(continued)
The Supreme Court has consistently recognized the sensitivity of First Amendment guarantees to the threat of harassing litigation, and has erected barriers to safeguard those guarantees. See, e. g., Time, Inc. v. Hill, 1967, 385 U.S. 374, 387-91, 87 S.Ct. 534, 17 L.Ed.2d 456; New York Times Co. v. Sullivan, 1964, 376 U.S. 254, 267-83, 84 S.Ct. 710, 11 L.Ed.2d 686; N.A.A.C. P. v. Button, 1963, 371 U.S. 415, 431-33, 83 S.Ct. 328, 9 L.Ed.2d 405. Because we think that similar values are endangered in this case, we hold that in order to state a claim for relief under the Trucking Unlimited exception, a complaint must include allegations of the specific activities, not protected by Noerr, which plaintiffs contend have barred their access to a governmental body. The deficiencies of McDonald's amended complaint in this regard are evident from what we have said above. Dismissal of that complaint was proper.
In holding that plaintiffs' allegations are insufficient in this case, we are not adopting a rule that so-called "fact" pleading, as distinguished from "notice" pleading, is required in antitrust cases. We repudiated that notion in Walker Distributing Co. v. Lucky Lager Brewing Co., 9 Cir., 1963, 323 F.2d 1, 3-4. What we do hold is that in any case, whether antitrust or something else, where a plaintiff seeks damages or injunctive relief, or both, for conduct which is prima facie protected by the First Amendment, the danger that the mere pendency of the action will chill the exercise of First Amendment rights requires more specific allegations than would otherwise be required.
It is no answer to say that there are better ways in which the defendants can show the lack of merit of the action. Reference is usually made to a motion for summary judgment. But this is not an answer in most cases. We are told that the motion is usually inappropriate in complex cases. Poller v. Columbia Broadcasting Co., 1962, 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458. Moreover, it takes little to establish a conflict of evidence as to a material fact. And if the defendants, by affidavits fully conforming to the rule, show that the case is without merit, and if fear of perjury (a rather uncommon fear among the makers of affidavits) prevents the filing of directly contradictory affidavits, Rule 56 still gives the plaintiffs an escape hatch. They can claim that they won't know the facts until they have had discovery and get action on the motion postponed. Moreover, the sanctions of Rule 56(g) are invoked with "extreme infrequency." See Alart Associates, Inc. v. Aptaker, 2 Cir., 1968, 402 F.2d 779, 780.
The Supreme Court seems now to be aware of a fact long known to practitioners. The liberal discovery rules of the Federal Rules of Civil Procedure offer opportunities for harassment, abuse, and vexatious imposition of expense that can make the mere pendency of a complex lawsuit so burdensome to defendants as to force them to buy their peace regardless of the merits of the case. The decision in Blue Chip Stamps v. Manor Drug Stores, 1975, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539, an action based on s 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the SEC, recognizes this fact and is to a considerable extent based upon it:
We believe that the concern expressed for the danger of vexatious litigation which could result from a widely expanded class of plaintiffs under Rule 10b-5 is founded in something more substantial than the common complaint of the many defendants who would prefer avoiding lawsuits entirely to either settling them or trying them. These concerns have two largely separate grounds.
The first of these concerns is that in the field of federal securities laws governing disclosure of information even a complaint which by objective standards may have very little chance of success at trial has a settlement value to the plaintiff out of any proportion to its prospect of success at trial so long as he may prevent the suit from being resolved against him by dismissal or summary judgment. The very pendency of the lawsuit may frustrate or delay normal business activity of the defendant which is totally unrelated to the lawsuit.
The potential for possible abuse of the liberal discovery provisions of the Federal Rules of Civil Procedure may likewise exist in this type of case to a greater extent than they do in other litigation. The prospect of extensive deposition of the defendant's officers and associates and the concomitant opportunity for extensive discovery of business documents is a common occurrence in this and similar types of litigation. To the extent that this process eventually produces relevant evidence which is useful in determining the merits of the claims asserted by the parties, it bears the imprimatur of those Rules and of the many cases liberally interpreting them. But to the extent that it permits a plaintiff with a largely groundless claim to simply take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the process will reveal relevant evidence, it is a social cost rather than a benefit.
Otter Tail Power Co. v. United States, 1973, 410 U.S. 366, 93 S.Ct. 1022, 35 L.Ed.2d 359, cited by plaintiffs, is not germane to the issue before us. In that case the district court had held that the Noerr immunity was inapplicable to the instigation of judicial proceedings. United States v. Otter Tail Power Co., D.Minn., 1971, 331 F.Supp. 54, 62. One paragraph of the Supreme Court's opinion, 410 U.S. 379-80, 93 S.Ct. 1022, remanded the immunity issue for reconsideration in light of the intervening Trucking Unlimited decision, which recognized that Noerr did apply to judicial proceedings. See 404 U.S. at 510, 92 S.Ct. 609. That paragraph obviously cannot be read, as McDonald's would have us read it, as a holding that the Otter Tail facts fall within the Trucking Unlimited exception. But even if the Supreme Court had so held, as the district court did on remand (D.Minn., 1973, 360 F.Supp. 451), the facts in Otter Tail are no more similar to those in our case than are the facts in Trucking Unlimited. As in Trucking Unlimited, the complaint in Otter Tail alleged that the defendant had threatened potential competitors municipalities seeking to take over electric power facilities then operated by the defendant with instigation of baseless proceedings litigation which had the effect of delaying and increasing the expense of sale of municipal securities necessary to finance the takeover. The defendant allegedly hoped that the added expense and delay would force the municipalities to abandon their takeover plans and renew their power contracts with the defendant. Thus, the gravamen of the government's case in Otter Tail was not defendant's instigation of the litigation, a right guaranteed by the First Amendment, see Trucking Unlimited, supra, 404 U.S. at 510, 92 S.Ct. 609, but the fact that the defendant had used the threat of litigation as a bludgeon in its attempts to retain its monopoly in the regional electric power market.
In one respect Otter Tail is a "through the looking glass" version of the case at bar. In that case, whenever a community sought to go into the power business, Otter Tail sued. The effect of the mere filing of the action destroyed the community's ability to proceed. Nobody would buy its bonds while the action was pending. Mere filing was enough to accomplish Otter Tail's purpose. In our case, that is not so. Mere opposition would not defeat McDonald's purpose; to do that, defendants had to persuade the Board to rule in their favor and it is alleged that they succeeded. The only bit of in terrorem litigation here is McDonald's action, an avowed purpose of which is to eliminate opposition, even the defendants' successful opposition, to its desires before the Board.
The proposed second amended complaint, submitted to the district court in conjunction with McDonald's motion to set aside the judgment and for leave to file the complaint, adds little but adjectives to the first amended complaint. [FN5] The new complaint alleges that defendants have sponsored two other administrative proceedings against McDonald's. This activity falls squarely within the protection of the Noerr immunity. The new complaint also alleges that defendants have made false and malicious statements to the news media for the purpose of engendering public wrath against McDonald's. But the nature of the statements is not disclosed, and nothing specifically alleged indicates that the statements were not genuinely intended to influence governmental action, like the publicity campaign held immune in Noerr. Finally, it is now alleged for the first time that the defendants have picketed existing McDonald's restaurants, interfering with deliveries and harassing customers. Like McDonald's other allegations, this one also is wholly conclusory. We are not told the nature or extent of the picketing, and no specific facts are alleged to indicate that, by virtue of its purpose or manner, the picketing falls outside the traditional protection afforded this activity by the First Amendment. See Amalgamated Food Employees Union Local 590 v. Logan Valley Plaza, Inc., 1968, 391 U.S. 308, 313-14, 88 S.Ct. 1601, 20 L.Ed.2d 603.
"The aforesaid combination and conspiracy has consisted of a continuing agreement and concert of action, the substantial terms of which have been and are:
(a) Motivated by an intent to deter plaintiffs from pursuing building permits for restaurants and to effectively foreclose plaintiffs from free and unlimited access to the Department of Public Works and the Board of Permit Appeals, the defendants would appear before the Board of Permit Appeals of the City and County of San Francisco and would oppose each and every permit granted to the Company by the San Francisco Department of Public Works;
(b) The defendant would secretly solicit the appearance before the Board of such of its members and other persons as it could secure to support its opposition to issuance of each such permit and that such other persons, while purportedly acting on behalf of themselves in said appearances, were acting on behalf of the defendants, which fact was not revealed to the Board;
(c) That all or substantially all of the persons who made an appearance before the Board in opposition to plaintiffs were members of defendants or were secretly solicited by defendants;
(d) That the defendants would threaten lack of political support to such Board members and other city officials who supported plaintiffs as were necessary;
(e) That defendants would engage in massive concerted action which was designed to engender public wrath against plaintiffs and which included, inter alia, the following activities:
In summary, we hold that the complaint charges nothing more than an agreement by the defendants to do that which, under Noerr-Pennington, they had a right to do. This action is in essence, an improper attempt to chill, indeed to prevent, the exercise of First Amendment rights. It was properly nipped in the bud by the trial judge.
Affirmed.
MARKEY, Chief Judge, United States Court of Customs and Patent Appeals
(concurring):
I concur in the excellent opinion of Judge Duniway. The presence of Judge Browning's strong and scholarly dissent, particularly its clear and forceful exposition of pleading considerations, prompts these few remarks.
I cannot find an allegation that defendants "did foreclose" free and unlimited access. Paragraph 18 alleges the defendants' opposition was a coverup of a "plan" to foreclose. Moreover, it would appear that McDonald's could not allege such foreclosure. It had full access. Whatever "free and unlimited" may mean, it cannot, in my view, require successful access or access unopposed. Nothing of record indicates that McDonald's feared defendants' opposition or that its freedom and ability to seek future permits was in any manner "chilled" by the expected opposition of defendants. On the contrary, as Judge Duniway's opinion makes plain, the present suit for $11,000,000 has an inherent chill factor with respect to defendants' freedom to oppose future permits.
In any event, the case illustrates, in my view, an effect of the unhappy marriage of "notice" pleading and virtually unlimited discovery.[FN*] The "might makes right" potential in that combination is, of course, completely contrary to the intent behind the effort to free the pre-trial phase from formalism and surprise.