THE SUPREME COURT IN BOROUGH OF DURYEA V. GUARNIERI SIGNALS A RETREAT FROM PRE’S BROAD DEFERENCE TO THE RIGHT TO PETITION

By Chris O’Connell¹

I. INTRODUCTION

This spring marks the twenty-first anniversary of the U.S. Supreme Court’s decision in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc. ("PRE"),² a seminal case determining when one can sue one’s competitor without antitrust scrutiny. The PRE Court, faced with an allegation that an anticompetitive lawsuit violated the Sherman Act,³ posited that a lawsuit is a petition to the judicial branch of government, protected by the First Amendment’s Petition Clause.⁴ Because of this constitutional protection, the PRE Court held that only in narrow circumstances could a lawsuit against one’s competitors be exposed to antitrust scrutiny.

Two decades later, the Court in its most recent right to petition case, Borough of Duryea v. Guarnieri,⁵ cast doubt on this critical First Amendment rationale. In Borough of Duryea, the Court limited the right of public employees to sue their employers in light of the substantial competing public interests that had to be balanced against those fostered by the Petition Clause.⁶ Furthermore, PRE’s own author, Justice Thomas, declared in an opinion concurring in the judgment: "I seriously doubt that lawsuits are ‘petitions’ within the original meaning of the Petition Clause of the First Amendment."⁷ While this does not necessarily portend the death knell for PRE’s First Amendment immunity for competitor litigation, it does demonstrate the evolving views of the justices on the scope of the Petition Clause, which invites a reappraisal of PRE’s basic holdings and approach. This article concludes that Borough of Duryea represents a rejection of an absolute deference to the right to petition and that its more nuanced approach to that right necessitates a recalibration of PRE’s broad First Amendment immunity for firms that sue competitors.

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II. THE PATH TO PRE

PRE was the latest in a line of cases in which the Supreme Court considered the protection of the Petition Clause for business conduct that otherwise might violate the antitrust laws.⁸ The cases covered petitioning to all branches of the government (legislative,⁹ executive,¹⁰ and judicial¹¹), at all levels of government (federal,¹² state,¹³ and local¹⁴). The principle that emerged from this line of cases was that a competitor—even a monopolist— could engage in anticompetitive activities with the intent to eliminate competition, without violating the Sherman Act as long as those activities constituted petitioning of the government under the First Amendment. This defense to antitrust liability came to be known as "Noerr immunity," or "Noerr-Pennington immunity," after the first cases to articulate the doctrine.¹⁵

The doctrine was originally developed in cases addressing petitioning to the legislative and executive branches of government. The Supreme Court reasoned that because the government has the authority to restrain or eliminate competition,¹⁶ the people must be free to urge the legislative and executive branches to enact restraints of trade.¹⁷ This principle applied even when those petitioning the government, with anticompetitive intent, sought anticompetitive legislation or action.¹⁸ A related rationale derived from the government’s separation of powers. The Court cautioned against judicial branch intrusion into the decision-making processes of the legislative and executive branches.¹⁹ The Court ultimately declared that lawsuits, too, were First Amendment petitions to the government— the judicial branch itself—and were similarly entitled to immunity from antitrust scrutiny.²⁰

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Noerr immunity was not absolute, however. The Court developed a corresponding exception, known as the "sham" exception, which recognized that some ostensible petitioning fell outside of First Amendment protection.²¹ In Noerr, the Court’s initial conception of "a mere sham" focused on conduct that could be deemed separate from attempts to influence legislative or executive officials—that is, conduct that was "nothing more than an attempt to interfere directly with the business relationships of a competitor."²² In later cases, the Court perceived the potential for sham within the petitioning process itself. A classic formulation of this kind of sham recognized the "use [of] the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon."²³ The first case in which a complaint adequately pleaded a sham involved this kind of bad-faith petitioning: The antitrust defendants allegedly filed multiple administrative or judicial proceedings against competitors, "with or without probable cause and regardless of the merits of the cases."²⁴ In short, the sham exception to Noerr immunity recognizes that a fairly narrow interest in competition might trump the right to petition where governmental proceedings are clearly being abused in order to suppress competition.²⁵

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In PRE, the Supreme Court addressed the sham exception in the context of competitor-versus-competitor litigation. The central question was the relevance of a litigant’s intent when its lawsuit against a competitor is challenged as a sham—that is, "whether litigation may be sham merely because a subjective expectation of success does not motivate the litigant."²⁶ The Court decided that anticompetitive intent alone was insufficient to support a finding of sham litigation; even further, a litigant’s intent was irrelevant unless its lawsuit was first shown to be "objectively baseless."²⁷

In PRE, eight motion picture studios filed a copyright infringement lawsuit against a resort hotel operator ("PRE") that rented movie videos to guests to watch in their rooms.²⁸ The studios contended that PRE’s rentals infringed their copyrights on the movies.²⁹ PRE denied infringement and counterclaimed under the Sherman Act, alleging that the studios’ lawsuit "was a mere sham that cloaked underlying acts of monopolization and conspiracy to restrain trade."³⁰ At summary judgment, the movie studios lost their copyright action when the court ruled that movie rentals for in-room viewing did not constitute public performance of a copyrighted work in violation of the Copyright Act.³¹ The U.S. Court of Appeals for the Ninth Circuit affirmed.³²

On remand regarding PRE’s antitrust counterclaims, the movie studios moved for summary judgment, invoking Noerr immunity for their copyright suit.³³ PRE argued that Noerr immunity was inapplicable because the studios "did not honestly believe that the infringement claim was meritorious" and their suit thus had been a sham.³⁴ This placed the studios’ intent squarely at issue, and PRE sought further discovery on why the studios had sued.³⁵ The district court rejected PRE’s argument, finding that the studios’ lawsuit "was clearly a legitimate effort and therefore not a sham."³⁶ The court saw both subjective good faith and objective merit in the studios’ suit: "It was clear from the manner in which the case was presented that [Columbia was] seeking and expecting a favorable judgment," and "[T]he case was far from easy to resolve. . . . I find that there was probable cause for bringing the action . . . ."³⁷ The court denied PRE’s request for further discovery on the studios’ intent.³⁸

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The Court of Appeals affirmed, setting forth a two-part test for sham litigation that separated the objective and subjective elements.³⁹ The court required antitrust plaintiffs to show "(1) that the suit is baseless—a legal question [citation omitted]; and (2) that the suit was brought as part of an anticompetitive plan external to the underlying litigation—a question of fact."⁴⁰ The court agreed that PRE could not show that the movie studios’ copyright suit was objectively baseless (the first prong), and so concluded that the district court was correct in denying further discovery on the studios’ intent (the second prong).⁴¹ In an assertion the Supreme Court subsequently adopted, the court said: "[A] suit brought with probable cause does not fall within the sham exception to the Noerr-Pennington doctrine."⁴²

The Supreme Court affirmed.⁴³ In an opinion by Justice Thomas, the Court first reiterated that a lawsuit is subject to Noerr immunity for petitioning activity, citing California Motor Transport.⁴⁴ The Court then surveyed its precedents and found that a plaintiffs subjective intent had never been the sole criterion for determining whether litigation amounted to a sham.⁴⁵ To the contrary, the Court said, "the sham exception contains an indispensable objective component."⁴⁶ The Court then set forth its own two-part test for determining when a lawsuit would be deemed a sham and thus exposed to antitrust scrutiny:

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First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. . . . Only if challenged litigation is objectively meritless may a court examine the litigant’s subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals ‘an attempt to interfere directly with the business relationships of a competitor’ (emphasis added), through the ‘use [of] the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon’ (emphasis in original).⁴⁷

The Court, drawing on the tort of wrongful civil proceedings, defined objectively baseless as lacking in probable cause to sue,⁴⁸ and emphasized that even if a plaintiff loses a lawsuit (as the movie studios did), the plaintiff should be found to have had probable cause if its belief in the chance of success was objectively reasonable.⁴⁹

To support this test for sham litigation, the Supreme Court relied on "fidelity to precedent."⁵⁰ The Court omitted discussion of the Petition Clause itself (perhaps because previous Noerr opinions had done the same).⁵¹ The Court also omitted any extended consideration of the public interest that could be harmed by this kind of petitioning—i.e., litigation’s potential to harm economic competition and consumer welfare. In other words, PRE did not engage in the balancing of the public interests served by the Petition Clause with those served by the antitrust laws, such as it did in Borough of Duryea v. Guarnieri, the recent case interpreting the right to petition. The Court’s broad interpretation of the constitutional right to litigate in PRE is difficult to reconcile with the Court’s narrower interpretation in Borough of Duryea.⁵²

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PRE came under criticism as over protective of antitrust defendants, starting with Justice Stevens’ opinion concurring in the judgment.⁵³ While he agreed that the movie studios’ lawsuit was not a sham,⁵⁴ Justice Stevens found the Court’s new rule unnecessarily broad: "I would not . . . use this easy case as a vehicle for announcing a rule that may govern the decision of difficult cases, some of which may involve abuse of the judicial process."⁵⁵ Justice Stevens preferred to leave federal courts freer to perform their traditional role under the Sherman Act of distinguishing between legitimate and illegitimate conduct, with a litigant’s intent having more relevance.⁵⁶

The label "sham" is appropriately applied to a case, or series of cases, in which the plaintiff is indifferent to the outcome of the litigation itself, but has nevertheless sought to impose collateral harm on the defendant by, for example, impairing his credit, abusing the discovery process, or interfering with his access to governmental agencies. It might also apply to a plaintiff who had some reason to expect success on the merits but, because of its tremendous cost, would not bother to achieve that result without the benefit of collateral injuries imposed on its competitor by the legal process alone.⁵⁷

Some commentators agreed that a firm’s intent to inflict "collateral harm" on a competitor through litigation should have greater relevance when the competitor alleges the litigation is a sham:

In many cases one can preserve the objective nature of the query without going as far as the Court did and requiring an objectively baseless suit. The objective query would then be presumably whether, objectively considered, the value of the antitrust defendant’s lawsuit was the anticipated judicial decision or the anticipated consequences upon rivals without regard to the merits of the case.⁵⁸

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III. REVISITING THE RIGHT TO PETITION

In Borough of Duryea v. Guarnieri, the Supreme Court interpreted the First Amendment right to petition in another context: a public employee’s lawsuit against his employer.⁵⁹ In this case, the Court left an employee unprotected by the Petition Clause against retaliation by an employer in light of the history and purpose of the right to petition and the "substantial government interests"⁶⁰ that would be harmed by "[u]nrestrained" petitioning⁶¹ by public employees. This approach differed from the Court’s approach in PRE, where a firm’s right to sue competitors was protected with scant analysis of the competing public interests served by the Petition Clause and our antitrust laws.

Perhaps the most striking aspect of Borough of Duryea was the view expressed by Justices Scalia and Thomas that litigation may not even be entitled to First Amendment protections. In a dissenting and concurring opinion, Justice Scalia declared: "The Court has never actually held that a lawsuit is a constitutionally protected ‘Petition,’ nor does today’s opinion hold that. . . . I find the proposition that a lawsuit is a constitutionally protected ‘Petition’ quite doubtful."⁶² In a separate opinion concurring in the judgment, Justice Thomas agreed. "For the reasons set forth by JUSTICE SCALIA, I seriously doubt that lawsuits are ‘petitions’ within the original meaning of the Petition Clause of the First Amendment. . . . Unreasoned statements to the contrary in this Court’s prior decisions do not convince me otherwise."⁶³ This view appears to contradict the rationale for the PRE opinion of two decades ago, which Justice Thomas authored and Justice Scalia joined.

The majority opinion in Borough of Duryea was less willing to exclude lawsuits from the right to petition (which would have overruled both California Motor Transport and PRE). However, the majority’s analysis contained important observations about the scope of the right to petition.

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A. The Case

In Borough of Duryea, the Supreme Court applied the "public concern" test for public employee speech rights⁶⁴ to a public employee’s right to sue his employer. In doing so, the Court necessarily explored and explained the purpose of the First Amendment’s Petition Clause. While the Court confined the application of its conclusions to the public employment context, these conclusions nevertheless have significant implications for the proper application of the Petition Clause in other areas of law, including antitrust.

In Borough of Duryea, after a town council fired its police chief (Guarnieri),⁶⁵ the chief responded by filing a union grievance. The grievance went to arbitration, and the arbitrator ordered Chief Guarnieri reinstated. The town council then passed several measures instructing Guarnieri in the performance of his duties (including directives that the borough’s police car was for official business only and that the borough’s municipal building was smoke-free). Guarnieri responded by filing another union grievance, which resulted in some of the directives being revised or withdrawn. Guarnieri then sued the borough, the council, and individual council members in federal court under 42 U.S.C. § 19 83.⁶⁶ In his lawsuit, Guarnieri contended that his initial union grievance over his termination had been a petition protected by the First Amendment, and that the council had retaliated against him by issuing the directives instructing him in his duties. Guarnieri later amended his lawsuit to add another allegation of retaliation by the council, this time for his filing of the lawsuit itself. He alleged that the council had denied a request that he made for overtime compensation because of his lawsuit, which also was a protected petition.

At trial, the district judge instructed the jury that Guarnieri’s union grievance and lawsuit were protected activities under the Constitution, and that the defendants could be found liable if there was a sufficient connection between those protected activities and the alleged retaliation against him. The jury found for Guarnieri and awarded him compensatory damages, punitive damages, and attorneys’ fees totaling more than $142,000. The U.S. Court of Appeals for the Third Circuit affirmed on the question of liability,⁶⁷ quoting from an earlier circuit case: "[A] public employee who has petitioned the government through a formal mechanism such as the filing of a lawsuit or grievance is protected under the Petition Clause from retaliation for that activity, even if the petition concerns a matter of solely private concern."⁶⁸ The court rejected the defendants’ argument that Guarnieri’s petitions were not protected by the First Amendment because they did not address matters of public concern (the test applied in some other circuits to Petition Clause claims by public employees). The Third Circuit said that only if a public employee’s petition were a "sham" would it be unprotected under the First Amendment.

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The Supreme Court reversed, framing the issue as follows: "This case concerns the extent of the protection, if any, that the Petition Clause grants public employees in routine disputes with government employers."⁶⁹ Writing for a seven-member majority, Justice Kennedy looked to the Court’s doctrine on public employee speech rights and applied it to public employee petitioning rights. The Court held that when a public employee sues his or her employer on a matter of private concern, the public entity may retaliate against the employee without violating his or her First Amendment right to petition.⁷⁰ If the public employee sues the employer "as a citizen" on a matter of public concern, retaliation by the employer will violate the employee’s right to petition only when the employee’s First Amendment interest outweighs the government’s interest in effective and efficient management.⁷¹ The Court concluded: "The right of a public employee under the Petition Clause is a right to participate as a citizen, through petitioning activity, in the democratic process. It is not a right to transform everyday employment disputes into matters for constitutional litigation in the federal courts."⁷²

As with its limit on public employee speech rights, the Court justified its limit on public employee petitioning rights in part by emphasizing the potential for these petitions to harm a substantial public interest: "the efficient and effective operation of government."⁷³ Public employees, the Court said, could "use petitions to frustrate progress towards the ends they have been hired to achieve."⁷⁴ Public employees also could "use the courts to pursue personal vendettas or to harass members of the general public," and consequently undermine public confidence in the government entity.⁷⁵ Further, the Court cautioned, such petitions could lead to an improper role for the federal courts: "Unrestrained application of the Petition Clause in the context of government employment would subject a wide range of government operations to invasive judicial superintendence. . . . This would raise serious federalism and separation-of-powers concerns."⁷⁶

The Court also grounded its rule in "the historic and fundamental principles" underlying the Petition Clause.⁷⁷ Some petitions, the Court said, merit greater First Amendment concern than others. "In analogous cases under the Speech Clause, this Court has noted the ‘Constitution’s special concern with threats to the right of citizens to participate in political affairs,’ even though it is likely that, in this and any other age, most speech concerns purely private matters. . . . Petitions to the government assume an added dimension when they seek to advance political, social, or other ideas of interest to the community as a whole."⁷⁸ The Court based this conclusion on the rich history of English and American petitioning, including Magna Carta, the Petition of Right of 1628, the Declaration of Right of 1689, and the Declaration of Independence, and its central preoccupation with freedom and governance.⁷⁹ "The right to petition is in some sense the source of other fundamental rights, for petitions have provided a vital means for citizens to request recognition of new rights and to assert existing rights against the sovereign."⁸⁰

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Given the historical importance of petitions on matters of public concern as opposed to private concerns, and given the inherent potential of public employee lawsuits to interfere with government operations, the Supreme Court in Guarnieri established limitations on a public employee’s right to sue his or her employer and thus exercise the right to petition. However, the Court reserved discussion of the First Amendment right to litigate outside of the public employment context. It suggested its ruling might be limited to similar scenarios, observing that in this case:

[r]estraints are justified by the consensual nature of the employment relationship and by the unique nature of the government’s interest. . . . Although retaliation by a government employer for a public employee’s exercise of the right of access to the courts may implicate the protections of the Petition Clause, this case provides no necessity to consider the correct application of the Petition Clause beyond that context.⁸¹

Similarly, the Court reserved discussion of whether petitions on matters of private concern might receive more protection in other areas of law. "The Petition Clause undoubtedly does have force and application in the context of a personal grievance addressed to the government. . . . Outside the public employment context, constitutional protection for petitions does not necessarily turn on whether those petitions relate to a matter of public concern."⁸²

B. The New View of Two Justices

In an opinion concurring in part and dissenting in part,⁸³ Justice Scalia set forth a significantly different view of the protections of the Petition Clause. Historically, he argued, the people had petitioned the legislative and executive branches of government, not the judicial branch.⁸⁴ Thus, he challenged the majority’s premise that a lawsuit is a petition to the judicial branch within the protection of the First Amendment.⁸⁵ Of particular interest to the antitrust field, Justice Scalia contended that California Motor Transport contained only "pure dictum" regarding First Amendment protection of lawsuits.⁸⁶ "The Court has never actually held that a lawsuit is a constitutionally protected ‘Petition,’ nor does today’s opinion hold that. . . . I find the proposition that a lawsuit is a constitutionally protected ‘Petition’ quite doubtful."⁸⁷

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While disagreeing with the majority’s broader application of the right to petition, Justice Scalia proffered a broader view of the kinds of petitions that merit First Amendment protection. He took issue with the majority’s distinction between petitions on matters of public concern and those on matters of private concern, pointing to the private nature of most historical petitioning.⁸⁸

We have decided innumerable cases establishing constitutional rights with respect to litigation, and until today not a one of them has so much as hinted that litigation of public concern enjoys more of those rights than litigation of private concern. . . . [T]here is no basis for believing that the Petition Clause gives special protection to public petitions.⁸⁹

In his own opinion concurring in the judgment,⁹⁰ Justice Thomas agreed with Justice Scalia regarding the constitutional status of lawsuits. His opinion opened with this statement: "For the reasons set forth by JUSTICE SCALIA, I seriously doubt that lawsuits are ‘petitions’ within the original meaning of the Petition Clause of the First Amendment. . . . Unreasoned statements to the contrary in this Court’s prior decisions do not convince me otherwise."⁹¹ Justice Thomas did not, however, mention any unreasoned statements in his PRE opinion, which not only assumed the existence of constitutional protection for litigation but also strengthened it.

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IV. SHAM LITIGATION AFTER BOROUGH OF DURYEA

Borough of Duryea analyzed the right to petition in a way the Supreme Court has yet to do in the antitrust context. Several points are worth consideration.

A. The Right to Petition

In the Noerr line of cases, the Supreme Court offered little analysis of the history or purpose of the Petition Clause in reaching its results. By contrast, in Borough of Duryea, the Court analyzed the interests and principles informing the right to petition at length. In doing so, it concluded that petitions on "political, social, or other ideas of interest to the community as a whole" lie at the core of the people’s right to petition their government.⁹² This became one of the Court’s justifications for limiting Petition Clause protection of public employees who sue their employers. That is, if a public employee’s lawsuit addresses a matter of private concern, the employee is not protected by the First Amendment against employer discipline or retaliation.

This reading of the Petition Clause necessarily raises the question of whether PRE’s strong protection of petitions to the government on matters of purely private concern—i.e., commercial lawsuits—remains justified. After Borough of Duryea, the question becomes what degree of First Amendment protection a firm should receive when it sues a competitor on a matter of private concern, given that public employees receive no First Amendment protection when they sue their employers on matters of private concern (and possibly no protection even when they sue on matters of public concern). The Supreme Court expressly left this question open outside the public employment context.⁹³

Over the years, the Court has offered some insight regarding the importance of petitioning on commercial matters.⁹⁴ However, Borough of Duryea made clear that "the ‘Constitution’s special concern’" protected by the Petition Clause derived from concerns for preservation of the right to petition on political affairs.⁹⁵ Just as Noerr stated that "[t]he proscriptions of the [Sherman] Act, tailored as they are for the business world, are not at all appropriate for application in the political arena,"⁹⁶ it seems reasonable to inquire whether the freedom of the Petition Clause, tailored as it is for the political world, is appropriate for or should be accorded the same weight in its application in the business arena.

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B. The Public Interest

In Borough of Duryea, the Supreme Court contemplated the tension between an individual’s right to petition and the public’s interest in effective government. The Court resolved this tension by imposing a limit on the individual right to petition: "In light of the government’s interests in the public employment context, it would be surprising if Petition Clause claims by public employees were not limited as necessary to protect the employer’s functions and responsibilities."⁹⁷ The potential for harm to the public interest, then, was another justification for limiting a public employee’s right to petition (along with the purpose of the Petition Clause itself, as discussed above).

By contrast, the PRE opinion focused on a competitor’s right to litigate and omitted any real evaluation or weighing of that right as against the important public interests served by the nation’s antitrust laws.⁹⁸ Clearly, the antitrust laws foster and further fundamental interests in free enterprise and consumer welfare that are critical public interests: "Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms."⁹⁹

After Borough of Duryea, a proper analysis of the right to sue a competitor should take into account the importance of this public interest. There, the Supreme Court limited the right to petition based upon the public’s interest in efficient government operation. In a hierarchy of public interests, one could readily conclude that the public interests in freely operating markets, which the legislature chose to enshrine in the antitrust laws, would be given greater weight than the unlegislated interests in efficient government recognized in Borough of Duryea.¹⁰⁰ Similarly, one could argue that the potential for public harm from antitrust violations eclipses any that could arise from public employee grievances, given the broader impact of anticompetitive conduct on the populace as a whole.

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While commercial litigation may serve to enforce, not frustrate, the public interest in lawful competition—for example, by vindicating a copyright or patent—the same could be said for according public employees the right to petition to uphold legislated labor principles. But often commercial litigation can hinder and impede the public’s interest in free competition and is pursued by the litigant for purely personal gain and profit. Why this litigation should be uncritically accorded the protection of the right of petition and insulated from the antitrust laws, particularly when some of the justices have tethered that right to vindication of public interests, seems particularly hard to justify after Borough of Duryea.

The Supreme Court has long recognized the broad reach of the Sherman Act: "That Congress wanted to go to the utmost extent of its Constitutional power in restraining trust and monopoly agreements . . . admit[s] of little, if any, doubt."¹⁰¹ The Court, as a general rule, has long exercised restraint when considering constitutional challenges to statutes.¹⁰² If the Court does perceive "a constitutional flaw in a statute," then "the touchstone for any decision about remedy is legislative intent, for a court cannot ‘use its remedial powers to circumvent the intent of the legislature.’"¹⁰³ Nevertheless, that is arguably what the Court did in the PRE case on the strength of its interpretation of the right to petition in purely private matters. In antitrust enforcement, Congress has directed the courts to determine where conduct is unduly restricting competition.¹⁰⁴ But restricting a court by judicial fiat to a technical judgment of a lawsuit’s objective merit prevents the kind of contextual inquiry that Congress made central to antitrust enforcement, and does so on the dubious justification of the right to petition.

V. CONCLUSION

Litigation has long been recognized as an effective tool to suppress competition. "Predation by abuse of governmental procedures, including administrative and judicial processes, presents an increasingly dangerous threat to competition. . . . As a technique for predation, sham litigation is theoretically the most promising."¹⁰⁵ The challenge is to devise a fair framework that respects firms’ right to petition the judicial branch "in the very instances in which that right may be of the most importance to them,"¹⁰⁶ while recognizing the potential for the "use [of] the governmental process—as opposed to the outcome of that process—as an anticompetitive weapon."¹⁰⁷ The PRE opinion skewed this balance, giving great weight to the First Amendment right to litigate without adequate constitutional justification and without recognition of the important public interest served by our antitrust laws that might be harmed. Borough of Duryea represents a better reasoned and better balanced doctrine that would be more faithful to the First Amendment’s purpose and to the letter and spirit of our antitrust laws.

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Notes:

^1. Chris O’Connell is a former newspaper journalist who became a lawyer in 2011 and entered private practice in San Francisco. He wishes to thank Cheryl Lee Johnson for her encouragement and feedback regarding this article. This article appeared originally in the Fall 2013 issue of Icarus, the journal of the Media and Technology Committee of the ABA’s Antitrust Section.

^2. 508 U.S. 49 (1993).

^3. Section 1 of the Sherman Act provides in part: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal . . . ." 15 U.S.C. § 1. Section 2 of the Act provides in part:

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . . ." 15 U.S.C. § 2.

^4. "Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances." U.S. Const. amend. I.

^5. 131 S. Ct. 2488, 2501 (2011).

^6. Id. at 2497-2500.

^7. Id. at 2501 (Thomas, J., concurring in the judgment).

^8. At the outset, it should be noted that the Supreme Court has not stated definitively whether this doctrine is grounded wholly in the Petition Clause or partly in a limiting construction of the Sherman Act. See, e.g., Fed. Trade Comm’n, Enforcement Perspectives on the Noerr-Pennington Doctrine 6 (2006), available at http://www.ftc.gov/reports/P013518enfperspectNoerr-Penningtondoctrine.pdf ("Although the Court has not provided a consistent source for the doctrine, it appears to be rooted in a construction of the Sherman Act to avoid conflict with the constitutional right to petition the government for redress of grievances and the principle of effective government decision-making."). This article presumes that the better view is that the Petition Clause is essential to the Court’s doctrine of immunity; without it, there would be no justification for shielding firms from the antitrust laws.

^9. E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 135-38 (1961) (Noerr).

^10. Id.; see also United Mine Workers v. Pennington, 381 U.S. 657, 669-70 (1965) (Pennington); Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972).

^11. Cal. Motor Transp., 404 U.S. at 510.

^12. Id.; Pennington, 381 U.S. at 669-70.

^13. Noerr, 365 U.S. at 135-138; Cal. Motor Transp., 404 U.S. at 510-11.

^14. Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492 (1988); City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991).

^15. Noerr, 365 U.S. at 135-38; Pennington, 381 U.S. at 669-70.

^16. Noerr, 365 U.S. at 136 (citing United States v. Rock Royal Coop., 307 U.S. 533 (1939), and Parker v. Brown, 317 U.S. 341 (1943)).

^17. Id.

^18. Id. at 139 ("[T]he right of the people to inform their representatives in government of their desires with respect to the passage or enforcement of laws cannot be properly made to depend upon their intent in doing so."); Pennington, 381 U.S. at 670 ("Noerr shields from the Sherman Act a concerted effort to influence public officials regardless of intent or purpose.").

^19. Noerr, 365 U.S. at 136 ("[U]nder our form of government the question whether a law of that kind [resulting in trade restraints or monopoly] should pass, or if passed be enforced, is the responsibility of the appropriate legislative or executive branch of government so long as the law itself does not violate some provision of the Constitution.").

^20. Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972) ("Certainly the right to petition extends to all departments of the Government. The right of access to the courts is indeed but one aspect of the right of petition."). The Court and commentators, however, recognized that petitioning of the courts is subject to more formalized rules than is petitioning of legislative and executive officials. Id. at 512-13; see also 1 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 203e (3d ed. 2006) ("As compared with the legislative process, improper behavior in the adjudicatory or judicial context is more readily identified as improper and more widely regarded as reprehensible. . . . Indeed, there are well developed and highly elaborated definitions of what is or is not proper behavior by litigating parties.").

^21. Noerr, 365 U.S. at 144. There also is a "misrepresentation" exception to Noerr immunity, applicable when a party, instead of being indifferent to the outcome of a governmental process, actually seeks and obtains governmental action, but does so through the use of misrepresentations to an adjudicatory body. See, e.g., In re Union Oil Co., 138 F.T.C. 1, 25 (2004) ("Although Supreme Court law remains unsettled, the weight of lower court authority, spanning more than thirty years, has recognized that misrepresentations may preclude application of Noerr-Pennington in less political arenas than the legislative lobbying at issue in Noerr itself."). See also Areeda & Hovenkamp, supra note 20, at ¶ 203f ("[T]he policy is more important than the underlying labels, and in most cases it makes little difference whether we say that the provision of false information is unprotected by Noerr to begin with or that it falls into the ‘sham’ exception to Noerr.") (citations omitted).

^22. Noerr, 365 U.S. at 144. The challenged conduct in Noerr was a publicity campaign intended to influence the passage of anticompetitive legislation.

^23. City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 380 (1991) (emphasis in original). See also Areeda & Hovenkamp, supra note 20, at ¶ 204a ("The injury to the rival springs directly from the antitrust defendant’s action rather than from a government decision.").

^24. Cal. Motor Transp., 404 U.S. at 512 ("[T]he allegations are not that the conspirators sought ‘to influence public officials,’ but that they sought to bar their competitors from meaningful access to adjudicatory tribunals and so to usurp that decisionmaking process.").

^25. See Robert H. Bork, The Antitrust Paradox 159 ("Misuse of courts and governmental agencies is a particularly effective means of delaying or stifling competition. We are here speaking of legal processes undertaken without regard to the merit of the claim advanced, in order to harm an actual or potential business rival."). See also Gary Myers, Antitrust and First Amendment Implications of Professional Real Estate Investors, 51 WASHINGTON & LEE L. REV. 1199, 1201 (1994) ("It is well established that litigation and other forms of petitioning activity can be part of a firm’s anticompetitive strategy."); Susan A. Creighton et al., Cheap Exclusion, 72 Antitrust L.J. 975, 992-93 (2005).

^26. PRE, 508 U.S. 49, 57.

^27. Id. at 51.

^28. Id. at 51-52.

^29. Id. at 52.

^30. Id.

^31. Id. at 53.

^32. Columbia Pictures Indus., Inc. v. Prof’l Real Estate Investors, Inc., 866 F.2d 278 (9th Cir. 1989).

^33. Columbia Pictures Indus., Inc. v. Prof’l Real Estate Investors, Inc., 944 F.2d 1525, 1527 (9th Cir. 1991).

^34. Id. at 1530.

^35. Id. at 1527.

^36. PRE, 508 U.S. at 53.

^37. Columbia Pictures Indus., 944 F.2d at 1528.

^38. Id.

^39. Id. at 1532.

^40. Id.

^41. Id. at 1532-33.

^42. Id. at 1532; see also PRE, 508 U.S. 49, 54. This represented a narrower reading of the sham exception than the Supreme Court’s California Motor Transport decision, which held that proceedings brought "with or without probable cause" could be deemed shams. Cal. Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 512 (1972); see also Areeda & Hovenkamp, supra note 20, at ¶ 205c ("In California Motor itself, the Supreme Court held that a sham claim was stated by allegations of repetitive suits brought ‘with or without probable cause,'[ ] and this was true even though the trial court had found that 21 out of 40 proceedings initiated by the antitrust defendants had ‘resulted in action favorable to the defendants.'[ ]" (citations omitted)). The Ninth Circuit subsequently distinguished PRE from California Motor Transport by noting that PRE involved one lawsuit, whereas California Motor Transport involved multiple proceedings. USS-POSCO Indus. v. Contra Costa County Bldg. & Constr. Trades Council, 31 F.3d 800, 810 (9th Cir. 1994).

^43. PRE, 508 U.S. 49.

^44. Id. at 57-58.

^45. Id. at 57-60.

^46. Id. at 58. This assertion seemed to have merit, but the Court undermined its credibility with a related statement: "Our original formulation of antitrust petitioning immunity required that unprotected activity lack objective reasonableness." Id. at 57 (citing Noerr, 365 U.S. at 138, 143). In fact, Noerr said nothing about a sham lacking objective reasonableness; Noerr instead described a sham as activity "ostensibly directed toward influencing governmental action" that was "a mere sham to cover what is actually nothing more than an attempt to interfere directly with the business relationships of a competitor . . . ." 365 U.S. at 144. Noerr’s concern thus was with defendants engaging in non-petitioning activities and trying to invoke the protection of petitioning activities; the concern was not about the objective reasonableness of real petitioning efforts.

^47. Id. at 60-61 (citations omitted). The Court observed that a plaintiff meeting this two-part test still would have to prove an antitrust violation. Id. at 61.

^48. Id. at 62-63.

^49. Id. at 60 n.5.

^50. Id. at 60.

^51. PRE mentioned the right to petition once in general terms ("Those who petition government for redress are generally immune from antitrust liability"), id. at 56, and once in reviewing the Noerr decision and its legislative and executive context ("Nor did we ‘impute to Congress an intent to invade’ the First Amendment right to petition."), id. at 56 (citing Noerr, 365 U.S. 127, 138). PRE thus protected a firm’s First Amendment right to litigate without quoting the relevant clause of the First Amendment or otherwise discussing its history or purpose. By contrast, the majority opinion in Borough of Duryea v. Guarnieri signaled its intent to explore the public interests that animate the Petition Clause from its opening statement: "Among other rights essential to freedom, the First Amendment protects ‘the right of the people . . . to petition the government for a redress of grievances.’ U.S. Const., Amdt. 1." 131 S. Ct. 2488, 2491 (2011).

^52. PRE’s protection of lawsuits as part of the right to petition is even harder to reconcile with Justice Thomas’ view in Borough of Duryea: "I seriously doubt that lawsuits are petitions within the original meaning of the Petition Clause." 131 S. Ct. 2488, 2501 (Thomas, J., concurring in the judgment).

^53. PRE at 67-76 (Stevens, J., joined by O’Connor, J., concurring in the judgment). See also, e.g., Gary Myers, Antitrust and First Amendment Implications of Professional Real Estate Investors, 51 Washington & Lee L. Rev. 1199, 1226 ("This definition of unreasonableness is overly narrow because it unnecessarily permits the use of litigation as an anticompetitive tool."); Litigation as a Predatory Strategy: Hearing Before the Subcomm. on Intellectual Property, Competition, and the Internet of the H. Comm. on the Judiciary, 112th Cong. 21 (2012) (statement of Marina Lao, Professor of Law, Seton Hall University School of Law) ("In the absence of a meaningful doctrinal limit to the expansive Noerr immunity principle, there are greater risks that dominant firms could bring actions against smaller competitors that they would not have rationally brought, in order to impose heavy costs on a small rival in the hope of excluding it from the market, diminishing its ability to compete on the merits, or deterring entry by other firms.").

^54. Id. at 69 ("Access to the courts is far too precious a right for us to infer wrongdoing from nothing more than using the judicial process to seek a competitive advantage in a doubtful case.").

^55. Id. at 76. Justice Stevens also questioned one of the Court’s rationales for its rule: conflicting appellate decisions on sham litigation: "To an unnecessary degree . . . the Court has set up a straw man to justify its elaboration of a two-part test describing all potential shams." Id. at 69.

^56. On this point, Justice Stevens quoted at length from Judge Posner’s opinion in Grip-Pak v. Ill. Tool Works, Inc., 694 F.2d 466, 476 (7th Cir. 1982), including this passage: "[W]e are not prepared to rule that the difficulty of distinguishing lawful from unlawful purpose in litigation between competitors is so acute that such litigation can never be considered an actionable restraint of trade, provided it has some, though perhaps only threadbare, basis in law. . . . The difficulty of determining the true purpose is great, but no more so than in many other areas of antitrust law."

^57. PRE at 68-69 (Stevens, concurring in the judgment).

^58. Areeda & Hovenkamp, supra note 20, at ¶ 205b. The reality is that one’s view of the PRE test depends on the danger that one is most concerned about: the possible suppression of parties’ rights to seek a judicial vindication of their rights, or the potential of a commercial plaintiff to suppress competition with a predatory lawsuit. Regardless of one’s view, the point is that a constitutional doctrine should be grounded in adequate constitutional analysis that gives due regard to all statutory rights after balancing their respective weight and the public’s interests. In that regard, this article considers Borough of Duryea to be far better reasoned than PRE.

^59. Borough of Duryea v. Guarnieri, 131 S. Ct. 2488, 2501 (2011).

^60. Id. at 2495.

^61. Id. at 2496.

^62. Id. at 2503 (emphasis in original).

^63. Id. at 2501.

^64. Pickering v. Bd. of Ed. of Twp. High Sch. Dist. 205, Will County, Ill., 391 U.S. 563, 568 (1968); Connick v. Myers, 461 U.S. 138, 142 (1983).

^65. The factual and procedural history in this and the following paragraph is taken from Borough of Duryea, 131 S. Ct. at 2492-93. (The opinion does not discuss the reasons for Guarnieri’s termination, but notes that he was reinstated after a disciplinary suspension.)

^66. The statute provides in part: "Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress . . . ."

^67. The appeals court found the evidence insufficient to support an award of punitive damages.

^68. Borough of Duryea, 131 S. Ct. at 2493 (quoting Borough of Duryea v. Guarnieri, 364 Fed. Appx. 749, 753 (3rd Cir. 2010)) (in turn quoting Foraker v. Chaffinch, 501 F.3d 231, 236 (3rd Cir. 2007)).

^69. Id. at 2491.

^70. Id. at 2500. The Court emphasized that government employees often have statutory and regulatory protections against "improper retaliation or discipline" and added: "The Petition Clause is not an instrument for public employees to circumvent these legislative enactments when pursuing claims based on ordinary workplace grievances." Id. at 2497.

^71. Id. at 2501.

^72. Id.

^73. Id. at 2495.

^74. Id.

^75. Id. at 2496.

^76. Id. This echoed the Court’s concern in Noerr, in the antitrust context, about the judicial branch intruding in the domain of the legislative and executive branches. Of course, when a court evaluates whether the lawsuit before it is a sham, separation of powers is not a concern.

^77. Id. at 2498.

^78. Id. (citation omitted).

^79. Id. at 2499-2500.

^80. Id. at 2500.

^81. Id. at 2494..

^82. Id. at 2498.

^83. Id. at 2502-07.

^84. Id. at 2503-04.

^85. Id. at 2502-04.

^86. Id. at 2503.

^87. Id. (emphasis in original). Justice Scalia also asserted: "The fact that the Court never affirmed a First Amendment right to litigate until its unsupported dictum in 1972—after having heard almost 200 years’ worth of lawsuits, untold numbers of which might have been affected by a First Amendment right to litigate—should give rise to a strong suspicion that no such right exists." Id. at 2504. However, Justice Scalia conceded that the question of Petition Clause protection of lawsuits was not before the Court: "[T]he parties have not litigated the issue, and so I agree we should leave its resolution to another day." Id.

^88. Id. at 2504-05.

^89. Id. at 2505-06. On the question before the Court, Justice Scalia said: "[W]e should hold that the Petition Clause protects public employees against retaliation for filing petitions unless those petitions are addressed to the government in its capacity as the petitioners’ employer, rather than its capacity as their sovereign." Id. at 2056. This would have withheld First Amendment protection from Guarnieri’s union grievance, but would have extended First Amendment protection to his federal lawsuit.

^90. Id. at 2501-02. On the question before the Court, Justice Thomas also endorsed Justice Scalia’s framework on public employee petitioning rights, but favored adding a further restriction: "Even where a public employee petitions the government in its capacity as sovereign, I would balance the employee’s right to petition the sovereign against the government’s interest as an employer in the effective and efficient management of its internal affairs." Id. at 2502.

^91. Id. at 2501.

^92. Id. at 2498.

^93. Other questions about the Petition Clause remain unanswered in the antitrust context. For example, while Borough of Duryea addressed an individual’s right to sue under the Petition Clause, the Supreme Court has yet to undertake a meaningful analysis of a commercial entity’s right to sue. That is, the Court has yet to explain why the language of the First Amendment—i.e., the right of "the people" to petition government—applies to commercial entities. But cf. Citizens United v. Fed. Election Comm’n, 130 S. Ct. 876, 899 (2010); First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765 (1978) (extending First Amendment protection to corporate speech). Another point is that commercial speech receives less First Amendment protection than individual speech. Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 566 (1980). Just as it looked to its doctrine on free speech for guidance on individual petitioning in Borough of Duryea, the Court could look to its doctrine on commercial speech for guidance on commercial petitioning in the antitrust context.

^94. See, e.g., Noerr, 365 U.S. 127, 139 ("A construction of the Sherman Act that would disqualify people from taking a public position on matters in which they are financially interested would . . . deprive the people of their right to petition in the very instances in which that right may be of the most importance to them."); Cal. Motor Transp., 404 U.S. 508, 510-511 ("We conclude that it would be destructive of rights of association and of petition to hold that groups with common interests may not, without violating the antitrust laws, use the channels and procedures of state and federal agencies and courts to advocate their causes and points of view respecting resolution of their business and economic interests vis-à-vis their competitors.").

^95. Borough of Duryea, 131 S. Ct. at 2498 (citation omitted).

^96. Noerr, 365 U.S. 127, 141.

^97. Borough of Duryea, 131 S. Ct. at 2497.

^98. After its initial citation of the Sherman Act, the PRE opinion made no further mention of the Act or its purposes.

^99. United States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972).

^100. Cf. L. A. County Metro. Transp. Auth. v. Alameda Produce Mkt., LLC, 52 Cal. 4th 1100, 1113-14 (2011) ("Our role as a court is not to ‘sit in judgment of the Legislature’s wisdom in balancing such competing public policies.’ Instead, ‘due respect for the power of the Legislature and for the separation of powers’ requires us to ‘follow the public policy choices actually discernible from the Legislature’s statutory enactments.’") (internal citations omitted); Planning & Conservation League v. Dep’t of Fish & Game, 55 Cal. App. 4th 479, 494 (1997) ("Exemptions cannot be judicially created" in the absence of an explicit statutory exemption).

^101. United States v. S.E. Underwriters, 322 U.S. 533, 558 (1944).

^102. Cf. Regan v. Time, Inc., 468 U.S. 641, 652 (1984) (plurality opinion) ("A ruling of unconstitutionality frustrates the intent of the elected representatives of the people.").

^103. Ayotte v. Planned Parenthood of N. New England, 546 U.S. 320, 328, 330 (2006) (citations omitted).

^104. Congress not only expressed the public interest in economic competition in the antitrust laws, but also entrusted the federal courts with deciding what is lawful and unlawful competition under those laws. The concern expressed in PRE was that judges would arbitrarily detect sham litigation; however, Congress has directed judges to "discern and draw" that "difficult line." Cal. Motor Transp. , 404 U.S. 508, 513. And of course, judges certainly are capable of determining when the judicial process is being abused. See Bork, supra note 25, at 357-58 ("Judges . . . have far more experience with and understanding of litigation than of economics and business behavior. They are far less likely to make mistakes about the former.").

^105. Bork, supra note 25, at 347.

^106. Noerr, 365 U.S. 127, 139.

^107. City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 380 (1991) (emphasis in original).