The First Amendment

Petitioning: the Sherman Act does not extend to joint or individual efforts to obtain legislative, executive, or judicial action (unless it’s a sham, see below)

Such an extension would jeopardize the First Amendment right to petition the government for redress

Petitioning for legislative or executive action: Noerr

Extending Noerr to petitioning an administrative agency: United Mine Workers

Extending Noerr to initiating and conducting litigation: California Motor Transp.

• Sham exception: the Sherman Act may apply (i.e., immunity does not apply) to petitioning activity that is a “mere sham”

Sham conduct: activities that are “not genuinely aimed at procuring factorable government action” (Allied Tube & Conduit Corp.)

Abuse of process: the sham exception encompasses situations in which persons use the governmental process – as opposed to the outcome of that process – as an anticompetitive weapon (Omni Outdoor Advertising)

Severe standard: to be sham conduct, it appears that the actor must have a 0% interest in the outcome of their petitioning

• Objectively baseless: no reasonable litigant can reasonably expect success
• Federalism and the sham exception: litigation is not immune from antitrust prosecution under Noerr if (Columbia Pictures Industries):

(1) The litigation is objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits

• If the litigant could reasonably expect a successful outcome, the litigation is immune from antitrust prosecution

(2) The litigation attempts to interfere directly with the business relationships of a competitor through the use of government process, as opposed to the outcome of the process, as an anticompetitive weapon

• Hospital lobbying hypo:

Permitted under Noerr: group of competing hospitals pool resource to lobby the government to deny a hospital entry permit

• Permitted because they are petitioning government for a particular end: to block the permit

Not permitted under Noerr: group of competing hospitals pool resources to lobby the government to deny a hospital entry permit, but they don’t think they are going to block the permit because government hasn’t blocked a permit in 50 years

• Not permitted because the goal of the litigation is to delay their competitor’s entry, not the stated goal of the litigation (blocking entry)

Caselaw

• SCTLA: while boycotting was not protected, petitioning to get better wages would have been protected

Eastern RR Presidents Conference v. Noerr Motor Freight (U.S. 1961) (petitioning for legislative or executive action)

Holding:

• Petitioning activity may be a “mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor”

Facts: Joint efforts by 24 railroads and an association of railroad presidents to obtain legislative and executive action unfavorable to competing trucking firms.

Prof. Note:

• Questionable how useful this formulation is, it is a very difficult rule to enforce because D has to show that P has 0% interest in the outcome of their petitioning
• United Mine Workers v. Pennington (1965): extending Noerr to petitioning an administrative agency
• California Motor Transp. Co. v. Trucking Unlimited (1972): extend Noerr to initiating and conducting litigation

Allied Tube & Conduit Corp. v. Indian Head (U.S. 1988): Sham conduct involves activities that are “not genuinely aimed at procuring favorable government action”

• City of Columbia v. Omni Outdoor Advertising (U.S. 1991): “The ‘sham’ exception to Noerr encompasses situations in which persons use the governmental process – as opposed to the outcome of that process – as an anticompetitive weapon”

Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc. (U.S. 1993) (rare example of a sham exception claim)

Holding: Columbia’s suit is not a sham

• Columbia: just filing a copyright infringement suit with the courts, we have Noerr immunity from antitrust laws given the court’s activity is state action
• Litigation is not immune from antitrust prosecution under Noerr if:
  • (1) The litigation is objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits
    • If the litigant could reasonably expect a successful outcome, the litigation is immune from antitrust protection
  • (2) The litigation attempts to interfere directly with the business relationships of a competitor thought the use of government process, as opposed to the outcome of the process, as an anticompetitive weapon
• Here, Columbia could reasonably have thought that they would win the suit, so it is not objectively baseless

Facts: hotel offers video services as a side business to other hotels. Columbia sues for copyright infringement. Hotel brings a counterclaim that Columbia is monopolizing in violation of the antitrust law.