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COURT OF APPEALS DECISION DATED AND RELEASED August 1, 1995 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-2922
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
T.C. #88-CV-018071
CENTURY SHOPPING
CENTER FUND I,
a Wisconsin Limited
Partnership, by its
general partner,
Century Capital Group,
and CENTURY MANAGEMENT
GROUP, LTD.,
a Wisconsin
corporation,
Plaintiffs-Joint-Appellants,
v.
MALONE & HYDE,
INC., a Delaware
Corporation, as
successor in interest
to Godfrey Company,
Inc., JOSEPH A.
CRIVELLO and CRIVELLO
PROPERTIES,
a General Partnership,
Defendants-Respondents.
---------------------------------------------------------------------------------------
T.C. #93-CV-008413
MARQUETTE PHARMACY,
INC., a Wisconsin
Corporation, SUSAN L.
KULINSKI, d/b/a
Oak Creek Book
Exchange, a Sole
Proprietorship, RONALD
J. and MARGARET S.
ENTRINGER, d/b/a Oak
Creek Homestyle
Laundry and Cleaners,
a Wisconsin General
Partnership,
Plaintiffs-Joint-Appellants,
v.
MALONE & HYDE,
INC., a Delaware Corporation,
JOSEPH A. CRIVELLO and
CRIVELLO PROPERTIES,
a General Partnership,
Defendants-Respondents.
---------------------------------------------------------------------------------------
T.C. #93-CV-013728
RONALD P. HUNTLEY, as
and only as Trustee
in Bankruptcy of
HOWELL PLAZA, INC.,
Plaintiff-Joint-Appellant,
v.
MALONE & HYDE,
INC.,
a Delaware
Corporation,
Defendant-Respondent.
APPEAL from orders of
the circuit court for Milwaukee County:
JOHN E. MCCORMICK, Judge. Reversed.
Before Wedemeyer, P.J.,
Sullivan and Fine, JJ.
FINE, J. This is an appeal from the trial court's
dismissal of consolidated actions brought against what this opinion refers to
as the Sentry defendant—the successor to the entities that owned the anchor
tenant in the Howell Plaza Shopping Center in Oak Creek, Wisconsin, a Sentry
food store. One action was brought by
the former owner and manager of Howell Plaza and by former tenants in the
Howell Plaza shopping center. We refer
to these parties as the “Century plaintiffs,” and to their complaint as the
“Century complaint.” The Century
plaintiffs also sued the Crivello defendants, developers of Oak Creek Centre, a
shopping center across the street from Howell Plaza.[1] The other action, against the Sentry
defendant only, was brought by the trustee-in-bankruptcy of Howell Plaza's
developer and current owner. The trial
court dismissed the complaints and precluded Century from pursuing certain
discovery. We reverse.
I. The
complaints.
A. Standard
of review.
Facts alleged in a
complaint must be taken as true, and “a claim should be dismissed as legally
insufficient only if `it is quite clear that under no conditions can the
plaintiff recover.'” Morgan v.
Pennsylvania Gen. Ins. Co., 87 Wis.2d 723, 731, 275 N.W.2d 660, 664
(1979) (citation omitted).
Unfortunately, the trial court ignored this paradigm. In any event, whether a complaint states a
claim is a question of law that we decide independently of the trial court's
determination. See Williams
v. Security Sav. & Loan Ass'n, 120 Wis.2d 480, 482, 355 N.W.2d 370,
372 (Ct. App. 1984).
B. The
claims.
The complaints filed by
the various plaintiffs allege claims that are either identical or similar to
each other, or are overlapping. For
simplicity of discussion, we analyze the separate claims seriatim.
1. The
Century plaintiffs allege that the Sentry food store owner breached its
anchor-tenant lease. This claim had
been dismissed previously, but the dismissal was reversed by this court in Century
Shopping Center Fund I v. Crivello, 156 Wis.2d 227, 233–237, 456 N.W.2d
858, 861–863 (Ct. App. 1990). The
supreme court denied review. 461 N.W.2d
444 (1990) (Table). The Sentry
defendant argues, and the trial court agreed, that the breach-of-lease issue
could be revisited because the supreme court partially overruled Century
Shopping Center Fund in Sampson Investments v. Jondex Corp.,
176 Wis.2d 55, 69–70, 499 N.W.2d 177, 183 (1993). We disagree.
Sampson Investments
explained that the lease clause in Century Shopping Center Fund
was different than the lease clause in Sampson Investments:
Although
the court of appeals, in Century, required a commercial lessee to
continuously operate a retail food market, the lease at issue in Century
is distinguishable from the lease at issue in the present case. The lease in Century provided that
the premises “shall be used as a retail food market and allied operation.” The provision at issue in Century,
however, differs from the provision at issue in the present case which contains
the word “only.” Furthermore, while the
commercial lessee in Century was not permitted to sublet the premises
without the lessor's written consent, Jondex possesses an unfettered right to
sublet[,] which is inconsistent with a continuous operation clause. Additionally, the lease in Century
contained a percentage-of-gross-receipts as part of the rent component while
the lease at issue in the present case provided for a flat-rate monthly
rent. These distinctions render the Century
case inapposite to the present case.
Sampson
Investments, 176 Wis.2d at 69–70, 499 N.W.2d at 183 (footnote
omitted). Nevertheless, Sampson
Investments opined that the legal analysis in Century Shopping
Center Fund was flawed, and overruled the decision “to the extent it
contradicts the law as expressed herein.”
Id., 176 Wis.2d at 70, 499 N.W.2d at 183.
Absent extraordinary
circumstances, a final appellate decision in a lawsuit is the law of the case
for all subsequent proceedings in that action.
Univest Corp. v. General Split Corp., 148 Wis.2d 29,
38–39, 435 N.W.2d 234, 237–238 (1989) (doctrine may be disregarded “when
`cogent, substantial, and proper reasons exist'”) (citation omitted); cf.
Schauer v. DeNeveu Homeowners Assoc., No. 93‑2459,
slip op. at 11-14 (Wis. June 20, 1995) (Rule
806.07(1)(f), Stats., does not
permit trial court to reopen judgment because caselaw relied upon in rendering
judgment has been overruled in an unrelated proceeding). Although Sampson Investments
criticized the analysis in Century Shopping Center Fund in
connection with whether a lease clause requires a tenant to continually operate
its business, it did not opine that the result in Century Shopping
Center Fund was wrong.
Accordingly, we see no reason to depart from the general rule—Century
Shopping Center Fund's decision on the breach-of-lease issue is the law
of the case here.
The breach-of-contract
count also asserts claims other than the clause required Sentry to continuously
operate a food store at Howell Plaza.
The trial court's written decision did not address these claims. We do.
First, the count alleges that the Sentry defendant intentionally
destroyed property in its Howell Plaza space, thereby violating the lease
provision that required Sentry to surrender the premises at the end of the
lease term “in the same condition in which they were at the commencement of
said term, reasonable use and wear thereof, and damage by accidental fire or
the elements excepted.” Second, the
count asserts that Sentry secretly assigned to the Crivello defendants
effective control to whom Sentry could sublease its space, in violation of a
clause in the lease that provided that the lease “shall not be assigned in any
way” by Sentry “nor shall the leased premises be subleased in whole or in part
without the written consent” of Howell Plaza.
These averments state claims.
The trial court's dismissal of the breach-of-lease count is reversed.
2. The
Century plaintiffs allege that Joseph A. Crivello, a partner in Crivello
Properties, tortiously interfered with Century's contract rights in connection
with Howell Plaza's lease with Sentry.
The classic summary of what constitutes tortious interference with
contract rights is in Restatement
(Second) of Torts § 766 (1979):
One
who intentionally and improperly interferes with the performance of a contract
(except a contract to marry) between another and a third person by inducing or
otherwise causing the third person not to perform the contract, is subject to liability
to the other for the pecuniary loss resulting to the other from the failure of
the third person to perform the contract.
This
formulation is the law in this state. Charolais
Breeding Ranches, Ltd. v. FPC Securities Corp., 90 Wis.2d 97, 105–106,
279 N.W.2d 493, 497 (Ct. App. 1979). A
partner is liable for the wrongful acts of his or her partners. Sections 178.10 and 178.12, Stats.
The Century complaint alleges sufficiently that the Crivello partnership
acting through partner Frank P. Crivello induced Sentry to violate its contract
with Howell Plaza. The trial court's
dismissal of the tortious-interference-with-contract claim against Joseph A.
Crivello is reversed.
3. The
Century plaintiffs allege that the Sentry defendant conspired to injure Century's
“reputation, trade and business,” and the Howell Plaza trustee alleges that
Frank P. Crivello and the Sentry defendant entered into a similar conspiracy to
injure Howell Plaza, Inc., in its business, all in violation of § 134.01, Stats.
Section 134.01 provides that:
“Any 2 or more persons who shall combine, associate, agree, mutually
undertake or concert together for the purpose of wilfully or maliciously
injuring another in his or her reputation, trade, business or profession by any
means whatever ... shall be punished by imprisonment in the county jail not
more than one year or by fine not exceeding $500.” This statute gives rise to a civil claim for damages by those
injured by the conspiracy. Radue
v. Dill, 74 Wis.2d 239, 244–245, 246 N.W.2d 507, 510–511 (1976).
The complaints allege
that the Sentry defendant agreed with Crivello to cripple Howell Plaza and
destroy Howell Plaza's business, and that, pursuant to that agreement, the
Sentry defendant, among other things, destroyed Howell Plaza property, violated
its lease agreement to operate a food store in Howell Plaza, gave Crivello
effective control over to whom the Sentry defendant could sublet its Howell
Plaza space, and that the Sentry defendant refused to relinquish its space at
Howell Plaza once it moved to the Oak Creek Centre, thereby preventing Howell
Plaza from getting another anchor tenant.
These allegations sufficiently assert that the conspiracy was to harm
Howell Plaza; they thus state a claim under § 134.01, Stats.
See Maleki v. Fine-Lando Clinic Chartered, S.C.,
162 Wis.2d 73, 86–88, 469 N.W.2d 629, 634–635 (1991) (“malice” requirement in §
134.01 means that all parties to conspiracy intended to do harm). The trial court's dismissal of the claims
predicated on § 134.01 is reversed.[2]
4. The
Century plaintiffs allege that Crivello defamed them by telling a Howell Plaza
tenant that “Century is a real estate group and is a risky venture,” that the
“Century management group is bankrupt,” and that the tenant “should really go
with someone more stable” as a shopping center landlord. These statements are capable of a defamatory
meaning and are actionable per se.
See Ridgeway State Bank v. Bird, 185 Wis. 418, 426,
202 N.W. 170, 173 (1925). Further, the
complaint sufficiently avers that the statements were part of the alleged
conspiracy between Crivello and the Sentry defendant to destroy Howell Plaza so
as to make the Sentry defendant liable for the defamation even though it did
commit the tort directly. See Segall v. Hurwitz, 114
Wis.2d 471, 481, 339 N.W.2d 333, 338 (Ct. App. 1983). Moreover, although the
defamation claim was asserted in an amended Century pleading beyond the
applicable two-year statute of limitations, § 893.57, Stats., Century's original complaint
was filed within the two-year period, and the defendants have not explained why
the relation-back provisions of § 802.09(3), Stats.,
do not apply.[3] The trial court's dismissal of the
defamation claim is reversed.
5. The
Century plaintiffs allege that the Sentry defendant and Crivello engaged in
“unfair competition.” We are puzzled by
this stand-alone count because we are unaware of any Wisconsin authority, and
the parties have cited none, sanctioning in this context a legally cognizable
claim for “unfair competition” as such, absent an impingement on some other
right or interest. Indeed, “[u]nfair
competition is still competition,” and restraints on competition, fair or
unfair, may run counter to the core free-market-place rationale underlying the
anti-trust laws. See Northwest
Power Products, Inc. v. Omark Industries, Inc., 576 F.2d 83, 88–90 (5th
Cir. 1978) (absent anti-competitive effect, allegations that “unfair” methods
were used to eliminate a competitor does not state a cognizable claim under the
Sherman Antitrust Act), cert. denied, 439 U.S. 1116. Giving Century's complaint the benefit of
every reasonable inference, as we must, we read the “unfair competition” count
to refer to the other, more specific allegations of injury that have been
well-pleaded. See id.,
576 F.2d at 89.[4] Accordingly, we reverse the trial court's
dismissal of the “unfair competition” count.
6. The
Century plaintiffs allege that the Sentry defendant and Crivello, together with
“the other co-conspirators” engaged in a common-law conspiracy. A plaintiff who suffers damages as the
result of a “combination of two or more persons by some concerted action to
accomplish some unlawful purpose or to accomplish by unlawful means some purpose
not in itself unlawful” has a claim sounding in conspiracy. Radue v. Dill, 74 Wis.2d at
241, 246 N.W.2d at 509; see also Cranston v. Bluhm, 33
Wis.2d 192, 198, 147 N.W.2d 337, 340 (1967).
Century's complaint alleges that among the methods Crivello and the
Sentry defendant used to harm Howell Plaza was the unlawful destruction of
Howell Plaza's property. This is
sufficient to state a claim for conspiracy under the Radue
formulation, and the trial court's dismissal of the conspiracy claim is
reversed.
7. The
Century plaintiffs and the Howell Plaza trustee allege that the Sentry
defendant and Crivello conspired to restrain trade and commerce in violation of
§ 133.03(1), Stats. This provision, which tracks section 1 of
the Sherman Antitrust Act, 15 U.S.C. § 1, declares: “Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce is illegal.” “[A]ny person injured, directly or
indirectly,” by a violation of § 133.03(1) “shall recover threefold the damages
sustained by the person and the cost of the suit, including reasonable attorney
fees.” Section 133.18(1)(a), Stats.
We interpret § 133.03(1) in accordance with the federal courts'
interpretation of section 1 of the Sherman Act. Independent Milk Producers Co-op v. Stoffel, 102
Wis.2d 1, 6, 298 N.W.2d 102, 104 (Ct. App. 1980).
“[A]llegations that the
defendants conspired or combined to engage in acts of unfair competition with
intent to injure or to destroy the plaintiff as a competitor” “constitute
[allegations of] an antitrust violation” under § 133.03(1), Stats.
Grams v. Boss, 97 Wis.2d 332, 347, 294 N.W.2d 473, 481
(1980). The Century complaint's
allegations in support of this claim are abundant. The only question is whether there must be an allegation of an
anti-competitive effect, or whether a per se rule applies. See id., 97 Wis.2d at
348, 294 N.W.2d at 481.[5] As with the situation in Grams,
97 Wis.2d at 351, 294 N.W.2d at 483, we need not decide whether application of
the per se rule here is appropriate because the Century complaint amply
alleges the anti-competitive effects of the alleged conspiracy.
The Century complaint
identifies a relevant market for grocery and related products, which, for the
purposes of the appeal, the Sentry defendant does not challenge, and alleges
that the Sentry defendant, as the anchor tenant in Howell Plaza was serving
that market. The complaint also alleges
that Crivello's Oak Creek Centre was seeking a supermarket similar to Sentry
but decided that it would be in its interest if there were only one, rather
than two, supermarkets serving that market, and that Crivello conspired with the
Sentry defendant to have Sentry move to Oak Creek Centre and, significantly, to
prevent Howell Plaza from replacing Sentry.
Thus, according to the facts alleged in the complaint, the defendants
saw to it that a second supermarket could not operate in what is alleged to be
the relevant market. Whether or not
these allegations can be proved at a trial, or whether or not they can survive
a motion for summary judgment, they certainly state a claim under § 133.03(1),
Stats. See Grams, 97 Wis.2d at 352–353, 294 N.W.2d
at 483–484. The trial court's dismissal
of the § 133.03(1) claims is reversed.[6]
8. The
Century plaintiffs allege that Frank P. Crivello monopolized and attempted to
monopolize the relevant market for “retail strip mall supermarket space,” that
Frank P. Crivello and the Sentry defendant monopolized and attempted to
monopolize the relevant market for groceries and related products, and that
Frank P. Crivello and the Sentry defendant conspired to monopolize the relevant
market for “retail strip mall supermarket space” and the relevant market for
groceries and related products, all in violation of § 133.03(2), Stats.
The Howell Plaza trustee alleges that the Sentry defendant attempted to
monopolize the relevant market, and that Frank P. Crivello and the Sentry
defendant conspired to monopolize that market, also all in violation of §
133.03(2). This provision, which tracks
section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, declares: “Every person who monopolizes, or attempts
to monopolize, or combines or conspires with any other person or persons to
monopolize any part of trade or commerce may be fined not more than $100,000 if
a corporation, or, if any other person, $50,000, or be imprisoned for not more
than 5 years, or both.” “[A]ny person
injured, directly or indirectly,” by a violation of § 133.03(2) “shall recover
threefold the damages sustained by the person and the cost of the suit, including
reasonable attorney fees.” Section
133.18(1)(a), Stats. As with § 133.03(1), Stats., we interpret § 133.03(2) in accordance with the
federal court's interpretation of its Sherman Act counterpart. See Grams, 97 Wis.2d at
346, 294 N.W.2d at 480.
The focus of §
133.03(2), Stats., is monopolization
by “predatory or anticompetitive conduct” combined with specific intent to
achieve monopoly power. See Spectrum Sports, Inc. v. McQuillan,
506 U.S. ___, 113 S. Ct. 884, 890, 122 L.Ed.2d 247, 257 (1993) (interpreting §
2 of the Sherman Act). Attempted
monopolization in violation of § 133.03(2) requires, in addition, that there be
a “dangerous probability of achieving monopoly power.” Ibid.
Century's allegations
are sufficient to state a claim under § 133.03(2), Stats. Century
asserts that Frank P. Crivello and the Sentry defendant conspired to and did
acts that would cripple Howell Plaza as a competing shopping center and that
would prevent the location in Howell Plaza of a competing supermarket. Indeed, incorporated into the complaint is a
letter by Frank P. Crivello to a potential source of financing for Oak Creek
Centre. In that letter, Frank P.
Crivello boasts of his pursuit of monopoly power as assisted by the Sentry defendant. He tells the financing source that the
Sentry defendant has agreed to close its store in Howell Plaza, and “keep it
dark.” This, he predicts, “will cripple
[Howell Plaza] and make it difficult for them to compete with me in the
future.” Further, he notes that the
Sentry defendant can tie up its space (“keep it dark”) in Howell Plaza for six
years, and that this “will make the lease of our [non anchor-tenant] space
extremely easy because we will be the dominant center without question.” Additionally, Frank P. Crivello describes
the result of his deal with the Sentry defendant as a “very neat play for us”
because “we are not going to see competition pop up down the road in the way of
another food store” inasmuch as “the other corners are already developed.” Century alleges that Howell Plaza was forced
into bankruptcy as a result of the defendants' predatory practices. This is a sufficient allegation of injury to
pass muster under § 133.18(1)(a), Stats. The trial court's dismissal of the
monopolization and attempted monopolization claims is reversed.
9. The
Century plaintiffs allege that the Sentry defendant's predecessors and the
Crivello defendants violated the Wisconsin Organized Crime Control Act,
§§ 946.80 to 946.88, Stats. The Act was patterned after the federal
Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
§§ 1961–1968, and we are guided by pertinent federal authority
interpreting that statute. State
v. Evers, 163 Wis.2d 725, 732, 472 N.W.2d 828, 831 (Ct. App.
1991). For the purposes of a private
plaintiff seeking damages resulting from the violation of the Wisconsin
Organized Crime Control Act, the Act has three main components: the section describing the activities
prohibited by the Act, § 946.83, Stats.;[7]
the section defining the terms of art used in the Act, § 946.82, Stats.;[8]
and the provision permitting recovery of damages, § 946.87(4), Stats.[9]
Defendants violate the
Wisconsin Organized Crime Control Act if they knowingly use, directly or
indirectly, proceeds derived directly or indirectly “from a pattern of
racketeering activity” to acquire “any title to, or any right, interest, or
equity in, real property or in the establishment or operation of any
enterprise,” § 946.83(1), Stats.;
“acquire or maintain, directly of indirectly, any interest in or control of any
enterprise or real property” “through a pattern of racketeering activity,”
§ 946.83(2), Stats.; or as
employees or associates of “any enterprise” “conduct or participate, directly
or indirectly, in the enterprise through a pattern of racketeering activity,” §
946.83(3), Stats. “`Pattern of racketeering activity' means
engaging in at least 3 incidents of racketeering activity that have the same or
similar intents, results, accomplices, victims or methods of commission or
otherwise are interrelated by distinguishing characteristics, provided at least
one of the incidents occurred after April 27, 1982 and that the last of the
incidents occurred within 7 years after the first incident of racketeering
activity.” Section 946.82(3), Stats.
The crimes that constitute “racketeering activity” are listed in
§ 946.82(4), Stats.
The Century plaintiffs
sufficiently allege all the necessary elements to support its claim under the
Wisconsin Organized Crime Control Act.
First, as predicate crimes under § 946.82(4), Stats., the complaint alleges that the Sentry defendant's
predecessors falsely reported to the Wisconsin Secretary of State that they did
not conspire to restrain trade and monopolize the relevant market. Such false reports, if made, violate §
180.0129, Stats., and
§ 943.39(1), Stats., which
are predicate offenses under the Act.[10] See § 946.82(4), Stats.
The complaint also alleges that the Sentry defendant's predecessors
illegally destroyed Howell Plaza property, in violation of § 943.01, Stats., which is also a predicate
offense under the Act. See
§ 946.82(4).[11] Second, the Century plaintiffs have
sufficiently alleged that the Sentry defendant's predecessors, Crivello
Properties, Joseph A. Crivello, and Frank P. Crivello violated § 946.83 in
connection with their interest in Oak Creek Centre and the anchor-tenant space,
see §§ 946.83(1) & (2), and that they participated in each other's
affairs “through a pattern of racketeering activity,” see § 946.83(3).
The Century plaintiffs also sufficiently allege damage under the Wisconsin
Organized Crime Control Act—as long as the Act has been violated it is
sufficient for a plaintiff to allege injury flowing from the predicate offenses
(here, alleged violations of §§ 180.0129, 943.01, and 943.39(1)) rather
than a “racketeering injury.” See
Sedima, S.P.R.L. v. Imrex
Co., Inc., 473 U.S. 479, 497 (1985) (interpreting the Racketeer
Influenced and Corrupt Organizations Act).
Further, “`general factual allegations of injury'” suffice at this stage
because “`on a motion to dismiss we presume that general allegations embrace
those specific facts that are necessary to support the claim.'” NOW, Inc. v. Scheidler, 510
U.S. ___, 114 S. Ct. 798, 803, 127 L.Ed.2d 99, 107 (1994) (interpreting the
Racketeer Influenced and Corrupt Organizations Act) (citation omitted). The
trial court's dismissal of the Wisconsin Organized Crime Control Act claim is
reversed.[12]
II. Discovery.
On July 2, 1992, the
Milwaukee law firm of O'Neil, Cannon & Hollman, S.C., attorneys for the
Sentry defendant in this case, and the firm that represented one of the Sentry
defendant's predecessors in Century Shopping Center Fund I v. Crivello,
156 Wis.2d 227, 456 N.W.2d 858 (Ct. App. 1990), filed motions with the supreme
court for permission to submit amicus briefs in the then pending Sampson
Investments case on behalf of the Wisconsin Merchants Federation and
the Wisconsin Grocers Association, trade associations representing retailers in
this state. The supreme court granted
the motions on July 16, 1992, and a consolidated brief on behalf of the
Federation and the Association was filed on August 4, 1992. The motions and the consolidated amicus
brief filed with the supreme court argued that the court of appeals decision in
Sampson Investments, which relied on Century Shopping
Center Fund, see Sampson Investments v. Jondex,
Nos. 91-0297, 91‑0957, slip op. at 5 (Wis. Ct. App. Jan. 10, 1992)
(unpublished), would “have calamitous results” for the members of the
Federation and the Association. In
their consolidated brief, the trade associations asked, inter alia, that
the supreme court overturn this court's holding in Century Shopping
Center Fund.
As part of their
discovery in this action, Century sought to depose two attorneys from O'Neil,
Cannon & Hollman, S.C., and officers and employees of the Wisconsin
Merchants Federation and the Wisconsin Grocers Association, all in connection
with the filing of the amicus brief in Sampson Investments. The notices of deposition also sought
documents described as pertinent to that inquiry. The trade associations, again
represented by O'Neil, Cannon & Hollman, S.C., moved to quash, and asserted
three grounds in support of the motion.
First, they alleged that the information sought was “not reasonably
calculated to lead to the discovery of admissible evidence,” a prerequisite to
discovery under Rule 804.01(2), Stats.
Second, they argued that discovery would “chill the constitutional
rights of non-parties to petition the government for redress of grievances
contrary to the First Amendment to the Constitution of the United States and
Article I, sec. 4 of the Wisconsin Constitution.” Third, they asserted that the discovery “seeks information
protected by the attorney-client privilege.”
In support of the motion, the trade associations submitted a conclusory
affidavit by a lawyer from O'Neil, Cannon & Hollman, S.C., that essentially
reiterated these arguments.
In opposition to the
motion to quash, and in support of its own motion to compel discovery, Century
argued that the amicus filing in Sampson Investments was
part of the scheme by one of the predecessors of the Sentry defendant to affect
the merits of this action in the guise of the amicus submission in
another case: “The Plaintiffs seek the
discovery at issue in order to determine whether and the extent to which [a
predecessor of the Sentry defendant] subverted the integrity of the judicial
process by effectively appearing before the Wisconsin Supreme Court ex parte,
and without the full disclosure required by the applicable ethical rules.” (Footnote omitted.) The trial court granted the motion to quash
and denied Century's motion to compel discovery, holding that the information
sought was not relevant to the issues in this case, would subject those named
in the notices of deposition to “an unwarranted fishing expedition” and would
invade the attorney client privilege.
The trial court neither held an evidentiary hearing on the motions nor
examined in camera any of the requested documents. We reverse.
As with its federal
counterpart, Rule 26(b) of the Federal Rules of Civil Procedure, Rule 804.01(2)(a), Stats., is an expansive grant of
pre-trial discovery. Anything that is “relevant to the subject matter involved
in the pending action” is fair game even though what is sought to be discovered
would not itself be admissible at trial if discovery “appears reasonably
calculated to lead to the discovery of admissible evidence.” Rule
804.01(2)(a). As long as these
requisites are met, the hoary cry of “fishing expedition” is not a valid
objection. See Hickman v.
Taylor, 329 U.S. 495, 507 (1947); State ex rel. Dudek v. Circuit
Court, 34 Wis.2d 559, 585, 150 N.W.2d 387, 402 (1967); see also State
ex rel. Amek bin Rilla v. Circuit Court, 76 Wis.2d 429, 435, 251 N.W.2d
476, 480 (1977) (requirement that material sought be relevant).
On this record, sparse
and untested by examination and cross-examination as it is, Century has made a
threshold showing that the material it seeks is within the scope of permissible
discovery. First, the spine of this
case is the alleged conspiracies by the defendants in connection with
termination of Sentry's anchor-tenant status in the Howell Plaza shopping
center. An important vertebra in that
spine is Sentry's Howell Plaza lease.
Our decision in Century Shopping Center Fund
interpreted that lease, and, as noted, the supreme court denied review. The amicus submission to the supreme
court in Sampson Investments by the law firm that represents the
Sentry defendant in this case sought to have Century Shopping
Center Fund overruled.
Century claims that the law firm did not adequately disclose to the
supreme court that, as alleged by Century, the law firm's interest in seeking
to have Century Shopping Center Fund overruled extended beyond
the face of its submissions and that those submissions were attempts by the
firm on behalf of the Sentry defendant here to influence the outcome of this
case in a proceeding at which the plaintiffs in this case would not be
represented. Although there is, of
course, a broad right under the First Amendment and its Wisconsin equivalent to
petition government and participate in judicial proceedings, that right does not
immunize illegal activity when the petitioning of government or the
participation in judicial proceedings is a mere “sham” designed to cloak and
advance illegal activity. California Motor Transport Co. v. Trucking
Unlimited, 404 U.S. 508, 511–516 (1972) (applying the “sham” exception
to the Noerr-Pennington doctrine enunciated in Eastern R.R.
Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and
United Mine Workers v. Pennington, 381 U.S. 657 (1965)); Badger
Cab Co., Inc. v. Soule, 171 Wis.2d 754, 762–765, 492 N.W.2d 375,
379–380 (Ct. App. 1992) (applying California Motor Transport). This is what Century contends is the
situation here; it has the right under Rule
804.01(2)(a), Stats., to pursue
discovery in that area. Accordingly, we
reverse the trial court's order precluding discovery.
Our conclusion that
Century may pursue discovery does not mean that it may rummage unchecked
through the files of either the trade associations or of O'Neil, Cannon &
Hollman, S.C. Rule 804.01(2)(a), Stats.,
permits discovery of “any matter, not privileged.” (Emphasis added.) “Statutory privileges are to be strictly and narrowly
construed.” Steinberg v. Jensen,
No. 92‑2475, slip op. at 20 (Wis. June 30, 1995). Upon remand, those subject to the notices of
deposition are to produce all documents requested and to answer all questions
asked, with the exception of those matters or documents claimed to be protected
by privilege. Documents that are not
produced pursuant to a claim of privilege are to be listed by date, author,
recipient, and privilege or privileges asserted, and are to be transmitted to
the trial court for its in camera inspection. A copy of the list shall also be furnished to all counsel. The trial court is to decide in a written
memorandum keyed to each document for which privilege is claimed whether the
claimed privilege or privileges apply. See
United States v. Zolin, 491 U.S. 554, 568–569 (1989) (in
camera review is appropriate method to determine applicability of
attorney-client privilege) (crime-fraud exception to privilege). All questions that are not answered pursuant
to a claim of privilege shall be certified to the trial court. The trial court is to decide in a written
memorandum keyed to each question so certified whether the claimed privilege or
privileges apply. The trial court may,
in the appropriate exercise of its discretion, hold an evidentiary hearing in
connection with the applicability of the “sham” exception to the Noerr-Pennington
doctrine and in connection with any claim of privilege.
By the Court.—Orders
reversed.
Publication in the
official reports is recommended.
[1] The action against Frank P. Crivello and Crivello Investments has been stayed pursuant to § 362 of the United States Bankruptcy Code, as the result of their filing under Chapter 11 of the Code.
[2] The trial court dismissed the claim under § 134.01, Stats., because it believed that the violation of an underlying legal right was required (relying on our statement in Century Shopping Center Fund I v. Crivello, 156 Wis.2d 227, 239, 456 N.W.2d 858, 864 (Ct. App. 1990), that there is no violation of § 134.01 “unless a legal right has been invaded”) and that Howell Plaza had no legal right to compel the Sentry defendant to operate a food store at the shopping center. Our statement in Century Shopping Center Fund, however, was predicated on our holding to that effect in Maleki v. Fine-Lando Clinic Chartered, S.C., 154 Wis.2d 471, 481–486, 453 N.W.2d 208, 212–214 (Ct. App. 1990). The supreme court overruled our decision in Maleki on this point. Maleki v. Fine-Lando Clinic Chartered, S.C., 162 Wis.2d 73, 91–95, 469 N.W.2d 629, 636–638 (1991). The supreme court's decision in Maleki thus also overruled, sub silentio, its own decision on this point in Cranston v. Bluhm, 33 Wis.2d 192, 198–200, 147 N.W.2d 337, 340–341 (1967), which it did not cite and which held that a conspiracy claim based on the closing of a theater for six months was properly dismissed when there was “no affirmative requirement in the lease that the theatre [sic] be operated at least six months in any lease year.”
[3] Rule 802.09(3), Stats., provides:
Relation Back of Amendments. If the claim asserted in the amended pleading arose out of the transaction, occurrence, or event set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the filing of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against such party, the party to be brought in by amendment has received such notice of the institution of the action that he or she will not be prejudiced in maintaining a defense on the merits, and knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against such party.
[4] As Northwest
Power Products explains:
“An instance where the result of
antitrust law and unfair competition law enforcement may not conflict is when a
firm with substantial market power, perhaps approaching that of a monopoly,
uses unfair competition to augment its position by eliminating a rival concern
from the market. But it is the
elimination of the competition, by fair means or foul, that is the concern of
the antitrust law, and it is only the unfair method on which the law of unfair
competition focuses.”
Id., 576 F.2d at 89 (emphasis added). See also Grams v. Boss, 97 Wis.2d 332, 347, 294 N.W.2d 473, 481 (1980) (“[A]llegations that the defendants conspired or combined to engage in acts of unfair competition with intent to injure or destroy the plaintiff as a competitor” state an antitrust-violation claim under § 133.03(1), Stats.).
[5] The per se doctrine is a broad-bladed sword, unable to make distinctions with any precision. It is pressed into service by the dual engine of instinct and necessity. It spares victims of presumed inherently pernicious practices the burden of demonstrating the market impact of those practices, which would be required under the so-called “rule of reason,” because adverse market impact is assumed. See Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 7–8 (1979); Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5 (1958). Membership criteria for this club of convenience, however, is strict: the practice must threaten the “central nervous system of the economy.” United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224 n.59 (1940). As we have already noted, the antitrust laws protect competition not competitors. See Northwest Power Products, Inc. v. Omark Industries, Inc., 576 F.2d 83, 88–90 (5th Cir. 1978), cert. denied, 439 U.S. 1116; Mid-West Underground Storage, Inc. v. Porter, 717 F.2d 493, 497 (10th Cir. 1983). The per se rule's rationale has weakened as markets have expanded and the tools with which to compete in those market have become more efficient. Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1, 19 (1984). Accordingly, there has been a retrenchment from the rigidity of the per se rule, see, e.g., National Collegiate Athletic Ass'n v. Board of Regents, 468 U.S. 85 (1984); Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984); Independent Milk Producers Co-op v. Stoffel, 102 Wis.2d 1, 10–11, 298 N.W.2d 102, 106 (Ct. App. 1980), and calls for permitting the forces of free-market dynamics to assume the greater regulatory burden, Easterbrook, 63 Tex. L. Rev. at 29.
[6] In its brief and on oral argument, the Sentry defendant focussed on Juster Associates v. City of Rutland, 901 F.2d 266 (2nd Cir. 1990), as, in the Sentry defendant's view, requiring affirmance of the trial court's dismissal of the antitrust claims. In Juster, a shopping center owner complained because the City of Rutland “subsidized or otherwise aided” the developers of a competing shopping center—thus increasing competition in the relevant market, id., 901 F.2d at 269; here, on the other hand, Century complains that the defendants have conspired to destroy, not help, a competitor—thus decreasing competition. Juster recognized that “increased competition and reduced profits resulting from an agreement between other parties does not constitute an antitrust injury.” Ibid. Juster is wholly inapplicable.
[7] Section 946.83, Stats., provides:
Prohibited
activities. (1) No person who has received any
proceeds with knowledge that they were derived, directly or indirectly, from a
pattern of racketeering activity may use or invest, whether directly or
indirectly, any part of the proceeds or the proceeds derived from the
investment or use thereof in the acquisition of any title to, or any right,
interest, or equity in, real property or in the establishment or operation of
any enterprise.
(2) No person, through a pattern of
racketeering activity, may acquire or maintain, directly or indirectly, any
interest in or control of any enterprise or real property.
(3) No person employed by, or associated with, any enterprise may conduct or participate, directly or indirectly, in the enterprise through a pattern of racketeering activity.
[8] Section 946.82, Stats., provides:
Definitions. In ss. 946.80 to 946.88:
(1) “Commission of a crime” means being
concerned in the commission of a crime under s. 939.05.
(2) “Enterprise” means any sole
proprietorship, partnership, limited liability company, corporation, business
trust, union organized under the laws of this state or other legal entity or
any union not organized under the laws of this state, association or group of
individuals associated in fact although not a legal entity. “Enterprise” includes illicit and licit
enterprises and governmental and other entities.
(3) “Pattern of racketeering activity”
means engaging in at least 3 incidents of racketeering activity that have the
same or similar intents, results, accomplices, victims or methods of commission
or otherwise are interrelated by distinguishing characteristics, provided at
least one of the incidents occurred after April 27, 1982 and that the last of
the incidents occurred within 7 years after the first incident of racketeering
activity. Acts occurring at the same
time and place which may form the basis for crimes punishable under more than
one statutory provision may count for only one incident of racketeering
activity.
(4) “Racketeering activity” means any activity specified in 18 USC 1961 (1) in effect as of April 27, 1982 or the attempt, conspiracy to commit, or commission of any of the felonies specified in: chs. 161 and 945 and ss. 49.49, 134.05, 139.44 (1), 180.0129, 181.69, 184.09 (2), 185.825, 215.12, 221.17, 221.31, 221.39, 221.40, 551.41, 551.42, 551.43, 551.44, 553.41 (3) and (4), 553.52 (2), 940.01, 940.19 (3) to (6), 940.20, 940.203, 940.21, 940.30, 940.305, 940.31, 941.20 (2) and (3), 941.26, 941.28, 941.298, 941.31, 941.32, 943.01 (2), 943.012, 943.013, 943.02, 943.03, 943.04, 943.05, 943.06, 943.10, 943.20 (3) (b) to (d), 943.23 (1g), (1m), (1r), (2) and (3), 943.24 (2), 943.25, 943.27, 943.28, 943.30, 943.32, 943.34 (1) (b) and (c), 943.38, 943.39, 943.40, 943.41 (8) (b) and (c), 943.50 (4) (b) and (c), 943.60, 943.70, 944.21 (5) (c) and (e), 944.32, 944.33 (2), 944.34, 945.03, 945.04, 945.05, 945.08, 946.10, 946.11, 946.12, 946.13, 946.31, 946.32 (1), 946.48, 946.49, 946.61, 946.64, 946.65, 946.72, 946.76, 947.015, 948.05, 948.08, 948.12 and 948.30.
[9] Section 946.87(4), Stats., provides, as material here:
Civil
Remedies.
....
(4) Any person who is injured by reason of any violation of s. 946.83 or 946.85 has a cause of action for 2 times the actual damages sustained and, when appropriate, punitive damages. The person shall also recover attorney fees and costs of the investigation and litigation reasonably incurred. The defendant or any injured person may demand a trial by jury in any civil action brought under this section.
[10] Section 133.12, Stats., requires every Wisconsin
corporation, “in its annual report filed with the secretary of state, [to] show
whether it has entered into any contract, combination in the form of trust or
otherwise, or conspiracy in restraint of trade or commerce.” Section 180.0129, Stats., provides:
Penalty
for false document. (1) A person may not sign a document with intent that it be
delivered to the secretary of state for filing or deliver, or cause to be
delivered, a document to the secretary of state for filing, if the person knows
that the document is false in any material respect at the time of its delivery.
(2) Whoever violates this section
may be fined not more than $10,000 or imprisoned for not more than 2 years or
both.
Section 943.39(1), Stats., provides:
Fraudulent writings.
Whoever, with intent to injure or defraud, does any of the following is
guilty of a Class D felony:
(1) Being a director, officer, manager, agent or employe of any corporation or limited liability company falsifies any record, account or other document belonging to that corporation or limited liability company by alteration, false entry or omission, or makes, circulates or publishes any written statement regarding the corporation or limited liability company which he or she knows is false[.]
[11] Section 943.01, Stats., provides:
Damage to property. (1) Whoever intentionally causes
damage to any physical property of another without the person's consent is
guilty of a Class A misdemeanor.
(2) Any person violating sub. (1)
under the following circumstances is guilty of a Class D felony:
(a)
1. In this paragraph, “highway” means any public way or thoroughfare, including
bridges thereon, any roadways commonly used for vehicular traffic, whether
public or private, any railroad, including street and interurban railways, and
any navigable waterway or airport.
2.
The property damaged is a vehicle or highway and the damage is of a kind which
is likely to cause injury to a person or further property damage; or
(b)
The property damaged belongs to a public utility or common carrier and the
damage is of a kind which is likely to impair the services of the public
utility or common carrier; or
(c)
The property damaged belongs to a person who is or was a witness as defined in
s. 940.41 (3) or a grand or petit juror and the damage was caused by reason of
the owner's having attended or testified as a witness or by reason of any
verdict or indictment assented to by the owner.
(d)
If the total property damaged in violation of sub. (1) is reduced in value by
more than $1,000. For the purposes of
this paragraph, property is reduced in value by the amount which it would cost
either to repair or replace it, whichever is less.
(e)
The property damaged is on state‑owned land and is listed on the registry
under sub. (5).
(2m) Whoever causes damage to any
physical property of another under all of the following circumstances is
subject to a Class B forfeiture:
(a)
The person does not consent to the damage of his or her property.
(b)
The property damaged is on state‑owned land and is listed on the registry
under sub. (5).
....
(3) If more than one item of
property is damaged under a single intent and design, the damage to all the
property may be prosecuted as a single forfeiture offense or crime.
(4) In any case of unlawful damage
involving more than one act of unlawful damage but prosecuted as a single
forfeiture offense or crime, it is sufficient to allege generally that unlawful
damage to property was committed between certain dates. At the trial, evidence may be given of any
such unlawful damage that was committed on or between the dates alleged.
(5) The department of natural resources shall maintain a registry of prominent features in the landscape of state‑owned land. To be included on the registry, a feature must have significant value to the people of this state.