(CN) - Former special counsel to President Bill Clinton cannot rely on D.C.'s Anti-SLAPP Act to challenge defamation claims from 3M, a Fortune Top 100 company, a federal judge ruled.
The decision marks a first for the U.S. District Court for the District of Columbia on the law.
3M is a multinational conglomerate that produces more than 55,000 products, including numerous medical and industrial products. It is ranked No. 97 on the Fortune 100 list, with revenues in 2010 of $26 billion.
In 2007, the company's UK subsidiary bought the maker of a test for the antibiotic-resistant "superbug," Staphylococcus aureus, which can cause Staph infections, pneumonia, toxic shock syndrome or meningitis.
3M quickly tried to stop marketing the BacLite test, however, after learning that it did not perform as well as Acolyte Biomedica claimed. It offered its vendors, including the Britain's Ministry of Defense and Porton Technology, $1.07 million to compensate them for the loss of BacLite sales through December 2009.
But Porton Technology CEO Harvey Boulter refused 3M's offer.
According to 3M's first amended complaint, filed December 2011, Boulter and his attorney, Lanny Davis, who once worked for Clinton, sought to "wring" 3M for tens of millions of dollars, an amount "much greater than that to which they were entitled."
3M said that Boulter and Davis then began a "campaign of harassment and intimidation."
Boulter allegedly "threatened 3M with a crippling sell-off of 3M's stock, and commensurate damages to 3M's value" if 3m did not concede to his demands. 3M claimed Davis launched a scheme to extract $30 million from 3M with "a comprehensive, international, and unrelenting bombardment of sensational and false accusations against 3M in the global media."
3M accused Davis of "publishing press releases which claimed that 3M had dropped BacLite out of bad faith," and filing a "sham's citizen's petition" with the Food and Drug Administration.
At an international press conference, Davis allegedly said that "thousands and thousands and thousands of people who died from MRSA might be alive today had there been a BacLite." He also coordinated "fake public demonstrations attended by pretend protestors" purportedly outraged by 3M's decision to drop BacLite, according to the complaint.
Davis allegedly signed off on a call Boulter made to 3M's attorney, warning the company to settle or leave the British government "quietly seething, with ramifications for a while."
Boulter also allegedly threatened to interfere with the planned knighthood of 3M CEO George Buckley.
3M said that this conversation "constituted an overt attempt by the defendants, acting in concert, to blackmail, extort and intimidate 3M." As a result, 3M says its total sales to the British government fell by 54 percent between 2010 and 2011.
Davis, Boulter and their firms moved to dismiss under the D.C. Anti-SLAPP (Strategic Lawsuit Against Public Participation) Act of 2010, but U.S. District Judge Robert Wilkins refused last week.
The judge said the Federal Rules of Civil Procedure pre-empt the dismissal provision of the district's law. "Upon careful examination of the act's special motion to dismiss procedure, this court holds that it squarely attempts to answer the same question that Rules 12 and 56 cover, and therefore, cannot be applied in a federal court sitting in diversity," Wilkins wrote.
"Another reason that the D.C. Anti-SLAPP Act cannot apply here is that it wholly strips a federal court of the discretion it otherwise has to determine whether a claim will be dismissed with or without prejudice," he added. "Section 16-5502(d) mandates that a dismissal under the Act must be a dismissal with prejudice, no matter the substance of a defendant's special motion to dismiss."
Porton Technology convinced the court, however, to dismiss it for lack of jurisdiction.
Britain's High Court affirmed its judgment against Porton Technology last week, awarding 3M $1.3 million in damages instead of the $30 million demanded.
Wilkins also dismissed the claims against Davis for tortious interference, blackmail and conspiracy, leaving only 3M's defamation claim to proceed.
"The court finds that 3M's allegations of Davis' statements - particularly those in reference to 3M's responsibility for thousands of MRSA deaths or exposures - reflect actual malice and/or bad faith on their face and cannot be dismissed at this stage," the 55-page decision states.
3M appeared pleased with its prospects.
"Our client looks forward to pursuing its defamation claims against Mr. Davis," 3M attorney William Brewer III of Bickel & Brewer said in a statement . He continued: "We are eager to conduct discovery on these claims - and bring this case to trial as quickly as possible."
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