Opinion ID: 770594
Heading Depth: 5
Heading Rank: 2

Heading: Bill Johnson's

Text: 75 The HUD officials strongly argue, however, that most of the investigatory period occurred after the state court entered judgment against the plaintiffs, and because of that adverse judgment there was no need for the officials to inquire into the lawsuit's objective basis. This argument is based on the theory that the Noerr-Pennington sham rule that protects all but frivolous suits applies in antitrust cases only and therefore does not apply to the plaintiffs' lawsuit. The officials assert that a decision from the realm of labor law, Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983), rather than Noerr-Pennington, sets forth the appropriate rule for the case before us. Under Bill Johnson's, according to the HUD officials, if a plaintiff loses its lawsuit, all that it is necessary to show is that the suit was filed with a discriminatory motive; whether or not there was an objective basis for the legal action is immaterial. 76 In Bill Johnson's a waitress filed unfair labor practice charges with the National Labor Relations Board (NLRB), alleging that she had been fired for her efforts to organize a union. 461 U.S. at 733. The restaurant sued her in state court, alleging that while picketing she had harassed customers, blocked access to the restaurant, threatened public safety, and libeled the restaurant in her leaflets. Id. at 734. The waitress then filed a second charge with the NLRB, alleging that the restaurant had violated 29 U.S.C. 158(a)(1) of the National Labor Relations Act (NLRA), which makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed under that act. See 461 U.S. at 734-35. The NLRB found that the restaurant's lawsuit lacked a reasonable basis in fact and was filed to penalize the waitress for engaging in protected activity, and it ordered the restaurant to withdraw its state-court complaint and undertake a number of additional remedial measures. Id. at 737. 77 The Supreme Court vacated and remanded. It observed that 158(a)(1) was a broad, remedial provision intended to guarantee employees the ability to enjoy their rights under the NLRA, and that [a] lawsuit no doubt may be used by an employer as a powerful instrument of coercion or retaliation. Id. at 740. On the other hand, the Court wrote, the right of access to the courts is an aspect of the First Amendment right to petition the Government for redress of grievances. Id. at 741 (citing California Motor Transp., 404 U.S. at 510). It cited its construction of the antitrust laws as not prohibiting the filing of a lawsuit, regardless of the plaintiff's anticompetitive intent or purpose in doing so, unless the suit was a `mere sham' filed for harassment purposes. Id. (citing California Motor Transp., 404 U.S. at 511). The NLRA had to be construed with a similar sensitivity to these First Amendment values, the Court said. Id. It therefore concluded that the California Motor Transport rule for sham litigation applied to the NLRA as well. The NLRB could enjoin a statecourt lawsuit as an unfair labor practice only if the employer was prosecut[ing] a baseless lawsuit with the intent of retaliating against an employee for the exercise of rights protected by [S 158]. Id. at 744. An injunction would be improper if there was any realistic chance that the plaintiff's legal theory might be adopted. Id. at 747. 78 Notwithstanding the foregoing analysis and its affirmance of the principles set forth in California Motor Transport, the Court in Bill Johnson's then went on to draw a distinction with respect to the NLRB's right to impose remedies for the filing of state-court lawsuits that were pending and those that had concluded in a judgment adverse to the plaintiffs. The latter lawsuits, the Court stated, did not receive the same broad immunity from NLRB action as the former. Once the plaintiff lost its lawsuit, the NLRB could consider the matter further and, if it is found that the lawsuit was filed with retaliatory intent, . . . find a violation and order appropriate relief. Id. at 749. Such NLRB action was permissible because at that point the employer has had its day in court,[and] the interest of the state in providing a forum for its citizens has been vindicated. Id. at 747. We would ordinarily be tempted to treat these statements in Bill Johnson's as dicta, because they were not pertinent to the case before the Court and because in Professional Real Estate Investors, decided ten years later, the Court did not even mention the Bill Johnson's statements when holding that unsuccessful lawsuits receive the traditional protection described in California Motor Transport, specifically including the requirement of objective baselessness. 18 Whatever we might otherwise make of the apparently contradictory positions announced by the Court, however, this circuit is not free to ignore the Bill Johnson's statements. On the basis of those statements, we have rejected an employer's argument that the NLRB erred in failing to determine whether a libel suit, which did not survive a demurrer in state court, was baseless. See Diamond Walnut Growers, Inc. v. NLRB, 53 F.3d 1085, 1088 (9th Cir. 1995). In that case we held that bringing an action that proves unmeritorious may constitute an unfair labor practice, even though the suit did not lack a reasonable basis in law or fact at the time it was filed. Id. We are bound by Diamond Walnut and therefore by the Bill Johnson's statements. 79 Citing Bill Johnson's and Diamond Walnut , the HUD officials argue that a person would violate the FHA if he brought an unsuccessful state court action to deter another person, or group of persons, from exercising their federally protected rights -e.g. to keep them from moving into the neighborhood. Because the plaintiffs ultimately lost their state-court lawsuit, the officials argue that they acted properly in investigating the plaintiffs' opposition to the Bel Air project to determine whether they had filed that action with a discriminatory motive. 19 80 The HUD officials do not adequately explain why the Bill Johnson's and Diamond Walnut rule which is applicable in NLRA cases should apply with respect to the FHA or to other statutes generally. They contend that the holding in Professional Real Estate Investors is limited to the antitrust context, whereas the statements in Bill Johnson's establish the rule for meritless state court suits in other contexts. The officials get the point exactly backwards. As we have discussed, this court has applied the First Amendment rationale of the Noerr-Pennington doctrine broadly to claims not involving antitrust law. See Manistee Town Ctr., 227 F.3d. at 1092 ; Boulware, 960 F.2d at 800; ONRC v. Mohla, 944 F.2d at 533-Indeed, in Evans v. County of Custer we cited Noerr in holding that the first amendment's protection of the right to petition the government for redress of grievances encompasses the right of homeowners to challenge such property-related decisions by local government as road access rules. 745 F.2d at 1204. Adopting the theory advanced by the HUD officials would thus conflict with our prior case law which protects the First Amendment right of citizens to engage in petitioning activity, including the filing of lawsuits with an objective basis in fact or law, even if they ultimately prove unsuccessful. Restricting the basic Noerr-Pennington principles to antitrust cases, as the HUD officials urge, would contravene our cases applying the Noerr-Pennington sham rule in all but the NLRA context. 20 81 Indeed, it is the NLRA cases that we treat differently from all others with respect to the Noerr-Pennington sham exception. The reason is simple. The First Amendment rights of employers in the context of [the] labor relations setting are limited to an extent that would rarely, if ever, be tolerated in other contexts. See NLRB v. Gissel Packing Co. , 395 U.S. 575, 617 (1969). In Gissel Packing the Supreme Court held that employer speech that constitutes an unfair labor practice under the NLRA does not receive full First Amendment protection. 21 The employer's right of expression has to be balanced against the equal rights of the employees to associate freely, giving special consideration to the economic dependence of the employees on their employers. Id. at 617. See also NLRB v. Associated Gen. Contractors, Inc., 633 F.2d 766, 772 n.9 (9th Cir. 1980) (Any attempt to reconcile an asserted governmental interest in disclosure with First Amendment rights must be made in the context of the labor relations setting. Association that would otherwise be protected may be regulated if necessary to protect substantial rights of employees or to preserve harmonious labor relations in the public interest.) (citation omitted). The NLRB is an agency charged with the regulation of union elections, the debate between employers and employees, and other related speech and conduct. Regulations controlling such expressive activity would almost certainly be invalid outside the labor relations setting. 82 In sum, the HUD officials would transform an exception that applies only to NLRB regulation of unfair labor practices into a rule of general applicability. They cite no cases that have so extended the Bill Johnson's rule, and we have found none through our own research. Moreover, despite the present argument of the officials made for purposes of litigation, the director of HUD's Office of Investigations in Washington acknowledged, in finding no reasonable cause to proceed, that when a lawsuit is premised on a reasonable basis in fact or in law, it is protected by the First Amendment. We therefore conclude, as we have concluded in other contexts (including in the context of the petitioning activity of homeowners), that the principles embodied in the NoerrPennington doctrine apply to this case. That doctrine protects losing as well as winning lawsuits, so long as they are not objectively baseless. Thus, for the reasons explained earlier, the HUD officials' failure to investigate the objective basis for the plaintiffs' lawsuit rendered its investigation into the plaintiffs' advocacy unconstitutional. 83