Santana Products v. Bobrick Washroom Equipment

Page 463

249 F.Supp.2d 463

SANTANA PRODUCTS, INC. Plaintiff v. BOBRICK WASHROOM EQUIPMENT, INC., Bobrick Corporation, the Hornyak Group, Inc., and Vogel Sales Co. Defendants

No. 3:CV-96-1794.

United States District Court, M.D. Pennsylvania.

March 7, 2003.

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B.Aaron Schulman, Larson & Taylor, Alexandria, V.A. Gerald J. Butler, Butler & LaBelle, Scranton, P.A. Linda R. Poteate, Larson & Taylor, Alexandria, VA, Paul J. Labelle, Scranton, P.A. Sarah Grace Wittig, William E. Jackson, Larson & Taylor, Alexandria, VA, for Plaintiff.

Carl W. Hittinger, Stevens & Lee, P.C., Philadelphia, P.A. Donald E. Wieand, Jr., Stevens & Lee, Lehigh Valley, PA, Walter F.Casper, J.r., Carbondale, PA, for Defendants.

George A. Reihner, Scranton, PA, Pro se.

OPINION

VANASKIE, Chief Judge.

TABLE OF CONTENTS

I.  INTRODUCTION.........................................................469
II.  BACKGROUND...........................................................471
A. The Toilet Compartment Industry........................................471
B. The ASTM E-84 Test and Santana's Fire Rated Compartment...............473
C. The 1994 TPMC Litigation..............................................475
D. Bobrick's "Fire Scare" Marketing Campaign...............................476
E. Procedural History.....................................................477

III.  DISCUSSION........................................................  478
A. Summary Judgment Standard ..................................................... 478
B. The Noerrl Pennington Defense.....................................     479
1.   Defendants' Activities Are Within the Ambit of NoerrlPennington
Immunity.......................................................................    480
2   There Is No "Commercial" Exception to Noerr/Pennington Immunity       487
3. There Is No "Fraud" Exception to Noerr/Pennington Immunity.....        491
4. The Noerr/Pennington Doctrine Is Applicable to Each of Santana's
Claims ......................................................................      492
C. Affirmative Defenses Pertaining to the Timeliness of the Filing of this
Action.......................................................................      494
1. Timeliness of the Sherman Act Claims............................                494
2. Timeliness of the Lanham Act Claims............................                 497
3. Timeliness of the Interference With Prospective Contract Claim.....             501
D. Santana's Claim under Section 1 of the Sherman Act...................           503
1. Concerted Action..............................................                  503
a. The alleged concerted action of Bobrick's sales representatives ...    505
b. The alleged concerted action of Bobrick.......................         506
2. Unreasonable Restraint of Trade................................                 508
a. The Per Se Rule...........................................             509
b. Application of the Ride of Reason............................          512
3. Anticompetitive Effects.........................................                515
E. The Sherman Act Section Two Claim................................               518
F. The Lanham Act Claims ...........................................               520
1. Advertising Statements Not Identified in the Complaint............              522
2. Unclean Hands................................................                   523
3. Literal Falsity ................................................                525
a. The Formica Videotape.....................................             526
b. The TB-73 Technical Bulletin...............................            535
c. The Bobrick "You Be The Judge" Videotape...................            536
d. Bobrick's Box Lunch Program and Slides.....................            537
e. Bobrick's Ads in Sweet's Architectural Catalogs ...............        537
f. National Trade Journal Advertisements......................            538
g. Bobrick's Thrislington "Script"..............................          539
4. Likelihood of Injury to Santana..................................               539
G. Tortious Interference with Prospective Contract ......................          542
IV.  CONCLUSION.....................                                      545

I. INTRODUCTION

On October 1, 1996, plaintiff Santana Products, Inc. (Santana) instituted this action against defendants Bobrick Washroom Equipment and Bobrick Corporation (collectively "Bobrick"), The Hornyak Group, Inc. ("Hornyak"), Vogel Sales Company ("Vogel"), Sylvester & Associates, Ltd., and Fred Sylvester. Santana, which manufactures and sells restroom and toilet partitions made of high density polyethylene ("HDPE"), alleges that Bobrick and other toilet compartment manufacturers conspired to enforce a product standard that had the effect of excluding Santana's HDPE compartments from the relevant market. Specifically, Santana claims that Bobrick along with members of a nowdefunct trade association, the Toilet Partition Manufacturers Council ("TPMC"), collectively embarked on a campaign to convince prospective customers that (1) toilet partitions had to meet fire code flame spread and smoke development requirements for "wall finish"; and (2) HDPE did not meet such requirements. Santana has asserted claims under §§1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2; the false advertising provision of the Lanham Act, 15 U.S.C. § 1125(a); and the common law tort of intentional interference with prospective contractual relationships.

Following protracted and, at times, acrimonious discovery, the parties filed crossmotions for summary judgment. Santana has filed a partial summary judgment motion on its Sherman Act section 1 claim, (Dkt. Entry 43), and a summary judgment motion as to the defendants' liability under section 43(a) of the Lanham Act, (Dkt. Entry 271), while the motions of Bobrick, Hornyak, and Vogel attack all of Santana's claims. (Dkt. Entries 287, 291, 294.)

The motions present several important and difficult issues for which there is no controlling precedent in this Circuit. For example, the defendants contend that their marketing activities directed toward public entities, such as school districts, are shielded from liability under the Noerr/Pennington doctrine. Defendants present this threshold defense not only with respect to the Sherman Act and common law claims, causes of action to which the Noerr/Pennington doctrine is plainly applicable, but also to the Lanham Act claim, an assertion for which there is little case law guidance. Because it is clear that the overwhelming bulk of the toilet partition market is directed at public construction, resolution of this issue in defendants' favor would have a significant impact on the scope of Santana's claims; effectively eliminate Hornyak and Vogel as defendants inasmuch as their marketing activities were limited to public institutions; and severely limit Bobrick's liability. Pointing out that Santana is complaining of conduct that occurred seven years before the filing of this action, and that Santana had settled an earlier lawsuit against the members of the TPMC, defendants have also presented a substantial challenge to the timeliness of Santana's claims, especially its Lanham Act cause of action, to which the doctrine of laches applies and for which there is no controlling precedent in this jurisdiction.

Having carefully considered the parties voluminous submissions,¹ the comprehensive evidentiary record, and the applicable law, I have concluded that the Noerr/Pennington doctrine is indeed applicable to all of Santana's claims, thereby limiting any recovery to the non-public sector. I have further determined that none of Santana's claims is time-barred, but recovery is limited to violations occurring within the applicable limitations period. In this regard, a four-year limitations period governs the Sherman Act claims, Pennsylvania's six-year limitations period for claims based upon statutory violations controls the Lanham Act claim, and a one year limitations period defines the compensable parameters of the tortious interference claim.

As to the substantive merits of Santana's claims, I have concluded that Hornyak and Vogel, as captive sales representatives of Bobrick, cannot be held liable under section 1 of the Sherman Act. I have further found that the assailed marketing campaign did not constitute an unlawful restraint on trade and that, in any event, Santana has shown no more than a de minimis effect on competition, thus warranting summary judgment in favor of the defendants on the Sherman Act § 1 claim. Defendants are also entitled to summary judgment on the § 2 claim because, for essentially the reasons articulated by Judge Mishler in the parallel case of Santana Products, Inc. v. Sylvester & Associates, Ltd., 121 F.Supp.2d 729 (E.D.N.Y. 1999), the "shared monopoly" claim presented by Santana is not cognizable under section 2 of the Sherman Act. Summary judgment in favor of the defendants on the tortious interference claim is warranted because Santana has failed to present evidence of the loss of a prospective contract with a non-public customer within the one-year limitations period. Finally, there are issues of material fact that preclude summary adjudication of the Lanham Act claim.

As a result of these rulings, Santana's claims have been severely limited. In recognition of the fact that appellate court consideration of difficult and close questions prior to any trial may serve the interests of the parties and of judicial economy, that the need for appellate review will not be mooted by further proceedings in this Court, and that there is "no just cause for delay," see Berckeley Inv. Group, Ltd. v. Colkitt, 259 F.3d 135, 140-42 (3d...