California Anti-SLAPP Project

Professional Real Estate Investors v. Columbia Pictures (concluded)


In each of the five other cases cited by the Court, the plaintiff alleged antitrust violations more extensive than the filing of a single anticompetitive lawsuit. In three of those cases, the core of the alleged antitrust violation lay in the act of petitioning the government for relief: one involved the repetitive filing of baseless administrative claims, [FN5] another involved extensive evidence of anticompetitive motivation behind the lawsuit that followed an elaborate and unsuccessful lobbying effort, [FN6] and in the third a collateral lawsuit was only one of the many ways in which the antitrust defendant had allegedly tried to put the plaintiff out of business. [FN7] In each of these cases, the court showed appropriate deference to our opinions in Noerr and Pennington, in which we held that the act of petitioning the government (usually in the form of lobbying) deserves especially broad protection from antitrust liability. The Court can point to nothing in these three opinions that would require a different result here. The two remaining cases -- in which the Courts of Appeals did state that a successful lawsuit could be a sham -- did not involve lobbying, but did contain much broader and more complicated allegations than petitioners presented below. [FN8] Like the three opinions described above, these decisions should not be expected to offer guidance, nor be blamed for spawning confusion, in a case alleging that the filing of a single lawsuit violated the Sherman Act.

[FN5] Litton Systems, Inc. v. American Telephone & Telegraph Co., 700 F.2d 785 (CA2 1983), cert. denied, 464 U.S. 1073 (1984). The Second Circuit found that AT & T's continued filing of administrative tariffs long after those claims had become objectively unreasonable supported a jury's sham finding. AT & T's anticompetitive actions were in fact so far removed from the act of petitioning the government for relief that Chief Judge Oakes and Judge Meskill also held, in reliance on Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962), and Cantor v. Detroit Edison Co., 428 U.S. 579 (1976) (plurality opinion), that tariff filings with the Federal Communications Commission were acts of private commercial activity in the marketplace, rather than requests for governmental action, and thus were not even arguably protected by the Noerr-Pennington doctrine. Litton Systems, 700 F.2d, at 806-809.

[FN6] Westmac, Inc. v. Smith, 797 F.2d 313 (CA6 1986), cert. denied, 479 U.S. 1035 (1987). Although the Sixth Circuit did hold that the genuine substance of an anticompetitive lawsuit creates a rebuttable presumption of objective reasonableness, given the facts of that case -- in which the antitrust plaintiff had presented strong evidence that the defendants' lawsuit, which followed a long and unsuccessful lobbying effort, had been motivated solely for the anticompetitive harm the judicial process would inflict on it -- that modest reservation was probably wise. Evidence of anticompetitive animus in Westmac was in fact so great that Chief Judge Merritt thought that the plaintiff had successfully rebutted the presumptive reasonableness of defendants' lawsuit. The delay from the defendants' combined lobbying and litigation attack had allegedly sent the plaintiff into bankruptcy, and memos from one defendant to its attorney had stated, "`If this [lobbying activity] doesn't succeed, start a lawsuit -- bonds won't sell,'" 797 F.2d, at 318, and (in a statement repeated to a codefendant), "`if nothing else, we'll delay sale of the bonds,'" id., at 322 (Merritt, C.J., dissenting) (emphasis omitted). In any event, the Sixth Circuit rule -- to the extent that it would apply in a case as simple as this one -- would result in the same conclusion we reach here.

[FN7] Federal Prescription Service, Inc. v. American Pharmaceutical Assn., 214 U.S. App. D.C. 76, 663 F.2d 253 (1981), cert. denied, 455 U.S. 928 (1982). In that case, the antitrust plaintiff alleged a 2-decade long conspiracy to lobby, boycott, and sue it (in state licensing boards, state legislatures, the marketplace, and both state and federal courts) out of existence. In spite of those allegations, the Court of Appeals found that the defendant's actions, which primarily consisted in lobbying for the abolition of plaintiff's mail order prescription business, were immune under Noerr-Pennington.

[FN8] In Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466 (1982) (Posner, J.), cert. denied, 461 U.S. 958 (1983), the antitrust defendant's alleged violations of several provisions of the Sherman and Clayton Acts included much more than the filing of a single lawsuit; they encompassed a broad scheme of monopolizing the entire relevant market by: purchasing patents; threatening to file many other, patently groundless lawsuits; acquiring a competitor; dividing markets; and filing a fraudulent patent application. In In re Burlington Northern, Inc., 822 F.2d 518 (CA5 1987), cert. denied, 484 U.S. 1007 (1988), the plaintiffs alleged, and produced evidence to support their theory, that the defendant had filed suit solely to cause them a delay of crippling expense, and the defendants had either brought or unsuccessfully defended a succession of related lawsuits involving petitioners' right to compete. In both of these cases, the Courts of Appeals ably attempted to balance strict enforcement of the antitrust laws with possible abuses of the judicial process. That they permitted some reliance on subjective motivation -- as even we have done in cases alleging abuse of judicial process, see California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513-518 (1972) -- is neither surprising nor relevant in a case involving no such allegations.

Even in this Court, more complicated cases, in which, for example, the alleged competitive injury has involved something more than the threat of an adverse outcome in a single lawsuit, have produced less definite rules. Repetitive filings, some of which are successful and some unsuccessful, may support an inference that the process is being misused. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972). In such a case, a rule that a single meritorious action can never constitute a sham cannot be dispositive. Moreover, a simple rule may be hard to apply when there is evidence that the judicial process has been used as part of a larger program to control a market and to interfere with a potential competitor's financing without any interest in the outcome of the lawsuit itself, see Otter Tail Power Co. v. United States, 410 U.S. 366, 379, n. 9 (1973); Westmac, Inc. v. Smith, 797 F.2d 313, 322 (CA6 1986) (Merritt, C.J., dissenting). It is in more complex cases that courts have required a more sophisticated analysis -- one going beyond a mere evaluation of the merits of a single claim.

In one such case, Judge Posner made the following observations about the subtle distinction between suing a competitor to get damages and filing a lawsuit only in the hope that the expense and burden of defending it will make the defendant abandon its competitive behavior:

"But we are not prepared to rule that the difficulty of distinguishing lawful from unlawful purpose in litigation between competitors is so acute that such litigation can never be considered an actionable restraint of trade, provided it has some, though perhaps only threadbare, basis in law. Many claims not wholly groundless would never be sued on for their own sake; the stakes, discounted by the probability of winning, would be too low to repay the investment in litigation. Suppose a monopolist brought a tort action against its single, tiny competitor; the action had a colorable basis in law; but in fact the monopolist would never have brought the suit -- its chances of winning, or the damages it could hope to get if it did win, were too small compared to what it would have to spend on the litigation -- except that it wanted to use pretrial discovery to discover its competitor's trade secrets; or hoped that the competitor would be required to make public disclosure of its potential liability in the suit, and that this disclosure would increase the interest rate that the competitor had to pay for bank financing; or just wanted to impose heavy legal costs on the competitor in the hope of deterring entry by other firms. In these examples, the plaintiff wants to hurt a competitor not by getting a judgment against him, which would be a proper objective, but just by the maintenance of the suit, regardless of its outcome. See City of Gainesville v. Florida Power & Light Co., 488 F.Supp. 1258, 1265-66 (S.D. Fla. 1980).

"Some students of antitrust law would regard all of our examples of anticompetitive litigation as fanciful, and in all the evidentiary problems of disentangling real from professed motives would be acute. Concern with the evidentiary problems may explain why some courts hold that a single lawsuit cannot provide a basis for an antitrust claim (see Fischel, Antitrust Liability for Attempts to Influence Government Action: The Basis and Limits of the Noerr-Pennington Doctrine, 45 U.Chi.L.Rev. 80, 109-10 (1977)) - an issue we need not face here, since three improper lawsuits are alleged, and it can make no difference that they were not all against Grip-Pak. Still, we think it is premature to hold that litigation, unless malicious in the tort sense, can never be actionable under the antitrust laws. The existence of a tort of abuse of process shows that it has long been thought that litigation could be used for improper purposes even when there is probable cause for the litigation; and if the improper purpose is to use litigation as a tool for suppressing competition in its antitrust sense, see, e.g., Products Liability Ins. Agency, Inc. v. Crum & Forster Ins. Cos., 682 F.2d 660, 663-64 (7th Cir. 1982), it becomes a matter of antitrust concern. This is not to say that litigation is actionable under the antitrust laws merely because the plaintiff is trying to get a monopoly. He is entitled to pursue such a goal through lawful means, including litigation against competitors. The line is crossed when his purpose is not to win a favorable judgment against a competitor, but to harass him, and deter others, by the process itself - regardless of outcome - of litigating. The difficulty of determining the true purpose is great, but no more so than in many other areas of antitrust law. Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466, 472 (1982).

It is important to remember that the distinction between "sham" litigation and genuine litigation is not always, or only, the difference between lawful and unlawful conduct; objectively reasonable lawsuits may still break the law. For example, a manufacturer's successful action enforcing resale price maintenance agreements, [FN9] restrictive provisions in a license to use a patent or a trademark, [FN10] or an equipment lease, [FN11] may evidence, or even constitute, violations of the antitrust laws. On the other hand, just because a sham lawsuit has grievously harmed a competitor does not necessarily mean that it has violated the Sherman Act. See Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 455-459 (1993). The rare plaintiff who successfully proves a sham must still satisfy the exacting elements of an antitrust demand. See ante, at 11.
[FN9] Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911); Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S. 384 (1951).

[FN10] Timken Roller Bearing Co. v. United States, 341 U.S. 593, (1951); Farbenfabriken Bayer A. G. v. Sterling Drug, Inc., 307 F.2d 207 (CA3 1962).

[FN11] International Salt Co. v. United States, 332 U.S. 392 (1947); United Shoe Machinery Corp. v. United States, 258 U.S. 451 (1922).

In sum, in this case, I agree with the Court's explanation of why respondents' copyright infringement action was not "objectively baseless," and why allegations of improper subjective motivation do not make such a lawsuit a "sham." I would not, however, use this easy case as a vehicle for announcing a rule that may govern the decision of difficult cases, some of which may involve abuse of the judicial process. Accordingly, I concur in the Court's judgment, but not in its opinion.


Return to Part Two of Case || Circuit Courts of Appeal Cases || U.S. Supreme Court Cases
Federal Menu || Home Page