The opinion of the court was delivered by: GREENAWAY
GREENAWAY, JR., District Judge
This matter comes before the Court on the motion for summary judgment of Lowenstein, Sandler, Kohl, Fisher & Boylan, attorneys for defendant Ethyl Corporation ("Ethyl").
Cheminor Drugs, Ltd. ("Cheminor") and its recently-formed subsidiary, Reddy-Cheminor, Inc. ("Reddy-Cheminor"), allege that Ethyl is liable under theories of antitrust, malicious prosecution, abuse of process, tortious interference and unfair competition. On July 31, 1991, Ethyl filed a petition (the "Petition")
with the Department of Commerce ("DOC") and the United States International Trade Commission ("USITC"), requesting the imposition of anti-dumping and countervailing duties ("AD/CVD") on imports of bulk ibuprofen from India. The Petition, which is at the heart of this litigation, alleges that from 1988 through 1991, the Government of India subsidized Cheminor, an Indian company
, in excess of 76% of the export value of its bulk ibuprofen. Cheminor 12G P 18.
The Petition also alleges that from 1988 through 1991 Cheminor dumped bulk ibuprofen into the U.S. market at less than fair value ("LTFV"). Id. at P 19. Cheminor does not dispute either that it received subsidies or dumped ibuprofen in the U.S. market. Cheminor does assert, however, that Ethyl could not have prevailed on its Petition because it could not have proven that it was materially injured by the sale of the imported product. Cheminor also claims that Ethyl wrongfully filed and prosecuted a Petition, replete with intentional misrepresentations,
causing Cheminor to withdraw from the U.S. market and lose sales.
Ethyl filed the instant summary judgment motion and denied making any misrepresentations. Assuming arguendo, that Ethyl somehow misled the USITC about its financial condition, the issue presented, according to Ethyl, is whether plaintiffs can establish that the entire petitioning process was "objectively baseless". In short, Ethyl asserts that the record demonstrates that it had probable cause to file the Petition; as such, it is immune from antitrust liability pursuant to the First Amendment and the Noerr-Pennington doctrine. In the alternative, Ethyl claims that its legitimate petitioning of its government not only entitles it to First Amendment protection but also defeats each of plaintiffs' individual claims -- i.e., malicious prosecution, abuse of process, tortious interference, unfair competition and violations of federal and state antitrust laws.
Ethyl manufactures numerous chemicals, including bulk ibuprofen. Ethyl began manufacturing this anti-inflammatory drug in 1978. Turnispeed Certif. P 2.
In May 1984, the FDA gave ibuprofen manufacturers, Upjohn Co. ("Upjohn") and Boots Co. USA, Inc. ("Boots")
, its approval for a two and one-half year period of marketing exclusivity to sell over-the-counter ("OTC") ibuprofen in 200 milligram dosages. Id. at P 5. In September 1986, the period of exclusivity granted to Upjohn and Boots to market OTC ibuprofen expired and new ibuprofen products flooded the market. Id. As of June 1990, the FDA approved 27 companies to sell ibuprofen in one or another of several dosage forms. Id.7
In 1987, bulk ibuprofen manufactured in India began entering the U.S. market. In 1988, Cheminor received FDA approval to sell its bulk ibuprofen to tablet manufacturers in the U.S. From 1988 through 1991, Cheminor was the only Indian manufacturer, selling bulk ibuprofen to formulators in the U.S., that had secured appropriate FDA approval. Turnispeed Certif. P 6.
Ethyl contends that from the time Cheminor entered the U.S. market with commercial quantities of bulk ibuprofen in 1988, it experienced remarkable success in gaining both overall volume as well as market share. The success occurred primarily as a result of Cheminor's pricing strategy of selling bulk ibuprofen at LTFV. Id. at P 12. Ethyl also contends that it learned that Cheminor had been benefitting from numerous subsidies from its own government. Id. at P 16. Further, by 1991, Ethyl believed Cheminor was receiving subsidies from the Indian government in excess of 76% of the bulk ibuprofen's export value. Id. According to Ethyl, Cheminor went from importing 57,000 kilograms in 1988 to importing 200,000 kilograms in the first six months of 1991. Id. at P 7. This growth represented an increase in Cheminor's U.S. market share from 2.19% in 1988 to 11.19% for the first six months of 1991. Id. at P 10.
In 1988, based on Ethyl's belief that Cheminor was receiving substantial subsidies and that its sales were LTFV, Ethyl filed a petition with the Chairman of the Generalized System of Preferences ("GSP") Subcommittee, Office of the U.S. Trade Representative, asking it to "withdraw GSP eligibility for duty-free treatment on ibuprofen imports from India." Turnispeed Certif. at Ex. C. Because bulk ibuprofen was on the list of eligible articles under the GSP program, Cheminor -- unlike the foreign importers (and competitors) from the U.K., Japan and Spain -- did not have to pay any duty on its export of bulk ibuprofen to the U.S. The President of the United States denied Ethyl's request.
Id. P 21 and Ex. D. On May 19, 1989, Turnispeed received a letter from the Office of the United States Trade Representative ("USTR"), explaining that the USTR denied the Petition because "imports from GSP countries comprise only two percent of the U.S. market. Consequently, the USITC determined that removing ibuprofen from India from the list of eligible articles under GSP would have little [effect.]" Id. However, imports from India continued to increase substantially during 1989-1990. Thus, in 1991, Ethyl filed a renewed request with the USITC asking that the U.S. withdraw ibuprofen imports from India from the GSP eligibility list. The USITC granted this request, effective July 1, 1991. Id. at 27.
The U.S. government's decision to remove bulk ibuprofen from India from GSP eligibility did not obviate Ethyl's concern that Cheminor would continue to use the Indian government's subsidization it was enjoying at home to dump bulk ibuprofen in the U.S. market. Ethyl Brief at 5
On July 31, 1991, Ethyl filed an AD/CVD Petition with the DOC and the USITC
Ethyl's Petition alleged that ibuprofen from India was being sold in the U.S. at LTFV margins of 34% to 39%, Petition at 9, and that Cheminor was benefitting from over thirteen separate subsidies from the Indian government, amounting to more than 76% of the total export value. Id. at 18-34. Ethyl also alleged that Cheminor's continued practice of dumping subsidized bulk ibuprofen into the U.S. "has caused and is causing material injury to petitioner and threatens it with further injury." Id. at 34.
Upon the filing of the Petition, the DOC investigated whether bulk ibuprofen from India was sold in the U.S. at LTFV and whether it was subsidized by the Indian government. The USITC investigated whether Ethyl was materially injured, or threatened with material injury, as a result of the dumped and subsidized imports. Ethyl 12G P 27.
As part of its investigation, the USITC asked Ethyl to complete a questionnaire. On August 13, 1991, Ethyl returned the completed questionnaire to the USITC. Id. P 28. The USITC also sent questionnaires to Flavine and tablet manufacturers. Id. at P 29.
The DOC issued questionnaires to Cheminor as part of its AD and CVD investigations. Id. at PP 32 & 35.
Cheminor claims that Ethyl knowingly misrepresented information to the USITC in its Petition and responses to the questionnaires. Specifically, Cheminor alleges that Ethyl intentionally: (1) failed to disclose a product recall that reduced its 1990 profits by at least $ 1.2 million. Cheminor 12G P 105; (2) reduced its first half-year 1991 profits by $ 2.7 million by including research and development and manufacturing costs for S ibuprofen -- as opposed to ibuprofen -- a product which was not being imported from India in 1991 and therefore was not being investigated by the USITC. Id. at PP 88-93; and (3) reduced its first half-year 1991 profits by another $ 2.1 million by including future environmental and expansion costs. Id. at PP 74-87.
On September 16, 1991, the USITC issued its preliminary determination (the "USITC Report"), concluding that there was a reasonable indication that the ibuprofen industry in the U.S. had been materially injured by reason of bulk ibuprofen imports that the Government of India allegedly subsidized these imports, and Cheminor sold bulk ibuprofen imports in the U.S. at LTFV. Leonard Certif. P 17.
The USITC Report cited two separate and distinct indications of material injury: (1) that Ethyl's "financial trends" demonstrated material injury; and (2) that "other factors, such as apparent domestic consumption and market share, further provide a reasonable indication of present injury." USITC Report at 16.
The USITC began its injury analysis by identifying the factors it would consider in making its injury determination. The factors employed included domestic consumption, production, capacity, capacity utilization, shipments, inventories, employment, financial performance, capital investment and research and development efforts. USITC Report at 15-16. In articulating the bases for its conclusion that Ethyl was being materially injured, the USITC used the same reasoning it had initially set forth in the Report. Id. at 16.
Cheminor claimed that the USITC's preliminary determination had little significance because: (1) respondents had little or no input into the questionnaire the USITC used for its preliminary determination; and (2) the USITC had little or no time in its preliminary investigation to probe the accuracy of the information that the domestic industry submitted and must, in preliminary determinations, resolve all doubts in favor of the petitioner. Cheminor 12G PP 136-37.
On August 26, 1991, the DOC announced its determination to initiate the AD and CVD investigations and issued its preliminary CVD questionnaire to Cheminor and the Government of India. Leonard Certif. P 22. On December 13. 1991, the DOC made its preliminary CVD determination in favor of Ethyl, finding a subsidy in the amount of 43.71%. Id. at P 24 & Ex. N. Along with this preliminary determination, the DOC directed the United States Customs Service to require a cash deposit or bond for all entries of this merchandise, equal to 43.71% ad valorem, for bulk ibuprofen produced and exported by Cheminor. Id.
In a letter dated January 13, 1992, Cheminor informed the DOC of its intention to withdraw from the U.S. bulk ibuprofen market and that because of the DOC's CVD determination "all outstanding orders and letters of credit for Cheminor's bulk ibuprofen were canceled by its exclusive U.S. importer, Flavine International, Inc." Leonard Certif. P 25 & Ex. O. Cheminor also informed the DOC that it would not participate in ...