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Avaya Inc v. Cisco Systems

November 14, 2011


The opinion of the court was delivered by: Honorable Tonianne J. Bongiovanni United States Magistrate Judge


This matter comes before the Court upon a Motion for Leave to Amend their Counterclaims filed by Defendant Cisco ("Defendant" or "Cisco") [Docket Entry No. 76]. Cisco seeks to amend their previously filed counterclaims against Avaya, Inc. ("Plaintiff" or "Avaya") in order to bring additional claims for abuse of process and unfair competition. Avaya opposes Cisco's motion. The Court has fully reviewed and considered all arguments made in support of and in opposition to Defendant's motion. The Court considers Defendant's motion without oral argument pursuant to FED. R. CIV. P. 78. For the reasons set forth below, Defendant's motion is GRANTED.

I. Background and Procedural History

The parties are business competitors in certain market spaces. In October 2010, Avaya filed its Complaint against Cisco following its Vice President's, Mark Cahna, resignation from his position with Avaya to take a position with Cisco. Avaya alleged, among other things, misappropriation of trade secrets and unfair competition. Cisco filed its Counter-Complaint in December 2010. The parties have engaged in discovery and disputes regarding discovery have resulted in additional motion practice. Cisco now brings this motion seeking to amend its counterclaims to include claims against Avaya for using this litigation in bad faith as an anticompetitive tool to further its "Attack Cisco" strategy. Specifically, Cisco asserts that Avaya is "attempting to harass Cisco and its employees, stifle competition and slow or prevent the departure of Avaya employees who seek better job opportunities with Cisco, and gain access to Cisco's confidential and proprietary information." See Defendant's Memorandum of Law in Support of their Motion at 4.

Cisco states that leave to amend is liberally granted. Cisco asserts that it has legitimate bases for the relief it seeks and that the proposed amendments do not involve bad faith, undue delay or dilatory motive. Cisco further states that Avaya will not be prejudiced in any way by the amendments because Avaya has not yet answered Defendant's initial counterclaims and discovery is still progressing.

Cisco explains that to state a claim for abuse of process, a party must demonstrate "(1) an ulterior motive and (2) some further act after an issuance of process representing the perversion of the legitimate use of the process." Fleming v. United Parcel Service, Inc., 604 A.2d 657, 681 (N.J. Super. Ct. 1992). Cisco contends that it has set forth in the proposed counterclaims various examples of "Avaya's improper motives and unfair, anti competitive and illegitimately abusive litigation practices." Cisco asserts that its proposed claims are not futile because it has provided substantial factual support so as to meet the standard for pleading a valid claim for relief. Cisco attaches the proposed Amended Counterclaims to its motion.

Avaya opposes Cisco's motion. Avaya asserts that Cisco has accused Avaya of abuse of process in an effort to intimidate and inhibit Avaya's ability to pursue its own claims against Cisco. Avaya argues that Cisco's motion would fail as futile because Cisco failed to establish that Avaya had any "ulterior motive" or that Avaya committed any "further acts" as required to state a claim for abuse of process. Further, Avaya contends that "no case in New Jersey has ever recognized the tort of unfair competition in any circumstances that are remotely similar to those at issue here." See Plaintiff's Memorandum of Law in Opposition to Defendant's Motion at 2. Avaya also asserts that the timing of Cisco's motion is indicative of Cisco's improper motive to hinder Avaya's ability to pursue its claims. At the time Cisco's motion was filed, Avaya was preparing for a two-day hearing on their motion for preliminary injunction.

Avaya first addresses the alleged futility of Cisco's motion. Avaya states that Cisco must allege facts sufficient to demonstrate that it is able to satisfy the required elements of its proposed new counterclaims. Bell Atlantic Corporation v. Twombly, 550 U.S. 544, 556 (2007). Avaya contends that Cisco has not alleged facts in support of its abuse of process claim which could satisfy either the "ulterior motive" or the "further act" requirements to plausibly demonstrate any entitlement to relief.

With respect to the "ulterior motive" element of an abuse of process claim, Avaya posits that "the crux of a case cannot constitute the requisite 'ulterior motive' as a matter of law." Falzo v. County of Essex, 2005 WL 2129927 (D.N.J. Aug. 31, 2005). Avaya concludes that the "ulterior motives" alleged by Cisco in this motion are nearly identical to Avaya's claims as alleged in their Complaint; thus, Cisco has failed to establish an "ulterior motive" by referencing Avaya's claims. Avaya further states that there is nothing improper about the relief that it seeks in the form of an injunction prohibiting the solicitation of its employees by Cisco in addition to monetary damages and other relief. Therefore, Avaya contends that its relief cannot suffice as an "ulterior motive." Finally, Avaya argues that the discovery it has conducted cannot be its "ulterior motive" because Avaya is entitled to the discovery it has propounded. Further, Avaya points out that Cisco has propounded identical discovery requests on Avaya. Avaya asserts that this indicates that there is no foundation for this motion.

With respect to the "further acts" aspect of the abuse of process claim, Avaya again argues that Cisco has failed to sufficiently plead this element. Avaya states that "it is well settled that neither the commencement of a lawsuit nor use of the discovery process constitute "further acts" as required to state a claim for abuse of process." Component Hardware Group, Inc., 2007 WL 2177667, at *4. Avaya further argues that "Courts have only found parties to have engaged in 'further acts' in circumstances involving far more drastic conduct outside the course of normal litigation, such as seeking 'attachment, execution, garnishment, sequestration proceedings arrest, and criminal prosecution'." D&D Assocs., Inc. v. Bd. of Educ. of N. Plainfield, 2007 WL 4554208, at *31 (D.N.J. 2007).

Avaya argues that Cisco's proposed unfair competition claim is futile as well. Avaya states that an unfair competition claim must be premised upon improper or illegal conduct. Mercedes-Benz USA, LLC v. ATX Group., Inc., 2010 WL 3283544, at *13 (D.N.J. 2010). Avaya contends that, in this matter, Cisco is claiming that the improper or illegal conduct which underpins the unfair competition counterclaim is Avaya's alleged abuse of process. Because Avaya has concluded that the premise of Cisco's unfair competition claim (the alleged abuse of process) fails as a matter of law, Avaya argues that Cisco has failed to state an unfair competition claim. Avaya further contends that Cisco's position is not supported by any New Jersey case law.

Avaya next argues that Cisco's proposed unfair competition claim is futile because it is barred by the Noerr-Pennington doctrine which, Avaya explains, immunizes a party's efforts to vindicate its rights through legal action. California Motor Transportation v. Trucking Unlimited, 404 U.S. 508 (1972). Avaya states that "only in cases where the original suit is purely a sham can a claimant overcome the protection of the Noerr-Pennington doctrine. See California Motor Transportation, 404 U.S. at 511. It is Avaya's position that Cisco has not established that this case fits into the "sham" exception; therefore, Avaya concludes that the claims are futile.

Avaya also argues that Cisco has unduly delayed seeking leave to amend its counterclaims. Avaya filed its Complaint in October 2010 and Cisco filed its Counter-Complaint in December of that same year. To the extent that Cisco argues that Avaya is seeking "unprecedented and illegal relief," Avaya states that this information was available to Cisco in October 2010 in the initial Complaint. In addition, Avaya states that they propounded discovery upon Cisco and that they provided a copy of the alleged "threatening letter" to a former Avaya employee to Cisco in November 2010. Therefore, Avaya contends that Cisco has not properly explained why these counterclaims were not included in its original Counter-Complaint or why Cisco waited so long to seek leave to file amended counterclaims. Avaya again points to the timing of Cisco's filing of this motion and suggests that Cisco chose this timing for an "improper tactical reason."

Avaya finally argues that it will suffer prejudice as a result of the amended counterclaims. Avaya states that it has spent "substantial time and resources searching for and collecting documents and information that are relevant to pleadings." Although discovery is at a standstill, Avaya states that it has made "extensive efforts to conduct and internal investigation into its claims and Cisco's stated defenses." Avaya does not further explain how it would be prejudiced.

In response to Avaya's opposition, Cisco states that it has provided sufficient factual support for its claims and that Avaya has failed to demonstrate that it would be unduly prejudiced by the granting of this motion. Cisco is confident that discovery on these issues will reveal further examples of Avaya's "ulterior motives" and will reveal that Avaya's unfair competition claim against Cisco is without merit. Cisco states that its counterclaims explain, in detail, how Avaya is engaging in conduct which is similar to the conduct about which Avaya complains in their Complaint against Cisco. Therefore, Cisco argues that Avaya "cannot have it both ways; it cannot continue to ...

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