Intercon Solutions, Inc. v. Basel Action Network & James Puckett

• Citation: 969 F.Supp.2d 1026
• Decision Date: 28 August 2013
• Docket Number: No. 12 C 6814.,12 C 6814.
• Parties: INTERCON SOLUTIONS, INC., Plaintiff, v. BASEL ACTION NETWORK and James Puckett, Defendants.
• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)

969 F.Supp.2d 1026

INTERCON SOLUTIONS, INC., Plaintiff,

v.BASEL ACTION NETWORK and James Puckett, Defendants.

No. 12 C 6814.

United States District Court,

N.D. Illinois,

Eastern Division.

Aug. 28, 2013.

Limited on Preemption Grounds

West's RCWA 4.24.525Paul Ely Starkman, Svetlana Zavin, Pedersen & Houpt, P.C., Chicago, IL, for Plaintiff.

George Carter Lombardi, Brendan Francis Barker, Christopher B. Essig, Winston & Strawn LLP, Chicago, IL, John Wentworth Phillips, Phillips Law Group, PLLC, Seattle, WA, for Defendants.

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

Plaintiff Intercon Solutions, Inc. is a California-based provider of e-recycling services that operates an e-recycling facility in Illinois. Defendant Basel Action Network (“BAN”) is a non-profit Seattle-based corporation that certifies businesses that provide e-recycling services. Intercon alleges that BAN and its founder and Executive Director, James Puckett (“Puckett”) defamed and placed Intercon in a false light by falsely and publicly accusing it of shipping hazardous e-Waste to China and Hong Kong. In addition to its defamation and false light claims, Intercon seeks an injunction restraining the Defendants from: (1) disseminating Intercon's confidential information; (2) stating that Intercon engages in illegal and unethical business practices; and (3) stating that Intercon was in possession of and shipped hazardous waste to China and Hong Kong. Defendants raise various affirmative defenses in their Amended Answer to Intercon's Complaint, including lack of personal jurisdiction, improper venue, unclean hands, and substantial truth. Defendants also assert that Intercon's Complaint is barred by Illinois and Washington anti-SLAPP (“Strategic Lawsuits Against Public Participation”) provisions and the First Amendment of the United States Constitution under the Noerr–Pennington doctrine. BAN has filed a Counterclaim seeking a declaration pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, that Intercon exports waste to China contraryto its representations to the public and that BAN's decision to deny e-Stewards certification to Intercon Solutions was justified.

The following Motions are before the Court: (1) Defendants' Motion to Dismiss Intercon's Complaint pursuant to the Washington Anti–SLAPP Act, RCW 4.24.510; (2) Defendants' Special Motion to Strike Intercon's claims, also pursuant to the Washington Anti–SLAPP Act, RCW 4.24.525; (3) Defendants' Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c); (4) Intercon's Motion to Dismiss, or in the alternative, Strike Defendants' affirmative defenses of improper venue, lack of personal jurisdiction, and unclean hands; and (5) Intercon's Motion to Strike and/or Dismiss BAN's Counterclaim. For the reasons stated herein, Defendants' Special Motion to Strike pursuant to RCW 4.24.525 and Motion for Judgment on the Pleadings are denied. Defendants' Motion to Dismiss pursuant to RCW 4.24.510 is granted in part and denied in part. Intercon's Motions to Strike Defendants' First and Second Affirmative Defenses and to Dismiss BAN's Counterclaim are granted. Intercon's Motion to Strike Defendants' Fourth Affirmative Defense is denied.

BACKGROUND

Intercon is a California-based corporation that is in the business of providing electronic recycling (“e-recycling”) services. (Complaint, ¶ 1.) In the e-recycling business, companies obtain certifications of compliance with certain industry standards upon which some customers rely. ( Id.) BAN is a non-profit corporation that certifies businesses that provide e-recycling services. ( Id. ¶ 2.) Intercon retained BAN to organize an audit on Intercon's business so that Intercon could obtain e-Stewards certification, a certification offered by BAN to companies that provide e-recycling services. ( Id. ¶ 5.) At the conclusion of its audit, BAN decided not to certify Intercon to the e-Stewards standard. ( Id. ¶ 15.)

Intercon alleges that during the audit, BAN abused its access to confidential information provided by Intercon by engaging in unlawful surveillance of Intercon's premises. ( Id. ¶ 6.) Intercon also alleges that after denying it the e-Stewards certification, BAN went on to state publicly—and falsely—that there was substantial evidence that Intercon shipped two containers of illegal and hazardous materials to Hong Kong and China. ( Id. ¶ 7.) According to Intercon, BAN wrongly concluded and made false public accusations that two containers parked on Intercon's premises contained hazardous e-Waste materials, that Intercon owned the supposedly hazardous e-Waste held within the containers, and that Intercon shipped the containers with hazardous material to China and Hong Kong. ( Id.)

Specifically, Intercon alleges that on or about June 28, 2011, James Puckett (“Puckett”), the founder and Executive Director of BAN, falsely stated in a letter posted on BAN's website that “there is substantial evidence that during the period of time that Intercon Solutions was contracted to be certified, Intercon Solutions exported hazardous electronic waste to China ... in violation of the e-Stewards Standard for Responsible Recycling and Reuse of Waste.” ( Id. ¶ 10.) The letter further states that “there is substantial reason to believe that such exports may violate Public Act 095–0959 ... of the State of Illinois, the Federal CRT Rule, ... as well as the waste importation laws of Hong Kong/China.” ( Id.) Intercon alleges that this letter was sent to selected news media, John Fraser of SAI Global, John Lingelbach of R2 Solutions, and remained accessible on the Internet. ( Id. ¶ 11.) Intercon also asserts that BAN attached to this letter its purported “Evidentiary Report of Potential e-Stewards Violation” (the “Evidentiary Report”). ( Id. ¶ 11.) According to Intercon, the Evidentiary Report falsely accuses Intercon of illegally shipping containers containing e-Waste to China and Hong Kong in violation of U.S. and Chinese law. ( Id. ¶¶ 12–13.) Intercon alleges that the Evidentiary Report also implies that BAN had evidence and facts to support its accusations against Intercon, when in fact BAN had no such evidence or facts. ( Id. ¶ 12.) The Evidentiary Report, like the letter, was publicized to selected news media, John Fraser, John Lingelbach, and remains readily accessible on the Internet. ( Id. ¶ 14.) Next, Intercon alleges that on or about July 5, 2011, BAN posted on its website, www. ban. org, another defamatory press release falsely stating that that BAN denied Intercon the e-Stewards certification based on “ ‘compelling evidence’ that Intercon had been exporting hazardous waste to China in violation of the United Nation's Basel Convention. ( Id. ¶ 15.) In a subsequent press release, Puckett stated, in what Intercon alleges to be an obvious reference to Intercon, that “[i]t is very sad that many e-Waste recycling companies continue to pose as ‘responsible recyclers' while they continue to export toxic waste.... In this case, we can take some satisfaction that our e-Stewards Certification screening methods and audits caught what BAN has every reason to believe is a violator.” ( Id. ¶ 16.) Intercon further alleges that BAN issued another press release on August 4, 2011, in which Puckett falsely stated that one of Intercon's containers “was known to contain hazardous waste.” ( Id. ¶ 17.)

DISCUSSION

I. Defendants' Anti–SLAPP Defenses

Anti–SLAPP statutes are intended to “address lawsuits brought primarily to chill the valid exercise of the constitutional rights of free speech and petition for redress of grievances.” RCW 4.24.525, Note 1(a). “The term ‘SLAPP,’ which stands for ‘Strategic Lawsuit Against Public Participation,’ was coined by two professors at the University of Denver, George W. Pring and Penelope Canan, who conducted the seminal study on this type of lawsuit.” Sandholm v. Kuecker, 2012 IL 111443, 356 Ill.Dec. 733, 962 N.E.2d 418, 427 (Ill.2012) (citing George W. Pring and Penelope Canan, “Strategic Lawsuits Against Public Participation” (“SLAPPs”): An Introduction for Bench, Bar, and Bystanders, 12 Bridgeport L.Rev. 937 (1992)). SLAPPs “masquerade as ordinary lawsuits” and may include myriad causes of action, including defamation, interference with contractual rights or prospective economic advantage, and malicious prosecution. See Kathryn W. Tate, California's Anti–SLAPP Legislation: A Summary of and Commentary on Its Operation and Scope, 33 Loy. L.A. L.Rev. 801, 804–05 (2000). The motive for filing a SLAPP is not to win but rather to chill the defendant's speech or protest activity and discourage opposition by others through delay, expense, and distraction. See John C. Barker, Common–Law and Statutory Solutions to the Problem of SLAPPs, 26 Loy. L.A. L.Rev. 395, 403–05 (1993). By forcing defendants to expend funds on litigation costs and attorney fees, the SLAPP plaintiff's goal of discouraging the defendant's protest activities are achieved through the ancillary effects of the lawsuit, not through an adjudication on the merits.¹See id. at 406. Recognizing that imposing litigation costs rather than winning is a SLAPP plaintiff's primary motivation, several states have enacted “anti-SLAPP” legislation aimed at “provid[ing] for expedited judicial review, summary dismissal, and recovery of attorney fees for the party who has been ‘SLAPPed.’ ” Sandholm, 356 Ill.Dec. 733, 962 N.E.2d at 428 (citations omitted).

Defendants offer two bases for dismissal pursuant to the Washington's Anti–SLAPP Act (the “Act”), RCW 4.24.500 et seq. First, Defendants assert they are immune from civil liability pursuant to RCW 4.24.510 because the communications that form the basis of Intercon's claims conveyed information to government agencies and concerned matters reasonably of concern to those agencies. Second, Defendants argue that Intercon's claims against it should be stricken pursuant to RCW 4.24.525 because they arise from ...