author: ROSENBLATT, District Judge.

text:
    Jerry EVENSON, dba World News Syndicate, World News Beat, and Bachelor’s Beat Newspapers, Plaintiff, v. Ruben ORTEGA, in his official capacity as Chief of Police of the City of Phoenix, et al., Defendants.
    No. Civ. 84-150 PHX PGR.
    United States District Court, D. Arizona.
    March 27, 1985.

      Richard J. Hertzberg, Phoenix, Ariz., for plaintiff.
    Brian Ross Hauser, Deputy Co. Atty., Phoenix, Ariz., for defendants.
   OPINION AND ORDER

ROSENBLATT, District Judge.

The plaintiff herein publishes a newspaper entitled “Bachelor’s World News Beat”. The sheriff of Maricopa County, Jerry Hill, and several of his deputies are the defendants. In November, 1982, the Maricopa County Sheriff’s Department, working through an undercover officer placed an advertisement in plaintiff’s newspaper. The advertisement was part of an undercover investigation of prostitution. The sheriff’s department advertised an “escort service” in the belief that many advertised escort services are fronts for prostitution. In fact, from responses to their advertisement, the defendant made numerous arrests and obtained convictions of persons soliciting acts of prostitution or engaging in a conspiracy to commit acts of prostitution.

The plaintiff seeks to enjoin the defendants from placing any other similar advertisements in his newspaper. The defendants have not agreed to refrain from placing such advertisements because they believe it to be a legitimate law enforcement technique. The complaint in this action originally sought damages and injunctive relief. To avoid statute of limitation problems, the claims for damages were dismissed with prejudice pursuant to stipulation of the parties.

The plaintiff requires that all persons who place an advertisement in his newspaper sign an affidavit which states:

BE IT KNOWN, that I/we, the undersigned, do hereby certify and guarantee that any advertising placed by or for us in any of the publications of or affiliated with World News Syndicate, are not intended or being used for any illegal purposes, and are accepted and published ONLY FOR THE PURPOSES CONTAINED THEREIN. Further, it is stipulated that the making of this affidavit is only required by the publisher due to the numerous allegations and charges leveled at certain individuals and business (sic) by various media and government agencies or individuals. Signing of, or request that same be signed, shall not in any way impugn the integrity or purposes of the undersigned or his/her agents or employees with regard to the advertising placed or the nature of the business or services so advertised. Further, I/we are not employed, retained or in other ways instructed or encouraged by any governmental agency to place said advertising.

The affidavit signed by the deputy sheriff who placed the advertisement was, of course, false.

The plaintiff’s position is that he does not want his newspaper to be used for law enforcement purposes without his knowledge and consent. He disapproves of the use of a sting operation to ensnare persons who call his advertisers and of the practice of publishing in the Phoenix Gazette the names of persons arrested for solicitation. He believes that the practice is unreasonably destructive of reputations and families and does not want his newspaper in any way involved in the practice.

Plaintiff has apparently had an on-going battle with the defendants about advertisements run in his newspaper. They have notified him in the past about persons under investigation for prostitution and requested that he cease running their advertisements. Plaintiff takes the position that he will refuse to run an advertisement for anyone who has been convicted, but will not refuse advertisements merely because someone is under investigation by law enforcement officials.

Plaintiff asserts herein that he has an absolute First Amendment right to determine what is published in his newspaper and he cannot be compelled to publish things, by deception or otherwise, that he does not wish to publish. Cf. Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974). Further he argues that he could be subjected to liability under the consumer fraud act for publishing false and deceptive advertising.

The defendants argue that their use of the plaintiffs newspaper is a legitimate law enforcement technique. It does not impinge substantially on plaintiffs First Amendment rights because it relates solely to commercial speech. They have done nothing to interfere with the editorial content of the newspaper. In fact, plaintiff has published an article condemning the defendants and the advertisement in question. Furthermore, the defendants argue that the plaintiff should not be allowed to use the First Amendment to shield his readers from prosecution. The defendants argue that the plaintiff routinely accepts advertisements from other advertisers (escort services and massage parlors) that are fronts for prostitution and who do not reveal their true purposes and/or identities. They argue that what plaintiff seeks to protect is a consistent level of falsity.

The plaintiff is correct that as a general proposition, a publisher cannot be compelled to print anything that he does not wish to print. Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974). Tornillo is the leading case in this area. In that case, the Supreme Court invalidated a Florida statute that required a newspaper to provide space for a reply to any political candidate whose personal character or official record has been assailed in the newspaper. The Supreme Court noted that its prior opinions had

expressed sensitivity as to whether a restriction or requirement constituted the compulsion exerted by government on a newspaper to print what it would not otherwise print. The clear implication has been that any such compulsion to publish that which reason tells them should not be published is unconstitutional. A responsible press is an undoubtably desirable goal, but press responsibility is not mandated by the Constitution and like many other virtues it cannot be legislated.

Id. at 256, 94 S.Ct. at 2838

A newspaper is more than a passive receptacle for news, comment and advertising. The choice of material to go into a newspaper, and the decisions made as to limitations on the size and content of the paper, and treatment of public issues and public officials—whether fair or unfair—constitute editorial control and judgment, (emphasis added).

Id. at 258, 94 S.Ct. at 2839. Government should not intrude into this area. Id.

This unbridled editorial discretion has been held to extend to commercial advertising. Mississippi Gay Alliance v. Goudelock, 536 F.2d 1073, 1949 (5th Cir.1976), cert. denied, 430 U.S. 982, 97 S.Ct. 1678, 52 L.Ed.2d 377 (1977) (a student newspaper rejected an advertisement submitted by an off-campus homosexual group); Associates & Aldrich Co. v. Times Mirror Co., 440 F.2d 133 (9th Cir.1971) (The Los Angeles Times altered an advertisement for the movie The Killing of Sister George) (cited with approval by Supreme Court in Tornillo); Chicago Joint Bd. Amalgamated Clothing Workers of Am. v. Chicago Tribune Co., 435 F.2d 470 (7th Cir.1970), cert. denied, 402 U.S. 973, 91 S.Ct. 1662, 29 L.Ed.2d 138 (1971) (four Chicago newspapers refused to publish a union’s advertisement intended to communicate its opposition to the sale of imported foreign-made clothing); Person v. New York Post Corp., 427 F.Supp. 1297. (EDNY), aff’d, 573 F.2d 1294, (2d Cir.1977) (the New York Post rejected a “tombstone advertisement” submitted by an attorney who sought to sell shares in a lawsuit); Modla v. Tribune Publishing Co. 14 Ariz.App. 82, 480 P.2d 999 (1971) (newspapers rejected plaintiff’s real estate ads); Fiorino v. Globe Newspaper Co., 5 Media L.Rep. (BNA) 1988 (Mass.Super.Ct.1979) (the Boston Globe rejected an advertisement for a placement service); Newspaper Printing Corp. v. Galbreath, 580 S.W.2d 777 (Tenn.), cert. denied, 444 U.S. 870, 100 S.Ct. 148, 62 L.Ed.2d 96 (1979) (a newspaper refused to accept an advertisement for a rental apartment unless certain modifications were made); Wisconsin Assn. of Nursing Home, Inc. v. Journal Co., 92 Wis.2d 709, 285 N.W.2d 891 (Ct.App.1979) (two Milwaukee newspapers rejected an ad by a nursing home association intended to refute investigative articles on nursing homes published by the newspapers). See generally, S. Metcalf, Rights and Liabilities of Publishers, Broadcasters and Reporters, Sec. 7.04 n. 1 (1982). This is true unless the refusal to advertise results in a violation of another statute such as the Sherman Act; See Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162 (1951); Home Placement Service, Inc. v. Providence Journal Co., 682 F.2d 274 (1st Cir.1982) cert. denied 459 U.S. 903, 103 S.Ct. 203, 74 L.Ed.2d 163 (1982); results in unconstitutional discrimination, Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973) (newspaper could not group advertisements for jobs under gender classes that would perpetuate gender discrimination in employment); Pines v. Tomson, 160 Cal.App.3d 370, 206 Cal.Rptr. 866 (1984) (Christian Yellow Pages could not refuse to publish advertisements for non-Christian businesses as a means to facilitate discrimination in patronage by Christians in favor of Christians); or is a breach of contract with the advertiser.

This case is unlike any of the other cases found where the rights of the advertisers have been considered in light of the First Amendment. In one such group of cases, the plaintiffs are advertisers suing to force a newspaper or other media to accept their advertising. E.g., Associates & Aldrich Co. v. Times Mirror Co., 440 F.2d 133 (9th Cir.1971); Chicago Joint Board, Amalgamated Clothing Workers of America v. Chicago Tribune Co., 435 F.2d 470 (7th Cir.1970) cert. denied 402 U.S. 973, 91 S.Ct. 1662, 29 L.Ed.2d 138 (1971). This Court would have no difficulty determining that the defendants herein would not be entitled to a mandatory injunction to force publication of their advertisement; but that is not to say that the plaintiff is necessarily entitled to an injunction to prevent the placement of the advertisement.

Another such class of cases involves the rights of the government to regulate commercial speech and advertising. The First Amendment does not provide absolute protection for commercial speech. Bolger v. Youngs Drug Products Corp., 463 U.S. 60, 103 S.Ct. 2875, 77 L.Ed.2d 469 (1983); Virginia Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748, 762, 96 S.Ct. 1817, 1825, 48 L.Ed.2d 346 (1976). The states right to regulate depends on a balance of interests; the public interest in regulation versus the public good of an unencumbered press. In Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980), the Supreme Court adopted a four part analysis for assessing the validity of restrictions on public advertising. The Court must determine whether the speech is constitutionally protected. For speech to receive any protection it must concern a lawful activity and not be misleading. The governmental interest must be substantial and the regulation must directly advance the governmental interest asserted. The Court must determine whether the regulation is more extensive than is necessary to serve that interest. Id.

The defendant has noted that undercover operations have generally been accepted by the courts. The Supreme Court pointed out in Lewis v. United States, 385 U.S. 206, 209-210, 87 S.Ct. 424, 426-427, 17 L.Ed.2d 312 (1966) that the government is entitled to use deceptions, decoys and to conceal the identity of the agents to combat criminal activity. The laws against many types of criminal activities, including prostitution (vice) would be nearly impossible to enforce without undercover investigation. Id. at 210, 87 S.Ct. at 427. Therefore, it is necessary for the law to distinguish between those deceits which are permissible and those that are not. Id. at 210 n. 6, 87 S.Ct. at 427 n. 6. The propriety of deception by police is often judged by whether the person deceived appeared inclined to do the same act were it not for the deception. Cf. LaFave, Search and Seizure, Sec. 8.2(n) (1978). A review of several issues of the plaintiff’s newspaper reveal many advertisements substantially similar to that placed by the defendants. This demonstrates that the plaintiff would have been likely to accept the advertisement but for the deception and the law enforcement purpose.

Only one remotely similar case was found where the plaintiff’s First Amendment rights were allegedly being violated by the use of undercover investigation or surveillance. In Socialist Workers Party v. Attorney General of the United States, 419 U.S. 1314, 95 S.Ct. 425, 42 L.Ed.2d 627 (1974), the plaintiff sought to enjoin the FBI from sending FBI undercover agents and informants to the national convention of the Young Socialist Alliance. The surveillance, plaintiff argued would chill free participation and debate and might discourage attendance. The District Court granted a preliminary injunction, but the Court of Appeals reversed because they believed that the plaintiffs had not sufficiently established that any harm would come from the surveillance and that the injunction would compromise the government informants. The appellate court held that there was insufficient evidence in the record to justify the extraordinary relief of a preliminary injunction barring investigation by the FBI. Justice Marshall, acting as circuit justice, was asked to stay the decision of the Court of Appeals and reinstate the preliminary injunction granted by the District Court. Marshall decided that the circumstances were not such as would justify the extraordinary relief requested. He noted that

governmental surveillance and infiltration cannot in any cqntext be taken lightly. The dangers inherent in undercover investigation are even more pronounced when the investigative activity threatens to dampen the exercise of First Amendment Rights. See DeGregory v. New Hampshire Atty. Gen., 383 U.S. 825, 86 S.Ct. 1148, 16 L.Ed.2d 292 (1966); Gibson v. Florida Legislative Comm., 372 U.S. 539, 83 S.Ct. 889, 9 L.Ed.2d 929 (1963); NAACP v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958). But our abhorrence for abuses of governmental investigative authority cannot be permitted to lead to an indiscriminate willingness to enjoin undercover investigation of any nature, whenever a countervailing First Amendment claim is raised.

419 U.S. at 1319, 95 S.Ct. at 428.

Here the question is whether a permanent injunction should issue under the injunctive authority provided in Sec. 1983 of the Civil Rights Act which permits this Court to enjoin activities that violate the constitutional rights of a citizen. This Court has found no authority, and the plaintiff has not cited any, that would permit this Court to enjoin the defendants from otherwise lawful investigative techniques even if this Court were to find that the practice violates the plaintiffs right to publish his newspaper free from governmental intrusion.

An injunction is an extraordinary remedy and is never lightly dispensed by a federal court. This is even more the case when the parties seek an injunction that would impose upon the sovereignty of a state in the exercise of its police power or law enforcement efforts. Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed. 561 (1976); Wilson v. Webster, 315 F.Supp. 1104 (D.Cal.1970) vacated on other grounds, 467 F.2d 1282 (9th Cir.1972). That is precisely the kind of extraordinary relief that the plaintiff seeks. “Where, as here, the exercise of authority by state officials is attacked, federal courts must be constantly mindful of the special delicacy of the adjustment to be preserved between federal equitable power and state administration of its own law.” Rizzo v. Goode 423 U.S. at 378, 96 S.Ct. at 607, quoting in part, Stefanelli v. Minard, 342 U.S. 117, 120, 72 S.Ct. 118, 120, 96 L.Ed. 138 (1951). This Court does not believe that the plaintiff has adequately established that it is entitled to such an injunction.

Injunctions under Sec. 1983 are governed by traditional principles of equity, Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed. 561 (1976), and several equitable principles support this conclusion. First the Court has substantial discretion in whether to issue an injunction. Lemon v. Kurtsman, 411 U.S. 192, 200, 93 S.Ct. 1463, 1469, 36 L.Ed.2d 151 (1973); Brown v. Board of Educ. of City of Chicago, 386 F.Supp. 110 (N.D.Ill.1974); Wilson v. Webster, 315 F.Supp. 1104 (D.Cal.1970) vacated on other grounds, 467 F.2d 1282 (9th Cir.1972). An injunction will not issue if the equities do not favor the party requesting the injunction. See Id. Furthermore, it will not issue if the injunction would not be in the public interest. Cf. Brown v. Board of Education, 349 U.S. 294, 300, 75 S.Ct. 753, 756, 99 L.Ed. 1083 (1955). Finally, the traditional requirements that the plaintiff demonstrate irreparable injury and lack of adequate remedy at law remain. Allee v. Medrano, 416 U.S. 802, 814, 94 S.Ct. 2191, 2200, 40 L.Ed. 566 (1974).

Given these principles, it is appropriate for this Court to look at the countervailing interests presented by the parties. The plaintiff has a First Amendment interest in publishing only what he chooses and in not being compelled by the government to publish things that he disapproves of. The injury to the plaintiff, however, appears to be slight. There is no intrusion on the editorial content of the newspaper, and in fact he has used the paper to protest the defendants’ use of sting operations. See Exhibit 2E. No property interest has been damaged. There is no evidence that the plaintiff will lose any revenue from the acts of the sheriff. It may be that persons who were prosecuted for prostitution or solicitation as a result of having responded to the sheriff’s advertisement may not continue to purchase the plaintiff’s newspaper. However, if the newspaper is purchased solely in search of prostitution services, no protectible interest is involved. The First Amendment does not protect the right to advertise prostitution free from governmental interference. The state clearly could prohibit the direct advertisement of prostitution services. Pittsburgh Press, 413 U.S. at 388, 93 S.Ct. at 2560. The plaintiff has argued that the advertisements placed by the defendants will injure his reputation and injure his readers’ trust in his newspaper. No explanation is offered for these assertions and no evidence in the record supports them. The plaintiff has made no effort to establish that his remedies at law are inadequate.

On the other side the state has an interest in enforcing the laws against prostitution and solicitation. There is evidence before the Court that the advertisement in question promoted that interest by providing evidence leading to convictions. This Court cannot say, on the record before it, that this means of enforcement is not sufficiently successful to be warranted. Nor can this Court substitute its judgment for that of the law enforcement officers by forcing them to use what is arguably a less restrictive alternative. The parties have simply not provided this Court with evidence that would support such a ruling. It should be noted that this Court is not sanctioning this method of investigation. It appears that there are other means to investigate prostitution that may be advertised surreptitiously in the plaintiffs newspaper that would not impinge on the plaintiffs First Amendment rights. The defendants have apparently had investigative success by merely following up on the advertisements placed in the plaintiffs newspaper. But the fact that there are alternative investigative techniques, does not necessarily entitle the plaintiff to an injunction.

Another equitable principle that mitigates against relief is that an injunction should not issue unless there is substantial evidence of impending injury. Tara Enterprises, Inc. v. Humble, 622 F.2d 400 (8th Cir.1980); Lewis v. Hyland, 554 F.2d 93 (3rd Cir.) cert. denied 434 U.S. 931, 98 S.Ct. 419, 54 L.Ed.2d 291 (1977); Wilson v. Webster, 467 F.2d 1282 (9th Cir.1972). Aside from the fact that the Sheriff has not promised to refrain from placing any future advertisements, there is little evidence that the practice complained of is likely to recur. The sheriff Jerry Hill, is no longer in office.

Finally, the Court is required, if it is to issue an injunction at all, to issue one which is neither too broad to be warranted by the facts, nor too narrow to protect the interests involved. It must set forth the prohibited activity with specificity so that the person or persons enjoined know exactly what is prohibited. Lewis v. Hyland, 554 F.2d 93 (3rd Cir.) cert. denied 434 U.S. 931, 98 S.Ct. 419, 54 L.Ed.2d 291 (1977); Wilson v. Webster, 315 F.Supp. 1104 (D.Cal.1970) vacated on other grounds, 467 F.2d 1282 (9th Cir.1972). This is virtually impossible to do in this case. Any injunction would be too broad, too narrow, or would require a factual comparison in the attempted enforcement.

This ruling should not be read to prevent the plaintiff from refusing any advertisement from the defendants that he becomes aware of. He may use any legal means at his disposal to determine whether an advertisement is being placed deceptively by law enforcement officers so that he may refuse to run it. This Court simply holds that the plaintiff has not established that he is entitled to the assistance of an injunction in that effort.

Consumer Fraud Act

Another basis upon which the plaintiff seeks relief is that the defendant’s misleading advertisements might subject him to liability under the Consumer Fraud Act, 44 A.R.S. See. 1521 et seq. Sec. 1522 A states as follows:

A. The act, use, or employment by any person of any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise whether or not any person has been misled, deceived or damaged thereby, is declared to be an unlawful practice.

Sec. 1531 imposes criminal penalties for wilfull violation of this section. Plaintiff argues that permitting publication of the defendants’ false and misleading advertisements might subject him to liability under these provisions.

The defendant points out that Sec. 1523 explicitly excepts from liability any newspaper who publishes an unlawful advertisement without knowledge of the intent or purpose of the advertiser. Plaintiff claims, however, that under these circumstances, he may never be truly without knowledge of the defendants’ activities.

It seems doubtful that the Arizona courts would interpret this section such that undercover activities by police officers would fall within the parameters of the Act. As a consequence, it is unreasonable to assume that the plaintiff, who did nothing but publish the advertisement, could be held liable for the deception, and this Court will not rely on such a strained interpretation of the law as grounds to enjoin otherwise legitimate law enforcement activity. Furthermore, it seems unlikely that any reader would sue the plaintiff after having been deceived by the defendants’ advertisement. Such a remote possibility does not bear much weight in the resolution of this litigation.

Conclusion

Based upon the reasoning and policy considerations discussed herein; IT IS ORDERED that the Plaintiff’s Motions for Summary Judgment are DENIED and the Defendants’ Motion for Summary Judgment is GRANTED.

      . The complaint lists as the first defendant Ruben Ortega, Chief of Police for the City of Phoenix. He was later dismissed from the case.

      . The Court will not comment on the propriety of this policy. It cannot however, form the basis for injunctive relief in this case. Interjecting this Court's opinion on that practice would be precisely the sort of governmental interference with editorial judgment that the First Amendment clearly prohibits.

      . The fact that legal remedies may be foreclosed by a statute of limitations does not make the remedy inadequate.


source: Caselaw Access Project

author: SHOOB, District Judge.

license: Public Domain

text:
    THERMO-CELL SOUTHEAST, INC., Plaintiff, v. TECHNETIC INDUSTRIES, INC., Defendant.
    Civ. A. No. C84-2393A.
    United States District Court, N.D. Georgia, Atlanta Division.
    March 27, 1985.

      Michael V. Elsberry, Atlanta, Ga., for plaintiff.
    Michael Doran, Morganton, N.C., for defendant.
   ORDER

SHOOB, District Judge.

Plaintiff, a Georgia corporation, brought this diversity action for breach of contract against defendant, a Michigan corporation whose principal place of business is North Carolina. Presently before the Court are defendants’ two motions to dismiss and quash service or for change of venue. Defendant maintains that plaintiff’s two attempts at service were deficient and that the Court lacks personal jurisdiction over defendant. Alternatively, defendant argues that for convenience the ease should be transferred to the Western District of North Carolina under 28 U.S.C. § 1404(a).

A. Sufficiency of Service

Both plaintiff’s attempts at service on defendant were by mail, outside the state of Georgia. Rule 4(f), Fed.R.Civ.P., restricts service to within the territorial limits of the state in which the district court is held, unless service is otherwise authorized by a federal statute or Rule. No federal statute authorizes nationwide service of process in this action, by mail or otherwise. Subsection (e)(2)(C)(i) of Rule 4 allows service by any means permissible under state law, but as defendant correctly points out, Georgia law does not authorize service by mail in this instance. See KMM Industries, Inc. v. Professional Placement Association, 164 Ga.App. 475, 476, 297 S.E.2d 512 (1982). Thus, defendant urges the Court to declare both attempts at service insufficient.

Plaintiff argues that its second attempt at service by mail was effective because subsection (f)’s restrictions on the territorial limits of service do not restrict subsection (c)(2)(C)(ii), which provides for service by mail. Plaintiff, however, cites no cases in support. In fact, courts have held just the opposite. According to William B. May Co. v. Hyatt, 98 F.R.D. 569 (S.D.N.Y.1983), the legislative history of Rule 4(c)(2)(C)(ii) makes it clear that the subsection on service by mail is subject to the territorial restrictions of Rule 4(f). This Court agrees with Hyatt and holds that both plaintiff’s attempts at service by mail were insufficient.

As defendant has acknowledged, the Court has broad discretion to dismiss the action or to quash service but retain the case. See 5 C. Wright & A. Miller, Federal Practice and Procedure § 1354 (1969). Because it appears that defendant may be amenable to. service of process under the Georgia long-arm statute, see O.C. G.A. §§ 9-10-91, -94, the Court elects to order that service be quashed.

B. Personal Jurisdiction

Defendant also maintains that this Court has no basis for personal jurisdiction over defendant, either under the Georgia long-arm statute or the due process clause. For purposes of surviving a motion to dismiss, plaintiff need only make a prima facie demonstration of the facts on which personal jurisdiction is predicated. Bracewell v. Nicholson Air Services, Inc., 680 F.2d 103, 104 (11th Cir.1982).

The Court finds that plaintiff has shown a prima facie basis for personal jurisdiction, both under the long-arm statute and under due process requirements. One provision in the long-arm statute authorizes personal jurisdiction over a defendant who “[t]ransacts any business within this state.” O.C.G.A. § 9-10-91(1). This subsection also requires that the defendant’s alleged liability arise out of the business transacted. Wise v. State Board for Examination, 247 Ga. 206, 210, 274 S.E.2d 544 (1981). These elements' are present here. Plaintiff has alleged that officers and agents of defendant appeared in Georgia to observe plaintiff’s plant, began negotiations in Georgia for a later purchase of plaintiff’s product, and after shipment of the product appeared in the state seeking advice on the application of the product. These contacts satisfy the requirements of O.C.G.A. § 9-10-91(1), especially in view of the trend in Georgia law to construe this provision liberally. Bosworth v. Cooney, 156 Ga.App. 274, 276, 274 S.E.2d 604 (1980).

Likewisé, this Court’s exercise of personal jurisdiction does not offend the constitutional restrictions of the due process clause. Several United States Supreme Court decisions have addressed what due process requires when a defendant’s contacts with the forum state are related to plaintiff’s claim, as is the case here. One commentator has concisely summarized those decisions as requiring only a single, purposeful, arguably commercial contact of some benefit to defendant. See Lewis, A Brave New World for Personal Jurisdiction: Flexible Tests Under Uniform Standards, 37 Vand.L.Rev. 1, 17 (1984). Defendant’s alleged contacts with Georgia satisfy each of these criteria. Thus, the Court concludes that plaintiff has made a prima facie showing of the existence of a proper basis for personal jurisdiction over this defendant.

C. Transfer under 28 U.S. C. § 1404(a)

Defendant further argues that this action should be transferred to the Western District of North Carolina. In support of this motion, defendant relies principally on the convenience of witnesses who reside in North Carolina and on the assertion that North Carolina substantive law will govern this action. As defendant recognizes, plaintiffs choice of forum ordinarily should not be disturbed unless the movant for transfer demonstrates that the balance of convenience and justice weighs heavily in favor of transfer. A.L. Williams & Associates, Inc. v. D.R. Richardson & Associates, Inc., 98 F.R.D. 748, 754 (N.D.Ga.1983). A district court has wide discretion to determine whether or not to transfer under 28 U.S.C. § 1404(a). Weber v. Coney, 642 F.2d 91, 93 (5th Cir.1981).

The Court finds that defendant has not met this burden. In support of this motion, defendant has listed only five witnesses who might be inconvenienced. At least four of these five, however, would need to travel only the relatively short distance from North Carolina to Atlanta for trial. Further, even if North Carolina substantive law governs this action, defendant has not shown that the applicable law is ambiguous or complex. See Vassallo v. Niedermeyer, 495 F.Supp. 757, 760 (S.D.N.Y.1980). These considerations do not warrant transfer, particularly when plaintiff is a resident of the district in which this action was brought. See 1 Fed.Proc., L.Ed. § 1:788 (1981). Thus, the motion to transfer will be denied.

Summary

In sum, (1) defendant’s first motion to dismiss and to quash service or for change of venue is DENIED as moot; (2) defendant’s renewed motion to quash service of process is GRANTED; (3) defendant’s renewed motion to dismiss is DENIED; (4) defendant’s renewed motion for change of venue is DENIED; and (5) defense counsel’s motion for admission pro hac vice is GRANTED provided that defendant complies with Local Court Rule 110-2 and designates local counsel within 20 days from the date of this order.

      . Defense counsel also have moved for admission pro hac vice, without designating local counsel as required by Local Court Rule 110-2. For purposes of this motion only, the Court will not require the designation of local counsel,

      . This allegation distinguishes these facts from those in O.N. Jonas Co. v. B & P Sales Corp., 232 Ga. 256, 206 S.E.2d 437 (1974)—a case on which defendant relies—in which the court noted that the parties had conducted no negotiations in Georgia. Id. at 258, 206 S.E.2d 437.

      . McGee v. International Insurance Co., 355 U.S. 220, 223-24, 78 S.Ct. 199, 201-02, 2 L.Ed.2d 223 (1957).

      . Hanson v. Denckla, 357 U.S. 235, 253-54, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958).

      . Kulko v. Superior Court, 436 U.S. 84, 94-95, 98 S.Ct. 1690, 1698, 56 L.Ed.2d 132 (1978).

      . World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298-99, 100 S.Ct. 559, 567-68, 62 L.Ed.2d 490 (1980).


author: WISEMAN, Chief Judge.

text:
    MILLER INSITUFORM, INC. and Thomas E. Smith v. INSITUFORM OF NORTH AMERICA, INC. and Jack Massar, and William C. and Ira B. Miller.
    No. 3-84-0972.
    United States District Court, M.D. Tennessee, Nashville Division.
    March 27, 1985.

      Gail Pigg, Nashville, Tenn., for plaintiffs.
    Robert J. Walker, Gayle Malone, Jr., Nashville, Tenn., for defendants.
   MEMORANDUM

WISEMAN, Chief Judge.

This case arises under the Sherman Antitrust Act and the Clayton Act, involving the alleged misuse of patent rights. Plaintiffs also seek pendent jurisdiction over state law claims for fraud and misrepresentation. Defendants have filed motions to dismiss and for summary judgment. Upon review of the facts and law of the case, the Court concludes that dismissal is appropriate as to certain claims, but that material issues of facts for adjudication are present with respect to others. The Court dismisses all claims made under Section 1 of the Sherman Act and the claim of an unlawful royalty formula. The Court denies the motion to dismiss claims alleging monopolization, attempt to monopolize, and an unlawful tie-in. The Court also denies the motion to dismiss the claims of fraud and misrepresentation.

Facts

The dispute in this matter centers around a licensing scheme regulating the use of a process patent on technology developed for the rehabilitation of sewers and other similar passageways. The patent, U.S.Patent No. 4,064,211, protects the “Insituform Process,” which consists of placing an absorbent liner in a passageway, impregnating the liner with a synthetic resin, and retaining the liner in place while the liner cures or is cured. Basically, the process permits a pipe or other passageway to be rehabilitated and/or strengthened, rather than having to be replaced.

The patent is owned by Insituform International, N.Y., a Netherlands Antilles corporation. In June of 1980, Insituform International entered into a licensing agreement with Insituform of North America, Inc. (INA), a Delaware corporation, conveying to INA the exclusive right to practice the patented process throughout the United States, except in California. Subsequently, INA granted exclusive subleases in various territories throughout the United States. On February 16, 1983, INA granted to Miller Insituform, Inc., an exclusive sublicense to practice the Insituform Process in Tennessee, Kentucky, and certain portions of Ohio.

The sublease agreement contains the following provisions which are material to this case:

1. Paragraph XII requires the sublicensee to maintain a net worth of at least $500,000.

2. Paragraph XIV(b) provides that INA may terminate the license agreement for failure of the sublicensee to perform any material term or condition of the contract, or if the sublicensee’s net worth falls below $500,000.

3. Paragraph IX governs the formula for calculating royalties which the sublicensee is obligated to pay INA. The terms provide that sublicensees are to pay 8 percent of the gross contract price on all contracts using the Insituform Process. The royalty formula includes the costs incurred for preparatory and finishing work, labor, and materials. The royalty formula includes in its calculation costs that are not subject to the process patent itself.

4. Paragraph IV states that because the Insituform Process is highly technical, its success is dependent upon the use of quality materials that conform to exacting specifications. The contract permits Miller Insituform to purchase materials not covered by INA patents or copyrights from any source, but conditions their use on INA’s approval.

At the time the sublicense agreement between INA and Miller Insituform was executed, William C. and Ira B. Miller were the sole shareholders of Miller Insituform. In September of 1983 the Millers sold 99 percent of their stock to the current individual plaintiff, Thomas E. Smith, a resident of Murfreesboro, Tennessee. Plaintiff Smith claims that at the time of the negotiations for sale of the Millers’ stock, INA agreed to modify the sublicense agreement’s requirement that Miller Insituform maintain a net worth of $500,000. Smith paid a total of $250,500 for the Millers’ stock; $125,000 was paid in cash, with the balance secured by a note and the assignment of accounts payable.

Smith claims that in the early part of 1984, INA began to conspire with one of its corporate officers, Jack Massar, and other wholly-owned sublicensees, to take over the Miller Insituform’s exclusive territory (Kentucky, Tennessee, and Southern Ohio). On or about May 9, 1984, INA terminated the sublicense agreement with Miller Insituform. In a letter signed by Jack Massar, plaintiff Smith was advised that Miller Insituform had failed to provide a balance sheet showing a net worth of at least $500,000, as required under the terms of the license agreement, and, consequently, Miller Insituform was in breach of the agreement.

Plaintiff Smith, along with Miller Insituform, now bring suit under the Sherman and Clayton Acts alleging that INA and Jack Massar unlawfully suppressed competition and sought to monopolize the market for the Insituform Process. Count One of the complaint charges that under Section 1 of the Sherman Act, INA conspired with its officer, Jack Massar, and certain of its sublicensees to wrongfully terminate Miller Insituform. Plaintiff also claims that the initial contract between INA and Miller Insituform conveying an exclusive sublicensee territory was an allocation of markets in restraint of trade, and that the royalty formula on the patent rights constituted price fixing. Finally, the plaintiffs charge INA with creating an illegal tying arrangement with regard to the unpatented materials used in the Insituform Process.

Count Two of the complaint charges INA with the attempt to monopolize and the actual monopolization of the entire United States market for the Insituform lining process, in violation of Section 2 of the Sherman Act. Plaintiffs claim that INA misused its patent license by implementing a royalty payment formula that required payments for work and materials not covered by the patent or copyright rights. Plaintiffs’ complaint also charges INA with the use of a tying arrangement. Plaintiffs claim that although the contract provided that nonpatented commodities could be purchased from other vendors, in fact, INA was the only entity from which these materials could be purchased, and that INA wrongfully refused to sell Miller Insituform these necessary materials in its attempt to take over Miller Insituform’s territory.

Count Three of the complaint charges William and Ira Miller, the former stockholders of Miller Insituform, with fraud and misrepresentation in the sale of their stock interest to plaintiff Smith. Plaintiffs claim that because the original sublicensing agreement between INA and Miller Insituform violated the Sherman Act, the license agreement was void ab initio, and, accordingly, any representation by the Millers to Smith as to the value and validity of the license rights constituted a false and misleading representation.

Law

Defendants INA and Jack Massar have filed a joint motion to dismiss under Fed.R. Civ.P. 12(b)(6) asserting that the plaintiffs have failed to state a claim on which relief can be granted. Similarly, William and Ira Miller have filed a motion to dismiss and/or for summary judgment. Because the issue as to the truth of the Millers’ representations hinges upon the initial validity of the sublicense agreement, the Court will first consider the antitrust claims.

A two-step framework of analysis is necessary to evaluate the plaintiffs’ claims under the Sherman Act. On the first level, the Court must look to the express terms of the sublicense contract to determine whether, on its face, the agreement is a contract “in restraint of trade” within the meaning of Section 1 of the Sherman Act, or unlawfully expands the scope of legitimate patent rights in violation of Section 2 of the Sherman Act. Secondly, the Court must review the .operation of the sublicense agreement to determine whether in the course of performance the contract unreasonably restrains trade under Section 1 of the Sherman Act, violates the prohibitions on monopolization under Section 2 of the Sherman Act, or constitutes a proscribed practice under the Clayton Act.

A. Analysis of the Express Terms of the Sublicense Contract

1. Validity of Territorial Restrictions in Patent Licensing Schemes

In count one of the complaint, plaintiffs assert that the sublicense agreement between INA and Miller Insituform is void ab initio since the arrangement constitutes a per se unlawful division of territories under the Sherman Act.

The Court will not review the reasonableness of INA’s division of markets under its sublicensing scheme. The Court holds that, as a matter of law, a patent licensor’s use of geographic restrictions in a sublicensing scheme to divide territories into ones of primary or exclusive jurisdiction constitutes a lawful application of the rights derived from a patent grant. Under Section 261 of the Patent Act, 35 U.S.C. § 261 (1976), a patentee may grant exclusive territorial rights over any specified part of the United States. Relevant portions of Section 261 provide: “The applicant patentee, or his assigns or legal representatives may in like manner grant and convey an exclusive right under his application for patent, or patents, to the whole or any specified part of the United States.” 35 U.S.C. § 261. Pursuant to the “inherency doctrine,” Section 261 immunizes from antitrust analysis an allocation of territories created by a patentee’s use of exclusive licenses. Brownell v. Ketcham Wire & Mfg. Co., 211 F.2d 121, 128-29 (9th Cir.1954); United States v. Parker-Rust-Proof Co., 61 F.Supp. 805, 812-13 (E.D.Mich.1945); see also Dunlop Company Ltd. v. Kelsey-Hayes Co., 484 F.2d 407, 417 (6th Cir.1973), cert. denied, 415 U.S. 917, 94 S.Ct. 1414, 39 L.Ed.2d 471 (1974); The Attorney General’s National Committee to Study the Antitrust Laws, Department of Justice, at 237 (1955); ABA Antitrust Section, Monograph No. 6, U.S. Antitrust Law in International Patent and Know-How Licensing, 13-15 (1981) (hereinafter ABA Monograph); Garrett and Johnson, Antitrust Aspects of Geographical Restrictions in Patent Licensing Arrangements, in 123 PLI, Patent Antitrust 1980, at pp. 214-22. The immunity also extends to a patent licensee’s division of its territory among its various sublicensees. Id. A patentee has a legal monopoly which he may exploit to the bounds of his right, Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 456, 60 S.Ct. 618, 625, 84 L.Ed. 852 (1940), and accordingly, the patentee can convey exclusive rights to another, in whole or in part, and may give a licensee an exclusive right to manufacture, use or sell a patented product, or practice a patent process, in a particular zone or territory. Pfizer, Inc. v. Heckler, 735 F.2d 1502, 1512 (D.C.Cir.1984). In Parker-Rust-Proof, 61 F.Supp. at 812-13, the court recognized the right of a patentee to limit territories and the number of licensees who may practice the patent. The court held that a patentee may impose on its licensees any condition that does not unlawfully expand the scope of his patent monopoly. Accord Dunlop Company, Ltd. v. Kelsey-Hayes Co., 484 F.2d at 417-18.

This Court adheres to the inherency doctrine, and holds that INA’s initial grant of an exclusive territory to Miller Insituform does not violate federal antitrust law and is a valid exercise of patent rights authorized under the Patent Act, 35 U.S.C. § 261.

2. Misuse of Patent Doctrine: ' Illegality of Restrictions that Expand the Scope of Patent Rights

A restriction that goes beyond the scope of the patent is not authorized under the Patent Act and is not clothed with immunity from antitrust laws. Walker Process Equipment, Inc. v. Food Machinery & Chemical Co., 382 U.S. 172, 175, 86 S.Ct. 347, 349,15 L.Ed.2d 247 (1965); Bender, Patent Misuse, in 123 PLI, Patent Antitrust 1980, 67-94. Rather, such a restriction is subject to antitrust scrutiny to assess the restraint’s competitive significance. Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 491-92, 62 S.Ct. 402, 404-05, 86 L.Ed. 363 (1942) (refusing injunctive relief in an infringement suit in which patentee was shown to have established an illegal tie-in between its patented salt machine dispenser and nonpatented salt tablets). In Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 665, 64 S.Ct. 268, 271, 88 L.Ed. 376 (1944), the Supreme Court enunciated the misuse of patent doctrine:

The grant of a patent is the grant of a special privilege “to promote the progress of science and useful arts.” Const; Art. I, § 8. It carries, of course, the right to be free from competition in the practice of the invention. But the limits of the patent are narrowly and strictly confined to the precise terms of the grant.

In Preformed Line Products Co. v. Fanner Mfg. Co., 328 F.2d 265, 267-78 (6th Cir.1964), cert. denied, 379 U.S. 846, 85 S.Ct. 56, 13 L.Ed.2d 51 (1964), the Sixth Circuit Court of Appeals applied the doctrine to condemn both a tying and exclusive dealings arrangement contained within a patent licensing scheme. In this case, although the Court recognizes the validity of INA’s initial allocation of an exclusive territory to Miller Insituform, it nevertheless must consider whether other terms of the contract and/or the contract’s operation go beyond the lawful scope of the patent rights and suppress competition in violation of the antitrust laws.

a. Royalties

The plaintiffs claim that the royalty formula requiring Miller Insituform to pay a fee of 8 percent of the total contract price constitutes an unreasonable abuse of INA’s patent license rights. Plaintiffs object to the formula since it includes in its calculation the costs of preparatory and finishing work, labor, and nonpatented materials. Plaintiffs maintain that a fee structure that charges for any item other than those directly tied to the patented Insituform Process constitutes unlawful leverage of the patent rights. The Court disagrees.

Under the antitrust laws, the province of the federal courts is to protect competition, not the competitor. Hence, a Court ordinarily will not review the terms of a contract negotiated at arm’s length. “A patent owner may exact royalties as high as he can negotiate with the leverage of that monopoly.” Brulotte v. Thys Co., 379 U.S. 29, 33, 85 S.Ct. 176, 179, 13 L.Ed.2d 99 (1964); but see American Photocopy Equipment v. Rovico, Inc., 359 F.2d 745, 747 (7th Cir.1966) (condemning 24 percent royalty fee on total sale price of a machine as “exorbitant and oppressive”). When reviewing INA’s alleged abusive royalty formula, then, this Court will limit its consideration to whether the payment structure unreasonably suppresses competition in the patented process, furthers unlawful monopolization of a particular market, or somehow constitutes a proscribed practice under the various antitrust statutes. A claim of overreaching, unless clearly tied to unlawful federal antitrust conduct, raises an issue of state contract law not subject to independent federal review.

INA’s royalty formula does not violate federal antitrust law. The payment schedule of 8 percent of the total contract is imposed on the single, unitary Insituform Process. The Process involves nonpatented preparatory and finishing stages and a patented “middle” stage, requiring the use of both patented and unpatented materials. The Court will not conduct a long and expensive inquiry to establish the relative value of each aspect of the entire rehabilitation procedure in the attempt to isolate out the appropriate value of the patented stages and materials. Indeed, since the engineering and technical requirements undoubtedly will differ in each particular application of the Insituform Process, the relation between the costs of the nonpatented and patented features of the Insituform process also must invariably differ from one job to the next. The Court will not formulate a substitute royalty formula for the one negotiated by the parties.

Further, the Court will not review the reasonableness of the royalty formula. The royalty formula in this case is distinguishable from the formula subjected to— and upheld under the reasonableness test in Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827, 70 S.Ct. 894, 94 L.Ed.2d 1312 (1950). In Automatic Radio, Hazeltine Research, Inc. [HRI] conveyed to Automatic Radio the right to use all present and future HRI patents in consideration for a pereentage-of-total-sales royalty. Automatic Radio sought to avoid the arrangement by arguing that the fee structure exacted royalties regardless of whether HRI patents were used in a particular radio. The Court concluded that the agreement represented “the most convenient method of fixing the business value of the privileges granted by the licensing agreement” since the formula avoided the need to determine whether each particular Automatic Radio model embodied HRI patents. 339 U.S. at 834, 70 S.Ct. at 898, The Supreme Court reached he opposite conclusion in Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), in which the Court invalidated a formula that, like Automatic Radio, exacted a percentage-of-total-sales royalty. The difference in Zenith Radio from Automatic Radio was that in Zenith Radio the licensee had, from the outset, objected to the royalty formula, claiming that many HRI patents were unsuitable for Zenith Radio applications and that, in fact, many of Zenith’s products contained patents of competing patentees. HRI refused to license its patents without a percentage-of-total-sales royalty. The Court concluded that the percentage-of-total-sales royalty in Zenith Radio was not reasonable, nor the most convenient method for calculating a fee.

The Court in this ease need not consider reasonableness or convenience of INA’s royalty formula since the Insituform royalty is charged only on projects that utilize the patented process. No uncertainty exists as to which of the Miller Insituform projects utilize the Insituform Process; they all do. The concern both in Automatic Radio and Zenith Radio was that a royalty was charged on certain sales that contained no HRI patent whatsoevér. Yet, in both cases, no question ever was raised as to the propriety of charging a percentage-of-sales royalty on those radios containing HRI patented parts, even though such radios may have also have contained other competing patented and nonpatented parts. Because INA’s royalty fee is triggered only by the use of the Insituform Process, the Court declines to review the reasonableness of the fee under antitrust analysis. For this reason, the Court dismisses the plaintiffs’ claims as they relate to royalties.

b. Misrepresentation and Fraud

The Court concludes that the sublicense agreement executed between INA and Miller Insituform is a valid contract which does not violate the antitrust laws. Accordingly, the Court finds that the contract was not void ab initio as is argued by the plaintiffs vis-a-vis the plaintiffs’ claim of fraud and misrepresentation against the Millers in Court Three of the complaint. At the same time, the Court concludes that (as discussed below in Part B of the Memorandum) certain aspects of the operation of the agreement may violate federal antitrust laws and, therefore, material issues are presented as to possible representations made by the Millers to Smith concerning the INA/Miller Insituform commercial relationship. The Court denies the Millers’ motion for dismissal and/or summary judgment. Fed.R.Civ.P. 56.

B. Analysis of the Operation and Effect of the Sublicense Agreement

Having analyzed the express terms of the sublicense agreement, the Court now considers the operation of the contract and those overt acts the plaintiffs claim violate federal antitrust law.

1. Section One Claims Under the Sherman Act

Plaintiffs charge that INA conspired and/or combined with Jack Massar and some of its wholly-owned sublicensees to terminate Miller Insituform’s exclusive license rights in violation of Section 1 of the Sherman Act. Plaintiffs argue such conduct constitutes an unlawful allocation of territory, a concerted refusal to deal and price fixing. The Court finds, however, the pleadings do not allege the type of concerted action federal courts have interpreted as necessary to make out a prima facie case under Section 1. Plaintiffs’ allegations object to conduct that represents unilateral activity under Section 1 of the Sherman Act and is therefore not actionable. United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919).

To make out a cause of action under Section 1 of the Sherman Act, the plaintiffs must demonstrate a contract, combination or conspiracy in restraint of trade. 15 U.S.C. § 1 (1976). Two elements are necessary. First, the plaintiffs must satisfy what is commonly known as the “duality requirement.” That is, at least two persons must have joined together in pursuit of a common scheme. Second, the plaintiffs must show that the particular scheme is “in restraint of trade.” Federal courts have interpreted the proscription on concerted action “in restraint of trade” to apply only to those forms of commercial conduct that unreasonably suppress competition in the market place. In this case, the plaintiffs charge that INA conspired, either with its employee Jack Massar or with its wholly-owned sublicensees to terminate Miller Insituform’s license patent rights.

All claims against Jack Massar are dismissed for failure to state a claim on which relief can be granted. Fed.R.Civ.P. 12(b)(6). Plaintiffs charge that Jack Massar, as an officer of INA, conspired with his employer in violation of Section 1 of the Sherman Act. Well established precedent in the federal courts holds that collaborative efforts between a corporation and its employees is not sufficient to satisfy the duality requirement for proving a conspiracy within the meaning of 15 U.S.C. § 1. Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 893 (3d Cir.1981), cert. denied, 454 U.S. 893, 102 S.Ct. 390, 70 L.Ed.2d 208 (1981); Nelson & Supply Co., Inc. v. Motorola, 200 F.2d 911, 914 (5th Cir.1952), cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953) (a corporate defendant is a legal “person” who can act only through its agents and officers). In Copperweld Corp. v. Independence Tube Corp., — U.S. -, -, 104 S.Ct. 2731, 2741, 81 L.Ed.2d 628, 642 (1984), the Supreme Court stated that coordinated conduct between officers and employees of a corporation cannot constitute a conspiracy under Section 1 of the Sherman Act. There is no “sudden joining” of previously divergent interests in economic force and, therefore the officer’s conduct does not threaten to reduce competition by removing independent decision making power in the market place. Rather, concerted effort by the officers of a corporation is necessary to effect efficient operation of the unitary interests of the employer corporation. Id.; Schwimmer v. Sony Corp. of America, 677 F.2d 946, 953 (2d Cir.1982), cert. denied, 459 U.S. 1007, 103 S.Ct. 362, 74 L.Ed.2d 398 (1982); Green v. Associated Milk Producers, Inc., 692 F.2d 1153, 1156-57 (8th Cir.1982).

Plaintiffs’ allegation of a conspiracy between INA and its wholly-owned subsidiaries similarly fails to make a claim on which relief can be granted. In Copperweld, — U.S. at - - -, 104 S.Ct. at 2736-41, 81 L.Ed.2d at 637-42, the Supreme Court held that a parent corporation and its wholly-owned subsidiary are incapable of conspiring with each other for purposes of Section 1 of the Sherman Act. Because a parent and its wholly-owned subsidiary have a unitary economic interest, concerted action between the two does not pose the type of anticompetitive dangers the Sherman Act is designed to combat.

In sum, because the plaintiffs claim that INA conspired with its wholly-owned subsidiary sublicensees and with Jack Massar, the plaintiffs have failed to state a claim under Section 1 of the Sherman Act.

2. Claims Under Section 2 of the Sherman Act: Attempt to Monopolize and Monopolization

The Court now considered whether the operation of the sublieense agreement constitutes a misuse of patent rights under Section 2 of the Sherman Act or the Clayton Act. Plaintiffs charge that INA wrongfully terminated Miller Insituform’s sublicense agreement on the pretext that the plaintiffs failed to provide a net worth statement demonstrating at least $500,000. Plaintiffs claim that this requirement previously was modified by INA during Smith’s negotiation with the Millers concerning Smith’s stock purchase and, therefore, no such contractual obligation existed at the time of termination. This then, is a question of fact for adjudication.

In order to make out a cause of action for attempt to monopolize, the plaintiff must demonstrate (1) that the defendant possessed an intent to monopolize and (2) there is a dangerous probability of success. Swift & Co. v. United States, 196 U.S. 375, 396, 25 S.Ct. 276, 279, 49 L.Ed. 518 (1905). The question of a party’s intent is peculiarly one of fact which must be determined at trial. Similarly, the question of the probability of success of an attempt to monopolize also gives rise to a question of fact for adjudication. In Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. at 177-78, 86 S.Ct. at 350-51, the Supreme Court held that in order to establish monopolization or an attempt to monopolize, the plaintiff must establish the relative exclusionary power of the patent in terms of the relevant market for the product involved. This question, then, requires the Court to determine the relevant product market for the Insituform Process and whether there are effective noninfringing substitutes for the process within that market. The Insituform Process may not be the only alternative for rehabilitating pipes and sewers. Furthermore, in some situations, a sewer line may be so dilapidated that it is cheaper to replace the entire pipe than to rehabilitate it with the patented process. These are questions of fact that cannot be determined on a motion for dismissal.

3. Tying Arrangements

Plaintiffs also charge INA with creating a tying arrangement by which it has used its rights to the Insituform Process as leverage to require sublicensees to purchase from INA separate, unpatented materials (e.g., liners and resin) necessary to perform the Insituform Process. Plaintiffs assert that though the sublicense contract permitted Miller Insituform to purchase approved materials from any source, the non-patented materials were, in fact, available only from INA, which wrongfully refused to sell Miller Insituform such products in furtherance of INA’s plan to terminate the sublicensee’s commercial activity. Defendants dispute this fact and claim the materials could be purchased from a number of suppliers. The relative availability of such materials presents a material issue of fact on the question of whether INA established an unlawful tying arrangement.

Tying arrangements are prohibited under Section 3 of the Clayton Act and may also be attacked as a misuse of patent monopoly power under Section 2 of the Sherman Act. In order to demonstrate an unlawful tying arrangement, the plaintiff must show three elements: (1) the existence of two separate products; (2) the defendant possesses sufficient market power in the tying market; and (3) the tying arrangement has a substantial adverse effect on competition in the tied market. Jefferson Parish Hospital District No. 2 v. Hyde, — U.S. -, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984); Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6, 78 S.Ct. 514, 2 L.Ed.2d 545, (1958); Aluminum Company of America v. Sperry Products, Inc., 285 F.2d 911, 926 (6th Cir.1960), cert. denied sub nom., Firestone v. Aluminum Company of America, 368 U.S. 890, 82 S.Ct. 139, 7 L.Ed.2d 87 (1961); Bell v. Cherokee Aviation Corp., 660 F.2d 1123, 1127 (6th Cir.1981). Conditioning the license of a patented process on the sublicensee’s agreement to purchase separate, nonpatented goods can be both a tying arrangement and a misuse of a patent. Preformed Line Products Co. v. Fanner Mfg. Co., 328 F.2d 265, 276-77 (6th Cir.1964). However, a tie-in usually would not exist when a patentee (or its licensee) conditions the right to use his patented process upon the vendee’s purchase of nonpatented commodities that are necessary to the process, if such commodities have no effective, noninfringing use other than application in the patented process. See Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176, 213, 100 S.Ct. 2601, 2621, 65 L.Ed.2d 696 (1980) (under Section 271(3) of the Patent Act, 35 U.S.C. § 271(c), “Congress granted to patent holders a statutory right to control nonstaple goods that are capable only of infringing use in a patented invention, and that are essential to that invention’s advance over prior art.”).

With respect to the tie-in claim, it is uncertain whether two separate products exist; that is, whether the nonpatented commodities are distinct from the technical Insituform Process. Further, the Court must inquire into whether INA has sufficient economic power to restrain competition in the tied products or, on the other hand, whether INA is the only entity interested in manufacturing and/or supplying such materials. Finally, the Court must consider the alleged tie-in’s effect on interstate commerce. These are material issues of fact for adjudication, warranting the Court’s denial of the defendants’ motion to dismiss on the tie-in claim.

      . The Court construes plaintiffs’ pleadings to state that the sublicensees with whom INA allegedly conspired were wholly owned subsidiaries of INA. See Complaint ¶ 11.

      . Tying arrangements are expressly prohibited under Section 3 of the Clayton Act and, in the context of this case, may also constitute unlawful conduct under Section 2 of the Sherman Act to the extent that it aids in the unlawful extension of the scope of the lawful patent right.

      . Even if the antitrust laws do apply to the territorial restrictions in INA’s patent licensing scheme, such vértical allocations of markets are not per se illegal, but are subject to scrutiny under the rule of reason. Continental TV, Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 54-59, 97 S.Ct. 2549, 2559-2562, 53 L.Ed.2d 568 (1977) (rule of reason is the proper standard of antitrust scrutiny for vertically-imposed divisions of territories since such restraints often generate pro-competitive interbrand rivalry).

      . Although federal courts generally apply the same antitrust-law-immunity to licensing schemes as that afforded to outright grants of patent rights, a number of commentators have challenged the legal rationale for the practice. The basic position of these commentators is that while Section 261 of the Patent Code expressly exempts assignments from conflicting antitrust provisions, an exemption for licenses may only be implied. Lacking an express exemption, licensing schemes should be subject to rule of reason scrutiny under the antitrust laws. Baxter, Legal Restrictions on Exploitation of the Patent Monopoly, 76 Yale L.J. 267, 347-52 (1966); Gibbons, Domestic Territorial Restrictions in Patent Transactions and the Antitrust Laws, 34 Geo.Wash.L.Rev. 893, 894-904 (1966); Turner, The Patent System and Competitive Policy, 44 N.Y.U.L. Rev. 450, 469-470 (1969); Andewalt and Allen, Patent Licensing and Immunity from the Antitrust Law—The Government Prospective, in 123 PLI, Patent Antitrust 1980, at pp. 273-284.
      Form over substance will not control this Court’s analysis. From a competition-oriented perspective, there is little difference between an assignment and a license of patent rights. The same pro-competition considerations apply when analyzing restrictions contained in the creation of both types of rights. Therefore, just as assignments enjoy immunity from antitrust scrutiny, licenses are similarly cloaked with such immunity. A license or a grant of patent rights is subject to antitrust scrutiny only upon a showing that the scheme unreasonably expands the scope of the legal monopoly granted by the federal government.

      . The types of practices constituting a misuse of patent monopoly power were reviewed in Brownell v. Ketcham Wire & Mfg. Co., 211 F.2d 121, 128-129 (9th Cir.1954).

        “It is not the monopoly of the patent that is invalid. It is the improper use of that monopoly." U.S. v. Line Material Co., 333 U.S. 287, 310, 68 S.Ct. 550, 562, 92 L.Ed. 701 (1948). The courts have condemned many practices in connection with the use of patents, e.g.:
      (a) Use of invalid patents in price fixing:

        McGregor v. Westinghouse Electric & Mfg. Co., 329 U.S. 402, 407, 67 S.Ct.421, [423] 91 L.Ed. 380 (1947).
      (b) Cross-licensing of patents:

        U.S. v. Line Material Co., supra.

      (c) Attempts to extend the scope of patent monopoly:

        Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502, 516, 37 S.Ct. 416, 61 L.Ed. 871 (1917); Carbice Corp. of America v. American Patents Development Corp., 283 U.S. 27, 31, 51 S.Ct. 334, [335], 75 L.Ed. 819 (1931).
      (d) Illegal price fixing activities in connection with patents:

        Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 63 S.Ct. 172, 87 L.Ed. 165 (1942); Edward Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394, 67 S.Ct. 416, 91 L.Ed. 374 (1947); McGregor v. Westinghouse Electric & Mfg. Co., supra, Pfotzer v. Aqua Systems, Inc., 162 F.2d 779, (2d Cir.1947), falls within this category. There was also involved the claim of royalties on unpatented articles.
      (e) Tying patents to unpatented devices or processes:

        Ethyl Gasoline Corp. v. U.S., 309 U.S. 436, 456, 60 S.Ct. 618, [625], 84 L.Ed. 852 (1940); Mercoid Corp. v. Mid-Continent Investment Co., 320 U.S. 661, 667-668, 64 S.Ct. 268, [272], 88 L.Ed. 376 (1944); Mercoid Corp. v. Minneapolis-Honeywell Regulator Co., 320 U.S. 680, 684, 64 S.Ct. 278, [280], 88 L.Ed. 396 (1944).
      (f) Seeking to extend the effect of an expired patent:

        U.S. v. Timken Roller Bearing Co., 83 F.Supp. 284, 313-314 (D.Ohio 1949), affirmed Timken Roller Bearing Co. v. U.S., 341 U.S. 593, 71 S.Ct. 971, 95 L.Ed. 1199 (1951).
      (g) Misuse of patents:

        U.S. v. National Lead Co., 932 U.S. 319, 67 S.Ct. 1634, 91 L.Ed. 2077 (1947); McCullough v. Kammerer Corp., 166 F.2d 759 (9th Cir.1948).

      . As the Department of Justice recently noted, the level of antitrust scrutiny of patent licensing schemes should not be as stringent as that imposed when evaluating restrictions which do not involve patents or other types of intellectual property.
      [R]estrictions in licenses of intellectual property (e.g., patent, a copyright, trade secret, and know-how) ... often are essential to ensure that new technology realizes its maximum legitimate return and benefits consumers as quickly and efficiently as possible.... Unless restrictions in intellectual property licenses involve naked restraints of trade unrelated to development of the intellectual property, or are used to coordinate a cartel among the owners of competing intellectual properties, the restrictions should not be condemned.
      Department of Justice, Vertical Restraints Guidelines, 50 Fed.Reg. No. 31, 6263, 6266 (February 14, 1985) (concluding that promulgated guidelines are not applicable to patent licensing schemes in view of differing competitive considerations applicable to intellectual property from typical commodities and services).

      . The Justice Department recently took the position that "[t]ying arrangements generally do not have significant anticompetitive potential,” Justice Department Guidelines on Vertical Restraints, supra, at 6271, and that it would prosecute such arrangements only when certain specified conditions exist.


author: MERHIGE, District Judge.

text:
    James WALLER, et al., Plaintiffs, v. Bernard BUTKOVICH, et al., Defendants.
    Civ. A. No. 80-605-G.
    United States District Court, M.D. North Carolina, Greensboro Division.
    March 27, 1985.

      P. Lewis Pitts, Jr., Greensboro, N.C., Carolyn McAllaster, Durham, N.C., Dan Sheehan, Washington, D.C., Stewart Kwoh, Legal Alliance for G’bo Justice, Los Angeles, Cal., Flint Taylor, Michael Deutsch, People’s Law Office, Chicago, Ill., James McNamara, Columbus, Ohio, Burt Neuborne, Amer. Civ. Liberties, New York City, for plaintiffs.
    Norajean M. Flanagan, Criminal Section, Civil Rights Div., Dept. of Justice, Washington, D.C., for Prosecution in Criminal Case.
    Robert W. Warren, Black Mountain, N.C., Jonathan C. Moore, Nat. Lawyers Guild, New York City, for Amicus Curiae.
    Virgil Griffin, David Wayne Matthews, Lawrence Gene Morgan, Coleman Blair Pridmore, Lisford Carl Nappier, Sr., Jerry Paul Smith, Michael Eugene Clinton, Roy Clinton Toney, Roland Wayne Wood, Claude Matthew McBride, Jr., Edward W. Dawson, Rayford Milano Caudle, Jack Wilson Fowler, Jr., Harold Covington, Gorrell Pierce, Billy Joe Franklin, Terry Wayne Hartsoe, Harold Dean Flowers, and Mark Sherer, pro se.
    Charles E. Nichols, Fred T. Hamlet, Kenneth Kyre, Jr., Jesse L. Warren, City Atty., Greensboro, N.C., for Swing, Bateman, Baucom, Melvin, Lovelace and City of Greensboro, N.C.
    R. Joseph Sher, Asst. Director, Eileen O’Brien, Trial Atty., Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, D.C., Kenneth W. McAllister, U.S. Atty., Greensboro, N.C., for Butkovich, Pelczar, Pence, Moses, Westra and Conroy.
    Charles T. Hagan, Jr., Daniel W. Fouts, Adams, Kleemeier, Hagan, Hannah & Fouts, Larry I. Moore, III, Gerard M. Chapman, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, N.C., Appointed as Friend of Court to represent indigent defendants.
   MEMORANDUM

MERHIGE, District Judge.

Before the Court is plaintiffs’ “Renewed Motion to Dismiss Ku Klux Klan and Nazi Defendants’ Purported Counterclaims.” Plaintiffs filed the motion on February 26, 1985. Although filed only two weeks before trial, the Court deemed it appropriate to entertain the motion in view of the possibility that, if well taken, a simplification of the issues in this factually complicated lawsuit might well result. Plaintiffs argued the motion at the Court’s hearing in Greensboro on February 28, 1985.

The Klan and Nazi defendants against whom the instant motion is directed have generally been proceeding pro se throughout the pendency of this action. Beginning in November, 1984, however, counsel acting as Friends of the Court, pursuant to the Court’s appointment, have assisted certain of the pro se Klan and Nazi defendants. Upon the Court’s request at the February 28 hearing, Friends of the Court filed, on March 7, 1985, a responsive brief to plaintiffs’ motion. This motion was denied orally in Open Court on March 11, 1985. This memorandum elaborates the reasons for the Court’s decision.

BACKGROUND

A number of the defendants in this suit, who are allegedly members of the Ku Klux Klan or the American Nazi Party, filed pleadings that include counterclaims. These counterclaims have been filed in responsive pleadings to both the initial and the amended complaint.

In their respective answers to plaintiffs’ initial complaint, fifteen of the nineteen Klan and Nazi defendants remaining in this action filed counterclaims, none of which was artfully pleaded. At the time, none of the Klan and Nazi defendants had the assistance of appointed counsel, nor does the record reflect the appearance of any counsel on their behalf. Indeed, most of the pleadings that these defendants filed express a desire to “assert appropriate counterclaims against the plaintiffs ..., and will do so by appropriate amendment to this answer if permitted to do so by this Court at such time as this defendant may obtain competent legal aid for that purpose.” Each of the fifteen counterclaims allege certain facts in connection with November 3, 1979 and/or the complaint itself, and all express a desire to recover from plaintiffs for plaintiffs’ allegedly unlawful conduct against them.

Twelve of the fifteen counterclaims asserted in response to the original complaint are virtually identical. The material substance of their allegations is that, on November 3, 1979, the plaintiffs conspired to and did attack the Klan and Nazi defendants, to deprive those defendants of their rights under the First Amendment and of other civil rights. The allegations fairly imply that plaintiffs attacked defendants because defendants were opposed to Communism. Two other of those fifteen original counterclaims allege “abuse of process” and “malicious prosecution” only; they state that the complaint is false and that the plaintiffs know this. Another of the fifteen alleges that a variety of the defendants’ rights under constitutional and state law were violated, and that plaintiffs attempted to attack him on November 3, 1979.

Plaintiffs filed replies to the latter three counterclaims, denying them and contending that they fail to state a claim. According to their brief in support of the instant motion, plaintiffs declined to file replies to the others because they construed them not to be counterclaims.

On May 3, 1982, plaintiffs, by leave of Court, filed an amended complaint. Only seven of the Klan and Nazi defendants answered the amended complaint. These seven had also answered the original complaint and had asserted counterclaims at that time. Their responsive pleadings to the amended complaint, as to the original complaint, include counterclaims.

Four incorporate the allegations in their prior counterclaim. In addition, defendant Wood’s “Response” sets forth a version of November 3, 1979 that alleges a conspiracy among the plaintiffs, motivated by animus against Christian Americans, to attack the Klan and Nazi defendants. Defendant Wood also repeatedly alleges that the complaint is replete with false statements about him and other Klan and Nazi defendants. He seeks relief for both the alleged attack by plaintiffs and the allegedly false statements in the complaint.

Defendant Dawson alleges a counterclaim based oh the alleged attack by plaintiffs and the alleged resulting deprivation of his First Amendment rights. One can fairly infer from the counterclaim that the plaintiffs were allegedly motivated in their attack by animus against anti-Communists. He also characterizes a number of the allegations in the complaint as false and seeks to recover for alleged abuse of process.

Defendant Sherer’s Answer to the amended complaint does not include facts to support a counterclaim, although he denominates the pleading as an “Answer, Counterclaim, and Claim for Other Relief.” Nor does he incorporate by reference the facts alleged in his responsive pleading to the original complaint, which did include a counterclaim. Defendant Sherer does, however, express a desire to assert a counterclaim upon being appointed a lawyer, and seeks “such relief as may be proper” in his responsive pleading to the amended complaint.

Plaintiffs replied to these counterclaims on December 27, 1983. The replies, after denying the truth of any of the material facts alleged, all include the defense that the counterclaims fail to state a claim for which relief can be granted. Plaintiffs did not file a motion to dismiss, however.

On February 7, 1985—over a year later— plaintiffs did move to dismiss all pending counterclaims. The sole ground for the motion was that the Court had previously indicated a view that such counterclaims are not “colorable” for purposes of compelling the Court to appoint counsel to assist the Klan and Nazi defendants in the prosecution of their counterclaims. See Waller v. Butkovich, 584 F.Supp. 909, 947 (M.D.N.C.1984). The Court denied that motion, and the instant motion followed shortly thereafter.

DISCUSSION

Plaintiffs have raised in their motion a number of points that, they argue, compel dismissal of the counterclaims. The Court addresses these arguments below. At the outset, however, the Court notes the especially lenient treatment with which it must consider pro se pleadings when faced with a motion to dismiss those pleadings. As the Supreme Court has held, allegations by a pro se party—even though inartfully pleaded—may require the Court to afford the pro se party an opportunity to offer supporting evidence. See Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 595, 30 L.Ed.2d 652 (1972). The district court must be able to conclude “with assurance” that, under the allegations of the pro se complaint, it appears “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. at 521, 92 S.Ct. at 596, quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). The Court of Appeals for the Fourth Circuit has frequently followed this rule in concluding that a district court has erred by dismissing a pro se complaint. See, e.g., Hudspeth v. Figgins, 584 F.2d 1345, 1347 (4th Cir.1978), cert. denied, 441 U.S. 913, 99 S.Ct. 2013, 60 L.Ed.2d 386.

Of course, a district court is not powerless to dismiss claims asserted by pro se parties. Claims that are frivolous may properly be dismissed. Boyce v. Alizaduh, 595 F.2d 948, 952 (4th Cir.1979). To be characterized as frivolous, the Court must conclude “ ‘beyond doubt’ and under any ‘arguable’ construction, ‘both in law and in fact’ of the substance of plaintiff’s claim that he would not be entitled to relief.” Id. Even though a pro se claim is deemed not frivolous, an evidentiary hearing is not necessarily required. See Wooten v. Shook, 527 F.2d 976, 978 (4th Cir.1975). The pro se party should have some kind of opportunity to offer evidence or to further particularize his claim, however, before the Court decides to dismiss it. See Haines v. Kerner, supra, 404 U.S. at 521, 92 S.Ct. at 596 (entitled to an opportunity to offer proof).

These considerations apply to the pro se pleadings in this case no less than in any other case. The fact that the pro se claims for relief are asserted in counterclaims rather than in an independent complaint is irrelevant; the counterclaim is the functional equivalent of a complaint for purposes of asserting a claim against a plaintiff. And the fact that the claims are asserted by members of the Nazi Party and the Ku Klux Klan is equally irrelevant. The counterclaims must be treated according to well-established rules of law governing the disposition of pro se pleadings.

I. Effect of Expressing “desire to assert an appropriate counterclaim.

Plaintiffs point out that many of the pro se defendants indicated a “desire to assert an appropriate counterclaim” upon obtaining assistance of counsel. Plaintiffs suggest that this reflects a recognition by the pro se defendants themselves that they were not in fact asserting counterclaims. Plaintiffs argue that such pleadings cannot be considered to include counterclaims. But this argument is contrary to the teaching of Haines and its progeny, discussed supra. Inartful pleading is no basis for dismissing a pro se claim. The pro se defendants involved here plainly intended to assert counterclaims, and they set forth facts to support such counterclaims. That they also expressed a desire to assert such counterclaims more artfully in the future when assisted by an attorney is hardly a basis for dismissing the counterclaims now.

II. Failure of some pro se defendants to reassert counterclaims.

Plaintiffs contend that the pro se defendants who failed to reassert their counterclaims after plaintiffs filed their amended complaint have waived their counterclaims. They have not supported this argument with any authority, however. Nor have the parties addressed how the defendants’ pro se status affects any waiver of counterclaims that may otherwise exist. The Court shall decline to dismiss any counterclaims as “waived” at the present time. The Court will, however, entertain further briefing on the issue, and has already solicited such briefing.

III. Counterclaims based on state law.

A. Jurisdiction. Plaintiffs contend that counterclaims based on state law must be dismissed for lack of subject matter jurisdiction. They appear to urge this argument only with respect to such counterclaims that exclusively allege state law as a basis, not to such counterclaims that may include claims based on federal law as well. Even if plaintiffs’ argument is so confined, it must fail. Federal courts have ancillary jurisdiction over counterclaims based purely on state law, at least where, as appears to be the case here, those state-law counterclaims are compulsory. See, e.g., Moore v. New York Cotton Exchange, 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750 (1926); Ambromovage v. United Mine Workers of America, 726 F.2d 972, 979-80 (3d Cir.1984).

B. Sufficiency of allegations. Plaintiffs state, in conclusory fashion in their motion itself, that none of the state counterclaims are properly alleged. They do not supply any supporting argument or authority in their brief, however; nor do they call the Court’s attention to any particular state' claims. Friends of the Court have reviewed, in their brief, the elements of assault, battery, and libel under North Carolina law, and urge that the counterclaims allege facts that satisfy these elements. This appears to be true with respect to the allegations of many of the counterclaimants. The Court will not dismiss any counterclaims based on state law in light of the present record, which is not well developed factually or legally.

7F Federal conspiracy claims.

Plaintiffs have vigorously argued, both in their brief and in open court, that the counterclaims allege no valid federal conspiracy claim. They focus on the elements of a claim under 42 U.S.C. § 1985(3). The counterclaims do not expressly invoke any particular statute, but the facts alleged do suggest that any possible federal claim they may have against plaintiffs arising out of the events of November 3, 1979 is based on Section 1985(3). The brief that Friends of the Court have submitted does not suggest otherwise.

As the Supreme Court has recently summarized, to establish a violation of Section 1985(3) a party must allege and prove four elements:

(1) a conspiracy; (2) for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws; and (3) an act in furtherance of the conspiracy; (4) whereby a person is either injured in his person or property or deprived of any right or privilege of a citizen of the United States.

See United Brotherhood of Carpenters and Joiners of America v. Scott, 463 U.S. 825, -, 103 S.Ct. 3352, 3356, 77 L.Ed.2d 1049 (1983). The Supreme Court has repeatedly held that the second element requires “some racial, or perhaps otherwise class-based, invidiously discriminatory animus” behind the conspirators’ deprivations. Id., quoting Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971). Having reviewed these elements, the Court addresses plaintiffs’ objections to any Section 1985(3) claims that the counterclaims may assert.

Sufficiency of allegations of conspiracy. Plaintiffs suggest that any claim asserted by the Klan and Nazi defendants must fail because the allegations of conspiracy are insufficient. Whatever the merits of this contention if those claims had been asserted by parties represented by counsel, it must be rejected here. As discussed supra, pro se parties are not held to the same standards of pleading as are represented parties. The counterclaims plainly allege that plaintiffs conspired against them. Any counterclaims based on Section 1985(3) cannot be dismissed merely because this allegation is conclusory, at least not until the defendants have been given an opportunity to flesh out their allegations further. Had plaintiffs moved for summary judgment on these counterclaims at the appropriate time, such an opportunity would have arisen. They did not so move, however. It would be error for the Court to dismiss these counterclaims on the present record, even though such a dismissal might facilitate for plaintiffs and the Court a more orderly presentation of the issues in the trial of this action.

Objects of the conspiracy: First Amendment rights, and right to travel. The second element of a 1985(3) claim is that the purpose of the conspiracy be to deprive the victims of equal protection of the laws, or of equal privileges and immunities under the laws. Plaintiffs in effect argue that no alleged object of the conspiracy satisfies this requirement. Specifically, they argue that the facts alleged do not support an actionable conspiracy under Section 1985(3) because the facts relating to the alleged objects of the conspiracy— depriving counterclaimants of their rights under the First Amendment, as well as their right to travel—are insufficient as a matter of law to establish such violations.

As for a Section 1985(3) conspiracy based on an alleged attempt to deprive the counterclaimants of First Amendment rights, plaintiffs point out that defendants' have not in any way alleged state involvement in the conspiracy. Citing Carpenters, supra, plaintiffs argue that this omission requires dismissal. See 463 U.S. at -, 103 S.Ct. at 3358. The Court notes, however, that Carpenters also states that a Section 1985(3) violation for a conspiracy to infringe First Amendment rights may be asserted where the object of the conspiracy is to influence the activity of the state, as well as where the state is actively involved in the conspiracy. See Carpenters, supra, 463 U.S. at -, 103 S.Ct. at 3357, 3358. Friends of the Court have argued in their brief opposing dismissal that the plaintiffs conspired to deprive the Klan and Nazi defendants of police protection. They allude to evidence developed in discovery supporting this theory. If proved, such contentions may constitute a conspiracy to influence the activity of the state so as to deprive the Nazi and Klan defendants of First Amendment rights; the police protection of which the counterclaimants may have been deprived appears to be related to their exercising First Amendment rights. The parties have not fully briefed this point, however, so the Court need not resolve it here.

Plaintiffs also argue that the counter-claimants allege no violation of any protected travel rights. They point out that the Constitution protects only the right to interstate, not intrastate, travel. See Griffin v. Breckenridge, 403 U.S. 88, 105-07, 91 S.Ct. 1790, 1799-1801, 29 L.Ed.2d 338 (1970). And it is true that the counterclaims do not describe in any way facts supporting the contention that interstate travel of the Klan and Nazis was involved. Further, plaintiffs argue that the facts show no burden whatsoever on the counter-claimants’ right, to travel—interstate or otherwise—during the November 3, 1979 incident. As to both arguments, however, a motion to dismiss is not the appropriate way to test them. Many of the pro se defendants have asserted, in at least a conclusory fashion, that their constitutionally protected right to travel has been violated. They must be given some opportunity to flesh out their assertions before that issue may be decided, as discussed supra.

Further, the Court notes that many of the counterclaimants have alleged, albeit in conclusory fashion, that plaintiffs conspired to deprive them of “other constitutional rights.” Friends of the Court have referred to “adequate police protection against unprovoked attacks” as one such right. They argue that evidence developed in discovery supports the view that plaintiffs conspired to deprive them of such a right. The pro se counterclaimants are entitled to an opportunity to state specifically the rights of which plaintiffs conspired to deprive them in light of the evidence available to them, and to offer such supporting evidence, before any Section 1985(3) counterclaims are dismissed.

Animus. Plaintiffs argue that any animus behind the alleged conspiracy against the counterclaimants is insufficient to sustain a Section 1985(3) claim, and that the counterclaims must therefore be dismissed. The counterclaims generally allege animus against the counterclaimants because of, inter alia, their anticommunist attitudes. At least one counterclaim also alleges animus against the counterclaimants because of their Christianity and because they are white Americans.

Plaintiffs argue that animus against Christians or anti-Communists is insufficient as a matter of law because such groups are not “traditionally disadvantaged classes.” Plaintiffs cite two cases for the proposition that a Section 1985(3) action does not lie unless the animus is directed against a traditionally disadvantaged class. The first, Santiago v. Philadelphia, 435 F.Supp. 136, 156 (E.D.Pa.1977), does not so hold. It merely states that animus against traditionally disadvantaged groups is one of three types of animus that satisfies Section 1985(3). The other two types of animus, according to Santiago, are “irrational” animus and animus that unnecessarily burdens a person’s exercise of fundamental rights. See id.

The second case plaintiffs cite is Orshan v. Anker, 489 F.Supp. 820, 823, (S.D.N.Y.1980). In that case, the district court briefly stated that animus for Section 1985(3) purposes must be against a well-defined and traditionally disadvantaged group, citing Santiago. The district court also stated that several other aspects must exist in order for the animus element of Section 1985(3) to be satisfied, and noted that the animus element is undergoing “an evolutionary process.” Orshan, supra, 489 F.Supp. at 823. The plaintiff had failed “entirely to set forth any allegation of class-based discriminatory animus,” however. See id. Accordingly, the district court dismissed his Section 1985(3) claim. With all respect to the district court in Orshan, this Court suggests that Orshan incorrectly cited Santiago for the proposition that Section 1985(3) requires animus against a traditionally disadvantaged group. The Court believes that the reading of Santiago discussed in the preceding paragraph more accurately characterizes the Santiago holding concerning animus under Section 1985(3). The Court also notes that the district court in Orshan did not need to consider carefully the nature of the animus requirement in order to dispose of the 1985(3) claim before it, because the plaintiff made no allegations of any class-based animus whatsoever. For both of these reasons, the Court believes that Orshan does not persuasively establish that animus for Section 1985(3) purposes must be directed at a traditionally disadvantaged group.

The Court rejects the notion that Section 1985(3) requires that animus be directed against a traditionally disadvantaged group. A number of cases have found the requisite animus against other groups as well. See, e.g., Keating v. Carey, 706 F.2d 377, 386-88 (2d Cir.1983) (Republicans); Glasson v. City of Louisville, 518 F.2d 899, 911-12 (6th Cir.) (critics of the President), cert. denied, 423 U.S. 930, 96 S.Ct. 280, 46 L.Ed.2d 258 (1975); see also Action v. Gannon, 450 F.2d 1227, 1232 (8th Cir.1971) (en banc) (worshippers at white parish successfully sought injunction under Section 1985(3) against disruption of services by black civil rights workers).

Plaintiffs also argue that any animus among them towards the Klan and Nazi members was not against them as anticommunists or Christians, but was against them because of their racist attitudes and activities. But this is an issue of fact that is inappropriate for disposition in a motion to dismiss. Even assuming that this were a correct statement of the facts, however, the Court is not convinced that it would render the alleged conspiracy unactionable under Section 1985(3). See Action v. Gannon, supra, 450 F.2d 1227, passim (successful Section 1985(3) claim against black civil rights groups infringing plaintiffs’ right to worship because of plaintiffs’ alleged racism).

Legislative history. Plaintiffs contend that Congress never intended for Section 1985(3) to protect members of the Ku Klux Klan or similar groups. They allude to the fact that the Civil Rights Act of 1871—of which Section 1985(3) was originally a part—was passed primarily to protect black people and their sympathizers in the postbellum South from racist terror of the Klan and similar groups. See, e.g., Carpenters, supra, 463 U.S. at -, 103 S.Ct. at 3360 (“central concern” of § 1985(3) was “to combat violent and other efforts of Klan and its allies to resist and to frustrate the intended affects of the Thirteenth, Fourteenth, and Fifteenth Amendments”).

Although the Act was prompted in that historical context, Section 1985(3) has often been successfully invoked by members of groups besides blacks—or advocates of equal rights for blacks. See, e.g., Keating v. Carey, supra; Glasson v. Louisville, supra; Action v. Gannon, supra. The Supreme Court has recently relied on the Act’s legislative history to limit the reach of Section 1985(3), holding that it cannot redress conspiracies motivated by bias against others on account of their economic views, status, or activities. See Carpenters, supra, 463 U.S. at -, 103 S.Ct. at 3360. But it remains clear that Section 1985(3) is not limited to conspiracies against blacks and/or advocates of equal rights for blacks. The Supreme Court in Carpenters reaffirmed the view, expressed in Breckenridge, that Section 1985(3) reaches “racial” animus. See Carpenters, supra, 463 U.S. at -, 103 S.Ct. at 3358. Such a concept contemplates animus against groups besides blacks and advocates of equal rights for blacks. In addition, the Carpenters court withheld opinion on whether purely political animus satisfies the requirements of Section 1985(3). Carpenters, 463 U.S. at -, 103 S.Ct. at 3360. The concept of political animus, like that of racial animus, obviously contemplates groups besides blacks and advocates of equal rights for blacks. This Court does not read Carpenters as confining the protection of Section 1985(3) only to blacks and their supporters, the groups that were foremost among Congress’s concerns at the time the Act was passed.

It may be that when Congress passed the Civil Rights Act of 1871 it did not foresee that situations would arise in which violent attacks were directed at Klan members. But this does not mean that Congress intended, as a per se matter, to exclude members of the Klan and similar organizations from the protection of the Act where the elements of Section 1985(3) are otherwise met. Plaintiffs provide no authority, in the form of legislative history or otherwise, that suggests that Congress intended such a limitation of Section 1985(3). Indeed, such a reading seems unfair and may well raise other issues of constitutional dimensions. The Court must reject the notion that those who are members of the Klan or similar organizations are automatically precluded from invoking Section 1985(3).

Damages. Plaintiffs do not challenge the sufficiency of any Section 1985(3) counterclaims due to a failure by counterclaim-ants to allege damages adequately. Most counterclaims have indeed alleged such damages, at least in conclusory fashion, or can fairly be inferred to allege damages. Thus, as parties proceeding pro se, the counterclaimants are at least entitled to an opportunity to present evidence on their damages claims, should their claim not be dismissed on other grounds at a later stage.

CONCLUSION

It is inappropriate to dismiss any of the counterclaims at this point. Thus, plaintiffs’ motion to dismiss the counterclaims shall be denied.

Nevertheless, the Court recognizes the problems inherent in trying this factually complex lawsuit with the counterclaims as well as the underlying claims of the plaintiffs. The Court may conclude that it would best serve a just trial of the issues if the counterclaims were severed for separate disposition. That decision, however, must await argument.

An appropriate order will issue.

      . The court wrote all pro se defendants in a letter filed October 24, 1984, informing them that they should complete a questionnaire and enclosed affidavit of indigency should they wish to be considered for appointment of counsel. Only five ultimately provided such information: defendants Caudle, Matthews, McBride, Pridmore, and Fowler. All are currently assisted by Friends of the Court.

      . The Court dismissed two such defendants— Brent Milland Fletcher and Lee Joseph McLain—on May 21, 1984.

      . See, e.g., the counterclaims on the first complaint of defendants listed infra Note 4.

      . These are the original counterclaims of defendants' Roland Wayne Wood, David Wayne Matthews, Jerry Paul Smith, Jack Wilson Fowler, Lawrence Gene Morgan, Coleman Blair Pridmore, Harold Covington, Mark Sherer, Michael Eugene Clinton, Claude Matthew McBride, Jr., Gorrell Pierce, and Edward Dawson.

      . Counterclaims of Carl Lisford Nappier and Virgil Griffin.

      . Counterclaim of Raeford Milano Caudle.

      . Answers to the amended complaint, and counterclaims, were filed by Fowler, McBride, Pierce, Caudle, Dawson, Sherer, and Wood. With Leave of Court, two others—Pridmore and Matthews—filed answers to the amended complaint for the first time on February 19, 1985, at the same time that Caudle, Fowler, and McBride filed amended answers to the amended complaint. The Court had previously denied these five defendants’ request to file amended counterclaims, however.

      . Fowler, McBride, Pierce, and Caudle incorporated by reference their prior counterclaims.

      . Plaintiffs reassert, inter alia, the same ground in the present motion. The Court remains unimpressed, for the reasons stated in its memorandum denying the motion (filed February 13, 1985).

      . See Response of Roland Wayne Wood, filed July 2, 1982.

      . The Court notes that plaintiffs’ proposed reading of Section 1985(3)—to exclude from its protection members of the Klan and the Nazi party—may well violate (i) the equal protection clause as invidious discrimination, and (ii) the First Amendment, as an impermissible burdening of one’s right of association.