Toyo Tire & Rubber Co., Ltd. et al v. Atturo Tire Corporation et al.
Filing
362
MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/30/17.Mailed notice(ca, )
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TOYO TIRE & RUBBER CO.,
LTD. and TOYO TIRE U.S.A.
CORP.,
Plaintiffs,
v.
ATTURO TIRE CORP. and
SVIZZ-ONE CORPORATION,
LTD.,
Defendants.
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Case No. 14 C 0206
Judge John Z. Lee
MEMORANDUM OPINION AND ORDER
Plaintiffs Toyo Tire & Rubber Co., Ltd. and Toyo Tire U.S.A. Corp. (“Toyo”), brought
this action against Defendants Atturo Tire Corporation (“Atturo”) and Svizz-One Corporation,
Ltd., alleging patent infringement, trade dress infringement, trade dress dilution, and other state
law claims concerning certain vehicle tires. Atturo filed seven counterclaims arising under state
common law and state and federal statutes. Toyo has moved for summary judgment as to all of
Atturo’s counterclaims based upon the Noerr-Pennington doctrine, arguing that the
counterclaims arise out of Toyo’s actions before the United States International Trade
Commission (ITC) and are, therefore, protected from suit. For the reasons that follow, Toyo’s
motion for summary judgment [331] is denied.
Background
In 2013, prior to commencing its action before this Court, Toyo filed a complaint with
the ITC, requesting that it investigate various manufacturers and distributors of foreign tires (the
1
“ITC respondents” or “respondents”). Pl.’s LR 56.1(a)(3) Stmt. ¶¶ 5, 7, ECF No. 331-2. Toyo
alleged that these respondents were importing and selling tires that it believed infringed various
Toyo design patents. Id. ¶¶ 6, 8. Atturo was not among the named respondents, nor were any
Atturo tires listed among the allegedly infringing tires in Toyo’s complaint.
Def.’s LR
56.1(b)(3)(C) Stmt. ¶¶ 43, 45, ECF No. 340-3.
At Toyo’s request, the ITC agreed to institute an investigation. Pl.’s LR 56.1(a)(3) Stmt.
¶ 11. The investigation, however, was never carried out. Instead, each of the respondents
identified in Toyo’s complaint (which, again, did not include Atturo) either defaulted, stipulated
to consent orders, or entered into settlement agreements with Toyo, following which the ITC
terminated its investigation as to each individual entity at Toyo’s request. Id. ¶¶ 13–16.
The terms of the relevant settlement agreements and the manner in which the ITC
terminated its investigation are central to the issues raised in the present motion. The settlement
agreements, which were identical in all material respects, provided that the named respondent
would refrain from importing and selling any “Accused Tires”—i.e., the tires listed in the ITC
complaint—as well as additional tires that Toyo believed infringed upon its intellectual property
rights. Id. ¶ 26. One of these additional tires was the “Atturo Trail Blade M/T,” a tire produced
by Atturo. Id. ¶¶ 26, 28. Thus, notwithstanding the fact that neither Atturo nor the Atturo Trail
Blade M/T was identified in Toyo’s complaint, the named respondents agreed in their settlement
agreements with Toyo not to sell the Atturo Trail Blade M/T. Id. ¶ 29; Def.’s LR 56.1(b)(3)(C)
Stmt. ¶ 52.
The agreements were negotiated, finalized, and executed solely between Toyo and the
individually named respondents; the ITC took no part in the settlement negotiations. Def.’s LR
56.1 (b)(3)(C) Stmt. ¶¶ 50–51, 53. Moreover, the agreements contained no provision requiring
2
approval by the ITC or any other government agency prior to taking effect. Id. ¶¶ 50–51.
Rather, the agreements were self-executing and became binding even before Toyo requested that
the ITC terminate its investigation. Id.; see Mot. Summ. J. Hr’g Tr. 48:1–2, ECF No. 360
(statement by Toyo’s counsel that the agreements were enforceable “as a matter of contract
law”).
Because the ITC was not involved in the settlement negotiations, the execution of the
settlement agreements did not automatically terminate the ITC proceedings. And so, with two
exceptions, 1 Toyo submitted the settlement agreements to the ITC along with requests that the
ITC terminate its investigation of the named respondents. Pl.’s LR 56.1(a)(3) Stmt. ¶¶ 16, 18.
When reviewing a request to terminate a proceeding based upon a settlement agreement
between the parties, the ITC regulations provide as follows:
Regarding terminations by settlement agreement, consent order, or
arbitration agreement under § 210.21 (b), (c) or (d), the parties may
file statements regarding the impact of the proposed termination on the
public interest, and the administrative law judge may hear argument,
although no discovery may be compelled with respect to issues
relating solely to the public interest. Thereafter, the administrative law
judge shall consider and make appropriate findings in the initial
determination regarding the effect of the proposed settlement on the
public health and welfare, competitive conditions in the U.S. economy,
the production of like or directly competitive articles in the United
States, and U.S. consumers.
19 C.F.R. § 210.50(b)(2). Nowhere do the regulations require the administrative judge to
consider the reasonableness or fairness of the settlement terms or any impact the
settlement agreement may have on third parties directly.
1
The two exceptions are a draft settlement agreement that Toyo sent to Doublestar Tyre
(“Doublestar”), one of the respondents named in the ITC complaint, and a settlement agreement entered
into with Vittore Wheel & Tire (“Vittore”) and RTM Wheel & Tire (“RTM”), two other respondents
named in the complaint. Def.’s LR 56.1(b)(3)(C) ¶¶ 60, 62. Because Doublestar filed consent order
stipulations with the ITC and Vittore and RTM defaulted in the ITC action, Toyo did not submit the
agreements to the ITC. Pl.’s Reply Supp. Summ. J. 2, ECF No. 344.
3
On November 20, 2013, Atturo submitted a letter in response to Toyo’s requests for
termination, noting its concern “that various executed and proposed Settlement Agreements in
this investigation represent an abuse of the [ITC] process, and are being used to unfairly restrict
competition in the United States market for tires.” Pl.’s LR 56.1(a)(3) Stmt., Ex. 26, at 2, ECF
No. 331-29. The ITC staff then reviewed Toyo’s requests to terminate and provided its view for
the administrative law judge’s consideration. See id. ¶ 21.
In its written response, the staff at the ITC noted that it had no objection to Toyo’s
requests, stating that “the Staff does not believe that termination of the investigation based on the
settlement agreement[s] at issue would be contrary to the public health and welfare, competitive
conditions in the U.S. economy, the production of like or directly competitive articles in the
United States, or U.S. consumers.” Id. (citing 19 C.F.R. § 210.50(b)(2)). With respect to
Atturo’s letter, the staff stated that it “apparently was found not to raise public interest concerns
that should prevent the settlements submitted in this investigation.” Id. Soon thereafter, stating
its agreement with the staff’s analysis of these public interest factors, the ITC granted Toyo’s
request that it terminate the investigation. Id. ¶ 24. Although the ITC acknowledged that Toyo’s
request was “based upon” the various settlement agreements, id. ¶ 25, the ITC did not review the
agreements for their specific impact on Atturo, nor did it mention Atturo in terminating the
investigation, see Def.’s LR 56.1(b)(3)(C) ¶¶ 50, 58.
Toyo filed its suit against Atturo in this Court on January 13, 2014, asserting claims of
design patent infringement, trade dress infringement, trade dress dilution, common law unfair
competition, common law unjust enrichment, and violation of the Illinois Deceptive Trade
Practices Act. Compl. ¶¶ 32–71, ECF No. 1. Atturo answered and asserted seven counterclaims:
(1) common law tortious interference with existing contracts; (2) common law tortious
4
interference with prospective business expectancy; (3) common law defamation; (4) common
law unfair competition; (5) common law unjust enrichment; (6) violation of the Illinois
Deceptive Trade Practices Act; and (7) violation of § 43(a)(1)(b) of the Lanham Act. Am.
Answer & Countercls. ¶¶ 100–66, ECF No. 39.
Atturo’s counterclaims arise primarily from the settlement agreements that Toyo
negotiated in the ITC action. 2 For example, in its first counterclaim, Atturo states that “Toyo
used leverage as a Complainant in the Toyo ITC action to expand the scope of the settlement
agreement with [one of the named ITC respondents] beyond the intellectual property at issue in
the Toyo ITC Action to include false trade dress infringement allegations against the Atturo Trail
Blade M/T Tire.” Id. ¶ 105. On this basis, Atturo claims that “Toyo unlawfully tortiously
interfered with an existing contract between Atturo and [one of the respondents].” Id. ¶ 108. On
May 20, 2016, Toyo moved for summary judgment as to Atturo’s counterclaims, asserting they
are barred by the Noerr-Pennington doctrine.
Analysis
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In this case, the
2
Atturo’s second through seventh counterclaims also rely upon on Toyo’s draft settlement
agreement with Doublestar and the agreement with Vittore and RTM, but neither of these documents was
submitted to the ITC. E.g., id. ¶¶ 112, 115, 121, 130, 132, 139, 141, 148, 150, 158.
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parties acknowledge that no material facts are in dispute. 3 Pl.’s Mem. Supp. Summ. J. 7–8, ECF
No. 331-1; Def.’s Mem. Opp. Summ. J. 15 n.9, ECF No. 340. The sole issue is a legal one:
whether the Noerr-Pennington doctrine immunizes Toyo from Atturo’s counterclaims.
I.
The Noerr-Pennington Doctrine
The Noerr-Pennington doctrine protects those who petition governmental actors for
redress from liability based on their petitioning activity. E. R.R. Presidents Conference v. Noerr
Motor Freight, Inc., 365 U.S. 127, 136–38 (1961); accord United Mine Workers v. Pennington,
381 U.S. 657, 669 (1965).
The doctrine originated in the antitrust context based on two
principles.
The first is that the antitrust laws, which generally bar concerted efforts by private actors
to restrain trade, should not bar individuals from joining together in efforts to persuade
governmental representatives to take action, even if similar concerted efforts to persuade private
decisionmakers might be unlawful. Noerr, 365 U.S. at 137. This principle follows in part from
basic notions of causation: namely, when the government acts based on petitioning, any
purportedly unlawful result is most proximately caused by government action, not by the private
petitioning. See F.T.C. v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 424–25 (1990);
Campbell v. City of Chi., 639 F. Supp. 1501, 1511 (N.D. Ill. 1986), aff’d, 823 F.2d 1182 (7th Cir.
1987). Conversely, where private parties take unlawful action merely hoping the government
will later ratify it, government action is not an intervening cause, and Noerr-Pennington
immunity does not arise. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 503–
3
Atturo’s memorandum in opposition to Toyo’s motion highlights that Toyo’s motion does not
mention the draft settlement agreement with Doublestar and the agreement with Vittore and RTM that
were not submitted to the ITC. Toyo does not dispute this fact. Pl.’s Reply at 2. Atturo also contends
that summary judgment is not appropriate because there are genuine issues of material fact as to whether
the “sham” exception to Noerr-Pennington immunity applies. Def.’s Mem. Opp. Summ. J. at 5, 13.
Because the Court holds that Toyo’s settlement agreements are not protected activity under NoerrPennington, there is no need to consider these issues.
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04 (1988); In re Brand Name Prescription Drugs Antitrust Litig., 186 F.3d 781, 789 (7th Cir.
1999); see also Superior Court Trial Lawyers Ass’n, 493 U.S. at 424–25.
The second principle underlying Noerr-Pennington is that prohibitions on petitioning
efforts “would raise important constitutional questions” under the First Amendment. Noerr, 365
U.S. at 137–38. Insofar as the antitrust laws would create liability that conflicts with the First
Amendment right of petition, the right of petition should prevail. See id.
Noerr-Pennington has since evolved from these well-defined roots. The Supreme Court
has recognized that the principles underlying the doctrine also warrant protection for individuals
who “use the channels and procedures of state and federal agencies and courts to advocate their
causes and points of view.” Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510–
11 (1972). Thus, in addition to petitioning the legislature, instituting a lawsuit is protected
petitioning activity under Noerr-Pennington. Id. Additionally, Noerr-Pennington immunity has
expanded beyond the antitrust context out of the recognition that the doctrine’s foundations—
particularly those sounding in the First Amendment—have force beyond the antitrust laws. See
BE & K Constr. Co. v. N.L.R.B., 536 U.S. 516, 526 (2002); In re Innovatio IP Ventures, LLC
Patent Litig., 921 F. Supp. 2d 903, 911 (N.D. Ill. 2013) (observing that “the Seventh Circuit has
applied the [Noerr-Pennington] doctrine broadly,” and collecting cases in which the Seventh
Circuit and other courts have applied Noerr-Pennington to claims arising under federal and state
statutes and state common law). 4
Additionally, Noerr-Pennington immunizes not only conduct that constitutes core
petitioning activity, but also conduct with anticompetitive consequences “independent of any
government action” insofar as the conduct is “‘incidental’ to a valid effort to influence
4
The parties here do not dispute that Noerr-Pennington can apply to each of the different causes of
action specified in Atturo’s counterclaims, nor do they suggest Noerr-Pennington should apply differently
to the different causes of action.
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government action.” Allied Tube, 486 U.S. at 499 (quoting Noerr, 365 U.S. at 143). Whether
conduct is sufficiently “incidental” to petitioning activity to warrant immunity depends upon the
“context and nature” of the conduct and the “source” of anticompetitive consequences. Id. at
499–500, 503–04. In making this determination, it is necessary to consider the fundamental
nature of the conduct at issue and decide whether it is akin to traditionally unlawful activity, on
the one hand, or tantamount to the political activity Noerr-Pennington is designed to protect, on
the other. Id. at 506–07. To guide this analysis, the Supreme Court has held that enough
incidental conduct must be protected so as to afford “breathing space” to the right of petition.
BE & K, 536 U.S. at 531. In other words, some conduct that does not directly implicate First
Amendment values should be protected so as not to chill core petitioning activity. Id.
On the other hand, an activity that is “mere sham”—i.e., activity that “is actually nothing
more than an attempt to interfere directly with the business relationships of a competitor”—is not
entitled to protection under Noerr-Pennington. Noerr, 365 U.S. at 144. In the case of lawsuits,
the Supreme Court has developed a two-part test for determining when a lawsuit is a “sham.”
“First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could
realistically expect success on the merits.” Prof’l Real Estate Investors, Inc. v. Columbia
Pictures Indus., Inc., 508 U.S. 49, 60 (1993). Winning lawsuits are per se immune, id. at 60 n.5,
and courts have invariably held that lawsuits terminating in a favorable settlement are also
objectively reasonable and are not shams, New W., L.P. v. City of Joliet, 491 F.3d 717, 722 (7th
Cir. 2007); see also Theme Promotions, Inc. v. News Am. Mktg. FSI, 546 F.3d 991, 1008 (9th
Cir. 2008). If a court determines a suit is objectively baseless, it continues to the second part of
the inquiry: whether the lawsuit “conceals ‘an attempt to interfere directly with the business
relationships of a competitor’” by using the lawsuit as an “anticompetitive weapon.” Prof’l Real
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Estate Investors, 508 U.S. at 60–61 (quoting Noerr, 365 U.S. at 144; City of Columbia v. Omni
Outdoor Advert., Inc., 499 U.S. 365, 380 (1991)).
II.
Noerr-Pennington Applied to Toyo’s ITC Conduct
While Noerr-Pennington is understood to protect the act of filing a lawsuit (subject to the
sham exception), it is less clear how the doctrine applies to other litigation conduct. There
appears to be little dispute that “core petitioning activity” in the litigation context is limited to
direct communications with the court. See Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180,
1184 (9th Cir. 2005) (“A complaint, an answer, a counterclaim and other assorted documents and
pleadings, in which plaintiffs or defendants make representations and present arguments to
support their request that the court do or not do something, can be described as petitions without
doing violence to the concept.”); Cardtoons, L.C. v. Major League Baseball Players Ass’n, 208
F.3d 885, 892 (10th Cir. 2000). But less unanimity exists as to what litigation-based conduct—
outside of direct court communications—would qualify as conduct “incidental” to petitioning
activity, thereby qualifying for Noerr-Pennington immunity.
For example, courts generally agree that the content of presuit demand letters that
threaten litigation or seek settlement is immune from suit under Noerr-Pennington.
In re
Innovatio IP Ventures, 921 F. Supp. 2d at 912 & n.5 (collecting cases). The question of whether
the negotiation and execution of settlement agreements also fall under “incidental” conduct has
met diverging views. Compare Columbia Pictures Indus., Inc. v. Prof’l Real Estate Investors,
Inc., 944 F.2d 1525, 1528 (9th Cir. 1991) (holding that “[a] decision to accept or reject an offer
of settlement is conduct incidental to the prosecution of the suit and not a separate and distinct
activity which might form the basis for antitrust liability”), with In re Nexium (Esomeprazole)
Antitrust Litig., 968 F. Supp. 2d 367, 395 (D. Mass. 2013) (stating that “[c]ourts are largely
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uniform in their view that private settlement agreements entered into during the pendency of
litigation that are neither presented to nor approved by the judge presiding over the dispute fall
outside the ambit of Noerr-Pennington immunity,” and collecting cases).
Here, Toyo argues that the settlement agreements between it and the respondents in the
ITC action are either core petitioning activity or conduct incidental to petitioning activity under
Noerr-Pennington. 5
In support of its argument that the settlement agreements are core
petitioning activity, Toyo points to the fact that it submitted the agreements to the ITC as part of
its requests for termination of the ITC proceedings. The Court does not find this argument
persuasive for a number of reasons.
It is necessary at the outset to precisely define the “activity” that is in dispute. Toyo
would have the Court consider the “activity” to comprise the settlement agreements in their
totality. But Atturo’s counterclaims arise only from the specific provisions in the settlement
agreements that restrict the respondents’ ability to purchase and distribute Atturo’s tires (the
“Atturo provisions”). The other provisions that involve other tires are entirely irrelevant to
Atturo’s claims. Accordingly, the Atturo provisions in the settlement agreements between Toyo
and the ITC respondents constitute the conduct for which Toyo is seeking immunity under the
Noerr-Pennington doctrine.
See Allied Tube, 486 U.S. at 499 (“The scope of [Noerr-
Pennington] protection depends [ ] on the source, context, and nature of the anticompetitive
restraint at issue.”). Furthermore, before applying the Noerr-Pennington doctrine, the Court has
to examine whether Toyo’s challenged conduct is in fact related to the prosecution of the suit or
“can be more fairly said to be outside of or unrelated to the petitioning activity.” United Tactical
5
In framing their arguments, the parties treat Toyo’s conduct in this case as the conduct of a party
in a lawsuit. Of course, the ITC is an executive agency and not a court, but the parties do not seem to
believe this matters for present purposes, and they are likely correct. See Cal. Motor Transp. Co., 404
U.S. at 510–11.
10
Sys., LLC v. Real Action Paintball, Inc., Case No. 14-cv-4050-MEJ, 2016 WL 524761, at *6
(N.D. Cal. Feb. 10, 2016).
Viewed in this way, it is difficult to see how the submission of the Atturo provisions
would constitute core petitioning activity in Toyo’s proceedings before the ITC. Recall that
Toyo’s complaint does not even mention Atturo or Atturo tires, and there is nothing in the record
to indicate that the scope of the requested investigation included Atturo or its tires. It only makes
sense that the metes and bounds of core petitioning activity in the context of litigation must be
determined by reference to the parties and claims to the suit. The jurisdiction of a court (or the
agency tribunal in this case) is limited to the parties named in a complaint seeking redress and
the scope of the claims alleged. Consider a hypothetical where Toyo and an ITC respondent
enter into a settlement agreement without the Atturo provisions and then enter into a separate
agreement where the respondent agrees to boycott Atturo tires. As Toyo’s counsel conceded at
oral argument, the latter agreement would not enjoy Noerr-Pennington immunity. Hr’g Tr. at
48:17–49:9. It would be odd to allow Toyo to insulate itself from liability simply by appending
the provisions (which are not relevant to the proceedings) to the settlement agreements that it
eventually submitted to the ITC. Toyo’s efforts to shoehorn whatever claims it may have with
respect to the Atturo tires into the ITC proceeding (when it could have, but did not, list them in
its ITC complaint) under the guise of motions to terminate “conceals an attempt to interfere
directly with the business relationships of a competitor” by using the ITC proceeding as an
“anticompetitive weapon,” thereby constituting a “sham” ineligible for Noerr-Pennington
protection. Prof’l Real Estate Investors, 508 U.S. at 60–61 (internal quotations omitted). 6
6
To be clear, this is not to say that Toyo’s complaint and the resulting ITC proceeding was a sham as a
whole. Rather, Toyo’s use of the ITC proceedings to immunize anti-competitive conduct against Atturo—a third
party who was not mentioned in the ITC complaint—was a sham vis-à-vis Atturo. See IPtronics Inc. v. Avago Tech.
U.S., Inc., Case No. 14-cv-5647-BLF, 2015 WL 5029282, at *6–7 (N.D. Cal. Aug. 25, 2015) (to determine whether
11
This conclusion is buttressed by the fact that the settlement agreements were private
agreements that did not require ITC approval to become effective in the first place. Although
they were executed after the commencement of the ITC proceedings, the ITC did not mandate
them or participate in their negotiation. Def.’s LR 56.1(b)(3)(C) ¶¶ 48, 50. Nor did the ITC
require the negotiation of the agreements as a prerequisite to termination of its investigation. Id.
The agreements delineated what tires the signators would and would not sell in the U.S. market
and with whom they would and would not deal, Pl.’s LR 56.1(a)(3) ¶ 26, and were fully
enforceable from their signing without regard to the ITC’s later decision to terminate its
investigation. Def.’s LR 56.1(b)(3)(C) ¶ 50. As the Seventh Circuit has recognized, the NoerrPennington doctrine “does not authorize anticompetitive action in advance of government’s [or
the ITC’s] adopting the industry’s anticompetitive proposal. The doctrine applies when such
action is the consequence of legislation or other governmental action, not when it is the means
for obtaining such action.” In re Brand Name Prescription Drugs, 186 F.3d at 789 (emphasis in
original). Here too the agreement between Toyo and the various ITC respondents with regard to
Atturo was an action that was taken by the parties themselves, unrelated to the ITC proceeding.
Holding otherwise would allow actors to shield anticompetitive or tortious conduct that
harms third parties simply by appending it to any host of motions in the course of a lawsuit. For
example, A could sue B for breach of contract, agree to settle its suit against B with one of the
conditions being that B breach an existing contract with C, file a motion to dismiss the suit
against B with the settlement agreement attached, and then assert Noerr-Pennington immunity
ITC proceeding was a sham, court looked only to portion of proceeding related to the party against whom the NoerrPennington doctrine was being asserted). For this reason, Toyo’s reliance on another court’s decision
concerning Toyo’s actions before the ITC, Toyo Tire & Rubber Co. v. CIA Wheel Grp., No.
SACV15246JLSDFMX, 2015 WL 4545187 (C.D. Cal. July 8, 2015), is misplaced. In that case, the court
considered the Noerr-Pennington doctrine solely as applied to Toyo’s actions before the ITC as such, not
the settlement agreements at issue in this case. Id. at *3.
12
when later sued by C for tortious interference. The purposes underlying the Noerr-Pennington
doctrine do not require such a result. Furthermore, allowing C to proceed with its claim against
A would not unreasonably chill A’s right to petition the court with respect to its original claims
against B. See United Tactical Sys., 2016 WL 524761, at *7 (finding Noerr-Pennington did not
apply where “at least some of the terms in the . . . settlement agreements and related agreed-on
conduct go beyond the [party’s] petitioning activities and its claims in [a prior action]”); Select
Portfolio Servicing v. Valentino, 875 F. Supp. 2d 975, 987 (N.D. Cal. 2012) (finding NoerrPennington inapplicable because defendant’s challenged conduct was based on a settlement
agreement term unrelated to the petitioning activity in the underlying lawsuit); cf. Broadcast
Music, Inc. v. Columbia Broadcasting Sys., Inc., 441 U.S. 1, 13 (1979) (“Of course, a consent
judgment, even one entered at the behest of the Antitrust Division, does not immunize the
defendant from liability for actions, including those contemplated by the decree, that violate the
rights of nonparties.”). For these reasons, the Court finds that Toyo’s submission of the Atturo
provisions as attachments to its motions to terminate the ITC proceedings did not constitute core
petitioning activity.
Alternatively, Toyo argues that the settlement agreements fall within the NoerrPennington doctrine because they are conduct incidental to its petitioning activity. This again
requires the Court to look to the context and nature of Toyo’s settlement agreements, as well as
the source of the alleged resulting harm, with a mind to giving adequate breathing space to the
right to petition. Allied Tube, 486 U.S. at 499–500, 503–04; BE & K, 536 U.S. at 531. In the
end, Toyo’s alternative argument also fails.
First, as discussed above, the agreements between Toyo and the ITC respondents
regarding Atturo are beyond the scope of Toyo’s complaint and the ITC investigation.
13
Accordingly, they were not incidental to Toyo’s petitioning activity before the ITC. See United
Tactical Systems, 2016 WL 524761, at *6 (denying immunity for conduct “outside of or
unrelated to the petitioning activity”). Second, the settlement agreements were the product of
negotiations between private parties, and the nature of the agreements is much the same: private
contracts entered into between private parties. Such private settlement agreements fall outside of
Noerr-Pennington immunity. See Andrx Pharm., Inc. v. Biovail Corp. Int’l, 256 F.3d 799, 818–
19 (D.C. Cir. 2001); In re Nexium, 968 F. Supp. 2d at 395 (collecting cases). This is true even in
those cases where the parties obtain a consent judgment, signed and approved by a judge, that
sets forth the terms of their settlement. In re Nexium, 968 F. Supp. 2d at 396–97. This is
because, in such cases, the parties dictate the terms of the settlement and their actions are not
intended to persuade a judicial officer to obtain a redress of grievances. Id.; accord In re
Androgel Antitrust Litig., Case No. 1:09-MD-2084-TWT, 2014 WL 1600331, at *7–8 (N.D. Ga.
Apr. 21, 2014) (holding that consent judgments are akin to private agreements and not entitled to
Noerr-Pennington immunity); In re Ciprofloxacin Hydrochloride Antitrust Litig., 261 F. Supp.
2d 188, 212–13 (E.D.N.Y. 2003) (same); see also In re Cardizem CD Antitrust Litig., 105 F.
Supp. 2d 618, 640–42 (E.D. Mich. 2000).
In response, Toyo contends that the settlement agreements in question were presented to
and approved by the ITC administrative law judge as part of Toyo’s motions to terminate the
ITC proceedings. But this argument has several problems. As an initial matter, it ignores the
fact that Atturo’s counterclaims are also based on a number of settlement agreements that were
never presented to the ITC. Am. Answer & Countercls. ¶¶ 112, 115, 121, 130, 132, 139, 141,
148, 150, 158. Furthermore, the settlement agreements that Toyo submitted to the ITC were a
fait accompli. They did not need the approval of the ITC judge to become effective. Def.’s LR
14
56.1 (b)(3)(C) Stmt. ¶¶ 50–51; Mot. Summ. J. Hr’g Tr. 48:1–2. Additionally, the Court is not
persuaded that the ITC’s review of the agreements—which was focused on broad public interest
factors, Pl.’s LR 56.1(a)(3) ¶¶ 21, 24—specifically considered, and thus can plausibly be said to
have endorsed, the injuries underlying Atturo’s counterclaims. Toyo’s counsel admitted as much
at oral argument. Hr’g Tr. at 14:24–15:8. 7 As a result, the Court finds that the settlement
agreements at issue here (or, perhaps, more precisely, the parties’ agreement as to Atturo) are
similar to the party-negotiated consent judgments discussed above and fall outside of the NoerrPennington doctrine.
The cases upon which Toyo relies are readily distinguishable. For example, Campbell v.
City of Chi., 639 F. Supp. 1501, 1511 (N.D. Ill. 1986), aff’d, 823 F.2d 1182 (7th Cir. 1987),
involved a settlement agreement between two taxicab companies and the City of Chicago. After
reviewing the history of the settlement negotiations, including discussions that resulted in the
passing of a favorable ordinance, the court found “the agreement reached here no more atypical
than any other lobbying effort made by a powerful lobbyist.” Id. at 1511. Similarly, A.D. Bedell
Wholesale Co. v. Philip Morris Inc., 263 F.3d 239 (3d Cir. 2001), involved a settlement
agreement that was negotiated between various tobacco manufacturers and numerous states. Id.
7
The ITC staff’s reference to a letter submitted by Atturo, which “apparently was found not to
raise public interest concerns,” Pl.’s LR 56.1(a)(3) ¶ 21, does not persuade the Court otherwise. Toyo
fails to specify who considered the letter and the basis for the staff’s conclusion. Additionally, the ITC’s
subsequent termination of the investigation made no mention of Atturo or its letter. Def.’s LR
56.1(b)(3)(C) ¶ 58. Toyo essentially argues that Atturo—like Toyo—had its opportunity to petition the
ITC and cannot complain that it lost. This argument has some superficial appeal. But the fact that Atturo
submitted a letter to the ITC regarding the propriety of the settlement agreements does not transform
Toyo’s submission of the settlement agreements into petitioning activity or conduct incidental to
petitioning activity. In effect, Atturo was left with two untenable choices. It could ignore Toyo’s actions
before the ITC (after all, Atturo was not a party to the ITC proceedings or previously involved in them),
or it could file its letter. It chose to do the latter. But, in doing so, Atturo was limited by the public
welfare standard in § 210.50(b)(2). It had no ability to oppose Toyo’s motion or the settlement
agreements on the ground that they would injure Atturo directly. The ITC staff’s opinion (which was
adopted by the administrative law judge) that the settlement agreements did not injure competition in the
domestic tire industry as a whole is hardly surprising.
15
at 253–54. Toyo also cites to Columbia Pictures Industries, Inc. v. Professional Real Estate
Investors, Inc., 944 F.2d 1525 (9th Cir. 1991), noting that, in that case, the Ninth Circuit found
that even the acceptance and denial of a settlement agreement pre-litigation was entitled to
Noerr-Pennington immunity. Id. at 1528. But the language in Columbia Pictures was dicta, and
in any event, “[s]ubsequent courts have limited Columbia Pictures’ holding to its facts, i.e., cases
involving the offer or rejection of a settlement.” United Tactical Systems, 2016 WL 524761, at
*6 (collecting cases). 8
Finally, the Court finds that subjecting private settlement agreements such as Toyo’s to
liability will leave adequate breathing space for the right to petition courts or agencies for
redress.
Parties in Toyo’s position remain free to file and settle their suits.
The First
Amendment values that lawsuits and similar agency proceedings implicate—notably,
“compensation for violated rights and interests, the psychological benefits of vindication, [and]
public airing of disputed facts,” Bill Johnson’s Rests., Inc. v. N.L.R.B., 461 U.S. 731, 743 (1983)
(citations omitted)—will not be undermined by refusing to immunize Toyo’s settlement conduct
with respect to Atturo in this case.
Parties in Toyo’s position have several different options. They can limit settlement
agreements to the scope the original complaint and seek express approval of their terms from the
judge. Or they can seek to include additional parties like Atturo, whose rights will be impacted
8
Toyo’s reliance on cases addressing other presuit activities, notably presuit demand letters, is also
misplaced. Reply at 6 n.8; see Sosa v. DIRECTV, Inc., 437 F.3d 923, 933–36 (9th Cir. 2006); In re
Innovatio IP Ventures, 921 F. Supp. 2d at 912 & n.5. There is good reason to distinguish presuit demand
letters from settlement agreements like those at issue here. Presuit demand letters are a unilateral action,
whereas the settlement agreements at issue here were not only bilateral in nature, but affected the rights of
a third party. Additionally, settlement agreements do not implicate the same First Amendment values as
presuit demand letters—notably, psychological vindication and the public airing of disputed facts—that
courts immunizing presuit demand letters have noted. Sosa, 437 F.3d at 936; see also In re Nexium, 968
F. Supp. 2d at 396–97 (distinguishing presuit demand letters on the basis that they are aimed at
“persuasion of a judicial officer to obtain a redress of grievances”).
16
by the settlement agreements, to the proceedings. In this way, they can ensure that their conduct
would qualify as core petitioning activity or conduct incidental to petitioning activity—precisely
the type of activity that the Noerr-Pennington doctrine is intended to protect.
Conclusion
For the foregoing reasons, the Court denies Toyo’s motion for summary judgment based
upon the Noerr-Pennington doctrine [331].
IT IS SO ORDERED.
ENTERED: 3/30/17
____________________________________
JOHN Z. LEE
United States District Judge
17
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