Court Opinion

ID: 9479794
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:29:17.985558+00
Date Added: 2024-06-11T17:47:17.196915
License: Public Domain

WILKINS, Circuit Judge,
dissenting:
I write not to suggest that the activities of the defendants present a model of good government for civics class instruction. I would affirm the district court simply because the facts do not support a finding of Sherman Act violations.
The majority holds COA liable for its successful lobbying efforts under the “sham” exception to Noerr-Pennington immunity. Additionally, the majority holds that the city is not shielded by Parker immunity from the federal antitrust laws even though the ordinances passed were pursuant to a clearly articulated state policy to replace competition with regulation. *1146Because the evidence is not sufficient for a jury to displace either Noerr-Pennington immunity, under the sham or co-conspirator exceptions, or Parker immunity, under the conspiracy exception, I respectfully dissent.
I.
According to the record, J. Willis Cantey, the half-owner of COA, and the Mayor of Columbia were personal friends. When Omni expressed its intent to enter the Columbia billboard market, COA became alarmed and Cantey used his personal relationship with the Mayor and other members of the Columbia City Council to secure passage of ordinances designed to substantially foreclose Omni from the Columbia billboard market. Telephone calls and letters from Cantey to Omni revealed that Cantey was confident that he could influence the city officials to pass anticompeti-tive billboard ordinances. Cantey submitted language for proposed ordinances which the City Council incorporated in the ordinances it enacted. The record showed that a moratorium ordinance was passed quickly despite warnings from the City Attorney that it was unconstitutional. The city instructed the City Attorney to defend a lawsuit challenging the ordinance even though the City Attorney again advised that in his opinion the ordinance was unconstitutional. The timing of the actions and inactions of the city was suspiciously close to the private meetings and telephone calls made by Cantey to the Mayor. And, the record contains evidence which could lead to the conclusion that the Mayor harbored antagonistic feelings toward Omni. Finally, there was evidence that the Mayor and other members of the City Council received in kind political contributions from COA.
From this evidence, one could reasonably conclude that the anticompetitive billboard ordinances were passed in large measure because of Cantey’s lobbying efforts and his personal relationship with the Mayor and other members of the City Council. But this is not sufficient to strip the defendants of antitrust immunity.
The majority quotes extensively from the charge given by the district court to the jury. In my view the charge was incomplete due to the general way “conspiracy” was described. No limiting factors, such as evidence of illegal acts like bribery or kickbacks or evidence of a selfish or corrupt motive, were included in the description of the conspiracy exception in order to guide the jury. The jury could have concluded, therefore, that lobbying, which resulted in anticompetitive billboard ordinances and rested primarily on the lobbyist’s personal relationship with elected officials, was sufficient evidence upon which to find a “conspiracy.” Because of the questionable charge, I attach less faith in the verdict of the jury than does the majority.
However, remand would be inappropriate for the evidence in the record is insufficient to support the verdict even if a more definite charge had been given. At no time did COA employees threaten anyone or use otherwise coercive tactics. No one engaged in deception or misrepresentation to secure passage of the billboard ordinances. There was no evidence of any illegal conduct such as bribery, coercion, violence, kickbacks, or the like. Neither the Mayor nor the City Council members stood to gain any personal financial advantage by passing the billboard ordinances nor was there any evidence of any other selfish or otherwise corrupt motive. Without some evidence of activity such as this, I would affirm the district court and hold that antitrust immunity attached.
II.
The district court held that COA was immune from antitrust liability under Noerr-Pennington immunity. I agree.
In Noerr, 365 U.S. 127, 81 S.Ct. 523, the Court stated:
In a representative democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives. To hold that the government retains the power to act in *1147this representative capacity and yet hold, at the same time, that the people cannot freely inform the government of their wishes would impute to the Sherman Act a purpose to regulate, not business activity, but political activity, a purpose which would have no basis whatever in the legislative history of that Act.
Id. at 137, 81 S.Ct. at 529. Thus, the Supreme Court has held that lobbying efforts directed at public officials, even if based solely on an anticompetitive motive, are not violative of the federal antitrust laws. Id. at 139, 81 S.Ct. at 530. See also United Mine Workers of America v. Pennington, 381 U.S. 657, 670, 85 S.Ct. 1585, 1593, 14 L.Ed.2d 626 (1965) (“Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or purpose.”).
However, not all efforts ostensibly directed toward influencing governmental action are protected. When the 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 [then] the application of the Sherman Act would be justified.” Noerr, 365 U.S. at 144, 81 S.Ct. at 533. The Supreme Court last applied the sham exception in California Motor Transport v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). In California Motor the defendants abused the governmental process by filing vexatious, serial litigation designed not to win victories in the adjudicatory process, but to harass and delay competitors from entering the California trucking market. The Court ruled that the use of the adjudicatory process in this manner was designed to directly injure the competition, not by way of litigation victories, but by way of the litigation process itself.
In MCI Communications Corp. v. AT & T Co., 708 F.2d 1081 (7th Cir.) cert. denied, 464 U.S. 891, 104 S.Ct. 234, 78 L.Ed.2d 226 (1983), the court stated:
Without a doubt, the intention to harm a competitor is not sufficient to make litigation or administrative proceedings a sham. That anticompetitive motive is the very matter protected under Noerr-Pennington. Rather, the requisite motive for the sham exception is the intent to harm one’s competitors not by the result of the litigation but by the simple fact of the institution of litigation.
Id. at 1156 (quoting City of Gainesville v. Florida Power & Light Co., 488 F.Supp. 1258, 1265-66 (S.D.Fla.1980)) (emphasis in original). Therefore, contrary to the view of the majority, the “sham” exception refers to invocation of governmental process not to achieve the legitimate outcome of the process, but as a weapon to directly injure competitors.
The majority relies on language from Hospital Bldg. Co. v. Trustees of Rex Hosp., 691 F.2d 678 (4th Cir.1982) (HBC II)1 to define the scope of the sham exception in our circuit. However, HBC II is distinguishable for it involved “baseless appeals” of the administrative process “with intent to delay ... entrance into the ... market.” Id. at 687.
Though not cited by the majority, this circuit has recently refined the breadth of the sham exception in Hospital Bldg. Co. v. Trustees of Rex Hosp., 791 F.2d 288 (4th Cir.1986) (HBC III). In HBC III this court accepted Professor Areeda’s explanation of a sham:
[T]he basic concept [of the sham exception], as employed by the Supreme Court, is that the defendant’s activity was intended to injure the plaintiff directly rather than through a governmental decision. When the antitrust defendant had not truly sought to influence a governmental decision, his invocation of governmental machinery is a sham. To be sure, he would always be pleased to obtain a governmental decision against his rival. But where he had no reasonable *1148expectation of obtaining the favorable ruling, his effort to do so was a sham.
Id. at 292 (quoting P. Areeda, Antitrust Law, ¶ 203.1a (Supp.1982)) (emphasis added). Professor Areeda’s definition is not inconsistent with the language of HBC II when read in context with the facts of that case.
The lobbying efforts of COA do not meet the definition of a sham as explained in HBC III. COA genuinely lobbied for ordinances which, if passed, would substantially foreclose Omni from the Columbia market. Not only did COA expect favorable results from its lobbying efforts, it was in fact successful in obtaining the billboard ordinances it sought. Nor was the injury to Omni inflicted directly by the COA lobbying efforts. Rather, any injury inflicted was by governmental action — the enactment of the billboard ordinances.
III.
Neither does the co-conspirator exception to Noerr-Pennington immunity strip COA of its immunity.
The district court recognized that some courts would find a violation when the anti-competitive lobbying goes beyond “official persuasion” to reach the point of a scheme to restrain trade. See Duke & Co. v. Foerster, 521 F.2d 1277, 1282 (3d Cir.1975). Even if one were to follow Duke I do not think the activities of COA here went beyond the tenuous line. It is fair to infer from the evidence that Cantey used to his advantage his personal relationship with city officials and persuaded them to pass the anticompetitive billboard ordinances. But if the outcome of lobbying efforts is the passage of objectionable legislation, the proper remedy lies with the political process.
Because I do not think that the term “official persuasion” precisely defines actionable lobbying techniques, I agree with the district court that “official persuasion,” as used in Duke, is too broad. The district court correctly stated it did not follow the Duke opinion because it feared that the general definition of illegal lobbying, beyond “official persuasion,” would emasculate the Noerr-Pennington immunity doctrine. In so ruling, the district court found other authorities more persuasive. Other circuits addressing the co-conspirator exception issue have erected more precise evidentiary hurdles than were articulated by the Third Circuit in Duke.
In Video Int’l Prod. v. Warner-Amex Cable Communications, 858 F.2d 1075 (5th Cir.1988), cert. denied, — U.S. —, 109 S.Ct. 1955, 104 L.Ed.2d 424 (1989), the court stated:
Although [the defendant] argues that the [co-conspirator] exception will not apply unless [the defendant] used coercion or bribery to obtain its end, we do not believe the exception is so restricted. At the same time, however, we do find that the cases indicate that the official with whom the petitioner conspires must, at a minimum, have had some selfish or otherwise corrupt motive in siding with the petitioner to result in an illegal conspiracy sufficient to activate the co-conspirator exception.
Id. at 1083. Not only is there no evidence of illegal conduct, there is also no evidence of a selfish or otherwise corrupt motive on the part of the Mayor or members of the City Council.
In Boone v. Redevelopment Agency of San Jose, 841 F.2d 886 (9th Cir.), cert. denied, — U.S. —, 109 S.Ct. 489, 102 L.Ed.2d 526 (1988), the court held that private meetings between government officials and a lobbyist proved nothing other than a classic case for application of the Noerr-Pennington doctrine. Id. at 894-95. The Boone court stated that without evidence that the defendant did something “otherwise illegal” its actions fell within the Noerr-Pennington immunity. Id. at 895. Likewise, in Westborough Mall, Inc. v. City of Cape Girardeau, 693 F.2d 733 (8th Cir.1982), cert. denied, 461 U.S. 945, 103 S.Ct. 2122, 77 L.Ed.2d 1303 (1983), the court stated that “the defendants may not be protected by Noerr because their legitimate lobbying efforts may have been accompanied by illegal or fraudulent actions.” Id. at 746.
*1149While it is true that Cantey and the Mayor had dinner together and met privately, there is not a scintilla of evidence that they engaged in any “otherwise illegal” or “fraudulent” activities.
Professor Areeda, in his treatise on antitrust law, recognized the need to control the scope of the co-conspirator exception.
If the conspiracy notion means anything ..., it can embrace nothing more than corrupt or bad faith decisions, the proof of which must be controlled in order to assure the proper functioning of official agencies. Fortunately, a careful definition of the relevant corruption or bad faith will dispose of many of the cases.
P. Areeda & H. Hovenkamp, Antitrust Law, ¶ 203.3c (Supp.1988). In his discussion regarding whether decisions based on personal bias or campaign contributions constituted bribery and were, therefore, sufficient to strip the lobbyist of antitrust immunity, Professor Areeda wrote:
This is not the place for an elaborate definition of bribery and whether it should include campaign contributions or other assistance to the official before or during his official tenure. Perhaps it is enough to say that these customary incidents of public life are not usually thought to impugn the legality of official acts. If official action is not invalidated by such events standing alone, neither should the casting of the challenge in antitrust terms call for invalidity or damages.
Id. I agree, for to do otherwise is to give those who lose political battles a ticket to explore the subjective motivations of political decision-makers by filing federal antitrust suits in which it is alleged that private meetings took place, that a personal friendship between the officials and the plaintiffs competition existed, and that an anticompetitive regulation was enacted.
IV.
The district court held that the city was immune from the antitrust laws under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985). I agree.
The heart of Parker immunity is federalism. In Parker, the Court stated: “In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.” Parker, 317 U.S. at 351, 63 S.Ct. at 313. In Parker the Court held that the acts of a state, as sovereign, are immune from the federal antitrust laws. Id. at 352, 63 S.Ct. at 314.
In California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), the Court established a two-prong test to determine whether a private party is entitled to the state action exemption from the Sherman Act under the Parker doctrine. First, there must be a clearly articulated state policy to displace competition with regulation. Id. 445 U.S. at 105, 100 S.Ct. at 943. Second, the state must actively supervise the activity. Id.
The Court refined the Midcal test in determining whether a municipality was entitled to Parker immunity in its Hallie decision. The Court held that municipalities are not required to meet the additional burden, imposed on private parties under Midcal, of proving active state supervision.2 The Court stated “[w]here the actor is a municipality, there is little or no danger that it is involved in a private price-fixing arrangement.” Hallie, 471 U.S. at 47, 105 S.Ct. at 1720 (emphasis in original). While the majority agrees that the City Council was acting pursuant to a clearly articulated state policy, it nevertheless holds that the city is stripped of its Parker immunity.
*1150I fear that the holding of the majority may invite heretofore unauthorized federal antitrust lawsuits against municipalities. Losers in political battles will be able to achieve all or some of their objectives by threatening antitrust litigation and, in the process, discourage public officials from performing their public duties while they contend with antitrust allegations.
The principles of federalism have guided other courts in limiting or foreclosing the conspiracy exception to Parker. The court in Boone rejected a claim that allegations of bad faith would strip the city of its antitrust immunity:
The availability of Parker immunity ... does not depend on the subjective motivations of the individual actors, but rather on the satisfaction of the objective standards set forth in Parker and authorities which interpret it. This must be so if the state action exemption is to remain faithful to its foundations in federalism and state sovereignty. A contrary conclusion would compel the federal courts to intrude upon internal state affairs whenever a plaintiff could present colorable allegations of bad faith on the part of defendants.
Boone, 841 F.2d at 892 (quoting Llewellyn v. Crothers, 765 F.2d 769, 774 (9th Cir.1985)); accord Hancock Indus. v. Schaeffer, 811 F.2d 225, 234 (3d Cir.1987) (quoting the same passage from Llewellyn, 765 F.2d at 774).
The Supreme Court has also expressed concern that if Parker antitrust immunity is easily avoided, then antitrust litigation may have a discouraging effect on public service. In Hoover v. Ronwin, 466 U.S. 558, 104 S.Ct. 1989, 80 L.Ed.2d 590 (1984), the Supreme Court considered an allegation that the Arizona Committee on Bar Examinations, a private entity advising the Arizona Supreme Court, entered into a scheme to reduce competition within the legal community by raising the qualifying score on bar exams for the purpose of controlling the number of attorneys admitted to practice law within the state. The Supreme Court stated that “to look behind the actions of state sovereigns and base ... claims of perceived conspiracies to restrain trade among the committees, commissions, or others” would emasculate the Parker v. Brown doctrine. Id. 466 U.S. at 580, 104 S.Ct. at 2001.
The majority cites several pr e-Hallie cases for the proposition that there is a conspiracy exception to Parker immunity. While I have some doubt about the validity of these pr e-Hallie cases as authority for the position of the majority, even if a conspiracy exception remains after Hallie, absent some proof of an illegal act or a selfish or a corrupt motive on the part of Columbia city officials, I would hold that the evidence is insufficient to strip the officials of immunity.
V.
Omni also charged that the defendants violated the South Carolina Unfair Trade Practices Act (UTPA). S.C.Code Ann. §§ 39-5-10 to 39-5-160 (Law. Co-op.1976). I would hold that the district court correctly ruled that the claim was precluded by Noack Enter. v. Country Corner Interiors of Hilton Head Island, Inc., 290 S.C. 475, 351 S.E.2d 347 (1986). Section 39-5-20(b) of the UTPA states that the intent of the state legislature was for courts interpreting the UTPA to follow interpretations of the antitrust laws by the Federal Trade Commission and the federal courts. It follows, therefore, that the South Carolina legislature intended that courts interpret the UTPA in light of Noerr-Pennington and Parker.

. Prior proceedings are reported in Hospital Bldg. Co. v. Trustees of Rex Hosp., 511 F.2d 678 (4th Cir.1975), rev’d, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) (HBC I); 691 F.2d 678 (4th Cir.1982) (HBC II); and 791 F.2d 288 (4th Cir.1986) (HBC III).

. The Court stated that active supervision prevents "a State from circumventing the Sherman Act’s proscriptions 'by casting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement.’” Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720 (quoting Midcal, 445 U.S. at 106, 100 S.Ct. at 943).