Court Opinion

ID: 8943530
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:09:13.483424+00
Date Added: 2024-06-11T17:09:47.454517
License: Public Domain

MERRITT, Circuit Judge,
dissenting.
In 1961 Justice Black wrote “[tjhere may be situations in which a publicity campaign, ostensibly directed toward influencing governmental action, is a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor and the application of the Sherman Act would be justified.” Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144, 81 S.Ct. 523, 533, 5 L.Ed.2d 464 (1961). Since then the federal courts have struggled to give specific meaning to the Noerr-Pennington doctrine's sham exception. We need a definition of the sham exception that is clear and analytically sound as well as functional.
I do not take issue with the Court’s general view of the Noerr-Pennington sham exception-that when an antitrust plaintiff claims his defendants conspired to restrain trade by filing a sham suit against a competitor, application of the sham exception turns on whether the defendants genuinely sought a favorable judgment in their action or were seeking to inflict antitrust injury on a competitor by the litigation process itself, regardless of the suit’s outcome. I do not agree, however, with the rule that the existence of an “issue of substance” or “colorable claim” should be held to create a constitutional presumption-rebuttable or irrebuttable-of no judicial abuse of process, and hence no sham. In this dissent I would make the same point that the Seventh Circuit made in Grip-Pak, Inc. v. Illinois Tool Works, Inc., 694 F.2d 466 (7th Cir.1982), cert. denied, 461 U.S. 958, 103 S.Ct. 2430, 77 L.Ed.2d 1317 (1983). The Court held that if lawsuits raising colorable claims
were immunized from government regulation by the First Amendment, the tort of abuse of process would be unconstitutional-something that, so far as we know, no one believes. The difference between abuse of process and malicious prosecution is that the former does not require proving that the lawsuit was brought without probable cause. If abuse of process is not constitutionally protected, no more should litigation that has an improper anticompetitive purpose be protected, even though the plaintiff has a colorable claim.
... The existence of a tort of abuse process shows that it has long been thought that litigation could be used for *321improper purposes even when there is probable cause for the litigation; and if the improper purpose is to use litigation as a tool for suppressing competition in its antitrust sense, it becomes a matter of antitrust concern.1
694 F.2d at 471-72 (citations omitted).
Rather than relying on the panel’s presumption rule in defining a sham, I would use the elements of the tort of abuse of process, as defined by Dean Prosser:
The essential elements of abuse of process, as the tort has developed, have been stated to be: first, an ulterior purpose, and second, a wilful act in the use of the process not proper in the regular conduct of the proceeding. Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, is required; and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.
W. Prosser, Handbook of the Law of Torts § 121 at 857 (4th ed.1971). The Restatement of Torts capsulizes abuse of process as follows:
One who uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which it is not designed, is subject to liability to the other for harm caused by the abuse of process.
Restatement (Second) of Torts § 682 (1977).2
A commentator has explained the use of the elements of the tort of abuse of process in defining Noerr-Pennington’s sham exception:
The gravamen of the tort of abuse of process is the initiation or instigation of a legal proceeding against an individual to secure an objective other than the judgment ostensibly sought in that proceeding. The ability to maintain the action does not depend either on the absence of probable cause for the initial proceeding or on its termination in favor of the abuse of process plaintiff. However, the plaintiff must show that the defendant instituted the litigation with the purpose of achieving a “collateral” objective, and that he committed a specific act-other than those acts incidental to the normal use of the court or agency-directed at attaining that objective. A paradigmatic case of abuse of process is the initiation of a lawsuit against the abuse of process plaintiff to compel him to pay a debt not the subject of the complaint (the collateral purpose) and an express offer to terminate or abstain from litigation if the plaintiff pays the debt (the specific act). Abuse of process rests on the theory that no legitimate social interest is served by allowing the employment of even meritorious litigation by the defendant when his real aim is the nonadjudicatory objective, and when proof of specific conduct taken to achieve that objective limits the dangers of inquiry into his subjective purpose.
There are analogous situations in which litigation, even if instituted with probable cause, could be used to achieve specifically evidenced anticompetitive ends collateral to the ostensible purpose of the litigation, and in which antitrust sanctions would be warranted. For example, party A and party B could con*322spire to threaten litigation against party C, and could expressly offer to forego the litigation if C, an active competitor, participated in a price-fixing scheme or abandoned an aggresive advertising campaign.
Note, Limiting the Antitrust Immunity for Concerted Attempts to Influence Courts and Adjudicatory Agencies: Analogies to Malicious Prosecution and Abuse of Process, 86 Harv.L.Rev. 715, 732-33 (1973) (emphasis in original); see also Chest Hill Co. v. Guttman, 1981-82 Trade Cases (CCH) ¶ 64,417 at 75,057-59 (S.D. Ohio May 29, 1981); Associated Radio Service Co. v. Page Airways, Inc., 414 F.Supp. 1088, 1096 (N.D.Tex.1976).
Under this analogy, if the defendants initiated their state court action with the primary3 purpose of achieving some anti-competitive result collateral to the ostensible purpose of the litigation and, in furtherance of that collateral purpose, committed some act not normally incident to litigating such an action, defendants’ actions amounted to sham litigation and are not protected from liability by the Noerr-Pennington doctrine.
This way of defining the sham exception accords with what we know about the litigation process. As lawyers we know that it is not uncommon for parties to commercial litigation (even some who win) to be motivated to file their actions, not by the prospect of winning, but by the harassment value of the litigation. If the defendants possess a claim with a reasonable basis but the antitrust plaintiff can show that the defendants were using the litigation process itself as a weapon, the court should rule that the defendants’ use of the process was a sham and was not genuine petitioning for redress of grievances-assuming a specific overt act of the type described above. Again, assuming an overt act, this definition would exclude from Noerr-Pennington’s protection the case of a group of defendants who conspire to bring a color-able claim against a competitor, but who leave a paper trail showing that they did not know of or care about the suit’s basis in the law and that they expected that the competitor would be driven out of the market by factors related to the litigation process itself-cost, delay, damage to reputation, decreased sales, etc. — long before any judgment in the action is rendered.
Applying this definition to this case, I believe that the plaintiff has alleged sufficient facts to support the conclusion that defendants were attempting to use the litigation process, as opposed to the judgment sought in the suit, as a weapon against plaintiff.4 Plaintiff discovered a memo from one of the defendants to his lawyer stating: “If this [lobbying activity] doesn’t succeed, start a lawsuit-bonds won’t sell.’’ (Emphasis added.) Another memo stated: “A letter I wrote to area elevator in August 1981 pleading for more contributions has two inflammatory references to [ {if nothing else, we’ll delay sale of the bonds)].” (Emphasis added.) Plaintiff asserts that one of defendants’ “sham purposes” behind filing the action was to coerce plaintiff into joining defendants’ price fixing conspiracy. Plaintiff alleges that before defendants filed their action, one of the defendants met with the plaintiff’s principal and asked him to implement certain “standard charges” at plaintiff’s proposed elevator in order to obtain “uniformity in certain charges.” Further, plaintiff alleges that while the appeal in defendants’ state court action was pending, one of the defendants told plaintiff’s representatives that if plaintiff would agree to implement a certain guaranteed system of prices to protect de*323fendants’ prices in the market, defendants would drop their appeal.
Thus, in short, plaintiff alleges that defendants were motivated to file their action primarily by the collateral anticompetitive purposes of forcing plaintiff to join a price fixing scheme and destroying the marketability of the EDC bonds. Plaintiff further alleges that at least one defendant committed the overt act of stating, in effect, that defendants’ action would be terminated if plaintiff joined defendants’ price fixing arrangement. Thus, according to plaintiff’s allegations, defendants possessed the requisite collateral purpose and committed an affirmative act in furtherance of that purpose. Such facts, if proven, require that defendants’ state court action be held to be a sham.
This case was originally decided by the District Court under an erroneous definition of the sham exception. Therefore, rather than attempting to determine from the record and argument whether defendants’ purpose and actions do indeed come within the sham exception, as properly defined, I would reverse the District Court’s judgment and remand for reconsideration in light of the discussion above.

. This analysis was criticized by Handler & De Sevo, The Noerr Doctrine and its Sham Exception, 6 Cardozo L.Rev. 1, 33-40 (1984), but the result it reached was accepted by Kintner & Bauer, Antitrust Exemptions for Private Requests for Governmental Action: A Critical Analysis of the Noerr-Pennington Doctrine, 17 U.C.D. L.Rev. 549, 575-76 (1984).

. Although this section of the Restatement does not expressly require an improper affirmative act in furtherance of the illegitimate purpose (as does Dean Prosser), the comments and illustrations make clear that such an act is required:
A is a dangerously insane person. B, her son, instigates lunacy proceedings against her, seeking to have her confined for the protection of herself and others. His motive in doing so is to succeed to the control of her property after she is committed. This is not abuse of process.
Restatement (Second) of Torts § 682 illustration 4.

. See Restatement (Second) of Torts § 682 comment b.

. Plaintiffs briefs assert that defendants filed their action with the intent to damage plaintiffs efforts to construct a grain elevator that would compete with defendants’ elevators. Indeed, defendants would probably admit that this was their intent. However, as discussed by Judge Wellford above, this intent does not (contrary to plaintiffs position) make a sham out of defendants’ lawsuit. Nevertheless, even though plaintiff was laboring under a mistaken view of the sham exception, plaintiff managed to bring forward enough facts to rebut the panel’s presumption.