Heary Bros. Lightning Prot. v. Lightning Prot.

• Citation: 287 F.Supp.2d 1038
• Decision Date: 23 October 2003
• Docket Number: No. CV962796PHXROS.,CV962796PHXROS.
• Parties: HEARY BROS. LIGHTNING PROTECTION CO., INC., et al., Plaintiffs, v. LIGHTNING PROTECTION INSTITUTE, et at., Defendants.
• Court: U.S. District Court — District of Arizona

287 F.Supp.2d 1038

HEARY BROS. LIGHTNING PROTECTION CO., INC., et al., Plaintiffs, v. LIGHTNING PROTECTION INSTITUTE, et at., Defendants.

No. CV962796PHXROS.

United States District Court, D. Arizona.

October 23, 2003.

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Michael Lee Parrish, Stinson, Morrison, Hecker, LLP, Phoenix, AZ, Linda H. Joseph, Schroder, Joseph & Associates, LLP, Buffalo, NY, for Plaintiffs.

Deana S Peck, Esq., David Geoffrey Bray, Esq., Quarles & Brady, Streich, Lang, LLP, Debra Ann Sirower, Esq., Bryan Cave, LLP, Edwin F. Hendricks, Sr., Esq., Paul Lincoln Stoller, Meyer, Hendricks & Bivens, PA, Joseph A. Kula, Esq., Law Offices of Joseph A. Kula, John C. Gemmill, Esq., Sanders & Parks, PC, Kendall Douglas Steele, Esq., Jardine, Baker, Hickman & Houston, PLLC, Jon D. Schneider, Esq., Jennings, Strouss & Salmon, PLC, Phoenix, AZ, Maureen Brodoff, National Fire Protection Association, Quincy, MA, Stacey Anne Mahoney, Constantine & Partners, PC, New York, NY, Barbara Janet Forde, Esq., Chickasha Cotton Oil Co., Chandler, AZ, Ronald Lynn Snelling, Snelling, Christensen & Laue, PA, Minneapolis, MN, Mark Alan Glick, Parsons, Behle & Latimer, LLC, Salt Lake City, UT, Elizabeth Paula Gilson Elizabeth P. Gilson Attorney at Law, New Haven, CT, for Defendants.

ORDER

SILVER, District Judge.

This case presents a variety of complex antitrust and false advertising issues in dispute among the parties, all participants in the lightning protection system industry. On March 31, 2003, the Court issued preliminary rulings on a number of pending motions, and on May 2, 2003, the Court held a hearing and heard arguments on all pending motions, including those with preliminary rulings. This Order resolves all pending motions and supersedes all previous rulings on these motions.

I. BACKGROUND

A. Procedural Overview

Plaintiffs are three manufacturers and distributors of lightning protections systems, Heary Brothers Lightning Protection Co., Inc. ("Heary Bros."), Lightning Preventor of America, Inc. ("LPA"), and the National Lightning Protection Corp. ("NLPC"). In or about 2001, LPA was merged into and became a division of Heary Bros. ("Heary/LPA"). Heary October Aff. ¶ 2 [Doc. # 282]. Heary/LPA manufactures and distributes two types of lightning protection systems: "conventional" systems (also known as "Faraday" or "Franklin" systems), and Early Stream Emission ("ESE") systems. Heary Oct. Aff. ¶ 3. NLPC manufactures and distributes conventional systems, and also distributes an ESE system known as the Prevectron, which is manufactured by Indelec, a French-based company. Rapp Aff. ¶ 3 [Doc. # 283].

Defendants are a number of other entities involved in the lightning protection industry. Defendant Lightning Protection Institute ("LPI") is a not-for-profit corporation that functions as a trade association of manufacturers and distributors of lightning protection systems. Second Amended Compl. ¶ 9 [Doc. # 206]. Defendant Thompson Lightning Protection Inc. ("Thompson") is a manufacturer and distributor of lightning protection systems, and Defendant Allan Steffes ("Steffes") is the Chairman, agent, and representative of Thompson. Sec. Am. Compl. ¶¶ 10-11. Defendant East Coast Lightning Equipment, Inc. ("East Coast") is also a manufacturer and distributor of lightning protections systems. Sec. Am. Compl. ¶ 12. The President of East Coast, Charles Ackerman ("Ackerman") was originally named as a Defendant but was dismissed for lack of personal jurisdiction, though Plaintiffs continue to name him as a co-conspirator for purposes of the Sherman Act. Order of 12/4/97 [Doc. # 75]. Thompson manufactures and distributes both conventional and ESE systems, but East Coast manufactures only conventional systems of lightning protection.

In its Second Amended Complaint, Plaintiff sues Defendants on a variety of counts. Count I alleges violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, against all Defendants. Count II alleges violations of Section 43(a) of the Lanham Act, codified at 15 U.S.C. § 1125(a), against Defendants Thompson, Steffes, and East Coast. Count III alleges common law claims for unfair competition, product defamation, and civil conspiracy against all Defendants. Count IV alleges common law interference with contractual relations against Defendant East Coast. In addition, East Coast has filed a Counterclaim against all Plaintiffs, alleging violations of Section 43(a) of the Lanham Act. As further explained below, Plaintiffs' Sherman Act claim (Count I) and East Coast's Lanham Act Counterclaim remain the key issues in dispute.

B. Statement of Facts

Plaintiffs' Sherman Act claim centers around a meeting of the National Fire Protection Association in November 1993. The National Fire Protection Association ("NFPA") promulgates a particular standard for the installation of lightning protection systems, NFPA 780. EC SSOF ¶ 3. The NFPA has maintained this standard, subject to some modifications and revisions, since 1904. DSOF ¶ 3. Lightning protection systems installed in conformance with NFPA 780, require a series of air terminals (commonly known as "lightning rods") spaced out over defined intervals on the protected structure, in addition to a network of ground terminations, conducting cables, and surge suppression devices. EC SSOF ¶ 4. These lightning protection systems function when lightning strikes an air terminal, and the resulting charge is dispersed safely to the ground. EC SSOF ¶¶ 2, 5. Certain organizations, most prominently the Underwriters Laboratory ("UL"), certify that conventional lightning protection systems are installed in compliance with NFPA 780. EC SSOF ¶¶ 3, 6.

ESE lightning protection systems are founded upon use of an ESE air terminal. According to its proponents, ESE air terminals function differently than conventional air terminals. The proponents of ESE terminals claim that ESEs produce greater levels of ionization at an earlier time before an imminent lightning strike than do conventional air terminals. The ionization results in a "upward streamer" which draws the lightning, such that it strikes the ESE terminal rather than any surrounding structure (hence, the name "Early Streamer Emission"). While conventional air terminals also produce "upward streamers," ESE proponents claim that the early time advantage translates into a longer upward streamer, and that this length provides a greater "zone of protection" than would a conventional air terminal standing alone.

Because ESE terminals allegedly provide an enhanced zone of protection, ESE systems require many less terminals than conventional systems, and smaller structures might require only a single terminal. ESE terminals themselves cost more than conventional terminals, but ESE systems are often cheaper than conventional systems, because less equipment may be required, depending on the size of the structure. EC SSOF ¶ 13. While ESE terminals can be installed in compliance with NFPA 780, the added cost of multiple ESE terminals would be considerably more expensive. Proponents claim that an ESE system, installed in a configuration not in compliance with NFPA 780, can protect more area than a conventional system installed in compliance with NFPA 780.

On or about April 24, 1990, the Standards Council of the NFPA formed a technical committee (the "781 Committee") to investigate lightning protections systems using ESE technology. DSOF ¶ 7. The 781 Committee was charged with determining whether the development of a standard for ESE systems was appropriate. DSOF ¶ 7. Both Kenneth Heary, of Plaintiff Heary Bros., and Robert Rapp ("Rapp") of Plaintiff NLPC were members of the 781 Committee. DSOF ¶ 9. The 781 Committee drafted a proposed standard for the installation of ESE systems, known as the Draft or Proposed NFPA 781 Standard, which was circulated to the NFPA membership for commentary sometime in March or April 1993. DSOF ¶¶ 10-11. The NFPA received approximately 269 comments regarding the Draft NFPA 781, and these comments, together with the 781 Committee's responses, were circulated to the NFPA's membership prior to a general membership meeting on November 15-18, 1993 in Phoenix, Arizona. DSOF ¶¶ 12-13.

On November 17, 1993, the general membership of the NFPA was scheduled to vote on the Technical Committee report regarding Proposed NFPA 781. DSOF ¶ 14. The membership vote could either adopt some or all of the report, or return some or all of the report to the Technical Committee for further study. DSOF ¶ 5. A membership vote to adopt the report would not have resulted in the immediate adoption of the NFPA 781 standard; rather, the Standards Council would make the final judgment whether to adopt the standard on the basis of "the entire record," which included the vote taken at the NFPA general membership meeting. DSOF ¶ 6.

On or before the scheduled vote of November 17, a number of individuals, including Charles Ackerman ("Ackerman"), President of East Coast, distributed handouts opposing the adoption of NFPA outside the hotel, in the lobby, and allegedly inside the meeting room. DSOF ¶ 15. Ackerman admitted in his deposition that he was told by some staff member of the NFPA to stop distributing the handouts. Although he testified that he believed that he had a right to hand them out in a public place, and that the NFPA "kind of drew a line and told us not to hand them out towards the entrance of the meeting hall or towards the door," he also testified that he continued to distribute the handouts, saying "NFPA told us to stop. We didn't stop." Ackerman Dep. at 247-8, Exh. 6 to PSOF. David McAfee ("McAfee"), acting chairman of the 781 Committee, met with other members of the 781 Committee, including Ken Heary and Rapp, to discuss how to respond to the distribution of the handouts. PSOF ¶¶ 16-18. Based in part upon the advice of Andy O'Connor ("O'Connor"), who chaired the 781 Committee but...