlying those claims is “protected activity” under the statute because the only 9 conduct complained of by OSA is the filing of SAL’s lawsuit and statements made in connection 10 with SAL’s lawsuit. Given this, the burden to defeat the anti-SLAPP motion falls to OSA to 11 establish a likelihood of prevailing on the merits which – as shown above – it has not done. However, as I am dismissing the state law claims with leave to amend, I need not reach the 12 13 anti-SLAPP special motion to strike. It may be renewed if SAL moves to strike any amended 14 claims. 15 CONCLUSION 16 SAL’s motion to dismiss is GRANTED as to the state law tort counterclaims and the 17 counterclaim for cancellation of SAL’s registrations WITH LEAVE TO AMEND. SAL’s special 18 motion to strike is DENIED without prejudice. 19 20 IT IS SO ORDERED. Dated: September 5, 2019 21 22 William H. Orrick United States District Judge 23 24 25 26 27 28 7
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