626 F.3d 372 (7th Cir. 2010), 10-1290, Rain v. Rolls-Royce Corp.

Docket Nº:10-1290.
Citation:626 F.3d 372
Opinion Judge:FLAUM, Circuit Judge.
Party Name:David N. RAIN and Paramount International, Inc., Plaintiffs-Appellants, v. ROLLS-ROYCE CORPORATION, Defendant-Appellee.
Attorney:Edward A. McConwell, Attorney (argued), Mission, KS, for Plaintiffs-Appellants. Libby Y. Goodknight, Attorney (argued), Alastair J. Warr, Attorney, Krieg Devault, Indianapolis, IN, for Defendant-Appellee.
Judge Panel:Before BAUER, FLAUM, and HAMILTON, Circuit Judges.
Case Date:November 18, 2010
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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626 F.3d 372 (7th Cir. 2010)

David N. RAIN and Paramount International, Inc., Plaintiffs-Appellants,



No. 10-1290.

United States Court of Appeals, Seventh Circuit.

November 18, 2010

Argued Sept. 14, 2010.

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[Copyrighted Material Omitted]

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Edward A. McConwell, Attorney (argued), Mission, KS, for Plaintiffs-Appellants.

Libby Y. Goodknight, Attorney (argued), Alastair J. Warr, Attorney, Krieg Devault, Indianapolis, IN, for Defendant-Appellee.

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Before BAUER, FLAUM, and HAMILTON, Circuit Judges.

FLAUM, Circuit Judge.

David Rain and Paramount International, Inc. brought a breach of contract action against Rolls-Royce Corporation, alleging that Rolls-Royce twice breached a non-disparagement agreement the parties executed in connection with the settlement of an earlier lawsuit. The district court granted partial summary judgment in Rolls-Royce's favor on one of the claims, and, following a bench trial, entered judgment for Rolls-Royce on the second claim. For the following reasons, we affirm.

I. Background

A. Factual Background

Rolls-Royce manufactures a Model 250 aircraft engine for use in helicopters. Rolls-Royce has a number of " authorized maintenance centers" (" AMCs" ) and " authorized rework facilities" (" ARFs" )-known as the " Model 250 FIRST Network" -that service, repair, and overhaul Model 250 engines around the world. David Rain is the sole shareholder and officer of Paramount International, Inc. (" Paramount" ), which is in the business of selling parts for the Model 250 engine to, among others, the AMCs and ARFs in the FIRST Network. Therefore, Paramount and Rolls-Royce are direct competitors.

Rolls-Royce and Rain have a contentious history. In 2005, Rolls-Royce filed suit against Rain, Paramount, and others, alleging that they had misappropriated Rolls-Royce's intellectual property. On May 19, 2006, the parties executed a formal settlement agreement and dismissed the lawsuit. The agreement, which is governed by Indiana law, contains a non-disparagement provision stating: " None of the Parties will disparage the other." The agreement further provides that any material breach of the settlement agreement entitles the prevailing party to its attorney's fees plus damages in an amount not less than $1,000,000.

1. The 2007 Texas Lawsuit

In 2007, Rolls-Royce filed a complaint in the United States District Court for the Northern District of Texas, alleging that the defendants in that case had obtained Rolls-Royce's proprietary information from a New Jersey corporation-referred to as the " Principal Corporation" -owned by " Mr. Doe." The complaint asserted a RICO claim, in which Rolls-Royce alleged that the defendants had conspired with " Principal Corporation" and " Doe" to obtain and use Rolls-Royce's proprietary information. There is no dispute that, while Rain and Paramount were not named as defendants in the Texas suit, the complaint used the pseudonyms " Mr. Doe" and " Principal Corporation" to refer to Rain and Paramount.

2. The 2007 Heli-Expo

Also in 2007, Rain attended the Heli-Expo, an annual trade show sponsored by the Helicopter Association International (" HAI" ). At the 2007 Heli-Expo, Rolls-Royce, the AMCs, and the ARFs sponsored a private customer appreciation event. The FIRST Network members purchased passes to the event from Rolls-Royce to give to their customers. Rain obtained a pass from an AMC and attended the event.

At the event, Rain spoke with various Rolls-Royce employees-including Scott Crislip, then the President of the Rolls-Royce Helicopter Division-without incident. While Rain was speaking with Rolls-Royce employee Tom Leonard, Jeff Edwards, a Rolls-Royce vice-president, approached Rain. Concerned that Rain

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would " bait" a Rolls-Royce employee into making a disparaging comment about him, Edwards told Rain that his presence at the event was inappropriate, and asked him to leave. Both Leonard and another Rolls-Royce employee, Andrew Maasch, were in the vicinity while Edwards spoke to Rain. Rain exited the event through the hotel lobby, at Edwards's direction, and Edwards followed Rain out. On his way out, Rain passed a business associate, Eric Witters, and told Witters that he was " getting kicked out."

Another individual, Steve Van Hemert, also was asked to leave the event. Van Hemert is the general manager of a shop that services Model 250 engines. Representatives from the AMCs were upset that Rolls-Royce had asked some of their invited guests-for whom they had purchased tickets-to leave the event.

B. Procedural History

On September 25, 2007, appellants filed a breach of contract suit alleging that Rolls-Royce had breached the non-disparagement provision in the 2006 settlement agreement-once by including certain allegations in the Texas complaint, and again by escorting Rain out of the Heli-Expo event. The district court granted Rolls-Royce's motion for partial summary judgment as to the claim based on the Texas lawsuit, finding that even if Rolls-Royce disparaged appellants by accusing them of being involved in racketeering and other wrongdoing, Rolls-Royce was immune from liability under Indiana's absolute litigation privilege. Following a bench trial on appellants' other breach of contract claim, the district court held that Rolls-Royce's treatment of Rain at the Heli-Expo event did not constitute disparagement in violation of the settlement agreement. In reaching that conclusion, the court looked to Black's Law Dictionary to identify the plain and ordinary meaning of the term " disparage," which it found to be: " [t]o dishonor (something or someone) by comparison" or " [t]o unjustly discredit or detract from the reputation of (another's property, product or business)." The trial judge found that while Rolls-Royce's action may have caused Rain embarrassment, it did not detract from his reputation as a businessman or reflect poorly on his character, his products or his business dealings, and thus did not constitute disparagement. Appellants timely appealed both rulings.

II. Discussion

A. Indiana's Absolute Litigation Privilege and the Texas Lawsuit

We review de novo a district court's grant of summary judgment. See Lewis v. Downey, 581 F.3d 467, 472 (7th Cir.2009). A grant of summary judgment is appropriate where " there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). On appellate review, we review the facts and inferences in the light most favorable to the nonmoving party. See Haefling v. UPS, 169 F.3d 494, 497 (7th Cir.1999).

" Indiana law has long recognized an absolute privilege that...

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