Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-18-03558/USCOURTS-ca7-18-03558-0/pdf.json

Parties Involved:
Board of Trade of the City of Chicago
Appellee
Chicago Mercantile Exchange
Appellee
U.S. Exchange Holdings, Inc.
Appellant
U.S. Futures Exchange, L.L.C.
Appellant

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 18-3558 

U.S. FUTURES EXCHANGE, L.L.C., et al., 

Plaintiffs-Appellants, 

v.

BOARD OF TRADE OF THE CITY OF CHICAGO, INC., et al., 

Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:04-cv-06756 — Thomas M. Durkin, Judge. 

____________________ 

ARGUED DECEMBER 13, 2019 — DECIDED MARCH 23, 2020 

____________________ 

Before MANION, KANNE, and BRENNAN, Circuit Judges. 

MANION, Circuit Judge. This antitrust case comes to us 

from the commodities and futures marketplace. As USFE tells 

it, Defendants torpedoed its new futures exchange by delaying the regulatory approval process and enacting an internal 

rule that deprived the new exchange of liquidity. The real 

question is whether Defendants violated the antitrust laws in 

doing so. We hold they did not. 

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I. Background 

In the early 2000s, U.S. Exchange Holdings, Inc., and its 

subsidiary U.S. Futures Exchange, L.L.C. (together, “USFE”), 

set out to offer a then-novel electronic-based futures trading 

platform. Electronic trading posed a direct competitive threat 

to entrenched exchanges that utilized the more traditional but 

less efficient floor-trading model, like the Board of Trade of 

the City of Chicago, Inc. (“CBOT.”) 

USFE targeted February 1, 2004, as its launch date. That 

would have given USFE about a month to establish itself before a number of futures and options contracts were set to expire, at which time traders could transfer their business from 

CBOT and elsewhere to USFE. Before it could begin operations, however, USFE needed to be approved as a designated 

contract market (“DCM”) by the Commodity Futures Trading 

Commission. USFE filed its DCM application in July 2003 and 

hoped for fast-track approval by mid-November. 

The Commission solicited public comment as part of the 

application review. CBOT and another futures exchange, Chicago Mercantile Exchange Inc. (“CME”), raised fifty-four objections to USFE’s application. Many other members of the 

public submitted critical letters and raised objections, too. At 

the close of the comment period, the Commission set a public 

hearing on USFE’s application for December 17, 2003. But before the hearing could convene, Defendants CBOT and CME 

requested the matter be postponed due to scheduling conflicts. The Commission obliged. 

In the background, USFE approached the Board of Trade 

Clearing Corporation (“BOTCC”) to negotiate an agreement 

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for clearing services.1 This would have provided USFE with 

access to essential startup liquidity in the form of open interest created by market participants and held at BOTCC.2 The 

problem for USFE was that CBOT also used this clearinghouse. Once it caught wind that USFE intended to contract 

with BOTCC, CBOT proposed a new exchange rule—Rule 

701.01—to the Commission for approval. The Commission 

approved the rule after more than a month of deliberation. 

Rule 701.01 compelled the transfer of CBOT’s open interest 

from BOTCC to its new, exclusive clearing partner: CME.3 By 

draining its open contracts from BOTCC, CBOT deprived 

USFE of access to a significant amount of liquidity. 

The Commission finally approved USFE as a DCM on February 4, 2004, and USFE launched on February 8. According 

to USFE, the delay—attributable to Defendants—caused such 

uncertainty that market participants were unable and/or unwilling to trade on the new exchange. The exchange flopped. 

USFE sued Defendants for violating the Sherman Antitrust Act and related state common law prohibitions against 

tortious interference. The case spent fifteen years in federal district court before reaching us. After multiple amended 

1 Every futures exchange must either provide its own clearing services 

or otherwise contract with a clearinghouse like BOTCC. A clearinghouse 

is an intermediary between buyers and sellers; it acts as the buyer for 

every seller and the seller for every buyer. The clearinghouse thus assumes counterparty risk; if a trade falls through on one end, the clearinghouse shields the other side. 

2 “Open interest” refers to trades or contracts that remain outstanding 

at the clearinghouse and is used as a predictor of liquidity. 

3 CME offers both clearing and trading services. It agreed to provide 

clearing services exclusively for CBOT in April 2003. 

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complaints and motions to dismiss, a venue change, on-andoff discovery, three rounds of summary judgment briefing, 

and reassignment to a new district judge, the matter culminated in summary judgment for Defendants. USFE appeals. 

II. Discussion 

We review summary judgment de novo, asking whether a 

genuine dispute exists over any material fact. Kopplin v. Wis. 

Cent. Ltd., 914 F.3d 1099, 1102 (7th Cir. 2019). 

USFE’s antitrust claims can be divided into two theories. 

The first is the “delay theory,” whereby Defendants flooded 

the Commission with frivolous objections in order to stall 

DCM approval and harm USFE. Second, in the “open interest 

theory,” Defendants conspired to deprive USFE of liquidity 

by transferring CBOT’s open interest from BOTCC to CME.4

We address each theory in turn. 

A. Delay Theory: Noerr-Pennington and its Exceptions 

In connection with USFE’s DCM application, Defendants 

filed fifty-four objections (most, considered but rejected by the 

Commission) and submitted letters requesting the December 

2003 hearing on USFE’s application be postponed. Defendants engaged in this petitioning despite their apparent belief 

that USFE’s application would be approved eventually. 

The district court held this petitioning immune from antitrust liability under the Noerr-Pennington doctrine.5 The 

4 The parties also debate whether USFE’s open interest claims are actionable at all. The district court did not rule on this issue so neither will 

we. 

5 The doctrine takes its name from two Supreme Court decisions: Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) 

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doctrine “extends absolute immunity under the antitrust laws 

to businesses and other associations when they join together 

to petition legislative bodies, administrative agencies, or 

courts for action that may have anticompetitive effects.” Mercatus Grp., LLC v. Lake Forest Hosp., 641 F.3d 834, 841 (7th Cir. 

2011) (internal quotation and citations omitted). The doctrine 

flows from First Amendment origins: antitrust laws do not supersede the people’s right to petition their government in favor of a desired monopoly. See id. at 841–42 (citing Premier 

Elec. Constr. Co. v. Nat’l Elec. Contractors Ass’n, Inc., 814 F.2d 

358, 371 (7th Cir. 1987)). Noerr-Pennington immunity is not absolute, however. Exceptions exist for petitioners who present 

fraudulent misrepresentations or bring sham lawsuits.6 USFE 

invokes both. 

i. The “Fraudulent Misrepresentations” Exception 

Fraudulent misrepresentations made in an adjudicative 

proceeding before an administrative agency are not protected 

from antitrust liability. Mercatus, 641 F.3d at 842. Those made 

in a legislative, political setting, however, enjoy immunity. 

Mercatus identifies five considerations to weigh when drawing the line between legislative and adjudicative proceedings 

(holding railroads’ publicity campaign to promote legislation and law enforcement practices that harmed trucking industry did not violate the 

Sherman Act); and United Mine Workers of America v. Pennington, 381 U.S. 

657, 670 (1965) (“Joint efforts to influence public officials do not violate the 

antitrust laws even though intended to eliminate competition.”). 

6 Mercatus describes these exceptions as “two specific kinds of conduct” that trigger a single exception to immunity: the “sham exception,” 

first mentioned in Noerr itself. See Mercatus, 641 F.3d at 842. We discuss 

them as separate exceptions to avoid confusing the distinction between 

“sham lawsuits” and the broader “sham exception” Noerr contemplates. 

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for Noerr-Pennington purposes: (1) the general nature of the 

authority exercised by the agency; (2) the formality of the 

agency’s fact-finding process; (3) the extent to which fact gathering is subject to political influence; (4) whether the agency 

received any testimony made under oath, affirmation, or penalty of perjury; and (5) whether the agency acted ultimately 

as a matter of discretionary authority or instead acted in accordance with more definite standards subject to judicial review. Id. at 845–46. This is a threshold inquiry; the fraud exception “does not apply at all outside of adjudicative proceedings.” Id. at 844.7 

Applying Mercatus’s factors here, we conclude the district 

court classified the Commission’s DCM application review 

process properly as legislative instead of adjudicative. First, 

we consider the nature of the Commission’s authority when 

it reviewed USFE’s application. The Commission’s DCM review process mirrors its public rulemaking function, which 

includes entertaining ex parte meetings on proposed rules, 

providing notice to the public, and seeking comment before 

promulgating, amending, or repealing a rule. 

In certain circumstances not present here, like when reviewing a decision to deny a DCM application, the Commission adjudicates. Blurring this line, USFE interprets the Commission’s review of a denied application and the Commission’s initial assessment of a DCM application as “different 

phases of the same proceeding.” (Reply Br. at 4.) The 

7 Should an antitrust plaintiff overcome this threshold, it still must 

demonstrate the alleged misrepresentation “(1) was intentionally made, 

with knowledge of its falsity; and (2) was material, in the sense that it actually altered the outcome of the proceeding.” Mercatus, 641 F.3d at 843. 

We do not address this second stage given the outcome here. 

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regulations reflect the opposite. The procedures governing initial designation are found at subpart 38.3. And as encompassed by part 38, the designation procedures apply only to 

“every board of trade that has been designated or is applying to 

become designated as a contract market ... .” 17 C.F.R. § 38.1 

(emphasis added). They do not apply to boards that have applied but were denied designation. Instead, when the Commission denies a DCM application, the aggrieved party may initiate review of the denial through a new, distinct proceeding 

subject to the Commission’s Rules of Practice, which govern 

“adjudicatory proceedings.” 17 C.F.R. §§ 10.1, 10.1(a).8 These 

Rules contemplate filing a complaint and notice of hearing, see 

§§ 10.21, 10.22, filing an answer, § 10.23, discovery, §§ 10.42, 

10.44, and motions practice, § 10.26. An administrative law 

judge presides over all proceedings covered by the Rules, 

§ 10.8, evidence must meet admissibility standards, § 10.67, 

and in stark contrast to the DCM application review process, 

ex parte communications are prohibited and even sanctionable, § 10.10. 

The Rules of Practice employ many signature adjudicative 

features, yet none applied to the Commission’s review of 

USFE’s application. The regulations illustrate a clear dichotomy between the process for reviewing DCM applications 

and that for reviewing denials. We reject USFE’s attempt to 

bring the two under the same roof. 

Second, the Commission utilized an informal fact-finding 

process. Although the Commission compiled a “record,” the 

contents of that record were not bound by any “strict rules of 

8 The regulations define “adjudicatory proceeding” as “a judicial-type 

proceeding leading to the formulation of a final order.” 17 C.F.R. § 10.2(b). 

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relevance and admissibility” as if before a court or other adjudicative body. Mercatus, 641 F.3d at 845. The Commission 

was “free to base its actions on information and arguments 

that [came] to it from any source,” including information, 

opinion, and argument submitted by the public. Metro Cable 

Co. v. CATV of Rockford, Inc., 516 F.2d 220, 228 (7th Cir. 1975). 

Third, the weight afforded to ex parte communications and 

public comment subjected the Commission’s fact-finding efforts to political influence—a hallmark of the legislative process. In Mercatus, a local hospital successfully petitioned the 

village board to deny development of plaintiff’s interloping 

physician center. We held this petitioning immune from antitrust scrutiny based in large part on the parties’ and the public’s lobbying efforts: 

Both Mercatus and the Hospital engaged in ex 

parte lobbying of individual Board members 

prior to the hearings. Mercatus executives contacted or met personally with individual Board 

members, and at least one Board member even 

took a tour of Mercatus’ facilities. A number of 

Lake Bluff residents also contacted the Board 

members to voice their views on the Mercatus 

project. ... In fact, the lobbying was encouraged 

by the village president ... . 

... 

At least one Board member, on his own initiative, contacted independent think tanks for 

guidance. Members of the general public were 

allowed to voice their opinions regarding Mercatus’ proposed site plan. 

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641 F.3d at 848. These facts led us to label the board’s review 

“decidedly legislative or political in nature.” Id.

Much of the same occurred here. USFE’s representatives, 

including outside counsel and at least one lobbyist, met with 

the Commission, its staff, and its attorneys on several occasions to discuss the DCM application. These meetings occurred over the phone and in person, ex parte. Commission 

staff visited USFE’s facilities for a demonstration of its proposed trading platform. The Commission twice sought public 

comment on USFE’s application and received letters from 

trading firms, individual traders, newsletter and magazine 

publishers, academics, and other government agencies. It reviewed and considered every one of these submissions before 

approving USFE’s application. All of this activity was “perfectly legitimate” in the context of the Commission’s DCM application review process, “as would not be the case in an adjudicative proceeding.” Id. 

Fourth, the Commission received no testimony under oath, 

affirmation, or penalty of perjury from the petitioning Defendants as part of the application review. A witness or other 

source of information in an adjudicative proceeding “is not ‘at 

liberty to exaggerate or color his version of an event,’ as might 

be possible in a more political or legislative setting.” Id. at 845 

(quoting United States ex rel. Haywood v. Wolff, 658 F.2d 455, 

463 (7th Cir. 1981)). Requiring a perjury-backed oath or affirmation drives this home by “impress[ing] upon a witness the 

solemnity of the occasion and the importance of telling the 

truth.” Mercatus, 641 F.3d at 845. But the Commission gave no 

such impression to Defendants or any other public commentators here. It did not require their written opinions and concerns to be made under penalty of perjury. 

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USFE points to the warning contained in “Form DCM”: 

“Intentional misstatements or omissions of material fact may 

constitute federal criminal violations (7 U.S.C. § 13 and 18 

U.S.C. § 1001) or grounds for disqualification from designation.” 17 C.F.R. pt. 38, App’x A.9 Form DCM—used to compile 

the usual information and exhibits all applicants must submit—and its warning do not apply to the challenged petitioning here, however. The Commission no doubt relied on the 

facts presented in USFE’s application materials, submitted 

with the understanding that intentional misrepresentations 

could subject USFE to federal prosecution. But the Commission also devoted significant consideration to unsworn public 

opinions, diluting the importance of truthful and accurate information inherent in adjudicative settings. Each commentator other than USFE was free and welcome to present its views 

in any color. This factor leans legislative. 

Consideration of the fifth and final factor is less one-sided. 

“The absence of definite standards” subject to judicial review 

“is more characteristic of purely political or legislative activity 

than of adjudication.” Mercatus, 641 F.3d at 846; see also Kottle 

v. Nw. Kidney Ctrs., 146 F.3d 1056, 1061 (9th Cir. 1998) (observing petitions to influence agency decisions that are “virtually 

9 The statutes cited by Form DCM—7 U.S.C. § 13 and 18 U.S.C. 

§ 1001—criminalize knowingly submitting materially false or misleading 

information to the Commission in connection with a DCM application. 

Although they do not touch on “perjury,” citation to these statutes similarly impresses upon the submitter that designation review and approval 

depends on accurate information. See Clipper Exxpress v. Rocky Mountain 

Motor Tariff Bureau, Inc., 690 F.2d 1240, 1261–62 (9th Cir. 1982) (likening 18 

U.S.C. § 1001 to perjury penalty in discussing the prohibitions against submitting false information to adjudicative bodies for anticompetitive purposes). 

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unguided by enforceable standards” and appealable only to a 

legislative body receive Noerr-Pennington protection). 

Here, USFE had to demonstrate it met and would continue 

to comply with more than twenty statutory requirements in 

order to be designated. The parties debate the limits of the 

Commission’s reviewing discretion and whether the requirements themselves qualify as “definite standards.” We need 

not engage in these side disputes. At the very least, designation requires compliance with far more definite prerequisites 

than in Mercatus, where the local ordinance “provided no 

standards governing the grant or denial” of plaintiff’s zoning 

application. 641 F.3d at 848 (emphasis added); cf. Boone v. Redevelopment Agency of City of San Jose, 841 F.2d 886, 896 (9th 

Cir. 1988) (immunizing petitioning of city council to approve 

a zoning plan that harmed plaintiffs; council’s review held 

legislative based on broad discretion to approve or deny new 

projects whenever deemed “‘necessary or desirable’ to carry 

out the ends of redevelopment”). In addition, while “matters 

of discretionary authority” fall into the legislative basket, the 

Commission has no discretion to deny an application that 

meets the statutory requirements. And again, the Commission’s assessment of USFE’s application was subject to judicial 

review, albeit through a distinct proceeding as discussed 

above. These details illustrate several adjudicative aspects of 

the DCM application review process. 

We emphasized in Mercatus, however, that “it may often 

not be clear whether, in a given circumstance, an agency is 

acting legislatively, adjudicatively, or perhaps somehow even 

in both capacities simultaneously.” 641 F.3d at 844 (citation 

omitted). The agency process in this case involves a combination of legislative and adjudicative features. Nevertheless, the 

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Commission’s exercise of rulemaking-like authority, the encouragement of lobbying and ex parte influence, a tolerance 

for petitions made outside perjury’s confines, and informal 

fact gathering render the DCM application review process a 

legislative one. Thus, USFE cannot rely on alleged fraudulent 

misrepresentations to circumvent Noerr-Pennington. 

ii. The “Sham Lawsuits” Exception

Noerr-Pennington’s “sham lawsuits” or “abuse-of-process” 

exception holds liable objectively baseless lawsuits brought in 

“an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60–61 (1993) (“PRE”) (internal quotation marks and citations omitted). The sham exception is “extraordinarily narrow.” Kottle, 146 F.3d at 1061; 

see also 1 PHILLIP E. AREEDA & HERBERT HOVENKAMP,

ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND 

THEIR APPLICATION 262 (4th ed. 2013) (The exception is “most 

difficult” to apply in legislative contexts, “where it is virtually 

impossible to identify the sham.”). The Ninth Circuit has even 

doubted whether the exception applies at all where, as here, 

plaintiffs allege a “pattern” of petitions in the legislative 

arena: “[S]ubjecting the same defendant to antitrust liability 

because it engaged in numerous unsuccessful attempts” to 

petition a legislative body “would eviscerate the Petition 

Clause.” Kottle, 146 F.3d at 1061. 

The exception requires a two-step inquiry: (1) only if challenged litigation is objectively meritless may a court (2) examine the litigant’s subjective motivation. PRE, 508 U.S. at 60. In 

other words, an antitrust plaintiff must “disprove the 

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challenged lawsuit’s legal viability” before proceeding to the 

second, subjective step. Id. at 61. Objectively reasonable suits 

therefore enjoy Noerr-Pennington immunity regardless of the 

reasons for their filing. 

An objectively reasonable lawsuit is one “reasonably calculated to elicit a favorable outcome.” Id. at 60. Baseless, frivolous efforts, “as distinct from colorable suits brought in bad 

faith,” receive no protection. Creek v. Vill. of Westhaven, 80 F.3d 

186, 192 (7th Cir. 1996). Notably, a successful action self-proves 

its reasonableness and “certainly cannot be characterized as a 

sham.” Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 

492, 502 (1988); PRE, 508 U.S. at 60 n.5 (“A winning lawsuit is 

by definition a reasonable effort at petitioning for redress and 

therefore not a sham.”); see also, e.g., New West, L.P. v. City of 

Joliet, 491 F.3d 717, 722 (7th Cir. 2007) (rejecting plaintiff’s argument that defendant filed sham lawsuits when none had 

been adjudicated in plaintiff’s favor). 

USFE insists the district court employed the wrong standard by relying on PRE. It argues Defendants’ various comments, letters, etc., comprise a “pattern” of sham petitioning 

that triggers a more generous examination than what PRE 

calls for. This approach stems from the Supreme Court’s language in California Motor Transport Co. v. Trucking Unlimited: 

“[A] pattern of baseless, repetitive claims may emerge which 

leads the factfinder to conclude that the administrative and 

judicial processes” have been used improperly “to deprive the 

competitors of meaningful access to the agencies and courts.” 

404 U.S. 508, 512 and 513 (1972). Filing petitions with “such a 

purpose or intent,” the Court stated, would “fall within the 

exception to Noerr.” Id. at 512. 

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The district court applied the correct standard. We do not 

agree California Motor provides a separate rubric to use whenever a “pattern” of sham filings is alleged. The First Circuit 

rejected this same reading of California Motor recently in 

Puerto Rico Telephone Co. v. San Juan Cable LLC, 874 F.3d 767 

(2017), splitting from the four circuit opinions cited by USFE, 

all of which adopt some version of the view that PRE applies 

only to single-lawsuit cases while California Motor applies to 

all others.10 The Puerto Rico Telephone panel reasoned persuasively: 

[There is no] pragmatic reason to presume that 

[PRE’s] protections for nonfrivolous petitioning 

activity disappear merely because the defendant exercises its right to engage in such activity 

on multiple occasions. One large lawsuit or intervention in an agency proceeding can impose 

much more of a burden on a competitor than 

might a series of smaller claims. 

874 F.3d at 772. 

Relying on California Motor and the just-mentioned four 

circuit opinions, USFE invites us to discard the first question 

of the two-part sham inquiry whenever more than a single petition has been made and to proceed only with the second 

step’s evaluation of subjective motive. This position 

10 See Hanover 3201 Realty, LLC v. Vill. Supermarkets, Inc., 806 F.3d 162, 

178–81 (3d Cir. 2015); Waugh Chapel S., LLC v. United Food & Commercial 

Workers Union Local 27, 728 F.3d 354, 363–64 (4th Cir. 2013); Primetime 24 

Joint Venture v. Nat’l Broad. Co., 219 F.3d 92, 101 (2d Cir. 2000); and USS–

POSCO Indus. v. Contra Costa Cnty. Bldg. & Constr. Trades Council, AFL–

CIO, 31 F.3d 800, 810–11 (9th Cir. 1994). 

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misconstrues California Motor and ignores PRE’s thorough explanation of that opinion’s role in the sham exception landscape. The Court in PRE described California Motor as requiring courts to draw the “difficult line” that separates out objectively reasonable claims from patterns of “baseless, repetitive 

claims” before finding a sham. 508 U.S. at 58 (emphasis 

added). In that sense, California Motor—issued more than 

twenty years before PRE—contains the very origins of the 

sham exception inquiry’s first step: an objective reasonableness assessment. 

PRE further confirmed the sham exception has never 

hinged on the petitioner’s subjective intent alone. 508 U.S. at 

59 (collecting cases). This aligns with the teachings of both 

Noerr and Pennington: “Noerr rejected the contention that an 

attempt ‘to influence the passage and enforcement of laws’ 

might lose immunity merely because the lobbyists’ ‘sole purpose ... was to destroy [their] competitors.’” Id. at 57 (quoting 

Noerr, 365 U.S. at 138); the right of the people to petition for 

desired outcomes “cannot properly be made to depend upon 

their intent in doing so.” Id. at 58 (quoting Noerr, 365 U.S. at 

139); “‘Noerr shields from the Sherman Act a concerted effort 

to influence public officials regardless of intent or purpose.’” 

Id. (quoting Pennington, 381 U.S. at 670). Accepting USFE’s position would subvert these core principles. 

 Moreover, the Supreme Court has acknowledged the objective reasonableness inquiry with regularity since California 

Motor. Valid efforts to influence government action, for example, do not qualify as a sham, while insubstantial claims might 

evidence one. PRE, 508 U.S. at 58 (citing Allied Tube, 486 U.S. 

at 500 n.4; Otter Tail Power Co. v. United States, 410 U.S. 366, 380 

(1973)). And in City of Columbia v. Omni Outdoor Advertising, 

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Inc., the Court “dispelled the notion that an antitrust plaintiff

could prove a sham merely by showing that its competitor’s 

‘purposes were to delay [the plaintiff’s] entry into the market 

and even to deny it a meaningful access to the appropriate ... 

administrative and legislative fora.’” PRE, 508 U.S. at 59–60 

(discussing and quoting 499 U.S. 365, 381 (1991)). That same 

“notion” describes USFE’s argument precisely. 

We stand with the First Circuit. Faced with only one alleged sham lawsuit, at no point did the PRE Court link its ruling to the number of suits or suggest the outcome would be 

different if it encountered multiple actions. We, too, find “little logic” in concluding a petitioner loses the right to file an 

objectively reasonable petition merely because it chooses to 

exercise that right more than once in the course of pursuing 

its desired outcome. See Puerto Rico Tel., 874 F.3d at 772. Tracing the Ninth Circuit’s lead in USS–POSCO, the Second, 

Third, and Fourth Circuits all reconciled California Motor and 

PRE “by reading them as applying to different situations.” 

USS–POSCO, 31 F.3d at 810. Nothing in either opinion indicates as much. As the Court made clear in PRE, the sham exception’s objective component is “indispensable” and California Motor does not suggest otherwise. 508 U.S. at 58. 

Even if PRE and California Motor provided two different 

standards for non-pattern and pattern cases, respectively, the 

district court still did not err by applying PRE. Unlike the four 

circuit opinions endorsing this divide, Defendants here did 

not bring multiple lawsuits or petition across various legislative and administrative fronts.11 This case is not characterized 

11 See Hanover 3201, 806 F.3d at 167–70 (defendants alleged to have 

pursued one state court lawsuit and three challenges before two state administrative bodies); Waugh Chapel, 728 F.3d at 357–58 (union defendants 

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by a wide-ranging “pattern.” It involves a single legislative 

proceeding within which Defendants made multiple efforts to 

influence the Commission’s decision regarding one overarching issue: whether to approve USFE’s application. Just as motions within a lawsuit support the lawsuit’s objective, individual lobbying efforts play a part in obtaining the ultimate desired legislative action. But in neither scenario do multiple filings, submissions, or other efforts transform one lawsuit or 

proceeding into many. See, e.g., Hanover 3201, 806 F.3d at 169 

and 181 (applying “pattern” standard where defendants initiated four distinct legal proceedings, but counting multiple letters submitted to a state agency as one proceeding). 

With PRE in hand, the district court correctly determined 

Defendants’ efforts did not “constitute the pursuit of claims 

so baseless that no reasonable litigant could realistically expect to secure favorable relief.” PRE, 508 U.S. at 62. USFE 

counters by focusing on the fact that the Commission eventually approved USFE’s application. According to USFE, its success in obtaining approval undermines the reasonableness of 

Defendants’ fifty-four objections submitted in response to the 

application. This is especially so, USFE argues, because Defendants themselves knew the application would be approved in the end. 

We reject USFE’s position. Although a successful, winning 

petition proves its own reasonableness, it does not follow that 

orchestrated a “barrage of legal challenges” that included multiple state 

court lawsuits and challenges to at least eleven separate zoning permits); 

Primetime 24, 219 F.3d at 101 (plaintiff alleged defendants abused provisions of the Satellite Home Viewers Act by conducting prelitigation challenges of thousands of individual subscribers); USS–POSCO, 31 F.3d at 

811 (defendants filed twenty-nine separate lawsuits). 

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a petition lacks merit simply because it did not prevail. Besides, the petitioning here was colorable. Defendants’ December 2003 scheduling letters persuaded the Commission to 

postpone the public hearing on USFE’s application in light of 

legitimate and well-documented conflicts. The letters were 

not frivolous. Neither were Defendants’ objections to USFE’s 

application. Before granting USFE’s application, the Commission held USFE to several remedial efforts it undertook in response to Defendants’ objections regarding USFE’s proposed 

one-member board, cross-border clearing link, and incentive 

programs. Furthermore, while Commission staff elected not 

to acknowledge many of the objections raised by other commentators, it addressed each of Defendants’ fifty-four concerns. This speaks to the substantiality of Defendants’ submissions, even those rejected by the Commission. Finally, 

whether Defendants believed or “knew” USFE’s application 

would succeed does not change our analysis. Even if petitioners believe a regulator may ultimately approve an application, 

that does not eliminate their right to encourage the governing 

body to consider shortcomings in the application. Proving 

sham petitioning in a legislative context like this one is virtually impossible, and the record does not meet that high bar. 

As with fraudulent misrepresentations, the “sham lawsuits” exception cannot save USFE’s delay theory claims. 

Noerr-Pennington therefore immunizes Defendants’ petitioning, even if that conduct delayed the Commission’s approval 

of USFE’s application and created market uncertainty that 

harmed USFE. 

B. Open Interest Theory: Implied Antitrust Immunity 

USFE claims CBOT, conspiring with CME, enacted Rule 

701.01 to transfer open interest away from USFE’s preferred 

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No. 18-3558 19

clearinghouse and thus deprive USFE of much-needed liquidity. Defendants advocate for implied antitrust immunity because the Commission itself ordained the rule. 

Regulatory statutes sometimes preclude application of the 

antitrust laws in explicit terms. If not, courts must determine 

whether the regulations implicitly preclude those laws’ application. Credit Suisse Securities (USA) LLC v. Billing, 551 U.S. 

264, 270–71 (2007). Implied immunity arises when a regulatory regime clashes with the antitrust laws to create a “clear 

repugnancy” or “clear incompatibility” between the two. Id. 

at 275. Only a clear showing will do; findings of implied immunity are not favored otherwise. Am. Agric. Movement, Inc. 

v. Bd. of Trade of the City of Chicago, 977 F.2d 1147, 1158 (7th Cir. 

1992) (citations omitted). Once the conflict has been demonstrated, the antitrust laws are “ousted” or “repealed” in favor 

of the regulatory scheme. See Credit Suisse, 551 U.S. at 271–72 

(discussing Silver v. N.Y. Stock Exch., 373 U.S. 341 (1963), and 

Gordon v. N.Y. Stock Exch., 422 U.S. 659 (1975)). 

Implied antitrust immunity has its roots in securities 

caselaw. In its most recent discussion of the doctrine, the Supreme Court in Credit Suisse identified a four-part test for implied immunity: (1) the existence of clear and adequate regulatory authority to supervise the activity in question; (2) evidence that the responsible regulatory entities exercise that authority in an active and ongoing manner; (3) a resulting risk 

that the antitrust laws and those governing the challenged activity, if both applicable, would produce conflicting guidance, 

requirements, duties, privileges, or standards of conduct; and 

(4) whether the questioned activity lies squarely within the 

heartland of the regulated area. 551 U.S. at 275–77. Assessing 

these four factors, the district court held Defendants’ role in 

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20 No. 18-3558 

the open interest theory immune from antitrust scrutiny. 

USFE challenges the district court’s findings on all but the final factor. 

The facts here satisfy Credit Suisse’s criteria easily. First, the 

Commission has clear and adequate regulatory authority to 

approve exchange rules. See 7 U.S.C. § 7a-2(c); 17 C.F.R. § 40.5. 

It also has clear and adequate authority over clearinghouses 

and the clearing of futures transactions. See 7 U.S.C. § 7a-1(a)–

(c).12 Second, the Commission indeed exercised this regulatory 

authority by approving CBOT’s proposed rule. The Commission’s overall regulation in this area, moreover, was both active (Commission staff reviewed the proposal for over a 

month, soliciting and considering more than a dozen comment letters) and ongoing (the same competition concerns 

raised by Rule 701.01 had been studied during the previous 

year through a Commission roundtable and report). Third, the 

Commission approved Rule 701.01 in spite of potential anticompetitive effects, creating conflict with the antitrust laws. 

Per statute, the Commission must “take into consideration the 

public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means” when approving exchange rules. 7 U.S.C. § 19(b). Keeping with this 

mandate, the Commission considered and acknowledged 

comment letters raising anticompetitive concerns but 

12 Even though exchange and clearing rules can be self-certified without the Commission’s input, that is not what happened here. Defendants 

voluntarily submitted Rule 701.01 for the Commission’s prior approval. Because of this, the Commission was required to exercise its authority to review and approve. 7 U.S.C. § 7a-2(c)(4)(C) (“If prior approval is requested 

... the Commission shall take final action on the request ....”) (emphasis 

added). 

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No. 18-3558 21

nonetheless deemed those concerns outweighed by the innovative gains to be had in the futures industry. With this and 

the other Credit Suisse factors met, the district court rightly 

concluded the Commission’s approval of Rule 701.01 was 

“clearly incompatible” with the antitrust laws and their objectives. 

Granted, the Supreme Court has not addressed implied 

antitrust immunity in the futures and commodities context, 

but this Circuit did so in American Agriculture—a decision predating Credit Suisse by twenty-five years. Seizing on this, 

USFE contends the district court erred by applying the fourpart test from Credit Suisse—a securities case—instead of our 

instruction in American Agriculture that immunity may be implied so long as the challenged action receives “active, intrusive, and appropriately deliberative” scrutiny and approval 

from the relevant agency. 977 F.2d at 1167. 

We disagree. USFE relies on the Court’s statement in Credit 

Suisse that implied immunity determinations “may vary from 

statute to statute,” 551 U.S. at 271, but that language does not 

make Credit Suisse’s factors irrelevant beyond the securities 

context. While the ultimate determination might depend on the 

regulations in play, the analysis does not. Credit Suisse’s test 

applies across regulatory boundaries and nothing in that 

opinion points to the contrary. Furthermore, that the Commission regulates exchanges and clearinghouses through a 

“principles-based approach”—as opposed to the “rules-based 

approach” of its securities counterpart—does not require us 

to apply wholly distinct standards to each regulatory scheme. 

Nowhere does American Agriculture indicate these inherent 

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22 No. 18-3558 

differences warrant separate standards.13 Indeed, American 

Agriculture derives its own “test” from the same securities

cases that provide the foundation for Credit Suisse’s four factors—Silver and Gordon—and relies significantly on decisions 

from other regulatory contexts as well. See Am. Agriculture, 

977 F.2d at 1164 (discussing MCI Commc’ns Corp. v. Am. Tel. & 

Tel. Co., 708 F.2d 1081 (7th Cir. 1983) (holding no implied antitrust immunity for alleged predatory pricing in telecommunications markets)). At most, American Agriculture’s emphasis 

on “active, intrusive, and appropriately deliberative” scrutiny 

is just another way to measure Credit Suisse’s second factor: 

active and ongoing exercise of regulatory authority. 

Implied immunity is neither a securities doctrine nor a 

commodities doctrine. It is an antitrust doctrine. And the 

question of whether it applies in a given case is answered ably 

by Credit Suisse. The regulatory setting—securities, commodities, or something else—simply provides the backdrop 

against which the template is applied. 

In any event, were we to accept USFE’s argument, implied 

immunity would still attach under the “standard” it pushes. 

Given the Commission’s focus on market competition in the 

year leading up to Defendants’ proposed rule change, the 

Commission’s solicitation and consideration of public comment and anticompetitive concerns, and its express, affirmative approval of Rule 701.01, this is not at all like the situation 

presented in American Agriculture. That case involved a challenge to an emergency resolution passed by CBOT to combat 

13 Following USFE’s argument to its logical conclusion would compel 

a unique implied immunity test for every regulated industry. We do not 

glean that intention from either Credit Suisse or American Agriculture. 

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No. 18-3558 23

market manipulation. Unlike here, however, the Commission 

took no official action in response to that resolution; Commission staff conducted an informal, nonpublic investigation 

only. The Commission’s “casual and modest” supervision 

and its “halfhearted and nonpublic review of the challenged 

practice” compelled us to reverse the district court’s finding 

of implied immunity. 977 F.2d at 1165 and 1167. The unavailability of judicial review in American Agriculture—a factor 

considered “extremely important” to the implied immunity 

calculus—further directed our decision in that case. Id. at 

1167. But here, USFE could have sought judicial review of the 

Commission’s approval under the Administrative Procedure 

Act—it apparently elected not to. See 5 U.S.C. §§ 702, 706. All 

told, the Commission’s approval of Rule 701.01 creates a 

“clear repugnancy” between the regulatory scheme and the 

antitrust laws. Implied immunity precludes USFE’s open interest claims. 

III. Conclusion

Based on Defendants’ petitioning before the Commission 

and their forced transfer of open interest, USFE brought this 

antitrust action to hold Defendants accountable for its failed 

exchange. But the Noerr-Pennington doctrine shields Defendants’ petitioning from antitrust scrutiny. And since neither exception to the doctrine applies, USFE’s delay theory fails. 

Moreover, the Commission’s explicit approval of Rule 701.01 

impliedly repeals the antitrust laws here, immunizing Defendants against USFE’s open interest claims. The district 

court got it right for both theories, so summary judgment for 

Defendants is 

AFFIRMED. 

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