Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02728/USCOURTS-caed-2_04-cv-02728-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Default

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

MERIDIAN PROJECT SYSTEMS,

INC.,

Plaintiff,

v. NO. CIV. S-04-2728 FCD DAD

MEMORANDUM AND ORDER

HARDIN CONSTRUCTION COMPANY,

LLC, and COMPUTER METHODS

INTERNATION CORP., 

Defendants.

___________________________/

COMPUTER METHODS INTERNATION

CORP., and HARDIN CONSTRUCTION

COMPANY, LLC, 

Counterclaimants,

v.

MERIDIAN PROJECT SYSTEMS,

INC., and JAMES OLSEN, JOHN

BODROZIC, and MIKE CARRINGTON,

Counterdefendants.

_____________________________/

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1 Because oral argument will not be of material

assistance, the court orders the matter submitted on the briefs. 

E.D. Cal. L. R. 78-230(h).

2 The four counterdefendants are referred to herein

collectively as “counterdefendants.”

3 Defendant and counterclaimant Hardin is not a party to

the Second through Fourth Counterclaims and has not filed a

response to counterdefendants’ motion to dismiss.

2

----oo0oo----

This matter is before the court on motion to dismiss,

pursuant to Fed. R. Civ. P. 12(b)(6), filed by plaintiff and

counterdefendant Meridian Project Systems, Inc. (“Meridian”), and

counterdefendants James Olsen (“Olsen”), John Bodrozic

(“Bodrozic”), and Mike Carrington (“Carrington”).1,

2 Defendant

and countercomplainant, Computer Methods International Corp.

(“CMIC”), opposes the motion.3

BACKGROUND

Meridian is a software company that provides project

management software for large real estate projects and other

capital-intensive construction initiatives. (First Amended

Complaint (“FAC”) ¶ 9.) Meridian’s “flagship” product is Prolog

Manager (“Prolog”), a project management software package that

automates all aspects of the construction process, from project

design to closeout. (FAC ¶ 9.)

Defendant Hardin Construction Company, LLC (“Hardin”) is a

large construction company in Georgia and long-time customer of

Meridian for its Prolog product. (FAC ¶ 11.) Defendant CMIC is

a software company based in Canada that provides software

products and software consulting. (FAC ¶ 14.) 

Meridian alleges that, beginning in late 2000 or early 2001,

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3

Hardin and CMIC initiated a scheme to reverse engineer Prolog for

the purpose of developing a competing project management software

solution that CMIC could combine with its existing financial and

operational software. (FAC ¶ 16.) As part of this scheme, CMIC

allegedly sent a programmer to Hardin’s facilities on numerous

occasions to view screen shots of Prolog, and then reverse

engineered and analyzed the functions, features, screens,

architecture, logic and operation of Prolog, in violation of

Meridian’s standard End User License Agreement. (FAC ¶ 16.) 

Hardin and CMIC allegedly thereby developed a competing project

management software product, called CMIC Projects, that has the

same overall look and feel as Prolog, and among other

similarities, copies many of the features and functions of

Prolog. (FAC ¶ 17.) Meridian alleges that Hardin and CMIC now

are targeting Meridian customers to induce them to switch from

Prolog to CMIC Projects. (FAC ¶ 18.)

On November 29, 2004, Meridian filed a complaint against

CMIC and Hardin in the Superior Court of Sacramento County. CMIC

and Hardin subsequently removed the action to this court. The

original complaint asserted seven causes of action for breach of

contract against CMIC, breach of contract against Hardin, breach

of the implied covenant of good faith and fair dealing, fraud,

interference with contractual relations, intentional interference

with prospective economic advantage, and unfair competition. 

(FAC ¶¶ 20-58.) On January 14, 2005, counterdefendants filed the

First Amended Complaint, which added an eighth claim, for

copyright infringement, to the seven claims asserted in the

original complaint. (FAC ¶¶ 59-68.) 

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4

On February 3, 2005, CMIC and Hardin filed an “Answer and

Counterclaims”, which added three Meridian officers, Olsen,

Bodrozic and Carrington, as parties to the lawsuit. The next

day, CMIC and Hardin filed an “Amended Answer and Counterclaims.”

On February 28, 2005, Meridian moved to dismiss the counterclaims

in the Amended Answer and Counterclaims. In response, CMIC and

Hardin filed the operative “Second Amended Answer and

Counterclaims” (“SACC”) on March 11, 2005. 

In the SACC, Hardin and CMIC deny that they infringed

Meridian’s copyright or created a derivative work of any of

Meridian’s products. (SACC ¶ 97.) In addition, Hardin and CMIC

jointly assert a counterclaim for declaratory judgment under 28

U.S.C. §§ 2201 and 2202 as to the extent of Meridian’s rights

under the Copyright Act, and that defendants did not infringe the

copyright (“First Counterclaim”). CMIC individually asserts

three counterclaims, for attempted monopolization, interference

with prospective economic advantage, and unfair competition under

California Business & Professions Code § 17200 et seq. (“Second,

Third, and Fourth Counterclaim,” respectively) (SACC ¶¶ 99-113.) 

The Second through Fourth Counterclaims are based on the

following allegations: Meridian invited CMIC’s potential

customers to a meeting on November 30, 2004 in Chicago, Illinois. 

(SACC ¶¶ 103-104.) Present at the meeting were Bodrozic,

Meridian’s President, and Carrington, Meridian’s Senior Vice

President for Global Sales. (SACC ¶ 104.) At the meeting,

Bodrozic allegedly notified the potential customers of Meridian’s

lawsuit against CMIC and Hardin, stated that CMIC had infringed

Meridian’s copyright, and impliedly threatened the customers with

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4 All further references to the “Rules” are to the

Federal Rules of Civil Procedure, unless otherwise noted.

5

copyright infringement lawsuits if they purchased software from

CMIC. (SACC ¶ 104.) 

On April 1, 2005, counterdefendants filed the instant motion

to dismiss the Second through Fourth Counterclaims. 

Counterdefendants contend that all three counterclaims fail to

meet the applicable pleading requirement in Federal Rule of Civil

Procedure 9(b)4; the three counterclaims are barred by the

Noerr-Pennington Doctrine; the state law claims are barred by the

litigation privilege in California Civil Code § 47(b); CMIC fails

to plead the necessary elements of the attempted monopolization

claim; the unfair competition claim fails because it is based on

conduct outside of California; and CMIC fails to state a claim

against counterdefendants Olsen and Carrington. For the reasons

stated herein, counterdefendants’ motion is GRANTED in part and

DENIED in part. 

STANDARD

On a motion to dismiss, the allegations of the complaint

must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322

(1972). The court is bound to give plaintiff the benefit of

every reasonable inference to be drawn from the “well-pleaded”

allegations of the complaint. Retail Clerks Int'l Ass'n v.

Schermerhorn, 373 U.S. 746, 753 n.6 (1963). Thus, the plaintiff

need not necessarily plead a particular fact if that fact is a

reasonable inference from facts properly alleged. See id. 

Given that the complaint is construed favorably to the

pleader, the court may not dismiss the complaint for failure to

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6

state a claim unless it appears beyond a doubt that the plaintiff

can prove no set of facts in support of the claim which would

entitle him or her to relief. Conley v. Gibson, 355 U.S. 41, 45

(1957); NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.

1986).

Nevertheless, it is inappropriate to assume that plaintiff

“can prove facts which it has not alleged or that the defendants

have violated the . . . laws in ways that have not been alleged.” 

Associated Gen. Contractors of Cal., Inc. v. Cal. State Council

of Carpenters, 459 U.S. 519, 526 (1983). Moreover, the court

“need not assume the truth of legal conclusions cast in the form

of factual allegations.” United States ex rel. Chunie v.

Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986).

In ruling upon a motion to dismiss, the court may consider

only the complaint, any exhibits thereto, and matters which may

be judicially noticed pursuant to Federal Rule of Evidence 201. 

See Mir v. Little Co. Of Mary Hosp., 844 F.2d 646, 649 (9th Cir.

1988); Isuzu Motors Ltd. v. Consumers Union of United States,

Inc., 12 F. Supp. 2d 1035, 1042 (C.D. Cal. 1998).

ANALYSIS

I. Rule 9(b)

Counterdefendants contend that the court should apply Rule

9(b)’s heightened pleading requirement because the Second through

Fourth Counterclaims sound in fraud. Rule 9(b) provides: “In all

averments of fraud or mistake, the circumstances constituting

fraud or mistake shall be stated with particularity. Malice,

intent, knowledge, and other condition of mind of a person may be

averred generally.” Fed. R. Civ. P. 9(b). It is well-settled in

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5 See also Glenn Holly Entm’t, Inc. v. Tektronix, Inc.,

100 F. Supp. 2d 1086, 1093 (C.D. Cal. 1999) (“Claims for fraud

and negligent misrepresentation must meet the heightened pleading

requirements of Rule 9(b).”); U.S. Concord, Inc. v. Harris

Graphics Corp., 757 F. Supp. 1053, 1058 (N.D. Cal. 1991)

(“Defendant further asserts that the negligent misrepresentation

claim fails to satisfy Rule 9(b)’s particularity requirements. 

The point is well-taken. Since the claim is based upon the same

flawed allegations of misrepresentation as the fraud count, it,

too, fails for lack of specificity.”). 

7

the Ninth Circuit that misrepresentation claims are a species of

fraud, which must meet Rule 9(b)’s particularity requirement. 

Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1141

(C.D. Cal. 2003).5 Averments of fraud must be accompanied by

“the who, what, when, where, and how” of the misconduct charged

in the complaint. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,

1106 (9th Cir. 2003) (citations omitted). However, only

allegations of fraud must be pled with particularity; allegations

of non-fraudulent conduct can be pleaded generally. Vess, 317

F.3d at 1104. An inadequate averment of fraud does not

necessarily mean that no claim has been stated. Id. “The proper

route is to disregard the averments of fraud not meeting Rule

9(b)’s standard and then ask whether a claim has been stated.” 

Id. at 1105 (quoting Lone Star Ladies Inv. Club v. Schlotsky’s

Inc., 238 F.3d 363, 268 (5th Cir. 2001)). 

Here, CMIC’s Second through Fourth Counterclaims are based

on the common allegations that counterdefendants intentionally

misrepresented to CMIC’s prospective customers that CMIC had

infringed Meridian’s copyright, in order to dissuade the

customers from purchasing CMIC’s software products. The SACC

further alleges that the acts were committed “with malice, fraud

and oppression.” (SACC at 14.) While fraud is not an element of

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8

any claim asserted by CMIC, nonetheless CMIC has alleged that

counterdefendants engaged in fraudulent conduct – the allegedly

false statement that CMIC violated Meridian’s copyright. Thus,

the court will apply Rule 9(b) to CMIC’s allegations that

counterdefendants made intentional misrepresentations. See Vess,

317 F.3d at 1103-1104 (finding that, even where fraud is not a

necessary element of a claim, where plaintiff alleges that the

defendant engaged in some fraudulent and some non-fraudulent

conduct, the allegations of fraud are subject to Rule 9(b)).

Applying Rule 9(b), the court finds that the allegations of

false statements made by Bodrozic at the November 30, 2004

meeting, contained in paragraphs 102 through 106 of the SACC,

satisfy Rule 9(b)’s pleading standard because they describe the

who, what, where when and how of the alleged misrepresentations. 

Vess, 317 F.3d at 1106. Moreover, contrary to counterdefendants’

contention, the SACC explains why the statements were false. 

Specifically, the SACC alleges that “defendants have not

infringed Meridian’s copyrights, have not created a derivative

work of any of Meridian’s works, and have not otherwise violated

Meridian’s rights.” (SACC ¶ 98.) 

However, the SACC also contains allegations regarding

additional misrepresentations that do not satisfy Rule 9(b). 

Specifically, paragraph 107 of the SACC provides that “on

information and belief, Meridian, Olsen, Bodrozic and Carrington

have made similar statements to other potential customers of

CMIC.” These allegations do not describe when, where or to whom

the misrepresentations were made, or provide any other details

that would afford counterdefendants an opportunity to rebut the

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9

charges. Thus, these general allegations of misconduct are

stricken from the SACC and will be disregarded when determining

whether CMIC’s Second through Fourth Counterclaims state a claim

for relief. Vess, 317 F.3d 1105. 

II. Noerr-Pennington Doctrine

Counterdefendants contend that the Second through Fourth

Counterclaims must be dismissed because Meridian’s filing of the

lawsuit is entitled to Noerr-Pennington immunity. 

The Noerr-Pennington doctrine provides broad antitrust

protection for those who “petition the government for a redress

of grievances.” City of Columbia v. Omni Outdoor Adver., Inc.,

499 U.S. 365, 379 (1991) (quoting U.S. Const., amend. I). This

protection extends to lobbying both the executive and legislative

branches, E. R.R. Presidents Conf. v. Noerr Motor Freight Ins.,

365 U.S. 127, 137-38 (1961), and to petitioning of administrative

agencies and courts, Cal. Motor Transp. Co. v. Trucking

Unlimited, 404 U.S. 508, 510 (1972). 

However, where a party engages in “sham” petitioning, NoerrPennington immunity does not apply. USS-POSCO Indus. v. Contra

Costa County Bldg. & Constr. Trades Council, 31 F.3d 800, 810

(9th Cir. 1994). The “sham” litigation exception exempts from

Noerr-Pennington immunity activity “ostensibly directed toward

influencing governmental action” that “is a mere sham to cover

. . . an attempt to interfere directly with the business

relationships of a competitor.” Noerr, 365 U.S. at 144. The

“sham” exception encompasses situations in which persons use the

governmental process — as opposed to the outcome of the process —

as an anti-competitive weapon. Id. In this Circuit, if the

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6 CMIC contends that the Ninth Circuit cases recognizing

a heightened pleading standard in Noerr-Pennington cases are “not

good law” in light of the Supreme Court’s decisions in 

Leatherman v. Tarrant County Narcotics Intelligence Coordination

Unit, 507 U.S. 163, 169 (1993)(no heightened pleading requirement

in constitutional tort cases against municipalities), and

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513 (2002)(no

heightened pleading for claims under Title VII of the Civil

Rights Act). (CMIC’s Mem. Opp’n Mot. Dismiss at 8.) However,

the Ninth Circuit continued to employ a heightened pleading

requirement in Noerr-Pennington cases well after Leatherman was

decided. See Kottle v. Northwest Kidney Centers, 146 F.3d 1056

(9th Cir. 1998); Flowers v. Carville, 310 F.3d 1118, 1131 (9th

Cir. 2002) (applying heightened pleading requirement, but noting

potential conflict with Supreme Court cases declining to afford

special procedural protections in other First Amendment contexts)

(citing Calder v. Jones, 465 U.S. 783, 790-91 (1984)). Thus, the

court finds that heightened pleading in Noerr-Pennington cases is

still required in this Circuit. 

10

alleged anti-competitive behavior consists of bringing a sham

lawsuit, “the antitrust plaintiff must demonstrate that the

lawsuit was (1) objectively baseless, and (2) a concealed attempt

to interfere with the plaintiff’s business relationships.” 

Freeman v. Lasky, Haas & Cohler, No. 03-56588, 2005 WL 1389122,

at *2 (9th Cir. June 14, 2005).

In claims involving the “right to petition governmental

bodies under Noerr-Pennington” a “heightened pleading standard”

is applied, requiring the plaintiff to “satisfy more than the

usual 12(b)(6) standard.”6 Or. Natural Res. Council v. Mohla,

944 F.2d 531, 533 (9th Cir. 1991). Under this standard, the

complaint will be dismissed unless it includes allegations of

“specific activities which bring the defendant’s conduct” into

one of the Noerr-Pennington exceptions. Id. (citing Franchise

Realty Interstate Corp. v. S.F. Local Joint Exec. Bd. of Culinary

Workers,542 F.2d 1076, 1082 (9th Cir. 1976) (internal quotation

marks omitted).

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Counterdefendants contend that, under Rule 9(b) and the

Noerr-Pennington heightened pleading standard, CMIC’s allegations

are insufficient to bring Meridian’s conduct within the sham

exception, because the allegations are mere legal conclusions

that the copyright claim is “objectively baseless.” Because CMIC

alleges that both Meridian’s filing of the complaint and the

false statements to CMIC’s prospective customers fall within the

sham exception, the court will analyze each separately. 

A. Filing of the Complaint

Initially, the court notes that CMIC’s allegations regarding

Meridian’s filing of the complaint implicate both Rule 9(b) and

Noerr-Pennington’s heightened pleading standard. Thus, in

addition to providing the “who, what, where, when and how” of the

misconduct, the SACC must contain allegations regarding the

“specific activities which bring the defendant’s conduct” into

one of the Noerr-Pennington exceptions. Mohla, 944 F.2d at 533. 

In the SACC, CMIC alleges that Meridian filed its complaint

despite the fact that the copyright claim was “objectively

baseless and that Meridian and its officers “knew and know that

its claim is objectively baseless.” (SACC ¶ 100.) CMIC further

alleges that Meridian brought this action for the purpose of

interfering with CMIC’s business rather than the purpose of

obtaining the relief requested.” (SACC ¶ 101.) The flaw with

CMIC’s allegations is not their specificity. To the contrary, as

to the copyright claim, CMIC’s allegations appear to satisfy both

Rule 9(b) and the Noerr-Pennington heightened pleading

requirement because they provide specific detail regarding the

alleged misconduct: Meridian asserting a claim it knew was

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7 This would be true even if the court were applying Rule

8(a)’s notice pleading standard. 

12

objectively baseless. However, to fall within the sham

exception, Meridian’s filing of the lawsuit must be objectively

baseless. Freeman, 2005 WL 1389122, at *2 (requiring the

antitrust plaintiff that the lawsuit was objectively baseless). 

Meridian’s complaint contains seven other claims, which CMIC does

not allege are baseless. Because CMIC makes no allegation that

these seven claims lack merit, the court cannot say Meridian’s

complaint as a whole is objectively baseless. Thus, CMIC’s

allegation that a single claim is objectively baseless does not

bring Meridian’s filing of the entire complaint within the sham

exception.7 

B. Communications with CMIC’s Prospective Customers

CMIC’s Second through Fourth Counterclaims also are

predicated on the alleged misrepresentations to CMIC’s customers

at the November 30, 2004 meeting in Chicago, Illinois. Because

the pertinent allegations describe fraudulent conduct, they must

satisfy Rule 9(b) and Noerr-Pennington’s heightened pleading

requirement. However, the court previously found that these

allegations satisfy Rule 9(b), see section I, supra, and for the

same reasons, they satisfy Noerr-Pennington’s heightened pleading

requirements. Thus, the sole remaining question is whether the

conduct alleged falls within the sham exception to NoerrPennington immunity. 

Where applicable, the Noerr-Pennington doctrine extends

immunity not only to the actual proceedings but to conduct

incidental to prosecution of the suit. Freeman, 2005 WL 1389122,

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8 See also Globetrotter Software, Inc. v. Elan Computer

Group, Inc., 362 F.3d 1367, 1376 (Fed. Cir. 2004); Primetime 24

Joint Venture v. Nat'l Broad. Co., 219 F.3d 92, 100 (2d Cir.

2000); A.D. Bedell Wholesale Co. v. Philip Morris Inc., 263 F.3d

239, 252-53 (3d Cir. 2001); McGuire Oil Co. v. Mapco, Inc., 958

F.2d 1552, 1560 (11th Cir. 1992). But cf. Cardtoons, L.C. v.

Major League Baseball Players Ass'n, 208 F.3d 885, 890-91 (10th

Cir. 2000) (refusing to apply Coastal States outside of the

antitrust context).

13

at *2 (holding that “conduct incidental to a petition is

protected by Noerr-Pennington if the petition itself is

protected.”). Most courts to address the issue have concluded

that pre-litigation communications among parties are incidental

to the suit and thus immune under Noerr-Pennington.

Given that petitioning immunity protects joint

litigation, it would be absurd to hold that it does not

protect those acts reasonably and normally attendant

upon effective litigation. The litigator should not be

protected only when he strikes without warning. If

litigation is in good faith, a token of that sincerity

is a warning that it will be commenced and a possible

effort to compromise the dispute.

Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358, 1367 (5th Cir.

1983).8 

Most courts have further extended Noerr-Pennington immunity

to protect a party’s communications with an opponent’s customers

when the communications are good faith acts attendant to

effective litigation. See Alexander v. National Farmers

Organization, 687 F.2d 1173, 1200-01 (8th Cir. 1982) (noting that

“[t]here may be circumstances in which actions against a

competitor's customers are in good faith” but finding conduct in

that case was clearly attempt to drive away competitor’s

customers); Barq's Inc. v. Barq's Beverages, Inc., 677 F. Supp.

449 (E.D. La. 1987) (finding letters to suppliers and demand

letters which preceded filing the lawsuit were protected under

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9 CMIC’s argues that the litigation privilege does not

apply because counterdefendants’ false statements to CMIC’s

(continued...)

14

Noerr-Pennington where litigation was filed in good faith). 

But cf. Oahu Gas Serv., Inc. v. Pac. Res., Inc., 460 F. Supp.

1359, 1386 (D. Haw. 1978) (finding that alleged threats of

lawsuits against potential customers for the purpose of

foreclosing competition, if proven, would not be protected by the

Noerr-Pennington privilege). 

Here, CMIC alleges that counterdefendants’ communications

with CMIC’s prospective customers were made “with the wrongful

intent of disrupting CMIC’s relationship with prospective

customers.” (SACC ¶¶ 120-22.) Such communications are not “good

faith acts attendant to effective litigation.” Alexander, 687

F.2d at 1200-1201. Thus, accepting CMIC’s allegation as true for

purposes of this motion, counterdefendants’ contacts with CMIC’s

prospective customers are not entitled to Noerr-Pennington

protection. 

Accordingly, Meridian’s motion to dismiss the Second through

Fourth Counterclaims on the basis of Noerr-Pennington immunity is

GRANTED as to the filing of the complaint and DENIED in all other

respects.

III. California Civil Code § 47(b)

Counterdefendants next contend that CMIC’s state law claims,

for interference with prospective economic advantage and unfair

business practices, must be dismissed because counterdefendants’

conduct is entitled to absolute privilege under California Civil

Code § 47(b).9

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9(...continued)

customers fall outside of the privilege. Because CMIC’s argument

is predicated on its allegations of fraud, Rule 9(b) applies. 

However, as noted in Section I, supra, the court previously found

that these allegations satisfy Rule 9(b). 

15

California Civil Code § 47(b) bars tort liability for

statements made in legislative, judicial, or other official

proceedings. Cal. Civ. Code § 47(b). The privilege is absolute,

and bars all tort causes of action, except a claim for malicious

prosecution. Hagberg v. Cal. Fed. Bank, FSB, 32 Cal. 4th 350,

361 (2004). The purpose of § 47(b) is to “assure utmost freedom

of communication between citizens and public authorities.” Id.

(quoting Silberg v. Anderson, 50 Cal. 3d 205, 213 (1990)). 

In the context of judicial proceedings, the § 47(b)

privilege applies to “any communication (1) made in judicial or

quasi-judicial proceedings; (2) by litigants or other

participants authorized by law; (3) to achieve the objects of the

litigation; and (4) that have some connection or logical relation

to the action.” Rubin v. Green, 4 Cal. 4th 1187, 1193-96 (1993);

Moore v. Conliffe, 7 Cal. 4th 634, 640-41, (1994); Jeffrey H. v.

Imai, Tadlock & Keeney, 85 Cal. App. 4th 345, 355-356 (2000). 

The requirement that the communication be made in judicial or

quasi-judicial proceedings does not limit the privilege to

statements made in the courtroom and in pleadings. Rather, the

privilege protects “any publication required or permitted by law

in the course of a judicial proceeding to achieve the objects of

the litigation . . ..” Hagberg, 32 Cal. 4th at 361 (quoting

Silberg, 50 Cal. 3d at 212). 

Here, CMIC alleges that counterdefendants’ November 30, 2004

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10 Counterdefendants invoke yet another heightened

pleading requirement, arguing that, in complex antitrust cases,

the court retains discretion to “insist upon some specificity in

the pleading before allowing a potentially massive factual

controversy to proceed.” (Mem. in Supp. Mot. Dismiss at 13

[citing Associated Gen. Contractors of Cal., Inc. v. Cal. State

Council of Carpenters, 459 U.S. 519, 526 n.17 (1983)].) CMIC

responds that there is no heightened pleading requirement in

antitrust cases. (CMIC’s Mem. in Opp’n Mot. Dismiss at 12.) The

court need not determine whether the cases recognizing this

(continued...)

16

meeting with CMIC’s customers was not a good faith effort to

forestall litigation, but merely an effort to discourage the

customers from purchasing CMIC’s product. (SACC ¶ 106.) Such

anti-competitive conduct would not be privileged under § 47(b). 

Because the court accepts the allegations as true for purposes of

deciding a motion to dismiss, counterdefefendants’ motion to

dismiss the Third and Fourth Counterclaims on the basis of §

47(b) privilege is DENIED. 

IV. Attempted Monopolization Claim

According to counterdefefendants, the court must dismiss

CMIC’s attempted monopolization claim because CMIC does not

sufficiently allege the elements of a claim for attempted

monopolization. Those elements are (1) specific intent to

control prices or destroy competition, (2) predatory or anticompetitive conduct directed at accomplishing that purpose, (3) a

dangerous probability of achieving ‘monopoly power’, and (4)

causal antitrust injury. Rebel Oil Co. v. Atl. Richfield Co., 51

F.3d 1421, 1433 (9th Cir. 1995). Specifically, counterdefendants

contend that CMIC does not sufficiently allege the elements of

dangerous probability of achieving monopoly power and causal

antitrust injury.10

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10(...continued)

pleading requirement are still good law because the court finds

that CMIC’s single antitrust claim, based on a meeting at which

Meridian’s agents allegedly attempted to stifle competition, is

not so complex as to require more specific pleading. 

11 Because the court finds that CMIC’s pleading does not

sufficiently allege dangerous probability of achieving monopoly

power, it need not determine whether CMIC sufficiently alleges

the element of causal antitrust injury. 

17

A. Dangerous Probability of Achieving Monopoly Power

First, Meridian contends that CMIC has failed to allege that

Meridian had a dangerous probability of achieving monopoly power. 

Rule 8(a)’s notice pleading applies to this element because it

does not incorporate allegations of misrepresentation. 

Here, the SACC states only that “[c]ounterdefendants’ acts

create a dangerous probability of Meridian achieving monopoly

power in the relevant market which is the market for project

management software for architects, engineers, and contractors in

the United States and Canada.” (SACC ¶ 110.) While CMIC does

define the relevant market, it provides no facts from which this

court can infer that Meridian’s conduct created a dangerous

probability of it achieving market power. The bare legal

conclusion to that effect is insufficient to satisfy even Rule

8(a)’s liberal pleading standard.11 See Chunie, 788 F.2d at 643

n.2 (finding that the court “need not assume the truth of legal

conclusions cast in the form of factual allegations.”); see also

Eon Labs Mfg., Inc. v. Watson Pharms., Inc., 164 F. Supp. 2d 350,

360 n.12 (S.D.N.Y. 2001) (finding that the “complaint must at

least outline the contours of the monopolization claim,” and

absence of circumstances to support inference of monopoly power

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12 CMIC attempts to distinguish these cases on the ground

that they involved monopolization claims, not attempted

monopolization claims. However, the principle that the court

need not accept as true legal conclusions cast as factual

allegations, applies equally to attempted monopolization claims.

See Chunie, 788 F.2d at 643 n.2.

18

violates even the permissive reading required on a 12(b)(6)

motion); Endsley v. City of Chicago, 230 F.3d 276, 282 (7th Cir.

2000)(noting that “where plaintiff’s fail to identify any facts

from which the court can ‘infer that defendants had sufficient

market power to have been able to create a monopoly,’ their § 2

claim may properly be dismissed.”)12 Accordingly,

counterdefendants’ motion to dismiss CMIC’s Second Counterclaim

for attempted monopolization is GRANTED. 

V. Unfair Competition Claim 

Counterdefendants next contend that the court must dismiss

CMIC’s Fourth Counterclaim for unfair business practices in

violation of California’s Unfair Competition Law (“UCL”),

California Business & Professions Code § 17200, because the

statute does not apply to extraterritorial conduct. 

California law embodies a presumption against the

extraterritorial application of its statutes. See Diamond

Multimedia Sys., Inc. v. Superior Court, 19 Cal. 4th 1036, 1060

n.20 (1999). Courts have specifically held that California’s UCL

does not support claims by non-California residents where none of

the alleged misconduct or injuries occurred in California. See

Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214,

222 (1999). Indeed, a California court’s adjudication of

non-residents’ claims without a nexus to California “raises

significant due process problems.” Id. at 225 (citing Phillips

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13 While presumably an out-of-state corporation could

suffer injury in California, CMIC makes no allegation to that

effect, and the court can not draw this inference from the facts

alleged. 

14 CMIC cites Wershba v. Apple Computer, Inc., 91 Cal.

App. 4th 224 (2001), to support its argument that the UCL applies

because counterdefendants’ conduct “emanated from California”. 

However Wershba is factually distinguishable. In that case, the

court was presented with specific California misconduct,

including the preparation and distribution of brochures in

California and decision making at defendant’s California offices. 

See id. at 241-42. Here, no such intra-state conduct is alleged.

19

Petroleum Co. v. Shutts, 472 U.S. 797, 810-11 (1985)); see also

Churchill Village, L.L.C. v. GE, 169 F. Supp. 2d 1119, 126-27

(N.D. Cal. 2000) (finding court lacked jurisdiction over § 17200

claim for injunctive relief where none of the challenged conduct

occurred in California, and only California residents were

injured in California). 

CMIC is a Canadian corporation; therefore, the court infers

that its injuries occurred there, and not in California.13 (SACC

¶ 87.) Moreover, the specific misconduct identified by CMIC

occurred in Chicago, Illinois – clearly outside the purview of

the UCL.14 Thus, no specific intrastate misconduct is alleged in

the SACC.

CMIC argues, however, that “even assuming arguendo that the

[SACC] does not allege conduct taking place in California, it is

reasonably inferred that counterdefendants committed at least

some of their unlawful acts in this state.” (CMIC’s Mem. Opp’n

Mot. Dismiss at 15.) CMIC points to the allegations that

Meridian and its officers reside in California and that they

“authorized, ordered or directed” the acts alleged in the

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15 Because the averments in paragraphs 111 and 124 of the

SACC can be construed to allege either fraudulent or nonfraudulent conduct, the court strikes them from the SACC only to

the extent they allege fraudulent conduct.

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counterclaim. (CMIC’s Mem. Opp’n Mot. Dismiss at 15.) However,

even if these general allegations were sufficient for the court

to infer intrastate conduct, to the extent they are construed to

allege fraudulent conduct, they must satisfy Rule 9(b).15

Because they do not describe the who, what, where, when and how

of counter-defendants’ alleged intrastate misrepresentations,

they fail to satisfy this pleading requirement. Vess, 317 F.3d

at 1106. Accordingly, counterdefendants’ motion to dismiss

CMIC’s Fourth Counterclaim is GRANTED.

VI. Individual Counterdefendants

Finally, counterdefendants contend that CMIC fails to allege

any misconduct by counterdefendants Carrington and Olsen. When

fraud claims involve multiple defendants, the complaint must

satisfy Rule 9(b) particularity requirements for each defendant. 

King v. Deutsche Bank Ag, No. CV 04-1029-HV, 2005 U.S. Dist.

LEXIS 11317, at *71 (D. Or., Mar. 8, 2005) (citing In re Worlds

of Wonder Sec. Litig., 694 F. Supp. 1427, 1432 (N.D. Cal. 1988)). 

Here, the allegations of misconduct specific to Olsen and

Carrington state that “on information and belief, Meridian,

Olsen, Bodrozic and Carrington have made similar statements to

other potential customers of CMIC,” and that “Olsen, Bodrozic and

Carrington authorized, ordered or directed the acts alleged in

this counterclaim.” (SACC ¶¶ 107, 112.) The court previously

found that these allegations fail to satisfy Rule 9(b). See

sections I and V, supra. Thus, they must be disregarded when

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determining whether the SACC states a claim against Olsen and

Carrington. Stripped of these general allegations, the SACC

fails to state a claim against Olsen and Carrington, as it is

completely silent regarding their conduct. Thus, the Second

through Fourth Counterclaims must be dismissed as to

counterdefendants Olsen and Carrington. 

CONCLUSION

For the reasons stated herein, counterdefendants’ motion to

dismiss is GRANTED in part and DENIED in part, as follows:

(1) Counterdefendants’ motion to dismiss the Second through

Fourth Claims on the basis of Noerr-Pennington Immunity is

GRANTED, with leave to amend, to the extent these claims are

based on Meridian’s filing of the complaint and DENIED in all

other respects. 

(2) Counterdefendants’ motion to dismiss CMIC’s Second

Counterclaim, for attempted monopolization, and Fourth

Counterclaim, for violation of California Business & Professions

Code § 17200, for failure to state a claim, is GRANTED, with

leave to amend. 

(3) Counterdefendants’ motion to dismiss the Second through

Fourth Counterclaims for failure to state a claim against

counterdefendants Olsen and Carrington is GRANTED, with leave to

amend.

(4) CMIC is granted twenty (20) days from the issuance of this

order to file a Third Amended Answer and Counterclaims. 

IT IS SO ORDERED.

DATED: July 6, 2005.

/s/ Frank C. Damrell Jr. 

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FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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