Court Opinion

ID: 1038366
Source: CourtListenerOpinion
Date Created: 2013-08-27 00:00:55.61691+00
Date Added: 2024-06-11T15:39:50.430585
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 12-1429

WAUGH CHAPEL SOUTH, LLC; WCS LLC; WCS PROPERTIES BUSINESS
TRUST; ELG INGLEWOOD LLC,

                Plaintiffs – Appellants,

           v.

UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 27; UNITED
FOOD & COMMERCIAL WORKERS UNION, LOCAL 400; MID−ATLANTIC
RETAIL FOOD INDUSTRY JOINT LABOR MANAGEMENT FUND,

                Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.     William D. Quarles, Jr., District
Judge. (1:11-cv-00841-WDQ)

Argued:   May 16, 2013                     Decided:   August 26, 2013

Before KING, DIAZ, and FLOYD, Circuit Judges.

Affirmed in part, vacated in part, and remanded by published
opinion. Judge Diaz wrote the opinion, in which Judge King and
Judge Floyd joined.

ARGUED:    Ira Lee Oring, FEDDER & GARTEN, PA, Baltimore,
Maryland, for Appellants.     Michael Timothy Anderson, MURPHY
ANDERSON PLLC, Washington, D.C., for Appellee United Food and
Commercial Workers Union Local 27; Sharon McNeilly Goodman,
SLEVIN & HART, P.C., Washington, D.C., for Appellee Mid−Atlantic
Retail Food Industry Joint Labor Management Fund.     ON BRIEF:
Neil Dubovsky, FEDDER & GARTEN, PA, Baltimore, Maryland, for
Appellants.    Arlus J. Stephens, Lorrie E. Bradley, MURPHY
ANDERSON PLLC, Washington, D.C., Joel A. Smith, David Gray
Wright, KAHN, SMITH & COLLINS, P.A., Baltimore, Maryland, for
Appellee UFCW Local 27; Carey R. Butsavage, John A. Durkalski,
BUTSAVAGE & ASSOCIATES, P.C., Washington, D.C., for Appellee
UFCW Local 400; Barry S. Slevin, Laura O. Aradi, SLEVIN & HART,
P.C., Washington, D.C., for Appellee MRFI JLM Fund.

                               2
DIAZ, Circuit Judge:

      Waugh Chapel South, LLC, WCS LLC, WCS Properties Business

Trust (collectively “WCS”) sued the United Food and Commercial

Workers Union Locals 27 and 400 (“UFCW”) and the Mid-Atlantic

Retail Food Industry Joint Labor Management Fund (the “Fund”)

under the Labor Management Relations Act (the “LMRA”), 29 U.S.C.

§ 187, which provides a cause of action for victims of “unfair

labor practices” as defined by the National Labor Relations Act

(the “NLRA”), 29 U.S.C. § 158(b)(4).            In its complaint, 1 WCS

alleges that the defendants orchestrated fourteen separate legal

challenges against their commercial real estate project in order

to   force   WCS   to    terminate   their   relationship   with   a   non-

unionized supermarket--conduct that WCS alleged was an illicit

“secondary boycott” under § 158(b)(4)(ii)(B).

     The defendants moved to dismiss the complaint under the

Noerr-Pennington 2 doctrine, claiming that their First Amendment

right to petition the courts insulated their litigation activity

from liability.         Alternatively, the Fund moved to dismiss the

      1
       Plaintiff ELG Inglewood LLC (“ELG”) also sued the unions
(Count II), alleging similar actions with respect to a related
commercial real estate development.   As discussed below, those
claims were dismissed in part, and ELG has since waived decision
on its appeal.
      2
       See United Mine Workers of Am. v. Pennington, 381 U.S. 657
(1965); E. R.R. Presidents Conference v. Noerr Motor Freight,
Inc., 365 U.S. 127 (1961).

                                      3
complaint on the basis that it was not a “labor organization”

under the NLRA.      The district court agreed with both arguments

and granted the motions to dismiss.                 This appeal followed.

      We agree with the district court that the Fund is not a

“labor    organization”     under    the       NLRA,       but   conclude    that      the

Noerr-Pennington     doctrine      does       not    (at    least     at   this   stage)

spare    the   remaining   defendants          from    the       allegations      of   the

complaint.     Although the courts are a medium by which citizens

may   exercise   their     First    Amendment         right      to    petition    their

government, the act of petitioning those courts may not serve as

the means to achieve illegal ends.                    Cal. Motor Transp. Co. v.

Trucking Unlimited, 404 U.S. 508, 515 (1972).                         Under this “sham

litigation” exception to the Noerr-Pennington doctrine, we hold

that the pleadings and the concomitant record evidence in this

case, if credited by a factfinder, are sufficient to show that

the unions have abused their right to petition the courts beyond

the point of constitutional protection.                    We therefore affirm in

part, vacate in part, and remand to the district court for a

determination of whether the unions waged a secondary boycott in

the manner alleged in the complaint.

                                          I.

      WCS and ELG are commercial real estate developers of two

respective shopping centers in Anne Arundel County, Maryland:

                                          4
(1) the Village at Waugh Chapel South (“Waugh Chapel”); and (2)

the Woodmore Towne Centre (“Woodmore”). 3                   Both companies planned

to lease a storefront unit in each of their shopping centers to

Wegmans      Food    Markets,       Inc.     Because     the    Wegmans       supermarket

chain      does     not    employ    organized        labor,    both     projects      were

opposed by the defendant unions.

       That    opposition       commenced        in    December    2006       when    union

leadership         “set[]     its     sights      on     Wegmans”        to    mount    an

antagonistic campaign.               J.A. 14.          According to WCS, a union

executive threatened WCS that if Wegmans did not unionize, “we

will fight every project you develop where Wegmans is a tenant.”

J.A. 18.       The unions thereafter directed and funded a barrage of

legal challenges at every stage of the projects’ development.

       The first of these challenges occurred in August 2008, when

UFCW       Secretary-Treasurer         George     Murphy,       represented      by     his

attorney      G.    Macy    Nelson,        petitioned     the     Anne    Arundel      City

Council (the “Council”) to revoke its decision to rezone the

Waugh Chapel site from agricultural and residential to mixed-use

commercial.         WCS argued that Murphy lacked standing.                      The day

       3
       We recite the facts here as a prelude to deciding whether
Noerr-Pennington warrants dismissal of the claims.   For reasons
described below, we treat the district court’s dismissal as a
grant of summary judgment to the unions, and therefore consider
all facts and reasonable inferences therefrom in the light most
favorable to WCS, the non-moving party.   Bonds v. Leavitt, 629
F.3d 369, 380 (4th Cir. 2011).

                                             5
before a scheduled hearing on the merits, Murphy withdrew the

petition and effectively ceded that he was not an “aggrieved

party.”    J.A. 441.

      After this petition failed, the union employed surrogate

plaintiffs to pursue their legal challenges.                  For the next few

years,     Nelson    would    represent       plaintiffs    in    sixteen       other

proceedings     objecting      to   the       development   of     the       shopping

centers,    with     the   unions   allegedly     directing      the    litigation.

Three of     those    challenges    pertained      to   Woodmore       and   are   not

before us on appeal.         We summarize the thirteen other challenges

to Waugh Chapel below.

  •   In December 2009, Paul Gilliam, Tracee Gilliam, and the
      environmental organization “Patuxent Riverkeeper” appealed
      the Council’s decision to extend the time for WCS to post
      fees and bonds for the project. WCS later posted the bonds
      and fees, mooting the case.

  •   In March 2010, Robert Smith and Madonna Brennan sued in
      Maryland state court to enjoin the Council’s approval of
      “Tax Increment Financing” (“TIF”) bonds, arguing that the
      Council did not conduct the requisite hearing. The Council
      did indeed fail to conduct a hearing, a failure it remedied
      by holding another hearing in May to reauthorize the TIF
      bonds. The case was then dismissed as moot.

  •   In June 2010, Smith and Brennan sued several defendants
      associated with the development project, including the
      Council and the Maryland Department of Energy (“MDE”),
      alleging the development had caused a nuisance.  After   a
      brief period of discovery in which Smith and Brennan
      proffered expert testimony, the parties moved for summary
      judgment. The state court found that there was no nuisance
      and dismissed the suit.

  •   In July 2010, Smith and Patuxent Riverkeeper filed a state
      court petition to vacate the MDE’s issuance of a mining
                                          6
      permit to WCS. They filed an identical petition in August
      when the MDE issued an amended mining permit.      The state
      court dismissed the July petition as based only on the
      “conjecture” and “speculation” of affidavits provided by
      plaintiffs.    J.A. 196-97.     After this dismissal, the
      plaintiffs voluntarily dismissed their August petition.

  •   From May to July 2011, Smith, Sandra Bowie, and Rosie
      Shorter appealed the grant of nine separate building and
      grading permits issued by the Council to WCS.       They
      withdrew the appeals after WCS subpoenaed the unions’
      financial records.

      On March 31, 2011, WCS and ELG sued the unions under the

LMRA, 29 U.S.C. § 187, alleging two counts of secondary boycott

activity under § 158(b)(4)(ii)(B).             Count 1 of the complaint

pertained to the Waugh Chapel shopping center (WCS), while Count

2 pertained to the Woodmore Towne Center (ELG).              As to Count 1,

the   district   court   categorized     the   fourteen   legal     challenges

directed against Waugh Chapel as follows: (1) one “successful

petition” to appeal the issuance of the TIF bonds, J.A. 55, (2)

two environmental suits dismissed for lack of standing, and from

which the court would not infer baselessness, (3) ten grading

and building “petitions withdrawn to avoid subpoenas” from which

the   court   would   not   infer   baselessness,     J.A.    57,    (4)   one

petition appealing the extension of time for WCS to post bonds

and pay fees that became moot, and (5) one environmental suit

dismissed on the merits “after thoughtful consideration,” J.A.

58.

                                     7
      The Fund successfully moved to dismiss the complaint under

Federal Rule of Civil Procedure 12(b)(6), arguing that it was

not a “labor organization” subject to the LMRA.           And because the

district court concluded that none of the prior legal challenges

to the development of Waugh Chapel were objectively baseless, it

dismissed Count I on Noerr-Pennington grounds.            While the court

allowed a portion of Count II to survive the unions’ motion to

dismiss, 4 a subsequent consent order also dismissed that count.

                                  II.

      Before reaching the merits of this appeal, we first address

the procedural posture of this appeal and our jurisdiction to

decide it.

                                   A.

      Although the parties do not address it, we must determine

our appellate jurisdiction to entertain this appeal under 12

U.S.C. § 1291, as “we are bound in all cases to ascertain our

own   appellate   jurisdiction   before   reviewing   a   district   court

      4
       As to ELG’s Count II, the district court concluded that
one of the three underlying legal proceedings allegedly
instigated by the unions was objectively baseless. Accordingly,
the court granted the unions’ motion to dismiss as to two of the
three alleged ‘sham’ suits, but allowed this one portion of
Count II to survive.

                                   8
judgment.”        Reid v. Angelone, 369 F.3d 363, 374 n.7 (4th Cir.

2004).

       “With         few      narrow        exceptions,”               including          certain

interlocutory and collateral orders, “our jurisdiction extends

only to appeals from all final decisions of the district courts

of the United States.”                United States v. Myers, 593 F.3d 338,

344 (4th Cir. 2010).                 In this case, after the district court

dismissed WCS’s Count I and most of Count II with prejudice, ELG

and the unions entered into a consent order, which purported to

dismiss     the      remainder       of    Count       II       of    the    complaint     “with

prejudice,        but      without    prejudice            to    refiling      in   any    other

proceeding.”         J.A. 68.        “This kind of split judgment ordinarily

would not be considered ‘final’ and therefore appealable under

28    U.S.C.     §    1291    because      it        does       not   wind    up    the    entire

litigation in the district court.”                          Palka v. City of Chicago,

662 F.3d 428, 433 (7th Cir. 2011); see also GO Computer, Inc. v.

Microsoft Corp., 508 F.3d 170, 175-76 (4th Cir. 2007).

       Several of our sister circuits have held that litigants may

not   use   voluntary         dismissals         as    a    subterfuge        to    manufacture

jurisdiction            for      reviewing                 otherwise          non-appealable,

interlocutory orders.                See Gannon Int’l, Ltd. v. Blocker, 684

F.3d 785, 791-92 (8th Cir. 2012); Rabbi Jacob Joseph School v.

Province    of       Mendoza,    425      F.3d       207,       210   (2d    Cir.   2005);   LNC

Investments LLC v. Republic of Nicaragua, 396 F.3d 342, 346 (3d

                                                 9
Cir. 2005); Marshall v. Kansas City S. Ry. Co., 378 F.3d 495,

499-500 (5th Cir. 2004); James v. Price Stern Sloan, Inc., 283

F.3d 1064, 1070 (9th Cir. 2002); CSX Transp., Inc. v. City of

Garden City, 235 F.3d 1325, 1327 (11th Cir. 2000); ITOFCA, Inc.

v. MegaTrans Logistics, Inc., 235 F.3d 360, 365 (7th Cir. 2000);

Cook v. Rocky Mountain Bank Note Co., 974 F.2d 147, 148 (10th

Cir. 1992).   “Tolerance of that practice would violate the long-

recognized policy against piecemeal appeals,” Rabbi Jacob Joseph

School, 425 F.3d at 210, and would allow “an end-run around the

final judgment rule.”    Palmieri v. Defaria, 88 F.3d 136, 140 (2d

Cir. 1996).

      ELG confesses that its Rule 41(a)(2) voluntary dismissal

was   intended   to   allow   appellate   review   of   an   otherwise

interlocutory order.    See Appellants’ Br. at 3 n.1 (“The claims

relating to one of those actions was dismissed by the March 29,

2012 Consent Order to allow for a final judgment.”).

      Under these circumstances, the question of remedy
      looms. In most cases, the proper remedy will be to
      reverse the Rule 41(a)(2) order and remand for
      completion of the case, without considering the merits
      of the earlier interlocutory order(s). We may also
      deem the ambiguous voluntary dismissal of Count [II]
      to be with prejudice and go on to consider the appeal
      from the district court’s dismissal of all remaining
      claims.

Madsen v. Audrain Health Care, Inc., 297 F.3d 694, 698 (8th Cir.

2002) (internal quotations omitted).      As did the Eighth Circuit,

we choose the latter remedy here, as it polices the boundaries

                                  10
of our appellate jurisdiction without punishing the litigants in

this appeal.        Accordingly, we deem ELG’s voluntary dismissal of

Count II to be with prejudice and proceed to consider WSC’s

appeal of its remaining claims.

                                       B.

       We next address a procedural wrinkle regarding the district

court’s Rule 12(b)(6) dismissal.            While we have since questioned

our decision to do so, see IGEN Int’l, Inc. v. Roche Diagnostics

GmbH, 335 F.3d 303, 311 (4th Cir. 2003), we have held that the

Noerr-Pennington doctrine is an affirmative defense, 5 N.C. Elec.

Membership Corp. v. Carolina Power & Light, 666 F.2d 50, 52 (4th

Cir.       1981).     The   district    court,    however,   purported   to

adjudicate the merits of the unions’ Noerr-Pennington defense

under Rule 12(b)(6), which is a procedure that tests only the

sufficiency of a complaint and “cannot reach the merits of an

       5
       In IGEN Int’l, the defendant Roche Diagnostics GmbH failed
to raise the Noerr-Pennington doctrine until after the district
court denied its motion to dismiss.     335 F.3d at 308-10.    On
appeal, Roche challenged the district court’s decision to deny
its Noerr-Pennington argument as untimely. While conceding that
“[t]his circuit has previously characterized Noerr-Pennington as
an affirmative defense,” the panel nonetheless stated in dicta
that “Roche was not required to plead [Noerr-Pennington] as an
affirmative defense.” Id. at 311.

     We, however, remain bound by our earlier precedent that the
Noerr-Pennington   doctrine  is   an  affirmative   defense.  See
McMellon v. United States, 387 F.3d 329, 333 (4th Cir. 2004).

                                       11
affirmative defense . . . .            [unless] all facts necessary to the

affirmative      defense       clearly     appear     on     the     face     of   the

complaint.”      Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th

Cir. 2007) (en banc) (internal quotations omitted).

     While WCS’s complaint alleges that the unions directed a

series of adverse lawsuits in order to wage a secondary boycott,

the mere reference to the purportedly sham proceedings does not

show--on   the    face    of    the    complaint--whether           Noerr-Pennington

bars WCS’s claims as a matter of law.                      In fact, much of the

relevant   evidence      that    the     district    court    considered      on   the

point consisted of materials 6 the parties appended as part of

the “Rule 12(b)(6) motion to dismiss, which is not a pleading.”

Mellon   Bank,   N.A.    v.     Ternisky,      999   F.2d    791,    795    (4th   Cir.

1993).

     We also note that when “matters outside the pleadings are

presented to and not excluded by the court, the [Rule 12(b)(6)]

motion must be treated as one for summary judgment under Rule

56,” and “[a]ll parties must be given a reasonable opportunity

to present all the material that is pertinent to the motion.”

     6
        These documents principally concerned the underlying
administrative and state court proceedings and consisted of
permit applications, legal filings, administrative hearings,
judicial orders, deposition excerpts, and affidavits. The unions
attached these materials to their motion to dismiss, as did WCS
to their response to that motion.

                                          12
Fed.      R.   Civ.     P.   12(d).       Here,      the    district    court       did   not

formally        convert      the     unions’    motion      to    dismiss     to    one   for

summary judgment, believing instead that it could adjudicate the

unions’        motion    under     Rule     12(b)(6)       by    considering       documents

incorporated          into     the     complaint      by        reference,    and    taking

judicial notice of the purported sham proceedings.

       It is not obvious to us that incorporation by reference is

appropriate in this context given our holding in Goodman that a

district court may consider only “the face of the complaint.”

Goodman, 494 F.3d at 464.                 Nor should “judicial notice” be used

as   an    expedient         for   courts      to   consider       “matters    beyond     the

pleadings” and thereby upset the procedural rights of litigants

to present evidence on disputed matters.                         Greater Balt. Ctr. for

Pregnancy Concerns, Inc. v. Mayor & City Council of Baltimore,

___ F.3d ___, 2013 WL 3336884, slip op. at 10 (4th Cir. July 3,

2013) (en banc) (internal quotations omitted); see Haavistola v.

Cmty. Fire Co. of Rising Sun, Inc. 6 F.3d 211, 218 (4th Cir.

1993).

       But the bottom line is that the district court did allow

the parties to supplement the record before ruling on the motion

to dismiss.        Moreover, the parties did not request discovery or

otherwise object to the court’s procedural management of the

unions’ motion to dismiss.                As we have stated before,

                                               13
     we are not bound by the label that the district court
     places upon its disposition of the case.      Whenever
     outside matters are presented to and not excluded by
     the trial court, the motion to dismiss should be
     considered on appeal as one for summary judgment even
     though the trial court characterized its action as a
     dismissal of the case for failure of plaintiffs to
     state a claim upon which relief can be granted.    The
     record in this case shows that both parties were given
     a reasonable opportunity to present evidence upon
     which the trial court could properly determine whether
     summary judgment should be entered.   Therefore, it is
     proper for this court on appeal to consider this as a
     motion for summary judgment.

Dean v. Pilgrim’s Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005)

(internal quotations omitted).                    We conclude that the principle

announced in Dean applies directly here, and so we too will

consider   the       unions’      motion     to    dismiss    based    on     the   Noerr-

Pennington doctrine as one for summary judgment.

     As    to    the    dismissal       of    the    Fund     under    Rule    12(b)(6),

therefore,      we    will    “review      the     district    court’s      grant     of   a

motion to dismiss de novo,”                  McCauley v. Home Loan Inv. Bank,

F.S.B.,    710       F.3d    551,   554      (4th    Cir.     2013),   accepting       the

allegations of WCS’s complaint as true, Trail v. Local 2850 UAW

United Def. Workers of Am., 710 F.3d 541, 543 (4th Cir. 2013).

But because we have refashioned the district court’s dismissal

of the claim against the remaining defendants as a grant of

summary    judgment,         we   review     de     novo    whether    there    are    any

genuine issues of material fact for the trier of fact to resolve

and, if not, whether the unions were entitled to dismissal as a

                                             14
matter of law.          Reynolds v. Am. Nat’l Red Cross, 701 F.3d 143,

149 (4th Cir. 2012).

                                           III.

        We first consider the district court’s decision to dismiss

the claim against the Fund on the basis that it is not a “labor

organization” under the NLRA subject to the secondary boycott

prohibitions       of      the     LMRA.         The      NLRA    defines     a     “labor

organization” as “any organization of any kind, or any agency or

employee representation committee or plan, in which employees

participate and which exists for the purpose, in whole or in

part,    of   dealing      with    employers       concerning         grievances,   labor

disputes,      wages,      rates      of    pay,       hours     of     employment,    or

conditions of work.”             29 U.S.C. § 152(5).

        We have “given a broad interpretation to the ‘dealing with’

requirement.”         NLRB v. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d

1262, 1270 (4th Cir. 1994).                But we have also explained that the

“dealing      with”     phraseology        denotes        a    “bilateral    mechanism”

through    which      an   employee    entity       and       management    reciprocally

interact:

        As we understand this “bilateral mechanism” analysis,
        several     general      principles    are     readily
        apparent. . . :   (1) while the term “dealing with”
        connotes activity which is broader than collective
        bargaining, an employer does not necessarily “deal
        with” its employees merely by communicating with them,
        even   if  the   matters   addressed  concern  working

                                            15
        conditions; (2) “dealing” occurs only if there is a
        “pattern or practice” over time of employee proposals
        concerning working conditions, coupled with management
        consideration thereof; [and] (3) isolated instances of
        the conduct described in number two do not constitute
        “dealing[.]”

Id. at 1271-72.

        An employee entity may be a “labor organization” if its

purpose or activity involves “dealing with” employers.                                 Id. at

1270 n.6.         Yet the Fund satisfies neither of these criteria.

First, WCS’s own complaint alleges that the Fund is prohibited

under       its      charter           from         “participating          directly             or

indirectly . . . in          union       collective          activities.”          J.A.      13.

Second,     while    the    “question         of    whether     an   organization           is    a

‘labor organization’ is primarily one of fact,”                          Peninsula Gen.,

36   F.3d    at    1269,    the       only    fact    suggesting      any    interactions

between the Fund and an employer concerns the alleged secondary

boycott.      There is plainly no “bilateral mechanism” when the

only alleged contact between an employee entity and management

is an unfair labor practice directed against an employer.

        Although     the     Fund      has     designated       itself      as     a    “labor

organization”        for     purposes         of    tax   liability,        this       is    not

sufficient to render it a “labor organization” for the purposes

of   labor    law.         The    Internal         Revenue    Code   (“I.R.C.”)         has       a

distinct     definition          of   “labor       organization.”        See     26     U.S.C.

§ 501(c)(5); 26 C.F.R. § 1.501(c)(5)-1(a).                           The First Circuit

                                               16
has    refused         to     borrow      the          NLRA      definition            of     “labor

organization” to determine the meaning of that term under the

I.R.C.      Tupper v. United States, 134 F.3d 444, 446 n.1 (1st Cir.

1998).      We agree with our sister circuit that the “I.R.C. and

the    NLRA    have     very       different       objectives,”             and   we    similarly

decline “to import definitions from statutes with unrelated or

cross-purposes.”            Id.

       Because Plaintiffs fail to allege that the Fund has engaged

in a pattern or practice of “dealing with” employers, it is not

a “labor organization” under the NLRA and is not subject to the

conditions      of     the     LMRA.         We    therefore          affirm      the       district

court’s decision to dismiss the complaint against the Fund.

                                              IV.

                                                  A.

       We     next    consider        whether          the    district       court      correctly

dismissed        the        claim      against           the     remaining           defendants.

Plaintiffs allege that the unions’ various legal challenges to

the    Waugh    Chapel        development         violated       the        secondary        boycott

provision      of     the     NLRA,    which       extends           to    efforts      to    “exert

pressure on an unrelated, secondary or neutral employer in order

to    coerce    the     secondary       employer         to     cease       dealing      with    the

primary        employer,          thereby         advancing           the     union’s          goals

indirectly.”           R.L.       Coolsaet    Constr.          Co.    v.    Local      150,    Int’l

                                                  17
Union of Operating Eng’rs, AFL-CIO, 177 F.3d 648, 655 (7th Cir.

1999) (internal quotations omitted).

         The    unions     counter    that    their    litigation         activity       is

protected by the Noerr-Pennington doctrine, which safeguards the

First Amendment right to “petition the government for a redress

of grievances,” U.S. Const. amend. I, by immunizing citizens

from the liability that may attend the exercise of that right.

See Noerr, 365 U.S. at 136-39; Pennington, 381 U.S. at 669.

        The    principle    originated       from   Noerr,       where       the   Supreme

Court extended First Amendment protection to lobbying efforts

for anti-competitive legislation, explaining that “mere attempts

to influence the passage or enforcement of laws” cannot comprise

a violation of antitrust law.            Noerr, 365 U.S. at 135.

        The Court has since expanded Noerr-Pennington immunity to

alleged labor law violations, BE & K Constr. Co. v. NLRB, 536

U.S. 516, 526 (2002), and to “the approach of citizens or groups

of them to administrative agencies . . . and to courts, the

third    branch      of   Government.”       Cal.     Motor,     404     U.S.      at   510.

However,       the     First    Amendment      offers       no     protection           when

“petitioning         activity   ostensibly      directed         toward      influencing

governmental action, is a mere sham to cover . . . an attempt”

to violate federal law.              Prof’l Real Estate Investors, Inc. v.

Columbia       Pictures     Indus.    (“PREI”),       508   U.S.       49,    56    (1993)

(internal quotations omitted).

                                         18
     The Supreme Court’s first engagement with this exception

occurred in California Motor, where highway carriers instituted

a slew of “state and federal proceedings to resist and defeat

applications by respondents to acquire operating rights or to

transfer     or     register      those       rights.”        404    U.S.      at      509.

Respondents,       a   group    of     rival        highway   carriers,        filed    an

antitrust    suit      claiming       this    litigation      activity    constituted

anti-competitive conduct.              The Court concluded that the facts

alleged came within the “sham” exception to the Noerr-Pennington

doctrine,        explaining    that     sham        litigation   occurs        where     “a

pattern     of    baseless,    repetitive           claims . . . emerge[s]            which

leads the factfinder to conclude that the administrative and

judicial processes have been abused.”                  Id. at 513.

     The Supreme Court revisited the sham litigation standard in

PREI,     which     involved      a    defendant’s       counterclaim        that      the

copyright action it was defending was a sham suit designed to

violate antitrust law.          In examining the applicability of Noerr-

Pennington, the Court set forth a “two-part definition of ‘sham

litigation.’        First, the lawsuit must be objectively baseless in

the sense that no reasonable litigant could realistically expect

success on the merits.”                PREI, 508 U.S. at 60.                The second

inquiry          focuses       on            the       “litigant’s          subjective

motivation . . . [and] whether the baseless lawsuit conceals an

attempt     to”     violate    federal        law    “through    the     use     of     the

                                             19
governmental   process.”     Id.     at    60-61.      Because      “the    sham

exception contains an indispensable objective component,” id. at

58,   “even    an   improperly     motivated        lawsuit   may     not    be

enjoined . . . as     an   unfair     labor     practice      unless        such

litigation is baseless,”    id. at 59.

      It is unclear whether PREI distinguished or displaced the

sham litigation test first propounded in California Motor.                  Two

of our sister circuits, however, “reconcile” the two cases “by

reading them as applying to different situations.              Professional

Real Estate Investors provides a strict two-step analysis to

assess    whether      a    single         action      constitutes          sham

petitioning. . . .     California Motor Transport deals with the

case where the defendant is accused of bringing a whole series

of legal proceedings.”     USS–POSCO       Indus. v. Contra Costa Cnty.

Bldg. & Const. Trades Council, AFL-CIO (“POSCO”), 31 F.3d 800,

810-11 (9th Cir. 1994); accord Primetime 24 Joint Vent. v. Nat’l

Broad. Co., 219 F.3d 92, 101 (2d Cir. 2000).

      We have not had occasion to confront this issue, as our

precedent has applied PREI only where a party has alleged a

single sham proceeding.      See IGEN Int’l, 335 F.3d at 307-08;

Baltimore Scrap Corp. v. David J. Joseph Co., 237 F.3d 394, 397-

98 (4th Cir. 2001).    Nevertheless, we agree with the distinction

adopted by our sister circuits.           In the absence of any express

statement that the sham litigation standard in PREI supplanted

                                    20
California Motor, we are obligated to “follow the case which

directly     controls,    leaving       to   th[e]        [Supreme        Court]   the

prerogative    of   overruling    its    own   decisions.”            Rodriguez     de

Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 484 (1989). 7

     We     distinguish    PREI   because      it    is    ill-fitted        to    test

whether a series of legal proceedings is sham litigation.                          When

a party contends that it is defending a sham lawsuit, it is

relatively simple for a judge to decide whether the singular

claim it is presiding over is objectively baseless.                         See PREI,

508 U.S. at 59-61.        But it is an entirely different undertaking

to       collaterally     review--as         here--fourteen               state     and

administrative      lawsuits   for   baselessness.            It     is    especially

difficult to do so where the presiding tribunal in those cases

had no occasion to measure the baselessness of the suit because

     7
       While the parties fully briefed and argued this issue in
the court below, WCS has not pressed for a different sham
litigation standard on appeal.     Nevertheless, “we possess the
discretion under appropriate circumstances to disregard the
parties’ inattention to a particular argument or issue.” United
States v. Ashford, ___ F.3d ___, 2013 WL 3069778, slip op. at 2
(4th Cir. June 20, 2013) (internal quotations omitted).       In
order to properly assess whether WCS’s complaint should be
dismissed because of the Noerr-Pennington doctrine, we believe
it is necessary to apply the correct sham litigation standard,
and we exercise our discretion to do so.

     At oral argument, the unions sensed our inclination to sua
sponte address this question, and requested that we allow
supplemental briefing on this point.    We deny this request, as
we have reviewed the parties’ briefing at the district court on
this issue and find it more than sufficient.

                                        21
(1)   it   had   no   inkling   that    the    action    comprised   a   possible

campaign of sham litigation, and (2) the plaintiffs preempted an

assessment of frivolity by prematurely withdrawing some of their

suits.

      Accordingly, when purported sham litigation encompasses a

series of legal proceedings rather than a singular legal action,

we conclude the sham litigation standard of California Motor

should govern.        In this context, the focus is not on any single

case.      Rather     a   district     court    should    conduct    a   holistic

evaluation of whether “the administrative and judicial processes

have been abused.”        Cal. Motor, 404 U.S. at 513.          The pattern of

the legal proceedings, not their individual merits, centers this

analysis:

      One claim, which a court or agency may think baseless,
      may   go   unnoticed;  but   a   pattern    of   baseless,
      repetitive    claims  may   emerge    which    leads   the
      factfinder to conclude that the administrative and
      judicial processes have been abused.      That may be a
      difficult line to discern and draw.      But once it is
      drawn, the case is established that abuse of those
      processes    produced   an    illegal    result,     viz.,
      effectively barring respondents from access to the
      agencies and courts. Insofar as the administrative or
      judicial processes are involved, actions of that kind
      cannot acquire immunity by seeking refuge under the
      umbrella of “political expression.”

Id.     Of course, the subjective motive of the litigant and the

objective merits of the suits are relevant, but other signs of

bad-faith litigation--including those present in this case--may

also be probative of an abuse of the adjudicatory process.

                                        22
                                             B.

      We    now   review       the    unions’     motion       to   dismiss    under    this

test. 8    Accordingly, we ask whether the record evidence presents

a   genuine    issue      of    material     fact    as    to       whether    the   unions

indiscriminately          filed       (or    directed)          a     series    of     legal

proceedings without regard for the merits and for the purpose of

violating federal law.            We conclude that it does.

      In    our   view,    the       vast   majority      of    the    legal   challenges

failed demonstrably.             In fact, it appears that only the March

2010 suit to enjoin the approval of TIF bonds could be called

successful.

      The     plaintiffs          objectively        lacked         standing     in      the

proceedings to rescind the rezoning decision by the Council, as

Maryland law requires a party to attend the public hearing of an

administrative body in order to have standing as an aggrieved

party.      See, e.g., Cnty. Council v. Billings, 21 A.3d 1065, 1075

(Md. 2011).

      Two additional suits regarding the MDE issuance of surface

mining permits were dismissed as “based in critical part only on

      8
       “Although we could remand to the district court for
reconsideration under the appropriate standard of review, doing
so would serve no useful purpose. . . . The validity vel non of
a summary judgment entails a pure question of law and,
therefore, we are fully equipped to resolve the question as a
matter of first-instance appellate review.” Piccicuto v. Dwyer,
39 F.3d 37, 40 (1st Cir. 1994).

                                             23
conjecture,” J.A. 196, as the petitioners supplied only their

own    conclusory         affidavits         of     environmental       harm     with     no

scientific     data       or     expert      testimony.          Finally,      collateral

estoppel would have barred the nine appeals of the building and

grading      permits,       as       the     petitioners       simply    repeated        the

substance of their nuisance claim--dismissed weeks earlier--that

the developments caused environmental harm to their property.

       While there is no particular win-loss percentage that a

litigant     must    achieve         to    secure   the    protection    of     the    First

Amendment,     a     one-out-of-fourteen              batting     average       at     least

suggests “a policy of starting legal proceedings without regard

to    the   merits   and       for    the    purpose      of   [violating      the    law].”

POSCO, 31 F.3d at 811; cf. Kaiser Found. Health Plan, Inc. v.

Abbott Lab. Inc., 552 F.3d 1033, 1046-47 (9th Cir. 2009) (no

sham litigation where plaintiffs “won seven of the seventeen

suits” and eight of the ten defeats concerned novel or close

questions of law); POSCO, 31 F.3d at 811 (no sham litigation

where fifteen out of twenty-nine suits succeeded); Twin City

Bakery Workers & Welfare Fund v. Astra Aktiebolag, 207 F. Supp.

2d 221, 224 (S.D.N.Y. 2002) (no sham litigation where the court

allowed     “four    of    the    six      asserted    patents     to   proceed       beyond

summary judgment.”).

       Of course, some of the legal challenges directed by the

unions may have been justifiable in one sense or another.                               For

                                              24
example, the petition appealing the issuance of TIF bonds could

be characterized as successful.                    Nevertheless, the fact that

there may be moments of merit within a series of lawsuits is not

inconsistent with a campaign of sham litigation, for “even a

broken clock is right twice a day.”                 POSCO, 31 F.3d at 811.

       We note some other indicia of bad-faith litigation.                         First,

there   was     a    perverse     nature    to    the   environmental       litigation

directed by the unions to enjoin the commercial development.

Because WCS and MDE entered into a consent decree to remediate

preexisting         environmental      contamination,        an    injunction       would

have    terminated          the     consent       decree     and        prevented     any

environmental remediation from actually occurring.

       Second, plaintiffs withdrew ten of the fourteen suits under

suspicious      circumstances.            UFCW     Secretary-Treasurer        Murphy’s

eleventh-hour withdrawal of the August 2008 petition occurred a

day before a hearing on the merits and after WCS had expended

significant resources opposing the petition.                        And in the nine

appeals    of        the    building      and     grading    permits,       plaintiffs

voluntarily         dismissed     their   suits--according         to    WCS--to    avoid

complying with subpoenas of financial records that would have

revealed      that    the    unions    were      directing   and    paying     for   the

litigation.          While third-party financing of legal proceedings

does not itself demonstrate an illegal purpose or render those

suits sham, see Balt. Scrap, 237 F.3d at 400-01, a reasonable

                                           25
factfinder could credit this evidence in deciding whether “the

administrative and judicial processes have been abused.”                          Cal.

Motor, 404 U.S. at 513.

       The unions’ post hoc justifications for these suits, as

well as their alternative theories for why the sham litigation

exception should not apply, fail to persuade us that dismissal

of WCS’s complaint is appropriate.                  We first reject the notion

that because no attorney or union member faced liability for

sanctions     or   an   abuse    of    process         tort   under    Maryland   law,

imposing     federal    liability      for      sham    litigation       “[u]ndermines

[f]ederalism” and the autonomy of states to regulate access to

their courts.       Appellee’s Br. at 32.               Maryland courts have the

authority to police litigation abuses, Felder v. Casey, 487 U.S.

131,   138   (1988),    but     no    state     may     dictate    the    terms   of   a

litigant’s First Amendment right to petition its courts by the

operation of this power.              See Harman v. Forssenius, 380 U.S.

528, 540 (1965) (“State[s] may not impose a penalty upon those

who exercise a right guaranteed by the Constitution.”).

       Just as we do not trespass on the prerogative of Maryland

to police access to its courts, a state court’s decision of

whether or not to penalize sham litigation cannot control our

determination      of   whether       we   should      afford     it   constitutional

protection.        It would make little sense to cede that federal

question to state law proceedings that involve issues that are

                                           26
distinct from our inquiry under California Motor.                       See Keller v.

State Bar of Cal., 496 U.S. 1, 11 (1990) (“Of course the Supreme

Court of California is the final authority on the ‘governmental’

status of the State Bar of California for purposes of state law.

But its determination . . . is not binding on us when such a

determination       is    essential       to    the     decision       of   a   federal

question.”).

     In any event, while a state court’s appraisal of the merits

of litigation aids the sham exception inquiry, see Balt. Scrap,

237 F.3d at 399-400, the plaintiffs in the majority of the cases

withdrew    their    suits      before    an    adjudication.          Moreover,      WCS

could not pursue sanctions against the unions, as they were not

parties to the litigation.               And even in the cases that reached

an adjudication, we accord slight significance to the absence of

a formal declaration of baselessness by the presiding tribunal

where--as here--the defendants and the court did not have reason

to suspect an improper motive behind the suits.                        Cf. PREI, 508

U.S. at 51-55.

     The    unions       also    emphasize       that     sham     litigation        must

“effectively      bar[]     [WCS]      from     access    to     the    agencies     and

courts.”     Cal.      Motor,    404     U.S.   at    513.       But   this     “access-

barring” language cannot mean that litigation must reach such a

crescendo    as   to     literally     incapacitate       the    legal      system    and

                                           27
prevent another          litigant from          receiving their      day in court. 9

Instead,         legal      challenges      need        only    “harass     and    deter

[litigants]         in    their     use     of     administrative       and    judicial

proceedings so as to deny them ‘free and unlimited’ access to

those tribunals.”             Id. at 511 (emphasis added).                It is enough

that WCS alleged that the series of legal challenges threatened

their       $260    million    commercial        development     with     substantially

increased risk and costs.                 If any of those suits had succeeded

in staying the project, even momentarily, WCS may have succumbed

to the boycott and replaced Wegmans with a unionized tenant.

        For this reason, we reject the unions’ final argument that

their series of legal challenges was not access-barring as a

matter      of     law   because    it    did     not   block   development       of   the

shopping         centers.      If   anything,       the    ineffectiveness        of   the

lawsuits in this case tends to prove, not dispel, the charge of

        9
        We disagree with the unions that either Racetrac
Petroleum, Inc. v. Prince George’s County, 601 F. Supp. 892 (D.
Md. 1985), aff’d on its reasoning, 786 F.2d 202 (4th Cir. 1986),
or Pendleton Construction Corp. v. Rockbridge County, Virginia,
652 F. Supp. 312 (W.D. Va. 1987), aff’d on its reasoning, 837
F.2d 178 (4th Cir. 1988), stand for such a proposition.    These
cases neither involved a pattern of litigation nor adopted the
suggestion that litigation cannot be sham where a litigant
ultimately received a fair adjudication.   In fact, we rejected
such a literal conception of access-barring in Hosp. Building
Co. v. Trs. of Rex Hosp., concluding that access-barring occurs
“if the proof establishes . . . intent to delay approval of
HBC’s application for a certificate of need and thereby delay
its entrance into the Raleigh market.”   691 F.2d 678, 687 (4th
Cir. 1982) (emphasis added).

                                             28
sham litigation.        Because successfully halting the project would

defeat any      sham    litigation     argument       in    the       first    place,   see

Balt. Scrap, 237 F.3d at 399 (“By definition, a winning lawsuit

is a reasonable effort at petitioning for redress and therefore

not a sham.” (internal quotations omitted)), this “heads I win,

tails you lose” theory of access-barring would nullify the sham

litigation exception altogether.

     We conclude that there remains a genuine issue of material

fact as to whether the pattern of litigation alleged in WCS’s

complaint derived from “a policy of starting legal proceedings

without regard to the merits and for the purpose of” waging a

secondary boycott.          POSCO, 31 F.3d at 811.               In light of the poor

litigation    record      and    the   signs     of   bad-faith         petitioning,      a

factfinder could reasonably conclude that the unions have abused

their   right     to   petition      the   courts      and,      as    a    result,     have

forfeited the protection of the First Amendment.                           Therefore, the

district    court      erred    in   dismissing       WCS’s      claims       against   the

unions.

                                           V.

     For the foregoing reasons, we affirm the district court’s

dismissal    of     WCS’s      complaint    as    to       the     Fund,      vacate     the

                                           29
dismissal   of   WCS’s   complaint    as   to   the   remaining   union

defendants, and remand for further proceedings.

                                                      AFFIRMED IN PART,
                                                       VACATED IN PART,
                                                           AND REMANDED

                                 30