Digital Ally, Inc. v. Taser International, Inc.

Filing 105

MEMORANDUM AND ORDER granting 24 Motion to Dismiss. (Counts III-VIII are dismissed.) Signed by District Judge Carlos Murguia on 1/12/2017. (ydm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

DIGITAL ALLY, INC.,
Plaintiff,
v.
TASER INTERNATIONAL, INC.,
Defendant.

)
)
)
)
)
)
)
)
)
)

Case No. 16-2032

MEMORANDUM AND ORDER
Plaintiff Digital Ally, Inc., filed this lawsuit, alleging that defendant TASER International, Inc.,
violated federal and state antitrust and unfair competition law. Highly summarized, plaintiff claims
that defendant conspired with and bribed numerous municipalities to purchase its law enforcement
body cameras, effectively denying plaintiff market access. Plaintiff also raises claims of patent
infringement, but those claims are not presently before the court. Defendant moved to dismiss all of
the antitrust and unfair competition claims. (Doc. 24.) Among other arguments, defendant claims that
it is entitled to Noerr-Pennington1 immunity. The court agrees. For the following reasons, the court
grants defendant’s motion.
Plaintiff and defendant both sell body-worn cameras to law enforcement. Plaintiff claims that
defendant has conspired with law enforcement agencies to exclude plaintiff and others from
competition. Plaintiff quotes a number of news reports that suggest that defendant essentially bribed
members of law enforcement and their agencies to buy its products. According to plaintiff, defendant
was able to get several agencies to buy its body cameras without submitting competing bids with other
sellers.
1

E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v. Pennington,
381 U.S. 657 (1965).

-1-

In Counts III and IV of its complaint, plaintiff alleges violations of federal antitrust law, citing
the Sherman Act and the Robinson Patman Amendments to the Clayton Act. See 15 U.S.C. §§ 1
(Sherman); 13(c) (Robinson Patman). The Supreme Court, however, has limited the reach of this law.
See City of Columbia v. Omni Outdoor Advert., Inc., 499 U.S. 365, 379–80 (1991) (“Omni”) (“The
federal antitrust laws do not regulate the conduct of private individuals in seeking anticompetitive
action from the government.”). In Eastern Railroad Presidents Conference v. Noerr Motor Freight,
Inc., the Court held that when private individuals took actions designed to influence government
action, those individuals were immune from antitrust liability. This doctrine (called the “NoerrPennington doctrine”) “exempts from antitrust liability any legitimate use of the political process by
private individuals, even if their intent is to eliminate competition.” Zimomra v. Alamo Rent-A-Car,
Inc., 111 F.3d 1495, 1503 (10th Cir. 1997); see also Omni, 499 U.S. at 383 (“In Noerr itself, where the
private party ‘deliberately deceived the public and public officials in its successful lobbying campaign,
we said that ‘deception, reprehensible as it is, can be of no consequence so far as the Sherman Act is
concerned.’”). Once a defendant asserts the Noerr-Pennington doctrine, the plaintiff bears the burden
of showing it does not apply. Aetna U.S. Healthcare, Inc. v. Hoechst Aktiengesellschaft, 54 F. Supp.
2d 1042, 1053 (D. Kan. 1999) (citing McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1558 n.9 (11th
Cir. 1992)).
To avoid application of Noerr-Pennington immunity, antitrust plaintiffs have urged courts to
apply exceptions to the doctrine. They have advocated for a conspiracy exception, a bribery exception,
and a commercial exception. In Omni, the Supreme Court rejected a conspiracy exception. 499 U.S.
at 383. Conspiring with government officials is acceptable, just as is petitioning them for action. GF
Gaming Corp. v. City of Black Hawk, Colo., 405 F.3d 876, 883 (10th Cir. 2005). Likewise, Omni
addressed bribery, declining to create a bribery exception. Id. at 378 (addressing state-action immunity

-2-

under Parker v. Brown, 317 U.S. 341 (1943)); Coll v. First Am. Title Ins. Co., 642 F.3d 876, 898 (10th
Cir. 2011) (“The Supreme Court in [Omni] understood that risk and held that corruption—and even
bribery explicitly—would not vitiate a claim of Noerr-Pennington immunity.”). And other courts have
rejected a commercial exception. See, e.g., Greenwood Utils. Comm’n v. Miss. Power Co., 751 F.2d
1484, 1505 (5th Cir. 1985); see also TEC Cogeneration Inc. v. Fla. Power & Light Co., 76 F.3d 1560,
1573 (11th Cir. 1996); Bright v. Ogden City, 634 F. Supp. 31, 35 (D. Utah 1985), aff’d sub nom. Bright
v. Moss Ambulance Serv., 824 F.2d 819 (10th Cir. 1987); cf. Allright Colo., Inc. v. City & Cty. of
Denver, 937 F.2d 1502, 1510 & n.11 (10th Cir. 1991) (holding that state-action immunity applied
despite the City’s status as a possible competitor).
Without application of these potential exceptions, defendant remains immune for its actions
intended to influence municipalities’ decisions. The court believes that this conclusion is dictated by
the Tenth Circuit’s decision in Coll v. First American Title Insurance Co. In Coll, the plaintiffs
claimed that the defendants (insurers) conspired with each other and the state superintendent of
insurance to bribe the superintendent to set unreasonably high insurance premium rates. 642 F.3d at
886. The Tenth Circuit panel held that the defendants were immune under Noerr-Pennington,
regardless of whether the allegations involved bribery or corruption. Id. at 898–99. In so holding, the
court relied heavily on the Supreme Court’s decision in Omni.
Plaintiff urges this court to regard Omni’s language addressing bribery and corruption as nonbinding dicta. (Doc. 35, at 33–35.) Plaintiff also argues that Coll is directly contrary to other Tenth
Circuit authority. (Id. at 39–40.) But Coll certainly did not treat the language in Omni as dicta. And
the one case plaintiff cites that did not allow antitrust claims to proceed based on an exception for
bribery and corruption—Instructional Systems Development Corp. v. Aetna Casualty and Surety Co.,
817 F.2d 639 (10th Cir. 1987)—preceded Omni. The court also does not agree with plaintiff’s

-3-

assessment that the Supreme Court recently abrogated Omni in its decision North Carolina State Board
of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015). There, the dissent complained that the majority
had diminished the impact of Omni’s holding. 135 S. Ct. at 1122 (Alito, J., dissenting). This,
however, is not the same as recognizing abrogation of a prior Supreme Court decision.
To be certain, plaintiff made many additional arguments why the actions of defendant should
not be immune to antitrust liability. The court has fully considered those arguments, even though not
addressed here. Based on the law in the Tenth Circuit, plaintiff simply cannot overcome NoerrPennington immunity. That fact is also dispositive of plaintiff’s claims under Kansas law (Counts VII
and VIII). See Kan. Stat. Ann. § 50-163(b) (“The Kansas restraint of trade act shall be construed in
harmony with ruling judicial interpretations of federal antitrust law by the United States Supreme
Court.”)
As for Count V—plaintiff’s claim under § 17043 of the California Unfair Trade Practices
Act—the court dismisses this claim, as well. Section 17043 makes it “unlawful for any person
engaged in business within this State to sell any article or product at less than the cost thereof to such
vendor, or to give away any article or product, for the purpose of injuring competitors or destroying
competition.” But to state a cause of action under this section, a plaintiff must plead the defendant’s
costs and prices. Eastman v. Quest Diagnostics Inc., 108 F. Supp. 3d 827, 838 (N.D. Cal. 2015).
Plaintiff has not done so.
Count VI likewise is subject to dismissal. Plaintiff seeks relief under the California Unfair
Competition Law (“UCL”). This claim is derivative of plaintiff’s other claims. See Aleksick v. 7Eleven, Inc., 205 Cal. App. 4th 1176, 1185 (2012). Because the court has dismissed plaintiff’s
underlying claims, this claim must be dismissed like the others.

-4-

IT IS THEREFORE ORDERED that Defendant Taser International, Inc.’s Motion to
Dismiss Second Amended Complaint (Doc. 24) is granted. Counts III-VIII are dismissed.
Dated this 12th day of January, 2017, at Kansas City, Kansas.

s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

-5-