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Current Developments in the Commercial Divisions of the
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Posted: August 1, 2015

Tortious Interference Claim Dismissed Based on Noerr-Pennington Doctrine

On July 20, 2015, Justice Kornreich of the New York County Commercial Division issued a decision in Caesars Entertainment Operating Co., Inc. v. Appaloosa Inv. L.P. I, 2015 NY Slip Op. 51095(U), dismissing a tortious interference claim based on the Noerr-Pennington doctrine.

In Caesars Entertainment Operating Co., the plaintiffs claimed that, among other things, the defendants had tortiously interfered with the plaintiffs’ business relations by complaining to regulators about them. The court dismissed those claims, explaining:

The claims based on these allegations are dismissed on the merits, with prejudice, because they are barred by the Noerr-Pennington doctrine, pursuant to which parties may not be subjected to liability for petitioning the government. Under the Noerr-Pennington doctrine, civil actions are barred where the activity challenged under federal statute or state law consists of petitioning legislatures, administrative bodies, and the courts,’ even if the defendant’s actions had an anticompetitive or otherwise injurious purpose or effect. Both the First and Second Departments have expressly held that the Noerr-Pennington doctrine applies to common law tort claims.

(Internal quotations and citations omitted). The court acknowledged that

There is a sham exception to the Noerr-Pennington doctrine which applies in situations in which persons use the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon. The sham exception to the Noerr-Pennington doctrine has an objective and subjective element. The objective element requires that the defendant’s conduct must be objectively baseless with no reasonable expectation of success. The subjective element requires that the defendant act, not with the intent of influencing governmental action, but rather with the intent to interfere directly with the business relationships of a competitor. If the objective element is not satisfied, the court is precluded from examining the subjective motivation for the conduct, and the “sham” exception is not applicable.

(Internal quotations and citations omitted). However, it held that the plaintiffs had not satisfied “the first, objective prong of the sham exception — namely, that the [defendants’] conduct was objectively baseless and had no reasonable expectation of success. Under this standard, it is not enough for [the plaintiffs] to be in the right; the [defendants’] claims must, essentially, be frivolous.” (Emphasis added).

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