Nineteen Eighty-Nine, LLC v. Icahn Enterprises L.P.: Court Denies Icahn's Motion to Dismiss by Applying the Noerr-Pennington Doctrine to 13D Filings
In Nineteen Eighty-Nine, LLC v. Icahn Enterprises L.P., 2012 N.Y. slip op. 06869 (N.Y. App. Div. Oct. 16, 2012), the Appellate Division of the New York Supreme Court affirmed the New York Supreme Court's grant of Nineteen Eighty-Nine's ("1989") motions to dismiss after holding, among others things, that 1989's beneficial ownership report on Schedule 13D and filed with the Securities and Exchange Commission ("SEC") was protected by the Noerr-Pennington doctrine.
According to the complaint, 1989 and Icahn Enterprises' ("Icahn") formed a partnership to acquire Federal Mogul Corporation ("FMO") debt securities while the company was still in bankruptcy. Upon emergence form bankruptcy, FMO's Plan of Reorganization granted a stock option for FMO to an Icahn affiliate.
Icahn retained Jefferies & Co., Inc. to underwrite a bond offering from the Defendants. Shortly after the announcement that road shows for the offering would begin, 1989 filed a lawsuit seeking declaratory judgment for the right to buy six million FMO shares and the imposition of a constructive trust on the FMO shares and alleging breach of contract. The law suit was attached to a Schedule 13D and filed with the SEC.
Icahn asserted the timing of 1989's lawsuit and filing of the Schedule 13D constituted a tortious interference with contract because it decreased the demand for bonds and the revenue gained from the bond sale.
The court disagreed, concluding that the filing of a Schedule 13D concerning the lawsuit was protected by the Noerr-Pennington doctrine. The Noerr-Pennington doctrine allows a party who petitions for remedy from the government, including lawsuits, the ability to avoid liability for claims like tortious interference of contract. 1989 filed the 13D after it filed the breach of contract complaint against Icahn. The court reasoned that the 13D was "incidental to the litigation," and that the Noerr-Pennington doctrine precluded Icahn's claims.
The primary materials for this case may be found on the DU Corporate Governance website.