Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
COMPUTER AID, INC. v. HEWLETT-PACKARD CO.
June 15, 1999
COMPUTER AID, INC., AND COMPUTER AID, INC., TRADING AND D/B/A NEW CENTURY COMMUNICATIONS, PLAINTIFFS,
HEWLETT-PACKARD COMPANY, SYDNEY FLUCK, AND AM COMMUNICATIONS, INC., DEFENDANTS. HEWLETT-PACKARD COMPANY, PLAINTIFFS, V. COMPUTER AID, INC., AND COMPUTER AID, INC., TRADING AND D/B/A NEW CENTURY COMMUNICATIONS, AND ANDERSON KILL & OLICK, P.C., DEFENDANTS.
The opinion of the court was delivered by: Van Antwerpen, District Judge.
This case is before us on Motions for Summary Judgment. Case No.
96-CV-4150 was filed in this court by Plaintiffs Computer Aid, Inc. and
Computer Aid, Inc., Trading and d/b/a New Century Communications
(hereafter, "Computer Aid") on June 5, 1996. Computer Aid brought
multiple causes of action against Defendants Hewlett-Packard Company
(hereafter, "Hewlett-Packard") and one Sydney Fluck, an employee of
Hewlett-Packard. Two months later, on August 26, 1996, Hewlett-Packard
filed a separate suit in the Northern District of California seeking a
declaratory judgment that a number of the claims brought by Computer Aid
in the Pennsylvania suit (96-CV-4150) were invalid. This suit also
brought claims that Computer Aid and its attorneys, Anderson Kill &
Olick, P.C. (hereafter, "Anderson Kill"), had committed defamation and
related torts by issuing a Press Release which accompanied the initial
suit in Pennsylvania (hereafter, "Press Release"). This California action
was transferred to our court on December 3, 1996, pursuant to the first
to file doctrine. In accordance with the procedures of our court, this
case was given file No. 97-CV-0284 and was assigned to the same judge who
was handling the original case No. 96-CV-4150. Both cases were
consolidated by Order of this court on March 14, 1997.
In their Answer and Counterclaims filed January 27, 1997, in the
original action, No. 96-CV-4150, Hewlett-Packard and Sydney Fluck have
raised a series of
Counterclaims. Hewlett-Packard's Counterclaim Count V raises tort claims
of trade libel against Computer Aid and Anderson Kill. Hewlett-Packard's
Counterclaim Count VIII alleges a tort of injurious falsehood against
Computer Aid and Anderson Kill. Sydney Fluck raises claims of libel in
his Second Counterclaim Count and claims of injurious falsehood in his
Third Counterclaim Count. In addition. Hewlett-Packard alone in
Counterclaim counts VI, VII and IX alleges, respectively: the torts of
common law unfair competition, statutory unfair competition, and
interference with contract against Computer Aid. Anderson Kill filed
Motions on March 4. 1999 seeking summary judgment with regard to
Hewlett-Packard's Counterclaim Counts V and VIII and also with regard to
Sydney Fluck's Counterclaim Counts II and III. Computer Aid filed Motions
on March 19, 1999 seeking Summary Judgment with regard to
Hewlett-Packard's Counterclaim Counts V, VI, VII, VIII and IX and also
with regard to Sydney Fluck's Counterclaim Counts II and III.
The thrust of Computer Aid and Anderson Kill's arguments against the
Counterclaims of defamation and injurious falsehood is that their conduct
is protected under the Fair Report Privilege. Computer Aid and Anderson
Kill also argue that Hewlett-Packard and Sydney Fluck have failed to show
that Computer Aid and Anderson Kill acted with the "actual malice"
necessary if Hewlett-Packard and Sydney Fluck are either public figures
or limited purpose public figures. Computer Aid argues also that
Hewlett-Packard and Sydney Fluck have failed to make the requisite
showing of special damages to succeed on their respective injurious
falsehood claims. Additionally, Computer Aid argues that
Hewlett-Packard's Counts VI and VII, common law and statutory unfair
competition, must fail because they are unsubstantiated and seek improper
damages. Finally, the parties all agree that Hewlett-Packard has conceded
it has no valid interference with contract claim against Computer Aid as
set forth in Counterclaim Count IX.
We believe both Computer Aid and Anderson Kill should prevail on
summary judgment on Hewlett-Packard and Sydney Fluck's counterclaims for
injurious falsehood. Computer Aid is also entitled to partial summary
judgment on Hewlett-Packard's counterclaim for common law and statutory
unfair competition. However, as we must consider the facts in the light
most favorable to the non-moving party in summary judgment, we believe
neither Computer Aid nor Anderson Kill is entitled to summary judgment on
Hewlett-Packard and Sydney Fluck's defamation Counterclaims.
The underlying complaint centers on a failed relationship between
Computer Aid and Hewlett-Packard. On November 10, 1993 Computer Aid and
CaLan, a cable television testing and monitoring equipment manufacturer,
entered into an agreement to develop a product known as Galaxy
(hereafter, "Agreement"). Sydney Fluck was the president and chief
executive officer in addition to being the chairman of the board of
directors of CaLan at that time. CaLan merged with Hewlett-Packard on
July 8, 1994. As a result, Hewlett-Packard became legal successor to
CaLan's rights and obligations under the Agreement and Sydney Fluck
became a manager at Hewlett-Packard. Subsequently, Hewlett-Packard and
Computer Aid have been unable to agree on the scope of their respective
rights and obligations.
In the spring of 1996, Anderson Kill prepared a complaint on behalf of
Computer Aid against Hewlett-Packard, Sydney Fluck and a third party, AM
Communications ("AM"), which was subsequently dropped from the
Complaint. The complaint was filed with this court on June 5, 1996. About
the time the Complaint was filed, Anderson Kill issued a five-page Press
Release on its firm's letterhead discussing Computer Aid's claims against
Hewlett-Packard, Sydney Fluck and AM. A few copies of the Press Release
were sent out to members of the press the night before the Complaint was
filed. This Press Release is now at the heart of Hewlett-Packard and
Sydney Fluck' claims in the case before us.
As previously discussed, Hewlett-Packard responded to the Complaint and
filed the separate action in the Northern District of California which
was transferred to this Court and consolidated with the underlying
action. On January 27, 1997, Sydney Fluck also filed an Answer to the
Complaint and asserted its counterclaims, similar to those of
Hewlett-Packard against Computer Aid and Anderson Kill. Subsequent
amendments to the parties' filings address the underlying action and do
not affect the Counterclaims which are presently before us.
A. Summary Judgment Standard
The court shall render summary judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine issue of
material fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" only if there
is sufficient evidentiary basis on which a reasonable jury could find for
the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is
"material" only if it might affect the outcome of the suit under
governing law. Id. at 248, 106 S.Ct. 2505. All inferences must be drawn
and all doubts resolved in favor of the non-moving party. United States
v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962);
Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985), cert. denied,
474 U.S. 1010, 106 S.Ct. 537, 88 L.Ed.2d 467 (1985).
On motion for summary judgment, the moving party bears the initial
burden of identifying those portions of the record that it believes
demonstrate the absence of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To defeat
summary judgment, the non-moving party must respond with facts of record
that contradict the facts identified by the movant and may not rest on
mere denials. Id. at 321 n. 3, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 56
(e)); see also First Nat'l Bank of Pennsylvania v. Lincoln Nat'l Life
Ins. Co., 824 F.2d 277, 282 (3d Cir. 1987). The non-moving party must
demonstrate the existence of evidence that would support a jury finding
in its favor. See Anderson, 477 U.S. at 248-49, 106 S.Ct. 2505.
Computer Aid and Anderson Kill suggest that the summary judgment
standard that Hewlett-Packard and Sydney Fluck must overcome is
heightened by First Amendment, Sixth Amendment right to counsel, and Due
Process concerns. Computer Aid and Anderson Kill first argue because
Hewlett-Packard and Sydney Fluck are required to show actual malice, the
appropriate standard of review should
be whether the evidence in the record could support a reasonable jury
finding that Hewlett-Packard and Sydney Fluck have shown actual malice by
"clear and convincing evidence." Anderson, 477 U.S. at 255-56, 106 S.Ct.
2505. see also Tucker v. Fischbein, 1999 WL 124355 (E.D.Pa. 1999). This
is in contrast to the general review of summary judgement motions where
the non-moving party must demonstrate the existence of evidence
sufficient to support a jury finding in its favor. Anderson. 477 U.S. at
248-49, 106 S.Ct. 2505. The standard for such a jury finding is simply
"more likely than not" rather than a "clear and convincing" standard.
However, we find below that Hewlett-Packard and Sydney Fluck are not
required to show actual malice because neither Hewlett-Packard nor Sydney
Fluck are public figures. See, infra, Section II. D., Actual Malice.
Therefore, Hewlett-Packard and Sydney Fluck do not need to meet a
heightened summary judgment standard on this basis.
Computer Aid and Anderson Kill also argue that the facts in this case
are vulnerable to the chilling of discussion of litigation of public
interest, therefore summary judgment is particularly appropriate. see
St. Sorb v. Virgin Islands Daily News. Inc., 21 F.3d 1309, 1318 (3d Cir.
1994). While summary judgment may indeed be appropriate, the St. Surin
case does not provide a basis for raising the standard Hewlett-Packard
and Sydney Fluck must overcome to defeat Computer Aid and Anderson Kill's
Motions for Summary Judgment.
Computer Aid and Anderson Kill further argue that the facts in this
case point to the chilling of lawyers' vigorous representation of their
clients for fear of being sued, citing United States v. Hurt. 543 F.2d 162
(D.C.Cir. 1976). In the Hurt case. the D.C. Circuit acknowledged that
when an attorney is ordered to continue to represent a client on whose
behalf he has made statements and is then sued for defamation with
respect to such statements. a conflict of interest exists which violates
the client's sixth amendment right to effective counsel. We note that
Hurt was a criminal case in which the defendant was appointed counsel. In
the case before us, we have not ordered Anderson Kill to continue to
represent Computer Aid in its civil matter.
We acknowledge that, in theory, some danger of chilling public
discussion and lawyer's vigorous representation of their client exists.
However, we do not believe that the facts of this case warrant deviating
from the general summary judgment standard.
Federal district courts generally apply the choice of law rules of the
state in which they are situated. Carrick v. Zurich-American Ins. Group,
14 F.3d 907 (3d Cir. 1994). However, when a case has been transferred
from a federal court for reasons other than lack of jurisdiction or
venue, the transferee court generally applies the choice-of-law rules for
the state in which the transferring court sits. McFadden v. Burton,
645 F. Supp. 457, 460 (E.D.Pa. 1986) (citing Van Dusen v. Barrack,
376 U.S. 612, 638-39, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). As noted,
Hewlett-Packard originated its present counterclaims as the California
Action, which was transferred to this court.
Computer Aid and Anderson Kill argue and Hewlett-Packard and Sydney
Fluck do not challenge that upon transfer the court should apply the
choice-of-law rules of the transferring state. see Tucker Anthony, Inc.
v. Bankers Trust Co., 1994 WL 9683 *1, *10 (S.D.N.Y. 1994). We have
doubts about this because Case No. 96-CV-4150 was filed in our court.
Nevertheless in an abundance of caution, we will apply California's