Legal Document

508 U.S. 49 113 S.Ct. 1920 123 L.Ed.2d 611 PROFESSIONAL REAL ESTATE INVESTORS, INC., et al., Petitionersv.COLUMBIA PICTURES INDUSTRIES, al. No. 91-1043. Argued Nov. 2, 1992. Decided May 3, 1993. Syllabus * Although those who petition government for redress are generally immune from antitrust liability, Eastern R. Presidents Conference v. Noerr Motor Freight, Inc., 365 127, 81 523, 5 464, such immunity is withheld when petitioning activity "ostensibly directed toward influencing governmental action, a mere sham to cover . an attempt interfere directly" with competitor's business relationships, id., at 144, S.Ct., 533. Petitioner resort hotel operators (collectively, PRE) rented videodiscs guests use videodisc players located in each guest's room and sought develop market the sale of other hotels. Respondent major motion picture studios Columbia), which held copyrights pictures recorded on PRE's licensed transmission rooms, sued PRE alleged copyright infringement. counterclaimed, alleging that Columbia's action was cloaked underlying acts monopolization conspiracy restrain trade violation §§ 1 2 Sherman Act. The District Court granted summary judgment claim, Appeals affirmed. On remand, claims. Because Columbia had probable cause bring infringement court reasoned, no entitled immunity. also denied request further discovery intent bringing its action. Noting sole argument lawsuit because did not honestly believe claim meritorious, found existence precluded application exception as matter law rendered irrelevant any evidence subjective suit. Held: 1. Litigation cannot be deprived unless it objectively baseless. This Court's decisions establish legality reasonable "directed obtaining action" "not all affected by anticompetitive purpose [the actor] may have had." Id., 140, 531. Thus, neither nor turns alone. See, e.g., Allied Tube & Conduit Corp. Indian Head, 486 492, 503, 108 1931, 1938, 100 497. Rather, "sham," litigation must meet two-part definition. First, baseless sense litigant could realistically expect success merits. Only if challenged meritless examine litigant's motivation. Under this second part definition should focus whether suit conceals "an Noerr, supra, U.S., 533, through "use [of] process—as opposed outcome process —as weapon," Omni Outdoor Advertising, 499 ----, 111 1344, 1347, 382. two-tiered requires plaintiff disprove lawsuit's legal viability before will entertain suit's economic viability. Pp. ____. 2. failed objective prong Noerr's exception, properly Columbia. A finding defendant claiming sue compels conclusion defendant's position merits lawsuit. Here, lower courts correctly Since there dispute over predicate facts proceedings—Columbia exclusive right show copyrighted publicly—the decide law. reasonably conclude plausible effort enforce rights, since, time entered judgment, clear rental activities; since might won two Circuits; would been press novel even absence supporting authority, similarly situated perceived some likelihood success. 3. refused circumstances litigation, matters were reasonableness P. 944 F.2d 1525 (CA 9 1991), THOMAS, J., delivered opinion Court, REHNQUIST, C.J., WHITE, BLACKMUN, SCALIA, KENNEDY, SOUTER, JJ., joined. filed concurring opinion. STEVENS, O'CONNOR, Patrick J. Coyne, Washington, DC, petitioners. Andrew Pincus, respondents. Justice THOMAS Court. case us define "sham" doctrine first identified 464 (1961), applies context. does qualify "is directly relationships competitor." We hold Ninth Circuit characterize admittedly institute. affirm. Petitioners Professional Real Estate Investors, Kenneth F. Irwin operated La Mancha Private Club Villas, Palm Springs, California. Having installed resort's rooms assembled library more than 200 titles, in-room viewing. hotels wishing offer viewing prerecorded material. Respondents, Pictures Industries, seven purchased. wired cable system called Spectradyne. therefore competed only but broader entertainment services 3 In 1983, rooms. charging violations Act, 26 Stat. 209, amended, 15 U.S.C. 1-2,1 various state-law infractions. particular, trade. 4 parties cross-motions postponed counterclaims. freely sell or lease lawfully purchased under Copyright Act's "first sale" doctrine, see 17 § 109(a), conceded playing constituted "performance" pictures, 101 (1988 ed. Supp. III). As result, depended solely infringed "perform work[s] publicly." 106(4). Ruling constitute public performance, PRE. 228 USPQ 743, 1986 WL 32729 (CD Cal.1986). affirmed grounds "public place" "transmit otherwise communicate" pictures. 866 278 (CA9 1989). See claims, arguing original supra. Reasoning "was clearly legitimate sham," 1990-1 Trade Cases ¶ 68,971, p. 63,243, 1990 56166 Cal.1990), motion: 6 "It manner presented [Columbia was] seeking expecting favorable judgment. I decided against [Columbia], far easy resolve, evident affirming my order trouble well. find regardless issue considered question fact law." Ibid. 7 then dismissed counterclaims without prejudice. 8 1991). After rejecting allegations conduct, 1528-1529,2 focused contention indeed characterized one types "abuse judicial processes": either " 'misrepresentations adjudicatory process' pursuit 'a pattern baseless, repetitive claims' instituted 'without cause, merits.' 1529 (quoting California Transport Co. Trucking Unlimited, 404 508, 513, 512, 92 609, 613, 612, 30 642 (1972)). "allege[d] [copyright] involved misrepresentations" "challenge[d] district court's brought i.e., baseless." F.2d, 1530. "the [was] [Columbia] meritorious." rejected "subjective precluding entry judgment." Instead, reasoned "preclude[d] law" "a fall within Noerr-Pennington doctrine." 1531, 1532. Finally, observed failure baseless" "evidence [Columbia's] intent." 1533. It accordingly intent. 10 appeals defined inconsistent contradictory ways.3 once become "no label apply they deem unworthy immunity." n. 10, 1941, 497 (1988). array definitions adopted demonstrates observation prescient. denied, 1073, 104 984, 79 220 (1984); Hydro-Tech Sundstrand Corp., 673 1171, 1177 (CA10 1982); Federal Prescription Service, Inc. American Pharmaceutical Assn., 214 U.S.App.D.C. 76, 85, 89, 663 253, 262, 266 (1981), cert. 455 928, 102 1293, 71 472 (1982). Still successful sham. Eden Hannon Sumitomo Trust Banking Co., 914 556, 564-565 (CA4 1990), 1414, 467 (1991); South Dakota Kansas City Southern 880 40, 54 (CA8 1989), sub nom. Co, 493 1023, 110 726, 107 745 (1990); Redd Horne, 749 154, 161 (CA3 1984). 11 Other Courts regard meritorious Sixth treats "genuine [legal] substance" raising merely rebuttable presumption" Westmac, Smith, 797 313, 318 (1986) (emphasis added), 479 1035, 885, 93 838 (1987). Seventh denies valid claims stakes, discounted probability winning, too low repay investment litigation." Grip-Pak, Illinois Tool Works, 694 466, (1982), 461 958, 103 2430, 77 1317 (1983). Fifth Circuit, "success preclude" proof "significantly motivated genuine desire relief." re Burlington Northern, 822 518, 528 (1987), Union Pacific Energy Transportation Systems, 484 1007, 701, 98 652 II 12 contends erred holding must, threshold prerequisite ., Brief 14. invites adopt approach "indifference outcome," ibid., prove grievances "would [a] predatory motive," Tr. Oral Arg. expose liability exception. decline invitation. 13 Those liability. recognized Act prohibit persons associating together persuade legislature executive take particular respect produce restraint monopoly." 136, 529. Accord, Mine Workers Pennington, 381 657, 669, 85 1585, 1593, 14 626 (1965). light government's "power act [its] representative capacity" "to actions operate trade," we punish "political activity" people inform their wishes." 137, Nor "impute Congress invade" First Amendment petition. 138, 530. however, activities "application justified" activity, itself, publicity campaign railroads legislation harmful truckers "effort influence legislation" highly successful." (1972), elaborated relevant respects. extended citizens administrative agencies courts." 510, 611. Second, complaint showed contained group highway carriers "sought bar competitors meaningful access tribunals so usurp decisionmaking process" "institut[ing] proceedings cases." 612 (internal quotation marks omitted). left unresolved case—whether expectation motivate litigant. now answer negative litigate intent.4 16 Our formulation required unprotected lack reasonableness. passage enforcement laws" lose lobbyists' "sole destroy [their] competitors." persuaded showing intended injure [competitors] customers," "direct injury" incidental effect action." 143, 532. "[t]he representatives desires laws made depend upon doing so." 139, short, "Noerr shields concerted officials purpose." 670, 1593. Nothing retreated these principles. Indeed, recourse condemned until reviewing has "discern[ed] draw[n]" "difficult line" separating leads factfinder processes abused." 613. recognition signifies institution "without cause" give rise effectively "bar[s] usurp[s] th[e] process." 612. 18 Transport, consistently assumed contains indispensable component. described "evidenced lawsuits carrying hallmark insubstantial claims." Otter Tail Power United States, 410 366, 380, 1022, 1031, 35 359 (1973) added). "private genuinely aimed procuring action," 500, 4, 1937, And explicitly certainly sham." 502, 1938. Vendo Lektro-Vend 433 623, 645, 97 2881, 2894, 53 1009 (1977) (BLACKMUN, result) (describing attemp[t] adjudicative legitimately" rather "). Whether applying invoking contexts, repeatedly reaffirmed alone transform into FTC Superior Trial Lawyers 411, 424, 768, 775, 851 NAACP Claiborne Hardware 458 886, 913-914, 3409, 3425-3426, 73 1215 Cf. Vendo, 635-636, 6, 639, 9, 2889-2890, 2891 (plurality J.); 644, n., 2894 result). analogy "improperly motivated" enjoined National Labor Relations unfair labor practice "baseless." Bill Johnson's Restaurants, NLRB, 731, 743-744, 2161, 2170-2171, 76 277 531, quoted 19 most recent applications demonstrate Tube, Lawyers, 427, 11, 777, let defendants immunize unlawful restraints pleading seek Colle giate Athletic Assn. Board Regents Univ. Okla., 468 101, 23, 2948, 2960, 82 70 (1984) ("[G]ood motives validate practice"). 382 (1991), challenges allegedly resolved according criteria. dispelled notion "purposes delay plaintiff's] deny appropriate legislative fora." 1354 inimical "may render lobbying improper unlawful, necessarily 'sham.' 1361-62 (STEVENS, dissenting). 20 sum, fidelity precedent reject purely "sham." construed undermine, vitiate, Noerr. despite whatever "superficial certainty" provide, standard utterly fail supply "real 'intelligible guidance.' 10. III 21 outline litigation. If calculated elicit outcome, immunized premised fail.5 our sham, competitor," 144 533 Omni, original). Of course, defeats demonstrating both components still substantive violation. Proof deprives immunity; relieve obligation elements his claim. 22 Some apparent confusion meaning stem word "genuine" denote opposite 1355; 4; 533; connotations. hand, means "actually having reputed qualities character." Webster's Third New International Dictionary 948 (1986). "Genuine" governs Rule Civil Procedure 56, issue" "that can finder [it] favor party." Anderson Liberty Lobby, 477 242, 250, 106 2505, 2511, 91 202 "sincerely felt experienced." Dictionary, 948. To therefore, senses word.6 IV 23 counterclaim. secure relief. 1529. 24 institute precludes engaged understood applied commonlaw tort wrongful civil proceedings,7 lacked unsuccessful pressed improper, malicious purpose. Stewart Sonneborn, 187, 194, 25 L.Ed. 116 (1879); Wyatt Cole, 504 112 1827, 1837, 118 (1992) (REHNQUIST, dissenting); T. Cooley, Law Torts *181. Wheeler Nesbitt, How. 544, 549-550, 765 (1861) (related prosecution criminal charges). Probable "reasonabl[e] belie[f] chance adjudication" Hubbard Beatty Hyde, 343 Mass. 258, 178 N.E.2d 485, 488 (1961); Restatement (Second) 675, Comment e, pp. 454-455 (1977). essential element tort, absolute defense. Crescent Live Stock Butchers' Slaughter-House 120 141, 149, 472, 476, 614 (1887); Wheeler, How., 551; Loan Gadsden Mizell, So.2d 45, 48 (Ala.1982). Just affect malice entitle prevail permit infer cause. Stewart, 194; C. Addison, 1, 853, 67-68 (1876); When sue, decision today, proper determination irrefutably proved Where, here, proceeding, Crescent, 476; Nelson Miller, 227 Kan. 271, 277, 607 P.2d 438, 444 (1980); Stone Crocker, 41 81, 84-85 (1831); Bishop, Commentaries Non-Contract 240, 96 (1889). Director General Kastenbaum, 263 25, 28, 44 52, 53, 68 146 (1923) ("The defendant] thought thinks did"). enjoyed "exclusive righ[t] perform copyrighted" "publicly." Regardless monopolistic use, acquired statutory "original" audiovisual "works authorship fixed" "tangible medium expression." 102(a)(6). condition demonstrated upset "limited grant" "monopoly privileges" simultaneously creative authors" work product." Sony America Universal Studios, 417, 429, 774, 782, 78 574 (1984). 1986, intruded copyrights. At time, video cassettes on-site, private screening owner's performance. 154 Aveco, F.Supp. 315 (MD Pa.1985), aff'd, 800 59 1986). distinguished reasoning offered degree privacy akin home store, USPQ, 746; 280-281, scholars criticized Circuit's decision, Goldstein, Copyright: Principles, Practice 5.7.2.2, 616-619 (1989); M. Nimmer D. Nimmer, 8.14[C][3], 8-168 8-173 (1992). expressly "decline[d] follow" instead place." Video Views, Studio 21, Ltd., 925 1010, 1020, 502 181, 143 (1991). unsettled law, plainly sue. 27 Any owner believed winning Even though survive arguably "warranted existing very least based "good faith extension, modification, reversal Fed. Civ. Proc. 11. By reviewed became Circuit. long rights. Accordingly, 28 held, pierce frivolous. occasion inquire indifferent suit, damages justify primarily benefit collateral injuries inflicted process. Contra, (CA7 1982), Such concern motivations eliminated material fact," Fed.Rule Civ.Proc. 56(c), issued. 29 affirm Appeals. So ordered. 31 concurring. 32 holds today person incur "objectively merits." Ante, assumes test satisfied concluded supported "probable cause," which, explains case, adjudication." ____ agree term, defined, rightly read expressing same announces today; dubbed "reasonable belief," realistic paraphrased being 33 established identity meaning, proceeds discuss terms own baselessness, cause." Up point, understandable; used term represent reasonableness, seems natural conclusions. Yet acknowledges, ante, ____, obliged consider de novo. There need frame Appeals's terms. prefer put terms, simply that, undisputed stood expected 34 My preference stems today's transplanting every nuance procedural quirk common-law federal do understand mean anything sort, citation Rules Procedure, signal importation jot tittle attorney sanctions. shorthand merits, understanding, join whom O'CONNOR joins, 36 While disposition intent," write separately disassociate myself unnecessarily broad dicta Specifically, disagree equation merits."1 well fit latter shown unreasonable, thus shams. just form merits—no how insignificant —could expected.2 With possibility mind, avoid regret confronted complicated case. 37 recently explained, weapon." 1354, distinction between abusing competition, prosecuting successful, guide filing, series filings, appropriately cases, nevertheless impose harm by, example, impairing credit, process, interfering agencies. reason tremendous cost bother achieve result imposed competitor pursued purposes fundamentally different relief itself competitive advantage or, perhaps, exclude potential entering product infringes plaintiff's patent violates franchise body. 38 latter, obviously legitimate, category. unethical system; instead, respondents invoked jurisdiction determine competition granted, consequences authorized Given reasonable—and Appeals, was—neither respondents' measure chances goal harming petitioners provides sufficient basis treating presume intends adversary; moreover, uncertainty about possible resolution questions characteristic adversary Access precious wrongdoing nothing using doubtful unquestionably correct. 39 am persuaded, all, virtually similar (involving single property right) reached conclusion. unnecessary degree, set up straw man elaboration describing ten cases cited widespread scope five share three important characteristics case: injury prayer action; conduct "external litigation"; Each concluded, anti-competitive motivation make sham.4 40 extensive filing core lay relief: One claims,5 another behind followed elaborate effort,6 third many ways tried out business.7 deference opinions (usually lobbying) deserves especially protection point require here. remaining cases—in state sham—did involve lobbying, contain much below.8 Like above, guidance, blamed spawning confusion, violated something threat adverse lawsuit, produced less definite rules. Repetitive unsuccessful, support inference misused. (1972). rule never dispositive. Moreover, simple hard larger program control financing interest 379, 1030, (1973); 322 (CA6 1986) (Merritt, complex sophisticated analysis—one going beyond evaluation 42 Judge Posner following observations subtle suing get hope expense burden defending abandon behavior: 43 "But prepared difficulty distinguishing lawful acute actionable trade, provided some, perhaps threadbare, Many wholly groundless sake; Suppose monopolist single, tiny competitor; colorable law; suit—its win, small compared what spend litigation—except wanted pretrial discover secrets; hoped disclosure increase rate pay bank financing; heavy costs deterring firms. examples wants hurt getting him, objective, maintenance outcome. Gainesville Florida Light 1258, 1265-66 (S.D. Fla. 1980). "Some students fanciful, evidentiary problems disentangling real professed acute. Concern explain why provide (see Fischel, Antitrust Liability Attempts Influence Government Action: Basis Limits Doctrine, 45 U. Chi. L. Rev. 80, 109-10 (1977))—an face here alleged, difference Grip-Pak. Still, think premature sense, laws. abuse shows litigation; tool suppressing see, Products Ins. Agency, Crum Forster Cos., 682 660, 663-64 (7th Cir.1982), becomes concern. say trying monopoly. He pursue means, including competitors. line crossed win harass deter others, itself—regardless —of litigating. determining true great areas remember always, only, conduct; break For manufacturer's enforcing resale price agreements,9 restrictive provisions license trademark,10 equipment lease,11 evidence, constitute, grievously harmed Spectrum Sports, McQuillan, 506 884, 891, 122 247 (1993). rare successfully proves satisfy exacting demand. 46 explanation baseless," not, vehicle announcing govern difficult concur syllabus constitutes Reporter Decisions convenience reader. States Detroit Lumber 321, 337, 282, 287, 50 499. Section prohibits "[e]very contract, combination conspiracy, commerce among several States." punishes shall monopolize, combine conspire persons, monopolize refusal grant licenses "separate distinct" 1528. suffered acts. stemmed attempted copyrights, independent activity. Continental Ore Carbide Carbon 370 690, 707-708, 1404, 1414-1415, 777 (1962). Resource Development Conoco, 739 1412, 1414 1984) (Kennedy, J.). refer defendants' "purpose deprive 515, (noting eliminate denying him free courts"); 615 (Stewart, judgment) (agreeing discourage ultimately prevent [a competitor] invoking" process). That depends intent, inquiry investigation. lost "resist understandable temptation engage post hoc concluding" "action unreasonable foundation." Christiansburg Garment EEOC, 434 412, 421-422, 694, 700, 648 (1978). Hughes Rowe, 449 5, 14-15, 173, 178-179, 66 163 (1980) (per curiam ). "[e]ven appear questionable unfavorable outset, party entirely ground suit." Christiansburg, 422, 701. surveying "forms illegal reprehensible corrupt violations," noted "unethical setting often results sanctions" "[m]isrepresentations, condoned political arena, 512-513, and, so, extent permits imposition fraud misrepresentations. 60(b)(3) (allowing "relieve final judgment" "fraud misrepresentation, misconduct party"); Walker Process Equipment, Food Machinery Chemical 172, 176-177, 86 347, 349-350, (1965); 179-180, 351-352 (Harlan, concurring). frequently "malicious prosecution," (strictly speaking) W. Keeton, Dobbs, Owen, Prosser Keeton 120, 892 (5th higher context criminal. 674, ____: "[S]ham relief;" "If ." But "The "Columbia's 'warranted law' standards These varied restatements new unclear willing individually, them together. Farrar Hobby, 566, 121 494 makes me wonder "10 years trips Appeals" recover "one dollar defendant," id. 575, (O'CONNOR, concurring), "favorable relief" McGuire Oil Mapco, 958 1552 (CA11 1992) (unsuccessful enjoin Alabama's Fuel Marketing sham); 1171 1982) misappropriation secrets 556 1990) (successful imposing constructive trust profits derived breach nondisclosure agreement 1989) contract sham; careful out, "categorically preclude 54, 30). Litton Telephone Telegraph 700 785 (CA2 1983), Second AT T's continued tariffs after jury's finding. removed Chief Oakes Meskill reliance (1962), Cantor Edison 428 579, 3110, 1141 (1976) opinion), tariff filings FCC commercial marketplace requests protected doctrine. 806-809. 313 1986), substance creates presumption given case—in strong effort, inflict them—that modest reservation probably wise. Evidence animus Westmac Merritt rebutted presumptive combined attack sent bankruptcy, memos stated, 'If [lobbying activity] doesn't succeed, start lawsuit—bonds won't sell,' 318, (in statement repeated co-defendant), 'if else, we'll bonds,' dissenting) event, rule—to one—would reach 253 2-decade lobby, boycott, licensing boards, legislatures, marketplace, courts) existence. spite allegat ions, actions, consisted abolition mail-order prescription business, Noerr-Pennington. 466 (1982) (Posner, J.), (1983), Clayton Acts included lawsuit; encompassed scheme monopolizing entire by: purchasing patents; threatening file other, patently lawsuits; acquiring dividing markets; fraudulent application. 518 (CA5 1987), (1988), plaintiffs theory, crippling expense, unsuccessfully defended succession related involving petitioners' compete. Appeal ably balance strict abuses permitted motivation—as done 513-518, 613-615, (1972)—is surprising allegations. Dr. Miles Medical John Park Sons 373, 376, 55 (1911); Schwegmann Brothers Calvert Distillers 341 384, 745, 95 1035 (1951). Timken Roller Bearing 593, 971, 1199 (1951); Farbenfabriken Bayer A.G. Sterling Drug, 307 207 1962). Salt 332 392, 12, (1947); Shoe 258 451, 363, 708 (1922).

Classification Label: 7