Opinion ID: 217510
Heading Depth: 3
Heading Rank: 2

Heading: Drawing the Line: Adjudicative or Legislative?

Text: On appeal, the parties focus their arguments on Noerr-Pennington almost entirely on whether the Board proceedings were legislative or adjudicative. But what makes a proceeding adjudicative or legislative for the purposes of the exceptions to Noerr-Pennington ? The answer to this question is not as obvious as it might seem at first. Some proceedingscivil or criminal trials, for exampleare, by their very nature, always adjudicatory. Other times, however, a governmental body will act in a legislative capacity in some cases but in an adjudicative capacity in others. A legislature clearly acts in a political, legislative capacity when it contemplates the passage of a new law, for example, but the Supreme Court has indicated that a legislature might also act in an adjudicative capacity in certain circumstances, at least so far as Noerr-Pennington immunity is concerned. Compare Allied Tube, 486 U.S. at 504, 108 S.Ct. 1931 (expressing doubt that misrepresentations made under oath at a legislative committee hearing in the hopes of spurring legislative action are protected under Noerr-Pennington ), with F.T.C. v. Superior Court Trial Lawyers Ass'n, 493 U.S. 411, 424, 110 S.Ct. 768, 107 L.Ed.2d 851 (1990) (It of course remains true that no violation of the [Sherman] Act can be predicated upon mere attempts to influence the passage or enforcement of laws. (quotation omitted)). Given the countless variations on state and federal agencies, 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. See Daniel J. Davis, Comment, The Fraud Exception to the Noerr-Pennington Doctrine in Judicial and Administrative Proceedings, 69 U. Chi. L.Rev. 325, 333 (2002) (observing that some federal statutes mandate that certain agencies use hybrid processes that combine legislative and adjudicatory procedures and that administrative proceedings can exhibit characteristics of both legislative and judicial actions). The district court correctly observed that the line between legislation and adjudication is not always easy to draw. Mercatus II, 695 F.Supp.2d at 819 (quotation omitted). In their briefs, the parties call to our attention only a single decision from this court discussing in any detail whether a proceeding was adjudicative or legislative for the purpose of applying the fraud exception to Noerr-Pennington. In Metro Cable Co. v. CATV of Rockford, Inc., we considered whether a mayor and city council acted in a legislative or adjudicative capacity when they denied the plaintiff a franchise to construct and operate a cable television system. 516 F.2d 220, 222 (7th Cir.1975). In so doing, we identified a number of characteristics indicating that the franchising decision was legislative rather than adjudicative. First, we considered the general nature of the authority exercised by the mayor and city council. The council possessed legislative power and, in fact, the only way it [was] organized and equipped to act was as a legislative body. Id. at 228. The mayor, for his part, was an executive officer with some legislative duties, which include[d] presiding over the city council and voting when the aldermen are equally divided. Id. Second, we considered the formality of the council's fact-finding processes. Unlike a court or other adjudicative body where evidence must satisfy strict rules of relevance and admissibility, the council did not compile an evidentiary record through formal proceedings and was free to base its actions on information and arguments that come to it from any source. Id. Third, we considered the extent to which the fact-finding process was subject to political influences, noting that the council was subject to lobbying and other forms of ex parte influence that typify the legislative or political process. Id. Based on the totality of these factors, we concluded that the mayor and city council had acted in a legislative capacity, so the complained-of petitioning activity was immune from antitrust liability under Noerr-Pennington. Id. The Metro Cable factors are not exclusive. A number of other factors may also prove helpful in determining whether a proceeding is adjudicative or legislative. Though perhaps encompassed by the Metro Cable factor regarding the formality of the fact-finding process, the Supreme Court has treated as significant whether any testimony at the proceeding in question was given under oath or affirmation, under penalty of perjury. See Allied Tube, 486 U.S. at 504, 108 S.Ct. 1931 (questioning whether misrepresentations made under oath are protected under Noerr-Pennington ); California Motor Transp., 404 U.S. at 512, 92 S.Ct. 609 ([U]nethical conduct in the setting of the adjudicatory process often results in sanctions. Perjury of witnesses is one example.). An oath or affirmation backed by penalty of perjury should impress upon a witness the solemnity of the occasion and the importance of telling the truth, and should make clear that the witness is not at liberty to exaggerate or color his version of an event, as might be possible in a more political or legislative setting. See, e.g., United States ex rel. Haywood v. Wolff, 658 F.2d 455, 463 (7th Cir.1981). [6] In classifying proceedings as legislative or adjudicative for antitrust purposes, other courts have found significant whether the governmental actions at issue were matters of discretionary authority or were instead guided by more definite standards susceptible to judicial review. Kottle, 146 F.3d at 1062; Boone v. Redevelopment Agency of San Jose, 841 F.2d 886, 896 (9th Cir.1988). The absence of definite standards is more characteristic of purely political or legislative activity than of adjudication. See Franchise Realty Interstate Corp. v. San Francisco Local Joint Exec. Bd. of Culinary Workers, 542 F.2d 1076, 1079 (9th Cir.1976) (noting that precise standards are simply absent from the rough and tumble of the political arena; almost any position, including the self-interested plea of one competitor that another should be denied a permit, may be urged before such a political body). [7] Before applying these factors to the case now before us, however, we must note the significant constitutional concerns implicated by the fraud exception's application to petitioning activity. Noerr-Pennington was crafted to protect the freedom to petition guaranteed under the First Amendment. See, e.g., Premier Elec. Constr. Co., 814 F.2d at 371. This freedom has long been recognized as a cornerstone of democratic government itself. See United Mine Workers of America, Dist. 12 v. Illinois State Bar Ass'n, 389 U.S. 217, 222, 88 S.Ct. 353, 19 L.Ed.2d 426 (1967) ([T]he rights to assemble peaceably and to petition for a redress of grievances are among the most precious of the liberties safeguarded by the Bill of Rights.); De Jonge v. Oregon, 299 U.S. 353, 364, 57 S.Ct. 255, 81 L.Ed. 278 (1937) (The very idea of a government, republican in form, implies a right on the part of its citizens to meet peaceably for consultation in respect to public affairs and to petition for a redress of grievances.) (quotation omitted); McDonald v. Smith, 472 U.S. 479, 486, 105 S.Ct. 2787, 86 L.Ed.2d 384 (1985) (Brennan, J., concurring) (noting that, except in the most extreme circumstances, the right to petition the government cannot be punished ... without violating those fundamental principles of liberty and justice which lie at the base of all civil and political institutions) (quotation omitted). Accordingly, we have recognized that the application of the sham exception might inadvertently stifle the legitimate exercise of this core right. Havoco of America, Ltd. v. Hollobow, 702 F.2d 643, 651 (7th Cir.1983) (declaring that the fraud exception cannot be used to chill [the] constitutional right to petition without fear of sanctions); Stern v. U.S. Gypsum, Inc., 547 F.2d 1329, 1345 (7th Cir.1977) (concluding, in context of civil rights suit, that the real if peripheral chill of the right to petition which [the] knowing falsity rule could engender is significant enough for the First Amendment values to play a part in construing federal legislation); see also BE & K Constr. Co. v. NLRB, 536 U.S. 516, 529-33, 122 S.Ct. 2390, 153 L.Ed.2d 499 (2002) (considering First Amendment burden imposed by NLRB's effective expansion of the sham exception in labor cases); Forro Precision, Inc. v. IBM Corp., 673 F.2d 1045, 1060 (9th Cir.1982) (extending Noerr-Pennington to communications with law enforcement based on concern that a contrary ruling would discourage citizens from providing information to the police). That risk grows when, as may often be the case, a layperson is uncertain whether the governmental action at issue is adjudicatory or legislative. See James M. Sabovich, Petition Without Prejudice: Against the Fraud Exception to Noerr-Pennington Immunity From the Toxic Tort Perspective, 17 Penn. St. Envtl. L.Rev. 1, 12 (2008) (observing that the fact-specific test used to determine whether the proceeding is judicial, leave[s] the immunity for many petitions uncertain.) (footnote omitted). Such uncertainty may stem either from an unfamiliarity with the relevant legal principles due to a lack of legal counsel, or from a more basic unfamiliarity with the specific proceedings at issue. For example, a petitioner might not know that one municipal body, unlike its counterparts in other municipalities, forbids ex parte lobbying of its members, or she might simply be unaware that a prohibition on such lobbying has any legal significance for her petitioning activity. Regardless of its source, the greater the uncertainty, the more likely that laypeople will hesitate to seek redress, out of fear that their petitioning activity will subject them to legal liability. Given the broad spectrum of possibilities implicated whenever a person contemplates engaging in legitimate First Amendment petitioning activity, a law's chilling effect is particularly great when it is unclear whether that law actually forbids the contemplated activity. See Schirmer v. Nagode, 621 F.3d 581, 586 (7th Cir.2010). Such chilling effect will be particularly pronounced when, as is the case with the antitrust laws, the allegedly fraudulent statements may be punishable by treble damages. That is not to say that any such chill would be confined to only that narrow class of petitioning activity forbidden by the antitrust laws, of course. After all,  Noerr-Pennington has been extended beyond the antitrust laws, where it originated, and is today understood as an application of the first amendment's speech and petitioning clauses. See New West, L.P. v. City of Joliet, 491 F.3d 717, 722 (7th Cir.2007). For these reasons, we must ensure that we do not transform the Sherman Act into a means by which to chill vital conduct protected under the First Amendment. Cf. Laird v. Tatum, 408 U.S. 1, 11, 92 S.Ct. 2318, 33 L.Ed.2d 154 (1972) (noting that constitutional violations may arise from the deterrent, or `chilling,' effect of governmental regulations that fall short of a direct prohibition against the exercise of First Amendment rights). Applying the factors we set out above, it is clear that the Village Board acted in a legislative capacity when it declined to approve the proposed Mercatus physician center. Like the city council in Metro Cable, the Board generally acts in a policymaking capacity. The Board also appears ill-equipped to conduct adjudicative proceedings. It conducts the vast majority of its business through relatively informal public meetings and holds formal hearings only once a year regarding the Lake Bluff budget. More specifically, the process by which the Board considered whether to grant Mercatus approval to develop the Shepard Land was decidedly legislative or political in nature. 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. This lobbying activity by advocates on both sides was perfectly legitimate, as would not be the case in an adjudicative proceeding. In fact, the lobbying was encouraged by the village president, who described the decision as [e]ssentially... political and preferred to give parties the opportunity to lobby directly the trustees. Letchinger Dep. at 18, 20. The processes by which the Board gathered information to guide its decision-making, unlike the processes in adjudicative proceedings, were decidedly informal. None of the evidence the Board considered was subject to strict rules of admissibility or any recognizable evidentiary rules, for that matter. 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. None of the testimony before the Board was given under oath or on penalty of perjury. The Board's decision on development approval was not guided by enforceable, definite standards subject to review. [8] The special use ordinance applicable to the Shepard Land required that the Board approve any additional development of that land, but the ordinance provided no standards governing the grant or denial of that approval. As several Board members recognized, this broad language gave the Board significant discretion whether or not to grant Mercatus approval to develop the Shepard Land. The record thus shows beyond reasonable dispute that the proceedings before the Board were legislative in nature. It was, as the village president explained, ultimately a political decision not to grant Mercatus approval to develop the Shepard Land. Because the fraud exception does not apply to legislative proceedings, guided as they are by political considerations, Noerr-Pennington immunity applies. We need not address whether the Hospital's alleged misrepresentations rendered the Board proceedings a sham. The district court properly granted summary judgment for the Hospital on Mercatus' antitrust claims based on the Hospital's activities during the Village Board proceedings.