On October 12, 2022, Justice Reed of the New York County Commercial Division issued a decision in CDx Diagnostics, Inc. v. Rutenberg, 2022 NY Slip Op. 51007(U), holding that counterclaims based on filing a complaint were barred by the Noerr-Pennington doctrine, explaining:
Rutenberg and Adenocyte bring four counterclaims against CDx and the individual defendants based solely on the fact that CDx filed a summons and complaint commencing this lawsuit: misappropriation of commercial advantage (first cause of action), abuse of process (third cause of action), conversion (sixth cause of action), and civil conspiracy (seventh cause of action). Because these counterclaims are based on the filing of a complaint in a court, which is protected petitioning activity under the First Amendment, they are barred under the Noerr-Pennington doctrine.
Under the Noerr-Pennington doctrine, citizens who petition the government for governmental action favorable to them cannot be prosecuted under the antitrust laws. Courts have been broad in their application of the doctrine, concluding that efforts to influence government as part of a broader scheme, or by the use of questionable or underhanded activity, are still immune from liability. Although the doctrine originated in the antitrust context, it is now broadly applied to protect the right under the First Amendment to petition the government for governmental action through litigation and activity incidental to litigation.
Accordingly, under the Noerr-Pennington doctrine, parties who petition the government for redress have First Amendment immunity from civil liability based on the petitioning activity. The First Department has expressly held that the Noerr—Pennington doctrine applies to common law tort claims.
The Noerr-Pennington doctrine applies in this case. The summons and complaint and amended complaint fall within the scope of petitioning activity. Moreover, the counterclaims and third-party claims for unfair competition/misappropriation, abuse of process, conversion, and civil conspiracy are targeted at the act of bringing this lawsuit.
The Noerr-Pennington doctrine precludes precisely what Rutenberg and Adenocyte attempt to do here: interfere with the act of filing a lawsuit, which is protected First Amendment activity, by bringing civil claims against the plaintiff, CDx, based on that act.
Accordingly, Rutenberg and Adenocyte’s claims for misappropriation, abuse of process, conversion, and civil conspiracy must be dismissed because they are predicated on the filing of CDx’s complaint, which is protected petitioning activity under the Noerr-Pennington doctrine.
. . . Rutenberg and Adenocyte argue the sham exception to the Noerr-Pennington doctrine applies to bar that doctrine.
The exception for sham petitions applies in situations in which persons use the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon. To establish the sham exception to the doctrine, petitioners must prove that respondents lacked a genuine interest in seeking governmental action and that their use of the litigation process in that quest was objectively baseless. The sham exception should be construed narrowly so as to avoid intrusion upon, or a chilling of, one’s right to petition under the First Amendment. The burden of proving the exception rests with the party attempting to invoke it.
Apart from repeatedly alleging that the CDx action is a sham lawsuit, Rutenberg and Adenocyte have failed to allege facts establishing the narrow sham exception to the Noerr-Pennington doctrine. Rutenberg and Adenocyte fail to show, as they must, that no reasonable litigant could realistically expect success on the merits of CDx’s declaratory judgment claim. The objective baselessness inquiry examines the legal viability of the request for government action. The existence of probable cause to institute legal proceedings precludes a finding that a defendant has engaged in sham litigation.
. . .
[O]n the face of the CTPC, this lawsuit is far from a sham. CDx has a stake in the outcome of this case, and it cannot plausibly be said that the claims are objectively baseless. Indeed, Rutenberg and Adenocyte have asserted their own declaratory judgment claim that mirrors CDx’s declaratory judgment claim. Because an objective litigant could readily conclude that the suit is reasonably calculated to elicit a favorable outcome, Rutenberg and Adenocyte’s claims are barred and must be dismissed.
(Internal quotations and citations omitted).