-~"APPRO:~~N v Ll. w86-7·7 34

86-7758 

IN THE UNITED STATES COURT OF APPEALS 


FOR THE SECOND CIRCUIT 


Nos. 86-7734, Sb-7758 

INDIAN HEAD, INC., 

Plaintiff-Appellant, 

Cross-Appel lee, 

v. 

ALLIED TUBE & CONDUIT CORPORATION, 

Defendant-Appellee. 

Cross-Appellant. 

ON APPEAL FROM THE UNITED STATES DISTRICT COURT 


FOR THE SOUTHERN DISTRICT OF NEW YORK 


; 

BRIEF OF THE UNITED STATES AND THE FEDERAL TRADE COMMISSION 

AMICUS CURIAE 

DOUGLAS H. GINSBURG 

Assistant Attorney General 

W. STEPHEN CANNON 

Deputy Assistant Attorney General 

CATHERINE G. O'SULLIVAN 

MARION L. JETTON 

Attorneys 

DEPARTMENT OF JUSTICE 

Washington, D.C. 20530 

ROBERT D. PAUL 

General Counsel 

ERNEST J. ISENSTADT 

Assistant General Counsel 

DEAN C. GRAYBILL 

MICHAEL GOLDENBERG 

Attorneys 

FEDERAL TRADE COMMISSION 

Washington, D.C. 20580 

(202) 523-3463 
TABLE OF CONTENTS 


.< TABLE OF AUTHORITIES.......................................... ii 


STATEMENT OF THE ISSUE . .•••. • ••..••• ~ a • • • • • • • • • • • • • • • • • • • • • • • • • • 1
 .. .~ 

INTEREST OF THE UNITED STATES AND THE FEDERAL TRADE 


COMMISSION........ • . . • • . . . . • • • . .. . • . . • . . . . • • . . . • . . • . . . . . . . • . . . • . 2 


!>'l'/\'l'EME:~'I' ()F' 'I'll~ C:~S~ •••••••••••••••••••••••••••••••••••••.•••• 3 


ARGUMENT. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • . • • 6 


I. 	 THE NOERR-PENNINGTON DOCTRINE DOES NOT PROTECT 


"PETITIONING" OF PRIVATE ORGANIZATIONS .•••••.•.•.•.••••• 7 


II. 	 ALLIED'S CONDUCT OUTSIDE THE POLITICAL ARENA 


CANNOT BE PROTECTED AS PETITIONING STATE 


AND LOCAL GOVERNMENTS . • • • • • • • • • • • • • • . . • • • • • • • • • • • • • • • . • 14 


CONCLUSION. • • . . • . • • . . • • • . • . . . • . . . • • . . . • . . . . . . . . • . . . . . . . . . . . . . • 19 


•. 

i 


--.... --- - . 
'•' 

..· 

TABLE OF AUTHORITIES 

Cases 

American Society of Mechanical Engineers, Inc. v. 


Hydrolevel Corp., 456 U.S. 556 (1982) .•••...•.••• 2, 6, 7, 12 


American Society of Sanitary Engineering, C-3169 


( F . T • C • , Oct . 3 , 19 8 5 ) . . • . . . . . • • . . • . . . . . . . . . . . . . . . . . . . . . . . . 2 


Ashley Meadows Farm, Inc. v. American Horse Shows 


Association, 1983-2 Trade Cas. (CCH) 


t65,653 (S.D.N.Y. 1983) •.••••.•••••••••••.•........•..•••. 11 


Board of Trade of the City of Chicago v. United States 


246 U.S. 231 (1918) ........•......•....... -:-• ..•........•... 7 


California Motor Transport Co. v. Trucking Unlimited, 
 - 404 U.S. 508 (1972) •••.•.•.•.••••••••.••••...••..••• 8, 17-18 


California Retail Liquor Dealers Association v. Midcal 


Aluminum, Inc., 445 U.S. 97 (1980) •.••••..•.••••.••••.•••. 12 


Cantor v. Detroit Edison Co., 428 U.S. 579 (1976) ............. 16 


City of Kirkwood v. Union Electric Co., 671 F.2d 1173 


(8th Cir. 1982), cert. denied, 459 U.S. 1170 (1983) .••.••• 15 


City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 

389 (1978) ............................................. 12-13 


Continental Ore Co. v. Union Carbide & Carbon Corp., 


370 U.S. 690 (1962) ••••••.••.•••••••••.•.••••.•.•..•..• 10-11 


Eastern Railroad Presidents Conference v. Noerr 


Motor Freight , Inc . , 3 6 5 U • S . 127 ( 19 61 ) . . • . • . . . • . 2 , 5 , 7-8 , 
 9, 14 


Federal Prescription Service, Inc. _v. American 


Pharmaceutical Association, 411 F. Supp. 126 (D.D.C. 


1979), af:'d in part and rev'd in part, 663 F.2d 253 


(D.C. Cir. 1981), cert. denied, 


455 U.S. 928 (1982) •• ~ ..•.....••.•.•.•••••....••...•.•• 14-15 


Feminist Women's Health Center, Inc. v. Mohammad, 

586 F.2d 530 (5th Cir. 1978), cert. denied, 

444 U.S. 924 (1979) .................................... .... 11 


Giboney v. Empire Storage & Ice Co., 


336 U.S. 490 (1949) ...............................•.••. 17-18 


Litton Systems, Inc. v. American Telephone & 


Telegraph Co., 700 F.2d 785 (2d Cir. 1983), 


cert denied, 464 U.S. 1073 (1984) ......•........ 8, 13, 15-16 


ii 

... 


.., 

..: 

McDonald v. Smith, 105 S. Ct. 2787 (1985) •.••.••••.••.•••••••.• 9 

MCI 	 Communications Corp. v. American Telephone & 


Telegraph Co., 708 F.2d 1081 (7th Cir.), 


cert. denied, 464 U.S. 891 (1983) .•.••.••••.•.••••••••.••• 11 


Mid-Texas Communications Systems, Inc. v. American 


Telephone & Telegraph Co., 615 F.2d 1372 


(5th Cir.), cert. denied, 449 U.S. 912 (1980) ..••••.•• 11, 16 


National Society of Professional Engineers v. United 

States, 435 U.S. 679 (1978) ••••...•••..•••••••••......•..• ·18 

Parker v. Brown, 317 U.S. 341 (1943) ••••.•••••••••.•.•.••..•••• 8 


Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 


U.S. 656 (1961) ......•..................................... 2 


Southern Motor Carriers Rate Conference, Inc. v. 


United States, 105 S. Ct. 1721 (1985) .••.••.•.•........•.• 12 


Superior Court Trial Lawyers Association, No. 9171 


(F.T.C. 1986), reprinted in 51 Antitrust & Trade 


Reg. Rep. No. 1272, 28 (BNA, July 3, 1986), 


appeal filed, No. 86-1465 (D.C. Cir.) ............•..•.••.• 17 


Town of Hallie v. City of Eau Claire, 105 S. Ct. 1713 


(1985) .........................•....................... 9, 13 


Union Labor Life Insurance Co. v. Pireno, 

458 	U.S. 119 (1982) ..................... ;, ................. 13 


United Mine Workers of America v. 


Pennington, 381 U.S. 657 (1965) ..•.•..•.•..... 2, S, 8, 10-11 


United States v. American Society of Mechanical 


Engineers, Inc., 1972 Trade Cas. (CCH) ,,1174,028, 


74,029 (S.D.N.Y. 1972) (consen5 decree) ..••.•..••..•...•••. 2 


United States v. O'Brien, 391 U.S. 367 (1968) .•........•..••.. 17 


Welch v. American Psychoanalytic Association, 1986-1 


Trade Cas. (CCH) ~67,037 (S.D.N.Y. 1986) ...•.....•.•....•• 11 


Wheeling-Pittsburgh Steel Corp. v. Allied Tube & Conduit 


.Corp. , 5 7 3 F. supp. 8 3 3 ( N. D. I 11 . 19 8 3 ) • • • • • • • • • • • • • • • • • • 13 


Statutes & Regulations 

26 U.S.C. 170(c) (2) (D) ........................................ 15 


26 U.S.C. SOl(c) (3) •••••••••••••••••••••••••••••••••.•.••••••• 15 


Treas. Reg. 1.SO~(c)(3)_-l(c)(3)(ii) (1986) ••••••••••.••••.•••• 15 


iii 

Miscellaneous 

.. P. Areeda, Antitrust Law (Supp. 1982) •••.••.••.•••••.•..•••.•. 10 


Hurwitz, Abuse of Governmental Processes, the First •' Amendment, and the Boundaries of Noerr, 

7 4 Geo. L. J. 6 5 ( 198 5 ) . • . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . 9 


Internal Revenue Service, Pub. No. 78, Cumulative List of 


Organizations described in Section 170(c) of the 


Internal Re venue Code o ! 1954 (1985) .•.•• ~ ..••..•......... 15 


National Bureau of Standards, Special Pub. No. 681, 


Standards Activities of Organizations in the 

United States (Aug. 1984) •••••.•••••••••••••••••••••••••••. 3 


/ 

iv 

IN THE UNITED STATES COURT OF APPEALS 


FOR THE SECOND CIRCUIT 


Docket Nos. 86-7734, 86-7758 

INDIAN HEAD, INC., 

Plaintiff-Appellant, 

Cross-Appellee, 

v. 

ALLIED TUBE & CONDUIT CORPORATION, 

Defendant-Appellee. 

Cross-Appellant. 

On Appeal from the United States District Court 

for the Southern District of New York 

BRIEF OF THE UNITED STATES AND THE FEDERAL TRADE COMMISSION 


AMICUS CURIAE 


STATEMENT OF THE ISSUE 

Whether an agreement among commercial members of a private 

/ 

standards-setting organization to· exclude a competitor's product 

from an industry standard constitutes petitioning of government 

protected by the Noerr-Pennington doctrine merely because 

governments incorporate the standard in their codes by reference. 

: 

INTEREST OF THE UNITED STATES AND THE FEDERAL TRADE COMMISSION 

The United States and the Federal Trade Commission 

("Commission"} file this brief pursuant to Rule 29 of the Federal 

Rules of Appellate Procedure in support of the position of 

appellant Indian Head that the Noerr-Pennington1 doctrine does 

not apply to participation in private standards-setting 

organizations. 2 

The Department of Justice and the Commission enforce the 

eederal antitrust laws. 15 u.s.c. 1, 2, 4, 26; 15 u.s.c. 41 et 

seg. The courts traditionally have applied the antitrust laws to 

private standards organizations and their members,3 and the 

Commission and the Department have engaged in enforcement actions 

against such organizations. 4 The Commission also has studied the 

standards industry extensively in connection with a proposed 

rulemaking. 43 Fed. Reg. 57,269 (1978). 

The standard involved in this case is only one of 32,000 

1 See Eastern Railroad Presidents Conference v. Noerr Motor 

Freight, Inc., 365 U.S. 127 {1961); United Mine Workers of 

America v. Pennington, 381 U.S. 657 (1965). 

2 The United States and the Commission express no view on the 

merits of the antitrust claim in this dispute and do not address 

whether Allied's conduct is within the "sham'' exception to NoerrPennington or the issues raised by Allied's cross-appeal. 

3 See,~·· American Society of Mechanical Engineers, Inc. v. 

Hydrolevel Corp., 456 U.S. 556 (1982); Radiant Burners, Inc. v. 

Peoples Gas Light & Coke Co., 364 U.S. 656 (1961). 

4 See,~·· American Society of Sanitary Engineering, C-3169 

(F.T.C., Oct. 3, 1985)(consent decree); United States v. American 

Society of Mechanical Enqineers, Inc., 1972 Trade Cas. (CCH) 

~U74,028, 74,029 (S.D.N.Y. 1972) (consent decree). 

2 

standards promulgated by over 420 private organizations.5 

Industry relies heavily on these standards, and government 

regulations incorporate many of them by reference. Although 

... 	 private standards can promote competition and consumer welfare, 

standards also can erect barriers to entry for innovative 

products and otherwise restrict competition. Government efforts 

to preserve competition in . the many industries that rely upon 

privately developed standards would be impeded significantly if 

the Noerr-Pennington doctrine is interpreted to exempt private 

standards-setting from antitrust scrutiny. 

STATEMENT OF THE CASE 

Plaintiff Indian Head ("Carlon") sells a flexible plastic 

conduit ("ENMT") that competes with metallic conduit sold by 

defendant Allied Tube & Conduit Corporation ("Allied") 

(Undisputed Fact ("U.F.") No. 4, J.A. 1554). 6 In 1978, Carlon 

proposed to the National Fire Protection Association ("NFPA") 

that ENMT be listed as a permissible type of electrical conduit 

in NFPA's National Electrical Code ("NEC") (U.F. No. 48, J.A. 

1560). 

The NEC, which is revised by NFPA every three years, 

establishes product and performance requirements for the design 

and installation of electrical wiring systems, including 

electrical conduit (U.F. Nos. 10, 19, J.A. 1555, 1556). NFPA is 

5 See 	National Bureau of Standards, Special Pub. No. 681, 

Standards Activities of Organizations in the United States 1 

(Aug. 1984). 

6 "J.A." 	refers to the Joint Appendix filed with this appeal. 

3 
a private, non-governmental, voluntary membership organization 

(U.F. No. 15, J.A. 1555). Among the NFPA members who develop the 

NEC are numerous groups and business organizations in the 

·~ electrical industry, including manufacturers, the electrical 

workers union, electrical contractors, electrical utilities, 

users of electrical equipment such as builders and hospitals, and 

testing laboratories. These groups serve on various code-making 

panels and attend NFPA meetings to consider adoption of NEC 

provisions (1984 NEC, at 70-i to xiv, Plaintiff's Exhibit ("PX'') 

595). 

The NEC is the primary code for the electrical industry in 

the United States and is also accepted world-wide (U.F. No. 25, 

J.A. 1556). Private certification laboratories use the NEC as a 

basis for labeling electrical products as meeting their safety 

requirements (U.F. No. 31, J.A. 1558). Many state and local 

statutes and ordinances also routinely incorporate the NEC by 

referertce in their electrical or building codes (U.F. No. 28, 

J.A. 1557). 

In December 1979, the NEC code-making panel responsible for 

reviewing ENMT approved the use of_, the product (U.F. No. 59, J.A. 

1561). This decision was then subject to approval by the members 

of NFPA attending NFPA's 1980 annual meeting. To prevent NFPA 

approval of the product, Allied agreed with other steel companies 

to sign up new NFPA members just prior to the annual meeting so 

these members could attend the meeting and outvote those favoring 

.. 	 approval of ENMT. Allied itself paid the membership dues and 

expenses for 155 persons, including employees and sales ager.ts 

4 
., 


(O.F. Nos. 95-112, J.A. 1566-67). This effort was successful; 

Carlon's proposal to include ENMT in the NEC was defeated by a 

margin of four votes (U.F. No. 112, J.A. 1567) . 

.. 

Carlon filed a complaint on October 9, 1981, in the United 

States District Court for the Southern District of New York, 

alleging that Allied and others had violated Section 1 of the 

Sherman act and seeking damages. 7 The jury found in Ca:lon's 

favor and awarded damages of $3.8 million (J.A. 474-0). The jury 

also answered specific questions as instructed by the cour~. The 

jury found that Allied's "meeting-packing" was a substantial or 

material factor in excluding ENMT from the NEC and that this 

conduct "subverted'' the consensus-making process of NFPA, 

adversely affected competition, and unreasonably restrained trade 

in violation of the antitrust laws (Answer to jury question nos. 

5, 9, 11, and 12, J.A. 474G, K, M, N). 

The district court did not disturb the jury's findings. 

However, in response to Allied's motion for judgment 

notwithstanding the verdict, the court in a lengthy oral opinion 

from the bench dismissed the complaint on the grou~d that 

Allied's conduct was a form of pet~tioning protected by the 

Noerr-Pennington doctrine. See Eastern Railroad Presidents 

Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 

{196l)("Noerr"); United Mine Workers of America v. Pennington, 

381 U.S. 657 (l965)("~ennington''). Relying on its finding that 

governments routinely adopt the NEC, the court characte~ized NFPA 

7 Carlon also name d NFPA as a defendant, but vcluntc: i ly 

dismissed its claims against NFPA before trial . 

5 
as "akin to a legislature" and described Allied's conduct as an 

"attempt to influence a legislative body" (Transcript of district 

court's opinion, June 27, 1986 ("Tr.") 61-62, J.A. 462-462A). 

The court further concluded that Allied's conduct at NFPA should 

be protected as a petition to state and local legislatures 

because Allied intended to "influence legislative action through 

the NFPA" (Tr. 58, 64-65, J.A. 459, 463-64) • . 

ARGUMENT 

As the district court recognized (Tr. 57-58, J.A. 458-59), 

NFPA wields substantial economic power. Codes and standards 

promulgated by organizations like NFPA influence the policies of 

numerous states and cities, and their guidelines '"may result in 

economic prosperity or economic failure, for a number of 

businesses of all sizes throughout the country,' as well as 

entire ·segments of an industry." American Society of Mechanical 

Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556, 570 (1982) 

(quoting H.R. Rep. No. 1981, 90th Cong., 2d Sess. 75 

(1968))("Hydrolevel"). 8 

The activities of private standards-setting groups are not 

, 

inherently anticompetitive; indeed, they may be substantially 

procompetitive. Influencing the decisions of such groups by 

8 In Hydrolevel, the Supreme Court held that the American 

Society of Mechanical Engineers (ASME) was liable as principal 

under the Sherman Act for the anticompetitive acts of commercial 

members acting with ASME's apparent authority. ASME, like NFPA, 

is a broad-based, nonprofit membership corporation that publishes 

hundreds of technical standards. The standard in Hydrolevel, 

like the NEC, was adopted by at least 45 states. 456 U.S. at 

558-59. 

6 
presenting accurate technical information concerning safety 

problems of a competitor's product generally would not be subject 

to antitrust condemnation under the rule of reason. See Board of 

Trade of the City of . Chicago v. United States, 246 U.S. 231 

(1918). However, private standards-setting organizations like 

NFPA "can be rife with opportunities for anticompetitive 

activity'' because the "less altruistic [m~mbers] * * * have an 

opportunity to harm their employers' competitors through 

manipulation of [the organization's] codes." Hydrolevel, 456 

U.S. at 571. The activities of private standards-setting 

organizations like NFPA therefore should be carefully 

scrutinized. 

The district court has improperly expanded the NoerrPennington doctrine to exempt from the antitrust laws attempts to 

influence what is conceded to be a private, non-governmental 

standards-setting body (U.F. No. 15, J.A. 1555). Its decision 

rests on a fundamental misunderstanding of the doctrine. The 

Noerr-Pennington doctrine is designed to avoid conflict between 

the antitrust laws and the governmental process; it does not 

afford an exemption for attempts t9 influence private conduct. 

Accordingly, the judgment must be reversed. 

I. 	 THE NOERR-PENNINGTON DOCTRINE DOES NOT PROTECT "PETITIONING'' 

OF PRIVATE ORGANIZATIONS 

The district court erred in concluding that influencing NFPA 

is the eqcivalent of influencing a legislative body for purposes 

of the Noerr-Penninoton doctrine (Tr. 61-62, J.A. 462-462A). In 

Noerr, the Supreme Court held that the antitrust laws, properly 

7 

construed, do not apply to private solicitation of government 

action, including anticompetitive government action. The Court : 

observed that it had earlier held, in Parker v. Brown, 317 U.S. 

.,, 341 (1943), that the Sherman Act was not intended to apply to 

. anticompetitive state action. The Court reasoned that a 

representative government "depends upon the ability of the people 

to make their wishes known .to their representatives" and it would 

not "impute to the Sherman Act a purpose to regulate, not 

business activity, but political activity, a purpose which would 

have no basis whatever in the legislative history of that Act." 

Noerr, 365 U.S. at 137. Moreover, application of the Sherman Act 

in such circumstances would have raised serious issues under the 

First Amendment: "The right of petition is one of the freedoms 

protected by the Bill of Rights, and we cannot, of course, 

lightly impute to Congress an intent to invade these freedoms." 

Id. at 138.9 See also Pennington, 381 U.S. at 669, 671; 

California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 

508, 510-11 (1972)("California Motor Transport")(Noerr-Pennington 

doctrine based explicitly on First Amendment); Litton Systems, 

Inc. v. American Telephone & Telegraph Co., 700 F.2d 785, 804-09 

(2d Cir. 1983), cert. denied, 464 U.S. 1073 (1984)("Litton"). 

Thus, the right protected by the Noerr-Pennington doctrine 

is the right to attempt to persuade the government -- not private 

organizations -- to take actions that may have the effect of 

9 The First Amendment provides in relevant part: "Congress 

shall make no law * * * abridging * * * the righ~ of the people * * * to petition the Government for a redress of grievances." 

U.S. Const. amend. I. 

8 
., 


restraining trade. Protected collective action must involve 

petitioning a governmental entity; it must b~ "an agreement 

jointly to seek legislation or law enforcement" and to "solicit[] 

• ~ • governmental action with respect to the passage and . enforcement of laws." Noerr, 365 U.S. at 136, 136. 

The Noerr-Pennington doctrine does not protect solicitation 

of private organizations to impose restraints on trade, because 

these organizations are not part of our repreientative form of 

government, and the constitutional right to petition the 

10 government does not protect access to such groups. See 

generally McDonald v. Smith, 105 S. Ct. 2787, 2789-90 

(1985)(discussing the origin and scope of the right to 

petition). There is no reason to think that Congress excluded 

from the Sherman Act attempts to influence the standards adopted 

by private standards-setting organizations, since such exclusion 

is unnecessary to avoid regulation of political activities "in 

the halls of legislative bodies," Noerr, 365 U.S. at 144, or to 

meet constitutional concerns.11 

10 As the Supreme Court stated: , 

We may presume, absent a showing to the 

contrary, that the municipality (i.e. 

government] acts in the public interest. A 

private party, on the other hand, may be 

presumed to be acting primarily on his or its 

own behalf . . 

Town of Hallie v. City of Eau Claire, 105 S. Ct. 1713, 1720 

(1985)(footnote omitted). See also Hurwitz, Abuse of 

Governmental Processes, the First Amendment, and the Boundaries 

of Noerr, 74 Geo. L.J. 65, 90-93 {1985) {Noerr-Pennington 

doctrine should not apply to private self-regulatory groups). 

11 Professor Areeda has stated that where a "'governmental 

(Footnote contin~ed) 

9 
Indeed, the Supreme Court in Continental Ore Co. v. Union 

Carbide & Carbon Corp., 370 U.S. 690 (1962)("Continental Ore"), 

held that Noerr was inapposite where the entity solicited was not 

a governmental unit. The Canadian Government had appointed Union 

Carbide's subsidiary, Electro Met, as its wartime agent for 

purchasing and allocating vanadium for Canadian industry. The 

plaintiff alleged that Union Carbide had directed Electro Met to 

exclude the plaintiff from the Canadian market, as part of a 

conspiracy to restrain and monopolize the vanadium industry·. The 

Court rejected Union Carbide's Noerr-Pennington defense, finding 

that its conduct was "wholly dissimilar to that of the defendants 

in Noerr." Id. at 707. The Court stated that subjecting Union 

Carbide to liability "for eliminating a competitor from the 

Canadian market by exercise of the discretionary power conferredupon Electro Met of Canada by the Canadian Government would 

effectuate the purposes of the Sherman Act and would not remotely 

infringe upon any of the constitutionally protected freedoms 

spoken of in Noerr." Id. at 707-08. 

Subsequently, in Pennington, the Court reaffirmed that its 

holding in Continental Ore was bas~d on the fact that Electro Met 

was a private entity; the Court in Pennington distinguished 

Continental Ore, remarking that in the earlier case the 

purchasing agent "was not a public official" and there was no 

indication that any Canadian official "approved or would have 

agency' is composed wholly of industry members, it will be 

treated as the private repository of unsupervised power that is 

subject to the usual antitrust principles governing indus ry 

rule-making.'' P. Areeda, Antitrust Law ~203.3c at 17 (Supp. 

1982). 

10 

approved" of the monopolistic practices. 381 U.S. at 671 n.4. 

•. Continental Ore's tea~hing is that the Noerr-Pennington 

doctrine does not reach attempts to influence private parties to 

take actions that restrain trade even where that private party 

is a government agent. ·A fortiori, the antitrust laws are 

applicable to attempts to influence an entirely private 

standards-setting organization. See also Feminist Women's Health 

Center, Inc. v. Mohammad, 586 F.2d 530, 544-45 (5th Cir. 1978), 

cert: denied, 444 U.S. 924 (1979)(medical review organizations 

whose recommendations were followed by statutory board are not 

governmental bodies for purposes of Noerr-Pennington).12 

NFPA is not a governmental entity. Indeed, Allied conceded 

in the "Undisputed Facts'' filed with the district court that 

"NFPA is a private, non-governmental, independent, voluntary 

membership organization * * * incorporated * * * under the notfor-profit laws of the Commonwealth of Massachusetts" (emphasis 

added) (U.F. No. 15, J.A. 1555). The NEC was begun not at the 

behest of government, but rather "as a result of the united 

efforts of various insurance, electrical, architectural, and 

.•· 

... / 

-· 12 See generally MCI Communications Corp. v. American Telephone 

& Telegraph Co., 708 F.2d 1081, 1159-60 (7th Cir.)(Noerr 

"immunizes only those actions directed toward governmental 

agencies or officials"), cert. denied, 464 U.S. 891 (1983); MidTexas Communications Systems, Inc. v. American Telephone & ~~ 

Telegraoh Co., 615 F.2d 1372, 1382 (5th Cir.)("(t]he crux of the 

Noerr-Pennington immunity is the need to protect efforts directed 

at governmental officials for the purpose of seeking redress''), 

cert. denied, 449 U.S. 912 (198 C); Welch v. American 

Psychoanalytic Association, 1986-1 Trade Cas. (CCH) ~67,037 at 

62,373 (S.D.N.Y. 1986)(quoting Mid-Texas); Ashley Meadows Farm, 

Inc. v. American Horse Shows Association, 1983-2 Trade Cas. (CCH) 

~65,653, at 69,352-53 (S.D.N.Y. 1983)(Noerr-Pennington does not 

extend to internal procedures of private associations). 

11 
allied interests" (1984 NEC, at 70-i, PX 595). A private 

standards organization like NFPA is "in reality an extragovernmental agency, which prescribes rules for the regulation 

and restraint of interstate commerce." HXdrolevel, 456 U.S. at 

570 (quoting Fashion Originators' Guild of America, Inc. v. FTC, 

312 U.S. 457, 465 (194l))(emphasis added). 

Significantly, Allied has made no claim that NFPA's 

standards-setting activities would constitute state action exempt 

from the antitrust laws. Any such claim plainly would have been 

unsuccessful, since NFPA's activities were neither specifically 

authorized by nor subject to on-going supervision by any 

government. See Southern Motor Carriers Rate Conference, Inc. v. 

United States, 105 S. Ct. 1721, 1727 (1985)("Southern Motor 

Carriers").13 There is, therefore, no reason to fear that 

subjecting attempts to lobby NFPA to Sherman Act scrutiny would 

interfere with the flow of information to the government. See 

City of Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 

13 The state action doctrine is "premised on the assumption that 

Congress, in enacting the Sherman Act, did not intend to 

compromise the States' ability to regulate their domestic 

commerce," and is intended to permit a state to utilize the 

powers reserved to it by the Constitution to impose restraints on 

competition either through its officers or agents. Southern 

Motor Carriers, 105 S. Ct. at 1726. However, the doctrine does 

not permit a state to "cast[] ***a g~uzy cloak of state 

involvement over what is essentially a private * * * 

arrangement." California Retail Liquor Dealers Association v. 

Midcal Aluminum, Inc., 445 U.S. 97, 106 (1980). Thus, if the 

actions of a private organization are not taken pursuant to a 

clearly articulated state policy to restrain competition and are 

not actively supervised by the state, the organization can 

properly be regulated by the Sherman Act without undue 

interference wi~h a state's exercise of its legislative powers. 

Southern Motor Carriers, 105 S. Ct. at 1727. 

12 

399-400 (1978)(state action and Noerr-Pennington exclusions are 

based on common concern of avoiding "conflict with policies of .. signal importance in our national traditions and governmental 

· structure of federalism").14 

Thus, attempting to influence NFPA is not the equivalent of 

attempting to influence the government. The policies of the 

Noerr-Pennington doctrine -- avoiding interference with the 

functioning of a representative government and protecting 

cohstitutional rights -- are not served by exempting Allied's 

conduct from antitrust scrutiny. The district court's expansion 

of the doctrine is unwarranted and conflicts with the fundamental 

principle that "exemptions from the antitrust laws must be 

construed narrowly." Union Labor Life Insurance Co. v. Pireno, 

458 U.S. 119, 126 (1982): accord Litton, 700 F.2d at 807.15 

14 There may be some limited circumstances in which it is 

appropriate to afford Ncerr protection to solicitation of 

governmental action t~at does not satisfy all of the requirements 

of the state action doctrine. For example, private parties might 

petition a city co~ncil to take action of a governmental 

nature. Such mur.icipal action would not constitute state action 

if the state had not authorized it (Town of Hallie v. City of Eau 

Claire, 105 S. Ct. 1713 (1985)), yet Noerr-Pennington protection 

might be appropriate. This case presents no such issue, however. 

15 In Wheeling-Pittsburgh Steel Corp. v. Allied Tube & Conduit 

Corp., 573 F. Supp. 833 (N.D. Ill. 1983), Allied took a position 

opposite to its position in this case, arguing in support of an 

antitrust counterclaim' that the NFPA was not entitled to a NoerrPennington exemption. That court ultimately held that NFPA was a 

"stand-in(] for* **municipal and state bodies,'' and applied 

the exemption. Id. at 841. For the reasons just discussed, we 

believe that Allied was correct the first time, and that the 

record shows that NFPA is not a governmental body for purposes of 

Noerr-Pennington. 

13 
II. 	 ALLIED'S CONDUCT OUTSIDE THE POLITICAL ARENA CANNOT BE 

PROTECTED AS PETITIONING STATE AND LOCAL GOVERNMENTS 

. ~ The district court also treated Allied's conduct at NFPA as 

an indirect petition to state and local governments that utilize 

the NEC, concluding thai Noerr-Pennington protects not only 

direct government petitioning, but also conduct "outside or 

removed from the legislative halls" that is intended to influence 

government policy (Tr. 56, J.A. 457). The court emphasized that, 

in Noerr, the Supreme C9urt protected not only the railroads' 

direct petitioning of government, but also their general 

publicity campaign designed to garner public support for the 

railroads' legislative position. The district court's ruling, 

however, misconstrues Noerr. 

In Noerr, the Court construed the Sherman Act not to apply 

to activities in the "political arena" designed to convince 

legislatures and executive branches to adopt a specific course of 

action. 365 U.S. at 141. In that case it was clear that the 

advertising campaign was merely one part of a general campaign to 

solicit public support for the railroads' direct lobbying 

efforts. By contrast, Allied's actions at NFPA were entirely , outside the political arena, involving no contacts with 

government or appeals to the public to supplement direct lobbying 

efforts. Nor can Allied's conduct be construed as an effort to 

mobilize NFPA to join in a lobbying campaign to government.16 

16 In support of its indirect petitioning argument, Allied has 

cited Federal Prescription Service, Inc. v. American 

Pharmaceutical Association, 471 F. Supp. 126 (D.D.C. 1979), aff'd 

in part and rev'd in part, 663 F.2d 253 (D.C. Cir. 1981), cert. 

denied, 455 U.S. 928 (1982). (Allied's Memorar.dum In Sup?ort Of 

(Footnote continued) 

14 
NFPA did not lobby government and, indeed, could no~ engage in 

any substantial efforts to lobby the government without 

jeopardizing its status as a charitable organization under the 

~ federal tax laws.17 

The district court considered it significant that, by 

influencing NFPA, Allied also was ultimately 0 influenc[ing] the 

various state and local bodies that adopt the NEC" (Tr. 64, J.A. 

463). 	 But the widespread use of the NEC by governments as a 

technical resource (see Tr. 57-58, J.A. 458-59) does not convert 

actions before the NFPA into 0 indirect" but protected lobbying of 

government. 

Indeed, this Court has recognized that not every private 

decision that is ultimately adopted by, or even prese~ted to, a 

government entity is protected by Noerr-Pennington. In Litton, 

Its Motion For Judgment, July 3, 1985, at 10). In Federal 

Prescription Service, the district court, relying on Noerr's 

discussion of the railroads' publicity campaign, found that the 

Noerr-Pennington do=trine applied to an effort by one 

organization to solicit other organizations to rally in a joint 

campaign to induce governmental action. 471 F. Supp. at 130. 

Allied's conduct, however, in no way resembles a joint publicity 

campaign. Moreover, the district court recognized the 

distinction between mere petitioning and anticompetitive 

agreements in industry codes, noting that the case did not 

involve an attempt to exclude a competitor through adoption of a 

code of ethics. 471 F. Supp. at 129. 

l7 NFPA is a charitable organization under §170(c) of the 

Internal Revenue Code, 26 U.S.C. 170(c). See Internal Revenue 

Service, Pub. No. 78, Cumulative List of Organizations cescribed 

in Section 170(c) of the Internal Revenue Code of 1954 790 

(1985). NFPA cannot maintain its status as a ch2ritable 

organization under this section if it is disqualified under 

50l(c)(3) for "attempting to influence legislation." 26 U.S.C. ... 	 170(c)(2)(D), 50l(c)(3). An organization is charitable under 

50l(c)(3) only if "no substantial part" of its activities co~prises attempts to influence legislation. 26 u.s.c. 

50l(c)(3); see also Treas. Reg. l.50l(c)(3)-l(c)(3)(ii) (1986). 

15 
700 F.2d at 804-809, AT&T argued that its tariffs, which required 

AT&T customers to use an interface device if they employed 

equipment supplied by AT&T's competitors, were Noerr-Pennington 

prote~ted because AT&T filed the tariffs with the Federal 

Communications Commission. This Court rejected that claim, 

holding that the tariff filing did not amount "to a request for 

governmental action" because the decision to impose and maintain 

the interface tariff "was made in the AT&T boardroom, not at the 

FCC." Id. at 807. The possibility of ultimate government review 

and adoption, pursuant to a private complaint or upon the FCC's 

initiative, did not exempt from the antitrust laws a decision 

that was basically private. See also, ~., Cantor v. Detroit 

Edison Co., 428 U.S. 579, 601-02 (1976)(plurality opinion)(privately developed utility marketing program that was approved by 

state public service commission without investigation was not 

Noerr-Pennington protected); Mid-Texas Communications Systems, 

Inc. v. American Telephone & Telegraph Co., 615 F.2d 1372, 1382­

83 {5th Cir.), cert. denied, 449 U.S. 912 (1980)(AT&T's refusal 

to interconnect, made prior to FCC involvement, not covered by 

Noerr-Pennington); City of Kirkwood v. Union Electric Co., 671 

F.2d 1173, 1180-81 (8th Cir. 1982), cert. denied, 459 U.S. 1170 

(1983)(filing of rate request not entitled to Noerr-Pennington 

exemption). 

Accordingly, on the basis of Litton, the district court 

should have concluded that Allied's actions in the private forum 

of NFPA meetings were not entitled to Noerr-Pennington protection 

even if the NFPA standards arrived at in this private context 

16 

were ultimately adopted in some form by various State and local 

governments. A private decision made in the equivalent of the 

NFPA "boardroom" is not Noerr-protected merely because it is 

later adopted by a governmental entity. 

To the extent that the district court was concerned about 

the equity of applying the antitrust laws to Allied's efforts to 

influence NFPA (Tr. 57-58, J.A. 458-59), it need not have been. 

As we have discussed (see supra, 6-7), the antitrust laws do not 

prevent Allied from presenting accurate information to NFPA 

regarding its competitor's product. Nor do the antitrust laws 

restrict Allied's right directly to petition state or local 

government. The right to petition, however, does not encompass 

the right to engage in any activity intended to get the message 

across. Cf. United States v. O'Brien, 391 U.S. 367, 376 

(1968)(First Amendment guarantee does not include all modes of 

communication of ideas.) An antitrust exemption designed to 

avoid interference with citizens' conveyance ~o the government of 

their views and desires for government action does not extend to 

other forms of conduct merely because the other conduct might be 

an effective means of producing g~yernment action. Superior 

Court Trial Lawyers Association, No. 9171 at 62 (F.T.C. 1986), 

reprinted in 51 Antitrust & Trade Reg. Rep. No. 1272, 28, 41 

(BNA, July 3, 1986), appeal filed, No. 86-1465 (D.C. Cir.). Such 

an expansion of the Noerr doctrine would "make it practically 

impossible ever to enforce the laws against agreements in 

restraint of trade" in the standards-setting area. See 

California Motor Transoort, 404 U.S. at 514 (quoting Gibonev v. 

17 

Empire Storage & Ice Co., 336 U.S. 490, 502 (1949)). 18 

•· 

... 


In svrn, the district court's ruling improperly expands the 

scope of Noerr-Pennington protection. Lobbying NFPA is not the 

equivalent of lobbying government for purposes of NoerrPennington. Allied's conduct also cannot be construed as an 

indirect petition to state and local legislatures protected from 

Sherman Act scrutiny. Allied's actions at NFPA, conducted 

outside the political arena, were not petitioning. Accordingly, 

this court should reject the district court's ruling to the 

extent it is based on the Noerr-Pennington doctrine. 

/ 

18 In Giboney, the Court held that the Fi'rst Amendment right of 

free speech does not prohibit government regulation of 

anticompetitive agreements. 336 U.S. at 499. See also National 

Society of Professional Engineers v. United States, 435 U.S. 679, 

697-98 n.27 (1978)(First Amendment right of free speech and 

petition did not prohibit enforcement of injunction prohibiting 

anticompetitive provisions in an industry code). 

18 

-·-----·

- . 
CONCLUSION 

The district court's decision that the Noerr-Pennington 

doctrine exempted Allied's activities from antitrust scrutiny 

·~ should be reversed. 

Respectfully submitted, 

DOUGLAS H. GINSBURG ROBERT D. PAUL 

Assistant Attorney General General Counsel 

W. STEPHEN CANNON ERNEST J. ISENSTADT 

Deputy Assistant Attorney General Assistant General Counsel 

CATHERINE G. O'SULLIVAN DEAN C. GRAYBILL 

MARION L. JETTON MICHAEL GOLDENBERG 

Attorneys Attorneys 

DEPARTMENT OF JUSTICE FEDERAL TRADE COMMISSION 

Washington, D.C. · 20530 Washington, D.C. 20580 

(202) 523-3463 

October 24, 1986 

/ 

19 

CERTIFICATE OF SERVICE 

I hereby certify that two (2) c c pies of the Brief of 

the United States and of the Federal Trade Commission Arnicus 

Curiae were served by air courier on October 24, 1986, to: 

Kaye, Scholer, Fierman, Hays & Handler 

425 Park Avenue 

New York, New York 10022 

Grand & Ostrow 


641 Lexington Avenue 


New York, New York 10022 


~~~--..,.~~~~~~~~~~~ 

Frederick E. Dooley, Jr. 

~£ 

/ 

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