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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.