Court Opinion

ID: 4150552
Source: CourtListenerOpinion
Date Created: 2017-03-07 15:07:57.301226+00
Date Added: 2024-06-11T14:49:54.498291
License: Public Domain

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16-P-42                                                Appeals Court

          THE GILLETTE COMPANY   vs.   CRAIG PROVOST & others.1

                              No. 16-P-42.

           Suffolk.      October 13, 2016. - March 7, 2017.

              Present:   Wolohojian, Carhart, & Shin, JJ.

"Anti-SLAPP" Statute. Privileged Communication. Practice,
     Civil, Motion to dismiss, Interlocutory appeal.

     Civil action commenced in the Superior Court Department on
January 16, 2015.

     A special motion to dismiss was heard by Janet L. Sanders,
J.

     Christopher Morrison for the plaintiff.
     Brian C. Swanson, of Illinois, for the defendants.

     SHIN, J.    The Gillette Company sued four of its former

employees (the individual defendants), claiming that they

misappropriated Gillette's trade secrets and other confidential

information to develop a wet-shaving razor for the benefit of

     1
       John Griffin, William Tucker, Douglas Kohring, and
ShaveLogic, Inc.
                                                                      2

their new employer, the defendant ShaveLogic, Inc.    After

ShaveLogic counterclaimed, alleging that Gillette brought its

lawsuit in bad faith, Gillette moved to dismiss the

counterclaims on grounds that the filing of the lawsuit was

petitioning activity protected by G. L. c. 231, § 59H (commonly

known as the anti-SLAPP2 statute), and was protected by the

litigation privilege.   A judge of the Superior Court denied the

motion, and Gillette filed this interlocutory appeal.

     We conclude that, based on the record before her, the judge

could have found that ShaveLogic met its burden of showing that

Gillette's petitioning activity was "devoid of any reasonable

factual support" and caused ShaveLogic "actual injury."       Under

the anti-SLAPP statute, that showing was sufficient to allow the

counterclaims to go forward.    We further conclude that the

litigation privilege does not bar the counterclaims because they

seek to hold Gillette liable not for speech, but for conduct

(its act of filing an allegedly groundless lawsuit), to which

the privilege does not apply.    We therefore affirm that part of

the judge's order resolving these two issues in ShaveLogic's

favor.3

     2
       The acronym "SLAPP" stands for strategic lawsuit against
public participation. Duracraft Corp. v. Holmes Prods. Corp.,
427 Mass. 156, 160 n.7 (1998).
     3
       The judge also rejected Gillette's argument that the
counterclaims lacked sufficient factual allegations to state a
                                                                      3

     Background.   We summarize the allegations made by each

party, reserving other facts as they become relevant to our

analysis of the issues raised.

     1.    Gillette's claims.   The complaint alleges the following

facts:    Gillette is in the business of "designing,

manufacturing, and marketing razors and other shaving products."

As a leader in this field, Gillette holds "thousands of patents

covering razors and other shaving technology."    It is also

"constantly researching and designing new technology and

advancing current technology" and "has taken affirmative steps

to protect the confidentiality of" information related to those

efforts.

     Each of the individual defendants once worked for Gillette

in positions that gave them access to Gillette's confidential

information and trade secrets, including confidential

information "relating to magnetic attachments for shaving

cartridges and elastomeric pivots."4    In addition, at least one

of the individual defendants, while at Gillette, "produced

and/or otherwise worked on sketches and/or prototypes with

claim upon which relief can be granted. That portion of the
decision is not before us because it is not open to
interlocutory appeal.
     4
       According to the defendants, "[a]n elastomer is
essentially a soft plastic, with resilience that is similar to
rubber."
                                                                     4

respect to several magnetic attachment and elastomeric pivot

concepts."   Upon their respective separations from Gillette, the

individual defendants agreed that they would not use Gillette's

confidential information or share it with any non-Gillette

employee or entity.    They also agreed "to disclose and assign to

Gillette any invention, idea, or improvement made or conceived

during their employment at Gillette."

    ShaveLogic is one of Gillette's competitors "in the wet

shaving field."   At some point after the individual defendants

left Gillette, ShaveLogic hired them as employees or retained

them as consultants.   Thereafter, ShaveLogic filed several

patent applications relating to the use of magnetic attachments

and elastomeric pivots in razors.   One of those applications,

which was directed to a magnetic attachment for a shaving

cartridge, became U.S. Patent No. 8,789,282 (the '282 patent).

ShaveLogic is the owner of the '282 patent, and two of the

individual defendants are named inventors.

    Based on these allegations, the complaint asserts that the

individual defendants "used Gillette confidential information

and trade secrets to design, invent, and/or otherwise contribute

to the technology covered by the '282 patent and the [p]atent

[a]pplications, including but not limited to magnetic attachment

and elastomeric pivot concepts."    Against the individual

defendants, the complaint raises claims for breach of contract,
                                                                      5

misappropriation of trade secrets, and unfair and deceptive acts

and practices in violation of G. L. c. 93A.     Against ShaveLogic,

the complaint asserts one count seeking to impose a constructive

trust on the '282 patent and the patent applications.5

     2.   ShaveLogic's counterclaims.    The counterclaims allege

the following facts:   ShaveLogic is a start-up company, which is

trying to compete in the wet-shaving market dominated by

Gillette.   Although Gillette currently holds "over [four] times

the market share held by the nearest competitor," its market

dominance is being threatened by "new competition from dynamic

start-up companies" such as ShaveLogic.    In response Gillette

has "tak[en] steps to attempt to thwart newer companies" from

entering the market.

     In May of 2014, Gillette began sending ShaveLogic letters

"containing threats of litigation."     Gillette sent the letters

with the knowledge that ShaveLogic would have to disclose them

to its potential investors and marketing and distribution

partners.   According to ShaveLogic, the letters and the ultimate

filing of this lawsuit had their intended effect:     ShaveLogic

has lost potential investors, and, in November of 2014, a

     5
       Gillette has since amended its complaint to include
additional claims and factual allegations. It has also
stipulated to the dismissal of its trade secret claim against
the individual defendants. As the parties agree, because the
original complaint was the pleading before the motion judge, it
is likewise the operative pleading for purposes of our review.
                                                                     6

marketing and distribution company withdrew from negotiations

with ShaveLogic that had been ongoing for most of that year.

Had the negotiations continued, they "would likely have led to a

contract for distribution of ShaveLogic razors."

    ShaveLogic characterizes this lawsuit as nothing more than

"an anti-competitive effort" by Gillette "to harass and to

prevent ShaveLogic from becoming a competitor in the wet shaving

market."    It asserts two counterclaims, the first for

intentional interference with advantageous business

relationships, and the second for unfair and deceptive acts and

practices in violation of G. L. c. 93A.

    3.     Gillette's motion to dismiss.   Gillette filed a motion

to dismiss the counterclaims directly under the anti-SLAPP

statute, G. L. c. 231 § 59H, and under Mass.R.Civ.P. 12(b)(6),

365 Mass. 754 (1974), predicated in part on the litigation

privilege.   To counter Gillette's arguments under the anti-SLAPP

statute, ShaveLogic submitted six declarations, including one

from each of the four individual defendants and one from its

chief executive officer, Rob Wilson.    Gillette submitted one

declaration in response, from its legal counsel, John M.

Lipchitz.

    After considering these materials and conducting a

nonevidentiary hearing, the judge issued a memorandum of

decision and order denying the motion to dismiss and ruling that
                                                                       7

the counterclaims could go forward to discovery.      Gillette filed

a timely notice of this interlocutory appeal.

    Discussion.   1.     Anti-SLAPP statute.    General Laws c. 231,

§ 59H, inserted by St. 1994, c. 283, § 1, provides that "[i]n

any case in which a party asserts that the civil claims,

counterclaims, or cross claims against said party are based on

said party's exercise of its right of petition under the

constitution of the United States or of the commonwealth, said

party may bring a special motion to dismiss."      When deciding

such a motion, the judge "shall consider the pleadings and

supporting and opposing affidavits stating the facts upon which

the liability or defense is based."     Ibid.   See Van Liew v.

Stansfield, 474 Mass. 31, 36 (2016).    If the judge denies the

motion, the moving party may immediately appeal under the

doctrine of present execution.     See Fabre v. Walton, 436 Mass.

517, 521–522 (2002).     Our review on appeal is limited to

determining whether the judge committed an abuse of discretion

or other error of law.    See Baker v. Parsons, 434 Mass. 543, 550

(2001); Burley v. Comets Community Youth Center, Inc., 75 Mass.

App. Ct. 818, 821 (2009).

    A two-part test governs special motions to dismiss under

G. L. c. 231, § 59H.     First, the moving party must "make a

threshold showing through the pleadings and affidavits that the

claims against it are 'based on' . . . petitioning activities
                                                                    8

alone and have no substantial basis other than or in addition to

the petitioning activities."   Duracraft Corp. v. Holmes Prods.

Corp., 427 Mass. 156, 167–168 (1998).   Here, ShaveLogic conceded

that its counterclaims are "based on" petitioning activity by

Gillette, namely, its act of filing this lawsuit.    See G. L. c.

231, § 59H (petitioning activities include "any written or oral

statement made before or submitted to a . . . judicial body" or

"made in connection with an issue under consideration or review

by a . . . judicial body"); Van Liew, 474 Mass. at 36

(application for harassment prevention order qualified as

petitioning activity under anti-SLAPP statute).6    The focus of

our inquiry is therefore on the second part of the test, which

shifts the burden to the nonmoving party to prove "by a

preponderance of the evidence" that the petitioning activities

at issue were "devoid of any reasonable factual support or any

arguable basis in law" and caused the nonmoving party "actual

injury."   Van Liew, 474 Mass. at 36, quoting from G. L. c. 231

     6
       Although the parties agree that Gillette's complaint
qualified as petitioning activity, we note that in Duracraft the
court expressed doubt that "the [anti-SLAPP] statute was
intended to reach suits such as this one between two corporate
competitors involved in other ongoing litigation, where the
special motion may have been deployed not to limit 'strategic
litigation,' but as an additional litigation tactic." 427 Mass.
at 163. See id. at 161 ("The typical mischief that the
legislation intended to remedy was lawsuits directed at
individual citizens of modest means for speaking publicly
against development projects").
                                                                      9

§ 59H.    See Baker, 434 Mass. at 553–554.   The motion judge did

not abuse her discretion in concluding that ShaveLogic satisfied

both of these requirements.

       With respect to the first requirement, the judge could have

found by a preponderance of the evidence that Gillette's

complaint was "devoid of any reasonable factual support."      As

the judge observed, ShaveLogic's burden on this issue was a high

one:    it had to demonstrate that "no reasonable person could

conclude" that there was a factual basis to support Gillette's

claims.    Baker, 434 Mass. at 555 n.20 (quotation omitted).   Even

so, ShaveLogic submitted enough evidence to permit the judge to

find that it met that burden.

       ShaveLogic's evidence showed that the general concept of

using magnetic attachments in razors was in the public domain as

early as 1919, and certainly before any of the individual

defendants started working at ShaveLogic.    Likewise, ShaveLogic

offered evidence showing that the general concept of using

elastomeric pivots in razors was publicly known before the

individual defendants joined ShaveLogic.     Indeed, at the hearing

on its motion to dismiss, Gillette admitted that these general

concepts are not trade secrets or protectable intellectual

property.

       ShaveLogic also submitted detailed declarations from the

individual defendants themselves, all of whom denied working on
                                                                   10

any projects at Gillette involving magnetic attachments or

elastomeric returns7 like those conceived and developed at

ShaveLogic years later.   They further denied using any Gillette

confidential information in developing ShaveLogic's product.

Their statements were corroborated by Wilson, who averred in his

declaration that he came up with the idea for the ShaveLogic

product in 2009, over a year before he met and hired the

individual defendants.    In support of that assertion, Wilson

included examples of computer automated design drawings of his

invention, which he said were created in April of 2010.    Only

then did he seek out people with experience designing and

developing shaving products, and it was not until early 2011

that he met any of the individual defendants.

     To counter ShaveLogic's evidentiary proffer, Gillette

submitted a single declaration, as noted above, from its legal

counsel, Lipchitz.   In sum and substance, Lipchitz's declaration

asserts that Gillette sent its prelitigation letters and filed

this lawsuit for a legitimate, good-faith purpose:   "to protect

     7
       According to the individual defendants who are named
inventors on the '282 patent, the razor they designed for
ShaveLogic uses an elastomer only in the "return force," which
is needed to return the blade to a neutral position when it is
not in contact with the user's skin. Their design does not use
elastomeric pivots; instead, it uses rigid, nonelastomeric
"fingers" and "receiving bores" for the pivot.
                                                                   11

[Gillette's] intellectual property rights and its substantial

investment in its confidential product development."

    Given this record, the judge was within her discretion to

find by a preponderance of the evidence that Gillette's

complaint lacked a reasonable factual basis.   In making her

determination, the judge did not, as Gillette argues, ignore the

allegations in the complaint.   The judge recited the allegations

but concluded that they added little to the analysis because the

complaint was "unverified" and "bare-bones" and many of the

allegations were made "on information and belief."   We agree

with that characterization.   Even read liberally, the complaint

contains only conclusory allegations that the individual

defendants misappropriated confidential information relating to

the generic concepts of magnetic attachments and elastomeric

pivots in razors -- concepts that Gillette conceded were in the

public domain before the individual defendants started working

at ShaveLogic.   Gillette offered no evidence disputing the

individual defendants' assertions that they did not work on any

projects at Gillette involving the specific shaving technologies

that are covered by the '282 patent and ShaveLogic's patent

applications.    Contrary to Gillette's representations, nothing

in the Lipchitz declaration establishes a "clear connection," or

any connection at all for that matter, between ShaveLogic's

product and the work that the individual defendants performed at
                                                                    12

Gillette.   Thus, in light of the uncontradicted evidence

submitted by ShaveLogic, the judge did not abuse her discretion

in finding that, on this record, there was no reasonable factual

support for Gillette's claims.    See Van Liew, 474 Mass. at 40

(affirming denial of defendant's special motion to dismiss where

"[i]t was clear from the text of [defendant's] complaint" in

prior action that there was "no valid basis" for relief

requested in that complaint).     Cf. Benoit v. Frederickson, 454

Mass. 148, 154 n.7 (2009) (determining that petitioning

activities had reasonable factual support where moving parties

provided "evidence that, if believed, would support a finding in

[their] favor").

    The judge also could have found on this record that

ShaveLogic proved by a preponderance of the evidence that it

incurred "actual injury" as a result of Gillette's petitioning

activity.   G. L. c. 231 § 59H.   As alleged in the counterclaims,

Gillette's lawsuit and prelitigation letters have caused

ShaveLogic to lose potential investors and marketing and

distribution partners.   Furthermore, Wilson's declaration states

that in 2014 ShaveLogic was in negotiations with a nationally

known shaving company for the potential acquisition of

ShaveLogic, but those discussions fell through late that year

because of this litigation.     The judge could permissibly

conclude that this was sufficient, at this stage of the
                                                                   13

litigation, to establish actual injury and that the

counterclaims could therefore go forward.     See Vittands v.

Sudduth, 49 Mass. App. Ct. 401, 415 (2000) (nonmoving party met

burden of proving actual injury through affidavits showing "that

she suffered both financial and personal injuries due to the

[petitioning activities]").

    2.   Litigation privilege.    The litigation privilege

generally precludes civil liability based on "statements by a

party, counsel or witness in the institution of, or during the

course of, a judicial proceeding," as well as statements

"preliminary to litigation" that relate to the contemplated

proceeding.   Sriberg v. Raymond, 370 Mass. 105, 108-109 (1976).

If the privilege attaches, its protections are absolute.     See

Correllas v. Viveiros, 410 Mass. 314, 320 (1991).    Thus, a

denial of a motion to dismiss predicated on litigation privilege

can be immediately appealed under the doctrine of present

execution.    See Visnick v. Caulfield, 73 Mass. App. Ct. 809, 811

n.4 (2009).   Our review on appeal is de novo, "accepting as

'true the factual allegations in the plaintiff['s] complaint

[here, the counterclaims] as well as any favorable inferences

reasonably drawn from them.'"    NES Rentals v. Maine Drilling &

Blasting, Inc., 465 Mass. 856, 860 (2013), quoting from Ginther

v. Commissioner of Ins., 427 Mass. 319, 322 (1988).    See Fisher

v. Lint, 69 Mass. App. Ct. 360, 363 (2007).
                                                                   14

    According to Gillette, to determine whether the privilege

applies in this case, we need only conduct a straightforward

inquiry into whether ShaveLogic's counterclaims challenge acts

taken in furtherance of litigation.   Utilizing that standard,

Gillette contends that the counterclaims fall within the

privilege because they are indisputably based on the letters

that Gillette's counsel sent in contemplation of litigation and

on the complaint itself.   The motion judge took a more nuanced

approach, however, characterizing the counterclaims as

challenging "conduct" -- namely, the "conduct of filing (and

threatening to file) a baseless lawsuit" -- and not "statements"

or "communications."   In the judge's view, ShaveLogic was

complaining "not about defamatory remarks" but "more about abuse

of process -- a claim plainly not subject to dismissal on the

grounds of any privilege."   This distinction between speech and

conduct is the focus of the parties' arguments on appeal.

    We think that the distinction is a sound one.    At its core

the litigation privilege is intended to protect participants in

judicial proceedings from actions for defamation based on

"statements" they made preliminary to or during the proceedings.

Sriberg, 370 Mass. at 108-109.   See Aborn v. Lipson, 357 Mass.

71, 72–73 (1970); Correllas, 410 Mass. at 319–320; Giuffrida v.

High Country Investor, Inc., 73 Mass. App. Ct. 225, 242 (2008).

The privilege has its origins in two policy considerations, both
                                                                    15

concerned with giving litigants the freedom to speak freely in

order to promote the interests of justice.    First, "an absolute

privilege is favored because any final judgment may depend

largely on the testimony of [a] party or witness, and full

disclosure, in the interests of justice, should not be hampered

by fear of an action for defamation."    Correllas, 410 Mass. at

320.    See Aborn, 357 Mass. at 72; Restatement (Second) of Torts,

§ 588 (1977).    Second, the privilege furthers "[t]he public

policy of permitting attorneys complete freedom of expression

and candor in communications in their efforts to secure justice

for their clients."    Sriberg, 370 Mass. at 108.   See Mack v.

Wells Fargo Bank, N.A., 88 Mass. App. Ct. 664, 667-668 (2015);

Restatement (Second) of Torts § 586.

       In this case ShaveLogic is not claiming that the statements

in Gillette's complaint or prelitigation letters are defamatory

or otherwise actionable in and of themselves.    Rather, the

statements are evidence that might support ShaveLogic's claims

of other misconduct, i.e., Gillette's purported acts of sending

letters threatening a baseless lawsuit with the knowledge that

ShaveLogic would have to disclose them to potential partners and

investors, and then actually filing a baseless lawsuit, all as a

means to prevent ShaveLogic from competing in the wet-shaving

market.   It is this conduct, and not any particular statements

in Gillette's letters and complaint, that is alleged to have
                                                                   16

interfered with ShaveLogic's business relationships and to

constitute unfair and deceptive acts and practices under G. L.

c. 93A.   See G.S. Enterprises, Inc. v. Falmouth Marine, Inc.,

410 Mass. 262, 273–275, 277 (1991) (holding that filing of

groundless lawsuit can support claims for intentional

interference with contractual relations and for violation of

G. L. c. 93A).

    We conclude that the privilege does not attach in these

circumstances, where it is not the statements themselves that

are said to be actionable.    See 58 Swansea Mall Drive, LLC vs.

Gator Swansea Property, LLC, U.S. Dist. Ct. No. 15-13538, slip

op. at 3 (D. Mass. Oct. 12, 2016) (interpreting Massachusetts

litigation privilege to apply to claims seeking to "hold[] a

speaker liable for the content of her speech" but not to claims

"using that speech as evidence of her misconduct").     Indeed,

without this distinction, it is hard to see how any claim for

abuse of process or malicious prosecution would survive an

assertion of the privilege.    Gillette's overly expansive view of

the privilege would eviscerate these longstanding causes of

action.   See Beecy v. Pucciarelli, 387 Mass. 589, 593–596 (1982)

(explaining elements of both causes of action).

    It is true, as Gillette points out, that the privilege

applies "to civil liability generally," not just to claims for

defamation.   Mack, 88 Mass. App. Ct. at 667, quoting from Bartle
                                                                      17

v. Berry, 80 Mass. App. Ct. 372, 378 (2011).      Contrary to

Gillette's suggestion, however, "civil liability" does not mean

any and all claims related to matters of litigation.     A

nondefamation claim can be barred by the privilege, but only if,

like a defamation claim, it seeks to hold a speaker liable for

the content of "statements" made in contemplation of or during

litigation.   Correllas, 410 Mass. at 324.   If it does, and "the

statements . . . were made in circumstances rendering them

absolutely privileged," then the privilege attaches regardless

of the underlying theory of liability.    Ibid.    This makes sense

because "[a] privilege [that] protect[s] an individual from

liability for defamation would be of little value if the

individual were subject to liability under a different theory of

tort."   Ibid.   But it does not follow that the privilege should

further extend to claims that allege conduct, not speech, as the

basis for liability.    To the contrary, such an extension would

unmoor the privilege from its original purpose -- to shield

individuals from defamation claims based on testimony given

during a judicial proceeding.    See Aborn, 357 Mass. at 72.

    We end with the acknowledgment that there are circumstances

where the privilege may not apply even to claims that are based

on speech.    For instance, the cases make clear that statements

preliminary to litigation are only privileged if they "relate[]

to a proceeding [that] is contemplated in good faith and [that]
                                                                     18

is under serious consideration."     Sriberg, 370 Mass. at 109.

Accord Visnick, 73 Mass. App. Ct. at 813; Mack, 88 Mass. App.

Ct. at 667.     See Correllas, 410 Mass. at 320–324.   If the

proceeding is not contemplated in good faith, the privilege

cannot be "employed as a shield of immunity for defamation" or

other liability.     Sriberg, 370 Mass. at 109.   Conversely, if the

proceeding itself is in good faith, statements pertaining to it

are absolutely privileged "even if uttered with malice or in bad

faith."    Correllas, 410 Mass. at 319.   We note these principles

but need not explore their precise contours here because, as

explained, ShaveLogic's counterclaims arise out of conduct, not

speech.    For this reason alone, the privilege has no application

to this case.

     Conclusion.    For the above reasons, we affirm the portions

of the judge's order denying Gillette's motion to dismiss the

counterclaims under G. L. c. 231, § 59H, and under the

litigation privilege.8

                                      So ordered.

     8
         We deny ShaveLogic's request for appellate attorney's
fees.