Opposition Brief — Forro Precision, Inc. v. International Business Machines Corp.

Office -Suprsme Court, US.

my FILED

by) 4

No. 84-1577. “~~ MAY @ 1985

ALEXANDER L. STEVAS,

CirRK

IN THE L

Supreme Court of the United States

OCTOBER TERM, 1984

FoRRO PRECISION, INC.,

Petitioner,

VS.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RESPONDENT’S BRIEF IN OPPOSITION

HENRY C. THUMANN

(Counsel of Record)

JAMES V. SELNA

ROBERT E. WILLETT

400 So. Hope Street

Suite 1500

Los Angeles, Calif. 90071

Telephone: (213) 669-6000

Of Counsel: Attorneys for Respondent

O’MELVENY & MYERS International Business

Machines Corporation

May 6, 1985

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QUESTION PRESENTED

Did the court of appeals err in affirming summary

judgment dismissing a California common-law tort claim on

the basis of its determination that respondent’s solicitation

of a police investigation of criminal trafficking in its trade-

secret designs and its subsequent participation, at police

request, in the execution of a judicially-issued search

warrant were absolutely privileged as a matter of California

law?

RULE 28.1 STATEMENT

Respondent International Business Machines Corpora-

tion (IBM) has no subsidiaries which are not wholly owned,

except Discovision Associates. IBM is also a partner in

Satellite Business Systems. IBM is not a subsidiary of any

other company.

ii

TABLE OF CONTENTS

Title

| eee Te

RR ee ttn

TABLE OF AUTHORITIES CITED o....cssssssssssssssssssesssssessssees

ey So ee

I ini acecscncndsictcnssnantbcets

RFASONS FOR DENYING THE WRIT.......::::sssssssssssssse

I. THE CONTROLLING ISSUES OF STATE LAW

RAISED BY PETITIONER OFFER NEITHER

SPECIAL NOR IMPORTANT REASONS TO

INVOKE THE COURT’S DISCRETIONARY

POWER OF REVIEW, AND NO COLORABLE

FEDERAL ISSUES ARE PRESENTED.....................000

Il. THE COURT OF APPEALS CORRECTLY APPLIED

PPP Eee Parke SPR PIR EAW civcciccsssccrsscrsssresceccssonsecessees

A. IBM’S Communications With the Authorities Were

PRGUARGI PIEVIIIIOE cccscsssscecssscsscosssecssesseseness esadiiesah

B. In According Absolute Privilege to IBM’s

Participation in the Execution of the Search Warrant,

the Court of Appeals Correctly Implemented

California’s Declared Policy of Encouraging

Affirmative Citizen Response to Police Requests for

ES ik ks dein nid cecisminbencinictensrecbceseabesinivissshonsosnssinensies

SN ITD tovinsisbsitdess tunis vneravecsnxsrnainiecesiaddcshadandaawesapeaalades

ili

TABLE OF AUTHORITIES CITED

Cases Page

Albertson v. Raboff, 46 Cal. 2d 375, 295 P.2d 405 (1956)....... 7, 10

Ball v. Rawles, 93 Cal. 222, 28 P. 937 (1892) ues 7, 10

Brody v. Montalbano, 87 Cal. App. 3d 725, 151 Cal. Rptr.

206 (1978), cert. denied, 444 U.S. 844 (1979)... 10, 12

Buckaloo v. Johnson, 14 Cal. 3d 815, 122 Cal. Rptr. 745, 537

Fa I TO sikipincinstiticsaccivlicrransthcinlaidetlaididiidss lila Biaaidciinnliticntntasscitsthn 9

Delta Air Lines, Inc. v. August, «50 U.S. 346 (1981)... 8, 16

Ellis v. Dixon, 349 U.S. 458, reh. denied, 350 U.S. 855

Sa rccastnescicenpubic vbabasnicadodaadianaasdnacan cesebenatiad da ipensdeclelstn ss dnitaclsockcealanbant 8

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) ..... ee eeeeeees 7

Ex Parte Peterson, 253 US. 300 (1920)... .ccsccsccsrscccscscseccccssssseses 8

Fidelity & Deposit Co. v. United States, 187 U.S. 315 (1902). 8

Forro Precision, Inc. v. Int. Bus. Machines Corp., 673 F.2d

Se ate REE BE Bi aicenstennniccinnsncmencedionmoennn passim

Forro Precision, Inc. v. Int. Bus. Machines Corp., 745 F.2d

Ce CUE See BIE TINE OEE seddccrreasivnrisrinnsinsnriennanrnstmssans passim

Frisk v. Merrihew, 42 Cal. App. 3d 319, 116 Cal. Rptr. 781

CR ieniesen soeseaciraarce lata Nicaea aca cls opietebaddnidesk catisavtecoandaiainasdinonee 12

Gruenberg v. Aetna Insurance Company, 9 Cal. 3d 566, 108

oe me Uk GE 2, | Oreo none 12

Huddleston v. Dwyer, 322 U.S. 232 (1944)... eee eceeeeeteeeee 7

Imig v. Ferrar, 70 Cal. App. 3d 48, 138 Cal. Rptr. 540

SOI chi oesie Gai datchatvaih ra ecaccascenediactebaasbeeiceeshashinadsnnsesabiaiiiaarahaaduncnos 10, 12

Itel Capital Corp. v. Cups Coal Co., 707 F. 2d 1253 (11th

I ccceth haba ccicces Bach sasneds Mab hiashcadngpidadmaleeeepaa alana tapebenainacaiiicas 12

Kachig v. Boothe, 22 Cal. App. 3d 626, 99 Cal. Rptr. 393

1 2) ) ER RS ern reer one epee morte iicckigiuabieomnalaieiunieneroks 11

Martin v. Kearney, 51 Cal. App. 3d 309, 124 Cal. Rptr. 281

Ea Tie sksccichinicisnieenaioubssuaacibi sig icaiehadchacliedigilad is cactugli eels cece inddencaah 10

Peterson v. Robison, 43 Cal. 2d 690, 277 P.2d 19 (1954). 8, 15, 16

Pettitt v. Levy, 28 Cal. App. 3d 484, 104 Cal. Rptr. 650

arr TIE ices utah sa taeindiccadeateasiddin aioeehaantstibNiglianealsincbatns 10, 11

Propper v. Clark, 337 U.S. 472, reh. denied, 338 U.S. 841

(1949), reh. denied, 342 U.S. 907 (1952) ............cccccssccsccsesees 15

iv

Rader v. Thrasher, 22 Cal. App. 3d 883, 99 Cal. Rptr. 670

PIT ia cicasnisnnssnsconeesiieiiiensa.aabeisehinnasssnciei ass eacanus ahccatiuapababbaasscadsinionesed 11

Scott v. McDonnell Douglas Corp., 37 Cal. App. 3d 277, 112

Ce GE. le Pe aibceiaiimitienacsiniieanissainns 10

Smith v. Hatch, 271 Cal. App. 2d 39, 76 Cal. Rptr. 350

CRI sci ecissceitetncsinicnisheeeke chal dadeia cacadeeadahiapaia atdaicciuaiaapiini diag 11

Sokol v. PUC, 65 Cal. 2d 247, 418 P.2d 265, 53 Cal.

ROE EF CI oi cvistediictistntaescenaccms tatiana Nenladesanaianl 8, 14, 15

Span-Deck, Inc. v. Fabcon, Inc., 570 F. Supp. 81 (D. Minn.

SEED icsicsicsicsrinniesshceceueadcabacsiiben tsi baad Acna thie tpi Aialipabialahaadialiaicas i2

Spiegel’s Estate v. Commissioner of Internal Revenue, 335

US. 701, reh. denied, 336 U.S. 915 (1949) .....cccccrcrorrccrcsssossse 7

Tiedemann v. Superior Court, 83 Cal. App. 3d 918. 148 Cal.

BR me CUTE siasataiciainasesncciesisnvlaleaicinacusdadiaielaiasannieiiein 10

Twyford v. Twyford 63 Cal. App. 3d 916, 145 Cal. Rptr.

SP CRIED inssitcsksssctsdsiniesdevtsciantsniaticlmhiowelaninlantn ina aaa 10, 12

United States v. Durham Lumber Co., 363 U.S. 522 (1960)..... 15

UNITED STATES CONSTITUTION

OU AMIE ic isisuisidnatnicadaxtblineiiahinitibdinanties 8

STATUTES

California Civil Code

PA ad ahs acs glee A arialde amare hdl eerasomnseaiueneieta aaalaiebe maa 14

STR seitcncecuuns s edpaiaiaiiapnmntboneuaccielamccuadcnduatssaneasedmcnin aeacaeeA 2,9

California Penal Code

A iaiccivvnaciaussetchsbianGonuccianaes ncaseueontaamisedebanctapaneuasaiamtia 15

Feria aaovihuse is acceso clgeatecndib isa ioitcllds dlapictae ache daa ood ebgdaeatoad 15

FARK, BS SEI. 6B icisescniss ptt ieeritiscetctetennsiinlasas 2,03

RULES

United States Supreme Court, Rule 17.1 ...............cscccscsscsssesesssees

Federal Rules of Civil Procedure, Rule 50(b) ............... eee

TREATISES

Restatement (Second), Torts, § 766................cssccccccssssssscecsssrcceses 9

V

No. 84-1577

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

FORRO PRECISION, INC.,

Petitioner,

VS.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNFTED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RESPONDENT’S BRIEF IN OPPOSITION

STATEMENT OF THE CASE

The California common-law intentional interference

claim as to which review is sought had its genesis in a 1974

complaint filed in the district court for the Northern District

of California. That complaint presented only a federai

antitrust claim. Petitioner was subsequently granted leave

to amend its complaint to add a pendent state-law claim for

2

intentional interference with prospective business ad-

vantage.'(CR 95.) The amended complaint asserted that

IBM had intentionally interfered with petitioner’s prospec-

tive business advantage by providing misleading informa-

tion to the Santa Clara County, California authorities, and

thereby causing a police investigation of petitioner and a

subsequent search of its business premises. (CR 87, {fl 22,

57.) The added claim likewise challenged IBM’s subsequent

assistance of the police in the execution of a search warrant.

IBM counterclaimed alleging petitioner’s misappropriation

of trade secret designs for various IBM products. (CR 7,CR

115.)

The case was tried to a jury in 1977. It failed to reach a

verdict on the antitrust claim, and the trial court subse-

quently granted IBM’s Motion for Judgment pursuant to

F.R.C.P. 50(b), finding that petitioner had failed to

establish a prima facie claim under Section 2 of the

Sherman Act.’ (CR 266.)That ruling was later affirmed by

the court of appeals,‘and is not a subject of the present

petition.

With respect to the interference claim, petitioner

presented evidence that petitioner’s business had been

adversely affected by news and trade media reports through

which its customers learned that its facilities had been

among a number of locations searched as part of a police

investigation of illicit trafficking in stolen IBM drawings. In

charging the jury on that common-law claim, the trial court

' Petitioner’s amended pleading asserted five other common-law claims

which were disposed of on summary judgment prior to trial. (CR 179;

CR 291, pp. 120-22.) None is a subject of the present petition.

* “CR” refers to the Clerk’s Record, and the filings therein are referred

to in accordance with the Clerk’s numbering system. “R” refers to the

trial transcript.

? 15 US.C. § 2.

* Forro Precision, Inc. v. International Business Machines Corp., 673

F.2d 1045, 1062 (9th Cir. 1982).

3

declined to instruct on the statutory privilege contained in

Section 47(2) of the California Civil Code which accords

absolute immunity to certain communications made to

government officials. It likewise declined to instruct on the

California common-law privilege related to IBM’s police-

requested participation in the execution of the search

warrant. (R 2948-49.) In the absence of such instruction,

the jury returned a verdict in favor of petitioner on the

common-law interference claim. (CR 237, 238.) The jury

also returned a verdict in favor of IBM on its trade secret

counterclaim. (CR 239.) Neither verdict was disturbed on

post-trial motions. (CR 266.)

On cross-appeals from the 1977 trial court judgment, the

court of appeals affirmed IBM’s trade secret misappropria-

tion award, noting abundant evidence of petitioner’s traf-

ficking in stolen IBM drawings. Forro Precision, Inc. v.

International Business Machines Corp., 673 F.2d 1045,

1057 (9th Cir. 1982) [hereinafter “Forro I’’| reproduced in

Petitioner’s Appendix A, at 17-18. However, the court of

appeals reversed and remanded the judgment on the

intentional interference claim, holding that the trial court

had erred in failing to accord IBM the benefit of

California’s statutory and common-law privileges. (Forro I,

App. A, at 16.)

On remand, IBM moved the district court-for summary

judgment on the ground that the sole proximate link

between petitioner’s claimed injury and the IBM conduct

evidenced in the record consisted of communications and

search participatory activity held absolutely privileged in

Forro I. (CR 332, pp. 17-21.) In its opposition, petitioner

made no further factual showing, but argued instead that

the California statutory privilege was not absolute and did

not extend to half-truths or statements amounting to

“fraudulent silence.” (CR 334, pp. 4-6, 11-12; CR 344, pp.

14-15, 17.) The district court entered summary judgment,

4

finding that the damage claimed by petitioner resulted

entirely from absolutely privileged conduct. (CR 340, Order

Granting Summary Judgment, reproduced in Petitioner’s

Appendix B, at 28-29.)

The court of appeals affirmed. Forro Precision, Inc. v.

International Business Machines Corp., 745 F.2d 1283 (9th

Cir. 1984) [hereinafter “Forro IJ’’], reproduced in Petition-

er’s Appendix C, at 31. In so doing, it reaffirmed its earlier

holding that the California statutory privilege was absolute

in nature, and rejected petitioner’s “fraudulent silence”

theory as incompatible with California’s statutory policy of

encouraging fullest citizen communication with govern-

mental authorities. (Forro II, App. C, at 33-34.)

STATEMENT OF FACTS

Petitioner Forro Precision, Inc. is a precision machine

shop which, since 1968, has specialized in producing metal

parts for electronic data processing devices. (R 1354-56.)

Respondent IBM is a developer and manufacturer of a

complete line of electronic data processing equipment.

Among the equipment offered by IBM are randomly

accessible auxiliary data storage devices known as disk

drives.

In late 1970, IBM became aware for the first time that

future disk product designs then in development at its San

Jose, California laboratory had become the subject of an

illicit market. (R 278; PX 437, p. 3.) Reports circulated at

an October 1970 trade show that blueprints for IBM’s 3330

“Merlin” product, then nearly a year away from initial

customer shipment, could be purchased in an emerging

underground market. Discovery in a state-court trade secret

action, IBM v. Memorex, indicated that petitioner was

supplying Memorex with certain machine parts which were

identical to critical ““Merlin” parts well before IBM’s initial

shipment of its “Merlin” product.

5

Having suffered compromise of its ‘““Merlin” design, IBM

in early 1973 was confronted with additional rumors that

the design of its yet-to-be-shipped “Winchester” device was

likewise “out.” Using a suspected former “‘Merlin”’ traffick-

er as a go-between, IBM commenced an internal investiga-

tion which revealed that a “source” still existed within its -

laboratory, and that IBM’s new technology was indeed

available for a price. (R 1860, 1863-65.) In April 1973,

IBM approached local prosecutorial and-law enforcement

authorities with its information, and based thereon, the San

Jose Police Department and the Santa Clara County

District Attorney’s Office initiated a criminal investigation

under their exclusive control. (R 689-90, 2067-68.) A series

of police-monitored meetings of the go-between and his

inside contact, together with information supplied by IBM,

indicated that Forro, among others, was linked to the

trafficking in confidential IBM designs. (PX 425, pp. 28,

29.)

In going to the authorities, IBM hoped to obtain both the

identification of its inside source and the prosecution of

those who had been criminally trafficking in its proprietary

designs. (R 1274, 1959, 1969-70.) In addition, some IBM

security officials had hoped that the “thunderclap” of

publicity which would accompany any such prosecution

would serve to put the industry on notice that the willful

misappropriation of IBM trade secrets involved criminal

misconduct. (R 1001-03.)

On the basis of an affidavit drafted by Santa Clara

County Deputy District Attorneys and executed by a San

Jose Police Department Officer, the authorities sought a

search warrant of petitioner’s facility. (PX 425.) Although

the affidavit largely reflected information provided by IBM,

the record is uncontradicted that IBM had no part in

preparing the affidavit or in the prosecutorial decision to

seek a warrant. (R 727, 966, 978.) On June 27, 1973, a

6

municipal court judge issued a warrant for the search of

Forro’s facility, and the warrant was executed two days later

at Forro’s Los Angeles plant. (PX 424, PX 425.) The search

was conducted under the supervision of the San Jose Police

Department. (R 2027, 2033.) At the written request of the

San Jose Police Chief, IBM employees were present to aid in

the identification of technical data falling within the call of

the warrant. (DX 6559, R 665.)

It is uncontested that each IBM employee was accom-

panied by a police officer at all times. (R 1406, 2023-26.)

Although IBM employees provided technical assistance, it

was the police who established the search guidelines and

made the final determination as to what to seize. (R 1652-

53, 2027, 2033.) The search produced numerous “Merlin”

drawings. (R 1651-52; PX 423.) Although there had been

some leads suggesting that Forro was producirig replicas of

components for IBM’s yet-to-be-shipped “Winchester” disk

drive (PX 437), no such drawings were uncovered during

the search. However, the undisturbed jury verdict on IBM’s

counterclaim established that petitioner had in fact previ-

ously solicited and obtained “Winchester” drawings from a

European contractor who was producing parts for IBM

Germany pursuant to a confidentiality agreement. Petition-

er’s president, who admitted hiding drawings during the

search, later assured his concerned European source that no

“Winchester” drawings had been found by the police.

(R 2345.) While several of the other subjects of the police

investigation were indicted and convicted, no charges were

filed against. Forro.

> Forro made no effort to challenge the validity of the search warrant

which had been issued by the Los Angeles municipal court, nor did it

seek return of the seized drawings. (R 1400-02, 1414-15.)

7

REASONS FOR DENYING THE WRIT

I. THE CONTROLLING ISSUES OF STATE LAW

RAISED BY PETITIONER OFFER NEITHER

SPECIAL NOR IMPORTANT REASONS TO INVOKE

THE COURT’S DISCRETIONARY POWER OF

REVIEW, AND NO COLORABLE FEDERAL ISSUES

ARE PRESENTED.

This Court has long recognized that the ultimate respon-

sibility for determining state law resides not with it but with

the highest court of the State. Erie R. Co. v. Tompkins, 304

U.S. 64, 78 (1938). Accordingly, where reasonable argu-

ments have been advanced to support a determination of

state law made by a federal circuit court, this Court has

found it “wholly unprofitable for us to analyze [the state]

cases on the point.” Spiegel’s Estate v. Commissioner of

Internal Revenue, 335 U.S. 701, 708, reh. denied, 336

US. 15 (1949). It has for that reason become the policy of

the Court to “accept and therefore ... not review, save in

exceptional cases, the considered determination of questions

of state law by the intermediate federal appellate courts.”

Huddleston v. Dwyer, 322 U.S. 232, 237 (1944). Indeed, as

Rule 17.1 of the Rules of this Court admonishes, discretion-

ary review should be granted only for “special and

important reasons,” and that is doubly so where the

controlling questions are of local law.

Here the court of appeals’ disposition of petitioner’s

common-law interference claim turned exclusively — and

correctly‘ — upon (1) a California statutory privilege which

has been definitively interpreted in scope and force by the

California Supreme Court;’and (2) upon a California

common-law policy of encouraging citizen assistance of law

° See Section II, infra.

" Albertson v. Raboff, 46 Cal.2d 375, 379, 295 P.2d 405, 408 (1956);

Ball v. Rawiles, 93 Cal. 222, 236, 28 P. 937, 941 (1892).

8

enforcement agencies which has likewise been accorded

clear recognition by the California Supreme Court. Little

purpose would be served by a review of California’s

statutory and common law, entirely local in its operation,

and in any case subject to ultimate state-court control

regardless of this Court’s intervention.

Petitioner’s effort to conjure an issue of federal concern is

both substantively’ mistaken and unsupported by its

procedural positions below. In a desperate search for a

constitutional issue, petitioner accuses the Forro I court of

“begging” the appellate court’s purported duty to make a de

novo review of the constitutional breadth of the Los Angeles

municipal court’s heretofore unchallenged search warrant.

(Petition, at 22.) While the court of appeals would have

such a duty in considering an appeal from a criminal

proceeding in which a warrant was challenged, this was a

civil case in which the warrant was not challenged and in

which its constitutionality bore on none of the elements of

the claim. Moreover, petitioner’s failure to raise the

purported constitutional issue in the trial court or in the

circuit court on either appeal bars any review here.’ Ellis v.

Dixon, 349 U.S. 458, 460, reh. denied, 350 U.S. 855 (1955);

see Delta Air Lines, Inc. v. August, 450 U.S. 346, 362

(1981).

® Sokol v. PUC, 65 Cal.2d 247, 257-58, 418 P.2d 265, 272, 53 Cal.

Rptr. 673, 680 (1966); Peterson v. Robison, 43 Cal.2d 690, 697, 277

P.2d 19, 24 (1954).

* Similarly misplaced, both procedurally and substantively, is the

assertion that application of an absolute privilege which takes the

liability determination from the jury amounts to a denial of Seventh

Amendment rights. (Petition, at 1.) Petitioner ignores a court’s

constitutionally permissible power to terminate an action short of a

jury verdict where as a matter of law there is no basis for imposing

liability. Ex Parte Peterson, 253 U.S. 300, 309-10 (1920); see Fidelity

& Deposit Co. v. United States, 187 U.S. 315, 320 (1902). Moreover,

in neither of its appeals below did petitioner raise any Seventh

Amendment issue.

9

II. THE COURT OF APPEALS CORRECTLY

APPLIED APPLICABLE CALIFORNIA LAW.

The court of appeals twice considered IBM’s communica-

tions with police authorities and its participation in the

search at police request. In the first instance it held that the

trial court had erred in failing to accord IBM the benefit of

California’s absolute privileges and in the second instance it

held that the trial court had on the record before it properly

entered summary judgment on the basis of those privileges.

In reaching both determinations the court of appeals applied

settled state law directed at the promotion of clearly

enunciated statutory and common-law policies.”

A. IBM’s Communications With the Authorities Were

Absolutely Privileged.

As a matter of long-standing statutory mandate,

California encourages the fullest degree of communication

between citizen and government. Section 47(2) of the

California Civil Code, adopted in 1872, declares statements

made “‘[i]n any (1) legislative or (2) judicial proceeding, or

(3) in any other official proceeding authorized by law” to be

privileged. (Enacted 1872; amended Code Am. 1873-74, c.

'° Petitioner’s assertion that the court in Forro II failed to follow the law

of the case betrays a fundamental misunderstanding of tort law.

(Petition, at 27.) Petitioner does correctly observe that Forro I

rejected a challenge to the sufficiency of Forro’s damage evidence, and

held that there need be no trial of the damage issue on remand. /Forro

I, App. A, at 7.) However, it is axiomatic that regardless of injury in

fact, a plaintiff sustains no recoverable damage unless that damage

flows from conduct giving rise to liability. Buckaloo v. Johnson, 14

Cal. 3d 815, 827-28, 122 Cal. Rptr. 745, 752, 537 P.2d 865, 872

(1975); Restatement (Second), Torts, § 766. On remand, the trial

court held on summary judgment, and the court of appeals affirmed,

that there was no non-privileged IBM conduct on which to causally

predicate liability for the exclusively search-related damage claimed

by petitioner. (Memorandum, App. B, at 29; Forro II, App. C., at 35.)

No violence is done to the doctrine of law of the case in hewing to the

proposition that without conduct giving rise to liability there can be no

recoverable damage.

10

612, p. 184, § 11.) Judicial interpretation has confirmed

that the privilege is absolute and that the policy it seeks to

adv’ nce would be frustrated if it were reduced to a qualified

pr ilege subject to a jury’s determination. Albertson v.

Raboff, 46 Cal. 2d 375, 379, 295 P.2d 405, 408 (1956); Imig

v. Ferrar, 70 Cal. App. 3d 48, 55-56, 138 Cal. Rptr. 540,

543 (1977).

The privilege attaches without regard to the presence of

malice or ulterior motive on the part of the declarer.

Albertson v. Raboff, 46 Cal. 2d at 379, 295 P.2d at 408-09;

Tiedemann v. Superior Court, 83 Cal. App. 3d 918, 926,

148 Cal. Rptr. 242, 248 (1978); Pettitt v. Levy, 28 Cal. App.

3d 484, 488, 104 Cal. Rptr. 650, 652 (1972). It extends to

communications designed to initiate a proceeding, including

specifically criminal proceedings, as well as those made in

the course of an existing proceeding. Ball v. Rawles, 93 Cal.

222, 236, 28 P. 937, 941 (1892); Martin v. Kearney, 51 Cal.

App. 3d 309, 311, 124 Cal. Rptr. 281, 282 (1975).

Moreover, the underlying state policy of encouraging citizen

communication is viewed as of such paramount importance

that any reasonable doubt concerning the applicability of

the privilege must be resolved in favor of according the

privilege. Brody v. Montalbano, 87 Cal. App. 3d 725, 733,

151 Cal. Rptr. 206, 212 (1978), cert. denied, 444 U.S. 844

(1979); Twyford v. Twyford, 63 Cal. App. 3d 916, 926, 134

Cal. Rptr. 145, 150 (1976)."

'' Petitioner trivializes the Section 47(2) privilege by suggesting that

resolution of doubts in favor of the privilege somehow obtains only in

proceedings involving domestic disputes. (Petition, at 27 citing

Twyford v. Twyford.) The statutory policy favors the privilege

whether a statement is uttered in a domestic relations proceeding, is

discussed at a public meeting, or is communicated in the course of any

other official proceeding recognized by law. Imig v. Ferrar, 70 Cal.

App. 3d 53, 55, 138 Cal. Rptr. 540, 543 (1977); Scott v. McDonnell

“ste. Corp., 37 Cal. App. 3d 277, 293, 112 Cal. Rptr. 609, 620

(1974).

il

That is the settled California law which confronted the

court of appeals in assessing petitioner's common-law

interference claim and its argument that no privilege was

applicable. In Forro I, the court of appeals fully adverted to

petitioner’s contention that IBM had in part an impermis-

sible ulterior motive in contacting the authorities — to

create a detrimental “thunderclap” of publicity — but

correctly noted that under California law malice is irrele-

vant so long as the communication has some legitimate

connection to the proceeding. (Forro I, App. A, at 13.) The

court pointed out that the record was uncontradicted that

“the company’s communications to the authorities were

made for law enforcement purposes as well as for the

purpose of creating publicity.” ( Forro I, App. A, at 16;

emphasis supplied.) That legitimate purpose supplied the

necessary “connection” between the communication and the

proceeding so as to make the privilege applicable as a matter

of law. Rader v. Thrasher, 22 Cal. App. 3d 883, 888-89, 99

Cal. Rptr. 670,673-74 (1972); Smith v. Hatch, 271 Cal.

App. 2d 39, 46, 76 Cal. Rptr. 350, 354 (1969).

The Forro I court likewise noted the substance of Forro’s

“fraudulent silence” contention: “IBM failed to inform the

police that a protective order shielded the depositions on

which the affidavit in support of the search warrant was

based, failed to disclose that IBM's counsei had returned

without restriction the Merlin drawings produced at deposi-

tions, and misled the authorities into thinking that the

designs were trade secrets.” (Forro I, App. A, at 13.)

Nevertheless, the court followed California law which

requires the full benefit of the privilege to be accorded even

misleading statements. Pettitt v. Levy, 28 Cal. App. 3d at

489, 104 Cal. Rptr. at 653; Kachig v. Boothe, 22 Cal. App.

3d 626, 641-42, 99 Cal. Rptr. 393, 403 (1971). And Forro I

made express the court’s recognition of the illogic of

petitioner’s theory that one could claim privilege for what he

12

said, but not for what he failed to say. (Forro II, App. C, at

33-34.)

Petitioner’s claim that the court of appeals overlooked an

intermediate California appellate authority, Frisk v.

Merrihew, 42 Cal. App. 3d 319, 326, 116 Cal. Rptr. 781,

785 (1974), is flat wrong. (Forro I, App. A, at 9.) Moreover,

even if good law," petitioner obtains no benefit from Frisk’s

observation that, in the absence of facts permitting but one

conclusion, it is for the jury to decide whether a privileged |

occasion was abused by reason of the communication’s

failure to bear a reasonable relationship to the official

proceeding. Given the concli sive effect of the jury’s counter-

claim finding of trade secret thievery, “there is but one

conclusion as to whether IBM, at least in part, had

legitimate cause for invoking police assistance. As the Forro

I court noted, “The jury’s verdict . . . indicates that IBM

had cause to seek help from the police, and our review of the

record supports that finding.” (Forro I, App. A, at 24-25.)

Nor did the court of appeals misinterpret California case

law in rejecting the argument in Forro II that IBM’s

communication should have been denied protection because

they were part of a broader, transcendent scheme. (Petition

at 28, citing, Gruenberg v. Aetna Insurance Company, 9

Cal. 3d 566, 108 Cal. Rptr. 480, 510 P.2d 1032 (1973).) As

the court of appeal noted, the insurance company in

Gruenberg had engaged in actionable conduct which

'* But see, e.g., Brody v. Montalbano, 87 Cal. App. 3d 725, 733, 151 Cal.

Rptr. 206, 212 (1978), cert. demied, 444 Us. 844 (1979); Imig v.

Ferrar, 70 Cal. App. 3d 48, 55-56, 138 Cal. Rptr. 540, 543 (1977);

seg) 5 Twyford, 63 Cal. App. 2d 916, 926, 134 Cal. Rptr. 145,

l l )

'* Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1260-61 & n.14

(11th Cir. 1983); Span-Deck, Inc. v. Fabcon, Inc., 570 F. Supp. 81, 88-

89 (D. Minn. 1983) (“The law of the case doctrine is no less applicable

here because the question involves the continued viability of jury

special verdict findings’’).

|

13

damaged plaintiff wholly apart from its privileged com-

munications. The Forro II court correctly determined that

the case had no applicability to the present situation

inasmuch as all of petitioner’s injury resulted directly from

the occurrence of the police search as to which the entirety

of IBM’s causally relevant conduct was privileged. (Forro

II, App. C, at 33n.2.)

Finally, petitioner asserts that a “conspiracy” claim

whereby the police are asserted to have been mere pawns

“bought and paid” for by IBM somehow “disappeared”

from the court of appeals’ analysis of its interference claim.

(Petition at 25.) But the fact is that the court expressly

noted petitioner’s argument, but found no evidence to

support it: “Although Forro would have us view IBM as a

puppeteer directing the actions of the police, our review of

the record convinces us that the evidence provides no basis

for inferring that the police were not in charge of obtaining

the search warrant and the conduct of the search itself.”

(Forro I, App. A, at 11.)"

“ Petitioner’s present assertion that the police were “bought and paid”

for is at odds with its own prior characterization of the evidence.

(Petition at 25.) Arguing in opposition to IBM’s Motion for Directed

Verdict, counsel for petitioner conceded that “[IBM’s payment of

investigation expenses] wasn’t a bribe in the sense that we would know

it where the recipient of the money willfully and knowingly accepts the

money to disregard his duty.” (R 1813.) Given that all the expense

money was properly spent and accounted for (R 2075), the best

argument that petitioner could offer was that IBM had psychological-

ly predis the authorities to credit IBM’s claim of trade secret

losses. (R 1813-14.)

Moreover, when asked by the trial court at the close of its rebuttal

case to identify evidence of conspiracy sufficient to warrant a

conspiracy jury charge under Section 2 of the Sherman Act, petitioner

abandoned the claim. (R 2686.) With respect to the interference

Ti} petitioner never even requested a conspiracy instruction. (CR

282.

'S Petitioner's accusation of non-feasance on the part of the court of

— is —— an effort to camouflage its belated introduction

the new but mistaken argument that the court applied the wrong

(footnote continued on next page)

14

In sum, the court of appeals fairly addressed and correctly

disposed of petitioner's attacks on the dispositive nature of

the California statutory privilege.

B. In According Absolute Privilege to IBM's Participa-

tion in the Execution of the Search Warrant, the Court

of Appeals Correctly Implemented California's

Declared Policy of Encouraging Affirmative Citizen

Response to Police Requests for Assistance.

While IBM's communications to the authorities are

absolutely privileged by operation of an express California

statute, no such legislative mandate protects IBM's police-

requested assistance in the execution of the search warrant.

However, the California Supreme Court has recognized

that affirmative citizen response to a police request for

assistance is a desirable social objective and has accordingly

formulated a principle of common law intended to promote

such citizen cooperation. In Sokol v. PUC, 65 Cal. 2d 247,

418 P.2d 265, 53 Cal. Rptr. 673 (1966), a telephone

company had terminated Sokol’s service upon police request

and advice that Sokol was using his telephone for illegal

purposes. In reviewing Sokol’s challenge of that termina-

tion, the California Supreme Court held that the telephone

company was protected from civil liability since “a contrary

rule . . . would discourage cooperation with law enforcement

agencies.” 65 Cal. 2d at 257-58, 418 P.2d at 272, 53 Cal.

Rptr. at 680. In so holding, the California Supreme Court

relied and expanded upon an earlier decision according

immunity to a citizen who, at police request, effected an

(footnote continued from previous page) )

statute in assessing IBM's communications. Pointing for the first time

to California Civil police § 43.S(a) and the qual nature of the

privilege it accords police officers executing arrest warrants, petition-

er asserts without explanation that a anche privilege accorded

1BM’s communications by independent statute somehow dissolves. |

Moreover, petitioner was never arrested by either IBM or the police. |

a

15

arrest. Peterson v. Robison, 43 Cal. 2d 690, 697, 277 P.2d

19, 24 (1954).

With that state-law policy squarely in place, the Forro /

court undertook an analysis of its applicability to IBM's

police-requested search participation. In dealing with this

previously unconsidered factual setting,“ the court cata-

logued both practical and legal consiCerations dictating the

principle’s full applicability. First, a layman would not have

been able to identify the technical materials specified in the

warrant. (Forro I, App. A, at 11.) Although the police

authorities made the final determination of what materials

would be seized (Forro I, App. A, at 11), expert technical

advice as to the nature of the information depicted on

particular blueprints was essential. (R 665, 2025-27.)

Second, California statutory provisions expressly authorize

police officers to make requests for citizen assistance. (Forro

I, A-11, citing California Penal Code, § 1530.) Finally, a

police officer executing a search warrant valid on its face

enjoys absolute immunity by provision of California statute.

(Forro I, App. A, at 12, citing California Penal Code,

§ 830.6(b)}.) In view of these circumstances, the court of

appeals concluded that a California court would apply the

rationale of Sokol and Peterson to accord immunity to

IBM’s search participation.

In this Court, petitioner makes no challenge — indeed no

mention — of California’s clearly articulated policy of

encouraging citizen cooperation with police requests for

assistance. Rather, petitioner makes a belated and irrele-

vant attack on the sufficiency of the underlying warrant,

contending that expert assistance cannot be used to cure an

16

unreasonably vague instrument. (Petition, at 22-24.) But

that argument has no relevance to the immunity due a third-

party citizen who did not have any role in the preparation of

the warrant. Indeed, in the Peterson case, the citizen

providing police-requested arrest assistance was determined

immune from a claim of false imprisonment “even if it be

assumed that the imprisonment which followed ... was

unlawful.” Peterson v. Robison, 43 Cal.2d at 698, 277 P.2d

at 24.

In sum, the Forro I court correctly held IBM’s search

participation immune. Moreover, petitioner's failure to

challenge the validity of the warrant at any previous stage of

the proceeding precludes its doing so here. Delta Air Lines,

Inc. v August, 450 U.S. at 362.

17

Ill. CONCLUSION.

For the foregoing reasons, International Business Ma-

chines Corporation respectfully requests the Court to deny

the instant petition for grant of a writ of certiorari.

Henry C. THUMANN

(Counsel of Record)

James V. SELNA

Ropert E. WILLETT

Attorneys for Respondent

International Business

Machines Corporation

Of Counsel:

O'MELVENY & MYERS

May 6, 1985