Gillette Co. v. Provost

• Decision Date: 07 March 2017
• Docket Number: No. 16-P-42,16-P-42
• Parties: The GILLETTE COMPANY v. Craig PROVOST & others.
• Court: Appeals Court of Massachusetts

91 Mass.App.Ct. 133

74 N.E.3d 275

The GILLETTE COMPANY

v.Craig PROVOST & others.¹

No. 16-P-42

Appeals Court of Massachusetts, Suffolk..

Argued October 13, 2016.

Decided March 7, 2017.

Christopher Morrison, Boston, for the plaintiff.

Brian C. Swanson, of Illinois, for the defendants.

Present: Wolohojian, Carhart, & Shin, JJ.

SHIN, J.

The Gillette Company sued four of its former employees (the individual defendants), claiming that they misappropriated Gillette's trade secrets and other confidential information to develop a wet-shaving razor for the benefit of their new employer, the defendant ShaveLogic, Inc. After ShaveLogic counterclaimed, alleging that Gillette brought its lawsuit in bad faith, Gillette moved to dismiss the counterclaims on grounds that the filing of the lawsuit was petitioning activity protected by G. L. c. 231, § 59H (commonly known as the anti-SLAPP² statute), and was protected by the litigation privilege. A judge of the Superior Court denied the motion, and Gillette filed this interlocutory appeal.

We conclude that, based on the record before her, the judge could have found that ShaveLogic met its burden of showing that Gillette's petitioning activity was "devoid of any reasonable factual support" and caused ShaveLogic "actual injury." Under the anti-SLAPP statute, that showing was sufficient to allow the counterclaims to go forward. We further conclude that the litigation privilege does not bar the counterclaims because they seek to hold Gillette liable not for speech, but for conduct (its act of filing an allegedly groundless lawsuit), to which the privilege does not apply. We therefore affirm that part of the judge's order resolving these two issues in ShaveLogic's favor.³

Background. We summarize the allegations made by each party, reserving other facts as they become relevant to our analysis of the issues raised.

1. Gillette's claims. The complaint alleges the following facts: Gillette is in the business of "designing, manufacturing, and marketing razors and other shaving products." As a leader in this field, Gillette holds "thousands of patents covering razors and other shaving technology." It is also "constantly researching and designing new technology and advancing current technology" and "has taken affirmative steps to protect the confidentiality of" information related to those efforts.

Each of the individual defendants once worked for Gillette in positions that gave them access to Gillette's confidential information and trade secrets, including confidential information "relating to magnetic attachments for shaving cartridges and elastomeric pivots."⁴ In addition, at least one of the individual defendants, while at Gillette, "produced and/or otherwise worked on sketches and/or prototypes with respect to several magnetic attachment and elastomeric pivot concepts." Upon their respective separations from Gillette, the individual defendants agreed that they would not use Gillette's confidential information or share it with any non-Gillette employee or entity. They also agreed "to disclose and assign to Gillette any invention, idea, or improvement made or conceived during their employment at Gillette."

ShaveLogic is one of Gillette's competitors "in the wet shaving field." At some point after the individual defendants left Gillette, ShaveLogic hired them as employees or retained them as consultants. Thereafter, ShaveLogic filed several patent applications relating to the use of magnetic attachments and elastomeric pivots in razors. One of those applications, which was directed to a magnetic attachment for a shaving cartridge, became United States Patent No. 8,789,282 (the '282 patent). ShaveLogic is the owner of the '282 patent, and two of the individual defendants are named inventors.

Based on these allegations, the complaint asserts that the individual defendants "used Gillette confidential information and trade secrets to design, invent, and/or otherwise contribute to the technology covered by the '282 patent and the [p]atent [a]pplications, including but not limited to magnetic attachment and elastomeric pivot concepts." Against the individual defendants, the complaint raises claims for breach of contract, misappropriation of trade secrets, and unfair and deceptive acts and practices in violation of G. L. c. 93A. Against ShaveLogic, the complaint asserts one count seeking to impose a constructive trust on the '282 patent and the patent applications.⁵

2. ShaveLogic's counterclaims. The counterclaims allege the following facts: ShaveLogic is a start-up company, which is trying to compete in the wet-shaving market dominated by Gillette. Although Gillette currently holds "over [four] times the market share held by the nearest competitor," its market dominance is being threatened by "new competition from dynamic start-up companies" such as ShaveLogic. In response Gillette has "tak[en] steps to attempt to thwart newer companies" from entering the market.

In May of 2014, Gillette began sending ShaveLogic letters "containing threats of litigation." Gillette sent the letters with the knowledge that ShaveLogic would have to disclose them to its potential investors and marketing and distribution partners. According to ShaveLogic, the letters and the ultimate filing of this lawsuit had their intended effect: ShaveLogic has lost potential investors, and, in November of 2014, a marketing and distribution company withdrew from negotiations with ShaveLogic that had been ongoing for most of that year. Had the negotiations continued, they "would likely have led to a contract for distribution of ShaveLogic razors."

ShaveLogic characterizes this lawsuit as nothing more than "an anti-competitive effort" by Gillette "to harass and to prevent ShaveLogic from becoming a competitor in the wet shaving market." It asserts two counterclaims, the first for intentional interference with advantageous business relationships, and the second for unfair and deceptive acts and practices in violation of G. L. c. 93A.

3. Gillette's motion to dismiss. Gillette filed a motion to dismiss the counterclaims directly under the anti-SLAPP statute, G. L. c. 231 § 59H, and under Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), predicated in part on the litigation privilege. To counter Gillette's arguments under the anti-SLAPP statute, ShaveLogic submitted six declarations, including one from each of the four individual defendants and one from its chief executive officer, Rob Wilson. Gillette submitted one declaration in response, from its legal counsel, John M. Lipchitz.

After considering these materials and conducting a nonevidentiary hearing, the judge issued a memorandum of decision and order denying the motion to dismiss and ruling that the counterclaims could go forward to discovery. Gillette filed a timely notice of this interlocutory appeal.

Discussion. 1. Anti-SLAPP statute. General Laws c. 231, § 59H, inserted by St. 1994, c. 283, § 1, provides that "[i]n any case in which a party asserts that the civil claims, counterclaims, or cross claims against said party are based on said party's exercise of its right of petition under the constitution of the United States or of the commonwealth, said party may bring a special motion to dismiss." When deciding such a motion, the judge "shall consider the pleadings and supporting and opposing affidavits stating the facts upon which the liability or defense is based." Ibid. See Van Liew v. Stansfield, 474 Mass. 31, 36, 47 N.E.3d 411 (2016). If the judge denies the motion, the moving party may immediately appeal under the doctrine of present execution. See Fabre v. Walton, 436 Mass. 517, 521–522, 781 N.E.2d 780 (2002). Our review on appeal is limited to determining whether the judge committed an abuse of discretion or other error of law. See Baker v. Parsons, 434 Mass. 543, 550, 750 N.E.2d 953 (2001) ; Burley v. Comets Community Youth Center, Inc., 75 Mass.App.Ct. 818, 821, 917 N.E.2d 250 (2009).

A two-part test governs special motions to dismiss under G. L. c. 231, § 59H. First, the moving party must "make a threshold showing through the pleadings and affidavits that the claims against it are ‘based on’ ... petitioning activities alone and have no substantial basis other than or in addition to the petitioning activities." Duracraft Corp. v. Holmes Prods. Corp., 427 Mass. 156, 167–168, 691 N.E.2d 935 (1998). Here, ShaveLogic conceded that its counterclaims are "based on" petitioning activity by Gillette, namely, its act of filing this lawsuit. See G. L. c. 231, § 59H (petitioning activities include "any written or oral statement made before or submitted to a ... judicial body" or "made in connection with an issue under consideration or review by a ... judicial body"); Van Liew, 474 Mass. at 36, 47 N.E.3d 411 (application for harassment prevention order qualified as petitioning activity under anti-SLAPP statute).⁶ The focus of our inquiry is therefore on the second part of the test, which shifts the burden to the nonmoving party to prove "by a preponderance of the evidence" that the petitioning activities at issue were "devoid of any reasonable factual support or any arguable basis in law" and caused the nonmoving party "actual injury." Van Liew, 474 Mass. at 36, 47 N.E.3d 411, quoting from G. L. c. 231 § 59H. See Baker, 434 Mass. at 553–554, 750 N.E.2d 953. The motion judge did not abuse her discretion in concluding that ShaveLogic satisfied both of these requirements.

With respect to the first requirement, the judge could have found by a preponderance of the evidence that Gillette's complaint was "devoid of any reasonable factual support." As the judge observed, ShaveLogic's burden on this issue was a high one: it had to demonstrate that "no reasonable person could conclude" that there was a factual basis to support Gillette's claims.

Baker, 434 Mass. at 555 n.20, 750 N.E.2d 953 (quotation omitted). Even so, ShaveLogic submitted enough evidence to permit the judge to find that it met...