Clean Conversion Technologies, Inc. v. Cleantech Biofuels, Inc. et al, No. 3:2012cv00239 - Document 23 (S.D. Cal. 2012)
Court Description: ORDER denying 14 Defendant's Motion to Dismiss for Failure to State a Claim. Signed by Judge M. James Lorenz on 8/20/2012. (sjt)
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Clean Conversion Technologies, Inc. v. Cleantech Biofuels, Inc. et al Doc. 23 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CLEAN CONVERSION 12 TECHNOLOGIES, INC., 13 14 15 16 17 18 ) Case No. 12-cv-239-L(JMA) ) ) ORDER DENYING DEFENDANT’S Plaintiff, ) MOTION TO DISMISS [DOC. 14] ) v. ) ) CLEANTECH BIOFUELS, INC., et al., ) ) Defendant. ) ) ) ) On January 30, 2012, Plaintiff Clean Conversion Technologies, Inc. (“CCT”) commenced 19 this action seeking injunctive relief and damages for alleged violations of the Sherman Act (15 20 U.S.C. §§ 1-2), the Clayton Act (15 U.S.C. § 18), the California Cartwright Act (Cal. Bus. & 21 Prof. Code § 16720, et seq.), and California’s Unfair Competition Law (“UCL”) (Cal. Bus. & 22 Prof. Code § 17200, et seq.). Defendant CleanTech Biofuels, Inc. (“CleanTech”) now moves to 23 dismiss the complaint.1 CCT opposes. 24 The Court found this motion suitable for determination on the papers submitted and 25 without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 17.) For the following reasons, the Court 26 DENIES CleanTech’s motion. 27 28 1 Defendant Steve Vande Vegte (“SVV”) does not join in CleanTech’s motion. 12cv239 Dockets.Justia.com 1 I. BACKGROUND 2 A. 3 CleanTech is a Delaware corporation engaged in the business of producing cellusitic Pressurized Steam Classification (“PSC”) Conversion 4 biomass from municipal solid waste. (Compl. ¶ 85.) CCT is a Washington corporation and 5 CleanTech competitor in the PSC conversion market. (Id. ¶¶ 1, 102–05.) 6 “PSC conversion is used to convert solid, contaminated municipal waste . . . into certain 7 kinds of usable commercial materials—specifically, various kinds and types of ferrous metals, 8 non-ferrous metals, plastics, glass, and usable biomass.” (Compl. ¶ 14.) “Usable biomass in 9 turn can be transformed into various commercial materials and other kinds of materials.” (Id.) 10 Without PSC conversion, a very substantial portion of contaminated municipal waste must be 11 buried in landfills, incinerated, or only partially treated by other methods. (Id. ¶ 46.) 12 13 B. 14 Beginning in 2008, CleanTech set out to obtain all of the patented PSC conversion Antitrust Allegations 15 technology in existence at the time. (See Compl. ¶¶ 87–95.) In September 2008, CleanTech 16 acquired Biomass North America Licensing, Inc. (“Biomass”), the owner of several important 17 patent applications relating to PSC technology—the “Noll Patents”—at that time. (Id. ¶ 93.) 18 This transaction gave CleanTech the rights to practice PSC technology described by several 19 patents and patent applications, most importantly the technology described in several U.S. Patent 20 Applications and their related Canadian Patent Applications. (Id.) In October 2008, CleanTech 21 purchased another set of PSC patents—the “Eley Patents”—from World Waste Technologies, 22 Inc. (“World Waste”). (Id. ¶ 94.) In both instances, CleanTech structured the transactions so 23 that Biomass and World Waste would derive substantial profits by cooperating with CleanTech’s 24 attempted monopolization of the PSC conversion market. (Id. ¶ 97.) Furthermore, CleanTech’s 25 purchase of the Eley Patents from World Waste did not reflect the market value of the patents. 26 (Id. ¶ 101.) Rather, CleanTech paid a huge premium in order to accomplish its goal of 27 consolidating the PSC technology in one entity. (Id.) 28 // 12cv239 2 1 After acquiring the Eley Patents, CleanTech allegedly put into motion a scheme to 2 terminate the Master License Agreement for those patents so that it could corner the market for 3 PSC conversion. (Compl. ¶¶ 96, 100.) However, the Eley Patents had already been exclusively 4 licensed to one of CleanTech’s competitors, Clean Earth Solutions. (Id. ¶¶ 98–99, 104.) Clean 5 Earth Solutions and its exclusive license of the Eley Patents was one of the final impediments to 6 CleanTech cornering of the PSC market. (Id.) Thus, immediately after CleanTech purchased 7 the Eley Patents from World Waste, it set in motion a scheme to terminate Clean Earth 8 Solution’s exclusive license. (Id. ¶ 100.) Working with Vande Vegte, CleanTech allegedly 9 conspired to have litigation initiated against Clean Earth Solutions to pressure it into giving up 10 its rights to the PSC technology in the Eley Patents (“SVV litigation”). (Id. ¶ 103.) As a result 11 of the debt load caused by the SVV litigation, Clean Earth Solutions sold its license under the 12 Eley Patents to CCT. (Id. ¶¶ 1, 102–05.) Vande Vegte then used this transfer as a basis of 13 another lawsuit filed against Clean Earth Solutions and CCT for fraudulent transfer.2 14 CleanTech seized the license transfer as an opportunity to attempt to terminate the license 15 itself. (Compl. ¶ 106.) In March 2011, CleanTech’s President, Ed Hennessey, approached CCT 16 and stated that he “had talked with Steve Vande Vegte and can make this [State Court] lawsuit 17 go away if you cooperate with me” in working together to market the PSC conversion 18 technology. (Id. ¶¶ 106–07.) Based on the allegations in the complaint, it is unclear which state19 court lawsuit Mr. Hennessey was referring to. 20 In September 2011, Mr. Hennessey and Vande Vegte contacted the original inventor of 21 the PSC technology in the Eley Patents, Dr. Michael Eley, in an effort to convince him that he 22 should participate in their attempt to monopolize the PSC market. (Compl. ¶¶ 100, 109.) Then, 23 on November 10, 2011, Mr. Hennessey put in CleanTech’s 10-Q filing that it was the company’s 24 25 2 Both parties refer to a second lawsuit between Vande Vegte and CCT in their moving 26 papers even though this vital second lawsuit is not clearly alleged anywhere in the complaint. (See Def.’s Mot. 7:11–12; Pl.’s Opp’n 4:4–6.) CleanTech cites Paragraph 106 of the complaint, 27 which only passingly mentions “concurrent litigation” against Clean Earth Solutions with no mention of CCT; CCT conveniently does not identify any allegation in the complaint that 28 discusses the second lawsuit. 12cv239 3 1 “intention to ‘consolidate the ownership’ of the intellectual property rights to PSC technology to 2 corner the PSC market by excluding all other market participants.” (Id. ¶ 108.) 3 CCT commenced this action on January 20, 2012, alleging claims against CleanTech for 4 various antitrust violations. Specifically, CCT alleges CleanTech’s “overall scheme” to 5 monopolize the PSC market violated Sections 1 and 2 of the Sherman Act as well as conspiracy 6 to monopolize under the same statute. (Compl. ¶¶ 114, 124.) Additionally, CCT brings suit 7 under the Clayton Act, the California Cartwright Act, and California’s UCL. (Id. ¶¶ 131, 140, 8 144.) 9 10 II. LEGAL STANDARD 11 The court must dismiss a cause of action for failure to state a claim upon which relief can 12 be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal 13 sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 14 must accept all allegations of material fact as true and construe them in light most favorable to 15 the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 16 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. 17 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily 18 assume the truth of legal conclusions merely because they are cast in the form of factual 19 allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) 20 (internal quotation marks omitted). In fact, the court does not need to accept any legal 21 conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, — , 129 S. Ct. 1937, 1949 (2009) 22 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed 23 factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ 24 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause 25 of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the 26 allegations in the complaint “must be enough to raise a right to relief above the speculative 27 level.” Id. Thus, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual 28 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. 12cv239 4 1 at 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 2 pleads factual content that allows the court to draw the reasonable inference that the defendant is 3 liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability 4 requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 5 Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory 6 or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 7 F.2d 530, 534 (9th Cir. 1984). 8 9 III. 10 DISCUSSION3 CleanTech moves to dismiss CCT’s complaint on three grounds: (1) CCT lacks standing 11 to pursue its antitrust claims because it fails to allege an antitrust injury; (2) litigation between 12 CCT and Vande Vegte cannot serve as the basis for this action because the litigation is 13 privileged under the Noerr-Pennington doctrine and California’s absolute litigation privilege; 14 and (3) CCT fails to allege “market power” under the Sherman Act. The Court will address each 15 argument below. 16 17 A. 18 Only those plaintiffs who meet the requirements for “antitrust standing” may pursue a Standing 19 claim under the antitrust acts. Am. Ad Mgmt., Inc. v. Gen. Tel. Co., 190 F.3d 1051, 1054-55 (9th 20 Cir. 1999). To have antitrust standing, a plaintiff must adequately allege “an injury of the type 21 the antitrust laws were intended to prevent and that flows from that which makes defendants’ 22 acts unlawful.” Big Bear Lodging Ass’n v. Snow Summit, Inc., 182 F.3d 1096, 1102 (9th Cir. 23 1999). The Ninth Circuit has defined antitrust injury as injury to the process of competition and 24 25 3 CleanTech claims that CCT’s opposition was untimely. (Def.’s Reply 6:23–28.) This 26 argument is completely baseless and frivolous. Based on the May 7, 2012 hearing date for this motion, CCT’s opposition was due April 23, 2012. CleanTech concedes that that is indeed the 27 due date for the opposition. The docket shows that CCT filed its opposition on April 23, 2012. (Doc. 20.) Accordingly, the Court rejects CleanTech’s claim and will consider CCT’s 28 opposition in assessing the merits of CleanTech’s motion. 12cv239 5 1 consumer welfare. Cascade Health Solutions v. PeaceHealth, 515 F.3d 883, 901 (9th Cir. 2 2008); Amarel v. Connell, 102 F.3d 1494, 1509 (9th Cir. 1997) (citing Assoc. Gen. Contractors 3 of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519, 528 (1983)). The plaintiff therefore 4 must show more than injury to itself as a competitor, “but rather injury to the competition.” 5 Austin v. McNamara, 979 F.2d 728, 739 (9th Cir. 1992). In addition, to have antitrust standing a 6 plaintiff must be a “participant in the same market as the alleged malefactors.” Glen Holly 7 Entm’t, Inc. v. Tektronix Inc., 352 F.3d 367, 373 (9th Cir. 2003) (internal quotation marks 8 omitted). “In other words, the party alleging the injury must be either a consumer of the alleged 9 violator’s goods or services[,] or a competitor of the alleged violator in the restrained market.” 10 Eagle v. Star-Kist Foods, Inc., 812 F.2d 538, 540 (9th Cir. 1987). 11 CleanTech contends that CCT lacks standing to pursue its Sherman Act and Cartwright 12 Act claims because “[t]here is no antitrust violation for intending to enforce legitimate patents 13 rights” and CCT fails to allege an antitrust injury. (Def.’s Mot. 6:23–7:6.) CleanTech does not 14 elaborate much on the former except to add that “CCT could not suffer an antitrust injury arising 15 from CleanTech enforcing its patent rights.” (Id.) It does, however, elaborate a bit more on the 16 latter, contending that “termination of the license agreement under which CCT intended to use 17 the Eley Patents is not a basis for antitrust injury,” and “[n]either is the purported litigation 18 against CCT[.]” (Id.) CCT responds that it properly alleges its standing, identifying allegations 19 throughout the complaint that purportedly show an antitrust injury. (Pl.’s Opp’n 7:19–8:16.) 20 To begin, CCT alleges that it participates in the business of producing cellustic biomass 21 as a licensee of PSC technology. (Compl. ¶¶ 85, 102, 110, 121, 133, 139.) From these 22 allegations, the Court can reasonably infer that CCT is a participant in the same market as 23 CleanTech. See Glen Holly Entm’t, 352 F.3d at 373. 24 Moving on, CCT alleges harms that are precisely the type that antitrust laws were 25 designed to prevent. Specifically, it alleges that but for the conspiracy to completely eliminate 26 CleanTech’s competition in the market for PSC conversion technology, there would be 27 participants other than CCT who could provide competitive bids and options to consumers. 28 (Compl. ¶ 101, 121, 133.) CCT also alleges that CleanTech’s conspiracy suppressed, eliminated, 12cv239 6 1 and interfered with competition and continues to do so through a scheme of strategic litigation, 2 market manipulation, and back-room agreements to manipulate market participants out of the 3 market—including CCT—and disrupt the natural competition in the relevant market for PSC 4 conversion technology and services. (Id. ¶ 102.) Further, the complaint includes allegations that 5 CleanTech’s conduct produced various anticompetitive effects including: (a) adversely affecting 6 competition in the market for PSC technology and services (id. ¶ 110), (b) increasing prices in 7 the PSC market (id. ¶ 114), (c) monopolizing the market related to municipal waste by PSC 8 conversion (id. ¶ 121), and (d) raising the barriers to entry into the PSC market (id. ¶ 122). CCT 9 does not allege that it suffered antitrust injury from CleanTech’s enforcement of its patent rights. 10 Rather, CCT alleges that it, as well as the market as a whole, suffered an injury to competition as 11 a result of CleanTech’s effort to conspire to consolidate the market and monopolize the market 12 power into one entity. (Id. ¶¶ 110, 113, 120, 121, 122, 133, 136, 137.) 13 Accordingly, the Court finds that CCT properly alleges an antitrust injury and thus has 14 standing to pursue its antitrust claims. See Austin, 979 F.3d at 739. 15 16 B. 17 In order to state a valid claim under the Sherman Act, a plaintiff must allege both that a Market Power 18 “relevant market” exists and that the defendant has power within that market. Newcal Indus., 19 Inc. v. Ikon Office Solution, 513 F.3d 1038, 1044 (9th Cir. 2008). CCT brings one of its antitrust 20 claims under § 1 of the Sherman Act, which governs restraint of trade and tying, and another 21 under § 2 of the Sherman Act, which governs monopolization and attempted monopolization. 22 The “relevant market” and “market power” requirements apply identically under these two 23 sections of the Sherman Act. Id. at 1044 n.3. CleanTech does not challenge CCT’s Clayton Act 24 claim. And though antitrust law requires allegations of product market, a geographic market, 25 and harm to competition, CleanTech does not challenge any of CCT’s allegations related to 26 those requirements. See id. at 1045. Rather, CleanTech only challenges the sufficiency of 27 CCT’s market-power allegation. Thus, that is the issue that the Court will address below. 28 12cv239 7 1 “Market power is the ability to raise price profitability by restricting output; when a party 2 has sufficient market power to exclude competition or control prices, that party possesses 3 monopoly power.” DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1119, 1136 (9th Cir. 4 2010) (citation and internal quotation marks omitted). Market power need not be pled with 5 specificity, and whether a defendant actually possesses market power is a factual question. 6 Newcal, 513 F.3d at 1045, 1051. A plaintiff may plead market power through allegations of 7 direct evidence showing the effects of anticompetative behavior, or indirect evidence of market 8 power. To demonstrate market power indirectly, a plaintiff must define the relevant market, and 9 show that (1) the defendant has a dominant share of that market, and (2) that there are significant 10 barriers to entry and existing competitors lack the capacity to increase their output in the short 11 run. Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1439 (9th Cir. 1995) (the “barriers to 12 entry” test looks at not only whether “there are significant barriers to entry [but also whether] . . . 13 existing competitors lack the capacity to increase their output in the short run”). Additionally, to 14 bring a claim for attempted monopolization, rather than pleading monopoly power, a plaintiff 15 may plead a “dangerous probability” that the defendant may be able to achieve monopoly power. 16 Newcal, 513 F.3d at 1044 n.3. 17 CleanTech argues that “the only allegation of market power is that CleanTech holds the 18 Eley Patent and Noll Patent,” and there are no other allegations to support any antitrust 19 violations regarding those patents. (Def.’s Mot. 11:11–17.) It contends that CCT’s Cartwright 20 Act claims fail for the same reasons. (Id. at 11:18–12:6.) In response, CCT argues that “it 21 alleges facts sufficient to support an indirect inference that Cleantech possesses market power in 22 the PSC market,” identifying allegations throughout the complaint to support its argument. 23 (Pl.’s Opp’n 10:18–11:3.) 24 As briefly discussed above, CCT adequately alleges that the relevant market here is the 25 PSC conversion market. (See Compl. ¶¶ 85, 102, 110, 121, 133, 139.) CCT also alleges that 26 CleanTech has taken action to remove competitors from that market in order to dominate it. (Id. 27 ¶¶ 93–97, 100–02, 113–14, 121–23, 133, 136–37.) Specifically, CleanTech acquired both 28 competing patents, the Eley patents and Noll patents, concerning the PSC conversion process in 12cv239 8 1 the United States with the intent to “consolidate the ownership” of the intellectual-property 2 rights to the PSC technology in order to corner the PSC market by excluding all other market 3 participants. (Id. ¶¶ 95–97, 108–10.) A prime example of this exclusionary behavior is 4 CleanTech’s alleged attempt to exclude CCT—the only licensee under the Eley Patents—from 5 the PSC market by terminating a license agreement that granted CCT rights to use the Eley 6 Patents. (Id. ¶¶ 98–106.) This type of exclusionary behavior also constitutes a substantial 7 barrier to entry into the market for any company considering developing its own offering of PSC 8 services. (See id. ¶¶ 72, 77.) Additionally, CCT alleges that in a market which already 9 maintains high entry costs in research, development, and manufacturing of the equipment, it is 10 unlikely that there will be additional entry into the PSC market as a result of CleanTech’s 11 behavior. (Id. ¶ 122.) From these allegations, the Court can reasonably infer that CleanTech has 12 indirect market power in the PSC conversion market, and that there is a “dangerous possibility” 13 that CleanTech may be able to achieve monopoly power.4 See Rebel Oil, 51 F.3d at 1439. 14 Finally, CleanTech’s argument regarding patent rights and market power are misguided. 15 Contrary to CleanTech’s contentions, CCT does not allege that CleanTech obtained its patents 16 through fraud on the Patent Office. Moreover, CCT is not a patent-infringement plaintiff and is 17 not alleging that as a part of CleanTech’s conspiracy to monopolize the PSC market that 18 CleanTech improperly maintained infringement actions against CCT. Instead, CCT alleges that 19 CleanTech, through its conspiracy with Vande Vegte, attempted to consolidate market power in 20 one entity, wrongfully terminated at least one patent, and created artificially high barriers to 21 entry into the PSC market. (Compl. ¶¶ 112-16, 119-22, 133, 136-37.) Therefore, the Court 22 rejects CleanTech’s argument that this action is a matter of patent-enforcement rights. 23 24 25 4 The Cartwright Act is California’s antitrust law that “was modeled after the Sherman Act.” Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1160 (9th Cir. 2001). 26 Accordingly, “[t]he analysis under California’s antitrust law mirrors the analysis under federal law because the Cartwright . . . was modeled after the Sherman Act.” Id. (citations omitted). 27 Therefore, because CleanTech’s argument against CCT’s Cartwright Act claim is predicated on the insufficiency of CCT’s Sherman Act claims, CleanTech also fails to show that CCT’s 28 Cartwright Act claim is insufficiently pled as well. 12cv239 9 1 C. 2 The Noerr-Pennington doctrine protects activities by parties to influence government Noerr-Pennington Doctrine 3 policy or legislation for antitrust claims. See E. R.R. Presidents Conference v. Noerr Motor 4 Freight, Inc., 365 U.S. 127, 135 (1961); United Mine Workers v. Pennington, 381 U.S. 657, 670 5 (1965). The doctrine nominally began as a judicially-created limitation on the scope of the 6 Sherman Act with respect to activities by parties to petition the government to take a certain 7 course of action beneficial to them and harmful to competitors. See, e.g., Noerr, 356 U.S. at 8 135. The doctrine has since been extended to protect those who petition for other forms of 9 governmental actions. See, e.g., Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508 10 (1972) (administrative and judicial proceedings); City of Columbia v. Omni Outdoor Adver., 11 Inc., 499 U.S. 365 (1991) (municipal ordinances). The doctrine has also been expanded to 12 include litigation to protect rights such as patents. See Prof’l Real Estate Investors v. Columbia 13 Pictures Indus., Inc., 508 U.S. 49, 60 (1993). The Noerr-Pennington doctrine protects “not only 14 petitions sent directly to the court in the course of litigation, but also ‘conduct incidental to the 15 prosecution of the suit.’” Sosa v. DIRECTV, Inc., 437 F.3d 923, 934-35 (9th Cir. 2006). The 16 Ninth Circuit has held that “communications between private parties are sufficiently within the 17 protection of the Petition Clause to trigger the Noerr-Pennington doctrine, so long as they are 18 sufficiently related to petitioning activity.” Id. at 935. 19 CleanTech contends that the litigation between Vande Vegte and CCT—which the Court 20 again emphasizes is not alleged in the complaint—does not fall within one of the recognized 21 circumstances to lose Noerr-Pennington protection, and thus the litigation is protected by the 22 doctrine. (Def.’s Mot. 8:21–25.) CCT responds that the litigation is not protected by the Noerr23 Pennington doctrine because references to the litigation do not involve “petitioning activity that 24 falls under the Noerr-Pennington umbrella.” (Pl.’s Opp’n 12:17–25, 18:17–14:12.) CleanTech 25 appears to challenge an allegation that it characterizes as stating that “Clean Tech conspired with 26 SVV to engage in litigation against CCT to monopolize the relevant market.” (Def.’s Mot. 27 7:11–12.) However, the application of the Noerr-Pennington doctrine appears to substantively 28 center around the allegation that “CleanTech’s president, Ed Hennessey manifested the 12cv239 10 1 Defendants’ intent to manipulate and conspire to monopolize the PCS [sic] market when he told 2 CCT on March 3, 2011, that he ‘had talked with Steve Vande Vegte and can make this [State 3 Court] lawsuit go away if you will cooperate with me’ in working together to market the PSC 4 conversion technology.”5 (Compl. ¶ 107.) 5 CCT refers to litigation only in that Mr. Hennessey, CleanTech’s president, used it at 6 leverage to attempt to compel CCT to “work[] together to market the PSC conversion 7 technology.” (See Compl. ¶ 107.) But based on the allegations in the complaint, Mr. Hennessey 8 does not appear to be party to the SVV litigation or the litigation between Vande Vegte and 9 CCT; the SVV litigation is between Vande Vegte and Clean Earth Solutions (id. ¶ 103), and the 10 unalleged second litigation appears to be between Vande Vegte and CCT. And though at first 11 glance the offer seems to be for some sort of settlement, that would be an inaccurate 12 characterization because Mr. Hennessey is not a party to either litigation, and thus he lacks the 13 authority to make the lawsuit “go away.” 14 More importantly, CleanTech puts the cart before the horse. Litigation is only implicated 15 in order to support an alleged scheme to violate antitrust law. CleanTech does not, however, 16 provide any substantive analysis as to whether the Noerr-Pennington doctrine even applies. It 17 neither specifically identifies any petitions sent directly to the court in the course of nor any 18 conduct incidental to the prosecution of the either litigation. See Sosa, 437 F.3d at 934-35. 19 Rather, CleanTech merely starts its analysis from the presumption that the doctrine applies, and 20 then goes on to argue that the unalleged litigation between Vande Vegte and CCT does not fall 21 within the “sham” exception. (See Def.’s Mot. 7:15–19, 7:20–8:25.) CleanTech has not shown 22 that it is entitled to the benefit of such a presumption. Simply put, CleanTech fails specifically 23 identify any petitioning activity, and also fails to show that either litigation is entitled to Noerr24 Pennington protection. Therefore, without more, the Court cannot conclude that either litigation 25 26 27 5 Though it is unclear which litigation that the “State Court lawsuit” refers to, the analysis below applies to both the SVV litigation and the unalleged second lawsuit between Vande Vegte 28 and CCT. 12cv239 11 1 is protected by the Noerr-Pennington doctrine.6 2 3 IV. CONCLUSION & ORDER 4 In light of the foregoing, the Court DENIES CleanTech’s motion to dismiss. (Doc. 14.) 5 IT IS SO ORDERED. 6 7 DATED: August 20, 2012 8 9 COPY TO: 10 HON. JAN M. ADLER UNITED STATES MAGISTRATE JUDGE 11 ALL PARTIES/COUNSEL 12 M. James Lorenz United States District Court Judge 13 14 15 16 17 18 19 20 21 22 23 24 6 CleanTech further moves to dismiss CCT’s UCL claim on the grounds that it is barred 25 by California’s absolute litigation privilege. “The usual formation is that the privilege applies to any communication (1) made in judicial or quasi judicial proceedings; (2) by litigants or other 26 participants authorized by law; (3) to achieve objects of the litigation; and (4) that have some connection or logical relation to the action.” People v. The Pac. Lumber Co., 158 Cal. App. 4th 27 950, 958 (2008) (internal citations and quotation marks omitted). CleanTech fails to identify any communication or action that falls under this protection. Therefore, the Court rejects 28 CleanTech’s absolute-litigation-privilege argument. 12cv239 12
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