Better Government Bureau, Inc. v. McGraw

• Decision Date: 16 October 1995
• Docket Number: Civ. A. No. 2:94-0952.
• Citation: 904 F. Supp. 540
• Court: U.S. District Court — Southern District of West Virginia
• Parties: BETTER GOVERNMENT BUREAU, INC., an Ohio Corporation, Plaintiff, v. Darrell V. McGRAW, Jr., et al., Defendants.

904 F. Supp. 540

BETTER GOVERNMENT BUREAU, INC., an Ohio Corporation, Plaintiff, v. Darrell V. McGRAW, Jr., et al., Defendants.

Civ. A. No. 2:94-0952.

United States District Court, S.D. West Virginia, Charleston Division.

October 16, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

E. Joseph Buffa, Jr., Kopelman & Associates, Charleston, WV, Roger P. Furey and Michael B. Adlin, Arter & Hadden, Washington, DC, for plaintiff.

David P. Cleek, Cleek, Pullin, Knopf & Fowler, Charleston, WV, for defendants.

MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending are the parties' cross motions for summary judgment. This matter is now fully briefed and postured for adjudication. The Court hereby GRANTS summary judgment to Plaintiff on the issue of qualified immunity. The Court further GRANTS summary judgment to Defendants on the official capacity claims alleged against them in Plaintiff's state law causes of action. With the exception of these rulings, the Court DENIES the remainder of the parties' cross motions for summary judgment.

I. FACTUAL BACKGROUND

Plaintiff Better Government Bureau, Inc., (BGB) alleges it is a "watchdog" of government activities with a membership of forty-seven businesses and 304 individuals from various states. BGB commenced operations in August 1993 and asserts it monitors government activities and disseminates information about government policies impacting business. Plaintiff's president, Kenneth Nickalo, summarized the workings of BGB as follows:

Where appropriate, we express our opinion in various public media and forums on matters of importance to our members and to the business community in general.

....

The BGB has a procedure for its members to follow if they have complaints about the policies or activities of the government, or about the manner in which the member has been treated by the government.

Nickalo aff. ¶¶ 3, 5. BGB derives its income from the dues paid by its members.

In August 1994 a BGB member, Suarez Corporation Industries (SCI), registered a complaint with the BGB arising out of action taken against SCI by the West Virginia Attorney General concerning SCI's advertising practices.¹ Specifically, the Attorney General alleged SCI (1) violated the West Virginia Consumer Credit and Protection Act, West Virginia Code §§ 46A-1-101 et seq., and (2) engaged in fraudulent activities with regard to direct mail marketing practices. SCI requested BGB to investigate its complaint and act accordingly.

BGB undertook preliminary investigative efforts with little apparent success. For instance, Nickalo asserts employees of the Attorney General's office refused BGB's requests under the Freedom of Information Act. Subsequently Plaintiff purchased time with three Charleston area radio stations to broadcast the following announcement on September 8, 1994:

THIS IS AN IMPORTANT ANNOUNCEMENT

The Better Government Bureau is investigating the actions of Attorney's General Darrell McGraw and Tom Rodd.

Voters already removed McGraw from the State Supreme Court because of his poor performance.

Now we are trying to obtain public information about the Attorney General under the "Freedom of Information Act", but it has been denied. What are McGraw and Rodd trying to hide?

If you have any information about Darrell McGraw, Tom Rodd or anyone in the Attorney General's office, please contact the Better Government Bureau toll free at XXXX-XXX-XXXX.

Nickalo aff. ex. E.

Approximately two weeks later, an article concerning BGB's activities appeared in the Charleston Gazette, a newspaper of general circulation in West Virginia. In part, the article quoted Nickalo as saying "the BGB plans to open a Charleston office and possibly start a West Virginia chapter." Nickalo also spoke of plans to lobby the Legislature and said BGB was aligning itself with the Christian Coalition. Nickalo was further reported to have said "`we all have one thing in common: We're sick of the state government of West Virginia.... We think we can crack politics in West Virginia, use what we do in West Virginia as a model, and do what we'll do in West Virginia in other states.'" Id. ex. F. The article also spoke of a sharply critical newsletter distributed by BGB concerning Rodd and McGraw.

Consistent with this announcement, Plaintiff took steps to incorporate a West Virginia chapter of its organization under the name "Better Government Bureau, Inc." during the first week of October 1994. As an interim measure, BGB applied to the West Virginia Secretary of State for a certificate of authority to do business as a foreign corporation. That office refused the application, explaining Defendant McGraw had filed articles of incorporation the previous week for a company using the words "Better Government Bureau" as part of its name.² BGB later learned of events that preceded Defendant McGraw's incorporation of the challenged entity.

On September 30, 1994 Defendant McGraw instructed one of his employees to reserve the name Better Government Bureau with the West Virginia Secretary of State.³ The employee was informed by a clerk at the Secretary of State's office that anyone attempting to reserve the Better Government Bureau name was first required to see Donald L. Wilkes, Director of the Corporations Division. The employee was then turned away by the clerk due to Wilkes' absence.⁴ When the employee returned to the Attorney General's office and informed Defendant McGraw of what transpired, the Attorney General instructed the employee to see Defendant Hechler personally about the matter. When the employee returned to the Secretary of State's office, Defendant Hechler personally escorted her to the Corporations Division. The employee then was permitted to reserve the "Better Government Bureau" name. Later in the day, the employee and Defendant McGraw prepared the necessary filings for the entity and they returned to the Secretary of State's office to seek incorporation. Defendant McGraw wrote a personal check to pay the incorporation fee.

On October 4, 1994 Defendant McGraw communicated with fifty-three attorneys general in various states and territories. His letter stated, in part, as follows:

Please review the enclosed newspaper article, paying particular attention to paragraph 5B and the activities of the Better Government Bureau described therein.

If your office becomes involved in a sweepstakes probe, you will encounter this corporation. To foreclose the possibility of such a corporation operating in your State, you may want to register the name of the Better Government Bureau as an agent for the Attorney General's office with the Secretary of State's Office or take other preventative measures.

Pl's. Mot. for Sum. Jgt. ex. 10.

Defendant McGraw forwarded a similar letter to the same parties on October 6, 1994. The letter alleged an SCI attorney "threatened violence" upon an assistant attorney general, and further read as follows:

When you come up against these people, you should know that there is a possibility that their modus operandi might include a proclivity to violence.

Please recall my recent letter, in which I recommended that you protect the name Better Government Bureau in your State, otherwise when you act to protect your consumers you will be attacked by a Better Government Bureau for doing so.

Id. ex. 12.

About the same time, Nickalo sent letters to both Defendants Hechler and McGraw seeking elimination of the obstacles BGB was encountering in its attempts to register its name in West Virginia. His efforts met with limited success. Wilkes advised Nickalo the BGB name conflicted with the name chosen by Defendant McGraw and was thus not available for use in West Virginia. Wilkes further advised Nickalo: "consent from the conflicting name holder is necessary to use a confusingly similar name." Nickalo aff. ex. G.⁵ Further, Defendant Hechler advised Nickalo as follows: "As I understand you are already conducting business in Charleston, WV; you should consult with your attorney." Pl's. Mot. for Sum. Jgt. ex. 13. Plaintiff's continued efforts to obtain permission to do business in West Virginia under the mark "Better Government Bureau, Inc." have met similar obstacles.

The record suggests other possible intimidatory or retaliatory activity by Defendants. The Attorney General's office contacted a BGB member, Imperial Marketing, one of the one hundred plus companies sued by the Attorney General, to discuss settlement. As a precondition to settlement, the Attorney General's office suggested Imperial Marketing discontinue its membership in BGB. Imperial Marketing resigned its membership in BGB, sent a copy of the resignation letter to an official in the Attorney General's office, and requested it be kept confidential. Subsequently the letter was leaked to the Charleston Gazette and BGB alleges its publication has had a chilling effect on BGB's attempts to attract new members in West Virginia.

On October 28, 1994 Plaintiff filed a verified complaint alleging (1) state and federal unfair competition claims and (2) a denial of Plaintiff's right to free speech under both the First Amendment to the United States Constitution and Article III, Sections Seven and Sixteen of the West Virginia Constitution. On November 22, 1994 Plaintiff sought a temporary restraining order and preliminary injunction. The Court denied the requested relief on December 2, 1994. Following discovery, the parties filed the instant cross motions for summary judgment.

II. THE LAW

A. Summary Judgment on the Unfair Competition and Constitutional Claims.

The well-settled standard governing the disposition of a motion for summary judgment was recently restated by our Court of Appeals:

A moving party is entitled to summary judgment `if the pleading, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact and that the moving party is

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