Noerr-Pennington Doctrine - Exception For Sham Proceedings

Exception For Sham Proceedings

There is a "sham" exception to the Noerr-Pennington doctrine which holds that using the petitioning process simply as an anticompetitive tool without legitimately seeking a positive outcome to the petitioning destroys immunity. See Omni, 499 U.S. 365, 113 L. Ed. 2d 382, 111 S. Ct. 1344.

The Supreme Court has articulated a two-part test to determine the existence of "sham" litigation. First, such suits must be "objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Professional Real Estate Investors, Inc. v. Columbia Pictures Indus. ("PREI"), 508 U.S. ({{{5}}} 60) 49 (1993). If that threshold is met, the court will inquire whether the suit demonstrates evidence of a subjective intent to use governmental process to interfere with a competitor's business.

For example, in California Motor Transport v. Trucking Unlimited, 404 U.S. 508 (1972), the United States Supreme Court held that the Noerr-Pennington doctrine did not apply where defendants had sought to intervene in licensing proceedings for competitors, because the intervention was not based on a good-faith effort to enforce the law, but was solely for the purpose of harassing those competitors and driving up their costs of doing business. The sine qua non of a "sham" proceeding is not the purpose to harm a competitor, but rather the absence of any purpose to actually obtain government action. Thus, initiating an administrative proceeding that one actually hopes to win in order to harm one's competitors is within the ambit of the Noerr-Pennington doctrine, while initiating a similar proceeding that one does not meaningfully intend to win solely to delay one's business competitors is within the sham exception.

In 1993, the Supreme Court rejected a purely subjective definition of a “sham” lawsuit, and set out a two-part test. See Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 113 S.Ct. 1920, 1926 (1993). Under the first prong of the test, a lawsuit fits within the “sham” exception to First Amendment immunity only if the lawsuit is objectively baseless in that “no reasonable litigant could realistically expect success on the merits.” Only if the challenged litigation meets the first prong (“objectively baseless”) may a court go on to the next prong, which consists of a determination of whether the litigant’s subjective motivation in filing the objectively baseless lawsuit was an attempt to interfere with the business of a competitor.