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

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 03-1845, 03-2283 & 03-2481

SANTANA PRODUCTS, INC.,

Appellant/Cross-Appellee,

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPORATION; THE HORNYAK GROUP INC.;

VOGEL SALES COMPANY; SYLVESTER &

ASSOCIATES, LTD.; FRED SYLVESTER,

Appellees/Cross-Appellants.

On Appeals from the United States District Court

for the Middle District of Pennsylvania

[Feb. 9, 2005]

Before ROTH, AMBRO and CHERTOFF, Circuit Judges.

Opinion for the court filed by Circuit Judge ROTH.

Opinion dissenting in part filed by Circuit Judge

CHERTOFF.

ROTH, Circuit Judge.

In order to persuade government architects to specify

Bobrick’s toilet partitions for use in government pro-

jects, Bobrick Washroom Equipment, Inc., its architec-

tural 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 prospec-

tive 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 timeli-

ness of Santana’s claims, arguing that the claims were

barred either by the statute of limitations or the doc-

trine 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 sum-

mary judgment on Santana’s Lanham Act claim. San-

tana Products, Inc. v. Bobrick Washroom Equipment,

Inc., 249 F.Supp.2d 463 (M.D.Pa.2003). We will affirm

the District Court’s entry of summary judgment in favor

of the defendants on Santana’s Sherman Act § 1 claim

1 Bobrick Corporation is the parent company of Bobrick Washroom

Equipment. We will refer to them collectively as Bobrick.

and its tortious interference with prospective contract

claim.? 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.“

A. The Toilet Partition Industry

Santana and Bobrick manufacture toilet partitions.‘

Toilet partitions are made of different materials, includ-

ing metal, stainless steel, plastic laminate, solid pheno-

lic, and high density polyethylene (HDPE). The parti-

tions are installed in public buildings, such as govern-

— ment 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

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

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.

* Toilet partitions are also referred to as toilet compartments.

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

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

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

5 One issue in the present litigation is whether toilet partitions are

finishes or furnishings/fixtures.

partition in the Sweet’s Catalogue’ 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 TPMC 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 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 characteris-

tics 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 Gil-

lis, both Bobrick employees, went on a plant tour of

building products. Manufacturers pay to place their catalogues in the

Sweel 's Catalogue, and architects subscribe to and refer to the Sweet's

Catalogue before specifying materials to be used in construction projects.

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

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 manufactur-

ers, andthe 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 parti-

tions 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 specifi-

ers 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 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 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 adver-

tisement 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 asa fire

hazard compared to Bobrick partitions.

II. PROCEDURAL HISTORY

Santana filed a complaint in the United States Dis-

trict Court for the Middle District of Pennsylvania

against Bobrick, Hornyak, Vogel, Sylvester & Associ-

ates, Ltd., and Fred Sylvester.’ 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 interference with prospective contract. After

three years of discovery, the parties filed cross-motions

for summary judgment.

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 San-

tana’s Sherman Act § I claim. As to Hornyak and Vogel,

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. u. 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.

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.“ 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 unrea-

sonable restraint on trade and that, even if it were,

Santana had only showed a de minimus effect on com-

petition. Id. at 470. The court also granted summary

judgment on Santana’s Sherman Act § 2 claim in favor

of defendants. Id. at 470, 505-06.“

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 appro-

priate on the Lanham Act claim as to Bobrick because

there were fact issues as to the literal falsity of state-

ments made in videos, advertisements, and other

marketing material. Id. at 471, 525-39.

s 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.

fFhe 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.

Finally, the District Court granted summary judgment

in favor of the defendants on Santana’s tortious interfer-

ence with prospective contract claim. The court held

that the Noerr/ Pennington doctrine shielded the defen-

dants 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

appeal pursuant to 28 U.S.C. § 1292(b).'° 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.“ 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.’”

10 28 U.S.C. § 129200) gives the courts of appeals discretionary

jurisdiction over a district court order “[wJhen 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.”

1! 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,” Itlhe 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).

10a

We conclude that we have appellate jurisdiction to

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

plies to the order certified to the court of appeals, and is

not tied to the particular question formulated by the

district court.“ Yamaha Motor Corporation, U.S.A. u.

Calhoun, 516 U.S. 199, 205, 116 S.Ct. 619, 133 L.Ed.2d

578 (1996). We can “address any issue fairly included

within the certified order” because the order is appeal-

able, 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, includ-

ing 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 prece-

dent in this Circuit.” Santana, 249 F.Supp.2d 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 jurisdic-

tion” 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.”).

lla

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 632-639 (8d 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’® shielded

13 The Noerr/Pennington doctrine protects “the right of the people

to petition the government for a redress of grievances.” U.S. CONST.

amend. I. Defendants in antitrust cases are immune from liability when

they are exercising their First Amendment right to petition. Actions

aimed at influencling] 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, 81 S. Ct. 523, 5 L.Ed.2d 464 (1961). 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,

85 S.Ct. 1585, 14 L.Ed.2d 626 (1965), and efforts to access the court

12a

Bobrick, 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, San-

tana’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 defen-

dants.“ Petruzzi’s IGA Supermarkets, Inc. v. Darling-

system, see California Motor Transport Co. v. Trucking Unlimited, 404

U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (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, 81 S.Ct. 523.

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 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 products exclusively. The court, relying on

the Supreme Court's decision in Copperweid Corp. u. Independence Tube

Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (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.

13a

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, 78

S.Ct. 514, 2 L.Ed.2d 545 (1958).

Santana argues that the defendants created a re-

straint 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 stan-

dard 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 on the failure of HDPE

compartments to comply with the NFPA/ASTM stan-

dards 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 re-

straint of trade.” Schachar v. American Academy of

Ophthalmology, Inc., 870 F.2d 397 (7th 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

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 § 1 claim would still fail.

14a

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 por -

trayed 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, 81S.Ct. 523;

cf. Schachar, 870 F.2d at 399 (“antitrust law does not

compel your competitor to praise your product or spon-

sor your work.“).

The court’s description in Stearns Airport Equipment

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

type of product promotion is instructive:

All of these arguments made by FMC 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 the

consumer was convinced by either FMC’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

15a

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 parti-

tions. 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 ex-

cluded,’ 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 “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.” Jd. 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 compe-

tition.

In an earlier Fifth Circuit case, Consolidated Metal

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

284, 286 (5th 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 ifthe API found that the equipment satisfied

its standards. The plaintiff applied for, and was denied,

16a

a license to use APE’s [sic] 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 re-

quired by law, equipment was sold frequently without it,

and consumers were in no way constrained from buying

the plaintiffs 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 manufactur-

ers 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 proce-

dure labeled “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 market-

place of ideas.

Id. at 400.

17a |

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

Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 108

S.Ct. 1931, 100 L.Ed.2d 497 (1988), 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 custom-

ers. .. to refrain from purchasing HDPE compartments

and to ensure that HDPE compartments were excluded

from purchase specifications.” Contrary to Santana’s

assertions, however, the TPMC 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 inter-

preted 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 distin-

guished Allied Tube:

Allied Tube .. involved the manipulation of the

process of establishing an influential body’s standards

to exclude rival technology from the market.

[Tjhis case does not involve efforts to influence stan-

dard-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 fin-

ishes does not constitute standard setting or enforce-

ment....

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, 108 S.Ct. 1931. Bobrick

“confine[d] itself to efforts to persuade an independent

decisionmaker” and did not “organize[ | . . . [or] orches-

tratel] the actual exercise of... decisionmaking author-

18a

ity in setting a standard.” Jd. at 507, 108 S.Ct. 1931.

The government officials making the decision to specify

materials were disinterested, conducted their own fire

safety tests before making decisions, and were suscepti-

ble to lobbying from all competitors in the toilet parti-

tion 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

held liable for a violation of the false advertising provi-

sion 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 San-

tana’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 deter-

mining whether the laches doctrine bars Santana’s claim

19a

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 (7th Cir.1999);

Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d

829 (9th Cir.2002). We also used the statute of limita-

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

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,

105 S.Ct. 1938, 85 L.Ed.2d 254 (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.” Jd. at 268, 105

S.Ct. 1938; 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, 105

S.Ct. 1938. 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.

20a

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

the Lanham Act, the plaintiff must prove that the

defendant

use[dj 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, misrepre-

sents the nature, characteristics, qualities, or geo-

graphic origin of his or her or another 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 F. 3d 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.

Io 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 compe-

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

the UTPCPL, a plaintiff must demonstrate

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

21a

(ii) Causing likeliness of confusion or of misunder-

standing 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;

(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., 565 Pa. 612, 777 A.2d 442, 446 (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 Act,“ the most analogous

18 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

22a

action in the Virgin Islands was one for 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. Jd. 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 mislead-

ing consumers, which more closely resembles the ‘likeli-

hood of confusion’ element that is the touchstone of a

§ 43(a) claim.” Jd.

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 Pennsyl-

vania 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 imper-

fect.” Wilson, 471 U.S. at 272, 105 S.Ct. 1938. As the

District Court noted, the Lanham Act and the UTPCPL

„supplement rather than supplant[] traditional com-

mon 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, 368 Pa. Super. 383, 534 A. 2d

488, 491 (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

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).

23a

(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”).

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 fraudu-

lent procurement of a trademark registration in viola-

tion of § 38 of the Lanham Act. Its holding is not,

therefore, controlling because this case involves an

action under § 43a). 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

plaintiffs 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. Jd. 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, 368 Pa.Super. 383, 534 A.2d 488, 495-96

(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 determining whether the doctrine of laches

24a

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 pro-

vided 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 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 19908.

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

25a

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 limita-

tions - 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 controls burdens of proof).

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 toa rebuttable presumption of both

elements of laches, held that the plaintiff can rebut the

presumption by negating “one or both” of the elements.

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 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.”

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.

26a

485 F.Supp. 410, 427-28 (E.D.Pa.1980) (Becker, J.). The

court reasoned:

[Rlequiring 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 plainitiff 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 there-

fore cannot uphold the defense of laches.

Id. at 428 n. 14.

Nevertheless, despite the reasoning of the District

Court in Anaconda, we have consistently held that a

plaintiff must prove that laches does not exist by show-

ing 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 limita-

tions 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 limita-

tions, then ‘the plaintiff (must). . come forward and

prove that his delay was excusable and that it did not

... prejudice the defendant.’ ”) (citation omitted); Burke

u. 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

27a

Corp., 429 F.2d 1156, 1160 (3d Cir. 1970) (never address-

ing whether plaintiff rebutted presumption of prejudice

because plaintiff did not rebut presumption of inexcus-

able 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 plain-

tiffs 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) (affirming district court’s dismissal of plain-

tiffs 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 plaintiffs 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 Con-

tract 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 defen-

dants are not shielded from liability, we agree with the

28a

District Court that Santana did not prove the existence

of a prospective contractual relation.“

There is only one prospective contract with which

Santana claims Bobrick interfered. Specifically, San-

tana tried to bid on a contract at the Rio Hondo Commu-

nity College in California. The architect for the project

originally specified HDPE toilet partitions. However,

the architect changed the specification to phenolic after

watching a 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., 488 Pa. 198,

412 A.2d 466, 471 (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.3d 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 speci-

fied.

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., 488 Pa. 198, 412 A.2d 466, 471 (1979).

29a

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 Commu-

nications, 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 — Capital Partitions

or Comtec’® — 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.

18 Comtec, which had supplied HDPE partitions to the three compa-

nies that had stopped selling the HDPE partitions, entered the toilet

partition market to sell HDPE partitions in their place.

30a

CHERTOFF, Judge, dissenting in part.

J. 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 plaintiffs delay in institut-

ing 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 plaintiffs

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 uv.

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 defendant did not suffer prejudice from the

delay. The majority concludes that our precedent

compels this conclusion.

3la

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.2d 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. Missis-

sippi Valley Barge Line Co., 310 F.2d 639, 642 (3d

Cir.1962), and Kane v. Union of Soviet Socialist Repub-

lies, 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, 121 S.Ct.

1511, 149 L.Ed.2d 517 (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 necessar-

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

a reading would be logically inconsistent with the

Court’s subsequent holding in Central Pennsylvania

Teamsters that each prong is an “essential element[]” of

32a

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:

[Rlequiring 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 there-

fore cannot uphold the defense of laches.

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

tions 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 stan-

dard of review we must apply. See Churma, 514 F.2d at

593.

Having concluded that laches does not bar Santana’s

Lanham Act claim, I would address the merits of Sant-

ana’s appeal on the application of the Noerr-Pennington

doctrine to the Lanham Act claim.

33a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

No. 3:CV-96-1794

SANTANA PRODUCTS, INC.,

Plaintiff,

BOBRICK WASHROOM EQUIPMENT, INC.;

BOBRICK CORPORATION; THE HORNYAK GROUP INC.;

AND VOGEL SALES Co.,

Defendants.

OPINION

VANASKIE, Chief Judge.

[Table of Contents Omitted]

I. INTRODUCTION

On October 1, 1996, plaintiff Santana Products, Inc.

(Santana) instituted this action against defendants

Bobrick Washroom Equipment and Bobrick Corpora-

tion (collectively “Bobrick”), The Hornyak Group, Inc.

(“Hornyak”), Vogel Sales Company (“Vogel”), Sylvester

& Associates, Ltd., and Fred Sylvester. Santana, which

manufactures and sells restroom and toilet partitions

made of high density polyethylene (“HDPE”), alleges

that Bobrick and other toilet compartment manufactur-

ers conspired to enforce a product standard that had the

effect of excluding Santana’s HDPE compartments from

the relevant market. Specifically, Santana claims that

Bobrick along with members of a now-defunct trade

association, the Toilet Partition Manufacturers Council

(“TPMC”), collectively embarked on a campaign to

34a

convince prospective customers that (1) toilet partitions

had to meet fire code flame spread and smoke develop-

ment requirements for “wall finish”; and (2) HDPE did

not meet such requirements. Santana has asserted

claims under §§ 1 and 2 of the Sherman Act, 15 U.S.C.

§§ 1-2; the false advertising provision of the Lanham

Act, 15 U.S.C. § 1125(a); and the common law tort of

intentional interference with prospective contractual

relationships.

Following protracted and, at times, acrimonious

discovery, the parties filed cross-motions for summary

judgment. Santana has filed a partial summary judg-

ment motion on its Sherman Act section 1 claim, (Dkt.

Entry 43), and a summary judgment motion as to the

defendants’ liability under section 43(a) of the Lanham

Act, (Dkt. Entry 271), while the motions of Bobrick,

Hornyak, and Vogel attack all of Santana’s claims.

(Dkt. Entries 287, 291, 294.)

The motions present several important and difficult

issues for which there is no controlling precedent in this

Circuit. For example, the defendants contend that their

marketing activities directed toward public entities,

such as school districts, are shielded fr»n liability under

the Noerr/Pennington doctrine. Defendants present

this threshold defense not only with respect to the

Sherman Act and common law claims, causes of action

to which the Noerr/Pennington doctrine is plainly

applicable, but also to the Lanham Act claim, an asser-

tion for which there is little case law guidance. Because

it is clear that the overwhelming bulk of the toilet

partition market is directed at public construction,

resolution of this issue in defendants’ favor would have

a significant impact on the scope of Santana’s claims;

effectively eliminate Hornyak and Vogel as defendants

inasmuch as their marketing activities were limited to

public institutions; and severely limit Bobrick’s liability.

Pointing out that Santana is complaining of conduct that

occurred seven years before the filing of this action, and

35a

that Santana had settled an earlier lawsuit against the

members of the TPMC, defendants have also presented

a substantial challenge to the timeliness of Santana’s

claims, especially its Lanham Act cause of action, to

which the doctrine of laches applies and for which there

is no controlling precedent in this jurisdiction.

Having carefully considered the parties voluminous

submissions,’ the comprehensive evidentiary record, and

the applicable law, I have concluded that the Noerr/

Pennington doctrine is indeed applicable to all of

Santana’s claims, thereby limiting any recovery to the

non-public sector. I have further determined that none

of Santana’s claims is time-barred, but recovery is lim-

ited to violations occurring within the applicable limita-

tions period. In this regard, a four-year limitations

period governs tlie Sherman Act claims, Pennsylvania's

six-year limitations period for claims based upon statu-

tory violations controls the Lanham Act claim, and a one

year limitations period defines the compensable parame-

ters of the tortious interference claim.

As to the substantive merits of Santana’s claims, I

have concluded that Hornyak and Vogel, as captive sales

representatives of Bobrick, cannot be held liable under

section 1 of the Sherman Act. I have further found that

the assailed marketing campaign did not constitute an

unlawful restraint on trade and that, in any event,

Santana has shown no more than a de minimis effect on

competition, thus warranting summary judgment in

favor of the defendants on the Sherman Act § 1 claim.

Defendants are also entitled to summary judgment on

the § 2 claim because, for essentially the reasons articu-

lated by Judge Mishler in the parallel case of Santana

Products, Inc. v. Sylvester & Associates, Lid., 121

F. Supp. 2d 729 (E.D.N.Y.1999), the “shared monopoly”

claim presented by Santana is not cognizable under

section 2 of the Sherman Act. Summary judgment in

1 The “briefs” and statements of material facts alone exceed 1,000

pages.

36a

favor of the defendants on the tortious interference

claim is warranted because Santana has failed to

present evidence of the loss of a prospective contract

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

tions period. Finally, there are issues of material fact

that preclude summary adjudication of the Lanham Act

claim.

As a result of these rulings, Santana’s claims have

been severely limited. In recognition of the fact that

appellate court consideration of difficult and close

questions prior to any trial may serve the interests of

the parties and of judicial economy, that the need for

appellate review will not be mooted by further proceed-

ings in this Court, and that there is “no just cause for

delay,” see Berckeley Inv. Group, Lid. v. Colkitt, 259 F.3d

135, 140-42 (8d Cir.2001), I will direct entry of final

judgment in favor of Bobrick as to the Sherman Act

claims (Counts I and II of the complaint), and the

tortious interference claim (Count IV), and in favor of

Hornyak and Vogel as to all claims, in accordance with

Fed.R.Civ.P. 54(b). Furthermore, because of the impact

of the Noerr/Pennington ruling on the scope of the

Lanham Act claim, and because that decision involves a

“controlling question of law as to which there is substan-

tial ground for difference of opinion and... an immedi-

ate appeal may materially advance the ultimate termi-

nation of the litigation,” 28 U.S.C. § 1292(b), I will

certify the accompanying order for immediate appeal

pursuant to 28 U.S.C. § 1292(b).

II. BACKGROUND

A. The Toilet Compartment Industry

The toilet compartment industry consists ofa number

of national distributors’? of toilet partitions® and a

2 The parties dispute the exact number of distributors. Santana

claims that in the mid-1980s there were ten companies who nationally

marketed their compartments and about five regional companies.

Pl. Rev. Stat. of Material Facts/Sherman Act, Dkt. Entry 382, J 4.)

37a

smaller number of regional distributors. These distribu-

tors offer several different materials for use as parti-

tions, including metal, stainless steel, plastic laminate,

solid phenolic, and HDPE. (Pl. Rev. Stat. of Material

Facts / Sherman Act, Dkt. Entry 382, J 5.) Other materi-

als can be used for toilet partitions, but generally have

drawbacks that prevent widespread use (for example,

marble is now rarely employed because of its expense

and weight). (Ex. 295, Supp. Appx. to Mem. in Support

of Bobrick’s S.J. Mot., Dkt. Entry 411, Final Report:

The Prospects for HDPE in the Market for Lavatory

Partitions and Panels, April 1990, at 5.)

The specification process for public building contracts

is central to competition within the toilet partition

industry because, by definition, toilet partitions are

installed only in public restroom facilities. Bidding on

a public building contract is a two-part process. It is the

first part — specification — that is the focus of this

litigation. Prior to competitive bidding on price, the

architect or “specifier” on a building project writes

specifications for the materials to be used. Once the

specifications are finalized, only those companies whose

products satisfy the specifications may ultimately bid on

the project. See generally Stearns Airport Equip. Co. v.

FMC Corp., 170 F.3d 518, 525 (5th Cir.1999). Thus, the

toilet partition suppliers actively lobby architects and

specifiers for public building projects to specify their

product or not to specify a competitor’s product. The

companies compete on such varied grounds as durabil-

ity, resistance to vandalism, ease of installation, and

aesthetics. After specification, competitors whose

products satisfy the specifications compete only on price.

Bobrick, however, contends that in 1990 there were nineteen market

players. (Bobrick’s Response to Pl. Rev. Stat. of Material Facts/Sherman

Act, Dkt. Entry 410, 1 4.) Either way, the market for toilet compart-

ments involved multiple competitors.

3 The terms “toilet compartments” and “toilet partitions” are used

interchangeably in this opinion.

38a

This litigation deals with the business practices of two

participants in the toilet partition industry. Santana,

based out of Scranton, Pennsylvania, was formed in the

late 1970s and was the first manufacturer to offer solid

plastic restroom toilet partitions as an alternative to

conventional toilet partitions. (Complaint, { 21.) In the

early 1980s, Santana introduced HDPE partitions.

(Pl. Rev. Stat. of Material Facts/Lanham Act, Dkt. Entry

387, J 1.) These partitions were advertised as vandal

resistant because of the ease of cleaning and ease of

repairing scratches, both due to the partition’s solid

plastic construction. In its Sweet's Catalog advertise -

ments,“ Santana listed as advantages of HDPE its cost,

durability, ease of maintenance, particularly in highly

vandalized areas, and lack of absorbency.’ (Ex. 60,

Appx. to Mem. in Support of Bobrick’s S.J. Motion, Dkt.

Entry 298, 1986 Sweet’s Catalog, at S 66786.) Santana

also promoted its partitions’ fire-resistant characteris-

tics. As of mid-1989, several companies offered HDPE

toilet partitions: Knickerbocker, Sanymetal, Capital

‘ The Sweet’s Catalog is a compilation of catalogs of numerous

manufacturers of various building products and materials used in

architectural and engineering fields. Manufacturers pay a fee to place

their catalogs and specifications in the Sweet's Catalog. (Bobrick’s Rev.

Stat. of Material Facts, Dkt. Entry 407, 1 38.) Architects annually

subscribe and routinely refer to the Sweet’s Catalog before selecting and

specifying building and construction products. One section of the Catalog

is devoted entirely to toilet partitions. (Id., J 39-40.)

5 Santana's 1986 Sweet's Catalog claimed:

There are a number of reasons for Santana’s astounding success in the

highly competitive industry it entered so recently and dominated so

quickly. First, of course, is the product. Solid, one-piece construction

of polymer resins just about says it all: there are simply no seams to

come apart. In addition, solid plastic doesn’t rust or dent like metal,

peel away like plastic laminates, or absorb odors like marble.

Additionally, POLY-MAR HD O has Santana's unique Plasti-Glaze 280

finish, which repels moisture, odors, mildew, and stains. Pencil, ink,

and even cosmetic marks wash off easily with an industrial-grade

cleaner.

(Exhibit 60, Def. Appx. to Mem. in Support of S.J. Mot., Dkt. Entry 298,

1986 Sweet's Catalog, at S 66786.)

39a

Partitions, General Partitions, and Santana. (Pl. Rev.

Stat. of Material Facts/Sherman Act, Dkt. Entry 382,

q 3.)

Bobrick Washroom Equipment, Inc. and The Bobrick

Corporation are California corporations. Bobrick

manufactures toilet partitions made of both solid

phenolic and laminated plastic over a particle board core

(plastic laminate). Phenolic is composed of craft paper

impregnated with resins and compressed under high

pressure and temperature to form a solid core. The core

material is covered on each side with a laminated plastic

material to provide a decorative surface. (Ex. 4, Appx.

to Mem. in Support of Bobrick’s S.J. Mot., Dkt. Entry

298, Thompson Dep. Tr., at 95-97; Ex. 5, id., Mahony

Dep. Tr., at 30-31; Ex. 7, id., Henry Dep. Tr. at 56-57.)

Bobrick’s marketing strategy in addition to the “fire

scare” campaign at the heart of this dispute — focused on

the durability of its partitions. For example, Bobrick

claimed in one ad:

With Bobrick’s solid phenolic construction and

heavy-duty stainless stee] hardware, it takes more

than 2,000 pounds of force to knock a door off a stile.

Plus, DuraLine compartments are available to meet

Class A and B fire safety standards. Smooth graffiti-

resistant surfaces wipe clean. School-engineered

hardware can be concealed from the outside or

through-bolted, and you can select from a variety of

colors.

(Vol. II, Ex. A. 11, Appx. in Support of Pl. S.J.

Mot./Lanham Act, Dkt. Entry 280, Klein Dep. Ex. 12, at

B 148756.) Toilet partitions constitute approximately

ten percent of Bobrick’s total sales, with the remaining

ninety percent consisting of various washroom accesso-

ries. (Bobrick’s Rev. Stat. of Material Facts, Dkt. Entry

407, J 3.) Bobrick is considered one of the largest wash-

room accessories manufacturers in the United States.

(Id.)

40a

Two of Bobrick’s independent sales representatives

are also defendants in this action. Hornyak is a Dela-

ware corporation that serves as a Bobrick architectural

representative in Pennsylvania. Similarly, Vogel is a

Pennsylvania corporation based out of Pittsburgh that

acts as a sales representative for Bobrick, inter alia, in

the western part of the state. (Complaint, 11 4-5.)

B. The ASTM E-84 Test and Santana's Fire

Rated Compartment

In the construction industry, materials are often

tested for flammability before use in construction. One

common flammability test is the American Standard

Test Methods (ASTM) E-84 Test. The ASTM E-84 test,

also called the “Steiner Tunnel Test,“ creates compara-

tive values for the speed at which a flame spreads across

the surface of a material and the rate at which smoke

develops when the material burns. Specifically, the test

develops “flame spread” and “smoke developed” indices

by comparing the rate of flame spread and smoke

developed of the test materia! with that of select grade

red oak and inorganic reinforced cement board surfaces

under the same fire exposure conditions. (Vol. IV, Ex. 3,

Appx. in Support of Pl. S.J. Mot./Lanham Act, Dkt.

Entry 280, ASTM E-84-95b, J 4.1) The ASTM E-84 test

does contain two caveats:

This standard should be used to measure and describe

the response of materials, products, or assemblies to

heat and flame under controlled conditions and should

not be used to describe or appraise the fire-hazard or

fire-risk of materials, products or assemblies under

actual fire conditions. However, results of the test

may be used as elements of a fire-hazard assessment

or a fire-risk assessment which takes into account all

of the factors which are pertinent to an assessment of

the fire hazard or fire risk of a particular end use.

Burning Characteristics of Building Materials.” (Vol. IV, Ex. 3, Appx. in

Support of Pl. S.J. Mot./Lanham Act, Dkt. Entry 280, ASTM E-84- 95b.)

4la

This standard does not purport to address all of the

safety concerns, if any, associated with its use. It is

the responsibility of the user of this standard to

establish appropriate safety and health practices and

determine the applicability of regulatory limitations

prior to use.

(Id., JJ 1.7, 1.8.)

Some building codes and the National Fire Protection

Association's (“NFPA”) Life Safety Code 101 use the

indices generated by the ASTM E-84 test to determine a

material’s fire rating. The following rating system is the

subject of this dispute:’ a Class A fire rating is the

highest fire rating, requiring a flame spread index of

0-25; Class B is the next highest rating and requires a

flame spread index between 26 and 75; finally, Class C

fire rating requires a flame spread rating between 76

and 200. All three classes require a “smoke developed”

index of less than 450. Any product that falls below the

Class C fire rating is considered unrated.

The NFPA Life Safety Code 101 requires different fire

ratings for materials depending on the characterization

of their use in the building project. For example, the

NFPA requires materials considered part of the “interior

finish” or “wall finish” to possess a Class B fire rating.

If, however, the material is considered part of a “furnish-

ing” or “fixture,” no fire rating is required. Central to

this dispute is the categorization of toilet partitions as

either an “interior finish,” requiring a Class B rating, or

as a “fixture,” requiring no fire rating.

7 Santana disputes the contention that most building codes use this

standard, instead arguing that model building codes and other building

codes have a fire rating standard called “noncombustible.” (Pl. Response

to Bobrick’s Rev. Stat. of Material Facts, Dkt. Entry 393, 1 4.) Although

not using the same terminology, many of these codes use the numerical

ratings produced by the ASTM E-84 test. Indeed, both Santana and

Bobrick have, at some time, used this fire rating system in their

promotional materials.

42a

In the early 1980s, Santana began to develop a fire

rated toilet partition, using the ASTM E-84 test to

measure the fire rating of its test panels. (Bobrick’s

Rev. Stat. of Material Facts, Dkt. Entry 407, J 8-10.)

This effort led to the 3000 Series toilet partition (also

called the “FR” partition by Santana), which Santana

advertised as meeting a ClassA rating. (Id., J 12.) One

Santana brochure stated that only the FR partition met

or exceeded “mandatory building code requirements for

flame spread, smoke generation, and toxicity. These

requirements were established and are currently

enforced by the NFPA, BOCA, and other federal, state,

and local municipality safety agencies nationwide.” (Ex.

24, Appx. to Mem. in Support of Bobrick’s S.J. Mot., Dkt.

Entry 298.) The reverse side of the brochure contained

proposed specifications, which specified a fire rated

toilet partition and referenced the ASTM E-84 test.“ (Id.

at B 403-04.) A description of the FR partition and its

fire rating was included in at least one of Santana’s

Sweet’s Catalog advertisements as well.“ (Ex. 60, Appx.

8 The parties dispute the circulation of this brochure. Bobrick

contends such brochures were distributed nationwide for several years,

while Santana argues that this brochure was developed for the New York

City area only — New York City required Santana to meet a wall finish

(Class B) standard — and that, at most, one copy was sent to Albany, New

York on January 4, 1991. l. Response to Bobrick’s Rev. Stat. of

Material Facts, Dkt. Entry 393, J] 12-14.)

® The advertisement states:

FR SERIES

Santana Products has the manufacturing capability to custom

compound polymer resins with fire retardants designed to meet the

most strict fire code requirements within certain states or local

municipalities. .. . Flame-spread index and smoke-generation values

have been established using ASTM E-84, Steiner Tunnel Test or

equivalent of NFPA’s 255. (Test data available upon request.)

(Ex. 60, Appx. to Mem. in Support of Bobrick’s S.J. Mot., Dkt. Entry

298, 1986 Sweet's Catalog, at 8 66786.) Earlier on the same page,

Santana claims that its Poly-Mar HD series “consists of standard

high-density polymer resin compounds with an equivalent Class ‘B’

flame-spread.” (Id.)

43a

to Mem. in Support of Bobrick’s S.J. Mot., Dkt. Entry

298, 1986 Sweet's Catalog, at S 66786.)

Bobrick and Santana also dispute the reasons for

Santana’s gradual withdrawal of its FR product.

Bobrick contends that Santana experienced quality

problems with the FR product. It was difficult to

produce and lost most of the benefits of HDPE. Specifi-

cally, the FR material was brittle, heavy, cuts and

scratches were difficult to fix, the color choices were

limited, and it was very expensive. (Bobrick’s Rev. Stat.

of Material Facts, Dkt. Entry 407, J] 18-19.) Moreover,

Santana experienced difficulty in making a consistently

Class A product. The FR partition varied in its fire

rating. (Pl. Response to Bobrick’s Rev. Stat. of Material

Facts, Dkt. Entry 393, 1 20.)

While not disputing that its FR partition suffered from

these various defects, Santana argues that this was not

the reason for its decision to stop promoting the fire

rated partition. Rather, Santana asserts that it stopped

promoting the sale of fire rated compartments “once it

realized that the market was being skewed in that

direction by the competitors,” (Rev. Mem. in Opp. to

Bobrick’s S.J. Mot., Dkt. Entry 391, at 67), and after

realizing that a Class A rating was not required by

building codes. Competitors, according to Santana, were

able to sell more competitively against the FR partition

precisely because of the negative characteristics listed

above, particularly price. No matter which interpreta-

tion of Santana’s actions is adopted, however, it is

undisputed that by the 1990s, Santana was phasing out

its Class A product in favor of its standard, non-rated’®

product, Poly-Mar HD.

* Although Santana advertised is Poly-Mar HD series as meeting a

Class B flame spread, Bobrick asserted in its “fire scare” marketing

campaign — and Santana does not dispute — that the Poly-Mar HD

partition’s smoke generation exceeded that allowed by the fire ratings.

44a

C. The 1994 TPMC Litigation

In late 1989, several alleged non-party co-conspirators

formed the Toilet Partitions Manufacturers Council

(“TPMC”). According to Santana, Formica, one of the

largest plastic laminate suppliers in the United States,

and its customers in the toilet compartment industry

had become concerned with Santana’s sales success in

the marketplace. To combat this success, Formica and

most of its plastic laminate customers” had a series of

group meetings beginning in October 1989, and continu-

ing until the summer of 1991. At these meetings, the

companies agreed that sales of HDPE compartments

were a threat and that they would assert to specifiers

that HDPE compartments, in particular Santana’s

compartments, exceeded fire code standards for wall

finish. The TPMC urged Formica to test its thick stock

(solid phenolic) product as to its compliance with the

ASTM E.-84 test for “wall finish” and add the results to

Formica's Technical Data Sheet. (Pl. Rev. Stat. of Mate-

rial Facts / Sherman Act, Dkt. Entry 382, J 12.) Addi-

tionally, Formica and Metpar prepared a videotape that

(according to Santana) falsely depicted the flammability

of Santana’s HDPE partitions. The videotape was

produced for use by the sales representatives of the

TPMC members.“

Santana claims that the TPMC bylaws excluded HDPE

toilet compartment manufacturers from membership.

(Id., JJ 27-30.) Bobrick, on the other hand, argues that

the by-laws did not exclude manufacturers of HDPE

from membership and that Santana was itself invited to

join. (Bobrick’s Rev. Stat. of Material Facts, Dkt. Entry

1 These customers included AAMCO, Knickerbocker, Global Parti-

tions, Sanymetal, Weis/Robart, Metpar, Accurate, All American, Flush

Metal and Columbia Partitions. l. Rev. Stat. of Material Facts/Sherman

Act, Dkt. Entry 382, J 8.)

12 The Formica videotape showed one of Santana’s HDPE toilet

partitions being set on fire with a lighter. This segment of the videotape

had been produced by Metpar, a competitor of Santana.

45a

407, J 78-80.) Regardless, the three members of the

TPMC that marketed HDPE partitions prior to 1990 —

Knickerbocker, General Partitions, and Sanymetal —

ceased to do so by the early 1990s (Pl.Rev.Stat. of

Material Facts / Sherman Act, Dkt. Entry 382, 1 19,

36A.)

Bobrick was aware of the formation of the TPMC, but

declined to join it. It did, however, interact with For-

mica and Metpar on the question of HDPE’s fire charac-

teristics. In July of 1989, Bobrick received a copy of a

Metpar Fact Sheet comparing HDPE and phenolic and

stating that HDPE had a smoke developed rating of 625,

exceeding the limit of 450. (Id., J 6A.) Later, Metpar

and Bobrick shared data regarding Bobrick’s testing of

Santana’s Poly-Mar HD toilet compartments. (Id.,

q 13-15A.) Alan Gettelman and Bob Gillis of Bobrick

were taken on a tour of a Formica plant and shown the

Formica videotape. (Id., J 22A.) Bobrick received a copy

of the Formica videotape in early 1990 and, with For-

mica’s permission, sent copies to various architectural

representatives. (Id., J 23-24; 34; 36.) The only

condition put on Bobrick’s use of the tape was that

Bobrick was not to use it at trade shows. (Id., J 36.)

While Bobrick did not join the TPMC, it promised the

Chairman of the TPMC that it “would be happy to help

support the Council in any way we could.” (Id., J 32.)

On November 30, 1994, Santana filed a complaint in

this Court against Formica, Metpar, ten other toilet

partition manufacturers and the TPMC under the

caption Santana Products, Inc. v. Toilet Partition

Manufacturers Council, Civ. A. No. 3:CV-94-1962. Asin

this case, Santana’s claims in the TPMC action included

alleged violations of sections 1 and 2 of the Sherman

Act, section 43(a) of the Lanham Act, as well as tortious

interference with prospective contractual relations. The

TPMC action focused on an alleged conspiracy “to use

scare tactics to discourage specification and acceptance

of Santana’s HDPE partitions in lieu of or as a replace-

46a

ment material for conventional [toilet partition] materi-

als by falsely alleging that Santana’s partitions posed a

dangerous fire hazard.” (Ex. 225, Appx. to Mem. in

Support of Bobrick’s S.J. Mot., Dkt. Entry 298, TPMC

Complaint, I 21.)

On January 27, 1995, the TPMC, Formica and the

eleven toilet partition manufacturers settled the 1994

TPMC litigation with Santana in a confidential agree-

ment. (Ex. 229, Appx. to Mem. in Support of Bobrick’s

S.J. Mot., Dkt. Entry 298, Settlement Agreement and

Releases.) The 1994 TPMC lawsuit was then dismissed.

D. Bobrick’s “Fire Scare” Marketing Campaign

Santana alleges that both before and after the 1994

TPMC lawsuit, Bobrick engaged in an unlawful market-

ing campaign designed to persuade architects and

specifiers that Santana’s HDPE compartments did not

meet building code requirements and were a fire hazard.

In addition to acquiring the Formica videotape in 1990,

(Bobrick’s Rev. Stat. of Material Facts, Dkt. Entry 407,

18), and distributing the Formica videotape to its sales

representatives, Bobrick also distributed to its sales

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

provided a comparison of the results of an ASTM E-84

test performed on Bobrick’s 1080 DuraLine Series

partitions and on HDPE partitions. (öId., J 57.) The

TB-73 bulletin was included in Bobrick’s Architectural

Manual from 1990 to at least 1994 and allegedly beyond.

(Id., J 59; Pl. Response to Bobrick’s Rev. Stat. of Mate-

rial Facts, Dkt. Entry 393, 4 59.) Bobrick also produced

its own videotape in 1992-1993, entitled “You Be The

Judge,” that included a side-by-side comparison of fire

tests performed on solid phenolic and HDPE bathroom .

stalls. (Bobrick’s Rev. Stat. of Material Facts, Dkt.

Entry 407, 1 108; Pl.Rev.Stat. of Material Facts /

Sherman Act, Dkt. Entry 382, J 81.) In addition to these

comparisons, some Bobrick representatives also con-

ducted live demonstrations of burning HDPE for archi-

tects and specifiers.

47a

Bobrick also addressed fire ratings in its national

advertisements. Bobrick placed advertisements in the

American School & University magazine (“AS & U”) in

the early 1990s that described HDPE as a “fire hazard”

that “far exceeds the maximum allowable smoke contri-

bution standard of the National Fire Protection Associa-

tion Life Safety Code . . according to a recent ASTM

E-84 test.. (Bobrick’s Rev. Stat. of Material Facts,

Dkt. Entry 407, J 131.) Similar comparative statements

were included in Bobrick’s Sweet’s Catalog advertise-

ments. Bobrick also created slide presentations and

sales scripts for its representatives that sought to

portray HDPE as a fire hazard in comparison to its solid

phenolic core compartments and its Thrislington series

plastic laminate compartments.

E. Procedural History

On October 1, 1996, Santana filed its Complaint in

this matter, naming as defendants Bobrick, Hornyak,

Voge!, Sylvester & Associates, Ltd., and Fred Sylvester.

(Dkt. Entry 1.) On June 1, 1998, Bobrick filed a

Third-Party Complaint against Formica, asserting

counts for (1) contribution, (2) indemnification, (3)

fraud, and (4) negligent misrepresentation. (Dkt. Entry

174.) Bobrick’s Third-Party Complaint was dismissed by

Memorandum and Order of August 30, 1999. See

Santana Prods., Inc. v. Bobrick Washroom Equip., Inc.,

69 F.Supp.2d 678, 690-91 (M.D.Pa.1999)(holding that

there is no right to contribution or indemnification

under the Sherman Act or the Lanham Act, that the

release between Formica and Santana barred Bobrick’s

contribution claim against Formica, that because

Santana’s underlying action depends upon Bobrick’s

knowing and intentional acts, a third-party claim for

indemnification was unavailable, and that claims for

fraud and negligent misrepresentation are not deriva-

tive claims for secondary liability, but rather independ-

ent tort claims which may not be maintained independ-

ently through a third-party complaint under Rule 14(a)).

48a

Sylvester & Associates and Fred Sylvester were earlier

dismissed from the case for lack of personal jurisdiction

by Memorandum and Order dated July 24, 1998.

Santana Prods., Inc. v. Bobrick Washroom Equip., Inc.,

14 F. Supp. 2d 710 (M. D. Pa. 1998).

Between March 3, 1997 and September 12, 2000, the

parties engaged in massive discovery. During the course

of discovery, the parties inspected over a million pages

of responsive documents and exchanged nearly 500, 000

pages of these documents and more than two dozen

videotapes. These responsive documents were the result

of subpoenas for documents issued to over 270 third

party architects, specifiers, public schools, municipali-

ties, and testing laboratories nationwide, as well as

every sales representative of both Bobrick and Santana.

Subpoenas to defendants of the 1994 TPMC litigation

and other competitors produced more than 50,000

additional pages of responsive documents. Several

extensive computer databases were produced on seven

compact discs and approximately two dozen computer

diskettes. The parties deposed 181 witnesses, whose

testimony filled more than 25,000 pages of transcripts.

These include depositions of 156 fact witnesses in 22

states, 8 expert witnesses, and 17 expert-related fact

witnesses. Moreover, a number of interrogatories were

served during the course of this litigation. Such consid-

erable discovery required the appointment of a Special

Master, George A. Reihner, in late 1997 for the purpose

of overseeing discovery and resolving discovery

disputes. '*

Following the conclusion of discovery, each party

presented summary judgment motions. In support ofits

13 Santana then commenced litigation against Sylvester in the Eastern

District of New York. That action has been stayed pending the resolution

of this case.

1 The Court is most grateful for the excellent work performed by Mr.

Reihner in superintending the sometimes contentious discovery problems

that are often encountered in litigation of this complexity.

49a

arguments, Santana proffered reports and testimony of

its expert witnesses. Defendants moved in limine to

have the court conduct Daubert"® hearings to determine

the admissibility of Santana’s expert witness opinions.

In response, Santana elected to withdraw its expert

witness opinions. The parties then submitted revised

memoranda of law that deleted references to the with-

drawn opinions of Santana’s experts. Oral argument on

the motions was held on April 30, 2002.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment should be granted when “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... the moving party is entitled to judgment as

a matter of law.” Fed.R.Civ.P. 56(c). A fact is “material”

if proof of its existence or non-existence might affect the

outcome of the suit under the applicable law. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,

91 L.Ed.2d 202 (1986). “Facts that could alter the

outcome are material facts.” Charlton v. Paramus Bd.

of Educ., 25 F.3d 194, 197 (3d Cir.), cert. denied, 513

U.S. 1022, 115 S.Ct. 590, 130 L.Ed.2d 503 (1994).

“Summary judgment will not lie if the dispute about a

material fact is ‘genuine,’ that is, if the evidence is such

that a reasonable jury could return a verdict for the

nonmoving party.” Anderson, 477 U.S. at 248, 106S.Ct.

2505.

Initially, the moving party must show the absence of

a genuine issue concerning any material fact. Celotex

Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91

L.Ed.2d 265 (1986). All doubts as to the existence of a

genuine issue of material fact must be resolved against

the moving party, and the entire record must be exam-

is Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786,

125 L.Ed.2d 469 (1993).

50a

ined in the light most favorable to the nonmoving party.

White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d

Cir.1988); Continental Ins. Co. v. Bodie, 682 F.2d 436,

438 (3d Cir.1982). Once the moving party has satisfied

its burden, the nonmoving party “must present affirma-

tive evidence to defeat a properly supported motion for

summary judgment.” Anderson, 477 U.S. at 256-57, 106

S.Ct. 2505. Mere conclusory allegations or denials taken

from the pleadings are insufficient to withstand a

motion for summary judgment once the moving party

has presented evidentiary materials. Schoch v. First

Fidelity Bancorporation, 912 F.2d 654, 657 (3d Cir.

1990). Rule 56 requires the entry of summary judgment,

after adequate time for discovery, where a party “fails to

make a showing sufficient to establish the existence of

an element essential to that party’s case, and on which

that party will bear the burden of proof at trial.”

Celotex, 477 U.S. at 322, 106 S.Ct. 2548.

B. The Noerr/Pennington Defense

“Rooted in the First Amendment and fears about the

threat of liability chilling political speech, the

[Noerr/ Pennington] doctrine was first recognized in two

Supreme Court cases holding federal antitrust laws

inapplicable to private parties who attempted to influ-

ence governmental action — even where the petitioning

had anticompetitive effects.” A.D. Bedell Wholesale Co.

v. Philip Morris, Inc., 263 F.3d 239, 250 (3d Cir.2001).

The first Supreme Court decision was Eastern Railroad

Presidents Conference v. Noerr Motor Freight, Inc., 365

U.S. 127, 81 S8. Ct. 523, 5 L.Ed.2d 464 (1961), which held

that the concerted efforts of railroads to influence the

passage of legislation adverse to the trucking industry

were immune from liability under the federal antitrust

laws. The second decision came in United Mine Workers

u. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L. Ed. 2d

626 (1965), which ruled that parties petitioning a

government agency to curtail coal purchases could not

be held to account to an injured coal producer in an

antitrust case. The Noerr/ Pennington doctrine has been

5la

extended to commercial tort claims, e.g. Cheminor

Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 128 (3d

Cir. 1999), as well as federal statutory claims other than

the Sherman Act. E.g., Int“ Bhd. of Teamsters, Local

734 Health & Welfare Trust Fund v. Philip Morris, Inc.,

196 F.3d 818, 826 (7th Cir.1999) (Noerr/ Pennington

applied to claim under the Racketeer Influenced &

Corrupt Organizations Act, 18 U.S.C. 5 1962).

Bobrick, Hornyak, and Vogel have each moved for

summary judgment on the ground that liability on

Santana’s federal statutory and state common law

claims is foreclosed or severely restricted by application

of the Noerr / Pennington doctrine. Specifically, defen-

dants contend that the Noerr/Pennington doctrine

precludes liability for alleged injuries resulting from

decisions of governmental actors to adopt bid specifica-

tions that effectively excluded Santana’s HDPE toilet

partitions.

As explained by our Court of Appeals,

Noerr/Pennington immunity extends to two separate

types of injury:

A petitioner may be immune from the antitrust

injuries which result from the petitioning itself. See

Noerr, 365 U.S. at 143, 81 S.Ct. 523, 5 L.Ed.2d 464

(finding trucking industry plaintiffs’ relationships

with their customers and the public were hurt by the

railroads’ petitioning activities, yet the railroads were

immune from liability). Also, ... parties are immune

from liability arising from the antitrust injuries

caused by government action which result from the

petitioning. See Pennington, 381 U.S. at 671, 85 S. Ct.

1585, 14 L.Ed.2d 626 (holding plaintiffs could not

recover damages resulting from the state’s actions)

.... Therefore, if its conduct constitutes valid peti-

tioning, the petitioner is immune from antitrust

liability whether or not the injuries are caused by the

act of petitioning or are caused by government action

which results from the petitioning.

52a

Bedell, 263 F.3d at 251. Defendants assert that San-

tana’s claims are premised upon decisions made by

governmental actors, and are therefore barred by Noerr/

Pennington.

“(T]he right to petition extends to all departments of

the Government.” Cal. Motor Transp. Co. v. Trucking

Unlimited, 404 U.S. 508, 510, 92 S.Ct. 609, 30 L.Ed.2d

642 (1972). Protected “petitioning” activity runs the

gamut of efforts to persuade governments! actors,

extending well beyond “filing formal grievances directly

with the government.” Bedell, 263 F.3d at 252. It

encompasses not only direct lobbying of legislative and

executive officials, but also publicity campaigns and

other marketing efforts. See Allied Tube & Conduit

Corp. v. Indian Head, Inc., 486 U.S. 492, 510, 108 S.Ct.

1931, 100 L.Ed.2d 497 (1988) (“Petitioner, and others

concerned about the safety or competitive threat of

polyvinyl chloride conduit, can, with full antitrust

immunity, engage in concerted efforts to influence [state

and local] governments through direct lobbying, public-

ity campaigns, and other traditional avenues of political

expression.”).

In this case, the conduct challenged by Santana

consisted of a multi-faceted advertising campaign that

sought to address the “competitive threat” of HPDE

toilet partitions by representing that the partitions were

subject to flammability requirements for wall finish, as

opposed to those applicable to furniture and fixtures,

and by disseminating information concerning the

flammability of HPDE compartments. Such a campaign,

to the extent it targeted governmental decisionmakers,

falls within the broad ambit of Noerr/ Pennington. Id.

Santana, however, contends that the nature and

context of the defendants’ activities remove this case

from the Noerr / Pennington doctrine. Santana alterna-

tively asserts that this case falls within several pur-

ported exceptions to Noerr/ Pennington immunity.

53a

1. Defendants’ Activities Are Within the Ambit

of Noerr/Pennington Immunity

Observing that the scope of immunity nonetheless

“depends on the source, context, and nature of the

anticompetitive restraint at issue,” id. at 499, 108 S. Ct.

1931, Santana argues that Bobrick’s conduct is not

entitled to protection. In support of its position,

Santana relies principally on Allied Tube.

The “relevant context” for the anticompetitive activity

at issue in Allied Tube was “the standard-setting

process of a private association.” Jd. at 500, 108 S.Ct.

1931. Specifically, manufacturers of steel electrical

conduit conspired to exclude polyvinyl! chloride (“PVC”)

conduit from the National Fire Protection Association’s

National Electrical Code. Plaintiff itself had sought to

have PVC conduit included in the 1981 edition of the

Code as an approved type of electrical conduit. The

defendant and other steel conduit manufacturers agreed

to rig the voting on the plaintiffs proposal by packing

the annual meeting of the NFPA with persons whose

only function would be to vote against the PVC proposal.

Defendant’s effort was successful: PVC was not ap-

proved as an electrical conduit material in the 1981

Code. The Court ruled that, although it was likely that

state and local governments would adopt the 1981 Code,

thereby excluding PVC conduit, the activity in question,

directed at a private standard-setting association, was

not entitled to Noerr/ Pennington immunity. Rejecting

the “absolutist position that the Noerr doctrine immu-

nizes every concerted effort that is genuinely intended

to influence governmental action,” id. at 503, 108 S.Ct.

1931, the Court concluded that “the Noerr immunity of

anticompetitive activity intended to influence the

government depends not only on its impact, but also on

the context and nature of the activity.” Id. at 504, 108

S.Ct. 1931. The Court found that Noerr immunity did

not apply to the conduct of the defendant because it

occurred “within the confines of a private standard-

setting process... [and] [t]he validity of conduct within

54a

that process has long been defined and circumscribed by

the antitrust laws without regard to whether the private

standards are likely to be adopted into law.” Id. at 506,

108 S.Ct. 1931.

Asserting that “Bobrick’s and its co-conspirators

actions took place within the context of ‘standard’

setting and enforcement by a private group of competi-

tors who set and enforced the ASTM E-84 standard

against HDPE toilet compartments because it was

known that those products did not meet the smoke

development index of the NFPA Life Safety Code,” (Rev.

Mem. in Opp. to Bobrick’s S.J. Mot., Dkt. Entry 391, at

25), Santana argues that “the context and nature of the

present horizontal conspiracy is [sic] very clearly the

type of commercial activity regulated by the antitrust

laws.” (Id.) There are indeed excerpts from the majority

opinion in Allied Tube that support Santana's position.

For example, the Court’s observation that “the antitrust

laws should not necessarily immunize what are in

essence commercial activities simply because they have

a political impact,” Allied Tube, 486 U.S. at 507, 108

S.Ct. 1931, viewed in isolation, supports a conclusion

that Noerr immunity should not pertain here. Bobrick’s

activities were plainly commercial in nature, and

application of the antitrust laws to such activity has

intuitive appeal. But the Court in Allied Tube carefully

circumscribed the reach of its decision: “Our holding is

expressly limited to cases where an ‘economically

interested party exercises decisionmaking authority in

formulating a product standard for a private association

that comprises market participants.“ Id. at 511 n. 13,

108 S.Ct. 1931 (emphasis in original).

The facts of this case do not fall within Allied Tube’s

narrow holding. Bobrick and its alleged co-conspirators,

individually or in combination, did not exercise any

decisionmaking authority in the formulation of a prod-

uct standard. This is not a case where a private stan-

dard-setting association was manipulated by machina-

tions of Santana’s competitors to exclude HDPE toilet

55a

compartments from applicable safety codes. Bobrick

and its alleged co-conspirators simply advocated an

interpretation of an applicable code that was adverse to

Santana’s position. This advocacy did not occur within

the confines of a private standard setting association,

but occurred in the context of a marketing campaign

that encompassed public building projects. In this

setting, Santana had the ability to advocate its position

that toilet compartments should not be subjected to the

requirements of wall finish standards and to refute

assertions concerning the flammability and smoke

characteristics of its product. The decisionmaker at

issue in this case is not Santana's competitors, but the

government agent — the specifier - who does not have a

commercial interest to advance in determining the

building code provisions applicable to toilet partitions.

Bobrick merely attempted to influence the specifier’s

decision. It did not formulate a product standard,

exercise decisionmaking authority, or direct its activi-

ties towards a private standards-setting organization.

Thus, Santana’s reliance upon Allied Tube is misplaced.

There is another delimiting factor in Allied Tube that

makes its holding inapplicable here. The plaintiff in

Allied Tube did not seek damages resulting from the

adoption of the rigged Code standard by any governmen-

tal entity. Id. at 500, 108 S.Ct. 1931. Instead, plaintiff's

recovery was limited to the theory that “the stigma of

not obtaining [Code] approval of its product and Allied’s

‘marketing’ of that stigma caused independent market-

place harm to [plaintiff] in those jurisdictions permitting

use of PVC conduit, as well as those that later adopted

the 1984 NEC, which permitted use of PVC conduit.

Indian Head, Inc. v. Allied Tube & Conduit Corp., 817

F. 2d 938, 941 n. 3 (2d Cir. 1987) (emphasis added), aff'd,

486 U.S. 492, 108 S.Ct. 1931, 100 L. Ed. 2d 497 (1988).

Thus, damages resulting from the adoption of the 1981

Code by various government agencies were explicitly

excluded from the claim considered by the Supreme

Court. See 486 U.S. at 498 n. 2, 108 S.Ct. 1931. Here,

56a

by way of contrast, Santana seeks recovery of damages

resulting from the effective exclusion of its product from

public building specifications attributable to the efforts

of Bobrick and its alleged co-conspirators.

Illustrating the significance of this distinguishing

feature of Allied Tube is the Ninth Circuit’s decision in

Sessions Tank Liners, Inc. v. Joor Manufacturing, Inc.,

17 F.3d 295 (9th Cir.), cert. denied, 513 U.S. 813, 115

S.Ct. 66, 180 L.Ed.2d 23 (1994). At issue in Sessions

was the activity of a storage tank manufacturer in the

amendment of a model fire code to the disadvantage of

the defendant’s competitor, Sessions Tank Liners, Inc.

(“Sessions”). Sessions was involved in the business of

“repair(ing] leaking storage tanks in place by cutting

them open, lining their interiors with a protective

coating of epoxy, and resealing them.” Id. at 296. The

defendant, Joor Manufacturing, Inc., produced under-

ground storage tanks. While the cost of lining a leaking

new tank was approximately the same as the cost of a

new replacement, tank lining proved “cheaper than tank

replacement . . because lining [did] not entail the

additional costs of removing and discarding the leaking

tank and installing a new one,” and “[did] not require

the lengthy interruption of business that tank replace-

ment often involve[d].” Jd. Tank lining, however,

required a government permit. Joor caused the amend-

ment of a model fire code to require that leaking tanks

be removed. In effect, the amendment was tantamount

to a ban on tank lining. Jd. at 297.

Claiming that this conduct violated federal antitrust

laws and California tort law, Sessions brought an

antitrust and unfair competition action in federal court.

The district court ruled that Joor was entitled to Noerr

immunity, No. 84-6363 MRP, 1986 WL 31689 (C.D.Cal.

Jan. 17, 1986), and the Ninth Circuit, in relevant part,

agreed. 827 F.2d 458 (9th Cir.1987). The Supreme

Court, however, vacated the Ninth Circuit ruling and

remanded the matter for further consideration in light

of Allied Tube. Sessions Tank Liners, Inc. v. Joor

57a

Manufacturing, Inc., 487 U.S. 1213, 108 S.Ct. 2862, 101

L.Ed.2d 899 (1988).

The case then went back to the district court, which

conducted a bench trial. The trial court found that Joor

had knowingly made false statements to the standard

setting organization that caused the effective ban on

tank lining. The district court further found that prior

to and immediately after the adoption of the code

amendment, “Joor ‘marketed’ the stigma which it had

caused the [standards-setting organization] to place on

tank lining by sending letters to public agencies and

customers urging its prohibition.” 786 F.Supp. 1518,

1532 (C.D.Cal.1991). As does Santana here, Sessions

claimed, and the district court found, that prior to the

amendment of the code, Sessions’ business was expand-

ing, but that it declined sharply following adoption of.

the code amendment. Sessions also proved that it was

receiving permits freely before the code amendment, but

was denied them thereafter and that it was denied

permits even before any local government would have

been able to adopt the code amendment. Id. The district

court concluded that, under these circumstances, Allied

Tube dictated the conclusion that Joor was not shielded

by Noerr immunity.

The Ninth Circuit reversed. In finding that Allied

Tube did not abrogate immunity for Joor’s conduct, the

Ninth Circuit explained that Noerr petitioning immu-

nity “has its roots in the Supreme Court’s decision in

Parker v. Brown, 317 U.S. 341, 350, 63 S.Ct. 307, 87

L.Ed. 315 (1943).” Sessions, 17 F.3d at 298. Parker

“held that the Sherman Act does not prohibit an

anticompetitive restraint imposed by a state as an act of

government.” Mass. School of Law at Andover, Inc. v.

Am. Bar Ass’n, 107 F.3d 1026, 1035 (3d Cir.1997). The

holding in Noerr was “a corollary to Parker: The federal

antitrust laws... do not regulate the conduct of private

individuals in seeking anticompetitive action from the

government.” City of Columbia v. Omni Outdoor Adver.,

Inc., 499 U.S. 365, 379-80, 111 S.Ct. 1344, 113 L.Ed.2d

58a

382 (1991). Thus, “ ‘where a restraint upon trade or

monopolization is the result of valid governmental

action, as opposed to private action,’ those urging the

governmental action enjoy absolute immunity from

antitrust liability for the anticompetitive restraint.”

Allied Tube, 486 U.S. at 499, 108 S.Ct. 1931. The Ninth

Circuit in Sessions recognized the critical distinction

between harm caused by the inability to procure a

government permit (valid state action) and harm to

competition independent of such state action. Holding

that the evidence showed that Sessions’ injuries were

directly attributable to the inability to secure requisite

permits from governmental entities, the Ninth Circuit

ruled that liability could not be imposed upon Joor:

In applying Allied to Joor’s conduct, the district court

overlooked a key distinction between Allied and this

case. The plaintiff in Allied was awarded damages

only on the theory that the stigma of banning the

plaintiffs product from a uniform code caused inde-

pendent marketplace harm to the plaintiff in jurisdic-

tions that permitted the use of the plaintiff's products.

In contrast, Sessions has never proved that it sus-

tained injuries from anything other than the actions

of municipal authorities. Sessions has not shown that

any potential tank lining customer in jurisdictions

that were not enforcing the... tank removal provision

decided not to engage Sessions’ services because of the

[Code amendment]. Nor has Sessions adduced any

evidence that Joor’s actions caused independent

marketplace harm in jurisdictions that continued to

permit tank lining. Unlike the plaintiff in Allied,

Sessions was not awarded damages on the theory that

Joor’s ‘marketing the stigma’ of [the Code amendment]

caused Sessions any loss of business independent of

the losses resulting from the permit denials. The

injuries for which Sessions seeks recovery flowed

directly from government action. This fact takes the

case entirely out of the realm of Allied.

x* «& & &© N *

59a

To rule otherwise and hold Joor liable for injuries

flowing from governmental decision-makers’ imposi-

tion of an anticompetitive restraint, we would have to

find that the restraint was imposed because of Joor’s

petitioning efforts. Proof of causation would entail

deconstructing the decision-making process to ascer-

tain what factors prompted the various governmental

bodies to erect the anticompetitive barriers at issue.

This inquiry runs afoul of the principles guiding the

Parker and Noerr decisions.

17 F. zd at 299, 300 (citations omitted)(emphasis added).

Santana's argument that Allied Tube is controlling

here does not distinguish between harm caused as a

result of specifications adopted for public building

projects that excluded its products and harm resulting

from the “stigma” attached to its products that caused it

to lose business in the non-public sector. Allied Tube did

not sanction the conflation of harm caused by govern-

mental adoption of a product standard or requirement,

on the one hand, and harm caused independent of the

adoption of the standard.

Buttressing this conclusion is the Third Circuit’s

analysis in Massachusetts School of Law, 107 F.3d at

1034-37. After being denied ABA accreditation, the

Massachusetts School of Law (“MSL”) sued the ABA and

others on the theory that they had conspired to organize

and enforce a group boycott in violation of section 1 of

the Sherman Act and conspired to monopolize legal

education, law school accreditation, and the licensing of

attorneys, in violation of section 2 of the Sherman Act.

MSL asserted several types of injury resulting from the

ABA’s allegedly anticompetitive conduct, including a

decline in enrollments because graduates of unaccred-

ited schools cannot take the bar examination in most

states. Judge Greenberg, writing for the unanimous

Third Circuit panel, defined the:

substantive issues on this appeal [as] whether state or

private conduct caused the injury MSL alleges it

60a

suffered because its graduates could not take the bar

examination in most states, and whether, if MSL

suffered an injury as a result of the ABA’s conduct, the

injury was an incidental effect of the ABA’s attempt to

influence the states with respect to establishing

criteria for bar admission. 3

Id. at 1035. Distinguishing Allied Tube on the ground

that its holding “specifically excluded from consideration

any injury resulting from the adoption of the challenged

standards by any government and dealt only with the

independent marketplace effect of the defendant's

conduct,” id. at 1036 n. 8, the Third Circuit concluded

that alleged injury arising from the inability of MSL

graduates to take the bar examination in most states

could not form the basis for antitrust injury. In reach-

ing the result that there was immunity from damages

caused by declining enrollments attributable to the

states giving effect to the ABA adverse accreditation

decision, the Third Circuit cited with approval the Ninth

Circuit ruling in Sessions. Id. at 1036. In short, the

Third Circuit recognized that there is immunity from

antitrust liability where, as here, “the ‘injuries for which

[plaintiff] seeks recovery flowed directly from govern-

ment action.“ Id. (quoting Sessions, 17 F.3d at 299).

This principle was reiterated by the Third Circuit in

Armstrong Surgical Center, Inc. v. Armstrong County

Memorial Hospital, 185 F.3d 154 (3d Cir. 1999). In

Armstrong, the plaintiff claimed, inter alia, that the

defendants’ threat to boycott plaintiffs outpatient

surgery center violated the federal antitrust laws.

Defendants claimed immunity to liability on the ground

that the threatened boycott had been communicated to

the Pennsylvania Department of Health during its

consideration of plaintiffs Certificate of Need (“CON”)

application, and that the plaintiffs alleged injuries

resulted solely from the decision of the Department of

Health to deny the CON. The Third Circuit agreed with

the defense position. Writing for the majority in

Armstrong, Judge Stapleton observed:

61a

[E]ven where the same petitioning conduct might give

rise to antitrust liability for injury directly caused to

a competitor in the marketplace, if relief is sought

solely for injury as to which the state would enjoy

immunity under Parker, the private petitioner also

enjoys immunity....

x M X XM & €*

In sum, where, as here, all of the plaintiff's alleged

injuries result from state action, antitrust liability

cannot be imposed on a private party who induced the

state action by means of concerted anticompetitive

activity.

Id. at 159, 160.

Another argument advanced by Santana is that Noerr

immunity is not available where the defendant “at-

tempted directly to persuade anyone not to deal with”

the plaintiff. (Rev. Memo. in Opp. to Bobrick’s S.J. Mot.,

Dkt. Entry 391, at 30 n. 12, quoting Mass. School of

Law, 107 F.3d at 1038 (quoting Noerr, 365 U.S. at 142,

81 S8. Ct. 523.)) Specifically, Santana asserts:

In the present case, it is undisputed that Bobrick and

its co-conspirators not only stated the position that

the NFPA/ASTM E-84 standards applied to Santana

but that they engaged in actual conduct directed at

Santana’s customers and potential customers to

enforce the standard in the marketplace. In sum, the

MSL decision clearly supports a denial of Bobrick’s

Noerr defense.

(Id., citation omitted.)

The language from Noerr on which Santana relies was

used in responding to the lower court's holding that the

railroads sought the legislation with the primary intent

to hurt the truckers, even if they secured no legislation.

In rejecting this contention, the Court explained:

62a

The apparent effect of these findings is to take this

case out of the category of those that involve re-

straints through governmental action and thus render

inapplicable the principles announced above. But this

effect is only apparent and cannot stand under close

scrutiny. There are no specific findings that the

railroads attempted directly to persuade anyone not to

deal with the truckers. Moreover, all of the evidence in

the record, both oral and documentary, deals with the

railroads’ efforts to influence the passage and enforce-

ment of laws. Circulars, speeches, newspaper articles,

editorials, magazine articles, memoranda and all

other documents discuss in one way or another the

railroads’ charges that heavy trucks injure the roads,

violate the laws and create traffic hazards, and urge

that truckers should be forced to pay a fair share of

the costs of rebuilding the roads, that they should be

compelled to obey the laws, and that limits should be

placed upon the weight of the loads they are permitted

to carry. In the light of this, the findings of the

District Court that the railroads’ campaign was

intended to and did in fact injure the truckers in their

relationships with the public and with their customers

can mean no more than that the truckers sustained

some direct injury as an incidental effect of the rail-

roads’ campaign to influence governmental action and

that the railroads were hopeful that this might hap-

pen.

oerr, 365 U.S. at 142-43, 81 S.Ct. 523 (emphasis

added).

From this language, our Court of Appeals gleaned an

exception to Noerr immunity where the defendant

attempts directly to persuade anyone not to deal with

the plaintiff.'® Mass. School of Law, 107 F.3d at 1038.

16 This does not appear to be an exception, per se, but merely a factor

in the Court's analysis. As the Court later stated in Allied Tube, “Noerr

immunity of anticompetitive activity intended to influence the govern-

ment depends not only on its impact, but also on the context and nature

63a

Santana overlooks, however, the court’s limited applica-

tion of this exception. In the Mass. School of Law case,

the court found the exception inapplicable because, inter

alia: a

if a claim for stigma injury could be advanced in

circumstances [where the plaintiff was mentioned

incidental to statements defending the defendant’s

standard], Noerr immunity would be confined se-

verely; a petitioner for governmental action is likely to

urge that the action is needed to ensure that stan-

dards are met, thereby suggesting that some entities

do not meet appropriate standards.

Id.

Upon reviewing the evidence, it is apparent that

Santana inaccurately summarizes the defendants’

campaign as stating that che NFPA/ASTM E-84 stan-

dards applied to Santana. (Rev. Memo. in Opp. to

Bobrick’s S.J. Mot., Dkt. Entry 391, at 30 n. 12.) Rather,

the defendants attempted through various means to

persuade architects and specifiers for public building

projects that certain building code standards applied to

toilet partitions. The defendants then represented to the

architects and specifiers that HDPE did not meet this

standard. While the goal of this campaign was, clearly,

to take business away from Santana and other HDPE

manufacturers, Pl. Rev. Stat. of Material Facts / Sherman

Act, Dkt. Entry 382, 9] 69, 71-73, 90, 91, 99, 101, 102,

103, 104, 107, 109, 111, 116), Noerr shields from the

Sherman Act a concerted effort to influence public

officials regardless of intent of purpose.“ Pennington,

of the activity.” 486 U.S. at 504, 108S.Ct. 1931. In Allied Tube, not only

was there evidence that the defendant was attempting to prevent anyone

from dealing with the plaintiff, but also that it did so by preventing a

private association from including the plaintiff's product in its industry

standards.

7 Santana claims that these statements of material fact show that the

defendants’ campaign was aimed directly at Santana. While these

statements certainly demonstrate that the purpose of the marketing

64a

381 U.S. at 670, 85 S.Ct. 1585. Indeed, the fact that the

goal of the railroads in Noerr was to injure trucking

companies did not vitiate their immunity. See Noerr,

365 U.S. at 143-44, 81S.Ct. 523.“

Furthermore, such a broad interpretation of this

exception is not supported by more recent cases. Both

Cheminor Drugs, Ltd. v. Ethyl Corp., 168 F.3d 119, 120

(3d Cir.1999), and Armstrong, involved defendants who

attempted to persuade the government not to “deal” with

a specific entity. In Cheminor, an American ibuprofen

manufacturer filed petitions with the Department of

Commerce and the United States International Trade

Commission requesting imposition of anti-dumping and

countervailing duties on imports of bulk ibuprofen from

an Indian manufacturer. Armstrong dealt with the

concerted action of a hospital and several doctors to

prevent the plaintiff from establishing an ambulatory

surgery center. Although these eases involved a differ-

ent context from the matter sub judice, they show that

targeting petitioning activity at one entity, by itself,

does not fall into the Noerr exception for direct persua-

sion not to deal. Looking at these cases as a whole, this

exception should apply only when the petitioning

activity consists solely of an attempt to persuade a

customer to not deal with the plaintiff, without present-

ing broader justifications. In Mass. School of Law, the

ABA did not merely state that “MSL is a bad institution,

or that a particular student should not go there,” but

that the school failed to satisfy the ABA’s accreditation

process. 107 F.3d at 1038. In Noerr, the railroads

campaign was to injure Santana’s business, they do not show that the

defendants sought to dissuade the architects from dealing with Santana

specifically, as opposed to specifying HDPE toilet partitions in general.

18 They did so by arguing that the “product” — cargo transportation by

truck - caused damage to the roads, violated the law and created traffic

hazards. Noerr, 365 U.S. at 142-43, 81 S.Ct. 523. Similarly, the

defendants’ marketing campaign asserted that HDPE partitions did not

meet the ASTM E-84 test (adopted into law by some states) and created

a fire hazard.

Say

65a

pointed to the negative impact of trucking on roads and

safety. Here, the defendants did not coerce the archi-

tects or specifiers to not deal with Santana, but argued

that HDPE (Santana’s product) failed to meet what the

defendants considered the governing safety test and

could be a fire hazard. Whether or not such assertions

are true is not relevant to this analysis.

Thus, tothe extent that Santana premises its damages

on decisions made by public officials or their agents (i.e.,

architects and others advising public officials) who

approved specifications for phenolic toilet partitions

or disapproved specifications for HDPE toilet parti-

tions, defendants are immune from liability. (Cf.

TEC Cogeneration, Inc. v. Fla. Power & Light Co.,

76 F.8d 1560, 1572 (llth Cir.1996) (recognizing

Noerr/ Pennington immunity for defendant's conduct in

successfully lobbying agency to vote against construction

of competing electrical transmission line because

“[a]bsolute immunity from antitrust liability results

where the restraint upon trade or monopolization is the

result of valid governmental action as opposed to private

action”); Bristol-Myers Squibb Co. v. Ivax Corp., 77

F.Supp.2d 606, 612 (D.N.J.2000) (holding that conduct

in securing governmental exclusive marketing privileges

for an anticancer drug was not subject to antitrust

liability because the alleged injuries ‘sustained by the

plaintiff “were the ‘direct result’ of decisions made by

government agencies“).

2. There Is No “Commercial” Exception to

Noerr/ Pennington Immunity

Santana asserts that even if defendants’ conduct falls

within the Noerr / Pennington doctrine, immunity is not

available where, as here, governmental units are the

purchasers of the products at issue. (Rev. Mem. in Opp.

to Bobrick’s S.J. Mot., Dkt. Entry 391, at 26.) In support

of this assertion, Santana cites Federal Trade Commis-

sion v. Superior Court Trial Lawyers Association, 493

U.S. 411, 110 S.Ct. 768, 107 L.Ed.2d 851 (1990).

66a

In Trial Lawyers, attorneys providing representation

to indigent criminal defendants under the District of

Columbia Criminal Justice Act (“CJA”) agreed to decline

acceptance of any new cases until the CJA rate of

compensation was increased. The group boycott proved

to be successful, but prompted a complaint by the

Federal Trade Commission that the attorneys had

entered into an illegal agreement to restrain trade. The

Court distinguished Noerr on the ground that “the

alleged restraint of trade was the intended consequence

of public action; in this case, the boycott was the means

by which respondents sought to obtain favorable legisla-

tion.” Id. at 424-25, 110 S.Ct. 768. The Court further

observed that “[t]he restraint of trade that was imple-

mented while the boycott lasted would have had pre-

cisely the same anticompetitive consequences during the

period even if no legislation had been enacted.” Id. at

425, 110S.Ct. 768.

In the matter sub judice, Bobrick sought to convince

government decisionmakers to specify phenolic compart-

ments or to exclude HDPE partitions. It was the actions

of the governmental] decisionmakers that imposed the

challenged restraint. In Trial Lawyers, by way of

contrast, the desired governmental action ended the

restraint. The Third Circuit in Armstrong recognized

the significance of this distinction:

The limitation on Noerr immunity recognized in Trial

Lawyers is inapplicable . . to a case where the sole

antitrust injury is caused directly by the government

action that the private defendant has helped to

secure... . [I]f relief is sought solely for injury as to

which the state would enjoy immunity under Parker,

the private petitioner also enjoys immunity.

185 F.3d at 159. As explained in Sandy River Nursing

Care v. Aetna Casualty, 985 F.2d 1138, 1143 (Ist

Cir. 1993):

Trial Lawyers does not establish a “government-

as-market-participant” exception to Noerr. What was

67a

significant about the concerted activity there was not

that the government was the purchaser, but that the

defendants had sought to influence the government

through an economic boycott that directly affected the

marketplace by, inter alia, constricting the supply of

lawyers available for indigent criminal defendants.

The Court emphasized that Noerr provides immunity

when the alleged restraint of trade is imposed by the

government as the intended consequence of the defen-

dants’ concerted activity. [Emphasis in original.]

In this case, the alleged restraint of trade was imposed

by governmental actors as the intended consequence of

the challenged concerted activity. Thus, this case falls

within Noerr, and not within Trial Lawyers.

Santana has not cited any other Supreme Court

precedent that recognized a “market participant” or

“commercial” exception to Noerr/Penningion immu-

nity.“ Indeed, the Court's decision in Pennington is

inconsistent with the recognition of the “commercial”

exception advanced by Santana. In Pennington, part of

the challenged conduct included lobbying the Tennessee

19 In City of Columbia, 499 U.S. at 374-75, 379, 111 S.Ct. 1344, the

Court intimated at a “possible market participant exception” to Parker

state action immunity. The Court, however, did not suggest that such an

exception existed in the Noerr/Pennington context. Moreover, the

Court’s citation in City of Colunibia to Union Pacific Railroad Co. v.

United States, 313 U.S. 450, 61 S.Ct. 1064, 85 L.Ed. 1453 (1941), as an

example of what it meant to be a commercial or market participant

suggests that the government must be in competition with the complain-

ing party before the exception to immunity may apply. In Union Pacific,

Kansas City was held liable for action take in its capacity as the owner

and operator of a wholesale produce market integrated with railroad

facilities. Here, by way of contrast, the governmental actors are not in

the business of making and selling toilet partitions. Thus, any possible

market participant exception suggested by the Supreme Court in City of

Columbia is not applicable here. See Hedgecock v. Blackwell Land Co.,

52 F.3d 333 (table), 1995 WL 161649, at *2 (9th Cir.1995) (governmental

entity's allocation of water does not fall within any commercial partici-

pant exception to Parker because “[p]laintiffs are not in competition with

the district, rather they feel the economic effect of the district’s decision

concerning the refusal to sell allegedly excess water to other districts.”).

68a

Valley Authority (“TVA”) to curtail purchases of coal on

the spot market because such sales were not subject to

requirements that the coal producers pay the miners a

certain minimum wage. The jury had been instructed

that this approach to the TVA would be illegal if the

TVA was urged to modify its coal purchasing policies for

the purpose of driving small producers out of business.

The Supreme Court held that such an instruction was

error because, under Noerr, “{j]oint efforts to influence

public officials do not violate the antitrust laws even

though intended to eliminate competition.” 381 U.S. at

670, 85S.Ct. 1585. The fact that the conduct in question

was aimed at TVA’s purchasing policies did not enter

into the analysis.

Santana nonetheless persists that there is a “long line

of cases that hold... that the Noerr doctrine does not

immunize concerted action by sellers against the govern-

ment when the government is acting in a commercial

capacity as a buyer of goods or services.” (Rev. Mem. in

Opp. to Bobrick’s S.J. Mot., Dkt. Entry 391, at 27.)

Santana’s citations to this purported “long line” of

decisional law begins with a 1970 First Circuit ruling,

George R. Whitten, Jr., Inc. u. Paddock Pool Builders,

Inc., 424 F.2d 25 (1st Cir.), cert. denied, 400 U.S. 850, 91

S.Ct. 54, 27 L.Ed.2d 88 (1970), and ends with a 1979

decision from the District of Columbia, General Aircraft

Corp. u. Air America, Inc., 482 F.Supp. 3 OD. D. C. 1979).

The first case cited by Santana, Whitten, was decided

in the context of a summary judgment motion in which

the defendant conceded for purposes of presenting a

Noerr / Pennington defense “that it had combined with

dealers and others to effect the use of its specifications

in the public swimming pool industry, that its specifica-

tions were so drawn that only it could comply, and that

20 The Third Circuit has apparently not addressed the question of

whether there should be an exemption from Noerr/ Pennington immunity

when the government is petitioned in its capacity as a consumer or

purchaser of goods and services.

69a

its purpose was to eliminate competition.” 424 F.2d at

27. As described by the appellate court, the applicability

of the Noerr/ Pennington immunity was to be decided in

the context of the:

government acting in a proprietary capacity, purchas-

ing goods and services to satisfy its own needs within

a framework of competitive bidding, where the initial

responsibility for recommending specifications has

been entrusted to a hired professional, and where the

selling effort directed at that professional and his

public client by a leading supplier was monopolisti-

cally motivated and ran the gamut from high pressure

salesmanship to fraudulent statements and threats.

Id. at 29. The First Circuit rejected the defense conten-

tion that liability could not be imposed because state

actors decided the content of bid specifications, reason-

ing that “valid government action confers antitrust

immunity only when the government determines that

competition is not the summum bonum in a particular

field and deliberately attempts to provide an alternate

form of public regulation.“ Id. at 30. The court also

rejected Noerr / Pennington immunity because, in its

view, immunity was limited to activity of a political

nature undertaken in the context of “the ‘passage or

enforcement of laws.“ Id. at 32.

Neither rationale advanced in Whitten can withstand

critical analysis. Ascertainment of whether the govern-

ment has determined that competition is not the “sum-

mum bonum” in determining bidding specifications that

concern factors of quality and safety “would require the

sort of deconstruction of the governmental process and

probing of the official ‘intent’ that [the Supreme Court

has] consistently sought to avoid.” City of Columbia,

499 U.S. at 377, 111 S.Ct. 1344. The deconstruction of

the decisionmaking process to determine the factors that

prompted various governmental bodies to impose the

challenged anticompetitive restraints was precisely the

type of inquiry that the Ninth Circuit found to be

704

contrary to “the principles guiding the Parker and Noerr

decisions.” Sessions, 17 F.3d at 300; see also Hedgecock,

1995 WL 161649, at *3. As to the Whitten court's

explanation that Noerr / Pennington immunity is limited

to activity of a political nature“ in the context of

“passage or enforcement of laws,” 424 F. 2d at 32, it is

sufficient to observe that Noerr / Pennington has been

applied to activities other than the publicity campaign

at issue in Noerr and in contexts that did not involve the

passage or enforcement of laws. E. g., Bedell, 263 F. 3d at

250-54 (negotiating settlement agreement to resolve

tobacco liability litigation); Cheminor, 168 F. 3d 119

(petition requesting imposition of anti-dumping and

countervailing duties on imports of ibuprofen from

India); Armstrong, 185 F.3d at 160-64 (representations

made in opposing issuance of a CON to a competitor).

Finally, recognition of a “commercial” exception as

suggested by Whitten cannot be reconciled with the

Supreme Court’s following observation in the subse-

quent case of California Motor Transport:

[I]t would be destructive of rights of association and of

petition to hold that groups with common interests

may not, without violating the antitrust laws, use the

channels and procedures of state and federal agencies

and courts to advocate their causes and points of view

respecting resolution of their business and economic

interests vis-a-vis thetr competitors.

404 U.S. at 510-11, 92 S. Ct. 609 (emphasis added).

Other courts have recognized that the holding in

Whitten may not be consonant with subsequent Supreme

Court holdings. See, e.g., In re Airport Car Rental

Antitrust Litig., 693 F.2d 84, 87 (9th Cir.1982) ("It is

possible that California Motor Transport implicitly

overruled... Whitten."), cert. denied, 462 U.S. 1133, 103

S.Ct. 3114, 77 L.Ed.2d 1368 (1983); Bustop Shelters, Inc.

v. Convenience & Safety Corp., 521 F.Supp. 989, 996

(S.D.N.Y.1981) (Whitten has “been disapproved in this

circuit, as implicitly overruled or weakened by Califor-

71a

nia Motor Transport”). Indeed, Allied Tube explicitly

sanctioned concerted efforts to influence governmental

actors with respect to either the safety or the competi-

tive threat of a particular product. 486 U.S. at 510, 108

S.Ct. 1931.

In Greenwood Utilities Commission v. Mississippi

Power Co., 751 F.2d 1484, 1505 (5th Cir. 1985), the court

refused to recognize a commercial exception to

Noerr/ Pennington immunity because, “although such a

distinction may be intuitively appealing it proves

difficult, if not impossible, of application .. where the

government engages in a policy decision and at the same

time acts as a participant in the marketplace.” The

court explained that rejection of a commercial exception

was appropriate because there is no bright line test for

determining when the government engages in a purely

commercial decision and when it is acting in a regula-

tory capacity or making a policy decision. Id. at 1505 n.

14.7! In Independent Taxicab Drivers Employees v.

Greater Houston Transportation Co., 760 F.2d 607

(5th Cir.1985), the Fifth Circuit reaffirmed its con-

clusion that there is no commercial exception to

Noerr/ Pennington immunity, explaining that “[i]t would

be anomalous to hold on the one hand that government

can contract with private entities to effectuate valid,

albeit anticompetitive, policies, while holding on the

other hand that private entities cannot petition govern-

ment to participate in the public endeavor. There is no

such case as Parker v. Noerr/Pennington." Id. at 613.

Other courts have similarly declined to carve out a

“commercial” exception to Noerr / Pennington immunity.

See, e. g., Bristol-Myers, 77 F. Supp. 2d at 615 (“ If the

injury flows directly from a governmental action then

21 Significantly, the Fifth Circuit explicitly rejected the characteriza-

tion advanced by Santana in this case that its earlier holding in Woods

Exploration and Producing Co. v. Aluminum Co. of America, 438 F.2d

1286 (5th Cir.1971), cert. denied, 404 U.S. 1047, 92 S.Ct. 701, 30 L.Ed.2d

736 (1972), recognized a “commercial” exception to the Noerr / Pennington

doctrine. Greenwood, 751 F.2d at 1505 n. 14.

72a

there is no liability for the private party, notwithstand-

ing that the ‘commercial’ defendant urged the govern-

ment to take ‘commercial’ action.“); Bright uv. Ogden

City, 635 F.Supp. 31, 35 (D. Utah 1985); United States v.

Johns-Manville Corp., 259 F.Supp. 440, 452-53

(E.D.Pa.1966) (“[A]ny concerted activities.. to influ-

ence the decision of public officials on pipe specifications

are constitutionally protected and cannot be the basis of

a finding of violation of the antitrust laws regardless of

the intent with which they were undertaken.”) (citation

omitted).

The weight of the authority plainly preponderates

against recognition of a commercial exception to

Noerr/ Pennington immunity. Moreover, the rationale

for rejecting a commercial exception is consistent with

Supreme Court pronouncements and is convincing. It is

difficult to ascertain when a governmental actor is

acting solely in a commercial capacity. As Bobrick

points out, the specification decisions assailed here

implicate not only price, but also safety, calling, at least

arguably, for a policy decision. In addition, as the Ninth.

Circuit recognized in In re Airport Car Rental Antitrust

Litigation, decisions concerning implementation of

policy are just as important as the setting of policy, and

petitioning regarding such decisions is entitled to as

much protection as petitioning regarding strict policy

matters. 693 F.2d at 87-88. Moreover, determining

whether a decision was motivated solely by commercial

considerations becomes even more difficult when there

are literally hundreds of governmental decisionmakers.

Finally, courts would be called upon to deconstruct

government decisions in order to determine whether

improper conduct prompted those decisions, the type of

intrusion into state and local governmental affairs that

22 The Ninth Circuit's rejection of a commercial exception in In re

Airport Car Rental Antitrust Litigation undermines Santana’s reliance

upon that court's earlier decision in Sacramento Coca-Cola Bottling Co.

v. International Brotherhood of Teamsters, 440 F.2d 1096 (9th Cir.1971).

73a

Noerr/ Pennington is intended to avoid. As explained by

Judge Walls in Bristol-Myers:

Antitrust immunity is not destroyed by a commercial

relationship between the government and a private

actor. If that were so, courts would be called upon to

frustrate First Amendment rights whenever the

government stood to profit from its decisions... .

Without express declaration of Congress, the [commer-

cial] exception cannot swallow the reaching rule of

immunity....

77 F.Supp.2d at 615. Accordingly, Noerr/Pennington

immunity is not defeated in this case by the fact that

state and local governments were acting as product

purchasers.

3. There Is No “Fraud” Exception to

Noerr/Pennington Immunity

Santana asserts that, in any event, allegations that

Bobrick engaged in fraud in seeking to affect specifica-

tion decisions vitiates the Noerr / Pennington defense. In

support of this assertion, Santana relies upon Cheminor.

Contrary to Santana’s assertion, Cheminor did not

hold that misrepresentations undermine a Noerr/

Pennington defense. Indeed, the Third Circuit in

Cheminor “decline[d] to carve out a new exception to the

broad immunity that Noerr/ Pennington provides.” 168

F.3d at 123. Instead, Cheminor involved application of

the settled two-step test for determining whether the

“sham” exception to Noerr / Pennington immunity

applied. The first prong of this test requires the courts

to ascertain whether the position taken by the defendant

“is objectively meritless.” Id. at 122-23. If so, the court

is to ascertain whether the baseless petition was “ ‘an

attempt to interfere directly with the business relation-

ships of a competitor, through the use of governmental

process — as opposed to the outcome of that process as

an anticompetitive weapon.“ Jd. (quoting Prof Real

Estate Investors v. Columbia Pictures Indus., Inc., 508

U.S. 49, 63, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993)).

74a

Santana's discussion ignores the fact that Cheminor

concerned only the first prong of the “sham” exception.

Significantly, the Third Circuit in Armstrong, decided

subsequent to Cheminor, held that it is unnecessary to

determine whether the position advanced by the defen-

_ dant is objectively meritless where it is clear that the

defendant’s purpose was to obtain the outcome of the

process. 185 F.3d at 158 n. 2. In this case, there is no

dispute that the defendants were focused on the outcome

of their advertising campaign — to convince customers to

use their product. Thus, the sham exception, which is

limited to “situations in which persons use the govern-

mental process — as opposed to the outcome of that

process — as an anticompetitive weapon,” City of Colum-

bia, 499 U.S. at 380, 111 S.Ct. 1344, is not applicable

here.

Armstrong also held that the alleged misrepresenta-

tion made by the defendants in connection with the

Department of Health’s consideration of the plaintiff's

CON application did not undermine Noerr / Pennington

immunity. Citing City of Columbia, in which the

Supreme Court ruled that there is no exception to

Parker and Noerr/ Pennington immunity for conspiracies

between governmental and private actors, the Third

Circuit explained that “[lJiability for injuries caused by

[states acting as regulators] is precluded even where it

is alleged that a private party urging the action did so by

bribery, deceit or other wrongful conduct that may have

affected the decision making process.” 185 F.3d at 162.

The court explained that the remedy in such circum-

stances rests with other laws directed to that conduct,

and “not with courts looking behind sovereign state

action at the behest of antitrust plaintiffs.”

Armstrong compels rejection of Santana’s contention

that Noerr/ Pennington immunity is inapplicable where

the defendant’s otherwise protected activity is rife with

fraud. Noerr itself recognized that immunity applies

even though the defendants had employed deceptive and

75a

unethical means. 365 U.S. at 145, 81 S. Ct. 523. Thus,

defendants are entitled to Noerr / Pennington immunity,

at least to the extent that Santana seeks to recover

damages resulting from decisions by governmental

actors to specify phenolic toilet compartments or to

prohibit HDPE toilet partitions.

4. The Noerr/Pennington Doctrine Is Applica-

ble to Each of Santana’s Claims

This conclusion applies with equal force not only to

Santana’s antitrust claims, but also to its claims of

tortious interference with prospective contractual

relationships and violations of the Lanham Act. In

Cheminor, our Court of Appeals explicitly ruled that the

Noerr / Pennington doctrine extends to bar immunity on

common law tort claims of malicious prosecution,

tortious interference with contract, tortious interference

with prospective economic advantage, and unfair

competition. 168 F.3d at 128.

Santana does not contest the application of the

Noerr/ Pennington doctrine to its common law tort claim.

It does, however, argue that Noerr / Pennington does not

extend to its Lanham Act claim because commercial

speech may be regulated without abridging First

Amendment protections.

There is no Supreme Court or Third Circuit precedent

addressing the applicability of Noerr / Pennington

immunity to Lanham Act § 43a) claims. The Supreme

Court, however, has indicated that Noerr / Pennington is

applicable in contexts other than antitrust suits. See

Prof l Real Estate Investors, 508 U.S. at 58-59, 113 S.Ct.

1920. Our Court of Appeals, in addition to extending

Noerr to common law claims, has ruled that Noerr/

Pennington extends immunity to claims under 42 U.S.C.

§ 1983. See Herr v. Pequea Township, 274 F.3d 109,

115-18 (3d Cir.2001). Emphasizing that the principle

established by Noerr is intended to assure free flow of

information to government decisionmakers, our Court of

Appeals held that not only individuals, but also munici-

76a

palities, are entitled to immunity from liability arising

out of petitioning conduct. Jd. at 120. Other courts have

similarly extended Noerr/ Pennington immunity beyond

antitrust claims. For example, the Seventh Circuit has

held that the Noerr/Pennington doctrine precluded

liability under the Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C. §§ 1961, et seq., for alleged

fraud committed by cigarette manufacturers in seeking

to influence Congress to pass favorable legislation and

to defeat unfavorable bills. Int l Bhd. of Teamsters,

Local 734 Health & Welfare Trust Fund v. Philip Morris,

Inc., 196 F.3d 818, 826 (7th Cir.1999). é

The same rationale that has compelled courts to

extend Noerr/Pennington immunity beyond the anti-

trust context persuades me that Noerr/Pennington

should also extend to Lanham Act § 43(a) claims.

Exercise of the right to petition the government would

be restrained if immunity did not extend to Lanham Act

claims. Just as the antitrust laws were enacted to

regulate private business, so too was the Lanham Act.

Like the Sherman Act, the Lanham Act is intended to

control “business activity” and not “political activity.”

Thus, where, as here; the challenged conduct falls

within the First Amendment right to petition the

government, Noerr/Pennington immunity must extend

even to Lanham Act § 43(a) claims.“

23 None of the cases Santana cites for the proposition that commercial

speech may be regulated — Central Hudson Gas & Electric Corp. v. Public

Service Commission of New York, 447 U.S. 557, 100 S.Ct. 2343, 65

L.Ed.2d 341 (1980); National Society of Professional Engineers v. United

States, 435 U.S. 679, 98 S.Ct. 1355, 55 L.Ed.2d 637 (1978); and Bates v.

State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977)

involved any petitioning activity. Commercial speech in the petitioning

context adds an additional First Amendment concern not addressed by

the case law cited by Santana. Indeed, Santana’s argument appears to

be a roundabout way of finding a commercial exception to the Noerr/

Pennington doctrine. As noted above, courts have already held that

misrepresentations by the petitioner do not vitiate Noerr immunity.

Santana wants to except from this principle commercial speech. But if

unethical and deceitful conduct does not eliminate Noerr immunity, even

Extending Noerr / Pennington immunity to Lanham

Act claims furthers not only the interest in assuring

free-flowing information to government decisionmakers,

but also the interest in avoiding judicial deconstruction

of valid governmental decisions by public officials. See

Sessions, 17 F.3d at 302. Santana acknowledges that its

right to recover monetary damages is dependent upon

establishing “customer reliance” on the allegedly decep-

tive advertising. (Rev. Mem. in Support of Pl. S.J.

Mot./Lanham Act, Dkt. Entry 385, at 9.) Thus, the

factors that induced government decisionmakers would

be at issue in this litigation. Just as “the antitrust laws

are not intended to precipitate such deconstruction of

public decision-making . ., Sessions, 17 F.3d at 302,

80, too, should the Lanham Act be construed to avoid

intrusive examination of the motives of government

officials.

In conclusion, Bobrick is entitled to immunity on each

of Santana’s claims to the extent that Santana premises

liability on decisions by governmental actors. See

Pennington, 381 U.S. at 671, 85 S.Ct. 1585 (under the

Noerr doctrine, jury should have been instructed to

exclude any damages for injuries sustained as a result

of government decisions to curtail coal purchases

induced by defendants). Analysis of Santana’s claims

against Bobrick will, therefore, be restricted to injury

purportedly sustained as a result of private sector

conduct.

where the aim is to restrain competition, so too deceptive and misleading

commercial speech directed at government actors should not undermine

the protection otherwise afforded First Amendment petitioning activity,

at least in the absence of a clear congressional directive to the contrary.

To hold otherwise would create too large a loophole in Noerr immunity

as many of the petitions aimed at government could be characterized as

involving commercial speech.

24 Co-defendants Hornyak and Vogel also moved for summary

judgment on the basis of the Noerr/ Pennington doctrine. Both Hornyak

and Vogel presented evidence that their sales activity were directed

exclusively at public entities. Santana did not dispute this characteriza-

tion of the evidence. Indeed, Santana’s opposition brief does not address

78a

C. Affirmative Defenses Pertaining to the

Timeliness of the Filing of this Action

Bobrick has raised statute of limitations defenses to

each of the discrete claims asserted by Santana. In

addition, Bobrick contends that Santana's Lanham Act

claim should be dismissed under the doctrine of laches.

The timeliness of the Sherman Act, Lanham Act, and

tortious interference with prospective contractual

relations claims will each be addressed separately.

1. Timeliness of the Sherman Act Claims

A four-year statute of limitations governs claims

under the Sherman Act. See 15 U.S.C. § 15b. Santana

brought this action on October 1, 1996. The dispositive

question on Bobrick's statute of limitations defense is

whether Santana’s claims accrued prior to October 1,

1992.

“Generally, a cause of action [under the antitrust

laws] accrues and the statute begins to run when a

defendant commits an act that injures a plaintiffs

business.” Zenith Radio Corp. v. Hazeltine Research,

Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77

(1971). Contending that the alleged conspiracy was

created and acts in furtherance of the conspiracy were

taken before October 1, 1992, Bobrick maintains that

Santana’s claim under § 1 of the Sherman Act is

time-barred and Santana’s claim under § 2 of the

Sherman Act is barred to the extent it relates to actions

taken by Bobrick and others prior to October 1, 1992.

Santana counters by arguing that Bobrick’s conduct was

part of a continuing conspiracy to violate the antitrust _

laws, so that Santana is entitled to recover at least those

the applicability of the Noerr / Pennington doctrine to the alleged actions

of Hornyak and Vogel. Accordingly, Hornyak and Vogel are entitled to

entry of judgment in their favor on all claims solely on the basis of the

Noerr / Pennington defense. I will also address, however, other issues

raised by the parties that pertain to the potential liability of Hornyak

and Vogel.

79a

damages incurred within four years of the filing of this

lawsuit.

In Hanover Shoe, Inc. v. United Shoe Machinery Corp.,

392 U.S. 481, 502 n. 15, 88 S.Ct. 2224, 20 L.Ed.2d 1231

(1968), the Court held that, in the context of a continu-

ing violation of the Sherman Act, a plaintiff may recover

damages sustained within the limitations period. In

Zenith, the Court explained:

In the context of a continuing conspiracy to violate the

antitrust laws, .. each time a plaintiff is injured by

an act of the defendants a cause of action accrues to

him to recover the damages caused by that act and

that, as to those damages, the statute of limitations

runs from the commission of the act.

401 U.S. at 338, 91 S.Ct. 795. As further explained by

Justice Breyer in Klehr v. A.O. Smith Corp., 521 U.S.

179, 189, 117 S.Ct. 1984, 138 L.Ed.2d 373 (1997):

Antitrust law provides that, in the case of a ‘continu-

ing violation,’ say, a price-fixing conspiracy that

brings about a series of unlawfully high priced sales

over a period of years, ‘each overt act that is part of

the violation and that injures the plaintiff,’ e.g., each

sale to the plaintiff, ‘starts the statutory period

running again, regardless of the plaintiff's knowledge

of the alleged illegality at much earlier times.’ But

the commission of a separate new overt act generally

does not permit the plaintiff to recover for the injury

caused by old overt acts outside the limitations period.

[Citations omitted.]

Santana has presented evidence from which it may be

inferred that it sustained injury within four years of

filing this litigation by being unable to bid on buildin

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