Santana Products Inc. v. Bobrick Washroom Equipment, Inc.

Opinions of the United

2005 Decisions States Court of Appeals

for the Third Circuit

2-9-2005

Santana Prod Inc v. Bobrick Washroom

Precedential or Non-Precedential: Precedential

Docket No. 03-1845

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos: 03-1845/2283/2481

SANTANA PRODUCTS INC.,

Appellant - No. 03-1845

v.

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPORATION; THE HORNYAK GROUP

INC.;VOGEL SALES COMPANY; SYLVESTER &

ASSOCIATES, LTD.;FRED SYLVESTER

SANTANA PRODUCTS INC.,

Appellant - No. 03-2283

v.

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPORATION; THE HORNYAK GROUP

INC.;VOGEL SALES COMPANY; SYLVESTER &

ASSOCIATES, LTD.;FRED SYLVESTER

SANTANA PRODUCTS INC.

v.

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPORATION; THE HORNYAK GROUP

INC.;VOGEL SALES COMPANY; SYLVESTER &

ASSOCIATES, LTD.;FRED SYLVESTER

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPATION,

Appellants - No: 03-2481

Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. No. 96-cv-01794 )

District Judge: Thomas I. Vanaskie, Chief Judge

Argued March 23, 2004

Before: ROTH, AMBRO and CHERTOFF, Circuit Judges

(Opinion filed: February 9, 2005 )

William E. Jackson, Esquire (Argued)

B. Aaron Schulman, Esquire

Stites & Harbison

1199 North Fairfax Street

TransPotomac Plaza, Suite 900

Alexandria, VA 22314

Gerald J. Butler, Esquire

142 North Washington, Suite 800

Scranton, PA 18503

Counsel for Appellants

Carl W. Hittinger, Esquire (Argued)

Stevens & Lee

1818 Market Street, 29th Floor

Philadelphia, PA 19103

Walter F. Casper, Jr., Esquire

35 South Church Street & &th Avenue

Carbondale, PA 18403

Counsel for Appellees

OPINION

ROTH, Circuit Judge:

In order to persuade government architects to specify

Bobrick’s toilet partitions for use in government projects,

3

Bobrick Washroom Equipment, Inc., 1 its architectural

representative, the Hornyak Group, Inc., and its sales

representative, Vogel Sales Co., were telling architects that

the partitions of Santana Products, Inc., posed a fire hazard

under fire safety codes. As a result, Santana brought claims

against Bobrick, Hornyak, and Vogel for anti-trust violations

of §§ 1 and 2 of the Sherman Act, for false advertising under

the Lanham Act, and for state law tortious interference with

prospective contract. The defendants allegedly violated the

Sherman Act by conspiring to induce government architects

to specify Bobrick’s product, which in turn created a restraint

of trade. They allegedly violated the Lanham Act by giving

the government architects false information about the fire

hazards of Santana’s product. They allegedly tortiously

interfered with a prospective contract of Santana’s by

inducing an architect to specify Bobrick’s product and remove

Santana’s product from a specification.

The defendants asserted numerous defenses. For

example, they contended that they could not be held liable for

Santana’s claims because they were merely petitioning the

government about a safety matter, an action which was

protected by the First Amendment of the U.S. Constitution.

They also challenged the timeliness of Santana’s claims,

arguing that the claims were barred either by the statute of

limitations or the doctrine of laches. The District Court

granted summary judgment in favor of the defendants on the

Sherman Act claims and the tortious interference with

prospective contract claim and denied defendants’ motion for

summary judgment on Santana’s Lanham Act claim. Santana

Products, Inc. v. Bobrick Washroom Equipment, Inc., 249

F.Supp. 2d 463 (M.D. Pa. 2003). We will affirm the District

1

Bobrick Corporation is the parent company of Bobrick

Washroom Equipment. We will refer to them collectively as

Bobrick.

4

Court’s entry of summary judgment in favor of the defendants

on Santana’s Sherman Act § 1 claim and its tortious

interference with prospective contract claim.2 However,

because we conclude that the Lanham Act claim is barred by

the doctrine of laches, we will reverse the granting of

summary judgment on that claim.

I. FACTUAL BACKGROUND

The following facts are taken primarily from the

District Court’s very thorough opinion.3

A. The Toilet Partition Industry

Santana and Bobrick manufacture toilet partitions.4

Toilet partitions are made of different materials, including

metal, stainless steel, plastic laminate, solid phenolic, and

high density polyethylene (HDPE). The partitions are

installed in public buildings, such as government offices,

schools and arenas, as well as in private commercial

buildings. The competitors in the toilet partition industry

must engage in competitive bidding for government contracts.

Before competitors bid for contracts, the architect or

“specifier” for the project specifies the materials to be used in

the government project. Only the companies that manufacture

materials that match those specified may bid on the contract.

A manufacturer will lobby architects and specifiers to

2

Santana does not appeal the § 2 claim, so we do not address

it.

3

The parties’ appeals – Nos. 03-1845, 03-2283, and 03-2481

– were consolidated. 03-1845.

4

Toilet partitions are also referred to as toilet compartments.

5

persuade them to specify its product instead of its

competitors’ products. Once the material for an element of a

contract has been specified, the companies that manufacture

the specified material then compete on price.

Santana makes toilet partitions composed of HDPE.

As of mid-1989, Santana and four other companies offered

HDPE partitions. Bobrick makes a partition composed of

solid phenolic and a partition composed of plastic laminate.

B. The ASTM E-84 Test and Santana’s HDPE Partition

The American Standard Test Methods (ASTM) E-84

test is commonly used in the construction industry to test

materials for flammability. The two characteristics that the

ASTM E-84 test analyzes are “flame spread,” which is the

speed at which a flame spreads across the test material, and

“smoke developed,” which is the rate at which smoke

develops once the material starts to burn. The E-84 test

generates indices that compare the “flame spread” and

“smoke developed” characteristics of the test material to those

of red oak and inorganic reinforced cement surfaces under the

same fire exposure conditions.

Building codes and the National Fire Protection

Association’s (NFPA) Life Safety Code 101 use the ASTM

E-84 test indices to generate fire ratings for materials. A

Class A fire rating is the best, Class B is second best, and

Class C is third best. Any material that does not fit into one

of these ratings is considered unrated. The flame spread value

for each class differs, but all classes require a “smoke

developed” value of less than 450. The NFPA Life Safety

Code 101 requires the material to meet a specific fire rating

depending on the manner in which the material is used. For

example, “interior finish” or “wall finish” materials are

required to have a Class B rating whereas material that is

6

considered a “furnishing” or “fixture” can be unrated.5

In the early 1980's Santana developed the “FR”

partition and used the ASTM E-84 test to assess the

partition’s fire rating. Santana advertised the FR partition in

the Sweet’s Catalogue6 as having a Class A rating. The same

advertisement claimed that Santana’s HDPE partition had a

Class B “flame spread.” By the 1990's, Santana was phasing

out the FR partition in favor of its HDPE partition. The

HDPE partition, however, even though its “flame spread”

value fit into the Class B rating, was precluded from being

rated because of its high “smoke developed” value.

C. The 1994 TPM C Litigation

Formica, one of the largest plastic laminate suppliers in

the United States, along with its customers in the toilet

compartment industry, all non-parties to this litigation, formed

the Toilet Partitions Manufacturers Council (TPMC).

According to Santana, the TPMC was concerned about the

success Santana was having with sales of its HDPE partitions.

The TPMC allegedly agreed to tell project specifiers that

Santana’s HDPE compartments were properly characterized

as wall finishes but did not meet the NFPA’s fire rating for

wall finishes because of the high “smoke developed” value.

Formica and Metpar, also a member of the TPMC, made a

5

One issue in the present litigation is whether toilet partitions

are finishes or furnishings/fixtures.

6

The Sweet’s Catalogue is a collection of catalogues of

manufacturers’ building products. Manufacturers pay to place

their catalogues in the Sweet’s Catalogue, and architects

subscribe to and refer to the Sweet’s Catalolgue before

specifying materials to be used in construction projects. One

section of the Sweet’s Catalogue is devoted to toilet partitions.

7

videotape that, according to Santana, falsely depicted the

flammability of Santana’s HDPE partitions. The sales

representatives of companies belonging to the TPMC showed

the videotapes during sales presentations to architects.

Bobrick was not a member of the TPMC but did

discuss with members of the TPMC the fire characteristics of

HDPE. In July 1989, Bobrick received a copy of a Metpar

fact sheet comparing HDPE to phenolic and stating that

HDPE had a “smoke developed” rating exceeding fire

standards. Alan Gettleman and Bob Gillis, both Bobrick

employees, went on a plant tour of Formica and watched the

videotape. Formica gave Bobrick a copy of the videotape in

early 1990, and Bobrick forwarded the videotape to its

architectural representatives.

In November 1994, Santana brought suit against

Formica, Metpar, ten other toilet partition manufacturers, and

the TPMC. The defendants in the present case were not

named as defendants in the 1994 action. The 1994 action

essentially alleged a conspiracy to use scare tactics to

discourage the specification of HDPE partitions by falsely

alleging that HDPE partitions posed a fire hazard. The parties

to the 1994 action settled it in 1995.

D. Bobrick’s Marketing Campaign

Santana contends that Bobrick conducted an unlawful

marketing campaign to persuade architects and specifiers that

HDPE partitions did not meet building code requirements and

posed a fire hazard. In addition to distributing the Formica

videotape in 1990, Bobrick distributed to its sales

representatives a “Technical Bulletin” (TB-73) which

provided a comparison of ASTM E-84 tests performed on

Bobrick’s partitions and on HDPE partitions. Bobrick

included the TB-73 Bulletin in its Architectural Manual from

1990 to at least 1994 and allegedly beyond. In 1992, Bobrick

8

produced a videotape entitled “You Be The Judge,” which

also included comparison tests of solid phenolic partitions and

HDPE partitions. Some Bobrick representatives conducted

live demonstrations during which they burned HDPE for

architects. Bobrick placed an advertisement in the American

School & University magazine in the early 1990's that

described HDPE as a fire hazard and as far exceeding fire

standards of the NFPA Life Safety Code. Bobrick also made

comparison statements in its advertisements in the Sweet’s

Catalogue. Finally, Bobrick created slide presentations and

sales scripts for use by its representatives that portrayed

HDPE as a fire hazard compared to Bobrick’s partitions.

II. PROCEDURAL HISTORY

Santana filed a complaint in the United States District

Court for the Middle District of Pennsylvania against

Bobrick, Hornyak, Vogel, Sylvester & Associates, Ltd., and

Fred Sylvester. 7 Santana asserted claims under §§ 1 and 2 of

the Sherman Act, 15 U.S.C. §§ 1-2, the false advertising

provisions of the Lanham Act, 15 U.S.C. § 1125(a), and

Pennsylvania state law for tortious intererence with

prospective contract. After three years of discovery, the

parties filed cross-motions for summary judgment.

7

Santana’s claims against Sylvester & Associates, Ltd., and

Fred Sylvester were dismissed for lack of personal jurisdiction.

Santana subsequently filed an action against them in the District

Court for the Eastern District of New York. The decision in that

case is reported at Santana Products, Inc. v. Sylvester & Assoc.,

Ltd., 121 F. Supp. 2d 729 (E.D.N.Y. 1999).

Bobrick filed a Third-Party Complaint against Formica

on June 1, 1998, bringing claims for contribution,

indemnification, fraud, and negligent misrepresentation, but that

complaint was dismissed for reasons unimportant to this appeal.

9

The defendants argued to the District Court that they

were immune from liability for all of Santana’s claims by

reason of the Noerr/Pennington doctrine. The District Court

agreed, holding that “the Noerr/Pennington doctrine is indeed

applicable to all of Santana’s claims.” Santana, 249 F. Supp.

2d at 470. The court stated that “to the extent that Santana

premises its damages on decisions made by public officials or

their agents . . . who approved specifications for phenolic

toilet partitions or disapproved specifications for HDPE toilet

partition, defendants are immune from liability” Id. at 487.

The court held that any recovery Santana might be entitled to

would be limited to the effects on the private sector of

defendants’ marketing campaign. Id. at 470.

The District Court, however, ultimately granted

summary judgment in favor of all defendants on Santana’s

Sherman Act § 1 claim. As to Hornyak and Vogel, the court

held that they could not be liable for a § 1 violation as a

matter of law because they were “captive sales representatives

of Bobrick.” 8 Id. As to Bobrick, even though the court found

the requisite element of concerted action between Bobrick and

the members of the TPMC, id. at 507-08, the court

nevertheless held that Bobrick’s marketing campaign was not

an unreasonable restraint on trade and that, even if it were,

Santana had only showed a de minimus effect on competition.

Id. at 470. The court also granted summary judgment on

Santana’s Sherman Act § 2 claim in favor of defendants. Id.

8

The court also found that, because there was no evidence

that Hornyak and Vogel were marketing to the private sector,

they were entitled to summary judgment on all claims based on

their Noerr/Pennington defense. Santana Products, Inc.,, 249

F. Supp. 2d at 494 n. 24.

10

at 470, 505-06.9

Turning to Santana’s false advertising claim under the

Lanham Act, the District Court rejected Bobrick’s timeliness

defenses. Id. at 500-01. The court concluded that the claim

was not barred by either the statute of limitations or the

doctrine of laches but then held that Santana’s recovery under

the Lanham Act, if at all, would be limited to violations

occurring within the applicable statute of limitations period,

which the court held to be the six year “catch-all” limitations

period under Pennsylvania’s Unfair Trade Practices and

Consumer Protection Law (UTPCPL). Id. at 500. The court

concluded that summary judgment was not appropriate on the

Lanham Act claim as to Bobrick because there were fact

issues as to the literal falsity of statements made in videos,

advertisements, and other marketing material. Id. at 471, 525-

39.

Finally, the District Court granted summary judgment

in favor of the defendants on Santana’s tortious interference

with prospective contract claim. The court held that the

Noerr/Pennington doctrine shielded the defendants from

liability, id. at 542, and alternatively found that Santana did

not “present evidence of the loss of a prospective contract

with a non-public customer within the one-year limitations

period.” Id. at 470-71.

III. JURISDICTION AND STANDARD OF REVIEW

The District Court certified its order for immediate

9

The District Court relied on the analysis in Santana

Products, Inc. v. Sylvester & Assoc., Ltd., 121 F. Supp. 2d 729

(E.D.N.Y. 1999) and held that Santana’s “shared monopoly”

claim was not a cognizable § 2 claim. Santana Products, 249 F.

Supp. 2d at 470. Santana does not appeal this ruling.

11

appeal pursuant to 28 U.S.C. § 1292(b). 10 We granted

Santana’s and Bobrick’s petitions for permission to appeal on

April 17, 2003.

Bobrick appeals the District Court’s finding that

Santana’s Lanham Act claim is not barred by the statute of

limitations or the doctrine of laches, and Santana appeals the

District Court’s holding that the Noerr/Pennington doctrine is

applicable to Lanham Act claims. 11 We raised the question of

our jurisdiction of Bobrick’s appeal pursuant to § 1292(b) and

asked the parties to provide supplemental briefing on this

issue even though a different panel of this Court had already

granted Bobrick’s petition for permission to appeal.12

We conclude that we have appellate jurisdiction to

consider Bobrick’s appeal. “[A]ppellate jurisdiction applies

to the order certified to the court of appeals, and is not tied to

10

28 U.S.C. § 1292(b) gives the courts of appeals

discretionary jurisdiction over a district court order “[w]hen a

district judge . . . shall be of the opinion that such order involves

a controlling question of law as to which there is substantial

ground for difference of opinion and that an immediate appeal

from the order may materially advance the ultimate termination

of the litigation.”

11

We have jurisdiction over Santana’s appeal in No. 03-1845

pursuant to 28 U.S.C. § 1291 because the District Court entered

a final judgment pursuant to Federal Rule of Civil Procedure

54(b) on Santana’s Sherman Act claims and its claim for

tortious interference with prospective contract.

12

Even though “other factors [may] counsel in favor of

deferring to the motions panel,” “[t]he merits panel is certainly

entitled to reexamine the decision of the motions panel.” In re

Healthcare Compare Corp. Sec. Litig., 75 F.3d 276, 279-80 (3d

Cir. 1996).

12

the particular question formulated by the district court.”

Yamaha Motor Corporation, U.S.A. v. Calhoun, 516 U.S.

199, 205 (1996). We can “address any issue fairly included

within the certified order” because the order is appealable, not

the controlling question of law. Id.; see also Morris v. Hoffa,

361 F.3d 177, 197 (3d Cir. 2004).

The District Court’s order outlined the manner in

which it was handling each of Santana’s claims, including

Santana’s Lanham Act claim. The court’s opinion explains

the reason it chose to certify the order. It stated that “[t]he

motions present several important and difficult issues for

which there is not controlling precedent in this Circuit.”

Santana, 249 F. Supp. at 470. The District Court was

referring to its decision that the Noerr/Pennington immunity

defense applied not only to Santana’s Sherman Act and state

law claims, but also to Santana’s Lanham Act claim. The

District Court also believed that Bobrick’s timeliness

challenge to 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” was “substantial.” Id.

The issue of the timeliness of Santana’s Lanham Act

claim is clearly included in the District Court’s order, and we

are satisfied that we have appellate jurisdiction to entertain

Bobrick’s appeal. Moreover, by addressing the laches issue

now, we avoid deciding a constitutional issue. For the

reasons we will articulate, it will not be necessary for us to

consider the Noerr/Pennington doctrine’s applicability to

Lanham Act claims. See Spicer v. Hilton, 618 F.2d 232, 239

(3d Cir. 1980). (“[I]t is well established that courts have a

duty to avoid passing upon a constitutional question if the

case may be disposed of on some other ground.”).

We exercise plenary review over the District Court’s

decision to grant summary judgment and will use the same

test applied below. Belitskus v. Pizzingrilli, 343 F.3d 632-

13

639 (3d Cir. 2003). Summary judgment is appropriate where

“the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that

the moving party is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c). “Summary judgment is not appropriate,

however, ‘if a disputed fact exists which might affect the

outcome of the suit under the controlling substantive law.’”

Belitskus, 343 F.3d at 639 (quoting Josey v. John R.

Hollingsworth Corp., 996 F.2d 632, 637 (3d Cir. 1993)). The

moving party bears the burden to show an absence of any

genuine issues of material fact and can meet this burden by

showing that the non-moving party “has failed to product

evidence sufficient to establish the existence of an element

essential to its case.” Alvord-Polk, Inc. v. F. Schumacher &

Co., 37 F.3d 996, 1000 (3d Cir. 1994).

IV. DISCUSSION

A. Sherman Act § 1 Claim

Santana contends that the District Court erred when it

held that the Noerr/Pennington doctrine 13 shielded Bobrick,

13

The Noerr/Pennington doctrine protects “the right of the

people . . . to petition the government for a redress of

grievances.” U.S. C ONST. amend. I. Defendants in antitrust

cases are immune from liability when they are exercising their

First Amendment right to petition. Actions aimed at

“influenc[ing] the passage or enforcement of laws” are immune

from Sherman Act liability even if the antitrust defendant

intends to restrain trade or to monopolize, so long as the

“restraint on trade or monopolization is the result of valid

government action.” Eastern Railroad Presidents Conference

v. Noerr Motor Freight, Inc., 365 U.S. 127, 135-36 (1961).

14

Hornyak, and Vogel from liability under § 1 of the Sherman

Act. As to this claim, however, there is no need to decide

whether Bobrick, Hornyak, and Vogel are entitled to

immunity under the Noerr/Pennington doctrine. Even if they

were entitled to immunity, Santana’s § 1 claim fails because

we conclude that there has been no restraint of trade.

Section 1 provides that “[e]very contract, combination

in the form of trust or otherwise, or conspiracy, in restraint of

trade or commerce among the several States . . . is declared to

be illegal.” 15 U.S.C. § 1. An antitrust plaintiff must first

prove concerted action by the defendants.14 Petruzzi’s IGA

Noerr/Pennington immunity extends beyond attempts to

influence the passage and enforcement of laws and applies

equally to efforts to influence administrative agency action, see

United Mine Workers of America v. Pennington, 381 U.S. 657

(1965), and efforts to access the court system, see California

Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508

(1972). The Noerr/Pennington doctrine protects antitrust

defendants’ rights to “freely inform the government of their

wishes” and “to seek action on laws in the hope that they may

bring about an advantage to themselves and a disadvantage to

their competitors,” Noerr, 365 U.S. at 138-39.

Santana argues that the defendants’ marketing campaign

is not petitioning activity and is therefore not protected by the

doctrine. Santana argues that, even if the marketing campaign

is considered petitioning activity, the defendants are not entitled

to Noerr/Pennington immunity because of the alleged fraudulent

nature of the defendants’ campaign. Finally, Santana argues that

Noerr/Pennington immunity does not extend to situations where,

as here, the government is the purchaser of the products at issue.

14

The District Court held that Santana proved the concerted

action element as to Bobrick, and Bobrick does not challenge

15

Supermarkets, Inc. v. Darling-Delaware Co., Inc., 998 F.2d

1224, 1229 (3d Cir. 1993). A plaintiff must next prove that

there is a restraint on trade and that the restraint is

unreasonable. Northern Pacific Railway Co. v. United States,

356 U.S. 1, 5 (1958).

Santana argues that the defendants created a restraint

on trade by engaging in a group boycott. Santana’s theory is

as follows: Bobrick and the other members of the TPMC

conspired to agree upon and enforce against business rivals a

single product standard that excluded HDPE technology.”

Because of a TPMC agreement to stop supplying HDPE

partitions, three TPMC members left the HDPE market,

leaving only two HDPE suppliers. This agreement was an

unreasonable restraint of trade because it restricted the output

of HDPE partitions. The defendants’ concerted action

reduced the number of HDPE compartment specifications that

Santana could bid for. In addition, the conspiracy’s emphasis

this finding. Santana, however, does appeal the District Court’s

conclusion that it did not prove concerted action as to Hornyak

and Vogel. Santana seeks to hold Hornyak and Vogel liable

under § 1 based on their relationship and interaction with

Bobrick. Hornyak and Vogel argued to the District Court that

they were incapable of conspiring with Bobrick as a matter of

law because they sold Bobrick’s products exclusively. The

court, relying on the Supreme Court’s decision in Copperweld

Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), and

our decision in Siegel Transfer, Inc. v. Carrier Express, Inc., 54

F.3d 1125 (3d Cir. 1995), held that, as a matter of law, Hornyak

and Vogel were incapable of conspiring. 249 F. Supp. 2d at

505-06.

As with the Noerr/Pennington issue, we do not need to

resolve this question because, even if we were to hold Santana

did prove concerted action as to Hornyak and Vogel, Santana’s

§ claim would still fail.

16

on the failure of HDPE compartments to comply with the

NFPA/ASTM standards had a tendency to “persuade” or

“coerce” specifiers because such private codes are published

and are used by various segments of the construction industry.

The conspiracy resulted in excluding HDPE compartments

from the market and depriving consumers of a superior

product.

We fail, however, to find “restraint” in this alleged

activity – and without a “restraint,” there is “no restraint of

trade.” Schachar v. American Academy of Ophthalmology,

Inc., 870 F.2d 397 (7 th Cir. 1989). Here, Santana’s antitrust

claim is built on allegations that the defendants criticized the

safety of HDPE partitions. It is undisputed that the

defendants informed potential customers that Santana’s

product presented safety hazards. Santana has not, however,

demonstrated that Bobrick imposed any restraints on trade.

Santana does not allege that Bobrick engaged in coercive

measures that prevented Santana from selling its products to

any willing buyer or prevented others from dealing with

Santana. Moreover, Santana’s allegations of fraud in the

manner in which the hazards of HDPE were portrayed are

irrelevant because “deception, reprehensible as it is, can be of

no consequence so far as the Sherman Act is concerned.”

Noerr, 365 U.S. at 145; cf. Schachar, 870 F.2d at 399

(“antitrust law does not compel your competitor to praise your

product or sponsor your work.”).

The court’s description in Stearns Airport Equipment

Co. v. FMC Corp., 170 F.3d 518 (5 th Cir. 1999), of this type

of product promotion is instructive:

All of these arguments made by FM C to its

potential customers may have been wrong,

misleading, or debatable. But they are all

arguments on the merits, indicative of

competition on the merits. To the extent they

were successful, they were successful because

17

the consumer was convinced by either FM C’s

product or FMC’s salesmanship. FMC –

unsurprisingly – wanted to be picked over

Stearns on a contract . . . Without a showing of

some other factor, we can assume that a

consumer will make his decision only on the

merits. To the extent a competitor loses out in

such a debate, the natural remedy would seem to

be an increase in the losing party’s sales efforts

on future potential bids, not an antitrust suit.

170 F.3d at 524-25

Here, the defendants’ marketing campaign was aimed

primarily at persuading government architects to specify

Bobrick’s materials instead of materials made from HDPE. It

was the architects who would make the ultimate decision of

which product to specify for use in a particular project. This

is classic competition on the merits of a product. In no real

sense is Santana excluded from the toilet partition market.

Santana remains free to tout its product to the specifiers and

remains equally free to reassure them that its partitions are

superior to Bobrick’s partitions and to prove Bobrick wrong

with respect to the flammability of HDPE partitions. Toilet

partition buyers are in no way constrained from buying HDPE

toilet partitions. “The central insight . . . is that jockeying

over specifications . . . is a valid form of competition . . ..

This behavior was ‘simple salesmanship’ that enhanced rather

than subverted competition on the merits. If . . . [Santana]

was ‘excluded,’ it was excluded by . . . [Bobrick’s] superior

product or business acumen.” Stearns, 170 F.3d at 526.

In Stearns, under very similar facts, the court rejected

the plaintiff’s claim that the defendant’s “attempts to

convince independent government purchasers to adopt

specifications in their favor prior to bidding are a violation of

the antitrust laws.” 170 F.3d at 522. The court reasoned that

18

“the alleged exclusionary conduct required the active approval

of the consumer.” Id. at 525. Unlike cases where the alleged

exclusionary conduct leaves the consumer with no input

whatever, the decision to specify “was always ultimately in

the hands of the consumer.” Id. There was no evidence that

the defendant prevented the plaintiff from “pushing its

arguments at the specifications phase.” Id. at 526.

Accordingly, the plaintiff was not excluded from competition.

In an earlier Fifth Circuit case, Consolidated Metal

Products, Inc. v. American Petroleum Institute, 846 F.2d 284,

286 (5 th Cir. 1988), the court came to the same conclusion

under a different set of facts. Plaintiff sued the American

Petroleum Institute (API), alleging the API excluded it from

the market by delaying trade standard certification to its

equipment. API was a standard-setting body that granted the

manufacturer a license to display its monogram on the

manufacturer’s equipment if the API found that the equipment

satisfied its standards. The plaintiff applied for, and was

denied, a license to use APE’s monogram. The court held

that “a trade association that evaluates products and issues

opinions, without constraining others to follow its

recommendations,” does not violate the Sherman Act by

unfavorably evaluating a manufacturer’s product. Id. at 292.

The court noted that API approval was not required by law,

equipment was sold frequently without it, and consumers

were in no way constrained from buying the plaintiff’s

products. The plaintiff was not excluded “in a real sense”

from the market because it was still free to sell its products

and consumers were free to buy them. Id. at 292. The court

stressed that manufacturers of equipment still had the ability,

even without an API monogram, to market the quality of their

products. Id. at 296.

The Seventh Circuit Court of Appeals in Schachar

similarly found no restraint of trade. The plaintiffs were

ophthalmologists who performed a surgical procedure labeled

19

“experimental” by the National Advisory Eye Council. 870

F.2d at 397. The American Academy of Ophthalmology

endorsed the Council’s position and issued a press release

advising physicians and patients not to use the procedure until

more research had been completed. The plaintiffs alleged that

the press release was part of a conspiracy to restrain trade.

The court held that there was no violation of the Sherman Act

because there was no enforcement device that operated to

restrain trade. None of the plaintiffs was prevented from

doing the procedure and none was sanctioned for performing

it. The court characterized the challenged action as “warfare

among suppliers and their different products,” not as restraint,

but as competition. Id. at 399. The court cited Consolidated

Metal Products with approval:

If such statements should be false or misleading

or incomplete or just plain mistaken, the remedy

is not antitrust litigation, but more speech – the

marketplace of ideas.

Id. at 400.

Santana, on the other hand, relies on Allied Tube &

Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1998), to

argue that the defendants “acted like a private standard-setting

organization in adopting an anti-HDPE campaign, using false

advertising videotapes to cause all types of customers . . . to

refrain from purchasing HDPE compartments and to ensure

that HDPE compartments were excluded from purchase

specifications.” Contrary to Santana’s assertions, however,

the TPM C is not a standard-setting body. It does not set,

adopt, or enforce any industry standards for safety or other

product characteristics. The NFPA is the relevant standard-

setting organization, but Santana has not alleged that Bobrick

and the TPMC members had any contact with the NFPA.

Bobrick, Hornyak, Vogel, and the members of the TPMC

20

interpreted NFPA standards to their advantage. Santana has

the right to do the same. What is lacking in these facts is

some enforcement device that operates to restrain trade. The

District Court properly distinguished Allied Tube:

Allied Tube . . . involved the manipulation of the

process of establishing an influential body’s

standards to exclude rival technology from the

market . . .. [T]his case does not involve efforts

to influence standard-setting or enforcement by

a body with a cachet of influence. A campaign

of persuasion of architects and specifiers that

toilet partitions are subject to fire and smoke

development standards for interior wall finishes

does not constitute standard setting or

enforcement . . ..

Santana Products, 249 F. Supp. 2d at 509-10.

Unlike Allied Tube, Bobrick’s activity did not take

place ‘within the confines of a private standard-setting

process.” 486 U.S. at 506. Bobrick “confine[d] itself to

efforts to persuade an independent decisionmaker” and did

not “organize[] . . . [or] orchestrate[] the actual exercise of . . .

decisionmaking authority in setting a standard.” Id. at 507.

The government officials making the decision to specify

materials were disinterested, conducted their own fire safety

tests before making decisions, and were susceptible to

lobbying from all competitors in the toilet partition industry.

For the above reasons, we conclude that there was no

restraint of trade.

B. Lanham Act § 43(a) Claim

The defendants also claimed that they could not be

21

held liable for a violation of the false advertising provision of

§ 43(a) of the Lanham Act because of Noerr/Pennington

immunity. The District court, after careful consideration,

concluded that the Noerr/Pennington doctrine shields the

defendants from liability under the Lanham Act. Santana,

249 F. Supp. 2d at 493. Santana appeals the District Court’s

holding, arguing that the court should not have extended the

applicability of the Noerr/Pennington doctrine to false

advertising claims brought under the Lanham Act. We will

not address at this time the Noerr/Pennington doctrine’s

applicability to Lanham Act claims because we conclude that

Santana’s Lanham Act claim is barred by laches.

Santana brought this action on October 1, 1996. The

Lanham Act does not contain a statute of limitations. Instead,

the Act subjects all claims to “the principles of equity.” 15

U.S.C.§1117(a). Bobrick challenged the timeliness of

Santana’s Lanham Act claim, asserting that Santana was

complaining of conduct that occurred seven years before it

filed the action and that Santana had settled its 1994 lawsuit

against the TPMC and Bobrick was not a party to that

litigation. Bobrick raised two timeliness defenses to

Santana’s Lanham Act claim – statute of limitations and

laches.

It was proper for the District Court to use the most

analogous statute of limitation as a guideline for determining

whether the laches doctrine bars Santana’s claim instead of

focusing solely on whether Santana brought its claims within

the applicable statute of limitations period. Courts commonly

use the appropriate statute of limitations as a guideline in

claims for false advertising under §43(a) of the Lanham Act.

See Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187 (2d

Cir.1996); Hot Wax, Inc. v. Turtle Wax, Inc., 191 F. 3d 813

(7 th Cir. 1999); Jarrow Formulas, Inc. v. Nutrition Now, Inc.,

304 F. 3d 829 (9 th Cir. 2002). We also used the statute of

limitations as a guideline. See, e.g., University of Pittsburgh

22

v. Champion Products, Inc., 686 F.2d 1040 (3d Cir. 1982)

(discussing relationship between statute of limitations and

inexcusable delay element of laches in claim for false

designation of origin of goods under § 43(a) of the Lanham

Act).

Because the Lanham Act does not specify a statute of

limitation, courts must

“adopt a local time limitation as federal law if it is not

inconsistent with federal law or policy to do so.” Wilson v.

Garcia, 471 U.S. 261, 266-67 (1985). To do this, a court

“must characterize the essence of the claim in the pending

case, and decide which statute provides the most appropriate

limiting principle.” Id. at 268; See also Malley-Duff & Assocs,

Inc. v. Crown Life Ins., 792 F.2d 341 (1986). The court must

decide which state claim is the “most appropriate” or “most

analogous” to all claims that may be brought under § 43(a) of

the Lanham Act. Wilson, 471 U.S. at 268. Courts must

“choose the best out of the available candidates.” Malley-

Duff, 792 F.2d at 349. Bobrick urges us to conclude that the

best choice is Pennsylvania’s action for fraud, which has a

two-year statute of limitation. Santana maintains, and the

District Court determined that the UTPCPL, which has a six-

year “catch-all” statute of limitation, is the best choice. We

agree with the District Court.

To assert a claim for false advertising under § 43(a) of

the Lanham Act, the plaintiff must prove that the defendant

use[d] in commerce any word, term, name, symbol, or

device, or any

combination thereof, or any false designation of origin,

false or misleading description of fact, or false or

misleading representation of fact, which . . .

in commercial advertising or promotion, misrepresents

the nature,

characteristics, qualities, or geographic origin of his or

her or another

23

person’s goods, services, or commercial activities . . .

15 U.S.C. 1125(a). The plaintiff must prove that the

commercial message is either literally false or, if not literally

false, literally true or ambiguous with the tendency to deceive

consumers. Novartis Consumer Health, Inc. v. Johnson &

Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d

Cir. 2002). If the plaintiff proves literal falsity, there is no

need to show that the buying public was misled. Johnson &

Johnson-Merck Consumer v. Rhone-Poulenc Rorer Pharm.,

Inc., 19 F3d 125, 129-30 (3d Cir. 1994). Otherwise, the

plaintiff must prove “that there is actual deception or at least a

tendency to deceive a substantial portion of the intended

audience.” Id. at 129.

To prove fraud in Pennsylvania, a plaintiff must prove

six elements: 1) a misrepresentation, 2) material to the

transaction, 3) made falsely, 4) with the intent of misleading

another to rely on it, 5) justifiable reliance resulted, and 6)

injury was proximately caused by the reliance. Viguers v.

Philip Morris USA, Inc., 837 A.2d 534 (Pa. Super. Ct. 2003).

On the other hand, to prove “unfair methods of

competition” and “unfair or deceptive acts or practices” under

the UTPCPL , a plaintiff must demonstrate

(i) Passing off goods or services as those of another;

(ii) Causing likeliness of confusion or of

misunderstanding as to the source, sponsorship,

approval, or certification of goods or services;

...

(iv) Using deceptive representations or designations of

geographic origin in connection with the goods or

services;

(viii) Disparaging the goods, services or business of

another by false or

misleading representation of fact;

(ix) Advertising goods or services with intent not to

sell them as advertised;

24

...

(xi) Making false or misleading statements of fact

concerning the reasons for,

existence of, or amounts of price reductions;

...

(xxi) Engaging in any other fraudulent or deceptive

conduct which creates a

likelihood of confusion or of misunderstanding.

73 P.S. § 201-2(4) (emphasis added). The Supreme Court of

Pennsylvania has held that a plaintiff bringing an action

under the UTPCPL must prove the common law fraud

elements of reliance and causation with respect to all

subsections of the UTPCPL.

Weinberg v. Sun Co., Inc., 777 A. 2d 442, 446 (Pa. 2001).

This Court in Island Insteel, Inc. v. Waters decided

that, even though a Virgin Islands action for fraud was

analogous to a trademark infringement claim brought under §

43(a) of the Lanham Act15 , the most analogous action in the

Virgin Islands was one for

15

To establish a trademark infringement claim under § 43(a),

the plaintiff must prove that the defendant:

use[d] in commerce any word, term, name, symbol, or

device, or any

combination thereof, or any false designation of origin,

false or misleading

description of fact, or false or misleading representation

of fact, which . . .

is likely to cause confusion, or to cause mistake, or to

deceive as to the

affiliation, connection, or association of such person with

another person, or as to

the origin, sponsorship, or approval of his or her goods,

services, or commercial activities by another person . . .

15 U.S.C. § 43(a) (emphasis added).

25

deceptive trade practices. 296 F.3d 200, 204 (3d Cir. 2002).

We noted that an

action for fraud requires proof of scienter, whereas an action

for deceptive trade practices and an action for trade

infringement do not. Id. We also noted that “a common law

fraud claim requires a plaintiff to prove actual reliance,”

whereas “an action for deceptive trade practices simply

requires proof that the practice at issue has the ‘tendency or

effect of deceiving or misleading consumers,’ which more

closely resembles the ‘likelihood of confusion’ element that

is the touchstone of a § 43(a) claim.” Id.

An action for fraud always requires the plaintiff to

prove scienter, whereas the Lanham Act does not. The

UTPCPL is in the middle. It encompasses causes of action in

which the plaintiff must prove intent and causes of action in

which the plaintiff need not prove intent. Furthermore, a

false advertising claim under Lanham Act is different both

from an action brought under the UTPCPL and from a fraud

action in Pennsylvania

because it does not always require the plaintiff to prove that

consumers have been misled. Analogies to state statutes or

common law “are bound to be imperfect.” Wilson, 471 U.S.

at 272. As the District Court noted, the Lanham Act and the

UTPCPL “‘ supplement[] rather than supplant[] traditional

common law remedies with per se liability for a variety of

unfair trade practices.”’ Santana, 249 F. Supp. 2d at 499

(quoting Gabriel v. O’Hara, 534 A.2d 488, 491 (Pa. Super.

Ct. 1987)). Section 43(a) has multiple claims, as does the

UTPCPL, while an action for fraud is narrower. The

UTPCPL is the most analogous state cause of action that

would encompass all claims brought under § 43(a) of the

Lanham Act. See Malley-Duff, 792 F.2d at 347 (noting the

need to “look[] to the federally created cause of action for a

broader analogy that could encompass all claims brought

thereunder in a given statute”).

26

Bobrick cites our opinion in Beauty Time, Inc. v. VU

Sys., Inc. 118 F.3d

140 (3d Cir. 1997), and argues that we have already held that

Pennsylvania’s fraud cause

of action was most analogous to claims under the Lanham

Act. However, Beauty Time involved a claim for fraudulent

procurement of a trademark registration in violation of § 38

of the Lanham Act. Its holding is not, therefore, controlling

because this case involves an action under § 43 (a). See

Island Insteel, 296 F.3d at 208.

Bobrick also argues that the District Court erred by

picking the UTPCPL six-year “catch-all” statute of

limitations because in Island Insteel we rejected the

plaintiff’s argument there that a similar catch-all limitations

period applied to a Lanham Act trademark infringement

action. In Island Insteel, however, the plaintiffs did not

“identify a specific statutory cause of action under Virgin

Islands law that is analogous to their

Lanham Act claim and is subject to the catch-all six year

limitations period for actions upon a liability created by a

statute that lacks a statute of limitations.” Id. at 204 (emphasis

added). In Island Insteel, we explained that the catch-all

statute of

limitations could have applied if the plaintiff had identified

an analogous cause of action

governed by that period. Id. at 209. Here, on the other hand,

the most analogous cause of action – an action under the

UTPCPL – is governed by the six-year “catch-all” limitations

period. See Gabriel v. O’Hara, 534 A.2d 488, 495-96 (Pa.

Super. Ct 1987); Algrant v. Evergreen Valley Nurseries, Ltd.,

941 F. Supp. 495, 499 (E.D. Pa 1996).

Regardless, however, of which statute of limitations is

applicable, Bobrick argues that the doctrine of laches

operates to bar Santana’s Lanham Act claim. The District

Court used the six-year statute of limitations as a guide for

27

determining whether the doctrine of laches applied here.

Noting that Santana was aware of Bobrick’s allegedly

wrongful conduct in 1989, more than seven years before

Santana brought the action, the

court held that there was a presumption of laches. Santana,

249 F. Supp. 2d at 501. The court first held that Santana’s

proffered excuse – that “it repeatedly provided

notice to Bobrick that Santana considered the alleged ‘fire

scare’ tactics to be wrongful” – could not justify the delay in

bringing the action. Id. The court nevertheless held that

laches did not bar Santana from bringing its claim because

Santana proved that Bobrick did not suffer material prejudice

as a result of the delay. Id.

Laches consists of two elements: (1) inexcusable

delay in bringing suit, and (2) prejudice to the defendant as a

result of the delay. Pittsburgh, 686 F.2d at 1044. Bobrick

contends that the District Court erred because it did not

require Santana to disprove both elements of laches. Santana

responds that the District Court did not err because Santana

had to disprove only one element, and it successfully did so

by proving that Bobrick did not suffer prejudice as a result of

the delay.16

16

The District Court made a finding that Santana was aware

of Bobrick’s allegedly wrongful conduct in 1989. Santana, 249

F.Supp. 2d at 501. Santana argues that there are fact issues as

to when Santana knew or should have known about Bobrick’s

marketing activities to fix the beginning of the delay period

prior to suit. Santana points out that the TPMC was not formed

until late 1989 and that Bobrick received a copy of the Formica

videotape in early 1990. Santana argues that it did not

distribute the Formica videotape to its sales representatives until

1990, it did not produce the “You Be The Judge” videotape until

1992, and it placed other advertisements throughout the 1990's.

The length of the delay is a question of fact which is

28

We conclude that the District Court erred because it

did not use the appropriate legal standard to assess Bobrick’s

laches defense. Once the statute of limitations has expired,

the defendant “enjoys the benefit of a presumption of

inexcusable delay and prejudice. EEOC v. The Great Atlantic

& Pacific Tea Co., 735 F.2d 69, 80 (3d Cir. 1984). The

District Court correctly found that there was a presumption of

laches as a result of Santana filing the claim after the

applicable statute of limitations – 6 years under the UTPCPL

– had run. Santana, therefore, carried the burden of proving

that its delay was excusable and that it did not prejudice

Bobrick. Gruca v.United States Steel Corp., 495 F.2d 1252,

1258-59 (3d Cir. 1974) (noting that the length of the delay

reviewed under the clearly erroneous standard. Churma

v.United States Steel Corp., 514 F.2d 589, 593 (3d Cir. 1975).

The District Court’s finding as to when Santana was aware of

Bobrick’s conduct is not clearly erroneous. As early as March,

1989, Santana was aware of Bobrick’s “fire scare” campaign.

On March 5, 1989, Lynch of Santana approached Bob Gillis at

the American Association of School Administrators Convention,

identified himself as the president of Santana, and informed

Gillis that he objected “to what he considered an unfair attack

on the physical properties of the polyethylene material used in

the manufacture of Bobrick’s toilet compartments.” Lynch

asked Gillis for the names of Bobrick’s attorneys so that

Santana’s attorneys could contact them. Patrick McGartland,

Santana’s regional sales manager, stated in his deposition that in

“either 1988 or 1989 . . . [he] was aware of that there was an

effort to create this impression on the part of the potential buyer

in the marketplace or the specifier that solid plastic was a fire

issue.”

29

controls burdens of proof). 17

Santana argues, however, that, despite the running of

the statute of limitations, a presumption of laches can be

rebutted by showing only an absence of prejudice. Santana

cites Anaconda Co. v. Metric Tool & Die Co., in which the

District Court, while recognizing that a defendant is entitled

to a rebuttable presumption of both elements of laches, held

that the plaintiff can rebut the presumption by negating “one

or both” of the elements. 485 F.Supp. 410, 427-28 (E.D. Pa

1980) (Becker, J.). The court reasoned:

[R]equiring the plaintiff to carry

this double burden would be

inconsistent with the conceptual

structure of the laches doctrine,

which requires the court to find

both inexcusable delay on the part

of the plaintiff and prejudice to

the defendant. If a plaintiff

rebuts the presumption as to either

of the two elements, the court

cannot find that both elements

exist, and therefore cannot uphold

the defense of laches.

Id. at 428 n.14.

Nevertheless, despite the reasoning of the District

17

This added presumption that both inexcusable delay and

prejudice exist is enjoyed by a defendant once the statute of

limitations has run. See EEOC v. The Great Atlantic & Pacific

Tea Co., 735 F.2d at 80. It is because of this presumption that

we do not agree with the position of the dissent that Santana had

only to demonstrate that prejudice to Bobrick did not exist.

Once the statute of limitations has run, the defendant’s burden

doubles.

30

Court in Anaconda, we have consistently held that a plaintiff

must prove that laches does not exist by showing that its delay

was excusable and that its delay did not prejudice the

defendant. See Great Atlantic & Pacific Tea Co., 735 F.2d at

80 (“If a statutory limitations period that would bar legal

relief has expired . . . the burden shifts to the plaintiff to

justify its delay and negate prejudice.”); Churma v. United

States Steel Corp., 514 F.2d 589, 593 (3d Cir. 1975) (“Prior to

the running of the statute, the defendant has to prove laches,

but thereafter the plaintiff has to disprove laches.”); Gruca v.

United States Steel Corp.., 495 F.2d 1252, 1259 (3d Cir.

1974) (“If a plaintiff sleeps on his rights for a period of time

greater than the applicable statute of limitations, then ‘the

plaintiff (must) . . . come forward and prove that his delay

was excusable and that it did not . . . prejudice the

defendant.’”) (citation omitted); Burke v. Gateway Clipper,

Inc., 441 F.2d 946, 949-50 (3d Cir. 1971) (“We are aware that

other circuits place the burden of proving inexcusable delay

and prejudice on the defendant. We see no new and

compelling reason to reverse the well-established principle

and thoroughly considered line of decisions of this Circuit

requiring the plaintiff to disprove inexcusable delay and lack

of prejudice to the defendant when, as here, . . . [the statute of

limitations period has run].”); Mroz v. Dravo Corp., 429 F.2d

1156, 1160 (3d Cir. 1970) (never addressing whether plaintiff

rebutted presumption of prejudice because plaintiff did not

rebut presumption of inexcusable delay); Lipfird v.

Mississippi Valley Barge Line, 310 F.2d 639, 642 (3d Cir.

1962) (holding that delay beyond the applicable statute of

limitations period bars plaintiff’s claim “unless he overcomes

the presumption of inexcusable delay and detriment to the

defendant resulting from the delay by pleading and proving

facts which do excuse the delay and show that it has been in

no way detrimental to the defendant”); Kane v. Union of

Soviet Socialist Republics, 189 F.2d 303, 307 (3d Cir. 1951)

31

(affirming district court’s dismissal of plaintiff’s claim based

on laches because it did not “plead[] facts negativing

prejudice and excusing his delay.”).

In all of our cases addressing this issue, we have held

that the plaintiff’s burden to rebut the presumption of laches

is conjunctive. Not once have we used the word “or.” The

District Court concluded that Santana’s delay in filing its

Lanham Act claim was inexcusable. The proper conclusion

then is that Santana’s Lanham Act claim is barred by laches.

C. Tortious Interference With Prospective

Contract Claim

Even though we have held that the Noerr/Pennington

doctrine shields petitioning activity from liability for claims

of tortious interference with contract and tortious interference

with prospective economic advantage, see Cheminor Drugs,

Ltd. v. Ethyl Corp., 168 F.3d 119, 128 (3d Cir. 1999), we do

not need to decide whether the marketing campaign at issue

here is petitioning activity which the doctrine immunizes.

For even if the defendants are not shielded from liability, we

agree with the District Court that Santana did not prove the

existence of a prospective contractual relation.18

There is only one prospective contract with which

Santana claims Bobrick interfered. Specifically, Santana

tried to bid on a contract at the Rio Hondo Community

College in California. The architect for the project originally

specified HDPE toilet partitions. However, the architect

changed the specification to phenolic after watching a

18

Aside from proving the existence of a prospective

contractual relation, a plaintiff must prove the defendant had the

purpose or intent to harm the plaintiff by preventing the relation

from occurring, the absence of privilege or justification on the

part of the defendant, and actual damage resulting from the

defendant’s conduct. Thompson Coal Co. v. Pike Coal Co., 412

A.2d 466, 471 (Pa 1979).

32

videotape and conducting a fire test on samples of HDPE,

which Santana had provided, and samples of phenolic, which

Bobrick had provided. Penner Partitions, a supplier of

phenolic partitions, ultimately won the contract. Santana

argues that it lost this contract as a result of Bobrick’s “fire

scare” tactics.

A prospective contractual relation “is something less

than a contractual right, something more than a mere hope.”

Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466, 471 (Pa

1979). To determine whether Santana had a prospective

contractual relation with Rio Hondo, “Santana must show that

an issue of fact exists as to whether, but for Bobrick’s ‘fire

scare’ campaign, there was a reasonable probability that

Santana would secure a contract from Rio Hondo.” Santana,

249 F.Supp.2d at 543. It need not be certain that Santana

would have obtained the contract, only reasonably probable.

Alvord-Polk, 37 F.2d at 1015.

Santana argues it was reasonably probable that it

would have obtained the contract but for the defendant’s

marketing campaign because it had approximately 60% of the

HDPE market segment, had a favorable track record with the

customer, and had actually been specified.

Despite the specification of HDPE for the Rio Hondo

project, we cannot say, however, that it was reasonably

probable that Rio Hondo was going to award the contract to

Santana. Even though Santana had convinced Rio Hondo to

specify its partitions, Santana did not have a “reasonable

probability of obtaining the contract” for the work. General

Sound Telephone Co. v. AT&T Communications, Inc., 654

F.Supp. 1562, 1565 (E.D. Pa 1987). Because Bobrick

persuaded Rio Hondo to change the specification to phenolic

instead of HDPE, Santana was simply denied an opportunity

to bid. However, even if Santana had had the opportunity to

bid, one of the two other suppliers of HDPE partitions –

33

Capital Partitions or Comtec19 – could still have obtained the

contract. There is no evidence that Santana would be the

winning bidder. The problems with obtaining a government

contract in this situation is demonstrated by the fact that Rio

Hondo did not in fact award the contract to Bobrick .

V. Conclusion.

For the foregoing reasons, we will affirm the District

Court’s grant of summary judgment in favor of the defendants

on Santana’s § 1 Sherman Act claim and tortious interference

with prospective contract claim. Because we conclude,

however, that the Lanham Act claim is barred by the doctrine

of laches, we will vacate the order granting Noerr/Pennington

immunity to defendants insofar as the § 43(a) claim applied to

government contracts and we will vacate the order denying

summary judgment to defendants insofar as the § 43(a) claim

applied to private contracts. We will remand the Lanham Act

claim to the District Court to dismiss it as barred by laches.

19

Comtec, which had supplied HDPE partitions to the three

companies that had stopped selling the HDPE partitions, entered

the toilet partition market to sell HDPE partitions in their place.

34

Chertoff, Circuit Judge, dissenting in part.

I join the majority insofar as it affirms summary

judgment on Santana’s claims under Section One of the

Sherman Act. I do not agree, however, that laches bars

Santana’s Lanham Act claim. Specifically, I do not believe

that either logic or this Court’s jurisprudence requires a

plaintiff who bears the burden of showing that laches does not

apply to show that both conditions necessary for the

application of laches do not exist. And since the District

Court determined that Bobrick had not suffered

prejudice—and the Court’s determination was not an abuse of

discretion—the doctrine of laches should not bar Santana’s

claim.

“The doctrine of laches consists of two essential

elements: (1) inexcusable delay in instituting suit; and (2)

prejudice resulting to the defendant from such delay.” Central

Pennsylvania Teamsters Pension Fund v. McCormick Dray

Line, Inc., 85 F.3d 1098, 1108 (3d Cir. 1996). If a plaintiff

filed suit before the analogous state statute of limitations had

run, the defendant bears the burden of showing that plaintiff’s

delay in instituting suit was inexcusable and the defendant

suffered prejudice from the inexcusable delay. Conversely, if

a plaintiff filed suit after the analogous state statute of

limitations had run, a presumption arises that plaintiff’s delay

in instituting suit was inexcusable and defendant suffered

prejudice from the delay. The plaintiff then bears the burden

of rebutting this presumption. See, e.g., Equal Employment

Opportunity Commission v. Great Atlantic & Pacific Tea Co.,

735 F.2d 69, 80-81 (3d Cir. 1984).

The majority today holds that a plaintiff who bears the

burden of rebutting such a presumption must show that his

delay in instituting suit was not inexcusable and that the

35

defendant did not suffer prejudice from the delay. The

majority concludes that our precedent compels this

conclusion.

To be sure, language in our prior decisions tends to

support the majority’s holding. As cited by the majority, we

wrote in Burke v. Gateway Clipper, 441 F.3d 946, 949 (3d

Cir. 1971), in language we quoted in Churma v. United States

Steel Corp., 514 F.2d 589, 593 (3d Cir. 1975) and Gruca v.

United States Steel Corp., 495 F.2d 1252, 1259 (3d Cir.

1974), that a plaintiff who bears the burden of proof must

“come forward and prove that his delay was excusable and

that it did not unduly prejudice the defendant.” Likewise, in

Lipfird v. Mississippi Valley Barge Line Co., 310 F.2d 639,

642 (3d Cir. 1962), and Kane v. Union of Soviet Socialist

Republics, 189 F.2d 303, 307 (3d Cir. 1951), we affirmed

dismissals where the plaintiff failed to allege “any facts

excusing his delay and showing lack of prejudice to the

defendant.”

We are “bound by holdings,” however, “not language.”

Alexander v. Sandoval, 532 U.S. 275, 282 (2001). On this

point, I agree with the District Court’s conclusion in Baczor v.

Atlantic Richfield Co., 424 F. Supp. 1370 (E.D. Pa. 1976),

that the references to rebutting both prongs of the test are

dicta in these cases, rather than holdings which bind the

Court. Id. at 1380 n.5; see also Anaconda Co. v. Metric Tool

& Die Co., 485 F. Supp. 410, 428 n.14 (E.D. Pa. 1980)

(agreeing with Baczor). In each case -- Churma, Gruca,

Burke, Lipfird and Kane -- the plaintiff did not rebut either

the delay or the prejudice prong, meaning that the Court did

not need to determine the issue that is before the Court today.

Even if one could read our prior cases as requiring the

plaintiff to rebut both prongs of the laches test, see, e.g. Mroz

v. Dravo Corp., 429 F.2d 1156, 1161 (3d Cir. 1970) (not

considering prejudice prong when, but not necessarily

because, plaintiff had not rebutted delay prong), such a

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reading would be logically inconsistent with the Court’s

subsequent holding in Central Pennsylvania Teamsters that

each prong is an “essential element[]” of the doctrine of

laches, 85 F.3d at 1108. It simply defies elementary logic to

require a plaintiff bearing the burden of proof on rebuttal to

show that the defendant cannot invoke the laches doctrine

because both essential elements are missing, when one

missing element would negate the doctrine. As Judge Becker

explained in Anaconda:

[R]equiring the plaintiff to carry this double

burden would be inconsistent with the

conceptual structure of the laches doctrine,

which requires the court to find both

inexcusable delay on the part of the plaintiff and

prejudice to the defendant. If a plaintiff rebuts

the presumption as to either of the two

elements, the court cannot find that both

elements exist, and therefore cannot uphold the

defense of laches.

485 F. Supp. at 428 n.14. Put differently, if two conditions

must be satisfied for a rule to apply, then (even if we presume

both to be satisfied) negation of either of those conditions (by

rebutting that presumption) defeats application of the rule.

Therefore, because the majority has concluded that the

older cases require the plaintiff to rebut both prongs of the

laches test, I recommend that the Court consider en banc

whether the older cases can be reconciled with our decision in

Central Pennsylvania Teamsters.

Here, the District Court concluded that Santana

“proffered sufficient evidence that Bobrick did not suffer

material prejudice as a result of the delay.” (App. 79.) I do

not believe that in reaching that conclusion the District Court

abused its discretion, which is the standard of review we must

apply. See Churma, 514 F.2d at 593.

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Having concluded that laches does not bar Santana’s

Lanham Act claim, I would address the merits of Santana’s

appeal on the application of the Noerr-Pennington doctrine to

the Lanham Act claim.

I

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