Civ. A. No. 83-0045-C.
United States District Court, D. Massachusetts.
Nov. 27, 1984.
COUNSEL:
Charles Ray Weidman, Chatman, Mass., for plaintiff.
Samuel Hoar, Laura L. Carroll, Goodwin, Procter & Hoar, Boston, Mass., for Cape Cod 5 Cent Savings Bank and David B. Willard.
Albert P. Zabin, Schneider, Reilly, Zabin, Connolly & Costello, Boston, Mass., for Orleans Bd. of Trade & 90 other Persons as Members.
CAFFREY, Chief Judge.
This is a civil action brought pursuant to antitrust statutes, 15 U.S.C. ss 1-15, which includes a pendant state law claim for unfair business practices. M.G.L. c. 93A. The plaintiff, Isaac Manego, alleges that the defendants conspired to orchestrate the denial of license applications, thereby producing an adverse anticompetitive effect. The defendants are David Willard, The Cape Cod Five Cents Savings Bank ("Bank"), the Orleans Board of Trade ("Board of Trade"), and its members. At times relevant to the events complained of, defendant Willard was both the President of the Board of Trade and an officer of the Bank. The case is now before the court on defendants' motions for summary judgment. Fed.R.Civ.P. 56(b).
This case is the third round of litigation initiated by plaintiff relating to the denial of his application for entertainment and liquor licenses in the Town of Orleans, Massachusetts. In the first case, Manego v. Board of Selectmen of the Town of Orleans, C.A. No. 38824 ("Manego I "), the plaintiff sought a writ of mandamus from the Massachusetts Superior Court. Upon dismissal of that action, plaintiff instituted his second case, a civil rights action in this Court, Manego v. Cape Cod Five Cents Savings Bank, et al, C.A. No. 80-1406- MC (D.Mass. April 13, 1982) ("Manego II ") which terminated in summary judgment for the defendants. The Court of Appeals affirmed. Manego v. Cape Cod Five Cents Savings Bank, 692 F.2d 174 (1st Cir.1982).
In substance, the plaintiff's present complaint is based on and addresses the same events that were the subject of both the earlier cases. In early 1979, the Orleans Board of Selectmen denied the plaintiff's applications for the liquor and entertainment licenses necessary to operate a proposed disco. The plaintiff alleges that his application was denied as a result of a conspiracy among the defendants, including the Board of Trade, the Bank, and David Willard. The alleged purpose of the conspiracy was to allow the Bank, through a sham transaction, to offer similar entertainment at the nearby Lower Cape Sports Arena ("Arena") free of competition from Mr. Manego. Indeed, it is undisputed that an entertainment license was issued to the Arena after the denial of plaintiff's application.
Defendants Cape Cod Five Cents Savings Bank and David Willard were also defendants in Manego II. The Orleans Board of Trade was not named as a defendant in the earlier actions, and a reference to Willard's status as president of the Board was stricken from the complaint on defendant Bank's motion.
Defendants Willard and the Bank move for summary judgment on grounds that the plaintiff's action is barred under the doctrine of res judicata and on the grounds that the alleged conspiratorial acts are protected by the First Amendment.
Under the doctrine of res judicata [FN1] "a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Res judicata is a bar only where the subsequent case concerns the same cause of action or claim. E.g. Cromwell v. County of Sac, 94 U.S. 351, 4 Otto 351, 24 L.Ed. 195 (1876). With the adoption of the Federal Rules of Civil Procedure the concept of "cause of action" has broadened beyond that of a single legal issue narrowly drawn in a writ. See 18 J. Wright, Miller & Cooper, Federal Practice and Procedure s 4407 n. 20. The scope of preclusion has necessarily expanded with the definition of "claim" or "cause of action." Id.
The Court of Appeals for the First Circuit has articulated a position closer to the broad restatement view. [FN2] Isaac v. Schwartz, 706 F.2d 15 (1st Cir.1983), Lovely v. Liberte, 498 F.2d 1261 (1st Cir.1974). In Lovely, the Court of Appeals held that a state court action for possession barred a subsequent s 1983 action because the parties were the same and concerned the same "operative nucleus of fact." Id. at 1263. In Issac the Court went further in its analysis:
The plaintiff argues that because he did not learn of the Bank's plans until three days before summary judgment was granted, his action, based upon this new knowledge, is not barred. The plaintiff further argues that because a reference to Mr. Willard's status as president of the Board of Trade was stricken from the Manego II pleading on defendant Bank's motion, the antitrust issues could not have been raised in the earlier proceeding.
Despite the plaintiff's contentions it is apparent that the present case concerns the same transaction or nucleus of fact that was adjudicated in Manego II. The mere fact that plaintiff failed to discover the Bank's plans until shortly before a final judgment does not affect its preclusive effect. [FN3] A judgment bars all claims prior to its entry. Lawlor v. National Screen Service, 349 U.S. 322, 328, 75 S.Ct. 865, 868, 99 L.Ed. 1122 (1955). Given the discovery and amendment provisions of the Federal Rules of Civil Procedure, plaintiff certainly could have obtained the necessary evidence to litigate his alternate theory in the first proceeding. Finally, the addition of new defendants in a subsequent action does not affect the preclusive affect of the judgment as to the original parties. E.g. Scarpa v. Fair, C.A. No. 82-2333, slip op. at 7 (D.Mass. April 11, 1983).
The Board of Trade moves for summary judgment on the following grounds: that the doctrine of res judicata bars the present action, that there is no genuine issue of material fact relating to the allegations of conspiracy, and that the alleged conduct had no adverse effect on interstate commerce.
Because the Board of Trade was not a party to Manego II, claim preclusion principles do not bar the present action. Furthermore, those members of the Board of Trade who were parties to the prior action may not rely on claim preclusion insofar as they are presently named as defendants in a different capacity. 1B J. Moore, Moore's Federal Practice Para. 01411[3]. Issue preclusion, on the other hand, may bar relitigation of issues actually litigated and necessary to a prior judgment in a different cause of action, and may be asserted defensively by a stranger to the original action. Parklane Hosiery v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 91979). Accordingly, the Board of Trade argues that the plaintiff should be estopped from relitigating the issue of conspiracy, claiming that it was resolved in favor of the defendants in Manego II.
Even an express finding that there was no conspiracy among the defendants in Manego II would not bar the present case. Because the Board of Trade was not a party to the earlier action the existence of a conspiracy involving the Board was not before the Court. I rule, therefore, that the prior judgment has no preclusive effect on this aspect of the present case.
The defendant's claim that there is no genuine issue of material fact is inexorably tied to what is commonly known as the Noerr-Pennington doctrine. See Eastern Railroad Presidents Conference v. Noerr Motor Freight Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). Generally stated, this doctrine exempts, with certain exceptions, concerted attempts to influence the passage or enforcement of laws from the sweep of antitrust legislation regardless of anticompetitive intent.
On the face of plaintiff's complaint, it is apparent that the allegations which relate to the Board of Trade involve attempts to influence governmental entities. Therefore, Noerr-Pennington applies unless the activity falls within one of the exceptions to the doctrine.
The complaint sets forth the following allegations. David Willard, an employee of the Bank and President of the Board of Trade, enlisted the "conspiratorial aid and assistance" of the members of the Board to "conduct sham opposition" to Manego's applications. He was assisted in so doing by a majority of the Board of Selectmen acting as members of the Board of Trade, who also exerted pressure on members of the Board to block the plaintiff's plan to operate a disco in Orleans. The purpose of this plan was to assure that the plaintiff's proposed disco would not be in a position to compete with the Bank, which planned to offer similar entertainment at the arena near plaintiff's site. In January 1979, the Board of Trade, at a meeting chaired by Willard and attended by two of the three Orleans selectmen, unanimously voted to oppose the plaintiff's license applications. Subsequently, Willard reported this vote to the full Board of Selectmen during the January 11 hearing on plaintiff's license applications. Approximately 100 persons attended the meeting, many as a result of the defendants plan to oppose the applications.
The Board of Selectmen denied plaintiff's application for a liquor license on February 8, 1979, and on February 14, 1979 held a hearing on the amusement license application. After conducting a traffic study which was intended only as a spurious excuse for denying the application, the selectmen denied the amusement license application, unlawfully, on the basis "of noise and traffic considerations." The subsequent development of some twenty-five businesses in the area, plus the issuance of an entertainment license to the Bank's arena, attest to the spurious nature of the selectmen's reasons for denial. Furthermore, intersections in the area have been improved and upgraded to handle this increased traffic.
In support of motions for summary judgment, defendants have resubmitted the affidavits of Herbert Wilcox, chairman of the Board of Selectmen, David Willard, and Charles Darling, a salesman at Nickerson Lumber Company, as well as excerpts from depositions of Willard, the plaintiff, and Paul Thiebert. Although several of the affidavits were prepared for the earlier litigation in Manego I and Manego II, they are nevertheless pertinent to the issues in this case.
Herbert Wilcox states in his affidavit that he voted against the issuance of license because of the "likelihood of increased traffic hazards and noise pollution" and "gave some weight to the overwhelming sentiment of the citizens who [opposed the disco] and to the traffic committees report." As to the issuance of a similar license to the arena, Wilcox stated that the rink held a similar license previously which had not been renewed because of an oversight. He voted for issuance because of the rinks proven "benefits to the community" and because it had never caused inconvenience or concern.
Mr. Willard's affidavit states unequivocally that "I have never had, and, to my knowledge, no other Bank employee has had private conversations with any of the Selectmen concerning the proposed disco while Mr. Manego's applications ... were under consideration," and "Nor did I ... or the Bank conspire with Orleans officials to deny Mr. Manego the requested licenses [for] improper reasons."
Mr. Willard testified at deposition that two of the Selectmen were members of the Board of Trade, but did not recall if they were present at the meeting when the disco was discussed. He further testified that he did not urge members to attend the license hearing, and that he was, at the time, an officer of the Bank. A discussion was held as to the desirability of the disco, and all but two of the 70-75 persons present opposed the project. The next day, Willard attended the license hearing, and, as president of the Board of Trade, informed the selectmen of the vote.
Paul Thibert, who managed the rink for the Bank, testified at deposition that there was never any "discussion of any threat of competition [from Mr. Manego]" among the Bank or Board of Trade.
The substance of the materials offered by the defendants is that the selectmen denied the plaintiff's license applications for permissible reasons, that there were no private conversations between Willard and the Selectmen, and that there was no discussion between the Bank and Board of Trade regarding Mr. Manego's disco as a potential competitor. These are denials of conspiracy from a selectman, the President of the Board of Trade, and an Officer and an employee of the Bank.
In support of his allegations, the plaintiff has produced several affidavits, extracts from depositions, and other evidence. The supplementary affidavit of Roger Hurlich, a builder reaffirms his earlier affidavit to the effect that the Bank had pressured Nickerson Lumber Company not to sell building supplies to Manego for the proposed disco. Even if taken as true, this evidence is not probative as to any conspiracy involving the Board of Trade. In response to an interrogatory requesting facts to support the allegations of conspiracy, the plaintiff answered "The meetings of the Board of Trade with David Willard as President held in January, February and subsequently in 1979, as set forth in the minutes of said meetings, and as testified to in deposition by David Willard." These materials reveal only that meetings were held, that two selectmen may have attended, and that the disco project was discussed and voted upon. When asked at deposition for the basis of his allegations of a conspiracy involving the selectmen, the plaintiff responded that "any time the selectmen attend a meeting and they were a member of the board of trade, that was illegal. That's conspiracy." The plaintiff did testify that an unidentified person had told him that officials of the Bank, Board of Trade and Board of Selectmen had met to oppose the disco, but he does not know the mans name. When asked what the Board of Trade did that was wrong, he said, "it was wrong for them to come out against me in opening a business."
The materials under consideration must be evaluated in light of the particular requirements of the substantive law in this area, i.e. whether there is a genuine issue of material facts which would allow the plaintiff to recover under an exception to the Noerr-Pennington doctrine. The plaintiff contends that two exceptions apply: the so-called "sham" and "conspiracy" exceptions. The former, developed in a line of cases beginning with California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972), applies where a party seeks not to influence public officials, but to "bar their competitors from meaningful access to adjudicatory tribunals and so to usurp the decisionmaking process." Id. at 512, 92 S.Ct. at 612. Trucking Unlimited concerned a series of "baseless repetitive claims" designed "to discourage and ultimately to prevent the [plaintiffs] from invoking the processes of the administrative agencies and courts," Id. at 512, 92 S.Ct. at 612. Subsequent developments have held that this exception also applies to a single suit filed for an improper purpose, such as generating publicity unfavorable to a competitor. E.g. Energy Conservation v. Heliodyne, 698 F.2d 386 (9th Cir.1982). Activity disguised as petitioning which is simply an effort to interfere directly with a competitor is not protected under Noerr-Pennington. Clipper Express v. Rocky Mountain Motor Tariff Bureau, 690 F.2d 1240 (9th Cir.1982), cert. denied, 459 U.S. 1227, 103 S.Ct. 1234, 95 L.Ed.2d 468. Other types of activity which fall within the "sham" exception are misrepresentation, Israel v. Baxter Laboratories, Inc., 466 F.2d 272, 275-79 (D.C.Cir.1972); and threats or coercive measures to influence state officials, Sacramento Coca-Cola Bottling Co. v. Teamsters Local 150, 440 F.2d 1096 (9th Cir.), cert. denied, 404 U.S. 826, 92 S.Ct. 57, 30 L.Ed.2d 54 (1971). In order for the "sham" exception to apply:
The plaintiff points to a suit filed by the Bank in opposition to the Selectmen's grant of a Building permit to Mr. Monego as such a "sham" abuse of process. He offers no evidence, or even the promise of evidence, that this suit was anything other than protected activity. Even with all inferences drawn most favorably to the plaintiff, there is no indication of misconduct which would rise to the level necessary to invoke the "sham" exception to Noerr-Pennington. At the core of this deficiency is the plaintiff's failure to produce any evidence that the lawsuit was instituted for an unlawful purpose. The fact that the suit was subsequently, withdrawn after the Bank's purported sale of the arena does not support an inference that the object of the suit was unlawful. Moreover, the "sham" was allegedly perpetrated by the Bank, and not the Board of Trade. Therefore, absent evidence that the Board of Trade conspired with the Bank as to this allegedly "sham" suit, it is irrelevant to the issue of the Board's immunity under Noerr-Pennington. The plaintiff has not offered such evidence, nor has he even alleged that a conspiracy existed with regard to the suit.